Wellness and Beauty Solutions Limited · In d e p e ndent auditor's report to the members of...

Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)

ABN 43 169 177 833

Annual Report - 30 June 2019

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Corporate directory30 June 2019

Corporate directory 2Chairman's letter to shareholders 3Directors' report 5Auditor's independence declaration 19Consolidated statement of profit or loss and other comprehensive income 20Consolidated statement of financial position 22Consolidated statement of changes in equity 23Consolidated statement of cash flows 24Notes to the consolidated financial statements 25Directors' declaration 64Independent auditor's report to the members of Wellness and Beauty Solutions Limited 65Shareholder information 69

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Corporate directory30 June 2019

Directors Angelos Giannakopoulos - ChairmanChristine Parkes - Managing DirectorDr Naveen Somia - Non-Executive Director

Company secretary Justin Mouchacca

Registered office Unit 14, 347 Bay RoadCheltenham Victoria 3192Telephone: (03) 9532 2639

Principal place of business Unit 14, 347 Bay RoadCheltenham Victoria 3192 Telephone: (03) 9532 2639

Share register Computershare Investor Services Pty LtdYarra Falls, 452 Johnston Street Abbotsford Victoria 3067 Telephone: (03) 9415 5000

Auditor RSM Australia PartnersLevel 21, 55 Collins Street Melbourne Victoria 3000

Stock exchange listing Wellness and Beauty Solutions Limited shares are listed on the Australian SecuritiesExchange (ASX code: WNB)

Date of Annual General Meeting The Company is proposing to hold its Annual General Meeting on Friday 29November 2019

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Chairman’s letter to shareholders30 June 2019

Dear Shareholders

It is my pleasure to present Wellness and Beauty Solutions Limited's (WNB) annual report for the 2019 financial year. This was truly a transformational year for the Company.

Following the acquisition of The Giving Brands Company Pty Ltd (GBCo) in October 2018, extensive Board and executive management changes were made as the initial step of a major strategy reset for the Company. As part of the GBCo acquisition, Ms Christine Parkes was appointed as WNB's Managing Director and CEO in September 2018 and has made an outstanding contribution to the Company since joining. It was my pleasure to join Dr Naveen Somia on the Board asNon-executive Director and Chairman on 10 December 2018.

After acquiring GBCo, your revitalised Board and management team immediately initiated a two-prong strategy tomaximise value for our shareholders. With the inclusion of GBCo, WNB now has two distinct but complementary businesses – a stable of high-profile consumer brands that are owned, licensed or private label (Brands) and a network of clinical spas (Services).

Your refreshed Board and new management team has worked diligently during the year to reshape our network of nine Immersion Clinical Spas and simultaneously integrate the business of GBCo, while also expanding and developing our portfolio of Brands. This has been an outstanding achievement in a compressed timeframe.

To help build understanding of our business and growth strategy, shareholders approved a change of company name to Wellness and Beauty Solutions Limited at the Company's 2018 Annual General Meeting. This was followed by the Company's listing code on the Australian Securities Exchange (ASX) changing to WNB on 3 December 2018.

It has been pleasing to see WNB gain increased attention as an emerging leader in Australian beauty, wellness and lifestyle brands and services and we believe the Company is well placed to capitalise on the burgeoning pro-aging (positive aging) and beauty industry globally.

Our portfolio of GBCo owned, licensed and private label brands was extended during the year with the addition of three product ranges under the internationally-recognised ELLE brand alongside our own tanning range, TANNED that was released in market in late in FY19. These new ranges added to our established licensed tanning range, Jbronze by Jennifer Hawkins. We also designed and manufactured three private label ranges for MYER that will be launched in store in early FY20 and are well advanced on the creation of bespoke lifestyle ranges for a number of key magazines including Country Style and the iconic Australian Women's Weekly in collaboration with publishing house, Bauer Media Group.

GBCo is increasingly being recognised and sought after by brand owners and retailers for our expertise in design, manufacturing, marketing and sale of beauty and wellness product ranges. As part of the consolidated WNB, GBCo has cemented and extended our retail footprint via key relationships with major pharmacy, grocery and department store retailers - including Chemist Warehouse, Priceline, Woolworths and MYER. I'm pleased to report that GBCo performed in line with expectations during the year, contributing revenue of $1.29 million post acquisition in FY19. We look forward to reporting a significant uplift from our Brands business in FY20.

As reported during the financial year, the turnaround of the rebranded Immersion Clinical Spa network's performance was more challenging than anticipated. The divestment of four clinics late in FY18/early FY19 and the closure of two clinics early in the reporting period is reflected in lower annualised revenue from the network of $9.02 million (FY18: $18.35million). After assessing the carrying value of prior acquisitions against their operating performance, the Board of Directorsmade the prudent decision to write down $5.23 million in goodwill.

Under new management, I am pleased to report the performance of the WNB's remaining nine Immersion Clinical Spas showed improvement in the second half, with significant uplift late in the year and the network achieving a close to break- even performance by the end of the period. We are confident there is significant scope for uplift in the clinics' utilisation levels and remain focussed on achieving an improved financial contribution to the Company's performance from our Services business in FY20.

Disappointingly, WNB reported a net loss after tax of $13.4 million for the year. This result was adversely affected by a number of material issues identified by the new management. I am pleased to report that these issues have been resolved. Total revenue from continuing operations in FY19 was $9.97 million (FY18: $14.71 million), in line with the reduced number of clinics. Adoption of a strict corporate cost control program realised a significant reduction in operating expenses from continuing operations, particularly in the second half of the year.

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Chairman’s letter to shareholders30 June 2019

Our cash position was strengthened by the injection of funds in October 2018 and, subsequent to the financial year end, we secured a $4 million facility for purchase order (manufacturing) and debtor financing for our Brand business. The terms of this facility provide flexibility to the Company to more effectively manage working capital requirements, particularly for lead time brand manufacturing ensuring adequate headroom to invest in the growth of GBCo’s expanding brand portfolio.

In July 2019, we announced the acquisition of Sydney-based skincare and beauty distributor True Solutions International Pty Ltd. True Solutions is recognised as one of Australia's heritage beauty companies and distributes premium and scientifically validated professional and cosmeceutical skincare and makeup brands as well as a range of medi-spa technologies to more than 1,000 professional aesthetic clinics, beauty salons and spas across Australia and New Zealand.

This acquisition exemplifies our ability to identify and execute on opportunities that deliver revenue growth through cross channel sales. It both enhances WNB's product portfolio with a suite of professional use products and technologies whilst also providing a larger customer network for WNB's existing beauty brands.

I firmly believe WNB has a clear pathway to profitability. Under Christine's leadership and discipline, we have a clear strategy for the delivery of operational improvements in our clinic network and through multiple channels for growth – geographic, cross channel and new product launches – from our brands business to maximise shareholder value.

To the entire WNB team, on behalf of the Board, I extend our gratitude for your hard work and dedication. To our Board ofDirectors and executive management, thank you for your commitment to the enactment of a transformation that is set toposition WNB towards substantial growth.

Yours sincerely

Angelos GiannakopoulosNon-executive Chairman

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Directors' report30 June 2019

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Wellness and Beauty Solutions Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2019.

DirectorsThe following persons were directors of Wellness and Beauty Solutions Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

Angelos Giannakopoulos (appointed director and Chairman 10 December 2018)Christine Parkes (appointed 27 September 2018)Dr Naveen SomiaKen Poutakidis (appointed director 27 August 2018, appointed Chairman 26 September 2018, resigned 10 December2018)Paul Fielding (resigned 27 September 2018)

Principal activitiesDuring the financial year the principal continuing activities of the consolidated entity consisted of the provision of goods andservices within the Australian beauty and wellness market, including:● providing non-invasive cosmetic treatments; and● the sale of complementary products.

DividendsThere were no dividends paid, recommended or declared during the current or previous financial year.

Review of operationsThe loss for the consolidated entity after providing for income tax amounted to $13,402,000 (30 June 2018: $11,681,000).

Operating results

The loss for the consolidated entity after providing for income tax amounted to $13.402 million (30 June 2018: $11.681 million). This result included the write down in value of $5.278 million of goodwill associated with the Company’s clinic network.

Total revenue from continuing operations in the reporting period was $9.93 million (2018: $14.71 million). This result was supported by the acquisition of The Giving Brands Company Pty Ltd (GBCo) on 8 October 2018. GBCo contributed operating revenue to the consolidated entity of $1.28 million since its acquisition.

Operating revenue from continuing clinic operation, rebranded Immersion Clinical Spas, was down $5.69 million over the previous corresponding period to $9.02 million. (2018: $14.71 million) representing a decrease of 39%. This disappointing result was impacted by a number of factors including the sale of four clinics across May and August 2018, as well as the suspension of operation and subsequent closure of the Canberra and Richmond clinics. At the time the clinics were sold the consolidated entity's liquidity was weak. The sale of these clinics contributed cash to the ongoing operations of the consolidated entity and enable the consolidated entity to continue trading whilst additional capital was raised.

Operating expenses were impacted by the write down in value of the Company’s clinic network by $5.278 million. This reduction was largely driven by the sale of three clinics and the decrease in revenues from continuing operations.

Other significant non-recurrent expenses ($1.58m) were incurred during the reporting period. Key issues included costs relating to the acquisition of The Giving Brands Company Pty Ltd, costs associated with the capital raise activity, losses on the sale of three clinics, the disposal of leased assets, legal expenses and the payment of employee entitlements related to the previous executive management team.

Net cash outflows from operating activities was $7.024 million during the period. Net cash inflow from investing activities in the reporting period was $1.085 million and net cash from financing activities was $6.748 million. The Company held $1.043 million in cash and cash equivalents held at the end of the reporting period (2018: $234,000) and $2.188 million in inventories (2018: $814,000).

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Review of operations

The Company achieved a number of key milestones during the 2019 Financial Year.

Share Placement

On 5 October 2018, 140,000,000 ordinary shares were issued to a number of existing and new institutional andsophisticated investors at a price of $0.05 per share, raising $7M (before costs) to fund working capital for improvement of the clinic network, to complete the GBCo acquisition and fund its business plan, and to repay debt.

Non-renounceable Entitlement Offer

On 8 October 2018, 27,829,537 ordinary shares were issued at a price of $0.05 per share to eligible shareholders under a 1 for 2 non-renounceable Entitlement Offer, raising $1.4M (before costs).

Acquisition of The Giving Brands Company (GBCo)

On 8 October 2018, the consolidated entity acquired The Giving Brands Company Pty Ltd (GBCo) for a total consideration of 51,725,552 fully paid ordinary shares. There was no cash consideration issued. As part of the acquisition, Ms Christine Parkes, Founder and CEO of GBCo, was appointed as Managing Director and CEO of Wellness and Beauty Solutions (formerly Total Face Group).

Reinstatement of Official Quotation

On 10 October 2018 the Company was reinstated to Official Quotation on the Australian Securities Exchange, following completion of a capital raising and the acquisition of GBCo.

Company Name Change

On 30 November 2018, the Company’s name changed to Wellness and Beauty Solutions Limited and the ASX ticker code changed to ASX: WNB on 3 December 2018.

The Giving Brands Company (GBCo)

The Giving Brands Company Pty Ltd, a wholly owned subsidiary of WNB, is a fully integrated brand immersion company that owns, licenses and partners with multiple brands in the wellness, beauty and lifestyle industry. The company has extensive management and operational experience in the development, manufacture, distribution and marketing of brands, a proven track record of creating clear rich brand stories, and strong relationships with retailers.

GBCo’s brands are sold to the professional and retail markets and include: Jbronze, ELLE Makeup, ELLE Kids, ELLE Baby, TANNED, nailKALM, private label brands for MYER, and products under development for Country Style and the Australian Women’s Weekly magazines.

GBCo has strong relationships with major banner groups in the pharmacy sector, including Chemist Warehouse, Priceline and TerryWhite Chemmart. Key relationships for owned, licenced and bespoke brand product ranges were established with Woolworths and Myer during the financial year, further diversifying the Company’s retail footprint.

While sales in the financial year were almost exclusively to Australian retailers, GBCo is well advanced in opening new sales channels in international markets for existing bands and new brands currently under development.

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GBCo’s existing brands include:

● Jbronze by Jennifer Hawkins

GBCo has an exclusive licence agreement for the use of Jbronze by Jennifer Hawkins trademark for its owned tanning range which has been in market since 2013. This licence agreement was extended on 12 June 2019 for a further 3 years, with an additional 2-year option, commencing on 1 July 2019. Jbronze has established a strong market position with banner group pharmacy retailers. In June 2019, WNB announced Jbronze will be sold in 995 Woolworth stores from September 2019, diversifying the brand’s retail channels.

● TANNED

In late June 2019, GBCo launched its 12-product safe sunless tanning range TANNED, with mega influencers Natalie Roser and Kris Smith contracted as brand ambassadors. Both ambassadors’ large network and extensive social media following, with over 1 million Instagram followers, that provides a strong platform to gain immediate brand awareness and retailer engagement.

● nailKALM

GBCo is licenced to manufacture, sell and distribute nailKALM, a product which contains a proprietary active ingredient (derived from blue-green algae) that is clinically proven to provide effective treatment for nails prone to fungal infections. The Australian Podiatry Association has stated that one in 10 adult Australians are affected by nail fungal infections. nailKALM is 100 percent organic and non-toxic, which is its unique selling proposition to the 1.7M nail fungal sufferers in Australia.

● ELLE Makeup, ELLE Kids & ELLE Baby

GBCo has been granted one of 125 licences in the world by ELLE brand owner, Legardere Active Enterprises (LAE), to design, manufacture and retail beauty, skincare and related products for three ranges - ELLE Makeup, ELLE Kids and ELLE Baby. The 4-year licencing contract is for multiple territories in Australasia, Europe and North America.

GBCo’s ELLE Makeup range includes more than 50 individual product lines, and ELLE Kids and ELLE Baby ranges have more than 35 individual products. The Intellectual Property (IP) for all ELLE Kids and ELLE Baby skincare and personal care product formulations are proprietary to GBCo. The three ranges will be launched in market in 1H’20.

MYER - homeware brand ranges

In April 2019, GBCo was contracted by Australian department store MYER to design and manufacture three new private label homeware ranges. The new ‘Only at MYER’ ranges, which include a range of personal care products and unique home fragrancing accessories, have been created exclusively for MYER’s homeware department. The range is on track for delivery in 1H’20.

● Professional and retail - skincare range

GBCo is working with Australian model and influencer Brooke Hogan on new product development and brand creative for its bespoke skincare range for the professional and retail markets. Brooke is contracted to be the brand’s ambassador and has a strong social media following of more than 700,000 followers that will be a key marketing channel for the brand.

Immersion Clinical Spas

The Company owns and operates a network of nine Immersion Clinical Spas in Australia.

The clinics provide non-invasive medical aesthetic (NIMA) and wellness and beauty services using a highly experienced team of doctors, aesthetic nurse consultants, dermal therapists and beauty consultants.

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Ambassador Agreements

The Company signed ambassador agreements with high profile influencers Natalie Roser, Kris Smith and Brooke Hogan as part of GBCo’s brand marketing strategy. The ambassadors each elected to take 2,000,000 fully paid ordinary shares at $0.05 per share in the Company (escrowed for 12 months) as part of their brand ambassador services.

Significant changes in the state of affairsThe following significant changes in the state of affairs of the consolidated entity occurred during the financial year:

● on 27 August 2018, Mr Ken Poutakidis, was appointed as a Non-Executive Director of the Company;● on 27 September 2018, Mr Paul Fielding resigned as director and was replaced as Chairman by Mr Ken Poutakidis

and Ms Christine Parkes was appointed as Chief Executive Officer and Managing Director of the Company;● On 28 September 2018, 27,829,537 ordinary shares were issued at a price of $0.05 per share to eligible shareholders

under a 1 for 2 non-renounceable Entitlement Offer, raising $1.4M (before costs);● on 5 October 2018 the Company issued 140,000,000 fully paid ordinary shares at $0.05 per share pursuant to the

share placement to professional and sophisticated investors raising $7M (before costs);;● on 8 October 2018 the Company issued 27,829,537 fully paid ordinary shares at $0.05 per share pursuant to a rights

issue, raising $1.4M (before costs);● on 8 October 2018 the Company acquired 100% of the issued shares of The Giving Brands Company Pty Ltd (GBCo)

and issued 51,725,552 fully paid ordinary shares at $0.05 per share to the vendor of GBCo as consideration for theacquisition;

● on 10 October 2018 the Company was reinstated to Official Quotation on the Australian Securities Exchange,following completion of a capital raising and the acquisition of GBCo;

● on 30 November 2018, the Company changed its name from Total Face Group Limited to Wellness and BeautySolutions Limited;

● on 10 December 2018, Mr Angelos Giannakopoulos was appointed Non-executive Chairman of the Company,replacing Mr Ken Poutakidis, who stepped down from the Board;

● on 26 March 2019 the Company issued 2,000,000 fully paid ordinary shares at $0.05 per share pursuant to anambassador services agreement;

● on 12 April 2019 the Company issued 2,000,000 fully paid ordinary shares at $0.05 per share pursuant to anambassador services agreement;

● on 3 May 2019 the Company issued 2,000,000 fully paid ordinary shares at $0.05 per share pursuant to anambassador services agreement.

There were no other significant changes in the state of affairs of the consolidated entity during the financial year.

Matters subsequent to the end of the financial yearOn 18 July 2019, the Company secured a $4M facility with Timelio Pty Ltd for purchase order (manufacturing) and debtorfinancing for the brand business. This facility gives flexibility to WNB’s debt structure to more effectively manage working capital requirements, particularly for lead time brand manufacturing and provides adequate headroom to invest in growth of GBCo’s expanding brand portfolio.

On 29 August 2019, the Company announced the acquisition of a leading Sydney-based skincare and beauty distributor True Solutions International Pty Ltd (True Solutions). The acquisition is to be funded through the issue of 10,000,000 Convertible Notes at an issue price of $0.05, equated to an aggregate issue price of $500,000. Each note is non-interest bearing and has a maturity date of 31 July 2022. The purchase also includes approximately $1.5m in stock held on consignment that will be acquired as it is sold down by WNB. The issue of the Convertible Notes is subject to the approval of the holders of existing convertible notes issued by the Company. If approval is not obtained, the Company must pay the purchase price in cash on the earlier of the completion of a capital raise or 12 months.

No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

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Likely developments and expected results of operationsThe consolidated entity is positioned to be a powerhouse of Australian beauty, wellness and lifestyle brands and services and is well placed to capitalise on the burgeoning pro-aging (positive aging) and beauty industry globally.

While the turnaround program implemented across the resized Immersion Clinical Spa network has been slower than expected, positive momentum was achieved late in FY19, particularly from our Queensland clinics. The Directors are confident the range of initiatives implemented to boost customer numbers, reduce costs and lift utilisation levels will result in a modest lift in revenues and see the network being cashflow positive in the first half of FY20.

Based on its contracted and projected sales pipeline, the consolidated entity expects its brand business (GBCo) will deliver revenue in the $6-$7M range in FY20.

The consolidated entity has begun integration of the newly acquired Sydney-based skincare and beauty distributor True Solutions International Pty Ltd. True Solutions is recognised as one of Australia's heritage beauty companies and distributes premium and scientifically validated professional and cosmeceutical skincare and makeup brands as well as a range of medi-spa technologies to more than 1,000 professional aesthetic clinics, beauty salons and spas across Australia and New Zealand. True Solutions is expected to add $4M - $5M in annualised revenue to the consolidated entity.

Environmental regulationThe consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.

Information on directorsName: Angelos Giannakopoulos (appointed director and Chairman 10 December 2018)Title: ChairmanQualifications: B.Bus. (Banking & Finance)Experience and expertise: Mr Giannakopoulos has significant expertise and business experience arising from

his work across capital markets and various industries as a prominent financier and holder of a number of leadership executive roles within the finance industry. He is currently the Victorian and South Australian State Manager for private wealth management firm Ord Minnett, was previously Global Head of Equities for ANZ Banking Group and has also held executive leadership positions with Treasury Corporation of Victoria and the Transport Superannuation Board.

Other current directorships: NoneFormer directorships (last 3 years): NoneInterests in shares: 1,421,895 fully paid ordinary sharesContractual rights to shares: 100,000 convertible notes

Name: Christine Parkes (appointed 27 September 2018)Title: Managing DirectorExperience and expertise: Mrs Parkes has built a reputation in the cosmetic and skincare industry over a 20+

year period and is recognised for brand management, new product development and rebranding. Christine has a strength in strategic marketing; import and export supply, registration and compliance requirements.

Along with Mrs Parkes' experience in cosmetic and skincare manufacturing, she combines her knowledge and experience with an extensive global network of key influencers in the cosmetics and skincare industries to develop, launch, support and grow brands within the retail sector.

Mrs Parkes previously owned a boutique cosmetic and skincare manufacturing company providing invaluable knowledge of the technical and manufacturing processes needed to create, manufacture and distribute cosmetic, skincare and wellness products in domestic and international markets.

Other current directorships: NoneFormer directorships (last 3 years): NoneInterests in shares: 51,725,552 fully paid ordinary shares

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Name: Dr Naveen SomiaTitle: Non- Executive DirectorQualifications: MBBS, PhD, FRACSExperience and expertise: Dr Naveen Somia is a Fellow of the Royal Australasian College of Surgeons and a

member of the Australian Society of Plastic Surgeons (ASPS), the peak body of Specialist Plastic Surgeons in Australia.

Other current directorships: NoneFormer directorships (last 3 years): NoneSpecial responsibilities: Audit & Risk Committee - Chair; Remuneration & Nomination Committee - ChairInterests in shares: -

Name: Ken Poutakidis (appointed director 27 August 2018, appointed Chairman 26September 2018, resigned 10 December 2018)

Title: ChairmanQualifications: B.Bus.Experience and expertise: Mr Poutakidis is corporate adviser and corporate finance executive with 16 years of

finance experience. He is the Managing Director and Founder of Avenue Advisory, a boutique advisory firm providing corporate finance and capital markets advice to emerging companies.

Previously, Mr Poutakidis worked as a management consultant and a corporate finance executive with leading equity firms across Australia and Asia. His particular expertise includes capital raisings, mergers & acquisitions, corporate advisory, asset divestment and strategy development.

Mr Poutakidis has previously served as Chairman of the Boards of Alchemia and Mach7 Technologies, was a non-executive director of Contango Microcap.

Other current directorships: N/A, as is no longer a director at the date of this reportFormer directorships (last 3 years): N/A, as is no longer a director at the date of this reportInterests in shares: N/A, as is no longer a director at the date of this report

Name: Paul Fielding (resigned 27 September 2018)Title: Executive ChairmanQualifications: CAExperience and expertise: Paul is a highly skilled professional with a high degree of commercial acumen and

has the ability to negotiate outcomes in complex and competitive environments. He has worked in the services sector for more than 20 years.

Paul previous successful Directorships took Ingena Group Limited (ASX: IGL) and RXP Services Limited (ASX: RXP) to IPO raising in excess of $50m across both organisations. IGL and RXP experienced significant growth organically and acquisitively in which Paul has played a key role.

Other current directorships: N/A, as is no longer a director at the date of this reportFormer directorships (last 3 years): N/A, as is no longer a director at the date of this reportInterests in shares: N/A, as is no longer a director at the date of this report

'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

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Company secretaryMr Justin Mouchacca, CA

Mr Mouchacca holds a Bachelor of Business majoring in Accounting. Justin became a Chartered Accountant in 2011 and since July 2019 has been a principal of JM Corporate Services Pty Ltd, specialising in outsourced company secretarial and financial duties. Justin has over 11 years’ experience in the accounting profession including 5 years in the Corporate Secretarial professions and is a company secretary and finance officer for a number of entities listed on the Australian Securities Exchange.

Meetings of directorsThe number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2019, and the number of meetings attended by each director were:

Nomination andFull Board Remuneration Committee Audit and Risk Committee

Attended Held Attended Held Attended Held

Angelos Giannakopoulos 3 3 - - - -Christine Parkes 5 5 - - - -Dr Naveen Somia 4 6 - - - -Ken Poutakidis 3 3 - - - -Paul Fielding 1 1 - - - -

Held: represents the number of meetings held during the time the director held office.

Remuneration report (audited)The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors.

The remuneration report is set out under the following main headings:● Principles used to determine the nature and amount of remuneration● Details of remuneration● Service agreements● Share-based compensation● Additional disclosures relating to key management personnel

Principles used to determine the nature and amount of remunerationThe Board policy for determining the nature and amount of remuneration of key management personnel is agreed by theBoard as a whole.

The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices:● competitiveness and reasonableness● acceptability to shareholders● performance linkage / alignment of executive compensation● transparency

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The Remuneration and Nomination Committee ("Committee") was established to advise on remuneration and issues relevant to remuneration policies and practices including those for senior management and non-executive Directors. Theperformance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.

At present, given the number and mix of directors, the Committee does not hold separate meetings and its functions are carried out by the Board.

In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate.

Non-executive directors remunerationFees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the Board or the Committee. The Board or Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at anydiscussions relating to the determination of his own remuneration. Non-executive directors do not receive share options,bonus payments or other incentives.

Executive remunerationThe consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components.

The executive remuneration and reward framework has four components:● base pay● short-term performance incentives● share-based payments● other remuneration such as superannuation and long service leave

The combination of these comprises the executive's total remuneration.

Fixed remuneration, consisting of base salary and superannuation, are reviewed annually by the Board or Committee based on individual and business unit performance, the overall performance of the consolidated entity and comparable market remunerations.

The short-term incentives ('STI') program is designed to align the targets of the business units with the performancehurdles of executives. STI payments are granted to executives based on specific annual targets and applicable keyperformance indicators ('KPI's') being achieved. KPI's may include profit contribution, customer satisfaction, leadership contribution and product management.

The Company has established a Long Term Incentive Plan (LTIP) that allows for the award of performance-related rights (‘Rights’) subject to the LTIP Rules. The Plan is designed to assist in the motivation, retention and reward of the Company’s Directors and senior executives. In addition, the Plan is designed to align the interests of Directors and senior executives more closely with the interests of shareholders.

To date, no rights have been granted pursuant to the LTIP. The Board will continue to monitor shareholder value and may issue rights under the Plan when considered appropriate.

Consolidated entity performance and link to remunerationThe remuneration of the Managing Director is directly linked to the performance of the consolidated entity. The amount of the Managing Director's cash bonus is dependent on the consolidated entity meeting or exceeding Board-approved forecasts.

Voting and comments made at the Company's 28 November 2018 Annual General Meeting ('AGM')At the 28 November 2018 AGM, 98.8% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2018. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.

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Details of remuneration

Amounts of remunerationDetails of the remuneration of key management personnel of the consolidated entity are set out in the following tables.

The key management personnel of the consolidated entity consisted of the following directors of Wellness and Beauty Solutions Limited:● Angelos Giannakopoulos (appointed Non-executive Director and Chairman 10 December 2018)● Christine Parkes (appointed Managing Director 27 September 2018)● Dr Naveen Somia● Ken Poutakidis (appointed Non-executive Director 27 August 2018, appointed Chairman 26 September 2018,

resigned 10 December 2018)● Paul Fielding (resigned 27 September 2018)

And the following persons:● Tim Smith - General Manager (appointed 18 February 2019)● Chris Adnams - Chief Financial Officer (appointed 5 December 2018, resigned 31 May 2019)● Kerstin Grant - Acting Chief Executive Officer (ceased 27 September 2018)● Liza Juegan - Chief Financial Officer and Company Secretary (resigned 16 October 2018)

Post-employment

benefits

Cash salary Cash Super-

Long-termbenefits

Longservice

Share-based

payments

Equity-and fees bonus monetary annuation payments leave settled Total

30 June 2019 $ $ $ $ $ $ $ $

Non-ExecutiveDirectors:AngelosGiannakopoulos(a) 50,000 - - - - - - 50,000Dr Naveen Somia 40,000 - - - - - - 40,000Ken Poutakidis(b) - - - - - - - -Paul Fielding (c) 14,208 - - - - - - 14,208

ExecutiveDirectors:Christine Parkes(d) 202,037 50,000 14,497 22,711 - - - 289,245

Other KeyManagementPersonnel:Tim Smith (e) 66,923 - - 6,358 5,148 - - 78,429Chris Adnams (f) 85,706 - - 8,142 4,871 - - 98,719Kerstin Grant (g) 86,641 - - 16,017 82,068 - - 184,726Liza Juegan (h) 71,046 - - 18,624 142,236 - - 231,906

616,561 50,000 14,497 71,852 234,323 - - 987,233

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(a) Appointed 10 December 2018(b) Mr Ken Poutakidis was appointed 27 August 2018 and resigned 10 December 2018. As agreed, he did not charge a

fee for his director services and therefore did not receive any remuneration.(c) Resigned 27 September 2018(d) Appointed 27 September 2018(e) Appointed 18 February 2019, resigned 30 June 2019(f) Appointed 5 December 2018, resigned 31 May 2019(g) Ceased 27 September 2018(h) Resigned 16 October 2018

Post-employment Long-term

Share-based

payments

Cash salary Cash Super- service Equity-and fees bonus Other annuation leave settled Total

30 June 2018 $ $ $ $ $ $ $

Non-Executive Directors:Paul Fielding 50,000 - - - - - 50,000Dr Naveen Somia 40,000 - - - - - 40,000Lynda Adler* 40,000 - - - - - 40,000

Executive Directors:Joanne Hannah** 211,914 - 15,050 17,584 - - 244,548

Other Key ManagementPersonnel:Kerstin Grant 233,286 - - 22,162 - - 255,448Kathryn Bran*** 126,065 75 13,777 11,621 - - 151,538Liza Juegan 168,950 - - 16,050 - - 185,000

870,215 75 28,827 67,417 - - 966,534

* Resigned 28 June 2018** Resigned 1 May 2018*** Resigned 29 March 2018

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The proportion of remuneration linked to performance and the fixed proportion are as follows:

Fixed remuneration At risk - STI At risk - LTIName 30 June 2019 30 June 2018 30 June 2019 30 June 2018 30 June 2019 30 June 2018

Non-Executive Directors:Angelos Giannakopoulos 100% - - - - -Dr Naveen Somia 100% - - - - -Ken Poutakidis 100% - - - - -Paul Fielding 100% 100% - - - -Lynda Adler - 100% - - - -

Executive Directors:Christine Parkes 100% - - - - -Joanne Hannah - 100% - - - -

Other Key ManagementPersonnel:Chris Adnams 100% - - - - -Kerstin Grant - 100% - - - -Liza Juegan 100% 100% - - - -Kathryn Bran - 100% - - - -

Service agreementsRemuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:

Name: Christine ParkesTitle: Managing Director and Chief Executive OfficerAgreement commenced: 27th September 2018Term of agreement: 4 yearsDetails: Total Fixed Annual Remuneration - $250,000. Where the executive remains in the

employ of the Company for twelve (12) months, Total Fixed Annual Remuneration will increase to $300,000.

Sign-on Bonus - $50,000.

Short Term Incentive (STI) - STI to a maximum of 25% of annual salary if the Company meets or exceeds the forecast approved by the Board of the Company for each of the Financial Years ending 30 June, 2019, 30 June 2020, 30 June 2021 and 30 June 2022.

Long Term Incentive (LTI) - The executive is eligible to participate in the Company’s LTI plan.

Notice period / termination entitlement - The Executive must give the Company 90 days' notice of cessation. The Company must give 12 months' notice if the Company terminates the executive's employment at any time before the Term, within the first three (3) years from the commencement date. The Company may elect to make payment in lieu of any unserved notice period. Employment may be ended immediately in certain circumstances including misconduct, incapacity and mutual agreement.

Key management personnel have no entitlement to termination payments in the event of removal for misconduct.

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Share-based compensation

Issue of sharesThere were no shares issued to directors and other key management personnel as part of compensation during the yearended 30 June 2019.

OptionsThere were no options over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2019.

There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2019.

Additional disclosures relating to key management personnel

ShareholdingThe number of shares in the Company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

Balance at Received Balance atthe start of as part of Disposals/ the end ofthe year remuneration Additions other the year

Ordinary sharesAngelos Giannakopoulos (a) - - 1,421,895 - 1,421,895Christine Parkes (b) - - 51,725,552 - 51,725,552Ken Poutakidis (c) - - 2,033,000 (2,033,000) -Paul Fielding (d) 14,638,799 - - (14,638,799) -Kerstin Grant (d) 300,000 - - (300,000) -Lisa Juegan (d) 146,674 - - (146,674) -

15,085,473 - 55,180,447 (17,118,473) 53,147,447

(a) "Additions" comprises 615,000 shares held at date of appointment and 656,895 shares subsequently acquired on- market. In addition, Mr Giannakopoulos held 100,000 convertible notes upon appointment and continued to holdthese at the end of the financial year.

(b) "Additions" are shares issued as consideration for the Company's acquisition of The Giving Brands Company Pty Ltd (c) "Additions" comprises 1,983,000 shares held at date of appointment and 50,000 shares acquired pursuant to rights

issue. "Other" is the balance of shares held at date of cessation as member of key management personnel. In addition, Mr Poutakidis held 200,000 convertible notes upon appointment and continued to hold these at date of cessation.

(d) "Other" is the balance of shares held at date of cessation as member of key management personnel. In addition, MrFielding held 125,000 convertible notes at the beginning of the year and continued to hold these at date of cessation.

(e) "Other" is the balance of shares held at date of cessation as member of key management personnel.

Loans to key management personnel and their related partiesAt 30 June 2019 consolidated entity has an amount receivable from Managing Director Christine Parkes. The loan wasadvanced to her by The Giving Brands Company Pty Ltd (GBCo) prior to its acquisition by the Company. As at the date of acquisition the balance of the loan was $18,986. As at the end of the financial period the balance of the loan was $26,597.

This concludes the remuneration report, which has been audited.

Shares under optionThere were no unissued ordinary shares of Wellness and Beauty Solutions Limited under option outstanding at the date of this report.

Shares issued on the exercise of optionsThere were no ordinary shares of Wellness and Beauty Solutions Limited issued on the exercise of options during the yearended 30 June 2019 and up to the date of this report.

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Indemnity and insurance of officersThe 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 auditorThe Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor.

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

Proceedings on behalf of the CompanyNo person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

Non-audit servicesDetails of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 29 to the financial statements.

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 29 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:● all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity

of the auditor; and● none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code

of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company,acting as advocate for the Company or jointly sharing economic risks and rewards.

Officers of the Company who are former partners of RSM Australia PartnersThere are no officers of the Company who are former partners of RSM Australia Partners.

Rounding of amountsThe Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Auditor's independence declarationA copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set outimmediately after this directors' report.

AuditorRSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.

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This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act2001.

On behalf of the directors

___________________________Angelos GiannakopoulosChairman

30 September 2019

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RSM Australia Partners

Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007

T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Wellness and Beauty Solutions Limited and its controlled entities for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) 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

R B MIANOPartner

30 September 2019Melbourne, Victoria

THE POWER OF BEING UNDERSTOODAUDIT | 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 theRSM 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 Legislation19

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Consolidated statement of profit or loss and other comprehensive incomeFor the year ended 30 June 2019

ConsolidatedNote 30 June 2019 30 June 2018

$'000 $'000

Revenue from continuing operations 5 9,932 14,708

Other income - 100Interest income 35 26

ExpensesNon refundable deposits lost - (100)Raw materials and consumables used (4,105) (4,637)Contractors (1,515) (1,879)Occupancy expenses (1,666) (1,431)Employee benefits expense (5,153) (5,899)Depreciation and amortisation expense 6 (1,615) (1,364)Impairment expense (5,278) (6,611)(Loss)/Gain on disposal of equipment (209) -Loss on deferred consideration - (309)Impairment of receivables (28) -Consultants (819) (910)Other expenses (2,023) (2,107)Finance costs 6 (590) (322)

Loss before income tax expense from continuing operations (13,034) (10,735)

Income tax expense 7 (135) -

Loss after income tax expense from continuing operations (13,169) (10,735)

Loss after income tax expense from discontinued operations 8 (233) (946)

Loss after income tax expense for the year attributable to the owners ofWellness and Beauty Solutions Limited 24 (13,402) (11,681)

Other comprehensive income for the year, net of tax - -

Total comprehensive income for the year attributable to the owners ofWellness and Beauty Solutions Limited (13,402) (11,681)

Total comprehensive income for the year is attributable to:Continuing operations (13,169) (10,735)Discontinued operations (233) (946)

(13,402) (11,681)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with theaccompanying notes

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Consolidated statement of profit or loss and other comprehensive incomeFor the year ended 30 June 2019


$'000 $'000

Cents Cents

Earnings per share for loss from continuing operations attributable to theowners of Wellness and Beauty Solutions LimitedBasic earnings per share 39 (4.57) (8.52)Diluted earnings per share 39 (4.57) (8.52)

Earnings per share for loss from discontinued operations attributable to theowners of Wellness and Beauty Solutions LimitedBasic earnings per share 39 (0.08) (0.75)Diluted earnings per share 39 (0.08) (0.75)

Earnings per share for loss attributable to the owners of Wellness and BeautySolutions LimitedBasic earnings per share 39 (4.66) (9.27)Diluted earnings per share 39 (4.66) (9.27)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with theaccompanying notes

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Consolidated statement of financial positionAs at 30 June 2019


$'000 $'000

Assets

Current assetsCash and cash equivalents 9 1,043 234Trade and other receivables 10 298 226Inventories 11 2,188 814Other assets 12 714 253Total current assets 4,243 1,527

Non-current assetsProperty, plant and equipment 13 1,970 3,608Intangibles 14 7,625 10,668Deferred tax 15 - 42Other assets 16 376 348Total non-current assets 9,971 14,666

Total assets 14,214 16,193

Liabilities

Current liabilitiesTrade and other payables 17 2,865 2,596Borrowings 18 2,473 835Provisions 19 278 252Contract liabilities 20 480 250Total current liabilities 6,096 3,933

Non-current liabilitiesBorrowings 21 1,481 3,221Provisions 22 174 30Total non-current liabilities 1,655 3,251

Total liabilities 7,751 7,184

Net assets 6,463 9,009

EquityIssued capital 23 36,710 25,854Accumulated losses 24 (30,247) (16,845)

Total equity 6,463 9,009

The above consolidated statement of financial position should be read in conjunction with the accompanying notes22

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Consolidated statement of changes in equityFor the year ended 30 June 2019

Issued Retainedcapital profits Total equity

Consolidated $'000 $'000 $'000

Balance at 1 July 2017 25,300 (5,164) 20,136

Loss after income tax expense for the year - (11,681) (11,681)Other comprehensive income for the year, net of tax - - -

Total comprehensive income for the year - (11,681) (11,681)

Transactions with owners in their capacity as owners:Contributions of equity, net of transaction costs (note 23) 554 - 554

Balance at 30 June 2018 25,854 (16,845) 9,009

Issued Retainedcapital profits Total equity

Consolidated $'000 $'000 $'000

Balance at 1 July 2018 25,854 (16,845) 9,009

Loss after income tax expense for the year - (13,402) (13,402)Other comprehensive income for the year, net of tax - - -

Total comprehensive income for the year - (13,402) (13,402)

Transactions with owners in their capacity as owners:Contributions of equity, net of transaction costs (note 23) 10,856 - 10,856

Balance at 30 June 2019 36,710 (30,247) 6,463

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes23

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Consolidated statement of cash flowsFor the year ended 30 June 2019


$'000 $'000

Cash flows from operating activitiesReceipts from customers (inclusive of GST) 11,392 20,117Payments to suppliers and employees (inclusive of GST) (18,055) (21,532)Interest received 14 10Interest and other finance costs paid (375) (322)

Net cash used in operating activities 37 (7,024) (1,727)

Cash flows from investing activitiesPayments for investments (8) (2,670)Payments for property, plant and equipment (236) (397)Payments for intangibles (147) -Payments for other non-current assets - (303)Proceeds from disposal of businesses 8 1,400 1,424Proceeds from disposal of property, plant and equipment 10 -Net cash acquired on business acquisition 66 -

Net cash from/(used in) investing activities 1,085 (1,946)

Cash flows from financing activitiesProceeds from issue of shares 8,391 -Proceeds from borrowings 209 -Proceeds from issue of convertible notes 20 1,290Proceeds from related party loan - 534Share issue transaction costs (422) -Repayment of borrowings (1,450) (615)Release of security deposit - 50

Net cash from financing activities 6,748 1,259

Net increase/(decrease) in cash and cash equivalents 809 (2,414)Cash and cash equivalents at the beginning of the financial year 234 2,648

Cash and cash equivalents at the end of the financial year 9 1,043 234

The above consolidated statement of cash flows include cash flows from discontinued operations as detailed in Note 8.

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes24

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Notes to the consolidated financial statements30 June 2019

Note 1. General information

The financial statements cover Wellness and Beauty Solutions Limited as a consolidated entity consisting of Wellness and Beauty Solutions Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Wellness and Beauty Solutions Limited's functional and presentation currency.

Wellness and Beauty Solutions Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Unit 14, 347 Bay RoadCheltenham VIC 3192Australia

A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 September 2019. The directors have the power to amend and reissue the financial statements.

Note 2. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New or amended Accounting Standards and Interpretations adoptedThe consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by theAustralian Accounting Standards Board ('AASB') 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 9 Financial InstrumentsThe consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification andmeasurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within abusiness model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New impairment requirements use an 'expected credit loss' ('ECL') modelto recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financialinstrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.

The adoption of AASB 9 did not have a material impact on the consolidated entity's financial statements and no adjustments were required.

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Note 2. Significant accounting policies (continued)

AASB 15 Revenue from Contracts with CustomersThe consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model forrevenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period.

The consolidated entity has concluded that revenue from its sales should be recognised either at the point in time or over the time, when (or as) the consolidated entity satisfies performance obligations by transferring the promised services to its customers and generally this will take place at a point in time.

In applying AASB 15, the consolidated entity has elected to use the modified retrospective approach, with any adjustment required being recognised on 1 July 2018 in retained earnings.

The adoption of AASB 15 did not have a material impact on the timing or the amount of revenue recognition.

Going concernThe financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.

As disclosed in the financial statements, the consolidated entity incurred a loss of $13.402 million and had net cash outflows from operating activities of $7.024 million for the year ended 30 June 2019. As at that date the consolidated entity had net current liabilities of $1.853 million.

These factors indicate a material uncertainty which may cast significant doubt as to whether the consolidated entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

The Directors believe that there are reasonable grounds to believe that the consolidated entity will be able to continue as a going concern, after consideration of the following factors:● On 18 July 2019, the consolidated entity secured a $4m facility with Timelio Pty Ltd which will support its working

capital requirements;● Management will continue to be focussed on achieving the forecasted growth of the consolidated entity;● The consolidated entity expects to raise further equity capital within the 12 months from reporting date;● The consolidated entity will attempt to secure projected new revenue contracts as per its cash forecast for the next

financial year; and● Management expects to manage its operating expenditures prudently and in line with its budget for the next financial

year.

Accordingly, the Directors believe that the consolidated entity will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report.

The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the consolidated entity does not continue as a going concern.

Basis of preparationThese general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

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Historical cost conventionThe financial statements have been prepared under the historical cost convention, except for, where applicable, therevaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial instruments.

Critical accounting estimatesThe 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 3.

Parent entity informationIn 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 33.

Principles of consolidationThe consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Wellness and Beauty Solutions Limited ('Company' or 'parent entity') as at 30 June 2019 and the results of all subsidiaries for the year then ended. Wellness and Beauty Solutions 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.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities andnon-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.

Operating segmentsOperating segments are presented using the 'management approach', where the information presented is on the samebasis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

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Revenue recognitionThe consolidated entity recognises revenue as follows:

Revenue from contracts with customersRevenue 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 goodsRevenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which isgenerally at the time of delivery.

Rendering of servicesRevenue from a contract to provide services is recognised at a point in time as the services are rendered based on either a fixed price or an hourly rate.

InterestInterest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating theamortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other revenueOther revenue is recognised when it is received or when the right to receive payment is established.

Income taxThe income tax expense or benefit for the period is the tax payable on that period's taxable income based on theapplicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a

transaction that is not a business combination and that, at the time of the transaction, affects neither the accountingnor taxable profits; or

● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in theforeseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

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The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

Wellness and Beauty Solutions Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

Discontinued operationsA discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co- ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss and other comprehensive income.

Current and non-current classificationAssets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle;it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalentsCash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade and other receivablesTrade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effectiveinterest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.

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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.

InventoriesStock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Property, plant and equipmentLand and buildings are shown at fair value, based on periodic, at least every 3 years, valuations by external independent valuers, less subsequent depreciation and impairment for buildings. The valuations are undertaken more frequently if there is a material change in the fair value relative to the carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Increases in the carrying amounts arising on revaluation of land and buildings are credited in other comprehensive income through to the revaluation surplus reserve in equity. Any revaluation decrements are initially taken in other comprehensive income through to the revaluation surplus reserve to the extent of any previous revaluation surplus of the same asset. Thereafter the decrements are taken to profit or loss.

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Computer equipment 33%Clinic Equipment 20-25%Leased clinic equipment 20-25%Leasehold Improvements 10-15%Motor Vehicles 15

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.

LeasesThe determination of whether an arrangement is or contains a lease is based on the substance of the arrangement andrequires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

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Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

Intangible assetsIntangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair valueat the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

GoodwillGoodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

Research and developmentResearch costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the consolidated entity is able to use or sell the asset; the consolidated entity has sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10 years.

WebsiteSignificant costs associated with the development of the revenue generating aspects of the website, including the capacityof placing orders, are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10 years.

Trademarks and licencesTrademarks and licences are recognised at cost and are amortised using the straight-line method over their estimated useful lives, which range from 3 to 5 years. Trademarks and licences are carried at cost less accumulated amortisation and any impairment losses.

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Development ExpenditureExpenditure attributed to the development of the entity’s own end to end operational and clinical software, “TESSA”, iscapitalised to the extent that it relates to the design, construction and testing.

Expenditure during the research phase of a project is recognised as an expense when incurred.

Development costs are capitalised only when the project are expected to deliver future economic benefits and these benefits can be measured reliably.

Amortisation of development expenditure

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. Amortisation of the development expenditure commences from the date of first use over the effective life of the intangible asset.

Impairment of non-financial assetsGoodwill, intangible assets not yet ready for use and intangible assets with indefinite useful lives are not subject to amortisation and are therefore tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.

For impairment assessment purposes, assets are generally grouped at the lowest levels for which there are largely independent cash flows (‘cash generating units’). Accordingly, most assets are tested for impairment at the cash- generating unit level. Because it does not generate cash flows independently of other assets or groups of assets, goodwill is allocated to the cash generating unit or units that are expected to benefit from the synergies arising from the business combination that gave rise to the goodwill.

Assets other than goodwill, intangible assets not yet ready for use and intangible assets with indefinite useful lives are assessed for impairment whenever events or circumstances arise that indicate the asset may be impaired.

An impairment loss is recognised when the carrying amount of an asset or cash generating unit exceeds the asset’s or cash generating unit’s recoverable amount. The recoverable amount of an asset or cash generating unit is defined as the higher of its fair value less costs to sell and value in use

Impairment losses in respect of individual assets are recognised immediately in profit or loss unless the asset is carried at a revalued amount such as property, plant and equipment, in which case the impairment loss is treated as a revaluation decrease. Impairment losses in respect of cash generating units are allocated first against the carrying amount of any goodwill attributed to the cash generating unit with any remaining impairment loss allocated on a pro rata basis to the other assets comprising the relevant cash generating unit.

Trade and other payablesThese 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.

Contract liabilitiesContract 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.

BorrowingsLoans 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.

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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.

Lease liabilitiesA lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the presentvalue of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the leaseor, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasuredif there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

Finance costsFinance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed inthe period in which they are incurred.

ProvisionsProvisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

Employee benefits

Short-term employee benefitsLiabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefitsThe liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Termination benefitsTermination benefits are recognised when a detailed plan of termination has been communicated to affected employees. They are measured as short-term employee benefits when expected to be settled wholly within 12 months of the reporting date or as long-term benefits when not expected to be settled within 12 months of the reporting date.

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Defined contribution superannuation expenseContributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Fair value measurementWhen an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Issued capitalOrdinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Business combinationsThe 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 equityinterest 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. Subsequentchanges 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.

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The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

Earnings per share

Basic earnings per shareBasic earnings per share is calculated by dividing the profit attributable to the owners of Wellness and Beauty Solutions Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per shareDiluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into accountthe after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Goods and Services Tax ('GST') and other similar taxesRevenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is notrecoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

Rounding of amountsThe Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

New Accounting Standards and Interpretations not yet mandatory or early adoptedAustralian 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 2019. 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.

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AASB 16 LeasesThis standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (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 will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.

The consolidated entity will adopt this standard from 1 July 2019. The directors expect that AASB 16 will be adopted by the consolidated entity by applying the modified retrospective method. Accordingly, the adoption of AASB 16 will result in lease assets and liabilities being recognised on balance sheet and a change in how related expenses are incurred. It is expected that:- total property leases of approximately $5,600,000 will be recognised on the balance sheet as right-of-use assets, with an

accumulated depreciation balance of $2,800,000 also recognised, and an amount of approximately $3.5 million will be recognised as lease liabilities, with the difference expected to be recorded as an adjustment to accumulated losses at 1 July 2019;- during the year commencing 1 July 2019, annual rental payments of approximately $875,000 will be reclassified fromoccupancy costs to interest expense (approximately $165,000) and liability payments (approximately $709,000); and- during the year commencing 1 July 2019, right-of-use asset depreciation expense of approximately $724,000 will be

recorded

AASB Interpretation 23 - Uncertainty over Income Tax TreatmentsThis interpretation is applicable to annual reporting periods beginning on or after 1 January 2019. This Interpretationclarifies how to apply the recognition and measurement requirements in AASB 112 'Income taxes' when there is uncertainty over income tax treatments. In such a circumstance, an entity shall recognise and measure its current or deferred tax asset or liability applying the requirements in AASB 112 based on taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined applying this Interpretation.

The consolidated entity will adopt Interpretation 23 from 1 July 2019. The directors expect that the consolidated entity will apply the interpretation retrospectively with the cumulative effect of initially applying the Interpretation recognised at the date of initial application and, if required, recognising the cumulative effect of initially applying the Interpretation as an adjustment to the opening balance of retained earnings. The adoption of the interpretation from 1 July 2019 will not have a material impact on the consolidated entity.

Note 3. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions thataffect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events,management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

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Note 3. Critical accounting judgements, estimates and assumptions (continued)

Estimation of useful lives of assetsThe consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for itsproperty, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Goodwill and other indefinite life intangible assetsThe consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assetsThe consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangibleassets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

Business combinationsBusiness combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities andcontingent liabilities assumed are initially estimated by the consolidated entity taking into consideration all availableinformation at the reporting date. Fair value adjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported.

Note 4. Operating segments

Identification of reportable operating segmentsThe consolidated entity is organised into two operating segments based on differences in products and services provided.

These operating segments are based on the internal reporting structures that are used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.

The consolidated entity operated predominantly in one geographical segment, Australia, which is the consolidated entity's country of domicile.

Prior to, during, and as at the end of, the previous financial year ended 30 June 2018, the consolidated entity operated in only one segment, being cosmetic injectables and aesthetic clinics. An additional segment was acquired during the current financial half when the consolidated entity acquired GBCo. Accordingly there is no comparative segment information for the current half year.

The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

Types of products and servicesThe principal products and services of each of these operating segments are as follows:1. Clinical and Beauty Treatments

The provision of clinical, skin and wellness services provided via a national network of beauty and wellness clinics.

2. Sale of Beauty Products Brand Development, product manufacture and wholesale of a range of beauty products.

Intersegment transactions were not made during the reporting period.

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Note 4. Operating segments (continued)

Intersegment receivables, payables and loansAny intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loanspayable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

Operating segment information

Clinical and Sale ofBeauty

TreatmentsBeauty

Products TotalConsolidated - 30 June 2019 $'000 $'000 $'000

RevenueSales to external customers (including discontinued operations) 9,023 1,285 10,308Total segment revenue 9,023 1,285 10,308Unallocated revenue:Interest income 35Discontinued operations (376)Total revenue from continuing operations 9,967

EBITDA (737) (1,128) (1,865)Impairment losses (5,278) (5,278)Depreciation and amortisation (1,615)Loss on disposals (209)Finance costs (590)Unallocated costs (3,745)Operating loss of discontinued operations 233Interest income 35Loss before income tax expense and discontinued operations (13,034)Income tax expense (135)Loss after income tax expense from continuing operations (13,169)

AssetsSegment assets 7,251 5,812 13,063Unallocated assets:Other assets - current 126Plant and equipment 64Intangible assets 961Total assets 14,214

LiabilitiesSegment liabilities 2,624 1,440 4,064Unallocated liabilities:Borrowings - current 2,121Provisions - current 17Borrowings - non-current 1,434Payables 115Total liabilities 7,751

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Note 5. Revenue

Consolidated30 June 2019 30 June 2018

$'000 $'000

From continuing operations

Revenue from contracts with customersSales revenue 9,932 14,694

Other revenueCommission - 14

Revenue from continuing operations 9,932 14,708

Disaggregation of revenueThe disaggregation of revenue from contracts with customers is as follows:


$'000 $'000

Major product linesClinical and Beauty Treatments 8,647 14,694Sale of Beauty Products 1,285 -

9,932 14,694

Timing of revenue recognitionGoods and services transferred at a point in time 9,932 14,694

Sale of beauty productsRevenue from the sale of products is recognised at the point in time when the customer obtains control of the goods, whichis generally at the time of delivery.

Sale from treatmentsRevenue from treatments is recognised when the treatment has been performed.

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Note 6. Expenses


$'000 $'000

Loss before income tax from continuing operations includes the following specific expenses:

DepreciationLeasehold improvements 144 133Clinic equipment 1,089 1,171Motor vehicles 1 4Computer equipment 32 34Office equipment 17 -

Total depreciation 1,283 1,342

AmortisationDevelopment 320 -Licences 12 22

Total amortisation 332 22

Total depreciation and amortisation 1,615 1,364

ImpairmentGoodwill 5,278 6,611

Finance costsInterest and finance charges paid/payable on lease liabilities 48 69Other 542 253

Finance costs expensed 590 322

Rental expense relating to operating leasesMinimum lease payments 1,276 1,185

Superannuation expenseDefined contribution superannuation expense 383 427

Employee benefits expense excluding superannuationEmployee benefits expense excluding superannuation 4,659 5,342

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Note 7. Income tax expense


$'000 $'000

Numerical reconciliation of income tax expense and tax at the statutory rateLoss before income tax expense from continuing operations (13,034) (10,735)Loss before income tax expense from discontinued operations (233) (946)

(13,267) (11,681)

Tax at the statutory tax rate of 27.5% (3,648) (3,212)

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:Legal expenses 64 -Impairment of goodwill 1,452 -Other non-deductible expenses 11 -Capitalised expenditure blackhole tax deductions (147) -Other non-allowable items 135 (87)

(2,133) (3,299)Current year tax losses not recognised 2,232 3,424Current year temporary differences not recognised 36 (125)

Income tax expense 135 -


$'000 $'000

Tax losses not recognisedUnused tax losses for which no deferred tax asset has been recognised 15,697 15,895

Potential tax benefit @ 27.5% 4,317 4,371

The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed.

Following the acquisition of The Giving Brands Company Pty Ltd, management is still assessing the extent of carried forward losses available to the consolidated entity. As at the date of this report, this assessment is not complete.


$'000 $'000

Deferred tax assets not recognisedDeferred tax assets not recognised comprises temporary differences attributable to:

Other 483 679

Total deferred tax assets not recognised 483 679

The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised in the statement of financial position as the recovery of this benefit is uncertain.

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Note 8. Discontinued operations

DescriptionDuring the year ended 30 June 2019 the consolidated entity sold three clinics:

● The Peninsula clinic (VIC) was sold on 10 August 2018 for consideration of $300,000 resulting in a gain on disposalbefore income tax of $97,000.

● The Port Melbourne (VIC) clinic was sold on 31 August 2018 for consideration of $300,000 resulting in a loss ondisposal before income tax of $134,000.

● The Chatswood (NSW) clinic was sold on 31 August 2018 for consideration of $800,000 resulting in a loss on disposalbefore income tax of $29,000.

At the time the clinics were sold the consolidated entity’s liquidity was weak. The sale of these clinics contributed cash to the ongoing operations of the consolidated entity and enable the consolidated entity to continue trading whilst additional capital was raised. Capital was then raised in October 2018 to support the growth of the consolidated entity’s operations.

The comparative figures for the year ended 30 June 2018 include amounts relating to the Fortitude Valley clinic disposed of during that period.

Financial performance information


$'000 $'000

Sales revenue 376 3,647

Raw materials and consumables used (177) (1,116)Contractors (84) (785)Occupancy expenses (94) (663)Employee benefits expense (83) (931)IT & Communications (14) (72)Depreciation and amortisation expense (64) (334)Advertising & Marketing - (47)Consultants (8) (3)Travel - (1)Other expenses (19) (87)Total expenses (543) (4,039)

Loss before income tax expense (167) (392)Income tax expense - -

Loss after income tax expense (167) (392)

Loss on disposal before income tax (66) (554)Income tax expense - -

Loss on disposal after income tax expense (66) (554)

Loss after income tax expense from discontinued operations (233) (946)

Cash flow information


$'000 $'000

Net cash from/(used in) operating activities (113) 28

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Note 8. Discontinued operations (continued)

Carrying amounts of assets and liabilities disposed


$'000 $'000

Inventories 190 97Other current assets 34 -Property, plant and equipment 504 131Intangibles 762 1,831Total assets 1,490 2,059

Provisions 37 31Total liabilities 37 31

Net assets 1,453 2,028

Details of the disposal


$'000 $'000

Total sale consideration 1,400 1,474Carrying amount of net assets disposed (1,453) (2,028)Disposal costs (13) -

Loss on disposal before income tax (66) (554)

Loss on disposal after income tax (66) (554)

Note 9. Current assets - cash and cash equivalents


$'000 $'000

Cash at bank and on hand 1,043 234

Note 10. Current assets - trade and other receivables


$'000 $'000

Trade receivables 113 -Other receivables 32 91Income tax refund due - 135BAS receivable 153 -

298 226

Due to the nature of the consolidated entity’s business operations, management assessed that no allowance for expected credit losses is required at 30 June 2019.

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Note 11. Current assets - inventories


$'000 $'000

Stock on hand - at cost 1,425 -Injectable inventory at cost 337 322Dermal inventory at cost 132 142CoolSculpting® inventory at cost 294 350

2,188 814

Note 12. Current assets - other assets


$'000 $'000

Prepayments 564 71Security deposits 150 182

714 253

Note 13. Non-current assets - property, plant and equipment


$'000 $'000

Leasehold improvements - at cost 1,141 1,316Less: Accumulated depreciation (539) (453)

602 863

Clinic equipment - at cost 3,152 4,429Less: Accumulated depreciation (2,095) (2,165)

1,057 2,264

Clinic equipment under lease 1,500 1,846Less: Accumulated depreciation (1,267) (1,439)

233 407

Motor vehicles - at cost - 27Less: Accumulated depreciation - (11)

- 16

Computer equipment - at cost 139 152Less: Accumulated depreciation (115) (94)

24 58

Office equipment - at cost 98 -Less: Accumulated depreciation (44) -

54 -

1,970 3,608

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Note 13. Non-current assets - property, plant and equipment (continued)

ReconciliationsReconciliations of the written down values at the beginning and end of the current and previous financial year are set outbelow:

Leasehold improvements

ClinicEquipment

Leased ClinicEquipment Equipment equipment

MotorVehicle

Consolidated $'000 $'000 $'000 $'000 $'000 $'000 $'000

Balance at 1 July 2017 846 3,110 869 71 - 20 4,916Additions 223 144 - 30 - - 397Additions through businesscombinations (note 34) - 104 - - - - 104Disposals (40) (92) - - - - (132)Depreciation expense (166) (1,002) (462) (43) - (4) (1,677)

Balance at 30 June 2018 863 2,264 407 58 - 16 3,608Additions 36 216 131 5 30 - 418Additions through businesscombinations (note 34) - - - - 41 - 41Disposals (146) (480) (103) (5) - (15) (749)Depreciation expense (151) (943) (202) (34) (17) (1) (1,348)

Balance at 30 June 2019 602 1,057 233 24 54 - 1,970

Note 14. Non-current assets - intangibles


$'000 $'000

Goodwill - at cost 5,941 8,971

Capitalised development costs - at cost 1,498 1,685Less: Accumulated amortisation (320) -

1,178 1,685

Website - at cost 149 -

Trademarks and licences - at cost 72 65Less: Accumulated amortisation (65) (53)

7 12

Formulations - at cost 350 -

7,625 10,668


$'000 $'000

Intangibles allocated to clinic and the Giving Brands cash generating units (Note 14(b)) 6,291 8,971Development costs, trademarks and licenses 1,334 1,697

7,625 10,668

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Note 14. Non-current assets - intangibles (continued)

Note 14(a)

ReconciliationsReconciliations of the written down values at the beginning and end of the current and previous financial year are set outbelow:

CapitalisedTrademarks & Development

Goodwill Licences Costs Formulations Website TotalConsolidated $'000 $'000 $'000 $'000 $'000 $'000

Balance at 1 July 2017 15,581 34 1,384 - - 16,999Additions - - 301 - - 301Additions through businesscombinations (note 34) 1,831 - - - - 1,831Disposals (1,315) - - - - (1,315)Impairment of assets (6,611) - - - - (6,611)Write off of assets (515) - - - - (515)Amortisation expense - (22) - - - (22)

Balance at 30 June 2018 8,971 12 1,685 - - 10,668Additions - 7 30 30 149 216Additions through businesscombinations (note 34) 3,011 - 30 320 - 3,361Disposals (763) - - - - (763)Adjustments - - (126) - - (126)Impairment of assets (5,278) - - - - (5,278)Write off of assets - - (4) - - (4)Allocate prior year R&D taxincentive received - - (117) - - (117)Amortisation expense - (12) (320) - - (332)

Balance at 30 June 2019 5,941 7 1,178 350 149 7,625

Goodwill amounts carried forward at 1 July 2018 were in relation to the clinical businesses acquired by the consolidated entity in previous financial periods. This goodwill has been allocated to cash generating units (CGU’s) according to the business combination that gave rise to the goodwill. These CGUs formed part of the clinical and beauty treatments segment in Note 4 Operating Segments.

The consolidated entity has recognised formulations and goodwill as a result of the acquisition of The Giving Brands Company Pty Ltd. As mentioned in Note 34 Business Combinations, these intangibles are being provisionally measured, pending management’s finalisation of their acquisition accounting within the measurement period.

Impairment Testing

During this period, management has considered Sunshine Vein Clinic (SVC) as part of the Cozmedics CGU based on the fact that SVC cannot operate in isolation and is dependent on clinic facilities, technology, management, supplier agreements/relationships and corporate support services of Cozmedics to generate cash inflows.

The recoverable amount of each CGU has been determined by a value-in-use calculation using a discounted cash flow model, based on a 5 year projection period approved by management, together with a terminal value.

Key assumptions are those to which the recoverable amount of an asset or CGUs is most sensitive.

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The following key assumptions were used in the discounted cash flow model for the clinical segment:● Average annual revenue growth rates of 3% determined with consideration to:● (a) Actual revenue results in the previous 12 months.● (b) The non-invasive cosmetic aesthetic market global growth expectations.● (c) Management’s expectations given recent investments into the clinics.● Average annual increases of 3.0% in clinic labour (noting there is significant capacity for revenue growth at the current

costs given the number of treatment rooms and the current utilisation of clinicians).● Average annual increases of 2.5% in clinic facility costs.● Average annual increases in direct administrative and support costs of 2.5%.● A perpetuity growth rate of 1.0% p.a.● A weighted average cost of capital (WACC) pre-tax discount rate of 22% and a post-tax discount rate of 16.0% p.a.

(2018: 11.0%p.a.). The WACC has been determined based on a range of factors and includes a premium for marketexpectations

The following key assumptions were used in the discounted cash flow model for the Giving Brands segment:● Average annual revenue growth rates of 109% determined with consideration to:● (a) Actual revenue results in the previous 12 months with existing contracts.● (b) Contracts with new customers anticipated to generate additional revenue, such as Woolworths and Sportsgirl.● (c) Contracts for brands to be launched in 2020, including Elle Make-Up, Elle Kids, Elle Baby, and private label ranges

for MYER.● Average annual increases of 31.0% in employee costs to account for additional sales force staff.● Average annual increases in direct administrative and support costs of 3%.● A perpetuity growth rate of 3.0% p.a. based on industry growth and management expectations.● A weighted average cost of capital (WACC) pre-tax discount rate of 24% and a post-tax discount rate of 17.5% p.a.

The WACC has been determined based on a range of factors and includes a premium for market expectations.

Impairment chargesBased on a discounted cash flow valuation using the assumptions above, the carrying amount of goodwill for the clinic CGUs exceeded its recoverable amount and therefore an impairment charge of $5,278,000 has been recognised in the current financial period (2018: $6,611,000).

SensitivityAs disclosed in note 3, the directors have made judgements and estimates in respect of impairment testing of goodwill.Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease. The sensitivities are as follows:

● Revenue would need to decrease by more than 3% for the Broadway clinic before goodwill would need to beimpaired, with all other assumptions remaining constant.

● The discount rate would be required to increase by 3% for the Broadway clinic before goodwill would need to beimpaired, with all other assumptions remaining constant.

● Revenue would need to decrease by more than 1% for the Penrith clinic before goodwill would need to be impaired,with all other assumptions remaining constant.

● The discount rate would be required to increase by 3% for the Penrith clinic before goodwill would need to beimpaired, with all other assumptions remaining constant.

● Revenue for The Giving Brand Company would need to decrease by more than 12% before goodwill would need tobe impaired, with all other assumptions remaining constant.

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Note 14(b)

Goodwill and intangibles with indefinite useful lives are allocated to the following cash generating units (CGU):

30 Jun 2019 30 June 2018

$'000 $'000

Melbourne Collagen Foundation & Cosmetic Skin InstituteGoodwill 1,758 1,758Impairment charge (1,758) (1,608)Melbourne Collagen Foundation & Cosmetic Skin Institute - 150

SkinovateGoodwill 1,237 1,237Impairment charge (760) (738)Skinovate 477 499

Heber DavisGoodwill 2,573 2,573Impairment charge (967) (125)Heber Davis 1,606 2,448

Face TodayGoodwill - 850Impairment charge - (88)Face Today - 762

Rejuven8 PenrithGoodwill 700 700Impairment charge (486) -Rejuven8 Penrith 214 700

CozmedicsGoodwill 7,122 6,531Impairment charge (6,489) (3,306)Cozmedics 633 3,225

Facial ArtistryGoodwill 596 596Impairment (596) -Facial Artistry - 596

Sunshine Vein Clinic*Goodwill - 591Sunshine Vein Clinic - 591

Canberra Cosmedic Medicine CentreGoodwill 354 354Impairment Charge (354) (354)Canberra Cosmedic Medicine Centre - -

Total Clinics 2,930 8,971

Giving BrandsGoodwill 3,011 -Formulations 320 -Development 30 -Giving Brands 3,361 -

Carrying amount at the end of the year 6,291 8,971

* - Sunshine Vein Clinic has been combined wit h Cozmedics in the June 2019 figures48

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Note 15. Non-current assets - deferred tax


$'000 $'000

Deferred tax asset - 42

Note 16. Non-current assets - other assets


$'000 $'000

Security deposits 376 348

Note 17. Current liabilities - trade and other payables


$'000 $'000

Trade payables 1,908 1,377Directors fees payable 115 90Other payables & accruals 822 998Payable to related parties - 3BAS payable 20 128

2,865 2,596

Refer to note 26 for further information on financial instruments.

Note 18. Current liabilities - borrowings


$'000 $'000

Borrowings - current 372 -Convertible notes payable 2,000 -Borrowings from related parties - current - 529Lease liability 101 306

2,473 835


The borrowings comprise a number of loans repayable within one year with interest rates ranging from 5.7% to 15.34%. All loans are fixed interest loans, with the exception of a loan of $200,000, repayable 13 January 2020, which has a variable interest rate.

The loans are unsecured, with the exception of the $200,000 variable rate loan, which is secured by a general charge over the business and assets of The Giving Brands Company Pty Ltd.

Refer to note 21 for further information on convertible notes and lease liability terms and assets pledged as security and financing arrangements.

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Note 19. Current liabilities - provisions


$'000 $'000

Employee benefits 157 252Onerous lease 121 -

278 252

Note 20. Current liabilities - contract liabilities


$'000 $'000

Loyalty payable 345 34Deferred consideration - 75Income in advance 135 141

480 250

Revenue recognized in the current reporting period that relates to carried-forward contract liabilities was $141,000 (2018: $174,000).

There was no revenue recognized during the year from performance obligations satisfied in previous periods (2018: nil).

Unsatisfied performance obligationsThe aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end ofthe reporting period was $480,000 as at 30 June 2019 ($250,000 as at 30 June 2018). Management expects to recognise $292,000 as revenue in financial year 2020 and a further $188,000 in financial year 2021.

Note 21. Non-current liabilities - borrowings


$'000 $'000

Convertible notes 1,276 3,208Borrowings 159 -Lease liability 46 13

1,481 3,221


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Note 21. Non-current liabilities - borrowings (continued)

Total secured liabilitiesThe total secured liabilities (current and non-current) are as follows:


$'000 $'000

Convertible notes 1,276 3,208Lease liability 147 319Other loan 200 -Convertible notes - current 2,000 -

3,623 3,527

Assets pledged as securityThe convertible note is secured by $3.3m of CoolSculpting® equipment at cost, classified as Clinic Equipment in theconsolidated entity's financial statements.

The terms of the convertible notes are below:

1. Interest rate is 10% of face value of notes (payable bi-annually in arrears).2. Noteholders are not able to redeem notes for cash until the end of the term of the notes.3. Noteholders are able to convert notes into equity during the term of the notes, subject to shareholder approval.4. Conversion rate is $0.10 per note.5. The terms of the notes end in June 2020 ($2,000,000) and November 2020 ($1,300,000)6. Repossession of clinic equipment under finance in event of default or breach7. Security cash deposit in accordance with Deed of Set Off to be released over the life of the term. This security deposit

has been recognised in receivables.

The lease liabilities are effectively secured as the rights to the leased assets, recognised in the statement of financial position, revert to the lessor in the event of default.

The Other loan is secured by a general charge over the business and assets of The Giving Brands Company Pty Ltd.

Note 22. Non-current liabilities - provisions


$'000 $'000

Employee benefits 71 30Onerous lease 103 -

174 30

Note 23. Equity - issued capital

Consolidated30 June 2019 30 June 2018 30 June 2019 30 June 2018

Shares Shares $'000 $'000

Ordinary shares - fully paid 351,620,733 126,065,644 36,710 25,854

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Note 23. Equity - issued capital (continued)

Movements in ordinary share capital

Details Date Shares Issue price $'000

Balance 1 July 2017 123,109,683 25,300Issue of COZmedics acquisition-related shares 30 August 2017 737,211 $0.30 221Issue of Artisan Rejuvenation Clinic acquisition-related shares 1 November 2017 2,218,750 $0.14 333

Balance 30 June 2018 126,065,644 25,854Placement to institutional and sophisticated investors 5 October 2018 140,000,000 $0.05 7,000Rights issue 8 October 2018 27,829,537 $0.05 1,391Issue of GBCo acquisition-related shares 8 October 2018 51,725,552 $0.05 2,586Issue of shares pursuant to ambassador agreement 26 March 2019 2,000,000 $0.05 100Issue of shares pursuant to ambassador agreement 12 April 2019 2,000,000 $0.05 100Issue of shares pursuant to ambassador agreement 3 May 2019 2,000,000 $0.05 100Capital raising costs - (421)

Balance 30 June 2019 351,620,733 36,710

Ordinary sharesOrdinary 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.

Share buy-backThere is no current on-market share buy-back.

Capital risk managementThe consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year.

The capital risk management policy remains unchanged from the 2018 Annual Report.

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Note 24. Equity - accumulated losses


$'000 $'000

Accumulated losses at the beginning of the financial year (16,845) (5,164)Loss after income tax expense for the year (13,402) (11,681)

Accumulated losses at the end of the financial year (30,247) (16,845)

Note 25. Equity - dividends

There were no dividends paid, recommended or declared during the current or previous financial year.

Note 26. Financial instruments

Financial risk management objectivesThe consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses derivative financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.

Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the consolidated entity's operating units. Finance reports to the Board on a monthly basis.


$'000 $'000

Financial assetsCash and cash equivalents 1,043 234Security deposit 150 182Other receivables 298 91Total financial assets 1,491 507

Financial liabilitiesPayables 2,865 2,593Convertible Note 3,276 3,208Borrowings 678 320Total financial liabilities 6,819 6,121

Market risk

Price riskThe consolidated entity is not exposed to any significant price risk.

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Note 26. Financial instruments (continued)

Interest rate riskThe consolidated entity's main interest rate risk arises from long-term borrowings. Any borrowings obtained at variablerates expose the consolidated entity to interest rate risk. Borrowings obtained at fixed rates expose the consolidated entity to fair value interest rate risk.

During the years ended 30 June 2019 and 30 June 2018 the consolidated entity did not have any borrowings at variable rates, with the exception of a $200,000 variable rate arising in the year ended 30 June 2019. The consolidated entity considers that the fair value interest rate risk arising from its fixed rate borrowings, and the risks arising from interest rate changes for its variable rate borrowings, are not material.

Credit riskCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. 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 have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the consolidated entity.

i) Cash deposits

Credit risk for cash deposits is managed by holding all cash deposits with major Australian banks.

ii) Other receivablesThe consolidated entity does not have any material credit risk exposure for other receivables or other financial instruments. The security deposit receivable is in accordance with a deed of setoff in relation to clinic equipment financing.

Liquidity riskVigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

There was no unused facility as at 30 June 2019.

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Note 26. Financial instruments (continued)

Remaining contractual maturitiesThe following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. Thetables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

Weightedaverage

interest rate 1 year or lessBetween 1 and 2 years

Between 2and 5 years Over 5 years

Remainingcontractualmaturities

Consolidated - 30 June 2019 % $'000 $'000 $'000 $'000 $'000

Non-derivativesNon-interest bearingPayables - 2,865 - - - 2,865

Interest-bearing - variableOther loans 5.73% 221 - - - 221

Interest-bearing - fixed rateOther loans 10.30% 151 159 - - 310Convertible notes payable 10.00% 2,000 1,276 - - 3,276Lease liability 12.10% 101 46 - - 147Total non-derivatives 5,338 1,481 - - 6,819

Weightedaverage

interest rate6 months or

less

Between 6and 12months

Between 1and 5 years Over 5 years

Remainingcontractualmaturities

Consolidated - 30 June 2018 % $'000 $'000 $'000 $'000 $'000

Non-derivativesNon-interest bearingPayables - 2,627 - - - 2,627

Interest-bearing - fixed ratePayables 8.00% 532 - - - 532Convertible notes payable 8.00% 52 80 3,752 - 3,884Lease liability 10.10% 189 133 13 - 335Total non-derivatives 3,400 213 3,765 - 7,378

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

Fair value of financial instrumentsUnless otherwise stated, the carrying amounts of financial instruments reflect their fair value.

Note 27. Fair value measurement

Fair value hierarchyThe carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.

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Note 28. Key management personnel disclosures

CompensationThe aggregate compensation made to directors and other members of key management personnel of the consolidatedentity is set out below:


$ $

Short-term employee benefits 681,058 899,117Post-employment benefits 71,852 67,417Termination benefits 234,323 -

987,233 966,534

Note 29. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by RSM Australia Partners, the auditor of the Company:


$ $

Audit services - RSM Australia Partners (30 June 2018: Pitcher Partners)Audit or review of the financial statements 115,000 166,768

Other services - RSM Australia Partners (30 June 2018: Pitcher Partners)Taxation services - 8,390

115,000 175,158

Note 30. Contingent liabilities

There were no contingent liabilities at 30 June 2019.

Note 31. Commitments


$'000 $'000

Lease commitments - operatingCommitted at the reporting date but not recognised as liabilities, payable:Within one year 529 1,107One to five years 669 1,986More than five years 18 285

1,216 3,378

Note 32. Related party transactions

Parent entityWellness and Beauty Solutions Limited is the parent entity.

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Note 32. Related party transactions (continued)

SubsidiariesInterests in subsidiaries are set out in note 35.

Key management personnelDisclosures relating to key management personnel are set out in note 28 and the remuneration report included in the directors' report.

Transactions with related partiesThe following transactions occurred with related parties:


$ $

Payment for other expenses:Rent paid to director-related entity (1) - 68,000Consulting fees paid to director-related party (2) 42,500 225,000Payment for consultants (3) 48,000 -

Other transactions:Capital costs (4) 360,000 -Payment for motor vehicle purchase (5) 10,446 -Payment for convertible note (6) 20,000 -

(1) Office rent paid to company, Fielding Hill Pty Ltd (Fielding Hill), controlled by Paul Fielding, who was a director of the Company during the relevant period. The rent related to a lease of premises located at Level 4, 11-19 Bank Place, Melbourne with Fielding Hill. The premises was the corporate head office of the consolidated entity up until 31 January 2018. The Lease was in a standard form and the Board considered that it was on arm's length commercialterms.

(2) Consulting fees paid to spouse of Paul Fielding, who was a director of the Company during the relevant period.Fees were paid to JMN Services Pty Ltd, a company related to Mr Fielding.

(3) Corporate advisory fees paid to Hennesey Capital Partners Pty Ltd (Hennessey Capital), which changed its name from Fielding Hill Pty Ltd. Paul Fielding, who was a director of the Company during the relevant period, was adirector of Hennessey Capital.

(4) Capital raising fees paid to Hennessey Capital.(5) Mr Fielding purchased a motor vehicle for $10,446 from the Company on 26 September 2018. The written down

value of the vehicle at the transaction date was $14,628.(6) Receipt from Fielding Hill for convertible note application.

Receivable from and payable to related partiesThere were no trade receivables from or trade payables to related parties at the current and previous reporting date.

Loans to/from related partiesThe following balances are outstanding at the reporting date in relation to loans with related parties:


$ $

Current receivables:Loan to key management personnel* 26,597 -

Current borrowings:Loan from director-related entity** - 531,807

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Note 32. Related party transactions (continued)

* Balance at 30 June 2019 comprised an amount receivable from Managing Director Christine Parkes. The loan wasadvanced to her by The Giving Brands Company Pty Ltd (GBCo) prior to its acquisition by the Company. As at thedate of acquisition the balance of the loan was $18,986. As at the end of the financial period the balance of the loan was $26,597.

** Balance at 30 June 2018 comprised amounts payable to director Paul Fielding, or entities controlled by him, as follows: loan facility - $528,933; credit card facility in director's name, utilised by the Company: $2,874. Mr Fielding resigned as a director during the half year ended 31 December 2018 and the loans were repaid in full during thisperiod.

Note 33. Parent entity information

Set out below is the supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income

Parent30 June 2019 30 June 2018

$'000 $'000

Loss after income tax (12,202) (11,681)

Total comprehensive income (12,202) (11,681)

Statement of financial position

Parent30 June 2019 30 June 2018

$'000 $'000

Total current assets 2,086 1,527

Total assets 13,695 16,193

Total current liabilities 4,539 3,933

Total liabilities 6,032 7,184

EquityIssued capital 36,710 25,854Accumulated losses (29,047) (16,845)

Total equity 7,663 9,009

Guarantees entered into by the parent entity in relation to the debts of its subsidiariesThe parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018, withthe exception of deed of a deed a cross guarantee between the Company and Heber Davis Pty Ltd which was in place at 30 June 2018 but is no longer in place at 30 June 2019.

Contingent liabilitiesThe parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018.

Capital commitments - Property, plant and equipmentThe parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.

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Note 33. Parent entity information (continued)

Significant accounting policiesThe accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2,except for the following:

● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.● Investments in associates are accounted for at cost, less any impairment, in the parent entity.● Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an

indicator of an impairment of the investment.

Note 34. Business combinations

The Giving Brands Company Pty Ltd (GBCo)On 8 October 2018 the Company acquired 100% of the ordinary shares of The Giving Brands Company Pty Ltd (GBCo) fortotal consideration transferred of $2,586,000, comprising 51,725,552 fully paid shares in the Company. There was no cash consideration issued. GBCo is a brand immersion company that owns, licenses and partners with multiple brands in the beauty industry and was acquired to complement and strengthen the Company's existing place within the Australian beautyand wellness industry. The goodwill of $3,011,000 represents the ability of the consolidated entity to vertically integrate its retail skincare business through the development and rollout by the consolidated entity of a range of skincare products based on GBCo's intellectual property, and the ability of the consolidated entity to diversify and grow its revenue base. The acquired business contributed revenues of $1,282,000 and loss after tax of $1,214,000 to the consolidated entity for theperiod from 8 October 2018 to 30 June 2019. If the acquisition occurred on 1 July 2018, the full year contributions would have been revenues of $1,570,000 and loss after tax of $1,311,000.

In relation to the business acquisition, the consolidated entity has performed a provisional assessment of the fair value of the assets and liabilities as at the date of the acquisition. For the purposes of the balance sheet, the assets and liabilities have been recorded at their provisional fair values. Under Australian Accounting Standards, the consolidated entity has up to 12 months from the date of acquisition to complete its initial acquisition accounting. The consolidated entity has already commenced this exercise to consider the fair value of intangible assets acquired. As at the date of this report, this assessment is not complete.

Details of the acquisition are as follows:

Fair value$'000

Cash and cash equivalents 66Trade receivables 101Other receivables 19Inventories 243Prepayments 11Other current assets 8Plant and equipment 41Formulations and development costs 350Trade payables (326)Other payables (56)Accruals (67)Employee benefits (4)Borrowings (811)

Net liabilities acquired (425)Goodwill 3,011

Acquisition-date fair value of the total consideration transferred 2,586

Representing:Wellness and Beauty Solutions Limited shares issued to vendor 2,586

Acquisition costs expensed to profit or loss 19859

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Note 35. Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2:

Ownership interestPrincipal place of business / 30 June 2019 30 June 2018

Name Country of incorporation % %

The Giving Brands Company Pty Ltd Australia 100.00% -Heber Davis Pty Ltd Australia 100.00% -

Note 36. Events after the reporting period

On 18 July 2019, the Company secured a $4M facility with Timelio Pty Ltd for purchase order (manufacturing) and debtor financing for the brand business. This facility gives flexibility to WNB’s debt structure to more effectively manage working capital requirements, particularly for lead time brand manufacturing and provides adequate headroom to invest in growth of GBCo’s expanding brand portfolio.

On 29 August 2019, the Company announced the acquisition of a leading Sydney-based skincare and beauty distributor True Solutions International Pty Ltd (True Solutions). The acquisition is to be funded through the issue of 10,000,000 Convertible Notes at an issue price of $0.05, equated to an aggregate issue price of $500,000. Each note is non-interest bearing and has a maturity date of 31 July 2022. The purchase also includes approximately $1.5m in stock held on consignment that will be acquired as it is sold down by WNB. The issue of the Convertible Notes is subject to the approval of the holders of existing convertible notes issued by the Company. If approval is not obtained, the Company must pay the purchase price in cash on the earlier of the completion of a capital raise or 12 months.

True Solutions International Pty LtdOn 29 August 2019 the Company acquired the business (True Solutions) of skincare and beauty distributor True SolutionsInternational Pty Ltd for total consideration comprising 10,000,000 Convertible Notes at an Issue Price of $0.05, equating to a nominal aggregate issue price of $500,000. Each note is non-interest bearing and has a maturity date of 31 July 2022. The issue of the Convertible Notes is subject to the approval of the holders of existing convertible notes issued by the Company. If approval is not obtained, the Company must pay the purchase price in cash on the earlier of the completion of a capital raise or 12 months. In addition to the convertible notes consideration, there will be a minor cash adjustment reflecting the difference between demonstration stock acquired and liabilities assumed.True Solutions distributes premium and scientifically validated professional and cosmeceutical skincare and makeup brands, along with medi-spa technologies including clinically-proven LED light therapy and micro-needling technology.Founded in 1992, the company supplies more than 1,000 professional aesthetic clinics, beauty salons and spas across Australia and New Zealand. The acquisition is expected to enhance the consolidated entity's product portfolio with a suite of professional use products and technologies, whilst also providing access to True Solutions’ customer network as an additional distribution channel for the consolidated entity's brands.

As the acquisition occurred after the end of the financial year ended 30 June 2019, it is not reflected in the statement of financial position as at that date. However, in accordance with the disclosure requirements of AASB 3 Business Combinations details of the acquisition are set out as follows, based on initial business acquisition accounting estimates, based on the consolidated entity's provisional assessment of the fair values of the assets and liabilities as at the date of the acquisition. Under Australian Accounting Standards, the consolidated entity has up to 12 months from the date of acquisition to complete its initial acquisition accounting. The consolidated entity has already commenced this exercise to consider the fair value of intangible assets acquired. As at the date of this report, this assessment is not complete.

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Note 36. Events after the reporting period (continued)

The estimated goodwill of $472,000 represents the synergies expected to arise due to the extension of the consolidated entity's distribution into True Solutions' network of over 1,000 clinics, beauticians and spas while also enhancing the sales opportunities for True Solutions' suite of professional brands across consolidated entity's existing sales network.

Details of the acquisition are as follows:Fair value

$'000Inventories 156Plant and equipment 27Development 1Employee provisions (173)Net assets acquired 11Goodwill 494Acquisition-date fair value of the total consideration transferred 505

Representing:Cash paid or payable to vendor 5Contingent consideration - convertible note liability component 444Contingent consideration - convertible note equity component 56

505

No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Note 37. Reconciliation of loss after income tax to net cash used in operating activities


$'000 $'000

Loss after income tax expense for the year (13,402) (11,681)

Adjustments for:Depreciation and amortisation 1,679 1,698Impairment of goodwill 5,278 6,611Write off of non-current assets 87 -Net loss on disposal of non-current assets 274 -Share-based payments 273 -Net loss on disposal of business - 554Net loss on settlement of deferred consideration - 209Non-cash interest expense 103 69Non refundable deposit taken to investing - 100Bad debts 28 -

Change in operating assets and liabilities:Decrease in trade and other receivables 73 55Decrease/(increase) in inventories (1,263) 302Increase in prepayments (627) -Increase in other operating assets (42) (39)Increase in trade and other payables 334 444Increase/(decrease) in other provisions 181 (16)Decrease in other operating liabilities - (33)

Net cash used in operating activities (7,024) (1,727)

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Note 38. Non-cash investing and financing activities


$'000 $'000

Shares issued in relation to business combinations 2,586 554

Note 39. Earnings per share


$'000 $'000

Earnings per share for loss from continuing operationsLoss after income tax attributable to the owners of Wellness and Beauty Solutions Limited (13,169) (10,735)

Number Number

Weighted average number of ordinary shares used in calculating basic earnings per share 287,896,051 126,065,644

Weighted average number of ordinary shares used in calculating diluted earnings per share 287,896,051 126,065,644

Cents Cents

Basic earnings per share (4.57) (8.52)Diluted earnings per share (4.57) (8.52)


$'000 $'000

Earnings per share for loss from discontinued operationsLoss after income tax attributable to the owners of Wellness and Beauty Solutions Limited (233) (946)

Number Number



Cents Cents



$'000 $'000

Earnings per share for lossLoss after income tax attributable to the owners of Wellness and Beauty Solutions Limited (13,402) (11,681)

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Note 39. Earnings per share (continued)

Number Number



Cents Cents


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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Directors' declaration30 June 2019

In the directors' opinion:

● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, theCorporations Regulations 2001 and other mandatory professional reporting requirements;

● the attached financial statements and notes comply with International Financial Reporting Standards as issued by theInternational Accounting Standards Board as described in note 2 to the financial statements;

● the attached financial statements and notes give a true and fair view of the consolidated entity's financial position asat 30 June 2019 and of its performance for the financial year ended on that date; and

● there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become dueand payable.

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the directors

___________________________Angelos GiannakopoulosChairman

30 September 2019

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RSM Australia Partners

Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007

T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199

www.rsm.com.au

INDEPENDENT AUDITOR’S REPORTTo the Members of Wellness and Beauty Solutions LimitedOpinionWe have audited the financial report of Wellness and Beauty Solutions Limited (the Company) and its subsidiaries (the Consolidated Entity), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.In our opinion the accompanying financial report of the Consolidated Entity is 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 2019 and of its

financial performance for the year then ended; and(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for OpinionWe 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 Consolidated Entity 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.

Material Uncertainty Related to Going ConcernWe draw attention to Note 2 in the financial report, which indicates that the Consolidated Entity incurred a net loss of $13,402,000 and had net cash outflows from operating activities of $7,024,000 for the year ended 30 June 2019. As at that date, the Consolidated Entity's current liabilities exceeded its current assets by $1,853,000. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Consolidated Entity's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter How our audit addressed this matter

Accounting for acquisition of The Giving Brands Company Pty Ltd CompanyDuring the year, the consolidated entity completed the acquisition of The Giving Brands Company PtyLtd, as described in Note 34 of the consolidatedfinancial statements. Management has determined the acquisition to be a business combination.

Management has performed a provisionalassessment of the net fair value of assets and liabilities acquired, which resulted in goodwill of$3 million being recognised on acquisition date. As at date of this audit report, this assessment is not complete.

This accounting for this acquisition is considered to be a Key Audit Matter as it involved the exercise of judgement in relation to the fair value of acquiredassets and liabilities. Furthermore, The Giving Brands Company Pty Ltd is a material component of the Consolidated Entity.

Our audit procedures in relation to the acquisition of The Giving Brands Company Pty Ltd included:

• Reviewing the share sale and purchaseagreement;

• Assessing the transaction against the criteria of abusiness in accordance with AASB 3 Business Combinations;

• Assessing management’s determination of the fairvalue of the consideration transferred and net assets acquired; and

• Reviewing the disclosures in Note 34 to thefinancial statements in order to assess compliance with the disclosure requirements of AASB 3.

Impairment of GoodwillThe consolidated entity has goodwill of $5.9 million relating to the historical acquisition of numerous clinics as well as the recent acquisition of The Giving Brands Company Pty Ltd. Refer Note 14 in the financial statements.

This was considered a Key Audit Matter due to the materiality of the goodwill balance, and the directors’ assessment of the ‘value in use’ of the cash generating unit (“CGU”) involves judgement regarding the future underlying cash flows of the business and the discount rates applied.

For the year ended 30 June 2019, management performed an impairment assessment of the goodwill balance by:- Calculating the value in use for each respective

CGU using a discounted cash flow model. This model used cash flows (revenues, expenses and capital expenditure) for a period of 5 years for each CGU. A terminal growth rate wasapplied in the 5th year. The cash flows were thendiscounted to net present value using the CGUs’ weighted average cost of capital (WACC); and

- Comparing the resulting value in use of the CGUto the respective book values.

Our audit procedures in relation to management’s impairment assessment included:

• Assessing management’s determination forallocation of goodwill to the respective CGUs based on the nature of the Consolidated Entity’s business and the format in which results are monitored and reported

• Assessing the valuation methodology used;

• Challenging the reasonableness of keyassumptions, including the cash flow projections, WACC discount rates, and sensitivities used; and

• Checking the mathematical accuracy of the cashflow model and assessing reasonableness ofinput data to supporting evidence.

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Management also performed a sensitivity analysis for the value in use calculations, by varying the assumptions used (growth rates, terminal growth rate and WACC) to assess the impact on the valuations.

Management have concluded that an impairment expense to the carrying value of the clinics was required of $5.3 million.

Other InformationThe directors are responsible for the other information. The other information comprises the information included in the Consolidated Entity's annual report for the year ended 30 June 2019, but does not include the financial report and the auditor's report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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Responsibilities of the Directors for the Financial ReportThe directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Consolidated Entity 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 Consolidated Entity or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Financial ReportOur objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf.This description forms part of our auditor's report.

Report on the Remuneration ReportOpinion on the Remuneration Report

We have audited the Remuneration Report included in pages 11 to 16 of the directors' report for the year ended 30 June 2019.

In our opinion, the Remuneration Report of Wellness and Beauty Solutions Limited, for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

RSM AUSTRALIA PARTNERS

R B MIANOPartner

30 September 2019Melbourne, Victoria

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Shareholder information30 June 2019

The shareholder information set out below was applicable as at 21 August 2019.

Current on-market buy-back

There is no current on-market buy-back.

Distribution of equitable securitiesAnalysis of number of equity security holders by size of holding:

Number of holdersof ordinary

shares

1 to 1,000 111,001 to 5,000 415,001 to 10,000 2510,001 to 100,000 135100,001 and over 176

388

Holding less than a marketable parcel 150

Equity security holders

Twenty largest quoted equity security holdersThe names of the twenty largest security holders of quoted equity securities are listed below:

Ordinary shares% of total

sharesNumber held issued

Merrill Lynch (Australia) Nominees Pty Limited 52,237,553 14.86GBC Investments Pty Ltd (GBC Investment A/C) 51,725,552 14.71UBS Nominees Pty Ltd 50,986,165 14.50Egea Pty Ltd 15,343,753 4.36Brispot Nominees Pty Ltd (House Head Nominee A/C) 15,305,271 4.35Australian Executor Trustees Limited (No 1 Account) 10,467,941 2.98Mr Geoffrey Ronald Pearce (Pearce Family Sett A/C) 10,000,000 2.84Polar Bear Capital (The Steve Cain Family A/C) 7,563,222 2.15P K Capital Pty Ltd 7,400,000 2.10GE Equity Investments Pty Ltd 5,500,000 1.56Mr Gabriel Hewitt 5,000,000 1.42Mr Paul Richard Fielding 4,300,000 1.22Fip Investments (Vic) Pty Ltd (Fip Investment A/C) 4,125,000 1.17Kembla No 20 Pty Ltd (Caa A/C) 4,100,000 1.17Govinda Freedom Fund Pty Ltd (Super Govinda A/C) 3,500,000 1.00Super Fielding Pty Ltd (Fielding Superannuation Fund) 3,300,000 0.94Sunlora Pty Ltd (The Three Fish Super A/C) 3,000,000 0.85Mr Paul Richard Fielding 2,750,000 0.78Mrs Caroline Margaret Yencken (Somerset Drive A/C) 2,500,000 0.71Marie Scodella & Associates Pty Ltd (Super Fund A/C) 2,447,592 0.70

261,552,049 74.37

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Wellness and Beauty Solutions Limited(Formerly known as Total Face Group Limited)Shareholder information30 June 2019

Unquoted equity securitiesThe Company currently has 3,300,000 unlisted convertible notes on issue.

Substantial holdersSubstantial holders in the Company, as disclosed in substantial holding notices given to the Company, are set out below:

Ordinary shares% of total

sharesNumber held issued

Regal Funds Management Pty Ltd 59,496,730 16.92GBC Investments Pty Ltd 51,725,552 14.71Geoffrey Pearce and associated entities 43,839,375 12.40TIGA Trading Pty Ltd and associated entities 41,489,435 11.80

Voting rightsThe voting rights attached to ordinary shares are set out below:

Ordinary sharesOn a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll eachshare shall have one vote.

There are no other classes of equity securities.

Restricted securities

Class Expiry Date

Corporate governance statement

Refer to the Company's Corporate Governance statement at: http://wnbltd.com.au/investor-centre/ and lodged on ASX on 30 September 2019.

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Number of shares

Fully paid ordinary shares subject to voluntary escrow 26 March 2020 2,000,000Fully paid ordinary shares subject to voluntary escrow 12 April 2020 2,000,000Fully paid ordinary shares subject to voluntary escrow 3 May 2020 2,000,000

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Wellness and Beauty Solutions Limited · In d e p e ndent auditor's report to the members of...

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