TALIUS GROUP LIMITED — Interim / Quarterly Report 2021

Aug 29, 2021

Appendix 4D

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Lodged with the ASX under listing rule 4.2A

REPORTING PERIOD

Report for the half-year ended: 30 June 2021 Previous corresponding period is half-year ended: 30 June 2020

RESULTS FOR ANNOUNCEMENTS TO THE MARKET

RESULTS FOR ANNOUNCEMENTS TO THE MARKET
		Previous
	Current period	corresponding	%
		period	change
	$	$
Revenue from ordinary activities	1,827,104	1,656,819	10%
Loss from ordinary activities after tax for the period attributable to members	(1,084,641)	(1,920,569)	(44%)
Loss for the period attributable to members	(1,084,641)	(1,920,569)	(44%)

Dividends

No dividends were declared or paid for the period ended 30 June 2021 (30 June 2020: nil). There are no dividend or distribution reinvestment plans in operation.

For a discussion on the items above refer to the Review of Operations section contained in the Directors’ Report.

NET TANGIBLE ASSETS PER SECURITY

NET TANGIBLE ASSETS PER SECURITY
	June	June
	2021	2020
	$	$
Net tangible assets per security	0.0022	0.0015

ENTITIES OVER WHICH CONTROL HAS BEEN GAINED OR LOST DURING THE PERIOD

The 100% owned subsidiary, HomeStay Care Solutions Pte Ltd was deregistered on 8 February 2021.

ASSOCIATES AND JOINT VENTURES

HSC Technology Group Ltd did not have any associates or joint ventures at any time during the current period or the previous corresponding period.

INDEPENDENT AUDITOR’S REVIEW REPORT

The half-year report has been reviewed by the Company’s independent auditor and is not subject to a modified opinion, emphasis of matter or other matter paragraph. The independent auditor’s review report is attached as part of the half-year report.

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HALF-YEAR REPORT 30 JUNE 2021

The information contained in this document should be read in conjunction with HSC Technology Group Ltds annual report for the year ended 31 December 2020 and any public announcements made by the company in accordance with the continuous disclosure obligations arising from the Corporations Act 2001and the ASX Listing rules.

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www.hsctg.com.au The Next Generation of Aged Care Technology ABN: 62 111 823 762

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Contents

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Directors Report …………………………………………………………………………………….…	2
Auditor’s Independence Declaration …………………………………………………………………	6
Consolidated Statement of Profit or Loss and Other Comprehensive Income……………….…..	7
Consolidated Statement of Financial Position ..………………………………………………….….	8
Consolidated Statement of Changes in Equity ………………………………………………….….	9
Consolidated Statement of Cash flows …………………………………………………………..….	10
Notes to the Consolidated Financial Statements ………………………………………….………..	11
Directors’ Declaration …………………………………...……………………………………………..	16
Independent Auditor’s Review Report ……………………………………………………………….	17

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Directors Report

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The directors present their report, together with the financial statements on the consolidated entity, consisting of HSC Technology Group Ltd (or ‘the Company’ or ‘HSC’) and the entities it controlled at the end of, or during, the half-year ended 30 June 2021 (‘consolidated entity’ or ‘Group’).

DIRECTORS

The names of directors in office at any time during or since the end of the period are listed below. Directors have been in office since the start of the period to the date of this report unless otherwise stated.

NAME OF PERSON

POSITION

Leylan Neep Non-Executive Chairman Graham Russell Managing Director Ramsay Carter Non-Executive Director

COMPANY SECRETARY

Stephen Rodgers Company Secretary – Single capacity from 19 April 2021 Marcus Fraumano Joint Company Secretary – resigned 19 April 2021

OPERATING RESULTS

The loss of the consolidated entity amounted to $1,084,641 (30 June 2020: $1,920,569) after providing for income tax.

DIVIDENDS

No dividends were paid or declared during the half-year. No dividend has been recommended.

PRINCIPAL ACTIVITIES

The principal continuing activities of the consolidated entity during the half-year was the development and integration of an assistive technology IOT platform for the aged care and disability sectors.

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Directors Report

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REVIEW OF OPERATIONS

HSC provides a suite of technology enabled care solutions to the aged and disability sectors, across multiple verticals including retirement living, residential aged care, home, and community settings.

HSC’s Talius Smart Care platform combine smart sensors with an AI machine learning (powered by CSIRO) that delivers automated actions. Talius links awareness, analysis, and action through one platform allowing the care model to move from spot check care to sense-respond care. Nursing staff can switch their focus from data collection to building human connection. And, most importantly, residents benefit from a new era of autonomy and dignity.

During the financial period, HSC has continued to grow and successfully implement its strategy.

Revenue

Overall revenue has increased 10.3% year on year. This has been achieved through our continued partnerships with Bolton Clarke, the ACH group, IRT, Feros Care and St John’s Singapore and new partnerships with ADT, Anglicare Retirement Living Division NSW, Sapio and Telstra.

Subscription growth

Total active subscriptions have increased to more than 7,400 which is a 58% increase year to date. As projects finalise over the coming months these numbers will continue to increase and provide a stable revenue stream.

New Distribution Partnerships

• ADT – announced 8[th] March 2021, an initial order for $465,000 for personal emergency response systems (PERS) was received in quarter one and a further order for $1,100,000 received in quarter two to be delivered over the coming 12 months.

• Sapio and Telstra – announced 29[th] March 2021, the commencement of a partnership in initially replacing approximately 2,300 PERS for Anglicare’s Retirement Living division in NSW.

• Tunstall Healthcare – announced 9[th] August 2021, an initial three-year reseller agreement which makes the Talius platform and HSC products accessible by Tunstall Healthcare clients.

• VitalCALL/Chubb – announced 17[th] August 2021, reseller agreement signed to supply next generation assistive technology to their national client base.

Projects completed or underway

• ACH Group – at final completion with several sites in South Australia. This project included the delivery of voice activated nurse stations, along with a range of activity sensors that proactively capture data for the Talius Smart Care platform.

• St John’s Singapore – at final completion. This innovative project uses technology to deliver insight on each resident by creating a profile of daily living activities using the patented CSIRO algorithm and HSC’s Talius Smart Care platform. Talius captures data through a bespoke wristband pendant that incorporates advanced accelerometer and bluetooth location technology. This wristband provides Talius with crucial data on daily living activities including step count, location, the absence of attending the dining room or changes in hygiene patterns. The pendant also acts as a mobile emergency button to allow residents to call for help anywhere in the facility.

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Directors Report

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Project wins

• ACH Group – further two sites in South Australia awarded March 2021

• The Healey Retirement Village in Moorabbin VIC awarded June 2021

• Finley Regional Care in Finley NSW with our reselling partner eHomecare awarded June 2021

• Odyssey Private Aged Care – Stage 2 Building 3 in Robina QLD awarded July 2021

Innovation

The R&D team have been finalising the development of the software for integration for the St John’s Singapore project. This includes the integration of the CSIRO Smarter Safer Homes Technology - Activities of Daily Living algorithm. These developments and improvements are being shared with our sales pipeline and market feedback has been extremely positive.

We have also achieved the successful integration of the next generation bed alarm - Toch Sleepsense into our Talius Smart Care platform. This sensor allows for the provision of real time information on in/out of bed status, heart rate, breathing rate and quality of sleep.

HSC is conducting numerous trials and pilots with aged care providers. Some of these trials include the testing of the sensor datasets and the operational efficiency benefits that Talius is providing.

Organisational improvement

In line with our strategy to east coast our operation, consolidate costs and ensure we are closer to port and transport facilities, we have transitioned our logistics and support functions to Brisbane.

FINANCIAL POSITION

The net assets of the consolidated entity as at 30 June 2021 were $4,390,149 a decrease of $960,486 from net assets of $5,350,635 at 31 December 2020.

The consolidated entity’s net working capital, being current assets less current liabilities is a surplus of $4,220,335 (31 December 2020: $5,049,166).

EVENTS AFTER THE REPORTING PERIOD

In compliance with its continuous disclosure obligations, the Company will continue to update the market in regard to the impact of COVID-19 on its revenue channels and adverse impact on the Company. At this stage COVID-19 has not had a significant impact however the extended periods of shutdown in VIC and NSW are being monitored as they hinder site visits from sales and operations, which in turn may slow down the sales cycle. If any of these impacts appear material, the Company will notify investors through appropriate market updates.

The directors are not aware of any other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

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Directors Report

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AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included within this financial report.

This directors’ report is signed in accordance with a resolution of the Board of Directors, pursuant to section 306(3)(a) of the Corporations Act 2001 .

On behalf of the Directors

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Graham Russell Managing Director

Dated this 30[th] day of August 2021

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Auditor's Independence Declaration

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 30 JUNE 2021

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Notes Revenue Other income 3 Cost of sales Amortisation and depreciation expenses Consulting fees Employee benefits expenses Marketing expenses Rental expenses Finance costs Share based payments 6 Write-off of assets Foreign exchange losses Other expenses Loss before income tax Income tax expense Total loss for the period Other comprehensive income Items that may be reclassified subsequently to operating results Exchange differences on translating foreign controlled entities Other comprehensive income/(loss) for the period Total comprehensive loss for the period Loss per share Basic and diluted loss (cents per share)	Consolidated June June 2021 2020 $ $ 1,827,104 1,656,819 452 - (1,184,243) (1,284,095) (179,590) (461,211) (72,206) (76,801) (946,829) (449,114) (127,760) (45,663) (4,232) (9,025) - (23,109) (118,833) (114,030) - (821,039) (73,702) (39,309) (204,802) (253,992)
	(1,084,641) (1,920,569) - -
	(1,084,641) (1,920,569)
	5,322 (3,622)
	5,322 (3,622)
	(1,079,319) (1,924,191)
	(0.05) (0.12)

The accompanying notes form part of this financial report.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021

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		Consolidated	Consolidated
		June	December
	Notes
		2021	2020
		$	$
ASSETS
Current assets
Cash and cash equivalents		3,266,768	4,457,264
Other assets		1,011,451	864,285
Trade and other receivables		714,150	194,693
Inventory		1,284,389	1,148,638
Total current assets		6,276,758	6,664,880
Non-current assets
Plant and equipment		18,333	26,810
Right-of-use assets		330,602	163,871
Intangible assets	4	98,380	146,500
Total non-current assets		447,315	337,181
Total assets		6,724,073	7,002,061
LIABILITIES
Current liabilities
Trade and other payables		1,456,996	1,126,692
Contract liabilities		478,380	325,598
Lease liabilities		64,422	128,552
Provisions		56,625	34,872
Total current liabilities		2,056,423	1,615,714
Non-current liabilities
Lease liabilities		277,501	35,712
Total non-current liablities		277,501	35,712
Total liabilities		2,333,924	1,651,426
Net assets		4,390,149	5,350,635
EQUITY
Issued capital	5	16,130,123	15,985,123
Reserves	6	1,088,478	1,109,323
Accumulated losses		(12,828,452)	(11,743,811)
Total equity		4,390,149	5,350,635

The accompanying notes form part of this financial report.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 30 JUNE 2021

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			Foreign	Share
	Issued Capital	Accumulated Losses	Currency Translation	Based Payments	Total
			Reserve	Reserve
Balance at 1 January 2020	11,917,250	(9,377,335)	20,023	910,087	3,470,025
Loss for the period	-	(1,920,569)	-	-	(1,920,569)
Other comprehensive income	-	-	(3,622)	-	(3,622)
Total comprehensive loss for the period	-	(1,920,569)	(3,622)	-	(1,924,191)
Transactions with owners, directly in equity
Options and performance rights issued	-	-	-	146,867	146,867
Issue of share capital	997,500	-	-	(16,500)	981,000
Capital raising costs	(50,667)	-	-	-	(50,667)
Balance at 30 June 2020	12,864,083	(11,297,904)	16,401	1,040,454	2,623,034
Balance at 1 January 2021	15,985,123	(11,743,811)	1,791	1,107,532	5,350,635
Loss for the period	-	(1,084,641)	-	-	(1,084,641)
Other comprehensive income	-	-	5,322	-	5,322
Total comprehensive income/(loss) for the period	-	(1,084,641)	5,322	-	(1,079,319)
Transactions with owners, directly in equity
Share based payments	-	-	-	118,833	118,833
Issue of share capital	145,000	-	-	(145,000)	-
Balance at 30 June 2021	16,130,123	(12,828,452)	7,113	1,081,365	4,390,149

The accompanying notes form part of this financial report.

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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 30 JUNE 2021

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Cash flows from operating activities Receipts from customers Interest received Payments to suppliers and employees Interest paid Net cash used in operating activities Cash flows from investing activities Proceeds from disposal of financial assets Net cash used in investing activities Cash flows from financing activities Proceeds from issue of performance rights Transaction costs relating to issue of shares Repayment of lease liabilities Net cash used in financing activities Net decrease in cash held Cash at the beginning of the financial period Cash at the end of the financial period	Consolidated June June 2021 2020 $ $ 1,619,610 1,932,507 405 2,694 (2,777,600) (2,559,084) (10,469) (29,787)
	(1,168,054) (653,670)
	- 77,965
	- 77,965
	- 5,600 - (50,667) (22,442) (81,118)
	(22,442) (126,185)
	(1,190,496) (701,890) 4,457,264 2,744,414
	3,266,768 2,042,524

The accompanying notes form part of this financial report.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2021

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1.

Statement of Compliance

The consolidated half-year financial report is a general purpose financial report which has been prepared in accordance with AASB 134: Interim Financial Reporting and the Corporations Act 2001. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34: Interim Financial Reporting.

The consolidated half-year financial report does not include all of the notes and information normally included in an annual financial report. Accordingly, this report should be read in conjunction with the consolidated annual financial report for the year ended 31 December 2020.

Basis of Preparation

The consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain noncurrent assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are in Australian dollars unless otherwise stated.

The accounting policies and methods of computation followed in the preparation of the half-year financial report are consistent with those followed and disclosed in the Annual Financial Report for the financial year ended 31 December 2020, except for the impact of the standards, interpretations and amendments described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

New accounting standards and interpretations

The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

The Group has chosen not to early adopt any accounting standards that have been issued but are not yet effective. The impact of accounting standards that have been issued, but are not yet effective, is not material to these financial statements.

2. Segment Information

The Directors have considered the requirements of AASB 8 Operating Segments and the internal reports that are reviewed by the Board in allocating resources and have concluded that at this time there are no separately identifiable segments. All revenues and costs are handled centrally and management reviews financial information on a consolidated basis. On this basis it is considered that there is only one operating segment, the details of which are disclosed within this financial report.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2021

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3.Other income	Consolidated	Consolidated
	June	June
	2021	2020
	$	$
Interest Income	452	-
Total	452	-
4.Intangible assets	Consolidated
	June	December
	2021	2020
	$	$
Customer list – at cost	45,000	45,000
Less: Accumulated amortisation	(45,000)	(45,000)
	-	-
Licences – at cost	250,000	250,000
Less: Accumulated amortisation	(151,620)	(103,500)
	98,380	146,500
	98,380	146,500

Reconciliations of the carrying amounts of each class of intangible asset at the beginning and end of the current financial period are set out below.

Consolidated Carrying amount at 1 January 2021 Amortisation expense Carrying amount at 30 June 2021	Licences Total $ $ 146,500 146,500 (48,120) (48,120)
	98,380 98,380

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2021

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5.Issued Capital Ordinary shares – Fully paid (‘FPO’) Capital raising costs a)Movements in ordinary shares on issue At 1 January 2021 Shares issued during the period - 1 March 2021 - Conversion of Performance Rights - 7 April 2021 - Conversion of Performance Rights - 11 May 2021 - Issue of First Milestone Shares At 30 June 2021 6.Reserves Foreign currency translation Share based payments Movements in reserves Share based payments Balance at the beginning of the reporting period Options issued during the period Options vested during the period Options lapsed during the period Performance right issued in prior period Performance rights issued during the period Performance rights converted to shares during the period Balance at the end of the period		Consolidated June December 2021 2020 $ $ 17,542,437 17,397,437 (1,412,314) (1,412,314)
		16,130,123 15,985,123
		Number $ 1,886,739,337 15,985,123 4,000,000 20,000 25,000,000 125,000 50,000,000 -
		1,965,739,337 16,130,123
		Consolidated June December 2021 2020 $ $ 7,113 1,791 1,081,365 1,107,532 1,088,478 1,109,323 1,107,532 910,087 - 27,237 - 2,500 - (7,205) 112,605 - 6,228 357,413 (145,000) (182,500) 1,081,365 1,107,532

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2021

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Foreign currency translation Balance at the beginning of the reporting period Exchange differences on translating foreign controlled entities Balance at the end of the period	Consolidated June December 2021 2020 $ $ 1,791 20,023 5,322 (18,232)
	7,113 1,791

(a) Share-based payments - options

A summary of the movements of all options issues is as follows:

(a)Share-based payments - options A summary of the movements of all options issues is as follows:
Options outstanding as at 1 January 2021 Options issued Options outstanding as at 30 June 2021	Number
	100,000,000 -
	100,000,000

(b) Share-based payments – performance rights “PRs”

A summary of the movements of all performance rights issues is as follows:

Performance rights outstanding as at 1 January 2021 Converted to shares 1 March 2021(1) Converted to shares 7 April 2021(2) Granted on 20 May 2021(3) Performance rights outstanding as at 30 June 2021	Number 75,000,000 (4,000,000) (25,000,000) 6,000,000
	52,000,000

• (1) On 1 March 2021, the Company converted 4,000,000 performance rights to a Director, for nil cash consideration. Performance rights vested subject to employment continuity. Total fair value of $20,000 was recognised as sharebased payments expense. The fair value recognised in the profit or loss for year ended 31 December 2020 and for half-year ended 30 June 2021 are $18,089 and $1,911 respectively.

• (2) On 7 April 2021, the Company converted 25,000,000 performance rights to a Director, for nil cash consideration. Performance rights vested subject to the attainment of revenue hurdles, together with employment continuity. Total fair value of $125,000 is recognised as share-based payments expense in the profit or loss for the financial year ended 31 December 2020.

• (3) On 20 May 2021, the Company granted 6,000,000 performance rights to a Director, for nil consideration. Performance rights will vest subject to the attainment of certain share price values, together with employment continuity. Total fair value of $59,396 to be recognised as share-based payments across the vesting period. The fair value recognised as share-based payments expense in the profit or loss for the half-year ended 30 June 2021 is $6,228

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2021

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AASB 2 Share-based Payment, the expense is recognised over the vesting period. The performance rights have been valued at the share price of the Company on grant date. The fair value inputs included in the performance right valuations were as follows

No. of PRs	Grant	Vesting date	Expiry date	Fair value at grant date	Share price	Probability
	date
15,000,000	15-Jun-20	15-Jun-22	15-Jun-25	$0.0029	$0.0050	100%
15,000,000	15-Jun-20	15-Jun-22	15-Jun-25	$0.0022	$0.0050	100%
2,000,000	8-Jun-20	16-Jun-21	15-Dec-21	$0.0050	$0.0050	100%
2,000,000	8-Jun-20	15-Jul-21	15-Dec-21	$0.0010	$0.0050	100%
2,000,000	8-Jun-20	15-Jul-21	15-Dec-21	$0.0006	$0.0050	100%
2,500,000	2-Nov-20	3-Aug-21	3-Aug-21	$0.0130	$0.0130	100%
2,500,000	2-Nov-20	3-May-22	3-May-22	$0.0130	$0.0130	100%
2,500,000	2-Nov-20	3-Aug-21	3-Aug-21	$0.0130	$0.0130	100%
2,500,000	2-Nov-20	3-May-22	3-May-22	$0.0130	$0.0130	100%
3,000,000	20-May-21	15-Jun-22	15-Jun-22	$0.0110	$0.0160	100%
3,000,000	20-May-21	15-Jun-22	15-Jun-22	$0.0088	$0.0160	100%

Total share based payments recognised in the statement of profit or loss and other comprehensive income during the half-year ended 30 June 2021:

$

8,000,000 performance rights granted to a Director on 8 June 2020 30,000,000 performance rights granted to a Director on 15 June 2020 10,000,000 performance rights granted to the Advisory Board on 2 November 2020 6,000,000 performance rights granted to a Director on 20 May 2021	7,940 39,824 64,841 6,228
	118,833

8. Events after the Reporting Period

In compliance with its continuous disclosure obligations, the Company will continue to update the market in regard to the impact of COVID-19 on its revenue channels and adverse impact on the Company. If any of these impacts appear material, the Company will notify investors through appropriate market updates.

The directors are not aware of any other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

9. Contingent liabilities

There have been no material changes to the consolidated entity’s contingent liabilities since 31 December 2020.

10. Commitments

There have been no material changes to the consolidated entity’s capital or other expenditure commitments since 31 December 2020.

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DIRECTORS’ DECLARATION

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The directors of the Company declare that:

1. the financial statements and notes, as set out in the financial report:

2. a) comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

3. b) give a true and fair view of the financial position as at 30 June 2021 and of the performance for the half-year ended on that date of the consolidated entity;

4. in the directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and

Signed in accordance with a resolution of the directors made pursuant to s.303(5)(a) of the Corporations Act 2001.

On behalf of the Directors

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Graham Russell Managing Director

Dated this 30[th] day of August 2021

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REVIEW REPORT

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REVIEW REPORT

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