ALCIDION
(ASX: ALC)
ANNUAL
REPORT 2019
TRANSFORMING
HEALTHCARE TOGETHER
OUR SOLUTIONS ARE CHANGING
THE FACE OF HEALTHCARE:
The world of healthcare is evolving. As healthcare providers around
the world increasingly look to digital solutions to improve patient care,
reduce risk and increase productivity, the market opportunity for Alcidion
is expanding. Alcidion is enabling healthcare providers to digitalise their
data, implement smart technology, and improve the overall delivery of
care. This is the value we provide.
215
42
Hospitals across the UK,
Australia, New Zealand
Healthcare organisations
transforming healthcare
with us
30K
Beds using our technology
11K
Active users across
Patientrack and
Miya Precision
79M
590K
Observations recorded
Alerts generated
Patientrack helps clinicians know every
patients’ status in real-time. Doctors
can intervene and prevent patient
deterioration faster than ever before.
Patientrack uses predictive algorithms to
support time-critical care.
Miya Precision combines AI-based predictive
analytics, Clinical Decision Support (CDS) and
mobile alerts in one easy-to-use analytics
dashboard. Integrating with any existing
source system, doctors can customise Miya
Precision to map the patient journey and
view critical patient insights in real-time.
Smartpage is a speedy messaging and
task management platform, delivering
the simplicity of your favourite messaging
service with the security of encryption.
It enables hospital staff to communicate
and collaborate instantly.
Alcidion also offers services including
project management, implementation
consulting and support services for digital
health projects. Alcidion has several reseller
agreements for leading complementary
software platforms, completing our offering
as a full service health IT provider.
1
FY2019 HIGHLIGHTS
300%
INCREASE IN
STATUTORY REVENUE;
33%
INCREASE IN COMBINED
FY2018 PROFORMA REVENUE
$2.0M
POSITIVE
OPERATIONAL
CASH INFLOW
EARNINGS APPROACHING
BREAKEVEN
$16.9
MILLION REVENUE
EBITDA
IMPROVEMENT
EBITDA
LOSS
CONTRACTS SIGNED
FOR INTEGRATED
FULL PRODUCT SUITE
98%
39K
2
TABLE OF CO NTENTS
TRANSFORMING HEALTHCARE TOGETHER
FY2019 HIGHLIGHTS
LETTER FROM THE CHAIR
OUR YEAR OF TRANSFORMATION
MANAGING DIRECTOR’S REPORT
CASE STUDY
DIRECTORS’ REPORT
REMUNERATION REPORT
AUDITOR’S INDEPENDENCE DECLARATION
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REVIEW REPORT
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
P.1
P.2
P.3
P.4
P.5
P.7
P.9
P.13
P.24
P.25
P.26
P.30
P.34
ADDITIONAL SHAREHOLDERS’ INFORMATION
P.63
CORPORATE DIRECTORY
P.65
2
LETTER FROM
THE CHAIR
ALCIDION ANNUAL
REPORT 2019
Dear fellow shareholders,
I am pleased to present Alcidion’s Annual Report
for the financial year ended 30 June 2019.
FY2019 was a defining year for Alcidion: The
acquisitions of Patientrack and MKM Health have
been central to this shift, and it has been a year
in which we have built the foundations for further
growth. We indicated at the time that these
acquisitions were transformative, and we are proud
that we have been able to deliver on this promise.
In the first year operating as the combined Alcidion
Group we have proven we have a commercially
attractive technology platform, along with wider
capabilities as a provider of health IT services. This,
combined with our complementary suite of reseller
solutions, has seen Alcidion selected to be a part
of some of the most exciting digital transformation
projects taking place in healthcare organisations
in Australia, New Zealand and the UK. We have
taken advantage of the cross-selling opportunities
that the acquisitions created, delivering our first
fully integrated Miya, Patientrack and Smartpage
contracts with luminary customers in Australia
and the UK. We also saw the first installation
of Miya Precision go live in New Zealand.
We closed out the 2019 financial year delivering
our first positive annual cash flow and with
earnings approaching break-even point. We
enter the new financial year in a strong position;
with a solid book of contracted revenue that
will be recognised in FY2020 and beyond, giving
us a strong foundation on which to build.
I’d like to take this opportunity to expand
further on some of the highlights of FY2019:
STRATEGIC CONTRACT WINS
Throughout the 2019 financial year, Alcidion’s
customer contracts increased significantly, contributing
to a 33 percent increase on pro forma FY2018
revenue as a group, and a 300 percent revenue
increase on FY2018 statutory reported revenue.
Milestone strategic contract wins included a $4.75
million five-year contract with ACT Health in July
2018, the first contract implementing our full Miya,
Patientrack, Smartpage product suite. In March 2019,
Dartford and Gravesham NHS Trust signed a five-year
contract worth £1.16 million ($2.1 million) for the first
UK implementation of the full product suite. These
wins exemplify the value of the combined group, and
we continue to pursue similar sales opportunities
in these markets for the integrated product suite.
Revenue generated from services also contributed
significantly to FY2019 results, making up $9.3 million
of the $16.9 million total revenue. This services
capability, along with our portfolio of solutions
from resellers, puts us in a highly differentiated
position as a trusted advisor and partner assisting
healthcare organisations conceive and implement
innovative digital health solutions. Significant services
revenue is also generated from our product sales.
INTEGRATION OF BUSINESS
AND CAPABILITIES
A core focus for Alcidion in FY2019 has been integrating
the businesses and capabilities of the combined
group. The acquisitions have provided Alcidion with an
expanded range of products and services, and enabled
us to take strongly differentiated product and services
offerings to an extended customer-base in Australia,
the UK, and New Zealand. As well as strong potential
for cross-selling further components of our integrated
product suite and health IT services to existing
customers, we have been encouraged by the market’s
interest in our data analytics offerings and capabilities.
From a product perspective, Alcidion was pleased to
launch its next-generation platform, Miya Precision.
Miya Precision offers customers a consolidated
platform to improve the patient journey, using smart
dashboards that utilise real-time information enhanced
by artificial intelligence and predictive algorithms. In
February 2019, Miya Precision was launched in New
Zealand, going live at MidCentral District Health Board
and receiving resoundingly positive feedback from
the customer. The Miya Precision platform has been
optimised for use with Patientrack and Smartpage.
Alcidion through its next few years of growth.
Simon replaced Geoffrey Rohrsheim, who stood
down from the Board effective 30 June 2019. I’d like to
sincerely thank Geoff for his contribution as a Non-
Executive Director, a role he held from August 2017.
In August 2019, subsequent to the financial year end,
Alcidion co-founder and Non-Executive Chairman Ray
Blight stepped down from his role as Chairman and
remains on the Board as a Non-Executive Director.
I would like to acknowledge and thank Ray for his
commitment and his vision in bringing Alcidion to
where it is today. Not only has Ray, alongside his
co-founder Malcom Pradhan, been instrumental in
seeing the technology evolve from an inspiration to
commercial reality, he has had the strategic foresight
to execute on the acquisitive growth strategy that
has expedited our commercial success to date.
Personally, I am honoured to take on the
Chair role and to contribute to the next
phase of Alcidion’s growth and success.
OUTLOOK
Post-acquisition, we invested in enhancing Patientrack
to seamlessly integrate with Miya and Smartpage
systems, to support our cross-selling focus and
ensure the three products complement each other
and deliver synergistic results to hospitals. This will
continue to be a focus in FY2020 as we further build
on the capabilities of the combined product set.
We have recently completed a rebrand, consolidating
the various identities of MKM Health, Patientrack
and Oncall Systems into one unified Alcidion
brand. For us it is much more than a logo change,
it signals that the process of integration is nearly
complete and that we are now poised for the
next stage of growth as one Alcidion group.
EVOLVING OUR LEADERSHIP TEAM
Alongside the changes within the business, Alcidion
has pursued a succession planning strategy to
ensure the Board is suitably structured to guide the
company through the next phase of its growth.
After becoming CEO of the Alcidion Group in July
2018, Kate was promoted to Group Managing
Director in January 2019. I would like to recognise
Kate’s leadership throughout this year which has
resulted in the company achieving significant
growth whilst maintaining operational focus on the
necessary integration of the acquired businesses.
She is supported by an exceptional executive team
and a talented group of health IT specialists who
have all contributed to the company’s success.
In July 2019, Simon Chamberlain was appointed
as Non-Executive Director. Simon is an
accomplished business leader and strategist,
bringing valuable international perspective, a
proven leadership track record across a range
of industries, and a global network. Simon will
provide guidance and valuable experience to
The healthcare industry is now accepting the need
to use IT to transform healthcare delivery in the face
of rising demand and a disenfranchised workforce.
The next phase of digitalisation of healthcare has
arrived and the adoption of platforms like Miya
Precision is gaining momentum. Alcidion has
demonstrated that it is well positioned to seize
upon this market opportunity and embark on our
mission of Transforming Healthcare Together.
On behalf of the Board, I’d like to thank our
shareholders for your support over the last financial
year, and as we look forward to FY2020. You continue
to play an important role in our growth and vision to
be a leading provider of health IT solutions globally.
Yours faithfully,
Ms Rebecca Wilson
Chair, Alcidion Group Limited
3
OUR YEAR OF
TRANSFORMATION
From its foundation in 2000, Alcidion’s focus has been on one premise: offering
innovative smart technologies to make healthcare better. Over the course
of its growth, Alcidion has expanded into three global markets, broadened
its healthcare IT capabilities and suite of products, and has evolved from an
Adelaide-based health informatics company into a leading provider of health
IT products and services globally, focused on improving patient outcomes.
Following two transformative acquisitions completed in July 2018, the combined Alcidion
has continued to deliver strong commercial and operational results across its expanded
markets of Australia, UK and New Zealand. In its first combined year, Alcidion increased
investment in integration of the businesses and capabilities, whilst also delivering
strategically significant contracts and financial growth. Today, Alcidion enters FY2020
having achieved positive net cash flow and with earnings approaching breakeven.
JULY 2018
OCTOBER 2018
ALCIDION COMPLETES ACQUISITIONS
OF MKM HEALTH AND PATIENTRACK
MKM Health CEO Kate Quirke
appointed Alcidion CEO.
FIRST INTEGRATED MIYA,
PATIENTRACK, SMARTPAGE
SOLUTION SIGNED IN AUSTRALIA
Five-year contract worth $4.75 million,
including first Miya, Patientrack,
Smartpage installation and electronic
journey board solution.
FIRST QUARTER OF POSITIVE
OPERATING CASH FLOW
ANNOUNCED
Q1 FY2019 showed a $221K net
positive operational cash flow.
Transition to positive cash flow
commences.
2018
MARCH 2019
FIRST INTEGRATED MIYA,
PATIENTRACK, SMARTPAGE
SOLUTION SIGNED IN THE UK
~$2 million deal over five-years
with Dartford & Gravesham
NHS Trust.
FEBRUARY 2019
MIYA PRECISION LAUNCHES
FOR THE FIRST TIME
Solution live in 19 wards at
two MidCentral District Health
Board sites.
AUGUST 2019
FY2019 UNAUDITED FULL YEAR
RESULTS ANNOUNCED
First operational positive cash flow year
($2M), $16.9M revenue, EBITDA loss of
$39K; earnings close to breakeven.
REBECCA WILSON APPOINTED
ALCIDION CHAIR
Rebecca’s leadership and strategic
skills position Alcidion for the next
stage of growth.
SMARTPAGE, PATIENTRACK AND
MKM HEALTH UNITE UNDER NEW
ALCIDION BRAND
New brand identity launched,
completing integration of businesses,
products and capabilities.
4
MANAGING DIRECTOR’S REPORT
Major new contracts announced
during FY2019 included:
Dear fellow shareholders,
I am pleased to present an update on
activities undertaken in financial year 2019
and milestones achieved in our first year
of reporting as a combined group.
BUILDING ON A TRANSFORMATIVE
ACQUISITION
FY2019 commenced with Alcidion acquiring the
combined business operations of the MKM Health
group of companies and the associated Patientrack
group of companies on 3 July 2018. The acquisitions
delivered the complementary electronic bedside
observations and early warning score system
Patientrack, an established health IT services
business in MKM Health, and a significant customer
base across Australia, New Zealand and the UK.
These acquisitions have been transformative for
Alcidion. In FY2019, Alcidion quadrupled year-
on-year revenue, integrated its newly acquired
Patientrack platform with Alcidion’s existing
Miya and Smartpage products, and established a
consolidated Alcidion group presence in the UK
market. During FY2019, Alcidion’s market presence
in Australia and New Zealand also expanded.
MKM Health’s long-term customer relationships
are providing opportunities for cross selling the
expanded Alcidion suite of products. Alcidion has
achieved early success in exploiting these cross-
selling opportunities, and this will be an important
strategy for continued growth in FY2020.
Alcidion’s leadership team and sales capability
has also been bolstered as a result of the
acquisitions, and this has helped to deliver
the strong result achieved in FY2019. All the
key executives of MKM Health and Patientrack
have remained with the business and this
proven management team will drive the further
expansion of Alcidion throughout FY2020.
Our customer offering has been strengthened
by the systems integration and health data
analytics skillset within the MKM Health team.
We now have the integration skills required to
extract and aggregate the data that feeds the
Miya Precision platform. In addition, MKM Health
has developed a real time replication capability
for one of the leading Electronic Medical Record
(EMR) platforms, which allows us to easily
integrate the EMR data to our platform and offer
EMR users a mobile EMR experience with clinical
decision support available at the point of care.
A YEAR OF SIGNIFICANT
NEW CONTRACT WINS
In a year when significant time and focus was
required to integrate the acquired businesses,
the expanded management team has still been
able to grow the business in all of our markets.
The expanded Alcidion group delivered $16.9M
in revenue in FY2019. This is an increase of over
300% on FY2018 revenue of $4.2M and represents
a revenue increase of 33% when compared to
the FY2018 unaudited pro forma revenue for
the combined entities, which was $12.7M.
Revenue during the year was boosted by new
contract wins for our leading software solutions,
including with customers who recognised
the value of the combined capability of these
platforms. We demonstrated our ability to
retain existing customers through the renewal
of several recurring revenue software contracts
for Miya and Patientrack. We also continued
to demonstrate our leadership in the area of
health systems integration and data analytics,
by signing several large services contracts.
• ACT Health (July 2018): a five year deal
valued at approximately $4.8 million with
ACT Health to deploy an Electronic Patient
Journey Board solution. This represented the
first deployment of a fully integrated Miya
Flow, Patientrack and Smartpage offering
• NT Department of Health (July 2018): a three
year contract extension with value of $2.6
million over three years for the Miya platform
• Dartford and Gravesham NHS Trust (March
2019): a five year contract worth £1.16 million
(~$2.1 million) for the first fully integrated
installation of Alcidion’s combined product suite,
Miya, Patientrack, and Smartpage, in the UK
• Brighton and Sussex NHS Trust (March 2019):
a five year contract worth £574K ($1.03 million)
to implement Patientrack at four hospital sites
• Queensland Health (November 2018): a contract
to establish a state-wide Referral Service
Directory, which will be the central point of
reference for external referrals from General
Practitioners across Queensland Hospital and
Health Services. This project will be deploying
the NextGate Matchmetrix software for which
Alcidion is the authorised reseller in Australia
and New Zealand. The contract value is
approximately $12 million with a five-year term;
• Alfred Health (August 2018): a strategic
collaboration to deliver data management
capability (contract terms not disclosed);
• ACT Health (Dec 2018): a two year contract
extension for the provision of ongoing IT
support services valued at $1.3 million
• ACT Health (February 2019): a 2.5 year
Patientrack licensing and support
extension valued at $711K, for use
in two Canberra hospitals
• Western Sussex Hospitals NHS Foundation Trust
(June 2019): a five year licensing and support
renewal agreement for Patientrack, with a
value of $970K. Patientrack is deployed across
68 wards at the trust’s three hospital sites.
The new contracts also enabled Alcidion to
commence FY2020 with $11.7M revenue already
sold for recognition in FY2020, with a further $19.5M
sold revenue to be recognised through to FY2025.
FY19 REVENUE
RECURRING VS NON-RECURRING ($M)
)
M
$
(
E
U
N
E
V
E
R
9
1
Y
F
20
15
10
5
0
9.0
7.9
RECURRING
NON-RECURRING
FY19 REVENUE
PRODUCTS VS SERVICES ($M)
PRODUCTS
9.3
7.6
TOTAL FY19 $16.9
On 17 September 2019, subsequent to the year-
end, Alcidion signed a three-year agreement
with Australian private healthcare provider
Healthscope to implement a data and analytics
solution worth $895K. This is Alcidion’s first
implementation of our data and analytics
capabilities into a private hospital group.
A TURNAROUND IN
FINANCIAL RESULTS
Of the total $16.9M FY2019 revenue, $7.9M (47%)
was recurring and $9.0M (53%) non-recurring.
Services revenue, which includes product
implementation as well as integration and data
analytics services, contributed $9.3M (55%) of
total revenue with product licensing, support and
maintenance generating the remaining $7.6M (45%).
Over FY2019, the expanded Alcidion group has
transitioned to a business that has demonstrated it
can deliver positive operational cash flow. Alcidion
achieved its first year of positive operating cash flow,
with a net cash inflow from operating activities of
$2.0M achieved from cash receipts of $16.5M. This
compares to a cash outflow from operating activities
of $1.8M in FY2018 from cash receipts of $4.3M.
5
a hospital, it stores millions of data points regarding
patient status throughout the patient journey from
admission to discharge. This data provides a hugely
valuable platform on which advanced data analytics
can be performed to both better understand the
impact of clinical care on a patient, as well as detect
and even predict issues with patients more quickly,
leading to more timely clinical intervention.
Patientrack is therefore highly complementary to
the existing Alcidion product Miya Precision, which
can perform the advanced data analytics and
provide enhanced clinical decision support, and
Smartpage which can transmit alerts and provide
a team collaboration environment for clinical staff
responding to these alerts. The full integration of
Patientrack, Miya and Smartpage began in FY2019,
and continued enhancement of the combined
product suite remains a priority for FY2020.
The market’s interest in, and readiness for, our
combined solution offering has been demonstrated
in FY2019 by the contract signed with ACT Health
for the first integrated Miya, Patientrack and
Smartpage installation, as well as the first integrated
Miya, Patientrack and Smartpage contract signed
in the UK with Dartford & Gravesham NHS Trust.
CONTINUED INVESTMENT
IN MIYA PRECISION
A significant product development milestone in
FY2019 was the successful launch of Alcidion’s
next-generation Miya Precision platform at New
Zealand’s MidCentral District Health Board in
February 2019. This was the first implementation
of the Miya Precision platform, which was fully re-
engineered to support SaaS deployment, and for
the deployment of Artificial Intelligence capabilities
and decision support algorithms to support the
transformation of healthcare. This launch was met
by very positive feedback from the customer.
There was an overall cash inflow for FY2019 of $282k
across all sources, after $1.5M cash consideration
was paid as part of the acquisition of MKM Health
and Patientrack. This increased Alcidion’s available
cash reserves from $2.9M to $3.2M. This compares
to an overall cash outflow of $2.4M in FY2018.
Alcidion also achieved a near break-even
earnings result in FY2019. FY2019 EBITDA loss
was $39k compared to an EBITDA loss of $2.1M
in FY2018. The net operating loss before tax of
$110K in FY2019 was a 95% improvement on the
FY2018 net operating loss before tax of $2.1M.
This is a substantial achievement for the company,
especially considering the impact of one-off costs
associated with the acquisitions of MKM Health
and Patientrack, and in a year of investment
in integrating the acquired businesses.
INTEGRATING ALCIDION’S
EXPANDED PRODUCT SET
The acquired Patientrack software product focuses
on improving patient safety and operational
efficiency by identifying patients at risk of
deterioration and alerting appropriate care givers.
Patientrack provides a mobile platform for bedside
recording and analysis of vital signs, performing
bedside patient assessments and completing other
clinical documentation that can trigger and informs
appropriate clinical response. By collecting all vital
signs and other patient assessments performed in
During the year NSW Health selected Alcidion and
the Miya Precision platform for a Proof of Concept
(PoC) with the Murrumbidgee LHD to trial the
ability to deploy the mobile EMR capability of Miya
along with its clinical decision support capabilities
running across the already deployed Cerner EMR.
The PoC project is exploring how critical laboratory
test results can be shared securely and in real time
via mobile devices to support enhanced clinical
decision-making. A team of 10 ED clinicians is
trialing mobile notifications of real-time pathology
results and risk indicators, via Alcidion’s Miya
Precision Clinical Decision Support (CDS) tool.
As well as the investment required to integrate
Miya Precision with the newly acquired Patientrack
software, further investments have been made
over FY2019 in developing and integrating
natural language processing (NLP) capabilities
in the platform to improve detection of critical
risks and assist with improved clinical coding
outcomes for maximising revenue, along with
continued development of the clinical decision
support capabilities. With the clinical decision
support market projected to grow to $6.4bn by
2024 according to latest Frost and Sullivan report,
Alcidion is focused on enhancing our offering
with more complex predictive algorithms and
enhanced artificial intelligence capabilities.
BROADENING ALCIDION’S PRODUCT
AND SERVICE OFFERINGS
Alcidion continues to expand its portfolio of
software products and related services it provides
to customers, via reseller agreements with suppliers
of complementary solutions. This is consistent with
our strategy of delivering end-to-end healthcare
IT solutions, services and support to customers
who are looking to achieve a well-integrated best
of breed technology platform to improve patient
care and achieve operational efficiencies.
Alcidion’s ~$12M contract signed in Q2 with
Queensland Health to establish a Queensland-
wide Referral Services Directory (RSD) using
NextGate’s Provider Registry is an example of
the value added by offering such solutions, and
aligns with our strategic focus on partnering
with state and territory healthcare agencies to
build enhanced ICT infrastructure to support
better connected and coordinated health
service delivery across multiple agencies.
In FY2019, Alcidion entered into a reseller
agreement with Better By Marand to resell its
OPENeP medication management solution. Since
the start of the FY2020 financial year, Alcidion has
announced that Dartford and Gravesham NHS Trust
in the UK has awarded Alcidion preferred provider
status for this solution, which is yet to be contracted.
OUTLOOK
Over the past year Alcidion has proven it is
capable of organic and sustainable growth.
We believe there is tremendous opportunity
ahead for Alcidion in its existing Australia, UK and
New Zealand markets, with healthcare providers
embracing digital solutions to improve care more
than ever before. We are ideally positioned to
seize this opportunity. Alcidion will continue to
invest in scaling up the organisation to ensure we
have the capacity to pursue new opportunities
and respond to the growing demand for health
IT solutions right across the healthcare sector.
Strategically, Alcidion’s sales focus continues
to be on cross-selling its broad capabilities,
including our suite of innovative platforms, reseller
solutions and integrated technology services.
We look forward to keeping our shareholders
updated as we build on the solid foundation laid
this year. We know that there are many long term
holders, and we were pleased to also welcome a
number of new investors over the past year, and I
sincerely thank you all for your support of Alcidion.
Yours faithfully,
Ms Kate Quirke
Managing Director, Alcidion Grroup Limited
6
IMPROVING
PATIENT FLOW AND
BED MANAGEMENT
AT MIDCENTRAL
DISTRICT HEALTH
BOARD
“The information is displayed
in an easy-to-read way and the
system provides both charge
nurses and nurse managers
with the ability to see real-
time updates on patient flow,
which improves planning
and ultimately ensures every
patient is provided with
the best care possible.”
Celina Eves
Executive Director of Nursing and Midwifery,
MidCentral District Health Board
RESULT
Miya Precision is being used across 17
wards and the Emergency Department
at Palmerston North Hospital, and two
wards at Horowhenua Health Centre.
Since the implementation of Miya Precision,
MDHB staff have seen a noticeable improvement
in bed allocation, smoother patient flow, and a
more efficient allocation of hospital resources.
With Miya Precision’s Hospital Operations Centre,
staff can quickly allocate the best beds for each
individual patient, minimising wait times and
keeping the patient journey as smooth as possible.
information and bed management updates to
MDHB staff and can be accessed by clinicians
using an iPad at the bedside, workstation, and
patient journey boards installed in each ward.
And now that clinicians can view a patient’s
information at the bedside, in real-time, they
are better equipped to make the right care
decisions, quickly, to improve patient outcomes.
In February 2019, Alcidion’s next-generation software Miya
Precision was launched, going live for the first time at two sites
at New Zealand’s MidCentral District Health Board.
Since introducing Miya Precision, the staff at New Zealand’s MidCentral District Health
Board (MDHB) staff have seen a noticeable improvement in bed allocation, smoother
patient flow, and a more efficient allocation of hospital resources. By integrating
five different clinical information systems, clinical staff can now see detailed patient
information in real-time, enabling them to make the right care decisions quicker,
improving patient outcomes
CHALLENGE
SOLUTION
MidCentral District Health Board
wanted to improve both patient safety
and the clinician experience.
To do this, Alcidion concluded that MDHB
needed to bring the data it had housed in
many separate, disparate information systems
together. By doing this, the data would be more
useful and actionable for its staff, making it
simple and fast for them to make the right care
decisions based on real-time information.
MDHB was the first healthcare organisation
in the world to roll-out of the next-generation
Miya Precision platform, a ground-breaking
technology to meet the needs of healthcare
interoperability requirements through the
integration of data from any source.
The software has successfully integrated with five
clinical information systems at MDHB, including
WebPas, CareStream Radiology, Clinical Portal
and Pathology. It delivers real-time patient flow
Miya Precision also allows clinicians to view a
patient’s admission history, demographics and test
results at the bedside, in real-time. It also allows
MDHB to add patient safety algorithms and apply
artificial intelligence to improve patient outcomes.
Finally, Miya Precision’s Hospital Operations
Centre gives MDHB’s Managing Nurses a high-
level overview of hospital bed occupancy in real-
time, with the ability to drill down into individual
departments and wards for more detailed insight.
“The mobile technology is a
godsend on ward rounds and has
helped improved patient flow
in and out of the ward, making
discharges more evident and
timely. I love it and wouldn’t be
without it now.”
Sarah Donnelly
Charge Nurse, MidCentral District Health Board
19
Wards are improving care
with Miya Precision.
5
Existing information systems
have been integrated with
Miya Precision.
7
FINANCIAL
RESULTS FY2019
ANNUAL REPORT – DIRECTOR’S REPORT
FOR YEAR ENDED 30 JUNE 2019
DIRECTORS’ REPORT
The directors of Alcidion Group Limited (“Alcidion” or the “Group” or, the “Company”) submit herewith the annual
financial report of the Group for the year ended 30 June 2019 (Report).
DIRECTORS
The names and particulars of the directors of the Company in office during the year and until the date of this report are
as follows.
Directors were in office for the entire year unless otherwise stated.
MS REBECCA WILSON
CHAIR (FROM 30 AUGUST 2019)
Appointed 1 August 2017
B.A (Journalism), Post Grad Applied
Finance and Investment (FINSIA)
MS KATE QUIRKE
MANAGING DIRECTOR
Appointed 3 July 2018
B. Applied Science
advice
science
Rebecca has more
than 20 years’
experience working within the health,
sectors
life
technology and
providing
stakeholder
communications,
issues management,
investor and corporate relations, and
business strategy to private and public
companies,
institutes,
research
governments, and asset managers.
on
relations
She advises boards and executive teams on
commercial
investor
strategies and has strong experience in
transactions, including more than 50 IPOs,
M&A transactions, and capital raisings.
and
&
Australia
is Executive Vice President
Rebecca
Singapore
for WE
Communications, Executive Director of
consulting firm WE Buchan, and Advisory
Board member of Gillian Fox Leadership.
She is a member of the Australian Institute
of Company Directors (AICD).
Kate has more than 25 years of experience
in the healthcare information sector. Prior
to becoming a Director and CEO of Alcidion
Group she was one of five working
Directors for MKM Health, based
in
Victoria. She has been involved in large
and
systems
implementations across Australia and Asia
Pacific.
procurements
Kate’s background involves holding leading
management roles at some of the largest
healthcare software firms. She was a
member of the Management buyout team
that created iSOFT Asia Pacific through a
merger with iSOFT plc in the UK in 1999,
from the healthcare product business at
Computer Sciences Corporation (CSC).
As Alcidion Managing Director, Kate leads
the various elements of the business with
a particular focus on sales and marketing
and developing business relationships with
customers and partners across the world.
PROF MALCOLM PRADHAN
EXECUTIVE DIRECTOR & CHIEF
MEDICAL OFFICER
Appointed 22 February 2016
MBBS, PhD, FACHI
With over 20 years of experience
in
Medical Informatics, Malcolm is one of the
world’s leading minds in Clinical Decision
Support. Prior to co-founding Alcidion in
2000, Malcolm was the Associate Dean of
IT and Director of Medical Informatics,
University of Adelaide. He also was active
in
informatics
community, as a founding fellow of the
Australasian College of Health Informatics
(ACHI).
the Australian health
In his time at Alcidion, Malcolm has
overseen and driven the development and
design of Alcidion’s products and has been
responsible for transforming Alcidion’s
technology platform, which was initially
used only for Emergency Medicine, into a
powerful health
informatics platform
which can be applied to a broad set of
clinical scenarios.
In 2009 Malcolm was awarded the title of
Adjunct Professor at the University of
South Australia, and performs a leadership
role within UniSA‘s academic organisation
– as an educator and a researcher.
9
ANNUAL REPORT – DIRECTOR’S REPORT
FOR YEAR ENDED 30 JUNE 2019
MR RAYMOND BLIGHT
NON-EXECUTIVE DIRECTOR
(Chairman until 30 August 2019)
Appointed 22 February 2016
B Tech, B EC, MBM, FIE (AUST),
FAICD
MR NICK DIGNAM
NON-EXECUTIVE DIRECTOR
Appointed 22 February 2016
B.Com, LLB, MAppFin
MR SIMON CHAMBERLAIN
NON-EXECUTIVE DIRECTOR
Appointed 1 July 2019
B.Comm (Accounting), B.Law (Hons)
Ray is the co-founder and Non-Executive
Director (Chairman until August 2019) of
Alcidion Group. He brings a wealth of
public and private sector healthcare
experience and knowledge to Alcidion
including the role of the Chief Executive
and Chairman of the South Australian
Health Commission from 1994 – 1998 and
Chair of the Australian Health Ministers’
budget
Advisory
responsibility during his tenure as CEO
Health Commission was US$1 billion per
annum.
Council.
Ray’s
Ray brings a rare combination of creative
and innovative thinking to Alcidion, along
with pragmatism and problem solving
health management skills and expertise.
Ray is passionate about the opportunities
for health
informatics technology to
transform safety, quality and timeliness
of health care service delivery and is
committed
delivering
intelligent software system innovations
that work effectively and efficiently and
benefit all levels of health care service
from patients through to providers and
budget holders.
Alcidion
to
Ray currently chairs the University of SA
Information
and
Mathematical Sciences Advisory Board.
Technology
for
firm. He
Nick Dignam is a Partner of Fortitude
Investment Partners, a growth capital
is
focused private equity
responsible
new
investment opportunities, working with
portfolio companies to deliver growth
and managing exit processes. Nick has
more than ten years’ experience working
in private equity.
originating
In addition to serving as a non-executive
Director of Alcidion, Nick also serves as a
director on the Board of a number of
Fortitude’s portfolio companies including
Better Medical, Birch & Waite, Sunfresh
Salads, Wild Breads and GM Hotels. Nick
has previously served on the Boards of
(outsourced hospital pharmacy
HPS
(software
Readify
services)
development services).
and
Prior to establishing Fortitude, Nick was
the Head of Growth Capital in Blue Sky’s
Private Equity division, and prior to this he
was an investment director with mid
market private equity
firm Catalyst
Investment Managers. Before Catalyst
Nick spent three years with Ernst & Young
in the corporate finance division.
Nick holds a Bachelor of Commerce and a
Bachelor of Laws from the University of
Queensland, and a Masters of Applied
Finance from Queensland University of
Technology.
Simon is an accomplished executive and
business leader, with more than 20 years’
experience in executive roles at high-
profile companies
including General
Manager at Medibank Private, Executive
Manager of Qantas Airways’ Hooroo
business, and most recently in his current
role as General Manager at MedAdvisor
(ASX:MDR).
Simon has a proven track record for a
strategic success and commercial growth
across a range of industries and markets.
Simon led Qantas’ entrance into the
online hotels business, establishing a
profitable, high growth new division for
Qantas. At Medibank, Simon had
responsibility
customer
across
channels and the enterprise’s data, and
oversaw the creation of its customer
experience practice.
all
Gaining a better understanding of the
complex challenges facing the wider
health system led to Simon’s role leading
strategy for MedAdvisor, where he has
supported the global expansion of its
health technology business. Simon brings
valuable international perspective and
global network to the Alcidion Board,
holding executive roles across the US and
the UK, where he was a key part of the
executive team that sold the Australian
start-up, Hitwise, to Experian in 2007.
Simon holds a Bachelor of Commerce
(Accounting) and Law
from
Monash University.
(Hons)
10
FORMER DIRECTORS
ANNUAL REPORT – DIRECTOR’S REPORT
FOR YEAR ENDED 30 JUNE 2019
MR GEOFF ROHRSHEIM
NON-EXECUTIVE DIRECTOR
Resigned 30 June 2019
B.E (Hons), Assoc.Dip Comp Apps,
MEngSc, GAICD
Geoff is a former EY Entrepreneur of the
Year winner for the southern region and
has had 3 start-ups appear in the BRW
Fast 100. His
latest venture, Kloud
Solutions grew rapidly in 5 years to have
over 170 staff with offices in Melbourne,
Sydney, Adelaide, Brisbane and Manila.
Kloud was ranked by BRW as the fastest
growing company in Australia in 2014.
Kloud was sold to Telstra in Feb 2016.
A graduate of the Australian Institute of
Company Directors, Geoff is a non-
executive director of Seeley
International, SOMARK Innovations and
Business SA (state chamber of
commerce). He is a member of the
Australia Post Stakeholder Council and
an angel investor and advisory board
member of various Adelaide based tech
startups
11
ANNUAL REPORT – DIRECTOR’S REPORT
FOR YEAR ENDED 30 JUNE 2019
SHARES AND OPTIONS HELD BY DIRECTORS
Director
Current
holding
Net increase/
(decrease)
Current
holding
Net increase/
(decrease)
Ordinary Shares
Options over Ordinary Shares
Rebecca Wilson (NE Chair) (i)
1,080,000
110,000
Kate Quirke (MD) (ii)
41,141,811
39,041,811
Malcolm Pradhan (ED)
134,582,403
-
Raymond Blight (NED) (iii)
100,578,081
1,313,960
Nicholas Dignam (NED)
Simon Chamberlain (NED) (iv)
-
-
Geoff Rohrsheim (NED) (v)
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
(ii)
(iii)
(iv)
(v)
Ms Wilson was appointed Non-Executive Chair on 30 August 2019.
Ms Quirke was appointed as Executive Director / CEO on 3 July 2018 and the Managing Director on 25 January 2019.
Mr Blight was Executive Chair until 25 January 2019 when his position changed from Executive to Non-Executive. On 30
August 2019 Mr Blight stood down from the role of Chair but continued as Non-Executive Director.
Mr Chamberlain was appointed Non-Executive Director on 1 July 2019.
Mr Rohrsheim served as Non-Executive Director until he resigned on 30 June 2019.
As at the date of this report, no share options had been granted to directors as part of their remuneration by
Alcidion Group Limited.
12
ANNUAL REPORT – REMUNERATION REPORT
FOR YEAR ENDED 30 JUNE 2019
REMUNERATION REPORT (AUDITED)
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration
B. Details of remuneration
C. Share-based compensation
D. Director equity holdings
E. Director & KMP service agreements
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
A. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
The Remuneration Committee consists of three non-executive directors. The remuneration policy has been designed to
align director and executive objectives with shareholder and business objectives by providing a fixed remuneration
component and short-term incentives based on the Group’s financial results and achievement of individual performance
targets aligned with the Company’s strategic goals. The Board believes the remuneration policy to be appropriate and
effective in its ability to attract and retain the best directors and executives to manage the Group.
The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives is
as follows:
The remuneration policy, setting the terms and conditions for the remuneration of executive directors and other
senior executives, is reviewed annually as appropriate, to reflect changing remuneration practices and the growing
size of the Company. All executives receive a base salary (which is based on the market rate for the role in similar
sized listed companies and the experience of the individual), superannuation and short-term incentives in the form
of annual performance-based bonuses.
The Board may exercise its discretion in approving both salaries and short-term incentives to ensure they are designed
to attract and appropriately incentivise the highest calibre of executives and reward them based on the achievement
of financial results and strategic objectives that will drive long-term growth in shareholder wealth and the realisation
of other strategic Company goals such as being an employer of choice and a good corporate citizen.
The Board has the discretion to offer long-term incentives (LTIs) in the form of performance rights or options to
executive directors and other senior executives, with a view to improving the retention of key executives. No LTIs
were granted in FY2019.
The executive directors receive a superannuation contribution of 10% of base salary up to the maximum permitted
concessionary contribution ($25,000) and do not receive any other retirement benefits.
All remuneration paid to directors and executives is valued at the cost to the Company and expensed.
The Board policy is to remunerate non-executive directors at market rates for comparable listed companies for time,
commitment and responsibilities. The Board determines payments to the non-executive directors and reviews the
remuneration annually, based on market practice, duties and accountability. Independent external advice is sought
when required. Fees for non-executive directors are not linked to the performance of the Company.
B. DETAILS OF REMUNERATION
Details of remuneration of the directors and key management personnel (as defined in AASB 124 Related Party
Disclosures) of Alcidion Group Limited are set out in the following table.
The Company does not have any other employees who are required to have their remuneration disclosed in accordance
with the Corporations Act 2001.
13
ANNUAL REPORT – REMUNERATION REPORT
FOR YEAR ENDED 30 JUNE 2019
The table below shows the 2019 and 2018 figures for remuneration received by the Company’s directors and executives:
Short Term
Post-employment
Share-based Payments
Equity settled
Total
Salary &
Fees
$
Bonus
$
Annual
Leave
$
Superannuation
$
Prescribed
benefits
$
Shares
$
Share Options
Exercised
2019 Directors
Rebecca Wilson (i)
53,273
-
Kate Quirke (ii)
249,820
120,000
Malcolm Pradhan (iii)
226,616
13,125
Raymond Blight (iv)
203,146
Nicholas Dignam (v)
Simon Chamberlain (vi)
-
-
Geoff Rohrsheim (vii)
50,000
Executives
-
-
-
-
-
34,180
33,384
17,354
-
-
-
5,061
25,000
25,000
22,050
-
-
-
Colin MacKinnon (viii)
240,789
90,000
Duncan Craig (ix)
197,403
-
20,211
35,697
25,000
15,900
2019 Total
1,221,047
223,125
140,826
118,011
-
-
-
-
-
-
-
-
-
-
2018 Directors
Raymond Blight (iv)
Nathan Buzza (x)
Malcolm Pradhan (iii)
Nicholas Dignam (v)
Brian Leedman (xi)
Rebecca Wilson (i)
Geoff Rohrsheim (vii)
Executives
Duncan Craig (ix)
2018 Total
261,613
104,277
231,083
-
3,500
34,246
41,667
180,000
856,386
-
-
-
-
-
-
-
-
-
-
-
11,987
-
-
-
-
21,953
7,006
21,953
-
-
3,253
-
3,819
-
3.,819
-
-
-
-
2,769
14,756
17,100
71,265
4,500
12,138
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
58,334
429,000
298,125
242,550
-
-
50,000
376,000
249,000
1,703,009
287,385
111,283
268,842
-
3,500
37,499
41,667
204,369
954,545
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
Ms Wilson was appointed Non-Executive Director on 1 August 2017 and Chair on 30 August 2019.
Ms Quirke was appointed as Executive Director / CEO on 3 July 2018 and the Managing Director on 25 January 2019.
Mr Pradhan was appointed as Executive Director on 22 February 2016.
Mr Blight was appointed Executive Chair on 22 February 2016. On 25 January 2019 his position as Chair changed from
Executive to Non-Executive. On 30 August 2019 Mr Blight stood down from the role of Chair but continues as a Non-
Executive Director.
Mr Dignam was appointed as a Non-Executive Director on 22 February 2016. The Board and Mr Dignam agreed that no
fees were to be paid to Mr Dignam from his appointment to 30 September 2019.
Mr Chamberlain was appointed Non-Executive Director on 1 July 2019.
Mr Rohrsheim served as Non-Executive Director until he resigned on 30 June 2019.
Mr MacKinnon assumed the roles of COO and CFO from 1 March 2019.
Mr Duncan Craig resigned as CFO / Company Secretary on 28 February 2019.
Mr Buzza was appointed as an Executive Director on 22 February 2016 and resigned on 31 July 2017.
Mr Leedman resigned as Non-Executive Director on 31 July 2017.
Refer to page 18 for details of remuneration of all current directors and other key management personnel as at the date of this report.
14
ANNUAL REPORT – REMUNERATION REPORT
FOR YEAR ENDED 30 JUNE 2019
C. SHARE-BASED COMPENSATION
Performance rights and options can be issued to directors and executives as part of their remuneration. There were no
performance rights or options granted in FY2019.
There were 10,000,000 options held by Brian Leedman as at 30 June 2019. All these options have been exercised by Mr
Leedman since the end of the financial year.
D. DIRECTORS’ EQUITY HOLDINGS
1.
Fully paid ordinary shares of Alcidion Group Limited:
Balance at
1 July
Share Options
exercised
Net other
change
(Sale)/Purchase
At date of
resignation
Balance at
30 June
No.
No.
No.
No.
No.
2019 Directors
Rebecca Wilson
Kate Quirke (i)
Raymond Blight (ii)
Malcolm Pradhan
Nicholas Dignam
Geoff Rohrsheim
Simon Chamberlain
Executives
Colin MacKinnon (iii)
Duncan Craig
2018 Directors
Raymond Blight (ii)
Nathan Buzza
Malcolm Pradhan
Nicholas Dignam
Brian Leedman
Geoff Rohrsheim
Rebecca Wilson
Executives
Duncan Craig
970,000
2,100,000
100,264,121
134,582,403
-
1,000,000
-
130,000
3,873,101
242,919,625
97,051,003
19,176,071
134,582,403
-
-
-
-
3,873,101
252,460,356
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
110,000
7,461,557
1,000,000
-
-
-
-
-
-
-
-
-
1,080,000
9,561,557
101,264,121
134,582,403
-
1,000,000
-
5,567,595
-
14,139,152
-
3,873,101
3,873,101
5,697,595
-
253,185,676
3,213,118-
-
-
-
-
1,000,000
970,000
19,176,071
-
-
-
100,264,121
-
134,582,403
-
-
1,000,000
970,000
-
1,970,000
-
19,176,071
3,873,101
235,254,285
(i)
(ii)
(iii)
The shares held by Ms Quirke as at 30 June include shares held in her own name (K Doyle) and in her superannuation
fund. Related parties to Ms Quirke held a further 100,001 shares as at 30 June 2019. Ms Quirke also had an interest in
a further 31,580,254 shares held in escrow in her name and the name of a related party which were released on 3 July
2019.
A related party to Mr Blight held a further 5,235,340 shares as at 30 June 2019 (and also as at 30 June 2018).
The shares held by Mr MacKinnon as at 30 June include shares held in the name of his family trust and his superannuation
fund. As at 30 June 2019, Mr MacKinnon also had an interest in a further 45,422,078 shares held in escrow in the name
of his family trust and a related party which were released on 3 July 2019.
15
ANNUAL REPORT – REMUNERATION REPORT
FOR YEAR ENDED 30 JUNE 2019
2.
Class A Contingent Share Rights and Class B Contingent Share Rights of Alcidion Group Limited:
Number of Class A Contingent Share
Rights held at 30 June 2019
No. (i)
Number of Class B Contingent Share
Rights held at 30 June 2019
No. (ii)
2019 Directors
Rebecca Wilson
Kate Quirke
Malcolm Pradhan
Raymond Blight
Nicholas Dignam
Simon Chamberlain
Geoff Rohrsheim
Executives
Colin MacKinnon
Duncan Craig
2018 Directors
Raymond Blight
Nathan Buzza
Malcolm Pradhan
Nicholas Dignam
Geoff Rohrsheim
Rebecca Wilson
Brian Leedman
Executives
Duncan Craig
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
(ii)
Class A Contingent Share Rights issued in consideration for the acquisition of Alcidion as detailed in the Company’s prospectus
dated 7 December 2015. On 29 February 2018 the milestone of $10,000,000 revenue was not fulfilled and as such the Class A
Contingent Share Rights were foregone.
Class B Contingent Share Rights issued in consideration for the acquisition of Alcidion as detailed in the Company’s prospectus
dated 7 December 2015. On 28 February 2019 the milestone of $15,000,000 revenue was not fulfilled and as such the Class B
Contingent Share Rights were forgone.
16
ANNUAL REPORT – REMUNERATION REPORT
FOR YEAR ENDED 30 JUNE 2019
3.
Share options of Alcidion Group Limited:
Balance at
1 July
No.
Granted as
remuneration
No.
Exercised
No.
Net other
change
No.
At date of
resignation
No.
Balance at 30
June
No.
2019 Directors
Rebecca Wilson
Kate Quirke
Malcolm Pradhan
Raymond Blight
Nicholas Dignam
Simon Chamberlain
Geoff Rohrsheim
Executives
Colin MacKinnon)
Duncan Craig
2018 Directors
Raymond Blight
Nathan Buzza
Malcolm Pradhan
Nicholas Dignam
Brian Leedman (i)
Geoff Rohrsheim
Rebecca Wilson
Executives
Duncan Craig
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
-
-
-
10,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
-
-
-
-
-
-
10,000,000
-
-
-
10,000,000
-
10,000,000
(i) Mr Leedman was appointed as a non-executive Director on 31 July 2016 and resigned on 31 July 2017. Mr Leedman was granted
15,000,000 unlisted options. The 15,000,000 unlisted options were provided in three tranches at 5,000,000 unlisted options
each. Mr Leedman exercised the first tranche of 5,000,000 unlisted options during the year ended 30 June 2017. The second
tranche of 5,000,000 options has a vesting date 31 August 2017 with an exercise price of $0.06. The third tranche of 5,000,000
options has a vesting date of 31 August 2018 with an exercise price of $0.08. All 10,000,000 unlisted options that were held by
Mr Leedman as at 30 June 2019, have been exercised by Mr Leedman subsequent to year end.
17
ANNUAL REPORT – REMUNERATION REPORT
FOR YEAR ENDED 30 JUNE 2019
E. DIRECTOR & KMP SERVICE AGREEMENTS
During FY2019, Director Raymond Blight was employed initially as Executive Chairman and then as Non-Executive
Chairman on following key terms:
a) Base salary of A$216,000 per annum plus $21,600 superannuation contribution
b) 6-month notice period
Managing Director Kate Quirke was employed from 3 July 2018 as an Executive Director & Chief Executive Officer on
following key terms:
a) Base salary of A$272,000 per annum plus $12,000 car allowance and $25,000 superannuation contribution
b) Annual performance-based cash bonus up to a maximum of $120,000
c) 6-month notice period
Executive Director Malcolm Pradhan was employed during FY2019 as an Executive Director & Chief Medical Officer on
following key terms:
a) Base salary of A$261,000 per annum plus $25,000 superannuation contribution
b) Annual performance-based cash bonus up to a maximum $60,000
c) 6-month notice period
Non-Executive Director Geoff Rohrsheim was employed during FY2019 on following key terms:
a) Director fee of A$50,000 per annum
Non-Executive Director Rebecca Wilson was employed during FY2019 on following key terms:
a) Salary of A$50,000 per annum inclusive of superannuation
Executive Duncan Craig was employed as Chief Financial Officer and Company Secretary up to his resignation on 28
February 2019, on following key terms:
a) Base salary of A$240,000 per annum plus $24,000 superannuation contribution
b) 6-month notice period
Executive Colin MacKinnon was employed from 3 July 2018 as Group Commercial Manager and then from 1 March 2019
as Chief Operations Officer and Chief Financial Officer on following key terms:
a) Base salary of A$261,000 per annum plus $25,000 superannuation contribution
b) Annual performance-based cash bonus up to a maximum $90,000
c) 1-month notice period
- - END OF REMUNERATION REPORT - -
18
ANNUAL REPORT – DIRECTOR’S REPORT (CONTINUED)
FOR YEAR ENDED 30 JUNE 2019
DIRECTORS’ REPORT (CONTINUED)
DIRECTORS’ MEETINGS
The following table sets out information in relation to Board and Committee meetings held during the year:
Board Member
Board Meetings
Audit and Risk
Committee
Nomination and
Remuneration
Committee
Eligible to
Attend
Attended
Eligible to
Attend
Attended
Eligible to
Attend
Attended
8
8
8
8
8
8
8
8
7
7
8
8
-
-
-
2
2
2
-
-
-
2
2
2
-
-
-
2
2
2
-
-
-
2
2
2
Raymond Blight
Kate Quirke
Malcolm Pradhan
Nicholas Dignam
Rebecca Wilson
Geoff Rohrsheim
PRINCIPAL ACTIVITIES
The principal activities of Alcidion include the development and licensing of its own healthcare software products (Miya,
Patientrack and Smartpage), the reselling of selected healthcare software products from its strategic partners and the
delivery of product implementation, product support and maintenance, systems integration and data analysis services to
healthcare customers in Australia, New Zealand and the UK.
OVERVIEW OF ALCIDION AND ITS BUSINESS
Alcidion has a simple purpose: to transform healthcare with smart, intuitive technology solutions that meet the needs of
hospital and allied healthcare, worldwide. It offers a complementary set of software products and services that create a
unique offering in the global healthcare market; solutions that support interoperability, improved team collaboration and
task management, and deliver clinical decision support at the point of care to improve patient outcomes.
In February 2018 Alcidion acquired Oncall Systems and its Smartpage clinical communications system. In July 2018 it
acquired the Patientrack bedside monitoring software and MKM Health, an IT solutions and services provider. These
offerings now operate under the Alcidion brand in Australia, New Zealand and the UK. With over 25 years of combined
healthcare experience, Alcidion brings together the very best in technology and market knowledge to deliver solution
that make healthcare better for everyone.
19
ANNUAL REPORT – DIRECTOR’S REPORT (CONTINUED)
FOR YEAR ENDED 30 JUNE 2019
FINANCIAL REVIEW
Operating Results
1. Alcidion Group Limited (the Group) FY2019 revenue was $16,864,323 over four times FY2018 (2018:
4,179,487)
2. The FY2019 loss before tax was $109,926 (2018: loss before tax of $2,135,253).
3. Net Cash at Bank at the end of the year was $3,171,843 with minimal debt.
Financial Position
The Group has incurred a net loss after tax for the year ended 30 June 2019 of $84,165 (2018: $2,089,313 loss), and a net
cash inflow from operating activities of $1,990,959 (2018: outflow of $1,825,305) contributing to an overall improvement
in year-end cash balance, after cash flows associated with investing and financing, to $3,171,843 (2018: 2,890,339). At
30 June 2019, the Group has current assets of $6,871,779 (2018: $4,481,227) and net equity of $13,242,586 (2018:
$3,333,246).
Summary of Financial Information as at 30 June 2019
Cash and cash equivalents ($)
Net assets/equity
Revenue
EBITDA
Group 2019
Group 2018
Group 2017
3,171,843
2,890,339
5,331,263
13,242,586
3,333,246
5,422,559
16,864,323
4,179,487
3,458,111
(39,315)
(2,087,125)
(1,983,830)
Underlying loss before income tax*
(8,364)
(1,494,447)
(1,355,106)
Loss from ordinary activities after income tax expenses ($)
(84,165)
(2,089,313)
(2,060,980)
No of issued shares
Basic earnings per share (cents)
Diluted earnings per share (cents)
Share price ($)
805,671,138
607,779,957
607,779,957
(0.01)
(0.01)
0.125
(0.34)
(0.34)
0.052
(0.34)
(0.34)
0.069
Market capitalisation (Undiluted) ($)
100,708,892
31,604,558
41,936,817
* The underlying loss before tax is a non-IFRS measure used to present the ongoing activities of the Group. It excludes the M&A activity expenses of
$101,562 in 2019 and $640,806 in 2018 as well as share-based payment expenses of $684,000 in 2017.
Risk Management
The Alcidion risk management processes support our business to manage and effectively mitigate critical risks. The ability
to effectively identify and manage risk is a vital element of business success for all parts of the Alcidion business. Risk
management takes place in many different processes and operations throughout the Group. The Board of Directors is
ultimately responsible for the governance of risk management and the executive management ensures that there is a
common and efficient process in place.
During the year the Audit and Risk Committee has developed a Risk Management Process, Risk Appetite Statement and
Risk Management Policy and continues to review and refine these on a regular basis. The Risk Register has been
developed and will be regularly reviewed by the Committee and the Board and mitigation strategies implemented.
Further details on Company Risk is outlined in Note 26 of the Financial Report.
Significant Changes in State of Affairs
Other than those disclosed in this annual report, no significant changes in the state of affairs of the Group occurred during
the financial year.
20
ANNUAL REPORT – DIRECTOR’S REPORT (CONTINUED)
FOR YEAR ENDED 30 JUNE 2019
Significant Events after the Balance Date
No matters or circumstances besides those disclosed below have arisen since the end of the financial year which
significantly affected or may significantly affect the operations of the Group, the results of those operations, or state of
affairs of the Group in future financial years.
The Company has had five subsequent events post 30 June 2019:
a) The appointment of Mr Simon Chamberlain as Alcidion Group Non-Executive Director as at 1 July 2019;
b) On 15 July 2019, Mr Brian Leedman exercised 5 million options for ordinary shares at an exercise price of 6 cents
per share;
c) On 27 August 2019, Mr Brian Leedman exercised his last remaining 5 million options for ordinary shares at an
exercise price of 8 cents per share;
d) The appointment of Ms Rebecca Wilson as Alcidion Chair and resignation of Mr Ray Blight as Alcidion Chair on
30 August 2019.
e) On 17 September 2019, Alcidion signed a three-year agreement with Australian private healthcare provider
Healthscope to implement a data and analytics solution worth $895K.
Likely Developments and Expected Results
The completion of the acquisition and integration of MKM Health and Patientrack represents the start of a new strategic
phase for Alcidion. Alcidion believes the health care industry is poised for the uptake of information technology to enable
transformation like it never has been before. As such we have developed a new three-year strategic plan focused on
increasing growth and scaling up our organisation to appropriately respond to this opportunity. We have a number of
options to enable growth that we are assessing and will share these with shareholders as they develop. They involve
enabling faster uptake in our current markets, expanding our geographical reach and potentially further acquisitions, all
aimed at enabling Alcidion to more rapidly deliver shareholder value.
Environmental Regulation and Performance
The Groups activities are not subject to any particular and significant environmental regulation under laws of either the
Commonwealth of Australia or a State or Territory of Australia.
We remain committed to acting in a manner that is sensitive to our impact on the environment and that remains
complaint with the environmental policies in each jurisdiction, that our public sector customers require us to comply
with.
Insurance of Directors and Officers
During or since the financial year, the Company has paid premiums insuring all the directors of Alcidion Group Limited
against costs incurred in defending conduct involving:
a) A breach of duty,
b) A contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the
Corporations Act 2001.
Alcidion has agreed to indemnify all directors and executive officers of the Company against liabilities to another person
(other than the Company or a related body corporate) that may arise from their position as directors of Alcidion, except
where the liability has arisen as a result of a wilful breach of duty in relation to the Company. The agreement stipulates
that Alcidion will meet the full amount of any such liabilities, including costs and expenses. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a
liability incurred as such an officer or auditor.
21
ANNUAL REPORT – DIRECTOR’S REPORT (CONTINUED)
FOR YEAR ENDED 30 JUNE 2019
Dividends
No dividends were paid or declared during the financial year and no recommendation for payment of dividends has been
made.
Non-Audit Services
The Board of Directors, in accordance with advice from the Audit and Risk Committee, is satisfied that the provision of
audit and non-audit services during the year is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Directors are satisfied that any non-audit services provided by the auditors
during the year did not compromise the external auditor’s independence. All services provided by the external auditor
or associates are reviewed and approved by the Audit and Risk Committee and/or the Board to ensure they do not
adversely affect the integrity an objectivity of the auditor.
The fees paid or payable to William Buck and its associates for audit and non-audit services provided during the year
ended 30 June 2019 have been disclosed at Note 9 of this financial report.
Compliance
Corporate Governance Statement
The Board of Directors is responsible for the corporate governance of the Company. The Board guides and monitors the
business affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are
accountable.
The Corporate Governance policies and practices of the Company are reviewed annually in accordance with the standards
required of the Company by the Directors, the ASX, ASIC and other relevant stakeholders, to ensure that the highest
appropriate governance standards are maintained, commensurate with the size and operations of the Company.
The ASX Corporate Governance Council released the third edition of its Corporate Governance Principles and
Recommendations on 27 March 2014 to take effect for the first full financial year commencing on or after 1 July 2014.
The Company’s Corporate Governance Statement, and associated policy documents complies as far as possible with the
spirit and intentions of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations
as appropriate, having regard to the size of the Company and the nature of its enterprise. The Corporate Governance
Statement can be found on the Company’s web site www.alcidion.com.
Independent Professional Advice
Directors of the Company are expected to exercise considered and independent judgement on matters before them and
may need to seek independent professional advice. A director with prior written approval from the Chair may, at the
Company’s expense, obtain independent professional advice to properly discharge his responsibilities.
Board Composition
The Board consists of two Executive and four Non-Executive Directors. Details of their skills, experience and expertise
and the year of office held by each director have been included in the Directors’ Report. The number of Board meetings
and the attendance of the directors are set out in the Directors’ Report.
The Board will decide on the choice of any new director upon the creation of any new Board position and if any casual
vacancy arises. Decisions to appoint new directors will be minuted. The Board considers that due to the size and
complexity of the Company’s affairs it does not merit the establishment of a separate nomination committee. Until the
situation changes the Board of Alcidion will carry out any necessary nomination committee functions.
Share Trading Policy
Directors, officers and employees are prohibited from dealing in Alcidion shares when they possess inside information
and during designated black-out periods preceding the release of quarterly and annual results to the ASX. All trading of
Alcidion shares by directors, officer and employees, when permitted, is subject to the prior written approval of the Chair
in respect of director trading and the Managing Director in the case of executives and staff trading. The Board is to be
notified promptly of any trading of shares in the Company by any director or officer of the Company.
22
ANNUAL REPORT – DIRECTOR’S REPORT (CONTINUED)
FOR YEAR ENDED 30 JUNE 2019
Auditor’s independence declaration
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included on page
24.
Signed in accordance with a resolution of the directors made pursuant to s 298(2) of the Corporations Act 2001.
For, and on behalf of, the Board of the Company,
Rebecca Wilson
Non-Executive Chair
Melbourne, Victoria this 20th day of September 2019
23
ANNUAL REPORT – AUDITOR’S INDEPENDENCE DECLARATION
FOR YEAR ENDED 30 JUNE 2019
AUDITOR’S INDEPENDENCE DECLARATION
24
ANNUAL REPORT – DIRECTOR’S DECLARATION
FOR YEAR ENDED 30 JUNE 2019
DIRECTORS’ DECLARATION
The Directors declare that:
a)
b)
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;
in the Directors’ opinion, the attached financial statements and notes thereto for the year ended 30 June 2019
are in accordance with the Corporations Act 2001, including compliance with the Corporations Regulations 2001,
Australian Accounting Standards and International Financial Reporting Standards as disclosed in Note 2 and
giving a true and fair view of the financial position and performance of the Group for the year ended on that
date;
c)
the Directors have been given the declarations required by s.295A of the Corporations Act 2001 for the year
ended 30 June 2019.
Signed in accordance with a resolution of the Board of Directors made pursuant to s.295(5) of the Corporations Act 2001.
For, and on behalf of, the Board of the Company,
Rebecca Wilson
Non-Executive Chair
Melbourne, Victoria this 20th day of September 2019
25
ANNUAL REPORT – INDEPENDENT AUDITOR’S REVIEW REPORT
FOR YEAR ENDED 30 JUNE 2019
INDEPENDENT AUDITOR’S REVIEW REPORT
26
ANNUAL REPORT – INDEPENDENT AUDITOR’S REVIEW REPORT
FOR YEAR ENDED 30 JUNE 2019
INDEPENDENT AUDITOR’S REVIEW REPORT
27
ANNUAL REPORT – INDEPENDENT AUDITOR’S REVIEW REPORT
FOR YEAR ENDED 30 JUNE 2019
INDEPENDENT AUDITOR’S REVIEW REPORT
28
ANNUAL REPORT – INDEPENDENT AUDITOR’S REVIEW REPORT
FOR YEAR ENDED 30 JUNE 2019
INDEPENDENT AUDITOR’S REVIEW REPORT
29
ANNUAL REPORT – FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
for the year ended 30 June 2019
Note
CONSOLIDATED 2019
$
CONSOLIDATED 2018
$
Revenue
Research & development rebate
Cost of sale of goods and services *
Gross profit *
Interest income
Other income
Depreciation and amortisation expense
Directors and employee benefits expense *
Marketing expense
Operations and administration expense
Other expenses from ordinary activities
Loss before income tax expense
Income tax (expense) / income
Loss after tax attributable to the owners of the Company
Other comprehensive (loss) net of tax
Items that may be reclassified to profit or loss
Items that will not be reclassified to profit or loss
4
4
4
5
5
5
6
16,864,323
-
(10,952,724)
5,911,599
15,551
-
(65,886)
(2,649,099)
(635,847)
(1,134,386)
(1,551,858)
(109,926)
25,761
(84,165)
-
-
3,149,797
1,029,690
(2,774,774)
1,404,713
73,710
1,217
(47,221)
(1,560,549)
(133,001)
(868,906)
(1,005,216)
(2,135,253)
45,940
(2,089,313)
-
-
Total comprehensive loss for the year attributable to the
owners of the Company
(84,165)
(2,089,313)
(Loss) per share
Basic and diluted loss per share (cents)
19
(0.01)
(0.34)
* These figures differ from those reported in the unaudited Preliminary Financial Statements. Refer Note 5.
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes, which form an integral part of the final annual report
30
ANNUAL REPORT – FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
Note
CONSOLIDATED 2019
$
CONSOLIDATED 2018
$
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Plant and equipment
Deferred tax assets
Intangible assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employee provisions
Other liabilities
Total current liabilities
Non-current liabilities
Employee provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated loses
Total equity
25
10
13
6
12
11
15
14
15
6
16 (a)
16 (c)
17
3,171,843
3,422,922
277,014
6,871,779
157,649
377,272
17,450,475
-
17,985,396
24,857,175
1,698,540
1,527,349
8,270,194
11,496,083
59,653
27,500
31,353
118,506
11,614,589
13,242,586
20,787,188
684,000
(8,228,602)
13,242,586
2,890,339
1,529,191
61,697
4,481,227
90,047
120,377
1,072,805
66,075
1,349,304
5,830,531
573,605
271,234
1,541,165
2,386,004
111,281
-
-
111,281
2,497,285
3,333,246
10,793,683
684,000
(8,144,437)
3,333,246
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes, which
form an integral part of the final annual report.
31
ANNUAL REPORT – FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019
CONSOLIDATED
Balance as at 1 July 2017
Loss for the year
Other comprehensive income, net of income tax
Total comprehensive loss for the year
Shares issued during the year
Options issued during the year
Issued capital
Reserves
$
10,793,683
-
-
-
-
-
$
684,000
-
-
-
-
-
Accumulated
losses
$
(6,055,124)
(2,089,313)
-
(2,089,313)
-
-
Total equity
$
5,422,559
(2,089,313)
-
(2,089,313)
-
-
Balance as at 30 June 2018
10,793,683
684,000
(8,144,437)
3,333,246
CONSOLIDATED
Balance as at 1 July 2018
Loss for the year
Other comprehensive income, net of income tax
Total comprehensive loss for the year
Shares issued during the year
Options issued during the year
10,793,683
-
-
9,993,505
-
684,000
-
-
-
-
-
(8,144,437)
(84,165)
-
(84,165)
-
-
3,333,246
(84,165)
-
(84,165)
9,993,505
-
Balance as at 30 June 2019
20,787,188
684,000
(8,228,602)
13,242,586
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes, which
form an integral part of the final annual report.
32
STATEMENT OF CASH FLOWS
For the year ended 30 June 2019
ANNUAL REPORT – FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
Note
CONSOLIDATED 2019
$
CONSOLIDATED 2018
$
Cash flows from operating activities
Receipts from customers & R&D Rebate received
Payments to suppliers and employees
Interest received
Net cash inflows (outflows) from operating activities
25
Cash flows from investing activities
Payments for acquisition of business, net of cash acquired
Payments for plant and equipment
Net cash (outflows) from investing activities
Cash flows from financing activities
Proceeds from borrowing
Repayments of borrowings
Net cash inflows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
25
16,469,206
(14,493,798)
15,551
1,990,959
(1,476,032)
(264,776)
(1,740,808)
92,015
(60,662)
31,353
281,504
2,890,339
3,171,843
4,286,510
(6,185,525)
73,710
(1,825,305)
(591,757)
(23,862)
(615,619)
-
-
-
(2,440,924)
5,331,263
2,890,339
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes, which form an
integral part of the final annual report.
33
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 30 June 2019
1.
GENERAL INFORMATION
Alcidion Group Limited (“Alcidion” or the “Group” or, the “Company”) is a limited company incorporated in Australia. The
core of Alcidion’s business model is to create intellectual property in the form of Clinical Decision Support Systems (CDSS)
software developed to improve the quality of care for all patients and improve the productivity of clinicians and care
teams.
The Company’s software is bundled with other technologies and services to create complete clinical and business
solutions for health care providers. In short, Alcidion builds, sells, delivers, runs and supports solutions for health care
provider organisations in Australia, the UK and New Zealand.
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements comprise the consolidated financial statements of the Company and its controlled entities
(collectively the Group).
The financial statements were authorised for issue by the directors on 20 September 2019.
2.1 Basis of preparation
The Company is a for profit entity. Material accounting policies adopted in the preparation of these financial statements
are presented below. They have been consistently applied unless otherwise stated.
2.1.1
Statement of compliance
These financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and in
compliance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB), and the Corporations Act 2001 (Cth).
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance
with AASBs ensures that the financial statements and notes also comply with IFRS as issued by the IASB.
The consolidated financial statements have been prepared on an accrual basis, except for cashflow information and are
based on historical costs. Historical cost is generally based on the fair values of the consideration given in exchange for
goods and services.
The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.
2.1.2
Comparative figures
Where required by Accounting Standards, comparative figures have been adjusted to conform with changes in
presentation for the current financial year.
2.2
Principles of consolidation
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated
financial statements as well as their results for the year then ended. Where controlled entities have entered (left) the
Consolidated Group during the year, their operating results have been included (excluded) from the date control was
obtained (ceased).
34
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
2.2.1
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on
which control is transferred to the Group. Control exists when the Group is exposed to variable returns from another
entity and has the ability to affect those returns through its power over the entity.
The Group measures goodwill at the acquisition date as:
less
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquisition; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree;
the net recognised amount of the identifiable assets acquired, and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to settlement of pre-existing relationships. Such
amounts are generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration
is classified as equity, it is not remeasured, and settlement is accounted for within equity. Otherwise, subsequent changes
to the fair value of the contingent consideration are recognised in profit or loss.
2.2.2
Subsidiaries
Subsidiaries are entities controlled by the Group.
The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by
the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests
even if doing so causes the non-controlling interests to have a deficit balance. A list of subsidiaries is provided in Note 28.
2.2.3
Transactions eliminated on consolidation
All intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.
2.3
Taxation
2.3.1
Income tax
The income tax expense / (income) for the year comprises current income tax expense/(income) and deferred tax
expense/(income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore
measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year
as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to
items recognised outside profit or loss or arising from a business combination.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have
been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable
profit or loss.
35
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their
measurement also reflects the manner in which management expects to recover or settle the carrying amount of the
related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets
and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where
it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur
in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
2.3.2 Goods and Services Tax (GST)
Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred is
not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included as a current asset or
liability in the Statement of financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows included in receipts from customers and R&D rebate
received or payments to suppliers and employees.
2.4
Plant and equipment
2.4.1 Recognition and measurement
Items of plant and equipment are measured on the cost basis and carried at cost less accumulated depreciation (see
below) and impairment losses (see accounting policy 2.5 Impairment of non-financial assets). In the event the carrying
amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down
immediately to the estimated recoverable amount and impairment losses are recognised either in profit or loss or as a
revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is
made when impairment indicators are present.
Cost includes expenditure that is directly attributable to the acquisition of the asset.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not more than the
recoverable amount from these assets. The recoverable amount is assessed based on the expected net cash flows that
will be received from the asset’s employment and subsequent disposal. The expected net cash flows have not been
discounted to their present values in determining recoverable amounts.
Where parts of an item of plant and equipment have different useful lives, they are accounted for as separate items of
plant and equipment.
2.4.2
Subsequent costs
The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured
reliably. Any costs of the day-to-day servicing of plant and equipment are recognised in the Statement of Profit or Loss
and Other Comprehensive Income as an expense as incurred.
36
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
2.4.3
Depreciation
Depreciation is charged to the statement of profit or loss and other comprehensive income on a diminishing value or
straight-line basis over the asset's useful life to the consolidated group commencing from the time the asset is held ready
for use.
Depreciation rates and methods are reviewed annually for appropriateness. The depreciation rates used for the current
and comparative period are:
Class of fixed asset
Depreciation rate (%)
Computer equipment
Furniture and fittings
25 – 66.67
10 - 25
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposal of an item of plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of plant and equipment and are recognised net within “other income” in the Statement of
profit or loss and other comprehensive income.
2.5
Impairment of non-financial assets
The carrying amounts of the Group's non-financial assets, other than deferred tax assets (see accounting policy 2.3.1) are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists,
then the asset's recoverable amount is estimated.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable
amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are
independent from other assets and groups. Impairment losses are recognised in the statement of profit or loss and other
comprehensive income, unless the asset has previously been revalued, in which case the impairment loss is recognised
as a reversal to the extent of that previous revaluation with any excess recognised through the statement of profit or loss
and other comprehensive income. Impairment losses recognised in respect of cash-generating units are allocated first to
reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other
assets in the unit on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For
an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-
generating unit to which the asset belongs.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation and amortisation, if no
impairment loss had been recognised.
2.6
Financial instruments
2.6.1
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to
the instrument. For financial assets, this is equivalent to the date that the entity commits itself to either the purchase or
sale of the asset (i.e. trade date accounting is adopted).
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ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified
“at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately. Where
available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques
are adopted. Trade receivables are initially measured at the transaction price if the trade receivables do not contain a
significant financing component or if the practical expedient was applied.
Classification and Subsequent Measurement
2.6.2
Financial Liabilities
A financial liability is measured at fair value through profit and loss if the financial liability is:
-
-
-
a contingent consideration of an acquirer in a business combination to which AASB 3: Business Combinations
applies;
held for trading; or
initially designated as at fair value through profit or loss.
All other financial liabilities are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest
expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial
asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of
the instrument to the net carrying amount at initial recognition.
Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not part of
a designated hedging relationship are recognised in profit or loss.
The change in fair value of the financial liability attributable to changes in the issuer's credit risk is taken to other
comprehensive income and are not subsequently reclassified to profit or loss. Instead, they are transferred to retained
earnings upon derecognition of the financial liability. If taking the change in credit risk in other comprehensive income
enlarges or creates an accounting mismatch, then these gains or losses should be taken to profit or loss rather than other
comprehensive income.
A financial liability is derecognised when it is extinguished (i.e. when the obligation in the contract is discharged, cancelled
or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial
modification to the terms of a financial liability is treated as an extinguishment of the existing liability and recognition of
a new financial liability. The difference between the carrying amount of the financial liability derecognised and the
consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit
or loss.
Financial Assets
A financial asset that meets the following conditions is subsequently measured at amortised cost:
-
-
the financial asset is managed solely to collect contractual cash flows; and
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding on specified dates.
A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive
income:
-
-
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding on specified; and
the business model for managing the financial assets comprises both contractual cash flows collection and the
selling of the financial asset.
By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value
through other comprehensive income are subsequently measured at fair value through profit or loss.
The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on
initial classification and is irrevocable until the financial asset is derecognised.
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ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the asset is transferred
in such a way that all the risks and rewards of ownership are substantially transferred. On derecognition of a financial
asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration
received and receivable is recognised in profit or loss.
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits
held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and
bank overdrafts. Bank overdrafts, if any, are shown within short-term borrowings in current liabilities on the Statement
of financial position.
Trade and other receivables
Receivables are usually settled within 60 days. Receivables expected to be collected within 12 months of the end of the
reporting period are classified as current assets. All other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment. Collectability of trade and other receivables are reviewed
on an ongoing basis. An impairment loss is recognised for debts which are known to be uncollectible. An impairment
provision is raised for any doubtful amounts.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year
which are unpaid and stated at their amortised cost. The amounts are unsecured and are generally settled on 30 day
terms.
2.6.3
Impairment of financial assets
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a “loss event”) having occurred, which has an impact on the estimated
future cash flows of the financial asset(s).
In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group
of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments;
indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic
conditions that correlate with defaults. Impairment of trade receivables is determined using the simplified approach in
AASB 9 which uses an estimation of lifetime expected losses.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to
reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of
recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the
written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced
directly if no impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the
Group recognises the impairment for such financial assets by taking into account the original terms as if the terms have
not been renegotiated so that the loss events that have occurred are duly considered.
2.6.4
Finance income and expenses
Finance income comprises interest income on funds invested, gains on the disposal of financial assets and changes in the
fair value of financial assets at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss,
using the effective interest method.
Foreign currency gains and losses are reported on a net basis.
39
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
2.7
Employee benefits
2.7.1
Short-term employee benefits
Provision for employee benefits for wages, salaries and annual leave that are expected to be settled wholly within 12
months of the reporting date represent present obligations resulting from employees' services provided to the reporting
date and are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects
to pay at the reporting date including related payroll on-costs, such as worker’s compensation insurance and payroll tax.
2.7.2 Other long-term employee benefits
The Group's obligation in respect of long-term employee benefits is the amount of future benefit that employees have
earned in return for their service in the current and prior periods plus related on-costs; that benefit is discounted to
determine its present value. The discount rate applied is determined by reference to market yields on high quality
corporate bonds at the report date that have maturity dates approximating the terms of the Group’s obligations.
2.7.3
Retirement benefit obligations: Defined contribution superannuation funds
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions onto a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to
defined contribution superannuation funds are recognised as an expense in the statement of profit or loss and other
comprehensive income as incurred.
2.7.4
Equity-settled compensation
The Group operates an employee share option plan. The fair value of options granted is recognised as an employee
expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period
during which the employees become unconditionally entitled to the options. The fair value of the options granted is
measured using the Black-Scholes pricing model, considering the terms and conditions upon which the options were
granted. The amount recognised is adjusted to reflect the actual number of share options that vest except where
forfeiture is only due to market conditions not being met.
2.8
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the
reporting period.
2.9
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised
as expenses on a straight-line basis over the term of the lease.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of
the lease term.
2.10 Revenue and other income
The core principle of AASB 15 is that revenue is recognised on a basis that reflects the transfer of promised goods or
services to customers at an amount that reflects the consideration the Group expects to receive in exchange for those
goods or services.
Revenue is recognised by applying a five-step process outlined in AASB 15 which is as follows:
Step 1: Identify the contract with a customer;
Step 2: Identify the performance obligations in the contract and determine at what point they are satisfied;
Step 3: Determine the transaction price;
40
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
Step 4: Allocate the transaction price to the performance obligations;
Step 5: Recognise revenue as the performance obligations are satisfied.
Following the adoption of AASB 15, on 1 July 2018, the Group’s revenue recognition accounting policy is that:
The performance obligation for the implemented Group’s software is satisfied when the software has been installed and
is operating materially as contractually required and appropriate services have been performed. Rather than recognising
the contracted revenue evenly over the contract period which ranges from 12 to 60 months in the case of license revenue
or evenly over an implementation period for service revenue (generally 3 to 12 months), under the new accounting policy,
both license and implementation revenue for the contracted period is recognised at the point in time when the Group’s
software has been installed and is operating materially as contractually required.
All revenue is stated net of the amount of GST (Note 2.3.2 Goods and Services Tax (GST)).
2.11
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other
components. All operating segments' results are regularly reviewed by the Group's Directors to make decisions about
resources to be allocated to the segment and assess its performance, and for which discrete financial information is
available.
2.12
Intangible assets
a.
Intangible assets
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually
or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the
indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a
prospective basis. The Directors consider that intangible assets, other than patents and trademarks, have indefinite
useful lives because they expect that they will continue to generate cash inflows indefinitely.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income when the asset is derecognised.
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the
business less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each
of the Group’s cash-generating units (or Groups of cash-generating units) that is expected to benefit from the synergies
of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when
there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its
carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any
impairment loss for goodwill is recognised directly in profit or loss in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income. An impairment loss recognised for goodwill is not reversed in subsequent periods.
b.
Intangible assets other than goodwill
Trademarks and licences
Patents and trademarks are recognised at cost of acquisition. They have a finite life and are carried at cost less any
accumulated amortisation and any impairment losses. Patents and trademarks are amortised over their useful lives
ranging from 5 to 10 years.
41
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
2.13
Critical Accounting Estimates and Judgements
Management discusses with the Board the development, selection and disclosure of the Group's critical accounting
policies and estimates and the application of these policies and estimates. The estimates and judgements that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
2.13.1
Key Estimate - Intangible assets and amortisation
Research 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.
2.13.2
Key Estimate – provision for R&D
Where the Group receives the Australian Government’s Research and Development Tax Incentive, the Group accounts
for the amount refundable on accrual basis. In determining the amount of the R&D provision at year end, there is an
estimation process utilising a conservative approach. Any changes to the estimation are recorded in the subsequent
Financial Year.
2.14
New, revised or amending Accounting Standards and Interpretations adopted
The Group has adopted all the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) that are that are relevant to their operations and are effective for the
current reporting period.
2.14.1 AASB 15 Revenue from Contracts with Customers (“AASB 15”)
The Group has adopted AASB15 as issued in May 2014 with the date of initial application being 1 July 2018. In accordance
with the transitional provision in AASB15 the standard has been applied using the full retrospective approach. In this
regard, the Group applied a practical expedient and did not restate any contracts that were completed at the beginning
of the earliest period presented.
AASB15 superseded AASB118 Revenue, AASB111 Construction Contracts and related interpretations and it applies to all
revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new
standard establishes a five-step model to account for revenue arising from contracts with customers. Under AASB15,
revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange
for transferring goods or services to customers.
2.14.2 Revenue recognition
The core principle of AASB 15 is that revenue is recognised on a basis that reflects the transfer of promised goods or
services to customers at an amount that reflects the consideration the Group expects to receive in exchange for those
goods or services.
At 1 July 2017 and 1 July 2018, all existing contracts were assessed and it was determined that the adoption of AASB15
standards did not result in any material changes to the Group’s results or its financial position in both the current year
and the comparative period.
2.14.3
AASB 9 Financial Instruments (“AASB 9”)
The Group has adopted AASB9 as issued in July 2014 with the date of initial application being 1 July 2018. In accordance
with the transitional provision in AASB9, comparative figures have not been restated. AASB9 replaces AASB139 Financial
Instruments: Recognition and Measurement (“AASB 139”). Bringing together all three aspects of the accounting for
financial instruments: classification and measurement; impairment and hedge accounting. The accounting policies have
been updated to reflect the application of AASB 9 for the period from 1 July 2018.
The adoption of AASB9 did not result in any material changes to the Group’s results or its financial position in both the
current year and the comparative period.
42
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
2.15 New Accounting Standards and Interpretations not yet mandatory or early adopted
AASBs that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group
for the annual reporting period ended 30 June 2019. The Group's assessment of the impact of these new or amended
AASBs, most relevant to the Group, are set out below:
AASB 16 Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
2.15.1
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases
and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for
leases to be classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
i.
ii.
iii.
iv.
v.
recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12 months
of tenure and leases relating to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and
unwinding of the liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease
liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead
account for all components as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line
with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the
date of initial application. AASB 16 also allows the use of practical expedients for recognition of contracts previously
classified as operating leases.
The Group has evaluated that the impact of the new standards and determined that the impact on the statement of
financial position at 30 June 2019 will be an increase in lease related assets of $892,746 and a corresponding increase in
lease liabilities of the same amount on recognition of leases previously classified as operating leases. The impact on the
consolidated statement of profit and loss is not material.
2.16 Functional and presentation currency
The functional currency of each of the Group’s entities is the currency of the primary economic environment in which
that entity operates. The consolidated financial statements are presented in Australian Dollars (AUD), which is the Parent
Entity’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date
of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items
measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary
items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange
differences arising on the translation of monetary items are recognised in profit or loss, except exchange differences that
arise from net investment hedges.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s
presentation currency, are translated as follows: assets and liabilities are translated at exchange rates prevailing at the
end of the reporting period; income and expenses are translated at exchange rates on the date of transaction; and all
resulting exchange differences are recognised in other comprehensive income.
43
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
3.
BUSINESS COMBINATION
Alcidion completed the 100% acquisition of MKM Health Pty Ltd (and MKM Health (NZ) Ltd) & Patientrack Holdings Ltd
(and its 100% owned subsidiaries Patientrack (UK) Ltd and Patientrack Pty Ltd) on 3 July 2018. MKM Health is a leading
provider of IT solutions and services to healthcare providers across Australia and New Zealand, while UK based
Patientrack is a world leading supplier of healthcare software targeted at improving patient safety in hospitals. The
acquisition expanded Alcidion’s international and domestic footprint substantially with a diversified customer base.
The purchase was satisfied by the issue of 197,891,181 ordinary shares at a deemed issue price of 5.05c per share and
the payment of $1,549,395 cash.
Assets and liabilities acquired in the MKM Health and Patientrack operations have been measured at their fair value and
the excess of the consideration over the net assets acquired and recognised upon acquisition has been recorded as
Goodwill on acquisition. The following table shows the assets acquired, liabilities assumed and the purchase
consideration at the acquisition date, with the business combination accounting being final.
Purchase consideration:
-
-
-
Cash
Shares
Contingent Consideration (i)
Total purchase consideration
Assets and liabilities acquired at fair value:
Cash and Cash Equivalents
Trade and Other Receivables
Plant and Equipment
Intangible Assets
Deferred Tax Asset
Trade and Other Payables
Employee Benefits
Deferred Income
Identifiable assets acquired, and liabilities assumed at fair value
Intangible assets recognised upon acquisition:
Intellectual Property
Net assets acquired and recognised upon acquisition
Purchase Consideration
Less: Net assets acquired and recognised upon acquisition
Goodwill (ii)
Fair Value
3 July 2018
1,549,395
9,993,505
4,000,000
15,542,900
73,363
3,333,092
60,675
10,212
203,002
(1,770,610)
(805,427)
(1,926,134)
(821,827)
1,714,244
892,417
15,542,900
(892,417)
14,650,483
44
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
(i) A further contingent consideration of up to AU$4m, to be satisfied by the issue of Alcidion shares at a deemed issue
price of 5.05c per share, is payable in 12 months from acquisition date subject to the revenue and EBITDA performance
of MKM Health and Patientrack in that 12-month period. The revenue target requires the MKM Health Group to
generate at least $11m in revenue over the 12-month period following the acquisition whilst the EBITDA target is
based on a sliding scale ranging from $1m to $2m EBITDA.
(ii) Goodwill arose in the acquisition of the MKM Health Group due to the strong position and competitive advantage
that the MKM Health Group has in the Health IT sector. None of the Goodwill arising on this acquisition is expected
to be deductible for tax purposes.
The measurement of identifiable intangible assets acquired in a business combination is highly subjective and there are
a range of possible values that could be attributed for initial recognition. Judgement is applied in selecting the value to
be recognized on the balance sheet. Management’s assessment of the useful life of the intangible assets is reviewed at
each reporting period.
Key Estimate – Contingent consideration
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
Impact of acquisition on the results of the Group
The acquisition has transformed Alcidion from what is was in FY2018. In FY2019, Alcidion quadrupled year-on-year
revenue. While the Group’s cost base was also significantly increased as a result of the acquisition, the profitable
operations of the acquired companies, resulted in a near breakeven FY2019 loss after tax for the expanded Alcidion Group
of $84,165.
Acquisition-related costs amounting to $150,000 have been excluded from the consideration transferred and have been
recognised as an expense in profit or loss for FY2019, within the ‘operations and administration expense’ line item.
Net cash outflow arising on acquisition
Consideration paid in cash
Less: Cash and cash equivalent balances acquired
1,549,395
(73,363)
1,476,032
45
4.
REVENUE
Recurring income
Non-recurring income (i)
Grants (ii)
Foreign exchange gain or (loss)
Other income
Other revenue
Research & Development Incentive Rebate
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
Consolidated 2019
$
Consolidated 2018
$
7,841,950
8,990,163
50,000
(17,790)
16,864,323
-
-
1,743,754
1,259,436
137,975
8,632
3,149,797
1,217
1,029,690
Non-recurring income relates to ad-hoc project work carried out for a variety of customers.
(i)
(ii) MTP Connect Grant revenue.
5.
LOSS FROM OPERATIONS
Loss before income tax has been arrived at after charging the following losses and expenses from continuing operations:
Depreciation and amortisation of non-current assets
Directors and employees benefit expense
Superannuation expense
Legal fees
M&A activities
Minimum lease payments from operating leases
Consolidated 2019
$
Consolidated 2018
$
65,886
11,967,349
735,112
105,248
101,562
58,931
47,221
2,843,919
233,768
611,034
92,772
103,591
NOTE: The Cost of Sale of Goods and Services for 2019 and 2018 differs from that presented in the unaudited Preliminary Financial
Statements which followed the presentation used in the 2018 Annual Report, which deducted only the cost of third party product and
hardware (i.e. cost of sale of goods only) from revenue to determine Gross Profit. This was inconsistent with how Gross Profit was
presented in the 2019 Half Year Review where the cost of direct labour used to deliver services and develop, maintain and support
product was also included in the Cost of Sale of Goods and Services. Accordingly, the cost of direct labour has been reclassified from
the total Directors and Employee Benefits Expense amounts shown above to Cost of Sale of Goods and Services and the calculation of
Gross Profit reflects this
6.
INCOME TAX
Income tax recognised in loss
Tax expense comprises:
Current tax (benefit) / expense
Deferred tax expense relating to the origination and reversal of temporary
differences
Total tax benefit
Consolidated 2019
$
Consolidated 2018
$
2,541
(28,302)
(25,761)
(2,963)
42,977
(45,940)
46
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the income tax expense in
the financial statements as follows:
Consolidated 2019
$
Consolidated 2018
$
(Loss) from operations
(109,926)
(2,135,253)
Income tax benefit calculated at 27.5%
Effect of different tax rates of group entities operating in different tax
jurisdictions
Research and Development expense
Effect of expenses exceeding income in determining taxable profit
Effect of expenses that are not deductible in determining taxable profit
Net effect of unused tax losses and temporary differences not recognised as
deferred tax assets
Net effect of temporary differences recognised as deferred tax assets
Adjustment to income tax
Tax effect of Alcidion Group DTA brought to account
Tax effect of MKM Health Pty Ltd DTL brought to account
Tax effect of Oncall Systems DTA brought to account
Income tax expense
(30,230)
(40,499)
-
16,717
(7,030)
6,979
51,333
-
(50,531)
27,500
-
(25,761)
(587,195)
(228)
367,789
100,741
198,877
(79,984)
(42,977)
-
-
(2,963)
(45,940)
The tax rate used in the above reconciliation in respect to the income of group entities domiciled in Australia is the
corporate tax rate of 27.5% (2018: 27.5%) payable by Australian corporate entities on taxable profits under Australian
tax law. The tax rate used in the above reconciliation in respect to the income of group entities domiciled in New Zealand
is the corporate tax rate of 28% (2018: 28%) payable by New Zealand corporate entities on taxable profits under New
Zealand tax law. The tax rate used in the above reconciliation in respect to the income of group entities domiciled in the
UK is the corporate tax rate of 19% (2018: 19%) payable by UK corporate entities on taxable profits under England &
Wales tax law. In 2018, the Australian Taxation Office introduced legislation under which the corporate tax rate for
Companies satisfying the requirements to be assessed as a 'Small Business' reduced to 27.5%. To satisfy the requirements
of a 'Small Business' in the 2019 financial year, a Company must have annual turnover of less than $50,000,000 (2018:
$25,000,000). Alcidion Group Ltd has satisfied this requirement and is therefore eligible to apply the reduced income tax
rate of 27.5%.
Recognised deferred tax balances
The following deferred tax assets have been brought to account:
Employee benefits
Accrued expenses
Legal cost – non deductable
Net temporary differences
Deferred Tax Asset
Net temporary differences
Deferred Tax Liability
Consolidated 2019
$
316,795
Consolidated 2018
$
115,757
23,681
36,796
-
377,272
27,500
27,500
4,620
-
120,377
-
-
Key estimate of unrecognised Deferred Tax Assets: Deferred tax assets are recognised for deductible temporary
differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise
those temporary differences and losses. A deferred tax asset has not been recognised in respect of accumulated tax
47
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
losses and some temporary differences as the realisation of the benefit is not regarded as probable. The tax loses carried
forward amount to $5,294,416 (2018: $819,630).
Franking Account: (5,967,642) (2018: 4,937,952)
The Company’s franking account is in debit by the amount of $5,967,642. The debit balance has arisen due to the
accumulation of Research & Development Tax Incentive Refunds totalling $5,978,248 since the year ended 30 June 2005.
In accordance with section 205 of the Income Tax Assessment Act (ITAA) 1997, the Company is not subject to franking
deficits tax on this balance.
7.
KEY MANAGEMENT PERSONNEL DISCLOSURES
a) Details of key management personnel
The directors and executives of Alcidion Group Limited during the financial year were:
Directors
Ms Rebecca Wilson (Appointed Chair on 30 August 2019)
Mr Raymond Howard Blight (Resigned as Chair on 30 August 2019)
Professor Malcolm Pradhan
Mr Nicholas Paul Dignam
Mr Geoff Rohrsheim (Resigned 30 June 2019)
Ms Kate Quirke (Appointed CEO and Executive Director on 3 July 2018 then appointed Managing Director
from 25 January 2019)
Mr Simon Chamberlain (Appointed on 1 July 2019)
Executives
Mr Duncan Craig (Resigned as CFO / Company Secretary on 28 Feb 2019)
Mr Colin MacKinnon (Appointed on 3 July 2018 as Group Commercial Manager and assumed roles of Group
COO / CFO from 1 March 2019)
b) Key management personnel compensation
The aggregate compensation made to key management personnel of the Company is set out below:
Short-term employee benefits
Annual Leave
Post-employment benefits
Share-based payments
Consolidated 2019
$
Consolidated 2018
$
1,444,172
140,826
118,011
-
1,703,009
856,386
14,756
83,403
-
954,545
The compensation of each member of the key management personnel of the Company is set out in the
Remuneration Report.
48
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
8.
SHARE-BASED PAYMENTS SHARE OPTIONS AND CONTINGENT SHARE RIGHTS
The Company provides an ownership-based compensation arrangement for its employees.
Each option issued under the arrangement converts into one ordinary share of Alcidion Group Limited on exercise. No
amounts are paid or payable by the recipient on receipt of the option. Options neither carry rights to dividends nor voting
rights. Options may be exercised at any time from the date of vesting to the date of their expiry. Vesting dates and
conditions are dependent on each arrangement as agreed to by the directors.
The number of options granted is at the sole discretion of the directors.
Incentive options issued to directors (executive and non-executive) are subject to approval by shareholders and attach
vesting conditions as appropriate.
No share-based payments were made during the current year.
There were no options over ordinary shares in the Company provided as remuneration to directors or key management
persons during the year.
Options
Consolidated 2019
$
Weighted average
exercise price
$
Number of
options
Consolidated 2018
$
Number of
options
Weighted average
exercise price
$
Balance at beginning of financial year
Granted during the financial year
Group’s options on acquisition
Group’s options foregone
Exercised during the financial year
Balance at end of the financial year (i)
Exercisable at end of financial year
10,000,000
-
-
-
-
10,000,000
10,000,000
0.07
-
-
-
-
0.07
0.07
10,500,000
-
-
(500,000)
-
10,000,000
10,000,000
0.07
-
-
0.07
-
0.07
0.07
(i) Balance at end of the financial year: The Share options outstanding at the end of the financial year had a weighted average remaining
contractual life of 1 year
Balance at beginning of financial year
Granted during the financial year
Foregone during the financial year
Balance at end of the financial year
Class A Contingent Shares
Rights (1)
Number of Rights
-
-
-
-
Class B Contingent Shares
Rights (2)
Number of Rights
148,387,096
-
(148,387,096)
-
(1) Each Class A Contingent shares right will be converted to one fully paid ordinary shares on Alcidion Group achieving $10,000,000 in revenue
(audited) over 12 consecutive months within 24 months from the 29th February 2016 (re-admission of Alcidion Group to the ASX) , this did not
occur and as such were forfeited during the 2018 financial year.
(2) Each Class B Contingent shares right will be converted to one fully paid ordinary shares on Alcidion Group achieving $15,000,000 in revenue
(audited) over 12 consecutive months within 36 months from the 29th February 2016 (re-admission of Alcidion Group to the ASX), this did not
occur and as such were forfeited during the 2019 financial year.
49
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
9.
REMUNERATION OF AUDITORS
Audit and review of the financial report for the Company (i)
Non-audit services
Consolidated 2019
$
Consolidated 2018
$
49,000
34,962
83,962
34,400
-
34,400
(i)
The 2019 auditor of Alcidion Group Limited, is William Buck (2018: William Buck).
10.
TRADE AND OTHER RECEIVABLES
R&D Tax Offset Refund Due
Trade accounts receivable
Consolidated 2019
$
Consolidated 2018
$
-
3,422,922
3,422,922
1,029,690
499,501
1,529,191
Trade receivable are non-interest bearing and generally on terms of 14-60 days. The receivables at reporting date have
been reviewed to determine whether there is any objective evidence that any of the receivables are impaired. An
allowance for credit loss is included for any receivable where the entire balance is not considered collectible. No
allowance for credit loss is required as of 30 June 2019 (2018: Nil).
Additional Information in relation to financial risks concerning or with a potential impact on financial assets and liabilities
is disclosed in Note 26 – Financial Instruments.
11.
TRADE AND OTHER PAYABLES
Goods and Services Tax
Trade payables (i)
Other
PAYG withholding
Consolidated 2019
$
Consolidated 2018
$
282,498
509,241
769,357
137,444
1,698,540
121,174
201,391
116,505
134,535
573,605
(i)
The average credit period on purchases of goods and services is 30 days. No interest is charged on the trade payables for the first 30 to 60 days
from the date of the invoice. Thereafter, interest is charged at various penalty rates. The group has financial risk management policies in place
to ensure that all payables are paid within the credit timeframe.
50
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
12.
INTANGIBLE ASSETS
Goodwill (i)
Intellectual Property (i)
Patents & Trademarks – at cost
Patents & Trademarks – accumulated amortisation
(ii)
Consolidated 2019
$
Consolidated 2018
$
15,388,966
1,736,543
348,138
(23,172)
17,450,475
771,059
298,083
14,331
(10,668)
1,072,805
(i)
(ii)
Goodwill and Intellectual Property assets have been recognised on the acquisition of MKM Health Group during the
2019 financial year. Refer to Note 3 for further details.
Reconciliation of Movements in Intangible Assets
Balance at the Beginning of the Year
Additional amounts arising from business acquisitions
Other movement in intangible assets
Amortisation Charged to intangible assets
1,072,805
16,374,939
3,858
(1,127)
4,367
1,069,142
-
(704)
Balance at the End of Year
17,450,475
1,072,805
KEY ESTIMATES AND ASSUMPTIONS: INTANGIBLE ASSETS
Intangible assets, other than goodwill and intellectual property, have finite useful lives. The current amortisation charges
for intangible assets are included under depreciation and amortisation expense as per the statement of profit and loss
and other comprehensive income.
Goodwill and intellectual property is tested for impairment at each reporting period in accordance with AASB136
Impairment of Assets. Management have determined that there is one CGU. To assess whether goodwill and intellectual
property is impaired, the carrying amount of the CGU is compared to the recoverable amount, determined based on the
greater of its value in use and its fair value less costs of disposal.
At each reporting date the directors review intangible assets for impairment. No impairment was assessed as necessary
in the 2019 financial year (2018: Nil).
51
13.
PLANT AND EQUIPMENT
Consolidated
Cost
Balance at 1 July 2017
Additions
Balance at 1 July 2018
Additions/(Disposal)
Balance at 30 June 2019
Accumulated depreciation and impairment
Balance at 1 July 2017
Net depreciation expense
Balance at 1 July 2018
Net depreciation expense
Balance at 30 June 2019
Net book value
At 30 June 2018
At 30 June 2019
14. OTHER LIABILITIES
Income in advance (i)
Other payables
Contingent consideration MKM Health/Patientrack (ii)
Contingent consideration Oncall Systems Ltd. (iii)
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
Computer
equipment at cost
$
Furniture and
fittings at cost
$
Total
$
368,763
21,612
390,375
(71,369)
319,006
324,875
22,810
347,685
(97,176)
250,509
42,690
68,497
145,336
2,250
147,586
84,654
232,240
91,412
8,817
100,229
42,859
143,088
47,357
89,152
514,099
23,862
537,961
13,285
551,246
416,287
31,627
447,914
(54,317)
393,597
90,047
157,649
Consolidated 2019
$
Consolidated 2018
$
3,771,433
3,048
4,000,000
495,713
8,270,194
942,093
123,409
-
475,663
1,541,165
(i)
(ii)
(iii)
Income in advance relates to invoices issued to customers, or physical cash received from customers for licencing, maintenance and
support services to be carried out in future periods.
Refer to Note 3 for details of the business combination accounting and contingent consideration payable details for MKM
Health/Patientrack
Contingent consideration relating to the acquisition of Oncall Systems on 1 February 2018 has been calculated with reference to
Smartpage related revenues achieved in the period from 1 February 2018 to 30 June 2019. This is to be satisfied as 40% cash payment
and 60% by the issue of shares at a deemed issue price of 4.92c per share based on the 30 day VWAP prior to 1 February 2018.
52
15.
EMPLOYEE PROVISIONS
Current
Annual leave
Long service leave
Other – bonus and commission payable
Non-current
Long service leave
Total employee provisions
16.
ISSUED CAPITAL
(a)
Issued capital
805,671,138 fully paid ordinary shares
(2018: 607,779,957)
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
Consolidated 2019
$
Consolidated 2018
$
548,310
532,674
446,365
1,527,349
59,653
1,587,002
107,920
163,314
-
271,234
111,281
382,515
Consolidated
2019
$
Consolidated
2018
$
20,787,188
10,793,683
Balance at 1 July 2018
Shares issued during the year
Balance at 30 June 2019
Consolidated
2019
Consolidated
2018
No.
607,779,957
197,891,181
805,671,138
$
10,793,683
9,993,505
20,787,188
No.
607,779,957
-
607,779,957
$
10,793,683
-
10,793,683
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long-term
shareholder value and ensure that the Group can fund its operations and continue as a going concern.
The Group’s debt and capital include ordinary share capital and financial liabilities, supported by financial assets.
The Group is not subject to any externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of debt
levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior
year.
53
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
(b)
Contingent share rights
Consolidated
2019
Consolidated
2018
No.
$
No.
$
Class A Contingent Share Rights
Balance at 1 July
Share rights foregone for non-performance
of Milestone 1
Balance at 30 June
-
-
-
Class B Contingent Share Rights
Balance at 1 July
Share rights foregone for non-performance
of Milestone 1
Balance at 30 June
148,387,096
(148,387,096)
-
-
-
-
-
-
-
145,161,290
(145,161,290)
-
148,387,096
148,387,096
-
-
-
-
-
Each Class B Contingent shares right will be converted to one fully paid ordinary shares on Alcidion Group achieving
$15,000,000 in revenue (audited) over 12 consecutive months within 36 months from the 29th February 2016 (re-
admission of Alcidion Group to the ASX), this did not occur and as such were forfeited during the 2019 financial year.
Refer Note 8 for terms & conditions of Contingent Share Rights.
(c)
Reserves (i)
Balance at beginning of financial year
Share-based payment expense
Balance at end of financial year
(i)
The reserve records the value of share-based payments provided.
(d)
Movements in options on issue
Beginning of the financial year
Options Foregone
Options Granted
Options exercised
End of the financial year (i)
(i)
Date options issued
29 November 2016
29 November 2016
Total number of options outstanding at the date of this report
Expiry Date
30 September 2020
30 September 2020
Consolidated
2019
$
Consolidated
2018
$
684,000
-
684,000
684,000
-
684,000
2019 No. of options
2018 No. of options
10,000,000
-
-
-
10,000,000
10,500,000
(500,000)
-
-
10,000,000
Exercise price (cents)
6
8
Number of options
5,000,000
5,000,000
10,000,000
The weighted average exercise price of these options is $0.07 & weighted average exercise period is 1 year.
54
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
17. ACCUMULATED LOSSES
Balance at beginning of financial year
(Loss) attributable to members of the entity
Balance at end of financial year
18. DIVIDENDS
There were no dividends paid or proposed during the year.
19.
LOSS PER SHARE
Basic (loss) per share (cents):
From continuing operations
Basic earnings per share
The earnings and weighted average number of ordinary shares used in the calculation
of basic earnings per share
Loss after tax
Consolidated
2019
$
Consolidated
2018
$
(8,144,437)
(84,165)
(8,228,602)
(6,055,124)
(2,089,313)
(8,144,437)
2019
Cents per share
2018
Cents per share
(0.01)
(0.34)
Consolidated
2018
$
Consolidated
2017
$
(84,165)
(2,089,313)
2019
No.
2018
No.
Weighted average number of ordinary shares for the purposes of basic earnings per
share
805,671,138
607,779,957
The rights of options held by option holders have not been included in the weighted average number of ordinary shares
for the purposes of calculating diluted EPS as they do not meet the requirements for inclusion in AASB 133 “Earnings per
Share”. The rights of options are non-dilutive as the Group has incurred a loss for the year.
.
20. RELATED PARTY DISCLOSURES
(a)
Key management personnel remuneration
Details of key management personnel remuneration are disclosed in Note 7 to the financial statements.
(b)
Loans to key management personnel and their related parties
There have been no loans to key management personnel during the year.
(c)
Other transactions with key management personnel
WE Buchan was paid $261,089 for Investor Relation services, a company in which non-executive director
Rebecca Wilson is interested. Balance payable as at 30 June 2019 is $45,178.
Transactions between related parties are on normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
55
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
21.
COMMITMENTS
The Group has a number of operating leases in effect for office premises and equipment.
Future minimum payments under this non-cancellable operating lease as at year end are:
Within one year
Between one year and less than five years
Consolidated 2019
$
Consolidated 2018
$
495,714
441,855
937,569
84,583
-
84,583
As at 30 June 2019 the Group has no other commitments (2018: nil) and no other other non-cancellable operating leases
contracted for but not recognised.
22.
CONTINGENCIES
In the opinion of the Directors, the Group did not have any contingent liabilites or contingent assets as at 30 June 2019
(2018: nil).
The Company has provided security as follows; first registered Company charge by Alcidion Corporation Pty Ltd over the
whole of its assets and undertakings including uncalled capital for any debt incurred that is not recoverable to its bankers.
At 30 June 2019, overdraft used is $0 (unused: $200,000). At 30 June 2019, credit card balance used is $42,014 (unused:
$112,986).
Variation to the security; guarantee limited to $210,000 by Mr Raymond Blight and Guarantee limited to $210,000 by
Professor Malcolm Pradhan. This security is against the overdraft and credit card facilities with CBA.
23.
SEGMENT REPORTING
The Group operates in the healthcare industry in Australia, New Zealand and the UK. For management purposes, the
Group is organised into one main operating segment which involves the provision of healthcare software solutions and
services in all these territories. All the Group’s activities are inter-related and discrete financial information is reported
to the Board (Chief Operating Decision Maker) as a single segment. Accordingly, all significant operating decisions are
based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial
statements of the Group as a whole.
Basis of accounting for purposes of reporting by operating segments
a. Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating decision makers with
respect to operating segments, are determined in accordance with accounting policies that are consistent with those
adopted in the annual financial statements of the Group.
b.
Intersegment transactions
An internally determined transfer price is set for all intersegment sales. The price is based on what would be realised in
the event the sale was made to an external party at arm’s length. All such transactions are eliminated on consolidation
of the Group’s financial statements.
c. Segment assets
When an asset is used across multiple segments, the asset is allocated to the segment that that receives the majority of
the economic value from the asset.
56
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
d. Segment liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the
operations of the segment.
e. Segment information
(i)
(ii)
Group Performance – No separate Group performance has been presented as the Board receives a
consolidated Group performance report which is the equivalent to the statement of Profit or Loss and Other
Comprehensive Income of the Group as a whole.
Group assets and liabilities – No separate Group asset and liabilities have been presented as the Board
receives a consolidated asset and liabilities report which is the equivalent to the statement of financial
position of the Group as a whole.
(iii)
Revenue by geographical region
Australia / New Zealand
United Kingdom
Total revenue
(iv)
Major customers
Consolidated 2019
$’000
Consolidated 2018
$’000
14,208
2,670
16,864
4,179
-
4,179
The Group has a number of customers to whom it provides both products and services. The Group does not
have a single customer who accounts for more than 10% of total revenue
(v)
Timing of revenue recognition
Australia / New Zealand
United Kingdom
Total revenue
Consolidated 2019
$’000
Goods transferred at
a point in time
Services transferred
over time
8,046
1,130
9,176
6,148
1,540
7,688
AASB 15 was adopted using the modified retrospective approach and as such comparatives have not been
provided for disaggregation of revenue
24.
SUBSEQUENT EVENTS
The Company has had the following subsequent events post 30th June 2019:
a. Appointment of Mr Simon Chamberlain as Alcidion Group Non-Executive Director as at 1 July 2019
b. On 15 July 2019, Brian Leedman exercised 5 million options for ordinary shares at an exercise price of 6
cents per share;
c. On 27 August 2019, Brian Leedman exercised his last remaining 5 million options for ordinary shares at an
exercise price of 8 cents per share.
d. Appointment of Ms Rebecca Wilson as Alcidion Chair and resignation of Mr Ray Blight as Alcidion Chair on
30 August 2019.
e. On 17 September 2019, Alcidion signed a three-year agreement with Australian private healthcare provider
Healthscope to implement a data and analytics solution worth $895K.
57
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
25. NOTES TO THE STATEMENT OF CASH FLOWS
(a)
Reconciliation of cash and cash equivalents
Cash and cash at bank
Consolidated
2019
$
3,171,843
Consolidated
2018
$
2,890,339
(b)
Reconciliation of loss for the year to net cash flows from operating activities
(Loss) for the year after income tax
Depreciation and amortisation of non-current assets
(84,165)
65,886
(2,089,313)
47,221
Changes in net assets and liabilities, net of effects from
acquisition and disposal of businesses:
(Increase)/decrease in assets:
Trade and other receivables
Other Assets
Intangible Assets
Deferred Tax Assets
Increase/(decrease) in liabilities:
Trade and other payables
Provisions
Deferred Tax Liabilities
Other Liabilities
Net cash generated/(used) in operating activities
26.
FINANCIAL INSTRUMENTS
(a)
Financial risk management objectives
(1,893,731)
(215,317)
-
(256,895)
1,001,526
1,204,487
27,500
2,141,668
1,990,959
(306,172)
(42,973)
(476,681)
(45,940)
174,537
185,805
-
728,211
(1,825,305)
The Group enters into financial instruments, including derivative financial instruments. The Group’s financial
instruments consist mainly of deposits with banks, accounts receivables and payables. The totals for each
category of financial instruments is shown at Note 26(c).
(b)
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class of
financial asset, financial liability and equity instrument are disclosed in Note 2 to the financial statements.
(c)
Interest rate risk management
The Company is exposed to interest rate risk as it places funds at both fixed and floating interest rates. The risk
is managed by maintaining an appropriate mix between fixed and floating rate products which also facilitate
access to money.
58
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
Maturity profile of financial instruments
The following table details the Company’s exposure to interest rate risk.
Weighted
average
interest
rate
%
Variable
interest
Rate
$
Fixed maturity dates
Less
than
1 year
$
1-5
years
$
5+
years
$
2019
Financial assets:
Cash and cash equivalents
Trade and other receivables
Financial liabilities:
Trade and other payables
Contingent consideration
2018
Financial assets:
Cash and cash equivalents
Trade and other receivables
Financial liabilities:
Trade and other payables
Contingent consideration
(d)
Credit risk management
1.34%
-
-
3,082,435
-
3,082,435
89,408
-
89,408
-
-
-
-
-
-
-
-
-
1.42%
-
-
1,237,343
-
1,237,343
1,652,996
-
1,652,996
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-
interest
bearing
$
-
3,422,922
3,422,922
1,698,540
4,495,713
6,194,253
-
1,529,191
1,529,191
573,605
475,663
1,049,268
Total
$
3,171,843
3,422,922
6,594,765
1,698,540
4,495,713
6,194,253
2,890,339
1,529,191
4,419,530
573,605
475,663
1,049,268
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults.
The Group’s exposure and the credit ratings of its counterparties are continuously monitored.
The Group does not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties
are banks with high credit-ratings assigned by international credit-rating agencies.
The quality of debtors is best monitored by the ageing of open invoices in accounts receivable.
Trade receivables are analysed as follows:
Consolidated
2019 $
Consolidated
2018 $
Not impaired:
-
-
Within trade terms
Past due but not impaired
Total trade receivables
3,175,933
246,989
3,422,922
458,419
41,082
499,501
Receivables that are neither past due nor impaired comprise customers with a long-term record of timely
payments and/or no recent history of default arising from financial difficulty.
59
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
Receivables that are past due but not impaired comprise customers which do not have any objective evidence
that the receivable may be impaired. Alcidion has actively engaged these customers and reasons for the invoices
remaining outstanding are being actively resolved.
An allowance for doubtful debts is recognised where Alcidion has identified objective evidence that an amount
owing may not be recoverable, mainly arising from observed financial difficulty of a customer.
Analysis of age of trade receivables:
Consolidated:
2019
Not Past Due
60-90 days
> 90 days
Total
Trade receivables
3,175,933
3,175,933
79,638
79,638
167,351
167,351
Not Past Due
60-90 days
> 90 days
Total
2018
Trade receivables
458,419
Total
458,419
-
-
41,082
41,082
3,422,922
3,422,922
Total
499,501
499,501
The Group always measures the loss allowance for trade receivables at an amount equal to lifetime expected
credit loss. The expected credit losses on trade receivables are estimated using a provision matrix by reference
to past default experience of the debtor and an analysis of the debtor's current financial position, adjusted for
factors that are specific to the debtor, general economic conditions of the industry in which the debtor operates
and an assessment of both the current and the forecast direction of conditions at the reporting date.
As at 30 June 2019, there were no expenses recognised during the financial year then ended for the write-off
of receivables or provision for doubtful debts (2018: Nil).
(e)
Liquidity risk management
Liquidity risk arises from the possibility that the Group may encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of
financial assets and liabilities. It is a policy of the Group that creditors are paid within 30 days.
2019 Financial liabilities:
Trade and other payables
Contingent consideration
2018 Financial liabilities:
Trade and other payables
Contingent consideration
Variable
interest
Rate
$
Fixed maturity dates
Less
than
1 year
$
1-5
years
$
5+
years
$
Total
$
Non-
interest
bearing
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,698,540
4,495,713
6,194,253
1,698,540
4,495,713
6,194,253
573,605
475,663
1,049,268
573,605
475,663
1,049,268
The amounts listed above equate to fair value. The cashflows in the maturity analysis above are not expected to occur
significaantly earlier than disclosed.
60
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
27.
INFORMATION RELATING TO ALCIDION GROUP LIMITED (THE PARENT)
The following information has been extracted from the books and records of the parent and has been prepared in
accordance with Australian Accounting Standards.
All assets listed below equate to fair value.
Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Statement of Profit or Loss & Other Comprehensive Income
Total Loss for the year before impairment charge
Total Loss for the year after impairment charge
Total comprehensive loss for the year
2019
$
2018
$
54,482
27,764,048
27,818,530
1,986,031
11,864,578
13,850,609
4,654,681
1,492,641
6,147,322
522,469
33,891
556,360
21,671,208
13,294,249
33,144,992
23,151,487
1,193,619
1,193,619
(12,667,403)
(11,050,857)
21,671,208
13,294,249
2019
$
1,616,546
2018
$
1,876,804
1,616,546
3,076,804
1,616,546
3,076,804
61
ANNUAL REPORT – NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2019
28.
INTERESTS IN CONTROLLED ENTITIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Name of Entity
Country of Incorporation
2019
2018
Percentage Owned (%)
Alcidion Corporation Pty Ltd
Oncall Systems Ltd.
MKM Health Pty Ltd
Patientrack Pty Ltd
Patientrack Holdings Limited
Patientrack (UK) Limited
MKM Consulting (UK) Ltd *
MKM Health (NZ) Ltd
Australia
New Zealand
Australia
Australia
England & Wales
England & Wales
England & Wales
New Zealand
100
100
100
100
100
100
100
100
100
100
0
0
0
0
0
0
* MKM Consulting (UK) Ltd was a dormant company which was acquired with the acquisition of Patientrack Holdings Limited but subsequently de-
registered.
29. GUARANTEES
Alcidion has entered into guarantees, as disclosed at Note 22.
30.
CAPITAL COMMITMENTS
At 30 June 2019, Alcidion had no contracted capital commitments for capital purchases (2018: NIL)
62
ANNUAL REPORT – ADDITIONAL SHAREHOLDERS’ INFORMATION
FOR YEAR ENDED 30 JUNE 2019
ADDITIONAL SHAREHOLDERS’ INFORMATION
Alcidion Group Limited’s issued capital is as follows:
ORDINARY FULLY PAID SHARES
At the date of this report there are the following number of Ordinary fully paid shares
Balance at the beginning of the year
Movement of share capital during the year and to the date of this report
Total number of shares at the date of this report
Number of shares
607,779,957
207,981,181
815,761,138
SHARES UNDER OPTION
At the date of this report there are no unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Unlisted options
Listed options
Movements of share options during the year and to the date of this report
Total number of options outstanding at the date of this report
Number of options
10,000,000
-
-
(10,000,000)
-
No person entitled to exercise any option referred to above has had, by virtue of the option, a right to participate in any
share issue of any other body corporate.
SUBSTANTIAL SHAREHOLDERS
Alcidion Group Limited has the following substantial shareholders (including related parties) as at 13 September 2019:
Name
Professor Malcolm Pradhan
Mr Raymond Blight
Isle of Wight Pty Ltd
Caledonia Nominees Pty Ltd
Number of
shares
134,582,403
100,578,081
51,119,673
50,989,673
Percentage of
issued capital
16.50
12.31
6.27
6.25
63
ANNUAL REPORT – ADDITIONAL SHAREHOLDERS’ INFORMATION
FOR YEAR ENDED 30 JUNE 2019
RANGE OF SHARES AS AT 13 SEPTEMBER 2019
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - > 100,001
Total
Total Holders
Units
% Issued Capital
94
284
496
1,735
629
3,238
10,396
1,082,787
4,109,366
72,470,937
737,997,652
815,671,138
0.00
0.13
0.50
8.88
90.48
100.00
UNMARKETABLE PARCELS AS AT 13 SEPTEMBER 2019
Minimum $500.00 parcel at $ 0.2150 per unit
Minimum
parcel size
2,326
Holders
Units
106
31,385
TOP 20 HOLDERS OF ORDINARY SHARES AS AT 13 SEPTEMBER 2019
Name *
Prof. Malcolm Pradhan
Sargon CT Pty Ltd
Rangiora-London Pty Ltd
HSBC Custody Nominees (Australia) Limited
Caledonia Nominees Pty Ltd
Isle of Wight Pty Ltd
Rewmicman Pty Ltd
1
2 Mr Raymond Blight
3
4
5
6 Mrs Katrina Doyle
6
8
9 MNMD Pty Ltd
10
11 MKMS Investment Pty Ltd
12
13 Dr Michael Buist
14 Dr Michael Buist _ Mrs Sarah Buist
15 Citicorp Nominees Pty Limited
16
17 Mr Colin MacKinnon + Mrs Maree MacKinnon
18 Mr Vivek Ramakrishnan + Miss Nisha Srinivasan
19 BNP Paribas Noms Pty Ltd
20 Ms Robyn Gaile Morris
Total of Top 20 Holders of ORDINARY SHARES
The Andromeda Group Pty Ltd
Emerald Shares Pty Limited
Units
134,582,403
95,828,781
43,104,209
37,854,209
26,526,606
19,893,428
19,893,428
19,625,869
13,262,919
9,102,553
7,885,464
6,552,238
6,409,831
6,385,600
5,665,441
5,500,000
5,380,000
5,186,789
4,581,315
4,549,300
477,770,383
%
16.50
11.75
5.28
4.64
3.25
2.44
2.44
2.41
1.63
1.12
0.97
0.80
0.79
0.78
0.69
0.67
0.66
0.64
0.56
0.56
58.57
* The holdings presented in the above table represent individual holdings as registered with the Company (reflecting how these would
be presented to shareholders requesting such a Top 20 report). Multiple holdings held by individual shareholders and holdings of
related parties to each director or KMP have not been grouped in the table. The Shares and Options Held By Directors table on
page 15 shows the consolidated equity interest that each director has in the Company.
64
ANNUAL REPORT – CORPORATE DIRECTORY
FOR YEAR ENDED 30 JUNE 2019
CORPORATE DIRECTORY
Current Directors (Alcidion Group Limited)
Position
Chair
Managing Director
Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Date of Appointment
01/08/2017
03/07/2018
22/02/2016
22/02/2016
22/02/2016
01/07/2019
Position
Non-Executive Director
Date of Resignation
30/06/2019
Name
Ms. Rebecca Wilson
Ms. Kate Quirke
Prof. Malcolm Pradhan
Mr. Ray Blight
Mr. Nick Dignam
Mr. Simon Chamberlain
Previous Directors
Name
Mr. Geoff Rohrsheim
Registered office
Level 4
100 Albert Road
South Melbourne VIC 3205
Principal place of office
Level 10
9 Yarra Street
South Yarra VIC 3141
1800 767 873
Website
www.alcidion.com
Auditors
William Buck
Level 6, 211 Victoria Square
Adelaide SA 5000
+61 8 8409 4333
+61 8 8409 4499
Accountants
BDO
Level 7, 420 King William Street
Adelaide SA 5000
+61 8 7324 6000
+61 8 7324 6111
65
Bankers
Westpac Banking Corporation
Westpac Commercial Banking Tower B,
Level 9, 799 Pacific Highway
Chatswood NSW 2067
+ 132 032
Solicitors
Kain Lawyers
315 Wakefield Street
Adelaide SA 5000
+61 8 7220 0931
+61 8 7220 0911
Stock Exchange
Australian Securities Exchange Limited
Exchange Centre
20 Bridge Street
Sydney, NSW 2000
ASX Code: ALC
Company Secretary
Ms Melanie Leydin
Registers of securities
Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell Street,
Adelaide SA 5000
ANNUAL REPORT – CORPORATE DIRECTORY
FOR YEAR ENDED 30 JUNE 2019
66
67