2023 Movement Goodwill $ Patents $ Trademarks $ hTERT $ Molecular NETS $ SubB2M $ Total $ Balance at the beginning of the year – 307,728 37,039 356,658 9,814,131 1,150,000 11,665,556 Additions – 57,137 3,248 – – – 60,385 Amortisation – (20,030) – (54,789) (890,144) – (964,963) Impairment – (123,925) – – – – (123,925) Effect of FX translation – 14,613 – – – – 14,613 Balance at the end of the year – 235,523 40,287 301,8698,923,9871,150,00010,651,666 2022 Movement Goodwill $ Patents $ Trademarks $ hTERT $ Molecular NETS $ SubB2M $ Total $ Balance at the beginning of the year 11,030,560 314,526 11,897 2,536,566 11,102,473 1,150,000 26,146,022 Additions – 99,656 26,420 – – – 126,076 Lapsed – (79,950) (1,278) – – – (81,228) Amortisation – (34,354) – (389,066) (1,288,342) – (1,711,762) Impairment* (11,030,560) – – (1,790,842) – – (12,821,402) Effect of FX translation – 7,850 – – – – 7,850 Balance at the end of the year – 307,728 37,039 356,658 9,814,131 1,150,000 11,665,556 * Impairment Testing and Key Assumptions The Group’s intangible asset and goodwill impairment testing policies are described in Note 2 (xi) and (xii). Discounted cash flow models (hTERT) or replacement cost assessments are produced when testing assets for impairment. The DCF model is based upon management estimates of future revenues, corporate tax rates, growth rates as well as discount rates. Forecasted gross margins from product sales anticipates growth from market penetration and the evolution of products. hTERT - the recoverable amount of the hTERT asset was determined using a Value In Use methodology that involved the estimating of future cash flows over a 5-year period. A Value In Use methodology was appropriate as the revenues and costs could be reliably estimated. Management allowed for sales estimates over a 5-year period, declining by 10% each year from FY25-FY28. No impairment of the hTERT asset was recognised in the current financial year. For the financial year ended 30 June 2022, INOVIQ recognised a non-cash impairment loss of $1,790,842 for the hTERT asset, the result of a reduction in forecast revenue. A summary of the parameters used to value hTERT and impairment test these assets is provided in the following table: Intangible Asset Valuation Method Years of Cash Flow Projection* Discount Rate % hTERT Value In Use 5 20% ^ Forecast revenue includes a gradual decline in revenues from years 2-5. Product revenue is supported by patents in key markets during this period. Molecular NETs - management determined the recoverable amount of Molecular NETs technology in the current year using the replacement cost method due to the inability to reliably estimate future cash flows as the technology is still undergoing development. The cost approach reflects the amount that would be required currently to replace the service capacity of an asset less any wastage, obsolescence and costs of disposal. Management consequently determined that no impairment exists. The assumptions used in the calculation of replacement cost resulted in an excess of fair value less cost of disposal over the carrying amount of 10.53%. 10 INTANGIBLE ASSETS AND GOODWILL (CONTINUED) 55 Annual Report 2023
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