ImExHS Annual Report 2021

Plain-text annual report

A N N U A L R E P O R T | 2 0 2 1 Annual Report Where innovation and technology meet medical experience IMEXHS® was founded in 2012 by two radiologists and two software engineers who decided to solve two pervasive issues in global healthcare: the prohibitive cost of care and the need for access to modern technology. Ten years later, IMEXHS® has ~250 employees across two businesses – Medical Imaging Software and Radiology Services. Our software is fully web and cloud-based, includes innovative artiﬁcial intelligence (AI) tools, and has a lower cost-base than our competitors, enabling us to provide attractive pricing to our customers. Our radiology services business consists of ~110 radiologists who exclusively use our software and provide us with a growing radiology database to develop AI tools. - 2 - Our 10 Year Journey | 2 0 1 2 | Founded in Bogota, Colombia to provide healthcare professionals access to medical technology in hard-to-reach areas like the Amazon jungle. | 2 0 1 5 | Expanded into countries in Latin America such as Ecuador and Mexico. | 2 0 1 8 | Listed on the Australian Stock Exchange (ASX:IME) to expand our global presence. | 2 0 1 9 | Received FDA Clearance in the US, expanded into new medical verticals & AI tools. | 2 0 2 0 | Launched a standardised radiology imaging solution, AQUILA in the Cloud, to accelerate global expansion. | 2 0 2 1 | Purchased RIMAB SAS to strengthen our radiology services business and to access vast amount of data provided by in-house radiologists. 2021 | Annual Report- 3 - Table of Contents 4 Gl oba l footp rint a n d key sta ts 6 Finan c ial H ighlights 8 Cha irman’s Letter 11 CEO’s Repor t 14 Ab out u s 27 Current case stud y 32 Stra tegic alli an ces a n d priorit ies 36 Up da tes to so ftware developm ent 38 Ou r team & o ur cu l ture 43 Finan c ial Repo r t 2021 | Annual ReportGlobal Footprint and Key Stats - 5 - Global Footprint A U S T R A L I A B O L I V I A C H I L E C O L O M B I A C O S T A R I C A D O M I N I C A N R E P U B L I C E C U A D O R E L S A L V A D O R G U A T E M A L A H O N D U R A S M E X I C O N I C A R A G U A P A N A M A P E R U S P A I N U N I T E D S T A T E S Key Stats as at 31/12/2021 + 7 . 8 m 5 6 3 m I N 2 0 2 1 1 . 5 b I N T O T A L N E W S T U D I E S P E R Y E A R I M A G E S S T O R E D ( A N O N Y M I Z E D ) 5 . 2 1 P B 3 8 6 S I T E S P E T A B Y T E S S T O R E D R U N N I N G O U R A P P L I C A T I O N S + 2 . 4 k S P E C I A L I S T S U S I N G O U R A P P L I C A T I O N 1 . 4 m U S E R S W I T H 2 . 5 m P O R T A L E N T R I E S P A T I E N T S & D O C T O R S U S I N G O U R P O R T A L * T H A I L A N D A d d e d i n J a n u a r y 2 0 2 2 1 7 * 3 5 C O U N T R I E S D I S T R I B U T O R S 2021 | Annual Report | Global Footprint and Key Stats FY21 Financial Highlights - 6 - S T R O N G G R O W T H I N A R R D R I V E N B Y N E W C O N T R A C T S F O R A Q U I L A I N T H E C L O U D, S T R O N G G R O W T H I N A Q U I L A E N T E R P R I S E I M A G I N G V O L U M E S A N D T H E A C Q U I S I T I O N O F R I M A B I N Q 4 S a l e s R e v e n u e 1 $ 1 3 . 4 m U p 2 3 % y o y U p 3 4 % o n a c o n s t a n t c u r r e n c y b a s i s A n n u a l i s e d R e c u r r i n g R e v e n u e ( A R R ) $ 2 0 . 4 m U p 1 0 2 % y o y U p 1 2 1 % o n a c o n s t a n t c u r r e n c y b a s i s E B I T D A ( $ 3 . 0 m ) v s ( $ 1 . 3 m ) i n F Y 2 0 d u e t o i n c r e a s e d i n v e s t m e n t i n o p e r a t i o n s R e c u r r i n g r e v e n u e C l o s i n g C a s h U n d e r l y i n g E B I T D A 2 $ 1 2 . 2 m U p 4 3 % y o y U p 5 7 % o n a c o n s t a n t c u r r e n c y b a s i s $ 4 . 2 m ( (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) $ 1 . 4m ) $ 1 0 . 8 m a t 3 1 D e c e m b e r 2 0 2 0 v s ( $ 0 . 7 m ) i n F Y 2 0 1 F i n a n c i a l r e s u l t s i n c l u d e R I M A B R e s u l t s f r o m Q 4 F Y 2 1 2 E x c l u d e s t h e i m p a c t o f F X , s h a r e b a s e d p a y m e n t s a n d t r a n s a c t i o n c o s t s f o r t h e R I M A B a c q u i s i t i o n . 3 C o n s t a n t c u r r e n c y b a s i s a s s u m e s F Y 2 1 r e s u l t s a r e c o n v e r t e d a t t h e a v e r a g e f o r e i g n e x c h a n g e r a t e f o r F Y 2 0 . T h i s r e m o v e s t h e i m p a c t o f c h a n g e s i n c u r r e n c y r a t e s a n d a l l o w s c o m p a r i s o n o f I M E X H S ’ s u n d e r l y i n g o p e r a t i n g p e r f o r m a n c e . 2021 | Annual Report | Financial HighlightsFY21 Financial Highlights - 7 - 2 5 2 0 1 5 1 0 5 0 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 S P O T N O T Y E T B I L L I N G C O N S T A N T C U R R E N C Y N O T Y E T B I L L I N G $ 2 0 . 4 m u p 1 0 2 % ( 1 2 1 % o n a c o n s t a n t c u r r e n c y b a s i s ) S E G M E N T E D R E V E N U E A N D A R R $ m M E D I C A L I M A G I N G S O F T W A R E R A D I O L O G Y S E V I C E S T O T A L R E V E N U E $ 5 . 0 m $ 8 . 4 m $ 1 3 . 4 m A R R $ 7 . 1 m $ 1 3 . 3 m $ 2 0 . 4 m *FY21 ﬁgures in clude RIMAB Q4 contribution only. *Audited 2021 Finan ci al Statem ents 2021 | Annual Report | Financial HighlightsChairman’s Letter - 9 - CHAIRMAN’S LETTER TO SHAREHOLDERS Dear Shareholders: We are pleased with the progress made throughout 2021 to grow the business within Latin America and to expand overseas. IMEXHS met 2021 revenue guidance provided during the year. Revenue growth was largely driven by expanding volumes of existing customers for both our Medical Imaging Software and our Radiology Services. Other highlights for the year included a high and rising share of recurring revenue, low customer churn and the expansion of our global footprint through sales of our standardised radiology product, AQUILA in the Cloud. Notably, this year saw the acquisition of Colombian radiology services provider RIMAB SAS, which is performing above our expectations, has a strong growth proﬁle and is solidly proﬁtable. The Q4 results show the ﬁnancial beneﬁt of having RIMAB within the Company. Furthermore, the acquisition of RIMAB removes related party transactions and administratively complicated joint contracts with several customers. Going forward, our reporting should be clearer for shareholders with segmental reporting covering Medical Imaging Software and Radiology Services. Collectively, our Radiology Services business is one of exceptional quality and is recognized for having some of the best radiologists in Colombia. The use of IMEXHS software provides an edge in terms of productivity and consequently, cost. This is a signiﬁcant step forward in our ability to provide outstanding service and win new business. It is the Company’s intention to continue to build the Imaging Software business globally and grow the Radiology Services business, particularly within Colombia. We have developed a structure to ensure that each business has appropriate resources to both independently and symbiotically develop and grow. During the year, the Board decided to proceed faster than anticipated on expenses associated with sales and distribution and with capital invested in development. The Company also invested in equipment to support opportunities in radiology services beyond original forecasts. Where appropriate, equipment investment was in part debt funded. The proportion of revenue from one-off transactions continued to fall while broadening the base of recurring revenue. The success of AQUILA in the Cloud is evident in terms of sales and the acceptance of the model of a non-customised SaaS product distributed through 35 partners that is now present in 11 countries. In the early stages, product implementation was slower as we learnt how to better help clients and partners prepare to onboard the software and adopt related beneﬁcial changes in working practices. To that end, we have developed better processes and implementation times have markedly improved. Importantly, the software package approach offers us some interesting strategic options, through direct online distribution and in applying the same packaged approach to other clinical practices, such as cardiology and pathology. 2021 | Annual Report | Chairman’s Letter - 10 - IMEXHS made two important announcements at the Looking forward, the focus will be on maintaining strong Radiological Society of North America (RSNA) Scientiﬁc growth and reaching EBITDA breakeven and cash ﬂow Assembly held in Chicago in November 2021. Firstly, positive with contract wins for AQUILA Enterprise and IMEXHS announced a partnership agreement with Neusoft AQUILA in the Cloud, high recurring revenue, faster Medical, a global leader in clinical diagnostic and treatment conversion of AQUILA in the Cloud, and the contribution of solutions. Secondly, IMEXHS announced the new IMEXHS positive earnings from RIMAB. IMEXHS is well-placed to Cloud product and solution. Neusoft will be one of IMEXHS’s leverage its distribution channels and unique global market ﬁrst strategic partners to offer the new IMEXHS Cloud positioning. The need for affordable Medical Imaging product. Software at all levels is not being met by the large players and leaves an enormous addressable market. Our Product Development team continued to do outstanding work in 2021, the details of which are covered The Board and management continue to recognize the later in the report. We have had excellent feedback from challenges, both actual and perceived, of overseeing a new clients and from existing users as new releases have Company whose operations are largely run outside of the been seamlessly applied. Global development in medical governance jurisdiction. However, the Board meets software in terms of architecture, the integration of frequently, both formally and informally, with regular capabilities, and the development of AI tools has never management discussions. Furthermore, the Company has moved so swiftly, and we believe this Company is well in place appropriate governance charters and the Board is placed to thrive. satisﬁed as to the Company’s adherence to those charters as well as the requirements of both the ASIC and ASX listing Our thoughts are with our staff and their families who rules and the spirit of those rules. contracted COVID-19 during the year, and who have thankfully all recovered. We enter 2022 with a signiﬁcant agenda but well placed to seize the opportunities available. I would like to thank our There is little doubt that pressure on health systems and directors for their contributions throughout the year and of hospitals due to COVID in Latin America caused delays in course our management team and staff across the world, decisions, including deferring upgrades to imaging most ably led by our CEO, Dr German Arango. Lastly, thank systems. However, reports show that Latin America, once a you to our shareholders – we appreciate your continued hotspot of COVID-19 cases, now leads the US and much of support and commitment. Doug Flynn Chairman. the world in vaccination rates and recovery. According to a Wall Street Journal article (dated 25 December 2021) about 62% of Latin America’s population has been vaccinated. “Thanks in part to the successes from past inoculation campaigns, like the ﬁght against yellow fever, citizens across Latin America generally embrace vaccines.” The somewhat younger demographic proﬁle compared to much of the Northern hemisphere has helped the recovery. There are few travel restrictions, and the market is returning to relatively normal levels. The gradual recovery from COVID-19 conditions in Latin America was reﬂected in our combined contract win for Colombia's Central Police Hospital announced in December 2021, which will contribute over $1.1m in Annualised Recurring Revenue. This validates the RIMAB acquisition and further positions IMEXHS as a more integrated proposition, while still allowing customers the ﬂexibility of choice. 2021 | Annual Report | Chairman’s LetterCEO’s Report - 12 - We founded IMEXHS in 2012 to improve the quality of life of patients and doctors by developing cutting edge technology to address real needs of physicians, hospitals, clinics and diagnostic centers. Developing an innovative cloud-based medical Imaging Software as a service has allowed us to become a market leader in Latin America and provided us with the opportunity to expand into larger global markets such as the US. Guided by our philosophy, ‘Where innovation and technology meet medical experience’, we are achieving great things for our Company, our customers and our future. Our customers and staff continued to overcome COVID-related challenges in 2021 which have now started to ease. During most of the year our staff worked remotely and had to overcome the challenges of conducting customer interactions remotely, while IMEXHS also experienced some delays in customer decision-making among larger organizations. We are pleased to report strong year-over-year growth in all our key metrics in 2021. Revenue for the twelve months ended 31 December 2021 was $13.4m, up 23% and up 34% on a constant currency basis versus pcp. Annualised Recurring Revenue (ARR) of $20.4 million increased by 102% and 121% on a constant currency basis which consisted of $13.3m from Radiology Services and $7.1m from Software. The EBITDA loss was $3.0m versus a loss of $1.3m in FY20 due to continued investment in operations. We ended the year in a sound ﬁnancial position with a cash balance of $4.2m. Underlying EBITDA, excluding the impact of FX, share based payments and transaction costs for the RIMAB acquisition was a loss of $1.3m versus a loss of $0.7m in FY20. Our high touch and customised enterprise solution, AQUILA Enterprise, is the main source of our existing revenues and continues to grow due to new contract wins and internal volume growth from existing customers. This product has helped build our reputation and allows us to upsell, but importantly the platform demonstrates its value in increasing productivity. In December 2021 we announced a new contract with Colombia’s Police Department with an ARR of $1.1m, reﬂecting a reactivation of purchase activities among larger public sector customers and that our enhanced platform is already generating good traction. Our disruptive cloud offering, AQUILA in the Cloud, continues to generate strong interest, addressing the underserviced need for small to mid-size enterprises around the world. We completed 111 AQUILA in the Cloud contracts in the ﬁnancial year, including 7 in the US and 5 in Australia. In November 2021, IMEXHS attended the Radiological Society of North America (RSNA) Scientiﬁc Assembly held in Chicago and did not see a comparable proposition. IMEXHS has a signiﬁcant opportunity to expand our footprint globally through our standardised cloud solutions. We see considerable demand in the US, driven by increasing technological advancements, as well as the high incidence of diseases and subsequent need for data management. During the year, we made signiﬁcant improvements to the implementation process for AQUILA in the Cloud, which revolved around ensuring customers were adequately equipped to install the software. We have also achieved signiﬁcant improvements in the time from signing deals to recognising revenue and collecting cash. Our key focus for 2022 will be to continue to work with customers and partners to ensure the onboarding process becomes more efﬁcient in order to invoice customers and collect payment. Welcoming RIMAB into IMEXHS in October 2021 was a signiﬁcant milestone for the Company. It eliminates related-party transactions and enabled us to restructure the Company into two businesses – Medical Imaging Software and Radiology Services. As a founder of both companies, I was pleased to see the two businesses I started with my partners ten years ago coming back together again. Over time, we expect radiology services and software to become increasingly intertwined and strongly believe that artiﬁcial intelligence (AI) will be the vehicle for enhancing that connection. 2021 | Annual Report | CEO’S report - 13 - Radiology Services revenue growth was stronger in the ﬁnal quarter due to pent up demand from COVID-19. Radiology services revenue of $3.1m in Q4 was above plan and improved the results of the combined Group. We expect RIMAB to maintain this momentum trend for the next year. Our partners program supports the existing product line and expands our global reach. Additionally, the new channel and distribution strategy has been well validated with the IMEXHS partners program, able to deliver most of the AQUILA in the Cloud deals (73%) across 11 countries. This is optimized by the contribution of IMEXHS University, the standardized training online platform. Our other signiﬁcant partnerships, such as with VITAL Images and Entelai, continue to support our growth and provide IMEXHS customers with the most advanced analysis tools. IMEXHS now has 35 distributors in 15 countries. Most recently, we signed an agreement with Neusoft Medical, a global leader in clinical diagnostic and treatment solutions. With 40,000 installations in more than 110 countries, Neusoft offers advanced medical imaging solutions and high-quality care to patients and healthcare professionals worldwide. Neusoft will be one of IMEXHS’s ﬁrst strategic partners to offer the new IMEXHS Cloud product, providing affordable access to high-tech medical imaging platforms through a combination of IMEXHS’ unique technology as well as Neusoft’s geographic reach. We have already started training activities for the Neusoft team of country managers and are preparing the ﬁrst proof of concept. The software development roadmap has been focused on product improvements with the integration of highly sophisticated tools for advanced post-processing and AI, which makes our platform more efﬁcient and disruptive in the market. Among the broader team, we are excited to bring on-board highly qualiﬁed experts for the new Chief Technology Ofﬁcer and Product Manager roles. It is important that we continue expanding and building the team to support the pace of growth. Looking to 2022, we are progressing into a new stage of our strategy, focused on accelerating our AI verticals and growing solid Imaging Software and Radiology Services, and strengthening the interconnection between these core areas. We have strong fundamentals in the development and sales delivery for our Medical Imaging software platform, together with an extensive number of outsourced radiology facilities, best in class radiologists, access to a high volume of images, and demonstrated experience in developing AI tools. We are in an advantageous position, ideal for creating services that anticipate the future needs of the industry. This year, we are also updating our marketing and branding efforts to help promote our products and services, with a rebrand and re-organization of AQUILA Enterprise, IMEXHS Cloud, and RIMAB. In closing, 2021 was all about investing in growth through our sales, technology development and operational engineers, which started to bear fruit towards the end of the year. We have retained some of the best engineers in the industry despite some signiﬁcant market resourcing challenges. Our focus in 2022 will be on building AI at the core of our business. We will aim to win more large contracts for AQUILA Enterprise, improve implementation timings for AQUILA in the Cloud, further integrate RIMAB into the business, and leverage our partnership network. I would like to extend my sincere thanks to the directors for their guidance, as well as the management team around the world and the whole IMEXHS team for their efforts. Dr. Germán Arango CEO 2021 | Annual Report | CEO’ report About US A Q U I L A I N T H E C L O U D O U R C L O U D - B A S E D S T A N D A R D I S E D R A D I O L O G Y S O L U T I O N , W A S L A U N C H E D I N 2 0 2 0 - 15 - T O F A S T T R A C K O U R G L O B A L E X P A N S I O N A N D M E E T T H E (cid:121) (cid:48) (cid:48) (cid:40) (cid:178) (cid:3) (cid:132) (cid:73) (cid:3) (cid:178) (cid:119) (cid:4) (cid:109) (cid:109) (cid:3) (cid:4) (cid:121) (cid:40) (cid:3) (cid:119) (cid:48) (cid:40) (cid:88) (cid:199) (cid:119) (cid:1612) (cid:178) (cid:88) (cid:240) (cid:48) (cid:40) (cid:3) (cid:48) (cid:121) (cid:192) (cid:48) (cid:170) (cid:167) (cid:170) (cid:88) (cid:178) (cid:48) (cid:178) (cid:1582) (cid:3) (cid:1654) W I T H T H I S I N M I N D , A Q U I L A I N T H E C L O U D I S B U I L T U P O N F O U R M A I N P I L L A R S : To be FAST is to be AVAILABLE To be EASY is to be ACCESIBLE In 2021, AQUILA in the Cloud was implemented in only 34 days on average compared to +100 days which is the industry’s standard. In 2021, 498 new radiologists from 6 different sub-specialities were trained and began using AQUILA in the Cloud. In 2021, AQUILA in the Cloud was deployed across 9 countries in 3 different continents. AQUILA in the Cloud is an intuitive and easy-to-use medical imaging platform. It takes the average radiologist 2-3 amount of clicks to ﬁnish a report compared to 6 clicks using a legacy platform. The AQUILA in the Cloud offering is presented to potential customers is a simple manner, they can either choose from: Lite, Pro & Ultimate. This differs from the industry standards which is complex, confusing, and time-consuming. AQUILA in the Cloud is EASY to buy. To be DIFFERENT is to be INNOVATIVE To be FOR ALL is to be AFFORDABLE In 2021, AQUILA in the Cloud was available across 138 countries for all segments of the market. AQUILA in the Cloud does not discriminate against small to mid-sized enterprises (SME’s), it caters for them and provides huge value. AQUILA in the Cloud is available FOR ALL In 2021, AQUILA in the Cloud customers beneﬁted from three proprietary, powerful AI algorithms on a pay per use model, as well as two third-party algorithms and instant software updates. AQUILA in the Cloud allows 100% of its users to work from anywhere at any time. In 2021, over two thirds of its users worked from home which meant that despite the uncertainty produced by COVID -19, they were still able to offer a precise and timely diagnosis to their patients. 2021 | Annual Report | Key Competitive Advantages - 16 - IMEXHS® Enterprise Imaging Universe O L O G I E S R A D I O L O G Y P A T H O L O G Y C A R D I O L O G Y ARTIFICIAL INTELLIGENCE ADVANCED VISUALISATION PICTURE ARCHIVING AND COMMUNICATION SYSTEM/ VENDOR NEUTRAL ARCHIVE VIEWER CORE (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:26)(cid:24)(cid:23)(cid:22)(cid:27)(cid:21)(cid:30)(cid:24)(cid:27)(cid:20)(cid:24)(cid:22)(cid:19)(cid:26)(cid:18)(cid:17)(cid:16)(cid:30)(cid:29)(cid:15) See page 17 for details CHEST COVID VITAL LUNG ALMA NEURO(*) BRAVIZ BREAST(*) BRAVIZ PORTAL VOICE RECOGNITION BUSINESS INTELLIGENCE IMEXHS UNIVERSITY PARTNERS PROGRAM See pages 21 & 22 for details ADVANCED TOOLS See pages 21,22 & 23 for details COMMUNITY See page 24 for details (*) Third Party Algorithm 2021 | Annual Report | Product Offering Product offering - 17 - AQUILA - Radiology is a multiplatform web system that allows the total management of the radiology service, in a centralized and agile way. The system provides management tools and consultation of productivity indicators for the administrator, from the appointment scheduling to the delivery of the result. It is a multi-user and multimodal platform with the availability of work lists and consultation of care status. AQUILA’s main objective is to optimize the care processes in the radiology service, allowing efﬁcient decision making. ALULA – Pathology is a fully functional multiplatform and multi-browser system under a web environment. This product guides the entire pathology workﬂow from the reception of samples to the creation of ﬁnal reports. In this system are the different phases of pathology such as macroscopy, histotechnology, microscopy. ALULA presents a digital view of these images where you can make use of different tools such as zone selection, measurement and in-depth exploration. (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:26)(cid:24)(cid:23)(cid:22)(cid:27)(cid:21)(cid:30)(cid:24)(cid:27)(cid:20)(cid:24)(cid:22)(cid:19)(cid:26)(cid:18)(cid:17)(cid:16)(cid:30)(cid:29)(cid:15) ANTEROS - Cardiology is a cloud-based platform that provides secure cloud storage, a universal web viewer, CIS, PACS and business intelligence tools, and access to all the functionalities of a VNA web platform in a single solution. Implementing ANTEROS in the cardiology department will make medical imaging and diagnosis simpler and easier, improving patient care, maximizing productivity, and minimizing risk. 2021 | Annual Report | Product Offering - 18 - Discover AQUILA 3.5 A Q U I L A G O E S O N E S T E P F U R T H E R W I T H I T S N E W V E R S I O N 3 . 5 In this new version 3.5, you can enjoy new or improved features, security ﬁxes and, better compatibility with different devices and tools. In addition, it presents an optimization in the stability of the software, eliminating obsolete functions. Other new features of this new version include hanging protocols, MPR improvements and the ability to access AI algorithms. All of these updates are aimed at improving the user experience, ensuring that you can take full advantage of its technology, and positively impacting patients and physicians around the world. AQUILA in the Cloud AQUILA in the Cloud is our standardised radiology offering launched in May 2020. It provides small and medium-sized centers with an affordable and accessible RIS/PACS product. The standardised solution is a cloud-based, multi-tenant, end-to-end radiology solution. It handles the workﬂow of an imaging center from the billing with to the scheduling high-end tools for medical visualization and reporting. It is a subscription-based model with additional charges are based on volumes of radiology studies. Charges are based on volumes of radiology studies. During 2021 IMEXHS signed 91 AQUILA in the Cloud contracts and reached a total of 111 projects in 13 countries by the end of the year. This number of projects represents an increase of more than 110% compared to 2020. Between 2020 and 2021, the number of radiologists using AQUILA in the Cloud increased by 98.4%. 2021 | Annual Report | Product Offering - 19 - R A D I O L O G I S T S U S I N G A Q U I L A I N T H E C L O U D 4 9 8 2 5 1 G R O W T H 9 8 . 4 % 2 0 2 0 2 0 2 1 Good progress has been made improving implementation times from order to cash. There remains signiﬁcant ramp up in cash in billings going into 2021. Further, we are seeing strong volume growth within clients as they become used to and enjoy the beneﬁts of the AQUILA in the Cloud software. The channel strategy has been strongly validated with more than 73% of the sales completed by distributors and more than 75% of AQUILA in the Cloud sales coming from outside of Colombia. Sales outside of Colombia are contracted in USD or AUD. To improve the onboarding process particularly in new geographies, IMEXHS has implemented a standardized training program for distributors through the online platform IMEXHS University. Strong sales momentum was generated in key markets with new orders from the US and Australia. The AQUILA in the Cloud platform is becoming a window for efﬁcient access into the most sophisticated tools for advanced post processing and artiﬁcial intelligence. It is democratising access to the most advanced medical technology across all the segments of the market. Equipment manufacturers have taken note of the advantages of the product and the ease of integration. This has led to a global product partnership with Neusoft Medical as we have done previously with Canon VITAL Imaging. 2021 | Annual Report | Product Offering - 20 - AQUILA Enterprise AQUILA Enterprise (formerly AQUILA Custom) is our customised Enterprise imaging platform for large clinics and hospitals with a high level of integration of third-party platforms. It has been specially designed for solving the workﬂow demands for multi-site and teaching hospitals, providing highly sophisticated tools for visualization, post processing, Business Intelligence and practice management. This has been bolstered by the recent integration of AI tools developed by the IMEXHS team and third parties, bringing improvements in productivity and reporting accuracy. Each AQUILA Enterprise contract tends to be unique, there is no standard model. These are normally multi-year agreements (ﬁve years on average) and charged on the basis of volume-related tiers. Most of the current IMEXHS software revenue is derived from this business model and despite the COVID pandemic, the main metrics continue to grow. This is as a consequence of new customers and internal volume growth from existing customers. This business model creates opportunities for upselling and cross-selling with some of the new product releases. In all Radiology Service contracts, IMEXHS software features and is priced on a commercial basis. IMEXHS ﬁnished 2021 with almost 100 AQUILA Enterprise projects across eight countries, representing revenue growth of 9%. There was also an increase in closed projects of almost 80% compared to 2020, when we had 54 projects in ﬁve countries. Between 2020 and 2021, the number of AQUILA Enterprise studies rose by 21.3%. N U M B E R O F S T U D I E S 7 , 5 1 1 , 3 7 7 6 , 1 9 3 , 4 1 3 G R O W T H 2 1 . 3 % 2 0 2 0 2 0 2 1 Closing tenders in 2021 proved challeging throughout the year due to COVID delays; however the Company won several smaller contracts and an important tender from the Central Police Hospital of Colombia. This coupled with the provision of clinical radiology services, added more than AUD$1.1m in ARR for the consolidated group. 2021 | Annual Report | Product Offering - 21 - A I E X P E R T I S E Highly skilled and experience team in developing AI technology. Large database of images (more than one billion) to feed data sets and data lakes. STELLA.I engine for the seamless integration of AI algorithms into our software products. Business models like AQUILA in the Cloud, ideal for enhancing the sales and distribution activities. E X I S T I N G A I P R O D U C T S IMEXHS AI CHEST: able to detect 14 diseases on a chest x-ray, useful for ER triage and for supporting non radiolo- gist physicians. IMEXHS AI COVID: automatic segmentation and detection of areas of covid lung pneumonia. IMEXHS AI LUNG: segmentation and volumetry of areas lung involvement by ground glass opacities and consolidation. IMEXHS AI NEURO: third party algorithm trained with our data set which helps physicians diagnose conditions such as dementia, multiple sclerosis on brain MRI, reducing time and optimizing workﬂow. IMEXHS AI BREAST : third party algorithm trained with our dataset which enables the splitting out the radiologist mammography work list into normal and abnormal. Braviz: : advance post-processing neuro suite for DTI tractography and brain volumetry. Artiﬁcial Intelligence Over the past two years, IMEXHS has gained signiﬁcant knowledge and beneﬁts from the development of artiﬁcial intelligence (AI). This has become a core activity which perfectly connects the technology to medical practices, a signiﬁcant part of the logic for the acquisition of RIMAB and strengthening Company’s competitive position. the in the tools STELLA.I offers a set of artiﬁcial intelligence cloud, developed to help specialists in the diagnosis. These tools make it possible to sort studies by relevance, identify pathologies more easily and perform advanced providing analysis, quantitative data to support medical decisions. and support is developing proprietary IMEXHS artiﬁcial intelligence algorithms and training third parties to strengthen our the diagnostic solutions, optimize workﬂow. process IMEXHS will continue to develop AI tools in-house. We have a number of key success drivers: relatively low cost, access to a large and growing data images with high base of patient quality successful development track record, a strong platform for trialling, training and reﬁning new AI tools, and a program for assessing accuracy, client beneﬁt and clinical productivity. reporting, 2021 | Annual Report | Product Offering - 22 - Advanced Tools A D V A N C E D V I S U A L I S A T I O N A unique partnership with VITAL Images, a leading provider of Enterprise Imaging solutions and a Canon Group company, provides a highly sophisticated and compelling set of tools in the cloud via the IMEXHS platforms. Users are able to render complex imaging protocols from MR and CT acquisitions, into images, delivering accurate information for complex diseases, which is frequently required by the high-end imaging centres and normally not accessible at the low end of the market. IMEXHS offers advanced tools for neurological images, abdomen and chest, vascular and MSK protocols, offering the option to examine medical images in order to obtain additional qualitative or quantitative data, efﬁciently post-process large volumes of data, study the functionality of speciﬁc organs, evaluate different pathologies and study structural changes associated with a pathology. Currently, seven customers and 11 sites have post-processing tools. Braviz, brain visualisation, is a highly sophisticated suite of tools for advanced post-processing of neurological images, including brain volumetry and segmentation, DTI tractography, functional MRI and statistical tools for research. Currently installed and used by research groups. P O R T A L Web-based system that allows the end user a fast and centralized access to the results issued by the institution's diagnostic imaging service. The portal is a multi-user platform with 24/7 availability of radiological examination consultations. The portal provides fast and easy access for radiologists, referring doctors, specialists and patients. It has been a very successful product with more than 150,000 portal entries per month, reaching more tan 2.5 million portal entries by 2021 and guaranteeing access to more than 1.4 million patients and doctors. 2021 | Annual Report | Product Offering - 23 - P o r t a l e n t r i e s Q 1 U s e r s 2 9 1 , 1 9 1 5 1 9 , 3 2 8 Q 2 U s e r s 3 2 5 , 6 2 0 P o r t a l e n t r i e s 5 8 0 , 7 2 1 P o r t a l e n t r i e s Q 3 U s e r s 3 9 3 , 3 2 1 7 0 1 , 4 6 0 Q 4 U s e r s 4 3 8 , 0 9 6 P o r t a l e n t r i e s 7 5 3 , 5 3 6 C l i c k s Total Users 1 , 4 4 8 , 2 2 8 Total portal entries 2 , 5 5 5 , 0 4 5 5 1 9 . 3 2 8 V O I C E R E C O G N I T I O N This advanced tool powered by Nuance offers the dictation of patient diagnosis reports. There is also the option to preload templates previously made with the most recurrent diagnoses encountered by radiologists in his daily work through speciﬁc voice commands. It is currently installed in 152 sites and during 2021 supported the reporting process of more than 2.1 million studies. Thus, during 2021 about 28% of new studies were supported by our voice recognition tool. B U S I N E S S I N T E L L I G E N C E All our solutions have a big data analysis within the application, which allows business managers and radiology leaders to obtain statistics on the performance of the following parameters: Addendums Agenda Agenda reservation and timeliness indicators Cancellations Contracts Income Integrations Invoices Note details Note report Radiological technique Readings Statuses Studies Tariff manual 2021 | Annual Report | Product Offering - 24 - Community IMEXHS – University IMEXHS has taken on the mission of providing partners, clients and employees with training and tools that allow them to keep up-to-date and to learn about the key components of the IMEXHS universe. IMEXHS University currently has 10 training courses in sales, marketing, implementation, support, techno vigilance, SaaS structure, among others. The partners onboarding process is carried out through the platform, and there are plans to carry out further training for our different products and new releases. Currently all our ~250 employees are registered and we have more than 150 registered users from various partners and 11 from customers. IMEXHS-University is a Universe of Innovation. PARTNERS PROGRAM This year our business partner model was redesigned with new rules that facilitate the sale of products through our distributor network. The new rules include: The new process and structure of the sales this process to constantly accompany the distributor. structure includes the creation of new work teams for inbound marketing, outbound marketing, Sales Development Representative, Customer Success and Account Management. A new 100% virtual Onboarding process for distributors, training in marketing, sales, CRM, customer success and customer support. rewards A new (iPoints) incentivizes distributors to accumulate points based on their sales and can redeem them for prizes. scheme 2021 | Annual Report | Product Offering- 25 - Radiology Services Offering OUR HIGH QUALITY PROPOSAL INCLUDES TWO MAIN BUSINESS MODELS: Outsourcing of imaging facilities Solution offering for hospitals including hardware, software and medical services. This business model represents 95% of current revenues. Teleradiology Medical imaging reporting from remote locations for images produced by third parties. This business model represents 5% of current revenues. Radiology services to hospitals and medical facilities in Colombia and teleradiology to HT Medica (Health Time SL) in Spain. OUR VALUE PROPOSITION IS DRIVEN MAINLY BY OUR HIGH QUALITY OFFERING: Extensive experience in the production and reporting of large volumes of medical images. High level of specialization of the radiologist team and the reporting database based on medical imaging subspecialties: NEURO ABDOMEN CHEST MSK BREAST PEDIATRIC INTERVENTIONAL Highly skilled radiologist team with strong academic credentials, visibility and recognition. 2021 | Annual Report | Radiology Services OfferingCombined Group - 26- T H E F U T U R E O F R A D I O L O G Y Anticipation of the future following the industry trends The incorporation of technology in the medical practice and in particular in the medical imaging ﬁeld is rapidly growing. We anticipate in the near future the elimination of the boundaries between technology and medical activities, so consider it a high priority to be highly involved in both fronts. End-to-End radiology offering The amalgamation of IMEXHS, a technology company, and RIMAB, a services company, allows the group to have a fully end-to-end radiology offering. By bringing together the clinical practice with the technology provider for medical imaging, the combined group can offer and provide software technology, human talent and operational capacity. Develop and test products the combined group is able to develop and test products in a fast and agile way by having in-house radiologists who have access to a real, complex and sophisticated test scenario. Develop AI algorithms RIMAB runs more than a million imaging reports per year, which provides IMEXHS with a vast amount of data to drive the development of its artiﬁcial intelligence algorithms. IMEXHS provides RIMAB with the imaging technology – AI, software and teleradiology – to make the radiology process more efﬁcient. 1 2 3 4 2021 | Annual Report | Combined Group OfferingCurrent Case Study - 28 - Central Police Hospital of Colombia HOCEN I N T R O D U C T I O N The Central Police Hospital of Colombia, provides healthcare to police personnel and their families, is now supported by the IMEXHS diagnostic imaging platform. With 640,000 users and their respective beneﬁciaries, the Central Police Hospital relies on IMEXHS digitalisation and centralisation of diagnostic images. T H E C H A L L E N G E The main challenge facing the Central Police Hospital was to update and improve all aspects of its imaging centre. Problems with the agility and efﬁciency of their radiologist teams in treating physicians and the ability to view images from any device in any place, led to reprocessing, additional costs, and delays in the care and treatment of patients. Additionally, the Central Police Hospital needed to contribute to the consolidation of the National Government's Democratic Security Policy, which means that each of its activities needs to guarantee compliance with the data protection and security law imposed by the Ministry of Defence. T H E S O L U T I O N With the implementation of AQUILA Enterprise, the Central Police Hospital has access to a world class radiology solution that is intuitive, ﬂexible and accessible, and which can optimise workﬂow from start to ﬁnish. Furthermore, with AQUILA, the Central Police Hospital was able to centralise their radiology department’s information nationwide. Physicians, police personnel and beneﬁciaries now have access to all studies along with the specialist's diagnosis from any device, anywhere. This translates into higher quality patient care, and time and cost reductions for the organisation. Thanks to the Advanced Visualisation advanced tools, the Central Police Hospital meets the diagnostic needs of the most current global protocols. Additionally, given the importance of patient care, IMEXHS’ web portal designed for patients and treating physicians allows anytime access without delays, providing the possibility to share, cooperate and maintain control of the diagnostic history. 2021 | Annual Report | Case Study - 29 - In addition, with the contribution from RIMAB, the radiology department was completely renovated. An initial projected four-month timeline to develop the project, the combined group was able to complete it in record two months. The redesign generated signiﬁcant beneﬁts, using best practices to improve the user experience with the installation of state-of-the-art architectural ﬁnishes for hospital centers. I M P L E M E N T A T I O N IMEXHS® in alliance with RIMAB (now part of Radiology Services), and complying with all the established data and infrastructure security requirements, provided their expertise to achieve immediate user access to required services, optimising care and controlling the proper use of the Health System of the Central Hospital of the Colombian Police. Additionally, state-of-the-art equipment was installed. Central Police Hospital of Colombia HOCEN 2021 | Annual Report | Case Study I N S T A L L A T I O N D I A G R A M A Q U I L A ® R I S P N H O C E N . H I R U K O . C O M . C O R V S P E E C H A N Y W H E R E S A S P N H O C E N . H I R U K O . C O M . C O - 30- - S I E M E N S - - I N T E R N E T - C E N T R A L P O L I C E H O S P I T A L R E S O N A N C E A N D C T S C A N A R E A R E M O T E A C C E S S I P S E C R o u t e r S R S I P P U B : 1 9 0 . 1 4 4 . 1 1 9 . 1 5 7 P r o x m o x V i r t u a l i z a t i o n . 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X V M R I S M W L V M P A C S V M D B V M N M S R V V M D M S R V 1 5 7 T B N A S S Y N O L O G Y I P 1 9 2 . 1 6 8 . 1 0 0 . 1 8 5 0 0 0 W E B P o r t s f o r p u b l i c a n d l o c a l a c c e s s b e t w e e n s i t e s P o r t s f o r a c c e s s b e t w e e n s e r v e r s D i c o m L o c a l i n f o r m a t i o n t r a n s f e r ( i m a g e s ) P l a t f o r m C o n s u m p t i o n C o n s u l t a t i o n b y P u b l i c I P T W O N E W D I G I T A L X - R A Y M A C H I N E S T W O U L T R A S O U N D M A C H I N E S D I G I T A L M A M M O G R A P H E R 2021 | Annual Report | Case Study - 31 - Global Market Opportunity I M E X H S O P E R A T E S I N L A R G E A N D G R O W I N G G L O B A L M A R K E T S R A D I O L O G Y S O F T W A R E M E D I C A L I M A G I N G A I 2 0 2 0 U S $ 2 . 7 b 2 0 2 5 U S $ 3 . 2 b C A G R 3 . 4 % 2 0 2 0 U S $ 8 0 0 m 2 0 2 5 U S $ 1 . 2 b C A G R 2 6 % D I A G N O S T I C I M A G I N G M E D I C A L S E R V I C E S : 2 0 2 1 U S $ 5 8 9 . 9 b 2 0 3 0 U S $ 9 0 5 . 8 b C A G R 4 . 8 8 % R A D I O L O G Y A S A S E R V I C E 2 0 2 1 U S $ 1 . 3 b 2 0 2 8 U S $ 4 . 7 b C A G R 2 0 . 3 % P A T H O L O G Y S O F T W A R E 2 0 2 0 U S $ 5 7 4 m 2 0 2 7 U S $ 1 . 4 b C A G R 1 3 . 9 % A D V A N C E D V I S U A L I S A T I O N I T T E L E R A D I O L O G Y 2 0 2 0 U S $ 1 . 1 b 2 0 2 5 U S $ 1 . 4 b C A G R 4 . 5 % 2 0 2 0 U S $ 1 . 3 b 2 0 2 5 U S $ 2 . 8 b C A G R 1 8 . 5 % S O U R C E O F M A R K E T S T A T S : S I G N I F Y R E S E A R C H , 2 0 2 1 R E S E A R C H A N D M A R K E T S , 2 0 2 1 2021 | Annual Report | Global Market Opportunity Strategic Alliances and Priorities - 33 - Strategic Global Business Alliances To join forces and promote growth and competitiveness, we have established new alliances while strengthening existing partnerships. I N 2 0 2 1 I M E X H S ® S I G N E D A N E W P A R T N E R S H I P A G R E E M E N T W I T H N E U S O F T M E D I C A L This partnership agreement signed in November 2021 will combine the technology of IMEXHS with the broad geographic reach of Neusoft Medical, company that maintains over 40,000 installations in more than 110 countries. As a result of this alliance, Neusoft is projected to consolidate its position as one of our main AQUILA in the Cloud distributors and one of the ﬁrst to IMEXHS Cloud, IMEXHS Box, IMEXHS Marketplace and IMEXHS Teleradiology portal. I M E X H S ® M A I N T A I N S I T S G L O B A L P A R T N E R S H I P A G R E E M E N T W I T H V I T R E A – V I T A L In September 2020 IMEXHS teamed up with VITAL, so our our clients can access their data, perform complex analyses and run advanced visualisation processes directly from our AQUILA platform. VITAL, a Canon Group company, has a legacy of leadership in healthcare imaging using smart algorithms and techniques of innovation. Their solutions give clinicians the ability to make real-time precise decision-making for today’s empowered healthcare consumer while delivering an exceptional patient care experience. I M E X H S ® S T R E N G T H E N E D I T S P A R T N E R S H I P A G R E E M E N T W I T H E N T E L A I P I C IMEXHS has reinforced its strategic agreement with Entelai Pic, an Argentine company specialized in artiﬁcial intelligence. Since 2020 AQUILA has been offering an embedded AI neuro tool powered powered by Entelai. This year a new tool has been added to strengthen our advanced tools: IMEXHS AI Breast. This add-on permits rapid detection of abnormalities such as calciﬁcations and benign or malignant nodules, optimizing workﬂows and achieving faster and more accurate diagnostics.or malignant nodules, optimizing workﬂows and achieving faster and more accurate diagnostics. 2021 | Annual Report | Strategic Alliances and Priorities - 34 - Strategic Global Business Alliances N U A N C E T O O L S C O N T I N U E T O L E V E R A G E I M E X H S ® T E C H N O L O G Y Thanks to a two years plus Alliance with Nuance, IMEXHS continues to offer the best voice recognition tools to make the diagnostic process more efﬁcient and agile. From one of the ﬁrst voice recognition systems to the most advanced ambient clinical intelligence ever introduced, Nuance has played a foundational role in the emergence of conversational AI. A L L I A N C E S W I T H U N I V E R S I T I E S U N I V E R S I D A D D E L O S A N D E S U N I V E R S I D A D S I M Ó N B O L Í V A R Internship programs for computer science graduate engineers to carry out work internships in the company or to support the development of their degree projects in co-develop- ment mode. Development of joint research projects and training agreements in technology and medicine at RIMAB's facilities for neurologists and radiologists. F U N D A C I Ó N U N I V E R S I T A R I A D E C I E N C I A S D E L A S A L U D After four years of research, a project in which IMEXHS participated as co-executor was completed this year. The project culminated with the publication of a scientiﬁc article published in the renowned journal Nature. U N I V E R S I D A D D E L A S A B A N A Talent attraction program through internships for students in training cycles and who want to enter the industry in an accelerated manner. 2021 | Annual Report | Strategic Alliances and Priorities - 35 - Industry Trends I M E X H S ® I S W E L L P L A C E D T O B E N E F I T F R O M I N D U S T R Y T A I L W I N D S O U T L I N E D B E L O W Large, growing but highly fragmented global medical imaging sector. Increased proportion of the value chain coming from (cid:4)(cid:562)(cid:584)(cid:478)(cid:731)(cid:423)(cid:478)(cid:394)(cid:502)(cid:3)(cid:88)(cid:513)(cid:584)(cid:437)(cid:502)(cid:502)(cid:478)(cid:464)(cid:437)(cid:513)(cid:423)(cid:437)(cid:3)(cid:1600)(cid:4)(cid:88)(cid:1601)(cid:1582) Shift from client server architecture to cloud solutions. LAND & EXPAND with multiple verticals including pathology, strengthening our portfolio. EXPAND into new geographies, leveraging our partner program network and AQUILA in the Cloud and enterprise offerings. INVEST in product and sales for AQUILA Enterprise to accelerate growth in high end customised solutions. Chronic global radiologist shortage driving demand for teleradiology. Growing use of big data for optimizing diagnostic techniques. S T R A T E G I C P R I O R I T I E S ENHANCE our teleradiology solution to allow radiologists to access images from any device or location. IMPROVE the implementation process for AQUILA in the Cloud. ACCELERATE our AI verticals, by using our extensive database and testing environment to develop AI tools. 2021 | Annual Report | Strategic Alliances and Priorities Updates to Software Development Updates to Software Development - 37 - I M E X H S A I I M E X H S C L O U D Core element of the new software development roadmap, attempting to deliver new AI algorithms developed by our own, keep training third party algorithms, enhance the AI integration engine and ﬁnally taking advantage of the huge available database, work through structuring and labeling images to offer data lakes and data sets to third parties. This will become the bridging element between imaging software and the diagnostic medical services. A cloud based medical imaging platform that provides an innovative way to manage medical imaging for healthcare institutions, offers advanced technological tools, with an affordable business model and all the security of a cloud service provider such as Azure (Microsoft). IMEXHS Cloud will initially have three main components: Cloud PACS, Enterprise Web Viewer and an App Marketplace. I M E X H S M A R K E T P L A C E An App Store with extensions that can enhance the user experience (for radiologists and non-radiologists) while using the medical image management platform. I M E X H S B O X IMEXHS Cloud. A complimentary component to the IMEXHS Box is a speciﬁc use device (appliance) designed for customers who wish to have a smooth and controlled transition to the cloud. IMEXHS Box allows the user to keep local (OnPrem), while image processing and storage enabling extensions and add-ons provided from IMEXHS Cloud. A Q U I L A N E W V E R S I O N This new version will be packed with new features that allow users to improve their productivity and workloads through its renewed PACS/VNA engine and rules engine to better integrate with any cycle revenue management system. The big focus is in enhancing the enterprise offer, bringing rules for highly complex We are developing a disruptive offer for the high-end market, supported by a new marketing and sales strategy. I M E X H S T E L E R A D I O L O G Y P O R T A L An innovative solution that has been designed to increase the efﬁciency of remote radiological diagnostic service providers. I M E X H S O P H T H A L M O L O G Y Ophthalmology centers and clinics now can take advantage of the power of our AQUILA software with Vendor Neutral Archive capabilities, helping our customers to improve their digital workﬂows, either are using DICOM or Non-DICOM equipment. 2021 | Annual Report | Updates to Software Development Our Team and Our Culture - 39 - Board of Directors Doug Flynn Non-executive Chairman Mr Flynn is an experienced international business leader, having run multiple companies in Europe and Australia. As an executive, Mr Flynn has broad business knowledge in manufacturing and mining services (ICI), business services, (Rentokil Initial), media (NewsCorp) and advertising and marketing services (Aegis Group). He also has experience in non-executive roles in media (West Australian Newspapers, Seven West Media, and APN Outdoor), technology infrastructure (NextDC) and human services (Konekt Limited). In the UK Mr Flynn successively ran News International plc, Aegis Group plc and Rentokil Initial plc. Mr Flynn is also chair of NextDC Ltd. Dr Arango has over 17 years' experience as a practicing Radiologist in Colombia. Dr. Arango completed a fellowship in Diagnostic Neuroradiology at McGill University, Montreal, Canada, holds a degree in Medicine and Surgery from Universidad El Bosque, with residency in Radiology and Diagnostic Imaging from Universidad de La Sabana, and a visiting fellowship in Neuroradiology from Medical College of Georgia, granted by SILAN. Dr. Arango is a renowned person in the academic environment having being professor of Neuroradiology for the Radiology, Neurology, Neurosurgery and Maxillofacial surgery residency programs of the main universities in Colombia. Dr. Germán Arango CEO & co-founder Carlos Palacio Non-executive Director Doug Lingard Non-executive Director Damian Banks Non-executive Director Mr Palacio is an entrepreneur with more Mr Lingard is a radiologist and nuclear Mr Banks is a proven business leader with than 27 years of experience in international medicine doctor with extensive experience, experience in the development and IT, telecommunications, and strategic who has worked in various leadership proﬁtable expansion of businesses across management. Mr Palacio is currently CEO positions in Auckland, Washington DC and health, employment, and banking with a of CrossPoint Telecommunications, a Sydney. In Australia, Mr Lingard co-founded focus on ﬁnancial management, provider of managed IT services that Pittwater Radiology Partners, a company technology, and people. Mr Banks also has specialises in creating and managing IT that after a series of mergers and a strong track record in customer focused solutions for multinational organisations. acquisitions listed on the ASX in mid-2000 culture development, and considerable He holds a bachelor’s degree in electrical and became Medical Imaging Australasia M&A experience. His most recent executive engineering with a specialisation in Ltd. He holds a medical degree from role was as Managing Director and CEO of telecommunications from the University of MB.ChB from the University of Otago. Mr Konekt Ltd, a technology focussed health Technology Sydney, a master’s degree in Lingard is currently a member of the and employment company. He led Konekt administration from Macquarie University Radiologists Association of Royal Australia & from its listing on ASX in 2012 through to its and a master’s degree in business New Zealand, a Senior Associate of FinSIA, successful sale to private equity in administration from Macquarie University. and a member of the Australian Institute December 2019. Prior to this Mr Banks and a member of the Australian Institute of worked in several leadership positions with Business Directors. Westpac Banking Corporation. Mr Banks currently holds directorship roles with Boom Logistics Ltd and RPM Automative Group Ltd. 2021 | Annual Report | Our Team and Culture Senior Management Team - 40 - Dr Germán Arango CEO & co-founder See page 39 for biography. Dr Jorge Marín (cid:33)(cid:472)(cid:478)(cid:437)(cid:463)(cid:3)(cid:119)(cid:437)(cid:430)(cid:478)(cid:423)(cid:394)(cid:502)(cid:3)(cid:132)(cid:463)(cid:731)(cid:423)(cid:437)(cid:562)(cid:3)(cid:1739)(cid:3)(cid:423)(cid:524)(cid:1612)(cid:463)(cid:524)(cid:592)(cid:513)(cid:430)(cid:437)(cid:562) Reena Minhas (cid:33)(cid:472)(cid:478)(cid:437)(cid:463)(cid:3)(cid:73)(cid:478)(cid:513)(cid:394)(cid:513)(cid:423)(cid:478)(cid:394)(cid:502)(cid:3)(cid:132)(cid:463)(cid:731)(cid:423)(cid:437)(cid:562) in medicine and surgery Dr Marin has more than 16 years of experience as a practicing radiologist in Colombia and Spain. Previously Mr Marin was chief radiologist of the CETIR teleradiology group, the Dos de Mayo Hospital and the San Rafael Hospital. He from the holds a degree Universidad Pontiﬁcia Bolivariana and specialisation in the National Radiology & Diagnostic University. He also holds a European Diploma in Neuroradiology, from ESNR. Mr Marin is a member of the IMAGINE research and development group for advanced imaging diagnosis at the University of Los Andes and for assistant professor of diagnostic neuroradiology residency programs and neurosurgery at the University FUCS. in neurology, radiology Imaging from Ms Minhas has extensive experience as CFO and Company Secretary of ASX-listed businesses, providing the ﬁnancial leadership and strategic direction necessary to drive superior business performance. Ms Minhas was previously the CFO and Company Secretary of ASX-listed Konekt Limited where she played a key role in the sale to Quadrant Private Equity’s APM. Prior to joining Konekt Limited, she was CFO and Company Secretary of ILH Group Limited and Energy One Limited. Her experience includes roles in acquisitions, debt and equity capital formation as well as the development of sound ﬁnance functions. Alejandro Varettoni (cid:33)(cid:472)(cid:478)(cid:437)(cid:463)(cid:3)(cid:178)(cid:394)(cid:502)(cid:437)(cid:570)(cid:3)(cid:132)(cid:463)(cid:731)(cid:423)(cid:437)(cid:562)(cid:3) Orlando Joven (cid:33)(cid:472)(cid:478)(cid:437)(cid:463)(cid:3)(cid:192)(cid:437)(cid:423)(cid:472)(cid:513)(cid:524)(cid:502)(cid:524)(cid:464)(cid:623)(cid:3)(cid:132)(cid:463)(cid:731)(cid:423)(cid:437)(cid:562) Mr Varettoni is an electrical engineer with an executive MBA and 25 years of experience in different companies in the LATAM region, among which stands out his long career at Agfa HealthCare. During his 14 years at Agfa, Mr Varettoni led the digital transformation of the imaging business from different roles: Key Account Manager, Sales Manager and Regional Manager of LATAM North. Mr Varettoni has worked within Healthcare, IT and Telecom throughout his career. He is currently a faculty member of the Aden Business School. Mr Joven has a master's degree in Administration (IMBA) and more than 18 years of managerial and executive experience, as well as P&L responsibility in multinational companies in technology, FMCG and ﬁnancial services industries. Mr Joven has extensive experience leading regional teams (+100 people) in the areas of digital transformation, innovation, technology, digital product and software development, business management, sales and ﬁnance. From the roles of CIO, CTO and CDO Ofﬁcer, he has been responsible for the deﬁnition of digital strategies and new business models, and the development of digital products and services. 2021 | Annual Report | Our Team and Culture - 41 - Our culture T H E W A Y W E D O B U S I N E S S R E V O L V E S A R O U N D T H E C O M P A N Y ’ S V A L U E P R O P O S I T I O N T O M A K E I T F A S T E R , E A S I E R , F O R A L L A N D D I F F E R E N T . Make it faster Based on the principle of optimization to improve the quality of life of patients and physicians around the world, we ask ourselves all the time: How can we simplify this to make it more efﬁcient? Make it easier Intuitive approach to everything we are and do. We seek to reduce complexity to favor the well-being of patients, physicians, partners, clients and employees. Make it for All Our purpose is to democratize access to high-tech image management platforms for centers of all sizes, while generating and sharing efﬁcient business models that allow us to grow as a society. Make it different We are agile innovators. We prioritize the ability to ﬁnd growth opportunities and new developments that allow us to fulﬁll our purpose. D E V E L O P M E N T P I L L A R S We are committed to delivering high values tools for today’s healthcare sector. Nearly one third of our team works in software development. We assist with and facilitate academic collaborations, industrial interaction, and knowledge transfer in the following ways: Ally with universities to collaborate in the generation of new knowledge and product innovation projects for the medical imaging sector. Identify emerging technological opportunities to include in our technological stack. Explore novel approaches to solving complex clinical problems. Lead cooperative research initiatives and support software development projects. Develop research projects to enable the development of novel services for the clinical context. 2021 | Annual Report | Our Team and Culture - 42 - BOSQUE in the Cloud In 2021 IMEXHS launched BOSQUE in the Cloud. Through this initiative we aim to plant two trees in the Colombian Amazon región for each AQUILA in the Cloud project sold. Over the year we planted over 200 trees. The project is carried out with the support of the foundation, Saving the Amazon, which works to rebuild the habitat of indigenous populations living in the Amazon. 2021 | Annual Report | Our Team and Culture - 43 - Table of Contents Financial Report 44 Directors’ Report Auditor’s 57 Adutitor´s Independence declaration 58 Statement of proﬁt or loss and other comprehensive income 59 Statement of ﬁnancial position 60 Statement of changes in equity 61 Statement of cash ﬂows 62 Notes to the ﬁnancial statements 100 Directors’ declaration 101 Independent auditor’s report to the members of IMEXHS Limited 105 Shareholder information 107 Corporate directory 2021 | Annual ReportIMEXHS Limited Directors' report 31 December 2021 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of IMEXHS Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 31 December 2021. Directors The following persons were directors of IMEXHS Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Mr Douglas Flynn Dr German Arango Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks Chairman Chief Executive Officer Non-Executive Director Non-Executive Director Non-Executive Director Principal activities The Group operates two businesses - medical imaging software and radiology services. ● The medical imaging software business is focused on the development and sale of modular imaging systems that include information systems for Radiology (AQUILA), Cardiology (ANTEROS) and Pathology (ALULA), as well as a Picture Archiving and Communications System (PACS). The information systems combine a workflow management system with a patient data and image distribution system, and the PACS allows a healthcare organisation to capture, store, view and share radiology images. The radiology services business provides radiological diagnostic services to hospitals and medical facilities in Colombia and Spain using IMEXHS medical imaging software. The services business also provides the Group with medical images and radiologists interpretation and reports to develop artificial intelligence (AI) tools. ● Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations A review of operations of the Group for the financial year ended 31 December 2021 is contained in Chairman's Letter and Chief Executive Officer's Report. The Chairman's Letter and Chief Executive Officer's Report precedes the Directors' report. Significant changes in the state of affairs On 5 October 2021, the Group acquired 100% of the ordinary shares in RIMAB SAS, a Colombia-based radiology services business, for total consideration of $6,762,468. 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 The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on the Group, if any, has been reflected in its published results to date. Whilst it would appear that control measures and related government policies, including the roll out of the vaccine, have started to mitigate the risks caused by COVID-19, it is not possible at this time to state that the pandemic will not subsequently impact the Group's operations going forward. The Group now has experience in the swift implementation of business continuation processes should future lockdowns of the population occur, and these processes continue to evolve to minimise any operational disruption. Management continues to monitor the situation both locally and internationally. No other matter or circumstance has arisen since 31 December 2021 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Likely developments and expected results of operations Other than as referred to in this report, further information as the likely developments in the operations of the Group and likely results of those operations would, in the opinion of the Directors, be speculative. Environmental regulation The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. 44 IMEXHS Limited Directors' report 31 December 2021 Information on directors Name: Title: Qualifications: Experience and expertise: Interests in shares: Interests in options: Other current directorships: Former directorships (last 3 years): Konekt Limited and APN Outdoor Group Limited Special responsibilities: Mr Douglas Flynn Non-Executive Chairman B.Eng., MBA Mr Flynn is a businessman with extensive executive and non-executive leadership experience in large and small listed companies in Australia, UK and Hong Kong. He also has sound experience in early stage technology businesses. NextDC Limited Member of the Remuneration and Nomination Committee and Audit and Risk Committee 730,000 ordinary shares 560,000 unlisted options over ordinary shares Experience and expertise: Name: Title: Qualifications: Dr German Arango Chief Executive Officer Medical Doctor and Surgery (El Bosque), Diagnostic Radiology (La Sabana), Diagnostic Neuroradiology (McGill), Member of RSNA, Member of CAR, Member of ACR, Member of ASNR Dr Arango is the CEO and founder of Imaging Experts and Healthcare Services S.A.S. and has over 15 years’ experience as a practising radiologist in Colombia. None Other current directorships: Former directorships (last 3 years): None None Special responsibilities: 4,426,201 ordinary shares Interests in shares: 655,009 options over ordinary shares Interests in options: Name: Title: Qualifications: Experience and expertise: Dr Douglas Lingard Non-Executive Director MB.ChB. FRANZCR, MAICD Dr Lingard is an experienced Radiologist and Nuclear Physician who has worked in various leadership roles in Auckland, Washington DC and Sydney. He is a Senior Associate of FINSIA and a member of the Australian Institute of Company Directors. He is the founder and present Chairman of the Mito Foundation, the peak charity in Australia for people with mitochondrial disease. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Member of the Remuneration and Nomination Committee and Audit and Risk Committee 770,732 ordinary shares 840,000 options over ordinary shares Interests in shares: Interests in options: Name: Title: Qualifications: Experience and expertise: Mr Carlos Palacio Non-Executive Director B.Elec.Eng, MBA Mr Palacio has over 27 years’ experience internationally in IT, telecommunications and strategic management. None Other current directorships: Former directorships (last 3 years): None Special responsibilities: Chairman of the Remuneration and Nomination Committee and member of the Audit and Risk Committee 2,076,672 ordinary shares 624,318 options over ordinary shares Interests in shares: Interests in options: 45 IMEXHS Limited Directors' report 31 December 2021 Name: Title: Qualifications: Experience and expertise: Mr Damian Banks Non-Executive Director B.Ec, MAICD Mr Banks is a proven business leader with experience in the profitable development and expansion of companies in health, employment, banking and private equity. Mr Banks has a proven business insight that leads to sustained performance of successful businesses. He also has global experience in achieving a culture with strong customer focus through vision development and rigorous leadership implementation. Boom Logistics Limited and RPM Automotive Group Limited Chairman of the Audit and Risk Committee and member of the Remuneration and Nomination Committee 500,000 ordinary shares None Other current directorships: Former directorships (last 3 years): Konekt Limited Special responsibilities: Interests in shares: Interests in options: '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 The Company’s Company Secretary is Ms Reena Minhas. Ms Minhas is also the Chief Financial Officer. Reena Minhas has extensive experience as a Chief Financial Officer and Company Secretary of ASX-listed businesses, providing the financial leadership and strategic direction necessary to drive superior business performance. Ms Minhas was previously the CFO and Company Secretary of ASX-listed Konekt Limited where she played a key role in the sale of that business to Quadrant Private Equity’s APM. Prior to joining Konekt Limited, Ms Minhas was CFO and Company Secretary of ILH Group Limited and Energy One Limited. Meetings of directors The number of meetings of the Company's Board of Directors ('the Board') and Board Committees held during the year ended 31 December 2021, and the number of meetings attended by each director were: Full Board Attended Held Remuneration and Nomination Committee Attended Held Audit and Risk Committee Attended Held Douglas Flynn German Arango* Doug Lingard Carlos Palacio Damian Banks 18 14 18 18 18 18 14 18 18 18 4 - 4 4 4 4 - 4 4 4 6 - 6 6 6 6 - 6 6 6 * Dr Arango did not attend 4 meetings of the Board of Directors where the Board considered the company’s potential acquisition of RIMAB SAS, due to being a RIMAB SAS shareholder. 46 IMEXHS Limited Directors' report 31 December 2021 Remuneration report (audited) Message from the Chair of Remuneration and Nomination Committee This Remuneration Report details our relatively simple executive remuneration. At IMEXHS we are focused on creating a corporate culture aligned with our core values. Retention and reward for performance and talent is a balancing act with affordability and fairness. 2021 was the first year of awards under the Long Term Incentive Plan ('LTIP') which had been approved in 2020. The key objectives of the plan are retention of talented key staff and alignment with shareholders interest. Details of the 2021 award are reported in the Remuneration Report on the following pages. With the exception of sales staff, no contracted Short Term Incentive Plan is currently in place. To help preserve cash and align directors interests with shareholders, non-executive directors received nil priced options as part of their remuneration. That plan was also approved by shareholders. Both executive and non-executive plans were subject to expert advice. As the Company grows and as it operates in more diverse economies and disparate salary norms, the challenge to manage our cost base, motivate, reward and retain that talent will become somewhat more challenging. This is a young company and a talented team with an ambitious agenda. The remuneration structure and guidance we provide will be critical to our success. As with 2020 your company and the broader community have been impacted by Covid. As mentioned in the Chair’s report the countries in which we operate while hard hit in the early stages of the pandemic they have also responded well to vaccination programs. Although several of our staff have contracted the virus all have recovered well. We are grateful for the diligence of staff during this difficult period. The Board through the Remuneration and Nomination Committee has established a Board Skills Matrix and a Board evaluation process which is performed at least annually. _______________________ Carlos Palacio Chair Remuneration and Nomination Committee The remuneration report details the key management personnel remuneration arrangements for the Group, 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 47 IMEXHS Limited Directors' report 31 December 2021 Principles used to determine the nature and amount of remuneration The objective of the Group's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices: ● ● ● ● competitiveness and reasonableness; acceptability to shareholders; performance linkage / alignment of executive compensation; and transparency. The Remuneration and Nomination Committee is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel. The Remuneration and Nomination Committee has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the Group. The reward framework is designed to align executive reward to shareholders' interests. The Remuneration and Nomination Committee has considered that it should seek to enhance shareholders' interests by: ● ● having economic profit as a core component of plan design; focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and attracting and retaining high calibre executives to run and manage the business. ● Additionally, the reward framework should seek to enhance executives' interests by: ● ● ● rewarding capability and experience; reflecting competitive reward for contribution to growth in shareholder wealth; and providing a clear structure for earning rewards. In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Non-Executive Directors' remuneration Fees and payments to non-executive directors reflect the Group’s current stage of development, remaining cognisant of market rates for comparable companies for time, commitment and responsibilities. Non-executive directors' fees and payments are reviewed annually by the Remuneration and Nomination Committee. The Remuneration and Nomination Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The most recent determination was at the Annual General Meeting held on 21 May 2020, where the shareholders approved the maximum aggregate remuneration payable by the Company to all non-executive directors of the Company for their services as directors including their services on a Board committee or sub-committee and including superannuation is limited to $400,000 per annum. The total remuneration packages exclusive of superannuation benefits for the Non-Executive Directors are as follows: Board fees Chairman Non-Executive Directors $ per annum 72,000 36,000 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. 48 IMEXHS Limited Directors' report 31 December 2021 The executive remuneration and reward framework has the following components: ● ● ● ● base pay and non-monetary benefits; performance pay 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, are reviewed annually by the Remuneration and Nomination Committee based on individual and business unit performance, the overall performance of the Group and comparable market remunerations. Executives may be offered specific performance pay incentives based on key performance areas affecting the Group’s financial results where the Remuneration and Nomination Committee deems such incentives to be appropriate. The long-term incentives (‘LTI’) include long service leave and share-based payments. At the discretion of the Remuneration and Nomination Committee, share options may be awarded to executives based on varied long-term incentive measures. The Remuneration and Nomination Committee reviews the long-term equity-linked performance incentives specifically for executives on an annual basis. Consolidated entity performance and link to remuneration Due to the change in the nature of operations of the business during the past two years there does not yet exist a clear link between the gross revenue, profits and dividends for the last five years for the Group as well as the share price at the end of the respective financial years. The normal operations of the Group during a full financial year for 2020 will help establish these relationships. Use of remuneration consultants During the financial year ended 31 December 2021, the Group did not engage remuneration consultants to review its existing remuneration policies. Voting and comments made at the Company's 13 May 2021 Annual General Meeting ('AGM') At the 2021 AGM, 97.82% of the votes received supported the adoption of the remuneration report for the year ended 31 December 2020. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the Group are set out in the following tables. The key management personnel of the Group consisted of the following directors of IMEXHS Limited: ● Mr Douglas Flynn - Chairman Dr German Arango - Chief Executive Officer ● Dr Douglas Lingard - Non-Executive Director ● ● Mr Carlos Palacio - Non-Executive Director ● Mr Damian Banks - Non-Executive Director And the following person: ● Ms Reena Minhas - Chief Financial Officer and Company Secretary 49 IMEXHS Limited Directors' report 31 December 2021 Short-term benefits Post-employment benefits Long-term benefits Share- based payments 2021 Non-Executive Directors: Mr Douglas Flynn* Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks Cash salary and fees $ 72,000 36,000 36,000 36,000 Executive Directors: Dr German Arango 314,658 Cash bonus $ Non- monetary $ Super- annuation $ Termination benefits $ Long service leave $ Equity- settled $ Total $ - - - - - - - - - 7,020 3,510 3,510 3,510 - - - - 12,112 15,455 27,101 - - - - - 248,305 42,230 35,790 35,790 327,325 81,740 75,300 75,300 14,644 383,970 Other Key Management Personnel: Ms Reena Minhas** 250,228 744,886 50,000 50,000 16,794 28,906 24,397 57,402 - 27,101 484 484 101,881 443,784 478,640 1,387,419 * Share based payment relates to the issue of 12,000,000 options (240,000 options post share consolidation) granted in accordance with Mr Flynn’s appointment ($176,727) and options granted to non-executive directors in accordance with the FY21 LTIP ($71,578). ** Ms Reena Minhas received a discretionary cash bonus of $50,000 during the year ended 31 December 2021. Short-term benefits Post-employment benefits Long-term benefits Share- based payments 2020 Non-Executive Directors: Mr Douglas Flynn*/** Mr Howard Digby* Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks* Cash salary and fees $ 57,871 12,000 36,000 43,065 21,968 Executive Directors: Dr German Arango 314,586 Other Key Management Personnel: Ms Reena Minhas* Mr Tony Thomas* 62,557 231,600 779,647 Cash bonus $ Non- monetary $ Super- annuation $ Termination benefits $ Long service leave $ Equity- settled $ Total $ - - - - - - - - - - - - - - 5,498 - 3,420 4,091 2,087 - - - - - 12,109 14,177 27,103 4,533 - 16,642 5,943 - 35,216 - - 27,103 - - - - - - - - - 555,273 - 9,750 - - 618,642 12,000 49,170 47,156 24,055 - 367,975 - - 73,033 231,600 565,023 1,423,631 * ** Represents remuneration from the date of appointment and/or to the date of resignation Share based payment relates to the issue of 28,000,000 options (560,000 options post share consolidation) granted in accordance with Mr Flynn's appointment. 50 IMEXHS Limited Directors' report 31 December 2021 The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Non-Executive Directors: Mr Douglas Flynn Mr Howard Digby Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks Executive Directors: Dr German Arango Other Key Management Personnel: Ms Reena Minhas Mr Tony Thomas Fixed remuneration 2020 2021 At risk - STI At risk - LTI 2021 2020 2021 2020 100% - 100% 100% 100% 10% 100% 80% 100% 100% 100% 100% 77% - 100% 100% - - - - - - - - - - - - - - - - - - - - - - 23% - 90% - 20% - - - - - 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 commencement: Term of agreement: Remuneration package: Termination by Executive: Dr German Arango Chief Executive Officer 2 July 2018 No fixed term Remuneration comprises a base salary of $290,000 per annum plus statutory superannuation. 6 months’ written notice; or immediately by giving notice, if the Company is in breach of a material term of its agreement with him; or with 6 months’ written notice if Dr Arango’s role becomes redundant. Termination by Company for cause: 1 month’s notice, or immediately with payment in lieu of notice if Dr Arango is unable to perform his duties under the agreement for three consecutive months or a period aggregating to three months in a 12 month period; or 6 months’ written notice if Dr Arango’s role becomes redundant. If the Company terminates the employment of Dr Arango within 6 months of a Change of Control it will be deemed to be a termination by reason of redundancy. If the Company terminates for reason of redundancy it shall be obliged to pay Dr Arango for any notice period worked. In addition, it will be required to pay any redundancy amount payable under applicable laws, an amount equal to 6 months’ base salary (less tax) and any accumulated entitlements; or at any time with written notice and without payment (other than entitlements accrued to the date of termination) as a result of any occurrence which gives the Company a right of summary dismissal at common law. Immediately with 6 months’ payment in lieu of notice. The service agreement otherwise contains industry‐standard provisions for a senior executive of a public listed company. Termination by Company: Other provisions: 51 IMEXHS Limited Directors' report 31 December 2021 Name: Title: Agreement commencement: Term of agreement: Remuneration package: Ms Reena Minhas Chief Financial Officer and Company Secretary 1 October 2020 No fixed term Remuneration comprises a base salary of $274,000 per annum including statutory superannuation. 6 months’ written notice. Termination by Executive: Termination by Company for cause: At any time with written notice and without payment (other than entitlements accrued to the date of termination) as a result of any occurrence which gives the Company a right of summary dismissal at common law. Immediately with 6 months’ payment in lieu of notice. The service agreement otherwise contains industry‐standard provisions for a senior executive of a public listed company. Termination by Company: Other provisions: Key management personnel have no entitlement to termination payments in the event of removal for misconduct. Share-based compensation Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the year ended 31 December 2021. Options The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Number of options granted Exercise price Fair value per option at grant date Vested % 160,000 160,000 240,000 10,000 30,000 140,000 11,307 22,957 14,361 29,158 19,719 $2.75 $3.50 $1.50 $2.65 $2.65 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 - $1.300 100% $1.250 100% $1.350 $0.660 100% $0.660 100% $2.030 $1.706 $1.804 $1.259 $1.369 $1.815 100% - - - - - Name Mr Douglas Flynn(a) Mr Douglas Flynn(a) Mr Douglas Flynn(a) Dr Douglas Lingard(b) Dr Douglas Lingard(b) Ms Reena Minhas(c) Ms Reena Minhas(d) Ms Reena Minhas(d) German Arango(e) German Arango(e) Carlos Palacio(f) Grant date 26/05/2020 26/05/2020 26/05/2020 10/12/2018 10/12/2018 04/03/2021 20/04/2021 20/04/2021 14/05/2021 14/05/2021 14/05/2021 Vesting and exercisable date 26/05/2020 26/05/2020 31/12/2021 10/12/2020 10/12/2021 01/10/2023 01/03/2023 01/03/2024 01/03/2023 01/03/2024 14/05/2021 Expiry date 12/03/2027 12/03/2027 12/03/2027 09/12/2023 09/12/2023 01/03/2031 20/04/2031 20/04/2031 14/05/2031 14/05/2031 14/05/2025 52 IMEXHS Limited Directors' report 31 December 2021 (a) On 26 May 2020, 560,000 share options (28,000,000 share options prior to the share consolidation) were granted to Mr Douglas Flynn as part of his appointment as Non-Executive Chairman. The grant consists of 3 tranches, tranche 1 and 2 each comprise of 160,000 options and tranche 3 comprises of 240,000 options. Tranche 1 and 2 vest on 26 May 2020 and tranche 3 vests when the Company's share price reaches or exceeds a 30 day VWAP of $6.00 (12 cents prior to the share consolidation). For the purposes of calculating the fair value of tranche 3, 31 December 2021 has been used as the estimated vesting date. Tranche 1, 2 and 3 have an exercise price of $2.75, $3.50 and $1.50 respectively ($0.055, $0.070 and $0.030 respectively prior to the share consolidation). All tranches expire on 12 March 2027. (b) On 10 December 2018, 40,000 share options (2,000,000 shares options prior to the share consolidation) were issued as remuneration to Non-Executive Director, Dr Douglas Lingard subject to vesting conditions. 10,000 options vested on 10 December 2020 and the remaining 30,000 options vest on 10 December 2021, have an exercise price of $2.65 ($0.053 prior to the share consolidation) and expire on 9 December 2023. (c) On 4 March 2021, 140,000 share options were granted to Reena Minhas under the companies Long Term incentive Plan. The options vest on 1 October 2023, have a nil exercise price and expire on 1 March 2031. (d) On 20 April 2021, 34,264 share options were granted to Reena Minhas under the companies Long Term Incentive Plan. The grant consists of 2 tranches, tranche 1 comprises 11,307 options and tranche 2 of 22,957. Both tranches have a nil exercise price and expire on 20 April 2031. (e) On 14 May 2021, 43,519 share options were granted to the CEO German Arango under the companies Long Term Incentive Plan. The grant consists of 2 tranches, tranche 1 comprises 14,361 options and tranche 2 of 29,158. Both tranches have a nil exercise price and expire on 14 April 2031. (f) On 14 May 2021, 98,594 share options were granted to Non-Executive Directors under the companies Long Term Incentive Plan. The options vested immediately on the grant date with a nil exercise price and expire on 14 May 2025. 78,875 of the options have been exercised during 2021. Options granted carry no dividend or voting rights. 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 Group, including their personally related parties, is set out below: Ordinary shares Mr Douglas Flynn Dr German Arango* Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks Balance at the start of the year Received as part of remuneration Purchases Options exercised Disposals/ other Balance at the end of the year 591,649 3,150,503 515,825 2,076,672 361,660 6,696,309 - - - - - - 90,011 - 186,868 - 158,340 87,777 - 68,039 - 68,059 (39,437) 1,275,698 - - (88,059) 730,000 4,426,201 770,732 2,076,672 500,000 435,219 223,875 1,148,202 8,503,605 * Other for Dr German Arango relates to the shares issued as consideration for acquisition of RIMAB SAS on 5 October 2021. 53 IMEXHS Limited Directors' report 31 December 2021 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 Group, including their personally related parties, is set out below: Options over ordinary shares Mr Douglas Flynn Dr German Arango Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks Ms Reena Minhas Balance at the start of the year 608,340 917,235 888,320 604,599 48,340 - 3,066,834 Granted Purchased 39,437 43,519 19,719 19,719 19,719 174,264 316,377 Expired/ forfeited/ other Balance at the end of the year - - - - - - - (87,777) (305,745) (68,039) (201,533) (68,059) - (731,153) 560,000 655,009 840,000 422,785 - 174,264 2,652,058 The number of options over ordinary shares vested by directors and other key management personnel are set out below: Options over ordinary shares Mr Douglas Flynn Dr German Arango Dr Doug Lingard Mr Carlos Palacio Ms Reena Minhas Vested and Unvested and exercisable unexercisable 320,000 - 840,000 624,318 - 1,784,318 240,000 655,009 - - 174,264 1,069,273 Balance at the end of the year 560,000 655,009 840,000 624,318 174,264 2,853,591 Other transactions with key management personnel and their related parties The Group sold goods and services from entities that are controlled by members of the Group’s key management personnel ('KMP'): KMP and related entity Nature of Transactions G Arango - RIMAB SAS(a) C Palacio - CrossPoint Telecommunications Pty Ltd Sales revenue Sales revenue Income amounts 2021 2020 $ Balance outstanding 2020 2021 $ $ 4,564,966 4,424,734 - 738,602 9,502 8,083 4,574,468 4,432,817 806 806 859 739,461 The Group acquired services from entities that are controlled by members of the Group’s KMP: KMP and related entity Nature of transaction G Arango - RIMAB SAS(a) G Arango - RIMAB SAS(a) G Arango - German Arango(b) PaaS Equipment Financing C Palacio - CrossPoint Telecommunications Pty Ltd(c) Office space and IT Services Interpretation services Supplies and license Expense amounts 2020 $ 2021 $ Balance outstanding 2020 2021 $ $ 1,178,084 672 74,651 1,169,703 1,985 87,198 16,785 14,831 1,270,192 1,273,717 - - - 10 10 - - 7,115 1,628 8,743 54 IMEXHS Limited Directors' report 31 December 2021 (a) During the year, the Company had an agreement with RIMAB S.A.S., an entity owned 65% by the Chief Executive Officer, Dr German Arango. This entity was acquired on 5 October 2021 and the revenue and expenses information is provided to that date. (b) Chief Executive Officer, Dr German Arango, has provided equipment to Imaging Experts and Healthcare Services S.A.S. in return for payments from a contract providing PaaS services. The equipment is repaid at a 200% rate of return on their loan which is paid in monthly instalments over the initial term of the PaaS contract. (c) CrossPoint Telecommunications is an associated entity of Non-Executive Director, Carlos Palacio, providing various services to IMEXHS and also a non-exclusive distributor in Australia of IMEXHS’s products. All transactions were made on normal commercial terms and conditions and at market rates. This concludes the remuneration report, which has been audited. Shares under option Unissued ordinary shares of IMEXHS Limited under option at the date of this report are as follows: Grant date 28 August 2018 28 August 2018 25 October 2018 10 December 2018 7 October 2019 31 October 2019 1 April 2020 1 April 2020 26 May 2020 26 May 2020 26 May 2020 4 March 2021 20 April 2021 20 April 2021 14 May 2021 14 May 2021 14 May 2021 Expiry date 28 August 2023 28 August 2023 25 October 2023 9 December 2023 31 March 2022 30 September 2022 1 April 2022 1 April 2023 12 March 2027 12 March 2027 12 March 2027 1 March 2031 20 April 1931 20 April 1931 14 May 2031 14 May 2031 14 May 2025 Exercise price Number under option $1.88 $1.88 $3.50 $2.65 $2.70 $2.70 $3.25 $5.00 $2.75 $3.50 $1.50 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 1,000,001 1,000,001 80,000 40,000 800,000 100,000 30,000 30,000 160,000 160,000 240,000 140,000 67,411 136,869 14,361 29,158 19,719 4,047,520 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 IMEXHS Limited were issued during the year ended 31 December 2021 and up to the date of this report on the exercise of options granted: Date options granted 22 July 2017 28 August 2018 14 May 2021 Exercise price Number of shares issued $1.25 $1.88 $0.00 700,000 50,000 78,875 828,875 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. 55 IMEXHS Limited Directors' report 31 December 2021 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. Non-audit services There were no non-audit services provided during the financial year by the auditor. Officers of the Company who are former partners of Nexia Sydney Audit Pty Ltd There are no officers of the Company who are former partners of Nexia Sydney Audit Pty Ltd. Auditor's independence declaration 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. 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 ___________________________ Douglas Flynn Chairman 28 February 2022 56 To the Board of Directors of IMEXHS Limited Auditor’s Independence Declaration under section 307C of the Corporations Act 2001 As lead audit partner for the audit of the financial statements of IMEXHS Limited for the financial year ended 31 December 2021, I declare that to the best of my knowledge and belief, there have been no contraventions of: (a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) any applicable code of professional conduct in relation to the audit. Yours sincerely Nexia Sydney Audit Pty Ltd Andrew Hoffmann Director Date: 28 February 2022 IMEXHS Limited Statement of profit or loss and other comprehensive income For the year ended 31 December 2021 Revenue Other income Interest revenue calculated using the effective interest method Expenses Hardware and licence expenses Research and development and support expenses Platform as a service expense Clinical services expenses Administration and sales expenses Share-based payments expenses Depreciation and amortisation expense Loss on disposal of assets (Impairment of)/reversal of impairment of inventories Expected credit losses Net foreign exchange losses Other expenses Finance costs Loss before income tax expense Income tax expense Loss after income tax expense for the year attributable to the owners of IMEXHS Limited Other comprehensive loss Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive loss for the year, net of tax Total comprehensive loss for the year attributable to the owners of IMEXHS Limited Basic earnings per share Diluted earnings per share Consolidated Note 2021 $ 2020 $ 5 13,372,709 10,913,968 197,417 18,848 67,674 20,068 (1,042,024) (1,114,813) (492,248) (6,645,493) (6,229,020) (569,585) (1,244,574) (19,776) (15,698) (7,591) (341,964) (111,458) (311,086) (1,433,397) (646,665) (572,396) (4,536,638) (4,441,049) (598,457) (1,024,386) - 86,617 (54,386) (31,315) (72,990) (1,204,736) (4,556,356) (3,528,088) (143,416) (87,889) (4,699,772) (3,615,977) 6 6,24 6 7 (1,056,502) (498,095) (1,056,502) (498,095) (5,756,274) (4,114,072) Cents Cents 38 38 (15.22) (15.22) (14.62) (14.62) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 58 IMEXHS Limited Statement of financial position As at 31 December 2021 Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Other Total current assets Non-current assets Trade receivables Property, plant and equipment Right-of-use assets Intangibles Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Contract liabilities Borrowings Lease liabilities Income tax Employee benefits Contingent consideration Total current liabilities Non-current liabilities Payables Contract liabilities Borrowings Deferred tax Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Consolidated Note 2021 $ 2020 $ 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 7 4,186,428 7,006,321 84,432 258,117 11,535,298 10,796,484 3,756,525 389,668 302,187 15,244,864 1,396,237 4,467,909 30,158 8,329,416 14,223,720 997,688 3,346,293 102,046 1,113,256 5,559,283 25,759,018 20,804,147 3,768,825 32,812 1,082,241 30,157 207,589 1,685,408 292,454 7,099,486 580,214 68,911 1,285,200 72,448 2,006,773 2,382,531 53,548 868,777 101,469 6,611 1,045,997 - 4,458,933 - - 727,951 81,277 809,228 9,106,259 5,268,161 16,652,759 15,535,986 23 24 34,765,453 2,101,133 (20,213,827) 28,461,991 2,588,050 (15,514,055) 16,652,759 15,535,986 The above statement of financial position should be read in conjunction with the accompanying notes 59 IMEXHS Limited Statement of changes in equity For the year ended 31 December 2021 Consolidated Issued capital $ Reserves $ Accumulated losses $ Total equity $ Balance at 1 January 2020 19,757,466 2,457,248 (11,898,078) 10,316,636 Loss after income tax expense for the year Other comprehensive loss for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 23) Share-based payments (note 39) Share options issued - - - - (498,095) (3,615,977) - (3,615,977) (498,095) (498,095) (3,615,977) (4,114,072) 8,704,525 - - - 598,457 30,440 - - - 8,704,525 598,457 30,440 Balance at 31 December 2020 28,461,991 2,588,050 (15,514,055) 15,535,986 Consolidated Issued capital $ Reserves $ Accumulated losses $ Total equity $ Balance at 1 January 2021 28,461,991 2,588,050 (15,514,055) 15,535,986 Loss after income tax expense for the year Other comprehensive loss for the year, net of tax Total comprehensive loss for the year - - - - (1,056,502) (4,699,772) - (4,699,772) (1,056,502) (1,056,502) (4,699,772) (5,756,274) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 23) Shares to be issued as part consideration for subsidiary (note 23 and note 33) Share-based payments (note 39) 5,181,159 1,122,303 - - - 569,585 - - - 5,181,159 1,122,303 569,585 Balance at 31 December 2021 34,765,453 2,101,133 (20,213,827) 16,652,759 The above statement of changes in equity should be read in conjunction with the accompanying notes 60 IMEXHS Limited Statement of cash flows For the year ended 31 December 2021 Cash flows from operating activities Loss before income tax expense for the year Adjustments for: Depreciation and amortisation Net loss on disposal of property, plant and equipment Share-based payments Foreign exchange differences Expected credit losses Impairment/(reversal of impairment) of inventories Interest received Interest and other finance costs Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables Decrease/(increase) in inventories Increase/(decrease) in trade and other payables Increase/(decrease) in contract liabilities Increase in employee benefits Interest received Interest paid Income taxes paid Net cash used in operating activities Cash flows from investing activities Payment for purchase of subsidiary, net of cash acquired Payments for property, plant and equipment Payments for intangibles Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from issue of options Proceeds from borrowings Repayment of borrowings Share issue transaction costs Repayment of lease liabilities Net cash (used in)/from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Consolidated Note 2021 $ 2020 $ (4,556,356) (3,528,088) 1,244,574 19,776 569,585 115,015 7,591 15,698 (18,848) 311,086 1,024,386 - 598,457 65,635 54,386 (86,617) (20,068) 1,204,736 (2,291,879) (687,173) 1,330,823 289,538 (2,333,556) 48,175 301,222 (2,655,677) 18,848 (311,086) (20,126) (1,272,319) (195,697) 952,246 (10,388) 195,916 (1,017,415) 20,068 (428,225) (41,470) (2,968,041) (1,467,042) (952,728) (1,009,816) (1,554,887) 131,194 - (1,264,915) (921,435) - (3,386,237) (2,186,350) 968,750 - 506,808 (1,526,275) (25,584) (85,477) 9,280,000 30,440 939,825 (2,174,009) (575,475) (96,021) (161,778) 7,404,760 (6,516,056) 10,796,484 (94,000) 3,751,368 7,149,683 (104,567) 33 13 15 23 Cash and cash equivalents at the end of the financial year 8 4,186,428 10,796,484 The above statement of cash flows should be read in conjunction with the accompanying notes 61 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 1. General information The financial statements cover IMEXHS Limited as a Group consisting of IMEXHS Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is IMEXHS Limited's functional and presentation currency. IMEXHS Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: 122 O’Riordan Street Mascot NSW 2020 A description of the nature of the Group'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 28 February 2022. The directors have the power to amend and reissue the financial statements. Note 2. 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. New or amended Accounting Standards and Interpretations adopted The Group 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. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Going concern The Group has prepared the financial statements for the year ended 31 December 2021 on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. For the year ended 31 December 2021, the Group generated a consolidated loss of $4,699,772 (2020: loss of $3,615,977) and incurred operating cash outflows of $2,968,041 (2020: outflows of $1,467,042). As at 31 December 2021, the Group had cash and cash equivalents of $4,186,428 (2020: $10,796,484), a surplus of net current assets of $4,435,812 (2020: $10,785,931) and surplus of net assets of $16,652,759 (2020: $15,535,986). The Group’s ability to continue as a going concern is dependent upon the sufficiency of current cash reserves to meet existing obligations. The directors believe current cash reserves are sufficient for the group to be able to pay its debts as and when they fall due for a period of at least 12 months from the date of these financial statements. 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 liabilities at fair value through profit or loss. 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 Group'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 3. 62 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 2. Significant accounting policies (continued) Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 32. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of IMEXHS Limited ('Company' or 'parent entity') as at 31 December 2021 and the results of all subsidiaries for the year then ended. IMEXHS Limited and its subsidiaries together are referred to in these financial statements as the 'Group'. Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group 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 Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. 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 Group. 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. Where the Group 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 Group 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. Operating segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM') which has been identified by the Group as the Managing Director and other members of the Board of Directors. Foreign currency translation The financial statements are presented in Australian dollars, which is IMEXHS Limited's functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into the Company's functional currency 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. 63 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 2. Significant accounting policies (continued) Revenue recognition The Group recognises revenue as follows: Revenue from contracts with customers Revenue is recognised from Software as a Service (SaaS) and Platform as a Service (PaaS) contracts. Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability. Sales revenue comprises revenue earned (net of returns, discounts and allowances) from the sale of goods or provision of services to entities outside the Group. The Group recognises revenue from contracts with customers in accordance with the recognition of the completion of performance obligations under the contract. Where a contract includes an element of a warranty obligation, the revenue attributable to this warranty obligation is recognised evenly over the period for which the obligation exists. 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. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. An income tax benefit will arise for the financial year where an income tax loss is incurred and, where the permitted to do so, is carried-back against a qualifying prior period’s tax payable to generate a refundable tax offset. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a ● transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. ● Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. 64 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 2. Significant accounting policies (continued) The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Current and non-current classification 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 Group'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 Group'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. 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. 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. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Inventories Stock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable. 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. Joint operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group has recognised its share of jointly held assets, liabilities, revenues and expenses of joint operations. These have been incorporated in the financial statements under the appropriate classifications. Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided. 65 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 2. Significant accounting policies (continued) Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off. Financial assets at amortised cost A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. Property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Leasehold improvements Furniture and fittings Computer equipment Medical equipment 1-5 years 5-10 years 3-5 years 5-10 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. 66 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 2. Significant accounting policies (continued) Intangible assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. Goodwill Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed. Internally developed software Research costs associated with internally developed software are expensed in the period in which they are incurred. Development costs associated with internally developed software are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the asset; the Group has sufficient resources and intent to complete the development; and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, being 5 years. Customer contracts Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5 years. Copyright Significant costs associated with copyright are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5-10 years. Licences The acquisition of licences are capitalised as an asset and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 1-5 years. Impairment of non-financial assets Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non- financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Trade and other payables Trade and other payables 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. Contract liabilities Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or services to the customer. 67 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 2. Significant accounting policies (continued) Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. 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. 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 high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Share-based payments Equity-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. 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 Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. 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. 68 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 2. Significant accounting policies (continued) 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 Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group 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. Issued capital Ordinary 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. Business combinations The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or accounting policies and other pertinent conditions in existence at the acquisition-date. Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. 69 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 2. Significant accounting policies (continued) Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of IMEXHS 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. 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. Comparative information Certain comparatives have been reclassified to align with current year presentation. These reclassifications had no effect on the net result or net assets of the Group. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 31 December 2021. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. Note 3. 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. Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic. 70 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 3. Critical accounting judgements, estimates and assumptions (continued) 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, historical collection rates, the impact of the Coronavirus (COVID-19) pandemic and forward-looking information that is available. The allowance for credit losses, as disclosed in note 9, is calculated based on the information available at the time of preparation. The actual credit losses in future years may be higher or lower. Goodwill and other indefinite life intangible assets The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Lease term The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the Group's operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances. Incremental borrowing rate Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the Group estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. Business combinations As discussed in note 2, business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all available information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported. Issued Capital No value has been allocated to the Class A Performance Shares due to the uncertainty of meeting the performance milestone. Issued Options No value has been allocated to the Class B or Class C options due to the uncertainty of meeting the performance milestone. Share Based Payments Share based payments are measured at the fair value of goods or services received or the fair value of the equity instrument issued (if the fair value of goods or services cannot be reliably determined) and are recorded at the date the goods or services are received. The fair value of options is determined using the Black-Scholes option pricing model. The number of share and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. 71 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 4. Operating segments The Group is organised into one main operating segment. All of the Group’s activities are interrelated and discrete financial information is reported to the Board (Chief Operating Decision Maker) as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole. Note 5. Revenue Medical equipment and licences Leasing equipment and software and services Sale of inputs Service and maintenance of equipment and software Revenue Disaggregation of revenue The disaggregation of revenue from contracts with customers is as follows: Timing of revenue recognition Goods transferred at a point in time Services transferred over time The majority of the Group's revenue is derived from one geographic region, Latin America. Note 6. Expenses Loss before income tax includes the following specific expenses: Finance costs Interest and finance charges paid/payable on borrowings Interest and finance charges paid/payable on lease liabilities Consolidated 2021 $ 2020 $ 918,262 12,001,432 138,586 314,429 2,078,376 8,414,224 228,709 192,659 13,372,709 10,913,968 Consolidated 2021 $ 2020 $ 1,130,111 12,242,598 2,037,930 8,876,038 13,372,709 10,913,968 Consolidated 2021 $ 2020 $ 307,667 3,419 1,199,655 5,081 311,086 1,204,736 72 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 6. Expenses (continued) Administration expenses Employee and Director benefits expense* Professional and consultancy fees* Taxes Office expenses Insurance Advertising and marketing Corporate expenses* Maintenance Travel expenses Other *includes acquisition costs of $701,698 Leases Short-term lease payments Employee and Director benefits expense Included in administration expenses: Employee benefits expense excluding superannuation and share-based payments Defined contribution superannuation expense Included in research and development and support expenses and clinical services expenses: Employee benefits expense excluding superannuation and share-based payments Defined contribution superannuation expense Share-based payments expense 3,357,211 568,413 247,759 323,456 109,205 135,536 867,704 5,782 92,719 521,235 2,290,579 545,853 200,465 262,382 103,031 74,962 734,949 719 31,944 196,165 6,229,020 4,441,049 58,656 26,734 3,120,288 236,923 3,357,211 2,153,494 137,085 2,290,579 4,561,023 383,333 4,944,356 2,596,366 130,217 2,726,583 569,585 598,457 8,871,152 5,615,619 73 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 7. Income tax Income tax expense Current tax Deferred tax - origination and reversal of temporary differences Aggregate income tax expense Deferred tax included in income tax expense comprises: Increase in deferred tax liabilities Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense Tax at the statutory tax rate of 26% (2020: 27.5%) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Expected credit losses Provision for inventories Non-deductible taxes Non-deductible employee contributions Non-deductible interest, fines and levies Non-deductible financial transactions levy Other non-deductible expenses Effect of overseas tax rates Deferred tax assets not recognised Income tax applied to companies in tax loss in overseas jurisdiction Movement in deferred taxes Adjustment of tax for prior period Income tax expense Deferred tax liability Deferred tax liability comprises temporary differences attributable to: Amounts recognised in profit or loss: Property, plant and equipment Intangible assets Allowance for expected credit losses Lease liabilities Deferred tax liability Movements: Opening balance Charged to profit or loss Foreign exchange differences Closing balance 74 Consolidated 2021 $ 2020 $ 143,416 - 6,612 81,277 143,416 87,889 - 81,277 (4,556,356) (3,528,088) (1,184,653) (970,224) 43,446 3,913 67,226 (338,289) 26,077 6,835 467,044 20,427 1,014,623 - 126,649 - 16,767 63,198 1,834 68,030 (210,504) 21,629 7,308 223,233 32,834 762,649 6,612 6,599 81,290 - 143,416 87,889 Consolidated 2021 $ 2020 $ 27,706 229,797 (157,349) (27,706) 31,082 257,801 (176,524) (31,082) 72,448 81,277 81,277 - (8,829) - 81,277 - 72,448 81,277 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 8. Current assets - cash and cash equivalents Cash at bank Note 9. Current assets - trade and other receivables Trade receivables Less: Allowance for expected credit losses Other receivables Indirect taxes receivable Consolidated 2021 $ 2020 $ 4,186,428 10,796,484 Consolidated 2021 $ 2020 $ 5,658,848 (214,497) 5,444,351 3,603,545 (866,708) 2,736,837 6,941 1,555,029 6,651 1,013,037 7,006,321 3,756,525 Allowance for expected credit losses The Group has recognised a loss of $7,591 (2020: $54,386) in profit or loss in respect of the expected credit losses for the year ended 31 December 2021. The ageing of the receivables (current and non-current) and allowance for expected credit losses provided for above are as follows: Consolidated Not overdue 0 to 3 months overdue 3 to 6 months overdue 6 to 12 months overdue Over 6 months overdue Expected credit loss rate Carrying amount 2021 % 2020 % 2021 $ 2020 $ Allowance for expected credit losses 2021 $ 2020 $ - 0.13% 14.60% 100.00% 100.00% - 6.46% 75.00% 100.00% 100.00% 5,184,015 1,621,728 43,310 33,856 172,176 3,279,190 453,659 124,012 56,992 687,380 - 2,141 6,324 33,856 172,176 - 29,327 93,009 56,992 687,380 7,055,085 4,601,233 214,497 866,708 Opening balance Additional provisions recognised Additions through business combinations Amounts recovered during the year Foreign exchange differences Closing balance 75 Consolidated 2021 $ 2020 $ 866,708 198,576 9,484 (815,331) (44,940) 884,467 52,755 - - (70,514) 214,497 866,708 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 10. Current assets - inventories Merchandise not manufactured by the Group - at cost Materials and spare parts - at cost Less: Provision for impairment Consolidated 2021 $ 2020 $ 87,148 44,275 (46,991) 371,627 53,877 (35,836) 84,432 389,668 The cost of inventories recognised as an expense during the year ended 31 December 2021 was $1,042,024 (2020: $1,433,397). The cost of inventories recognised as an expense includes $15,698 (2020: write back of $86,617) in respect of reversal of write downs of inventory to net realisable value. Note 11. Current assets - other Prepayments Note 12. Non-current assets - trade receivables Trade receivables Consolidated 2021 $ 2020 $ 258,117 302,187 Consolidated 2021 $ 2020 $ 1,396,237 997,688 Refer to note 9 for an analysis of ageing of the receivables and allowance for expected credit losses. 76 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 13. Non-current assets - property, plant and equipment Leasehold improvements - at cost Less: Accumulated depreciation Furniture and fittings - at cost Less: Accumulated depreciation Motor vehicles - at cost Less: Accumulated depreciation Computer equipment - at cost Less: Accumulated depreciation Medical equipment - at cost Less: Accumulated depreciation Consolidated 2021 $ 2020 $ 96,090 (3,200) 92,890 18,540 (5,161) 13,379 1,850 (126) 1,724 32,340 (359) 31,981 23,117 (13,922) 9,195 - - - 1,964,331 (1,010,610) 953,721 4,185,890 (779,695) 3,406,195 1,435,049 (773,137) 661,912 3,259,322 (616,117) 2,643,205 4,467,909 3,346,293 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 January 2020 Additions Disposals Exchange differences Depreciation expense Balance at 31 December 2020 Additions Additions through business combinations (note 33) Disposals Exchange differences Transfers in/(out) Depreciation expense Leasehold improvements $ Furniture and fittings $ Motor vehicles $ Computer equipment $ Medical equipment $ Total $ - 33,066 - (718) (367) 31,981 - 70,172 - (8,250) - (1,013) 17,577 18,647 (19,091) (2,777) (5,161) 9,195 491 10,223 - (1,059) (1,927) (3,544) - - - - - 1,207,320 75,014 (92,233) (130,017) (398,172) 2,151,109 1,138,188 (61,319) (263,084) (321,689) 3,376,006 1,264,915 (172,643) (396,596) (725,389) - 1,850 661,912 202,708 2,643,205 804,767 3,346,293 1,009,816 - - - - (126) 28,368 (1,102) (72,178) 503,133 (369,120) 1,352,222 (149,868) (380,642) (501,206) (362,283) 1,460,985 (150,970) (462,129) - (736,086) Balance at 31 December 2021 92,890 13,379 1,724 953,721 3,406,195 4,467,909 77 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 14. Non-current assets - right-of-use assets Land and buildings - right-of-use Less: Accumulated depreciation Consolidated 2021 $ 2020 $ 140,266 (110,108) 153,185 (51,139) 30,158 102,046 The Group leases land and buildings for its offices under agreements of between 1 to 5 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. The Group leases office equipment under agreements of less than 1 year. These leases are either short-term or low-value, so have been expensed as incurred and not capitalised as right-of-use assets. 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 January 2020 Additions Modifications of lease terms Exchange differences Depreciation expense Balance at 31 December 2020 Additions Exchange differences Depreciation expense Balance at 31 December 2021 Land and buildings $ 40,805 159,257 (2,341) (6,202) (89,473) 102,046 14,165 (7,742) (78,311) 30,158 78 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 15. Non-current assets - intangibles Goodwill - at cost Internally developed software - at cost Less: Accumulated amortisation Customer contracts - at cost Copyright - at cost Less: Accumulated amortisation Licenses - at cost Less: Accumulated amortisation Consolidated 2021 $ 2020 $ 5,316,420 - 2,082,518 (269,984) 1,812,534 946,674 23,745 (21,033) 2,712 998,942 (747,866) 251,076 805,629 - 805,629 - 24,275 (18,198) 6,077 892,058 (590,508) 301,550 8,329,416 1,113,256 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 January 2020 Additions Disposals Exchange differences Amortisation expense Balance at 31 December 2020 Additions Additions through business combinations (note 33) Exchange differences Amortisation expense Internally developed software $ Customer contracts $ Goodwill $ Copyright $ Licences $ Total $ - - - - - - - - 805,629 - - - 805,629 1,417,704 - - - - - - - 5,704,649 (388,229) - - (140,815) (269,984) 1,015,804 (69,130) - 10,413 - - (1,228) (3,108) 6,077 - - (530) (2,835) 459,474 115,806 (12,177) (55,137) (206,416) 469,887 921,435 (12,177) (56,365) (209,524) 301,550 137,183 1,113,256 1,554,887 - (30,299) (157,358) 6,720,453 (629,003) (430,177) Balance at 31 December 2021 5,316,420 1,812,534 946,674 2,712 251,076 8,329,416 Impairment testing Goodwill acquired through business combinations has been allocated to one cash generating unit ('CGU'), being the radiology services CGU. The radiology services business provides radiological diagnostic services to hospitals and medical facilities in Colombia and Spain using IMEXHS medical imaging software. The services business also provides the Group with medical images and radiologists interpretation and reports to develop artificial intelligence ('AI') tools. Goodwill and the CGU to which it belongs is tested annually for impairment or at the end of each reporting date where an indicator of impairment exists. At 31 December 2021, the recoverable amount of the CGU has been assessed. An impairment exists when the carrying value of the CGU exceeds its recoverable amount. 79 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 15. Non-current assets - intangibles (continued) Recoverable amount of CGU The recoverable amount of the Group’s CGU’s has been determined by value in use ('VIU') calculations. The calculations use cash flow projections based on a five-year discounted cash flow model, with a terminal value applied to the discounted cash flows after year five. Key assumptions and impairment testing results Key assumptions are those to which the recoverable amount of an asset or CGU is most sensitive. The following key assumptions were used in the VIU model at 31 December 2021: Assumption How determined Rate used in the VIU calculation Discount rate (pre-tax) Based on weighted average cost of capital reflecting current market assessments of the time value of money and risks specific to the CGU. 22.7% Sales volume growth rate Based on a five year cash flow projection taking into account historical growth rates and product lifecycle. 10% Terminal value growth rate Based on long-term economic growth rates. Nil The recoverable amount of the CGU including unallocated corporate assets is in excess of the carrying amount and therefore no impairment charge was required. The excess of recoverable amount over carrying amount is such that a reasonably possible change in assumptions is unlikely to reduce the recoverable amount below the carrying amount. Note 16. Current liabilities - trade and other payables Trade payables Withholding tax payable Other payables Refer to note 26 for further information on financial instruments. Note 17. Current liabilities - contract liabilities Contract liabilities Reconciliation Reconciliation of the written down values (current and non-current) at the beginning and end of the current and previous financial year are set out below: Opening balance Payments received in advance Additions through business combinations (note 33) Transfer to revenue - included in the opening balance Exchange differences Closing balance 80 Consolidated 2021 $ 2020 $ 3,194,493 458,286 116,046 1,457,945 617,161 307,425 3,768,825 2,382,531 Consolidated 2021 $ 2020 $ 32,812 53,548 53,548 72,139 74,264 (87,903) (10,325) 63,936 42,533 - (45,837) (7,084) 101,723 53,548 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 17. Current liabilities - contract liabilities (continued) Representing: Contract liabilities - current Contract liabilities - non-current (note 21) 32,812 68,911 53,548 - 101,723 53,548 Unsatisfied performance obligations The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting period was $101,723 as at 31 December 2021 ($53,548 as at 31 December 2020) and is expected to be recognised as revenue in future periods as follows: Within 6 months 6 to 12 months 12 to 18 months 18 to 24 months Over 24 months Note 18. Current liabilities - borrowings Credit cards Unsecured revolving credit loans Unsecured fixed term loans PaaS equipment financing loan* Consolidated 2021 $ 2020 $ 21,394 11,419 13,170 25,990 29,750 24,042 1,868 27,638 - - 101,723 53,548 Consolidated 2021 $ 2020 $ 11,012 22,310 1,040,467 8,452 2,759 40,833 808,588 16,597 1,082,241 868,777 * Relates to various loans provided to the Company for PaaS contracts where the equipment is repaid at a 200% rate of return on their loan which is paid in monthly instalments over the initial term of the PaaS contract. Refer to note 26 for further information on financial instruments. Note 19. Current liabilities - Contingent consideration Contingent consideration - cash Refer to note 27 and note 33 for further information. Consolidated 2021 $ 2020 $ 292,454 - 81 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 20. Non-current liabilities - payables Trade payables Refer to note 26 for further information on financial instruments. Note 21. Non-current liabilities - contract liabilities Contract liabilities Refer to note 17 for further information. Note 22. Non-current liabilities - borrowings Unsecured revolving credit loans Unsecured fixed term loans Refer to note 26 for further information on financial instruments. Financing arrangements Unrestricted access was available at the reporting date to the following lines of credit: Total facilities Unsecured revolving credit loans Unsecured fixed term loans Used at the reporting date Unsecured revolving credit loans Unsecured fixed term loans Unused at the reporting date Unsecured revolving credit loans Unsecured fixed term loans 82 Consolidated 2021 $ 2020 $ 580,214 - Consolidated 2021 $ 2020 $ 68,911 - Consolidated 2021 $ 2020 $ 27,248 1,257,952 40,056 687,895 1,285,200 727,951 Consolidated 2021 $ 2020 $ 49,559 2,344,958 2,394,517 80,889 1,496,483 1,577,372 49,559 2,344,958 2,394,517 80,889 1,496,483 1,577,372 - - - - - - IMEXHS Limited Notes to the financial statements 31 December 2021 Note 23. Equity - issued capital Consolidated 2021 Shares 2020 Shares 2021 $ 2020 $ Ordinary shares - fully paid 32,860,889 29,699,842 34,765,453 28,461,991 Movements in ordinary share capital Details Date Shares Balance Issue of shares Conversion of class A performance shares Issue of shares Issue of shares Consolidation of shares 50 to 1 Share issue transaction costs, net of tax Balance Issue of shares on exercise of options Issue of shares on exercise of options Issue of shares on exercise of options Issue of shares on exercise of options Issue of shares on exercise of options Issue of shares on exercise of options Issue of shares on exercise of options Issue of shares - acquisition of subsidiary (note 33) Shares to be issued as part consideration for acquisition of subsidiary (note 33) Share issue transaction costs, net of tax 1 January 2020 26 May 2020 23 July 2020 30 October 2020 30 October 2020 6 November 2020 31 December 2020 26 February 2021 4 March 2021 30 March 2021 23 April 2021 20 September 2021 21 September 2021 22 September 2021 5 October 2021 1,175,657,186 16,666,667 6 276,000,000 16,666,667 (1,455,290,684) - 29,699,842 301,680 193,320 205,000 50,000 19,719 39,437 19,719 2,332,172 - - Issue price $ $0.03 $0.03 $0.03 $0.03 $0.00 $1.25 $1.25 $1.25 $1.88 $0.00 $0.00 $0.00 $1.82 19,757,466 500,000 - 8,280,000 500,000 - (575,475) 28,461,991 377,100 241,650 256,250 93,750 - - - 4,237,993 1,122,303 (25,584) Balance 31 December 2021 32,860,889 34,765,453 Ordinary shares Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders should the Company be wound up, in proportions that consider both the number of shares held and the extent to which those shares are paid up. 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. Share buy-back There is no current on-market share buy-back. 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 and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. 83 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 23. Equity - issued capital (continued) The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current Company's share price at the time of the investment. The Group is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies. The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The capital risk management policy remains unchanged from the 31 December 2020 Annual Report. Note 24. Equity - reserves Foreign currency reserve Share-based payments reserve Options reserve Consolidated 2021 $ 2020 $ (1,575,829) 3,646,522 30,440 (519,327) 3,076,937 30,440 2,101,133 2,588,050 Foreign currency reserve The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations. Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services. Options reserve The reserve is used to record amounts received from option holders from the issue of 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 January 2020 Foreign currency translation Share-based payments - options issued to KMP and employees Amounts paid on issue of options Balance at 31 December 2020 Foreign currency translation Share-based payments - options issued to KMP Foreign currency reserve $ Share-based payments reserve $ Options reserve $ Total $ (21,232) (498,095) 2,478,480 - - - 2,457,248 (498,095) - - 598,457 - (519,327) (1,056,502) - 3,076,937 - 569,585 - 30,440 30,440 - - 598,457 30,440 2,588,050 (1,056,502) 569,585 Balance at 31 December 2021 (1,575,829) 3,646,522 30,440 2,101,133 Note 25. Equity - dividends There were no dividends paid, recommended or declared during the current or previous financial year. 84 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 26. Financial instruments Financial risk management objectives The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks 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 and ageing analysis for credit 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. Market risk Foreign currency risk Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a currency that is not the Company’s functional currency. Individual transactions are assessed, and forward exchange contracts are used to hedge the risk where deemed appropriate. While the Group as a whole has assets and liabilities in different currencies, individual entities in the Group do not have a significant foreign exchange exposure to receivables or payables in currencies that are not their functional currency. The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting date were as follows: Consolidated US dollars Euros Colombian peso Assets Liabilities 2021 $ 2020 $ 2021 $ 2020 $ 138,698 2,810 8,513,069 322,814 22,748 4,556,964 926,392 - 4,872,410 784,699 - 551,517 8,654,577 4,902,526 5,798,802 1,336,216 Based on the financial instruments held at 31 December 2021, had the Australian dollar weakened by 5% against the Colombian Peso, US Dollar and Euro, with all other variables held constant, the Group’s pre-tax profit for the year would have been $77,108 higher (2020: $27,962 higher). If the Australian dollar had strengthened the corresponding impact would have been a decrease in pre-tax profit by the same amount. Price risk The Group is not exposed to any significant price risk. Interest rate risk The Group’s main interest rate risk arises from borrowings with variable rates, which expose the Group to cash flow interest rate risk. Group policy is to have mainly fixed rate loans directly. During the financial years ended 31 December 2021 and 31 December 2020, the Group’s borrowings at variable rate were denominated in Colombian Pesos. The Group’s borrowings and receivables are carried at amortised cost. The Group is exposed to interest rate risk at the date of this report via its cash holdings. 85 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 26. Financial instruments (continued) The exposure of the Group’s borrowings to interest rate changes and the contractual re-pricing dates of the borrowings at the end of the reporting period are as follows: 2021 $ % of total loans % 2020 $ % of total loans % Variable rate borrowings Fixed rate borrowings (no repricing dates) 11,012 2,347,977 0.5 99.5 2,759 1,577,373 0.2 99.8 2,358,989 100.0 1,580,132 100.0 Due to the carrying value of borrowings at variable interest rate, the Group is not exposed to any significant interest rate risk. 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 strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. 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. The Group does not hold any collateral. The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the Group based on recent sales experience, historical collection rates and forward-looking information that is available. 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 Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. 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. 86 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 26. Financial instruments (continued) 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. Consolidated - 2021 Weighted average interest rate % < 6 months $ Trade payables Other payables Contingent consideration Lease liabilities Borrowings - variable rate Borrowings - fixed rate - - - 5% 27% 11% 3,194,493 116,046 - 26,102 11,012 703,013 6-12 months $ - - 292,454 4,055 - 615,706 Between 1 and 2 years $ Between 2 and 5 Year $ Over 5 Years $ 580,214 - - - - 798,806 - - - - - 566,120 Total contractual cash flows inclusive of interest payments $ Carrying amount - 3,774,707 3,774,707 116,046 - 292,454 - 30,157 - - 11,012 - 2,683,645 2,347,977 116,046 292,454 30,157 11,012 4,050,666 912,215 1,379,020 566,120 - 6,908,021 6,572,353 Consolidated - 2020 Weighted average interest rate % < 6 months $ Trade payables Other payables Lease liabilities Borrowings - variable rate Borrowings - fixed rate - - 5% 27% 14% 1,457,945 307,425 101,469 2,759 583,332 Between 1 and 2 years $ Between 2 and 5 Years $ Over 5 Years $ Total contractual cash flows inclusive of interest payments $ Carrying amount - - - - 635,669 - - - - 179,145 - 1,457,945 1,457,945 307,425 - 101,469 - - 2,759 - 1,773,175 1,577,374 307,425 101,469 2,759 6-12 months $ - - - - 375,029 2,452,930 375,029 635,669 179,145 - 3,642,773 3,446,972 Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. 87 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 27. Fair value measurement Fair value hierarchy The following tables detail the Group's assets and liabilities, measured or disclosed 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 Level 3: Unobservable inputs for the asset or liability Consolidated - 2021 Liabilities Contingent consideration Total liabilities Level 1 $ Level 2 $ Level 3 $ Total $ - - - - 292,454 292,454 292,454 292,454 There were no transfers between levels during the financial year. For all assets and liabilities net fair value approximates their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments of which the entity has no holdings in. Financial assets where the carrying amount exceeds net fair values have not been written down as the Group intends to hold these assets to maturity. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to the financial statements. There are no financial assets or liabilities that are carried at fair value in the financial statements therefore no additional disclosures have been made with respect to fair value measurement. Valuation techniques for fair value measurements categorised within level 2 and level 3 Contingent consideration has been valued using a discounted cash flow model. Level 3 assets and liabilities Movements in level 3 assets and liabilities during the current and previous financial year are set out below: Consolidated Balance at 1 January 2020 Balance at 31 December 2020 Additions Foreign exchange differences Balance at 31 December 2021 Contingent consideration $ - - 313,811 (21,357) 292,454 The level 3 assets and liabilities unobservable inputs and sensitivity are as follows: Description Unobservable inputs Range of probabilities Sensitivity Contingent consideration Probability of to satisfy/not to satisfy If the specified revenue targets are achieved achieving revenue targets 100% of the contingent consideration is payable / if revenue targets are not achieved no contingent consideration is payable 88 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 28. Key management personnel disclosures 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 Share-based payments Note 29. Remuneration of auditors Consolidated 2021 $ 2020 $ 773,792 84,987 478,640 796,289 62,319 565,023 1,337,419 1,423,631 During the financial year the following fees were paid or payable for services provided by Nexia Sydney Audit Pty Ltd, the auditor of the Company, and its network firms: Audit services - Nexia Sydney Audit Pty Ltd Audit or review of the financial statements - Nexia Sydney Audit Pty Ltd Other services - Nexia Sydney Tax Advisory Pty Ltd Preparation of the tax return - Nexia Sydney Audit Pty Ltd Other services - Nexia Sydney Tax Advisory Pty Ltd Corporate Advisory - Nexia Sydney Corporate Advisory Pty Ltd Audit services - network firms Audit or review of the financial statements Other services - network firms Other Audit services - other firms Audit or review of the financial statements - BDO Audit (WA) Pty Ltd Other services - other firms Preparation of the tax return - BDO Audit (WA) Pty Ltd Tax advice - BDO Audit (WA) Pty Ltd Valuation services - BDO Audit (WA) Pty Ltd Consolidated 2021 $ 2020 $ 102,196 26,500 11,915 - 82,819 196,930 - 26,500 19,957 31,835 27,007 46,964 1,341 33,176 - 41,601 - 1,000 5,500 6,500 18,762 - - 60,363 250,394 120,039 On 30 October 2020, Nexia Sydney Audit Pty Ltd was appointed auditor or the Company following the removal of BDO Audit (WA) Pty Ltd. During the financial year ended 31 December 2020, the fees presented in the table above represent fees which were paid or payable for services provided by BDO Audit (WA) Pty Ltd up until 30 October 2020 and fees which were paid or payable for services provided by Nexia Sydney Audit Pty Ltd thereafter. During the current financial year, the Group engaged BDO Audit (WA) Pty Ltd for tax advice and valuation services. 89 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 30. Contingent liabilities The Group had no contingent liabilities as at 31 December 2021 (2020: none) Note 31. Related party transactions Parent entity IMEXHS Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 34. Joint operations Interests in joint operations are set out in note 35. Key management personnel Disclosures relating to key management personnel are set out in note 28 and the remuneration report included in the directors' report. Transactions with related parties The following transactions occurred with related parties: Sale of goods and services: Sale of goods to key management personnel Payment for goods and services: Payment for services from key management personnel Payment for other expenses: Interest paid to key management personnel - on PaaS equipment financing loan Consolidated 2021 $ 2020 $ 4,574,467 4,432,817 1,195,542 1,186,519 74,651 87,198 During the year, the Company had an agreement with RIMAB S.A.S., an entity owned 65% by the Chief Executive Officer, Dr German Arango. This entity was acquired on 5 October 2021 and the revenue and expenses information is provided to that date. Receivable from and payable to related parties The following balances are outstanding at the reporting date in relation to transactions with related parties: Current receivables: Trade receivables from key management personnel Current payables: Trade payables to key management personnel Consolidated 2021 $ 2020 $ 806 739,461 10 1,628 90 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 31. Related party transactions (continued) Loans to/from related parties The following balances are outstanding at the reporting date in relation to loans with related parties: Non-current borrowings: Loan from key management personnel - PaaS equipment financing loan Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Note 32. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Total comprehensive loss Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Share-based payments reserve Options reserve Accumulated losses Total equity Consolidated 2021 $ 2020 $ - 7,115 Parent 2021 $ 2020 $ (7,805,521) (10,419,073) (7,805,521) (10,419,073) Parent 2021 $ 2020 $ 3,029,675 9,324,261 8,391,390 9,326,465 2,514 2,514 5,109 5,109 38,446,255 3,300,703 30,440 (33,388,522) 32,142,799 2,731,118 30,440 (25,583,001) 8,388,876 9,321,356 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 31 December 2021 and 31 December 2020. Contingent liabilities The parent entity had no contingent liabilities as at 31 December 2021 and 31 December 2020. 91 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 32. Parent entity information (continued) Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 31 December 2021 and 31 December 2020. Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following: ● ● ● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Investments in associates 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. 92 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 33. Business combinations On 5 October 2021, IMEXHS acquired 100% of the ordinary shares of RIMAB SAS for the total consideration transferred of $6,762,468. RIMAB SAS is a radiology services business and was acquired to strengthen IMEXHS's customer offering with imaging and teleradiology services and provide a test bed for artificial intelligence ('AI') development. The acquired business contributed incremental revenues of $3,345,758 and profit after tax of $214,338 to the Group for the period from 1 October to 31 December 2021. If the acquisition occurred on 1 January 2021, the full year contributions would have been incremental revenues of $2,920,280 and EBITDA (before one-off costs and normalisations in relation to the acquisition) of $1,463,425. The values identified in relation to the acquisition of RIMAB SAS are provisional as at 31 December 2021. Details of the acquisition are as follows: Cash and cash equivalents Trade and other receivables Income tax refund due Prepayments Other current assets Property, plant and equipment Customer contracts Trade and other payables Provision for income tax Employee benefits Financial liabilities Indirect taxes Other non-financial liabilities Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid or payable to vendor IMEXHS Limited shares issued to vendor Contingent consideration - cash Contingent consideration - IMEXHS Limited shares Acquisition costs expensed to profit or loss Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents Less: shares issued by Company as part of consideration Less: shares to be issued by the Company as part of consideration Less: contingent consideration Net cash used Fair value $ 135,633 3,194,704 986,580 760,062 1,343 1,460,985 1,015,804 (3,962,523) (68,859) (338,189) (1,790,180) (263,277) (74,264) 1,057,819 5,704,649 6,762,468 1,088,361 4,237,993 313,811 1,122,303 6,762,468 701,698 6,762,468 (135,633) (4,237,993) (1,122,303) (313,811) 952,728 As part of the acquisition of RIMAB SAS an amount of contingent consideration has been agreed, which is subject to RIMAB SAS meeting pre-determined contract renewal and financial year 2022 revenue thresholds. 93 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 33. Business combinations (continued) The amount of contingent consideration recognised, comprising of $313,811 payable in cash and $1,122,330 to be issued in shares (based on a fixed number of shares at a fixed price) is the maximum amount payable if the pre-determined contract renewal and revenue thresholds are met. If these thresholds are not met, then no amount is payable. Given the current performance of the business, it appears probable that the thresholds will be met and as such, contingent consideration of $313,811 payable in cash has been recognised as a liability and $1,122,330 to be issued in shares has been recognised in equity. Note 34. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2: Name Principal place of business / Country of incorporation OMT Operations (AU) Pty Ltd* Imaging Experts and Healthcare Services Pty Ltd Imaging Experts and Healthcare Services S.A.S. IMEXHS Corp IMEXVR SAS* IMEXMB SAS* Dictatech Inc* RIMAB SAS Australia Australia Colombia US Colombia Colombia US Colombia * Dormant. Note 35. Interests in joint operations Ownership interest 2020 2021 % % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% - During the comparative period for the year ended 31 December 2020, the Group recognised its 30% share of jointly held assets, liabilities, revenues and expenses of joint operations in Hospital Central Policía Nacional (National Police Hospital) Colombia. The joint operations ceased on 5 October 2021 when the Group acquired 100% of the ordinary shares in RIMAB SAS, a related party of the joint operations. Note 36. Non-cash investing and financing activities Shares issued in relation to business combinations Contingent consideration - shares to be issued by the Company as part of consideration Consolidated 2021 $ 2020 $ 4,237,993 1,122,303 5,360,296 - - - 94 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 37. Changes in liabilities arising from financing activities Consolidated Balance at 1 January 2020 Net cash used in financing activities Acquisition of leases Modifications of lease terms Unwinding deferred borrowing costs Balance at 31 December 2020 Net cash used in financing activities Acquisition of leases Changes through business combinations (note 33) Borrowings $ Lease liabilities $ 2,059,483 (1,234,184) - - 771,429 1,596,728 (1,019,467) - 1,790,180 40,574 (96,021) 159,257 (2,341) - 101,469 (85,477) 14,165 - Total $ 2,100,057 (1,330,205) 159,257 (2,341) 771,429 1,698,197 (1,104,944) 14,165 1,790,180 Balance at 31 December 2021 2,367,441 30,157 2,397,598 Note 38. Earnings per share Consolidated 2021 $ 2020 $ Loss after income tax attributable to the owners of IMEXHS Limited (4,699,772) (3,615,977) Weighted average number of ordinary shares used in calculating basic earnings per share 30,887,790 24,730,188 Weighted average number of ordinary shares used in calculating diluted earnings per share 30,887,790 24,730,188 Number Number Basic earnings per share Diluted earnings per share Cents Cents (15.22) (15.22) (14.62) (14.62) Share options on issue have been excluded from the weighted average number of ordinary shares used in calculating diluted loss per share as they are considered anti-dilutive. 95 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 39. Share-based payments Options granted to key management personnel and external parties are as follows: ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● On 22 July 2017, 700,000 shares options (35,000,000 share options prior to the share consolidation) were granted to key management personnel. The options have vested, have an exercise price of $1.25 ($0.025 prior to the share consolidation) and expired on 31 March 2021. On 28 August 2018, 1,000,001 Class A share options (50,000,000 Class A share options prior to the share consolidation) were granted to key management personnel. The options vested immediately on grant date, have an exercise price of $2.50 ($0.050 prior to the share consolidation) and expired on 30 June 2021. On 28 August 2018, 1,000,001 Class B share options (50,000,000 Class B share options prior to the share consolidation) were issued as consideration for Imaging Experts and Healthcare Services Pty Ltd. The options are subject to the vesting condition of the Group exceeding $5,000,000 EBIT in any rolling four quarter period. The options have an exercise price of $1.875 ($0.038 prior to the share consolidation) and expire on 28 August 2023. On 28 August 2018, 1,000,001 Class C share options (50,000,000 Class C share options prior to the share consolidation) were issued as consideration for Imaging Experts and Healthcare Services Pty Ltd. The options are subject to the vesting condition of the Group exceeding $7,500,000 EBIT in any rolling four quarter period. The options have an exercise price of $1.875 ($0.038 prior to the share consolidation) and expire on 28 August 2023. On 28 August 2018, 250,000 shares options (12,500,000 share options prior to the share consolidation) were granted to key management personnel. The options vested immediately on the grant date, have an exercise price of $1.875 ($0.038 prior to the share consolidation) and expired on 30 June 2021. On 28 August 2018, 600,000 shares options (30,000,000 share options prior to the share consolidation) were granted to third party advisors in exchange for services provided. The options vested immediately on the grant date, have an exercise price of $2.50 ($0.050 prior to the share consolidation) and expired on 30 June 2021. On 25 October 2018, 80,000 share options (4,000,000 shares options prior to the share consolidation) were issued as remuneration to Non-Executive Director, Mr Tom Pascarella subject to vesting conditions. The options vested when Mr Tom Pascarella resigned on 30 November 2019. The options have an exercise price of $3.50 ($0.070 prior to the share consolidation) and expire on 25 October 2023. On 10 December 2018, 40,000 share options (2,000,000 shares options prior to the share consolidation) were issued as remuneration to Non-Executive Director, Dr Douglas Lingard subject to vesting conditions. 10,000 options vested on 10 December 2020 and the remaining 30,000 options vest on 10 December 2021, have an exercise price of $2.65 ($0.053 prior to the share consolidation) and expire on 9 December 2023. On 7 October 2019, 800,000 share options (40,000,000 shares options prior to the share consolidation) were issued to Domatorisaro Pty Ltd, a related party of Dr Douglas Lingard, pursuant to a loan agreement. The options vested immediately on the grant date, have an exercise price of $2.70 ($0.054 prior to the share consolidation) and expire on 31 March 2022. On 31 October 2019, 100,000 share options (5,000,000 prior to the share consolidation) were granted to third party advisors in exchange for services provided. The options vested immediately on the grant date, have an exercise price of $2.70 ($0.054 prior to the share consolidation) and expire on 30 September 2022. On 1 April 2020, 30,000 share options (1,500,000 share options prior to the share consolidation) were granted to an employee. The options vest when the Company's share price reaches or exceeds a 10 day VWAP of $4.45 (8.5 cents pre-consolidation). The options have an exercise price of $3.25 ($0.065 prior to the share consolidation) and expire on 1 April 2022. On 1 April 2020, 30,000 share options (1,500,000 share options prior to the share consolidation) were granted to an employee. The options vest when the Company's share price reaches or exceeds a 10 day VWAP of $7.50 (15 cents pre-consolidation). The options have an exercise price of $5.00 ($0.10 prior to the share consolidation) and expire on 1 April 2023. On 26 May 2020, 560,000 share options (28,000,000 share options prior to the share consolidation) were granted to Mr Douglas Flynn as part of his appointment as Non-Executive Chairman. The grant consists of 3 tranches, tranche 1 and 2 each comprise of 160,000 options and tranche 3 comprises of 240,000 options. Tranche 1 and 2 vest on 26 May 2020 and tranche 3 vests when the Company's share price reaches or exceeds a 30 day VWAP of $6.00 (12 cents prior to the share consolidation). Tranche 1, 2 and 3 have an exercise price of $2.75, $3.50 and $1.50 respectively ($0.055, $0.070 and $0.030 respectively prior to the share consolidation). All tranches expire on 12 March 2027. On 4 March 2021, 140,000 share options were granted to Reena Minhas under the companies Long Term incentive Plan. The options vest on 1 October 2023, have a nil exercise price and expire on 1 March 2031. On 20 April 2021, 204,280 share options were granted to Employees under the companies Long Term Incentive Plan. The grant consists of 2 tranches, tranche 1 comprises 67,411 options and tranche 2 of 136,869 which vest on 1 March 2023 and 1 March 2024 respectively, based on certain performance hurdles. Both tranches have a nil exercise price and expire on 20 April 2031. 96 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 39. Share-based payments (continued) ● ● On 14 May 2021, 43,519 share options were granted to the CEO German Arango under the companies Long Term Incentive Plan. The grant consists of 2 tranches, tranche 1 comprises 14,361 options and tranche 2 of 29,158 which vest on 1 March 2023 and 1 March 2024 respectively, based on certain performance hurdles. Both tranches have a nil exercise price and expire on 14 May 2031. On 14 May 2021, 98,594 share options were granted to Non-Executive Directors under the companies Long Term Incentive Plan. The options vested immediately on the grant date with a nil exercise price and expire on 14 May 2025. 78,875 of the options have been exercised during 2021. Set out below are summaries of options granted: 2021 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 22/07/2017 28/08/2018 28/08/2018 28/08/2018 28/08/2018 28/08/2018 25/10/2018 10/12/2018 07/10/2019 31/10/2019 01/04/2020 01/04/2020 26/05/2020 26/05/2020 26/05/2020 04/03/2021 20/04/2021 14/05/2021 14/05/2021 31/03/2021 30/06/2021 28/08/2023 28/08/2023 30/06/2021 30/06/2021 25/10/2023 09/12/2023 31/03/2022 30/09/2022 01/04/2022 01/04/2023 12/03/2027 12/03/2027 12/03/2027 01/03/2031 20/04/2031 14/05/2031 14/05/2025 $1.25 $2.50 $1.88 $1.88 $1.88 $2.50 $3.50 $2.65 $2.70 $2.70 $3.25 $5.00 $2.75 $3.50 $1.50 $0.00 $0.00 $0.00 $0.00 700,000 1,000,001 1,000,001 1,000,001 250,000 600,000 80,000 40,000 800,000 100,000 30,000 30,000 160,000 160,000 240,000 - - - - 6,190,003 - - - - - - - - - - - - - - - 140,000 204,280 43,519 98,594 486,393 (700,000) - - - (50,000) - - - - - - - - - - - - - (78,875) (828,875) - (1,000,001) - - (200,000) (600,000) - - - - - - - - - - - - - (1,800,001) - - 1,000,001 1,000,001 - - 80,000 40,000 800,000 100,000 30,000 30,000 160,000 160,000 240,000 140,000 204,280 43,519 19,719 4,047,520 Weighted average exercise price $2.18 $0.00 $1.17 $2.43 $2.02 97 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 39. Share-based payments (continued) 2020 Grant date Expiry date Exercise price 22/07/2017 28/08/2018 28/08/2018 28/08/2018 28/08/2018 28/08/2018 25/10/2018 10/12/2018 07/10/2019 31/10/2019 01/04/2020 01/04/2020 26/05/2020 26/05/2020 26/05/2020 31/03/2021 30/06/2021 28/08/2023 28/08/2023 30/06/2021 30/06/2021 25/10/2023 09/12/2023 31/03/2022 30/09/2022 01/04/2022 01/04/2023 12/03/2027 12/03/2027 12/03/2027 $1.25 $2.50 $1.88 $1.88 $1.88 $2.50 $3.50 $2.65 $2.70 $2.70 $3.25 $5.00 $2.75 $3.50 $1.50 Balance at the start of the year 35,000,000 50,000,000 50,000,000 50,000,000 12,500,000 30,000,000 4,000,000 2,000,000 40,000,000 5,000,000 - - - - - 278,500,000 Granted Exercised Expired/ forfeited/ other* Balance at the end of the year - - - - - - - - - - 1,500,000 1,500,000 8,000,000 8,000,000 12,000,000 31,000,000 - - - - - - - - - - - - - - - - (34,300,000) (48,999,999) (48,999,999) (48,999,999) (12,250,000) (29,400,000) (3,920,000) (1,960,000) (39,200,000) (4,900,000) (1,470,000) (1,470,000) (7,840,000) (7,840,000) (11,760,000) (303,309,997) 700,000 1,000,001 1,000,001 1,000,001 250,000 600,000 80,000 40,000 800,000 100,000 30,000 30,000 160,000 160,000 240,000 6,190,003 Weighted average exercise price $2.14 $2.59 $0.00 $2.18 $2.18 * On 6 November 2020, the Company consolidated its options on a basis of 50 to 1. Set out below are the options exercisable at the end of the financial year: Grant date Expiry date 22/07/2017 28/08/2018 28/08/2018 28/08/2018 25/10/2018 10/12/2018 07/10/2019 31/10/2019 26/05/2020 26/05/2020 14/05/2021 31/03/2021 30/06/2021 30/06/2021 30/06/2021 25/10/2023 09/12/2023 31/03/2022 30/09/2022 12/03/2027 12/03/2027 14/05/2025 2021 Number 2020 Number - - - - 80,000 40,000 800,000 100,000 160,000 160,000 19,719 700,000 1,000,001 250,000 600,000 80,000 10,000 800,000 100,000 160,000 160,000 - 1,359,719 3,860,001 The weighted average share price during the financial year was $1.70 (2020: $1.60). The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.57 years (2020: 1.85 years). 98 IMEXHS Limited Notes to the financial statements 31 December 2021 Note 39. Share-based payments (continued) 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 04/03/2021 20/04/2021 20/04/2021 14/05/2021 14/05/2021 14/05/2021 01/03/2031 20/04/2031 20/04/2031 14/05/2031 14/05/2031 14/05/2025 Share price at grant date Exercise price Expected volatility Dividend yield Risk-free interest rate Fair value at grant date $2.03 $2.34 $2.34 $1.82 $1.82 $1.82 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% - - - - - - 0.10% 0.07% 0.10% 0.08% 0.11% 0.74% $2.030 $1.706 $1.804 $1.259 $1.369 $1.815 Note 40. Events after the reporting period The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on the Group, if any, has been reflected in its published results to date. Whilst it would appear that control measures and related government policies, including the roll out of the vaccine, have started to mitigate the risks caused by COVID-19, it is not possible at this time to state that the pandemic will not subsequently impact the Group's operations going forward. The Group now has experience in the swift implementation of business continuation processes should future lockdowns of the population occur, and these processes continue to evolve to minimise any operational disruption. Management continues to monitor the situation both locally and internationally. No other matter or circumstance has arisen since 31 December 2021 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. 99 IMEXHS Limited Directors' declaration 31 December 2021 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 2 to the financial statements; the attached financial statements and notes give a true and fair view of the Group's financial position as at 31 December 2021 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 ___________________________ Douglas Flynn Chairman 28 February 2022 100 Independent Auditor’s Report to the Members of IMEXHS Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of IMEXHS Limited (the Company and its subsidiaries (the Group)), which comprises the consolidated statement of financial position as at 31 December 2021, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the financial statements, 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 31 December 2021 and of its financial performance for the year then ended; 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 & 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. 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. Key audit matter How our audit addressed the key audit matter Revenue recognition Refer to note 5 in the financial report. Revenue recognition is considered a key audit matter as it is the most significant balance in the Group’s Statement of Profit or Loss and Other Comprehensive Income, and is the key driver to the Group’s performance. Furthermore, there are complexities and significant management judgements associated with interpreting the key contractual terms of revenue contracts entered into by the Group against the requirements of the AASB 15 ‘Revenue from Contracts with Customers’ (AASB 15). Our audit procedures in respect of this area included but were not limited to the following:  Assessing the adequacy of the disclosures in notes 2 and 5 of the financial report.  Instructing and reviewing the audit work papers of the component auditor in Columbia, which included the following specific procedures: - Testing a sample of contracts, considering their terms and conditions and identification of the performance obligations in those arrangements, and assessing their accounting treatment under AASB 15; - Testing a sample of revenue transactions to sales contracts signed by customers; - Performing cut-off testing for a sample of contracts to determine whether revenue had been recorded in the correct accounting period based on their contractual terms;  Testing material revenue contracts, including considering their terms and conditions, and identification of the performance obligations in those arrangements and assessing their accounting treatment under AASB 15. Capitalisation of internally generated software intangibles Our audit procedures in respect of this area included by were not limited to the following:  We obtained an understanding of the Group’s processes and controls, including the records and data relating to time incurred by core development staff, used to identify and recognise capitalised software development costs;  Instructing and reviewing the audit work papers of the component auditor in Columbia, which included the following specific procedures: - Tested a sample of capitalised development costs to ensure the activities recorded were consistent with the recognition requirements of AASB 138.  We obtained representations from management, including the Head of Development that the allocation of costs to individual projects are determined in accordance with AASB 138. Refer to note 15 in the financial report. The capitalisation of internally generated software intangibles is considered a key audit matter due to the significant judgement in the assessment of development project costs in accordance with the requirements of AASB 138 ‘Intangible Assets’ (AASB 138). The Group has a number of active internal software development programs which are at various stages of development. Given the unique nature of the software in development there is significant management judgement in the application of the recognition criteria under AASB 138. Business combinations and acquisition accounting Our audit procedures in respect of this area included by were not limited to the following:  We obtained management’s assessment of the identifiable assets and Key audit matter How our audit addressed the key audit matter Refer to note 33. liabilities acquired, including intangible assets and goodwill;  We assessed whether transactions costs were appropriately recognised in accordance with AASB 3;  We assessed whether deferred tax liabilities arising from the acquisition were appropriately recognised;  We obtained an understanding of the contractual conditions and calculations giving rise to the payment of contingent consideration in the business combination;  We assessed the reasonableness of management’s assumptions and its basis of calculating contingent consideration payable at the acquisition date;  We assessed whether management’s measurement of contingent consideration at reporting date was appropriate and recognised in accordance with AASB 3; and  We assessed the appropriateness of the disclosures in the financial statements. The Group’s recent acquisitions are required to be accounted for under AASB 3 - Business Combinations. There is a risk that the acquisitions of these entities have not been accounted for in accordance with AASB 3, which includes the determination of identifiable intangible assets. We consider the business combinations and accounting for acquisitions as a key audit matter due to:    the level of estimation involved in assessing the fair value of assets acquired in a business combination and the reliance on a management’s expert in determining this valuation; the risk that all assets and liabilities on acquisition are not identified and correctly recognised; and the level of estimation involved in the calculation of contingent consideration including the probabilities that targets will be achieved Other information The directors are responsible for the other information. The other information comprises the information in IMEXHS Limited’s annual report for the year ended 31 December 2021, 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 the other information we are required to report that fact. We have nothing to report in this regard. Directors’ responsibility for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Group’s ability 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 have no realistic alternative but to do so. Auditor’s responsibility 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 Australian Auditing and Assurance Standards Board website at: 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 pages 47 to 55 of the directors’ Report for the year ended 31 December 2021. In our opinion, the Remuneration Report of IMEXHS Limited for the year ended 31 December 2021, 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. Nexia Sydney Audit Pty Ltd Andrew Hoffmann Director Dated: 28 February 2022 Sydney IMEXHS Limited Shareholder information 31 December 2021 The shareholder information set out below was applicable as at 31 January 2022. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Holding less than a marketable parcel Equity security holders Ordinary shares Options over ordinary shares Number of holders % of total shares issued Number of holders % of total shares issued 320 379 146 241 43 0.44 3.25 3.39 22.25 70.67 1,129 100.00 166 0.09 2 16 7 21 8 54 - 0.04 0.98 1.32 18.92 78.74 100.00 - Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: National Nominees Limited Digital Imaging Solutions Sas Jaava Asesores Integrales Sas Volegna Holdings Pty Ltd (The Csa A/C) Irukandji Investments Pty Ltd (Longreach Family A/C) Rio Negro Pty Ltd (The Medallo A/C) Altor Capital Management P/L (Altor Alpha Fund) Hsbc Custody Nominees (Australia) Limited Dr & Lc Flynn Nominees Pty Limited (Flynn Super Fund A/C) Dixson Trust Pty Limited Sandhurst Trustees Ltd (Jmfg Consol A/C) Tisia Nominees Pty Ltd (Henderson Family A/C) Ilewise Pty Ltd (Lingard Family A/C) Optim8 Pty Ltd (The Gic Super Fund A/C) Ban Investment Group Pty Limited (Ban Investment A/C) Carmen Cecilia Arango Bonnet Virgina Marin Munoz Ilewise Pty Ltd (Lingard Super Fund A/C) Business Super Pty Ltd John Alexander Sanz Ramirez Unquoted equity securities Options over ordinary shares issued 105 Ordinary shares Number held % of total shares issued 3,211,611 3,150,503 2,048,758 1,240,190 1,187,836 888,836 876,937 829,951 681,660 511,266 469,496 395,500 333,333 300,000 292,011 290,857 290,857 280,000 270,110 253,625 9.77 9.59 6.23 3.77 3.61 2.70 2.67 2.53 2.07 1.56 1.43 1.20 1.01 0.91 0.89 0.89 0.89 0.85 0.82 0.77 17,803,337 54.16 Number on issue Number of holders 4,047,520 54 IMEXHS Limited Shareholder information 31 December 2021 The following person holds 20% or more of unquoted equity securities: Name Class Douglas Lingard and associate (Domatorisaro Pty Ltd) Option over ordinary shares Substantial holders Substantial holders in the Company are set out below: National Nominees Limited Digital Imaging Solutions Sas Milla Paula Inari Palacio* Jaava Asesores Integrales Sas Number held 840,000 Ordinary shares Number held 3,211,611 3,150,503 2,076,672 2,048,758 % of total shares issued 9.77 9.59 6.32 6.23 * Irukandji Investments Pty Ltd (Longreach Family A/C) 1,187,836 shares (3.61%), Rio Negro Pty Ltd (The Medallo A/C) 888,836 shares (2.70%). Voting rights The voting rights attached to ordinary shares are set out below: Ordinary shares 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. There are no other classes of equity securities. 106 Corporate directory -107- DIRECTORS Mr Douglas Flynn - Non-Executive Chairman Dr German Arango - Chief Executive Ofﬁcer Dr Douglas Lingard - Non-Executive Director Mr Carlos Palacio - Non-Executive Director Mr Damian Banks - Non-Executive Director COMPANY SECRETARY Ms Reena Minhas NOTICE OF ANNUAL GENERAL MEETING The details of the annual general meeting of IMEXHS Limited are: To be held at 10:00AM on Thursday, 19 May 2022 The location is yet to be determined. REGISTERED OFFICE 122 O’Riordan Street Mascot NSW 2020 PRINCIPAL PLACE OF BUSINESS 122 O’Riordan Street Mascot NSW 2020 SHARE REGISTER Automic Pty Ltd Level 5, 126 Phillip Street Sydney NSW 2000 Tel: 1300 288 664 Tel: +61 2 9698 5414 (international) Email: hello@automic.com.au AUDITOR Nexia Sydney Audit Pty Ltd Level 16, 1 Market Street Sydney NSW 2000 BANKERS National Australia Bank 2 Carrington Street Sydney NSW 2000 STOCK EXCHANGE LISTING IMEXHS Limited shares are listed on the Australian Securities Exchange (ASX code: IME) CORPORATE GOVERNANCE STATEMENT The directors and management are committed to conducting the business of IMEXHS Limited in an ethical manner and in accordance with the highest standards of corporate governance. IMEXHS Limited has adopted and has complied with the ASX Corporate Governance Principles and Recommendations (Fourth Edition) (‘Recommendations’) to the extent appropriate to the size and nature of its operations. The Corporate Governance Statement, which sets out the corporate governance practices that were in operation during the ﬁnancial year and identiﬁes and explains any Recommendations that have not been followed was approved by the Board of Directors at the same time as the Annual Report and can be found at www.imexhs.com 2021 | Annual Report | Corporate directoryA N N U A L R E P O R T | 2 0 2 1 Where innovation and technology meet medical experience imexhs.com

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