ANNUAL
REPORT
2022
YEAR ENDING JUNE
PAINCHEK LIMITED | ABN 21 146 035 127
CORPORATE DIRECTORY
Board of Directors
Mr John Murray
Mr Philip Daffas
Mr Adam Davey
Mr Ross Harricks
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Ms Cynthia Payne
Non-Executive Director
Company Secretary
Ms Sally McDow
Registered Office
Principal Place of Business
Suite 401, 35 Lime Street
Suite 401, 35 Lime Street
Sydney NSW 2000
Sydney NSW 2000
Website
Website: www.painchek.com
Auditor
BDO Audit Pty Ltd
Share Registry
Boardroom Pty Ltd
Grosvenor Place
Level 12, 225 George Street
Sydney, NSW 2000
Tel:
Fax:
+61 2 9290 9600
+61 2 9290 9655
Stock Exchange
Australian Securities Exchange
20 Bridge Street
Sydney, NSW 2000
ASX Code
PCK
CONTENTS
Chairmans letter
Directors’ report
Auditor’s independence declaration
Consolidated statement of profit or
loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report
4
6
27
28
29
30
31
32
56
57
CHAIRMAN’S LETTER
Dear Fellow Shareholders,
It gives me pleasure to present the 2022 Annual
Report for PainChek Limited (ASX: PCK) as we reflect
on our achievements over the past 12 months and the
substantial opportunity that is ahead of us.
We continue to execute our growth strategy with
focuses on maintaining and growing our market position
for adult PainChek® App in the Residential Aged Care
(RAC) sector in Australia and New Zealand, gaining a
stronger foothold in international RAC markets, as well
as in new verticals such as infant care, home care and
hospital settings. I am proud to report progress across
all these areas in FY22.
Our proprietary adult pain assessment App is a cost-
effective and clinically validated solution, which we have
now successfully implemented in RAC in Australia, New
Zealand, Singapore, UK and Ireland. We have regulatory
clearance for our adult App in these markets, as well as
Europe and Canada, as a class 1 medical device. We have
plans underway to achieve approval in other territories,
including the lucrative United States market, to continue
to grow our footprint across the globe.
We have achieved 20 commercial
integrations of
PainChek® with care management systems partners
across Australia, United Kingdom, Ireland, New Zealand
and Canada, providing access to 470,000 RAC beds
across these markets, of which we now have more than
126,000 contracted.
This was a critical year for our company as we had to
begin the transition of our RAC customers in Australia
from government subsidised use of PainChek® to
standard commercial terms.
4 | PAINCHEK LIMITED
During this year the RAC industry remained under
considerable stress, still recovering from the Covid
pandemic and experiencing workforce challenges.
Nevertheless, we successfully commenced this transition
with approximately 28,000 licences under commercial
terms at 30 June 2022, generating Annual Recurring
Revenue (ARR) of $1.4 million; and a further 66,000
aged care beds implemented which offers an additional
$3.2M of potential ARR if converted to commercial
terms. About 1.3 million clinical pain assessments were
conducted in Australian aged care as at 30 June 2022,
undertaken by more than 8,000 PainChek-trained users.
On this strong foundation, we focused on building our
international RAC business in FY22 and expanded our
resources and integration partners in the UK, where
we have 4,000 out of 7,500 RAC contracted beds
implemented. We also commenced development of the
New Zealand market, contracting the third largest aged
care provider across more than 1,000 RAC beds.
We have developed an Infant PainChek® App to measure
pain in children who are pre-verbal. Targeting uniform
geographical regulatory approvals for our Infant app,
we’ve built commercial integrations and partnerships
critical to our go-to-market strategy. Market access for
the Infant app in the US will position PainChek to align
the roll out of this technology across the US, Europe
and ANZ, where we have already achieved regulatory
clearance.
During FY22, we developed our strategy and relationships
in the home care and hospital markets and expect to
develop these important markets in FY23.
I would like to thank our hardworking team for their all
efforts during another challenging year, and who are
currently progressing well with our FY23 initiatives.
I would also like to thank our shareholders who
participated in the recent $3.0 million Share Placement
and accompanying Entitlement Offer, which raised $1.6
million. This funding will allow us to execute on our plans
during FY23.
We are ready to capitalise on the considerable
opportunities ahead of us, and I hope you will continue
to share the journey with us.
John Murray
Non-Executive
ChairmanPainChek Limited (ASX: PCK)
ABN 21 146 035 127
Suite 401, 35 Lime Street,
Sydney, NSW, 2000
Registered Office:
Suite 401, 35 Lime Street,
Sydney, NSW, 2000
info@painchek.com
PAINCHEK LIMITED | 5
DIRECTORS’ REPORT
The directors of PainChek Limited (“PainChek” or
“the Company”) submit herewith the financial report
of the Company and its controlled entities (“Group”
or “Consolidated Entity”) for the year ended 30 June
2022. In order to comply with the provisions of the
Corporations Act 2001, the directors report as follows:
Names of Directors
The names of the directors of the Company during or
since the end of the year are noted below. Directors
were in office for the entire period unless otherwise
stated:
Mr John Murray (appointed 30 September 2016)
LLB (Hons), CA, MAICD – Non-executive Chairman
Mr Murray has 25 years’ experience in private equity
and venture capital and was a co-founder and Managing
Partner of Technology Venture Partners; one of the
original and leading venture capital firms in Australia.
Mr Murray is a past chairman of the Australian Venture
Capital Association. Mr Murray has considerable
experience as an investor and a non-executive director
of high growth, technology-based companies. He
possesses a broad understanding of global trends in
technology and its impact on a variety of industries.
He is a past Chairman of a private, residential aged care
business in Australia. Mr Murray also brings 12 years’
experience in executive roles in corporate banking,
accounting and IT services industries.
Mr Murray has been on the Board of a number of
successful technology rollouts and exits including
online travel play Viator, which was acquired by
TripAdvisor for approximately US$200 million in 2014.
He is a chartered accountant with an Honour degree
in Law and is a member of the Australian Institute of
Company Directors. Mr Murray is a director of UK AIM
listed company Seeing Machines Ltd and was Chairman
of ASX listed company Flamingo AI Limited until
October 2019, but otherwise has not been a director of
an ASX listed company in the past 3 years.
6 | PAINCHEK LIMITED
Mr Philip Daffas (appointed 30 September 2016)
BSc, Dip EENG, MBA, GAICD – Managing Director
Philip is a highly accomplished global business leader
and people manager with an international career
spanning more than 25 years with leading blue-chip
healthcare corporates and novel technology start-up
companies.
Philip has held senior global business leader positions
in Europe, US and Australia. He has been instrumental
in building businesses, growing market share and
developing extensive high-level customer and industry
relationships in each sector on a global basis.
Philip’s earlier experience was gained in Europe with
market leaders such as IVAC infusion systems and Shiley
cardiopulmonary products. He subsequently joined
Boehringer Mannheim, initially in the UK managing
their diagnostics business and subsequently was
promoted to a Global Marketing role in the Diabetes
Care business cased in Mannheim, Germany.
In 1997 Philip joined Cochlear in the UK as the European
Sales and Marketing Manager and subsequently was
promoted in 2000 to the VP Global Marketing role
based in Sydney, Australia
Other roles in Australia have included General Manager
with Roche Diagnostics, Managing Director at Bio-
Rad Laboratories and CEO of Applied Physiology, an
Australian software start-up company in the intensive
care monitoring sector.
Graduated in the UK with a BSc and Diploma in
Electronic Engineering, Philip also has an MBA and
is a Graduate of the Australian Institute of Company
Directors (GAICD). Mr Daffas has not been a director of
an ASX listed company in the past 3 years.
Mr Ross Harricks (appointed 30 September 2016)
BE, MBA – Non-executive Director
Mr Adam Davey (appointed 30 September 2014)
– Non-executive Director
Mr Harricks’ experience in the commercialisation of
medical products spans over forty years and over three
continents. His experience includes the marketing and
commercialising of the computed technology scanner
(CT or CAT scanner) in Australia, where he headed up
the EMI Electronics Group as General Manager. His
remit included developing EMI’s medical business in
this region.
In 1983, Mr Harricks joined the Nucleus Group
as Group Marketing Executive, and later became
President the two Nucleus Group subsidiaries in United
States marketing medical equipment and scientific and
engineering computing products. In 1989 in the US,
Mr Harricks was the CEO of a venture capital-backed
start-up company developing specialist scientific and
medical lasers.
In Australia Mr Harricks has been a director of ResMed
Limited and cofounder of AtCor Medical where he
completed an Australian initial public offering in 2005
leading the company until 2007. He was a director of
VentraCor from 2005 to 2009. Other than PainChek,
Mr Harricks has not been a director of an ASX listed
company in the past 3 years.
Mr Harricks works with Australian medical and
technology companies assisting in commercialisation
of their products into the US and EU markets. His
unique expertise and experience includes strategic
advising on the best path to early international market
endorsement and adoption, and on providing hands-
on help with implementation in the American and
European markets.
Mr Davey’s expertise spans over 25 years and includes
capital raising (both private and public), mergers and
acquisition, ASX listings, asset sales and purchases,
transaction due diligence and director duties. Mr Davey
is a Director of Wealth Management at Canaccord
Genuity Patersons Limited. Mr Davey has been
involved in significantly growing businesses in both the
industrial and mining sector.
This has been achieved through holding various roles
within different organisations, including chairman,
managing director, non-executive director, major
shareholder and corporate adviser to the board.
Mr Davey is a non-executive director of the Agency
Group Australia Ltd and was a director of Ensurance
Limited until 2nd July 2021. Otherwise, Mr Davey has
not been a director of an ASX listed company in the
past 3 years.
Ms Cynthia Payne (appointed 30 March 2022)
– Non Executive Director
Ms Payne brings 30 years executive
leadership
experience as well as significant board and operational
experience in residential and home aged care services
in Australia. That experience includes over 16 years as
CEO for a large private aged care Provider in NSW and
before that head of operation manager for a large Not
for Profit with home care, residential and retirement
living portfolios. She is the founder and Managing
Director of Anchor Excellence, a leading consultancy
firm in the aged care services industry in Australia that
advises boards and management on operational and
compliance best practices.
Cynthia is a board advisor to Total Constructions Pty
Ltd, a former Director of the Heart Foundation and past
Chair of Business Excellence Australia.
PAINCHEK LIMITED | 7
Cynthia holds a Bachelor of Applied Science (Nursing)
with specific interest in Dementia Care, an MBA from
the University of New England, is a Member of the
Australian Institute of Company Directors, Fellow of the
Governance Institute Australia and Certified Chair with
The Board Advisory centre.
Company Secretary
Ms Sally McDow was appointed to the position of
Company on 2 June 2021. Ms McDow is an experienced
company secretary, admitted as a solicitor (QLD) and
holds an MBA and a corporate governance diploma.
OPERATIONS REPORT
Principal Activities
The principal activity of the Company is the development
and commercialisation of mobile medical device
applications that automate intelligent pain assessment
of individuals who are unable to communicate their pain
with carers.
Financial and operational review
The loss of the Group for the year ended 30 June 2022,
after accounting for income tax benefit, amounted to
$5,720,534 (2021 $6,063,647). The year ended 30 June
2022 operating results are attributed to the following:
• Research expense of $2,350,816 (30 June 2021:
$2,652,106);
• Share based payments in respect of options issued
to Directors and employees of $549,191 (non-cash)
(30 June 2021: $709,720 (non-cash)); and
• Corporate and administration expenses of $2,775,117
(30 June 2021: $3,612,398, which
included a
provision for payroll tax assessment of $1,400,414
relating to the year ended 30 June 2020).
Review of Operations
The 2022 financial year has seen PainChek reinforce its
position in residential aged care within its home market
of Australia while making important strides as part of
the Company’s market expansion strategy.
PainChek is now demonstrating commercial operations
and sales in multiple markets, a clear path and strategy
to become the global market leader with both its Adult
and Infant pain assessment offerings.
The PainChek® technology uses cameras in smartphones
and tablets to capture a brief video of the person, which
is analysed in real time using facial recognition software
to detect the presence of facial micro-expressions that
are indicative of the presence of pain. These results
are combined with other observational assessments to
provide an overall pain score and pain severity level of
the person being assessed.
The PainChek® technology has regulatory clearance in
TGA (Australia), CE Mark (Europe) UK, New Zealand,
Singapore and Canada as a class 1 medical device
to assess pain in people who are unable to reliably
verbalise, such as people with dementia.
During FY21 PainChek developed and commercially
launched PainChek® Universal, which has the same
regulatory market clearances. PainChek® Universal is
a complete point-of-care solution that combines the
existing PainChek® App with the Numerical Rating Scale
(NRS) and data from PainChek® Analytics. This enables
best-practice pain management for people living with
pain in any environment — from those who cannot
verbalise pain to those who can, and those who fluctuate
between the two. This means that PainChek is now a
tool to assess and document pain for all people within
aged care, hospital, and the home care environment.
8 | PAINCHEK LIMITED
This time 12 months ago, PainChek outlined
several focuses for FY22, which included:
Maintaining and growing its position in
the ANZ market including transition of
customers onto commercial agreements
International
market expansion
Enabling development of
the infant market
Accessing the home care
and hospital markets
PainChek has made significant inroads on each of these
areas, creating the platform for substantial growth
moving forward.
Maintaining & growing the ANZ opportunity
In May 2021 the Australian Federal Government funded
grant (for the use of PainChek® Adult App for people
living with dementia or cognitive impairment) came
to an end. At this point PainChek had achieved 82,982
dementia specific beds reported to the government,
with resulting Federal Government grant payments to
PainChek totalling $4.3M in FY20 and FY21.
At the close of FY22 a total of 28,000 Australian licences
were under standard PainChek commercial terms, thus
providing actual Annual Recurring Revenue (ARR) of
$1.4M. There are currently a total 66,000 aged care beds
implemented in Australia, offering a potential $3.2M
ARR should these all convert to commercial terms.
On the assumption that all existing contracted beds
have a 67% conversion rate to commercial terms, this
implies an ARR of approximately $4.3m by Q4 FY23,
which excludes new sales in the period. Revenue from
contracts is recognised in the statement of profit or loss
and other comprehensive income in accordance with
the Group’s accounting policy for Revenue set out on
page 38.
Some 1.3 million clinical pain assessments have been
conducted in Australian aged care as at 30 June 2022, with
an increasing number of case study reports confirming
the clinical and cost benefit. Those assessments are
undertaken by over 8,000 users that have been trained
by PainChek.
International market expansion
PainChek saw numerous developments
in the UK
market during FY22 as its international expansion gained
momentum.
At 30 June 2022, PainChek has over 7,500 contracted
beds in the UK, with close to 4,000 of these implemented.
The pipeline is growing in the aged care sector and new
opportunities are arising with hospital and home care
sectors.
PainChek UK has, at 30 June 2022,
integration
agreements with six care management partners and
one medication management partner who can provide
a pipeline opportunity of up to 200,000 residential aged
care beds.
These UK integration partnerships include Care Vision
CMS and Nourish Care, who provide care management
software to more than 60,000 residential aged care beds
that could potentially use the PainChek® assessment
solution.
PAINCHEK LIMITED | 9
PainChek received an order for an initial rollout of 1,000
beds from one of these partners during the last quarter.
Support was also received from Life Sciences Hub Wales
with funding from the Gwent Regional Partnership Board
via its Technology Enabled Care Programme.
Funding will support a 12-month pilot for up to 1,000
residents in care environments such as residential,
nursing, hospital and palliative care homes, across
Gwent as the first step in rolling-out PainChek across
Wales.
Closer to home, Summerset Holdings Ltd, New Zealand’s
3rd largest aged care provider, commenced roll out of
the PainChek® pain assessment solution across 24 of its
care centres and 1,150 beds.
Overall, the Company has more than 20 commercial
integrations with care management and medication
management system partners in Australia, UK, Ireland,
New Zealand, Singapore and Canada. These partnerships
provide access to 275,000 UK beds and 470,000 beds
across these 4 markets, improve the pain assessment
and pain management clinical care and reduce costs for
our clients. This makes the PainChek a cost effective and
clinically efficient healthcare solution.
PainChek® Adult App FDA deNovo application has
progressed positively and the clinical studies in the USA
are projected to commence in 2022. Based on current
time lines we are projecting Q4 C2023 for FDA regulatory
clearance.
Enabling development of the infant market
The PainChek® Infant App received Australian TGA, CE
Mark (Europe), UK, New Zealand, Singapore and Canada
regulatory clearances during FY21. Furthermore, the
PainChek Infant Face-Only pain assessment study was
peer reviewed and accepted for publication in the Lancet
Digital Scientific journal in July 2021 validating the
PainChek Infant technology and clinical study outcomes.
The Company
in building commercial
integrations and partnerships with larger diagnostic and
therapeutic corporates. Collaborations with Children’s
hospitals and validation studies in Melbourne, NSW and
overseas markets continue to progress as part of the go
to market strategy.
is engaged
During FY22 PainChek progressed significant new
opportunities that have matured as a result of the
COVID-19 pandemic. PainChek has been engaged in
discussion with the Australian Department of Health
following both the FDA and TGA confirming regulatory
clearances for the COVID-19 vaccination for infants as
young as 6 months of age.
10 | PAINCHEK LIMITED
Market access for the Infant App in the US in 2022
would be a significant development for the Company
and would align the Infant technology roll out across US,
Europe and ANZ as this major infant vaccination program
also rolls out.
Additionally, led by Associate Prof Jenny Downs, Principal
Research Fellow, Head Disability Research Program and
Co-Head Child Disability Team, Telethon Kids Institute, a
team of Western Australia researchers received a State
Government of Western Australia Future Health Research
and Innovation Fund grant to work in collaboration
with PainChek to develop a new pain assessment tool
specifically for children with disability aged 5 to 12 years.
PainChek will hold all the commercialisation and IP
rights.
Accessing the home care & hospital markets
PainChek remains focused on opportunities in the home
care and hospital markets and this will remain the case
through FY23 with growing interest and demand for
the PainChek Adult technology as a post operative (e.g.
orthopaedic) pain assessment solution to prevent the
risk of a patient’s delirium.
The Nurse-led Volunteer Support and PainChek Frailty
Study funded through the Ramsay Hospital Research
Foundation (RHRF) commenced at the Hollywood
Hospital in WA during March, and a second study
at Ramsay’s Joondalup Health Campus, also funded
through the RHRF, is planned to evaluate the use of
PainChek® Universal again combined with a nurse-led
volunteer program.
The market need for PainChek technology within
Palliative care management continues to evolve as better
pain management is seen as the critical element to
ensure Palliative care be best delivered across hospitals,
aged care, hospices and the home environment.
Likely Developments and Overview of Group Strategy
We aim to maintain and grow our core Residential Aged
Care (RAC) market position in ANZ by maintaining the
current contracted RAC beds above 120,000, through
direct sales channel and in partnership with our 20 +
existing CMS and medication management integration
providers. These partnerships are projected to increase
as we broaden our geographic reach. We will continue
to implement and transition the remaining government
contracted clients onto standard PainChek commercial
terms during this year and gain new RAC clients in all key
markets.
The Home Care market will continue to be accessed,
initially leveraging existing RAC clients that also have
government funded home care packages in Australia
and similar packages in overseas markets including the
UK. The Hospital market will be entered by leveraging
existing studies with hospitals, partnering with medical
device suppliers and by bundling the Infant and Adult
App for broad use across the hospital. The Company is
investing in sales capability to service these markets in
Australia and UK.
International market expansion is planned in the existing
UK and New Zealand markets by expanding the RAC beds
market penetration and developing the home, hospital
and infant markets.
The Company is negotiating new market entry and
in Europe, Canada and
partnership opportunities
the USA for both the Adult and Infant technologies
with established local aged care and hospital supplier
commercial entities. We have regulatory clearance
in Canada for the Adult and Infant technologies and
are entering the US market with the PainChek Infant
technology as a Clinical Decision Support tool. In parallel
we continue with the de-Novo application with FDA for
US market clearance by Q4 C2023.
PAINCHEK LIMITED | 11
In addition we are exploring market entry into key Asian
markets including Japan with trade industry partners.
REMUNERATION REPORT (AUDITED)
Key Management Personnel
the
FY22
report discloses
The
remuneration
arrangements and outcomes for the people listed
below, who are the individuals within the Company
who have been determined to be Key Management
Personnel (KMP) in the financial year to 30 June 2022.
Key Management Personnel (KMP) are those people
who have the authority and responsibility for planning,
directing and controlling the Group’s activities, either
directly or indirectly.
Remuneration Policy
The remuneration policy of the Group has been designed
to align director objectives with shareholder and
business objectives by providing a fixed remuneration
component which is assessed on an annual basis in line
with market rates. The Board of the Company believes
the remuneration policy to be appropriate and effective
in its ability to attract and retain the best Directors to
run and manage the Company, as well as create goal
congruence between Directors and shareholders.
The Infant market indications for use will expand
following the completion of clinical studies including
The Royal Children’s Hospital in Melbourne “Painfaces
Study”, evaluating the validity and reliability of the
application for the assessment of procedural pain
amongst infants in the Emergency Department.
The Company has also commenced additional Children’s
research studies in Europe to expand Children’s App
clinical indications to include the 1-3 year age range
thus further expanding the market size and overall
opportunity.
The Company continues to build and explore ‘go to
market’ partnerships for the Infant App with large
pharma, diagnostics and clinical research organisations
to position PainChek as the total pain assessment and
pain management solution that can be delivered in the
home and hospital sectors.
Subsequent events
On 29 July 2022 the Group announced the completion of
an Entitlement Offer, this followed the completion of a
Placement of shares on 1 July 2022 to sophisticated and
professional investors. The Group raised $4,587,000
before costs, of which $2,822,500 was received after the
reporting date.
12 | PAINCHEK LIMITED
The Board’s policy for determining the nature and
amount of remuneration for board members is as
follows:
• The remuneration policy, setting the terms and
conditions for the executive Directors and other
senior staff members, was developed and approved
by the Board.
•
In determining competitive remuneration rates,
the Board considers local and international trends
among comparative companies and the industry
generally so that executive remuneration is in line
with market practice and is reasonable in the context
of Australian executive reward practices.
• All executives receive a base salary (which is based
on factors such as length of service and experience),
superannuation and fringe benefits.
Performance Based Remuneration
The Company is a technology development entity
and therefore speculative in terms of performance.
Consistent with attracting and retaining talented
executives and Directors, executives and Directors
are paid market rates associated with individuals in
similar positions within the same industry. Options,
equity-based performance incentives and cash bonus’
have been and may be further issued to provide
in the
a performance-linked
remuneration package for the executive and Directors,
and for the future performance by the executives and
Directors in managing the operations and strategic
direction of the Company.
incentive component
All remuneration paid to Directors is valued at the cost
to the Company and expensed. Options are valued
using an appropriate valuation methodology. For details
of Directors’ and executives’ interests in options and
performance rights at year end, refer to section (d) of
this remuneration report.
Short term incentive
Generally paid in cash and structured, with a focus on
delivery of specific short-term objectives aligned with
the company’s strategies and goals and the Executives
role in meeting these targets.
Remuneration Consultant
(“Eagan”) to undertake an
In August 2019, the Company engaged Eagan Associates
Pty Ltd
independent
remuneration review of the executive director and non-
executive director’s salary and fees. The remuneration
recommendations are set out below and continue to be
applied.
The Board
is satisfied that Eagan’s remuneration
recommendation was made free from undue influence
by the KMP to whom the recommendations relate given
only the non-executive chairman had made contact,
Eagan does not provide any other consulting services
to the Group and does not have any prior or continuing
relationship or association with the company or any
members of the KMP.
Company Performance, Shareholder Wealth and
Directors’ and Executives’ Remuneration
The remuneration policy has been tailored to align
the strategic goals of the Company to create value for
shareholders, Directors and executives. The Company
believes the policy has been effective in aligning the
interests of the Company’s key management personnel
with the interests of its shareholders. For details of
Directors’ and executives’ interests in equity securities
at year end, refer to section (c) of this remuneration
report.
2018
2019
2020
2021
2022
Share price at 30 June
$0.056
$0.20
$0.115
$0.059
$0.028
Loss for the year (continuing
and discontinued operations)
Loss for the year
(continuing operations)
EPS for the year (continuing
and discontinued operations)
EPS for the year
(continuing operations)
($4,810,532)
($3,262,418)
($12,392,659)
($6,063,647)
($5,720,534)
($4,810,532)
($3,262,418)
($12,392,659)
($6,063,647)
($5,720,534)
(0.6) cents
(0.4) cents
(1.3) cents
(0.5) cents
(0.5) cents
(0.6) cents
(0.4) cents
(1.3) cents
(0.5) cents
(0.5) cents
PAINCHEK LIMITED | 13
Fixed remuneration is not linked to group performance. It is set with reference to the individual’s role,
responsibilities and performance and remuneration levels for similar positions in the market.
No dividends were paid by the Company nor was there any return of capital over the past 5 years.
Performance Income as a Proportion of total compensation
A short term incentive performance bonus of $52,500 was paid to Mr Daffas for the year ended 30 June 2021,
based on Mr Daffas achieving certain internal KPI’s.
Eagan’s report recommended that the Company’s non-executive director remuneration be supplemented with the
following annual grant of Performance Rights for the financial years ended 30 June 2020, 2021 and 2022 as follows:
Directors
John Murray
Adam Davey
Ross Harricks
Total
Fee
Performance Rights
Total remuneration
$ 80,000
$ 40,000
$ 40,000
$ 160,000
$ 40,000
$ 120,000
$ 20,000
$ 60,000
$ 20,000
$ 60,000
$ 80,000
$ 240,000
Non-executive director performance rights have no performance conditions as they are provided to supplement
fixed director fees. The performance rights vest at end 30 June of each subsequent year provided the director
remains a director of the Company at that date.
The notional value of performance rights approved by shareholders will differ to the value required to be
recognised for accounting purposes in accordance with AASB 2 Share Based Payments.
Remuneration Consultant Benchmarks
The median total statutory remuneration of $120,000 for the Chairman represents 120% of the median total
statutory remuneration of $100,000 benchmark in the Health and IT sector for companies with a market
capitalisation of between $50 million and $200 million.
The median total statutory remuneration of $60,000 for a non-executive director represents 99% of the median
total statutory remuneration of $60,857 benchmark in the Health and IT sector for companies with a market
capitalisation of between $50 million and $200 million. At the 2019 Annual general meeting, shareholders
approved the issue of Performance Rights to the non-executive directors on the following principles and terms:
a) each non-executive director will in each end of financial year on 30 June 2020, 2021 and 2022 receive 1/3 of
their total annual remuneration in Performance Rights;
b) the number of Performance Rights issued for a year will be calculated based on the VWAP of the Company’s
ordinary shares calculated 5 days either side of and including the date of announcement of the company’s
annual statutory results for the financial year;
c) Performance Rights will vest at 30 June each subsequent year - being the end of the financial year subject to the
director remaining a director of the Company at that date;
d) each Performance Right has the conditional right to acquire one Share;
e) the Performance rights are issued for Nil consideration;
f)
the Performance Rights expire 3 months after the vesting date;
g) the Performance Rights are subject to the terms and conditions of the LTI Plan; and
14 | PAINCHEK LIMITED
1
h) the below table summarises the position:
Remuneration
for year ended
30 June
Share price
calculation date
Grant date
Vesting date
Date that
Performance
Rights convert to
shares
Expiry Date of
Performance Rights if
not converted to
shares
2020
2021
2022
5/09/2019
4/09/2020
7/09/2021
20/11/2019
30/06/2020
28/07/2020
20/11/2019
30/06/2021
15/07/2021
20/11/2019
30/06/2022
12/07/2022
30/09/2020
30/09/2021
30/09/2022
CEO remuneration review
The Eagan report recommended that the Company’s CEO remuneration be supplemented with an annual grant of
$200,000 worth of Performance Rights for the financial years ended 30 June 2020, 2021 and 2022.
The Company entered into a new agreement on 8th October 2019 with Philip Daffas to increase his fixed and variable
cash remuneration to a maximum of $400,000 per annum which together with the proposed $200,000 grant of
Performance Rights, will result in total statutory remuneration of $600,000 for FY22. The notional value of
performance rights as set out in the AGM Notice will differ to the value required to be recognised for accounting
purposes in accordance with AASB 2 Share Based Payments.
The total statutory remuneration of $600,000 for Philip Daffas represents 124% of the median total statutory
remuneration of $483,812 benchmark in the Health and IT sector for companies with a market capitalisation of
between $50 million and $200 million.
The Company received Shareholder approval at the 2019 AGM for the issue of Performance Rights to Philip Daffas to
the value of $600,000 over the 3 years ending 30 June 2022, with an annual limit of $200,000 for Philip Daffas or his
nominee(s) to acquire one Share for each Performance Right held pursuant to the LTI Plan and as part of Philip Daffas'
remuneration.
The Performance Rights issued for a year will be issued at the VWAP of the Company’s ordinary shares calculated 5
days either side of and including the date of announcement of the company’s annual statutory results for the financial
year preceding the financial year of the grant of the Performance Rights (Award Issue Price).
Vesting of the Performance Rights is conditional on the following:
a) 50% of the annual grant of $200,000 worth of Performance Rights will vest two years after the commencement of
each vesting period on 1 October of the year of grant, subject to the Company's Share price achieving a
compounded annual increase in Share price of 15% p.a. (Award Target Price) from the relevant Award Issue Price
and provided that Philip Daffas remains employed by the Company at that date (unless he is a Good Leaver as
defined in the LTI Plan in which case he retains the relevant pro rata portion of the grant subject to the increase in
Share price vesting condition); and
b) 50% of the annual grant of $200,000 worth of Performance Rights will vest three years after the commencement
of each vesting period on 1 October of the year of grant, subject to the Company's Share price achieving a
compounded annual increase in Share price of 15% p.a. from the relevant Award Issue Price and provided that
Philip Daffas remains employed by the Company on that date (unless he is a Good Leaver as defined in the LTI Plan
in which case he retains the relevant pro rata portion of the grant subject to the increase in Share price vesting
condition).
The Award Target Price will be calculated based on the 10 days VWAP leading up to and including the
relevant vesting date
2
PAINCHEK LIMITED | 15
The following table summarises the above terms:
The following table summarises the above terms:
Remuneration
Remuneration
for year
ended 30 June
for year
ended 30 June
Share Price
Share Price
Calculation
date
Calculation
date
Grant
date
Grant
date
Vesting date
Vesting date
assuming share price
hurdle is met
assuming share price
hurdle is met
Likely date that
Likely date that
Performance Rights
will convert to
Performance Rights
will convert to
shares
shares
Expiry Date of
Expiry Date of
Performance Rights
if not converted to
Performance Rights
if not converted to
shares
shares
2020
2020
2021
2021
2022
2022
5/09/2019
5/09/2019
20/11/2019
20/11/2019
50% on 1/10/2021;
50% on 1/10/2021;
50% on 1/10/2022
50% on 1/10/2022
50% on 30/10/2021;
50% on 30/10/2021;
50% on 30/10/2022
50% on 30/10/2022
50% on 1/1/2022;
50% on 1/1/2022;
50% on 1/1/2023
50% on 1/1/2023
4/09/2020
4/09/2020
20/11/2019
20/11/2019
50% on 1/10/2022;
50% on 1/10/2022;
50% on 1/10/2023
50% on 1/10/2023
50% on 30/10/2022;
50% on 30/10/2022;
50% on 30/10/2023
50% on 30/10/2023
50% on 1/1/2023;
50% on 1/1/2023;
50% on 1/1/2024
50% on 1/1/2024
7/09/2021
7/09/2021
20/11/2019
20/11/2019
50% on 1/10/2023;
50% on 1/10/2023;
50% on 1/10/2024
50% on 1/10/2024
50% on 30/10/2023;
50% on 30/10/2023;
50% on 30/10/2024
50% on 30/10/2024
50% on 1/1/2024;
50% on 1/1/2024;
50% on 1/1/2025
50% on 1/1/2025
Remuneration Policy of Key Management Personnel
Remuneration Policy of Key Management Personnel
The objective of the Company’s executive reward framework is set to attract and retain the most qualified and
The objective of the Company’s executive reward framework is set to attract and retain the most qualified and
experienced Directors and senior executives. The Board ensures that executive reward satisfies the following key
experienced Directors and senior executives. The Board ensures that executive reward satisfies the following key
criteria for good reward governance practices:
criteria for good reward governance practices:
• Competitiveness
• Competitiveness
• Acceptability to shareholders
• Acceptability to shareholders
• Performance linkage
• Performance linkage
• Capital management
• Capital management
Non-executive Directors
Non-executive Directors
The Board’s policy is to remunerate non-executive Directors at market rates for comparable companies for time,
The Board’s policy is to remunerate non-executive Directors at market rates for comparable companies for time,
commitment and responsibilities. The Board determines payments to the non-executive Directors and reviews their
commitment and responsibilities. The Board determines payments to the non-executive Directors and reviews their
remuneration annually based on market practice, duties and accountability. The maximum aggregate amount of fees
remuneration annually based on market practice, duties and accountability. The maximum aggregate amount of fees
that can be paid to non-executive Directors is subject to approval by shareholders at the Annual General Meeting and
that can be paid to non-executive Directors is subject to approval by shareholders at the Annual General Meeting and
is currently set at $400,000 as approved by shareholders at the 2019 AGM. Fees for non-executive Directors are not
is currently set at $400,000 as approved by shareholders at the 2019 AGM. Fees for non-executive Directors are not
linked to the performance of the Company.
linked to the performance of the Company.
Directors’ Fees
Directors’ Fees
A Director may be paid fees or other amounts as the Directors determine where a Director performs special duties or
A Director may be paid fees or other amounts as the Directors determine where a Director performs special duties or
otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed
otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed
for reasonable out of pocket expenses incurred as a result of their Directorship or any special duties.
for reasonable out of pocket expenses incurred as a result of their Directorship or any special duties.
16 | PAINCHEK LIMITED
3
3
Service Agreements
Philip Daffas, Managing Director (appointed 30 September 2016)
The Company entered into an Executive Services Agreement (“Agreement”) with Mr Philip Daffas pursuant to which
Mr Daffas was appointed as Managing Director of the Company as at 30 September 2016 which was varied on 8
October 2019. The key terms of the Agreement are:
• A salary of $250,000 per annum inclusive of superannuation;
• A short term incentive of up to $150,000 per annum at the boards discretion;
• An invitation to apply in respect of each of FY2020, FY2021 and FY2022 for an award of the number of
performance rights equivalent to $200,000 divided by the volume weighted average price (VWAP) of PainChek
Ltd shares, calculated 5 days either side of and including the date of announcement of the Company’s annual
statutory results for the financial year preceding the financial year of the Award, with vesting conditional on
terms described above.
The Agreement may be terminated by either party at any time on the giving of not less than three (3) months’ notice
in writing.
Iain McAdam, Chief Financial Officer (appointed 22 March 2021)
The Company entered into an Employment Agreement (“Agreement”) with Mr Iain McAdam pursuant to which Mr
McAdam was appointed as Chief Financial Officer of the Company as at 22 March 2021. The key terms of the
Agreement are:
• A salary of $251,142 per annum inclusive of superannuation;
• A short term incentive of up to 20% of base salary, excluding superannuation, on achievement of the Company’s
and the Employee’s annual goals and payable at the discretion of the PainChek Board;
• An offer of 5 million options in accordance with the Company’s Long Term Incentive Plan (“LTIP”), 25% vest after
12 months of the grant date and the balance in quarterly instalments over the next 3 years, subject to continued
employment and with a restriction on disposal of underlying shares (assuming options have vested and exercised)
for 2 years from the date of issue of the options.
The Agreement may be terminated by either party at any time on the giving of not less than three (3) months’ notice
in writing.
Retirement Benefits
Other retirement benefits may be provided directly by the Company if approved by shareholders. However, no
retirement benefits other than statutory superannuation are currently paid.
4
PAINCHEK LIMITED | 17
DIRECTORS’ AND EXECUTIVE OFFICERS’ EMOLUMENTS
(a) Details of Key Management Personnel
Name
Executives
Philip Daffas
Iain McAdam
Position
Term
Managing Director
Chief Financial Officer
From 30 September 2016
From 22 March 2021
Non-Executive Directors
John Murray
Adam Davey
Ross Harricks
Cynthia Payne
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
From 30 September 2016
From 30 September 2014
From 30 September 2016
From 30 March 2022
Except as detailed in Notes (b) – (e) to the Remuneration Report, no key management personnel have received or
become entitled to receive, during or since the financial year, a benefit because of a contract made by the Company
or a related body corporate with key management personnel, a firm of which a member of key management
personnel is a member or an entity in which a member of key management has a substantial financial interest.
18 | PAINCHEK LIMITED
5
(b) Compensation of Key Management Personnel
Remuneration Policy
The Board of Directors, comprising a majority of Non-Executive Directors, is responsible for determining and
reviewing compensation arrangements for the key management personnel.
The Board will assess the
appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant
employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the
retention of a high-quality Board and executive team. Remuneration of Directors is set out below.
The value of remuneration received, or receivable, by key management personnel for the financial year to 30 June
2022 is as follows:
2022
Short Term
Employee
Benefits
Equity
Compensation
Post-
employment
Performance
related %
Base
Salary
and
Fees
Cash
Bonus
Value of
Options
Performance
Rights
Superannuation
Contributions
$
$
$
$
$
Directors
John Murray
Philip Daffas
Ross Harricks
Adam Davey
Cynthia Payne
Total Directors
80,000
-
227,273 52,500
-
40,000
40,000
20,000
-
-
407,273 52,500
-
-
-
-
-
-
14,995
108,083
7,498
7,498
-
138,074
Iain McAdam
228,311
4,281
Total
635,584 56,781
137,742
137,742
-
138,074
-
22,727
-
-
-
22,727
22,831
45,558
Total
$
94,995
410,583
47,498
47,498
20,000
620,574
393,165
1,013,739
16%
39%
16%
16%
0%
22%
35%
27%
2021
Short Term
Employee
Benefits
Equity
Compensation
Post-
employment
Performance
related %
Base
Salary
and
Fees
Cash
Bonus
Value of
Options
Performance
Rights
Superannuation
Contributions
$
$
$
$
$
Directors
John Murray
Philip Daffas
Ross Harricks
Adam Davey
Total Directors
Iain McAdam
Ian Hobson
73,059
231,507
36,530
40,000
381,096
64,103
119,400
-
75,000
-
-
75,000
-
-
Total
564,599
75,000
-
-
-
-
-
41,147
-
41,147
39,492
145,162
19,746
19,746
224,146
-
-
224,146
6,941
18,493
3,470
-
28,904
6,090
-
34,994
Total
$
119,492
470,162
59,746
59,746
709,146
111,340
119,400
939,886
33%
47%
33%
33%
32%
37%
0%
28%
6
PAINCHEK LIMITED | 19
c) Shares Held by Key Management Personnel
2022
Balance at 1
July 2021
Performance
Rights Converted
Bought &
(Sold)
Shares
issued in
lieu of cash
Other
Balance at 30
June 2022
Directors
John Murray
Philip Daffas
Ross Harricks
Adam Davey
Cynthia Payne
12,486,402
20,499,581
6,243,201
9,783,965
-
49,013,149
Other key management personnel
Iain McAdam
12,961
49,026,110
412,791
-
206,396
206,396
-
825,583
-
825,583
2021
Balance at 1
July 2020
Performance
Rights Converted
Bought &
(Sold)
Directors
John Murray
Philip Daffas
Ross Harricks
Adam Davey
12,299,748
20,499,581
6,149,874
9,690,638
48,639,841
Other key management personnel
Iain McAdam
Ian Hobson
-
-
186,654
93,327
93,327
373,308
-
-
48,639,841
373,308
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,899,193
20,499,581
6,449,597
9,990,361
-
-
-
49,838,732
-
-
-
-
12,961
49,851,693
Shares
issued in
lieu of cash
Other
Balance at 30
June 2021
-
-
-
-
-
-
-
-
12,486,402
20,499,581
6,243,201
9,783,965
-
-
49,013,149
12,961
-
12,961
-
-
-
-
12,961
-
-
-
49,026,110
20 | PAINCHEK LIMITED
7
d) Options Held by Key Management Personnel
2022
Balance at
1 July 2021
Received as
Remuneration
Exercise
of
Options
Other
Balance at
30 June
2022
Vested and
exercisable
Unvested
Directors
John Murray
Philip Daffas
Ross Harricks
Adam Davey
Cynthia Payne
-
-
-
-
-
-
Other key management personnel
Iain McAdam
5,000,000
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
1,562,500
3,437,500
5,000,000
1,562,500
3,437,500
2021
Balance at
1 July 2020
Received as
Remuneration
Exercise
of
Options
Other
Balance at
30 June
2021
Vested and
exercisable
Unvested
Directors
John Murray
Philip Daffas
Ross Harricks
Adam Davey
-
-
-
-
-
-
-
-
-
-
Other key management personnel
Iain McAdam
Ian Hobson
-
-
5,000,000
-
-
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
-
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
-
5,000,000
8
PAINCHEK LIMITED | 21
e) Performance Rights Held by Key Management Personnel
2022
Directors
John Murray
Philip Daffas
Ross Harricks
Adam Davey
Cynthia Payne
Balance
at 1 July
2021
412,791
2,997,227
206,396
206,396
Received as
Remuneration
Conversion
to shares
Expired
Balance
at 30
June
2022
Vested
and
Exercisable
Unvested
792,079
(412,791)
-
792,079
792,079
-
3,960,396
396,040
-
(206,396)
(466,635) 6,490,988
396,040
-
- 6,024,353
-
396,040
396,040
(206,396)
-
-
-
-
-
396,040
-
396,040
-
-
-
3,822,810
5,544,555
(825,583)
(466,635) 8,075,147
1,584,159 6,024,353
Other key management personnel
Iain McAdam
-
-
-
-
-
-
-
3,822,810
5,544,555
(825,583)
(466,635) 8,075,147
1,584,159 6,024,353
2021
Directors
John Murray
Philip Daffas
Ross Harricks
Adam Davey
Balance
at 1 July
2020
186,654
933,270
93,327
93,327
Received as
Remuneration
Conversion
to shares
Other
Balance
at 30
June
2021
Vested
and
Exercisable
Unvested
412,791
2,063,957
206,396
206,396
(186,654)
-
(93,327)
(93,327)
-
412,791
- 2,997,227
206,396
-
206,396
-
412,791
-
- 2,997,227
-
-
206,396
206,396
1,306,578
2,889,540
(373,308)
- 3,822,810
825,583 2,997,227
Other key management personnel
Iain McAdam
-
1,306,578
-
2,889,540
-
(373,308)
-
-
- 3,822,810
-
-
825,583 2,997,227
Share, Performance Rights and Option Holdings
All equity dealings with Directors have been entered into with terms and conditions no more favourable than those
that the entity would have adopted if dealing at arm’s length.
f) Compensation Options and Performance Rights
Options
During the financial year ended 30 June 2022, Nil options were granted by the Company to Directors or Other Key
Management Personnel (2021: 5,000,000) and Nil options (2021: Nil) were exercised by Directors or Other Key
Management Personnel.
Performance rights
During the financial year ended 30 June 2022, 5,544,555 performance rights were granted by the Company to
Directors in lieu of cash remuneration following the shareholder approval on 20 November 2019 (2021: 2,889,540).
1,584,159 of these performance rights (2021: 825,583) were exercised by Directors in July 2022.
22 | PAINCHEK LIMITED
9
CEO performance rights
The fair value at the date of grant of performance rights issued to the CEO is determined using a Monte-Carlo option
pricing model that takes into account the exercise price, the underlying share price at the time of issue, the term of
the performance right, the underlying share’s expected volatility, expected dividends and the risk free interest rate
for the expected life of the instrument.
The value of the performance rights were calculated using the inputs shown below:
Tranche 1A
Tranche 1B
Tranche 2A
Tranche 2B
Tranche 3A
Tranche 3B
Grant date
20 November
2019
20 November
2019
20 November
2019
20 November
2019
20 November
2019
20 November
2019
Exercise price
Nil
Nil
Nil
Nil
Nil
Nil
Vesting conditions
& vesting dates
Share price at
date of grant
Refer section “CEO remuneration review” above for vesting conditions and vesting dates
$0.29
$0.29
$0.29
$0.29
$0.29
$0.29
Expiry date
1 January 2022
1 January
2023
1 January
2023
1 January
2024
1 January
2024
1 January
2025
Life of the
instruments (years)
Underlying share
price volatility
2.12
100%
Expected dividends
Nil
3.12
100%
Nil
3.12
100%
Nil
4.12
100%
Nil
4.12
100%
Nil
5.12
100%
Nil
Risk free interest
rate
Pricing model
Fair value per
instrument
0.80%
0.80%
0.80%
0.80%
0.80%
0.80%
Monte-Carlo
Simulation
Monte-Carlo
Simulation
Monte-Carlo
Simulation
Monte-Carlo
Simulation
Monte-Carlo
Simulation
Monte-Carlo
Simulation
$0.1979
$0.1980
$0.1711
$0.1773
$0.1763
$0.1536
Non-executive director performance rights
The fair value at the date of grant of performance rights issued to the non-executive directors was calculated based
on the share price at the date of issue ($0.29) (tranche 1), the value of the award specified in applicable years 2021
(tranche 2) and 2022 (tranche 3) over the vesting period.
The value of the performance rights were calculated using the inputs shown below:
Grant date
Exercise price
Vesting date
Tranche 1
Tranche 2
Tranche 3
20 November 2019
20 November 2019
20 November 2019
Nil
30 June 2020
Nil
Nil
30 June 2021
30 June 2022
Share price at date of grant
$0.29
$0.29
$0.29
Expiry date
30 September 2020
30 September 2021
30 September 2022
g) Short term employee benefits
These amounts include director and consulting fees paid to non-executive directors as well as salary and paid
leave benefits awarded to executive directors.
h) Post-employment benefits
These amounts are superannuation contributions made during the year.
10
PAINCHEK LIMITED | 23
Transactions with Directors and Director related entities
There were no other transactions with Directors or Director related entities during the year.
Loans to Key Management Personnel
There was no loans to KMP during the year.
End of Remuneration Report
ENVIRONMENTAL REGULATIONS AND PROCEEDINGS
The Group’s operations are not subject to any significant environmental regulations where it operates.
MEETINGS OF DIRECTORS
The number of Directors’ meetings held during the financial year each director held office and the number of
meetings attended by each director are:
Director
John Murray
Philip Daffas
Ross Harricks
Adam Davey
Cynthia Payne
Directors Meetings
Meetings
Attended
13
13
13
13
3
Number Eligible
to Attend
13
13
13
13
5
The full Board currently fulfils the duties of the Remuneration Committee and the Audit Committee.
OPTIONS
At the date of this report, the following options over new ordinary shares in the Company were on issue.
Type
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Date of Expiry
Exercise Price
Number under Option
9 November 2023
26 September 2024
23 March 2025
28 April 2025
25 August 2025
24 September 2025
1 March 2026
$0.032
$0.11
$0.09
$0.095
$0.084
$0.075
$0.051
4,000,000
3,000,000
1,000,000
500,000
5,000,000
7,000,000
12,500,000
5,000,000 ordinary shares were issued (2021: Nil) as a result of the exercise of options during or since the financial
year ended 30 June 2022.
24 | PAINCHEK LIMITED
11
PERFORMANCE RIGHTS
At the date of this report, the following performance rights, convertible for Nil consideration at a ratio of 1:1 into new
ordinary shares in the Company were on issue.
Granted to
CEO
CEO
CEO
CEO
CEO
Date Right
granted
Expiry date
20/11/2019
20/11/2019
20/11/2019
20/11/2019
20/11/2019
1/01/2023
1/01/2023
1/01/2024
1/01/2024
1/01/2025
Share
price at
date of
grant
$0.29
$0.29
$0.29
$0.29
$0.29
Value of
performance
rights
approved at
the AGM
No. of
performance
rights under
plan
$92,779
$58,904
$59,421
$60,300
$56,014
466,635
1,031,979
1,031,978
1,980,198
1,980,198
6,490,988
1,584,159 ordinary shares were issued to Non-executive directors as a result of the conversion of performance
rights since the financial year ended 30 June 2022.
EQUITY HOLDINGS
The relevant interests of each director in the Company’s share capital, options and performance rights at the date of
this report are as follows:
Directors
John Murray
Adam Davey
Philip Daffas
Ross Harricks
Cynthia Payne
Total
Insurance of officers
Number
of Shares
Number
of Options
Number of
Performance Rights
13,691,272
10,386,401
20,499,581
6,845,637
-
51,422,891
-
-
-
-
-
-
-
-
6,490,988
-
-
6,490,988
To the extent permitted by law, the Company has indemnified (fully insured) each director and the secretary of the
Company. The liabilities insured include costs and expenses that may be incurred in defending civil or criminal
proceedings (that may be brought) against the officers in their capacity as officers of the Company or a related body,
and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other
than where such liabilities arise out of conduct involving a willful breach of duty by the officers or the improper use by
the officers of their position or of information to gain advantage for themselves or someone else or to cause
detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance
against legal costs and those relating to other liabilities. The company has not insured against or indemnified its
auditor.
Proceedings on behalf of the Group
The Group is not aware that any person has applied to the court under section 237 of the Corporations Act 2001 for
leave to bring proceedings on behalf of the Group, or to intervene in any proceedings in which the Group is a party, for
the purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the court under section 237
of the Corporations Act 2001.
12
PAINCHEK LIMITED | 25
Non-audit Services
The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Group and/or the Group are important.
The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise
the auditor independence requirements of the Corporations Act 2001 for the following reasons:
•
all non-audit services have been reviewed to ensure they do not impact the impartiality and objectivity of the
auditor;
•
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
Details of the amounts paid or payable to the auditor, BDO Audit Pty Ltd for audit services provided during the year
are set out in note 21 to the financial report.
Non-audit services
BDO Audit Pty Ltd
Other assurance services (assessment of payroll tax and R&D)
Total remuneration for non-audit services
2022
$
2021
$
-
-
6,000
6,000
Auditor’s independence declaration
The auditor’s independence declaration is included on the following page.
Signed in accordance with a resolution of directors.
John Murray
Chairman
31 August 2022, Sydney, NSW
26 | PAINCHEK LIMITED
13
Auditor’s independence declaration
Auditor’s independence declaration
PainChek Limited
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek Street
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY T R MANN TO THE DIRECTORS OF PAINCHEK LIMITED
As lead auditor of PainChek Limited for the year ended 30 June 2022, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of PainChek Limited and the entities it controlled during the period.
T R Mann
Director
BDO Audit Pty Ltd
Brisbane, 31 August 2022
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
14
PAINCHEK LIMITED | 27
20
Consolidated statement of profit or loss and other
comprehensive income for the year ended 30 June 2022
Revenue
Other income – R&D Grant & other rebates
Other income – Government Grant
Cost of sales
Research and development expenses
Marketing and business development expenses
Corporate administration expenses
Share based payment expenses
Loss before income tax
Income tax benefit
Consolidated
Consolidated
Note
30 June 2022
$
30 June 2021
$
3
4
5
6
14
7
994,148
1,102,500
750,796
(1,237,392)
(2,350,816)
(1,655,464)
(2,775,117)
(549,191)
233,887
1,136,601
1,750,000
(639,010)
(2,652,106)
(1,570,900)
(3,612,398)
(709,720)
(5,720,534)
(6,063,647)
-
-
Loss for the period attributable to Owners of PainChek Limited
(5,720,534)
(6,063,647)
Other comprehensive income, net of income tax
Exchange differences relating to translation of foreign
operations
Other comprehensive income for the period, net of income tax
Total comprehensive loss for the period
Loss and total comprehensive loss attributable to:
Owners of PainChek Limited
5,177
-
(7,370)
-
(5,715,357)
(6,071,017)
(5,715,357)
(6,071,017)
Loss per share:
Basic and diluted (cents per share)
8
(0.50)
(0.55)
Notes to the financial statements are included on pages 32 to 55.
28 | PAINCHEK LIMITED
15
Consolidated statement of financial position
as at 30 June 2022
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
30 June 2022
$
Consolidated
30 June 2021
$
Note
18
9
10
11
12
13
14
6,141,422
484,709
11,419,512
372,929
6,626,131
11,792,441
26,172
26,172
6,652,303
18,455
18,455
11,810,896
1,641,548
187,341
1,828,889
1,828,889
4,823,414
3,399,364
167,153
3,566,516
3,566,516
8,244,379
32,484,187
13,344,599
(41,005,372)
30,738,987
12,790,230
(35,284,838)
4,823,414
8,244,379
Notes to the financial statements are included on pages 32 to 55.
16
PAINCHEK LIMITED | 29
Consolidated statement of changes in equity
for the year ended 30 June 2022
Company
Consolidated
Balance at 1 July 2020
Loss for the year
Other comprehensive income
Total comprehensive
loss for the period
Transactions with owners
in their capacity as owners:
Issue of ordinary shares
(refer to note 13)
Share issue costs (refer to note 13)
Recognition of share based
payments (refer to note 14)
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
$
Note
21,261,768
-
-
12,095,110
-
(14,600)
(29,228,421)
(6,063,647)
7,230
4,128,457
(6,063,647)
(7,370)
-
(14,600)
(6,056,417)
(6,071,017)
10,000,000
-
(522,781)
-
709,720
-
-
-
10,000,000
(522,781)
709,720
Balance at 30 June 2021
30,738,987
12,790,230
(35,284,838)
8,244,379
Consolidated
Balance at 1 July 2021
Loss for the year
Other comprehensive income
Total comprehensive
loss for the period
Transactions with owners
in their capacity as owners:
Issue of ordinary shares
(refer to note 13)
Share issue costs (refer to note 13)
Issue of shares on exercise of
options (Refer to note 13)
Recognition of share based
payments (refer to note 14)
Balance at 30 June 2022
30,738,987 12,790,230
(35,284,838)
8,244,380
-
-
-
-
(5,720,534)
(5,720,534)
5,177
-
5,177
5,177
(5,720,534)
(5,715,356)
1,763,200
(198,000)
180,000
-
-
-
-
549,191
-
-
-
-
1,763,200
(198,000)
180,000
549,191
32,484,187 13,344,599
(41,005,372)
4,823,414
Notes to the financial statements are included on pages 32 to 55.
30 | PAINCHEK LIMITED
17
Consolidated statement of cash flows
for the year ended 30 June 2022
Cash flows from operating activities
Receipts from customers
Receipt from government grant
Payments to suppliers and employees
Payroll Tax liability paid
Interest received
R&D Grant and other rebates
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of share issue costs
Net cash (used in)/provided by financing activities
Consolidated
Consolidated
Year ended
Note
30 June 2022
$
30 June 2021
$
11
18.1
1,292,223
-
(7,996,631)
(1,400,414)
5,195
1,102,127
(6,997,500)
168,293
1,353,316
(6,787,569)
-
19,090
1,125,820
(4,121,050)
(21,960)
(21,960)
(60,032)
(60,032)
13
13
1,943,200
(198,000)
10,000,000
(522,781)
1,745,200
9,477,219
Net increase / (decrease) in cash and cash equivalents
(5,274,260)
5,296,136
Cash and cash equivalents at the beginning of the period
Effect of FX on cash balances
Cash and cash equivalents at the end of the period
18
11,419,512
(3,830)
6,141,422
6,120,090
3,286
11,419,512
Notes to the financial statements are included on pages 32 to 55.
18
PAINCHEK LIMITED | 31
Notes to the financial statements for the year ended 30 June 2022
1.
Significant accounting policies
Basis of preparation
The consolidated financial statements comprises PainChek Limited (referred to as the “Company” or
“Parent Entity”) and its controlled entities (together referred to as the “Consolidated Entity” or the
“Group”) and is a listed public company, incorporated and domiciled in Australia. The Group principal
activities are development and commercialization of mobile medical device applications that provide
pain assessment for individuals that are unable to communicate with their carers.
The financial report is presented in Australian dollars.
The financial report is a general purpose financial report, which has been prepared in accordance with
the Corporations Act 2001 and Australian Accounting Standards and Interpretations.
The financial information has been prepared on the accruals basis and is based on historical costs and
does not take into account changing money values. Cost is based on the fair values of the consideration
given in exchange for assets.
Statement of Compliance
The financial report was authorised for issue on 31 August 2022.
The financial report complies with Australian Accounting Standards, which include Australian equivalents
to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures that the
financial report, comprising the financial statements and notes thereto, complies with International
Financial Reporting Standards (“IFRS”).
Standards and Interpretations on issue not yet adopted
Certain new accounting standards and interpretations have been published that are not yet mandatory
for 30 June 2022 reporting periods. The Consolidated Entity has decided against early adoption of these
standards. The Consolidated Entity has assessed the impact of these new standards and interpretations
and does not expect that there would be a material impact on the Consolidated Entity in the current or
future reporting periods and on foreseeable future transactions.
New and amended standards adopted by the Group
The accounting policies adopted are consistent with those of the previous financial year. Several other
amendments and interpretations were applied for the first time during the year, but these changes did
not have an impact on the Consolidated Entity’s financial statements, and hence, have not been
disclosed.
Going concern basis
The financial statements have been prepared on the going concern basis, which contemplates continuity
of normal business activities and the realisation of assets and settlement of liabilities in the normal
course of business.
As disclosed in the financial statements, the consolidated entity has net operating cash outflows for the
year of $6,997,500 (2021: 4,121,050) and net current assets of $4,823,414 (30 June 2021: $8,244,379).
The consolidated entity also generated a loss after tax of $5,720,534 (2021: $6,063,647).
32 | PAINCHEK LIMITED
19
The ability of the consolidated entity to continue as a going concern is principally dependent upon one or
more of the following conditions:
•
•
the successful commercialisation of its intellectual property in a manner that generates
sufficient operating cash inflows; and
the ability of the consolidated entity to raise sufficient capital as and when necessary.
These conditions give rise to material uncertainty which may cast significant doubt over the consolidated
entity’s ability to continue as a going concern. The directors believe that the going concern basis of
preparation is appropriate due to its recent history of raising capital and the significant progress made
on exploiting its intellectual property, control over discretionary expenditure projects and conversion of
customers onto commercial terms.
Should the consolidated entity be unable to continue as a going concern, it may be required to realise its
assets and extinguish its liabilities other than in the ordinary course of business, and at amounts that
differ from those stated in the financial report. This financial report does not include any adjustments
relating to the recoverability and classification of recorded asset amounts or the amounts or
classification of liabilities and appropriate disclosures that may be necessary should the consolidated
entity be unable to continue as a going concern.
Significant accounting policies of the Consolidated Entity
Set out below are the significant accounting policies that have been applied in the preparation of the
consolidated financial statements:
Fair Values
The fair values of consolidated entity’s financial assets and financial liabilities approximate their carrying
values due to short –term in nature. No financial assets or financial liabilities are readily traded on
organised markets in standardised form.
(a)
Principles of Consolidation
The consolidated financial statements comprise the financial statements of all subsidiaries of the
Company and the results of all subsidiaries from the date that control was obtained. The Company
controls another entity when the Company is exposed to, or has the 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 fully transferred. They are
deconsolidated from the date control ceases.
The financial statement of the subsidiary is prepared for the same reporting period as the parent
entity, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions,
income and expenses and profit and losses resulting from intra-group transactions have been
eliminated in full.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change
in ownership interest without a loss of control is accounted for as an equity transaction.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
financial statements. Losses incurred by the consolidated entity are attributed to the non-controlling
interests in full, even if that results in a deficit balance.
20
PAINCHEK LIMITED | 33
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including
goodwill, liabilities and non-controlling interest in the subsidiary, together with any cumulative
translation differences in equity. The consolidated entity recognises the fair value of the
consideration received and the fair value of any investment retained together with any gains or losses
in profit or loss.
(b)
Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted by the reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred
income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of 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 profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates
or interests in joint ventures, and the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from
the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
or
• when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only recognised to
the extent that it is probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are
reassessed at each reporting date and are recognised to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to be recovered.
34 | PAINCHEK LIMITED
21
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit
or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to
the same taxable entity and the same taxation authority.
(c)
Impairment of non – financial Assets
The Group assesses at each reporting date whether there is an indication that an asset may be
impaired.
If any such indication exists, or when annual impairment testing for an asset is required, the Company
makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of
its fair value less costs to sell and its value in use and is determined for an individual asset, unless the
asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such
cases the asset is tested for impairment as part of the cash generating unit to which it belongs. When
the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or
cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset unless the asset is carried at
revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A previously recognised impairment loss is
reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. If that is the case the carrying amount of the
asset is increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is
carried at revalued amount, in which case the reversal is treated as a revaluation increase.
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s
revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(d)
Share-based Payment Transactions
The cost of equity-settled transactions with employees is measured by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using a
suitable option pricing model.
22
PAINCHEK LIMITED | 35
In valuing equity-settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of the Company.
The cost of equity-settled transactions is recognised, together with a corresponding increase in
equity, over the period in which the performance and/or service conditions are fulfilled, ending on
the date on which the relevant recipient of the equity becomes fully entitled to the award (the
vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until
vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Company’s best
estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the
likelihood of market performance conditions being met as the effect of these conditions is included in
the determination of fair value at grant date. The profit or loss charge or credit for a period
represents the movement in cumulative expense recognised as at the beginning and end of that
period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
only conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. In addition, an expense is recognised for any modification that
increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to
the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original
award, as described in the previous paragraph.
(e)
Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are 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. Bank overdrafts are shown within
borrowings in current liabilities in the statement of financial position.
For the purpose of the Statement of Cash Flows, cash includes on hand and other funds held at call
net of bank overdrafts.
(f)
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 provision for impairment. Trade receivables are
generally due for settlement within 30 days.
The group applies the simplified approach permitted by AASB 9, which requires expected
lifetime losses to be recognised from initial recognition of the receivables. Management has
determined that assessment of expected credit loss associated with trade receivables is immaterial.
36 | PAINCHEK LIMITED
23
(g)
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 plant and
equipment over their expected useful lives as follows:
Plant and equipment
Less than 5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate,
at each reporting date.
An item of 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.
(h)
Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method. These amounts represent liabilities for goods and
services provided to the Group prior to the end of the financial year and which are unpaid. Due to
their short-term nature they are measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
(i)
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 within 12 months of the reporting date are recognised in current
liabilities in respect of employees' services up to the reporting date and 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 recognised in non-current liabilities, provided there is an unconditional right to
defer settlement of the liability. The liability is measured as 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 expect future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market yields at the reporting
date on corporate bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they
are incurred.
(j)
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.
PAINCHEK LIMITED | 37
24
(k)
Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the Group, adjusted to
exclude any costs of servicing equity, divided by the weighted average number of ordinary shares,
adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the Group, adjusted
for:
•
•
the weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares;
costs of servicing equity;
•
the after tax effect of dividends and interest associated with dilutive potential ordinary shares
that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result
from the dilution of potential ordinary shares divided by the weighted average number of
ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
(l)
Revenue from Contracts with Customers and Government Grants
Software subscriptions
i)
Revenue from the sale of term (subscription) licences is recognised on a straight line basis over the
subscription term.
Training
ii)
Revenue from the provision of training services is recognised typically at a point in time when the
Group has provided training and has met the performance obligation.
Software support (maintenance)
iii)
Revenue for software support is recognised on a straight line basis over the service period as
performance obligations require the Consolidated Entity to respond to requests made by customers
to provide technical product support and unspecified updates, upgrades and enhancements on a
when-available and if-available basis.
Incremental Costs of obtaining Customer Contracts
iv)
Commissions on software subscriptions are capitalised and amortised over the term, where the term
is greater than 12 months.
Contract Liabilities
v)
A contract liability is recognised when a customer initially purchases services and goods, it is released
as they are delivered to the customer.
Contract Assets (Trade Receivables and Work in progress)
vi)
Trade receivables are amounts due from customers for goods sold or services performed in the
ordinary course of business. They are generally due for settlement within 30 days and therefore are
all classified as current. Trade receivables are recognised initially at the amount of consideration that
is unconditional unless they contain significant financing components, when they are recognised at
fair value. The Company holds the trade receivables with the objective to collect the contractual cash
flows and therefore measures them subsequently at amortised cost using the effective interest
method.
Work in progress represents costs incurred and profit recognised for services that are in progress at
reporting date and the Company has an enforceable right to payment for its performance completed
to date.
38 | PAINCHEK LIMITED
25
Unsatisfied performance obligations
vii)
The Company continues to recognise its contract liabilities under AASB 15 in respect of any
unsatisfied performance obligations in the Statement of Financial Position.
Financing components
viii)
The Company does not recognise adjustments to transition prices or Contract balances where the
period between the transfer of promised goods or services to the customer and payment by
customer does not exceed one year.
The Company reviewed its prior year contracts and did not identify material adjustments in timing
and amounts recognised as revenue in prior years.
Government grants
ix)
Government grants are recognised where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with. When the grant relates to an expense
item, it is recognised as income on a systematic basis over the periods that the related costs, for
which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised
as income in equal amounts over the expected useful life of the related asset.
(m)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or
reclassifies items in its financial statements, an additional (third) statement of financial position as at
the beginning of the preceding period in addition to the minimum comparative financial statements is
presented. No adjustments was made to prior year numbers.
(n)
Significant accounting judgements and key estimates
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expense. Actual results may differ from these estimates.
In preparing these statements, the key estimates made by management in applying the Consolidated
Entity’s accounting policies in particular to:
• Going concern – refer note 1 above.
• The valuation of share-based payments - refer to note 14;
• Recognition of Government Grant income when milestones are reasonably assured of being
met as detailed in notes 4, 5 and 11; and
• Recognition of a payroll tax liability related to options issued – refer to note 11.
2.
Segment information
Operating segments are presented using the ‘management approach’, where information presented is
on the same basis as the internal reports provided to the Chief Operating Decision Makers (CODM). The
CODM is responsible for the allocation of resources to operating segments and assessing their
performance. The Group operates predominantly in one segment, being the sale of its pain assessment
solutions. The primary financial statements reflects this segment.
26
PAINCHEK LIMITED | 39
3.
Revenue
Revenue from Contracts with Customers
Interest income
Total Revenue
4.
R&D and other rebates
ATO cash boost
COVID-19 government payments
Research & Development Tax Incentive
Total Other Income
Consolidated
2022
$
978,567
15,581
Consolidated
2021
$
214,798
19,089
994,148
233,887
Consolidated
2022
$
Consolidated
2021
$
-
9,809
1,092,691
1,102,500
50,000
28,280
1,058,320
1,136,601
Research and development tax incentive
The consolidated entity is eligible for the Commonwealth Government research and development tax
incentive. To be eligible the company must meet stringent guidelines on what represents both core and
supporting activities of research and development. Government grants are not recognised until there is
reasonable assurance that the company will comply with the conditions attaching to them and the
grants will be received which generally coincides with lodgement of the return with the regulatory
body.
5. Other income – government grants
Government grant
Total government grants
Consolidated
2022
$
750,796
Consolidated
2021
$
1,750,000
750,796
1,750,000
In December 2019, the Australian Government signed a grant funding contract with the Company for
the national trial of the PainChek application for Australians with dementia living in residential aged
care facilities. The Grant ended 31 May 2021.
The intended outcome of the grant is to improve diagnosis and management of pain in people living
with dementia in residential aged care. During this period, PainChek Limited also entered into
agreements with end users acknowledging the Australian Government grant and allowing for the first
period of those agreements to be funded in accordance with the Australian Government grant
agreement.
During the year, the Group received $Nil (FY21: $1,353,316) pursuant to the terms of the funding
contract of which $750,796 (FY21: $1,750,000) has been recognised as income and at 30 June 2022 the
balance of $102,520 (FY21: $853,316) has been recognised as deferred income – see note 11.
40 | PAINCHEK LIMITED
27
6.
Loss for the year
Loss for the year has been arrived at after charging the
following items of expenses:
Corporate administration expenses
Salaries & oncosts
Superannuation
Payroll Tax assessment
Board fees
Company secretary fees
Consultants fees
Travel
Legal and professional fees
Regulatory
Share registry fees
ASX
Audit & tax
IT & telecommunications
Other administration expenses
7.
Income taxes
7.1
Income tax recognised in profit or loss
Current tax expense/(income)
Deferred tax expense/(income)
Tax losses not recognised
Total Tax expense/(income)
Consolidated
Consolidated
2022
$
842,397
80,873
-
180,000
77,330
71,162
83,757
127,099
215,677
52,389
58,831
186,057
330,915
468,630
2,775,117
2021
$
426,174
210,043
1,400,414
160,000
131,400
272,234
28,156
116,343
8,313
55,169
80,035
185,202
144,246
394,669
3,612,398
Consolidated
Consolidated
2022
$
(1,399,246)
43,550
1,355,696
-
2021
$
(1,501,202)
(49,186)
1,550,388
-
The income tax expense for the year can be reconciled to the accounting loss as follows:
Loss before tax from continuing operations
Income tax expense/ (revenue) calculated at 25% (2021: 26%)
Effect of items that are not assessable/deductible in
determining taxable loss:
Non-deductible expenses
Non-assessable income
Change in Tax Rates
Over/under provision
Effect of unused tax losses not recognised as deferred tax assets
Consolidated
2022
$
Consolidated
2021
$
(5,720,534)
(6,063,646)
(1,430,134)
(1,576,548)
370,867
(290,008)
(9,693)
3,272
1,355,696
-
329,387
(303,227)
-
-
1,550,388
-
The tax rate used for the 2022 was 25% and 2021 was 26% to calculate the reconciliations above being the
corporate tax rate payable by Australian corporate entities on taxable profits under Australian tax law in those
years.
28
PAINCHEK LIMITED | 41
The Company has no franking credits available for recovery in future years.
7.2
Income tax recognised directly in equity
Current tax
Share issue costs calculated at 25% (2021: 26%)
7.3
Unrecognised deferred tax assets
Unused tax losses (revenue) for which no deferred tax assets
have been recognised at 25%
Temporary differences at 25% (2021: 26%)
Consolidated
2022
$
Consolidated
2021
$
(49,500)
(49,500)
(135,923)
(135,923)
Consolidated
2022
$
4,813,067
Consolidated
2021
$
375,314
3,101,481
293,555
All unused tax losses were incurred by Australian entities.
This benefit for tax losses will only be obtained if the specific entity carrying forward the tax losses derives
future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions
for the losses to be realised, and the Group complies with continuity of business / same business test and the
conditions for deductibility imposed by tax legislation.
8.
Loss per share
Basic and diluted loss per share (cents per share)
Consolidated
2022
$
Consolidated
2021
$
(0.50)
(0.55)
The loss and weighted average number of ordinary shares used in the calculation of basic loss per
share are as follows:
Loss for the year attributable to the owners of the Company
(5,720,534)
(6,063,647)
Consolidated
2022
$
Consolidated
2021
$
Consolidated
2022
No.
Consolidated
2021
No.
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share
1,128,290,139
1,111,992,128
Options and Performance Rights on issue are considered to be anti-dilutive while the entity is making
losses.
9.
Trade and other receivables
Trade receivables
Other receivables
Prepayments
At the reporting date, $100,329 trade receivables are past due.
42 | PAINCHEK LIMITED
Consolidated
2022
$
411,946
24,807
47,956
Consolidated
2021
$
124,170
191,652
57,107
484,709
372,929
29
10.
Property, plant and equipment
Cost
Balance at 1 July
Additions
Disposals
Balance at 30 June
Accumulated depreciation
Balance at 1 July
Depreciation expense
Disposals
Balance at 30 June
Net book value
11.
Trade and other payables
Trade creditors
Deferred income
Contract liability
Accruals and other payables
Consolidated
2022
$
126,249
21,960
-
Consolidated
2021
$
66,036
60,032
-
148,209
126,249
Consolidated
2022
$
(107,613)
(14,424)
Consolidated
2021
$
(48,084)
(59,259)
(122,037)
(107,613)
26,172
18,455
Consolidated
2022
$
275,481
102,520
703,703
559,844
Consolidated
2021
$
325,135
853,316
191,893
2,196,172
1,641,548
3,399,364
Trade creditor payment terms are 30 days from end of month.
Deferred income comprises the Federal Government Grant received and recognised as deferred
income until the related costs, for which the grant is intended to compensate, are incurred.
Contract liability is the customer initial payments for subscriptions and training recognised as a
contract liability until the services are delivered. Customer terms vary between 1 month and 1 year
payment in advance.
Payroll Tax liability
Accruals and Other Payables includes $Nil (2021: $1,400,414) Payroll Tax assessment received,
relating to the 30 June 2020 year.
The NSW Office of State Revenue issued an amended 2020 payroll tax assessment in relation to
options issued in 2016 and exercised in 2020. This assessment indicated that PainChek had a liability
of $1,400,414 (including penalties) related to the 2020 financial year.
30
PAINCHEK LIMITED | 43
12.
Provisions
Provision for employee annual leave entitlements
13.
Issued capital
1,195,601,811 fully paid ordinary shares (June 2021:
1,126,804,799)
Consolidated
2022
$
187,341
Consolidated
2021
$
167,153
Consolidated
2022
$
Consolidated
2021
$
32,484,187
30,738,987
Movements during the period
Balance at beginning of the
period
Placement – issued at $0.028
(FY21: $0.11) per share
Exercise of options – exercise
price $0.036
Exercise of performance rights
– exercise price $0.00
Capital raising costs (net of
tax)
Balance at end of period
2022
Number
2021
Number
2022
$
2021
$
1,126,804,799
1,035,522,400
30,738,987
21,261,767
62,971,429
90,909,091
1,763,200
10,000,000
5,000,000
-
180,000
825,583
373,308
-
-
-
1,195,601,811
-
1,126,804,799
(198,000)
32,484,187
(522,781)
30,738,987
Fully paid ordinary shares carry one vote per share and carry the right to dividends. Ordinary shares
participate in the proceeds on winding up of the Company in proportion to the number of shares held.
14. Reserves
Balance at beginning of the reporting period
Share based payments reserve
Foreign currency translation reserve
Total reserves at end of period
Reconciliation of movement in reserves
Opening balance
Foreign exchange gain/loss recognised
Share based payments reserve
Total reserves at end of period
Consolidated
2022
$
Consolidated
2021
$
12,790,231
549,191
5,177
13,344,599
12,095,111
709,720
(14,600)
12,790,231
Share based
payments
reserve
Foreign
exchange
reserve
Total
12,818,453
-
549,191
13,367,644
(28,222)
5,177
-
(23,045)
12,790,231
5,177
549,191
13,344,599
44 | PAINCHEK LIMITED
31
The foreign currency translation reserve records exchange rate differences arising from the translation of
the financial statements of foreign subsidiaries.
The share based payments reserve is used to record the value of share based payments provided to
employees as part of their remuneration and to consultants for services provided.
Financial instruments
15.1
Capital management
The Group manages its capital to ensure entities in the Group will be able to continue as going
concern while maximising the return to stakeholders through the optimisation of the debt and equity
balance. The Group’s overall strategy remains unchanged from 2021.
The Group is not subject to any externally imposed capital requirements.
Given the nature of the business, the Group monitors capital on the basis of current business
operations and cash flow requirements.
15.2
Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Consolidated
2022
$
Consolidated
2021
$
6,141,422
484,709
6,626,131
11,419,512
372,929
11,792,441
835,325
835,325
2,354,155
2,354,155
The fair value of the above financial instruments approximates their carrying values.
15.3 Financial risk management objectives
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group’s objectives, policies and processes for managing those
risks and the methods used to measure them. Further quantitative information in respect of those risks
is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the methods used to measure them from
previous periods unless otherwise stated in this note.
The board has overall responsibility for the determination of the Group’s risk management objectives
and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for
designing and operating processes that ensure the effective implementation of the objectives and
policies to the Group’s finance function.
The Group’s risk management policies and objectives are therefore designed to minimise the potential
impacts of these risks on the Group where such impacts may be material. The board receives monthly
financial reports through which it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets. The overall objective of the board is to set
policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness
and flexibility.
32
PAINCHEK LIMITED | 45
15.4 Market risk
Market risk for the Group arises from the use of interest bearing financial instruments. It is the risk
that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
interest rate (see 16.5 below).
15.5
Interest rate risk management
The sensitivity analyses below have been determined based on the exposure to interest rates for cash
deposits at the end on the reporting period.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for cash
deposits at the end on the reporting period.
If interest rates had been 100 basis points higher/lower and all other variables were held constant, the
Group’s loss for the year ended 30 June 2022 would increase/decrease by $72,000 (2021: $120,000).
15.6 Credit risk management
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 adopted a policy of dealing with creditworthy counterparties
and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss
from defaults. The Group only transacts with entities that are rated the equivalent of investment grade
and above. This information is supplied by independent rating agencies where available and, if not
available, the Group uses other publicly available financial information and its own trading records to
rate its major customers. The Group’s exposure and the credit ratings of its counterparties are
continuously monitored and the aggregate value of transactions concluded is spread amongst approved
counterparties.
The credit risk on other receivables is limited because the counterparties are banks with high credit-
ratings assigned by international credit-rating agencies.
15.7
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, which has
established an appropriate liquidity risk management framework for the management of the Group’s
short-, medium- and long-term funding and liquidity management requirements. The Group manages
liquidity by maintaining adequate banking facilities, by continuously monitoring forecast and actual cash
flows, and by matching the maturity profiles of financial assets and liabilities.
Contractual cash flows
Carrying
Amount
Less than 1
month
1-3
months
3-12
months
1 year to
5 years
Total
contractual cash
flows
$
$
$
$
$
$
2022
Trade and other payables
2021
Trade and other payables
835,325
835,325
2,354,155
2,354,155
-
-
-
-
-
-
835,325
2,354,155
46 | PAINCHEK LIMITED
33
16.
Key management personnel
The aggregate compensation made to directors and other members of key management personnel of
the Company is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
17.
Related party transactions
17.1 Entities under the control of the Group
Consolidated
2022
$
692,365
45,558
275,816
1,013,739
Consolidated
2021
$
639,599
34,994
265,293
939,886
Parent Entity: PainChek Ltd
Australia
Country of
Incorporation
Percentage Owned (%)*
2022
2021
Electronic Pain Assessment
Technology (EPAT) Pty Ltd
PainChek UK Limited
Australia
England
100%
100%
100%
100%
*Percentage of voting power is proportional to ownership
17.2 Key management personnel
Any person(s) having authority and responsibility for planning, directing and controlling the activities
of the entity, directly or indirectly, including any director (whether executive or otherwise) of that
entity, are considered key management personnel.
For details of disclosures relating to key management personnel, refer to note 17.
17.3 Other related party transactions
There were no transactions between the Group and the key management personnel and their related
parties during the year (2021: Nil).
18.
Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and
in banks, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting
period as shown in the statement of cash flows can be reconciled to the related items in the statement
of financial position as follows:
Cash and bank balances
Consolidated
2022
$
6,141,422
Consolidated
2021
$
11,419,512
34
PAINCHEK LIMITED | 47
18.1
Reconciliation of loss for the year to net cash flows from operating activities
Cash flow from operating activities
Loss for the year
Consolidated
2022
$
Consolidated
2021
$
(5,720,534)
(6,063,647)
Adjustments for:
Depreciation
Share based payments
Movements in working capital
(Increase)/decrease in other receivables
(Increase)/decrease in prepayments
Increase/(decrease) in trade and other payables
Increase in provisions
Net cash outflows from operating activities
Refer to Note 13 for non-cash issuance of shares during the year.
14,424
549,191
59,529
709,720
(120,931)
9,151
(1,748,989)
20,188
(6,997,500)
(232,622)
(48,562)
1,402,932
51,600
(4,121,050)
19.
Remuneration of auditors
Auditor of the parent entity
Audit and review of the financial statements
Other non-audit services – assessment of payroll tax and R&D.
Consolidated
2022
$
90,243
-
Consolidated
2021
$
63,359
6,000
90,243
69,359
The auditors of PainChek Ltd are BDO Audit Pty Ltd.
20.
Events after the reporting period
On 29 July 2022 the Group announced the completion of an Entitlement Offer, this followed the
completion of a Placement of shares on 1 July 2022 to sophisticated and professional investors. The
Group raised $4,587,000 before costs, of which $2,822,500 was received after the reporting date.
There are no other events after the reporting period significant enough for disclosure.
21.
Parent entity information
The accounting policies of the parent entity, which have been applied in determining the 2022 and
2021 financial information shown below, are the same as those applied in the financial statements.
Refer to note 1 for a summary of significant accounting policies relating to the Group. The legal
Parent Entity of the Consolidated Entity is PainChek Limited.
48 | PAINCHEK LIMITED
35
Financial position of PainChek Limited
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Share based payments Reserves
Balance at beginning of the reporting period
Share based payments reserve
Total reserves at end of period
2022
$
2021
$
6,272,195
23,267
6,295,462
11,444,688
15,050
11,459,738
1,472,048
3,215,358
-
1,472,048
4,823,414
-
3,215,358
8,244,380
41,238,892
13,406,656
(49,822,134)
4,823,414
39,493,692
12,857,465
(44,106,777)
8,244,380
(5,715,356)
(6,071,016)
Consolidated
2022
$
Consolidated
2021
$
12,857,465
549,191
13,306,656
12,147,745
709,720
12,857,465
22.
Approval of financial statements
The financial statements were approved by the board of directors and authorised for issue on 31
August 2022.
23. SHARE BASED PAYMENTS
Performance rights
The Company has granted performance rights to the non-executive directors (NEDs) and the CEO at the 2019
AGM. The performance rights were granted for nil consideration and are not quoted on the ASX.
Performance rights granted carry no dividend or voting rights. When vested, each performance right is
convertible into one ordinary share.
36
PAINCHEK LIMITED | 49
Details of performance right issued, exercised and expired during the financial year are set out below:
Expiry Date
Tranche
30/09/2020
30/09/2021
30/09/2022
01/01/2022
01/01/2023
01/01/2023
01/01/2024
01/01/2024
01/01/2025
NEDs 1
NEDs 2
NEDs 3
CEO 1A
CEO 1B
CEO 2A
CEO 2B
CEO 3A
CEO 3B
Exercise
Price
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
VWAP
Price
$0.29
$0.10
$0.05
$0.21^
$0.21^
$0.10^
$0.10^
$0.05^
$0.05^
1 July 2021
Issued
Movements
Exercised
-
825,583
-
-
-
(825,583)
- 1,584,159
466,635
466,635
1,031,979
-
-
-
1,031,978
-
- 1,980,198
- 1,980,198
-
-
-
-
-
-
-
Expired /
Forfeited
-
-
-
(466,635)
-
-
-
-
-
30 June
2022
-
-
1,584,159
-
466,635
1,031,979
1,031,978
1,980,198
1,980,198
3,822,810 5,544,555
(825,583)
(466,635)
8,075,147
The performance rights outstanding at the end of the year had a weighted average exercise price of nil and a
weighted average remaining contractual life of 1.3 years (2021: 0.8 years)
^ Refer details of vesting conditions below.
The following table shows the calculation of the Performance Rights issued as part of Philip Daffas’
remuneration for holding office during FY20, FY21 and FY22 and vesting dates, if Philip Daffas remains in
office and the relevant Award Target Price is achieved on the relevant vesting date:
Annual Value of
Performance Rights
for FY20, FY21
and FY22
Share price calculated
based on the VWAP 5 days
(and including the day of)
either side of FY19, FY20
and FY21 statutory results
No. of
Performance
Rights
Vesting
Date
Award Target
Price
$100,000
$100,000
$100,000
$100,000
$100,000
$100,000
$0.2143
$0.2143
$0.0969
$0.0969
$0.05
$0.05
466,636
466,635
1 October 2021
1 October 2022
1,031,979
1 October 2022
1,031,979
1 October 2023
1,980,198
1 October 2023
1,980,198
1 October 2023
$0.28
$0.33
$0.13
$0.15
$0.07
$0.08
The performance shares have the following key terms and conditions:
Non- executive directors:
a) each non-executive director receive in each end of financial year on 30 June 2020, 2021 and
2022, 1/3 of their total annual remuneration in Performance Rights;
b) the number of Performance Rights issued for a year are calculated based on the VWAP of the
Company’s ordinary shares calculated 5 days either side of and including the date of
announcement of the company’s annual statutory results for the financial year;
c) Performance Rights vest at 30 June each subsequent year – being the end of the financial year
subject to the director remaining a director of the Company at that date;
d) each Performance Right has the conditional right to acquire one Share;
e) the Performance rights are issued for Nil consideration;
f)
the Performance Rights expire 3 months after the vesting date
g) the Performance Rights are subject to the terms and conditions of the LTI Plan
50 | PAINCHEK LIMITED
37
CEO
The issue of Performance Rights to Philip Daffas to the value of $600,000 over the years ended 30 June
2020, 2021 and 2022 with an annual limit of $200,000 for Philip Daffas or his nominee(s) to acquire one
Share for each Performance Right held pursuant to the LTI Plan and as part of Philip Daffas’
remuneration.
The Performance Rights issued for a year are issued at the VWAP of the Company’s ordinary shares
calculated 5 days either side of and including the date of announcement of the company’s annual
statutory results for the financial year preceding the financial year of the grant of the Performance Rights
(Award Issue Price).
a) 50% of the annual grant of $200,000 worth of Performance Rights will vest two years after the
commencement of each vesting period on 1 October of the year of grant, subject to the Company’s
Share price achieving a compounded annual increase in Share price of 15% p.a. (Award Target Price)
from the relevant Award Issue Price and provided that Philip Daffas remains employed by the
Company at that date (unless he is a Good Leaver as defined in the LTI Plan in which case he retains
the relevant pro rata portion of the grant subject to the increase in Share price vesting condition);
and
b) 50% of the annual grant of $200,000 worth of Performance Rights will vest three years after the
commencement of each vesting period on 1 October of the year of grant, subject to the Company’s
Share price achieving a compounded annual increase in Share price of 15% p.a. from the relevant
Award Issue Price and provided that Philip Daffas remains employed by the Company on that date
(unless he is a Good Leaver as defined in the LTI Plan in which case he retains the relevant pro rata
portion of the grant subject to the increase in Share price vesting condition).
Fair value of performance rights granted
The assessed fair value at the date of grant of performance shares issued is determined using a option pricing
models that takes into account the exercise price, the underlying share price at the time of issue, the term of
the performance share, the underlying share’s expected volatility, expected dividends and the risk free interest
rate for the expected life of the instrument.
The value of the performance shares was calculated using the inputs shown below:
Non- executive directors
The fair value at the date of grant of performance rights issued to the non-executive directors was calculated
based on the share price at the date of issue ($0.29) (tranche 1), the value of the award specified in applicable
period.
years
(tranche
(tranche
vesting
2022
2021
over
and
the
3)
2)
Grant date
Exercise price
Vesting condition
Vesting date
Tranche 1
20 November 2019
Tranche 2
20 November 2019
Tranche 3
20 November 2019
Nil
Refer above
30 June 2020
Nil
Refer above
30 June 2021
$0.29
Nil
Refer above
30 June 2022
$0.29
Share price at date of grant
$0.29
Expected dividends
Expiry day
Life of instrument
Fair value of instrument
nil
30 September 2020
nil
30 September 2021
nil
30 September 2022
0.9
$108,259
1.9
$78,927
2.9
$78,301
The performance rights outstanding at the end of the year had a weighted average exercise price of nil and a
weighted average remaining contractual life of 0.3 years (2021: 0.8 years)
PAINCHEK LIMITED | 51
38
CEO
Tranche 1A
Tranche 1B
Tranche 2A
Tranche 2B
Tranche 3A
Tranche 3B
Grant date
Exercise price
20/11/19
Nil
20/11/19
Nil
Refer above
- 50% will
vest after 3
years from
grant date
20/11/19
Nil
Refer above
- 50% will
vest after 3
years from
grant date
20/11/19
Nil
Refer above
- 50% will
vest after 4
years from
grant date
20/11/19
Nil
Refer above
- 50% will
vest after 4
years from
grant date
20/11/19
Nil
Refer above
- 50% will
vest after 5
years from
grant date
Refer above
- 50% will
vest after 2
years from
grant date
5 September
2019
5 September
2019
5 September
2020
5 September
2020
5 September
2021
5 September
2021
Vesting
conditions
Share price
calculation
date
Vest date
1 Oct 2021
1 Oct 2022
1 Oct 2022
1 Oct 2023
1 Oct 2023
1 Oct 2024
Share price at
date of grant
Expected
dividends
Expiry date
$0.29
$0.29
$0.29
$0.29
$0.29
$0.29
Nil
Nil
Nil
Nil
Nil
Nil
1 January
2022
1 January
2023
1 January
2023
1 January
2024
1 January
2024
1 January
2025
Life (years)
2.12
3.12
3.12
4.12
4.12
5.12
Fair value
$0.1979
$0.1980
$0.1711
$0.1773
$0.1763
$0.1536
Volatility
100%
100%
100%
100%
100%
100%
Risk free rate
0.80%
0.80%
0.80%
0.80%
0.80%
0.80%
Pricing model
Monte-Carlo
Simulation
Monte-Carlo
Simulation
Monte-Carlo
Simulation
Monte-Carlo
Simulation
Monte-Carlo
Simulation
Monte-Carlo
Simulation
The performance rights outstanding at the end of the year had a weighted average exercise price of nil and a
weighted average remaining contractual life of 1.6 years (2021: 2 years)
Summary of vesting dates
Non-executive directors
Remuneration for
year ended 30 June
Share price
calculation
date
(estimated)
Grant
date
Vesting
date
Likely date that
Performance
Rights will
convert to shares
2020
2021
2022
5/09/2019
20/11/2019
30/06/2020
30/07/2020
5/09/2020
20/11/2019
30/06/2021
30/07/2021
5/09/2021
20/11/2019
30/06/2022
30/07/2022
Expiry Date of
Performance
Rights if not
converted to
shares
30/09/2020
30/09/2021
30/09/2022
52 | PAINCHEK LIMITED
39
CEO
The Award Target Price will be calculated based on the 10 days VWAP leading up to and including the
relevant vesting date. The following table summarises the above terms:
Remuneration
for year
ended 30 June
Share Price
Calculation date
(estimated)
Grant date
2020
5/09/2019
20/11/2019
2021
5/09/2020
20/11/2019
2022
5/09/2021
20/11/2019
Vesting date
assuming share
price hurdle is
met
Likely date that
Performance
Rights will
convert to
shares
Expiry Date of
Performance
Rights if not
converted to
shares
50% on
1/10/2021; 50%
on 1/10/2022
50% on
30/10/2021; 50%
on 30/10/2022
50% on 1/1/2022;
50% on 1/1/2023
50% on
1/10/2022; 50%
on 1/10/2023
50% on
30/10/2022; 50%
on 30/10/2023
50% on 1/1/2023;
50% on 1/1/2024
50% on
1/10/2023; 50%
on 1/10/2024
50% on
30/10/2023; 50%
on 30/10/2024
50% on 1/1/2024;
50% on 1/1/2025
Options
Details of options issued, exercised and expired during the financial year are set out below:
Expiry Date
3 October 2021
22 July 2022
9 November 2023
30 June 2022
31 March 2024
26 September 2024
23 March 2025
28 April 2025
25 August 2025
24 September 2025
1 March 2026
Tranches
3
4
5
6
7
8
9
10
11
12
13
Exercise
Price
$0.036
$0.073
$0.032
$0.250
$0.210
$0.110
$0..090
$0.095
$0.084
$0.075
$0.051
1 July 2021
Issued
5,000,000
3,000,000
4,000,000
14,241,379
3,000,000
3,000,000
1,000,000
500,000
5,000,000
7,000,000
-
-
-
-
-
-
-
-
-
-
- 12,500,000-
12,500,000
45,741,379
Movements
Exercised
(5,000,000)
-
-
-
-
-
-
-
-
-
-
(5,000,000)
Expired
-
-
-
(14,241,379)
(3,000,000)
-
-
-
-
-
-
(17,241,379)
30 June
2022
-
3,000,000
4,000,000
-
-
3,000,000
1,000,000
500,000
5,000,000
7,000,000
12,500,000
36,000,000
The share options outstanding at the end of the year had a weighted average exercise price of $0.0666 (2021:
$0.1647) and a weighted average remaining contractual life of 2.8 years (2021: 1.1 years)
Fair value of options granted
The assessed fair value at the date of grant of options issued is determined using a option pricing models that
takes into account the exercise price, the underlying share price at the time of issue, the term of the option,
the underlying share’s expected volatility, expected dividends and the risk free interest rate for the expected
life of the instrument.
PAINCHEK LIMITED | 53
40
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54 | PAINCHEK LIMITED
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42
PAINCHEK LIMITED | 55
DIRECTORS DECLARATION
1.
The Directors of the Company declare that:
a. the accompanying financial statements and notes are in accordance with the Corporations
Act 2001 including:
i.
giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
performance for the year then ended; and
ii.
complying with Australian Accounting Standards, the Corporations Regulations 2001,
professional reporting requirements and other mandatory requirements.
b. there are reasonable grounds to believe that the company will be able to pay its debts
as and when they become due and payable; and
c.
the financial statements and notes thereto are in accordance with International
Financial Reporting Standards issued by the International Accounting Standards Board.
2.
This declaration has been made after receiving the declarations required to be made to the
Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year
ended 30 June 2022.
This declaration is signed in accordance with a resolution of the Board of Directors.
John Murray
Chairman
31 August 2022
56 | PAINCHEK LIMITED
43
Independent auditor’s report
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
Level 10, 12 Creek Street
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of PainChek Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of PainChek Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
44
PAINCHEK LIMITED | 57
51
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
Key audit matters
our audit of the financial report of the current period. These matters were addressed in the context of
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
our audit of the financial report of the current period. These matters were addressed in the context of
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
related to going concern section, we have determined the matters described below to be the key audit
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
matters to be communicated in our report.
related to going concern section, we have determined the matters described below to be the key audit
Revenue Recognition and other income
matters to be communicated in our report.
Revenue Recognition and other income
Key audit matter
How the matter was addressed in our audit
Key audit matter
Recognition of Revenue and Other Income was
identified as a key audit matter due to the
Recognition of Revenue and Other Income was
significance to the financial report and the
identified as a key audit matter due to the
complex nature of the agreements entered into
significance to the financial report and the
by the Group.
complex nature of the agreements entered into
The assessment of revenue recognition and
by the Group.
income required significant auditor effort and
The assessment of revenue recognition and
judgement.
income required significant auditor effort and
judgement.
•
•
•
How the matter was addressed in our audit
We have performed the following procedures to
address this risk in the financial report:
We have performed the following procedures to
•
Reviewing the terms and conditions of the
address this risk in the financial report:
agreements entered into in the current and
Reviewing the terms and conditions of the
prior year to determine the relevant
agreements entered into in the current and
accounting standard to be applied to the
prior year to determine the relevant
various revenue and income streams.
accounting standard to be applied to the
Assessing the accounting policy adopted for
various revenue and income streams.
recognition of revenue and other income
Assessing the accounting policy adopted for
and assessing compliance with AASB 15
recognition of revenue and other income
Revenue from Contracts with Customers
and assessing compliance with AASB 15
(‘AASB 15’) or AASB 120 Accounting for
Revenue from Contracts with Customers
Government Grants and Disclosure of
(‘AASB 15’) or AASB 120 Accounting for
Government Assistance (‘AASB 120’).
Government Grants and Disclosure of
Verified government grant income to bank
Government Assistance (‘AASB 120’).
statements and ensured income is
Verified government grant income to bank
recognised in the correct period and in
statements and ensured income is
compliance with AASB 120.
recognised in the correct period and in
For a sample of transactions, vouching to
compliance with AASB 120.
supporting documentation such as invoices
For a sample of transactions, vouching to
and receipts and assessing compliance
supporting documentation such as invoices
against the accounting policy adopted
and receipts and assessing compliance
including the recognition of any contract
against the accounting policy adopted
liability or deferred income.
including the recognition of any contract
Assessed the adequacy of the disclosures in
liability or deferred income.
the financial statements.
Assessed the adequacy of the disclosures in
the financial statements.
•
•
•
•
•
•
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
firms. Liability limited by a scheme approved under Professional Standards Legislation.
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
58 | PAINCHEK LIMITED
52
52
Other information
The directors are responsible for the other information. The other information comprises the
information contained in the Directors report for the year ended 30 June 2022, but does not include
the financial report and our auditor’s report thereon, which we obtained prior to the date of this
auditor’s report, and the Annual report, which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors and will request that it is corrected. If it is not
corrected, we will seek to have the matter appropriately brought to the attention of users for whom
our report is prepared.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
PAINCHEK LIMITED | 59
53
Report on the Remuneration Report
Opinion on the Remuneration Report
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 24 of the directors’ report for the
Opinion on the Remuneration Report
year ended 30 June 2022.
We have audited the Remuneration Report included in pages 12 to 24 of the directors’ report for the
In our opinion, the Remuneration Report of PainChek Limited, for the year ended 30 June 2022,
year ended 30 June 2022.
complies with section 300A of the Corporations Act 2001.
In our opinion, the Remuneration Report of PainChek Limited, for the year ended 30 June 2022,
Responsibilities
complies with section 300A of the Corporations Act 2001.
The directors of the Company are responsible for the preparation and presentation of the
Responsibilities
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
The directors of the Company are responsible for the preparation and presentation of the
Australian Auditing Standards.
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
BDO Audit Pty Ltd
T R Mann
Director
T R Mann
Director
Brisbane, 31 August 2022
Brisbane, 31 August 2022
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
60 | PAINCHEK LIMITED
54
54
Additional Shareholder Information
The following additional information is current as at 24 October 2022.
CORPORATE GOVERNANCE:
The Company’s Corporate Governance Statement
www.painchek.com/corporate-governance.
is available on the company’s website at
SUBSTANTIAL SHAREHOLDER:
Holder Name
PETERS INVESTMENTS PTY LTD
ORDINARY SHARES:
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Totals
Holding
118,650,000
% IC
9.141%
Holders
88
443
739
2,177
1,060
4,507
Total Units
13,615
1,500,360
5,669,419
83,955,474
1,206,850,674
1,297,989,542
There are 77 shareholders with less than a marketable parcel.
VOTING RIGHTS
Each fully paid ordinary share carries voting rights of one vote per share.
THE TOP 20 HOLDERS OF ORDINARY SHARES ARE:
Name
PETERS INVESTMENTS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J&E CONSULTING PTY LTD
DR KRESHNIK HOTI
MR MUSTAFA ABDUL WAHED ATEE
BNP PARIBAS NOMS PTY LTD
MR PHILIP DAFFAS
MR CRAIG ROBERT WILLIAMSON
THORNBURY NOMINEES PTY LTD
MR ALLAN GRAHAM JENZEN & MRS ELIZABETH JENZEN
Balance as at
26-09-2021
118,650,000
67,710,244
38,003,125
37,717,411
37,003,125
29,143,853
21,524,560
19,255,683
15,802,500
%
0.000
0.120
0.440
6.470
92.980
100.000
%
9.141%
5.217%
2.928%
2.906%
2.851%
2.245%
1.658%
1.484%
1.217%
14,141,873
1.090%
PAINCHEK LIMITED | 61
G & G CHILCOTT PTY LTD
NANJOP PTY LTD
MR ROBERT ANTHONY HEALY
MS ELOISE KATHLEEN JENNINGS & MR ANDREW JOHN HOPKINS
CITICORP NOMINEES PTY LIMITED
CAPPER SUPERANNUATION PTY LTD
MR ROBERT ANTHONY HEALY
FLUE HOLDINGS PTY LTD
MR SHANNON JOHN GORMAN
MR ADAM STUART DAVEY
Total Securities of Top 20 Holdings
Total of Securities
UNQUOTED EQUITY SECURITIES
Number
Number of
Holders
Class
13,927,169
12,914,735
12,857,143
12,129,791
11,675,234
11,674,331
11,000,000
10,758,457
10,463,516
10,175,170
1.073%
0.995%
0.991%
0.935%
0.899%
0.899%
0.847%
0.829%
0.806%
0.784%
516,527,920
39.794%
1,297,989,542
Holders of more than 20%
1
1
9
2
1
1
3
1
PCKAT Performance Rights
Phillip Daffas
Share options with an exercise price of $0.09 and
an expiry date of 23 March 2025
Issued pursuant to ESOP
Options exercisable at various prices expiring
various dates
Issued pursuant to ESOP
Share options with an exercise price of $0.075 and
an expiry date of 24 September 2025
Issued pursuant to ESOP
Share options with an exercise price of $0.21 and
an expiry date of 31 March 2024
Share options with an exercise price of $0.11 and
an expiry date of 26 September 2024
Issued pursuant to ESOP
Issued pursuant to ESOP
Share options with an exercise price of $0.084 and
an expiry date of 25 August 2025
Issued pursuant to ESOP
Share options with an exercise price of $0.095 and
an expiry date of 28 April 2025
Issued pursuant to ESOP
6,490,988
1,000,000
13,500,000
7,000,000
2,542,377
3,000,000
5,000,000
500,000
Use of Funds
The entity has used the cash and assets in a form readily convertible into cash at the time of listing in a way
that is consistent with its business objectives.
There is no current share buy-back.
62 | PAINCHEK LIMITED
PainChek Limited (ASX: PCK)
ABN 21 146 035 127
Suite 401, 35 Lime Street,
Sydney, NSW, 2000
Registered Office:
Suite 401, 35 Lime Street,
Sydney, NSW, 2000
info@painchek.com
WWW.PAINCHEK.COM