Asian American Medical Group Limited Annual Report 2014

Plain-text annual report

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Asian American Medical Group Limited ABN NUMBER 42 091 559 125 Annual report for the year ended 31 August 2014 s ssssssssssssssssssssssssssssssssssss t tttttttttttttttttttttttttttt n nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn e eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee t tttttttttttttttttttt nnnnnnnnnnnnnnnnnnnnnnnnn n ooooooooooooooooooooooooooooooooooooo o C CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC 000000000000000000000000000000000000000000002222222222222222222222222222222222222 02 5 6 8 Corporate directory Chairman’s message Executive Director’s message 10 Proﬁ le of Board of directors 13 Proﬁ le of Doctors and Key Management 16 Financial review 19 Patient’s testimonial – Michael Toh 22 Corporate governance statement 28 Directors’ report 39 Auditor’s Independence Declaration 41 Consolidated statement of proﬁ t or loss and other comprehensive income 42 Consolidated statement of ﬁ nancial position 43 Consolidated statement of changes in equity 44 Consolidated statement of cash ﬂ ows 45 Notes to the ﬁ nancial statements 78 Directors’ declaration 79 Independent auditor’s report 82 Shareholder Information s ss t tt n nn e e t t n n o o C C 033 03 yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy y rrrrrrrrrrrrrrrrr r ooooooooooooooooooooo o ttttttttttttttttttt t c ccccccccccccccccccccc e eeeeeeeeeeeeeeeeeeeeee r rrrrrrrrrrrrrrr i iiiiiiiiiiiiiiiii d dddddddddddddddddddddddd e eeeeeeeeeeeeeeeeeeeeeeeeeeeeeee t tttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa a rrrrrrrrrrrrrrrrrrrrrrrrrrrr r oooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo o ppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppp p rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr r ooooooooooooo o C CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC 000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000004444444444444444444444444444444444444444444444444444444444 04 DIRECTORS Dato’ Dr Kai Chah Tan (Executive Chairman) Ms Pamela Anne Jenkins (Executive Director) Mr Wing Kwan Teh (Non-Executive Director) Mr Evgeny Tugolukov (Non-Executive Director) Mr Heng Boo Fong (Independent Non-Executive Director) Mr Paul Vui Yung Lee (Independent Non-Executive Director) Ms Jeslyn Jacques Wee Kian Leong (Independent Non-Executive Director) COMPANY SECRETARY Dario Nazzari REGISTERED OFFICE 25 Peel Street Adelaide SA 5000 Tel: +61 8 8110 0999 Fax: +61 8 8110 0900 Website: www.aamg.co AUDITORS Grant Thornton Audit Pty Ltd Level 1, 67 Greenhill Road Wayville SA 5034 Tel: +61 8 8372 6666 Fax: +61 8 8372 6677 BANKER Westpac Banking Corporation 114 William Street Melbourne VIC 3000 SHARE REGISTRY Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street Adelaide SA 5000 Tel: +61 8 8236 2300 Fax: +61 8 9473 2408 STOCK EXCHANGE LISTING The Company’s shares are quoted on the Oﬃ cial List of the Australian Securities Exchange Limited. ASX Code : AJJ y r o t c e r i d e t a r o p r o C 05 Dato’ Dr Kai Chah Tan D.P.M.P., MBBS(MAL), FRCS(EDIN) Executive Chairman and Surgeon, Hepatobiliary / Transplant Dear Shareholders, The ﬁ nancial year ended 31 August 2014 (“FY2014”) was marked by challenges in the operating environment as well as our continued eﬀ orts to oﬀ er a wider range of medical specialisation as well as geographical expansion. Despite the high healthcare costs in Singapore and the impact of competing medical tourism centres in the region, the Asian American Medical Group Limited (“AAMG”) remains committed to move up the value chain in two core medical specialties currently – liver and bone marrow. Increased competition from neighbouring medical tourism centres and a decrease in transplantation cases and patients were the main factors which led to a decline in revenue to S$16.2 million in FY2014 compared to S$19.4 million in FY2013. Rising associated healthcare costs in Singapore – especially, rentals, manpower and overall dollar value of many third-party ancillary services – have been a cause of patients diverting to lower- cost locations. At the same time, our operating expenses have also risen. Despite these challenges, the Group continued to improve service quality with a view to achieving our mission of improving medical outcomes. At the same time, we are exploring opportunities to collaborate with potential partners in the region, in areas where we can leverage on our medical expertise. These activities have resulted in travel and related professional costs. The combination of these factors led to a net loss of S$2.5 million for FY2014 compared to S$0.2 million proﬁ t in FY2013. Despite the loss for the year under review, our ﬁ nancial position remains healthy. Our cash and cash equivalents stood at S$5.3 million as at 31 August 2014, even after paying FY2013 ﬁ nal dividends of S$0.2 million. Net Asset Value per share as at 31 August 2014 declined by 1.2 Singapore cents to 2.6 Singapore cents. AAMG’s leadership had anticipated the changes in the operating environment. Rather than step back and wait for the storm clouds to pass over, we took the deliberate decision to move up the value chain, enlarge our competencies and expand to the region. Towards this end, our strategy has been greatly enhanced by our ongoing collaboration with UPMC, the renowned U.S. healthcare group, whom we have partnered with to develop a Comprehensive Transplant Centre (“CTC”). This CTC gained traction with the opening of the Asian American Blood & Bone Marrow Transplant Centre Pte Ltd (“AABMTC”) in February 2013, complementing our earlier single core specialisation of liver transplantation oﬀ ered through the Asian American Liver Centre (“AALC”). I am pleased to report that AABMTC has performed much better in the year under review compared to FY2013 when the practice was just starting. Patient transactions quadrupled to 1,810 in FY2014 from 456 in FY2013 (when it recorded only seven months of operations), while the number of bone marrow transplants performed increased to seven from one over the comparative periods. In less than two years, the blood and bone marrow practice has grown signiﬁ cantly and now contributes 24.1% of the total Group’s revenue. We are yet to see its full potential and will continue to dedicate resources to this practice so as to raise AAMG’s proﬁ le as a global healthcare brand deeply committed to achieving an outstanding record of clinical outcomes. e g a s s e m s ’ n a m r i a h C 06 Apart from widening our ﬁ eld of medical expertise, another major objective of our collaboration with University of Pittsburgh Medical Centre (“UPMC”) was to use the CTC in Singapore as a springboard for regional expansion. In this regard I am pleased to report several positive developments. First, as part of the Group’s geographical expansion plans, AALC’s doctors have commenced surgical procedures at iHeal Medical Centre in Malaysia’s capital city Kuala Lumpur in early 2014. In FY2014 alone, patient numbers for our clinic in Malaysia rose sharply by 82.1%. The steady growth in patient ﬂ ow underscores the importance of our Malaysian operations, which we will build upon by increasing marketing awareness. Second, I want to share with you what we are doing in Russia, a vast country with great potential. On our own we would not have seriously considered penetrating this market due to distance and cultural diﬀ erences. However, leveraging on our collaboration with UPMC we have been working with RusSing Med Holdings Pte Ltd (“RusSing”), our third largest shareholder, to create a network of outpatient medical imaging centres in Russia. RusSing, a private holding company, primarily focuses on business opportunities between Singapore and Russia. This move is also in line with our intention to move up the value-chain by expanding our consultancy and management services. These services tap into our extensive experience and networks in the medical ﬁ eld. We continue to explore related opportunities in other regional markets. While there has been a general slowdown in number of foreign patients to Singapore, one positive trend is the strong revival of patient referrals from the United Arab Emirates (“UAE”) Health Oﬃ ce in Singapore since June 2014. This followed a series of meetings with our medical colleagues in the Middle East. The revival aﬃ rms our clinical track record and we have since resumed liver transplantations for UAE patients in August. We are conﬁ dent that this will reﬂ ect positively in our ﬁ nancial performance next year. We remain committed to building a strong brand – coupled with our strong partnership with UPMC – as we continue to pursue geographical expansion, build up our core capabilities and move up the value chain by oﬀ ering consultancy and management services. With a dedicated management team, we look forward to improving our performance in FY2015. Such projects underscore our close working relationship between AAMG and UPMC and we are excited to pursue more of such opportunities as we continue charting growth beyond Asia. I am also pleased to announce the re-election of Ms. Pamela Jenkins, Mr. Wing Kwan Teh, Mr. Paul Lee Vui Yung and Mr. Evgeny Tungolukov as Directors of the Company during the ﬁ nancial year under review. On behalf of the Board of Directors, I would like to extend my appreciation to our shareholders for your unwavering support this year and to the management team and staﬀ for their commitment and hard work during this challenging period. We look forward to your continued support in the year ahead. Third, we have also made inroads into Myanmar – a country of 51 million people with rising incidence of liver disease. Through a partnership with Pinlon Hospital and 30th Street Clinic we will establish Myanmar’s ﬁ rst holistic liver centre. To be completed by the ﬁ rst quarter of 2015, the Pinlon Liver Centre is signiﬁ cant for AAMG in addressing e. the high costs of associated medical care in Singapore. he Through this partnership, AAMG surgeons, under the ct banner of collaboration with UPMC, can now conduct ill liver operations or transplantations overseas. AAMG will nt be able to oﬀ er high-quality liver surgery but with patient ch beneﬁ ts due to savings in associated healthcare costs such ’s as hospitalisation. The partnership will leverage on AAMG’s cy medical expertise to provide management and consultancy of services to the Myanmar partners, including training of medical staﬀ , research collaboration and telemedicine. Dato’ Dr Kai Chah Tan Dato’ Dr Kai Chah Tan Executive Chairman Chairman’s message cont’d 07 Pamela Anne Jenkins RGN, B Sc (Hons), MBA Executive Director This has been a challenging year for AAMG as the headwinds – mainly from rising costs and increased competition from the region – are not only being felt by AAMG but also by all healthcare providers in Singapore. In view of this, AAMG continues to evolve from a specialist medical centre in Singapore into a global healthcare brand through its strategy of expansion into target markets focusing on our two core capabilities in liver and bone marrow, and widening of service oﬀ erings to include medical project consultancy and advisory work. to strengthen Working with UPMC AAMG continues relationship with UPMC by working with their International and Commercial Services Division on projects across Asia. During the year, we are very excited to have commenced two projects with UPMC in Myanmar and Russia respectively, which we hope are a prelude to many more in the future. its In Myanmar, UPMC and AAMG were engaged by Pinlon Hospital to evaluate its existing radiation oncology programme, radiation oncology technology, train its health care professionals and to put in place a long-term treatment planning support. The engagement is expected to take up to ﬁ ve years. implement state-of-the-art UPMC and AAMG have entered into collaboration with RusSing Med to develop a strategy for the design and operation of the Imaging Centre Initiative in the Russian Federation. RusSing Med aims to develop a chain of Imaging Centres to meet the strong demand for such services by private providers in Russia. The main scope of this engagement is to assist RusSing Med with medical equipment selection and service line deﬁ nition, and the development of an information technology conﬁ guration. Joint venture in Yangon, Myanmar Much has been said about the economic boom and prospects of Myanmar, widely referred to by investors as Asia’s “last frontier”. Myanmar, with a population of 51 million people, is the size of France and shares a border with Bangladesh, China, India, Laos and Thailand. Its geographic proximity to India and China alone makes Myanmar an intriguing economic and geopolitical partner. e e g a s s e m s ’ r o t c e r i D e v i t u c e x E 08 This makes it a market of huge potential to AAMG if we are able to make inroads into the country early, despite Myanmar only representing approximately 3%-4% of AAMG’s currents patients. Currently, aﬄ uent Myanmar citizens are travelling mostly to Thailand and India for treatment and medical check-ups and we hope to gain market share by oﬀ ering similar or better quality health-care services in Myanmar. Since early 2014, AAMG has been actively looking for suitable partners to work with to set up a presence in Myanmar, following our exit from Vietnam with the closure of our Ho Chi Minh City clinic and the mutual termination of our Services Agreement with Vinmec International Hospital JSC (“Vinmec”) in Hanoi. In late August, AAMG formalised a Joint Venture Agreement to team up with Pinlon Hospital (“Pinlon”) and 30th Street Clinic (“30th Street”) to establish the ﬁ rst holistic international liver centre in Myanmar - Pinlon Liver Center. The new liver centre will be situated in privately held Pinlon Hospital, in the city of Yangon, and will provide the most advanced treatment for a whole spectrum of liver diseases. 30th Street, which is headed by one of Myanmar’s foremost hepatologists and academics, Professor Khin Maung Win, will work closely with AAMG and Pinlon Hospital on the clinical and patient care aspect of the clinic. AAMG’s main role will be to provide guidance and expertise on the development of a quality clinical management and surgical programme. Bone Marrow segment Since the start of our blood and bone marrow clinic’s operations in February 2013, the number of patient transactions in FY2014 quadrupled compared to the seven months of the last ﬁ nancial year (“FY2013”). Patient transactions in the second half of FY2014 increased 25% from the ﬁ rst half, underlying the steady growth of this segment. We also performed a total of seven stem cell transplants during the year compared to only one in the FY2013. The blood and bone marrow segment is becoming an important contributor to the performance of the Group. In FY2014, this segment represented a quarter of the Group’s turnover and 16% of the overall patient transaction of the Group. We expect this upward momentum to continue as we invest more in our marketing initiatives to increase awareness for AABMTC and its services. Expanding our consultancy and management arm We believe that there is also huge potential in the business of providing consultancy and management services, an area that we have been focusing on. With extensive years of experience and knowledge in the healthcare industry, our team, led by Dr Tan, will be able to provide advice, management and leadership to parties who require specialised medical expertise in their healthcare related projects. Currently, we are exploring such opportunities in China, Russia and Indonesia. Conclusion We have been experiencing some positive results as we continue to build a new global and diversiﬁ ed brand of AAMG. We remain committed to build on our core strengths of clinical success and strong reputation to drive growth. Whilst we acknowledge that the ﬁ nancial performance for this ﬁ nancial year has been disappointing due to certain macroeconomic pressures, we would like to reassure our shareholders and partners that we have put in place strategic plans to grow and diversify AAMG’s business to be less vulnerable to speciﬁ c business risks, thus making us more robust. We are conﬁ dent we will see an improvement in the next ﬁ nancial year. Lastly, I would also like to acknowledge the hard work, dedication and contribution of every staﬀ member during the year. We look forward to an exciting year ahead as we continue to chart new growth. Pamela Anne Jenkins Executive Director Executive Director’s message cont’d 09 Dato’ Dr Kai Chah Tan Executive Chairman D.P.M.P., MBBS (MAL), FRCS (EDIN) Pamela Anne Jenkins RGN, B Sc (Hons), MBA Executive Director Dato’ Dr Kai Chah Tan serves as the Executive Chairman of AAMG. He is also the Executive Chairman of Asian American Liver Centre Pte Ltd (“AALC”) and the director of Asian American Medical Group Inc.(“AAMG Inc”), Asian American Blood & Marrow Transplant Centre Pte Ltd (“AABMTC”) and Asian American Medical Group Pte Ltd (“AAMG PL”), all wholly owned subsidiaries of AAMG. Dr Tan is the lead Surgeon (Hepatobiliary/Transplant) in AALC. Dr Tan graduated from the University of Malaya, in 1978 and obtained his Surgical Fellowship from the Royal College of Surgeons, Edinburgh in 1982. From 1984 to 1987, he obtained advanced training in paediatric surgery in Manchester and Southampton, United Kingdom (“UK”) and further training in paediatric hepatobiliary surgery and liver transplant surgery at King’s College Hospital (“KCH”), London. Dr Tan was Consultant Liver Surgeon at KCH and taught surgery at the University of London from 1988 to 1994. Dr Tan returned to South-East Asia in 1994 to set up private practice, the AALC, in Gleneagles Hospital, Singapore and the then Subang Jaya Medical Centre (“SJMC”), in Kuala Lumpur, Malaysia. He started a paediatric Living Donor Liver Transplantation (“LDLT”) programme in SJMC, Malaysia in 1995 where over 50 transplants were performed. It was here that he performed South-East Asia’s ﬁ rst paediatric LDLT on 23 March 1995. In 1996, Dr Tan was appointed Director of the Liver Transplant Programme, National University Hospital (“NUH”), Singapore. He performed 47 transplants, both adult and paediatric, at the NUH before he left in March 2002. In April 2002, the ﬁ rst successful adult-adult LDLT in South-East Asia was performed in Gleneagles Hospital, Singapore. Dr Tan and his team have successfully performed more than 200 LDLTs - the only private centre in South-East Asia to reach this historical milestone. He has published extensively, including co-editing a textbook on ‘The Practice of Liver Transplantation’, and lectured on the subjects of hepatobiliary and liver transplantation surgery. •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Ms Pamela Anne Jenkins is the Executive Director of AAMG. She is also the Managing Director of AALC and the director of AAMG Inc, AABMTC and AAMG PL. Ms Jenkins oversees management and operational issues, budgetary control and strategic planning in liaison with the Executive Chairman and Founder, Dato’ Dr Kai Chah Tan. Ms Jenkins holds a Bachelor of Science (Honours) degree from University of East London, United Kingdom as well as a Master of Business Administration (“MBA”) from Kingston University, United Kingdom. Ms Jenkins has wide experience in specialised nursing and healthcare management, covering neurosurgery, cardiothoracic surgery, vascular surgery, orthopaedic surgery, general surgery, microvascular surgery, eye surgery, plastic surgery, paediatric surgery, urology and renal transplantation, hepatobiliary and liver transplant surgery. She has also written conference papers on liver failure and liver transplantation, with special focus on paediatric liver diseases. Ms Jenkins began her career in 1984 as an Operating Theatre Sister, KCH, London, and subsequently attained the position of Clinical Nurse Specialist and Department Manager at the hospital’s Liver Transplant Surgical Service. In her latter role she was in charge of operating theatre staﬀ , trainee nurses, administration, management of the unit and budgetary control. After ten years at KCH, she relocated to Singapore in 1994 to establish AALC with Dr Tan, assuming the role of director of AALC. She was responsible for the design and development of the centre, implementation of management systems, and assisted in hepatobiliary and liver transplantation surgery. In 1997, she assumed the position of Managing Director. s r o t c e r i d f o d r a o B f o e ﬁ o r P l 10 Mr Wing Kwan Teh Non-Executive Director CA (S’pore), FCCA (UK), CA (M’sia) Mr Evgeny Tugolukov Non-Executive Director B Econ Mr Wing Kwan Teh specializes in corporate restructuring, corporate ﬁ nance and merger & acquisition. Mr Teh is currently a Group CEO and Executive Director of Sapphire Corporation Limited (listed on the Main Board of the Singapore Exchange Securities Limited (“SGX-ST”)), a non-executive and non- independent director of Singapore eDevelopment Ltd (listed on Catalist of the SGX-ST and previously known as CCM Group Limited), an appointed Adviser to the Board of Koda Ltd (listed on the Main Board of SGX-ST), a sophisticated investor and a director of BMI Capital Partners Limited (Hong Kong). He was a non-executive and non-independent director of Heng Fai Enterprises Limited (listed on the Hong Kong Stock Exchange) and he also served as appointed Audit Committee Chairman and Independent Director of other public companies listed on the SGX-ST. Mr Teh has had signiﬁ cant experience having been a professional in ﬁ nance who have been advising companies listed in and prepared to list in Hong Kong, Singapore, Australia, Vietnam and Taiwan. Mr Teh is a Chartered Accountant of the Institute of Singapore Chartered Accountants, Fellow Member of the Association of Chartered Certiﬁ ed Accountants (United Kingdom), a Chartered Accountant of the Malaysian Institute of Accountants and a Full Member of Singapore Institute of Directors. •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Mr Evgeny Tugolukov holds a degree in Economics and Enterprise Management from the Ural State Technical University (“USTU”) in Russia. He is the President and Founder of RusSing Holdings Pte Ltd (“RusSing”) which was founded to create more linkages between Russia and Singapore/South-East Asia to create new business visions and ideas and also strengthening the cultural interstate communications Mr Tugolukov has over 19 years of rich entrepreneurial background in various business ﬁ elds. Under his management, several sizeable holdings were created, including one of Russia’s largest power machine- building companies – PJSC EMAlliance. He is currently involved in industries such as agriculture, natural resources, healthcare and real estate development. Having established a successful track record in the business ﬁ eld, Mr Tugolukov became and is currently an Honorary Business Representative of International Enterprise Singapore in Russia and Ukraine. Mr Tugolukov was appointed as Non-Executive Director of AAMG on 3 June 2013. Proﬁ le of Board Of Directors cont’d 11 Mr Paul Vui Yung Lee Independent Non-Executive Director B Bus (MIS) Ms Jeslyn Jacques Wee Kian Leong Independent Non-Executive Director FCCA (UK) Mr Heng Boo Fong Independent Non-Executive Director FCA (S’pore), B Acc (Hons) Mr Heng Boo Fong is an Independent Non-Executive Director and is also the Chairman of the Audit Committee of AAMG. He is also a member of the Nomination and Remuneration Committee. Mr Fong studied at the University of Singapore (now known as National University of Singapore, “NUS”) and graduated with an Honours Degree in Accountancy. He has over 40 years of working experience in auditing, ﬁ nance, business development and corporate governance. He is currently a Director (Special Duties) at the Singapore Totalisator Board (owner of Singapore Pools & Singapore Turf Club). Prior to this appointment, he was with the Auditor-General’s Oﬃ ce, Singapore, from 1975 to 1993. He held the appointment of Assistant Auditor-General when he left the Auditor-General’s Oﬃ ce. He was also General Manager (Corporate Development) of a listed company in Singapore as well as the Chief Financial Oﬃ cer of a listed company in Australia. His other professional experience included membership of Audit Committees of Statutory Boards and Advisory Committees of School of Accountancy of Nanyang Technological University, Singapore and Ngee Ann Polytechnic, Singapore. Mr Fong is a Fellow Member of the Institute of Singapore Chartered Accountants. He was a council member of the then Institute of Certiﬁ ed Public Accountants of Singapore (“ICPAS”) (now known as Institute of Singapore Chartered Accountants (“ISCA”)) and he was awarded a silver medal by ICPAS in 1999. Mr Fong is also presently an Independent Director of four companies listed on the SGX-ST, which are Colex Holdings Limited, Pteris Global Limited, CapitaRetail China Trust Management Limited and Sapphire Corporation Limited. •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Mr Paul Lee Vui Yung has over 18 years’ experience in business development, quality control and cost management. He has been serving on a few boards of companies in Malaysia and Australia. He has broad experience in diverse industries and international businesses such as public utilities infrastructure construction, building materials, property development, and oil palm plantations. With a Business Degree from Edith Cowan University in Perth and strong analytical skills, he has aided companies in both identifying and implementing strategic growth opportunities. Mr Lee was appointed to the Board on 31 January 2013. He chairs the Nomination and Remuneration Committee and is also a member of the Audit Committee. •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Ms Jeslyn Jacques Wee Kian Leong is a Fellow of the Association of Chartered Certiﬁ ed Accountants (United Kingdom) with 23 years of extensive experience in the ﬁ eld of corporate ﬁ nance, which included tenure as a Financial Accountant of Teys Australia Pty Ltd, Australia’s leading beef processor and exporter. Ms Leong joined AAMG as an Independent Non-Executive Director on 1 January 2012. She is currently an Accountant with Orrcon Steel, a wholly-owned subsidiary of BlueScope Steel Limited (listed in Australian Securities Exchange, “ASX”), a leading Australian distributor and manufacturer of steel, tube and pipe. In this role she has obtained extensive experience in manufacturing management. Proﬁ le of doctors and key mgmt cont’d 12 Dr Kang Hoe Lee Respiratory Physician & Intensivist (Critical Care & Liver Transplant) MA (UK), MBBCHir (UK), MRCP (UK), FAMS (SIN), EDIC (EUR) Dr Yee Lee Cheah Surgeon (Liver Transplant/ Hepatopancreatobiliary Surgery) MBBCh BAO (IREL), AFRCSI (IREL), American Board of Surgery (USA) Dr Kang Hoe Lee graduated from University of Cambridge, UK, in 1987. He was a scholar at Jesus College, Cambridge, where he received the Duckworth Prize. Dr Lee also received a scholarship from the Kuok Foundation, Malaysia, for furthering his medical studies. He performed his surgical housemanship with Professor Sir Roy Calne (one of the pioneers in liver transplantation) at Addenbrooke’s Hospital, Cambridge. This was followed by further training in internal medicine at Cambridge and he obtained his MRCP (London) in 1990. Subsequent to this, he joined the Department of Medicine, NUH, Singapore, and underwent further training in Intensive Care and Respiratory Medicine. This continued with a two-year Critical Care Fellowship at University of Pittsburgh Medical Center, USA- the leading centre for liver transplantation in the world - under Professor Thomas Starzl and Professor John Fung, where he was awarded Fellow of the Year. Dr Lee then returned to Singapore in 1995, and later joined the NUS as a Lecturer in the Department of Medicine. He later became an Associate Professor of Medicine and Senior Consultant, and Director of Medical Intensive Care Unit. He was also one of the founding members of the Society of Intensive Care Medicine in Singapore. During this period, he published many articles on respiratory related issues (especially pneumonia), ICU issues, health outcomes, liver cirrhosis and liver transplantation. Dr Lee joined Gleneagles Hospital in September 2005 as the Director of Critical Care and has been aﬃ liated with AALC and AAMG since then. He has established close contacts with the King’s College Liver Unit, UK, as part of the development of AALC as a leading liver transplant centre. He is currently responsible for managing all the acute liver failure patients and liver transplant patients treated at AALC and bone marrow patients from AABMTC. He is also responsible for all liver dialysis treatments and has brought several machines to AALC, making it one of the premier liver dialysis centres in the world. •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• A Board Certiﬁ ed surgeon of the American Board of Surgery, Dr Cheah Yee Lee specialises in liver transplantation and hepatopancreatobiliary surgery (surgery of the liver, pancreas and bile ducts). Dr Cheah began her surgical career in 2000 with a medical degree from the Royal College of Surgeons, Ireland, and obtained her Associate Fellowship of the Royal College of Surgeons, Ireland, in 2003. From 2003 to 2008, she completed her general surgery training at the prestigious Ivy League General Surgery Residency Program at Brown University in Rhode Island, USA, where she was appointed Executive Chief Resident of General Surgery in 2008. Dr Cheah also received the Dean’s Teaching Award in 2007 and the Haﬀ enreﬀ er Outstanding Resident of the Year Award in 2008 at Brown University. Dr Cheah underwent advanced training in liver transplantation and hepatopancreatobiliary surgery under the mentorship of Professors Elizabeth Pomfret and Roger Jenkins at the Lahey Clinic in Massachusetts, USA. She completed her American Society of Transplant Surgeons (“ASTS”) accredited fellowship in 2010. Dr Cheah returned to Asia and joined Khoo Teck Puat Hospital (“KTPH”), Singapore, as Consultant Surgeon and was instrumental in developing its hepatopancreatobiliary surgery programme until 2014, when she left KTPH to join AALC. Dr Cheah’s clinical interests are in living donor liver transplantation, surgery of the liver, pancreas and bile ducts for benign and malignant disorders, and nutrition support and therapy of surgical patients. Her main research interests are in the areas of living donor safety, and disorders of the liver, pancreas and bile ducts. Dr Cheah was appointed Clinical Instructor at Brown University and Tufts University, USA, from 2003 to 2010. She is currently an Adjunct Assistant Professor at National University Singapore, as well as a founding member of the Hepatopancreatobiliary Association of Singapore. In addition, she has served in the Vanguard and Membership Committees of the International Liver Transplant Society (“ILTS”) since 2011. Dr Cheah has given presentations at local national and international surgical, transplant and nutrition meetings and conferences. t n e m e g a n a M y e K d n a s r o t c o D l f o e ﬁ o r P 13 Dr Yvonne Loh Haematologist & Medical Director (Haematopoietic Cell Transplant and Leukaemia) MBBS (SIN), MRCP (UK), FAMS (FAEM) Dr Yvonne Loh is the Haematologist and Medical Director of AABMTC. Prior to joining AABMTC, she was a Senior Consultant (Department of Haematology), Medical Director of Haematopoietic Stem Cell Transplant Programme and Director of the Acute Leukemia Service, at Singapore General Hospital (“SGH”). She was responsible for drafting the risk-adapted transplant approaches which have been vital in ensuring the seamless management of acute leukaemia patients from diagnosis to transplant. Following her undergraduate medical training at NUS, where she was a recipient of the Dean’s list of awards in the Second and Final Professional examinations, Dr Loh attained her basic specialist training in internal medicine and advanced specialty training in Haematology at SGH. Subsequently, she became a Fellow of the Academy of Medicine Singapore, College of Physicians, Chapter of Haematologists. In 2006, Dr Loh pursued her HMDP Fellowship at the Division of Immunotherapy, Northwestern University, Chicago – the world’s largest single-centre experience in transplants in immunological diseases – under her mentor, Professor Richard Burt. Upon her return to Singapore, Dr Loh spearheaded the SGH programme for haematopoietic cell transplantation for immunological diseases – the only transplant physician in the Asia Paciﬁ c region with speciﬁ c training in this ﬁ eld to do so. Dr Loh was also a holder of various grants; having received support from the National Medical Research Council of Singapore for her role as the project principal investigator of the Centre for Immunological Diseases Research and Therapy, as well as SingHealth Foundation for her role as the principal investigator of several clinical trials in transplantation for MDS and leukaemia. Dr Loh’s work has been published in leading peer-reviewed journals including Blood, JAMA, Bone Marrow Transplantation and Lancet Neurology. She has also presented several abstracts at international meetings by the American Society of Hematology Congress, the American Society of Blood and Marrow Transplant, and the European Blood and Marrow Transplantation. She is a frequent speaker at local and regional meetings in the areas of bone marrow transplantation, acute leukaemia and transplantation for immunological diseases. As a clinical lecturer at the Yong Loo Lin School of Medicine, NUS and Physician Faculty for the SGH Medicine Residency Programme, Dr Loh has been involved in undergraduate and post-graduate teaching. She also serves as a board member and medical advisor at the Bone Marrow Donor Programme, the local registry of bone marrow donors in Singapore. She remains a visiting consultant in the Department of Haematology in SGH. In the time since joining AABMTC in 2013, Dr Loh has overseen the setting up of the stem cell transplant program that has successfully treated several patients. She continues to remain active in education, giving talks locally and in the region. t n e m e g a n a m y e K d n a s r o t c o D l f o e ﬁ o r P 14 Mr Cherinjit Kumar Shori Group Chief Operating Oﬃ cer B Acc, PGDip Marketing & Healthcare Mr Meng Yau Yeoh Mr Meng Group Chief Financial Oﬃ cer Group Chief FCA (S’pore), FCCA (UK), FCA (S’pore CA (M’sia) CA (M’sia) Mr Cherinjit Kumar Shori has been with AAMG as the Group Chief Operating Oﬃ cer since November 2009. Since his joining, the Group has entered into a strategic relationship with the UPMC and expanded into the treatment of blood related disorders in addition to its already successful liver diseases and transplantation program. He has more than 20 years’ experience in the healthcare and hospitality industries covering business development and marketing. Prior to joining AAMG, he was the Group Vice President/Deputy Chief Marketing Oﬃ cer for Parkway Pantai Limited (“PPL”), part of the IHH Healthcare Berhad Group, one of Asia’s largest healthcare providers. During his tenure there, he was responsible for strategic marketing, clinical programs marketing, business development and regional expansion to increase the market share for its group of hospitals in Singapore. Mr Shori had also held senior management positions with various companies including Sun Cruises and Sembawang Leisure (a subsidiary of Sembawang Corporation) doing business development activities. Mr Shori holds a Bachelor of Accountancy Degree from Nanyang Technological University in Singapore. He also holds a Graduate Diploma in Marketing from the Singapore Institute of Management and Certiﬁ cate in Healthcare Management from Georgetown University, USA. Mr Shori has also been invited to speak at international conferences including being nominated by Singapore Tourism Board to speak at the Internationale Tourismus-Börse Berlin (“ITB Berlin”) Conference where he shared his experience in the future of global medical tourism. •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Mr Meng Yau Yeoh obtained his professional accounting qualiﬁ cation from the Association of Chartered Certiﬁ ed Accountants (United Kingdom) in 1994. He started his career at the then KPMG Peat Marwick in 1995 as Audit Junior and left as an Audit Senior in 1998. After spending four years in the Big 4 audit ﬁ rm, Mr Yeoh spent the next ten years between 1999 and 2009 working in several listed and privately owned companies involved in a wide range of industries ranging from construction, information technology, investment holdings to service and hospitality in Singapore, Malaysia and Australia. During that period, he was involved in two successful IPOs in Singapore. Mr Yeoh is a Fellow Member of the Institute of Singapore Chartered Accountants, Fellow Member of the Association of Chartered Certiﬁ ed Accountants (United Kingdom) and a Chartered Accountant registered with the Malaysian Institute of Accountants. He joined AAMG as Group Financial Controller in December 2009 and was subsequently appointed as Group Chief Financial Oﬃ cer in March 2013. Proﬁ le of doctors and key mgmt cont’d 15 FINANCIAL REVIEW Year ended 31 August Revenue 2014 S$’000 2013 S$’000 Decrease % 16,202 19,399 (16.5) Earnings before interest, taxation, depreciation and amortisation (“EBITDA”) (2,355) (Loss)/Proﬁ t after income tax attributable to members (2,493) 479 231 n.a. n.a Total share capital and reserves 5,279 7,899 (33.2) Basic (loss)/earnings per share Net asset value per share Net tangible asset value per share 2014 S Cents 2013 S Cents (1.19) 2.52 2.39 0.12 3.77 3.64 The overall Group’s revenue declined 16.5% or S$3.2 million to S$16.2 million in FY2014 from S$19.4 million in FY2013. The overall number of patient transaction (for the liver segment, in particular) declined by 3.5% from 11,930 in FY2013 to 11,508 in FY2014. In general, the healthcare related costs in Singapore continue to rise and the industry has since become increasingly competitive. More recently, we have seen increased competition from neighbouring medical tourism centres. Liver segment Revenue for the liver segment declined signiﬁ cantly by 34.5% or S$6.5 million to S$12.3 million as a result of a fall in patient transactions by 15.5% from 11,474 in FY2013 to 9,698 in FY2014. The number of living donor liver transplantations also fell by 58.3% to ﬁ ve compared to 12 last year. In line with our overseas expansion plans, we widened our services oﬀ ered to include surgical procedures in Kuala Lumpur, Malaysia in early 2014. As a result, patient numbers for our clinic in Malaysia rose sharply by 82.1% for FY2014 accounting for some 3% of the Group’s patient numbers. Bone marrow segment The bone marrow segment recorded its ﬁ rst full year results in FY2014 compared to a seven-month reporting in FY2013. Revenue rose more than six times to S$3.9 million in FY2014 from S$0.6 million in FY2013. Patient transactions for the bone marrow clinic quadrupled to 1,810 from 456 in FY2013. A total of seven bone marrow transplants were performed in FY2014, compared to just one in FY2013. The bone marrow segment revenue now forms almost a quarter or 24.1% of the total Group’s revenue, up from 3.2% in FY2013, underlying the growing signiﬁ cance of the bone marrow segment as an important component in our Comprehensive Transplant Centre (“CTC”). Direct costs and operating expenses Cost of sales declined by 25.0% or S$2.7 million to S$8.1 million in FY2014 from S$10.8 million in FY2013 due to improved eﬃ ciency and lower revenue. Operating expenses increased by 28.9% or S$2.5 million to S$10.8 million in FY2014 from S$8.3 million in FY2013 due mainly to: a) Higher staﬀ cost of S$0.7 million – we recruited an additional doctor for Asian American Liver Centre Pte Ltd (”AALC”); b) Higher staﬀ cost of S$0.6 million for Asian American Bone and Marrow Transplant Centre Pte Ltd (“AABMTC”) – we recorded full-year staﬀ cost for AABMTC; c) A write-oﬀ of S$0.3 million of related party loan to Asian Liver Centre Co., Ltd Vietnam, which is non-recurring; d) Higher other expenses of S$0.6 million – we incurred additional overhead and recorded full-year operating expenses for AABMTC and we also increased our marketing activities; e) Unrealised foreign exchange loss on translation of foreign currency denominated balances in FY2014 instead of unrealised foreign exchange gain in FY2013; and f) Higher oﬃ ce lease of S$0.1 million – we recorded full-year lease expense for AABMTC. There was a tax credit of S$0.05 million in FY2014 compared to a tax expense of S$0.1 million in FY2013 due mainly to over provision for prior year tax and reversal of deferred tax liability. w e i v e r l a i c n a n F i 16 As a result of the above-mentioned, the Group incurred Net Loss (being Net Loss After Taxation attributable to the members of the parent entity) of S$2.5 million. Excluding the one-time write-oﬀ of the related party loan, our Net Loss would have been S$2.2 million for FY2014. Revenue 25000 EBITDA and (Loss)/Proﬁ ts 20000 15000 10000 5000 0 Revenue (S$'000) 4,000 3,000 2,000 1,000 0 -1,000 -2,000 -3,000 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 EBITDA (S$'000) (Loss)/Proﬁt a(cid:2)er income tax a(cid:3)ributable to members (S$'000) Share capital and reserves EPS and NAV 8000 7000 6000 5000 4000 3000 2000 1000 0 2010 2011 2012 2013 2014 Total share capital and reserves (S$'000) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 2010 2011 2012 2013 2014 Net asset value per share (S cents) Basic (Loss)/Earnings per share (S cents) Net assets for the Group declined by S$2.6 million to S$5.3 million. Signiﬁ cant changes during the year under review were: a) Lower cash and cash equivalents, which fell by S$2.0 million to S$5.3 million as a result of current year loss and payment of ﬁ nal dividend of S$0.2 million (declared in FY2013); b) Lower trade and other receivables, which fell by S$1.7 million to S$1.8 million on the back of lower revenues. Receivables turnaround time however improved from 61 days to 38 days; and c) Trade and other payables balance decrease correspondingly by S$1.3 million to S$2.9 million due mainly to lower purchases of materials and consumables in line with lower revenue. There was an improvement in creditors’ turnover from 116 days to 80 days. Given the above, Shareholders’ Equity or Net Assets decreased by S$2.6 million from S$7.9 million to S$5.3 million as at 31 August 2014. Correspondingly, Net Asset Value (“NAV”) per share declined by S 1.3 cents to S 2.5 cents. Financial Review cont’d 17 B A N G M Y A L I N D I A N M A N R A D E S H 3 2 % % 2 % V IE T N A M 6 % MONGOLIAN 6% OTHERS 13% INDONESIAN 28% LIVER 2013 M Y A N M A R 3 % B A N G L A D E S H 1 % I N D I A N V I E T N M A O N G M 3 O % 4 % LI A N 3 % INDONESIAN 28% 28% OTHERS 16% LIVER 2014 MALAYSIAN 12% SINGAPOREAN 14% UAE 14% MALAYSIAN 12% UAE 15% SINGAPOREAN 14% There was an overall decline in the number of patients across the board for the liver segment but there was a notable increase in patients from Myanmar. Patients from Indonesia, UAE, Singapore and Malaysia continue to form the majority of our liver segment’s core patients. I N B A N G L D I A N V I E M O N G T N 1 % A M A D E S H O LI A 5 % 3 % N 1 % INDONESIAN 27% B A N G L A D E S H 4 4 4 % % % INDONESIAN 23% 23% OTHERS 11% M A L A Y S I A N 4 % E A N S I N G A P O R 8 % Blood & Bone Marrow 2013 UAE UAE 40% 40% VIETNAM VIETNAM 32% 32% Blood & Bone Marrow 2014 M M UAE 14% S S I I N N G G A P A A O L L R E A N 8 % A A Y Y S S I A N 4 % OTHERS 15% Patients from the Vietnam, Indonesia and UAE represent about 69% of the patients in the Group’s bone marrow segment during current ﬁ nancial year. This was a direct result of our marketing eﬀ orts which were targeted at these markets where we see the most potential. Local Singaporeans, patients from Malaysia and South Asia forms the remaining number of patients. Financial Review cont’d 18 MICHAEL TOH I lived my life MY OWN W A Y 19 MICHAEL TOH I lived my life MY OWN W A Y t t’ t PP ti Patient’s testimonial – Pattiieenntt ti Michael Toh: i l y r o t c e r i d e t a r o p r o C 20 “D evil may care” was the attitude I lived my life even after multiple trips to the hospital due to liver problems. However moving on to forty, my health deteriorated further. Warning signs included the drastic decline in alcohol tolerance such that I would pass out after my second drink and also drifting off at the wheel while driving. Thus, I began to change for the better. I stopped smoking, drinking and almost all my vices. However, the damage done was irreversible. A blood test conducted at a routine medical check-up in my ﬁ fties showed issues with my liver and I was sent for an ultrasound. This did not shake me up as I had liver problems for more than 10 years, until the ultrasound revealed the presence of two hepatomas. After a thorough MRI, I was diagnosed with liver cancer. Surgery was merely the start of a long and arduous journey involving chemotherapy that lasted another ﬁ ve years. Unlike regular chemotherapy that most cancer patients go through, mine was done with a catheter being inserted through the groin straight into the portal vein that led to the liver. I did this treatment for ten times over the ﬁ ve years, yet the cancer cannot be halted. By this time, my cancer reached Stage 3C. I was left with no choice but to undergo a liver transplant. I was fortunate, as during these ﬁ ve years, the cancer did not spread to other parts of the body. Dr K C Tan, a renowned liver surgeon and hepatobiliary expert from Asian American Liver Centre in Singapore, and his team of doctors, nurses and staff quickly got down to work. After a series of tests to assess the suitability of my family members as donors, my son, Toh Bu Keat, was found to be a suitable donor, and he responded to the call. The recovery process was not an easy one but the unwavering support and love of my family members were my pillar of strength, especially my wife who stayed beside me through thick and thin over the years and my son who gave part of his liver to save my life. I am also thankful to my employer back then, Tractors Malaysia Holdings, for being so understanding. Ten years on after the successful transplant, I feel better than ever. Both Bu Keat and I did not experience any side effects and have been doing well since. It is indeed a great feeling to be able to walk away from cancer and to be healthy again. A small word of advice to anyone who is suffering or diagnosed with liver cancer, do seek treatment and get the best medical advice as soon as possible. It is not a death sentence. I would like to express my sincere gratitude to Dr Tan and his dedicated team of doctors, nurses and staff whose professionalism was my biggest source of conﬁ dence and support. M i c h a e l T o h y r o t c e r i d e t a r o p r o C 21 CORPORATE GOVERNANCE STATEMENT The Board of Asian American Medical Group Limited (“AAMG”) seeks to practise the highest ethical and commercial standards while executing its responsibilities in directing the business and aﬀ airs of the Company on behalf of its shareholders. The Board of AAMG has considered the principles of good corporate governance and best practice recommendations as published by the ASX Corporate Governance Council (“ASXCGC”). ASX Listing Rule 4.10.3 requires the Company to disclose the extent to which it follows or diverges from these best practice recommendations in its Annual Report. This report discloses corporate governance practices the Board would like to highlight to stakeholders. Additional information relating to corporate governance practices that the Company has adopted can be found on the Company’s web site: www.aamg.co. The Role of the Board & Management The Company has formalised and disclosed the roles and responsibilities of the Board and those delegated to senior management. The Board of the Company is responsible for the overall corporate governance of the AAMG, including its ethical behavior, strategic direction, establishing goals for management and monitoring the achievement of those goals with a view to optimising Company performance and maximising shareholder value. The role of management is to support the Executive Director and implement the running of the general operations and ﬁ nancial business of the Company, in accordance with the delegated authority of the Board. Full details of the matters reserved to the Board and to senior management are available on the Company’s web site at www.aamg.co. Scheduled meetings of the Board are held at least four times a year and the Board meets on other occasions to deal with matters that require attention between scheduled meetings. The responsibility for the operation and administration of the consolidated entity is delegated by the Board to the Managing Director. The Board is responsible for: • Setting the strategic direction of the Company and establishing goals to ensure these strategic objectives are met; • Appointing the Managing Director, setting objectives for the Managing Director and reviewing performance against those objectives, ensuring appropriate policies and procedures are in place for recruitment, training, remuneration and succession planning; • Monitoring ﬁ nancial performance including approval of the annual and half-yearly ﬁ nancial reports and liaison • with the Company’s auditors; Ensuring that risks facing the company and its controlled entities have been identiﬁ ed ensuring that appropriate and adequate controls, monitoring and reporting mechanisms are in place; • Receiving detailed brieﬁ ngs from senior management on a regular basis during the year; • Approving the Boards of directors of subsidiary companies; and • Ensuring the Company complies with the law and conforms to the highest standards of ﬁ nancial and ethical behavior. AAMG has obligations to its stakeholders to ensure the Company is managed with appropriate due diligence and that all necessary processes are implemented to minimise risk and maximise business opportunities. To this end, all commercial arrangements, capital expenditure, operational expenditure and other commitments are appropriately documented and have been authorised by either the Executive Director or the Board as appropriate. The composition of the Board is determined in accordance with the Company’s constitution and the following principles and guidelines: • • • The Board should comprise of at least three directors with at least two non-executive directors; The Board should comprise of directors with an appropriate range of qualiﬁ cations and expertise; and The Board should meet formally at least four times per annum and informally on an “as required” basis with all directors being made aware of, and having available, all necessary information, to participate in an informed discussion of all agenda items. 22 CORPORATE GOVERNANCE STATEMENT Directors in oﬃ ce At the date of this statement the following directors are considered independent by the Board: Name Position Independent Mr Heng Boo Fong Non-Executive Director Ms Jeslyn Jacques Wee Kian Leong Non-Executive Director Mr Paul Vui Yung Lee Non-Executive Director Yes Yes Yes The skills, experience, expertise and tenure of each director are disclosed in the Directors’ Report within this Annual Report. Director independence The Board considers three of AAMG’s directors as independent under the guidelines. In assessing the independence of directors, the Board follows the ASX guidelines as set out: An independent director is a non-executive director (i.e. is not a member of management) and: • Is not a substantial shareholder of the Company or an oﬃ cer of, or otherwise associated directly with, a substantial shareholder of the Company; • Within the last three years has not been employed in an executive capacity by the Company or another Group member, or been a director after ceasing to hold any such employment; • Within the last three years has not been a principal of a material professional adviser or a material consultant to the Company or another Group member, or an employee materially associated with the service provided; Is not a material supplier or customer of the Company or other Group member, or an oﬃ cer of or otherwise associated directly or indirectly with a material supplier or customer; • • Has no material contractual relationship with the Company or another Group member other than as a director of the Company; • Has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere • with the director’s ability to act in the best interests of the Company; and Is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company. ASXCGC Recommendation 2.1 states that the majority of directors of the Company should be independent. Although currently AAMG does not comply with that recommendation, the Board is of the opinion that the current structure and composition of the Board is appropriate given the size and nature of operations of the Group. Where additional skills are considered necessary for speciﬁ c purposes, access is made to independent professional advice at the expense of the Company. Such advice is to be shared amongst the directors. 23 Chairman Due to the size of the Company, Dato’ Dr Kai Chah Tan is the Company’s Chairman. While recognising that the ASXCGC recommends that the chairperson be independent, the Company feels that the strong independence exercised by the other Board members mitigates any negative impact on the Company that it may have. Appointment to the Board Where a casual vacancy arises during the year, the Board has procedures to select the most suitable candidate with the appropriate experience and expertise to ensure a balanced and eﬀ ective board. Any director appointed during the year to ﬁ ll a casual vacancy or as an addition to the current board, holds oﬃ ce until the next Annual General Meeting and is then eligible for re-election by the shareholders. New directors receive a letter of appointment which sets out the terms of their appointment. On appointment, an induction programme is available to directors that include one-on-one sessions with members of the senior management team. Evaluation of senior executives Senior executives, including the Group Chief Operating Oﬃ cer or Group Chief Financial Oﬃ cer have a formal job description and letter of appointment describing their term of oﬃ ce, duties, rights, responsibilities and entitlements upon termination. The performance of senior executives is reviewed annually before the budgets are approved for the next ﬁ nancial year. This process is a formal one with the executive’s performance assessed against Company, division and personal benchmarks by the Nomination and Remuneration Committee. Benchmarks are agreed with the respective senior executives and reviews are based upon the degree of achievement against those benchmarks. Induction procedures are in place to allow new senior executives to participate fully and actively in management decision-making. The induction program includes orientation of: • • The Company’s ﬁ nancial position, strategies, operations and risk management policies. The respective rights, duties, responsibilities and roles of the board and senior executives. Ethical business practices The Company has adopted a Code of Conduct to maintain conﬁ dence in the Company’s integrity, its legal obligations and the expectations of its stakeholders. The Company is committed to being a socially responsible corporate citizen, using honest and fair business practices, to act in the best interests of clients so as to achieve the best outcome for shareholders. The Board has procedures in place for reporting any matters that may give rise to unethical practices or conﬂ icts between the interests of a director or senior executive and those of the Company. These procedures are reviewed as required by the Board. To this end, the Company has adopted a Conﬂ ict of Interest Policy that clariﬁ es the processes for directors and senior executives to determine and disclose when a conﬂ ict of interest exists. Diversity policy The Company values diversity and recognises the beneﬁ ts it can bring to the organisation’s ability to achieve its goals. Our recruitment processes encourage the development of diversity in our workplace, bearing in mind that employees must have the required skills to be successful in their positions. In accordance with this policy and ASX Corporate Governance Principles, the Board has established the following objectives in relation to gender diversity. We currently meet our objectives but will continue to monitor and improve on our objectives to be in line with our Company’s needs and direction. A written diversity policy has been developed by the Board to ensure gender diversity. 24 CORPORATE GOVERNANCE STATEMENT Number of women employees in the whole organisation Number of women in senior executive positions Number of women on the Board Shareholding and trading Objective Actual Number 22 3 2 % 75 43 29 Number 24 3 2 % 83 43 29 The Board encourages directors and senior executives to own shares in the Company to further link their interests with the interests of all shareholders. Trading of shares by directors or senior executives is prohibited under certain circumstances and as described in the ASX Listing Rules and during certain periods of the ﬁ nancial year. A director or senior executive must not deal in the Company shares at any time when he or she has unpublished information which, if generally available, might aﬀ ect the share price. Directors are required to notify the Company Secretary following dealing. Safeguard integrity The Board has established an Audit Committee comprised of the two non-executive directors. This committee operates under a charter to enable it to perform its roles and responsibilities. Where considered appropriate, the Company’s external auditors and the Company’s management are invited to attend meetings. The members of the Audit Committee are: • Mr Heng Boo Fong (Chairman) • Mr Paul Vui Yung Lee The qualiﬁ cations of members of the committee together with their attendances at committee meetings are disclosed in the Directors’ Report within this Annual Report. The role of the Audit Committee is to assist the Board fulﬁ ll its responsibilities in relation to the identiﬁ cation of the areas of signiﬁ cant business risks and the monitoring of the following: Eﬀ ective management of ﬁ nancial and other business risks; • • Reliable management reporting; • Compliance with laws and regulations in respect to ﬁ nancial reporting; • Maintenance of eﬀ ective and eﬃ cient audits; • Meeting with external auditors on a twice-yearly basis and informally as circumstances require; and • Recommending to the Board the appointment, rotation, removal and remuneration of the external auditors, and review their terms of engagement, and the scope and quality of the audit. Periodically, the Audit Committee reviews the appointment of the external audit engagement partners using a formal process of evaluation to determine the most appropriate level of skills and experience to suit the size and complexity of the Company. The Audit Committee provides the Board with additional assurances regarding the reliability of ﬁ nancial information for inclusion in the ﬁ nancial statements. The committee is chaired by an independent chair who is not the chairman of the Board. Timely and balanced disclosure The Board recognises the need to comply with ASX Listing Rule 3.1 concerning continuous disclosure. At each meeting of directors, consideration is given as to whether notice of material information concerning the Company, including its ﬁ nancial position, performance, ownership and governance has been made available to all investors. The Continuous Disclosure Policy also requires senior executives in possession of disclosable information to comply with that policy. 25 Communication with shareholders The Board aims to ensure that shareholders, on behalf of whom they act, are informed of all major developments aﬀ ecting the Company’s activities and its state of aﬀ airs, including information necessary to assess the perform ance of the directors. Communication with shareholders is achieved through the distribution of the following information: • • • The Annual Report distributed to shareholders; The Half Yearly Report which is available on the Company’s web site; The Annual General Meeting and other meetings called to obtain shareholder approval for Board action as appropriate. Shareholders are encouraged to attend and participate at the Company’s Annual General Meeting and other General Meetings; Letters to shareholders when considered to be appropriate and informative; • • Announcements to the Australian Securities Exchange; and • Investor information through the Company’s internet portal at www.aamg.co. The Company strives to ensure that Company announcements via the ASX are made in a timely manner, are factual, do not omit material information and are expressed in a clear and objective manner. Shareholders’ role The shareholders of the Company are responsible for voting on the election of directors at the Annual General Meeting in accordance with the constitution. All directors (other than a Managing Director) are subject to re-election by rotation, no later than every three years. The Annual General Meeting also provides shareholders with the opportunity to express their views on matters concerning the Company and to vote on other items of business for resolution by shareholders. Risk management The Board is responsible for overseeing the risk management function. The Company believes that it is crucial for all Board members to be a part of the process and as such has established risk management as a component of the Audit Committee. The Board is responsible for ensuring the risks and opportunities are identiﬁ ed on a timely basis. The Board has a number of mechanisms in place to ensure the management’s objectives and activities are aligned with the risks identiﬁ ed by the Committee. These include the following: • • Board monitoring of progress against these budgets, including the monitoring of key performance indicators of Implementation of Board approved operating plans and budgets; both a ﬁ nancial and non ﬁ nancial nature; and The establishment of committees to report on speciﬁ c risk as identiﬁ ed. • Internal Risk Management System Compliance Management is accountable to the Board to ensure that operating eﬃ ciency, eﬀ ectiveness of risk management procedures, internal compliance control systems and controls and policies are all being monitored. Management has designed and implemented a risk management and internal control system to manage the Company’s material business risks and reports to the Board at each meeting on the eﬀ ective management of those risks. The Company has developed a series of operational risks which the Company believes to be inherent in the industry in which the Company operates. These include: • Changed operating, market or regulatory environments; • • • Fluctuations in demand volumes; Fluctuations in exchange rates; and Increasing costs of operations. These risk areas are provided here to assist investors better understand the nature of the signiﬁ cant risks faced by the Company. 26 CORPORATE GOVERNANCE STATEMENT Monitoring Performance The Board and senior management monitor the performance of all divisions through the preparation of monthly management accounts. The monthly management accounts are prepared using accrual accounting techniques and report each business unit’s result as contribution after overhead allocation. These monthly management accounts are compared to monthly budgets, which have been set allowing for the seasonality of anticipated revenues and costs in each of the divisions. The monitoring of the Company’s performance by the Board and management assists in identifying the correct allocation of resources and staﬀ to maximise the overall return to share holders. A performance evaluation for senior management was undertaken during the year and was in accordance with the process developed by the Board for that purpose. Details of the structure of non-executive directors’ and senior executives’ remuneration are included in the Remuneration Report within the Directors’ Report in this Annual Report. Nomination and Remuneration Nomination and Remuneration Committee The Nomination and Remuneration Committee is comprised of two non-executive directors. The role of the Nomination and Remuneration Committee is to make decisions on the following matters: • Determine the appropriate size and composition of the Board; • Determine the terms and conditions of appointment to and retirement from the Board; • Develop appropriate criteria for Board membership; • Reviewing membership of the Board and proposing candidates for consideration by the Board; • Arranging a review of the Board’s own performance; • Determine the Company’s remuneration plans, policies and practices, including compensation arrangements for the non-executive directors, executive directors, Group Chief Operating Oﬃ cer, Group Chief Financial Oﬃ cer and senior executives; and • Responsible for considering general remuneration policies and practices, recruitment and termination policies and superannuation requirements. Details of the attendance of directors at the Nomination and Remuneration Committee meetings are disclosed in the Directors’ Report in this Annual Report. The Board believes that it has the right numbers and skill sets within its Board members for the current size of the Company, and is conﬁ dent that each non-executive director brings independent judgement to bear on Board decisions. The Company does not have a policy to preclude its executives from entering into transactions to limit their economic risk from investing in Company shares, options or rights and has made executives aware of their obligations in relation to ﬁ nancial commitments against shares issued under the executive securities plan and has requested that they take suﬃ cient professional advice in relation to their individual ﬁ nancial position. There are no retirement schemes or retirement beneﬁ ts other than statutory beneﬁ ts for non-executive directors. 27 DIRECTORS’ REPORT The directors present their report, together with the ﬁ nancial statements of the Asian American Medical Group Limited (“the Group”) for the year ended 31(cid:428)August 2014. Directors The directors of the Group at any time during or since the end of the ﬁ nancial year are as set out below. Dato’ Dr Kai Chah Tan (Executive Chairman) Ms Pamela Anne Jenkins (Executive Director) Mr Wing Kwan Teh (Non-Executive Director) Mr Evgeny Tugolukov (Non-Executive Director) Mr Heng Boo Fong (Independent Non-Executive Director) Mr Paul Vui Yung Lee (Independent Non-Executive Director) Ms Jeslyn Jacques Wee Kian Leong (Independent Non-Executive Director) The skills, experience, expertise and tenure of each director are disclosed in the proﬁ le of directors section within the Annual Report. Principal activities The principal activity of Asian American Medical Group Limited and its controlled entities (“AAMG” or “the Group”) is that of provision of specialised medical services to cater for patients seeking treatment for liver and blood diseases and transplantation under its Comprehensive Transplant Centre (“CTC”). There has been no change in the principal activity of the Group during the ﬁ nancial year. Company Secretary The following person held the position of company secretary at the end of the ﬁ nancial year: Mr Dario Nazzari Dario Nazzari has a Bachelor of Commerce, a Diploma in Financial Planning and has more than 17 years professional experience. He is a Chartered Accountant and a member of the Institute of Chartered Accountants. Review and results of operations Details of the Operations of AAMG during the year, the ﬁ nancial position and the strategies and prospects for the future years can be found in the Chairman and Executive Director’s message found on pages 6 to 9 and Financial Review section on pages 16 and 18, which forms part of this Annual Report. 28 DIRECTORS’ REPORT Directors’ meetings The following table sets out the number of director’s meetings (including meetings of Committees of directors) held during the ﬁ nancial year and the number of meetings attended by each director (while they were a director or committee member). During the ﬁ nancial year, ﬁ ve (5) Board meetings, four (4) Audit Committee meetings and two (2) Nomination and Remuneration Committee meetings were held. Directors’ Meetings Audit Committee Meetings Joint Nomination and Remuneration Committee Meetings Number Eligible to attend Number Attended Number Eligible to attend Number Attended Number Eligible to attend Number Attended Dato’ Dr Kai Chah Tan Ms Pamela Anne Jenkins Mr Wing Kwan Teh Mr Evgeny Tugolukov Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong 5 5 5 5 5 5 5 5 5 5 5 5 5 5 - - - - 4 4 - - - - - 4 4 - - - - - 2 2 - - - - - 2 2 - Directors’ interest The relevant interests of each director in the shares of the parent entity at the date of this report are as follows: Director Dato’ Dr Kai Chah Tan Ms Pamela Anne Jenkins Mr Wing Kwan Teh Mr Evgeny Tugolukov Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong Number of shares 102,298,250 21,324,600 4,084,090 ^ 21,000,000 - - - ^ Indirect interest through RusSing Med Holdings Pte Ltd. None of the directors have share options in the Company. 29 Dividends paid or recommended A ﬁ nal dividend in respect of the year ended 31 August 2013 of S$235,842 (representing a dividend of A$0.001 per ordinary share) was paid on 12 December 2013. No interim or ﬁ nal dividend has been paid or recommended by the Directors for the ﬁ nancial year ended 31 August 2014. Signiﬁ cant changes in state of aﬀ airs There were no signiﬁ cant changes in the state of aﬀ airs of the Group during the year. Events subsequent to balance date No other matters or circumstances have arisen since the end of the ﬁ nancial year which signiﬁ cantly aﬀ ected or may signiﬁ cantly aﬀ ect the operations of the Group, the results of those operations, or the state of aﬀ airs of the Group in future ﬁ nancial years. Likely developments Likely developments, future prospects and business strategies of the operations of the Group and the expected results of those operations in future years are detailed in the Chairman’s and Executive Director’s message on pages 6 to 9. These are mainly in line with the Group’s growth strategies as follows: 1) 2) 3) Continue with the Group’s geographical expansion plans and build on existing presence overseas such as in Malaysia and Myanmar; Continue to widen AAMG’s service oﬀ erings to include project consultancy and other medical disciplines; and Strengthen our position by increasing our marketing eﬀ orts on our core markets for liver and bone marrow such as UAE, Indonesia and Malaysia. Options At the date of this report, the unissued ordinary shares of AAMG under option are as follows: Grant Date Exercise Price outstanding at Options 1.9.2013 Options granted Options exercised/ cancelled/ lapsed Options outstanding at Exercise period 31.8.2014 17.1.2011 $0.088 1,299,000 - - 1,299,000 17.1.2012 to 17.1.2016 Option holders do not have any rights to participate in any issues of shares or other interests in the company or any other entity. Except as disclosed above, there have been no unissued shares or interests under option of any controlled entity within the Group during or since reporting date. For details of options issued to key management personnel as remuneration, refer to the Remuneration Report. During the ﬁ nancial year, no ordinary shares were issued as a result of the exercise of options. Environmental regulation The Company’s operations are not regulated by any signiﬁ cant environmental regulation under a law of the Commonwealth or of a State or Territory. The directors are not aware of any particular or signiﬁ cant environmental issues which have been raised in relation to the Company’s operations during the ﬁ nancial year. The directors are also not aware of any breach in the environmental regulations in Singapore, Malaysia and Vietnam during the ﬁ nancial year. 30 DIRECTORS’ REPORT REMUNERATION REPORT (Audited) The Directors of Asian American Medical Group Limited (“AAMG” or ‘the Group’) present the Remuneration Report for Non-Executive Directors, Executive Directors and other Key Management Personnel, prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001. Details of Members of Key Management Personnel The key management personnel of the Group during the ﬁ nancial year ended 31 August 2014 are listed below. Directors: Dato’ Dr Kai Chah Tan – Executive Director and Chairman Ms Pamela Anne Jenkins – Executive Director Mr Wing Kwan Teh - Non-Executive Director Mr Evgeny Tugolukov - Non-Executive Director Mr Heng Boo Fong - Independent Non-Executive Director Mr Paul Vui Yung Lee - Independent Non-Executive Director Ms Jeslyn Jacques Wee Kian Leong - Independent Non-Executive Director Other key management personnel: Mr Cherinjit Kumar Shori – Group Chief Operating Oﬃ cer Mr Meng Yau Yeoh – Group Chief Financial Oﬃ cer The skills, experience, expertise and tenure of each director and key management personnel are disclosed in the proﬁ le of directors and key management personnel sections respectively within the Annual Report. The Remuneration Report is set out under the following main headings: a. b. c. d. e. principles used to determine the nature and amount of remuneration; details of remuneration; service agreements; share-based remuneration; and other information. a. Principles used to determine the nature and amount of remuneration The principles of the Group’s executive strategy and supporting incentive programs and frameworks are: • • to align rewards to business outcomes that deliver value to shareholders; to drive a high performance culture by setting challenging objectives and rewarding high performing individuals; and to ensure remuneration is competitive in the relevant employment market place to support the attraction, motivation and retention of executive talent. • AAMG has structured a remuneration framework that is market competitive and complementary to the reward strategy of the Group. The Board has established a Nomination and Remuneration Committee which operates in accordance with its charter as approved by the Board and is responsible for determining and reviewing compensation arrangements for the Directors and the Executive Team. The Nomination and Remuneration Committee, consisting of at least two non-executive directors, is responsible for making recommendations on remuneration policies and packages applicable to Board members and for approval of remuneration for executive oﬃ cers of the Group taking into account the ﬁ nancial position of the Consolidated Group. The Board remuneration policy per the formal Charter is to ensure the remuneration package properly reﬂ ects the person’s duties and responsibilities, and that remuneration is competitive in attracting, retaining and motivating people of the highest quality. The Constitution of the Company speciﬁ es that the aggregate remuneration of directors, other than salaries paid to executive directors, shall be determined from time to time by general meeting. An amount not exceeding the amount determined is divided between those directors as they agree. The latest determination was at the Annual General Meeting held on 23 November 2009 when shareholders approved an aggregate remuneration pool of A$200,000 per annum. The Board as a whole determines the amount of the fees paid to each non-executive director. The amount proposed to be paid to each non-executive director during the year is between A$15,000 - A$25,000 (2013 : A$15,000 - A$25,000). 31 The remuneration structure that has been adopted by the Group consists of the following components: • • ﬁ xed remuneration being annual salary; and short term incentives, being employee share schemes and bonuses. The Nomination and Remuneration Committee assess the appropriateness of the nature and amount of remuneration on a periodic basis by reference to recent employment market conditions with the overall objective of ensuring maximum stakeholder beneﬁ t from the retention of a high quality Board and Executive Team. The payment of bonuses, share options and other incentive payments are reviewed by the Nomination and Remuneration Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses, options and incentives must be linked to pre-determined performance criteria. Short Term Incentive (“STI”) AAMG performance measures involve the use of annual performance objectives, metrics, performance appraisals and continuing emphasis on living the Company values. The performance measures are set annually after consultation with the Directors and executives and are speciﬁ cally tailored to the areas where each executive has a level of control. The measures target areas the Board believes hold the greatest potential for expansion and proﬁ t and cover ﬁ nancial and non-ﬁ nancial measures. The Key Performance Indicators (“KPI’s”) for the Executive Team are summarised as follows: Performance area: • • ﬁ nancial - operating proﬁ t and earnings per share; and non-ﬁ nancial - strategic goals set by each individual business unit based on job descriptions. The STI Program incorporates both cash and share-based components for the Executive Team and other employees. The Board may, at its discretion, award bonuses for exceptional performance in relation to each person’s pre-agreed KPIs Voting and comments made at the Company’s last Annual General Meeting AAMG received more than 99% of ‘yes’ votes on its Remuneration Report for the ﬁ nancial year ended 31 August 2013. The Company received no speciﬁ c feedback on its Remuneration Report at the Annual General Meeting. Consequences of performance on shareholder wealth In considering the Group’s performance and beneﬁ ts for shareholder wealth, the Board have regard to the following indices in respect of the current ﬁ nancial year and the previous four ﬁ nancial years: Item EPS (S cents) Dividends (S cents per share) Net (loss)/proﬁ t (S$000) Share price (A$) 2014 2013 2012 2011 2010 (1.19) - (2,493) 0.08 0.12 0.20 231 0.14 1.35 0.50 2,506 0.09 0.86 0.40 1,541 0.09 1.24 0.90 2,340 0.07 Used of Remuneration in Consultants AAMG did not make use of Remuneration Consultants during the ﬁ nancial year. 32 DIRECTORS’ REPORT b. Details of remuneration Details of the nature and amount of each element of the remuneration of each Key Management Personnel (“KMP”) of AAMG are shown in the table below: Short Term Employee Beneﬁ t Post- employment beneﬁ t Share based Payments Termination beneﬁ ts Cash salary and fees Cash bonus Non- monetary Beneﬁ ts Central Provident Fund Options Termination payments Total Performance based percentage of remuneration 31 August 2014 S$ S$ S$ S$ S$ S$ S$ % Executive Director Dato’ Dr Kai Chah Tan 2,400,000 50,533 Ms Pamela Anne Jenkins Non-Executive Directors 480,000 50,533 Mr Wing Kwan Teh 25,568 Mr Evgeny Tugolukov 4,275 Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong 25,568 10,072 17,340 Other Key Management Personnel - - - - - Mr Cherinjit Kumar Shori 252,000 59,500 Mr Meng Yau Yeoh 168,666 49,872 3,383,489 210,438 - - - - - - - - - - 6,300 8,400 - - - - - - - - - - - - 13,600 5,296 13,601 2,874 - 2,456,833 - - - - - - - - 538,933 25,568 4,275 25,568 10,072 17,340 330,396 235,013 41,901 8,170 - 3,643,998 2% 9% - - - - - 18% 21% - The cash bonus relates to bonus that was vested during the year and is subject to approval by the Nomination and Remuneration Committee. The cash bonus is paid between November and December every year and no part of the bonus is payable in the future years. There was no bonus that was forfeited during the year. 33 Short Term Employee Beneﬁ t Post- employment beneﬁ t Share based Payments Termination beneﬁ ts Cash salary and fees Cash bonus Non- monetary Beneﬁ ts Central Provident Fund Options Termination payments Total Performance based percentage of remuneration 31 August 2013 S$ S$ S$ S$ S$ S$ S$ % 2,473,925 554,400 3% 12% Executive Director Dato’ Dr Kai Chah Tan 2,400,000 65,000 Ms Pamela Anne Jenkins Non-Executive Directors 474,000 65,000 Mr Wing Kwan Teh 27,586 Mr Evgeny Tugolukov (2) - Mr Heng Boo Fong 27,586 Mr Paul Vui Yung Lee (2) Mr Harry Vui Khiun Lee (1) Ms Jeslyn Jacques Wee Kian Leong - 18,568 12,379 - - - - - - Other Key Management Personnel Mr Cherinjit Kumar Shori 252,000 73,500 Mr Meng Yau Yeoh 154,200 53,040 3,366,319 256,540 - - - - - - - - - - - 8,925 15,400 - - - - - - - - - - - - - - 10,240 15,054 13,600 8,171 - - - - - - - - - - 27,586 - 27,586 - 18,568 12,379 350,794 229,011 48,165 23,225 - 3,694,249 - - - - - - 21% 23% - (1) Mr Harry Vui Khiun Lee resigned on 31 January 2013 (2) Mr Evgeny Tugolukov and Mr Paul Vui Yung Lee were appointed during the ﬁ nancial year end 31 August 2013. The cash bonus relates to bonus that was vested during the year and is subject to approval by the Nomination and Remuneration Committee. The cash bonus is paid between November and December every year and no part of the bonus is payable in the future years. There was no bonus that was forfeited during the year. 34 DIRECTORS’ REPORT c. Service agreements Remuneration and other terms of employment for the Executive Directors and other Key Management Personnel are formalised in a service agreement. The major provisions of the agreements relating to remuneration are set out below: Name Dato’ Dr Kai Chah Tan Ms Pamela Anne Jenkins Mr Cherinjit Kumar Shori Mr Meng Yau Yeoh Base salary per month (S$) Term of agreement Notice period 200,000 40,000 21,000 14,166 No ﬁ xed term No ﬁ xed term No ﬁ xed term No ﬁ xed term 2 months 2 months 1 month 1 month d. Share-based remuneration All directors and executives may be allocated options to acquire shares in the Group under the Incentive Option Scheme approved by shareholders from time to time. The last such scheme was approved by shareholders at the Annual General Meeting of shareholders held on 6 December 2010. Grant details For the ﬁ nancial year ended 31 August 2014 Overall Date No. Value $ (Note 1) Exercised no. Exercised $ Lapsed no. Lapsed $ Vested no. Vested % Unvested % Lapsed % Percentage Remuneration that are options Group Key Management Personnel Mr Cherinjit Kumar Shori Mr Meng Yau Yeoh 17.1.2011 842,000 46,858 17.1.2011 457,000 25,433 - - - - - - - - - - - - 842,000 100% 457,000 100% - - - - 2% 1% 1,299,000 Note 1 The value of options granted as remuneration and as shown in the above table has been determined in accordance with applicable accounting standards. 35 e. Other Information KMP Options and Right Holdings All KMP may be allocated options to acquire shares in the Group under the Incentive Option Scheme approved by shareholders from time to time. The last such scheme was approved by shareholders at the Annual General Meeting of shareholders held on 6 December 2010. The number of options over ordinary shares held by each KMP of the Group during the ﬁ nancial year is as follows: Balance at beginning of year Granted as remuner- ation during the year Exercised during the year Lapsed/ cancelled Balance at end of year Balance vested as end of year Vested during the year Mr Meng Yau Yeoh 457,000 1,299,000 31 August 2014 Dato’ Dr Kai Chah Tan Ms Pamela Anne Jenkins Mr Wing Kwan Teh Mr Evgeny Tugolukov Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong Mr Cherinjit Kumar Shori 31 August 2013 Dato’ Dr Kai Chah Tan Ms Pamela Anne Jenkins Mr Wing Kwan Teh Mr Heng Boo Fong Mr Harry Vui Khiun Lee Ms Jeslyn Jacques Wee Kian Leong Mr Cherinjit Kumar Shori - - - - - - - 842,000 - - - - - - 842,000 Mr Meng Yau Yeoh 457,000 1,299,000 36 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 842,000 842,000 281,000 457,000 457,000 153,000 1,299,000 1,299,000 434,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 842,000 561,000 281,000 457,000 304,000 152,000 1,299,000 865,000 433,000 Balance at beginning of year Granted as remuner- ation during the year Exercised during the year Lapsed/ cancelled Balance at end of year Balance vested as end of year Vested during the year DIRECTORS’ REPORT KMP Shareholdings The number of ordinary shares in Asian American Group Limited held by each KMP of the Group during the ﬁ nancial year is as follows: 31 August 2014 Balance at beginning of year Issued during the year Issued on exercise of options during the year Other changes during the year Balance at end of year Dato’ Dr Kai Chah Tan 102,298,250 Ms Pamela Anne Jenkins 21,324,600 Mr Wing Kwan Teh Mr Evgeny Tugolukov Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong Mr Cherinjit Kumar Shori Mr Meng Yau Yeoh 4,084,090 21,000,000 - - - - - 148,706,940 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 102,298,250 21,324,600 4,084,090 21,000,000 - - - - - 148,706,940 31 August 2013 Balance at beginning of year Issued during the year Issued on exercise of options during the year Other changes during the year Balance at end of year Dato’ Dr Kai Chah Tan 102,298,250 Ms Pamela Anne Jenkins 21,324,600 Mr Wing Kwan Teh 4,084,090 Mr Evgeny Tugolukov Mr Heng Boo Fong Mr Harry Vui Khiun Lee Ms Jeslyn Jacques Wee Kian Leong Mr Cherinjit Kumar Shori Mr Meng Yau Yeoh - - 561,915 - - - - - - - - - - - - - - - - - - - - - - - - 102,298,250 21,324,600 4,084,090 21,000,000* 21,000,000* - (561,915)^ - - - - - - - - 128,268,855 20,438,085 148,706,940 * at date of appointment ^ resigned on 31 January 2013 Other KMP Transactions There have been no other transactions involving equity instruments other than those described in the tables above. For details of other transactions with KMP, refer to Note 27: Related Parties. End of audited remuneration report. 37 DIRECTORS’ REPORT Indemniﬁ cation and insurance of oﬃ cers The Company is required to indemnify the directors and other oﬃ cers of the Company against any liabilities incurred by the directors and oﬃ cers that may arise from their position as directors and oﬃ cers of the Company. No costs were incurred during the year pursuant to this indemnity. The Company has entered into deeds of indemnity with each director whereby, to the extent permitted by the Corporations Act 2001, the Company agreed to indemnify each director against all loss and liability incurred as an oﬃ cer of the Company, including all liability in defending any relevant proceedings. Since the end of the previous year the Company has paid insurance premiums in respect of directors’ and oﬃ cers’ liability and legal expenses’ insurance contracts. The terms of the policies prohibit disclosure of details of the amount of the insurance cover, the nature thereof and the premium paid. Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. There were no such proceedings brought or interventions on behalf of the Company with leave from the Court under section 237 of the Corporations Act 2001. Non-audit services During the year, Grant Thornton, the Group’s auditors, performed certain other services in addition to their statutory audit duties. The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by resolution of the Audit Committee, is satisﬁ ed that the provision of those non-audit services during the year is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons: • All non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed by the Audit Committee to ensure they do not impact upon the impartiality and objectivity of the auditor; and The non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards. • Details of the amounts paid to the auditors of the Group, Grant Thornton, and its related practices for audit and non- audit services provided during the year are set out in note 8 to the Financial Statements. Auditor’s Independence Declaration A copy of the auditor’s independence declaration as required by section 307C of the Corporations Act 2001 for the year ended 31 August 2014 has been received as set out immediately following the end of the Directors’ report. The Report of Directors is signed in accordance with a resolution of the Board of Directors. Dato’ Dr Kai Chah Tan Dato’ Dr Kai Chah Tan E Executive Chairman Ch i ti 3 November 2014 38 Level 1, 67 Greenhill Rd Wayville SA 5034 Correspondence to: GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E info.sa@au.gt.com W www.grantthornton.com.au AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF ASIAN AMERICAN MEDICAL GROUP LIMITED In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Asian American Medical Group Limited for the year ended 31 August 2014, I declare that, to the best of my knowledge and belief, there have been: a b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON AUDIT PTY LTD Chartered Accountants S J Gray Director – Audit & Assurance Adelaide, 3 November 2014 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member ﬁ rms provide assurance, tax and advisory services to their clients and/ or refers to one or more member ﬁ rms, as the context requires. Grant Thornton Australia Ltd is a member ﬁ rm of Grant Thornton International Ltd (GTIL). GTIL and the member ﬁ rms are not a worldwide partnership. GTIL and each member ﬁ rm is a separate legal entity. Services are delivered by the member ﬁ rms. GTIL does not provide services to clients. GTIL and its member ﬁ rms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies. Our Ref: Asian American Medical Group_Aug 14.Docx 39 Asian American Medical Group Limited ABN NUMBER 42 091 559 125 Annual report for the year ended 31 August 2014 40 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 August 2014 Revenue Other operating income Changes in inventories Inventories Purchase services Employment beneﬁ ts expense Operating lease expense Depreciation and amortisation expenses Directors’ fees Related party loan written oﬀ Finance expense Other expenses Proﬁ t before income tax Income tax beneﬁ t/(expense) (Loss)/Proﬁ t for the year Other comprehensive income: Items that may be reclassiﬁ ed subsequently to proﬁ t or loss Net eﬀ ect of foreign currency translation Consolidated Group Year ended Year ended Note 31 August 2014 31 August 2013 S$ S$ 3 3 27 4 5 6 (cid:428) 16,201,710 19,399,378 101,398 30,622 67,033 56,216 (2,703,528) (2,124,813) (5,420,798) (8,721,636) (7,905,271) (6,632,480) (670,631) (586,095) (185,350) (186,365) (267,027) (3,943) (143,220) (78,081) - (4,326) (1,535,458) (900,688) (2,544,641) 51,509 (2,493,132) 331,288 (99,865) 231,423 100,023 (20,696) Total comprehensive (loss)/income for the year (2,393,109) 210,727 (Loss)/Proﬁ t attributable to : Members of the parent entity (2,493,132) 231,423 (2,493,132) 231,423 Total comprehensive (loss)/income attributable to : Members of the parent entity (2,393,109) 210,727 Earnings per share From continuing operations: Basic (loss)/earnings per share (S cents) 10 Diluted (loss)/earnings per share (S cents) 10 (1.19) (1.19) 0.12 0.12 (2,393,109) 210,727 These ﬁ nancial statements should be read in conjunction with the accompany notes. 41 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 August 2014 Current assets Cash and cash equivalents Trade and other receivables Inventories Income tax refundable Total current assets Non-current assets Plant and equipment Intangible assets Balance with related party Total non-current assets Total assets Current liabilities Trade and other payables Finance lease liabilities Current tax liabilities Total current liabilities Non-current liabilities Finance lease liabilities Deferred tax liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings Total equity Note Consolidated Group 2014 S$ 2013 S$ 11 12 14 18 (cid:428) 15 16 13 (cid:428) (cid:428) 17 19 18 (cid:428) 19 18 (cid:428) (cid:428) (cid:428) 20 21 (cid:428) (cid:428) 5,292,123 1,786,481 403,641 17,000 7,317,924 3,472,770 373,019 - 7,499,245 11,163,713 468,349 266,123 - 734,472 594,063 266,123 320,765 1,180,951 8,233,717 12,344,664 2,925,484 4,207,918 29,580 - 49,059 141,028 2,955,064 4,398,005 - - - 29,580 17,645 47,225 2,955,064 4,445,230 5,278,653 7,899,434 4,267,495 4,267,495 178,185 832,973 69,992 3,561,947 5,278,653 7,899,434 42 These ﬁ nancial statements should be read in conjunction with the accompany notes. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For year ended 31 August 2014 Issued Capital Retained Earnings Foreign Currency Translation Reserve Employee share option reserve Total S$ S$ S$ S$ S$ Balance at 1.9.2012 266,133 4,288,487 26,679 40,896 4,622,195 Proﬁ t for the year Other comprehensive loss Employee share option - - - Shares issued during the year 4,001,362 231,423 - - - - (20,696) - - - - - 231,423 (20,696) 23,113 23,113 - - 4,001,362 (957,963) Dividend paid (note 9) - (957,963) Balance at 31.8.2013 4,267,495 3,561,947 5,983 64,009 7,899,434 Balance at 1.9.2013 4,267,495 3,561,947 5,983 64,009 7,899,434 Loss for the year Other comprehensive income Employee share option Dividend paid (note 9) - - - - - - (235,842) (2,493,132) - 100,023 - - (2,493,132) 100,023 - - 8,170 8,170 - (235,842) Balance at 31.8.2014 4,267,495 832,973 106,006 72,179 5,278,653 These ﬁ nancial statements should be read in conjunction with the accompany notes. 43 C ONSOLIDATED STATEMENT OF CASH FLOWS For year ended 31 August 2014 Cash ﬂ ows from operating activities Receipts from customers Payments to suppliers and employees Income tax paid Consolidated Group Year ended Year ended Note 31 August 2014 31 August 2013 S$ S$ 18,157,786 20,214,587 (19,850,854) (19,343,474) (124,164) (507,649) Net cash (used in)/provided by operating activities 25a (1,817,232) 363,464 Cash ﬂ ows from investing activities Purchase of property, plant and equipment 15a (65,918) (452,718) Fixed deposit Interest received Net cash used in investing activities Cash ﬂ ows from ﬁ nancing activities Proceeds from issue of new shares Repayment of ﬁ nance lease liabilities Dividends paid Finance cost Net cash (used in)/generated from ﬁ nancing activities Net change in cash and cash equivalents held Cash and cash equivalents at beginning of ﬁ nancial year Eﬀ ect of exchange rate change on cash held in foreign currencies (cid:428) 9 4 (cid:428) (252,132) (1,500,000) 76,187 33,980 (241,863) (1,918,738) - 4,001,362 (49,058) (47,025) (235,842) (957,963) (3,943) (4,326) (288,843) 2,992,048 (2,347,938) 5,696,038 1,436,774 4,271,067 70,005 (11,803) Cash and cash equivalents at end of ﬁ nancial year (cid:428)11 3,418,105 5,696,038 44 These ﬁ nancial statements should be read in conjunction with the accompany notes. NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 August 2014 1. Statement of signiﬁ cant accounting policies Asian American Medical Group Limited (“AAMG” or “Company”) is a company domiciled in Australia. The consolidated ﬁ nancial report of the Company as at and for year ended 31 August 2014 comprises the Company and its subsidiaries. The principal activity of AAMG is that of provision of specialised medical services to cater for patients seeking treatment for liver and blood diseases and transplantation under its Comprehensive Transplant Centre (“CTC”). AAMG is a for proﬁ t entity for the purpose of preparing ﬁ nancial statements. 2. Statement of signiﬁ cant accounting policies This ﬁ nancial report includes the consolidated ﬁ nancial statements and notes of Asian American Medical Group Limited (“AAMG”) and controlled entities (“Consolidated Group” or “Group”). (a) Basis of preparation The consolidated general purpose ﬁ nancial statements of the Group have been prepared in accordance with the requirements of the Corporation Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Material accounting policies adopted in the preparation of this ﬁ nancial report are presented below and have been consistently applied unless otherwise stated. The ﬁ nancial report has been prepared on an accruals basis and is based on historical costs, modiﬁ ed, where applicable, by the measurement at fair value of selected non-current assets, ﬁ nancial assets and ﬁ nancial liabilities. AAMG is a company domiciled in Australia. The consolidated ﬁ nal report is presented in Singapore Dollars (SGD or S$) as a signiﬁ cant portion of the group’s activity is denominated in Singapore Dollars. These consolidated ﬁ nancial statements have been approved for issue by the Board of Directors on 3 November 2014. (b) Principles of consolidation The Group ﬁ nancial statements consolidate those of the Parent company and all of its subsidiaries as of 31 August 2014. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to aﬀ ect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 31 August. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intragroup asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the ﬁ nancial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Proﬁ t or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the eﬀ ective date of acquisition, or up to the eﬀ ective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s proﬁ t or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. 45 (c) Business combinations Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination one of the combining entities must be identiﬁ ed as the acquirer (i.e. parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair value of the identiﬁ able assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured. The acquisition may result in the recognition of goodwill (refer Note 2(j)) or a gain from a bargain purchase. The method adopted for the measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree where less than 100% ownership interest is held in the acquiree. The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate ﬁ nancial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the entity interest issued by the acquirer. Reverse acquisition, where the cost of the business combination is deemed to have been incurred by the legal subsidiary (i.e. the acquirer for accounting purposes) in the form of equity instruments issued to the owners of the legal parent (i.e. the acquiree for accounting purposes), are accounted for under AASB 3: Business Combinations. The method calculates the fair value of the instruments issued by the legal parent on the basis of existing instruments of the legal subsidiary. All transaction costs incurred in relation to the business combination are expensed to the proﬁ t or loss. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s proﬁ t or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. 2. Statement of signiﬁ cant accounting policies cont’d 46 NOTES TO THE FINANCIAL STATEMENTS (d) Income tax The income tax expense (beneﬁ t) for the year comprises current income tax expense (beneﬁ t) and deferred tax expense (beneﬁ t). Current income tax expense charged to the proﬁ t or loss is the tax payable on taxable income calculated using applicable income tax rates that have been 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 reﬂ ects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Current and deferred income tax expense (beneﬁ t) is charged or credited directly to equity instead of the proﬁ t or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary diﬀ erences arising between the tax bases of assets and liabilities and their carrying amounts in the ﬁ nancial 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 eﬀ ect on accounting or taxable proﬁ t or loss. 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 reﬂ ects the manner in when management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary diﬀ erences and unused tax losses are recognised only to the extent that it is probable that future taxable proﬁ t will be available against which the beneﬁ ts of the deferred tax asset can be utilised. The amount of beneﬁ ts brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income tax legislation and the anticipation that the Company will derive suﬃ cient future assessable income to enable the beneﬁ t to be realised and comply with the conditions of deductibility imposed by the law. (e) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories includes direct costs associated with the purchase of inventory including transportation costs. (f) Plant & equipment Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment are measured on the cost basis less depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash ﬂ ows that will be received from the asset’s employment and subsequent disposal. The expected net cash ﬂ ows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic beneﬁ ts associated with the item will ﬂ ow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the proﬁ t or loss during the ﬁ nancial year in which they are incurred. 2. Statement of signiﬁ cant accounting policies cont’d 47 Depreciation The depreciation of all ﬁ xed assets is depreciated on a straight line basis over the asset’s useful life to the Consolidated Group commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of ﬁ xed asset Oﬃ ce equipment Medical equipment Computers Furniture and ﬁ ttings Renovations Depreciation Rate 5 years 5 years 5 years 5 years 5 years The asset’s 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 disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the proﬁ t or loss. (g) Leases Lease payments for operating leases, where substantially all the risks and beneﬁ ts remain with the lessor, are charged as expenses in the periods in which they are incurred. The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a ﬁ nance leasing liability, irrespective of whether some of these lease payments are payable up-front at the date of inception of the lease. Leases of land and buildings are classiﬁ ed separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognised initially. Depreciation methods and useful lives for assets held under ﬁ nance lease agreements correspond to those applied to comparable assets which are legally owned by the Group. The corresponding ﬁ nance leasing liability is reduced by lease payments less ﬁ nance charges, which are expensed as part of ﬁ nance costs. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to proﬁ t or loss over the period of the lease. 2. Statement of signiﬁ cant accounting policies cont’d 48 NOTES TO THE FINANCIAL STATEMENTS (h) Financial instruments Initial recognition and measurement Financial assets and ﬁ nancial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For ﬁ nancial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs except where the instrument is classiﬁ ed “at fair value through proﬁ t or loss” in which case transaction costs are expensed to the proﬁ t or loss immediately. Classiﬁ cation and subsequent measurement Financial instruments are subsequently measured at either fair value, amortised cost using the eﬀ ective interest rate method or cost. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, quoted prices in an active market are used to determine fair value. The Group does not designate any interest in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards speciﬁ cally applicable to ﬁ nancial instruments. (i) Loans and receivables Loans and receivables are non-derivative ﬁ nancial assets with ﬁ xed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. (ii) Held-to-maturity investments These investments are non-derivative ﬁ nancial assets that have ﬁ xed maturities and ﬁ xed or determinable payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost. (iii) Available for sale ﬁ nancial assets Available for sale ﬁ nancial assets are non-derivative assets that are either not suitable to be classiﬁ ed into other categories of ﬁ nancial assets due to their nature or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a ﬁ xed maturity nor ﬁ xed or determinable payments. Available for sale ﬁ nancial assets are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting year. (iv) Financial liabilities Non-derivative ﬁ nancial liabilities (excluding ﬁ nancial guarantees) are subsequently measured at amortised cost. (v) Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the Group assesses whether there is objective evidence that a ﬁ nancial instrument has been impaired. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash ﬂ ows expires or the asset is transferred to another party whereby the entity no longer has any signiﬁ cant continuing involvement in the risks and beneﬁ ts associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The diﬀ erence between the carrying value of the ﬁ nancial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in proﬁ t or loss. (i) Impairment of assets At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the proﬁ t or loss. Impairment testing is performed annually for goodwill. 2. Statement of signiﬁ cant accounting policies cont’d 49 (j) Intangibles Goodwill Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of: (i) the consideration transferred; (ii) any non-controlling interest; and (iii) the acquisition date fair value of any previously held equity interests over the acquisition date fair value of net identiﬁ able assets acquired. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is tested for impairment annually and is allocated to the Group’s cash generating units or groups of cash generating units, which represent the lowest level at which goodwill is monitored by where such level is not larger than an operating segment. (k) Foreign Currency Transactions and Balances Functional and presentation currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated ﬁ nancial statements are presented in Singapore dollars which is the Group’s functional and presentation currency. Transaction and balances Foreign currency transactions are translated into 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 diﬀ erences arising on the translation of monetary items are recognised in the statement of proﬁ t or loss and other comprehensive income, except where deferred in equity as a qualifying cash ﬂ ow or net investment hedge. Exchange diﬀ erences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange diﬀ erence is recognised in the statement of proﬁ t or loss and other comprehensive income. Group companies The ﬁ nancial results and position of foreign operations whose functional currency is diﬀ erent from the Group’s presentation currency are translated as follows: • assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; • income and expenses are translated at average exchange rates for the year; and • retained earnings are translated at the exchange rates prevailing at the date of the transaction. Exchange diﬀ erences are charged or credited to other comprehensive income and recognised in the foreign currency translation reserve in equity. 2. Statement of signiﬁ cant accounting policies cont’d 50 NOTES TO THE FINANCIAL STATEMENTS (l) Employee beneﬁ ts Provision is made for the Group’s liability for employee beneﬁ ts arising from services rendered by employees to balance date. Employee beneﬁ ts that are expected to be settled within one year are measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee beneﬁ ts payable later than one year are measured at the present value of the estimated future cash outﬂ ows to be made for those beneﬁ ts. Those cash ﬂ ows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash ﬂ ows. Central Provident Fund (“CPF”) contributions: The Group makes contributions to the Central Provident Fund scheme in Singapore, a deﬁ ned contribution post-employment or pension scheme. Contributions to post- employment beneﬁ ts under deﬁ ned contribution plans are recognised as an expense in the proﬁ t or loss as incurred. Equity-settled compensation: The Group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a binomial option pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting date such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. (m) 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 outﬂ ow of economic beneﬁ ts will result and that outﬂ ow can be reliably measured. (n) Cash and cash equivalents Cash and cash equivalents includes cash on hand, demand deposits held with banks, other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insigniﬁ cant risk of changes in values. (o) Revenue and other income Revenue is measured at the fair value of the consideration received or receivable. Revenue from sale of medication is recognised upon delivery of the medication to the patient. Revenue from rendering of medical services such as medical consultation, surgery and transplantation is recognised upon completion of the consultation or procedure. Interest revenue is recognised using the eﬀ ective interest rate method, which, for ﬂ oating rate ﬁ nancial assets, is the rate inherent in the instrument. All revenue is stated net of goods and services tax (“GST”). (p) Trade and other payables Trade and other payables represent the liability outstanding at the end of the reporting year for goods and services received by the Group during the reporting year which remains unpaid, The balance is recognised as a current liability with the amount being normally paid within 30 days of initial recognition. (q) Goods and services tax Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Oﬃ ce (“ATO”) or Inland Revenue Authority of Singapore (“IRAS”). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated in the statement of ﬁ nancial position inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO or IRAS is included as a current asset or liability in the statement of ﬁ nancial position. Cash ﬂ ows are included in the statement of cash ﬂ ows on a gross basis. The GST components of cash ﬂ ows arising from investing and ﬁ nancing activities which are recoverable from, or payable to, the ATO or IRAS are classiﬁ ed as operating cash ﬂ ows. 2. Statement of signiﬁ cant accounting policies cont’d 51 (r) Share-based employee remuneration The Group operates equity-settled share-based remuneration plans for its employees. None of the Group’s plans feature any options for a cash settlement. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example proﬁ tability and sales growth targets and performance conditions). All share-based remuneration is ultimately recognised as an expense in proﬁ t or loss with a corresponding credit to ‘share option reserve’. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest diﬀ ers from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are diﬀ erent to that estimated on vesting. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up are allocated to share capital. (s) Transaction costs on the issue of equity instruments Transaction costs arising from the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued. (t) Comparative ﬁ gures When required by Accounting Standards, comparative ﬁ gures have been adjusted to conform to changes in presentation for the current ﬁ nancial year. (u) Standards and Interpretations issued but not yet eﬀ ective Certain new accounting standards and interpretations have been published that are not mandatory for 31 August 2014 reporting periods. The Group has elected not to early adopt these new standards or amendments in the ﬁ nancial statements. The Group has yet to fully assess the impact the following accounting standards and amendments to accounting standards will have on the ﬁ nancial statements, when applied in future periods: • AASB 2012-3 Amendments to Australian Accounting Standards – Oﬀ setting Financial Assets and Financial Liabilities; • AASB 9 Financial Instruments; • Annual Improvements 2010-2012 Cycle; • Annual Improvements 2011-2013 Cycle; • AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments (Part B and Part C); • AASB 1031 Materiality; and • IFRS 15 Revenue from Contracts with Customers. Other standards and interpretations that have been issued but are not yet eﬀ ective are not expected to have any signiﬁ cant impact on the Group’s ﬁ nancial statements in the year of their initial application. 2. Statement of signiﬁ cant accounting policies cont’d 52 NOTES TO THE FINANCIAL STATEMENTS (v) New and revised standards that are eﬀ ective for these ﬁ nancial statements A number of new and revised standards are eﬀ ective for annual periods beginning on or after 1 September 2013. Information on these new standards is presented below: AASB 10 Consolidated Financial Statements AASB 10 supersedes AASB 127 Consolidated and Separate Financial Statements (AASB 127) and AASB Interpretation 112 Consolidation - Special Purpose Entities. AASB 10 revises the deﬁ nition of control and provides extensive new guidance on its application. These new requirements have the potential to aﬀ ect which of the Group’s investees are considered to be subsidiaries and therefore to change the scope of consolidation. The requirements on consolidation procedures, accounting for changes in non-controlling interests and accounting for loss of control of a subsidiary are unchanged. Management has reviewed its control assessments in accordance with AASB 10 and has concluded that there is no eﬀ ect on the classiﬁ cation (as subsidiaries or otherwise) of any of the Group’s investees held during the period or comparative periods covered by these ﬁ nancial statements. AASB 11 Joint Arrangements AASB 11 supersedes AASB 131 Interests in Joint Ventures (AAS 131) and AASB Interpretation 113 Jointly Controlled Entities- Non-Monetary-Contributions by Venturers. AASB 11 revises the categories of joint arrangement, and the criteria for classiﬁ cation into the categories, with the objective of more closely aligning the accounting with the investor’s rights and obligations relating to the arrangement. In addition, AASB 131’s option of using proportionate consolidation for arrangements classiﬁ ed as jointly controlled entities under that Standard has been eliminated. AASB 11 now requires the use of the equity method for arrangements classiﬁ ed as joint ventures (as for investments in associates). The Group does not maintain any joint venture arrangement within the scope of AASB 11. The eﬀ ect of the new standard in the Group’s ﬁ nancial statements will continue to be assessed. AASB 12 Disclosure of interests in Other Entities AASB 12 integrates and makes consistent the disclosure requirements for various types of investments, including unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities. The Group has applied AASB 12 from 1 September 2013 and Notes 23 illustrate the application of AASB 12 in the current year. The eﬀ ect of the new standard in the Group’s ﬁ nancial statements will continue to be assessed. Consequential amendments to AASB 127 Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures AASB 127 now only addresses separate ﬁ nancial statements. AASB 128 brings investments in joint ventures into its scope. However, AASB 128’s equity accounting methodology remains unchanged. AASB 13 Fair Value Measurement AASB 13 clariﬁ es the deﬁ nition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It does not aﬀ ect which items are required to be fair-valued. The scope of AASB 13 is broad and it applies for both ﬁ nancial and non-ﬁ nancial items for which other Australian Accounting Standards require or permit fair value measurements or disclosures about fair value measurements, except in certain circumstances. AASB 13 applies prospectively for annual periods beginning on or after 1 January 2013. Its disclosure requirements need not be applied to comparative information in the ﬁ rst year of application. The Group has however included as comparative information the AASB 13 disclosures that were required previously by AASB 7 Financial Instruments: Disclosures. The standard did not have a material eﬀ ect on the Group’s ﬁ nancial statements. 2. Statement of signiﬁ cant accounting policies cont’d 53 (w) Critical accounting estimates and judgements The directors evaluate estimates and judgements incorporated into the ﬁ nancial report based on historical knowledge and best available information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Key Estimates and Judgements (i) Impairment The Group assesses impairment at each reporting date by evaluating conditions and events speciﬁ c to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value in use calculations and valuations from independent valuers are performed and used in assessing recoverable amounts, these calculations and valuations incorporate a number of key estimates. Please refer to note 16 with respect to Management’s consideration of impairment of goodwill as at 31 August 2014. 2. Statement of signiﬁ cant accounting policies cont’d 54 NOTES TO THE FINANCIAL STATEMENTS Consolidated Group 2014 S$ 2013 S$ 11,236,790 15,889,095 4,688,086 3,443,852 276,834 66,431 16,201,710 19,399,378 76,187 25,211 101,398 33,980 33,053 67,033 (cid:428) (cid:428) 3(cid:428)(cid:428)(cid:428)(cid:428) Revenue Operating activities Provision of services Sale of medication Management fee Total revenue from operating activities Other revenue Interest received Other income Total other revenue 4(cid:428)(cid:428)(cid:428)(cid:428) Finance expense Interest expense on obligation under ﬁ nance lease 3,943 4,326 5(cid:428)(cid:428)(cid:428)(cid:428) (Loss)/Proﬁ t for the year The (loss)/proﬁ t for the year has been arrived at after crediting/(charging) the following items: a.(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428) Expenses Cost of sales Foreign currency translation (loss)/gain Consolidated Group 2014 S$ 2013 S$ (8,093,704) (10,790,233) (39,235) 105,759 Administrative expenses include rental expense on operating leases as follows: -(cid:428)(cid:428)(cid:428) premises (670,631) (586,095) Depreciation and amortisation is reﬂ ected in the statement of proﬁ t or loss and other comprehensive income as follows: -(cid:428)(cid:428)(cid:428) depreciation Professional fees Management fee Credit card charges Central Provident Fund Share option expense (Note 21 (b) (i)) (185,350) (143,220) (313,373) (179,220) (251,293) (214,020) (101,306) (98,541) (262,127) (221,784) (8,170) (23,225) 55 6(cid:428)(cid:428)(cid:428)(cid:428) Income Tax Expense a.(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428) The components of tax expense comprise: Current tax Deferred tax Over provision in respect of prior years (cid:428) Note Consolidated Group 2014 S$ (17,000) (17,645) (16,864) (51,509) 2013 S$ 141,028 (20,847) (20,316) 99,865 18 (cid:428) (cid:428) b.(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428) The prima facie tax on proﬁ t before income tax is reconciled to the income tax as follows: Prima facie tax payable on proﬁ t before income tax at Australian tax rate of 30% (2013 : 30%) (763,392) 99,386 Add: Eﬀ ect of tax rates in foreign jurisdiction 271,292 (43,067) Tax eﬀ ect of: -(cid:428)(cid:428)(cid:428)over provision for income tax in prior years - partial income tax exemption -(cid:428)(cid:428)(cid:428)current year losses for which no deferred tax asset was recognised Income tax (beneﬁ t)/expense (16,864) (19,719) 477,174 (51,509) (20,316) (25,925) 89,787 99,865 (cid:428) (cid:428) The value of tax losses not recognised is S$2,552,000 (2013 : S$781,000). 7(cid:428)(cid:428)(cid:428)(cid:428) Key Management Personnel Compensation The key management personnel (“KMP”) compensation included in employment expenses includes: Short-term beneﬁ ts Post employment beneﬁ t Share based payments Total compensation Detailed remuneration disclosures are provided in the remuneration report. 2014 S$ 2013 S$ 3,593,927 3,622,859 41,901 8,170 48,165 23,225 3,643,998 3,694,249 56 NOTES TO THE FINANCIAL STATEMENTS 8(cid:428)(cid:428)(cid:428)(cid:428) Auditor’s Remuneration Remuneration of the parent entity auditor, Grant Thornton Audit Pty Ltd: - auditing or reviewing the ﬁ nancial report - taxation services Remuneration of related practices of Grant Thornton Audit Pty Ltd: - auditing or reviewing the ﬁ nancial report of subsidiaries - taxation services 9(cid:428)(cid:428)(cid:428)(cid:428) Dividends Consolidation Group 2014 S$ 2013 S$ 32,367 9,537 77,600 4,150 35,897 3,837 68,500 - Consolidation Group 2014 S$ 2013 S$ Final unfranked dividend of 0.1 S cents per share in respect of ﬁ nancial year ended 2013 (2013 : 0.4 S cents per share) 235,842 728,088 Interim unfranked dividends Nil S cents per share (2013 : 0.1 S cents per share) - 229,875 235,842 957,963 Following the completion of accounts the Directors propose no ﬁ nal dividend for the ﬁ nancial year ended 31 August 2014 (2013 : 0.1 S cents). 57 10(cid:428)(cid:428)(cid:428) Earnings per Share Basic earnings per share amounts are calculated by dividing the proﬁ t for the year attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the ﬁ nancial year. Diluted earnings per share amounts are calculated by dividing the proﬁ t for the year attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the ﬁ nancial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. The following table reﬂ ects the proﬁ t and loss and share data used in the computation of basic and diluted earnings per share for the year ended 31 August: Consolidation Group 2014 2013 (Loss)/Proﬁ t for the year (S$2,493,132) S$231,423 Weighted average number of ordinary shares during the year used in calculating basic EPS Eﬀ ect of dilution: Share option Weighted average number of ordinary shares during the year used in calculating diluted EPS Basic (loss)/earnings per share (S cents) Diluted (loss)/earnings per share (S cents) 11(cid:428)(cid:428)(cid:428)(cid:428) Cash and Cash Equivalents Cash and bank balances Fixed deposit Number of shares Number of shares 209,453,754 196,011,692 1,299,000 812,121 210,752,754 196,823,813 (1.19) (1.19) 0.12 0.12 Consolidation Group 2014 S$ 2013 S$ 3,418,105 5,696,038 1,874,018 1,621,886 5,292,123 7,317,924 The eﬀ ective interest rate on short-term bank deposits was 0.13% - 3.15% (2013 : 0.13% - 1.15%) per annum; these deposits have a maturity of between 4 - 12 months (2013 : 18 months). Fixed deposit amounting to S$121,886 (2013 : S$121,886) is pledged to a bank for performance guarantee relating to the operating lease. In 2013, ﬁ xed deposit amounting to S$500,000 was pledged to a bank for a standby credit facility of S$1,000,000 and this standby credit facility was subsequently terminated in July 2014. Reconciliation of cash (cid:428) (cid:428) (cid:428) Cash at the end of the ﬁ nancial year as shown in the consolidated statement of cash ﬂ ows is reconciled to items in the consolidated statement of ﬁ nancial position as follows: Cash and cash equivalents Less: Fixed deposit 5,292,123 7,317,924 (1,874,018) (1,621,886) Cash and cash equivalents in the consolidated statement of cash ﬂ ows (cid:428) 3,418,105 5,696,038 58 NOTES TO THE FINANCIAL STATEMENTS 12(cid:428)(cid:428)(cid:428) Trade and Other Receivables Current Trade receivables Other receivables Deposits Consolidation Group 2014 S$ 2013 S$ 1,695,825 3,227,588 23,206 67,450 177,732 67,450 Total current trade and other receivables (cid:428) 1,786,481 3,472,770 a(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)Provision for impairment of receivables Current trade and term receivables are non-interest bearing loans and generally on 30-day terms. A provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired. No trade or other receivables are considered past due and impaired. (cid:428) b(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)Credit risk The group has no signiﬁ cant concentration of credit risk with respect to any single counter party or group of counter parties. The following table details the Group’s trade receivables exposed to credit risk with ageing analysis. Amounts are considered as ‘past due’ when the debt has not been settled, with the terms and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are speciﬁ c circumstances indicating that the debt may not be fully repaid to the Group. The balances of receivables that remain within initial trade terms are considered to be high credit quality. Current Due 1 - 30 days Due 31- 60 days Due over 60 days Consolidation Group 2014 S$ 2013 S$ 1,063,578 1,418,331 173,554 1,211,596 371,617 87,076 508,233 89,428 1,695,825 3,227,588 59 13(cid:428)(cid:428)Loan to related party Non-current Consolidation Group 2014 S$ 2013 S$ Non-trade amount due from associate company - 320,765 The non-trade amount due from associate company was unsecured, interest-free and had no ﬁ xed repayment terms. During the year, the amount of S$320,765 was written oﬀ to the Proﬁ t or Loss but subsequently S$53,738 was recovered, resulting in a net write-oﬀ of S$267,027. 14(cid:428)(cid:428)Inventories Current -(cid:428)(cid:428) Medical Supplies at cost (cid:428)Total inventories Consolidated Group 2014 S$ 2013 S$ 403,641 403,641 373,019 373,019 60 NOTES TO THE FINANCIAL STATEMENTS Consolidated Group 2014 S$ 12,627 (8,088) 4,539 2013 S$ 12,792 (10,824) 1,968 389,887 383,824 (253,359) (185,988) 136,528 197,836 150,999 (69,787) 81,212 13,294 (13,294) - 132,068 (69,027) 63,041 13,294 (13,056) 238 480,288 480,288 (234,218) (149,308) 246,070 330,980 468,349 594,063 (cid:428) (cid:428) (cid:428) (cid:428) (cid:428) (cid:428) (cid:428) 15(cid:428) Plant and Equipment Oﬃ ce equipment At Cost Accumulated depreciation Total oﬃ ce equipment Medical equipment At Cost Accumulated depreciation Total medical equipment Computers At Cost Accumulated depreciation Total computers Furniture and ﬁ ttings At cost Accumulated depreciation Total furniture and ﬁ ttings Renovations At cost Accumulated depreciation Total Renovations Total plant and equipment 61 Oﬃ ce equipment Medical equipment Computers Furniture and ﬁ ttings Renovations Total S$ S$ S$ S$ S$ S$ a.(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428)(cid:428) Movements in Carrying Amounts Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current ﬁ nancial year. Consolidated Group Balance at 31 August 2013 Additions Disposals Depreciation expense Carrying amount at 31 August 2014 Balance at 31 August 2012 Additions Depreciation expense Carrying amount at 31 August 2013 1,968 197,836 63,041 238 330,980 594,063 3,660 6,063 56,195 - - (6,282) - - - - 65,918 (6,282) (1,089) (67,371) (31,742) (238) (84,910) (185,350) 4,539 136,528 81,212 - 246,070 468,349 4,126 165,805 60,708 2,897 51,029 284,565 - 90,395 26,961 - 335,362 452,718 (2,158) (58,364) (24,628) (2,659) (55,411) (143,220) 1,968 197,836 63,041 238 330,980 594,063 Included in medical equipment is medical equipment under ﬁ nance lease arrangement amounting to S$66,867 (2013 : S$114,067). Finance lease liabilities (see note 19) are secured by the related assets held under ﬁ nance leases. 16(cid:428) Intangible Assets Total Intangible Assets Goodwill Cost Accumulated impairment losses Closing carrying value at the end of the year Reconciliation of Goodwill Balance at the beginning of year Additions Disposals Impairment losses Consolidated Group 2014 S$ 2013 S$ 266,123 266,123 - - 266,123 266,123 266,123 266,123 - - - - - - Closing carrying value at the end of the year (cid:428) 266,123 266,123 15(cid:428) Plant and Equipment cont’d 62 NOTES TO THE FINANCIAL STATEMENTS Impairment test for goodwill Goodwill is allocated to cash generating units (CGU’s) according to applicable business operations. There is no impairment loss in the current period and prior year. In the prior ﬁ nancial years, AAMG had one cash generating unit which is the liver segment. However, in the current ﬁ nancial year, the liver segment incurred a loss. The Management is of the view that the quantum of the loss for the current ﬁ nancial year is irregular and expects to see an improvement in the revenue in the next ﬁ nancial year which will in turn improve the segment’s proﬁ tability going forward. The recoverable amount of a CGU is based on value-in-use calculations. These calculations are based on projected cash ﬂ ows approved by management covering a period not exceeding ﬁ ve years. Management’s determination of cash ﬂ ow projections and gross margins are based on past performance and its expectation for the future. The present value of future cash ﬂ ows has been calculated using a discount rate of 10% (2013 : 7%) and a growth rate of 5% (2013 : 10%) per annum to determine value-in-use. No impairment loss was required for the carrying value of goodwill as the recoverable amount was assessed to be in excess of its carrying value. The directors believe that any reasonable change in the key assumptions will not materially cause the recoverable value of the CGU to be lower than the carrying amount. 17(cid:428) Trade and Other Payables Current Trade payables Patients’ deposits Provision for employee beneﬁ ts Sundry payables and accrued expenses Consolidated Group 2014 S$ 2013 S$ 1,701,622 393,880 213,504 616,478 3,431,120 70,159 258,723 447,916 Total current trade and other payables (cid:428) 2,925,484 4,207,918 The provision for employee beneﬁ ts relates to the provision for cash bonus to employees for the period from January to August 2014 (2013 : January to August 2013) and is payable by December 2014 (2013 : December 2013). 18(cid:428)(cid:428)(cid:428)Taxation Current assets Income tax refundable Current liabilities(cid:428) Income tax payable(cid:428) Non-current (cid:428) Consolidated Group 2014 S$ 2013 S$ 17,000 - - 141,028 1 September 2013 Recognised in proﬁ t or loss 31 August 2014 Deferred tax assets/(liabilities): S$ S$ S$ Tax allowances relating to plant & equipment Net deferred tax asset/(liability) (17,645) (17,645) 17,645 17,645 - - (cid:428) 1 September 2012 Recognised in proﬁ t or loss 31 August 2013 Deferred tax liabilities: S$ S$ S$ Tax allowances relating to plant & equipment Net deferred tax liability(cid:428) (38,492) (38,492) 20,847 20,847 (17,645) (17,645) 63 19 Finance Lease Current Non-current 20(cid:428) Issued Capital Opening share balance Shares issued during the year Transaction cost Total capital (cid:428) Consolidated Group 2014 S$ 2013 S$ 29,580 - 29,580 49,059 29,580 78,639 Consolidated Group 2014 S$ 2013 S$ 4,267,495 266,133 - - 4,063,745 (62,383) (cid:428) 4,267,495 4,267,495 Changes to the then Corporation Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, the parent entity does not have a limited amount of authorised capital and issued shares do not have a par value. a. Ordinary Shares At the beginning of reporting year Shares issued during year At reporting date Consolidated Group 2014 Number of shares 2013 Number of shares 209,453,754 188,453,754 - 21,000,000 (cid:428) 209,453,754 209,453,754 Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. In April 2013, the Company issued 21,000,000 new ordinary shares at A$0.17 per share for A$3,570,000 (S$4,063,745 at exchange rate of A$1 : S$1.138) before transaction cost, which are fully paid. b.(cid:428)(cid:428)(cid:428)(cid:428)Capital Management Management controls the capital of the Group in order to provide shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. Currently the Group’s debt relates to ﬁ nance lease only. There are no externally imposed capital requirements. There have been no changes in the strategy adopted by management to control the capital during the year. 64 NOTES TO THE FINANCIAL STATEMENTS 21(cid:428) Reserves Nature and purpose of reserve a. (i) Share-based payments The share-based payments reserve is used to recognise: • At grant date of the fair value of options issued to employees but not exercised • At grant date the fair value of shares issued to employees • The issue of shares held by the AAMG Employee Share Trust to employees (ii) Foreign currency translation Exchange diﬀ erence arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note 2(k) and accumulated in a separate reserve within equity. The cumulative amount is reclassiﬁ ed to proﬁ t or loss when the net investment is disposed of. b. Movements in reserves (i) Employee Share option reserve Beginning of ﬁ nancial year Employee share option – value of employee services (Note 5) End of ﬁ nancial year (ii) Foreign Currency Translation reserve Beginning of ﬁ nancial year Net currency translation diﬀ erence of ﬁ nancial statements of foreign subsidiaries End of ﬁ nancial year Total as at the end of ﬁ nancial year Consolidated Group 2014 S$ 2013 S$ 64,009 8,170 72,179 40,896 23,113 64,009 5,983 26,679 100,023 (20,696) 106,006 178,185 5,983 69,992 65 22(cid:428) Share-Based Payments i. On 23 November 2009, the shareholders of AAMG approved the establishment of the AAMG Employee Share Option Plan and the rules that govern the operation of the Plan. Minor amendments to the Rules have been approved by shareholders at the Annual General Meeting since. The options are granted under the Plan for no consideration and hold no voting or dividend rights and are not transferable. On 17 January 2011, 1,299,000 share options were granted to certain key management personnel under the Plan to take up ordinary shares at an exercise price of A$0.088 each. The options are exercisable on or before 17 January 2016. ii. Options granted to key management personnel are as follows: Grant Date 17 January 2011 Number 1,299,000 These options vest over a 3-year period and are subject to service conditions such that only a third of the options granted may be exercised on or after the ﬁ rst, second and third anniversary of the grant. Options expire at the earlier of termination of employment or ﬁ ve years after the grant date. Further details of these options are provided in the Directors’ report. The options lapse when a KMP ceases their employment with the Group. During the ﬁ nancial year, 434,000 options were vested with key management personnel (2013 : 433,000). iii. The Company established the AAMG Employee Share Option Plan as a long-term incentive scheme to recognise talent and motivate executives to strive for Group performance. Employees are granted options which vest over 3 years, subject to meeting speciﬁ ed service criteria. The options are issued for no consideration and carry no entitlements to voting rights or dividends of the Group but have been listed. The number available to be granted is determined by the Nomination and Remuneration Committee and is based on performance measures including growth in shareholder return, return on equity, cash earnings, and group EPS growth. Options are forfeited 30 days after the holder ceases to be employed by the Group, unless the Board determines otherwise (this is usually only in the case of retirement, redundancy, death or disablement). The options are issued with an exercise price determined by the Nomination and Remuneration Committee to be either: (a) a price equal to the Market Price or such higher price as may be determined by the Committee in its absolute discretion; or (b) a price which is set at a discount to the Market Price, the quantum of such discount to be determined by the Committee in its absolute discretion, provided that the maximum discount which may be given in respect of any Option shall not exceed twenty (20) per cent of the Market Price in respect of the that Option. The Market Price is deﬁ ned as the weighted average closing sale price of the shares recorded on the Australian Securities Exchange (“ASX”) over the last 5 trading days on which sales of the shares were recorded preceding the day on which the Committee resolves to invite the application for an Option. A summary of the movements of all Company options issues is as follows: Options outstanding as at 31 August 2013 1,299,000 A$0.088 Number Weighted average exercise price Granted Forfeited Exercised Expired - - - - - - Options outstanding as at 31 August 2014 1,299,000 A$0.088 Options exercisable as at 31 August 2014: Options exercisable as at 31 August 2013: 1,299,000 865,000 A$0.088 A$0.088 66 NOTES TO THE FINANCIAL STATEMENTS The weighted average remaining contractual life of options outstanding at year end was 1.4 years. The exercise price of outstanding shares at the end of the reporting year was A$0.088. The fair values of options granted were determined using a variation of the binomial option pricing model that takes into account factors speciﬁ c to the share incentive plans, such as the vesting period. The total shareholder return performance condition related to the Scheme, being a market condition, has been incorporated into the measurement by means of actuarial modelling. The following principal assumptions were used in the valuation: Grant date Vesting period ends Share price at date of grant Volatility Option life Dividend yield Risk free investment rate Fair value at grant date Exercise price at date of grant Exercisable from / to 17 January 2011 17 January 2014 A$0.12 69% 5 years 5.830% 2.875% A$0.04 A$0.088 17 January 2012- 17 January 2016 Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future movements. The life of the options is based on the historical exercise patterns, which may not eventuate in the future. 23(cid:428) Controlled Entities a.(cid:428)(cid:428) Controlled entities consolidated (cid:428) Country of incorporation Principle activities (cid:428) Asian American Medical Group Limited Australia Investment holding Percentage owned (%) 2014 100 2013 100 Subsidiary of Asian American Medical Group Limited: Asian American Medical Group Inc. Subsidiary of Asian American Medical Group Inc. Asian American Liver Centre Pte. Ltd. (formerly known as Asian Centre for Liver Diseases & Transplantation Pte. Ltd.) British Virgin Islands Investment holding 100 100 Singapore Liver specialist clinic 100 100 Asian American Blood & Marrow Transplant Centre Pte. Ltd. (formerly known as Asian Centre for Blood & Bone Marrow Transplantation Pte. Ltd.) Singapore Asian American Medical Group Pte. Ltd. Singapore Blood diseases specialist clinic Management and consultancy 100 100 100 100 Associate of Asian American Liver Centre Pte. Ltd. : Asian Liver Centre Co. Ltd Vietnam Liver specialist clinic PT. Asian Liver Center Indonesia Indonesia Dormant - 50 30 50 b.(cid:428)(cid:428)Acquisition of controlled entities On 1 March 2013, Asian American Medical Group Inc., a subsidiary of Asian American Medical Group Ltd, incorporated a fully owned subsidiary called Asian American Medical Group Pte Ltd, a limited liability company in Singapore with an intended activity of providing management and consultancy services in the healthcare industry. c.(cid:428)(cid:428)Disposal of associate On 1 July 2014, Asian American Liver Centre Pte. Ltd. (“AALC”) disposed of its entire 30% interest in Asian Liver Centre Co. Limited (“ALCVN”). As a result of this ALCVN has ceased to be an associate of the Group. 67 24(cid:428) Commitments Operating leases Non-cancellable operating leases contracted for but not capitalised in the ﬁ nancial statements: Payable – minimum lease payments Not longer than 1 year Longer than 1 year but not longer than 5 years Consolidated Group 2014 S$ 2013 S$ 213,000 106,500 319,500 587,423 319,501 906,924 One of the leases for the Group’s oﬃ ce premises at Gleneagles Hospital expired in June 2014 and there have been no subsequent renewal as of the release of these ﬁ nancial statements. The other clinic space lease will expire in February 2016. Finance leases Future minimum ﬁ nance lease payments at the end of each reporting period under review were as follows: Minimum lease payments due Within 1 year S$ 1 to 5 years S$ After 5 years S$ Total S$ 29,975 (395) 29,580 - - - 51,348 29,975 (2,289) (395) 49,059 29,580 - - - - - - 29,975 (395) 29,580 81,323 (2,684) 78,639 31 August 2014 Lease payments Finance charges Net present values 31 August 2013 Lease payments Finance charges Net present values Capital Commitments Capital expenditures contracted for at the reporting date but not recognised in the ﬁ nancial statements amounting to S$25,006 (US$20,000) is in respect of investment of 20% shares in a joint venture company in Myanmar. The Myanmar joint venture company is in the process of incorporation subsequent to year end and upon completion of the incorporation; the investment commitment will be payable. There is no other capital commitment as at reporting date. 68 NOTES TO THE FINANCIAL STATEMENTS 25(cid:428) Cash Flow Information a(cid:428)(cid:428)(cid:428)(cid:428)Reconciliation of cash ﬂ ow from operations with (loss)/proﬁ t after income tax Consolidated Group 2014 S$ 2013 S$ (Loss)/Proﬁ t after income tax Non cash ﬂ ows in (loss)/proﬁ t: Depreciation and amortisation Foreign currency translation Employee share option cost Finance income Finance cost Loss from disposal of ﬁ xed assets Related party loan written oﬀ Changes in assets and liabilities: Decrease in trade and other receivables Increase in inventories Decrease in trade and other payables Decrease in deferred and current tax liabilities (2,493,132) 231,423 185,350 30,018 8,170 143,220 (8,893) 23,113 (76,187) (33,980) 3,943 6,281 300,765 1,706,289 (30,622) 4,326 - - 816,137 (56,216) (1,282,434) (347,882) (175,673) (407,784) Net cash (used in)/provided by operating activities (1,817,232) 363,464 26(cid:428) Events After the Balance Date No other matters or circumstances have arisen since the end of the ﬁ nancial year which signiﬁ cantly aﬀ ected or may signiﬁ cantly aﬀ ect the operations of the Group, the results of those operations, or the state of aﬀ airs of the Group in future ﬁ nancial years. 69 27(cid:428) Related Party The Group’s related parties include its associates and joint venture, KMP and post-employment beneﬁ t plans for the Group’s employees. Balances and transactions between the Company and its subsidiaries, which are related to the Company and set out in note 23, have been eliminated on consolidation and are not disclosed in this note. Disclosures relating to KMP are set out in the Remuneration Report. Related party balances Non-current assets: Balance with related party 2014 S$ 2013 S$ - 320,765 The balance due from related party represents non-trade amount due from Asian Liver Centre Co. Ltd (“ALCVN”) and is unsecured, interest-free and has no ﬁ xed repayment terms as disclosed in note 13. During the year, the amount of S$320,765 was written oﬀ to the Proﬁ t or Loss but subsequently S$53,738 was recovered, resulting in a net write-oﬀ of S$267,027. The write oﬀ was due to the sale of the Group’s entire stake in ALCVN to a third party during the year. The amount due from ALCVN was a result of loans to and payments made of behalf of ALCVN for initial working capital, purchase of assets and construction cost. 70 NOTES TO THE FINANCIAL STATEMENTS 28 Operating Segments AASB 8 requires operating segments to be identiﬁ ed on the basis of internal reports about components of the Consolidated Group that are regularly reviewed by the chief operating decision maker, the Board of Directors (chief operating decision makers), in order to allocate resources to the segment and to assess its performance. The Consolidated Group has identiﬁ ed its operating segments to be as follows based on distinct operational activities: (i) (ii) Provision of medical consultation and services in the hepatology and related ﬁ elds; and Provision of medical consultation and services in the haematology and related ﬁ elds. This is the basis on which internal reports are provided to the Board of Directors for assessing performance and determining the allocation of resources within the Consolidated Group. Unless stated otherwise, all amounts reported to the Board of Directors, being the chief decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual ﬁ nancial statements of the group. The Consolidated Group operates primarily in two businesses, namely the provision of medical consultation and services in the hepatology and haematology and their related ﬁ eld. Details of the performance of each of these operating segments for the ﬁ nancial years ended 31 August 2014 and 31 August 2013 are set out below: (i) Segment Performance 31 August 2014 External sales revenue Inter segment sales Total segment revenue Unallocated items Total Group revenue Liver S$ Blood & Bone Marrow S$ Total S$ 12,305,073 3,896,637 16,201,710 38,538 - 38,538 12,343,611 3,896,637 16,240,248 (38,538) 16,201,710 Segment net loss before tax (1,905,263) (221,651) (2,126,914) Unallocated items Total Group net loss before tax (417,727) (2,544,641) 31 August 2013 External sales revenue Inter segment sales Total segment revenue Unallocated items Total Group revenue Liver S$ 18,786,215 110,897 18,897,112 Blood & Bone Marrow S$ Total S$ 613,163 19,399,378 - 110,897 613,163 19,510,275 Segment net proﬁ t/(loss) before tax 1,086,045 (366,511) Unallocated items Total Group net loss before tax (110,897) 19,399,378 719,534 (388,246) 331,288 71 (ii) Segment assets 31 August 2014 Liver S$ Blood & Bone Marrow S$ Total S$ Segment assets 3,799,605 1,761,511 5,561,116 Reconciliation of segment assets to Group assets: Unallocated assets Total Group assets Segment asset increases in the year 2,672,601 8,233,717 Capital expenditure 59,365 6,553 65,918 31 August 2013 Segment assets Reconciliation of segment assets to Group assets: Unallocated assets Total Group assets Segment asset increases in the year Liver S$ Blood & Bone Marrow S$ Total S$ 10,035,347 1,159,315 11,194,662 1,150,002 12,344,664 Capital expenditure 56,282 396,436 452,718 Unallocated assets are mainly goodwill and cash balances in the holding company. (iii) Segment liabilities 31 August 2014 Liver S$ Blood & Bone Marrow S$ Total S$ Segment liabilities (2,104,018) (2,352,680) (4,456,698) Reconciliation of segment liabilities to Group liabilities: Unallocated liabilities Total Group liabilities 31 August 2013 1,501,634 (2,955,064) Liver S$ Blood & Bone Marrow S$ Total S$ Segment liabilities (4,476,056) (1,528,834) (6,004,890) Reconciliation of segment liabilities to Group liabilities: 28 Operating Segments cont’d Unallocated liabilities Total Group liabilities 1,559,660 (4,445,230) 72 NOTES TO THE FINANCIAL STATEMENTS (iv) Revenue by geographical location Revenue attributable to external customers is disclosed below, based on the location of where the revenue was derived: Consolidated Group 2014 S$ 2013 S$ Singapore Outside Singapore Total revenue (v) Assets by geographical location Assets by geographical location Australia Singapore Total assets 15,983,876 19,382,947 217,834 16,431 16,201,710 19,399,378 Consolidated Group 2014 S$ 2013 S$ 4,191,066 4,119,618 4,042,651 8,225,046 8,233,717 12,344,664 (vi) Major Customers The Group is not reliant on any one major customer to whom it provides its products or services. 28 Operating Segments cont’d 73 29(cid:428) Financial risk management policies The Group’s ﬁ nancial instruments consist mainly of cash at bank and accounts receivable and payable. The totals for each category of ﬁ nancial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to the ﬁ nancial statements, are as follows. Financial assets (cid:428)(cid:428)(cid:428)(cid:428)(cid:428)Cash and cash equivalents (cid:428)(cid:428)(cid:428)(cid:428)(cid:428)Trade and other receivables Total ﬁ nancial assets Financial liabilities Trade and other payables Finance lease Total ﬁ nancial liabilities Total net ﬁ nancial assets Consolidated Group 2014 S$ 2013 S$ 5,292,123 7,317,924 1,786,481 3,793,535 7,078,604 11,111,459 (2,925,484) (4,207,918) (29,580) (78,639) (2,955,064) (4,286,557) 4,123,540 6,824,902 Financial risk management policies The Board is responsible for monitoring and managing ﬁ nancial risk exposures of the Group. Speciﬁ c ﬁ nancial risk exposures and management The main risk the Group is exposed to include foreign exchange risk, credit risk, liquidity risk and treasury management risk. (a) Foreign exchange risk Exposure to foreign exchange risk may result in the fair value or future cash ﬂ ows of a ﬁ nancial instrument ﬂ uctuating due to movement in foreign exchange rates of currencies in which the Group holds ﬁ nancial instruments which are other than the functional currency of the Group which is the Singapore dollar. (i) Risk management The Group’s transactions are predominantly in it functional currency which is the Singapore dollar. The amount of asset and liability held in foreign currency is not considered material to the Group and hence does not hedge these asset or liability. (ii) Sensitivity analysis Foreign exchange risk A sensitivity analysis of the impact of foreign exchange risk is not shown as it is not considered material to the Group at the reporting date. 74 NOTES TO THE FINANCIAL STATEMENTS (b) Credit risk exposures Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The credit risk on ﬁ nancial assets of the entity which have been recognised in the statement of ﬁ nancial position, is the carrying amount, net of any provision of doubtful debts. Credit risk is managed through the maintenance of procedures which ensure to the extent possible, that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment. No receivables are considered past due or impaired. (c) Liquidity risk Liquidity risk arises from the possibility that the Group might encounter diﬃ culty in settling its debts or otherwise meeting its obligations related to ﬁ nancial liabilities. All ﬁ nancial assets and liabilities as disclosed above have maturities within one year for the 31 August 2014 ﬁ nancial year with the exception of the non-current other payables and non-current portion of the ﬁ nance lease. The Group manages liquidity risk by monitoring forecast cash ﬂ ows. (d) Treasury risk management The Board meets on a regular basis to analyse ﬁ nancial risk exposure and evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. The Board’s overall risk management strategy seeks to assist the Consolidated Group in meeting its ﬁ nancial targets, whilst maintaining the eﬀ ects on ﬁ nancial performance. Risk is also minimised through investing surplus funds in ﬁ nancial institutions that maintain a high credit rating or in entities that the Board has otherwise cleared as being ﬁ nancially sound. (e) Fair values of ﬁ nancial assets and liabilities Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants at the measurement date. The carrying values of ﬁ nancial instruments approximate their fair values. 75 30(cid:428) Parent Company Information Parent entity Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Total net assets Equity Issued capital Retained earnings Employee share option reserve Foreign currency revaluation reserve Total equity Financial performance (Loss)/Proﬁ t for the year Other comprehensive income Total comprehensive (loss)/income 2014 S$ 2013 S$ 4,191,066 4,119,618 1,154,029 2,803,557 5,345,095 6,923,175 (66,442) (160,422) - - (66,442) (160,422) 5,278,653 6,762,753 17,354,262 17,354,262 (12,162,267) (10,596,287) 72,180 14,478 64,010 (59,232) 5,278,653 6,762,753 (1,330,137) 975,774 73,710 124 (1,256,427) 975,898 Included in the loss for the year is S$1,649,528 write down of investment in subsidiary to the net asset of the Group and does not have an impact on the Group’s consolidated results for the current or prior year. The parent entity has no contingent liabilities, contractual commitments or guarantees in relation to its subsidiary entities. 76 NOTES TO THE FINANCIAL STATEMENTS 31(cid:428) Company Details The registered oﬃ ce of the Company is: 25 Peel Street Adelaide SA 5000 The principal place of business is: Asian American Medical Group 6A Napier Road, Gleneagles Hospital Annexe Block #02-37, Singapore 258500 Singapore centres: Asian American Liver Centre 6A Napier Road, Gleneagles Hospital Annexe Block #02-37, Singapore 258500 Asian American Blood & Marrow Transplant Centre 6A Napier Road, Gleneagles Hospital Annexe Block #05-36, Singapore 258500 Malaysia centre: iHEAL Medical Centre Level 7 & 8, Annexe Block, Menara IGB, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia 77 DIRECTORS’ DECLARATION The directors of Company declare that: (a) the ﬁ nancial statements and notes, as set out on pages 41 to 77, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the ﬁ nancial position as at 31 August 2014 and of the performance for the year ended on that date of the Consolidated Group; and complying with Accounting Standards. (ii) (b) (c) (d) the Executive Director and Group Chief Financial Oﬃ cer have declared that: (i) the ﬁ nancial records of the Company for the ﬁ nancial year have been properly maintained in accordance with s286 of the Corporations Act 2001; The ﬁ nancial statements and notes for the ﬁ nancial year comply with the Accounting Standards; and The ﬁ nancial statements and notes for the ﬁ nancial year give a true and fair view. (ii) (iii) 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. complying with International Financial Reporting Standards as disclosed in Note 2 to the ﬁ nancial statements; This declaration is made in accordance with a resolution of the Board of Directors. Dato’ Dr Kai Chah Tan Director 3 November 2014 78 Level 1, 67 Greenhill Rd Wayville SA 5034 Correspondence to: GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E info.sa@au.gt.com W www.grantthornton.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASIAN AMERCIAN MEDICAL GROUP LIMITED REPORT ON THE FINANCIAL REPORT We have audited the accompanying ﬁ nancial report of Asian American Medical Group Limited (the “Company”), which comprises the consolidated statement of ﬁ nancial position as at 31 August 2014, the consolidated statement of proﬁ t or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash ﬂ ows for the year then ended, notes comprising a summary of signiﬁ cant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the ﬁ nancial year. Directors’ responsibility for the ﬁ nancial report The Directors of the Company are responsible for the preparation of the ﬁ nancial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001. The Directors’ responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the ﬁ nancial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the ﬁ nancial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the ﬁ nancial statements comply with International Financial Reporting Standards. Auditor’s responsibility Our responsibility is to express an opinion on the ﬁ nancial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the ﬁ nancial report is free from material misstatement. Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member ﬁ rms provide assurance, tax and advisory services to their clients and/ or refers to one or more member ﬁ rms, as the context requires. Grant Thornton Australia Ltd is a member ﬁ rm of Grant Thornton International Ltd (GTIL). GTIL and the member ﬁ rms are not a worldwide partnership. GTIL and each member ﬁ rm is a separate legal entity. Services are delivered by the member ﬁ rms. GTIL does not provide services to clients. GTIL and its member ﬁ rms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies. 79 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the ﬁ nancial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the ﬁ nancial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the ﬁ nancial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eﬀ ectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the ﬁ nancial report. We believe that the audit evidence we have obtained is suﬃ cient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s opinion In our opinion: a the ﬁ nancial report of Asian American Medical Group Limited is in accordance with the Corporations Act 2001, including: i giving a true and fair view of the consolidated entity’s ﬁ nancial position as at 31 August 2014 and of its performance for the year ended on that date; and ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and b the ﬁ nancial report also complies with International Financial Reporting Standards as disclosed in the notes to the ﬁ nancial statements. Report on the remuneration report We have audited the remuneration report included in the directors’ report for the year ended 31 August 2014. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. 80 Auditor’s opinion on the remuneration report In our opinion, the remuneration report of Asian American Medical Group Limited for the year ended 31 August 2014, complies with section 300A of the Corporations Act 2001. GRANT THORNTON AUDIT PTY LTD Chartered Accountants S J Gray Director – Audit & Assurance Adelaide, 3 November 2014 81 SHAREHOLDER INFORMATION The shareholder information set out below was applicable as at 24 October 2014. A. Distribution of holders of equity securities 1 - 1,000 1,001 5,001 10,001 - - - 5,000 10,000 100,000 100,001 and over Ordinary Shares Employee Options 156 59 52 79 38 384 - - - - 2 2 There were 223 holders of less than marketable parcel of ordinary shares. The percentage of the total holdings of the twenty largest holders of ordinary shares was 97.03 per cent. 82 B. Equity security holders The names of the twenty largest holders of quoted equity securities are listed below: Name Number held Percentage Ordinary shares Dato' Dr Kai Chah Tan HSBC Custody Nominees (Australia) Limited Ms Pamela Anne Jenkins Citicorp Nominees Pty Limited Russing Med Holdings Pte Ltd Mr Wing Kwan Teh Dr Kang Hoe Lee Mr Robert John Wood & Mrs Stella Agnes Wood (Bob & Stella Wood S/F A/C) Mrs Anjana Nandha Mr Ravindran Govindan Mr Harry Vui Khiun Lee UOB Kay Hian Private Limited (Client A/C) DBS Vickers Securities (Singapore) Pte Ltd (Client A/C) Mr John Philip Joshua Mr Barry William Quaill & Mrs Pamela Louise Quaill (BW&PLQUAILL Investment A/C) Mr Boon Hwa Koh Arabesque Unit Trust Pty Ltd Mr Mohan Singh Nandha Mr Amitoze Nandha Mr Peter Roy Boettcher & Mrs Madonna Mary Boettcher (Boettcher Superfund A/C) 102,298,250 25,301,094 21,324,600 21,314,948 21,000,000 4,084,090 2,500,040 1,140,415 700,000 699,483 561,915 412,391 354,599 245,000 236,800 220,000 217,400 215,000 213,500 200,000 48.84 12.08 10.18 10.18 10.03 1.95 1.19 0.54 0.33 0.33 0.27 0.20 0.17 0.12 0.11 0.11 0.10 0.10 0.10 0.10 83 C. Substantial holders Substantial holders in the company are set out below: Ordinary shareholders Dato' Dr Kai Chah Tan HSBC Custody Nominees (Australia) Limited Ms Pamela Anne Jenkins Citicorp Nominees Pty Limited Russing Med Holdings Pte Ltd D. Voting rights Please refer note 20. E. On-market buy back There are no current on-market buy back. Number held 102,298,250 25,301,094 21,324,600 21,314,948 21,000,000 Percentage 48.84 12.08 10.18 10.18 10.03 84 NOTES TO THE FINANCIAL STATEMENTS 85 Asian American Medical Group Limited www.aamg.co In collaboration with UPMC 6A Napier Road, Gleneagles Hospital Annexe Block #02-37 Singapore 258500 T (65) 6476 2088 F (65) 6476 3088 E enquiry@aamg.co

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