WELLFULLY LIMITED
(ABN 72 056 482 636)
(formerly OBJ Limited)
2020 ANNUAL REPORT
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
CORPORATE DIRECTORY
AUSTRALIAN COMPANY NUMBER:
056 482 636
DIRECTORS:
Antonio Varano Della Vergiliana
Jeffrey David Edwards
Steven Lorn Schapera
Cameron Reynolds
SECRETARY:
John Joseph Palermo
CEO:
Paul Peros
REGISTERED OFFICE:
Level 1
284 Oxford Street
LEEDERVILLE WESTERN AUSTRALIA 6007
Telephone: +61 8 9443 3011
SHARE REGISTER:
Automic Registry Services
Level 2, 267 St Georges Terrace
PERTH WA 6000
Telephone: 1300 288 664 (Local)
Telephone: +61 2 9698 5414 (International)
AUDITORS:
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade
PERTH WESTERN AUSTRALIA 6000
Telephone: +61 8 9261 9100
Facsimile: +61 8 9261 9101
HOME EXCHANGE:
Australian Securities Exchange Limited
Central Park, 152-158 St Georges Terrace
PERTH WESTERN AUSTRALIA 6000
ASX CODE:
WFL
CONTENTS:
Corporate Directory
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and
Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Governance Statement
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
REVIEW OF OPERATIONS
Device Business
In May, the Company launched its first wholly-owned consumer brand, RÉDUIT, a luxury beauty technology brand.
The brand is focused on technical performance, sustainability and design, with the objective of delivering advanced
beauty solutions in a user-friendly format.
Suitable for use at home as well as in selected professional applications, this device is based on Wellfully Ltd’s
patented Magnetic Misting technologies and is initially aimed at the haircare and hair styling space.
The rechargeable RÉDUIT One applicator device is used to
apply the haircare and styling products contained within the
Hairpods™, another Wellfully Ltd innovation. Each pod
delivers RÉDUIT’s proprietary product formulations in the form
of a super-fine mist, with the distribution and deposition of
individual droplets being controlled by the Company’s Magneto-
Wetting technology, for which international patents have been
filed.
With the same level of active ingredients as a traditional 100 to
250ml bottle, each RÉDUIT Hairpods™ offers the same number
of treatment applications - yet has a far lower carbon footprint
than bulky old-style products. Each pod is fully recyclable
through RÉDUIT’s own Return & Refurbishment program,
ensuring that both the formulation and delivery system have the lowest possible environmental impact.
During September 2019, the Company announced the establishment of subsidiaries for the device business, known
as Wellfully. Some of the subsidiaries were acquired from Wellfully Ltd’s CEO Mr Paul Peros. The consideration
for this acquisition was agreed to be $120,000 worth of ordinary shares in the Company.
The new subsidiaries enable the Company to pursue new opportunities in the beauty technology and consumer
device sector under its own brand, thereby retaining full control over the commercialisation of its technology and
capturing a higher proportion of sales revenue.
Wellfully SA, a beauty and technology/consumer products holding company for the device business, has been
established in Switzerland. Within Wellfully SA are three subsidiaries:
- Wellfully d.o.o. – a sales and marketing support, back-office and service company which has been established in
Croatia;
- Wellfully Ltd – a China holding, Asia trading company which has been established in Hong Kong; and
- Peros (Dongguan) Technology & Trading Co, Ltd – an operations and trading base which has been established in
China (this name will be changed to Wellfully in due course).
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
REVIEW OF OPERATIONS (continued)
Bodyguard
Wellfully Ltd has continued to progress its Bodyguard program and has been working toward achieving regulatory
approval for its core product – the Lubricen™ knee patch. The Company is fulfilling the necessary testing and data
submission requirements as outlined by the Therapeutics Goods Administration (TGA) of Australia to market the
product as a medical device. Once home market approval is achieved, submissions can be made in other
jurisdictions.
Surface Hygiene
The Company’s Surface Hygiene work has recently joined Reduit’s Haircare and Skincare programs under the
Magneto-Misting platform. The focus is now on the development and commercial launch of the first two Surface
Hygiene devices.
The first is to be a Personal Hygiene device, using the
portability of the Reduit Pod architecture and systems. The
Personal Hygiene device will provide portable disinfection
and anti-viral Mists for hands, surfaces, clothes, bags,
footwear and shopping in the field.
The second device will be a larger capacity Household
hygiene device for disinfection and anti-viral Misting of
benchtops, floors, surfaces, as well as food, shopping,
packaging, school bags and footwear. The ambitious
program is expected to deliver market ready products by the
end of this calendar year.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
REVIEW OF OPERATIONS (continued)
Procter & Gamble Partnership
In November 2019, Wellfully Ltd announced it has executed two new Licensing Agreements with Procter & Gamble
(P&G), a Third Addendum and Release under the Product Development Agreement of April 2016, and a First
Amendment to five Licensing Term Sheets under the Master Licensing Agreement of August 2016.
These Agreements were designed to harmonise and unify a number of separate Agreements already in existence
between the two companies and improve the practical aspects of their operation.
Highlights for Wellfully Ltd included:
- Improved royalty rates;
- Revised payment schedules, and exclusivities & distribution routes for existing Wellfully Ltd products &
technologies;
- More clearly defined exclusivity provisions; and
- The release back to Wellfully Ltd of all Beauty sub-categories other than Skin care.
The agreements also provide a clearer definition of each company’s freedom to operate across various Beauty and
Grooming sub-categories.
Under the Agreements, Addenda and Amendments, P&G will hold a worldwide exclusive license for certain
existing Wellfully Ltd technology platforms, enabling research, development and commercialisation of products
within defined fields of use. The Wellfully Ltd technology platforms covered by the license are Permanent Magnetic
Technology, Electromagnetic Technology, Pre-programmed Electromagnetic Technology, and Programmable
Electromagnetic Technologies.
While the Company has renegotiated improved royalty rates on products commercialised by P&G, specific details
around these rates and related terms remain confidential for commercial reasons. The Company deems the change
in royalty is not material to its agreements but will recognise revenue and payment at the point of shipment rather
than the wholesale sale.
Late in the financial year, the Company executed a new Licensing Term Sheet and Work Plan with P&G for the
development of a new skincare device based on the Company’s Programmable Array technologies (“Second
Technology”).
Research & Development
Wellfully Ltd’s R&D team explored applications for the Company’s Magnetic Misting technologies during the
period, beyond the current Beauty and Hygiene focus. The increasing global interest in buccal and inhalation drug
delivery for the treatment of COVID-19 and other respiratory conditions has led the team to explore potential
opportunities in the nebulizer field for the Company’s misting technologies. Through the team’s previous
experience in areas such as personalization and smart phone connectivity, it has been able to quickly develop
solutions for secure prescriptions, compliance monitoring, in-field programmability, peer to peer authentication and
auto-activation, all of which pose considerable technical barriers for existing propellant or dry powder nebulizers.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
REVIEW OF OPERATIONS (continued)
Intellectual Property
The Company bolstered its intellectual property position with the granting of new important patents by the Japanese,
USA and Chinese patent offices. These new patents expand the Company’s exclusivity in a range of innovations
employed in its Magnetic Misting and Programmable Arrays technologies.
In November 2019, the Company reported that the Australian Patent Office had issued a Notice of Acceptance for
Bodyguard Patent No. 2015274237, covering the range of Bodyguard products. The patent expires 10 June 2035,
while the Company awaits responses to the same patent application filed in USA, Europe, China and Hong Kong.
Corporate
Key Appointments / Board Changes
Effective 14 April 2020, Wellfully Ltd appointed Paul Peros as Chief
Executive Officer (CEO) of the Company. Mr Peros transitioned to the
CEO role from his position as head of the device business, to which he
was appointed on 1 June 2019. Wellfully Ltd’s founder and former CEO,
Jeffrey Edwards, continues as Managing Director of the Company.
Mr Peros appointment came as the Company moved to streamline
operations around the device business, which has been well positioned to
swiftly react to the challenges of a volatile environment in terms of capital efficiency, as well as tactical go-to-
market and range adjustments.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
REVIEW OF OPERATIONS (continued)
The Board identified Mr Peros as having the experience and skillset required to lead the Company’s operations
through the challenging times experienced during the period.
Long-time board member Dr Chris Quirk resigned from his role as Wellfully Ltd’s Non-Executive Director,
effective 30 April 2020. Dr Quirk, who has worked in both the public and private sector as a consultant
dermatologist for the past 30 years, served on the Board since 19 November 2004 and played an important role in
Wellfully Ltd’s development during his long involvement with the Company.
Capital Raising
In April, the Company secured Loan Facilities for up to $2.3 million via the issue of Convertible Notes. This
funding was essential in securing the operations of the Company, in particular establishing the infrastructure and
driving the RÉDUIT business to commercialisation throughout the COVID-19 pandemic.
Subsequent to the end of the financial year, the Company announced a proposed pro-rata non-renounceable
entitlement offer, followed by a proposed placement, together raising up to approximately $4.5 million before costs.
The proceeds from the entitlement offer and placement are intended to fund BodyGuard’s regulatory/compliance
and commercial launch, device division development and go-to-market activities, redemption of the aforementioned
Convertible Notes, as well as providing for general working capital.
Nutrition Systems transaction
In November 2019, the Company announced it has entered into a share sale agreement to acquire 100% of the shares
in Export Corporation (Australia) Pty Ltd (Export Corporation or Nutrition Systems), the owner and operator of
Nutrition Systems, a business in the distribution and wholesale of nutritional wellness products in Australia and
New Zealand.
In March 2020, Wellfully Ltd advised that the Company and the sole shareholder of Export Corporation, Mr Danny
Pavlovich, had mutually agreed to terminate the share sale agreement between the parties. Extreme market volatility
and restrictions on travel and investor presentations due to COVID-19 meant the Company was unable to raise the
required funds on the agreed terms and within a known or adequate timeframe.
Separately, the Company and Nutrition Systems remain motivated to work closely together to pursue a number of
mutually beneficial programmes including the Bodyguard launch and distribution, and manufacturing opportunities
for brands within the Nutrition Systems portfolio.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
DIRECTORS' REPORT
The directors present their report on the results of Wellfully Limited and its controlled entities (the “Consolidated
Entity”) (formerly OBJ Limited) for the year ended 30 June 2020.
DIRECTORS
The names of directors in office at any time during or since the end of the financial year are:
Mr Antonio Varano Della Vergiliana
Mr Jeffrey David Edwards
Mr Steven Lorn Schapera
Mr Cameron Reynolds
Dr Christopher John Quirk
(resigned: 30 April 2020)
PRINCIPAL ACTIVITIES
The principal activities of the Consolidated Entity during the financial year ended 30 June 2020 were research and
development for its Dermaportation and ETP transdermal drug delivery technologies.
There were no significant changes in the nature of the Consolidated Entity’s principal activities during the financial year
other than those referred to in the Review of Operations.
OPERATING RESULT AND FINANCIAL POSITION
The net consolidated loss of the Consolidated Entity after providing for income tax amounted to $3,713,117 (2019: loss
of $1,710,001).
The net liabilities of the Consolidated Entity at 30 June 2020 were $1,219,031 (2019: net assets $2,545,408). At
that date, there was cash and cash equivalents of $612,172 (2019: $2,251,910).
DIVIDENDS PAID OR RECOMMENDED
No dividends were paid during the year ended 30 June 2020.
The Board has not made a recommendation to pay dividends for the period to 30 June 2020.
REVIEW OF OPERATIONS
The Consolidated Entity continues to pursue development of its Dermaportation and Enhanced Transdermal Polymer
(ETP) technologies, review its intellectual property assets and evaluate new business opportunities to strengthen its
technology and/or product portfolio with the objective of enhancing shareholder value. Further details are noted in the
Review of Operations section of the annual report.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Consolidated Entity other than those referred to in
the Review of Operations.
LIKELY FUTURE DEVELOPMENTS AND EXPECTED RESULTS
Certain information regarding future developments has been disclosed in this report under the heading “Review of
Operations”. The disclosure of expected results of likely future developments is likely, in the opinion of the directors,
to result in unreasonable prejudice to the interests of the Consolidated Entity and accordingly, this information has
not been disclosed in this report.
ENVIRONMENTAL REGULATION
The Consolidated Entity is not affected by any specific environmental legislation.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
DIRECTORS' REPORT (continued)
INFORMATION ON DIRECTORS
Mr Antonio Varano Della Vergiliana
Mr Varano has more than 30 years experience across Australia, Europe and the USA, operating and managing
successful entrepreneurial, corporate and investment pursuits. This experience has covered start up, funding and
growth, corporate operations, executive management and business exits. His expertise spans retail, cosmetics,
skincare, real estate, agriculture, publishing, construction, entertainment and the arts. Many of these businesses have
achieved a dominant position in the markets in which they operate. New York-based, Mr Varano holds Board and
investment positions in several companies he has either founded or invested in at an early stage. Mr Varano studied
business at the Western Australian Institute of Technology, and an MBA at the University of Western Australia.
During the past three years, Mr Varano has not held a directorship in any other listed companies.
Interest in shares at 30 June 2020: 200,000
Mr Jeffrey Edwards
Mr Edwards is the founder and Managing Director of the Company and has led the Science, Technology and
Innovation activities from the Company’s inception. Mr Edwards is responsible for Licensing and Partnering programs
with Procter & Gamble and other partners, Intellectual Property and Technology Innovations. He is the recipient of
an Australia Design award, and Product Innovation and Partnering awards from Procter & Gamble Consumer Products
Divisions. During the past three years, Mr Edwards has not held a directorship in any other listed companies.
Interest in shares at 30 June 2020: 2,021,550
Mr Steven Schapera
Mr Schapera founded the successful BECCA Cosmetic brand (www.beccacosmetics.com) and commercialised it into
a range of cosmetic products that were distributed throughout Europe, Asia and North America. Mr Schapera guided
BECCA from its infancy through to being a global player in the luxury cosmetic space. In 2016, BECCA was sold to
Estee Lauder for more than US$230 million. Mr Schapera is Chairman of BECCA Holdings Pty. Ltd.; he serves as a
non-executive Director on the Board of Invincible Brands GmbH., arguably Europe’s most successful influencer-
marketing business, and recently assisted with their partial sale to Henkel. He is also Founder and Managing Director
of London-based Lab Brands Limited and is a non-executive Director of Wild Nutrition Ltd, a fast-growing player in
the vitamin and mineral supplement space. Mr Schapera is Chairman of ASX-listed Crowd Media Holdings Ltd,
headquartered in the Netherlands. During the past three years, Mr Schapera has not held a directorship in any other
listed companies other than those detailed above.
Interest in shares at 30 June 2020: 461,200
Mr Cameron Reynolds
Mr Reynolds is the President, Chief Executive Officer (CEO) and Director of VolitionRX, a biotech company which
listed on the New York Stock Exchange (NYSE) in February 2015 after being founded by Mr Reynolds in 2010. He
has extensive experience in the management, structuring, and strategic planning of start-up companies and has held
positions including CEO, Chief Financial Officer and Non-Executive Director of public and private enterprises.
During the past three years, Mr Reynolds has not held a directorship in any other listed companies.
Interest in shares at 30 June 2020: None
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
DIRECTORS' REPORT (continued)
COMPANY SECRETARY
Mr John J Palermo B.Bus, FCA, AGIA
Mr Palermo is a Chartered Accountant with over 20 years experience in Public Practice. His areas of expertise are in
corporate advisory, strategic business management and business structuring. Currently a Director of Palermo
Chartered Accountants, he has experience in public company accounting and administration. Mr Palermo is a Director
and Chairman of Chartered Accountants Australia and New Zealand and Deputy Chairman of the Royal Perth Hospital
Medical Research Foundation. He is also a Director of ASX listed Alterra Ltd and Crowd Media Holdings Ltd.
CEO
Mr Paul Peros
For over 25 years, Paul has been working on growth-orientated performance strategies and disruptive innovation,
developing brands and businesses for challenges in an ever-changing world and the ‘new normal’. Prior to Wellfully,
Paul led a number of successful engagements in luxury consumer products and beauty-tech. Paul was the CEO of
Swedish brand FOREO, from its 2013 inception, to what was effectively global market leadership with over USD 1
billion in revenues and a presence in over 80 countries achieved in a short period of five years. In addition to his zeal
for innovation across all activities of an organisation, Paul’s drive is also rooted in his extensive experience in
management consulting. He was part of the Milan-based GEA for over 10 years, engaging with global leaders on
product and brand development. Paul holds an MBA from IMD, Lausanne and a BS in Physics from UCLA.
DIRECTORS’ MEETINGS
During the financial year ended 30 June 2020, the Company held directors’ meetings, including directors’ resolutions.
The total number of meetings attended and circular resolutions executed by each director were:
Mr A Varano Della Vergiliana
Mr J D Edwards
Mr S L Schapera
Mr C Reynolds
Dr C J Quirk (resigned: 30/04/2020)
Board Meetings
Number Eligible
to Attend
9
9
9
9
7
Number
Attended
9
9
9
9
4
Resolutions
Number
Executed
13
14
13
14
10
EVENTS SUBSEQUENT TO REPORTING PERIOD
• Wellfully raised $4.5m via a rights issue to existing shareholders and a placement to sophisticated investors;
• On 19 August 2020, the Company held an Extraordinary General Meeting where all 9 resolutions were
passed in favour;
• The Company also lifted the suspension in its securities to resume trading on the Australian Securities
Exchange on 21 August 2020;
• On 14 September 2020, the Company announced it had undertaken a name change from OBJ Limited to
Wellfully Limited (ASX: WFL); and
• Wellfully Ltd entered a supply agreement with the Hut Group and also a content partnership agreement
with Victoria Beckham.
The impact of the Coronavirus (COVID-19) pandemic is ongoing, it is not practicable to estimate the potential
impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on
measures imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
DIRECTORS' REPORT (continued)
EVENTS SUBSEQUENT TO REPORTING PERIOD (continued)
There has been no other matter or circumstance that has arisen since the end of the financial year that has significantly
affected, or may significantly affect, the operations of the Consolidated Entity, the results of those operations, or the
state of affairs of the Consolidated Entity, which has not been announced to the market.
SHARE OPTIONS
As at 30 June 2020, no outstanding options existed.
CORPORATE STRUCTURE
Wellfully Limited is a company limited by shares that is incorporated and domiciled in Australia with its principal place
of business at Ground Floor, 284 Oxford Street, Leederville, Western Australia.
Wellfully Limited has prepared this consolidated financial report incorporating the entities that it controlled during the
financial year, which are outlined in the following illustration of the Consolidated Entity’s corporate structure:
WELLFULLY LIMITED
Perth, Australia
Bodyguard Lifesciences
Pty Ltd
Perth, Australia
International Scientific
Pty Ltd
Perth, Australia
Wellfully SA
Neuchatel, Switzerland
Wellfully Limited
Hong Kong, SAR, PR China
Wellfully d.o.o.
Zagreb, Croatia
Peros Dongguan
Technology and Trading
Co. Ltd.
Dongguan, PR China
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
DIRECTORS' REPORT (continued)
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for directors and executives of the Consolidated Entity.
Remuneration policy
The Board receives independent advice on remuneration policies and practices generally, and also receives specific
recommendations on remuneration packages and other terms of employment for senior executives. There is no use of
external remuneration consultants during the year ended 30 June 2020.
Executive remuneration and other terms of employment are reviewed annually by the Board having regard to
performance against goals set at the start of the year, relevant comparative information and independent expert advice.
As well as a base salary, remuneration packages include superannuation. Remuneration packages are set at levels that
are intended to attract and retain executives capable of managing the Consolidated Entity’s operations.
Remuneration of non-executive directors is determined by the Board within the maximum amount approved by the
shareholders from time to time.
The Board undertakes an annual review of its performance against goals set at the start of the year.
At the 2019 AGM, 87% of the votes received supported the adoption of the remuneration report for the year ended 30
June 2019.
Directors and Executives Remuneration:
The Board is responsible for making recommendations on remuneration packages and policies applicable to board
members and senior executives of the Consolidated Entity. The remuneration policy is to ensure the remuneration
package properly reflects the person’s duties and responsibilities and that remuneration is competitive in attracting,
retaining and motivating people of the highest quality. Directors’ remuneration is arrived at after consideration of the
level of expertise each director brings to the Consolidated Entity and the time and commitment required to efficiently
and effectively perform the required tasks.
Remuneration of Executive Director
Jeffrey Edwards is paid a salary of $208,050 per annum inclusive of compulsory superannuation contributions (effective
from 19 March 2020).
Remuneration of Non-Executive Directors
Antonio Varano is paid $40,000 per annum plus the USD equivalent of £6,300 per month, paid monthly in arrears
for consulting fees.
Steven Schapera is paid $40,000 per annum plus £6,300 per month, paid monthly in arrears for consulting fees.
Cameron Reynolds is paid $75,000 per annum, paid quarterly in arrears for director fees.
Remuneration of CEO
Paul Peros’ remuneration is EURO 30,000 per month, paid by a combination of cash and ordinary shares with
EURO 24,000 in cash and EURO 6,000 in ordinary shares.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
DIRECTORS' REPORT (continued)
REMUNERATION REPORT (continued)
Remuneration of Directors and Executives
Primary
Salary &
Fees ($)
Cash
Bonus
($)
Non-
Monetary
($)
Post Employment
Equity
Superann-
uation ($)
Retirement
Benefits ($)
($)
Other
Benefits
($)
TOTAL
($)
Parent Entity Directors and Executives
Varano Della Vergiliana, A: Director (non-executive)
2020
2019
140,2331
223,870*
Edwards, J D: Director (executive)
2020
2019
271,263
301,202
Schapera, S L: Director (non-executive)
2020
2019
173,3012
183,767
Reynolds, C: Director (non-executive)
2020
2019
56,2503
75,000
--
--
--
--
--
--
--
--
Quirk, C J: Director (non-executive) (resigned: 30/04/2020)
2020
2019
33,333
40,000
Peros, P: CEO (appointed: 14/04/2020)
2020
2019
Total
2020
2019
470,9824
--
1,145,362
823,839
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
20,207
20,532
--
--
--
--
--
--
--
--
20,207
20,532
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
140,233
223,870
16,000
24,000
307,470
345,734
--
--
--
--
--
--
--
--
173,301
183,767
56,250
75,000
33,333
40,000
470,982
--
16,000
24,000
1,181,569
868,371
1 Shares were issued in lieu of remuneration on 19 August 2020 - $81,589
2 Shares were issued in lieu of remuneration on 19 August 2020 - $127,313
3 Shares were issued in lieu of remuneration on 19 August 2020 - $37,500
4 Shares were issued in lieu of remuneration on 19 August 2020 - $120,000
* Includes consulting fees of $32,155 paid for services to be rendered in the financial year ended 30 June 2020.
There are no other specified executives in positions of control or exercising management authority.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
DIRECTORS' REPORT (continued)
REMUNERATION REPORT (continued)
Interests in Shares of the Company
As at 30 June 2020, the directors’ interests in shares of Wellfully Limited were:
Shares
Balance
01/07/19
(No. of Shares)
Received
Remuneration
(No. of Shares)
No. of
Performance
Rights/Options
Exercised
Net Other
Change
(No. of Shares)
Balance
30/06/20
(No. of Shares)
A Varano Della Vergiliana
J D Edwards
S L Schapera
C Reynolds
4,000,000
40,430,995
9,224,010
--
Total
53,655,005
--
--
--
--
--
--
--
--
--
--
(3,800,000) *
200,000
(38,409,445) *
2,021,550
(8,762,810) *
461,200
--
--
(50,972,255) *
2,682,750
.
* Consolidated 1 for 20 on 18/02/2020.
Other Transactions with Key Management Personnel and their Related Parties
As of 30 June 2020, the following remuneration amounts remained payable:
• PB Commodities Pte Ltd, an entity related to the director, Cameron Reynolds - $37,500*
• Steven Schapera and The Brand Laboratories FZ LLC, an entity related to the director, Steven Schapera -
$127,313*
• Antonio Varano Della Vergiliana and Anthony Varano Inc., an entity related to the director, Antonio
Varano Della Vergiliana - $81,589*
Jeffrey Edwards - $46,158
•
• Paul Peros - $120,000*
* Shares were issued in lieu of remuneration on 19 August 2020.
As of 30 June 2019, director’s remuneration of $18,750 remained payable to PB Commodities Pte Ltd, an entity
related to the director, Cameron Reynolds. An amount of $30,188 also remained payable to The Brand Laboratories
FZ LLC, an entity related to the director, Steven Schapera.
Additional Information
The earnings of the Consolidated Entity for the five years to 30 June 2020 are summarised below:
Sales revenue
EBITDA
EBIT
Loss after income tax
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic and diluted loss per share (cents per share)
2020
$
1,484,218
(3,729,866)
(3,802,918)
(3,713,117)
2019
$
2,744,781
(1,623,108)
(1,695,990)
(1,710,001)
2018
$
2,039,994
(1,587,933)
(1,684,779)
(1,698,783)
2020
--*
--
(4.10)
2019
0.015
--
(1.89)
2018
0.028
--
(0.09)
2017
$
1,966,224
(2,883,975)
(3,030,203)
(3,044,208)
2017
0.048
--
(0.17)
2016
$
1,521,573
(3,465,064)
(3,541,373)
(3,555,381)
2016
0.082
--
(0.20)
* Company was suspended on 30 June 2020.
13
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
DIRECTORS' REPORT (continued)
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of the Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all
or any part of those proceedings. The Company was not a party to any such proceedings during the year.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of
Wellfully Limited support and have substantially adhered to the best practice recommendations set by the ASX
Corporate Governance Council. The Company’s Corporate Governance Statement is contained in the annual report.
INDEMNITY AND INSURANCE OF OFFICERS
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as
a director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives
of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF RSM AUSTRALIA
There are no officers of the Company who are former partners of RSM Australia.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor's Independence Declaration as required under Section 307C of the Corporations Act 2001 is
set out on page 15.
NON-AUDIT SERVICES
Any non-audit services that may have been provided by the entity’s auditor, RSM Australia Partners, is shown at
Note 13. The directors are satisfied that the provision of non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act and the general principles relating to auditor
independence set out in APES 110 Code of Ethics for Professional Accountants. The nature and scope of each type
of non-audit service provided means that auditor independence was not compromised.
AUDITOR
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
Signed in accordance with a resolution of the board of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
_______________
Jeffrey Edwards
Director
Perth, Western Australia
30th September 2020
14
For personal use only
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Wellfully Limited for the year ended 30 June 2020, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
Any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 September 2020
TUTU PHONG
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Revenue
Net foreign exchange gains/(losses)
Borrowing costs written off /(expensed)
Bad debt written off
Depreciation expenses
Administration fees
Auditor’s remuneration
Consultants and consultants benefits expenses
Directors and employees benefits expenses
Intangible assets written off
Legal costs
Marketing and operations services
Materials and requisites
Occupancy expenses
Patent and trademark service fees
Product design and trial testing expenses
Travel and accommodation
Other expenses
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
Loss attributable to:
Members of the parent entity
Total comprehensive loss attributable to:
Members of the parent entity
Note
Consolidated
30 June
2020
$
30 June
2019
$
2
1,484,218
75,105
2,744,781
(26,390)
83,310
(52,781)
(73,052)
(505,681)
(61,249)
(501,446)
(2,273,156)
(372,982)
(215,345)
(165,644)
(271,699)
(146,780)
(189,579)
(35,938)
(132,738)
(357,680)
(14,011)
--
(72,882)
(629,604)
(40,750)
(667,528)
(1,769,638)
--
(276,696)
--
(65,675)
(135,592)
(219,271)
(115,286)
(91,870)
(329,589)
(3,713,117)
(1,710,001)
3
--
--
(3,713,117)
(1,710,001)
(51,322)
--
(3,764,439)
(1,710,001)
(3,713,117)
(1,710,001)
(3,764,439)
(1,710,001)
Cents
(4.10)
Cents
(1.89)
Basic and diluted losses per share (cents per share)
16
The above statement of profit or loss and other comprehensive income
should be read in conjunction with the accompanying notes.
16
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non Current Assets
Plant and equipment
Total Non Current Assets
Total Assets
Current Liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Borrowings
Employee benefits provision
Total Current Liabilities
Non Current Liabilities
Lease liabilities
Total Non Current Liabilities
Total Liabilities
Net (Liabilities)/Assets
Equity
Issued capital
Reserves
Accumulated losses
Note
4
5
6
7
8
Consolidated
30 June
2020
$
30 June
2019
$
612,172
271,193
2,251,910
560,813
883,365
2,812,723
308,181
323,846
308,181
323,846
1,191,546
3,136,569
1,072,068
203,358
28,635
1,007,053
90,234
255,157
--
--
252,000
84,004
2,401,348
591,161
9,229
9,229
--
--
2,410,577
591,161
(1,219,031)
2,545,408
14
15
33,043,514
181,012
(34,443,557)
33,043,514
232,334
(30,730,440)
Total (Deficiency)/Equity
(1,219,031)
2,545,408
The above statement of financial position
should be read in conjunction with the accompanying notes.
17
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Issued
Capital
$
Share
Based
Payments
Reserves
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
Total
Equity
$
$
Consolidated
Balance at 1 July 2018
Loss after income tax expense for the
year
Total comprehensive loss for the year
33,043,514
232,334
--
--
--
--
Balance at 30 June 2019
33,043,514
232,334
Balance at 1 July 2019
Loss after income tax expense for the
year
Exchange differences on translation of
foreign operations
Total comprehensive loss for the year
33,043,514
232,334
--
--
--
--
--
--
--
--
--
--
--
(29,020,439)
4,255,409
(1,710,001)
(1,710,001)
(1,710,001)
(1,710,001)
(30,730,440)
2,545,408
(30,730,440)
2,545,408
(3,713,117)
(3,713,117)
(51,322)
(51,322)
--
(3,713,117)
(51,322)
(3,764,439)
Balance at 30 June 2020
33,043,514
232,334
(51,322)
(34,443,557)
(1,219,031)
The above statement of changes in equity
should be read in conjunction with the accompanying notes.
18
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Receipts from research and development tax incentives
Receipts from government subsidies
Payments to suppliers and employees
Interest received
Borrowing costs
Note
Consolidated
30 June
2020
$
30 June
2019
$
1,099,419
776,675
118,000
(4,680,562)
11,539
(1,637)
1,635,002
758,069
--
(4,326,372)
56,912
(11)
Net cash used in operating activities
10
(2,676,566)
(1,876,400)
Cash flows from investing activities
Payments for plant and equipment
Cash obtained from acquisition of subsidiaries
Net cash from/(used) in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of lease liabilities
Net cash provided by financing activities
--
336,246
(21,362)
--
336,246
(21,362)
645,000
(19,523)
625,477
--
--
--
Net decrease in cash and cash equivalents held
(1,714,843)
(1,897,762)
Cash and cash equivalents at the beginning of the financial year
2,251,910
4,176,062
Effect of exchange rate changes on cash holdings
75,105
(26,390)
Cash and cash equivalents at the end of the financial year
4
612,172
2,251,910
The above statement of cash flows
should be read in conjunction with the accompanying notes.
19
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and notes represent those of Wellfully Limited and its controlled entities
(the “Consolidated Entity”). In accordance with the Corporations Act 2001, these financial statements present the
results of the Consolidated Entity only. Supplementary information about the Parent Entity is disclosed in Note 24.
Basis of Preparation
The financial report is a general purpose financial report which has been prepared in accordance with Australian
Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001.
Wellfully Limited is a for-profit entity for financial reporting purposes under Australian Accounting Standards.
The financial report was authorised for issue by the Board on 30 September 2020.
Except for cash flow information, the financial report has been prepared on an accruals basis and is based on
historical costs. Cost is based on the fair values of the consideration given in exchange for assets.
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Consolidated Entity's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in Note 1(z).
Going concern
These financial statements have been prepared on the going concern basis, which contemplates the continuity of
normal business activities and the realisation of assets and settlement of liabilities in the normal course of business.
As disclosed in the financial statements, the Consolidated Entity incurred a loss of $3,713,117 and had net cash
outflows from operating activities of $2,676,566 for the year ended 30 June 2020. As at that date, the Consolidated
Entity had net liabilities of $1,219,031 and net current liabilities of $1,517,983. The ability of the Consolidated
Entity to continue as a going concern is principally dependent upon the ability of the Consolidated Entity to secure
funds by raising capital from equity markets and managing cash flows in line with available funds.
The Directors believe that it is reasonably foreseeable that the Consolidated Entity will continue as a going concern
and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration
of the following factors:
•
As disclosed in Note 18, subsequent to the reporting date, the Consolidated Entity has raised $4.5m via a
rights issue to existing shareholders and a placement to sophisticated investors;
The Company has the ability to issue additional equity securities under the Corporations Act 2001 to raise
further working capital; and
•
20
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Going concern (continued)
•
The Consolidated Entity has the ability to curtail administrative, discretionary research and development,
and overhead cash outflows as and when required.
The significant policies, which have been adopted in the preparation of this financial report, are:
(a)
Statement of Compliance
The financial report complies with Australian Accounting Standards, which include Australian equivalents to
International Financial Reporting Standards (“IFRS”). Compliance with IFRS ensures that the financial statements
and notes comply with International Financial Reporting Standards.
(b)
New and Revised Accounting Standards and Interpretations
The Consolidated Entity has adopted all of the new and revised Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The following Accounting Standards and Interpretations are most relevant to the Consolidated Entity:
AASB 16 Leases
The Consolidated Entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and
for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and
leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of
financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the
right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included
in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be
higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax,
Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and
depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed
in operating activities and the principal portion of the lease payments are separately disclosed in financing activities.
For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
21
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
New and Revised Accounting Standards and Interpretations (continued)
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been
restated. During the year ended 30 June 2020, the Consolidated Entity has also adopted the practical expedient for
short-term leases.
The impact of adoption on opening retained profits as at 1 July 2019 was as follows:
Operating lease commitments as at 1 July 2019 (AASB 117)
Operating lease commitments discount based on the weighted average incremental
borrowing rate of 5% (AASB 16)
Right-of-use assets (AASB 16)
Lease liabilities - current (AASB 16)
Lease liabilities - non-current (AASB 16)
Reduction in opening accumulated losses as at 1 July 2019
Subsequent recognition
1 July 2019
$
59,567
(2,827)
56,740
(27,644)
(29,096)
(56,740)
--
The Group will recognise a lease liability based on the discounted payments under the lease. The lease liability is
to be measured with reference to an estimate of the lease term. The Group will use the cost model to recognise
the right-of-use asset and amortise it over the remaining of its lease term.
22
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Wellfully Limited
as at 30 June 2020 and the results of all subsidiaries for the year then ended. Wellfully Limited and its subsidiaries
together are referred to in these financial statements as the “Consolidated Entity”.
Subsidiaries are all those entities over which the Consolidated Entity has control. The Consolidated Entity controls
an entity when 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.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Consolidated Entity
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Consolidated Entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or
loss and other comprehensive income, statement of financial position and statement of changes in equity of the
Consolidated Entity. Losses incurred by the Consolidated Entity are attributed to the non-controlling interest in
full, even if that results in a deficit balance.
Where the Consolidated Entity loses control over a subsidiary, it derecognises the assets including goodwill,
liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences
recognised in equity. The Consolidated Entity recognises the fair value of the consideration received and the fair
value of any investment retained together with any gain or loss in profit or loss.
(d)
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 current when: it is 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 twelve months after the reporting
period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for
at least twelve months after the reporting period. All other assets are classified as non-current.
23
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d)
Current and Non-Current Classification (continued)
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose
of trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right
to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
(e)
Income Tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or
disallowed items. It is calculated using the rates that have been enacted or are substantively enacted by the reporting
date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising
between the tax base of assets and liabilities and their carrying amounts in the financial statements. No deferred
income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination,
where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability
is settled. Deferred tax is credited to profit or loss except where it relates to items that may be credited directly to
equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future profit will be available against
which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that
no adverse change will occur in income taxation legislation and the anticipation that the Consolidated Entity will
derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of
deductibility imposed by the law.
24
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f)
Plant and Equipment
Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated
depreciation and impairment losses.
Plant and Equipment
Plant and equipment is measured on the cost basis less depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash
flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have
been discounted to their present values in determining recoverable amounts.
Depreciation
The depreciable amount of all fixed assets is depreciated on either a diminishing value method or a straight-line
method commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Plant and equipment
2.5-100%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date and
where adjusted, shall be accounted for as a change in accounting estimate. Where depreciation rates or method are
changed, the net written down value of the asset is depreciated from the date of the change in accordance with the
new depreciation rate or method.
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.
25
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g)
Impairment of Assets
At each reporting date, the Consolidated Entity reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed to the statement of comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
(h)
Financial Assets
Financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement,
except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either
amortised cost or fair value depending on their classification. Classification is determined based on both the
business model within which such assets are held and the contractual cash flow characteristics of the financial asset
unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and
the Consolidated Entity has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified
as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for
trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or
a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are
recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
Consolidated Entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such
upon initial recognition.
Impairment of financial assets
The Consolidated Entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
allowance depends upon the 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.
26
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(h)
Financial Assets (continued)
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.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised
within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
(i)
Intangibles
Research and Development
Expenditure during the research phase of a project is recognised as an expense when incurred.
Development costs are capitalised only when feasibility studies identify that the project will deliver future economic
benefits and these benefits can be measured reliably. Development costs have a finite life and are amortised on a
systematic basis matched to the future economic benefits over the useful life of the project.
(j)
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less, net of outstanding bank overdrafts.
(k)
Trade and Other Receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for
settlement within 30 days.
27
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k)
Trade and Other Receivables (continued)
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are
written off by reducing the carrying amount directly. An allowance for expected credit losses of trade receivables
is raised when there is objective evidence that the Consolidated Entity will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that
the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 60
days overdue) are considered indicators that the trade receivable may be impaired. The amount of the allowance is
the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect
of discounting is immaterial. The Consolidated Entity has applied the simplified approach to measuring expected
credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables
have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
(l)
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of
the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are
not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
(m)
Employee Benefits
Short-Term Employee Benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected
to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees'
services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Other Long-Term Employee Benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting
date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the
liability.
Defined Contribution Superannuation Expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
28
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n)
Revenue
The Consolidated Entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Consolidated Entity is expected to
be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the
Consolidated Entity: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time value of
money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-
alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each
performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services
promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events.
Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement
of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent
that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur.
The measurement constraint continues until the uncertainty associated with the variable consideration is
subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund
liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods,
which is generally at the time of delivery.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Rendering of services
Revenue from licence and research fees are recognised over time as derived from work plan agreements with
customers.
Royalties are recognised at a point in time in accordance with the terms of the agreements.
29
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(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n)
Revenue (continued)
Other revenue
Research and development tax incentive revenue is recognised at a point in time when it is received or when the
right to receive payment is established.
All revenue is stated net of the amount of goods and service tax.
(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 (“ATO”). 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 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.
Commitments and contingencies are disclosed net of the amounts of GST recoverable from or payable to the ATO.
(p)
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting
date, the loans or borrowings are classified as non-current.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the
statement of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for
an equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis
until extinguished on conversion or redemption. The increase in the liability due to the passage of time is
recognised as a finance cost. The remainder of the proceeds are allocated to the conversion option that is
recognised and included in shareholders equity as a convertible note reserve, net of transaction costs. The carrying
amount of the conversion option is not remeasured in the subsequent years. The corresponding interest on
convertible notes is expensed to profit or loss.
(q)
Borrowing Costs
Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of
ancillary costs incurred in connection with arrangement of borrowings and lease finance charges. Borrowing costs
are expensed as incurred.
30
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r)
Share-Based Payment Transactions
Wellfully Limited provides benefits to employees (including directors) in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (“equity-settled
transactions”).
There is currently one plan in place to provide these benefits:
(i)
the Employee Share Option Plan, which provides benefits to full-time or part-time employees and
consultants of the Company.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date
at which they are granted. The fair value is determined using the Black-Scholes option valuation model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (“vesting date”).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date
reflects; (i) the extent to which the vesting period has expired, and (ii) the number of awards that, in the opinion
of the directors of the Company, will ultimately vest. This opinion is formed based on the best available
information at reporting date. No adjustment is made for the likelihood of market performance conditions being
met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional
upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms
had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as
a result of the modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for
the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new
award are treated as if they were a modification of the original award, as described in the previous paragraph.
Goods or services received or acquired in a share-based payment transaction are recognised as an increase in
equity if the goods or services were received in an equity-settled share-based payment transaction or as a liability
if the goods and services were acquired in a cash settled share-based payment transaction.
31
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r)
Share-Based Payment Transactions (continued)
For equity-settled share-based transactions, goods or services received are measured directly at the fair value of
the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made, the
value of the goods or services is determined indirectly by reference to the fair value of the equity instrument
granted.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of
earnings per share.
(s)
Loss per share
(i) Basic Loss per share
Basic loss per share is determined by dividing the operating profit/(loss) after income tax attributable to
members of Wellfully Limited by the weighted average number of ordinary shares outstanding during the
financial year.
(ii) Diluted Loss per share
Diluted loss per share adjusts the amounts used in the determination of basic loss per share by taking into
account unpaid amounts on ordinary shares and any reduction in loss per share that will probably arise from
the exercise of options outstanding during the financial year.
(t)
Issued Capital
Issued and paid up capital is recognised at 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.
(u)
Right-of-use Assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing
the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the Consolidated Entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any remeasurement of lease liabilities.
The Consolidated Entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-
term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
32
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(v)
Contract Liabilities
Contract liabilities represent the Consolidated Entity's obligation to transfer goods or services to a customer and are
recognised when a customer pays consideration, or when the Consolidated Entity recognises a receivable to reflect
its unconditional right to consideration (whichever is earlier) before the Consolidated Entity has transferred the
goods or services to the customer.
(w)
Business Combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any
non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree
is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition
costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Consolidated Entity assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation in accordance with the contractual terms, economic
conditions, the Consolidated Entity's operating or accounting policies and other pertinent conditions in existence at
the acquisition-date.
Where the business combination is achieved in stages, the Consolidated Entity remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous
carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised
in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is
accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-
existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing
fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer,
the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after
a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the
acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.
33
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(w)
Business Combinations (continued)
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances that existed at the acquisition-date. The
measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine fair value.
(x)
Foreign Currency Transactions and Balances
Functional and Presentation Currency
The functional currency of each of the Company’s controlled 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 Consolidated 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 translated at the year-end exchange rate. Non-monetary
items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-
monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss.
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 the statement
of profit or loss and other comprehensive income.
Controlled Entities
The financial results and position of foreign controlled entities whose functional currency is different from the
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.
Exchange differences arising on translation of foreign controlled entities are transferred directly to the foreign
currency translation reserve in the statement of financial position. These differences are recognised in the statement
of profit or loss and other comprehensive income in the period in which the operation is disposed.
34
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(y) New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Consolidated Entity for the annual reporting period ended 30 June
2020. The Consolidated Entity's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the Consolidated Entity, are set out below.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020
and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well
as new guidance on measurement that affects several Accounting Standards. Where the Consolidated Entity has
relied on the existing framework in determining its accounting policies for transactions, events or conditions that
are not otherwise dealt with under the Australian Accounting Standards, the Consolidated Entity may need to review
such policies under the revised framework. At this time, the application of the Conceptual Framework is not
expected to have a material impact on the Consolidated Entity’s financial statements.
(z) Critical Accounting Estimates and Judgments
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or
may have, on the Consolidated Entity based on known information. This consideration extends to the nature of the
products and services offered, customers, supply chain, staffing and geographic regions in which the Consolidated
Entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant
impact upon the financial statements or any significant uncertainties with respect to events or conditions which may
impact the Consolidated Entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus
(COVID-19) pandemic.
There are no judgements, estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year.
35
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 2: REVENUE
Revenue from contracts with customers
Research and development collaboration revenue
Royalties
Other income
Government grants and subsidies
Interest received
Revenue
Disaggregation of Revenue
The disaggregation of revenue from contracts with customers is as follows:
Development of the dermaportation drug delivery technology
Geographical region
Singapore
Japan
Timing of revenue recognition
Services transferred at a point in time
Services transferred over time
NOTE 3: INCOME TAX
The prima facie tax on loss before income tax is
reconciled to the income tax as follows:
Loss before income tax
Income tax calculated at 27.5% (2019: 27.5%)
Non-allowable expenditure
Deferred tax assets not recognised
Income tax expenses
The following deferred tax assets have not been
brought to account as assets:
Tax losses available at 27.5% (2019: 27.5%) tax rate
Tax losses available
Consolidated
30 June
2020
$
30 June
2019
$
66,756
503,796
570,552
907,175
6,491
913,666
491,291
1,444,939
1,936,230
758,069
50,482
808,551
1,484,218
2,744,781
570,552
--
570,552
503,796
66,756
570,552
1,837,971
98,259
1,936,230
1,444,939
491,291
1,936,230
(3,713,117)
(1,710,001)
(1,021,107)
(470,250)
115,237
905,870
--
7,929
462,321
--
4,204,968
3,348,938
13,597,855
11,621,649
Deferred tax assets in relation to tax losses are not brought to account unless it is probable that future taxable amounts
within the entity will be available against which the unused tax losses can be utilised. The amount of these benefits
is based on the assumption that no adverse change will occur in income tax legislation and the anticipation that the
Consolidated Entity will derive sufficient future assessable income to enable the benefit to be realised and comply
with the conditions of deductibility imposed by law.
36
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 4: CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
Cash on deposit
NOTE 5: TRADE AND OTHER RECEIVABLES
Trade debtors
Prepayments
Accrued income
GST refundable
Loans
Leasehold deposit
Consolidated
30 June
2020
$
30 June
2019
$
12,132
600,040
--
2,358
249,552
2,000,000
612,172
2,251,910
60,521
73,583
35,203
51,664
43,995
6,227
223,962
41,388
242,600
52,863
--
--
271,193
560,813
Allowance for expected credit losses
The Consolidated Entity recognised $52,781 in profit or loss in respect of the expected credit losses for the year
ended 30 June 2020. The Consolidated Entity did not recognise any losses in profit or loss in respect of the expected
credit losses for the year ended 30 June 2019.
Past due but not impaired
Customers with balances past due but without provision for impairment:
0 to 6 months overdue
6 to 12 months overdue
12 to 18 months overdue
NOTE 6: PLANT AND EQUIPMENT
Plant and equipment at cost
Accumulated depreciation
Total plant and equipment (a)
Office building
Accumulated depreciation
Total right-of-use assets
37
60,521
--
--
--
171,181
52,781
60,521
223,962
800,609
(529,681)
800,611
(476,765)
270,928
323,846
56,740
(19,487)
37,253
-
-
-
308,181
323,846
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 6: PLANT AND EQUIPMENT (continued)
(a) Reconciliation of the carrying amount of plant and equipment is set out below:
Carrying amount at the beginning of year
Additions
Disposals
Depreciation expense
Carrying amount at the end of year
Consolidated
30 June
2020
$
30 June
2019
$
323,846
20,134
--
(73,052)
375,366
21,362
--
(72,882)
270,928
323,846
NOTE 7: TRADE AND OTHER PAYABLES
Other creditors and accruals
1,072,068
255,157
NOTE 8: BORROWINGS
Convertible notes – unsecured
Convertible notes – secured
Convertible notes – unpaid interest
Unsecured convertible note terms:
140,000
840,000
27,053
140,000
--
112,000
1,007,053
252,000
Issue
Date
Amount
$
Interest
Rate
Convertible On
or Before
4 June 2009
140,000
10% per annum
4 June 2012 (i)
If the convertible notes which are convertible at $0.003 have not been converted in their entirety into shares on the date
which is 11 months after the date of issue, the Company may convert the amount of the convertible notes which has not
been repaid (together with any accrued interest), into shares, upon giving 5 business days notice to the convertible note
holder.
(i)
140,000 convertible notes issued on 4 June 2009 were not converted by the due date being 4 June 2012. The
terms of the agreement have not since that date been extended. Correspondingly, the principal amount
outstanding including any interest outstanding has been classified as current.
38
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 8: BORROWINGS (continued)
Secured convertible note terms:
Issue
Date
Amount
$
Interest
Rate
Convertible On
or Before
15 April 2020
840,000
12.5% per annum
15 October 2021 (ii)
(ii)
$840,000 convertible notes issued on 15 April 2020 were converted to shares on 19 August 2020.
NOTE 9: COMMITMENTS
(a) Capital expenditure commitments
There were no capital expenditure commitments as at 30 June 2020 (30 June 2019: Nil).
(b) Lease commitments
Due to the adoption of AASB 16 the lease commitments shown in this Note 9 reduced to nil at 30 June 2020 and are now
recognised as a right of use asset and lease liability, see Note 1 and Note 6 (30 June 2019: Nil).
There are no other material commitments as at 30 June 2020 (2019: Nil).
39
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 10: CASH FLOW INFORMATION
Reconciliation of net cash and cash equivalents used in
operating activities to loss for the year:
Loss for the year
Bad debt written off
Borrowing costs written off
Depreciation
Employee benefits provisions
Foreign exchange movements
Intangible asset written off
Movements in assets and liabilities:
Trade and other receivables
Trade and other payables
Contract liabilities
Net cash used in operating activities
Consolidated
30 June
2020
$
30 June
2019
$
(3,713,117)
(1,710,001)
52,781
(84,944)
73,052
6,230
(75,105)
372,982
--
--
72,882
14,568
26,390
--
289,620
198,577
203,358
(305,904)
25,665
--
(2,676,566)
(1,876,400)
NOTE 11: KEY MANAGEMENT PERSONNEL
Names and positions of directors and specified executives in office at any time during the financial year are:
Mr Antonio Varano Della Vergiliana
Mr Jeffrey David Edwards
Mr Steven Lorn Schapera
Mr Cameron Reynolds
Dr Christopher John Quirk
Mr Paul Peros
Director – Non-Executive
Director – Executive
Director – Non-Executive
Director – Non-Executive
Director – Non-Executive
CEO
(resigned: 30/04/2020)
(appointed: 14/04/2020)
Refer to the Remuneration Report contained in the Director’s Report for details of the remuneration paid or payable
to the Company’s key management personnel for the year ended 30 June 2020.
40
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 11: KEY MANAGEMENT PERSONNEL (continued)
The totals of remuneration paid to key management personnel
during the year are as follows:
Short term employee benefits
Post-employment benefits
Other benefits
Consolidated
30 June
2020
$
30 June
2019
$
1,145,362
20,207
16,000
1,181,569
823,839
20,532
24,000
868,371
Transactions with Key Management Personnel
There were no transactions with related parties other than directors’ fees and consultants’ fees which have been
disclosed in the Remuneration Report.
NOTE 12: CONTROLLED ENTITIES
The consolidated financial statements include the financial statements of Wellfully Limited and the subsidiaries listed
in the following table.
Country
of
Incorporation
Australia
Australia
Switzerland
Croatia
China
China
%
Equity Interest
2019
2020
$
$
100%
100%
100%
100%
100%
100%
100%
100%
--
--
--
--
International Scientific Pty Ltd
Bodyguard Lifesciences Pty Ltd
Wellfully SA
Wellfully d.o.o.
Wellfully Ltd
Peros Dongguan Technology &
Trading Co. Ltd
NOTE 13: AUDITOR’S REMUNERATION
Amounts paid or due and payable to the auditor for:
Audit and review services
Information technology consulting services
41
Book Value of Shares held
by Parent Entity
2020
$
--
1,000
120,000
--
--
--
2019
$
--
1,000
--
--
--
--
121,000
1,000
Consolidated
30 June
2020
$
30 June
2019
$
60,750
23,753
84,503
40,750
--
40,750
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 14: ISSUED CAPITAL
(a)
Issued Capital
90,473,939 fully paid ordinary shares
(2019: 1,809,462,635)
Consolidated
30 June
2020
$
30 June
2019
$
33,043,514
33,043,514
(b)
Movements in ordinary share capital of the Company during the year were as follows:
Date
Details
Number of Shares
Issue Price
$
01/07/2019 Opening balance
18/02/2020
Conversion of shares 1 for 20*
Less: transaction costs arising on share
issues
1,809,462,635
(1,718,988,696)
--
--
33,043,514
--
--
--
30/06/2020
Closing balance
90,473,939
33,043,514
* Weighted average number of ordinary shares used in calculating basic and diluted loss per share had been adjusted as if the conversion
of shares 1 for 20 had occurred at the beginning of the earliest period presented. The basic and diluted loss per share for 30 June
2019 had been adjusted accordingly.
(c)
Capital Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the Company does not have a limited amount of authorised capital.
On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
There is no current on-market share buy-back.
42
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 14: ISSUED CAPITAL (continued)
(d)
Capital Risk Management
When managing capital, management’s objective is to ensure the Company continues as a going concern as well as
to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a
capital structure that ensures the lowest cost of capital available to the Company.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares, enter into joint ventures or sell assets.
The Company does not have a defined share buy-back plan.
No dividends were paid in 2020 and no dividends are expected to be paid in 2021.
There is no current intention to incur debt funding on behalf of the Company as on-going expenditure will be funded
via cash reserves or equity.
The Company is not subject to any externally imposed capital requirements.
The capital risk management policy remains unchanged from the prior year.
NOTE 15: RESERVES
Foreign currency translation reserve
Share based payments reserve
Consolidated
30 June
2020
$
(51,322)
232,334
181,012
30 June
2019
$
--
232,334
232,334
The share based payments reserve records items recognised as expenses on valuation of consultant share options from
prior years.
Movements in options were as follows:
Date
Details
01/07/2019
Opening balance
30/06/2020
Closing Balance
Number of
Options
Exercise
Price
Listed
Unlisted
Fair Value
of Options
Issued
$
Expiry
Date
--
--
--
--
--
232,334
--
232,334
43
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16: LOSS PER SHARE
Diluted loss per share is the same as basic loss per share.
The following reflects the income and data used in the calculations of basic and diluted loss per share:
Loss for the year
Consolidated
30 June
2020
$
(3,713,117)
30 June
2019
$
(1,710,001)
Loss used in calculating basic and diluted loss per share
(3,713,117)
(1,710,001)
Weighted average number of ordinary shares used in calculating
basic loss per share:
Weighted average number of ordinary shares used in calculating
diluted loss per share:
90,473,939*
90,473,939*
90,473,939*
90,473,939*
Basic and diluted losses per share (cents per share)
(4.10)
(1.89)
* Weighted average number of ordinary shares used in calculating basic and diluted loss per share had been adjusted as if the conversion
of shares 1 for 20 had occurred at the beginning of the earliest period presented (see Note 14). The basic and diluted loss per share
for 30 June 2019 had been adjusted accordingly.
Options outstanding are considered non-dilutive and therefore are excluded from the calculation of diluted loss per
share.
NOTE 17: RISK MANAGEMENT OBJECTIVES AND POLICIES
The Consolidated Entity’s principal financial instruments comprise cash and short-term deposits.
The main purpose of these financial instruments is to finance the Consolidated Entity’s operations. The
Consolidated Entity has various other financial assets and liabilities such as other receivables and trade payables,
which arise directly from its operations. It is, and has been throughout the entire period under review, the
Consolidated Entity’s policy that no trading in financial instruments shall be undertaken.
The main risk arising from the Consolidated Entity’s financial instruments is cash flow interest rate risk. Other
minor risks are either summarised below or disclosed at Note 14 in the case of capital risk management. The Board
reviews and agrees policies for managing each of these risks.
Cash Flow Interest Rate Risk
The Consolidated Entity’s exposure to the risks of changes in market interest rates relates primarily to the
Consolidated Entity’s short-term deposits with a floating interest rate. These financial assets with variable rates
expose the Consolidated Entity to cash flow interest rate risk. All other financial assets and liabilities in the form
of receivables and payables are non-interest bearing. The Consolidated Entity does not engage in any hedging or
derivative transactions to manage interest rate risk.
The following tables set out the carrying amount by maturity of the Consolidated Entity’s exposure to interest rate
risk and the effective weighted average interest rate for each class of these financial instruments. The Consolidated
Entity has not entered into any hedging activities to cover interest rate risk. In regard to its interest rate risk, the
Consolidated Entity does not have a formal policy in place to mitigate such risks.
44
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 17: RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Consolidated
2020
Financial assets:
Cash and cash equivalents
Trade and other receivables
Financial liabilities:
Trade and other payables
Borrowings
Non-
Interest
Bearing
($)
5,036
271,193
276,229
--
--
--
1,072,068
27,053
1,099,121
--
980,000
980,000
Net financial instruments
(822,892)
(980,000)
1 Year or
Less
Fixed Interest Rate Maturing
More
than
5 years
($)
Over 1 to
5 Years
($)
($)
Floating
Interest
Rate
($)
Total
($)
Weighted
average
interest
rate
--
--
--
--
--
--
--
--
--
--
--
--
--
--
607,136
--
607,136
612,172
271,193
883,365
--
--
--
1,072,068
1,007,053
2,079,121
607,136
(1,195,756)
1.07%
--
--
11.25%
Consolidated
2019
Non-
Interest
Bearing
($)
1 Year or
Less
Fixed Interest Rate Maturing
More
than
5 years
($)
Over 1 to
5 Years
($)
($)
Floating
Interest
Rate
($)
Total
($)
Weighted
average
interest
rate
Financial assets:
Cash and cash equivalents
Trade and other receivables
Financial liabilities:
Trade and other payables
Borrowings
2,358
560,813
563,171
2,000,000
--
2,000,000
255,157
112,000
367,157
--
140,000
140,000
Net financial instruments
196,014
1,860,000
--
--
--
--
--
--
--
--
--
--
--
--
--
--
249,552
--
249,552
2,251,910
560,813
2,812,723
--
--
--
255,157
252,000
507,157
249,552
2,305,566
1.92%
--
--
10.00%
45
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 17: RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Interest Rate Sensitivity
At 30 June 2020, if interest rates had changed by 10% during the entire year with all other variables held constant,
loss for the year and equity would have been $649 (2019: $5,048) lower/higher, mainly as a result of lower/higher
interest income from cash and cash equivalents.
A sensitivity of 10% has been selected as this is considered reasonable given the current level of both short-term
and long-term Australian dollar interest rates.
Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances are impacted
resulting in a decrease or increase in overall income.
Credit Risk Exposure
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Consolidated Entity. The Consolidated Entity has a strict code of credit, including obtaining agency credit
information, confirming references and setting appropriate credit limits. The Consolidated Entity obtains
guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to
recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed
in the statement of financial position and notes to the financial statements. The Consolidated Entity does not hold
any collateral.
The Consolidated Entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade
receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions
are considered representative across all customers of the Consolidated Entity based on recent sales experience,
historical collection rates and forward-looking information that is available.
The Consolidated Entity has no significant concentrations of credit risk with any single counterparty or group of
counterparties.
Commodity Price Risk
The Consolidated Entity is not exposed to commodity price risk.
Liquidity Risk
The Consolidated Entity manages liquidity risk by maintaining sufficient cash reserves and marketable securities
and through the continuous monitoring of budgeted and actual cash flows.
Contracted maturities of liabilities
at 30 June
Payables
- less than 6 months
Borrowings
- less than 6 months
46
Consolidated
30 June
2020
$
30 June
2019
$
1,072,068
255,157
1,007,053
2,079,121
252,000
507,157
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 17: RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Foreign Exchange Risk
The Consolidated Entity is not exposed to significant foreign exchange risk at reporting date. Although foreign
exchange transactions in US Dollars, GB Pounds and EURO were entered into during the year, resulting in a foreign
exchange gain of $75,105 (2019: exchange loss of $26,390), the Consolidated Entity is unlikely to enter into any
material foreign exchange transactions in the next reporting period.
Reconciliation of Net Financial Assets to Net Assets
Net financial (liabilities)/assets
Plant and equipment
Contract liabilities
Lease liabilities
Employee benefits provision
Net (liabilities)/assets
Net Fair Values
Consolidated
30 June
2020
$
(1,195,756)
308,181
(203,358)
(37,864)
(90,234)
(1,219,031)
30 June
2019
$
2,305,566
323,846
--
--
(84,004)
2,545,408
For other assets and liabilities, the net fair value approximates their carrying value. The Consolidated Entity has no
financial assets or liabilities that are readily traded on organised markets and has no financial assets where the
carrying amount exceeds net fair values at the reporting date.
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the
statement of financial position and in the notes to the financial statements.
NOTE 18: EVENTS SUBSEQUENT TO REPORTING PERIOD
• Wellfully raised $4.5m via a rights issue to existing shareholders and a placement to sophisticated investors;
• On 19 August 2020, the Company held an Extraordinary General Meeting where all 9 resolutions were
passed in favour;
• The Company also lifted the suspension in its securities to resume trading on the Australian Securities
Exchange on 21 August 2020;
• On 14 September 2020, the Company announced it had undertaken a name change from OBJ Limited to
Wellfully Limited (ASX: WFL); and
• Wellfully Ltd entered a supply agreement with the Hut Group and also a content partnership agreement
with Victoria Beckham.
The impact of the Coronavirus (COVID-19) pandemic is ongoing, it is not practicable to estimate the potential
impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on
measures imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
There has been no other matter or circumstance that has arisen since the end of the financial year that has significantly
affected, or may significantly affect, the operations of the Consolidated Entity, the results of those operations, or the
state of affairs of the Consolidated Entity, which has not been announced to the market.
NOTE 19: ECONOMIC DEPENDENCY
The Consolidated Entity is not economically dependent upon any third parties.
47
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 20: SEGMENT INFORMATION
The Consolidated Entity has considered the requirements of AASB8 – Operating Segments and has identified its
operating segments based on the internal reports that are reviewed and used by the board of directors (chief operating
decision makers) in assessing performance and determining the allocation of resources.
Consolidated – 30 June 2020
The Consolidated Entity operates in two segments which are development of the dermaportation drug delivery
technology and devices segments.
Revenue
Revenue and royalties
Interest revenue
Government grants and subsidies
Net foreign exchange gains
Total revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs written off
Intersegment eliminations
Dermaportation
drug delivery
technology
$
Devices
$
Total
$
570,552
6,440
907,175
75,105
1,559,272
(2,169,079)
(52,918)
6,440
83,310
--
--
51
--
--
51
(1,560,787)
(20,134)
51
--
--
570,552
6,491
907,175
75,105
1,559,323
(3,729,866)
(73,052)
6,491
83,310
--
(Loss)/ profit before income tax
(2,132,247)
(1,580,870)
(3,713,117)
Income tax expense
--
--
--
(Loss)/ profit after income tax
(2,132,247)
(1,580,870)
(3,713,117)
Assets
Segment assets
Intersegment eliminations
Total assets
Liabilities
Segment liabilities
Intersegment eliminations
Total liabilities
3,016,932
460,763
8,385,886
2,205,803
3,477,695
(2,286,149)
1,191,546
10,591,689
(8,181,112)
2,410,577
Segment revenues are allocated based on the country in which the customer is located. Operating revenues of
$570,552 or 100% are derived from a single external party. Segment assets are allocated to countries based on where
the assets are located.
48
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 20: SEGMENT INFORMATION (continued)
Consolidated – 30 June 2019
The Consolidated Entity operates as a single segment which is development of the dermaportation drug delivery
technology within Australia.
The Consolidated Entity is domiciled in Australia. All revenue from external parties is generated from Singapore
and Japan. Segment revenues are allocated based on the country in which the party is located. Operating revenues
of approximately $1,866,987 or 68% are derived from a single external party.
All the assets are located in Australia only. Segment assets are allocated to countries based on where the assets are
located.
NOTE 21: BUSINESS COMBINATIONS
On 5 November 2019, Wellfully Limited acquired 100% of the ordinary shares of Wellfully SA for $120,000
payable with ordinary shares of Wellfully Limited. The acquisition is deemed to be a business combination and the
details of the acquisition are as follows.
Details of the acquisition are as follows:
Cash and cash equivalents
Other assets
Related party loan
Trade and other payables
Net liabilities acquired
Representing:
Shares payable to vendor
Intangibles recognised at acquisition date
Fair value
$
336,246
88,175
(582,834)
(94,569)
(252,982)
120,000
372,982
From the date of acquisition to 30 June 2020, Wellfully SA incurred a loss of $1,506,736.
At 30 June 2020, intangibles of $372,982 has been written off.
NOTE 22: CONTINGENT ASSETS AND LIABILITIES
The directors of the Company are unaware of any existing contingent assets and liabilities, other than the contingent
liability matter regarding the Company being served with a writ over a Convertible Note, as announced to the
market. The Company has retained legal representation for the active defence of the matter, to which mediation
still continues.
49
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 23: RELATED PARTY TRANSACTIONS
Parent Entity
Wellfully Limited is the Parent Entity.
Subsidiaries
Interests in subsidiaries are set out in Note 12.
Key Management Personnel
Disclosures relating to key management personnel are set out in Note 11 and the remuneration report in the
Directors' Report.
Transactions with Related Parties
As set out in Note 11 and the remuneration report in the Directors’ Report.
Receivables from and Payables to Related Parties
As of 30 June 2020, the following remuneration amounts remained payable:
• PB Commodities Pte Ltd, an entity related to the director, Cameron Reynolds - $37,500*
• Steven Schapera and The Brand Laboratories FZ LLC, an entity related to the director, Steven Schapera -
$127,313*
• Antonio Varano Della Vergiliana and Anthony Varano Inc., an entity related to the director, Antonio
Varano Della Vergiliana - $81,589*
Jeffrey Edwards - $46,158
•
• Paul Peros - $120,000*
* Shares were issued in lieu of remuneration on 19 August 2020.
As of 30 June 2019, director’s remuneration amount of $18,750 remained payable to PB Commodities Pte Ltd, an
entity related to the director, Cameron Reynolds. An amount of $30,188 also remained payable to The Brand
Laboratories FZ LLC, an entity related to the director, Steven Schapera.
There were no receivables from related parties at the current and previous reporting date.
Loans to/from Related Parties
There were no loans to or from related parties at the current and previous reporting date.
50
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 24: PARENT ENTITY DISCLOSURES
(a) Financial Position
Total Current Assets
Total Non-Current Assets
Total Assets
Total Current Liabilities
Total Liabilities
Net Assets
Issued Capital
Reserves
Accumulated Losses
Total Equity
(b) Financial Performance
Loss for the year
Other comprehensive loss
Total Comprehensive Loss
2020
$
2019
$
443,333
2,769,718
2,538,772
324,846
2,982,105
3,094,564
2,096,816
550,404
2,096,816
550,404
885,289
2,544,160
33,043,514
232,334
(32,390,559)
33,043,514
232,334
(30,731,688)
885,289
2,544,160
2020
$
2019
$
(1,658,871)
--
(1,720,682)
--
(1,658,871)
(1,720,682)
(c) Guarantees
Wellfully Limited has not entered into any guarantees in relation to the debts of its subsidiaries.
(d) Other Commitments and Contingencies
Wellfully Limited are unaware of any existing contingent assets and liabilities, other than the contingent liability matter
regarding the Company being served with a writ over a Convertible Note, as announced to the market. The Company
has retained legal representation for the active defence of the matter, to which mediation still continues.
(e) Plant and Equipment Commitments
Wellfully Limited has no commitments to acquire property, plant and equipment.
(f) Lease commitment
There were no lease commitments as at 30 June 2020 as the Company pays rent on a month-by-month basis
(30 June 2019: Nil).
(g) Significant Accounting Policies
Wellfully Limited accounting policies do not differ from the Consolidated Entity disclosed in Note 1.
51
For personal use only
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
DIRECTORS’ DECLARATION
In the opinion of the directors:
a) The financial statements, notes and additional disclosures included in the directors’ report designated as
audited, are in accordance with the Corporations Act 2001, including:
i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2020 and of its
performance for the year ended on that date; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
b)
c)
the financial statements and notes thereto are in accordance with International Financial Reporting Standards
issued by the International Accounting Standards Board, as disclosed in Note 1(a); and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
This declaration has been made after receiving the declarations required to be made to the directors in accordance
with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2020.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5)(a) of the Corporations Act
2001.
__________________
Jeffrey Edwards
Director
Perth, Western Australia
30th September 2020
52
For personal use only
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
WELLFULLY LIMITED
Opinion
We have audited the financial report of Wellfully Limited (the Company) and its subsidiaries (the Group), which
comprises the statement of financial position as at 30 June 2020, the statement of profit or loss and other
comprehensive income, the statement of changes in equity and the 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 2020 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.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed this matter
Revenue Recognition
Refer to Note 2 in the financial statements
As reported in the statement of profit or loss and
other comprehensive income for the year ended 30
June 2020, the Group has recognised total revenue
of $1,484,218. We determined revenue recognition
to be a key audit matter due to the following:
The balance is material to the Group and there
are
risks associated with management
judgements for recognising revenue including
identification of contracts and performance
obligations, determination of the transaction
price and its timing; and
Revenue recognition is a presumed fraud risk
under the Australian Auditing Standards.
Acquisition of Wellfully SA
Refer to Note 21 in the financial statements
During the year, the Company acquired 100% of
the ordinary shares of Wellfully SA for $120,000
payable with ordinary shares of Wellfully Limited.
Accounting for this acquisition is a key audit
matter as it involves management judgements in
determining the acquisition accounting treatment,
the acquisition date, the fair value of net assets
acquired and the fair value of the purchase
consideration.
Going Concern
Refer to Note 1 in the financial statements
The Group incurred a loss of $3,713,117 and had
net cash outflows from operating activities of
$2,676,566 for the year ended 30 June 2020. As at
that date, the Group had a net current liabilities and
liabilities of $1,517,983 and $1,219,031
net
respectively.
The directors’ have prepared the financial report on
a going concern basis based on a cash flow forecast,
which considers the factors disclosed in Note 1 to
the financial statements.
We determined this assessment of going concern to
be a key audit matter due to the significant
judgements involved in preparing the cash flow
forecast.
Our audit procedures included:
Ensuring
the Group’s
recognition
accounting policy is in accordance with Australian
Accounting Standards;
revenue
Reviewing contracts with customers to obtain an
understanding of the contractual arrangements;
On a sample basis, vouching revenue recognised to
appropriate supporting documentation;
Reviewing revenue transactions before and after
the reporting date to ensure that revenue is
recognised in the correct financial period; and
Assessing the appropriateness of the disclosures in
the financial report.
Our audit procedures included:
Reviewing
agreement
conditions of
accounting considerations;
the share exchange and
to understand
the key
transaction and
the
transfer
terms and
related
the
Evaluating management’s determination that the
acquisition is a business combination in accordance
with Australian Accounting Standards;
Assessing management’s determination of
the
acquisition date, fair value of consideration paid and
the fair value of the net assets acquired; and
Reviewing the adequacy and accuracy of the relevant
disclosures in the financial statements.
Our audit procedures included:
Assessing the appropriateness and mathematical
accuracy of the cash flow forecast prepared by
management;
Challenging
the
reasonableness of
the key
assumptions used in the cash flow forecast;
Critically assessing the directors’ reasons of why
they believe it is appropriate to prepare the financial
report on a going concern basis; and
Assessing the adequacy of the going concern
disclosures in the financial report.
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 2020, 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 Corporation 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.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
For personal use only Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Wellfully Limited, for the year ended 30 June 2020, 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
Perth, WA
Dated: 30 September 2020
TUTU PHONG
Partner
For personal use only WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
ASX ADDITIONAL INFORMATION
1.
(a)
QUOTED SECURITIES
ORDINARY FULLY PAID SHARES AS AT 24 SEPTEMBER 2020
(i)
DISTRIBUTION OF SHAREHOLDERS:
SPREAD
OF HOLDINGS
NO. OF
HOLDERS
NO. OF
SHARES
PERCENTAGE OF
ISSUED CAPITAL %
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001+
1,364
1,302
531
1,012
279
4,488
476,401
3,616,795
4,006,024
36,279,213
102,108,700
146,487,133
0.33
2.47
2.73
24.77
69.70
100.00
The number of shareholdings held in less than marketable parcels is 1,870.
(ii)
TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES:
The names of the twenty largest shareholders of ordinary fully paid shares are listed below:
NAME
NO. OF
ORDINARY
SHARES
HELD
PERCENTAGE
OF ISSUED
SHARES
%
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
VIA PASTURA LIMITED
MR DANNY PAVLOVICH
SUNSET CAPITAL MANAGEMENT PTY LTD
RFID SYSTEMS PTY LTD
THE BRAND LABORATORIES FZ LLC
CITICORP NOMINEES PTY LTD
ROKAMAHO PTY LTD
VIRTUS CAPITAL PTY LTD
ANTONIO VARANO DELLA VERGILIANA
JEB HOLDINGS PTY LTD
JOMIMA PTY LTD
DR ALOK JHAMB
SABINA PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LTD
14.
15. MR PETER FEDELE
16.
17.
HSBC CUSTODY NOMINEES (AUSTRALIA) LTD
DAUGHTERS & CO PTY LTD
18. MR JASON MICHAEL HARKESS
19. MULLOWAY PTY LTD
20.
PROVENDORE PTY LTD
57
6,720,000
3,825,000
3,500,000
2,950,000
2,858,013
2,533,738
1,903,334
1,846,559
1,402,330
1,371,886
1,207,180
1,160,000
1,125,000
1,074,945
981,657
910,708
881,608
820,000
750,000
740,000
4.59
2.61
2.39
2.01
1.95
1.73
1.30
1.26
0.96
0.94
0.82
0.79
0.77
0.73
0.67
0.62
0.60
0.56
0.51
0.51
38,561,958
26.32
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
ASX ADDITIONAL INFORMATION (continued)
1.
QUOTED SECURITIES (continued)
(a)
ORDINARY FULLY PAID SHARES AS AT 24 SEPTEMBER 2020 (continued)
(iii)
VOTING RIGHTS
No restrictions - on a show of hands every member present in person or by proxy shall have one vote
and upon a poll, each fully paid share shall have one vote.
(iv)
SUBSTANTIAL SHAREHOLDERS
There were no Substantial Shareholders as recorded in the Register of Members as at 24 September
2020.
2.
UNQUOTED SECURITIES
(a)
OPTIONS
As at 24 September 2020, there existed the following unquoted options:
(i)
6,150,000 OPTIONS EXERCISABLE AT $0.10 EACH ON OR BEFORE 19 AUGUST 2023
NAME
VALE CAPITAL PTY LTD
VIA PASTURA LIMITED
NO. OF
OPTIONS
4,950,000
1,200,000
6,150,000
%
80.49
19.51
100.00
(ii)
VOTING RIGHTS
Holders of options are not entitled to vote at a General Meeting of Members in person, by proxy or
upon a poll, in respect of their option holding.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
CORPORATE GOVERNANCE STATEMENT
Wellfully Limited (“the Company”) is committed to implementing and maintaining the highest standards of
corporate governance. The primary responsibility of the Board of the Company (“the Board”) is to represent and
advance the Company’s shareholders’ (“the Shareholders”) interests and to protect the interests of all stakeholders.
To fulfil this role, the Board is responsible for the overall corporate governance of the Company including its
strategic direction, establishing goals for its employees and monitoring achievement of these goals.
The Company adopts the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations 3rd edition, (“the Recommendations”) to determine an appropriate system of control and
accountability to best fit its business and operations commensurate with these guidelines.
The Company’s compliance with the Recommendations is summarised in the table below:
Recommendation 1.1
Recommendation 1.2
Recommendation 1.3
Recommendation 1.4
Recommendation 1.5
Recommendation 1.6
Recommendation 1.7
Recommendation 2.1
Recommendation 2.2
Recommendation 2.3
Recommendation 2.4
Recommendation 2.5
Recommendation 2.6
Recommendation 3.1
Recommendation 4.1
ASX P & R1
If not, why not2
Recommendation 4.2
Recommendation 4.3
Recommendation 5.1
Recommendation 6.1
Recommendation 6.2
Recommendation 6.3
Recommendation 6.4
Recommendation 7.1
Recommendation 7.2
Recommendation 7.3
Recommendation 7.4
Recommendation 8.1
Recommendation 8.2
Recommendation 8.3
ASX P & R1
If not, why not2
¹ Indicates where the Company has followed the Recommendations and summarised those practices below.
² Indicates where the Company has provided an “if not, why not” disclosure below.
The Company has provided disclosure for each of the 29 recommendations. Where the Company has departed from
a recommendation, the Company has provided substantive reasons and refers to material containing additional
disclosure, as relevant.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
CORPORATE GOVERNANCE STATEMENT (continued)
The “if not, why not” disclosure of the Company is summarised in the table below:
Recommendation
1.2
1.5
2.1
2.2
2.6
3.1
Explanation of Departure from Recommendation
Given the Company’s small size and stage of development, the Company does
not have formal procedures relating to senior executive included in its Policy
and Procedure for Selection and Appointment of New Directors.
Given the Company’s small size and stage of development, it is not appropriate
to establish a formal gender diversity policy. However, its recruitment is
fundamentally driven by identifying the best candidate for all positions
regardless of gender.
Owing to the size and composition of the Board, it is not appropriate to
establish an independent Nomination Committee, or to establish a formal
nomination policy and that its resources would be better utilised in other areas.
In accordance with the Company’s policy and procedure for selection and
appointment of new Directors, the full Board currently carries out the duties
that would ordinarily be assigned to the Nomination Committee. Candidates
for the Board are considered and selected by reference to a number of factors
including their relevant experience and achievements, compatibility within the
Company’s scope of activities and intellectual and physical ability to undertake
Board duties and responsibilities.
The Board does not have, and has not disclosed, a skills matrix setting out the
mix of skills and diversity that the Board currently has or is looking to achieve
in its membership. Owing to the size of the Company and its operations, the
Board does not consider the need to have a skills matrix as it considers the Board
to have the appropriate skills for the operation and governance of the Company.
Should the Company’s operations expand or change, the Board will re-consider
the needs for a skills matrix.
The Board does not have a program for periodically reviewing whether there is
a need for existing directors to undertake professional development. Owing to
the size of the Company and its operations, the Board does not consider the need
to have such a program as it considers the Board to have the appropriate skills
for the operation and governance of the Company. Should the Company’s
operations expand or change, the Board will re-consider the needs for such a
program.
Given the Company’s small size and stage of development, the Company does
not have a formal statement of values. Owing to the size of the Company and
its operations, the Board does not consider the need to have such a statement as
it considers the Board to have general oversight of the Company’s practices.
Should the Company’s operations expand or change, the Board will re-consider
the needs for such a statement.
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4.2
7.1 and 7.2
8.3
WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
CORPORATE GOVERNANCE STATEMENT (continued)
As at the date of this Annual Report, the Company has not appointed a chief
financial officer (“the CFO”), accordingly it cannot comply with this
Recommendation. Due to the size and scale of the Company’s operations, this
role is currently performed by the CEO and the Board, specifically Mr Jeffrey
David Edwards and Mr Steven Schapera, who are primarily responsible for
financial matters in relation to the Company. These Directors provide the
declaration required by section 295A of the Corporations Act.
Due to the size and scale of the Company and the Board, a separate committee
has not been established to oversee risk management. However, the Board has
established a formal risk management policy to recognise and manage risk.
The Audit Committee also oversees risk management.
Risk oversight, management and internal control are dealt with on a continuous
basis by the Company Secretary and the Board, with differing degrees of
involvement from various Directors and the Company Secretary, depending
upon the nature and materiality of the matter.
The Board continuously reviews material business risks to identify whether the
system for identifying and reporting risks is being managed effectively and
whether the Company is operating with due regard to the risk appetite set by
the Board.
Whilst the Company has a policy for dealing in the Company’s securities which
sets out circumstances in which the Company’s Directors, management and
employees are prohibited from dealing with the Company’s securities
(including shares and options), there is no specific prohibition on transactions
which limit the economic risk of participating in the Company’s equity-based
remuneration scheme.
However, the Directors note that there is no market for exchange-traded options
in respect of the Company’s securities and, for all practical purposes, there is
no capacity for scheme participants to directly limit the economic risk
associated with their holdings of the Company’s securities pursuant to the
Company’s equity-based remuneration scheme.
The Company’s policy for dealing in the Company’s securities is available on
the Company’s website.
It is noted that as the Company’s activities develop in size, nature and scope, the Company’s corporate governance
policies and processes will continue to be reviewed and improved as resources permit.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
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CORPORATE GOVERNANCE STATEMENT (continued)
1.
BOARD OF DIRECTORS
1.1. Role of Board
The Board is responsible for setting the strategic direction and establishing and overseeing the policies and
financial position of the Company, and monitoring the business and affairs on behalf of its Shareholders, by
whom the directors of the Company (“the Directors”) are elected and to whom they are accountable.
Further, the Board takes specific responsibility for:
Protecting and enhancing Shareholder value;
Formulating, reviewing and approving the objectives and strategic direction of the Company;
•
•
• Approving all significant business transactions including acquisitions, divestments and capital
expenditure;
• Monitoring the financial performance of the Company by reviewing and approving budgets and
•
monitoring results;
Ensuring that adequate internal control systems and procedures (including financial, risk management,
occupational health and safety, environmental management systems and procedures) exist and that
compliance with these systems and procedures is maintained;
Identifying significant business risks and ensuring that such risks are adequately managed;
•
• Appointing Directors to the Board;
• Monitoring and reviewing the performance and remuneration of Directors;
• Monitoring and evaluating the Company Secretary’s performance;
• Monitoring and evaluating the CEO’s performance;
•
•
Establishing and maintaining appropriate ethical standards; and
Evaluating and, where appropriate, adopting with or without modification, the ASX Corporate
Governance Council’s Corporate Governance Principles and Recommendations.
The Board is responsible for establishing a culture and framework that supports corporate governance,
including creating the strategic direction for the Company, establishing goals for employees and the
management and monitoring the achievement of these goals.
The Company has a formal Board Charter, which is available from the Company on request. In broad terms,
the Board is accountable to the Shareholders and must ensure that the Company is properly managed to
protect and enhance Shareholders’ wealth and other interests. The Board Charter sets out the role and
responsibilities of the Board within the governance structure of the Company and its related bodies corporate
(as defined in the Corporations Act).
1.2. Terms of Office of Directors
The constitution of the Company (“the Constitution”) specifies that one third of the Directors, excluding the
Managing Director, Mr Jeffrey Edwards, shall rotate on an annual basis.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
CORPORATE GOVERNANCE STATEMENT (continued)
1.3. Composition of the Board and Independence
The Directors in office at the date of this statement are:
Name
Mr Jeffrey David Edwards
Mr Antonio Varano Della
Vergiliana
Mr Steven Lorn Schapera
Mr Cameron Reynolds
Position
Managing Director
Independent
No
Expertise
Refer to Director’s Report
Non-Executive Director Yes
Refer to Director’s Report
Non-Executive Director Yes
Non-Executive Director Yes
Refer to Director’s Report
Refer to Director’s Report
The Board considers the majority of Directors to be independent, commensurate with Recommendation 2.3.
Mr Steven Schapera was appointed as a Non-Executive Director on 1 August 2017 and is considered to be
independent. Mr Antonio Varano Della Vergiliana was appointed as a Non-Executive Director on 15 May
2018 and is considered to be independent. Mr Cameron Reynolds was appointed as a Non-Executive Director
on 2 July 2018 and is considered to be independent. Mr Jeffrey Edwards is not considered to be independent,
owing to the nature of his relationship with the Company.
In accordance with Recommendation 2.5, the Chair of the Company is Mr Antonio Varano Della Vergiliana,
who is considered by the Board to be independent.
1.4. Composition of the Board and Board Skills
The Company has not established a formal policy for the nomination and appointment of Directors.
However, the composition of the Board is determined using the following principles:
•
•
The Board comprises four Directors; however, this number may be increased where it is felt that
additional expertise is required in specific areas, or when an outstanding candidate is identified; and
The Board should comprise Directors with a broad range of expertise.
The Board reviews its composition on an annual basis to ensure that the Board has the appropriate mix of
expertise and experience. When a vacancy exists, for whatever reason, or where it is considered that the
Board would benefit from the services of a new Director with particular skills, the Board selects a panel of
candidates with the appropriate expertise and experience. Potential candidates are identified by the Board
with advice from an external consultant, if necessary. The Board then appoints the most suitable candidate
who must stand for election at a general meeting of Shareholders.
1.5 Monitoring of Board Performance
In accordance with Recommendation 1.6, the Directors’ performance is reviewed by the Chair on an ongoing
basis. In the event that any Director’s performance is considered to be unsatisfactory, that Director will be
asked to retire from the Board. The Chair performed this review during the reporting period.
The Chair’s performance is reviewed by the remaining three Board members on an ongoing basis. The
remaining three Board members undertook this review during the reporting period.
The Company has established firm guidelines to identify the measurable and qualitative indicators of the
Directors’ performance during the course of the year (“the Guidelines”). Those Guidelines include minimum
requirements for attendance at all Board and Shareholder meetings, whereby the non-attendance of a Director
at more than three consecutive meetings without reasonable excuse will result in that Director’s position
being reviewed.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
CORPORATE GOVERNANCE STATEMENT (continued)
1.6 Professional Development and Independent Professional Advice
In accordance with Recommendation 2.6, each Director has the right, in connection with his/her duties and
responsibilities as a Director, to seek professional development opportunities to develop and maintain the
necessary skills and knowledge and independent professional advice at the Company’s expense. However,
prior approval of the Chairman (as elected) is required, which will not be unreasonably withheld.
2.
EXECUTIVE MANAGEMENT
2.1 Role and Responsibility of Executive Management
In accordance with Recommendation 1.1, the Company’s board charter specifies that the role of management
is to support the Board and to implement the running of the general operations and financial business of the
Company, in accordance with the delegated authority of the Board.
In accordance with Recommendation 1.4, the Company’s Company Secretary is accountable directly to the
board, through the Chair of the Company, Mr Antonio Varano Della Vergiliana.
2.2 Monitoring of Executive Management’s Performance
In accordance with Recommendation 1.7, the executive management’s performance is reviewed by the Board
on an annual basis.
The Company has established firm guidelines to identify the measurable and qualitative indicators of the
executive management’s performance during the course of the year (“the Guidelines”). Those Guidelines
include a Board competency questionnaire and Chairman’s assessment.
The Board undertook an executive management performance review during the reporting period.
2.3 CEO and CFO Attestations
As at the date of this Annual Report, the Company has not appointed a chief financial officer (“the CFO”).
Due to the size and scale of the Company’s operations, these roles are currently performed by the CEO and
the Board, specifically Mr Jeffrey David Edwards and Mr Steven Schapera who are primarily responsible
for financial matters in relation to the Company.
In lieu of the CFO’s attestation, the CEO, Mr Jeffrey David Edwards and Mr Steven Schapera certifies to the
Board that:
•
•
The Company’s financial reports are complete and present a true and fair view, in all material aspects,
of the financial condition and operational results of the Company and are in accordance with relevant
accounting standards (“the Executive Director’s Statement”); and
The Executive Director’s Statement is founded on a sound system of risk management and internal
compliance and control which implements the policies adopted by the Board and that the Company’s
risk management and internal compliance and control is operating effectively and efficiently in all
material aspects.
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
CORPORATE GOVERNANCE STATEMENT (continued)
3.
BOARD COMMITTEES
3.1. Nomination Committee
Owing to its size and composition, the Company has not established a separate nomination committee.
Rather, the Board considers that the selection and appointment of Directors should be the responsibility of
the full Board and that no benefits or efficiencies are to be gained by delegating this function to a separate
committee.
The Board does not have a separate charter for its nomination and succession planning functions. However,
the Company does have a separate policy and procedure for selection and appointment of new Directors,
pursuant to which candidates are considered and selected by the Board by reference to a number of factors
including their relevant experience and achievements, compatibility within the Company’s scope of activities
and intellectual and physical ability to undertake Board duties and responsibilities.
3.2. Audit Committee
The Company has an Audit Committee, which comprises Mr Steven Schapera (Non-Executive Director), Mr
Cameron Reynolds (Non-Executive Director) and Mr John Palermo (Company Secretary).
The majority of the Auditor Committee members are independent and all Directors are financially literate.
In addition, the Company Secretary holds financial qualifications. The Directors and Company Secretary
have, together, accumulated sufficient technical expertise in other directorships to provide valuable insight
and technical knowledge, allowing the Board to verify and safeguard the integrity of the Company’s financial
reports.
Preserving the spirit of Principle 4, the external auditor has full access to the Board throughout the year.
The Audit Committee has a separate charter for its audit functions, which charter specifies the following
responsibilities:
•
•
•
•
•
to monitor the integrity of the financial statements of the Company, reviewing significant financial
reporting judgments;
to review the Company’s internal financial control system and, unless expressly addressed by a separate
risk committee or by the Board itself, risk management systems;
to monitor and review the effectiveness of the Company’s internal audit function (if any);
to monitor and review the external audit function including matters concerning appointment and
remuneration, independence and non-audit services; and
to perform such other functions as assigned by law, the Company’s constitution, or the Board.
The Audit Committee also reviews the performance of the external auditors on an annual basis and ensures
that the external auditor is required to attend the AGM of the Company and is available to answer questions
from shareholders.
3.3. Remuneration Committee
The Company has established a Remuneration Committee, which comprises Mr Steven Schapera (Non-
Executive Director), Mr Antonio Varano (Non-Executive Chairman), Mr Jeffrey Edwards (Managing
Director) and Mr John Palermo (Company Secretary).
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
CORPORATE GOVERNANCE STATEMENT (continued)
The Remuneration Committee has a separate charter for its remuneration functions, which charter specifies
the following responsibilities:
•
•
•
•
•
•
to make decisions with respect to appropriate remuneration and incentive policies for executive directors
and senior executives;
to ensure that executive remuneration involve a balance between fixed and incentive pay, reflecting
short and long-term performance objectives appropriate to the Company’s circumstances and
objectives;
to ensure that fees paid to non-executive directors are within the aggregate amount approved by
shareholders;
to ensure that non-executive directors are not entitled to retirement benefits other than statutory
superannuation entitlements or to participate in equity-based remuneration schemes without due
consideration and appropriate disclosures to shareholders;
to review and make recommendations concerning long-term incentive compensation plans; and
to ensure that incentive plans are designed around appropriate and realistic performance targets.
The Remuneration Committee obtains independent advice on the appropriateness of remuneration packages.
In making decisions with respect to appropriate remuneration and incentive policies for Executive Directors,
the CEO and the Company Secretary, the Remuneration Committee’s objectives are to:
• motivate executive Directors, the CEO and the Company Secretary to pursue the long term growth and
success of the Company within an appropriate control framework;
demonstrate a clear correlation between key performance and remuneration; and
align the interests of key leadership with the long-term interests of the Company’s shareholders.
•
•
Shareholder approval is also required to determine the maximum aggregate remuneration for Non-Executive
Directors. The maximum aggregate remuneration approved for Non-Executive Directors is currently set at
$250,000 per annum.
Full disclosure of the Company’s remuneration philosophy and framework, and the remuneration received
by Directors and the CEO in the current period, is set out in the Remuneration Report, which is contained
within the Directors’ Report.
The Remuneration Committee meets as and when required and did not meet during the reporting period.
4.
DIVERSITY
The Company does not currently have a formal gender diversity policy in place. However, its recruitment is
fundamentally driven by identifying the best candidate for all positions regardless of gender. Based on the
current scale of activities of the Company, there is no set objective to achieve a certain percentage of female
employees in the workforce.
The Board does not currently believe that the adoption of a formal gender diversity policy would significantly
improve the functions currently performed by the Board.
Given the Company’s small size and stage of development, the Board considers it impractical at this time to
set measurable diversity objectives and adopt a formal gender diversity policy.
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CORPORATE GOVERNANCE STATEMENT (continued)
The Company currently has 36 employees, of which 23 are male and 13 are female. There are no women in
senior executive positions or on the Board. However, while the Board considers this to be appropriate at this
stage of the Company’s development, the Company will review this requirement annually as the
circumstances of the Company change.
5.
ETHICAL STANDARDS
The Company has established a formal Code of Conduct (“the Code”) as per Recommendation 3.1, which is
available from the Company on request.
The Code outlines the Company’s expectations of the Board, the management and employees and its related
bodies corporate in relation to their behaviour and the way business is conducted in the workplace on a range
of issues. The Board, the management and employees are committed to acting with the utmost integrity and
objectivity, striving at all times to enhance the reputation and performance of the Company. The Board, the
management and employees must conduct themselves in a manner consistent with the expectations of its
stakeholders, commensurate with prevailing community and corporate standards, and must take
responsibility for upholding the Company’s legal obligations. In addition, the Board subscribes to the
Statement of Ethical Standards as published by the Australian Institute of Company Directors.
6.
DIRECTORS’ DEALINGS IN COMPANY SHARES
The Company has implemented a formal trading policy as required by ASX Listing Rule 12.9. This policy
applies to Directors, management, employees and contractors of the Company, and is available from the
Company on request.
In addition, Directors must notify the Australian Securities Exchange of any acquisition or disposal of shares
by lodgement of a Notice of Director’s Interests. Board policy is to prohibit Directors, management and
employees from dealing in shares of the Company whilst in possession of price sensitive information.
7.
CONTINUOUS DISCLOSURE AND SHAREHOLDER COMMUNICATION
The Company has implemented a formal Disclosure Policy and Shareholder Communication Strategy as
suggested in Recommendation 5.1, which is available from the Company on request. This policy was
introduced to ensure the Company achieves compliance with its continuous disclosure obligations under the
Corporations Act and ASX Listing Rules.
The Board aims to ensure that the Shareholders, on behalf of whom they act, are informed of all information
necessary to assess the performance of the Directors. Information is communicated to Shareholders through:
The Annual Report which is distributed to all Shareholders;
•
• Half-yearly reports, quarterly reports and all ASX announcements which are posted on the Company’s
•
website;
The Annual General Meeting and other meetings so called to obtain Shareholder approval for Board
action as appropriate;
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CORPORATE GOVERNANCE STATEMENT (continued)
• Compliance with the continuous disclosure requirements of the ASX Listing Rules; and
•
The Company’s auditor is required to be present, and be available to Shareholders, at the Annual
General Meeting.
The Company encourages full participation of Shareholders at a general meeting of Shareholders (including
an annual general meeting). The Company also informally adopts several of the suggestions in
Recommendation 6.1 and 6.4, including communicating to Shareholders electronically, and uploading its
formal codes and policies to the Company’s website.
In addition, the Company has implemented an investor relation program as suggested in Recommendation
6.2 and has engaged an external investor relations consultant to manage this program. The key responsibilities
of the investor relations consultant include the following:
•
•
•
•
•
distributing shareholder news electronically through setting up a mail-out system with latest
announcements and news;
dealing with requests from shareholders or potential shareholders;
assisting in the writing, editing and managing content for any key report, communication, press release,
advertisement and news article for newspapers and magazines;
developing and editing investor presentations; and
developing and maintaining website content.
8.
RESPECT THE RIGHTS OF SHAREHOLDERS
The Company has a formal privacy policy (“the Privacy Policy”), which is available from the Company on
request. The Company is committed to respecting the privacy of Shareholders’ personal information. The
Privacy Policy sets out the Company’s personal information management practices and covers the application
of privacy laws, personal information collection, the use and disclosure of personal information, accessing
and updating Shareholders’ information and the security of that information.
9.
RECOGNISE AND MANAGE RISK
Due to the size and scale of the Company and the Board, a separate committee has not been established to
oversee risk management. However, the Board has established a formal risk management policy to recognise
and manage risk. This risk management policy is available from the Company on request.
Risk management is a priority for the Board who remains vigilant in creating a culture, processes and
structures directed to optimising the Company’s opportunities whilst minimising and managing potential
material business risks.
Risk oversight, management and internal control are dealt with on a continuous basis by the CEO and the
Board, with differing degrees of involvement from various Directors and the CEO, depending upon the nature
and materiality of the matter.
The Board continuously reviews material business risks to identify whether the system for identifying and
reporting risks is being managed effectively. Determined areas of risk which are regularly considered
include:
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WELLFULLY LIMITED AND ITS CONTROLLED ENTITIES
(ABN 72 056 482 636)
CORPORATE GOVERNANCE STATEMENT (continued)
Performance and funding of research and development activities;
•
• Budget control and asset protection;
•
Status of intellectual property;
• Compliance with government laws and regulations;
•
• Continuous disclosure obligations; and
•
Safety and the environment;
Sovereign risk.
The Company does not have a formal internal audit function to assist the Board in evaluating risk
management and internal control processes. Rather the CEO and the Managing Director perform this function
for the benefit of the Board.
The Annual Report sets out the major categories of risk applicable to the Company, which is set out in the
Notes to the Financial Statements in the Annual Report.
This Corporate Governance Statement has been approved by the Board and is current as at 30 September 2020.
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