Michael Clarke Former Australian Cricket Captain Respiri AmbassadorANNUAL REPORTFor the year end 30 June 2019For personal use only This page is intentionally left blank
For personal use only Table of Contents
Directors’ Report ............................................................................................................................. 3
Auditor’s Independence Declaration ........................................................................................... 22
Financial Report ............................................................................................................................. 23
Statement of Profit or Loss and Other Comprehensive Income ..................................................... 24
Statement of Financial Position ....................................................................................................... 25
Statement of Changes in Equity ...................................................................................................... 26
Statement of Cash Flows ................................................................................................................ 27
Notes to the Financial Statements .................................................................................................. 28
Directors’ Declaration ................................................................................................................... 57
Independent Auditor’s Report ...................................................................................................... 58
Shareholder Information ...............................................................................................................63
Corporate Directory ...................................................................................................................... 65
Page 2 of 65
For personal use only Directors’ Report
The Directors’ of Respiri (“RSH”, “Respiri” or “the Group”) formerly iSonea (“ISN”) submit herewith the
annual financial report for the Group for the financial year ended 30 June 2019. In order to comply with the
Corporations Act 2001 the Directors’ Report as follows:
Directors
The names of the Directors in office at any time during the year, or since the end of the year, are as follows:
Mr Mario Gattino
CEO and Executive Director
Appointed to the Board
14th December 2017
Last elected by Shareholders
N/A
Experience
Mr Mario Gattino has over 25 years’ experience in senior leadership positions within
the medical industry. His track record in commercialising and managing sales of drug
and medical device products in multiple countries will be invaluable in helping Respiri
achieve its commercial milestones. Mr Gattino has held senior leadership positions
in Pfizer, one of the world’s largest pharmaceutical companies in the USA and Europe.
He is an expert in sophisticated stakeholder management, portfolio and business
development via M&A and licensing, brand commercialisation, business innovation
and profit generation. Other key roles he has held include Managing Director for
Perrigo ANZ, a company that makes a wide range of consumer healthcare products,
and was the key advisor to an in-vitro diagnostic start-up where he developed its
global commercialisation strategy and successfully raised capital.
Qualifications
MBA, Bachelor of Applied Science (Medical Administration), Graduate Diploma in
Management. GAICD
Interest in shares and options
420,000 Ordinary Shares and 20,000,000 Unlisted Options
Committees
N/A
Directorships held in other
listed entities
No other Public Company Directorships in the past three years
Mr Ross Blair-Holt
Non-Executive Chairman
Appointed to the Board
27th November 2018
Last elected by Shareholders
N/A
Experience
Mr Ross Blair-Holt is a Director and CEO of all Bruce Mathieson Group private family
companies, Director of ALH Group Pty Ltd, since 2004 and Chief Operating Officer
2004 – 2014. He is also a Director of Beovista Pty Ltd, an energy saving machine
manufacturer and operator, and Director of GreyScan Pty Ltd, world’s first inorganic
explosive detector, and Firefly Health Pty Ltd, non-invasive personal hypoglycaemic
monitoring for Type 1 diabetics.
Qualifications
Bachelor of Commerce, a Fellow of Certified Practising Accountants (FCPA)
Interest in shares and options
1,120,423 Ordinary Shares
Directorships held in other
entities
Director and CEO of all Bruce Mathieson Group private family companies, Director
and CEO of ALH Group Pty Ltd, Director of Beovista Pty Ltd, Director of GreyScan
Pty Ltd and Director of Firefly Health.
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For personal use only Directors’ Report continued
Professor Bruce Thompson
Non-Executive Director
Appointed to the Board
27th November 2018
Last elected by Shareholders
N/A
Experience
Mr Bruce Thompson is Head of Physiological Services at The Alfred Hospital, one of
the largest lung function laboratories in Australia, Adjunct Professor, Central Clinical
School, Monash University and will take up his new role as Dean, School of Health
Sciences at Swinburne University of Technology in 2019. He is the President-elect of
the Thoracic Society of Australia and New Zealand and is a member of a number of
other professional associations including the Asia Pacific Society of Respirology,
American Thoracic Society, European Respiratory Society, National Health and
Medical Research Council, Institute for Breathing and Sleep, Lung Health Promotion
Centre, National Science Week and World Congress in Biomedical Engineering. Mr
Thompson has been the recipient of over $34 million in competitive grants for
research, has contributed to Government Policy Documents and is the author of
numerous peer reviewed journal articles and official documents. Mr Thompson is
also Chair of Respiri’s Australian Medical and Scientific Advisory Board.
Qualifications
B.app.Sci, CRFS, FANZSRS, FThorSoc, FAPSR, PhD
Interest in shares and options
-
Mr Brendan Mason
Appointed to the Board
Non-Executive Director
30th May 2018
Resigned from the Board
27th November 2018
Qualifications
EMBA, Business Administration and Management, Post Graduate Diploma in
Operations, Business Operations
Mr Mark Ziirsen
Non-Executive Chairman
Appointed to the Board
30th May 2018
Resigned from the Board
27th November 2018
Qualifications
MBA, International business, B.Comm and CPA
Dr Thomas Duthy
Non-Executive Director
Appointed to the Board
24th October 2018
Resigned from the Board
27th November 2018
Qualifications
PhD, MBA
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Company Secretaries
Mr Alastair Beard
Company Secretary
Mr Alastair Beard was appointed as Company Secretary on 13th March 2019.
Mr Beard is a skilful and adaptable Certified Practicing Accountant with diverse private and public company experience
including roles as director or Chief Financial Officer in the property, utilities, aquaculture and research-to-
commercialisation industries.
Mr Julian Rockett
Company Secretary
Resigned on
13th March 2019
Ms Jenni Lightowlers
Company Secretary
Resigned on
3rd July 2018
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Principal Activities
The Company’s principal activities in the course of the financial year have been the research, development
and commercialisation of medical devices, and the development of mobile health applications. There were
no significant changes in the nature of the Company’s principal activities during the financial year.
Operating and Financial Review
The loss of the Company after income tax for the financial year was $8,474,586 (2018: $3,207,220). This
result has been achieved after fully expensing all research and development costs.
This first half year represented a period of intense activity and achievement for the Group focused on the
completion of the Wheezo technology towards a viable medical device for commercialisation, plus a key
objective of complimenting this with the highest level medical and scientific validation:
HIGHLIGHTS
• Cutting edge engineering and software development of the Wheezo home monitoring device
and smart app culminating in a functional medical device quality breath sensor prototype in
September. Decision by Group that design phase was completed and this prototype in
conjunction with the smart app would be subjected to the mandatory testing and compliance
process that will form the basis of our Wheezo regulatory submission for CE approval.
•
•
Subsequent to this, the group announced a manufacturing agreement with SRX Global for
the production of its next generation breath and asthma wheeze detection sensor. Four
imperatives guided our selection of production partner; local operation to control synergies
across the ecosystem, manufacturing innovation, strong engineering and the ability to quickly
scale to volume to meet global demand via Malaysia facility.
In September 2018, the appointment of Professor Bruce Thompson, one of the leading
respiratory experts in this country and the President-elect of the Thoracic Society of Australia
and New Zealand, to Chair Respiri’s Medical & Scientific Advisory Board. Under Professor
Thompson’s leadership, an advisory board meeting was held in London in October 2018 with
a leading group of UK respiratory experts to define the clinical study program for the Wheezo
technology necessary to obtain health care practitioners (HCP) endorsement in early launch
markets.
• On November 28th the Group held its Annual General Meeting, where the previous Chairman,
Mr. Mark Ziirsen and Non-Executive Directors, Mr. Brendan Mason and Dr. Thomas Duthy
announced their resignations from the Board prior to the AGM, leading to the appointment of
Mr. Ross Blair-Holt as Non-Executive Chairman and Professor Bruce Thompson also taking
on a Non-Executive Director position along with his continued role as Chair of the Medical &
Scientific Advisory Board.
•
•
The Group conducted a successful capital raising process in December 2018 that achieved
$3,200,000 funding (including $50,000 from directors subject to approval at the Company’s
AGM in 2019)
The Company also completed an oversubscribed Share Purchase Plan process in January
2019 delivering another $1,000,000.
The Group led by the newly appointed Board in the second half 2019 FY, was strongly aligned with
the 3 strategic pillars driving our success as announced at the recent AGM:
• Clinical Validation
• Customer Engagement
• Big Data Technologies
During this period there was a deliberate shift from development to planning for market entry and
commercialising the technology. The R&D phase of development for Wheezo was winding down with
activity heavily focused on final testing and the integration process of the state-of-the-art Breath Sensor
and wireless connectivity to the smart app by our development partners. This represents the final mandatory
step in meeting all regulatory submission requirements for product approval and sales:
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HIGHLIGHTS
•
•
•
•
•
The previously announced first two key Clinical Studies under Professor Bruce Thompson’s
leadership supporting our market launch promotional claims, were the focus of our activity for the
remainder of the period and beyond. 1) Stethoscope Comparison – completed and paper
submitted for publication Sept 19 & 2) Correlation of wheeze rate with other clinical measures –
target completion early Dec 19 Quarter and paper submitted for publication. The success of these
2 clinical studies will allow us to actively engage the medical community, asthma associations,
health technology assessment agencies, private insurers/payors to endorse the adoption of
Wheezo in asthma self-management
Lower than forecast spend in product manufacturing, advertising, and marketing activities for the
period was aligned with updated phasing and timing of these activities, reflecting the previously
communicated delay due to resolving the issue around plastics components. Finished final
Wheezos for demonstration purposes were available by end May 2019.
Staff costs and other corporate & admin costs were closely managed during the period, in line
with expectations and factoring in transaction costs associated with capital raising activity.
The company secured a borrowing facility of up to $1.4 M which anticipated the forecasted 2019
R&D tax incentive claim of which $0.6m was undrawn at the end of June 2019. The facility
provided increased financial flexibility and strength in executing our plans towards the Wheezo
launch. Any draw down from this facility by the company is expected to be fully repaid by end
October 2019.
Signed a transformational joint venture for India with Dr. Harsha Vardan and MedAchievers that is
evolving rapidly to provide major opportunities for Respiri in that market. A key focus of the
Company’s activities for the coming months is capitalising on the early interest and emerging
demand from India. We anticipate our first global sales to come from India this year, after a short
period of key evaluation and clinical implementation studies – focusing on leading hospitals and
Government-supported health initiatives around respiratory disease, where Wheezo’s contribution
can be defined and ramped-up to meet the broader population needs.
• Completed the development of the state-of-the-art Breath Sensor and wireless connectivity to the
smart app to deliver the promise of the world first Wheezo technology for CE approval and
demonstrations to leading respiratory experts, investors and potential partners to support
strategic partnerships with leading global MedTech, pharma or technology companies.
•
The Group’s previously announced reported negotiations with a major China based
pharmaceutical group did not materialise into a final agreement at the time. China remains one of
the most important future launch markets for our Wheezo technology and we continue to engage
on a market entry strategy with third parties.
Through this diligent and structured approach, we continue to de-risk the business model with each
successful milestone, transitioning from an R&D, development stage entity towards a commercially
driven operational company to deliver significant revenue streams in 2020.
Key prioritised milestones for 1H / 2020 FY:
• Working towards orders for Wheezo from target leading hospitals and Government-supported
health initiatives in India. The B2B2C business model in this market, selling directly to large
institutional customers allows a faster, low risk path to revenue at significantly reduced launch
spending vis a vis B2C markets.
•
Implementing our manufacturing plan from initial production run in Australia, through to
scaling up for high capacity production (20,000 units/month) in Malaysia in collaboration with
SRX. Continuously working towards lower production costs, optimal product design, shorter
timelines and improved margin driven by volume.
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• Completion of the 2 key clinical studies to allow us to actively engage the medical community,
asthma associations, health technology assessment agencies, private insurers/payors and
potential partners to endorse / collaborate in the adoption of Wheezo in asthma self-
management.
• Culminating in CE approval and green light for sales in all target markets for 2020
Approaching the final stages of launch, the Group will operate with a disciplined spending mindset that
supports our stated business plan towards success. The Board continues to prioritise future capital
needs, maintaining shareholder support and attracting new investors. As we execute these plans, the
Group remains agile and where required, will pivot (e.g. India) to achieve our mission, enjoy success and
deliver shareholder value.
Dividends
The Company did not pay any dividends during the financial year. The Directors do not recommend the
payment of a dividend in respect of the 2019 financial year.
Significant Changes in the State of Affairs
In the opinion of the Directors, there were no significant changes in the state of affairs of the Company
during the financial year under review not otherwise disclosed in this Annual Report.
Matters Subsequent to Reporting Period
Former Directors’ Options
At the 2017 Annual General Meeting on 14 December 2017, shareholders approved the issue of
14,000,000 options to two directors who subsequently retired on 30 May 2018. The Company
subsequently determined that these options were not issued and had not vested. The 2018 financial
statements have been prepared reflecting the Company’s position.
The Company has announced on 6 September 2019 that it has resolved the legal dispute with its two
former directors on terms satisfactory to both parties and in accordance with the original terms of the
options, which were set out in the Explanatory Memorandum to the notice of the 2017 Annual General
Meeting and approved by shareholders at that meeting.
The Company confirmed that the 14,000,000 options issued to the two former directors were validly
issued and that, as approved by the Board on 30 May 2018, the options vested immediately (as a result of
the former directors’ retirement) and therefore the options are exercisable upon satisfaction of the share
price and term exercise conditions in accordance with the option terms.
The Company has recognised an additional non-cash share based payment expense of $934,438 in the
consolidated statement of profit and loss and other comprehensive income for the year ended 30 June
2019 for the vested options issued to the two former directors.
Share Placement
On 30 July 2019, the Company has successfully conducted a $3.4 million capital raising via a private
placement to sophisticated and professional investors at Placement price of 10 cents per fully ordinary
share. The Placement also includes $100,000 from directors of the Company which will subject to
shareholder approval at the Company’s AGM.
Likely Developments and Expected Results
Please refer to the ‘Operating and Financial Review’ section at the start of the Directors’ Report for
information in relation to Company’s future Developments and Events
Environmental Regulations
The Company's operations are not subject to any significant environmental regulations under either
Commonwealth or State legislation.
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Risk Management
The Audit, Risk and Compliance Committee is responsible for overseeing the establishment and
implementation of the risk management system, and for the reviewing and assessing the effectiveness of
the Company's implementation of that system on a regular basis.
The Audit, Risk and Compliance Committee and senior management continue to identify the general areas
of risk and their impact on the activities of the Company. The potential risk areas for the Company include:
Ø Reliance on key personnel
Ø efficacy, safety and regulatory risk of medical devices;
Ø financial position of the Company and the financial outlook;
Ø domestic and global economic outlook and share market activity;
Ø changing government policy (Australian and overseas);
Ø competitors' products and research and development programs;
Ø market demand and market prices for medical device technologies;
Ø environmental regulations;
Ø ethical issues relating to medical device research and development;
Ø the status of partnership and contractor relationships;
Ø other government regulations including those specifically relating to the biomedical and health
industries; and
Ø occupational health and safety and equal opportunity law.
The above list of risk areas ought not to be taken as an exhaustive one of the risks faced by the Company
or by investors in the Company. The above areas, and others not specifically referred to above, may in the
future materially affect the financial performance of the Company.
The Board and Management will continue to perform a regular review of the following:
Ø the major risks that occur within the business;
Ø the degree of risk involved;
Ø the current approach to managing the risk; and
Ø where appropriate, determine:
o any inadequacies of the current approach; and
o possible new approaches that more efficiently and effectively address the risk.
Healthcare Technology Companies – Inherent Risks
Some of the risks inherent in the development of medical device products to a marketable stage include
the uncertainty of patent protection and proprietary rights, whether patent applications and issued patents
will offer adequate protection to enable product development or may infringe intellectual property rights of
other parties, the obtaining of the necessary regulatory authority approvals and difficulties caused by the
rapid advancements in technology.
Also a particular medical device may fail the clinical development process through lack of efficacy or safety.
Companies such as Respiri Limited are dependent on the success of their medical devices and on the ability
to attract funding to support these activities.
Investment in healthcare technology including medical devices cannot be assessed on the same
fundamentals as trading and manufacturing enterprises and thus investment in these areas must be
regarded as speculative taking into account these considerations.
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This Report may contain forward-looking statements regarding the potential of the Company’s projects and
interests, and the development of the Company’s projects and interests, and the development potential of
the Company’s research and development projects.
Any statement describing a goal, expectation, intention or belief of the Company is a forward-looking
statement and should be considered an at-risk statement. Such statements are subject to certain risks and
uncertainties, particularly those inherent in the process of discovering, developing and commercialising
medical devices that are safe and effective for use as human devices and the financing of such activities.
There is no guarantee that the Company’s healthcare technology including medical devices will be
successful, or receive regulatory approvals, or prove to be commercially successful in the future. Actual
results could differ from those projected, or detailed in this report.
As a result, you are cautioned not to rely on forward-looking statements. Consideration should be given to
these, and other risks concerning the Company’s research and development program referred to in this
Directors’ Report as contained in this Financial Report for the year ended 30 June 2019.
Meetings of Directors
A number of formal meetings and circular resolutions were held during the year as tabled below:
Directors’ Meetings
Committee Meetings
Audit, Risk & Compliance
Director
Mr Mario Gattino
Mr Bruce Thompson
Mr Ross Blair-Holt
Mr Mark Ziirsen
Mr Brendan Mason
Dr Thomas Duthy
Number
Eligible
to Attend
15
7
7
8
8
3
Number
Attended
15
7
7
8
8
3
Number
Eligible
to Attend
-
-
-
-
-
-
Number
Attended
-
-
-
-
-
-
Number
Eligible
to Attend
2
2
2
-
-
-
Remuneration
& Nomination
Number
Attended
2
2
2
-
-
-
For the date of appointment and resignation of each Director and Executive, please refer to the Remuneration Report section of the Directors’
Report.
In addition, the Board routinely establishes special purpose and ad hoc committees to meet on regular basis
to address various matters.
As at the date of this report, the Company had an Audit, Risk & Compliance Committee and a Remuneration
& Nominations Committee, with membership of the committees as follows:
Position
Chairman
Audit, Risk & Compliance
Committee
Remuneration &
Nominations Committee
Mr Ross Blair-Holt
Prof Bruce Thompson
Member
Prof Bruce Thompson
Mr Ross Blair-Holt
Indemnification of Officers and Auditors
During the financial year, the Company maintained an insurance policy to indemnify Directors and Officers
against certain liabilities incurred as such a Director or Officer, including costs and expenses associated in
successfully defending legal proceedings. The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify the
Auditor of the Company or any related body corporate against a liability incurred as such an Officer or
Auditor.
Proceedings on Behalf of the Company
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
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Non-Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties
where the auditor's expertise and experience with the Company and/or the Group are important.
During the year ended 30 June 2019 the Company did not engage the external auditor to provide non-audit
services.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act
2001 for the year ended 30 June 2019 has been received and can be found in the ‘Auditor’s Independence
Declaration’ section of this Annual Report.
Share Options on Issue as at the Date of this Report
The unissued ordinary shares of Respiri Limited under option as at the date of this report were:
Unlisted Options:
ASX Code
Date of Expiry
Exercise Price
No. under Option
RSH
RSH
RSH
RSH
RSH
RSH
RSH
30 November 2019
31 December 2023
31 December 2024
31 December 2025
21 December 2020
31 December 2020
31 December 2021
$0.28
$0.03
$0.03
$0.03
$0.12
$0.005
$0.125
10,000,000
14,000,0001
12,000,0001
8,000,000
5,000,000
6,000,0002
4,000,0002
1Included the reinstated 14,000,000 options issued to former directors in the 2018 financial year
2Issued in 2 tranches with different vesting conditions. See Note 24.
There were no listed options outstanding at the reporting date.
Corporate Governance
In recognising the need for the highest standards of corporate behaviours and accountability, the Directors
of Respiri support and adhere to good corporate governance practices. The Company’s Corporate
Governance Statement is available on the Company’s website at www.Respiri.co.
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Remuneration Report (Audited)
This Remuneration Report outlines the Director and Executive remuneration arrangements of the Company
as required by the Corporations Act 2001 and its Regulations.
This report details the nature and amount of remuneration of each Director of Respiri Limited and all other
Key Management Personnel.
For the purposes of this report, Key Management Personnel (KMP) are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company,
directly or indirectly, including any Director (whether Executive or otherwise) of the Company.
For the purposes of this report, the term 'executive' encompasses the Executive Chairman.
Directors:
Name
Mr Mario Gattino
Mr Brendan Mason
Mr Mark Ziirsen
Mr Ross Blair-Holt
Prof Bruce Thompson
Dr Thomas Duthy
Other KMP
Ms Koswani Wall
Dr Samaneh Sarraf Shirazi
Remuneration Policy
Position
CEO and Executive Director
Non-Executive Director
Non-Executive Chairman
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Appointment / Resignation
Appointed CEO and Executive Director on 14th Dec 2017
Appointed on 30th May 2018 and Resigned on 27th Nov 2018
Appointed on 30th May 2018 and Resigned on 27th Nov 2018
Appointed on 18th December 2018
Appointed on 27th November 2018
Appointed on 27th November 2018
Appointed on 24th October 2018 and Resigned on 27th Nov 2018
Chief Customer Experience & Appointed on 1st June 2018
Communications
(CXO)
Chief Research Officer
Appointed on 4th Feb 2019
Officer
Remuneration of all Non-Executive Directors and Officers of the Company is determined by the Board
following recommendation by the Remuneration and Nomination Committee.
The Company is committed to remunerating Executive Directors in a manner that is market-competitive and
consistent with "Best Practice" including the interests of shareholders. Remuneration packages are based
on fixed and variable components, determined by the Executives' position, experience and performance,
and may be satisfied via cash or equity.
Non-Executive Directors are remunerated out of the aggregate amount approved by shareholders and at a
level that is consistent with industry standards. Non-Executive Directors do not receive performance based
bonuses and prior Shareholder approval is required to participate in any issue of equity. No retirement
benefits are payable other than statutory superannuation, if applicable.
Voting and comments made at the Company’s Annual General Meeting
The Company did not receive any specific feedback at the AGM or throughout 2018 on its remuneration
practices. The Remuneration Report was adopted at the 2018 AGM by more than 85% of eligible votes
received.
Remuneration Policy Versus Company Financial Performance
Directors have been compensated for work undertaken and the responsibilities assumed in being Directors
of this publicly listed company based on industry practice. Consistently with good corporate governance
practices, compensation of Non-Executive Directors is not linked to specific performance hurdles or
objectives.
The Company envisages its performance in terms of earnings will remain negative whilst the Company
continues in the development and commercialisation phase. Shareholder value reflects the speculative and
volatile biotechnology market sector.
This pattern is indicative of the Company's performance over the past five years. Accordingly, no
dividends have been paid during the year, or in respect of the 2019 financial year.
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Financial Year
Net (Loss)/Profit
2019
2018
2017
2016
2015
2014
2013
2012*
(8,474,586)
(3,207,220)
(2,522,052)
(4,010,944)
($5,464,443)
($10,309,957)
($5,580,768)
($5,585,172)
Share Price at
Balance Date
$ AUD
$0.09
$0.10
$0.04
$0.04
$0.06
$0.24
$0.36
$0.05*
Loss per Share
cents per share
(1.69)
(0.73)
(0.58)
(1.34)
(1.94)
(3.91)
(2.55)
(9.69)*
* Share prices have been normalised for consideration of the capital consolidation performed in Aug 2012.
Performance Based Remuneration
The purpose of a performance bonus is to reward individual performance in line with Company objectives.
Consequently, performance based remuneration is paid to an individual where the individual's performance
clearly contributes to a successful outcome for the Company. This is regularly measured in respect of
performance against key performance indicators (KPI's).
The Company uses a variety of short-term and long-term KPI's to determine achievement, depending on
the role of the executive or director being assessed and the particular KPI being targeted.
These include:
• successful contract negotiations;
• Company share price consistently reaching a targeted rate on the ASX or applicable market over a
period of time; and
• completion of set milestones;
The Non-Executive Directors do not receive performance-based remuneration.
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Details of Remuneration for Year Ended 30 June 2019
The remuneration for each Director and each of the other Key Management Personnel of the consolidated entity during the year was as follows:
Short-term Employment Benefits
Cash salary and fees
Cash Bonus
Consulting Fees
$AUD
$AUD
$AUD
Post-Employment
Benefits
Share-based
Payments
Superannuation
Contribution
$AUD
Shares/Options
$AUD
Total
$AUD
330,000
-
34,444 -
-
37,500
-
40,118
-
67,361
-
4,167
-
-
-
-
-
-
127,140
230,000
870,730
-
-
-
-
-
-
20,531
-
3,563
3,811
6,399
-
12,078
20,531
66,913
347,353
-
-
-
-
-
-
6,908
354,261
697,884
34,444
41,063
43,929
73,760
4,167
139,218
257,439
1,291,904
30 June 2019
Directors
Mr Mario Gattino
Mr Brendan Mason
Mr Mark Ziirsen
Mr Ross Blair-Holt
Prof Bruce Thompson
Dr Thomas Duthy
Other Key Management
Personnel
Dr Samaneh Sarraf Shirazi
Ms Koswani Wall2
Note: For the date of appointment and resignation of each Director and Executive please refer to the Directors Report.
1. Remuneration in the form of share based payments are “at risk” as they are subject to vesting conditions based on length of service. Please see Note 24 for the determination of the fair value of the
shares/options granted.
2. Ms Koswani Wall was not considered a Key Management Personnel in the 2018 financial year.
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Directors’ Report continued
Details of Remuneration for Year Ended 30 June 2018
The remuneration for each Director and each of the other Key Management Personnel of the consolidated entity during the year was as follows:
30 June 2018
Directors
Mr Leon L'Huillier
Mr John Ribot-de-Bresac
Dr Timothy Oldham
Mr Mario Gattino
Mr Brendan Mason
Mr Mark Ziirsen
Short-term Employment Benefits
Cash salary and fees
Cash Bonus
Consulting Fees
$AUD
$AUD
$AUD
Post-Employment
Benefits
Share-based
Payments
Superannuation
Contribution
$AUD
Shares/Options
$AUD
Total
$AUD
108,333
-
20,000
192,500
-
-
320,833
-
-
-
-
-
-
125,000
-
-
-
-
-
-
-
-
12,400
-
-
-1
-1
-
129,3121
-
-
233,333
-
20,000
334,212
-
-
-
125,000
12,400
129,312
587,545
Note: For the date of appointment and resignation of each Director and Executive please refer to the Directors Report.
1.
2.
The shareholders approved the issuance of 34,000,000 unlisted RSH Options to Directors in accordance with resolution 3 of Company’s 2017 Annual General Meeting. The Company subsequently
determined that 14,000,000 options to former Directors were not issued and have not vested. This matter was in dispute in the 2018 financial year but has now been resolved. Refer to the
subsequent event note (see Note 25) for more information
Remuneration in the form of share based payments are “at risk” as they are subject to vesting conditions based on length of service. Please see Note 24 for the determination of the fair value of
the shares/options granted
Page 15 of 65
For personal use only
Directors’ Report continued
At Risk Income as a Proportion of Total Remuneration
All Executive Directors and other key management personnel are eligible to receive incentives whether
through employment contracts or by the recommendation of the Board. Their performance payments are
based on a set monetary value, set number of shares or options or as a portion of base salary. Therefore,
there is no fixed proportion between incentive and non-incentive remuneration. Entitlement to these payments
does not depend on the future performance of the Company.
Non-Executive Directors are not entitled to receive bonuses and/or incentives.
The relative proportions of remuneration income that are at risk, and those that are fixed, are as follows:
Fixed Remuneration
2019
2018
At Risk - STI
At Risk - LTI
2019
2018
2019
2018
Directors
Mr Mario Gattino (appointed on 14th Dec 2017)
Mr Brendan Mason (appointed on 30th May 2018,
resigned 27th Nov 2018)
Mr Mark Ziirsen (appointed on 30th May 2018,
resigned 27th Nov 2018)
Mr Ross Blair-Holt (appointed on 27th Nov 2018)
Prof Bruce Thompson (appointed on 27th Nov
2018)
Dr Thomas Duthy (appointed on 24th Oct 2018,
resigned 27th Nov 2018)
Other Key Management Personnel
Dr Samaneh Sarraf Shirazi (appointed 04th Feb
2019)
Ms Koswani Wall (appointed 1st Jun 2018)
50%
61%
100%
100%
100%
100%
100%
100%
97%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50%
39%
-
-
-
-
-
-
3%
-
-
-
-
-
-
-
At risk long term incentive (LTI) relates to remuneration in the form of share based payments, which are
subject to vesting conditions based on length of service. At risk short term incentive (STI) relates to
discretionary bonuses approved by the board in respect of performance during the relevant year.
Share-based Compensation
At the General Meeting held on 31 October 2013, Shareholders approved the establishment of the 2013
Employees', Directors' and Consultants' Share and Option Plan (ESOP). The ESOP is intended to reward
Directors, employees and/or consultants for their contributions to the Group. The Plan is to be used as a
method of retaining key personnel for the growth and development of the Group. Due to the Group's presence
in Israel and USA, the Plan has been established to benefit personnel in Australia, Israel and USA. As at 30
June 2019 equity had been issued to 1 director & 1 employee in Australia, 8 employees in USA and 2
employees in Israel under ESOP.
The terms and conditions of each grant of options affecting Director and other Key Management Personnel
remuneration in the current or future reporting periods are as follows:
Grant Date
22 Nov 2016
14 Dec 2017
14 Dec 2017
14 Dec 2017
7 Jun 2019
7 Jun 2019
Date Vested &
Exercisable
22 Nov 2016
31 Dec 2020
31 Dec 2020
31 Dec 2020
31 Dec 2020
31 Dec 2021
Expiry Date
30 Nov 2019
31 Dec 2023
31 Dec 2024
31 Dec 2025
31 Dec 2023
31 Dec 2024
Exercise
Price
$0.285
$0.03
$0.03
$0.03
$0.005
$0.125
Share Price
Hurdle
N/A
$0.10
$0.15
$0.20
0.20
0.25
Fully
Vested
Yes
Yes
No
No
No1
No1
Value per Option
at Grant Date
$0.022
$0.048
$0.092
$0.112
$0.048
$0.073
1 See Note 24 for details of vesting conditions.
Page 16 of 65
For personal use only
Directors’ Report continued
Options granted under the plan carry no dividend or voting rights until exercised into ordinary fully paid
shares.
When exercisable, each option is convertible into one ordinary share as soon as practical after the receipt by
the Company of the completed exercise form and full payment of the exercise price.
The exercise price of options granted under this plan shall be determined by the Committee in its sole
discretion.
The plan rules contain a restriction on removing the 'at risk' aspect of the instruments granted to executives.
Plan participants may not enter into any transaction designed to remove the 'at risk' aspect of an instrument
before it vests.
Details of options over ordinary shares in the Company provided as remuneration to each Director of the
company and each of the other Key Management Personnel are set out below:
Number of Options
Granted During the
Year
2019
2018
Number of Options
Forfeited/ Lapsed/
Exercised During the
Year
2019
2018
Number of Options
Vested During the Year
2019
2018
Directors
Mr Ross Blair-Holt
Mr Mario Gattino
Mr Brendan Mason
Mr Mark Ziirsen
Mr Ross Blair-Holt
Prof Bruce Thompson
Dr Thomas Duthy
Other Key Management Personnel
Dr Samaneh Sarraf Shirazi
Ms Koswani Wall
-
-
- 20,000,000
-
-
-
-
-
-
-
-
-
-
-
10,000,000
-
-
10,000,000 20,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,000,000
-
-
-
-
-
-
-
6,000,000
-
-
-
-
-
-
-
-
-
-
1.
Refer to Page 19 for closing balance of options held by each Director and other Key Management Personnel of Respiri Limited,
including their personally related parties, as at 30 June 2019.
No shares have been issued to the Directors in the current or proceeding financial year in their capacity as a
director or as a result of exercise of any options.
(a)
Shareholdings
The number of fully paid ordinary shares in the Company held during the financial year by each Director and
other Key Management Personnel of Respiri Limited, including their personally related parties, are set out
below:
30 June 2019
Balance at Start
of the Year
Granted as
Compensation
Shares from
Options
Exercised
Net Change
Other
Balance at
End
of the Year
Directors
Mr Mario Gattino
Mr Brendan Mason
Mr Mark Ziirsen
Mr Ross Blair-Holt
Prof Bruce Thompson
Dr Thomas Duthy
420,000
-
-
2,513,448
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,393,025)
-
420,000
-
-
1,120,423
-
Page 17 of 65
For personal use only Directors’ Report continued
Other Key Management
Personnel
Dr Samaneh Sarraf Shirazi
Ms Koswani Wall
-
221,206
3,154,654
-
-
-
-
-
-
-
138,000
-
359,206
(1,255,025)
1,899,629
30 June 2018
Balance at Start
of the Year
Granted as
Compensation
Shares from
Options
Exercised
Net Change
Other
Balance at
End
of the Year
Directors
Mr Mario Gattino
Mr Brendan Mason
Mr Mark Ziirsen
Mr Leon L'Huillier
Mr John Ribot-de-Bresac
Dr Timothy Oldham
-
-
-
-
5,106,267
7,983,614
126,392
13,216,273
1. Directors resigned during the Financial Year 2018.
2. Purchased upon appointment.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
420,0002
-
-
420,000
-
-
(28,033)
(28,033)
420,000
-
-
420,000
5,106,2671
7,983,6141
98,3591
13,188,240
Page 18 of 65
For personal use only Directors’ Report continued
b)
Options and Rights
The number of options over ordinary shares in the Company held during the financial year by each Director and other Key Management Personnel of Respiri
Limited, including their personally related parties, are set out below:
30 June 2019
Balance at
Start of the Year
Granted as
Compensation
Options
Exercised
Net Change
Other
Balance at
End of the Year
Vested and
Exercisable
Unvested
Directors
Mr Mario Gattino
Mr Brendan Mason
Mr Mark Ziirsen
Mr Ross Blair-Holt
Prof Bruce Thompson
Dr Thomas Duthy
Other Key Management
Personnel
Dr Samaneh Sarraf Shirazi
Ms Koswani Wall
20,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000,000
-
10,000,000
10,000,000
1. Existing options issued prior to appointment.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,0001
2,000,000
20,000,000
-
-
-
-
-
-
12,000,000
32,000,000
6,000,000
-
-
-
-
-
-
2,000,000
8,000,000
14,000,000
-
-
-
-
-
-
10,000,000
24,000,000
Page 19 of 65
For personal use only Directors’ Report continued
30 June 2018
Balance at
Start of the Year
Granted as
Compensation
Options
Exercised
Net Change
Other
Balance at
End of the Year
Vested and
Exercisable
Unvested
Directors
Mr Leon L'Huillier
Mr John Ribot-de-Bresac
Dr Timothy Oldham
Mr Mario Gattino
Mr Brendan Mason
Mr Mark Ziirsen
4,000,000
2,000,000
2,000,000
-
-
-
8,000,000
-
-
-
20,000,0001
-
-
20,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000,000
2,000,000
2,000,000
20,000,000
-
-
28,000,000
4,000,0001
2,000,0001
2,000,0001
-
-
-
8,000,000
-
-
-
20,000,000
-
-
20,000,000
1.
The shareholders have approved the issuance of 34,000,000 unlisted RSH Options to Directors in accordance with resolution 3 of Company’s 2017 Annual General Meeting. The Company
subsequently determined that 14,000,000 options to former Directors were not issued and have not vested. This matter was in dispute in the 2018 financial year but has now been resolved.
Refer to the subsequent event note (see Note 25) for more information.
Page 20 of 65
For personal use only Directors’ Report continued
The Directors and other Key Management Personnel are subject to service agreements with normal
commercial terms and conditions. The key terms of these agreements are set out below:
Duration
Ongoing term
Periods of
Notice Required
to Terminate
In the case of:
- Mario Gattino, three months’ notice of termination by the employee and six months’
-
-
notice of termination by the Company;
Samaneh Shirazi, one month’s notice of termination by the employee and one
months’ notice of termination by the Company; and
Koswani Wall, three months’ notice of termination by the employee and three
months’ notice of termination by the Company.
This is the end of the Audited Remuneration Report.
This report is made in accordance with a resolution of Directors.
Mr Ross Blair-Holt
Non-Executive Chairman
Dated this the 17th September 2019
Melbourne, Australia
Page 21 of 65
For personal use only AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Respiri Limited for the year ended 30 June 2019, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
P A RANSOM
Partner
Dated: 17 September 2019
Melbourne, Victoria
Page 22 of 65
For personal use only Annual Financial Statements
For the year ended 30 June 2019
Page 23 of 65
For personal use only Statement of Profit or Loss & Other Comprehensive Income
Revenue
Non-operating Revenue
Other Income
Total Revenue
Expenses
Amortisation
Consulting, employee and director
Equity-based payment
Corporate administration
Depreciation
Marketing and promotion
Research and development
Travel
Loss before income tax expense from continuing operations
Income tax expense
Loss after income tax for the year
Other comprehensive income:
Consolidated
30 June 2019
Consolidated
30 June 2018
Note
$ AUD
$ AUD
3
3
4
24
5,136
1,026,252
1,031,388
17,612
861,455
879,067
-
(1,367,916)
(1,288,699)
(1,540,279)
(4,628)
(854,177)
(4,237,397)
(118,610)
(1,039,026)
(129,312)
(1,104,311)
(6,838)
(22,826)
(1,512,288)
(212,878)
(153,076)
(8,474,586)
(3,207,220)
5
-
-
(8,474,586)
(3,207,220)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
(9,620)
(18,862)
(8,484,206)
(3,226,082)
Loss attributable to members of the parent entity
(8,474,586)
(3,207,220)
Total comprehensive loss attributable to members of the parent entity
(8,484,206)
(3,226,082)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
8
8
(1.69)
(1.69)
(0.73)
(0.73)
The accompanying notes form part of these financial statements.
Page 24 of 65
For personal use only Statement of Financial Position
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Other assets
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Other financial liabilities
Other Borrowings
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS/(LIABILITIES)
EQUITY
Issued capital
Reserves
Accumulated Losses
TOTAL EQUITY
Consolidated
30 June 2019
Note
$ AUD
Consolidated
30 June 2018
$ AUD
9
10
14
12
13
14
15
16
17
18
19
306,655
161,566
534,709
1,002,930
9,502
-
1,173
10,675
2,418,427
118,763
109,833
2,647,023
10,951
-
2,985
13,936
1,013,605
2,660,959
1,756,955
12,912
806,442
2,576,309
997,234
12,912
-
1,010,146
2,576,309
1,010,146
(1,562,704)
1,650,813
106,043,361
1,590,476
(109,196,541)
(1,562,704)
102,332,258
40,510
(100,721,955)
1,650,813
The accompanying notes form part of these financial statements
Page 25 of 65
For personal use only
Consolidated Statement of Changes in Equity
Issued Capital Option Reserve
Foreign Currency
Translation Reserve
Accumulated Losses
Total
$ AUD
$ AUD
$ AUD
$ AUD
$ AUD
Balance at 30 June 2017
99,382,258
217,102
(287,042)
(97,514,735)
1,797,583
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total Comprehensive Income for the year
-
-
-
Transactions with Equity holders in their capacity as equity holders:
Shares Issued
Capital Raising Costs
Options Issued
Transfers to/from reserves1
Balance at 30 June 2018
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total Comprehensive Income for the year
3,200,000
(250,000)
-
3,200,000
102,332,258
-
-
-
-
-
-
-
-
129,312
-
346,414
-
-
-
Transactions with Equity holders in their capacity as equity holders:
Shares Issued
Capital Raising Costs
Options Issued
Balance at 30 June 2019
4,199,990
(488,887)
-
106,043,361
-
-
1,559,586
1,906,000
-
(18,862)
(18,862)
(3,207,220)
-
(3,207,220)
(18,862)
(3,207,220)
(3,226,082
-
-
-
-
-
-
-
-
3,200,000
(250,000)
129,312
3,200,000
(305,904)
(100,721,955)
1,650,813
-
(9,620)
(9,620)
-
-
-
(8,474,586)
-
(8,474,586)
(9,620)
(8,474,586)
(8,484,206)
-
-
-
4,199,990
(488,887)
1,559,586
(315,524)
(109,196,541)
(1,562,704)
1.
2.
To transfer the value of lapsed/expired options from the reserve to accumulated losses.
The shareholders have approved the issuance of 34,000,000 unlisted RSH Options to Directors in accordance with resolution 3 of Company’s 2017 Annual General Meeting. The Company subsequently determined
that 14,000,000 options to former Directors were not issued and have not vested. The matter has now been resolved. Refer to the subsequent event note (see Note 25) for more information.
The accompanying notes form part of these financial statements
Page 26 of 65
For personal use only Statement of Cash Flows
Consolidated
30 June 2019
Note
$ AUD
Consolidated
30 June 2018
$ AUD
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees (inclusive of GST)
Interest received
R&D tax refund1
Net cash flows used in operating activities
23a
Cash flows related to investing activities
Interest received
Proceeds from sales of plant and equipment
Payments for purchases of plant and equipment
Net cash flows used in investing activities
Cash flows related to financing activities
Proceeds from issues of securities
Capital raising costs
Borrowings
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at the end of the year
9
-
(7,442,713)
5,136
1,026,252
(6,411,325)
-
-
(3,179)
(3,179)
3,749,990
(218,000)
800,000
4,331,990
(2,082,514)
2,418,427
(29,259)
306,655
2,255
(3,781,680)
15,357
1,687,058
(2,077,009)
-
1,404
(7,902)
(6,498)
3,000,000
(50,000)
-
2,950,000
866,492
1,562,920
(10,985)
2,418,427
1.
Total R&D tax concession refund received in the financial year 2018 consists of $108,058 of additional refund for the financial year 2015,
$825,603 for the financial year 2016, and $753,397 for the financial year 2017.
The accompanying notes form part of these financial statement
Page 27 of 65
For personal use only Notes to the Financial Statements
Note 1 - Statement of Significant Accounting Policies
Corporate Information
Respiri Limited is a listed public company limited by shares incorporated and domiciled in Australia whose
shares are publicly traded on the Australian Stock Exchange.
The addresses of its registered office and principal place of business are disclosed in company details (see
Note 28).
The principal activities of the Company are the research, development and commercialisation of medical
devices, and the production of mobile health applications. The company is a for-profit company.
The financial report of Respiri Limited (the Company) for the year ended 30 June 2019 was authorised for
issue in accordance with a resolution of the Directors on the 16th Day of September 2019.
Statement of Compliance
The financial report is a general purpose financial report that has been prepared in accordance with the
Corporations Act 2001, Accounting Standards and Australian Accounting Interpretations, and complies with
other authoritative pronouncements from the Australian Accounting Standards Board, as appropriate for for-
profit orientated entities.
The financial report covers Respiri Limited as a consolidated entity consisting of Respiri Limited and the
entities it controlled during the year.
The financial report complies with Australian Accounting Standards, as issued by the Australian Accounting
Standards and with International Financial Reporting Standards ('IFRS') as issued by the International
Accounting Standards Board (IASB).
Basis of Preparation
The financial report has been prepared on an accruals basis and is based on historical costs, except for the
revaluation of certain non-current assets and financial instruments. Cost is based on fair values of the
consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise
noted and amounts rounded to the nearest dollar.
Critical Accounting Estimates and Judgements
The preparation of the financial statements requires the Directors and Management to make judgements,
estimates and assumptions that affect the reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities,
revenue and expenses. Management bases its judgements, estimates and assumptions on historical
experience and on other various factors, including expectations of future events, management believes to be
reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results.
The estimates and underlying assumptions are continually evaluated. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and future periods.
The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below:
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees and consultants by
reference to the fair value of the equity instruments at the date at which they are granted. The fair value is
determined by using the Monte Carlo model taking into account the terms and conditions upon which the
instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based
payments would have no impact on the carrying amounts of assets and liabilities within the next annual
reporting period but may impact profit or loss and equity.
Page 28 of 65
For personal use only Notes to the Financial Statements continued
Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The
level of provision is assessed by taking into account the recent sales experience, the ageing of receivables,
historical collection rates and specific knowledge of the individual debtors financial position.
Operating Segments
Operating segments are identified on the basis of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and
to assess its performance. The operating segments of the Group are determined to be Australia and Israel.
For more information, refer to Note 22.
Going Concern Basis
The financial report has been prepared on the going concern basis, which assumes continuity of normal
business activities and the realisation of assets and the settlement of liabilities in the ordinary course of
business.
As disclosed in the financial statements, the Group recorded losses of $8,474,586 (2018: $3,207,220 loss)
and experienced net operating cash outflows of $6,411,325 (2018: $2,077,009 operating cash outflows) for
the year ended 30 June 2019. As at that date the Group had net current liabilities of $1,573,379 (2018:
$1,636,877 net current assets) and net liabilities of $1,562,704 (2018: $1,650,813 net assets).
The Group has undertaken significant research and development activities but expects the transition to
commercialisation phase to occur in the coming months as the Research and Development (R&D) phase
winds down. The Group has continued to receive Research and Development Tax Incentive income in
relation to these activities, including $1,026,252 cash received in the 2019 financial year for the R&D activities
conducted in the 2018 financial year.
The Group expects to receive further R&D Tax Incentive income in relation to its 30 June 2019 activities. The
Board expect payment of the R&D Tax Incentive for all eligible R&D activities done during the 2019 financial
year in October/November 2019 and this is estimated to be $1,800,000. The cash will be utilised to repay
outstanding loans as disclosed in Note 17 – Other Borrowings, with any residual cash used to fund continuing
business operations. The Group is also evaluating other Australian based activity beyond R&D that has the
potential to qualify for increased Government funding (e.g. manufacturing and export of the technologies).
The Group was successful in raising capital of $3,150,000 in December 2018 and a further $1,000,000 was
raised through its Share Purchase Plan in February 2019 to assist with its planned milestones. As disclosed
in Note 25 Subsequent Events, on 30 July 2019 the Group successfully conducted a $3,400,000 capital
raising via a private placement to sophisticated and professional investors at a Placement price of 10 cents
per fully ordinary share.
The Group expects to commercialise its technologies in the coming months and will divert its resources to
sales and marketing activities when the commercialisation phase commences. The Group will require
additional funding sources in order to meet its planned milestones. The directors believe there are reasonable
grounds to expect that the Group has the capacity to raise capital. The Group has a strong track record of
accessing capital when it is required to advance its portfolio.
Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is
appropriate to adopt the going concern basis in the preparation of the financial report. The financial report
does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that
might be necessary if the Group does not continue as a going concern.
Should the Group be unable to achieve the matters set out above, a material uncertainty would exist as to
whether the Group would be able to continue as a going concern and therefore whether it would realise its
assets and discharge its liabilities in the normal course of business.
Page 29 of 65
For personal use only Notes to the Financial Statements continued
Amendments to Accounting Standards that are mandatorily effective for the current reporting period
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to their operations and effective for an accounting
period that begins on or after 1 July 2018.
New and revised Standards and amendments thereof and Interpretations effective for the current year that
are relevant to the Group include:
•
•
AASB 9 Financial Instruments
AASB 15 Revenue from contracts with customers
The application of these amendments has had an immaterial impact on the Group's consolidated financial
statements, see note (g) and (n) for further details.
New and revised Australian Accounting Standards in issue but not yet effective
At the date of authorisation of the financial statements, the Group has not applied the following new and
revised Australian Accounting Standards, Interpretations and amendments that have been issued but are
not yet effective:
Ref
Title
Summary
Leases
6
1
B
S
A
A
The standard replaces AASB 117 'Leases' and for
lessees will eliminate the classifications of
operating leases and finance leases. The standard
outlines
the recognition and measurement
requirements for ‘right-of-use’ assets on the
statement of financial position.
Amendments
1
-
8
to Australian
1
0
Accounting
2
B
Standards –
S
A
Annual
A
Improvements
2015–2017
Cycle
AASB 2018-1 amends AASB 3 Business
Combinations (August 2015), AASB 11 Joint
Arrangements (July 2015), AASB 112 Income
Taxes (August 2015) and AASB 123 Borrowing
Costs (August 2015). As a consequence of the
issuance of
International Financial Reporting
Standard Annual Improvements to IFRS Standards
2015- 2017 Cycle by the International Accounting
Standards Board (IASB) in December 2017.
Accounting Policies
(a)
Basis of Consolidation
Effective for
reporting
period
beginning
1 Jan 19
1 Jan 19
Impact on
financial
report
Expected to
be initially
applied
30 Jun 20
30 Jun 20
The Company
does not
expect any
material
impact.
The Company
does not
expect any
material
impact.
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) (referred to as 'the Group' in these financial statements). Control
is achieved where the consolidated entity is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity.
They are de-consolidated from the date that control ceases.
A list of controlled entities is contained in Note 11 to the financial statements. All controlled entities have a 30
June financial year-end.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. In the
separate financial statements of the Company, intra-group transactions ('common control transactions') are
generally accounted for by reference to the existing book value of the items. Where the transaction value of
Page 30 of 65
For personal use only
Notes to the Financial Statements continued
common control transactions differ from their consolidated book value, the difference is recognised as a
contribution by or distribution to equity participants by the transacting entities.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those
policies applied by the parent entity. Subsidiaries are accounted for at cost in the parent entity.
The results of subsidiaries acquired or disposed of during the year are included in profit or loss from the
effective date of acquisition or up to the effective date of disposal, as appropriate.
(b)
Income Tax
The income tax expense is based on the taxable income for the year. It is calculated using the tax rates that
have been enacted or are substantially enacted by the balance 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 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 statement of financial position. 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 (excluding a business combination) that 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 interests 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 assets and 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. Current and deferred tax is recognised
as an expense or income in Profit or Loss, 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.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its
assets and liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by
the same taxation authority and the company/Group intends to settle its current tax assets and liabilities on
a net basis.
Respiri Limited (head entity) and its wholly owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime.
Where the company is entitled to a tax rebate under the R&D Tax Concession during a particular financial
year, the rebate is recorded as revenue for the year when received, rather than when expenditure was
incurred.
(c)
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed
in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12
months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for a least 12 months after the reporting period. All other assets are
classified as non-current.
Page 31 of 65
For personal use only Notes to the Financial Statements continued
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there
is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
All other liabilities are classified as non-current.
(d)
Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value
on a ‘first in first out’ basis. The cost of inventories comprises cost of purchase and costs incurred in bringing
inventories to their present location and condition. Cost of purchased inventories is determined after
deducting rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of
completion and the estimated selling costs.
The Company periodically evaluates the condition and age of inventories and makes provisions for slow
moving inventories accordingly.
If in a particular period production is not at normal capacity, the costs of inventories does not include
additional fixed overheads in excess of those allocated based on normal capacity. Such unallocated
overheads are recognised as an expense in Profit or Loss in the period in which they are incurred.
Furthermore, cost of inventories does not include abnormal amounts of materials, labour or other costs
resulting from inefficiency.
(e)
Plant and Equipment
Plant and equipment is stated at cost, less accumulated depreciation and impairment.
Cost includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and
variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance
are charged to Profit or Loss during the financial period in which they are incurred.
Depreciation
The depreciable amount of all plant and equipment is depreciated on a straight-line basis commencing from
the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Plant & Equipment
Depreciation Rate
Furniture & fittings
Computer equipment
Medical equipment
6 - 15%
15 - 33%
15%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains
and losses are included in profit or loss.
(f)
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee
substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases,
under which the lessor effectively retains substantially all risks and benefits.
Page 32 of 65
For personal use only
Notes to the Financial Statements continued
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets,
or if lower, the present values of minimum lease payments. Lease payments are allocated between the
principal components of the lease liability and the finance costs, so as to achieve a constant rate of interest
on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter
of the assets useful life and the lease term if there is no reasonable certainty that the consolidated entity will
obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a
straight-line basis over the term of the lease.
(g)
Financial Assets and Liabilities
Recognition
Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for those with maturities greater than
12 months after the reporting date which are classified as non-current assets. Loans and receivables are
carried at amortised cost using the effective interest rate method less impairment.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees on points paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the
debt instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped
based on days overdue.
Financial Liabilities
Other financial liabilities, including borrowings and trade and other payables, are initially measured at fair
value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using
the effective interest method, with interest expense recognised on an effective yield basis. The effective
interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to
the net carrying amount on initial recognition.
A financial liability is removed from the balance sheet when the obligation specified in the contract is
discharged or cancelled or expires. Non-derivative financial liabilities are recognised at amortised cost using
the effective interest rate method, comprising original debt less principal payments, amortisation and
impairment.
(h)
Impairment of Assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
Page 33 of 65
For personal use only Notes to the Financial Statements continued
allowance depends upon the consolidated entity's assessment at the end of each reporting period as to
whether the financial instrument's credit risk has increased significantly since initial recognition, based on
reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset
has become credit impaired or where it is determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss
recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls
over the life of the instrument discounted at the original effective interest rate.
(i)
Intangibles
Intellectual Property
Intellectual property relates to technology assets, know-how and patents related to assets acquired on
acquisition of Respiri (Israel) Limited (previously KarmelSonix (Israel) Limited) and is recorded at cost less
accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over the expected
life, being 10 years. Amortisation commences when the asset is available for use, that is, when it is in the
location and condition necessary for it to be capable of operating in the manner intended by management.
The amortisation period and the amortisation method for an intangible asset is reviewed at least at the end
of each reporting period. If the expected useful life of the asset is different from the previous estimates, the
amortisation shall be changed accordingly. Such changes are accounted for as changes in accounting
estimates.
(j)
Foreign Currency Transactions and Balances
Functional and Presentation Currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented in
Australian dollars which is the parent entity's functional and presentation currency.
Transaction and Balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at
the date of the transaction. Foreign currency monetary items are retranslated at the rates prevailing at the
reporting date. Non-monetary items that are measured in terms of historical cost are not retranslated. Non-
monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the date when the fair value was determined.
Exchange differences arising on the translation of monetary items are recognised in Profit or Loss, except
where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the
extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised
in Profit or Loss.
For the purpose of presenting these consolidated financial statements, the assets and liabilities of the
Group’s foreign operations are translated into Australian dollars using exchange rates prevailing at the end
of the reporting period. Income and expense items are translated at the average exchange rates for the
period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates
at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity (and attributed to non-controlling interests as appropriate).
Group Companies
The financial results and position of foreign operations whose functional currency is different from the Group’s
presentation currency are translated as follows:
•
•
•
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Page 34 of 65
For personal use only
Notes to the Financial Statements continued
Exchange differences arising on translation of foreign operations are transferred directly to the Group's
foreign currency translation reserve in the Statement of Financial Position. These differences are recognised
in the Profit or Loss in the period in which the operation is disposed.
(k)
Employee Benefits
Annual Leave and Long Service Leave
A liability is recognised for the Company’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits that are expected to be settled within one year have been
measured at the amounts expected to be paid when the liability is settled, plus related on-costs.
Employee benefits payable later than one year have been measured at the present value of the estimated
future cash outflows to be made for those benefits.
Short term benefits include salaries, paid annual leave, paid sick leave, recreation and social security
contributions (Israel only) and are recognised as expenses as the services are rendered.
Post employment benefits include superannuation and payments to insurance companies (Israel only) and
are defined contribution plans. Such payments are made in accordance with the relevant legislation for
country and/or state where an employee normally performs their duties as an employee. Payments are
recognised as expenses as the services are rendered.
Share-Based Payments
Shared-based compensation benefits are provided to employees via the Respiri Limited Employee Option
Plan and an employee share scheme.
The fair value of options granted under Respiri Limited Option Share Plan is recognised as an employee
benefit expense with a corresponding increase in equity. The fair value is measured at the grant date and
recognised over the period during which the employees become unconditionally entitled to the options.
The fair value at grant date was determined using an option pricing model that takes into account the exercise
price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable
nature of the option, the share price at grant date and the expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
(l)
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation and the amount has
been reliably measured. Provisions are not recognised for future operating losses.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where
a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount
is the present value of those cash flows.
(m)
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less.
(n)
Revenue
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the
Group: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time
value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of
the goods or services promised.
Page 35 of 65
For personal use only Notes to the Financial Statements continued
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such
as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other
contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount'
method. The measurement of variable consideration is subject to a constraining principle whereby revenue
will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty
associated with the variable consideration is subsequently resolved. Amounts received that are subject to the
constraining principle are recognised as a refund liability.
Interest
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets. All revenue is stated net of the amount of goods and services tax (GST).
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of
the goods, and control has transferred to the customer and there is a valid sales contract. Amounts disclosed
as revenue are net of sales returns and trade discounts.
Government Grants
Government grants are recognised at fair value where there is reasonable assurance that the grant will be
received and all grant conditions will be met. Grants relating to expense items are recognised as income over
the periods necessary to match the grant to the costs they are compensating. Grants relating to the purchase
of property, plant and equipment are included in non-current liabilities as deferred income and are credited
to Profit or Loss over the expected useful life of the related asset on a straight-line basis.
Government grants received in Israel as support for research and development projects, include an obligation
to pay royalties (ranging from 3.5% to 5%) conditional on future sales arising from the project. These grants
are recognised upon receipt as a liability if future economic benefits are expected from the project (i.e. sales).
If no economic benefits are expected, the grants are recognised as a reduction of the related research and
development expenses and the royalty obligation treated as a contingent liability.
At the end of each reporting date, the Company evaluates if there is reasonable assurance that the liability
recognised, in whole or part, will not be repaid. If there are indications the liability will not be repaid, the
appropriate amount of the liability is derecognised and recorded in Profit or Loss as a reduction of research
and development expenses. Otherwise, the appropriate amount of the liability that reflects expected future
royalty payments is recognised with a corresponding adjustment to research and development expenses.
Royalty payments are treated as a reduction of the liability.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
R&D Tax Concession Refunds
R&D Tax concession refunds are recorded as revenue for the year when received, rather than when
expenditure was incurred.
(o)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as
part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in
the Statement of Financial Position sheet are shown inclusive of GST.
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component
of investing and financing activities, which are disclosed as operating cash flows.
(p)
Share Capital
Ordinary share capital is recognised as the fair value of the consideration received by the Company. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of
the share proceeds received.
Page 36 of 65
For personal use only Notes to the Financial Statements continued
(q)
Earnings per share
Basic earnings per share
Basics earnings per share is calculated by dividing the profit attributed to the owners of Respiri Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued
during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
Note 2 - Parent Entity Information
The following information has been extracted from the books and records of the parent entity and has been
prepared in accordance with the accounting standards.
Statement of Financial Position
Assets
Current Assets
Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Accumulated Losses1
Total Equity
Parent Entity
30 June 2019
$ AUD
30 June 2018
$ AUD
936,913
12,257
949,170
2,588,775
13,706
2,602,481
2,497,771
2,497,771
1,548,601
537,289
537,289
2,065,192
106,043,361
102,332,258
1,906,000
(109,497,962)
346,414
(100,613,480)
1,548,601
2,065,192
Statement of Profit or Loss and Other Comprehensive Income
Loss after income tax
Total Comprehensive Income
(8,884,482)
(3,140,047)
(8,884,482)
(3,140,047)
1.
There was no transfer of lapsed/expired options from reserve in the financial year 2019 (2018: -nil)
Parent Entity Contingencies and Commitments
Parent Entity does not have any contingent liabilities and commitments.
Parent Entity Guarantees in Respect of the Debts of its Subsidiaries
The Parent Entity has no guarantees in respect of its subsidiaries.
Page 37 of 65
For personal use only Notes to the Financial Statements continued
Note 3 - Revenue
Revenue
Non-operating Revenue
Interest
Other Revenue
Total Non-Operating Revenue
Total Revenue
Other Income
R&D Tax Concession Received 1
Total Other Income
30 June 2019
30 June 2018
$ AUD
$ AUD
5,136
-
5,136
15,357
2,255
17,612
5,136
17,612
1,026,252
1,026,252
1,031,388
861,455
861,455
879,067
1. The R&D tax concession refund of $1,026,252 relates to the R&D tax concession refund for the financial year 2018. The financial
year 2018 comparatives of $861,455 consists of $108,058 of additional R&D tax concession refund for the financial year 2015 and
the R&D tax concession refund of $753,397 for the financial year 2017.
The value of any allocable R&D tax concession refund with respect to eligible R&D expenditures incurred during the financial year
2019 has not yet been determined and have therefore not been included within the financial statements for financial year 2019.
Page 38 of 65
For personal use only Notes to the Financial Statements continued
Note 4 - Expenses
Expenses
a) Amortisation
b)
Consulting, employee and director
Consulting expenses
Employee expenses
Director expenses
c)
Equity-based payment
d)
Corporate administration
Audit and accounting fees
Foreign exchange (gain)/loss
Corporate administration expenses
Office rentals
Other
e) Depreciation
f) Marketing and promotion
g)
Research and development
h)
Travel
Total Expenses
30 June 2019
30 June 2018
$ AUD
$ AUD
-
118,610
511,015
484,920
371,981
292,241
286,634
460,151
1,367,916
1,039,026
1,288,699
129,312
248,014
19,638
1,182,335
90,292
-
78,642
(2,665)
998,264
30,070
-
1,540,279
1,104,311
4,628
854,177
6,838
22,826
4,237,397
1,512,288
212,878
153,076
9,505,974
4,086,287
4,086,287
4,694,820
Page 39 of 65
For personal use only Tax effect of amounts which are not deductible in calculating income tax:
Notes to the Financial Statements continued
Note 5 - Income Tax Expenses
30 June 2019
30 June 2018
$ AUD
$ AUD
a)
The prima facie tax on loss from ordinary activities
before the loss is reconciled to the income tax as
follows:
Loss before income tax
Income tax benefit calculated at 27.50% (2018:27.50%)
Tax effect of amounts which are not deductible in calculating income tax:
(8,474,586)
(2,330,511)
(3,207,220)
(881,985)
- impairment and amortisation expenses
- share-based payments expenses
- other expenses not deductible
Other non-assessable income
Other deductible items
Deferred tax assets relating to tax losses and
temporary differences not recognised
Income tax expense
b)
Unrecognised Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are attributable to the
following:
- Tax losses
- Prepayments
- Provision
- Accruals
-
354,392
73,357
(282,219)
(172,002)
2,356,983
32,618
35,560
10,527
(236,900)
(38,842)
1,079,022
-
-
21,260,625
(147,045)
20,324
43,422
18,821,228
(30,205)
3,292
26,028
Net deferred tax assets not recognised
21,177,326
18,820,343
c)
Components of Tax
The components of tax expense comprise:
- Current Tax
- Deferred Tax
Income tax expense
-
-
-
-
-
-
Included in the total of deferred tax assets attributable to tax losses not recognised are tax losses in relation
to operations in Israel, United States of America and Australia. Tax losses in Australian entities alone of
$19,692,869 (2018: $20,082,070) relate to losses generated from 22 November 2006 to 30 June 2019. The
ongoing availability of these tax losses are subject to further review by the Company to ensure compliance with
the relevant provisions of Australia Income Tax laws.
Page 40 of 65
For personal use only Notes to the Financial Statements continued
Note 6 - Key Management Personnel Compensation
The aggregate compensation made to Directors and other Key Management Personnel of the Consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments1
1.
Refer to Note 24 for reconciliation.
Note 7 - Auditor’s Remuneration
30 June 2019
30 June 2018
$ AUD
$ AUD
870,730
66,913
354,261
1,291,904
445,833
12,400
129,312
587,545
On 17th January 2019, Respiri’s shareholders approved the appointment of RSM Australia Partners as the
Company’s auditor, replacing Deloitte Touche Tohmatsu effective 17th January 2019.
Remuneration of Company's Auditor, RSM for:
- auditing or reviewing the financial report of the Group
Remuneration of Company's former Auditor, Deloitte for:
- auditing or reviewing the financial report of the Group
Remuneration of Subsidiary Company's Auditor, Ernst & Young Israel for:
- auditing or reviewing the financial report of the subsidiary1
30 June 2019
$ AUD
30 June 2018
$ AUD
40,000
6,075
46,075
8,068
54,143
-
72,050
72,050
6,592
78,642
1. Audit fees paid to Ernst & Young subsidiaries for the auditing and/or review of the financial report of Respiri (Israel) Ltd.
Note 8 - Loss per Share
Basic loss per share (cents)
Diluted loss per share (cents)
30 June 2019
30 June 2018
(1.69)
(1.69)
(0.73)
(0.73)
a)
b)
c)
Net loss used in the calculation of basic and diluted loss per share
(8,474,586)
(3,207,220)
Weighted average number of ordinary shares outstanding during
the period used in the calculation of basic and diluted loss per share
499,122,902
441,492,813
Potential ordinary shares, including options, are excluded from the weighted average number of shares used
in the calculations of basic loss per share as they are considered non-dilutive.
Page 41 of 65
For personal use only
Notes to the Financial Statements continued
Note 9 - Cash and Cash Equivalents
Cash at Bank
30 June 2019
30 June 2018
$ AUD
$ AUD
306,655
2,418,427
The interest rates on cash at bank on 30 June 2019 was 1.6% (2018: 0.6%). The Group’s exposure to
interest rate risk is discussed in Note 27 (b). The maximum exposure to credit risk at the end of the financial
year is the carrying amount of each class of cash and cash equivalents mentioned above.
Note 10
- Trade and Other Receivables
Current
Other Receivables1
1. Other receivables include GST/V.A.T receivable.
30 June 2019
30 June 2018
$ AUD
$ AUD
161,566
118,763
Refer to Note 27 (c) for more information on the Group’s credit risk management policy.
Note 11
- Controlled Entities
Parent Entity
Respiri Limited
Subsidiaries of Respiri Limited
KarmelSonix Australia Pty Ltd
iSonea (Israel) Limited
iSonea USA Inc.
Country of Incorporation
Percentage of Ownership*
30 June 2019
30 June 2018
Australia
Australia
Israel
United States of America
-
-
100%
100%
100%
100%
100%
100%
*
Percentage of voting power is in proportion to ownership.
Page 42 of 65
For personal use only Notes to the Financial Statements continued
Note 12
- Property, Plant and Equipment
Furniture & Fittings
At cost
Accumulated depreciation
Computer Equipment & Software
At cost
Accumulated depreciation
Medical Equipment
At cost
Accumulated depreciation
30 June 2019
30 June 2018
$ AUD
$ AUD
-
-
-
192,713
(183,211)
9,502
35,648
(35,648)
-
-
-
-
188,981
(178,030)
10,951
35,442
(35,442)
-
a)
Movement in Carrying Amounts
Movements in carrying amounts for each class of property, plant and equipment between the beginning and
the end of the current financial year.
Furniture &
Fittings
Computer
Equipment
Medical
Equipment
$ AUD
$ AUD
$ AUD
Total
$ AUD
Balance as at 1 July 2017
Additions
Depreciation expense
Write Off/Disposals of assets
Exchange adjustments
Carrying amount as at 30 June 2018
Additions
Depreciation expense
Write Off/Disposals of assets
Exchange adjustments
Carrying amount as at 30 June 2019
5,746
-
(311)
(5,435)
-
-
-
-
-
-
-
13,523
7,902
(6,454)
(4,020)
-
10,951
3,179
(4,628)
-
-
9,502
628
-
(73)
(555)
-
-
-
-
-
-
-
19,897
7,902
(6,838)
(10,010)
-
10,951
3,179
(4,628)
-
-
9,502
Page 43 of 65
For personal use only Notes to the Financial Statements continued
Note 13
- Intangible Assets
Intellectual Property
At cost
Accumulated Amortisation
Balance as at 1 July 2017
Additions
Amortisation
Exchange adjustments
Carrying amount as at 30 June 2018
Additions
Amortisation
Exchange adjustments
Carrying amount as at 30 June 2019
Amortisation
30 June 2019
30 June 2018
$ AUD
$ AUD
2,006,793
(2,006,793)
2,006,793
(2,006,793)
-
-
Acquired
Intellectual
Property
$AUD
122,974
-
(118,610)
(4,364)
-
-
-
-
-
Amortisation is charged on a straight-line basis over the expected life of the asset and begins when the asset
is available for use. The Directors have determined that the asset was available for use on 1 January 2008
and the life of the intangible is 10 years. Intellectual property relates to acquired assets. The asset is fully
written down as at 30 June 2018.
Note 14
- Other Assets
Current
Prepayments
Deposits
Non-Current
Other
30 June 2019
30 June 2018
$ AUD
$ AUD
522,324
12,385
534,709
94,299
15,534
109,833
1,173
1,173
2,985
2,985
535,882
112,818
Page 44 of 65
For personal use only Notes to the Financial Statements continued
Note 15
- Trade and Other Payables
Current
Trade payables
Accrued expenses
30 June 2019
$ AUD
30 June 2018
$ AUD
1,525,149
231,806
1,756,955
503,312
493,922
997,234
Terms and conditions of the above financial liabilities:
•
•
Trade payables are non-interest bearing and are normally settled on between 30 - 45 day terms
Accrued expenses are non-interest bearing
Refer to Note 27 (d) for more information on the Group’s liquidity risk management policy.
Note 16
- Other Financial Liabilities
Current
Other Financial Liability1
30 June 2019
$ AUD
30 June 2018
$ AUD
12,912
12,912
12,912
12,912
1. Detailed information in relation to the Chief Scientist grants received in Israel is contained in Note 21.
Note 17
- Other Borrowings
Opening Balance
Add: Loan drawdown1
Add: Capitalised Interest
Less: Repayments
Closing Balance
30 June 2019
30 June 2018
$ AUD
$ AUD
-
800,000
6,442
-
806,442
-
-
-
-
-
1.
Short term R&D credit loan facility of $1.4 million provided by FundSquire based on 80% of expected FY2019 R&D tax refund at
interest rate of 1.35% per month. The Company has drawn down $800,000 from the facility in June 2019.
Page 45 of 65
For personal use only
Notes to the Financial Statements continued
Note 18
- Issued Capital
The Company has an unlimited authorised share capital of no par value ordinary shares.
30 June 2019
30 June 2018
No.
$ AUD
No.
$ AUD
Fully Paid Ordinary Shares
Balance at beginning of year
Shares issued during the year
Transactions costs relating to share issues
Total Issued Capital
473,383,224 102,332,258
4,199,990
(488,887)
52,499,874
-
525,883,098 106,043,361
433,383,224
40,000,000
-
473,383,224
$99,382,258
3,200,0001
(250,000)1
102,332,258
During the Year ended 30 June 2019, the Company issued the following securities:
Date
21 Dec 18
11 Feb 19
15 Feb 19
Details
Issue of shares to certain professional and sophisticated
investors as announced to the market on 21st Dec 2018
Issue of shares to certain professional and sophisticated
investors as announced to the market on 11th Feb 2019
Issue of shares in lieu of cash payment for services rendered 1
Issue Price Total Value
No.
$ AUD
$ AUD
39,375,000
0.080
3,150,000
12,499,874
0.080
999,990
625,000
52,499,874
0.080
50,000
4,199,990
1. This pertains to shares issued to the Brand Ambassador in lieu of cash payment for services rendered.
Terms and Conditions of Issued Capital
Ordinary Shares:
Ordinary shareholders have the right to receive dividends as declared and in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of
and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by
proxy at a meeting of the Company.
Options:
Option holders do not have the right to receive dividends and are not entitled to vote at the meeting of the
Company until options are exercised into ordinary shares by payment of the exercise price. Options may be
exercised at any time from the date they vest to their expiry date. Share options convert into ordinary shares
on a one for one basis on the date they are exercised.
Capital Risk Management:
The consolidated entity’s objective when managing capital is to safeguard its ability to continue as a going
concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain
an optimum capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company
was seen as a value adding relative to the current company’s share price at the time of the investment. The
consolidated entity is not actively pursuing additional investment in the short-term as it continues to develop
its technologies.
Page 46 of 65
For personal use only
Notes to the Financial Statements continued
Note 19
- Reserves
30 June 2019
30 June 2018
No.
$ AUD
No.
$ AUD
Options
Balance at beginning of year
Unlisted Options issued during the year
Adjustment for Options Issued in prior period
Expense recorded over vesting period
Cancellation of options
Total Option Reserve
FX Reserve
Balance at beginning of year
Other comprehensive income for the year, net of tax
Total FX Reserve
Total Reserves
30,000,000
15,000,000
14,000,000
-
-
346,414
277,795
934,4381
347,353
-
59,000,000
1,906,000
20,000,000
20,000,0001
-
-
(10,000,000)2
30,000,000
217,102
129,312
-
-
-
346,414
-
-
-
(305,904)
(9,620)
(315,524)
-
-
-
(287,042)
(18,862)
(305,904)
59,000,000
1,590,476
30,000,000
40,510
1
2
The shareholders have approved the issuance of 34,000,000 unlisted RSH Options to Directors in accordance with resolution 3 of Company’s
2017 Annual General Meeting. The Company subsequently determined in the 2018 financial year that the 14,000,000 options to former
Directors were not issued and have not vested. The matter was in dispute in the 2018 financial year but has since been resolved with the
options reinstated and expenses recognised in the 2019 financial year. Refer to subsequent event note (see Note 25) for more information.
10,000,000 Unlisted Options issued on 24 February 2017 exercisable at $0.10 on or before 24 February 2022 for corporate advisory
consultant services compensation were cancelled in December 2017. No expense recognised given this has all occurred within the
same financial year.
During the Year ended 30 June 2019, the Company issued the following options:
Date
21 Dec 18
7 Jun 19
7 Jun 19
Details
No. of options
$ AUD
$ AUD
Option fair value Total Value
Issue to Lead Manager of the Dec 18 placement in
lieu of fees for services rendered.
Issue to other Key Management Personnel under
Employee Share Option Plan (ESOP)
Issue to other Key Management Personnel under
Employee Share Option Plan (ESOP)
5,000,000
0.0542
270,887
6,000,000
0.0484
4,000,000
0.0736
15,000,000
5,826
1,082
277,795
Option Reserve:
The option reserve recognises the proceeds from the issue of options over ordinary shares and the expense
recognised in respect of share based payments.
Page 47 of 65
For personal use only
Notes to the Financial Statements continued
Note 20
- Capital and Leasing Commitments
a)
Operating Lease Commitments
Haifa, Israel
The lease is a non-cancellable lease with a five-year term and has expired in 2018. There are no further lease
commitments for the Israel operation.
b)
Other commitments
Respiri Limited has no other commitments.
Note 21
- Contingent Liabilities
Office of the Chief Scientist- Israel
Following approval from the Office of the Chief Scientist in Israel (OCS), four OCS grants totalling
USD$541,470 were received by Karmel Medical Acoustic Technologies Ltd (KMAT) prior to 2006 to assist
with the R&D of technologies. The R&D associated with these OCS grants was acquired by Respiri from
KMAT in 2006, together with the associated OCS grant obligations. In 2008, Respiri subsequently received
two further grants from the OCS totalling USD$307,047 to assist in the funding of ongoing R&D work.
The terms of the OCS grant scheme specify that should technologies be developed with the direct assistance
of a grant, and be commercialised, and generate sale revenue for the company, a royalty of between 3% -
3.5% of the associated sales revenue will be paid to the OCS until that OCS grant(s) amount, plus applicable
interest applied to that grant(s) amount (based on LIBOR) has been repaid.
Page 48 of 65
For personal use only Notes to the Financial Statements continued
Note 22
- Segment Reporting
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the
Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the
segment and to assess its performance.
Information reported to the Group’s Chief Operating Decision Makers for the purposes of resource allocation
and assessment of performance is more specifically focused on the geographical locations of the Group’s
operations.
The Group’s reportable segments under AASB 8 are therefore as follows:
•
•
Australia
Israel
The Australia reportable segment activities include research, development and commercialisation of medical
devices, and the production of mobile health applications in Australia.
The Israel reportable segment activities include research, development and commercialisation of medical
devices, and the production of mobile health applications in Israel.
In prior years, the Group has had operations in United States; however, these operations have ceased and
therefore are no longer reported as a reportable segment.
Information regarding these segments is presented below. The accounting policies of the reportable segments
are the same as the Group’s accounting policies.
----- Medical Devices -----
Segment
Australia
$ AUD
Israel
$ AUD
Segment
Corporate
Total
Total
$ AUD
$ AUD
$ AUD
30 June 2019
Segment Revenue
External sales
Interest revenue
Other Income
-
-
1,026,252
-
-
-
-
-
-
1,026,252
1,026,252
-
5,136
-
5,136
-
5,136
1,026,252
1,031,388
Total Segment Revenue
1,026,252
Segment Expenses
Segment Depreciation
Expenses
Segment Expenses
-
(4,059,200)
-
(123,074)
-
(4,182,274)
(4,628)
(5,319,072)
(4,628)
(9,501,346)
Total Segment Expense
(4,059,200)
(123,074)
(4,182,274)
(5,323,700)
(9,505,974)
Income Tax Expense
Net Result
Assets
Segment assets
Total Assets
Liabilities
Segment liabilities
Total Liabilities
(3,032,948)
(123,074)
(3,156,022)
(5,318,564)
(8,474,586)
18,592
18,592
950
950
14,271
14,271
41,043
41,043
32,863
32,863
980,742
980,742
1,013,605
1,013,605
41,993
41,993
2,534,316
2,576,309
2,534,316
2,576,309
Page 49 of 65
For personal use only Notes to the Financial Statements continued
30 June 2018
Segment Revenue
External sales
Interest revenue
Other Income
Total Segment Revenue
Segment Expenses
Segment Depreciation
Expenses
Segment Expenses
----- Medical Devices -----
Segment
Australia
$ AUD
Israel
$ AUD
Segment
Corporate
Total
Total
$ AUD
$ AUD
$ AUD
-
-
861,455
861,455
-
2,259
-
2,259
-
-
-
2,259
861,455
863,714
15,353
-
15,353
17,612
861,455
879,067
-
(1,582,684)
(2,714)
(395,892)
(2,714)
(1,978,576)
(4,124)
(2,100,874)
(6,838)
(4,079,449)
Total Segment Expense
(1,582,684)
(398,606)
(1,981,290)
(2,104,998)
(4,086,287)
Income Tax Expense
-
-
-
-
-
Net Result
Assets
Segment assets
Total Assets
Liabilities
Segment liabilities
Total Liabilities
(721,229)
(396,347)
(1,117,576)
(2,089,645)
(3,207,220)
25,139
25,139
34,628
34,628
59,767
59,767
2,601,192
2,660,959
2,601,192
2,660,959
404,816
404,816
31,856
31,856
436,672
436,672
573,474
573,474
1,010,146
1,010,146
Note 23
- Cash Flow Information
a)
Reconciliation of cash flow from operations with loss after income tax
Net Loss for the year
Add back depreciation expense
Add back amortisation expense
Add back share based payments
Add back capitalised interest on loan
Add back loss on disposal/write-off of assets
Add back foreign exchange adjustments
(Increases)/Decreases in Accounts Receivable1
Increases in Other Current Assets
(Decreases)/Increases in Accounts Payable
Net cash flows used in operating activities
30 June 2019
30 June 2018
$AUD
$AUD
(8,474,586)
4,628
-
1,738,699
6,442
-
19,639
(42,805)
(423,062)
759,720
(3,207,220)
6,838
118,610
129,312
-
7,856
(2,663)
747,410
(43,644)
166,491
(6,411,325)
(2,077,010)
1.
Decrease in receivables balance relates to receipt of R&D tax concession receivable as at 30 June 2018 in the financial year
2018
b)
Non-Cash financing and investing activities
Please refer to Note 18 and 19 for further details regarding equity issued for nil cash consideration.
Page 50 of 65
For personal use only Notes to the Financial Statements continued
Note 24
- Share-based Payments
a)
Employee share and option plan
At the Annual General Meeting held on 30 October 2013, Shareholders approved the establishment of the
2013 Employees', Directors' and Consultants' Share and Option Plan (ESOP). The ESOP is intended to reward
Directors, employees and/or consultants for their contributions to the Group. The Plan is to be used as a
method of retaining and providing incentives to key personnel for the growth and development of the Group.
The Plan has been established to benefit personnel in Australia, Israel and USA.
The following options were issued during the current year under ESOP:
No. of
Options
6,000,0001
4,000,0002
Grant
Date
7 Jun 19
7 Jun 19
Expiry date
31 Dec 23
31 Dec 24
Share
price at
grant date
$ AUD
$0.135
$0.135
Exercise
price
$ AUD
$0.005
$0.125
Expected
Volatility
126.10%
126.10%
Dividend
yield
-
-
Risk-free
interest
rate
0.98%
0.98%
Fair value at
grant date
$ AUD
$0.0484
$0.0736
1. Options will vest after 31 December 2020, subject to the Company’s share price being $0.20 or greater on 10 trading days within
20 sequential trading days in the eighteen months commencing July 2019.
2. Options will vest after 31 December 2021, subject to the Company’s share price being $0.25 or greater on 10 trading days within
20 sequential trading days in the three months commencing July 2020.
The weighted average fair value of the share options granted during the financial year is $0.058 (2018:
$0.087). Expected volatility is based on the historical share price volatility over the past 2 years. To allow for
the effects of early exercise, it was assumed that executives and senior employees would exercise the
options after vesting date when the share price is two and a half times the exercise price.
b)
Fair value of share options granted in the year outside of the ESOP
For the options granted during the current financial year, the Black Scholes Option valuation model inputs
used to -determine the fair value at the grant date, are as follows:
No. of
Options
5,000,0001 21 Dec 18
Grant
Date
Expiry date
21 Dec 20
Share
price at
grant date
$ AUD
$0.093
Exercise
price
$ AUD
$0.12
Expected
Volatility
126.10%
Dividend
yield
-
Risk-free
interest
rate
0.98%
Fair value at
grant date
$ AUD
$0.0542
1.
Issue to Lead Manager of the Dec 18 placement in lieu of fees for services rendered.
Page 51 of 65
For personal use only Notes to the Financial Statements continued
c)
Movements in share options during the year
The following reconciles the share options outstanding at the beginning and end of the year:
30 June 2019
30 June 2018
Outstanding at the beginning of
the year
Granted
Adjustment for granted in
prior period
Exercised
Expired/lapsed
Cancelled
No. of Options
30,000,000
15,000,000
14,000,0001
-
-
-
Weighted
Average
Exercise Price
$ AUD
Weighted
Average
Exercise Price
$ AUD
No. of Options
0.12
0.08
0.03
-
-
-
20,000,000
20,000,0001
-
-
(10,000,000)
30,000,000
10,000,000
0.19
0.03
-
-
-
0.12
0.12
Outstanding at year-end
Exercisable at year-end
59,000,000
29,000,000
0.08
0.13
1
The shareholders have approved the issuance of 34,000,000 unlisted RSH Options to Directors in accordance with resolution 3
of Company’s 2017 Annual General Meeting. The Company subsequently determined in the 2018 financial year that the
14,000,000 options to former Directors were not issued and have not vested. The matter was in dispute in the 2018 financial
year but has since been resolved with the options reinstated and expenses recognised in the 2019 financial year. Refer to
subsequent event note (see Note 25) for more information.
d)
Share options exercised during the year
No options were exercised during the financial year 2019.
e)
Share options outstanding at the end of the year
The options outstanding at 30 June 2019 had a weighted average exercise price of $0.08 (2018: $0.12) and
a weighted average remaining contractual life between 0.5 to 6.5 years. Exercise prices range from $0.005
(2018: $0.03) to $0.28 (2018: $0.28) in respect of options outstanding at 30 June 2019.
f)
Share-based payments expense
Share-based payments
Options issued to directors
Options issued to suppliers
-
-
- Options issued to other key management
personnel
- Options issued to former directors
30 June 2019
$ AUD
30 June 2018
$ AUD
347,353
270,887
6,908
934,4381
1,559,586
129,3121
-
-
129,312
1
The shareholders have approved the issuance of 34,000,000 unlisted RSH Options to Directors in accordance with resolution 3
of Company’s 2017 Annual General Meeting. The Company subsequently determined in the 2018 financial year that the
14,000,000 options to former Directors were not issued and have not vested. The matter was in dispute in the 2018 financial
year but has since been resolved with the options reinstated and expenses recognised in the 2019 financial year. Refer to the
subsequent event note (see Note 25) for more information.
Page 52 of 65
For personal use only Notes to the Financial Statements continued
Note 25
- Subsequent Events
Share Placement
On 30 July 2019, the Company has successfully conducted a $3.4 million capital raising via a private
placement to sophisticated and professional investors at Placement price of 10 cents per fully ordinary share.
The Placement also includes $100,000 from directors of the Company which will subject to shareholder
approval at the Company’s AGM.
Former Directors’ Options
At the 2017 Annual General Meeting on 14 December 2017, shareholders approved the issue of 14,000,000
options to two directors who subsequently retired on 30 May 2018. The Company subsequently determined
that these options were not issued and had not vested. The 2018 financial statements have been prepared
reflecting the Company’s position.
The Company has announced on 6 September 2019 that it has resolved the legal dispute with its two
former directors on terms satisfactory to both parties and in accordance with the original terms of the
options, which were set out in the Explanatory Memorandum to the notice of the 2017 Annual General
Meeting and approved by shareholders at that meeting.
The Company confirmed that the 14,000,000 options issued to the two former directors were validly issued
and that, as approved by the Board on 30 May 2018, the options vested immediately (as a result of the
former directors’ retirement) and therefore the options are exercisable upon satisfaction of the share price
and term exercise conditions in accordance with the option terms.
The Company has recognised an additional non-cash share based payment expense of $934,438 in the
consolidated statement of profit and loss and other comprehensive income for the year ended 30 June 2019
for the vested options issued to the two former directors.
Note 26
- Related Party Transactions
The Group’s related parties comprise of subsidiaries and key management personnel.
Disclosures relating to key management personnel are set out in the remuneration report. Transactions
between the parent company and its subsidiaries are eliminated on consolidation and are not disclosed in
this note.
There were no other related party transactions in the year ended 30 June 2019.
Page 53 of 65
For personal use only Notes to the Financial Statements continued
Note 27
- Financial Risk Management
The Group's activities expose it to a variety of financial risks including market risk, credit risk and liquidity
risk. Price risk is not a risk exposure. The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the consolidated entity. The Company and Group do not have written policies regarding risk
management however, these risks are managed
prudently by senior management.
The Group holds the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Other financial liabilities
Other borrowings
a) Foreign Currency Risk
30 June 2019
$ AUD
30 June 2018
$ AUD
306,655
161,566
468,221
1,756,955
12,912
806,442
2,576,309
2,418,427
118,763
2,537,190
997,234
12,912
-
1,010,146
The Group engages in international purchase transactions and is exposed to foreign currency risk arising
from various currency exposures, primarily with respect to the US dollar (USD) and Israeli shekel (ILS). The
parent has minimal exposure to foreign exchange risk as it does not hold any foreign currency cash reserves
and only makes minor foreign currency payments. The Group does not make use of derivative financial
instruments to hedge foreign exchange risk.
The carrying amount of the foreign currency denominated monetary assets and liabilities at the reporting date
is as follows, all amounts in the table below are displayed in $AUD at year-end spot rates:
Cash and trade and other receivables
- ILS
- USD
Trade and other payables
- ILS
- USD
30 June 2019
30 June 2018
$ AUD
$ AUD
4,068
44,190
48,258
(28,130)
(36,545)
(64,675)
20,108
10,514
30,622
(18,944)
(26,795)
(45,739)
Page 54 of 65
For personal use only Notes to the Financial Statements continued
Sensitivity Analysis
The following tables demonstrate the sensitivity to a reasonably possible change in USD and ILS exchange
rates, with all other variables held constant. The impact on the Group’s profit before tax is due to changes in
the fair value of monetary assets and liabilities including non-designated foreign currency derivatives and
embedded derivatives. The Group’s exposure to foreign currency changes for all other currencies is not
material.
2019
2018
2019
2018
Change in USD Rate Effect on profit before tax
5%
(5%)
5%
(5%)
(382)
382
(814)
814
Change in ILS Rate Effect on profit before tax
5%
(5%)
5%
(5%)
1,203
(1,203)
59
(59)
b)
Interest Rate Risk
The Group's exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result
of changes in market interest rates and the effective weighted average interest rates on classes of financial
assets and financial liabilities.
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to
interest rate risk (against the implied 30 day bank bill rate). The table also represents the quantitative impact
on the financial statements should the variation occur.
Carrying Amount
$ AUD
30 June 2019
Weighted
average
interest rate
%
(1%) effect on
profit before
tax
$ AUD
1% effect on
profit before tax
$ AUD
Financial assets
Cash and cash equivalents
306,655
Total (decrease)/increase
306,655
1.67
-
(3,067)
(3,067)
3,067
3,067
30 June 2018
Carrying
Amount
$ AUD
Weighted average
interest rate
%
(1%) effect on
profit before tax
$ AUD
1% effect on profit
before tax
$ AUD
2,418,427
2,418,427
0.60
-
(24,184)
(24,184)
24,184
24,184
Financial assets
Cash and cash equivalents
Total (decrease)/increase
c) Credit Risk
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial
loss to the Group. The Group has no significant concentration of credit risk in the current or prior year.
The Group ensures that surplus cash is invested with financial institutions of appropriate credit worthiness
and limits the amount of credit exposure to any one counter party.
Page 55 of 65
For personal use only Notes to the Financial Statements continued
d) Liquidity Risk
Liquidity risk is the risk that the Group will not pay its debtors when they fall due. Prudent liquidity risk
management implies maintaining sufficient cash and the availability of funding through an adequate amount
of committed credit facilities. The Group manages liquidity risk by maintaining sufficient bank balances to
fund its operations and the availability of funding through committed credit facilities.
Management manages this risk by monitoring rolling forecasts of the Group's liquidity reserve on the basis
of expected cash flows. The table below analyses the Group’s financial liabilities.
30 June 2019
Trade and other payables
Other borrowings
30 June 2018
Trade and other payables
Other borrowings
0-12 months
Maturing 1 to 3 years
$ AUD
$ AUD
Total
$ AUD
1,756,955
806,442
2,563,397
997,234
-
997,234
-
-
-
-
-
-
1,756,955
806,442
2,563,397
997,234
-
997,234
e) Capital Risk Management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going
concern and to maintain a capital structure that maximises shareholder value. In order to maintain or achieve
an optimal capital structure, the Group may issue new shares or reduce its capital, subject to the provisions
of the Group's constitution.
The capital structure of the Group consists of equity attributed to equity holders of the Group, comprising
contributed equity and reserves disclosed in Notes 18 and 19. By monitoring undiscounted cash flow
forecasts and actual cash flows provided to the Board by the Group's Management the Board monitors the
need to raise additional equity from the equity markets.
f) Fair Value Estimation
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents
their respective fair values determined in accordance with the accounting policies disclosed in Note 1.
Note 28
- Company Details
Registered Office
Level 10, 446 Collins Street,
Melbourne, Victoria
AUSTRALIA 3000
Principal Place of Business
Level 27, 101 Collins Street
Melbourne, Victoria
AUSTRALIA 3000
Ph: +61 (0)3 9602 3366
Fx: +61 (0)3 9602 3606
www.respiri.co
www.wheezo.com
Page 56 of 65
For personal use only
Directors’ Declaration
The Directors of the Company declare that:
1.
the financial statements and the notes, as set out on pages 24 to 56, and the remuneration disclosures
that are contained within the Remuneration report within the Directors’ report, set out on pages 12 to
21, are in accordance with the Corporations Act 2001 and:
a.
b.
c.
d.
In the director’s opinion there are reasonable grounds to believe the company will be able to
pay its debts as and when they become due and payable
In the directors’ opinion the financial statements and notes also comply with International
Financial Reporting Standards as disclosed in Note 1.
In the directors’ opinion the attached financial statements and notes thereto are in accordance
with the Corporations Act 2001, including compliance with accounting standards and giving a
true and fair view of the financial position and performance of the consolidated entity; and
The directors have been given the declarations required by s295A of the Corporations Act 2001
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act
2001
On behalf of the Directors
Mr Ross Blair-Holt
Non-Executive Chairman
Dated this the 17th Day of September 2019
Melbourne, Australia
Page 57 of 65
For personal use only INDEPENDENT AUDITOR’S REPORT
To the Members of Respiri Limited
Opinion
We have audited the financial report of Respiri Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor's Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
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 Company, would be in the same terms if given to the directors as at the
time of this auditor's report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Page 58 of 65
For personal use only Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss
of $8,474,586 and had net operating cash outflows from operating activities of $6,411,325 during the
year ended 30 June 2019 and, as of that date, the Group had net current liabilities of $1,573,379 and
net liabilities of $1,562,704. As stated in Note 1, these events or conditions, along with other matters
as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the
Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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. In addition to the matter described in the Material Uncertainty
Related to Going Concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Key Audit Matter
How our audit addressed this matter
Share based payments
Refer to Note 24 in the financial statements
Respiri Limited have an Employees',
Directors' and Consultants' Share and
Option Plan (“ESOP”) as part of the
remuneration packages of employees.
We identified share-based payments as a
key risk due the complexity in the valuation
of the options issued, and the estimates
made by management in relation to the
achievement of vesting conditions.
Our audit procedures in relation to share based
payments included:
• Reviewing the reasonableness of option valuation
inputs into the Black Scholes Option Valuation
Model including assessment of the share volatility
rates applied in comparison to entities in the
similar industry; and
• Performing a recalculation of the Black Scholes
Option Valuation Model for a sample of options
issued;
• Testing a sample of options issued to signed
ESOP agreements;
• Reviewing the accounting for the share-based
payments in accordance with AASB 2 Share-
based Payments; and
• Reviewing the reasonableness of management’s
estimates of the likelihood of the achievement of
vesting conditions for the options issued.
Page 59 of 65
For personal use only Other Information
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 2019, but does not include the financial
report and the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or 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.
Page 60 of 65
For personal use only Auditor's Responsibilities for the Audit of the Financial Report (Continued.)
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of Respiri Limited, for the year ended 30 June 2019, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
RSM AUSTRALIA PARTNERS
P A RANSOM
Partner
Dated: 17 September 2019
Melbourne, Victoria
Page 61 of 65
For personal use only SHAREHOLDER INFORMATION as at 17 September 2019
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Holder
INVESTMENT HOLDINGS PTY LTD
MR PETER KARL BRAUN
NETWEALTH INVESTMENTS LIMITED
NETWEALTH INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
LUHOPI PTY LTD
MR STEPHEN RICHARD BARRETT
EQUITAS NOMINEES PTY LIMITED
DR BELINDA DEBORAH JACKSON
GREY INNOVATION HOLDINGS PTY LTD
ATLANTIS INVESTIGATIONS PTY LIMITED
MR WILLIAM JOHN RICHARDS & MRS MARY MITCHELL RICHARDS
CLEMWELL PTY LTD
NAVIGATOR AUSTRALIA LTD
COONAN FAMILY SUPERANNUATION FUND PTY LTD
TWO BULLS HOLDINGS PTY LTD
MR ROSS SPENCE BAYNES
MR WILLIAM JOHN RICHARDS & MRS MARY MITCHELL RICHARDS
CARLDEM PTY LTD
DL MARSHALL SUPER PTY LTD
Unquoted equity securities
Ordinary
shares held
% of total shares
issued
72,008,027
13,654,325
12,880,421
11,480,918
8,506,184
7,533,614
7,000,000
6,642,449
6,540,862
6,250,000
5,884,524
5,671,269
5,535,678
5,350,000
5,000,000
5,000,000
4,429,923
4,370,000
4,316,015
4,105,000
12.88%
2.44%
2.30%
2.05%
1.52%
1.35%
1.25%
1.19%
1.17%
1.12%
1.05%
1.01%
0.99%
0.96%
0.89%
0.89%
0.79%
0.78%
0.77%
0.73%
Unquoted equity securities
Number on issue
Number of holders
Options over ordinary shares issued
59,000,000
9
Page 62 of 65
For personal use only Substantial holders
Holder
Designation
Ordinary
shares
held
% of total shares
issued
INVESTMENT HOLDINGS PTY LTD
72,008,027
12.88%
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or proxy shall have one vote and upon a
poll each share shall have one vote.
There are no other classes of equity securities.
On-market buy-backs
There is no current on-market buy-back in relation to the Company’s securities.
Securities subject to voluntary escrow
There are no securities subject to voluntary escrow.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and above
Unmarketable parcels
Number of Holders of ordinary shares
1,893
513
351
1,076
626
As at the above date there were 2,431 shareholders with unmarketable parcels on the register.
Page 63 of 65
For personal use only SHAREHOLDER ENQUIRIES
Shareholders with enquiries about their shareholdings should contact the Share Register:
Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, Victoria, 3067
Telephone: +61 (0)3 9415 4000
Facsimilie: +61 (0)3 9473 2500
Email:
www.investorcentre.com/contact
CHANGE OF ADDRESS, CHANGE OF NAME, CONSOLIDATION OF SHAREHOLDINGS
Shareholders should contact the Share Registry to obtain details of the procedure required for any of
these changes.
REMOVAL FROM THE ANNUAL REPORT MAILING LIST
Shareholders who wish to receive the Annual Report should advise the Share Registry in writing. These
shareholders will continue to receive all other shareholder information.
TAX FILE NUMBERS
It is important that Australian resident shareholders, including children, have their tax file number or
exemption details noted by the Share Registry.
CHESS (Clearing House Electronic Sub-register System)
Shareholders wishing to move to uncertified holdings under the Australian Stock Exchange (CHESS)
system should contact their stockbroker.
UNCERTIFIED SHARE REGISTER
Shareholding statements are issued at the end of each month in which there is a transaction that alters
the balance of your holding.
Page 64 of 65
For personal use only Corporate Information
AUSTRALIAN COMPANY NUMBER (ACN)
009 234 173
Respiri Limited is a Public Company Limited
by shares and is domiciled in Australia.
DIRECTORS
Mr Mario Gattino
Mr Brendan Mason
Mr Mark Ziirsen
Mr Ross Blair-Holt
Prof Bruce Thompson
Dr Thomas Duthy
CEO and Executive Director (Appointed on 14th Dec 2017)
Non-Executive Director (Resigned 27th Nov 2018)
Non- Executive Chairman (Resigned 27th Nov 2018)
Non-Executive Chairman (Appointed on 18th Dec 2018)
Non-Executive Director (Appointed on 27th Nov 2018)
Non-Executive Director (Resigned on 27th Nov 2018)
REGISTERED OFFICE
Level 10, 446 Collins Street
Melbourne, Victoria
AUSTRALIA 3000
Telephone: + 61 (0)3 9602 3366
Fax: + 61 (0)3 9602 3606
SOLICITORS
MinterEllison
Level 23, Rialto Towers
525 Collins Street
Melbourne, Victoria, 3000
Australia
Telephone: +61 (0) 3 8608 2000
BANKERS
National Australia Bank (NAB)
330 Collins Street,
Melbourne, Victoria, 3000
Australia
COMPANY SECRETARY
Mr Alastair Beard
PRINCIPAL PLACE OF BUSINESS
Level 27, 101 Collins Street
Melbourne, Victoria
AUSTRALIA 3000
Telephone: + 61 (0)3 9824 5254
Fax: + 61 (0)3 9822 7735
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, Victoria, 3067
Australia
Telephone: +61 (0)3 9415 4000
Facsimile: +61 (0)3 9473 2500
AUDITORS
RSM Australia Partners
Level 21, 55 Collins Street
Melbourne, Victoria, 3000
Australia
Telephone: +61 (0) 3 9286 8000
WEBSITES
www.respiri.co
www.wheezo.com
SECURITIES QUOTED
Australian Securities Exchange
- Ordinary Fully Paid Shares (Code: RSH)
Page 65 of 65
For personal use only
Registered Office 10/446 Collins Street Melbourne Victoria, Australia 3000Telephone: +61 3 9653 9160 Fax: +61 3 9653 9162 Email: admin@respiri.coACN 009 234 173 ABN 98 009 234 173For personal use only