ImExHS Annual Report 2022

Plain-text annual report

ANNUAL REPORTLeading the way in life-changing diagnostics.2022IMEXHS was established in 2012 by a team of radiologists and software engineers with the goal of addressing the high cost of healthcare and the lack of access to advanced technology. Today, the company boasts a team of over 300 in two areas: Medical employees, operating Imaging Software and Radiology Services. Our is designed to be web-based and software artiﬁcial cloud-compatible, intelligence technologies, while maintaining a competitive pricing model. Our Radiology Services division is staffed by a team of more than 150 radiologists, who use our software exclusively. includes and Over the past decade, we have embarked on an extraordinary journey to expand healthcare access to even the most remote and underserved areas. Our journey began in 2012, when we founded our company in Bogota, Colombia, with a mission to provide medical technology solutions to healthcare professionals operating in challenging environments. In 2015, we expanded our services to countries throughout Latin America, including Mexico and Ecuador. Three years later, in 2018, we achieved a signiﬁcant milestone by listing on the Australian Stock Exchange (ASX: IME), broadening our global presence and reach. By 2019, we had secured FDA clearance in the US and expanded our offerings to new medical verticals and innovative AI tools. The following year, in 2020, we launched AQUILA in the Cloud, (now IMEXHS Cloud), a standardised radiology imaging solution that accelerated our global expansion even further. In 2021, we acquired RIMAB SAS to strengthen our radiology services business and gain access to a vast repository of data from our in-house radiologists. As we moved into 2022, we implemented a clear strategy focused on achieving proﬁtability, which involved reducing costs, retaining recurring revenue sources, and acquiring new customers. Our journey thus far has been both inspiring and rewarding, and we remain dedicated to driving progress and innovation in the healthcare industry. Make it faster 2022 | IMEXHS Limited | Annual Report | 02 Table of contents: Global footprint and key stats Financial highlights Chairman’s letter CEO’s report About us Updates on software and product development Our team & culture Financial report 04 07 09 12 15 21 24 28 Make it faster 2022 | IMEXHS Limited | Annual Report | 03 Make it differentGlobalfootprint & certiﬁcations2022 | IMEXHS Limited | Annual Report | 05Make it fasterCertiﬁcationsGlobal footprintAustraliaSpainThailandBoliviaChilePeruCosta RicaEl SalvadorGuatemalaDominicanRepublicColombiaEcuadorPanamaBrazilHondurasNicaraguaMexicoUnited States2022 | IMEXHS Limited | Annual Report | 06Make it faster10.7m# New studiesper annum8PetabytesStored692mImages (Stored- Anonymized)2.7mUsers Patient Portal3.5mPortalEntries35CurrentDistributors+3,000Specialist Using our application449Sites Runningour solutionKey Stats 2022Make it faster2022 | IMEXHS Limited | Annual Report | 07SalesRevenue$17.1mFY22 Financial HighlightsUp 28% yoyUp 34% on a constant currency basisDebt$1.1mvs $2.4m as at 31 December 2021Annualised Recurring Revenue (ARR) $19.7mDown 4%Up 8% in constant currency basisClosingCash$1.9mvs $4.2m at 31 December 2021Underlying EBITDA($0.1m)vs ($1.4m)in FY212022 | IMEXHS Limited | Annual Report | 08Make it faster25201510502018 2019 2020 2021 2022SpotNot Yet BillingConstant CurrencyNot Yet Billing$mARRRevenue $6.4m$10.7m--------$17.1m$9.2m$10.5m$19.7m$1.1m$0.7m($1.9m)($0.1m)Underlying EBITDACorporateTotal SoftwareRadiology ServicesSegment Financials Annualised Recurring RevenueMake it differentCharmain’s letterChairman’s Letter to Shareholders Dear Shareholders: As investors know, 2022 was a challenging year for markets. Midway through the year the world started to come out of its response to the Covid pandemic with countries moving at different speeds but with all central banks and government ﬁscal policy stimuluses still propping up economies and encouraging demand. Unsurprisingly, we saw accelerating inﬂation across the board touching every aspect of economies. Most countries went into and through 2022 with strong employment. Adding to the encouragement of interest rates at record lows and ﬁscal generosity we saw ongoing supply chain disruption as a hangover from Covid together with global tensions and Russia’s attack on Ukraine, all which have contributed to inﬂation returning to levels not seen for many years. The response in the 3rd and 4th quarters, as we know, has been increased interest rates around the world though not much in the way of ﬁscal tightening. The impact on asset values has been a re-rating across the board of public markets and of assets held in private equity and venture capital, Also, the number and value of transactions have sharply decreased. We saw pre-proﬁt tech stocks fall and capital availability become limited. Against the backdrop of dynamic market conditions and prudent decision-making, the Board and Management implemented a cost optimisation project to enhance proﬁtability while preserving robust growth prospects. The project, executed during Q2 and Q3 of 2022, targeted operating and software development costs, with a total reduction in Opex and Capex expenses amounting to approximately $250k per month. As we monitor performance in the upcoming year, we will assess opportunities for additional investment in product or market expansion." The company also raised capital of $4m in August and Board members strongly supported that raise as did shareholders. Raising modest amounts of capital is not particularly efﬁcient but under the circumstances necessary. Board members ceased to be paid cash fees from 1 April 2022 and are paid in shares. Directors participated strongly in the capital raise so it was prudent to advise the market at the time of the existence of two active contract negotiations. However, as events would have it these took much longer to close than expected with one Enterprise Software contract for radiology and cardiology at Mexico’s IMMS hospitals not closing until December 2022 and another yet to be executed. The cost out project has been accompanied by decisions to pursue those product and market development projects that had a near term path to proﬁt. The changes allow us to continue to strongly support customer service and to grow markets where we were conﬁdent, we could do so proﬁtably. That has involved some hard decisions. The cost of direct sales teams in new markets is substantial. We had made progress in the USA, but we could not continue to support the cost of a team there. Consequently, we have, for the time being, withdrawn from that market as a direct sales operation though we will of course continue to support our current customers in the USA. So, what does our strategy look like going forward? Our strength is in Latin America, and we continue to see good growth in the key markets. Our sales of IMEXHS Cloud have mostly been through our partner program and mostly outside of Colombia. We do have direct sales and support in Mexico alongside Partners and our growth there accelerated in 2022. We have entered the Brazilian market with Partners and are making good progress across Central and South America. We will sell into other markets both opportunistically and strategically as appropriate. All our software sales in Latam outside of Colombia are priced in USD or in a relevant strong currency such as AUD or Euro. This policy has been in place for some time, however, the revenue now priced in these currencies is growing and becoming of substance. In 2022, software revenue of 31% was priced in hard currencies which is translated into COP or local currency at the spot rate. Our customers love our software - it meets the highest functional needs, easy to use, lowers their operating cost, fast to install and integrates with clinic and hospital systems. You can see the acceptance and use of our software through the growth metrics of number of studies, volume of data storage and the number of radiologists and other clinicians using our tools. Similarly, the growth in studies reported through RIMAB shows the strength of our offering. On the software development front, we have oriented our program to prioritize customer-centric features and projects that have a clear path to proﬁtability in the near term. As a result, some of our potential ‘game changers’ such as the Universal Platform 'all ologies' imaging project, have experienced some delays but remain viable and promising. Like all cloud-based technology enterprises, our company incurs a signiﬁcant and increasing expenses related to data storage. In Q1 of 2023, we are conducting trials for a new PACS architecture, aimed at achieving a minimum 50% reduction in storage costs. Make it faster 2022 | IMEXHS Limited | Annual Report | 10 In the fourth quarter we launched a software based DICOM router which increase the speed of installation and the ease of integration of Modality worklists. Several new releases were carried out across the year that had the effect of improving the usability, functionality, and efﬁciency of our software. There has been considerable progress in the automation of several functions in helpdesk and in software implementation this has achieved both a cost reduction and an improvement in customer satisfaction scores. Since our acquisition of RIMAB in October 2021, we have successfully integrated their services into our operations and eliminated any potential conﬂicts of interest. Although this has simpliﬁed our business management, we still face challenges in separating our accounting processes into distinct business units for software and radiology services. RIMAB operates as a full-service radiology services provider to major hospitals, clinics, and medical insurance companies in Colombia. In addition, it offers Tele-radiology reporting services to providers in Spain and Mexico. What sets RIMAB apart is the depth of academic specialisation within their team of outstanding radiologists, who use IMEXHS Enterprise exclusively and gain a unique productivity advantage. The acquisition has provided an outstanding showcase for our software, and RIMAB will continue to expand in Colombia while exploring new opportunities in nearby markets. We are conﬁdent that our combined expertise and resources will enable us to deliver exceptional radiology services and technology solutions to even more customers in the years to come. The fourth quarter of 2022 and the early weeks of 2023 saw sales in line with plan of software and new contracts for radiology services which will provide us with a strong start to 2023. During the year, the management team continued to evolve with some good hires. Management has addressed many important matters during the year including key areas of price structure, client commitment, implementation process, pace and discipline, collections, development program and its pathway to proﬁtability, better deﬁned go-to-market and target markets and operating cost. As we move through 2023 and can demonstrate proﬁtable growth we will, where appropriate, invest in further growth opportunities. I want to thank the directors and management for their effort and support during 2022 and we enter the new year with conﬁdence in the direction the company is pursuing. Doug Flynn Chariman Make it faster 2022 | IMEXHS Limited | Annual Report | 11 Make it differentCEO’S reportMake it faster2022 | IMEXHS Limited | Annual Report | 13We founded IMEXHS in 2012 to improve the quality of life of patients and doctors by developing cutting edge technology to address the real needs of physicians, hospitals, clinics and diagnostic centres. Developing an innovative cloud-based medical Imaging Software as a service, has allowed us to become a market leader in Latin America. Guided by our philosophy, ‘Where innovation and technology meet medical experience,’ we are achieving great things for our Company, our customers, and our future. In October 2021 IMEXHS acquired RIMAB SAS, a Colombia-based radiology services provider. The acquisition strengthened IMEXHS’s customer offering with imaging and teleradiology services. 2022 was an important year for IMEXHS. During the year, the Company has taken a deﬁnitive pathway to achieve proﬁtability based on a cost reduction plan, maintaining existing recurrent revenues, and winning new customers. The improvements in the onboarding process plus the optimization of the post-sales support have been key objectives for the Company, including the automation of the most time-consuming activities. The standardized product IMEXHS Cloud, keeps contributing to the geographical expansion and footprint. The radiology services business conﬁrms the attractiveness of the outsourcing model after the renewal of three of the largest contracts, one with Colsubsidio and two with Colombia’s National Police Force and building the foundations for a proﬁtable stage for the company. The Company has demonstrated the scalability of the business across different geographies with an attractive product and disruptive business model and is focused on generating positive numbers in 2023.In August 2022 the company announced that it had received binding commitments for $2m via a placement and was undertaking a non-renounceable pro-rata entitlement offer to raise a further $2m. The Capital raising was completed by the end of September and was strongly supported by shareholders and Directors. The net proceeds from the placement have been used to pay down existing high yield debt, fund working capital and for general corporate purposes and are expected to fund the Company through to run rate cashﬂow positive. We are pleased to report strong underlying growth in all our key metrics in FY22. Revenue for the twelve months ended 31 December 2022 was $17.1m, up 28% and up 34% on a constant currency basis versus FY21. Annual Recurring Revenue (ARR) of $19.7m was up 8% on a constant currency basis, with new customer contracts and increased volumes offsetting a customer the company chose to exit on 1 July 2022. ARR of $19.7m consisted of $10.5m from Radiology and $9.2m from Software. We had forecast that the company would be underlying EBITDA positive for the year however we were slightly behind this with an underlying EBITDA loss of ($0.1m), though this was a $1.3m improvement on prior year. The Company had also forecast to reach monthly run-rate underlying cash break-even within the last quarter and whilst that was achieved in the month of October there was $0.4m collection slippage through to early January which would have made the operating cashﬂows positive in the last quarter.Despite these narrow misses, the company has shown steps towards positive cash ﬂow and proﬁtability in particular the reduction in operating costs and in capital expenditure through the cost-out program undertaken during the year.The pipeline of volume increase from current customers remains strong. There is a high priority to implement ‘contracts not yet billing’ and have them contribute as soon as possible. Negotiations of material contracts is taking longer than expected, but have continued to progress in the ﬁrst quarter of FY23. Our high touch and customized enterprise solution, IMEXHS Enterprise, is the main source of our existing software 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. The new IMSS ~$440k ARR high margin deal, is the ﬁrst material contract with public hospitals outside Colombia and conﬁrms the competitiveness of our enterprise platform for big-complex centres. Also, the $1.1m ARR Colombia Police Department contract won through a public tender process in December 2021 and renewed in October 2022, reﬂects a reactivation of purchase activities among larger public sector customers and shows that the enhancement of our platform is already generating good traction. Our disruptive standardized offering, IMEXHS Cloud, continues to generate strong interest, addressing the underserviced need for small to mid-size enterprises around the world. There were 169 active IMEXHS Cloud contracts across LATAM, US and Australia as of 31 December 2022. We took the strategic decision in 2022 to focus on the near-term opportunities both in geographic markets and product development projects. Of necessity the high cost of operating directly in the USA could not be maintained. The opportunity 2022 | IMEXHS Limited | Annual Report | 14Make it fasterDr German ArangoCEO and Co-Founderremains to address future geographical expansion with innovation and product development. The company will consider such wider ambitions in the future. In 2022 the key priority was the optimization of the implementation process for IMEXHS Cloud, which resulted in substantial improvements in all deployment related KPI’s and contract to revenue times. RIMAB was fully incorporated into the IMEXHS processes and structure during 2022, eliminating any duplication and redundancy resulting in cost optimization across the Group. RIMAB continues to be a clear leader in the Colombian Radiology services market, now enhanced by the availability of IMEXHS technology and mature processes. The cessation of the services provided to a substantial client in June due to bad payment behaviour, led a decrease in our ARR, which has been partially backﬁlled.The renewal of our biggest contract with Colsubsidio and of the two contracts with HOCEN is a clear demonstration of the quality of our services and of the level of satisfaction of our customers, with the addition of improved pricing for all of them, the year ahead looks much more promising for us. The opportunities for RIMAB with the IMEXHS contribution are exciting and will contribute to the company's growth in the near term. Furthermore, IMEXHS is being fed by the information from the Radiologic practice available in the 35 sites where RIMAB is providing services, improving the user experience and usability, and growing our AI data library, now with more than 2 billion images stored.Our partner’s program has evolved into a more mature structure with optimized processes and higher satisfaction from the distributors network. We are conﬁdent there is a big window of opportunity in the Latin-American region mostly through the growing footprint, reference sites and reputation of our products.We created a knowledge database to include tutorials, videos, papers, and any type of information to support the proper understanding and training of the partners network, reducing signiﬁcantly the IME intervention in the deployment process and post-sales tickets requirements.The program supports the existing product line and expands our global reach, now with 35 distributors in 15 countries. Additionally, the new channel and distribution strategy has been well validated with the IMEXHS partner’s network, able to deliver most of the IMEXHS Cloud deals (+80%) across 15 countries. Recertiﬁcation in ISO 13485 and FDA clearance were achieved, as well as some other country’s regulatory registrations.Our CFO Reena Minhas has transformed with more structure and a new team the ﬁnancial department, with signiﬁcant improvements in KPIs of billing, collections and reporting activities, contributing to improved operations and anticipating the future growth and scalation of the business.The software development roadmap has been focused on product improvements to address concrete short to mid-term opportunities, while protecting the long term single medical imaging platform view. The focusing strategy is helping us to optimize resources for revenue generating priorities and has been supported by the implementation of more structured processes and methodologies. This has resulted in signiﬁcant improvement in quality and agility of the software development activities. The strategy and the structured implementation have been enhanced by the knowledge and experience of the company’s CTO, Orlando Joven, who is bringing new and disruptive methodologies while, taking a key leadership role in the operations of IME.In closing, 2022 was a year of strategic refocus to achieve a path to proﬁt whilst maintaining existing recurrent revenues and winning new customers. Looking to 2023, the proﬁtability pathway has been taken and remains the priority for the year ahead. This will be supported by protecting the existing recuring revenues, the acceleration of onboarding process to generate new revenues from already signed deals, the sales strategy of bringing new high margin software deals across the LATAM region, plus the growth traction from the radiology services front and the tight control on the cost structure.We will keep a dynamic permanent evaluation of the strategy, to reactivate the investment in sales and marketing in US and Australia, as soon as our ﬁnancial position allow us to do so. We are also focused on going into a next level of quality of the radiology services, improving onboarding of new customers and post sales service satisfaction levels and keep developing under the previously mentioned strategic premises, with agility and high-quality standards products for the sort-mid-term and for the long-term view of a single medical imaging platform.I would like to extend my sincere thanks to the directors for their guidance, as well as the management team in Colombia and Sydney, and the whole IMEXHS team for their efforts.Make it differentAbout us2022 | IMEXHS Limited | Annual Report | 16Make it fasterValue propositionCommunication / development pillarsIMEXHS: Our innovative cloud-based software solutions are intuitive, comprehensive, and accessible to facilities of all sizes around the world.IMEXHS Cloud:offers cutting-edge imaging solutions designed for healthcare centres that require secure, efﬁcient, and cost-effective processing of more than 500 studies per month. Our ready-to-use platform ensures the secure storage, smooth visualisation, and streamlined optimisation of all imaging processes. With advanced functionality, our imaging solutions provide the highest level of data security and conﬁdentiality, while enabling healthcare professionals to deliver better patient outcomes at the best possible value.IMEXHS Enterprise:provides advanced imaging solutions that are designed to be easily integrated into the infrastructure of hospitals and healthcare institutions. Our solutions are highly ﬂexible, customisable, and modular, making them ideal for healthcare organisations of all sizes and types. Our technology can process over 10,000 images per month, streamlining complex processes and increasing efﬁciency. With our focus on ﬂexibility and scalability, we can tailor our solution to meet the unique needs of any healthcare organisation, no matter the complexity of their workﬂow.Make it fasterBased on our principle of optimization, we constantly seek ways to improve the quality of life for patients and physicians worldwide by simplifying processes and increasing efﬁciency.Make it EasyWe prioritize an intuitive approach to everything we do, with the goal of reducing complexity and promoting the well-being of patients, physicians, partners, clients, and employees.Make it for allOur purpose is to democratize access to high-tech image management platforms for centers of all sizes, while creating and sharing efﬁcient business models that beneﬁt society.Make it DifferentAs agile innovators, we actively seek growth opportunities and new developments that allow us to fulﬁll our purpose in unique and impactful ways.2022 | IMEXHS Limited | Annual Report | 17Make it fasterIMEXHS now has 169 active IMEXHS Cloud customers across 18 countries which represents a 52% increase compared to 2021.Our OfferingIMEXHS Cloud (previously AQUILA in the Cloud)IMEXHS Cloud is the Company’s standardised radiology offering launched in May 2020. It provides small and medium-sized centres 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 centre from the scheduling to the billing with high-end tools for medical visualization and reporting. It is a subscription-based model with additional charges for more advanced tools such as Artiﬁcial Intelligence and Advanced Visualisation.Charges are based on volumes of radiology studies.IMEXHS Cloud historically targeted small and medium sized customers however during the second half of 2022, IMEXHS Cloud gained signiﬁcant interest among larger medical institutions who have found enormous value in the Company’s comprehensive, affordable and accessible standardized radiology offering. Four notable, multi-year IMEXHS contracts were signed in the ﬁnal two quarters of the year.ALULA – Pathology Is a cloud, web-based system that supports the entire pathology workﬂow, from sample intake to ﬁnal report generation. ALULA offers a digital view of pathology images, with tools for zone selection, measurement, and in-depth exploration. ALULA has been built to work on multiple platforms and browsers.AQUILA – Radiology is a comprehensive cloud, web-based system that centralises and streamlines the management of radiology services. It offers tools for scheduling appointments, monitoring productivity, and delivering results to patients and referring physicians. The platform is designed for multiple users with features such as work lists, advanced visualisation, and voice recognition. The goal of AQUILA is to improve patient care.IMEXHS Enterprise (previously AQUILA Enterprise) IMEXHS Enterprise is a highly adaptable imaging platform designed to meet the speciﬁc needs of large and comprehensive clinics and hospitals. It has been engineered to support multi-site hospitals, providing advanced visualization and post-processing tools, business intelligence, and practice management features. Our solution offers unmatched ﬂexibility and scalability, making it the ideal choice for healthcare institutions that require custom integrations and workﬂows to optimize their processes Unlike IMEXHS Cloud, IMEXHS Enterprise tend to be customized, long-term agreements – with an average duration of 5-years – and pricing is determined by volume-based tiers. By the end of 2022, IMEXHS had 117 active IMEXHS Enterprise customers across eight countries. The number of IMEXHS Enterprise studies increased by 33% between 2021 and 2022. In December, the Company entered into a contract with its local partner in Mexico and Mexico’s Social Security Institute, the IMSS, for enterprise software. This is a three year contract and is valued years and is valued between US$690,000 and US$900,000. The contract is expected to bring in an Annual Recurring Revenue (ARR) of approximately US$230,000 to US$300,000. Make it faster 2022 | IMEXHS Limited | Annual Report | 18 Make it faster2022 | IMEXHS Limited | Annual Report | 19IMEXHS Radiology Services (RIMAB)OUR PATIENT CENTRIC OFFERING INCLUDES TWOMAIN BUSINESS MODELS:Outsourcing of imaging facilities.This accounts for approximately 95% of the total revenue generated by this business unit. The current revenue of the business is primarily derived from a business model that provides hospitals with a combination of medical services and technology solutions.The shortage of radiologists is a global phenomenon that has put pressure on hospitals to fulﬁll the increasing demand for diagnostic imaging, including new clinical applications. This gap in medical practice presents an opportunity that RIMAB has seized with its attractive business model. The company has assembled a team of over 150 highly skilled radiologists, many with overseas fellowships, and cutting-edge technology that not only addresses the gap in hospitals but also exceeds their expectations and optimizes cost structures. The radiologist team includes renowned ﬁgures such as Dr. Jorge Carrillo, who authored 16 chapters in the US-published "Diagnostic Imaging Chest" from Amirsys, a global reference book in this ﬁeld, and Dr. Sandra Nino, who holds two fellowship degrees from McGill University in Abdominal radiology and MSK and manages the radiologists' team. With easy access to IME technology, RIMAB is in a privileged position to compete in the outsourcing market. The company is currently the outsourcing market leader in Colombia and plans to expand its model to other regions in the mid-term.TeleradiologyINTERVENTIONALNEUROABDOMENCHESTMSKBREASTPEDIATRIC0102OUR VALUE PROPOSITION IS DRIVEN MAINLY BY OUR HIGHQUALITY OFFERING:Extensive experience in the production and reporting of large volumes of medical images.High level of specialization of the radiologist team and reporting database based on medicalimaging subspecialities:Highly skilled radiologist team with strong academic credentials, visibility and recognition. RIMAB extended its Teleradiology business model to deliver remote medical imaging reporting services to third parties in countries with higher pricing and stronger currencies such as Spain. With our highly qualiﬁed radiologist team, we are able toprovide a superior level of accuracy and quality in our Teleradiology services, which has resulted in this growing business unitpresently contributing 5% of our total revenues. We remain committed to expanding our Teleradiology services to other regionswhile continuing to maintain an unwavering dedication to providing high acedemic quality imaging reporting to our clients.2022 | IMEXHS Limited | Annual Report | 20Make it fasterPatient Portal Our web-based platform, IMEXHS Portal, provides efﬁcient and centralized access to diagnostic imaging results for radiologists, referring physicians, specialists, and patients. The multi-user system is available 24/7 and has seen great success with over 290,000 monthly portal entries, totalling 3.5m in 2022 (Increase of 1m vs last year), and providing access for over 2.7m individuals (Increase of 1.3m vs last year).Web Voice Recognition Our advanced voice recognition tool, powered by Nuance, provides a streamlined and efﬁcient solution for radiologists to dictate patient diagnosis reports. The tool also offers the ability to preload templates for common diagnoses encountered in daily work, allowing radiologists to quickly and easily complete their reports using speciﬁc voice commands.Advances Visualization and AIOur advanced visualization tool add-ons, including options for neurological images, abdomen, and chest, vascular, and MSK protocols, allow users to render complex imaging protocols from MR and CT acquisitions into images, providing accurate information for complex diseases that is often only available at high-end imaging centres. These tools enable users 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. Our solutions are designed to help centers and clinics maximize quality and accuracy, minimize costs, and provide scalability for future growth.OUR PRODUCT EXTENSIONSPARTNERS PROGRAMOur business partner model has undergone updates this year in order to enhance its strength and to promote the sales of our products through our network of distributors. The new regulations that have been implemented include:A fully virtual onboarding process for distributors, including training in marketing, sales, implementation, installation, support, quality, self-management tools, and customer service.Adoption of a virtual tool to evaluate knowledge transfer and certify our partners' staff in the provision of IMEXHS services.Update of Implementation policy.Updates on software and product developmentMake it different2022 | IMEXHS Limited | Annual Report | 22Make it fasterMajor improvements for world-class products. All products with improved localization (EN, PG, ES), security (major technology backend update, cookie handling, and Auth0 authentication), and analytics NPS - CSAT (Hotjar – capturing information from +60,000 sessions per month), Microsoft Clarity & Google Analytics. 45% of the installed base updated so far with these improvements.Better quality controlwith no additional costs. Quality assurance (QA) was enhanced both for test coverage and test automation for all products. 2022 ended with 100% of test coverage for +7,500 test use cases and 62.7% of total tests automated (from 32% coverage and 0% automated at the beginning of the year). New self-service managementtools for IMEXHS partners. Minimum viable prototype (MVP) of IMEXHS Cloud -the partner management dashboard- developed. It enables our partner network user management capabilities and online monitoring and reporting of usage (eg. studies per modality, date, etc), with real-time RIS and PACS data, through automatic registration of AQUILA clients.Exponential sales growth enabled through increased operative efﬁciency and capacity. With a combination of automation, standardization, DevOps, and virtual training (webinars), the average installation time for IMEXHS Cloud projects has been reduced by 70% approx. These improvements will also have a positive impact on Enterprise projects.Revolutionary concept all-in-one“ologies” workﬂow engine. MVP of Enterprise Imaging ready with new worklists frontend design, newer technology, basic workﬂow creator, and Single-Sign-On, offering a completely modular, customizable, and modern experience for any ology with image-based workﬂows.Improved customerservice with lower costs. In 2022 a 50% reduction in helpdesk tickets from customers was achieved. A knowledge base with +800 articles was created, +34 training webinars (for partners and customers) recorded and +300 attendants registered.IMEXHS Products andProcesses ISO and FDA certiﬁed. ISO 13485, ISO 9001, and FDA certiﬁcations were obtained/renewed, where IMEXHS has demonstrated its ability to provide medical software that consistently meets customer and applicable regulatory requirements, opening the doors for faster regulatory approval and commercialization on new geographies.New features that improveradiology workﬂow efﬁciency on IMEXHS Enterprise & IMEXHS Cloud:Critical cases module to establish timely notiﬁcation of radiological ﬁndings that imply situations of risk for the patient favouring urgent treatment. End user license agreement implementation and registration of payment methods for integration with Synapse (Australia), sharing radiologists’ assigned studies in the reading worklist, and new clinical search module implemented. Implementation of functionality for the use of multiple screens with the viewer and option implemented to edit details of the procedure from the technologist's listing, and double conﬁrmation is disabled when validating a study, to optimize the radiologist's time. Refactored text editor to improve the experience with Nuance RV and integration with Invox Medical RV (Brazilian market). 2022 | IMEXHS Limited | Annual Report | 23Make it fasterNew features to improve radiologist’s performance and accuracy on Viewer: Oblique MPR tool allows to easily visualize anatomic structures that are not possible using the traditional axial, sagittal, or coronal views. Allowing diagnostic accuracy to be positively impacted. Walkthrough section so users can explore guided tours to understand the product's functionalities, providing a quick start guide through different viewer tools, improving user experience. Custom toolbar, so the radiologist can customize their workspace, and tool to mark key images, so it’s possible to associate pathologies to speciﬁc images. Visualization of multiplanar series, which consists of the presentation for series with multiplanar images. Visual integration between Viewer and Braviz (tractography case). Radiologists can process diffusion brain imaging to visualize a 3D representation of brain white matter. Useful for evaluating the progress of neurodegenerative pathologies, and brain surgeries, as well as any other condition that requires comparing 2 stages of white matter.Enhanced experience onthe Patient Portal: Better design of the patient portal to make it more user-friendly and better looking on mobile devices. Consult-studies integration adjustment, for third-party applications, now there is the possibility of sharing images and reports through a shared link with valid-time established in the administrator form. Self-service feature to change the client's logo from the administrator form. New products to democratize access: Two new products on IMEXHS portfolio, ﬁrst DICOM Gateway and, second, Modality Worklist Gateway. Both enable our customers to integrate with IMEXHS solutions at lower cost, with no infrastructure required, and in 90% less time. Renewed storage architecture toincrease performance and offercost ﬂexibility: New multi-cloud PACS architecture that will offer a double-digit reduction in cloud storage costs, improved performance (speed and ﬂexibility), and age-based policies for storage of studies and images depending on modality and use case. Our team & cultureMake it differentMake it faster2022 | IMEXHS Limited | Annual Report | 25BOARD DIRECTORSDoug FlynnNon-ExecutiveChairmanMr Flynn is an experienced international business leader with a track record of successfully running companies in Europe and Australia. He has experience in various industries, including manufacturing and mining services, business services, media, advertising and marketing services, and human services. Throughout his career, Mr Flynn has held executive and non-executive roles in several companies, including ICI, Rentokil Initial, NewsCorp, Aegis Group, West Australian Newspapers, Seven West Media, APN Outdoor, NextDC, and Konekt Limited. In the UK, Mr Flynn held leadership positions at News International, Aegis Group, and Rentokil Initial. Currently, he is the chair of NextDC Ltd.Dr. Arango has over 17 years of experience as a practicing radiologist in Colombia. He completed a fellowship in Diagnostic Neuroradiology at McGill University in Montreal, Canada, and holds a degree in Medicine and Surgery from Universidad El Bosque. He also has a residency in Radiology and Diagnostic Imaging from Universidad de La Sabana, and a visiting fellowship in Neuroradiology from the Medical College of Georgia. Dr. Arango is a well-known ﬁgure in the academic community and has served as a professor of Neuroradiology for radiology, neurology, neurosurgery, and maxillofacial surgery residency programs at several universities in Colombia.Dr. Germán ArangoCEO & co-founderCarlos PalacioNon-Executive DirectorMr Lingard is a qualiﬁed radiologist and nuclear medicine doctor with a wealth of experience, having held leadership positions in Auckland, Washington DC and Sydney. He co-founded Pittwater Radiology Partners in Australia, which later merged and listed on the ASX as Medical Imaging Australasia Ltd. Mr Lingard holds a medical degree from the University of Otago and is a member of the Radiologists Association of Royal Australia & New Zealand, a Senior Associate of FinSIA, and a member of the Australian Institute and a member of the Australian Institute of Directors.Doug LingardNon-Executive DirectorMr. Banks is an experienced business leader with a proven track record in the development and expansion of successful businesses in the healthcare, employment, and banking industries. He has a focus on ﬁnancial management, technology, and people, as well as a strong history of developing customer-focused cultures. Mr. Banks has also completed several M&A transactions. His most recent executive position was as the Managing Director and CEO of Konekt Ltd, a technology-focused healthcare and employment company. He led Konekt from its listing on the ASX in 2012 until its successful sale to private equity in December 2019. Prior to this, Mr. Banks held several leadership roles with Westpac Banking Corporation. Currently, Mr. Banks serves as a director for Boom Logistics Ltd and ICSGlobal Limited.Damian BanksNon-Executive DirectorMr Palacio is a seasoned entrepreneur with a proven track record in international IT, telecommunications, and strategic management. He earned a bachelor's degree in electrical engineering with a specialization in Telecommunications from the University of Technology Sydney and holds master's degrees in management and Business Administra-tion from Macquarie University. Mr. Palacio founded and served as the CEO of Crosspoint Telecommunications, a company that provided managed IT services globally, with operations in Australia and SE Asia. He led the successful sale of the company in 2022.Make it faster2022 | IMEXHS Limited | Annual Report | 26With over 3 years of experience driving revenue growth and expanding the Company’s market share, Benjamin has been instrumental in growing and strengthening the Company’s partners network across the 15 countries with a strong emphasis on Mexico and the country’s outside of the Latin American region. Thanks to his comprehensive understanding of the business, he plays an important role in connecting the daily operations in Latin America with the Company's activities in Australia by facilitating communication. With his experience in business development, sales, and international expansion, Benjamin is committed to driving growth and success for our company.Benjamin BrinquisHead of GrowthWith more than 21 years of experience as a practicing radiologist in Colombia and Spain, Dr Marin has a wealth of expertise in the ﬁeld. He has served as chief radiologist at the CETIR teleradiology group, the Dos de Mayo Hospital, and the San Rafael Hospital. Dr Marin holds a degree in medicine and surgery from the Universidad Pontiﬁcia Bolivariana and has specialized in radiology and diagnostic imaging from the National University. He also holds a European Diploma in Neuroradiology from ESNR. In addition to his clinical work, Dr Marin is a member of the IMAGINE research and development group for advanced imaging diagnosis at the University of Los Andes and serves as an assistant professor of diagnostic neuroradiology for residency programs in neurology, radiology, and neurosurgery at the University FUCS.Dr Jorge MarinChief Medical Ofﬁcer & Co-founderWith an IMBA and over 18 years of management experience, Mr Joven is a seasoned professional in the technology, FMCG, and ﬁnancial services industries. He has extensive experience leading regional teams of over 100 people in digital transformation, innovation, technology, digital product and software development, business management, sales, and ﬁnance. In his roles as CIO, CTO, and CDO Ofﬁcer, Mr Joven has been responsible for deﬁning digital strategies, developing new business models, and creating digital products and services. He has also had P&L responsibility in multinational companies.Orlando JovenChief Operations OfﬁcerWith a background in business strategy development and sales for technology and software solutions in the healthcare industry, Juan Sebastian Bonnet is a proﬁcient professional with a MBA and over 10 years of experience at IMEXHS. A skilled problem solver and team builder, Bonnet was a key member of the team that built the sales department from scratch, developing the value proposition, product portfolio, sales process, and commercial deck/pitch. He has a proven track record of successfully closing ambitious negotiations with the healthcare industry.Juan Sebastian BonnetHead of SalesWith over 10 years of experience as a CFO and Company Secretary for ASX-listed companies, Ms Minhas is skilled in providing ﬁnancial leadership and strategic direction to drive business growth. She has previously held these roles at Konekt Limited, ILH Group Limited, and Energy One Limited, and has played a key role in acquisitions, debt and equity capital formation, and building strong ﬁnance functions. Ms Minhas was also instrumental in the sale of Konekt Limited to Quadrant Private Equity's APM.Reena MinhasChief Financial OfﬁcerDr. Germán ArangoCEO & co-founderSENIOR MANAGEMENT TEAM2022 | IMEXHS Limited | Annual Report | 27Case Studies: IMSSIntroduction:IMEXHS Limited, a health technology company, proudly announces winning a new three-year software contract with the Mexican Institute of Social Security (IMSS). This contract will contribute between US$230,000 and US$300,000 in annual recurring revenues (ARR).Challenge:IMSS was seeking to modernize and improve its imaging system in its two specialized cardiology hospitals and tertiary general hospitals. The IMSS caters for over 80m people and over 420,000 daily medical consultations, it was essential for IMSS to ﬁnd a solution that offered operational efﬁciencies and better patient care.Results:IMEXHS's selection as a provider of enterprise imaging solutions for one of the world's largest social security programs is validation of its success in Mexico. With 36 instances of IMEXHS Cloud installed or ordered, the company has proven to be a reliable and efﬁcient provider in the country. The implementation of AQUILA and ALULA will provide IMSS not only with intuitive and user-friendly technology but also signiﬁcant operational efﬁciencies, cost savings, and better patient care.Solution:IMEXHS, through its local partner Ingeniería para el Cuidado de la Salud, S.A., was selected to implement its enterprise imaging solutions in both IMSS hospitals. The company will provide its AQUILA radiology platform and ALULA pathology platform. The implementation of these systems is scheduled for the ﬁrst quarter of 2023.IMEXHS Provides Enterprise Imaging Solutions to the Mexican Institute of Social SecurityConclusion:This success case demonstrates IMEXHS's ability to meet the needs and challenges of a constantly growing public health system. By providing quality enterprise imaging solutions, the company continues to strengthen its position as a market leader and provide exceptional medical care to the population.Financial reportMake it different2022 | IMEXHS Limited | Annual Report | 29Make it fasterTable of contentsFinancial Report304546Directors' reportAuditor's independence declarationStatement of proﬁt or loss and othercomprehensive incomeStatement of ﬁnancial positionStatement of changes in equityStatement of cash ﬂowsNotes to the ﬁnancial statementsDirectors' declarationIndependent auditor's report to themembers of IMEXHS LimitedShareholder informationCorporate directory4748495089909496IMEXHS Limited Directors' report 31 December 2022 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 2022. 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 cloud based imaging systems that include information systems for Radiology, Pathology and other ‘ologies’. The main component of this is a modern and robust Picture Archiving and Communications System (PACS), with a very efficient web viewer. The information systems combine a workflow management system (RIS) with a patient data and image distribution system (Patient Portal), 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. ● 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 2022 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 3 August 2022, the Group announced a fully underwritten capital raising of $4 million, comprising of a Placement of $2 million and a 1 for 8 non-renounceable Entitlement Offer of $2 million. The Capital raising was completed by the end of September and was strongly supported by shareholders and Directors. The net proceeds from the placement have been used to pay down existing high yield debt, fund working capital and for general corporate purposes and are expected to fund the Company through to run rate cashflow positive. There were no other significant changes in the state of affairs of the Group during the financial year. Matters subsequent to the end of the financial year No matter or circumstance has arisen since 31 December 2022 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. Risk and governance The Group identified its key risk areas as: External technology risk IMEXHS uses off the shelf software (in addition to its own proprietary software) to enable the functionality of its product offerings. This external software may be subject to issues outside of IMEXHS’s control such as third party interfaces, version conflict, obsolescence or other related issues. These external issues may affect the ability of IMEXHS to effectively upgrade and maintain its software. Any licensing or commercial conditions imposed by third party software providers may be unsustainable or impracticable for IMEXHS, which may result in a need for IMEXHS to obtain alternative solutions or develop these in house. There is no guarantee that IMEXHS would be able to do so or do so in a undisruptive manner, if required. 30 IMEXHS Limited Directors' report 31 December 2022 Ability to establish and maintain strategic relationships To be successful, IMEXHS must continue to maintain existing strategic relationships and establish additional strategic relationships with leaders in a number of healthcare and health information industry segments. There is no guarantee that IMEXHS will be able to maintain or establish these relationships. Reliance on third party providers IMEXHS’ products are built to work with various computer operating systems, internet platforms, computing networks and hardware devices. Any changes to external platforms, networks, systems, devices or hardware may give preference to competing products or adversely impact the functionality of IMEXHS's products, which may have a detrimental impact on IMEXHS's financial performance. Sales cycles Variations in timing of sales can cause significant fluctuations in IMEXHS’s sales and financial performance. The duration of the sales cycle and implementation schedule for IMEXHS’s products and services depend on a number of factors including nature and size of the potential clients and the extent of the commitment being made by the potential client, which are difficult to predict. Sales and marketing efforts with respect to hospitals, health organisations and other potential clients will generally a involve lengthy sales cycle due to these organisations’ size and complex decision making processes. Ability to manage growth effectively IMEXHS will need to continue to expand its operations if it successfully achieves market acceptance of its products and services in new markets. IMEXHS’s existing systems, procedures and resources may not be adequate to support such expansion. IMEXHS may experience difficulties in managing any future growth, or may not be able to expand and upgrade its systems and infrastructure to accommodate such growth. Hosting provider, data loss, theft or corruption IMEXHS stores data in its own systems and networks and with a variety of third party service providers and hosting facilities located in the cloud. These facilities may be vulnerable to damage or outages, which if prolonged, may have a material adverse impact on IMEXHS’s products, business operations and reputation. Further, exploitation or hacking of any of these systems or networks could lead to corruption, theft or loss of data which could have a material adverse effect on the IMEXHS’s business, financial condition, and results. Although IMEXHS maintains comprehensive measures to prevent, detect, address and mitigate cybersecurity threats, a cybersecurity incident could potentially result in the misappropriation, destruction, of critical data or proprietary information. The potential consequences of a material cybersecurity incident include reputational damage, compromised employee, customer, or third party information, litigation with third parties, regulatory actions, and increased cybersecurity protection and remediation costs. Foreign exchange risks IMEXHS’s operations are based in Colombia and the majority of IMEXHS’s current revenue is in Colombian Pesos and other Latin American currencies while its financial results are reported in Australian dollars. As a result, IMEXHS’s financial results may be affected by any currency fluctuations and volatility. In addition, the proceeds of the Placement and Entitlement Offer will be received primarily in Australian dollars while the majority of the Company’s expenditure is in Colombian Pesos, so the Company may be exposed to exchange rate fluctuations on the conversion. Regulatory risks As with any technology offering, IMEXHS’s products and services may be exposed to the regulatory environment of different jurisdictions, which may be complex and ever changing. IMEXHS may also be subject to a number of domestic and international government regulations regarding the use of software in medical diagnostics and the use and storage of medical data. There is a risk that IMEXHS’s products and services will not always comply with all applicable laws and regulations. Doing business outside of Australia IMEXHS currently has employees in Colombia and Mexico and distributors engaged in Mexico and other Latin American countries. IMEXHS may wish to engage further employees and distributors outside of Australia as it grows its existing business and expands to new markets. This exposes IMEXHS to a range of multi-jurisdictional risks including modern slavery labour practices, environmental matters, difficulty in enforcing contracts, changes to the legal and regulatory environment and other issues. Economic conditions General economic conditions, introduction of tax reform, movements in interest and inflation rates and currency exchange rates generally may have an adverse effect on IMEXHS’s activities, as well as on its ability to fund those activities. Deterioration in general economic conditions, including factors that impact negatively on IMEXHS’s customers ability to finance may adversely affect IMEXHS’s profitability. 31 IMEXHS Limited Directors' report 31 December 2022 Market conditions and price volatility Market conditions may affect the value of IMEXHS’s shares regardless of its operating performance. Share market conditions are affected by many factors such as, general economic outlook, interest rates, inflation rates, exchange rates, changes in investor sentiment toward particular market sectors. Environmental regulation The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. Information on directors Name: Title: Qualifications: Experience and expertise: 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. Other current directorships: NextDC Limited Former directorships (last 3 years): Konekt Limited Special responsibilities: Member of the Remuneration and Nomination Committee and Audit and Risk Committee 1,497,714 ordinary shares 600,087 options over ordinary shares Interests in shares: Interests in options: 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: 4,842,869 ordinary shares Interests in shares: 728,402 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 1,548,659 ordinary shares 60,044 options over ordinary shares Interests in shares: Interests in options: 32 IMEXHS Limited Directors' report 31 December 2022 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. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Chairman of the Remuneration and Nomination Committee and member of the Audit and Risk Committee 2,787,280 ordinary shares 442,829 options over ordinary shares Interests in shares: Interests in options: Name: Title: Qualifications: Experience and expertise: Interests in shares: Interests in options: 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 Chairman of the Audit and Risk Committee and member of the Remuneration and Nomination Committee 1,210,607 ordinary shares 20,044 options over ordinary shares Other current directorships: Former directorships (last 3 years): Konekt Limited and RPM Automotive Group Limited Special responsibilities: '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 2022, 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 Mr Douglas Flynn Dr German Arango Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks 12 12 11 12 12 12 12 12 12 12 33 2 2 2 2 2 2 2 2 2 2 6 6 6 6 6 6 6 6 6 6 IMEXHS Limited Directors' report 31 December 2022 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. 2022 was the second 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 2022 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. 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. While we need to attract and retain talent we are determined to ensure rewards remain aligned to performance and shareholders’ interests. During the year the Company undertook a cost out program which saw a number of people leave the Company. In the Board’s view the process was well communicated and handled and the redirection towards more immediately profitable projects was fundamental for the Company. Further the board elected to take future directors fees in the form of newly issued shares to align directors’ interests with shareholders and to contribute to cash preservation. This measure was approved by shareholders at the Annual General Meeting held on 19 May 2022, with the arrangement taking effect on and from 1 April 2022 up to 31 December 2022 and the ability to extend this arrangement for a further period to 31 December 2023. The Board has determined in January 2023 that this arrangement will continue for that further period. To help preserve cash and align directors' interests with shareholders, non-executive directors receive nil priced options as part of their remuneration, which was also approved by shareholders. Both executive and non-executive plans were subject to expert advice. 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. Yours sincerely _______________________ 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 34 IMEXHS Limited Directors' report 31 December 2022 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 19 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. 35 IMEXHS Limited Directors' report 31 December 2022 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 2023 will help establish these relationships. Use of remuneration consultants During the financial year ended 31 December 2022, the Group did not engage remuneration consultants to review its existing remuneration policies. Voting and comments made at the Company's 19 May 2022 Annual General Meeting ('AGM') At the 2022 AGM, 99.47% of the votes received supported the adoption of the remuneration report for the year ended 31 December 2021. 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 36 IMEXHS Limited Directors' report 31 December 2022 Short-term benefits Post-employment benefits Long-term benefits Share- based payments 2022 Non-Executive Directors: Mr Douglas Flynn Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks Cash salary and fees $ 18,000 9,000 9,000 9,000 Executive Directors: Dr German Arango 299,189 Other Key Management Personnel: Ms Reena Minhas 250,228 594,417 Cash bonus $ Non- monetary $ Super- annuation $ Termination benefits $ Long service leave $ Equity- settled $ Total $ - - - - - - - - - - - 1,800 900 900 900 - - - - 15,249 16,308 27,355 - - - - - 87,841 43,921 43,921 43,921 107,641 53,821 53,821 53,821 35,390 393,491 4,343 19,592 30,648 51,456 - 27,355 2,581 2,581 120,330 408,130 375,324 1,070,725 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 - 27,101 484 484 443,784 101,881 478,640 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. 37 IMEXHS Limited Directors' report 31 December 2022 The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Non-Executive Directors: Mr Douglas Flynn Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks Executive Directors: Dr German Arango Other Key Management Personnel: Ms Reena Minhas Fixed remuneration 2021 2022 At risk - STI At risk - LTI 2022 2021 2022 2021 100% 100% 100% 100% 46% 100% 100% 100% 91% 96% 71% 66% - - - - - - - - - - - - - - - 54% - - - 9% 4% 11% 29% 23% 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. Ms Reena Minhas Chief Financial Officer and Company Secretary 1 October 2020 No fixed term Remuneration comprises a base salary of $276,500 per annum including statutory superannuation. 6 months’ written notice. Termination by Company: Other provisions: Name: Title: Agreement commencement: Term of agreement: Remuneration package: 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: 38 IMEXHS Limited Directors' report 31 December 2022 Key management personnel have no entitlement to termination payments in the event of removal for misconduct. Share-based compensation Issue of shares Shares were issued to non-executive directors in lieu of directors' fees during the year ended 31 December 2022 as approved at the Annual General Meeting held on 19 May 2022 are set out below: Name Non-Executive Directors: Mr Douglas Flynn Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks Date Shares Issue price $ Various dates* Various dates* Various dates* Various dates* 69,370 34,685 34,685 34,685 $0.8589 $0.8589 $0.8589 $0.8589 59,580 29,790 29,790 29,790 * The shares issued to directors during the year were at various dates, being 25 July 2012, 4 October 2012 and 21 February 2023. The shares issued on 21 February 2023 relates to shares issued in lieu of directors' fees for Q4FY2022. 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 40,087 20,044 20,044 20,044 24,220 49,173 28,512 57,888 $2.75 $3.50 $1.50 $2.65 $2.65 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $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% $0.705 100% $0.705 100% $0.705 100% $0.705 100% $0.455 $0.501 $0.423 $0.470 - - - - 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) Mr Douglas Flynn(g) Mr Damian Banks(g) Dr Douglas Lingard(g) Mr Carlos Palacio(g) Dr German Arango(h) Dr German Arango(h) Ms Reena Minhas(i) Ms Reena Minhas(i) 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 19/05/2022 19/05/2022 19/05/2022 19/05/2022 19/05/2022 19/05/2022 18/07/2022 18/07/2022 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 19/05/2022 19/05/2022 19/05/2022 19/05/2022 01/03/2024 01/03/2025 01/03/2024 01/03/2025 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 19/05/2026 19/05/2026 19/05/2026 19/05/2026 19/05/2032 19/05/2032 18/07/2032 18/07/2032 39 IMEXHS Limited Directors' report 31 December 2022 (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 vested 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 vested on 10 December 2021. All 40,000 options have an exercise price of $2.65 ($0.053 prior to the share consolidation) and expire on 9 December 2023. (c) On 1 March 2021, 140,000 share options were granted to Reena Minhas under the Company's 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 Company's 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 Company's 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 May 2031. (f) On 14 May 2021, 98,594 share options were granted to Non-Executive Directors under the Company's 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 were exercised during 2021. 19,719 options remain on issue. (g) On 19 May 2022, 100,219 share options were granted to Non-Executive Directors under the Company's Long Term Incentive Plan. The options vested immediately on the grant date with a nil exercise price and expire on 19 May 2026. (h) On 19 May 2022, 73,393 share options were granted to the CEO German Arango under the Company's Long Term Incentive Plan. The grant consists of 2 tranches, tranche 1 comprises 24,220 options and tranche 2 of 49,173. Both tranches have a nil exercise price and expire on 19 May 2032. (i) On 18 July 2022, 86,400 share options were granted to Reena Minhas under the Company's Long Term Incentive Plan. The grant consists of 2 tranches, tranche 1 comprises 28,512 options and tranche 2 of 57,888. Both tranches have a nil exercise price and expire on 18 July 2032. Options granted carry no dividend or voting rights. Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel as part of compensation during the year ended 31 December 2022 are set out below: Name Non-Executive Directors: Mr Douglas Flynn Dr Douglas Lingard Mr Carlos Palacio Mr Damian Banks Executive Director: Dr German Arango Value of options granted during the year $ Value of options exercised during the year $ Value of options lapsed during the year $ Remuneration consisting of options for the year % 14,131 28,261 14,131 14,131 35,656 - - - - - - (1,080,000) - - 26% 26% 26% 26% - 9% Additional information The earnings of the Group for the five years to 31 December 2022 are summarised below: Sales revenue Loss before income tax 17,117,357 13,372,709 10,913,968 7,727,260 (2,946,233) (4,556,356) (3,528,088) (6,042,631) (4,795,347) 5,779,851 2022 $ 2021 $ 2020 $ 2019 $ 2018 $ 40 IMEXHS Limited Directors' report 31 December 2022 The factors that are considered to affect total shareholders return ('TSR') are summarised below: 2022 2021 2020 2019 2018 Share price at financial year end ($) Basic loss per share (cents per share) 0.49 (8.54) 1.03 (15.22) 1.71 (14.62) 2.04 (30.85) 1.39 (0.007) 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 730,000 4,426,201 770,732 2,076,672 500,000 46,212 - 23,106 23,106 23,106 34,000 - 67,320 - - 8,503,605 115,530 101,320 - - - - - - 687,502 416,668 687,501 687,502 687,501 1,497,714 4,842,869 1,548,659 2,787,280 1,210,607 3,166,674 11,887,129 * Other relates to participation in 2022 Capital Raising. 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 560,000 655,009 840,000 422,785 - 174,264 2,652,058 Granted Purchased 40,087 73,393 20,044 20,044 20,044 86,400 260,012 Expired/ forfeited/ other Balance at the end of the year - - - - - - - - - (800,000) - - - (800,000) 600,087 728,402 60,044 442,829 20,044 260,664 2,112,070 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 Mr Damian Banks Ms Reena Minhas Vested and Unvested and exercisable unexercisable 360,087 - 20,044 39,763 20,044 - 439,938 240,000 728,402 40,000 403,066 - 260,664 1,672,132 Balance at the end of the year 600,087 728,402 60,044 442,829 20,044 260,664 2,112,070 41 IMEXHS Limited Directors' report 31 December 2022 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 Income amounts 2022 2021 $ Balance outstanding 2021 2022 $ $ Dr German Arango - RIMAB SAS(a) Mr Carlos Palacio - CrossPoint Telecommunications Pty Ltd Sales revenue - 4,564,966 Sales revenue 1,338 9,502 1,338 4,574,468 - 239 239 The Group acquired services from entities that are controlled by members of the Group’s KMP: KMP and related entity Nature of transaction Expense amounts 2021 $ 2022 $ Balance outstanding 2021 2022 $ $ Interpretation services Dr German Arango - RIMAB SAS(a) Dr German Arango - RIMAB SAS(a) Dr German Arango - German Arango(b) Mr Carlos Palacio - CrossPoint Telecommunications Pty Ltd(c) Office space and IT Services PaaS Equipment Financing Supplies and license - - - 1,178,084 672 74,651 14,942 16,785 14,942 1,270,192 - - - 20 20 - 806 806 - - - 10 10 (a) During the previous 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) Managing Director, 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. 42 IMEXHS Limited Directors' report 31 December 2022 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 26 May 2020 26 May 2020 26 May 2020 4 March 2021 20 April 2021 14 May 2021 14 May 2021 19 May 2022 19 May 2022 18 July 2022 Expiry date 28 August 2023 28 August 2023 25 October 2023 9 December 2023 12 March 2027 12 March 2027 12 March 2027 1 March 2031 20 April 2031 14 May 2031 14 May 2025 19 May 2026 19 May 2032 18 July 2032 Exercise price Number under option $1.8750 $1.8750 $3.5000 $2.6500 $2.7500 $3.5000 $1.5000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 1,000,001 1,000,001 80,000 40,000 160,000 160,000 240,000 140,000 115,348 43,519 19,719 100,219 73,393 380,844 3,553,044 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 There were no ordinary shares of IMEXHS Limited issued on the exercise of options during the year ended 31 December 2022 and up to the date of this report. Indemnity and insurance of officers The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Indemnity and insurance of auditor The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. 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. 43 IMEXHS Limited Directors' report 31 December 2022 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 2023 44 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 2022, 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 2023 IMEXHS Limited Statement of profit or loss and other comprehensive income For the year ended 31 December 2022 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 Write-down of inventories Net reversal of 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 2022 $ 2021 $ 5 17,117,357 13,372,709 127,505 46,659 52,627 18,848 (570,591) (1,527,386) (359,943) (9,199,938) (5,886,136) (285,880) (1,759,329) - (6,320) 54,380 (129,799) (124,120) (442,692) (1,042,024) (1,114,813) (492,248) (6,645,493) (6,236,956) (569,585) (1,236,638) (19,776) (15,698) 137,199 (341,964) (111,458) (311,086) (2,946,233) (4,556,356) (92,420) (143,416) (3,038,653) (4,699,772) 6 7 7,25 7 8 (1,710,936) (1,056,502) (1,710,936) (1,056,502) (4,749,589) (5,756,274) Cents Cents 38 38 (8.54) (8.54) (15.22) (15.22) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 46 IMEXHS Limited Statement of financial position As at 31 December 2022 Assets Current assets Cash and cash equivalents Trade and other receivables Contract assets Inventories Prepayments 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 2022 $ 2021 $ 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 8 1,911,910 5,369,451 850,780 96,825 282,445 8,511,411 4,186,428 5,283,576 869,932 84,432 258,117 10,682,485 628,325 3,700,422 29,162 8,118,327 12,476,236 1,396,237 4,467,909 30,158 8,431,889 14,326,193 20,987,647 25,008,678 2,475,980 14,276 545,161 29,161 23,974 1,366,855 23,924 4,479,331 3,018,485 32,812 1,082,241 30,157 207,589 1,685,408 292,454 6,349,146 - - 542,785 64,935 607,720 580,214 68,911 1,285,200 72,448 2,006,773 5,087,051 8,355,919 15,900,596 16,652,759 24 25 38,476,999 676,077 (23,252,480) 34,765,453 2,101,133 (20,213,827) 15,900,596 16,652,759 The above statement of financial position should be read in conjunction with the accompanying notes 47 IMEXHS Limited Statement of changes in equity For the year ended 31 December 2022 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 24) Shares to be issued as part consideration for subsidiary (note 24 and note 34) 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 Consolidated Issued capital $ Reserves $ Accumulated losses $ Total equity $ Balance at 1 January 2022 34,765,453 2,101,133 (20,213,827) 16,652,759 Loss after income tax expense for the year Other comprehensive loss for the year, net of tax Total comprehensive loss for the year - - - - (1,710,936) (3,038,653) - (3,038,653) (1,710,936) (1,710,936) (3,038,653) (4,749,589) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 24) Share-based payments (note 39) 3,711,546 - - 285,880 - - 3,711,546 285,880 Balance at 31 December 2022 38,476,999 676,077 (23,252,480) 15,900,596 The above statement of changes in equity should be read in conjunction with the accompanying notes 48 IMEXHS Limited Statement of cash flows For the year ended 31 December 2022 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 Write-down of inventories Equity settled transactions (directors' fees) Interest received Interest and other finance costs Change in operating assets and liabilities: Decrease in trade and other receivables Decrease/(increase) in inventories Decrease in trade and other payables Increase/(decrease) in contract liabilities Increase/(decrease) 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 borrowings Repayment of borrowings Share issue transaction costs Repayment of lease liabilities Net cash (used in)/from financing activities Net decrease 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 2022 $ 2021 $ (2,946,233) (4,556,356) 1,759,328 - 285,880 (273,001) 98,398 6,320 99,226 (46,659) 442,692 1,244,574 19,776 569,585 115,015 7,591 15,698 - (18,848) 311,086 (574,049) (2,291,879) 599,077 (18,713) (1,122,716) (84,203) (318,553) (1,519,157) 46,659 (442,692) (283,548) 1,330,823 289,538 (2,333,556) 48,175 301,222 (2,655,677) 18,848 (311,086) (20,126) (2,198,738) (2,968,041) (268,530) (647,956) (1,383,496) 77,538 (952,728) (1,009,816) (1,554,887) 131,194 (2,222,444) (3,386,237) 3,975,109 - (1,279,495) (362,789) (81,097) 968,750 506,808 (1,526,275) (25,584) (85,477) 2,251,728 (161,778) (2,169,454) 4,186,428 (105,064) (6,516,056) 10,796,484 (94,000) 34 14 16 24 Cash and cash equivalents at the end of the financial year 9 1,911,910 4,186,428 The above statement of cash flows should be read in conjunction with the accompanying notes 49 IMEXHS Limited Notes to the financial statements 31 December 2022 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 27 February 2023. 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 2022 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 2022, the Group generated a consolidated loss of $3,038,653 (2021: loss of $4,699,772) and incurred operating cash outflows of $2,198,738 (2021: outflows of $2,968,041). As at 31 December 2022, the Group had cash and cash equivalents of $1,911,910 (2021: $4,186,428), a surplus of net current assets of $4,032,080 (2021: $4,333,339) and surplus of net assets of $15,900,596 (2021: $16,652,759). 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. On 3 August 2022, the Group announced a fully underwritten capital raising of $4.0 million, comprising of a Placement of $2 million and a 1 for 8 non-renounceable Entitlement Offer to raise approximately a further $2 million. The Capital raising was completed by the end of September and was strongly supported by shareholders and Directors. The net proceeds from the placement have been used to pay down existing high yield debt, fund working capital and for general corporate purposes and are expected to fund the Company through to run rate cashflow positive. The Directors believe that the Group has sufficient funding to meet its minimum expenditure commitments and support its planned level of expenditures and therefore it is appropriate to prepare the financial statements on the going concern basis. 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'). 50 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 2. Significant accounting policies (continued) 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. 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 33. 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 2022 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. 51 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 2. Significant accounting policies (continued) The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. 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. 52 IMEXHS Limited Notes to the financial statements 31 December 2022 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. Contract assets Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes. 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. 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. 53 IMEXHS Limited Notes to the financial statements 31 December 2022 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. 54 IMEXHS Limited Notes to the financial statements 31 December 2022 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 15 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. 55 IMEXHS Limited Notes to the financial statements 31 December 2022 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. 56 IMEXHS Limited Notes to the financial statements 31 December 2022 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. 57 IMEXHS Limited Notes to the financial statements 31 December 2022 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 additional ordinary shares that would have been outstanding assuming conversion of all 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 conform with current year presentation. This has not had any impact on the financial position of the Group at 31 December 2021 or the results for the year then ended. 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 2022. 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. 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 10, is calculated based on the information available at the time of preparation. The actual credit losses in future years may be higher or lower. 58 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 3. Critical accounting judgements, estimates and assumptions (continued) 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. 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 shares 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. Note 4. Operating segments Identification of reportable operating segments Since the acquisition of RIMAB in October 2021, the Group is organised into two operating segments based on differences in products and services provided: Software and Radiology Services. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. Other segments represent the Group's corporate headquarters. The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on a monthly basis. 59 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 4. Operating segments (continued) Types of products and services The principal products and services of each of these operating segments are as follows: Software Radiology The software business is focussed 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. Intersegment transactions There were no intersegment transactions made during the year ended 31 December 2022 (31 December 2021: $nil). Intersegment receivables, payables and loans Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation. Major customers During the year ended 31 December 2022, one customer individually contributed to approximately 38% of the total external revenue generated by the Group (2021: 41%). Operating segment information Consolidated - 2022 Revenue Sales to external customers Total revenue EBITDA Depreciation and amortisation Finance costs Interest revenue Profit/(loss) before income tax expense Income tax expense Loss after income tax expense Software $ Radiology $ Corporate $ Total $ 6,384,289 6,384,289 10,733,068 10,733,068 - - 17,117,357 17,117,357 749,323 (1,453,058) (140,774) 33,834 (810,675) 670,093 (223,708) (301,912) 10,948 155,421 (2,210,287) (82,563) (6) 1,877 (2,290,979) (790,871) (1,759,329) (442,692) 46,659 (2,946,233) (92,420) (3,038,653) All assets and liabilities, including taxes are not allocated to the operating segments as the CODM reviews and manages on an overall group basis. Following the acquisition of RIMAB SAS on 1 October 2021, the Group has changed its structure of its internal organisation in a manner that has caused its reportable segments to change. The information for the 2021 period cannot be restated as the information is not available and has not been reported to the Board during the 2022 period and has been reported as a single segment only. 60 IMEXHS Limited Notes to the financial statements 31 December 2022 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. Research and development and support expenses R&D and Support Expenses Note 7. 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 2022 $ 2021 $ 135,491 16,522,566 58,641 400,659 918,262 12,001,432 138,586 314,429 17,117,357 13,372,709 Consolidated 2022 $ 2021 $ 343,624 16,773,733 1,130,111 12,242,598 17,117,357 13,372,709 Consolidated 2022 $ 2021 $ 1,527,386 1,114,813 Consolidated 2022 $ 2021 $ 438,047 4,645 307,667 3,419 442,692 311,086 61 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 7. Expenses (continued) Administration expenses Employee and Director benefits expense(a) Professional and consultancy fees(a) Taxes Office expenses Insurance Advertising and marketing Corporate expenses(a) Maintenance Travel expenses Other 3,434,735 415,651 289,430 456,899 176,684 145,427 254,922 6,522 120,498 585,368 3,357,211 568,413 247,759 323,456 117,140 135,536 867,704 5,782 92,719 521,236 5,886,136 6,236,956 (a) The above expenses included total acquisition costs of $701,698 for the financial year ended 31 December 2021. Leases Short-term lease payments Employee and Director benefits expense Included in administration expenses: Employee benefits expense excluding superannuation and share-based payments(b) 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 Share-based payments expense on issue of Director options Share-based payments expense on issue of Employee options Total employee and Director benefits expense 211,106 58,656 3,190,345 244,390 3,434,735 3,120,288 236,923 3,357,211 5,483,200 443,303 5,926,503 4,561,023 383,333 4,944,356 106,045 179,835 285,880 376,759 192,826 569,585 9,647,118 8,871,152 (b) Administrative expenses for the year ended 31 December 2022 include $148,950 worth of shares issued to the directors in lieu of directors' fees. 62 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 8. Income tax Income tax expense Current tax Aggregate income tax expense Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense Tax at the statutory tax rate of 25% (2021: 26%) 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 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 Foreign exchange differences Closing balance 63 Consolidated 2022 $ 2021 $ 92,420 143,416 92,420 143,416 (2,946,233) (4,556,356) (736,558) (1,184,653) (7,091) 1,759 101,888 (265,172) 32,945 9,638 142,738 25,962 784,758 43,446 3,913 67,226 (338,289) 26,077 6,835 467,044 20,427 1,014,623 90,867 1,553 126,649 16,767 92,420 143,416 Consolidated 2022 $ 2021 $ 24,833 205,968 (141,033) (24,833) 27,706 229,797 (157,349) (27,706) 64,935 72,448 72,448 (7,513) 81,277 (8,829) 64,935 72,448 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 9. Current assets - cash and cash equivalents Cash at bank Note 10. Current assets - trade and other receivables Trade receivables Less: Allowance for expected credit losses Other receivables Indirect taxes receivable Consolidated 2022 $ 2021 $ 1,911,910 4,186,428 Consolidated 2022 $ 2021 $ 4,489,132 (94,119) 4,395,013 3,936,103 (214,497) 3,721,606 3,516 970,922 6,941 1,555,029 5,369,451 5,283,576 Allowance for expected credit losses The Group has recognised a net gain of $54,380 (2021:$137,199) in profit or loss in respect of the expected credit losses for the year ended 31 December 2022. 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 Allowance for expected credit losses 2022 % 2021 % 2022 $ 2021 $ 2022 $ 2021 $ - 1.69% 1.53% 7.65% 100.00% - 0.13% 14.60% 100.00% 100.00% 2,387,215 1,781,348 518,639 405,202 25,053 3,461,270 1,621,728 43,310 33,856 172,176 - 30,107 7,951 31,008 25,053 - 2,141 6,324 33,856 172,176 5,117,457 5,332,340 94,119 214,497 Opening balance Additional provisions recognised Additions through business combinations Amounts recovered during the year Foreign exchange differences Closing balance 64 Consolidated 2022 $ 2021 $ 214,497 205,111 - (303,509) (21,980) 866,708 198,576 9,484 (815,331) (44,940) 94,119 214,497 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 11. Current assets - contract assets Contract assets Reconciliation Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below: Opening balance Additions Additions through business combinations (note 34) Transfer to trade receivables Exchange differences Disposals Closing balance Note 12. Current assets - inventories Merchandise not manufactured by the Group - at cost Materials and spare parts - at cost Less: Provision for impairment Consolidated 2022 $ 2021 $ 850,780 869,932 869,932 850,781 - (779,725) 9,822 (100,030) 1,803,378 869,932 1,068,879 (2,596,637) (275,620) - 850,780 869,932 Consolidated 2022 $ 2021 $ 103,054 42,209 (48,438) 87,148 44,275 (46,991) 96,825 84,432 The cost of inventories recognised as an expense during the year ended 31 December 2022 was $570,591 (2021: $1,042,024). The cost of inventories recognised as an expense includes $6,320 (2021: $15,698) in respect of write downs of inventory to net realisable value. Note 13. Non-current assets - trade receivables Trade receivables Consolidated 2022 $ 2021 $ 628,325 1,396,237 Refer to note 10 for an analysis of ageing of the receivables and allowance for expected credit losses. 65 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 14. 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 2022 $ 2021 $ 172,780 (56,150) 116,630 29,276 (13,241) 16,035 1,658 (277) 1,381 96,090 (3,200) 92,890 18,540 (5,161) 13,379 1,850 (126) 1,724 1,505,988 (1,011,534) 494,454 1,964,331 (1,010,610) 953,721 4,431,710 (1,359,788) 3,071,922 4,185,890 (779,695) 3,406,195 3,700,422 4,467,909 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 2021 Additions Additions through business combinations (note 34) Disposals Exchange differences Transfers in/(out) Depreciation expense Balance at 31 December 2021 Additions Disposals Exchange differences Transfers in/(out) Depreciation expense Leasehold improvements $ Furniture and fittings $ Motor vehicles $ Computer equipment $ Medical equipment $ Total $ 31,981 - 70,172 - (8,250) - (1,013) 92,890 88,032 - (8,487) - (55,805) 9,195 491 10,223 - (1,059) (1,927) (3,544) 13,379 13,087 - (2,140) 1,027 (9,318) - 1,850 - - - - (126) 1,724 - - (159) - (184) 661,912 202,708 2,643,205 804,767 3,346,293 1,009,816 28,368 (1,102) (72,178) 503,133 (369,120) 953,721 66,887 (75,532) (63,119) - (387,503) 1,352,222 (149,868) (380,642) (501,206) (362,283) 3,406,195 479,950 (2,006) (311,898) (1,027) (499,292) 1,460,985 (150,970) (462,129) - (736,086) 4,467,909 647,956 (77,538) (385,803) - (952,102) Balance at 31 December 2022 116,630 16,035 1,381 494,454 3,071,922 3,700,422 66 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 15. Non-current assets - right-of-use assets Land and buildings - right-of-use Less: Accumulated depreciation Consolidated 2022 $ 2021 $ 80,516 (51,354) 140,266 (110,108) 29,162 30,158 The Group leases land and buildings for its offices under agreements of between 1 to 3 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 2021 Additions Exchange differences Depreciation expense Balance at 31 December 2021 Additions Exchange differences Depreciation expense Balance at 31 December 2022 For other lease related disclosures refer to: - - - - note 7 for details of interest on lease liabilities and other lease expenses; consolidated statement of financial position for lease liabilities at 31 December 2022; note 27 for maturity analysis of lease liabilities; and consolidated statement of cash flow for repayment of lease liabilities. Land and buildings $ 102,046 14,165 (7,742) (78,311) 30,158 80,101 (7,596) (73,501) 29,162 67 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 16. Non-current assets - intangibles Goodwill - at cost Internally developed software - at cost Less: Accumulated amortisation Customer contracts - at cost Less: Accumulated amortisation Copyright - at cost Less: Accumulated amortisation Licenses - at cost Less: Accumulated amortisation Consolidated 2022 $ 2021 $ 4,856,982 5,418,893 2,969,140 (602,704) 2,366,436 2,082,518 (269,984) 1,812,534 848,508 (70,709) 777,799 19,394 (19,388) 6 946,674 - 946,674 23,745 (21,033) 2,712 463,258 (346,154) 117,104 998,942 (747,866) 251,076 8,118,327 8,431,889 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 2021 Additions Additions through business combinations (note 34) Exchange differences Amortisation expense Balance at 31 December 2021 Additions Exchange differences Amortisation expense Internally developed software $ Customer contracts $ Goodwill $ - - 805,629 1,417,704 - - 5,814,604 (395,711) - 5,418,893 - (561,911) - - (140,815) (269,984) 1,015,804 (69,130) - 1,812,534 1,268,424 (297,997) (416,525) 946,674 - (89,211) (79,664) Copyright $ Licences $ Total $ 6,077 - - (530) (2,835) 2,712 - 12 (2,718) 301,550 137,183 1,113,256 1,554,887 - (30,299) (157,358) 251,076 115,072 (14,226) (234,818) 6,830,408 (636,485) (430,177) 8,431,889 1,383,496 (963,333) (733,725) Balance at 31 December 2022 4,856,982 2,366,436 777,799 6 117,104 8,118,327 Impairment testing As described in note 4, the Group has two main CGUs being the radiology and software CGUs. 68 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 16. Non-current assets - intangibles (continued) Goodwill and customer contracts acquired through business combinations have been allocated to the radiology cash generating unit ('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. Internally developed software has been allocated to the software CGU. The software business is focussed 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. Both CGUs are tested annually for impairment or at the end of each reporting date where an indicator of impairment exists. At 31 December 2022, the recoverable amount of the CGUs have been assessed. An impairment exists when the carrying value of the CGUS exceeds their recoverable amount. Recoverable amounts The recoverable amounts of the radiology and software CGUs have 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 the CGU is most sensitive. The following key assumptions were used in the VIU model to test each CGU at 31 December 2022: 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. 22.57% Sales volume growth rate Based on a five year cash flow projection taking into account historical growth rates and product lifecycle. 20% Terminal value growth rate Based on long-term economic growth rates. Nil The recoverable amounts of the radiology and software CGUs including unallocated corporate assets were in excess of their carrying amounts 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 17. Current liabilities - trade and other payables Consolidated 2022 $ 2021 $ 2,026,604 395,478 53,898 2,444,153 458,286 116,046 2,475,980 3,018,485 Trade payables Withholding tax payable Other payables Refer to note 27 for further information on financial instruments. 69 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 18. 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 34) Transfer to revenue - included in the opening balance Exchange differences Closing balance Representing: Contract liabilities - current Contract liabilities - non-current (note 22) Consolidated 2022 $ 2021 $ 14,276 32,812 101,723 90,236 - (174,438) (3,245) 53,548 72,139 74,264 (87,903) (10,325) 14,276 101,723 14,276 - 32,812 68,911 14,276 101,723 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 $14,276 as at 31 December 2022 ($101,723 as at 31 December 2021) 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 Consolidated 2022 $ 2021 $ 3,271 902 - 10,103 - 21,394 11,419 13,170 25,990 29,750 14,276 101,723 70 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 19. Current liabilities - borrowings Credit cards Unsecured revolving credit loans Unsecured fixed term loans PaaS equipment financing loan* Consolidated 2022 $ 2021 $ 10,970 - 529,217 4,974 11,012 22,310 1,040,467 8,452 545,161 1,082,241 * 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 23 for further information on financing arrangements and note 27 for further information on financial instruments. Note 20. Current liabilities - Contingent consideration Contingent consideration - cash Refer to note 28 and note 34 for further information. Note 21. Non-current liabilities - payables Trade payables Refer to note 27 for further information on financial instruments. Consolidated 2022 $ 2021 $ 23,924 292,454 Consolidated 2022 $ 2021 $ - 580,214 Non-current trade payables as at December 2021 represented payments for equipment over 3 years in relation to a 7 year customer contract. Note 22. Non-current liabilities - contract liabilities Contract liabilities Refer to note 18 for further information. Consolidated 2022 $ 2021 $ - 68,911 71 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 23. Non-current liabilities - borrowings Unsecured revolving credit loans Unsecured fixed term loans Refer to note 27 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 Note 24. Equity - issued capital Consolidated 2022 $ 2021 $ - 542,785 27,248 1,257,952 542,785 1,285,200 Consolidated 2022 $ 2021 $ - 1,072,002 1,072,002 49,559 2,344,958 2,394,517 - 1,072,002 1,072,002 49,559 2,344,958 2,394,517 - - - - - - Ordinary shares - fully paid 41,257,901 32,860,889 38,476,999 34,765,453 Consolidated 2022 Shares 2021 Shares 2022 $ 2021 $ 72 28,461,991 377,100 241,650 256,250 93,750 - - - 4,237,993 1,122,303 (25,584) 34,765,453 49,500 934,180 1,975,110 1,065,820 49,725 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 24. Equity - issued capital (continued) Movements in ordinary share capital Details Date Shares Issue price $ 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 34) Shares to be issued as part consideration for acquisition of subsidiary (note 34) Share issue transaction costs, net of tax 1 January 2021 26 February 2021 4 March 2021 30 March 2021 23 April 2021 20 September 2021 21 September 2021 22 September 2021 5 October 2021 29,699,842 301,680 193,320 205,000 50,000 19,719 39,437 19,719 2,332,172 $1.2500 $1.2500 $1.2500 $1.8800 $0.0000 $0.0000 $0.0000 $1.8200 Balance Issue of Shares - Director fees Issue of Shares - Placement Issue of Shares - Rights Issue Issue of Shares - Director Placement Issue of Shares - Director fees Share issue transaction costs (exercise of options), net of tax 31 December 2021 25 July 2022 10 August 2022 1 September 2022 29 September 2022 4 October 2022 32,860,889 57,635 1,946,208 4,114,816 2,220,458 57,895 $0.8600 $0.4800 $0.4800 $0.4800 $0.8600 - $0.0000 (362,789) Balance 31 December 2022 41,257,901 38,476,999 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. 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. 73 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 24. Equity - issued capital (continued) The capital risk management policy remains unchanged from the 31 December 2021 Annual Report. Note 25. Equity - reserves Foreign currency reserve Share-based payments reserve Options reserve Consolidated 2022 $ 2021 $ (3,286,765) 3,932,402 30,440 (1,575,829) 3,646,522 30,440 676,077 2,101,133 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 2021 Foreign currency translation Share-based payments - options issued Balance at 31 December 2021 Foreign currency translation Share-based payments - options issued Foreign currency $ Share-based payments $ Options $ Total $ (519,327) (1,056,502) - (1,575,829) (1,710,936) - 3,076,937 - 569,585 3,646,522 - 285,880 30,440 - - 30,440 - - 2,588,050 (1,056,502) 569,585 2,101,133 (1,710,936) 285,880 Balance at 31 December 2022 (3,286,765) 3,932,402 30,440 676,077 Note 26. Equity - dividends There were no dividends paid, recommended or declared during the current or previous financial year. Note 27. 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. 74 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 27. Financial instruments (continued) 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 2022 $ 2021 $ 2022 $ 2021 $ 180,083 32,410 8,739,047 138,698 2,810 7,660,256 563,232 1,703 5,215,088 926,392 - 4,019,598 8,951,540 7,801,764 5,780,023 4,945,990 Based on the financial instruments held at 31 December 2022, 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 $102,670 higher (2021: $77,108 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 2022 and 31 December 2021, 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. 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: 2022 $ % of total loans % 2021 $ % of total loans % Variable rate borrowings Fixed rate borrowings (no repricing dates) 10,970 1,072,002 1.1 98.9 11,012 2,347,977 0.5 99.5 1,082,972 100.0 2,358,989 100.0 Due to the carrying value of borrowings at variable interest rate, the Group is not exposed to any significant interest rate risk. 75 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 27. Financial instruments (continued) 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. 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 - 2022 Weighted average interest rate % Within 6 months $ 6-12 months $ Between 1 and 2 years $ Between 2 and 5 Year $ Over 5 Years $ Trade payables Other payables Contingent consideration Lease liabilities Borrowings - variable rate Borrowings - fixed rate - - - 3.7% 32.0% 10.0% 2,026,604 53,898 23,924 25,146 10,970 332,752 - - - 4,015 - 255,272 - - - - - 432,205 - - - - - 189,491 Total contractual cash flows inclusive of interest payments $ Carrying amount - 2,026,604 2,026,604 53,898 - 23,924 - 29,161 - - 10,970 - 1,209,720 1,072,002 53,899 23,924 29,161 10,970 2,473,294 259,287 432,205 189,491 - 3,354,278 3,216,559 76 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 27. Financial instruments (continued) Consolidated - 2021 Weighted average interest rate % Within 6 months $ 6-12 months $ Between 1 and 2 years $ Between 2 and 5 Years $ Over 5 Years $ Trade payables Other payables Contingent consideration Lease liabilities Borrowings - variable rate Borrowings - fixed rate - - - 5.0% 27.0% 11.0% 2,444,153 116,046 - 26,102 11,012 703,013 - - 292,454 4,055 - 615,706 580,214 - - - - 798,806 - - - - - 566,120 Total contractual cash flows inclusive of interest payments $ Carrying amount - 3,024,367 3,024,367 116,046 - 292,454 - 30,157 - - 11,012 - 2,683,645 2,347,977 116,046 292,454 30,157 11,012 3,300,326 912,215 1,379,020 566,120 - 6,157,681 5,822,013 Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. Note 28. 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 - 2022 Liabilities Contingent consideration Total liabilities Consolidated - 2021 Liabilities Contingent consideration Total liabilities Level 1 $ Level 2 $ Level 3 $ Total $ Level 1 $ - - - - Level 2 $ - - - - 23,924 23,924 23,924 23,924 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. Valuation techniques for fair value measurements categorised within level 2 and level 3 Contingent consideration has been valued using a discounted cash flow model. 77 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 28. Fair value measurement (continued) 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 2021 Additions Foreign exchange differences Balance at 31 December 2021 Paid Foreign exchange differences Balance at 31 December 2022 Contingent consideration $ - 313,811 (21,357) 292,454 (284,139) 15,609 23,924 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 Note 29. 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 30. Remuneration of auditors Consolidated 2022 $ 2021 $ 614,009 81,391 375,325 823,792 84,987 478,640 1,070,725 1,387,419 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: 78 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 30. Remuneration of auditors (continued) Audit services - Nexia Sydney Audit Pty Ltd Audit or review of the financial statements Other services - Nexia Sydney Tax Advisory Pty Ltd Preparation of the tax return Other services - Nexia Sydney Corporate Advisory Pty Ltd Corporate Advisory Audit services - network firms Audit or review of the financial statements Other services - network firms Other Consolidated 2022 $ 2021 $ 120,006 102,196 9,500 11,915 - 129,506 82,819 196,930 39,813 19,957 - 39,813 27,007 46,964 169,319 243,894 Note 31. Contingent liabilities The Group had no contingent liabilities as at 31 December 2022 (2021: none). Note 32. Related party transactions Parent entity IMEXHS Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 35. Key management personnel Disclosures relating to key management personnel are set out in note 29 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 (i) 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 2022 $ 2021 $ 1,338 4,574,467 14,942 1,195,542 - 74,651 (i) During the year ended 31 December 2022, CrossPoint Telecommunications an associated entity of the Non-Executive Director, Carlos Palacio, provided various services to IMEXHS and was also a non-exclusive distributor in Australia of IMEXHS’s products. 79 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 32. Related party transactions (continued) 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 Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Note 33. 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 80 Consolidated 2022 $ 2021 $ 239 806 20 10 Parent 2022 $ 2021 $ (5,506,873) (7,805,521) (5,506,873) (7,805,521) Parent 2022 $ 2021 $ 1,534,386 3,029,675 6,895,633 8,391,390 15,545 15,545 2,514 2,514 42,158,461 3,586,583 30,440 (38,895,395) 38,446,255 3,300,703 30,440 (33,388,522) 6,880,089 8,388,876 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 33. Parent entity information (continued) 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 2022 and 31 December 2021. Contingent liabilities The parent entity had no contingent liabilities as at 31 December 2022 and 31 December 2021. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 31 December 2022 and 31 December 2021. 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. 81 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 34. Business combinations Acquisition of RIMAB SAS during the financial year ended 31 December 2021 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. 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 3,084,749 986,580 760,062 1,343 1,460,985 1,015,804 (3,962,523) (68,859) (338,189) (1,790,180) (263,277) (74,264) 947,864 5,814,604 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 The net assets recognised in the 31 December 2021 financial statements were based on a provisional assessment of their fair value. The fair value assessment of net assets had not been finalised by the date the 2021 financial statements were approved for issue by the Board of Directors. In August 2022, the valuation of the net assets was finalised and the acquisition date fair value of the trade and other receivables was $3,084,749, a decrease of $109,955 under the provisional value. The 2021 comparative information was restated to reflect the adjustment to the provisional amounts. As a result, there was an increase in goodwill of $109,955, resulting in $5,814,604 of total goodwill arising on the acquisition. 82 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 35. 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 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 Note 37. Changes in liabilities arising from financing activities Ownership interest 2021 2022 % % 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% Consolidated 2022 $ 2021 $ - - - 4,237,993 1,122,303 5,360,296 Consolidated Balance at 1 January 2021 Net cash used in financing activities Acquisition of leases Changes through business combinations (note 34) Balance at 31 December 2021 Net cash used in financing activities Acquisition of leases Borrowings $ Lease liabilities $ Total $ 1,596,728 (1,019,467) - 1,790,180 2,367,441 (1,279,495) - 101,469 (85,477) 14,165 - 1,698,197 (1,104,944) 14,165 1,790,180 30,157 (81,097) 80,101 2,397,598 (1,360,592) 80,101 Balance at 31 December 2022 1,087,946 29,161 1,117,107 Note 38. Earnings per share Consolidated 2022 $ 2021 $ Loss after income tax attributable to the owners of IMEXHS Limited (3,038,653) (4,699,772) 83 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 38. Earnings per share (continued) Weighted average number of ordinary shares used in calculating basic earnings per share 35,599,795 30,887,790 Weighted average number of ordinary shares used in calculating diluted earnings per share 35,599,795 30,887,790 Number Number Basic earnings per share Diluted earnings per share Cents Cents (8.54) (8.54) (15.22) (15.22) 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. Note 39. Share-based payments The following shares were issued to key management personnel during the year: Issue date 25/07/2022 04/10/2022 21/02/2023 Number of shares Issue Price Value $ 57,895 57,895 57,895 173,685 $0.8589 $0.8589 $0.8589 49,501 49,724 49,725 148,950 The shares issued on 21 February 2023 relates to shares issued in lieu of directors' fees for Q4FY2022. 84 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 39. Share-based payments (continued) Options granted to key management personnel and external parties are as follows: ● On 28 August 2018, 1,000,001 Class B share options 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 and expire on 28 August 2023. On 28 August 2018, 1,000,001 Class C share options 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 and expire on 28 August 2023. On 25 October 2018, 80,000 share options 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 and expire on 25 October 2023. On 10 December 2018, 40,000 share options 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 vested on 10 December 2021. All 40,000 options have an exercise price of $2.65 and expire on 9 December 2023. On 26 May 2020, 560,000 share options 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 vested on 26 May 2020 and tranche 3 vests when the Company's share price reaches or exceeds a 30 day VWAP of $6.00. Tranche 1, 2 and 3 have an exercise price of $2.75, $3.50 and $1.50 respectively. All tranches expire on 12 March 2027. On 1 March 2021, 140,000 share options were granted to Reena Minhas under the Company's 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 Company's Long Term Incentive Plan. The grant consists of 2 tranches, tranche 1 comprises 67,411 options and tranche 2 of 136,869. Both tranches have a nil exercise price and expire on 20 April 2031. 88,932 options have lapsed during the 2022. On 14 May 2021, 43,519 share options were granted to the CEO German Arango under the Company's 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 May 2031. On 14 May 2021, 98,594 share options were granted to Non-Executive Directors under the Company's 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 were exercised during 2021. 19,719 options remain on issue. On 19 May 2022, 73,393 share options were granted to the CEO German Arango under the Company's Long Term Incentive Plan. The grant consists of 2 tranches, tranche 1 comprises 24,220 options and tranche 2 of 49,173. Both tranches have a nil exercise price and expire on 19 May 2032. On 19 May 2022, 100,219 share options were granted to Non-Executive Directors under the Company's Long Term Incentive Plan. The options vested immediately on the grant date with a nil exercise price and expire on 19 May 2026. On 18 July 2022, 416,018 share options were granted to Employees under the Company's Long Term Incentive Plan. The grant consists of 2 tranches, tranche 1 comprises 161,507 options and tranche 2 of 327,904. Both tranches have a nil exercise price and expire on 18 July 2032. 35,174 options have lapsed during the 2022. ● ● ● ● ● ● ● ● ● ● ● 85 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 39. Share-based payments (continued) Set out below are summaries of options granted: 2022 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 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 19/05/2022 19/05/2022 18/07/2022 28/08/2023 28/08/2023 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 19/05/2026 19/05/2032 18/07/2032 $1.8750 $1.8750 $3.5000 $2.6500 $2.7000 $2.7000 $3.2500 $5.0000 $2.7500 $3.5000 $1.5000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 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 - - - - - - - - - - - - - - - 100,219 73,393 416,018 589,630 - - - - - - - - - - - - - - - - - - - - - - - (800,000) (100,000) (30,000) (30,000) - - - - (88,932) - - - - (35,174) (1,084,106) 1,000,001 1,000,001 80,000 40,000 - - - - 160,000 160,000 240,000 140,000 115,348 43,519 19,719 100,219 73,393 380,844 3,553,044 Weighted average exercise price $2.0190 $0.0000 $0.0000 $2.4700 $1.8330 86 IMEXHS Limited Notes to the financial statements 31 December 2022 Note 39. Share-based payments (continued) 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 $1.2500 $2.5000 $1.8800 $1.8800 $1.8800 $2.5000 $3.5000 $2.6500 $2.7000 $2.7000 $3.2500 $5.0000 $2.7500 $3.5000 $1.5000 $0.0000 $0.0000 $0.0000 $0.0000 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 $2.1800 $0.0000 $1.1690 $2.4310 $2.0190 Set out below are the options exercisable at the end of the financial year: Grant date Expiry date 25/10/2018 10/12/2018 07/10/2019 31/10/2019 26/05/2020 26/05/2020 14/05/2021 19/05/2022 25/10/2023 09/12/2023 31/03/2022 30/09/2022 12/03/2027 12/03/2027 14/05/2025 19/05/2026 2022 Number 2021 Number 80,000 40,000 - - 160,000 160,000 19,719 100,219 80,000 40,000 800,000 100,000 160,000 160,000 19,719 - 559,938 1,359,719 The weighted average share price during the financial year was $0.70 (2021: $1.70). The weighted average remaining contractual life of options outstanding at the end of the financial year was 3.08 years (2021: 2.57 years). 87 IMEXHS Limited Notes to the financial statements 31 December 2022 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 19/05/2022 19/05/2022 19/05/2022 18/07/2022 18/07/2022 19/05/2026 19/05/2032 19/05/2032 18/07/2032 18/07/2032 Share price at grant date Exercise price Expected volatility Dividend yield Risk-free interest rate Fair value at grant date $0.7100 $0.7100 $0.7100 $0.6700 $0.6700 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 80.00% 80.00% 80.00% 80.00% 80.00% - - - - - 3.06% 2.57% 2.86% 2.76% 3.07% $0.705 $0.455 $0.501 $0.423 $0.470 Note 40. Events after the reporting period No matter or circumstance has arisen since 31 December 2022 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. 88 IMEXHS Limited Directors' declaration 31 December 2022 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 2022 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 2023 89 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 2022, 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 2022 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 16 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. 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 2022, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of 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 34 to 42 of the directors’ Report for the year ended 31 December 2022. In our opinion, the Remuneration Report of IMEXHS Limited for the year ended 31 December 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Nexia Sydney Audit Pty Ltd Andrew Hoffmann Director Dated: 28 February 2023 Sydney IMEXHS Limited Shareholder information 31 December 2022 The shareholder information set out below was applicable as at 31 January 2023. 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 269 326 126 256 47 0.27 2.15 2.23 19.23 76.12 1,024 100.00 285 0.31 1 26 8 25 8 68 - 0.02 1.89 1.67 23.51 72.91 100.00 - Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Sandhurst Trustees Ltd (Jmfg Consol A/C) Digital Imaging Solutions Sas Jaava Asesores Integrales Sas Altor Capital Management Pty Ltd (Altor Alpha Fund A/C) Hsbc Custody Nominees (Australia) Limited Volegna Holdings Pty Ltd (The Csa A/C) German Anibal Arango Bonnet Rio Negro Pty Ltd (The Medallo A/C) Dixson Trust Pty Limited Dr & Lc Flynn Nominees Pty Limited (Flynn Super Fund A/C) Irukandji Investments Pty Ltd (Longreach Family A/C) Mr Christian James Haustead Ilewise Pty Ltd (Lingard Super Fund A/C) Jorge H Marin Munoz National Nominees Limited Goldstake Corporation Pty Ltd Prof Alan Jonathan Berrick Heff Super Pty Ltd (J & A Heff Super Fund A/C) Ilewise Pty Ltd (Lingard Family A/C) Optim8 Pty Ltd (The Gic Super Fund A/C) Unquoted equity securities Options over ordinary shares issued 94 Ordinary shares Number held % of total shares issued 4,098,520 3,407,708 2,048,758 1,809,505 1,553,532 1,448,524 1,435,161 1,426,417 1,400,602 1,371,737 1,336,316 1,020,524 945,803 663,503 590,002 444,938 382,079 381,312 375,000 350,000 9.93 8.26 4.97 4.39 3.77 3.51 3.48 3.46 3.39 3.32 3.24 2.47 2.29 1.61 1.43 1.08 0.93 0.92 0.91 0.85 26,489,941 64.21 Number on issue Number of holders 3,553,064 68 IMEXHS Limited Shareholder information 31 December 2022 Substantial holders Substantial holders in the Company are set out below: Sandhurst Trustees Ltd (Jmfg Consol A/C) Digital Imaging Solutions Sas Milla Paula Inari Palacio* Ordinary shares Number held 4,098,520 3,407,708 2,762,733 % of total shares issued 9.93 8.26 6.70 * Irukandji Investments Pty Ltd (Longreach Family A/C) 1,136,316 shares (3.24%), Rio Negro Pty Ltd (The Medallo A/C) 1,426,417 shares (3.46%). 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. 95 Corporate directory 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 AM on Thursday, 18 May 2023. The location is yet to be determined The details of the annual general meeting of REGISTERED OFFICE 122 O’Riordan Street Mascot NSW 2020 Tel: +61 2 9030 0040 PRINCIPAL PLACE OF BUSINESS 122 O’Riordan Street Mascot NSW 2020 Tel: +61 2 9030 0040 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 Make it faster 2022 | IMEXHS Limited | Annual Report | 94 ANNUAL REPORT 2022 Leading the way in life-changing diagnostics. Make it faster

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