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1 Appendix 4D & Half Year Financial Report Rule 4.2A Results for announcement to the market Details of the reporting period and the previous corresponding period Reporting Period: Half Year ended 31 December 2016 (1H FY17) Previous corresponding period(s): Half Year ended 31 December 2015 (1H FY16) Year ended 30 June 2016 Results for announcement to the market 1H FY17 1H FY16 Movement $ Change % Change Revenue from ordinary activities 10,335,408 2,988,554 Increase in revenue 7,346, % Profit (Loss) from ordinary activities (90,137) (562,670) Decrease in loss 472,533 84% after tax attributable to members Net profit (loss) for the period attributable to members (90,137) (562,670) Decrease in loss 472,533 84% Dividends No dividends declared during the half financial year. No dividends declared subsequent to the half financial year end. Explanation of Results The half year results of the Company are consistent with the expectations of the Directors given the acquisitive and organic growth achieved during the period. Excluding acquisition costs associated with the business combinations noted in note 14, the group achieved a net profit of $152,359. Importantly, the Group achieved growth in two key performance metrics with a gross profit margin of 73% and a clinic operating profit margin over 28% for the half year ended 31 December This announcement of results is based on the accompanying Directors Report and Financial Statements for the period. Net tangible assets At 31 Dec 2016 At 30 June 2016 % Change Net tangible assets per security $0.008 $0.039 (79%) Details of entities over which control has been gained or lost during the period No entites were gained or lost during the period. The businesses acquired during the period, including their contribution to the Company s results, are included in Note 14 to the accompanying financial statements for the period. TOTAL FACE GROUP LIMITED TOTAL FACE GROUP ABN PO Box 317, Collins Street West, Melbourne VIC

2 TOTAL FACE GROUP LIMITED AND CONTROLLED ENTITIES FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2016 This half-year financial report is to be read in conjunction with the financial report for the year ended 30 June 2016

3 FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2016 TABLE OF CONTENTS Page Directors Report 1 Auditor s Independence Declaration 3 Financial Report for the half-year ended 31 December 2016 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 4 Condensed Consolidated Statement of Financial Position 5 Condensed Consolidated Statement of Changes in Equity 6 Condensed Consolidated Statement of Cash Flows 7 Notes to the Condensed Consolidated Financial Statements 8 Directors Declaration 23 Independent Auditor s Review Report 24

4 DIRECTORS REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2016 The directors present their report together with the condensed financial report of the consolidated entity consisting of Total Face Group Limited (the Company) and its controlled entities (the Group) for the half-year ended 31 December 2016 and independent review report thereon. This financial report has been prepared in accordance with AASB 134 Interim Financial Reporting. Directors The names of directors in office at any time during or since the end of the half-year are: Paul Fielding Joanne Hannah Dr Naveen Somia (appointed 6 October 2016) Dr Vilma Di Maria (resigned 24 November 2016) John Conidi (resigned 31 December 2016) The directors have been in office since the start of the financial period to the date of this report unless otherwise stated. Results The consolidated Statutory loss of the Group for the half year amounted to ($90,137) (2015: ($562,670)). Excluding acquisition costs associated with the business combinations noted in note 14, the group achieved a net profit of $152,359. Importantly, the Group achieved growth in two key performance metrics with a gross profit margin of 73% (FY16: 71%) and a clinic operating profit margin over 28% (FY16: 18%) for the half year ended 31 December Review of operations In July the Company successfully completed a $10m capital raising to facilitate the acquisition of 5 clinics two in Brisbane, one on the Sunshine Coast and one in both Canberra and Melbourne. These acquisitions broadened our national clinic network and established an eastern seaboard presence that was a key factor in securing the Business Chicks partnership announced to the market on 8 August As planned, the capital raise also enabled the Company to further invest in our body fat reduction modality using CoolSculpting equipment. During the half we have installed a further 17 machines taking our total machines in use at the end of the half to 28. To support the introduction and investment in CoolSculpting we regularly conduct CoolEvents across our clinic network to drive awareness and sales. At the clinic level, we continue to see no drop off in the operating performance of what was acquired with the clinics who joined the group in July; all are operating in line with expectations. Integration activities have gone smoothly and we continue to see network benefits both internally and externally with our key our suppliers. In September we gathered key suppliers, promoters and our most important asset, our team - that includes some of the industry s most respected and influential practitioners - to launch our brand. Our brand is a key foundation to establishing ourselves as the most influential and trusted cosmetic provider of choice. The manifesto can be seen on youtube at The rollout of our proprietary end to end operational system and clinical application, TESSA, is starting to provide dividends as the data being captured, and our ability to use that data to drive targeted campaigns to our existing client base, matures. As the data we capture matures further, we expect campaigns to drive cross referrals between modalities to also strengthen, ensuring clients benefit from all treatment modalities. On 14 February 2017, Allergan Plc (Allergan), announced it has agreed to pay $2.48 billion in cash for Zeltiq Aesthetics Inc. (Zeltiq). Both Allergan and Zeltiq are key suppliers to Total Face Group across two of our three modalities being Cosmetic Injectables and Body Fat Reduction using CoolSculpting. Whilst it is too early to say what, if any, impact this transaction will have on our business, we see Allergan s acquisition of Zeltiq as a positive reinforcement of our strategic decision to invest in the body fat reduction market and validates our decision to do so using the CoolSculpting technology by Zeltiq. Rounding of amounts In accordance with ASIC Corporations (Rounding in Financial/Directors Reports) Instrument 2016/191, the amounts in the financial statements and in the directors report have been rounded to the nearest dollar

5 DIRECTORS REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2016 Auditor s independence declaration A copy of the auditor s independence declaration as required under section 307C of the Corporation Act 2001 in relation to the review for the half-year is provided with this report. Signed in accordance with a resolution of the directors: Director Dated this 27 th day of February

6 An independent Victorian Partnership ABN Level 19, 15 William Street, Melbourne VIC 3000 Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners is an association of independent firms Melbourne Sydney Perth Adelaide Brisbane Newcastle An independent member of Baker Tilly International

7 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2016 Half-year 31-Dec-16 Half-year 31-Dec-15 $ $ Revenue and Other Income Sales revenue 9,950,466 2,982,939 Other income 384,942 5,615 10,335,408 2,988,554 Less: Expenses Materials and consumables used 2,641, ,620 Accounting 163,409 93,269 Acquisition Costs 241,034 - Marketing & Advertising 589, ,036 Contractor costs 1,392, ,534 Employee benefits expense 2,929,783 1,003,281 Depreciation and amortisation expenses 675, ,738 Occupancy expenses 752, ,825 Finance costs 70,320 73,387 Insurance 75,548 13,472 Travel & Accommodation 105,848 45,904 IT & Communications 259,761 94,731 Consultants 114,322 86,226 Other expenses 413, ,201 10,425,545 3,551,224 Loss before income tax expense (90,137) (562,670) Income tax expense - - Net Loss from continuing operations (90,137) (562,670) Other comprehensive income for the half-year - - Total comprehensive income for the half-year (90,137) (562,670) Total comprehensive income attributable to: Members of the parent (90,137) (562,670) Earnings per share for profit from continuing operations attributable to equity holders of the parent entity: Basic earnings per share (0.001) (0.010) Diluted earnings per share (0.001) (0.010) The accompanying notes form part of these condensed consolidated financial statements

8 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 Notes 31-Dec Jun-16 $ $ Current assets Cash and cash equivalents 2 1,743,744 2,601,306 Receivables 3 215, ,467 Inventories 1,515, ,690 Other assets 4 148, ,538 Current tax receivable 135,121 86,204 Total current assets 3,758,404 3,972,205 Non-current assets Receivables 3 157, ,439 Plant and equipment 5 5,587,618 2,608,177 Intangible assets 6 21,269,094 8,417,802 Deferred tax assets 42,103 42,103 Other assets 4 323,566 98,947 Total non-current assets 27,379,708 11,331,468 Total assets 31,138,112 15,303,673 Current liabilities Payables 7 2,114,075 1,445,710 Other liabilities 8 5,253, ,649 Borrowings 9 585, ,375 Provisions , ,479 Total current liabilities 8,197,235 3,036,213 Non-current liabilities Borrowings 9 633, ,862 Provisions 12 36,302 6,899 Total non-current liabilities 670, ,761 Total liabilities 8,867,274 3,975,975 Net assets 22,270,838 11,327,699 Equity Contributed capital 13 25,059,044 14,025,768 Retained earnings (2,788,206) (2,698,069) Equity attributable to owners of Total Face Group Limited 22,270,838 11,327,699 Non-controlling interests - - Total equity 22,270,838 11,327,699 The accompanying notes form part of these condensed consolidated financial statements

9 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2016 Consolidated Contributed equity Retained earnings Total Equity $ $ $ Balance as at 1 July ,025,768 (2,698,069) 11,327,699 Loss for the half-year - (90,137) (90,137) Total comprehensive income for the half-year - (90,137) (90,137) Transactions with owners in their capacity as owners: Shares issued during the period 11,783,597-11,783,597 Capital raising costs (750,321) (750,321) Total transactions with owners in their capacity as owners 11,033,276-11,033,276 Balance as at 31 December ,059,044 (2,788,206) 22,270,838 Consolidated Contributed equity Retained earnings Total Equity $ $ $ Balance as at 1 July ,942,556 (1,085,015) 3,857,541 Loss for the half-year - (562,670) (562,670) Total comprehensive income for the half-year - (562,670) (562,670) Transactions with owners in their capacity as owners: Shares issued during the period 4,260,000-4,260,000 Capital raising costs (250,681) (250,681) Total transactions with owners in their capacity as owners 4,009,319-4,009,319 Balance as at 31 December ,951,875 (1,647,685) 7,304,190 The accompanying notes form part of these condensed consolidated financial statements

10 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016 Half-year Half-year $ $ Cash flow from operating activities Receipts from customers 11,003,264 3,565,950 Payments to suppliers and employees (10,697,955) (4,485,562) Finance costs (69,634) (73,387) Interest received 8, Other income received 216,282 - Income tax instalments paid (48,918) (34,358) Net cash provided by/(used in) operating activities 411,246 (1,027,166) Cash flow from investing activities Payments for investments (7,060,882) (2,100,000) Payments for plant and equipment (2,862,197) (889,690) Payments for other non-current assets (312,095) (202,685) Net cash used in investing activities (10,235,175) (3,192,375) Cash flow from financing activities Proceeds from share issue 10,000,000 4,010,000 Payments for shares issue costs (750,321) (250,682) Proceeds from borrowings - 889,690 Repayment of borrowings (271,926) (180,847) Repayment of related party loan (11,386) (43,750) Net cash provided by financing activities 8,966,367 4,424,411 Net (decrease)/increase in cash and cash (857,562) 204,870 equivalents Cash and cash equivalents at beginning of half-year 2,601, ,947 Cash and cash equivalents at end of the half-year 1,743, ,817 The accompanying notes form part of these condensed consolidated financial statements

11 NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT This condensed consolidated half-year financial report does not include all the notes of the type usually included in an annual financial report. It is recommended that this half-year financial report be read in conjunction with the annual financial report for the year ended 30 June 2016 and any public announcements made by Total Face Group Limited during the halfyear in accordance with any continuous disclosure obligations arising under the Corporations Act This condensed half-year financial report covers Total Face Group Limited and controlled entiites as a consolidated entity. Total Face Group Limited is a company limited by shares, incorporated and domiciled in Australia. The address of Total Face Group Limited s registered office and principal place of business is Level 4, Bank Place, Melbourne, Victoria. Total Face Group Limited is a for-profit entity for the purpose of preparing the financial statements. The half-year financial report was authorised for issue by the directors on as at the date of the directors report. (a) Basis of preparation This condensed consolidated half-year financial report has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting, as appropriate for for-profit entities, and the Corporations Act Compliance with AASB 134, as appropriate for for-profit entities, ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. The half-year financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets as described in the accounting policies. The accounting policies applied in this half-year financial report are consistent with those of the annual financial report for the year ended 30 June 2016 and the corresponding half-year. (b) Going Concern The financial report has been prepared on a going concern basis. During the half-year ended 31 December 2016, the Group incurred a deficit from ordinary activities of $90,137 (31 December 2015 deficit $562,670), and as at that date the Group s current liabilities exceeded its current assets by $4,438,831 (30 June 2016 current assets exceeded current liabilities by $935,992) and total assets exceeded total liabilities by $22,270,838 (30 June 2016 total assets exceeded total liabilities by $11,327,698) and generated net operating cash inflows of $411,246 (31 December 2015 net operating cash outflows of $1,027,166). The Group expects to continue achieve positive cash flows from operations and forecasts an increasing EBITDA profit in the twelve months to December The Directors have the ability to refinance some or all of the approximately $3m worth of CoolSculpting equipment to increase its cash reserves. Further, should the Group require additional funding as the Group s forecasted positive cash flows from operations are realised, funding from the corporate debt market remains an option, with the Group in current discussions with financiers. This has and continues to involve the process of evaluating options available, including negotiating terms and rates from varying lenders. On this basis no adjustments have been made to the financial report relating to the recoverability and classification of the carrying amount of assets or the amount and classification of liabilities that might be necessary should the entity not continue as a going concern. Accordingly, the financial report has been prepared on a going concern basis. Should the cash flow forecast not be achieved then, the entity may in the future not be able to continue as a going concern and may therefore be required to realise assets and extinguish liabilities other than in the ordinary course of business with the amount realised being different from those shown in the financial statement

12 (c) Accounting standards issued but not yet effective The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Group. The Group has decided not to early adopt any of these new and amended pronouncements. The Group s assessment of the new and amended pronouncements that are relevant to the Group but applicable in future reporting periods is set out below. AASB 9: Financial Instruments (December 2014), AASB : Amendments to Australian Accounting Standards arising from AASB 9 (December 2014), AASB : Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) Application of AASB 9 (December 2009) and AASB 9 (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2018). These Standards will replace AASB 139: Financial Instruments: Recognition and Measurement. The key changes that may affect the Group on initial application of AASB 9 and associated amending Standards include: simplifying the general classifications of financial assets into those carried at amortised cost and those carried at fair value; permitting entities to irrevocably elect on initial recognition to present gains and losses on an equity instrument that is not held for trading in other comprehensive income (OCI); simplifying the requirements for embedded derivatives, including removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost; requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity s own credit risk in OCI, except when it would create an accounting mismatch ; introducing a new model for hedge accounting that permits greater flexibility in the ability to hedge risk, particularly with respect to non-financial items; and requiring impairment of financial assets carried at amortised cost to be based on an expected loss approach. Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group s financial instruments, including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB 15: Revenue from Contracts with Customers, AASB : Amendments to Australian Accounting Standards arising from AASB 15, AASB : Amendments to Australian Accounting Standards Effective Date of AASB 15 and AASB : Amendments to Australian Accounting Standards Clarifications to AASB 15 (applicable for annual reporting periods commencing on or after 1 January 2018). AASB 15 will provide (except in relation to some specific exceptions, such as lease contracts and insurance contracts) a single source of accounting requirements for all contracts with customers, thereby replacing all current accounting pronouncements on revenue. These Standards provide a revised principle for recognising and measuring revenue. Under AASB 15, revenue is recognised in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the provider of the goods or services expects to be entitled. To give effect to this principle, AASB 15 requires the adoption of the following 5-step model: identify the contract(s) with a customer; identify the performance obligations under the contract(s); determine the transaction price; allocate the transaction price to the performance obligations under the contract(s); and recognise revenue when (or as) the entity satisfies the performance obligations. AASB 15 also provides additional guidance to assist entities in applying the revised principle to licences of - 9 -

13 intellectual property, warranties, rights of return, principal/agent considerations and options for additional goods and services. Although the directors anticipate that the adoption of AASB 15 may have an impact on the Group s reported revenue, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB 16: Leases (applicable for annual reporting periods commencing on or after 1 January 2019). AASB 16 will replace AASB 117: Leases and introduces a single lessee accounting model that will require a lessee to recognise right-of-use assets and lease liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Right-of-use assets are initially measured at their cost and lease liabilities are initially measured on a present value basis. Subsequent to initial recognition: right-of-use assets are accounted for on a similar basis to non-financial assets, whereby the right-ofuse asset is accounted for in accordance with a cost model unless the underlying asset is accounted for on a revaluation basis, in which case if the underlying asset is: investment property, the lessee applies the fair value model in AASB 140: Investment Property to the right-of-use asset; or property, plant or equipment, the lessee can elect to apply the revaluation model in AASB 116: Property, Plant and Equipment to all of the right-of-use assets that relate to that class of property, plant and equipment; and lease liabilities are accounted for on a similar basis as other financial liabilities, whereby interest expense is recognised in respect of the liability and the carrying amount of the liability is reduced to reflect lease payments made. AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly, under AASB 16 a lessor would continue to classify its leases as operating leases or finance leases subject to whether the lease transfers to the lessee substantially all of the risks and rewards incidental to ownership of the underlying asset, and would account for each type of lease in a manner consistent with the current approach under AASB 117. Although the directors anticipate that the adoption of AASB 16 may have an impact on the Group s accounting for its operating leases, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB : Amendments to Australian Accounting Standards Recognition of Deferred Tax Assets for Unrealised Losses (applicable for annual reporting periods commencing on or after 1 January 2017). This Amending Standard amends AASB 112: Income Taxes to clarify the requirements on recognition of deferred tax assets for unrealised losses on debt instruments measured at fair value. This Standard is not expected to significantly impact the Group s financial statements. AASB : Amendments to Australian Accounting Standards Disclosure Initiative: Amendments to AASB 107 (applicable for annual reporting periods commencing on or after 1 January 2017). This Amending Standard amends AASB 107: Statement of Cash Flows to require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. To the extent necessary to satisfy this objective, entities will be required to disclose the following changes in liabilities arising from financing activities: changes from financing cash flows; changes arising from obtaining or losing control of subsidiaries or other businesses; the effect of changes in foreign exchange rates; changes in fair values; and other changes. This Standard is not expected to significantly impact the Group s financial statements

14 31-Dec Jun-16 NOTE 2: CASH & CASH EQUIVALENTS $ $ Cash at bank 1,736,276 2,598,050 Petty cash 7,468 3,256 1,743,744 2,601,306 NOTE 3: RECEIVABLES CURRENT Security deposit 39,332 82,220 Receivable from related parties 2,108 - Other receivables 174,294 25, , ,467 NON-CURRENT Security deposit 157, , , ,439 SECURITY DEPOSIT Not later than one year 50, ,000 Later than one year and not later than 5 years 200, ,000 Minimum repayment 250, ,000 Add: unearned income (53,341) (53,341) 196, ,659 NOTE 4: OTHER CURRENT ASSETS CURRENT Prepayments 148,367 49,538 Deposits Paid - 210, , ,538 NON-CURRENT Rental Bonds 323,566 98, ,566 98,

15 31-Dec Jun-16 NOTE 5: PLANT & EQUIPMENT $ $ Motor Vehicle At cost 27,000 27,000 Accumulated depreciation (5,337) (3,295) 21,663 23,705 Leasehold Improvements At cost 1,135, ,755 Accumulated depreciation (216,561) (145,709) 919, ,046 Computer equipment At cost 98,290 58,285 Accumulated depreciation (34,118) (20,152) 64,172 38,133 Clinic equipment At cost 4,168,627 1,348,162 Accumulated depreciation (748,953) (339,506) 3,419,674 1,008,656 Leased clinic equipment At cost 1,845,975 2,084,460 Accumulated depreciation (683,090) (539,754) Useful life revision - (214,068) 1,162,885 1,330,638 Total plant and equipment Cost 7,275,677 3,870,662 Accumulated depreciation (1,688,059) (1,048,416) Useful life revision - (214,068) Total plant and equipment 5,587,618 2,608,178 Reconciliations of the carrying amounts at the beginning and end of the half-year ending 31 December 2016 are provided below. Leasehold Improvements Clinic Equipment Leased Clinic Equipment Computer Equipment Motor Vehicle $ $ $ $ $ $ Balance at 30 June ,046 1,008,656 1,330,638 38,133 23,705 2,608,178 Additions 240,847 2,589,244-32,107-2,862,197 Additions through business combination 542, ,529-7, ,611 Depreciation expense (70,852) (409,755) (167,753) (13,966) (2,042) (664,368) Balance at 31 December ,224 3,419,674 1,162,885 64,172 21,663 5,587,618 Total

16 31-Dec Jun-16 NOTE 6: INTANGIBLE ASSETS $ $ Goodwill At cost 20,215,164 7,665,029 20,215,164 7,665,029 Trademark and licences At cost 65,099 65,099 Accumulated amortisation and impairment (20,433) (9,495) 44,666 55,604 Capitalised development costs At cost 1,009, ,169 Accumulated amortisation and impairment - - 1,009, ,169 Total Intangibles At cost 21,289,527 8,427,263 Accumulated amortisation and impairment (20,433) (9,461) Total carrying amount end of year 21,269,094 8,417,802 Reconciliations of the carrying amounts at the beginning and end of the half-year ending 31 December 2016 are provided below. Goodwill Capitalised Trademark & Development Licences Costs Total $ $ $ $ Carrying amount at beginning of year 7,665,029 55, ,169 8,417,802 Additions through business combination 12,550,135 12,550,135 Additions through internal development 312, ,095 Amortisation charge (10,938) (10,938) Carrying amount end of year 20,215,164 44,666 1,009,264 21,269, Dec Jun-16 NOTE 7: PAYABLES $ $ CURRENT Trade creditors 1,271, ,708 Directors fees payable 85,000 60,000 Other payables & accruals 757, ,724 Payable to related parties - 9,278 2,114,075 1,445,

17 31-Dec Jun-16 NOTE 8: OTHER LIABILITIES $ $ CURRENT Income in advance 177, ,839 Deferred Consideration (i) 5,076, ,810 5,253, ,649 (i) Deferred consideration includes consideration payable on business combinations during the period (see Note 14) and $323,443 that relates to business combinations of Lase by the Sea, Face Today and Rejuven8 during the previous reporting period. 31-Dec Jun-16 NOTE 9: BORROWINGS $ $ CURRENT Secured Finance Lease liability 585, , , ,375 NON-CURRENT Secured Finance Lease liability 633, , , ,862 (a) Secured lease liability finance lease 1,219,311 1,491,237 (b) Finance leases: (i) Commercial financing arrangements for the purchase of clinic equipment (ii) Future minimum lease payment and the present value of the net minimum lease payment - Not later than one year 685, ,229 - Later than one year and not later than five years 676,925 1,018,487 - Later than five years - - Total minimum lease payments 1,362,297 1,705,716 - Future finance charges 142, ,479 Present value of minimum lease payment 1,219,311 1,491,237 - Current liability 585, ,375 - Non-current liability 633, ,862 (c) Terms and conditions and assets pledging as security relating to the above financial instruments

18 31-Dec Jun-16 NOTE 10: FINANCIAL RISK MANAGEMENT $ $ FINANCIAL ASSETS Cash and cash equivalents 1,743,744 2,601,306 Security deposit 196, ,659 Other receivables 176,402 25,247 2,116,805 2,873,212 FINANCIAL LIABILITIES Payables 2,114,075 1,445,710 Borrowings 1,219,311 1,491,237 Deferred consideration 5,076, ,810 Income in advance 177, ,839 8,586,603 3,777,596 Interest bearing Non-interest bearing Total carrying amount Weighted average effective interest rate Fixed / variable rate 31 December 2016 $ $ $ % (i) Financial assets Cash 574,294 1,169,450 1,743, % Variable Security Deposit - 196, , % Fixed Other receivables 176, , ,696 1,366,109 2,116,805 (ii) Financial liabilities Payables - 2,114,075 2,114,075 Finance lease liability 1,219,311-1,219, % Fixed Deferred consideration 494,573 4,581,443 5,076, % Fixed Income in advance 177, ,201 1,713,884 6,872,719 8,586,603 Interest bearing Non-interest bearing Total carrying amount Weighted average effective interest rate Fixed / variable rate 30 June 2016 $ $ $ % (i) Financial assets Cash 1,879, ,108 2,601, % Variable Security Deposit - 246, , % Fixed Other receivables 25,247-25, ,904, ,767 2,873,212 (ii) Financial liabilities Payables - 1,445,710 1,445,710 Finance lease liability 1,491,237-1,491, % Fixed Deferred consideration 716, ,810 Income in advance 123, ,839 1,491,237 2,286,359 3,777,

19 NOTE 10: FINANCIAL RISK MANAGEMENT CONTINUED < 6 Months 6-12 Months 1-5 years Total contractual cash flows Carrying amount 31 December 2016 $ $ $ $ $ Cash 1,743, ,743,744 Security Deposit , , ,659 Other receivables 176, , ,402 Payables (2,114,075) - - (2,114,075) (2,114,075) Borrowings (343,810) (341,562) (676,925) (1,362,297) (1,219,311) Deferred Consideration (473,443) (4,408,000) (225,000) (5,106,443) (5,076,016) Income in advance (177,201) (177,201) (177,201) Net maturities (1,011,182) (4,926,763) (705,266) (8,333,614) (6,469,798) < 6 Months 6-12 Months 1-5 years Total contractual cash flows Carrying amount 30 June 2016 $ $ $ $ $ Cash 2,601, ,601,306 Security deposit 50, , , ,659 Other receivables 25, ,247 25,247 Payables (1,445,710) - - (1,445,710) (1,445,710) Borrowings (334,999) (352,230) (1,018,487) (1,705,716) (1,491,237) Deferred Consideration (300,000) (416,810) (716,810) (716,810) Income in advance (123,839) (123,839) (123,839) Net maturities 595,844 (892,878) (821,829) (3,666,828) (904,384) NOTE 11: FAIR VALUE MEASUREMENTS Asset and liabilities measured and recognised at fair value have been determined by the following fair value measurement hierarchy: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: Input other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Inputs for the asset or liability that are not based on observable market data The following table provides the fair value classification of those assets and liabilities held by the group that are measured either on a recurring or non-recurring basis at fair value. 31 December 2016 Level 1 Level 2 Level 3 Total Recurring fair value measurements $ $ $ $ Financial assets Financial assets at fair value through profit or loss - 196, , , ,659 Financial liabilities Financial liabilities at fair value through profit or loss (i) (i) Deferred consideration - - 5,076,016 5,076, ,076,016 5,076,

20 NOTE 11: FAIR VALUE MEASUREMENTS CONTINUED 30 June 2016 Level 1 Level 2 Level 3 Total Recurring fair value measurements $ $ $ $ Financial assets Financial assets at fair value through profit or loss - 246, , , ,659 Financial liabilities Financial liabilities at fair value through profit or loss (i) (i) Deferred consideration , , , ,810 (c) Valuation techniques and inputs used in level 2 and 3 fair value measurements Security deposit valuation is based on contracted deed of set off amount, discounted at the weighted average cost of capital. Fair value of deferred consideration is based on either: contracted post completion payments, or forecast operating results and performance thresholds outlined in the respective Business Sale and Purchase agreement. Consideration payments expected to occur more than 12 months after acquisition date are discounted at the weighted average cost of capital. (d) Significant unobservable inputs used in level 3 fair value measurements Forecast operating results are determined by historcial performance and growth expectations following acquisition. (e) Reconciliation of recurring level 3 fair value movements Deferred Consideration Balance at 1 July 2016 (716,810) Through business combinations (4,752,573) Payments during the period 393,367 Balance at 31 December 2016 (5,076,016) 31-Dec Jun-16 NOTE 12: PROVISIONS $ $ CURRENT Employee benefits 244, ,442 Bonuses - 38, , ,479 NON-CURRENT Employee benefits 36,302 6,899 36,302 6,899 Aggregate employee benefits liability 280, ,

21 31-Dec Jun-16 NOTE 13: CONTRIBUTED CAPITAL $ $ (a) Issued and paid up capital Ordinary shares fully paid 25,059,044 14,025,768 Fully paid ordinary shares carry one vote per share and carry the right to dividends. (b) Movements in shares on issue Parent Equity Parent Equity 31-Dec Dec-15 No of Shares $ No of Shares $ Beginning of the half year 74,707,953 14,025,768 4,140,015 4,942,556 Issued during the half year : Heber Davis Acquisition 500, ,000 74, ,000 Capital Raising 40,000,000 10,000,000 1,066,666 4,010,000 COZmedics Acquisition 5,767,718 1,441,930 Facial Artistry Acquisition 266,667 66,667 Endless Solutions 600, ,000 Reconstruction (11:1) 52,807,550 - Transaction costs of equity issued (750,321) (250,681) End of the half year 121,842,338 25,059,044 58,088,305 8,951,

22 NOTE 14: BUSINESS COMBINATIONS (a) COZmedics On 18th July 2016, the consolidated entity acquired 100% of the business of COZmedics Maroochydore, Kenmore & Ascot, QLD. The acquisition is in line with the company s acquisitive growth strategy to become a national industry leader. Details of the purchase consideration: $ Cash paid 4,083,743 Shares 1,441,930 Deferred consideration 3,058,000 Total purchase consideration 8,583,673 5,767,718 ordinary shares measured at the quoted share price of $0.25. Deferred Consideration In accordance with the Business Sale & Purchase Agreements, deferred consideration is to be based on 3 times the 12 month EBIT for the period 1 July 2016 to 30 June 2017 payable 50% cash and 50% shares in Total Face Group Ltd issued at the higher of $0.30 or the weighted average share price preceeding 28 August A deferred consideration liability has been estimated based on the performance of COZmedics for the half year to 31 December Assets and liabilities acquired Recognised on acquisition at fair value $ Clinic Equipment 96,565 Leasehold improvements 542,184 Stock 131,323 Employee entitlements (52,404) Income in advance (48,300) Net identifiable assets acquired 669,368 Add: goodwill 7,914,305 Total purchase consideration 8,583,673 Goodwill Goodwill is not deductible for tax purposes. Goodwill comprises of expected synergies from combining the acquirer and acquire and intangibles that did not qualify for separate recognition. Initial accounting incomplete The accounting for the COZmedics business combination remains provisional in order to complete measurement of goodwill. Transaction costs Transaction costs of $248,517 were incurred in relation to the acquisition. Of this amount, $239,784 were incurred in relation to Queensland State Revenue Office Stamp Duty and are shown in the statement of comprehensive income for the period ended 31 December Additional costs of $8,733 were included within consulting expenses in the statement of comprehensive income for the period ended 30 June Contribution since acquisition Since acquisition, COZmedics has contributed revenue of $2,696,551 which is included in the statement of comprehensive income

23 NOTE 14: BUSINESS COMBINATIONS CONTINUED (b) Endless Solutions On 18th July 2016, the consolidated entity acquired 100% of the business of Endless Solutions, Port Melbourne VIC. The acquisition is in line with the company s acquisitive growth strategy to become a national industry leader. Details of the purchase consideration: $ Cash paid 632,265 Shares 150,000 Total purchase consideration 782, ,000 ordinary shares measured at the quoted share price of $0.25. Recognised on acquisition at fair Assets and liabilities acquired value $ Clinic Equipment 76,410 Stock 7,265 Net identifiable assets acquired 83,675 Add: goodwill 698,590 Total purchase consideration 782,265 Goodwill Goodwill is not deductible for tax purposes. Goodwill comprises of expected synergies from combining the acquirer and acquire and intangibles that did not qualify for separate recognition. Initial accounting incomplete The accounting for the Endless Solutions business combination remains provisional in order to complete measurement of goodwill. Contribution since acquisition Since acquisition, Endless Solutions has contributed revenue of $189,695 which is included in the statement of comprehensive income

24 NOTE 14: BUSINESS COMBINATIONS CONTINUED (c) Facial Artistry On 20th July 2016, the consolidated entity acquired 100% of the business of Facial Artistry, Canberra ACT. The acquisition is in line with the company s acquisitive growth strategy to become a national industry leader. Details of the purchase consideration: $ Cash paid 2,269,875 Shares 66,667 Deferred Consideration 1,200,000 Total purchase consideration 3,536, ,667 ordinary shares measured at the quoted share price of $0.25. Deferred Consideration In accordance with the Business Sale & Purchase Agreements, deferred consideration is to be based on 3 times the 12 month EBIT for the period 1 July 2016 to 30 June 2017 in excess of $600,000 to a maximum EBIT of $1,000,000 payable 50% cash and 50% shares in Total Face Group Ltd at an issue price the higher of $0.40 or the 30 day weighted average proceeding the 28th August A deferred consideration liability has been estimated based on the performance of COZmedics for the half year to 31 December Assets and liabilities acquired Recognised on acquisition at fair value $ Clinic Equipment 66,452 Stock 105,756 Employee Entitlements (3,333) Net identifiable assets acquired 168,875 Add: goodwill 3,367,667 Total purchase consideration 3,536,542 Transaction costs Transaction costs of $12,445 were incurred in relation to the acquisition. Of this amount, $1,462 is included with consultings expenses and $1,250 in acquisition costs in the statement of comprehensive income for the period ended 31 December $8,733 of these costs were included with consulting expenses in the statement of comprehensive income for the period ended 30 June Goodwill Goodwill is not deductible for tax purposes. Goodwill comprises of expected synergies from combining the acquirer and acquire and intangibles that did not qualify for separate recognition. Initial accounting incomplete The accounting for the Facial Artistry business combination remains provisional in order to complete measurement of goodwill. Contribution since acquisition Since acquisition, Facial Artistry has contributed revenue of $596,138 which is included in the statement of comprehensive income

25 NOTE 14: BUSINESS COMBINATIONS CONTINUED (c) Sunshine Vein Clinic On 14 October 2016, the consolidated entity acquired 100% of the business of Sunshine Vein Clinic, QLD. The acquisition is in line with the company s acquisitive growth strategy to become a national industry leader. Details of the purchase consideration: $ Cash paid 75,000 Deferred Consideration 494,573 Total purchase consideration 569,573 Deferred Consideration In accordance with the Business Sale & Purchase Agreement, consideration payable shall be paid in quarterly installments of $75,000 commencing the end of the quarter after the completion payment. Deferred consideration due more than 12 months after acquisition date has been discounted to its fair value at 31 December Assets and liabilities acquired Recognised on acquisition at fair value $ Goodwill 569,573 Total purchase consideration 569,573 Goodwill Goodwill is not deductible for tax purposes. Goodwill comprises of expected synergies from combining the acquirer and acquire and intangibles that did not qualify for separate recognition. Contribution since acquisition Since acquisition, Sunshine Vein Clinic has contributed revenue of $112,585 which is included in the statement of comprehensive income. Had the acquisition occurred at the beginning of the period, Sunshine Vein Clinic would have contributed an additional $239,436. NOTE 15: RELATED PARTY DISCLOSURES Paul Fielding is sole Director, company secretary and shareholder of Fielding Hill Pty Ltd (Fielding Hill). Total Face Group Limited and controlled entities have a Lease of premises located at Level 4, Bank Place, Melbourne with Fielding Hill. The premises is the corporate head office of the Group. The Lease is in a standard form and the Board considers that it is on arms length commercial terms. As at 31 December 2016, Paul Fielding owes the Group $2,108 (2015: ($9,278)). The balance represents a credit card facility in the name of Paul Fielding utilized by the Group. NOTE 16: SEGMENT INFORMATION Total Face Group Limited and its controlled entities operate cosmetic injectable and aesthetic clinics. There is only one reportable segment based on the aggregation criteria in AASB 8 Operating Segments. Operations are only conducted in the entity s domiciled country providing non-invasive, non-surgical cosmetic procedures throughout its clinic network

26 DIRECTORS DECLARATION The directors declare that: 1. In the directors opinion, the financial statements and notes thereto, as set out on pages 4 to 22, are in accordance with the Corporations Act 2001, including: (a) (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and giving a true and fair view of the financial position of the consolidated entity as at 31 December 2016 and of its performance for the half-year ended on that date. 2. In the directors opinion there are reasonable grounds, at the date of this declaration, to believe that Total Face Group Limited will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the directors. Joanne Hannah Director Melbourne 27 February

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