ResApp Health Limited
ABN 51 094 468 318
CONSOLIDATED ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2017
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Contents to the Consolidated Financial Report
Corporate Information ........................................................................................................................................... 3
Directors’ Report ................................................................................................................................................... 4
Auditor’s Independence Declaration ................................................................................................................... 15
Consolidated Statement of Profit and Loss and Other Comprehensive Income for the financial year ended 30
June 2017 ............................................................................................................................................................ 16
Consolidated Statement of Financial Position as at 30 June 2017 ...................................................................... 17
Consolidated Statement of Changes in Equity for the financial year ended 30 June 2017 ................................ 18
Consolidated Statement of Cash Flows for the financial year ended 30 June 2017 ........................................... 19
Notes to the Consolidated Financial Statements .................................................................................................. 20
Directors’ Declaration .......................................................................................................................................... 41
Independent Auditor’s Report .............................................................................................................................. 42
ASX Additional Information ............................................................................................................................... 46
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Corporate Information
This annual report is for ResApp Health Limited and its controlled entity (“the Group”). Unless otherwise stated,
all amounts are presented in Australian Dollars.
A description of the Group’s operations and of its principal activities is included in the review of operations and
activities in the directors’ report on pages 6 to 9. The directors’ report is not part of the financial statements.
Directors
Dr Roger Aston (appointed 2 July 2015)
Dr Tony Keating (appointed 2 July 2015)
Mr Brian Leedman (appointed 19 February 2016)
Mr Chris Ntoumenopoulos (appointed 21 January 2015)
Company Secretary
Ms Nicki Farley
Principal Office
Level 8, 127 Creek St
Brisbane QLD 4000
Registered Office
Level 24
44 St Georges Tce,
PERTH WA 6000
Share Registry & Register
Link Market Services Ltd
Level 12, 250 St Georges Tce
PERTH WA 6000
Bankers
National Australia Bank
100 St Georges Tce
PERTH WA 6000
Contact Information
Ph: 08 6211 5099
Fax: 08 9218 8875
Auditors
Grant Thornton Audit Pty Ltd
Level 1, 10 Kings Park Road
WEST PERTH WA 6005
Solicitors
Price Sierakowski Corporate
Level 24, 44 St Georges Tce
PERTH WA 6000
Stock Exchange Listing
ResApp Health Limited
ASX Code: RAP
Web Site
www.resapphealth.com.au
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report
The directors of ResApp Health Limited (“the Company”) and its controlled entity (“the Group”) submit herewith
the annual financial statements of the Group for the financial year ended 30 June 2017. These financial statements
cover the period from 1 July 2016 to 30 June 2017. In order to comply with the provision of the Corporations Act
2001, the directors’ report is as follows:
The names and particulars of the directors of the Company during or since the end of the financial year are:
Dr Roger Aston
Interest in Shares
and Options
Directorships held in
other listed entities
Dr Tony Keating
Non-Executive Chairman
(appointed 2 July 2015)
Dr Aston is a scientist and seasoned biotechnology entrepreneur. He has been
closely involved in start-up companies and major pharmaceutical companies.
Aspects of his experience include US Food and Drug ('FDA') and European
Union ('EU') product registration, clinical trials, global licensing agreements,
fundraising through private placements, and a network of contacts within the
pharmaceutical, banking and stock broking sectors.
Dr Aston has also held Directorships/Chairmanships with Clinuvel Ltd,
HalcyGen Ltd, and Ascent Pharma Ltd, and was a member of the AusIndustry
Biological Committee advising the Industry Research and Development
Brand.
More recently, Dr Aston was Executive Chairman of Mayne Pharma Group
from 2009 to 2011 and later, CEO of Mayne Pharma Group.
Dr Aston holds 8,437,500 ordinary shares and 8,437,500 performance shares
indirectly in the Company.
Dr Aston holds 3,600,000 options in the Company.
During the past three years Dr Aston has served as a Director for
the following other listed companies:
(a) Immuron Limited – appointed 25 May 2012;
(b) Regeneus Limited – appointed 21 September 2012;
(c) PharmAust Limited – appointed 12 August 2013;
(d) Oncosil Medical Limited – appointed 28 March 2013;
(e) Polynovo Limited – appointed 15 November 2013, resigned 10
September 2014.
Chief Executive Officer and Managing Director
(appointed 2 July 2015)
Dr Tony Keating has over 10 years’ experience in commercialising
technology. Dr Keating created the initial business strategy for ResApp and
has led the commercialization of ResApp’s technology to date. Previously, Dr
Keating was Director, Commercial Engagement at UniQuest Pty Ltd, one of
the global leaders in commercialisation of university technology. While at
UniQuest, Dr Keating held roles as interim Chief Executive Officer and Non-
Executive Director for a number of privately-held, venture-capital funded
start-up companies. Prior to joining UniQuest Dr Keating held business
development and engineering management roles at Exa Corporation, a US-
based software company that is now listed on the NASDAQ.
Dr Keating holds a Bachelor of Engineering, a Master of Engineering Science
and a Doctor of Philosophy (Mechanical Engineering) from The University of
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report (continued)
Queensland. Dr Keating also has an Executive Certificate of Management and
Leadership from the MIT Sloan School of Management, and is a Graduate
Member of the Australian Institute of Company Directors.
Interest in Shares
and Options
Dr Keating holds nil shares in the Company.
Dr Keating holds 23,800,000 options in the Company.
Directorships held in
other listed entities
During the past three years Dr Keating has not held directorship of any other
ASX listed companies.
Mr Brian Leedman
Interest in Shares
and Options
Directorships held in
other listed entities
Mr Chris Ntoumenopoulos
Executive Director and Vice President, Corporate Affairs
(appointed 19 February 2016)
Mr Leedman is a marketing and investor relations professional with over 15
years’ experience in the biotechnology industry. Mr Leedman was co-founder
of ResApp Diagnostics Pty Ltd which was acquired by Narhex Life Sciences
Ltd to form ResApp Health. Prior to ResApp, Mr Leedman co-founded
Oncosil Medical Limited and Biolife Science Limited (acquired by Imugene
Limited). Mr Leedman previously served for 10 years as Vice President,
Investor Relations for pSivida Corp which is listed on the ASX and NASDAQ.
He is formerly the WA chairman of AusBiotech, the association of
biotechnology companies in Australia.
Mr Leedman holds a Bachelor of Economics and a Master of Business
Administration from the University of Western Australia.
Mr Leedman holds 25,125,000 ordinary
performance shares indirectly in the Company.
Mr Leedman holds 3,600,000 options in the Company.
shares and 23,250,000
During the past three years Mr Leedman has served as a Director for
the following other listed companies:
(a) Alcidion Group Limited – appointed 28 July 2016, resigned 31 July 2017.
Non-Executive Director
(appointed 21 January 2015)
Mr Ntoumenopoulos is the Managing Director of Twenty 1 Corporate. He has
worked in financial markets for the past 14 years, focusing on Capital
and Corporate Advisory. Mr
Raisings, Portfolio Management
Ntoumenopoulos has advised and funded numerous ASX companies from
early stage venture capital, through to IPO. He is an executive director of
various private companies which span across finance, technology and medical
sectors.
Mr Ntoumenopoulos has a Bachelor of Commerce degree from the University
of WA, majoring in Money and Banking, Investment Finance and Electronic
Commerce.
Interest in Shares
and Options
Mr Ntoumenopoulos holds 3,109,375 shares indirectly in the Company.
Mr Ntoumenopoulos holds 3,600,000 options in the Company.
Directorships held in
other listed entities
During the past three years Mr Ntoumenopoulos has served as a Director for
the following other listed companies:
(a) Race Oncology Ltd – appointed 27 April 2016.
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report (continued)
Ms Nicki Farley
Company Secretary
(appointed 7 November 2012)
Ms Farley has over 10 years’ experience working within the legal and
corporate advisory sector providing advice in relation to capital raisings,
corporate and securities laws, mergers and acquisitions and general
commercial transactions. Ms Farley also holds a number of company
secretarial roles for ASX listed companies. Ms Farley holds a Bachelor of
Laws and Arts from the University of Western Australia.
Directors’ Meetings
The following table sets out the number of directors’ meetings held during the financial year and the number of
meetings attended by each director (while they were a director).
Board of Directors
Eligible to
Attend
Attended
Dr Roger Aston
Dr Tony Keating
Mr Brian Leedman
Mr Chris Ntoumenopoulos
5
5
5
5
5
5
5
5
The Board of Directors also approved fifteen (15) circular resolution during the year ended 30 June 2017 which
were signed by all Directors of the Company. The audit, compliance and corporate governance committee is
performed by the Board of Directors.
PRINCIPAL ACTIVITIES
During the year, the Company continued the development and commercialisation of the ResApp technology for
the purpose of providing health care solutions for respiratory disease.
OPERATING RESULTS AND FINANCIAL POSITION
The net loss for the year ended 30 June 2017 was $10,032,750 compared with a net loss of $3,207,577 for the
previous year. The Company had a net asset position as at 30 June 2017 of $11,349,067 (2016: $16,046,358).
During the year ended 30 June 2017, the Company increased its research and development activities. A large
portion of the net loss (51%) for the current year is also made up of the valuation of options issued during the
year. The loss for the prior year is attributable to operating activities and research and development costs incurred
following the acquisition of ResApp Diagnostics.
REVIEW OF OPERATIONS
Operational Review
US SMARTCOUGH-C Study
During the period, the Company commenced its SMARTCOUGH-C study in the United States (US).
SMARTCOUGH-C is a multi-site, double blind, prospective clinical study to investigate ResAppDx for the
diagnosis of respiratory disease in infants and children using cough sounds. The co-primary endpoints of the study
are the diagnosis of pneumonia compared to clinical and radiologic diagnosis. Secondary endpoints are diagnosis
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report (continued)
of upper respiratory tract infection, lower respiratory involvement, croup, asthma/reactive airways disease and
bronchiolitis compared with a clinical diagnosis.
On 21 October 2016, the Company announced that it is had received its first institutional review board (IRB)
approval at the Cleveland Clinic for the SMARTCOUGH-C study. The Company subsequently announced that it
had also received IRB approval at the Massachusetts General Hospital (MGH) on 11 November 2016 and at
Baylor College of Medicine and Texas Children’s Hospital on 16 November 2016.
On 9 December 2016, ResApp confirmed the initiation of its SMARTCOUGH-C study in the US.
On 10 January 2017, the Company announced that it had entered into a two-year expanded research collaboration
with MGH alongside MGH’s participation in ResApp’s SMARTCOUGH-C study. Working together, ResApp
and MGH will perform additional analysis of the SMARTCOUGH-C study data, use the SMARTCOUGH-C
dataset to investigate the state of respiratory disease clinical practice today and evaluate the efficacy of ResApp’s
cough-based diagnostic test in additional respiratory disease indications.
On 15 March 2017, the Company provided an update on its SMARTCOUGH-C study confirming recruitment
locations included multiple emergency departments, urgent care facilities and primary care offices at each of the
three participating hospitals, with 478 participants having been enrolled as of 10 March 2017.
On 19 April 2017, the Company announced its intention to extend the SMARTCOUGH-C study through to the
end of May and increase maximum recruitment to 1,500 patients. Enrolment in the study had progressed well
across eleven recruitment locations maintained by the three participating hospitals, however the incidence of
pneumonia and croup among study patients had been unseasonably low.
On 19 June 2017, the Company announced that it has completed enrolment in its SMARTCOUGH-C study with
a total of 1,245 patients enrolled across the three participating hospitals, all located in the United States. With
enrolment complete, the study entered the data verification phase, where clinical and radiologic adjudication were
conducted for the remaining patients and final source data verification site visits performed.
Subsequent to the end of the period on 9 August 2017, the Company announced top-line data from its multi-site,
double blind, prospective clinical study to investigate ResAppDx for the diagnosis of respiratory disease in infants
and children using cough sounds. The predefined study endpoints were based on achieving greater than 75% for
positive percent agreement (PPA) and negative percent agreement (NPA) for the diagnosis of pneumonia, croup,
bronchiolitis, asthma/reactive airways disease (RAD), lower respiratory tract disease (LRTD) and upper
respiratory tract infection (URTI).
In the final data review, prior to the un-blinding of the study data, ResApp identified at least two issues with the
clinical data. Contrary to instructions and training, a high number of patients were treated before clinical research
staff recorded their cough sounds. A high number of recordings were also found to contain a second person’s
cough sounds or an unacceptable amount of background noise and interference. These issues are known to affect
cough sound analysis and their presence had skewed the preliminary results.
A preliminary analysis indicated that the study is unlikely to meet its predefined endpoints for diagnosis of
childhood respiratory disease with the lower bound of the 95% confidence interval of both PPA and NPA with
clinical diagnosis being below 75% of all diseases. The most promising result was for bronchiolitis, which
achieved an 80% (95%CI 66%-91%) PPA and 95% (95%CI 94%-97%) NPA with clinical diagnosis, although
due to the reduced number of bronchiolitis patients (caused by removing recordings with obvious issues) this
result did not meet the predefined study endpoint.
The Company proposes completing a second US paediatric pivotal clinical study this US winter as well as
continuing and completing its adult program, including its US adult pivotal study which is also set to begin this
US winter.
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report (continued)
Australian Clinical Studies
During the period, the Company continued its Australian paediatric clinical studies at Joondalup Health Campus
(JHC) and Princess Margaret Hospital in Perth and its Australian adult studies at JHC and Wesley Hospital in
Brisbane.
On 3 October 2016, ResApp announced further positive results from its Australian adult study. ResApp’s cough
sound-based algorithms achieved between 91% and 100% accuracy for distinguishing adult patients with chronic
obstructive pulmonary disease (COPD), asthma or pneumonia from subjects with no discernible respiratory
disease. In addition, the new analysis demonstrated accuracy of 100% for distinguishing patients with an upper
respiratory tract infection (URTI) from the no respiratory disease group (not previously reported). The differential
diagnosis of asthma versus COPD, pneumonia versus asthma and pneumonia versus COPD (not previously
reported) was achieved at an accuracy in the range of 88% and 94%. As was found in the paediatric study, the
algorithms were able to correctly detect lower respiratory tract disease in 84% of adult patients who were initially
diagnosed as clear by experienced clinicians using stethoscopes but were finally diagnosed as having a lower
respiratory tract disease after additional clinical testing.
On 18 August 2016, the Company announced preliminary clinical results that demonstrated the potential for
measuring the severity of asthma or viral wheeze in children using cough sounds. The Company also announced
that it had begun working with two lung function test laboratories, one at Joondalup Health Campus in Perth and
one at the Wesley Hospital in Brisbane to record adult asthma and chronic obstructive pulmonary disease (COPD)
patients’ breathing and cough sounds alongside comprehensive lung function tests.
On 28 April 2017, ResApp announced that it had signed an exclusive worldwide license agreement with UniQuest
for an additional diagnostic tool that complements ResApp’s existing cough-based diagnostic technology. The
tool is a set of machine learning algorithms that use a combination of clinical features to screen for childhood
pneumonia. Unlike ResAppDx, it does not use cough sound analysis, but relies on commonly-taken measurements
such as heart rate, temperature, presence of chest in-drawing or oxygen saturation.
On 22 June 2017, the Company provided an update on its Australian paediatric clinical study. A total of 1,127
children had been enrolled, and for most disease groups patient numbers had more than doubled since previous
results. The dataset and machine learning algorithms were optimised to match the design of the SMARTCOUGH-
C study as closely as possible. ResAppDx achieved between 90% and 100% PPA and between 89% and 96%
NPA with clinical diagnosis of primary upper respiratory tract infection (i.e. with no comorbidities), croup, lower
respiratory tract involvement, asthma/reactive airways disease (RAD) and bronchiolitis. For pneumonia,
ResAppDx demonstrated 89% PPA and 79% NPA with clinical diagnosis. The lower NPA reflects the higher
uncertainty in the current method of clinical diagnosis of pneumonia and in particular the clinical overlap between
pneumonia, bronchiolitis and asthma/RAD, which can occur at the same time.
Doctors Without Borders / Médecins San Frontières (MSF)
On 15 September 2016, the Company, in partnership with UniQuest (the main commercialisation company of
The University of Queensland), announced it had shipped smartphones to a leading global humanitarian
organisation under the terms of a non-binding memorandum of understanding to field-test ResApp’s smartphone-
based respiratory disease diagnostic tool in the developing world. The Company subsequently named this
humanitarian organisation partner as Doctors Without Borders/Médecins San Frontières (MSF), who are moving
towards starting a clinical study of ResAppDx in a lower income rural context setting.
Corporate Review
On 9 November 2016, the Company confirmed the appointment of new auditors Grant Thornton Audit Pty Ltd
replacing Greenwich & Co Audit Pty Ltd.
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report (continued)
Subsequent to the end of the period, on 23 August 2017 the Company announced the appointed of Dr Philip Currie
to its Scientific Advisory Board. Dr Currie is a cardiologist with more than 35 years in cardiology both in the US
and in Australia with extensive experience in medical research, clinical cardiology and business.
Subsequent Events
As noted above, subsequent to the end of the period on 9 August 2017, the Company announced top-line data
from its multi-site, double blind, prospective clinical study to investigate ResAppDx for the diagnosis of
respiratory disease in infants and children using cough sounds. In the final data review, prior to the un-blinding
of the study data, ResApp identified at least two issues with the clinical data. Contrary to instructions and training,
a high number of patients were treated before clinical research staff recorded their cough sounds. A high number
of recordings were also found to contain a second person’s cough sounds or an unacceptable amount of
background noise and interference. These issues are known to affect cough sound analysis and their presence had
skewed the preliminary results. Preliminary analysis indicated that the SMARTCOUGH-C study is unlikely to
meet its predefined endpoints for diagnosis of childhood respiratory disease with the lower bound of the 95%
confidence interval of both PPA and NPA with clinical diagnosis being below 75% of all diseases.
The Company indicated that it proposes completing a second US paediatric pivotal clinical study this US winter
as well as continuing and completing its adult program, including its US adult pivotal study which is also set to
begin this US winter.
On 14 September 2017, the Company announced that while key staff at MSF have reaffirmed their belief in the
potential of ResApp’s core technology, after reviewing the issues identified by ResApp in its SMARTCOUGH-
C study, and the high cost of keeping the project open, MSF decided to not proceed with its planned field
evaluation of ResAppDx at this point in time. ResApp and MSF maintain their collaborative relationship and will
seek opportunities for field testing the technology once issues identified in the SMARTCOUGH- C study have
been resolved.
Except for the events noted above, no material events have occurred subsequent to the reporting date.
Future Developments
The Group will continue the development and commercialisation of the ResApp technology for the purpose of
providing health care solutions to assist doctors and consumers diagnose respiratory disease.
Environmental Issues
The Group’s operations are not subject to significant environmental regulations under the law of the
Commonwealth or of a State, or Territory.
Dividends
No amounts have been paid or declared by way of dividend by the Group since the end of the previous financial
year and the Directors do not recommend the payment of any dividend.
Indemnification of Officers and Auditors
The Group has not otherwise, during or since the financial year, except to the extent permitted by law, indemnified
or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability
incurred as such an officer or auditor.
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report (continued)
Remuneration Report – Audited
Directors
Dr Roger Aston (appointed 2 July 2015)
Dr Tony Keating (appointed 2 July 2015)
Mr Brian Leedman (appointed 19 February 2016)
Mr Chris Ntoumenopoulos (appointed 21 January 2015)
Remuneration Policy
The board policy is to remunerate non-executive directors at a level which provides the company with the ability
to attract and retain directors with the experience and qualification appropriate to the development strategy of the
company’s Intellectual Property. 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. This was set at $200,000 per
annum by shareholders on 18 November 2005. Directors’ fees are reviewed annually. From 1 June 2016,
Chairman and non-executive director fees increased to $90,000 and $55,000 per annum respectively.
Non-executive directors’ fees are not linked to the performance of the company. However to align directors
interests with shareholder interests, the directors are encouraged to hold shares in the company. The board policy
is to remunerate executive directors at a level that provides the company with the ability to attract and retain
executives with the experience and qualification appropriate to the development strategy of the company’s
Intellectual Property. During the financial year, the Group did not employ the use of remuneration consultants.
Executive Remuneration
The following table discloses the contractual arrangements with the Group’s executive Key Management
Personnel.
CEO and Managing Director – Dr Tony Keating
Fixed remuneration
Contract duration
$280,000 pa from 2 July 2017
2 years commencing on 2 July 2017
Termination notice by the individual/company
6 months
Other entitlements
Annual leave
Vice President, Corporate Affairs and Executive Director – Mr Brian Leedman
Fixed remuneration
Contract duration
$187,000 pa from 15 September 2017
2 years commencing on 15 September 2017
Termination notice by the individual/company
6 months
Other entitlements
None
Relationship Between the Remuneration Policy and Company Performance
Aside from the matters described above, no Director held or holds any contract for performance-based
remuneration with the Company.
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report (continued)
Remuneration Expense Details for the Year Ended 30 June 2017
The directors incurred the following amounts as compensation for their services as directors and executives of the
Group during the year:
Short-term employee
benefits
Salary
and fees
$
Bonus
$
Other
$
Post
employment
benefits
Super-
annuation
and leave
$
Share-
based
payments
Options
and rights
$
%
consisting
of share-
based
payments
Total
$
90,000
55,000
255,708
187,000
587,708
-
-
-
-
-
-
-
-
-
-
-
-
927,236
927,236
1,017,236
982,236
38,303
-
974,441
927,236
1,268,452
1,114,236
38,303
3,756,149
4,382,160
91%
94%
77%
83%
-
2017
Non-Executive
Directors:
Dr Roger Aston1
Mr Chris
Ntoumenopoulos2
Executive Directors:
Dr Tony Keating3
Mr Brian Leedman4
Total
1 Dr Aston’s director fees were paid to Newtonmore Biosciences Pty Ltd.
2 Mr Ntoumenopoulos’s director fees were paid to Sobol Capital Pty Ltd.
3 Dr Keating’s director fees were paid to himself.
4 Mr Leedman’s director fees were paid to himself.
Short-term employee
benefits
Salary
and fees
$
Bonus
$
Other
$
Post
employment
benefits
Super-
annuation
$
Share-
based
payments
Options
and rights
$
2016
Non-Executive
Directors:
Dr Roger Aston1
Mr Adam
Sierakowski2
Dr Robert Ramsay3
Mr Chris
Ntoumenopoulos4
Executive Directors:
Dr Tony Keating5
Mr Brian Leedman6
Total
72,210
34,968
-
48,583
188,737
78,083
422,581
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
consisting
of share-
based
payments
-
-
-
Total
$
72,210
34,968
-
48,583
-
-
-
-
-
-
-
-
17,930
330,000
-
-
17,930
330,000
536,667
78,083
770,511
62%
-
-
1 Dr Aston was appointed on 2 July 2015 and his director fees were paid to Newtonmore Biosciences Pty Ltd.
2 Mr Sierakowski resigned on 22 March 2016 and his director fees were paid to Trident Capital Pty Ltd.
3 Dr Ramsay resigned on 2 July 2015 and his director fees were paid to himself.
4 Mr Ntoumenopoulos’s director fees were paid to Sobol Capital Pty Ltd.
5 Dr Keating was appointed on 2 July 2015 and his director fees were paid to himself.
6 Mr Leedman was appointed on 19 February 2016 and his director fees were paid to himself.
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ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report (continued)
Securities Received That are Not Performance-Related
No members of key management personnel are entitled to receive securities that are not performance-based as
part of their remuneration package.
Options and Rights Granted as Remuneration
Grant date
Number
Value1
Exercised
Lapsed
Dr Roger Aston
Dr Tony Keating
Mr Brian Leedman
10 November 2016
10 November 2016
10 November 2016
Mr Chris Ntoumenopoulos
10 November 2016
Dr Roger Aston
Dr Tony Keating
Mr Brian Leedman
10 November 2016
10 November 2016
10 November 2016
Mr Chris Ntoumenopoulos
10 November 2016
1,800,000
1,800,000
1,800,000
1,800,000
1,800,000
2,000,000
1,800,000
1,800,000
$502,398
$502,398
$502,398
$502,398
$424,838
$472,043
$424,838
$424,838
Total
14,600,000
$3,756,149
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 The fair value of incentive options granted and as shown in the table above has been determined in accordance with Australian
Accounting Standards and will be recognised as an expense over the relevant vesting period to the extent that conditions
necessary for vesting are satisfied.
Description of Options Issued as Remuneration
Details of the options granted as remuneration to those key management personnel listed in the previous table are
as follows:
Grant date
Issuer
10 Nov 2016
10 Nov 2016
ResApp
Health
Limited
ResApp
Health
Limited
Entitlement on
exercise
1:1 ordinary share in
ResApp Health Limited
1:1 ordinary share in
ResApp Health Limited
Dates
exercisable
by
Exercise
price
Value per
option at
grant date
Amount
paid/payable
by recipient
10 Nov 2019
$0.45
$0.28
$0.00
10 Nov 2019
$0.75
$0.24
$0.00
Option values at grant date were determined using the Black-Scholes method (note 15).
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ResApp Health Limited – Consolidated Annual Report
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Directors’ Report (continued)
Key Management Personnel Shareholdings
The number of ordinary shares in ResApp Health Limited held by each key management personnel of the Group
during the financial year is as follows:
Balance at 1
July 2016 or
on date of
appointment
16,875,0001
-
53,310,0002
2,109,375
72,294,375
Dr Roger Aston
Dr Tony Keating
Mr Brian Leedman
Mr Chris Ntoumenopoulos
Total
1 Includes 8,437,500 performance shares.
2 Includes 23,250,000 performance shares.
Granted as
remuneration
during the
year
Issued on
exercise of
options during
the year
Net other
changes
during the
year
Balance at 30
June 2017 or
on date of
resignation
16,875,0001
-
48,375,0002
-
-
-
-
-
-
-
-
-
1,875,000
(6,810,000)
-
-
2,109,375
1,875,000
(6,810,000)
67,359,375
Each of the performance shares will convert to one (1) fully paid ordinary share upon satisfaction of the relevant
Milestone. Accordingly, the performance shares will convert into fully paid ordinary shares in the capital of the
Company within 7 days of the release of the audited accounts in respect of the period in which ResApp and any
subsidiaries of ResApp (or if the Company or any Related Entity of the Company is licensed to use the Licensed
IP, the Company and that Related Entity) achieving aggregated gross revenue of $20,000,000 in the five years
commencing on the day the Company is readmitted to quotation on ASX, being 14 July 2015.
No performance shares were converted or cancelled during the period. No performance milestones were met
during the period.
Options held by the key management personnel of the Group as at 30 June 2017 are as follows:
Dr Roger Aston
Dr Tony Keating
Mr Brian Leedman
Mr Chris Ntoumenopoulos
Number of Options
Fair Value of Options
3,600,000
23,800,000
3,600,000
3,600,000
$927,236
$1,304,441
$927,236
$927,236
Other Equity-Related Key Management Personnel Transactions
There have been no other transactions involving equity instruments apart from those describe in the table above
relating to options, rights and shareholdings.
Other Transactions with Key Management Personnel and/for Their Related Parties
There were no other transactions conducted between the Group and Key Management Personnel or their related
parties, apart from those disclosed above and those disclosed in Note 20, that were conducted other than in
accordance with normal employee, customer or supplier relationships on terms no more favourable than those
reasonably expected under arm’s length dealings with unrelated persons.
End of Audited Remuneration Report
13
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Report (continued)
Voting and Comments Made at the Company’s 2016 Annual General Meeting
The Company received 73.62% of votes, of those shareholders who exercised their right to vote, in favour of the
remuneration report for the 2016 financial year. The Company did not receive any specific feedback at the AGM
or throughout the year on its remuneration practices.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the company
for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors support
and have adhered to principles of sound corporate governance. The Company continued to follow best practice
recommendations as set out by 3rd edition of the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations. Where the Company has not followed best practice for any recommendation,
explanation is given in the Corporate Governance Statement which is available on the Company’s website at
www.resapphealth.com.au/investor-relations/corporate-governance/.
Non-Audit Services
During the year $20,650 was paid to Grant Thornton for the provision of non-audit services (2016: nil).
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 15 of the annual report.
Signed in accordance with a resolution of the directors
Tony Keating
Director
Brisbane
29th day of September 2017
14
Level 1
10 Kings Park Road
West Perth WA 6005
Correspondence to:
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
to the Directors of ResApp Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of ResApp Limited for the year ended 30 June 2017, I declare that, to the best of my
knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
P W Warr
Partner - Audit & Assurance
29 September 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the financial year ended 30 June 2017
Interest income
Other income
Administration costs
Research and development costs
Finance costs
Amortisation
Doubtful debts expense
Share based payment expense
Loss before income tax
Consolidated
Note
7
8
9
6
2017
$
204,317
1,143,368
(2,573,594)
(3,462,380)
(4,861)
(269,829)
-
(5,069,771)
(10,032,750)
2016
$
82,633
-
(1,428,488)
(1,093,896)
(2,708)
-
(330,600)
(434,518)
(3,207,577)
Income tax benefit
Loss for the year
11
-
-
(10,032,750)
(3,207,577)
Other comprehensive income for the year
Total comprehensive income for the year
-
(10,032,750)
-
(3,207,577)
Loss per share (basic and diluted) (cents)
16
(1.53)
(0.65)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
16
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Statement of Financial Position
as at 30 June 2017
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Other assets
Total current assets
Non-current assets
Intangibles (net)
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Annual leave provision
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
17
12
6
13
14
15
Consolidated
2017
$
8,554,764
83,852
1,164,395
26,096
9,829,107
2,158,630
2,158,630
2016
$
13,735,219
100,495
20,890
6,231
13,862,835
2,428,459
2,428,459
11,987,737
16,291,294
584,354
54,316
638,670
638,670
221,550
23,386
244,936
244,936
11,349,067
16,046,358
21,781,211
6,327,741
(16,759,885)
11,349,067
21,515,523
1,257,970
(6,727,135)
16,046,358
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
17
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Statement of Changes in Equity
for the financial year ended 30 June 2017
Consolidated
Balance at 1 July 2015
Loss for the year
Total comprehensive income
Transactions with owners, in their
capacity as owners
Issue of options
Issue of shares
Costs directly attributable to issue of
share capital
Fully paid
ordinary
shares
$
Equity-settled
benefits
reserve
$
Accumulated
losses
$
Total
$
4,004,499
-
-
-
-
-
(3,519,558)
(3,207,577)
(3,207,577)
484,941
(3,207,577)
(3,207,577)
-
19,565,062
1,257,970
-
(2,054,038)
-
-
-
-
1,257,970
19,565,062
(2,054,038)
Balance at 30 June 2016
21,515,523
1,257,970
(6,727,135)
16,046,358
Consolidated
Balance at 1 July 2016
Loss for the year
Total comprehensive income
Transactions with owners, in their
capacity as owners
Issue of options
Issue of shares
Costs directly attributable to issue of
share capital
21,515,523
-
1,257,970
-
(6,727,135)
(10,032,750)
16,046,358
(10,032,750)
-
-
(10,032,750)
(10,032,750)
-
265,688
5,069,771
-
-
-
-
-
-
5,069,771
265,688
-
Balance at 30 June 2017
21,781,211
6,327,741
(16,759,885)
11,349,067
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
18
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Statement of Cash Flows
for the financial year ended 30 June 2017
Note
Cash flows from operating activities
Cash payments to suppliers and employees
Interest paid
Interest received
Net cash flows used in operating activities
17
Cash flows from investing activities
Cash acquired on acquisition of ResApp
Diagnostics
Net cash flows provided by investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Costs of capital raising
Net cash flows (used in)/provided by financing
activities
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at the beginning of the
financial year
Cash and cash equivalents at the end of the
financial year
Consolidated
2017
$
(5,645,463)
(4,861)
204,181
(5,446,143)
-
-
265,688
-
265,688
2016
$
(2,467,614)
-
41,443
(2,426,171)
31,872
31,872
13,116,789
(1,084,400)
12,032,389
(5,180,455)
9,638,090
13,735,219
4,097,129
8,554,764
13,735,219
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
19
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements
for the financial year ended 30 June 2017
Note 1 Reporting Entity
This annual financial report includes the financial statements and notes of ResApp Health Limited (“the
Company”) and its controlled entity (“the Group”). The Group is a for-profit entity and is domiciled in Australia.
The Group, through an exclusive license is developing smart phone applications for respiratory disease diagnostics
and management. Its registered address is Level 24, 44 St George’s Terrace, Perth, Western Australia, 6000. Its
principal office is Level 8, 127 Creek Street, Brisbane, Queensland, 4000.
Note 2 Going Concern
The financial report has been prepared on the going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and settlements of liabilities in the ordinary course of business.
The entity incurred an operating loss of $10,032,750 for the year ended 30 June 2017 (2016: $3,207,577) and a
net cash outflow from operating activities amounting to $5,446,143 (2016: $2,426,171).
Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going
concern basis of preparation is appropriate. The Directors believe there are sufficient funds to meet the Company’s
working capital requirements and as at the date of this report, the Company believes it can meet all liabilities as
and when they fall due.
Note 3 New Accounting Standards for Application in Future Periods
There are a number of new Accounting standards and Interpretations issued by the AASB as follows, that are not
yet mandatorily applicable to the Group and have not been applied in preparing these consolidated financial
statements. The Group does not plan to adopt these standards early.
AASB 2016-1 - Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for
Unrealised Tax Losses (continued)
The estimate of future taxable profits can include recovery of certain assets at amounts more than their carrying
amount if there is enough evidence that it is probable that the entity will recover the asset for more than its carrying
amount. Examples would include:
• Property measured using cost model for which an external valuation has been conducted
• Fixed rate debt instruments held to maturity.
Application date - Financial years beginning on or after 1 January 2017
Expected Impact - No expected impact
AASB 2016-3 - Amendments to Australian Accounting Standards – Clarifications to AASB 15
Clarifies AASB 15 application issues relating to:
• Identifying performance obligations
• Principal vs. agent considerations
• Licensing
• Practical expedients
Application date - Financial years beginning on or after 1 January 2018
Expected Impact - No expected impact
AASB 2016-5 - Amendments to Australian Accounting Standards – Classification and Measurement of Share-
based Payment Transactions:
This Standard amends AASB 2 Share-based Payment to address:
• The accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled
share-based payments;
20
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
• The classification of share-based payment transactions with a net settlement feature for withholding tax
obligations; and
• The accounting for a modification to the terms and conditions of a share-based payment that changes
the classification of the transaction from cash-settled to equity-settled.
Application date - Financial years beginning on or after 1 January 2018
Expected Impact - No expected impact
AASB 9 - Financial Instruments
AASB 9 (December 2014) is a new standard which Replaces AASB 139. This new version supersedes AASB
issued in December 2009 (as amended) and AASB 9 (issued in December 2010) and includes a model for
classification and measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially
reformed approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1 January 2018. However, the Standard is available
for early adoption. The own credit changes can be early adopted in isolation without otherwise changing the
accounting for financial instruments.
Application date - Financial years beginning on or after 1 January 2018
Expected Impact – The Group has no financial instruments and therefore there is no expected impact.
AASB 15 - Revenue from Contracts with Customers
This Standard establishes principles (including disclosure requirements) for reporting useful information about the
nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.
Application date - Financial years beginning on or after 1 January 2018
Expected Impact - The Group has no revenues and therefore there is no expected impact
AASB 16 - Leases
AASB 16 eliminates the operating and finance lease classifications for lessees currently accounted for under AASB
117 Leases. It instead requires an entity to bring most leases onto its Statement of Financial Position in a similar
way to how existing finance leases are treated under AASB 117. An entity will be required to recognise a lease
liability and a right of use asset in its Statement of Financial Position for most leases.
There are some optional exemptions for leases with a period of 12 months or less and for low value leases.
Lessor accounting remains largely unchanged from AASB 117.
Application date - Financial years beginning on or after 1 January 2019
Expected Impact - No expected impact
Note 4
Significant Accounting Policies
Basis of preparation
These financial statements include the financial statements of the ResApp Health Limited (the “Company”), and
its controlled entity (the “Group”). These general purpose financial statements have been prepared in accordance
with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements
of the Australian Accounting Standards Board and the Corporations Act 2001. Australian Accounting Standards
are equivalent to International Financial Reporting Standards (“IFRS”). Compliance with Australian Accounting
Standards ensures that these financial statements comply with International Financial Reporting Standards.
21
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Material accounting policies adopted in the preparation of these financial statements are presented below and have
been consistently applied unless otherwise stated.
Except for the cash flow information, the financial statements have been prepared on an accruals basis and are
based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current
assets, financial assets and financial liabilities.
The functional currency of the Group is measured using the currency of the primary economic environment in
which the Group operates. These financial statements are presented in Australian dollars which is the Group’s
functional and presentation currency.
The following significant accounting policies have been adopted in the preparation and presentation of the financial
report:
a)
Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value.
b)
Financial instruments
Recognition and initial measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the Group
becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial
assets that are delivered within timeframes established by marketplace convention.
Financial instruments are initially measured at fair value plus transaction costs where the instrument is not
classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value
through profit or loss are expensed to profit or loss immediately. Financial instruments are then classified and
measured as set out below.
Classification and subsequent measurement
All financial instruments of the Group are subsequently measured at amortised cost, using the effective interest
rate method.
Amortised cost
Amortised cost is calculated as a) the amount at which the financial asset or liability is measured at initial
recognition; b) less principal repayments; c) plus or minus the cumulative amortisation of the difference, if any,
between the amount initially recognised and the maturity amount calculated using the effective interest method;
and d) less any reduction for impairment.
Effective interest rate method
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction
costs and other premiums or discounts) through the expected life of the financial instrument to the net carrying
amount of the financial asset or financial liability Revisions to expected future net cash flows will necessitate an
adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.
Derecognition
Financial instruments are derecognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the Group no longer has any significant continuing involvement in the risks
22
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are
discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished
or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or
liabilities assumed, is recognised in profit or loss.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied
to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at
each balance sheet date. Financial assets are impaired where there is objective evidence that as a result of one or
more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the
investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is
the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with
the exception of trade receivables where the carrying amount is reduced through the use of an allowance account.
When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of
amounts previously written off are credited against the allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss.
Debt and equity instruments
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the
contractual arrangements.
b)
Impairment of other tangible and intangible assets
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the company estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent
basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or
otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment
annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which the estimates of future
cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset (cash generating unit) is reduced to its recoverable
amount.
An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in
which case the impairment loss is treated as a revaluation decrease.
23
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in
profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the
impairment loss is treated as a revaluation increase.
c)
Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable to or recoverable in respect of the
taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or
substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or
asset) to the extent that it is unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences
between the tax base of an asset or liability and its carrying amount in the balance sheet. The tax base of an asset
or liability is the amount attributed to that asset or liability for tax purposes.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible
temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and
liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of
assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor
accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary
differences arising from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in
subsidiaries, branches and associates, and interests in joint ventures except where the Group is able to control the
reversal of the temporary differences and it is probable that the temporary differences will not reverse in the
foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these
investments and interest are only recognised to the extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
Deferred tax liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and
liability giving rise to them are realised or settled, based on the tax rates (and tax laws) that have been enacted or
substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax
consequence that would follow from the manner in which the company expects, at the reporting date, to recover
or settle the carrying amount of its assets and liabilities
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authorities
and the company intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the statement of profit or loss and other
comprehensive income, except when it relates to items credited or debited directly to equity, in which case the
deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business
combination, in which case it is taken into account in the determination of goodwill or excess.
24
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Research and development tax incentives
Research and development tax incentives are recognised as revenue during the financial period in which the claim
for refund is made.
d)
Share-based payments
Equity-settled share-based payments are measured at fair value of the equity instrument at the grant date. Fair
value is measured by the use of a Black-Scholes model. The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
e)
Trade and other payables
Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid
at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid
within 30 days of recognition of the liability.
f)
Asset acquisitions
On 2 July 2015, ResApp Health Limited acquired 100% of all the rights and title to ResApp Diagnostics Pty Ltd
through the issue of 93,750,000 Fully Paid Ordinary Shares and 93,750,000 Performance Shares to the Vendors
as consideration for the acquisition.
When an asset acquisition does not constitute a business combination, the assets and liabilities are assigned a
carrying amount based on their relative fair values in an asset purchase transaction and no deferred tax will arise
in relation to the acquired assets and assumed liabilities as the initial recognition exemption for the deferred tax
under AASB 112 applies. No goodwill will arise on the acquisition and transaction costs of the acquisition will be
included in the capitalised cost of the asset.
h)
Critical accounting judgements and key sources of estimation uncertainty
The directors make a number of estimates and assumptions in preparing general purpose financial statements. The
resulting accounting estimates, will, by definition, seldom equal the related actual results. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and future periods if relevant.
The following key judgement and estimate was made in preparing these financial statements:
Impairment of intangibles
The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific
to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed
using calculations which incorporate various key assumptions. All intangible assets are accounting for using the
cost model whereby costs are amortised on a straight-line basis over their estimated useful lives, as these assets
are considered finite, if indicators the Group considers indicators are present. The Group has ascribed an estimated
useful life of the intangibles of 18 years from the date of acquisition, which is based on the expected usage and
benefits derived over the patents' useful lives. Residual values and useful lives are reviewed at each reporting date.
In addition, they are subject to impairment testing.
Share based payment expenses
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instrument
at the date at which they are granted. The fair value of options granted is measured using the Black-Scholes option
pricing model. The model uses assumptions and estimates as inputs.
25
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
R&D tax incentive
The R&D Tax Incentive is recognised when a reliable estimate of the amounts receivable can be made. For the
year end 30 June 2017, the Group has estimated the rebate which will be received in early 2018 and has accrued
that amount has income in the statement of profit or loss and other comprehensive income.
Note 5
Investment
The consolidated financial statements include financial statements of ResApp Health Limited and the following
subsidiary:
Name
Country of Incorporation
ResApp Diagnostics Pty Ltd
Australia
% Equity Interest
2017
100%
2016
100%
ResApp Health Limited is the ultimate Australian parent entity and ultimate parent of the Group.
Note 6
Intangibles
Intangibles (licences held over patent)
Amortisation1
Consolidated
2017
$
2,428,459
(269,829)
2,158,630
2016
$
2,428,459
-
2,428,459
1 The Group has ascribed an estimated useful life of the intangibles of 18 years from the date of acquisition, which
is based on the expected usage and benefits derived over the patents' useful lives.
The Licensed IP developed (and owned) by UQ and licensed to ResApp via UniQuest includes patent applications
filed in five countries as well as those countries encompassed by the European Patent Convention. The patent
applications all claim a priority date of 29/3/2012. The following table summarises the patent applications.
Country
Australia
Application Number
Title
2013239327
A method and apparatus for processing patient sounds
United States
14/389291
A method and apparatus for processing patient sounds
Europe
Japan
China
Korea
13768257.1
2015-502020
A method and apparatus for processing patient sounds
A method and apparatus for processing patient sounds
201380028268.X
A method and apparatus for processing patient sounds
10-2014-7030062
A method and apparatus for processing patient sounds
In addition to these patent applications, ResApp has an exclusive license of the know-how (and trade secrets) in
the set of mathematical features and classifier technology used for the diagnosis and severity measurement of
pneumonia, asthma and COPD developed by the research team at UQ.
Note 7 Other Income
Management applied judgement to estimate the amount of Research & Development rebate (R&D rebate)
available to the Group for the financial year ended 30 June 2017 to be $629,435. In August 2017, the Group
received an R&D rebate of $513,933 for the financial year ended 30 June 2016.
26
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Note 8 Administration Expenses
Consulting fees
Director fees and employee costs
Professional fees (including legal fees)
Other administration expenses
Note 9 Research and Development Costs
Consolidated
2017
$
(187,000)
(1,243,282)
(237,244)
(906,068)
(2,573,594)
2016
$
(81,833)
(653,937)
(137,323)
(555,395)
(1,428,488)
During the period, the Group incurred research and development costs associated with its technology and clinical
studies in both Australia and the United States. These research and development costs do not include costs of
employees involved in research and development.
Note 10 Remuneration of Auditors
Audit and other non-audit services
Grant Thornton Audit Pty Ltd:
Audit and review of financial reports
Other services
Greenwich & Co Audit Pty Ltd:
Audit and review of financial reports
Somes Cooke:
Audit and review of financial reports
Consolidated
2017
$
23,635
20,650
2016
$
-
-
-
21,500
-
44,285
18,000
39,500
27
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Note 11 Incomes Taxes
(a) Income tax recognised in profit or loss Tax
expense/(income) comprises:
Current tax expense/(income)
Deferred tax expense/(income) relating to the origination
and reversal of temporary differences
Total tax expense/(income)
(b) The prima face income tax expense on pre-tax
accounting loss from operations reconciles to the
income tax expense in the financial statements as
follows:
Loss from operations
Income tax benefit calculated at 27.5% (2016: 30%)
Tax effect of:
- Other timing differences
- Non-deductible items
o Share based payments
o Expenditure subject to R&D claim
o Entertainment
o Other non-deductible items
- Capital raising costs
- Non-assessable R&D refund
- Current year deferred tax asset not recognised
Income Tax Expense
(c) Unrecognised deferred tax balances
The following deferred tax assets (at 30%) have not been
brought to account:
Unrecognised deferred tax asset – tax losses
Unrecognised deferred tax asset – other temporary
differences
Net deferred tax assets
Consolidated
2017
$
-
-
2016
$
-
-
(10,032,750)
(2,759,006)
(3,207,577)
(962,273)
-
1,394,187
397,919
12,088
-
-
(314,426)
1,269,238
-
2,557,443
67,887
2,325,330
104,605
130,355
-
3,057
6,359
(13,374)
-
731,271
-
1,459,276
109,084
1,568,360
The net deferred tax assets not brought to account will only be of a benefit to the Company if future assessable
income is derived of a nature and amount sufficient to enable the benefits to be realised, the conditions for
deductibility imposed by the tax legislation continue to be complied with and the Company is able to meet the
continuity of ownership and/or continuity of business tests.
28
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Note 12 Other Receivables
Interest receivable
R&D rebate receivable
Note 13 Trade and Other Payables
Trade and other payables – related parties
Trade and other payables – non-related parties
Accruals – related parties
Accruals – non-related parties
Consolidated
Note
7
2017
$
21,027
1,143,368
1,164,395
Consolidated
2017
$
18,186
384,086
43,505
138,577
584,354
2016
$
20,890
-
20,890
2016
$
10,004
150,509
33,392
27,645
221,550
29
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Note 14 Issued Capital
Fully paid ordinary shares and authorised capital
Balance as at 1 July 2015
Shares issued 2 July 2015 under Public Offer (i)
Shares issued 2 July 2015 for the acquisition of ResApp Diagnostics (i)
Shares issued 2 July 2015 under the Facilitation Offer (i)
Shares issued 22 January 2016 for conversion of options (ii)
Shares issued 11 February 2016 for conversion of options (iii)
Shares issued 29 April 2016 pursuant to Placement (iv)
Shares issued 29 April 2016 as Advisory Shares pursuant to Placement (iv)
Shares issued 18 May 2016 for conversion of unlisted options (vi)
Shares issued 2 June 2016 for conversion of unlisted options (vii)
Shares issued 9 June 2016 for conversion of unlisted options (viii)
Shares issued 28 June 2016 for conversion of unlisted options (ix)
Costs directly attributable to issue of share capital (x)
Balance as at 30 June 2016
Balance as at 1 July 2016
Shares issued 15 July 2016 for conversion of unlisted options(xi)
Shares issued 22 July 2016 for conversion of unlisted options(xii)
Shares issued 16 September 2016 for conversion of unlisted options(xiii)
Shares issued 7 October 2016 for conversion of unlisted options(xiv)
Shares issued 26 October 2016 for conversion of unlisted options(xv)
Shares issued 16 December 2016 for conversion of unlisted options(xvi)
Balance as at 30 June 2017
No
$
249,273,353
200,000,000
93,750,000
18,749,999
18,093,750
187,500
4,004,499
4,000,000
1,875,000
375,000
470,438
4,875
62,500,000
12,500,000
1,016,250
468,750
3,375,000
1,312,500
93,750
203,250
12,187
87,750
34,125
2,437
-
(2,054,038)
648,820,852
21,515,523
648,820,852
21,515,523
375,000
750,000
187,500
2,437,500
1,218,750
5,250,000
9,750
19,500
4,875
63,375
31,688
136,500
659,039,602
21,781,211
(i) Pursuant to the Company’s Replacement Prospectus dated 26 May 2015, the Company issued 200,000,000
shares under the Public Offer, 93,750,000 shares under the Vendor Offer and 18,749,999 shares under the
Facilitation Offer.
(ii) On 22 January 2016, 18,093,750 shares were issued on the conversion of unlisted options at $0.026 per share.
(iii) On 11 February 2016, 187,500 shares were issued on the conversion of unlisted options at $0.026 per share.
(iv) On 29 April 2016, 62,500,000 shares were issued at $0.20 per share pursuant to a Placement.
(v) On 29 April 2016, 1,016,250 shares were issued in consideration for fees for capital raising services.
(vi) On 18 May 2016, 468,750 shares were issued on the conversion of unlisted options at $0.026 per share.
(vii) On 2 June 2016, 3,375,000 shares were issued on the conversion of unlisted options at $0.026 per share.
(viii) On 9 June 2016, 1,312,500 shares were issued on the conversion of unlisted options at $0.026 per share.
(ix) On 28 June 2016, 93,750 shares were issued on the conversion of unlisted options at $0.026 per share.
(x) Costs of capital comprises: $203,250 relating to Advisory Shares (outlined above), $823,452 relating to
valuation of Unlisted Options issued on 29 April 2016 (Note 7), and other costs of $1,027,336.
(xi) On 15 July 2016, 375,000 shares were issued on the conversion of unlisted options at $0.026 per share.
(xii) On 22 July 2016, 750,000 shares were issued on the conversion of unlisted options at $0.026 per share.
(xiii) On 16 September 2016, 187,500 shares were issued on the conversion of unlisted options at $0.026 per share.
(xiv) On 7 October 2016, 2,437,500 shares were issued on the conversion of unlisted options at $0.026 per share.
(xv) On 26 October 2016, 1,218,750 shares were issued on the conversion of unlisted options at $0.026 per share.
(xvi) On 16 December 2016, 5,250,000 shares were issued on the conversion of unlisted options at $0.026 per share.
30
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Fully paid ordinary shares carry one vote per share and carry the right to dividends. Ordinary shares participate in
dividends and the proceeds on winding up of the Company in proportion to the number of shares held. At the
shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder
has one vote on a show of hands.
Note 15 Equity-Settled Benefits Reserve
Balance at 1
July 2016
Issued during
the year
Exercised during
the year
Balance at 30
June 2017
Unlisted options
(including ESOP options)
41,585,417
24,600,000
(10,218,750)
55,966,667
Balance as at 1 July 2015
Fair value of options issued1
Balance as at 30 June 2016
Balance as at 1 July 2016
Fair value of options issued2
Balance as at 30 June 2017
$
-
1,257,970
1,257,970
$
1,257,970
5,069,771
6,327,741
1 During the financial year ended 30 June 2016, ResApp Health Limited issued the following unlisted options:
• 5,000,000 unlisted options were issued to Dr Tony Keating on 2 July 2015, following shareholder approval
at the General Meeting held on 26 November 2014. The options are to subscribe for ordinary fully paid
shares in the Company at any time on or before 2 July 2020 at an exercise price of $0.025.
• 5,000,000 unlisted options were issued to Dr Tony Keating on 2 July 2015, following shareholder approval
at the General Meeting held on 26 November 2014. The options are to subscribe for ordinary fully paid
shares in the Company at any time on or before 2 July 2020 at an exercise price of $0.05.
• 10,000,000 unlisted options were issued to Dr Tony Keating on 2 July 2015, following shareholder
approval at the General Meeting held on 26 November 2014. The options are to subscribe for ordinary
fully paid shares in the Company at any time on or before 2 July 2020 at an exercise price of $0.10.
• 3,000,000 unlisted options were issued to Dr Udantha Abeyratne on 22 September 2015, as approved by
Shareholders at the General Meeting held on 30 November 2015. The options are to subscribe for ordinary
fully paid shares in the Company at any time on or before 2 July 2020 at an exercise price of $0.05.
• 2,000,000 unlisted options were issued to Dr Udantha Abeyratne on 22 September 2015, as approved by
Shareholders at the General Meeting held on 30 November 2015. The options are to subscribe for ordinary
fully paid shares in the Company at any time on or before 2 July 2020 at an exercise price of $0.10.
• On 29 April 2016 the Company issued 4,500,000 Unlisted Options (exercisable at $0.28, expiring 29 April
2019) and 1,866,667 Unlisted Options (exercisable at $0.30, expiring 29 April 2019) in consideration for
capital raising services provided. These options are escrowed for a period of 12 months to 29 April 2017.
2 During the financial year ended 30 June 2017, ResApp Health Limited issued the following options which were
expensed as share based payments:
•
2,000,000 Employee Incentive Options were issued to Employees on 16 September 2016 pursuant to the
terms of the Company’s Employee Incentive Plan. The Options are exercisable at $0.45 and expire on
16 September 2019. One third of the Employee Incentive Options vest immediately with the remaining
two thirds vesting in equal quarterly instalments over 2 years from the date of issue if the employee
remains employed by the Company.
31
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
•
•
•
•
•
•
•
2,000,000 Consultancy Incentive Options were issued to consultants on 16 September 2016, being
exercisable at $0.45 and expiring on 16 September 2019.
2,000,000 Consultancy Incentive Options were issued to consultants on 16 September 2016, being
exercisable at $0.75 and expiring on 16 September 2019.
7,200,000 Director Incentive Options were issued to Directors on 10 November 2016, being exercisable
at $0.45 and expiring on 10 November 2019, as approved by Shareholders at the Company’s Annual
General Meeting on 2 November 2016.
7,400,000 Director Incentive Options were issued to Directors on 10 November 2016, being exercisable
at $0.75 and expiring on 10 November 2019, as approved by Shareholders at the Company’s Annual
General Meeting on 2 November 2016.
750,000 Employee Incentive Options were issued to Employees on 14 February 2017, being exercisable
at $0.45. 250,000 Options are expiring on 31 October 2020 with one third of the Options vesting on 31
October 2017 with the remaining two thirds vesting in equal quarterly instalments over 2 years from 31
October 2017 if the employee remains employed by the Company. 500,000 Options are expiring on 12
December 2020 with one third of the Options vesting on 12 December 2017 with the remaining two
thirds vesting in equal quarterly instalments over 2 years from 12 December 2017, if the employee
remains employed by the Company.
500,000 Employee Incentive Options were issued to Employees on 13 March 2017, being exercisable at
$0.45 and expiring on 13 March 2021 with one third of the Options vesting on 13 March 2018 with the
remaining two thirds vesting in equal quarterly instalments over 2 years from 13 March 2018, if the
employee remains employed by the Company.
250,000 Employee Incentive Options were issued to Employees on 1 May 2017, being exercisable at
$0.45 and expiring on 1 May 2021 with one third of the Options vesting on 1 May 2018 with the
remaining two thirds vesting in equal quarterly instalments over 2 years from 1 May 2018, if the
employee remains employed by the Company.
The fair value of the options issued was estimated at the date of grant using the Black-Scholes option pricing
model. The following table sets out the assumptions made in determining the fair value of the options granted.
Options
expiring
Options
expiring
Options
expiring
Options
expiring
Options
expiring
Options
expiring
2-Jul-20
2-Jul-20
2-Jul-20
22-Sep-20
22-Sep-20
29-Apr-19
2-Jul-15
2-Jul-15
2-Jul-15
22-Sep-15
22-Sep-15
29-Apr-16
0%
110%
1.92%
0%
110%
1.92%
0%
110%
1.92%
0%
110%
1.92%
0%
110%
1.92%
0%
110%
2.00%
Grant date
Dividend yield
Expected volatility
Risk-free interest rate
Option exercise price
$0.025
$ 0.05
$0.10
$0.05
$0.10
$0.28
Expected life (years)
Share price on date of
grant
Value attributable to
the options in the
equity settled benefits
reserve at 30 June
2017
5
5
5
5
5
3
$0.021
$ 0.021
$0.021
$0.03
$0.03
$0.210
$95,000
$85,000
$150,000
$66,006
$38,512
$585,445
32
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Options
expiring
Options
expiring
Options
expiring
Options
expiring
Options
expiring
Options
expiring
29-Apr-19
16-Sep-19
16-Sep-19
16-Sep-19
10-Nov-19
10-Nov-19
Grant date
29-Apr-16
16-Sep-16
16-Sep-16
16-Sep-16
10-Nov-16
10-Nov-16
Dividend yield
Expected volatility
Risk-free interest rate
0%
110%
2.00%
0%
100%
1.48%
0%
100%
1.48%
0%
100%
1.48%
0%
104%
1.48%
0%
104%
1.48%
Option exercise price
$0.30
$0.45
$0.45
$0.75
$0.45
$0.75
Expected life (years)
Share price on date of
grant
Value attributable to
the options in the
equity settled benefits
reserve at 30 June
2017
3
3
3
3
3
3
$0.210
$ 0.430
$ 0.430
$0.430
$0.440
$0.440
$238,007
$314,064*
$527,454
$439,545
$2,009,593
$1,746,558
Options
expiring
Options
expiring
Options
expiring
Options
expiring
31-Oct-20
12-Dec-20
13-Mar-21
1-May-21
Grant date
14-Feb-17
14-Feb-17
13-Mar-17
1-May-17
Dividend yield
Expected volatility
Risk-free interest rate
0%
100%
1.48%
0%
100%
1.48%
0%
100%
1.48%
0%
100%
1.48%
Option exercise price
$0.45
$0.45
$0.45
$0.45
Expected life (years)
Share price on date of
grant
Value attributable to
the options in the
equity settled benefits
reserve at 30 June
2017
3.7
3.8
4
4
$0.370
$0.370
$0.315
$0.320
$8,149*
$11,686*
$9,933*
$2,789*
* subject to vesting conditions as disclosed in the narrative of this note 15.
33
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Note 16 Loss Per Share
The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are
as follows:
Attributable to ordinary equity holders (used in
calculating basic and diluted EPS) – continuing
operations.
Weighted average number of ordinary shares for the
purpose of basic and diluted earnings per share adjusted
for share consolidation1
Loss per share (basic and diluted) (cents)
Consolidated
2017
$
2016
$
(10,032,750)
(3,207,577)
655,480,955
(1.53)
491,713,750
(0.65)
1 55,966,667 options excluded from the calculation will have no impact due to the Group’s loss-making position.
Note 17 Notes to the Cash Flow Statement
(a) Reconciliation of cash and cash equivalents
For the purpose of the cash flow statement, cash includes cash on hand and in banks and deposits at call, net of
outstanding bank overdrafts. Cash at the end of the financial year as shown in the Cash Flow Statement is
reconciled to the related items in the balance sheet as follows:
Cash at bank
Consolidated
2017
$
8,554,764
8,554,764
2016
$
13,735,219
13,735,219
34
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
(b) Reconciliation of loss for the period to net cash flows from operating activities
Loss after income tax
Non-cash flows in loss:
Interest accrued
Share based payments
Bad debt
Bank fees
Amortisation
Foreign exchange movements
Changes in assets and liabilities relating to operating
activities
(Increase) in trade receivables
(Increase) in other receivables
Decrease/(increase) in other assets
(Decrease)/increase in trade and other payables
Increase/(decrease) in provisions
Net cash flows from operating activities
Note 18 Financial Instruments
Consolidated
2017
$
2016
$
(10,032,750)
(3,207,577)
(21,027)
5,069,771
-
-
269,829
31,003
(16,643)
(1,166,841)
19,865
528,139
(121,045)
(5,446,143)
(20,300)
434,518
330,600
24
-
-
(35,478)
(20,890)
91,912
(22,366)
23,386
(2,426,171)
The Company’s financial instruments consist mainly of deposits with banks and accounts receivable and payable.
Financial assets
Cash and cash equivalents
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
(a) Financial risk management policies
Consolidated
2017
$
8,554,764
83,852
-
8,638,616
584,354
584,354
2016
$
13,735,219
100,495
20,890
13,856,604
221,550
221,550
The Group’s principal financial instruments comprise cash and short-term deposits and trade and other payables
as disclosed in the financial statements. The main purpose of these financial instruments is to manage the working
capital needs of the Group’s operations. It is the Group’s policy that no trading in financial instruments shall be
undertaken. The board reviews and agrees policies for managing this risk is summarised below.
35
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
(i) Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expenses are recognised, in respect of each class of financial
asset, financial liability and equity instruments are disclosed in Note 4 to the financial statements.
(ii) Credit risk management
The Company is not currently exposed to credit risk other than in the normal course of business.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance
sheet.
Credit risk related to balances with banks and other financial institutions is managed by the Board in accordance
with approved board policy. Such policy requires that surplus funds are only invested with counterparties with a
Standard & Poor’s rating of at least AA-. The following table provides information regarding the credit risk
relating to cash and money market securities based on Standard & Poor’s counterparty credit ratings.
Cash and cash equivalents
AA- rated
(iii) Liquidity risk management
Consolidated
2017
$
8,554,764
8,554,764
2016
$
13,735,219
13,735,219
Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an
appropriate liquidity risk management framework for the management of the Company’s short, medium and long-
term funding and liquidity management requirements. The Company manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and
actual cash flows and matching the maturity profiles of financial assets and liabilities.
Financial liabilities due for payment
Trade and other payables
Total expected outflows
Financial assets – cash flow realisable
Cash and cash equivalents
Trade receivables
Other receivables
Total anticipated inflows
Consolidated
2017
$
584,354
584,354
8,554,764
83,852
-
8,638,616
2016
$
221,550
221,550
13,735,219
100,495
20,890
13,856,604
Net inflow on financial instruments
8,054,262
13,635,054
36
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
(iv) Interest rate risk
The financial instruments which primarily expose the Company to interest rate risk are cash and cash equivalents.
The Company’s exposure to interest rate risk and the effective interest rate for classes of financial assets and
financial liabilities is set out below:
Effective
interest
rate
Floating
interest
rate
$
1 year or
less
$
1 to 5
years
$
Non-
interest
bearing
$
Total
$
Consolidated
30 June 2017
Financial assets
Cash assets
Trade receivables
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
Consolidated
30 June 2016
Financial assets
Cash assets
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
1.00%
-
-
-
-
-
-
-
-
-
8,554,764
-
8,554,764
-
-
-
-
-
-
-
-
8,554,764
83,852
83,852
83,852
8,638,616
584,354
584,354
584,354
584,354
Effective
interest
rate
Floating
interest
rate
$
1 year or
less
$
1 to 5
years
$
Non-
interest
bearing
$
Total
$
0.95%
-
-
-
-
-
-
-
-
-
-
-
13,735,219
-
-
13,735,219
-
-
-
-
-
-
-
-
-
13,735,219
100,495
100,495
20,890
20,890
121,385
13,856,604
221,550
221,550
221,550
221,550
(v) Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows:
• The fair value of financial assets and financial liabilities with standard terms and conditions and traded
on active liquid markets are determined with reference to quoted market prices; and
• The fair value of other financial assets and financial liabilities are determined in accordance with
generally accepted pricing models based on discounted cash flow analyses.
37
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
The directors consider that the carrying amounts of financial assets and financial liabilities which are all recorded
at amortised cost less accumulated impairment charges in these financial statements, approximate their fair values.
Consolidated 2017
Consolidated 2016
Carrying
Amount
$
Fair Value
$
Carrying
Amount
$
Fair Value
$
Financial assets
Cash and cash equivalents
8,554,764
8,554,764
13,735,219
13,735,219
Trade receivables
Other receivables
83,852
83,852
-
-
100,495
20,890
100,495
20,890
Total financial assets
8,638,616
8,638,616
13,856,604
13,856,604
Financial liabilities
Trade and other payables
Total financial liabilities
584,354
584,354
584,354
584,354
221,550
221,550
221,550
221,550
Note 19 Related Party Transactions
(a)
Transactions with key management personnel
i.
Key management personnel compensation
The aggregate compensation made to key management personnel of the company and the Company is set out
below:
Short term employee benefits
Post-employment benefits
Termination benefits
Other benefits
Share-based payments
Consolidated
2017
$
587,708
38,303
-
-
3,756,149
4,382,160
2016
$
422,581
17,930
-
-
330,000
770,511
ii.
Transactions with key management personnel and related parties
A number of key management personnel, or their related parties, hold positions in other entities that result in them
having control or significant influence over the financial or operating policies of those entities. There were no
related party transactions that occurred in the reporting period.
Note 20 Contingent Liabilities
The Directors of the Group are not aware of any contingent liabilities which require disclosure in the financial
year ended 30 June 2017.
38
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Note 21 Commitments
Operating lease commitments
Not later than 1 year
Later than 1 year but not later than 5 years
Total operating lease commitments
Company secretary commitments
Not later than 1 year
Total company secretarial commitments
Research expenditure commitments
Not later than 1 year
Later than 1 year but not later than 5 years
Net cash flows from operating activities
Clinical study commitments
Not later than 1 year
Later than 1 year but not later than 5 years
Total operating lease commitments
Note 22 Subsequent Events
Consolidated
2017
$
26,649
193,846
220,495
32,000
32,000
341,138
-
341,138
Consolidated
2017
USD
880,087
-
880,087
2016
$
68,463
203,838
272,301
32,000
32,000
170,376
492,141
662,517
2016
USD
-
-
-
On 9 August 2017, the Company announced top-line data from its multi-site, double blind, prospective clinical
study to investigate ResAppDx for the diagnosis of respiratory disease in infants and children using cough sounds.
A preliminary analysis indicated that the SMARTCOUGH-C study is unlikely to meet its predefined endpoints
for diagnosis of childhood respiratory disease with the lower bound of the 95% confidence interval of both PPA
and NPA with clinical diagnosis being below 75% of all diseases. The Company indicated that it proposes
completing a second US paediatric pivotal clinical study this US winter as well as continue and complete our adult
program, including our US adult pivotal study which is also set to begin this US winter.
On 14 September 2017, the Company announced that while key staff at MSF have reaffirmed their belief in the
potential of ResApp’s core technology, after reviewing the issues identified by ResApp in its SMARTCOUGH-
C study, and the high cost of keeping the project open, MSF decided to not proceed with its planned field
evaluation of ResAppDx at this point in time. ResApp and MSF maintain their collaborative relationship and will
seek opportunities for field testing the technology once issues identified in the SMARTCOUGH- C study have
been resolved.
Except for the events noted above, no material events have occurred subsequent to the reporting date.
39
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Consolidated Notes to the Financial Statements (continued)
for the financial year ended 30 June 2017
Note 23 Segment Note
The Group has identified its operating segment as medical technology. The reportable segment is represented by
the primary consolidated statements forming the financial report for the year ended 30 June 2017. These are the
figures that are reviewed and used by the Board of Directors in assessing performance and determining the
allocation of resources.
Note 25 Parent Entity Information
The following detailed information is related to the parent entity, ResApp Health Limited, as at 30 June 2016 and
30 June 2017.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Reserves
Accumulated Losses
Total equity
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
2017
$
9,515,506
1,980,171
11,495,677
638,670
-
638,670
21,781,211
6,426,350
(17,350,554)
10,857,007
(10,645,042)
-
(10,645,042)
2016
$
14,062,918
2,250,000
16,312,918
244,935
-
244,935
21,515,524
1,257,970
(6,705,512)
16,067,982
(3,185,954)
-
(489,321)
40
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
Directors’ Declaration
The Directors’ of the Group declare that:
1.
in the Directors’ opinion, the financial statements and accompanying notes set out on pages 16 to 40 are in
accordance with the Corporations Act 2001 and:
(a)
comply with Accounting Standards and the Corporations Regulations 2001; and
(b)
give a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance
for the year ended on that date;
note 4 confirms that the financial statements also comply with International Financial Reporting Standards
(IFRSs) as issued by the International Accounting Standards Board (IASB);
in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable;
the remuneration disclosures included in pages 10 to 13 of the directors’ report (as part of the audited
Remuneration Report), for the year ended 30 June 2017, comply with section 300A of the Corporations
Act 2001; and
2.
3.
4.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf
of the directors by:
Tony Keating
Director
Brisbane
29th day of September 2017
41
Level 1
10 Kings Park Road
West Perth WA 6005
Correspondence to:
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
to the Members of ResApp Health Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of ResApp Health Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017,
the consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of ResApp Health Limited the Group, is in
accordance with the Corporations Act 2001, including:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
b 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
independence requirements of 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 (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 Group, would be in the same terms if given to the Directors as at
the time of this auditor’s report.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Intangible assets – licenses held over patent:
Note 6
At 30 June 2017 the carrying value of intangible
assets was $2,158,630.
In accordance with AASB 138 Intangible Assets, the
entity is required to review at each reporting period
the amortisation period and amortisation method for
intangible assets with finite lives. In accordance with
AASB 136 Impairment of Assets, the entity must also
assess if there are any triggers for impairment which
may suggest the carrying value of the intangible
assets is in excess of the recoverable value.
The intellectual property assets are licenses held
over patents and the entity is currently in the
research stage.
The process to assess the related patent
amortisation period and method and to evaluate
potential impairment triggers involves significant
management judgement and subjectivity.
This area is a key audit matter due to the degree of
subjectivity involved in the estimates and
assumptions used by management in the impairment
analysis and in the assessment of the amortisation
period and method.
Recognition of R&D tax incentive – Note 7
Under the research and development (R&D) tax
incentive scheme, the Group receives a 43.5%
refundable tax offset (2016: 45%) of eligible
expenditure if its turnover is less than $20 million per
annum, provided it is not controlled by income tax
exempt entities. An R&D plan is filed with
AusIndustry in the following financial year and,
based on this filing, the Group receives the incentive
in cash. Management performed a detailed review of
the Group’s total R&D expenditure to estimate the
refundable tax offset receivable under the R&D tax
incentive legislation.
The process undertaken by management to estimate
the amount of the incentive requires an element of
judgement in determining eligible expenditures.
Management has an incentive to classify
expenditures as R&D to make a claim under the tax
incentive scheme.
This area is a key audit matter due to the size of the
accrual and the degree of judgement and
interpretation of the R&D tax legislation required by
management to assess the eligibility of the R&D
expenditure under the scheme.
Our procedures included, amongst others:
• Assessing the reasonableness of management's
assessment of the amortisation period and
amortisation method, pursuant to AASB 138;
• Making enquiries of management to gain an
understanding of the judgements and assumptions
they have used in making their assessment;
• Analysing management’s impairment
memorandum to understand their assessment of
impairment indicators under AASB 136;
• Considering the application of requirements under
AASB 136 for identifying an asset that may be
impaired; and
• Assessing the appropriateness of the related
financial statement disclosures.
Our procedures included, amongst others:
• Comparing the nature of the R&D expenditure
included in the current year estimate to the prior
period claims;
• Utilising an internal R&D tax specialist to review
the expenditure methodology employed by
management for consistency with the R&D tax
offset rules;
• Considering the nature of the expenditure against
the eligibility criteria of the R&D tax incentive
scheme to form a view about whether the
expenses included in the estimate were likely to
meet the eligibility criteria;
• Comparing the eligible expenditure used in the
•
receivable calculation to the expenditure recorded
in the general ledger;
Inspecting copies of relevant correspondence with
AusIndustry and the ATO related to historic
claims; and
• Assessing the appropriateness of the related
financial statement disclosures.
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the Financial Report
The Directors of the Group are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.
Auditor’s 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:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 13 of the directors’ report for
the year ended 30 June 2017.
In our opinion, the Remuneration Report of ResApp Health Limited, for the year ended 30 June
2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Group are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
P W Warr
Partner - Audit & Assurance
Perth, 29 September 2017
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
ASX Additional Information
Pursuant to the Listing Rules of the Australian Securities Exchange, the shareholder information set out below
was applicable as at 18 September 2017.
A.
Distribution of Equity Securities
Analysis of numbers of shareholders by size of holding:
Distribution
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
Number of
Shares
265,723
3,590,286
7,157,325
94,816,183
553,210,085
659,039,602
%
0.04
0.54
1.09
14.39
83.94
100.00
Number of
Shareholders
578
1,254
897
2,572
824
6,125
There were 2,188 shareholders holding less than a marketable parcel of ordinary shares.
B.
Substantial Shareholders
An extract of the Company’s Register of Substantial Shareholders (who hold 5% or more of the issued capital) is
set out below:
Shareholder Name
FIL Limited (i)
Freeman Road Pty Ltd
Ian Francis Reynolds (i)
Issued Ordinary Shares
Number
60,848,856
46,200,000
36,930,633
%
9.23
7.01
5.60
Note (i) - This information is based on the Substantial Shareholder Notices lodged by the respective holders.
C.
Twenty Largest Shareholders
The names of the twenty largest holders of quoted shares are listed below:
Shareholder
1 HSBC Custody Nominees (Australia) Limited
2 Freeman Road Pty Ltd
3 Mr Brian Leedman & Mrs Natasha Leedman
4 Narhex Life Sciences Developments Limited
5 CEM International (Asia) Pty Ltd
6
J P Morgan Nominees Australia Limited
7 Mr Frank Weng Thong Chew
8 BNP Paribas Nominees Pty Ltd
9 Newtonmore Biosciences Pty Ltd
10 Uniquest Pty Ltd
46
Number of
Shares
60,319,883
46,200,000
20,625,000
15,000,000
12,352,883
12,246,047
11,975,000
10,431,897
8,437,500
8,437,500
%
9.15
7.01
3.13
2.28
1.87
1.86
1.82
1.58
1.28
1.28
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
ASX Additional Information
11 Let Superannuation Pty Ltd
12 Tittel Pty Ltd
13 Citicorp Nominees Pty Limited
14 Wilk Holdings Pty Ltd
15 Tashtech Pty Ltd
16 Mr Victor John Wilk
17 Comsec Nominees Pty Limited
18 Gardmac Pty Ltd
19 L & V P Pty Ltd
20 Benoni Pty Ltd
TOTAL
D.
Listed Options
6,000,000
5,800,000
4,839,704
4,800,000
4,500,000
4,500,000
4,139,213
3,460,069
3,281,250
3,250,000
0.91
0.88
0.73
0.73
0.68
0.68
0.63
0.53
0.50
0.49
250,595,946
38.02
As at the date of this report there were nil listed options on issue in the Company.
E.
Voting Rights
In accordance with the Company’s Constitution, voting rights in respect of ordinary shares are on a show of hands
whereby each member present in person or by proxy shall have one vote and upon a poll, each share will have
one vote.
F.
Unquoted Securities
Performance Shares
Number of Performance Shares
Number of Holders
Holders with more than 20%
93,750,000
8
UniQuest Pty Ltd – 45%
Brian Leedman & Natasha Leedman – 20%
Unlisted Options - $0.28; 29 April 2019
Number of Options
Number of Holders
4,500,000
3
Holders with more than 20%
Jay-V Inc. – 61.11%
Mr Robert Hamilton – 31.11%
Unlisted Options - $0.30; 29 April 2019
Number of Options
Number of Holders
1,866,667
1
Holders with more than 20%
Jett Capital Advisors Pty Ltd - 100%
47
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
ASX Additional Information
Incentive Options - $0.025; 2 July 2020
Number of Performance Shares
Number of Holders
Holders with more than 20%
Incentive Options - $0.05; 2 July 2020
Number of Performance Shares
Number of Holders
Holders with more than 20%
Incentive Options - $0.10; 2 July 2020
Number of Incentive Options
Number of Holders
Holders with more than 20%
5,000,000
1
Dr Tony Keating – 100%
5,000,000
1
Dr Tony Keating – 100%
10,000,000
1
Dr Tony Keating – 100%
Incentive Options - $0.05; 22 September 2020
Number of Incentive Options
Number of Holders
Holders with more than 20%
3,000,000
1
Dr Udantha Abeyratne – 100%
Incentive Options - $0.10; 22 September 2020
Number of Incentive Options
Number of Holders
Holders with more than 20%
2,000,000
1
Dr Udantha Abeyratne – 100%
Consultancy Incentive Options- $0.45; 16 September 2019
Number of Incentive Options
Number of Holders
Holders with more than 20%
2,000,000
2
Dr Udantha Abeyratne – 50%
Dr Paul Porter – 50%
Consultancy Incentive Options- $0.75; 16 September 2019
Number of Incentive Options
Number of Holders
Holders with more than 20%
2,000,000
2
Dr Udantha Abeyratne – 50%
Dr Paul Porter – 50%
48
ResApp Health Limited – Consolidated Annual Report
ABN 51 094 468 318
ASX Additional Information
Employee Incentive Options
ESOP Options - $0.45; 16 September 2019
2,000,000 Options – 4 holders
ESOP Options - $0.45; 10 November 2019
7,200,000 Options – 4 holders
ESOP Options - $0.75; 10 November 2019
7,400,000 Options – 4 holders
ESOP Options - $0.45; 31 October 2020
250,000 Options – 1 holder
ESOP Options - $0.45; 12 December 2020
500,000 Options – 1 holder
ESOP Options - $0.45; 13 March 2021
ESOP Options - $0.45; 1 May 2021
ESOP Options - $0.45; 1 June 2020
ESOP Options - $0.75; 1 June 2020
500,000 Options – 1 holder
250,000 Options – 1 holder
1,000,000 Options – 1 holder
1,500,000 Options – 1 holder
G.
Details Performance Shares
Each of the 93,750,000 performance shares will convert to one (1) fully paid ordinary share upon satisfaction of
the relevant Milestone. Accordingly, the performance shares will convert into fully paid ordinary shares in the
capital of the Company within 7 days of the release of the audited accounts in respect of the period in which
ResApp and any subsidiaries of ResApp (or if the Company or any Related Entity of the Company is licensed to
use the Licensed IP, the Company and that Related Entity) achieving aggregated gross revenue of $20,000,000 in
the five years commencing on the day the Company is readmitted to quotation on ASX, being 14 July 2015.
No performance shares were converted or cancelled during the period. No performance milestones were met
during the period.
H.
On Market Buy-Back
There is no current on market buy-back for any of the Company’s securities.
I.
Restricted Securities
There are currently no restricted securities on issue.
49