F FORGING AHEAD AA Annual Report 2017 nAn For personal use only Dedicated to healing Powered by Innovation Asian American Medical Group Limited ABN NUMBER 42 091 559 125 Annual report for the year ended 31 August 2017 For personal use only For personal use only TABLE OF CONTENTS 03 Corporate directory 04 Corporate profile 06 Key milestones 08 Chairman’s message 10 Profile of Board of Directors 13 16 Profile of Doctors and Key Management Financial review 20 Corporate governance statement 26 Directors’ Report 35 Auditor’s Independence Declaration 37 Consolidated statement of profit or loss and other comprehensive income 38 Consolidated statement of financial position 39 Consolidated statements of changes in equity 40 Consolidated statement of cash flows 41 Notes to the financial statements 73 Directors’ Declaration 74 Independent Auditor’s Report 77 Shareholder information For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 CORPORATE DIRECTORY BOARD OF DIRECTORS Dato’ Dr Kai Chah Tan (Executive Chairman) Mr Evgeny Tugolukov (Non-Executive Director) Mr Kong Meng Ang (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) AUDIT COMMITTEE Mr Heng Boo Fong (Chairman) Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong NOMINATION AND REMUNERATION COMMITTEE Mr Heng Boo Fong (Chairman) Mr Paul Vui Yung Lee Mr Evgeny Tugolukov 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 3, 170 Frome Street Adelaide SA 5000 Tel: +61 8 8372 6666 Fax: +61 8 8372 6677 BANKERS DBS Bank Ltd 12 Marina Boulevard DBS Asia Central, Marina Bay Financial Centre Tower 3 Singapore 018982 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 03 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 04 CORPORATE PROFILE Asian American Medical Group Limited (“AAMG” or the “Group”), based in Singapore, has been listed on the Australian Securities Exchange (“ASX”) since September 2009. The Group’s operations include the Asian American Liver Centre Pte Ltd (“AALC”), established 1994 in Singapore, and Asian American Radiation & Oncology Pte Ltd (“AARO”), established in 2015. The Group entered into a strategic collaboration in October 2012 with US-based US$13-billion integrated global health enterprise University of Pittsburgh Medical Centre (“UPMC”). UPMC ranked No. 12 in the U.S. News & World Report Honor Roll of American’s Best Hospitals, is affiliated with the University of Pittsburgh Schools of the Health Sciences and is a pioneer in the field of transplantation. This collaboration has enhanced AAMG’s clinical capabilities through shared protocols, rigorous quality standards and technology and also created a platform for AAMG to expand into other countries in Asia such as Malaysia and Myanmar. AALC, one of Asia’s foremost liver centres, is led by renowned hepatobiliary expert and liver transplant surgeon, Dato’ Dr. Kai Chah Tan (“Dr. KC Tan”), who helped start the Liver Transplant Programme at King’s College Hospital in London, U.K., and pioneered the highly successful Living Donor Liver Transplantation (“LDLT”) Programme in Singapore. In 2014, AALC began conducting surgical procedures at iHEAL Medical Centre in Kuala Lumpur, Malaysia. AARO offers radiation oncology clinical, consultancy and management services and is spearheaded by Dr Daniel Yat Harn Tan. Based in Singapore, AARO will drive expansion into the growing radiotherapy and oncology segment in the overseas market, at a time where there is a shortage of modern radiotherapy treatment centres. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 OUR VISION To develop AAMG into an international healthcare brand through organic growth and geographical expansion. OUR MISSION To deliver excellent multi-disciplinary medical care through clinical excellence, technological innovation and patient-centric care. OUR VALUES Excellence We always strive to excel and take pride in all that we do. Innovation We practise the most up-to-date clinical techniques, employ the latest technology and keep abreast of advancements in medical treatment. Integrity Honesty and integrity are fundamental to our organisation. We take pride in our ethical conduct and comply strictly with legal requirements. 05 Transparency We carefully communicate to our patients what their care will entail so that they clearly understand the medical process. We regularly publish and present our clinical outcomes. Compassion Patients are our top priority, and we work hard to meet their diverse needs. Empathy and compassion are integral to our mission to provide the best quality care. KEY BUSINESS SEGMENTS LIVER RADIATION ONCOLOGY AAMG’s liver segment operates under AALC and is headquartered at Gleneagles Hospital in Singapore. Today, AALC is one of Asia’s foremost liver centres dedicated to the treatment of all liver, pancreas and bile duct diseases in adults and children, and has expanded to Malaysia and Myanmar. is a AARO sub-specialised radiation oncology division of AAMG. AARO provides radiation therapy treatment as well as management advisory services to radiation oncology units is currently focused on expanding across Singapore, Myanmar and has a collaboration agreements in Russia. in Asia. and It HEALTHCARE MANAGEMENT AND CONSULTANCY experience, Leveraging on the rich pool of knowledge and network of AAMG’s key management team, the Group’s healthcare management and consultancy segment aims to source and identify potential healthcare-related projects that AAMG can participate in. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 KEY MILESTONES 1990 - 1997 1990 1991 1992 1993 1994 1995 1997 The world’s fi rst heart-and-liver transplant performed by Dr KC Tan and Professor Sir Magdi Yacoub. First split-liver transplant in the United Kingdom (“UK”) by Dr KC Tan. First auxiliary liver transplant for liver failure in the UK by Dr KC Tan. First paediatric living donor liver transplant (“LDLT”) in the U.K. and Second auxiliary liver transplant for metabolic disease in the world by Dr KC Tan. AALC, formerly known as Asian Centre for Liver Diseases & Transplantation (”ACLDT”), is established. First paediatric LDLT in Southeast Asia. Second split-liver transplant in Asia. 06 2002 2004 - 2006 2007 2009 2010 2011 2012 2013 33333333333333333333333333 2000022 - 2013 2 First successful adult LDLT in Southeast Asia. Performed fi rst liver transplants for patients from Pakistan, Sri Lanka, Myanmar, Bangladesh and The United Arab Emirates in our centre. Successfully performed the 100th LDLT. Listed on the Australian Securities Exchange (“ASX”), stock code AJJ. First healthcare company in Singapore to use remote patient monitoring devices for the Intensive Care Unit. Established its fi rst satellite clinic, which incorporated telemedicine services, in Ho Chi Minh City, Vietnam. Entered into a Management Services Agreement with Parkway Hospitals to co-manage Gleneagles Hospital’s liver diseases clinical program. Signed Service Agreement with UPMC, a top Global Healthcare Enterprise based in Pittsburgh, U.S. Successfully performed the 200th LDLT. Signed Consultancy Agreement with iHEAL Medical Services to practise at iHEAL Medical Centre in Kuala Lumpur, Malaysia. Established Haematopoietic Stem Cell Transplant centre which off ers treatment for other blood related diseases. Signed Service Agreement with Vinmec International Hospital to set up a liver clinic in Hanoi, Vietnam. Successful placement of 21,000,000 new shares to RusSing Med Holdings. Creation of new brand and corporate identity, renamed Asian American Medical Group (“AAMG”). For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 2014 2014 Signed a Joint Venture agreement with Pinlon Hospital and 30th Street Clinic in Yangon, Myanmar to establish the fi rst premier liver centre based in Pinlon Hospital to provide treatment for liver diseases. 07 0152 2015 - 2017 2015 Successful placement of 30,000,000 new shares to a group of sophisticated investors. Set up a Radiation Oncology division, Asian American Radiation Oncology Pte Ltd (“AARO”), led by Dr Daniel Yat Harn Tan. Entered into Agreement with Rich Tree Land to provide Consultancy Services as Project Lead Manager for proposed Zhuhai-Singapore Life Science Park in Zhuhai, China. Entered into a Conditional Sale and Purchase agreement to acquire 60% of Rich Tree Land for S$19.6 million. Signed a Memorandum of Understanding (“MOU”) between AARO and Hwa Koon Engineering, a specialist contractor in the healthcare industry, focusing on turnkey project design and building services with expertise in radiation shielding and bunker construction to explore collaborations in Asia. 2016 Successful placement of 57,000,000 new shares to a group of sophisticated investors. Opened the Pinlon Gastrointestinal & Liver Centre (“PGLC”) in Yangon, Myanmar. Signed a Services Agreement between AARO and Japan’s Jisenkai Medical Corporation Aizawa Hospital, following an earlier MOU. Signed a Collaboration Agreement with the Tunku Laksamana Johor Cancer Foundation to jointly assess the feasibility of setting up a cancer research and treatment centre in Johor, Malaysia. 2017 Partnered Golden Land United Health Group Company Limited to explore healthcare opportunities in Myanmar through Gold Bell Asia American Healthcare Ventures Co., Ltd. Signed a joint venture agreement with Grand Hantha Company Limited through Gold Bell Asia American Healthcare Ventures Co., Ltd to provide clinical services to Grand Hantha International Hospital. Entered into a Services Agreement with Hippocrates Development Sdn Bhd (“HDSB”), to provide advice and project leadership for HDSB’s development of a premium cancer treatment centre in Johor, Malaysia. Entered into a conditional agreement to subscribe for 19,408,163 new shares or 95.1% in HDSB, subject to shareholders’ approval at the annual general meeting. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 CHAIRMAN’S MESSAGE Dear Shareholders, On behalf of the Board of Directors of Asian American Medical Group (“AAMG” or the “Group”), I am pleased to present our annual report for the year ended 31 August 2017 (“FY2017”). Radiation Oncology The Group’s subsidiary AARO, established in 2015, has grown steadily under the leadership of Dr. Daniel Yat Harn Tan. Shareholders will recall that this division, a signifi cant pillar of our expansion strategy, was established in partnership with UPMC (ranked among the top 12 U.S. hospital groups). During the year AARO provided radiation oncology- related clinical services to 373 patients (FY2016: 173). Beyond Singapore, the AARO team also provides management and advisory services in Myanmar and Russia. AARO’s revenue grew 84.1% or S$0.9 million to S$2.0 million (FY2016: S$1.1 million). Net Profi t rose to S$0.2 million in FY2017 (FY2016: S$4,000). During the year, Dr. Jonathan Yi Hui Teh joined AARO as Consultant, after a decade’s experience with the National Cancer Centre Singapore. Dato’ Dr Kai Chah Tan Executive Chairman 08 BUSINESS REVIEW Over the past few years, I have shared with you the challenges of the healthcare sector, especially in the context of AAMG. These include rising costs and competition from emerging healthcare operations in the region. Coupled with the relative weakness of some regional currencies (compared to the Singapore dollar) this has meant slower traffi c in our main medical specialisation – that of world-class liver treatment at our centre located at Gleneagles Hospital in Singapore. Our strategic response in the last few years has been to increase our areas of specialisation – starting with radiation oncology – and establish more collaboration to widen our footprint. I am pleased to report that this strategy gained signifi cant momentum in the year under review. FINANCIAL PERFORMANCE Liver Segment The Group’s wholly owned AALC – the major revenue driver – successfully carried out six LDLTs, seven fewer than a year earlier. Nevertheless, cases of liver dialysis performed increased by 63.9% from FY2016. This suggests that while the overall cost of LDLT – including associated healthcare – in Singapore is proving to be a challenge for patients, AALC has a strong brand for dialysis treatment and potential for further growth. Patient fl ow for AALC declined 15.6% to 6,530 in FY2017 from 7,733 in FY2016. Sales of medication and professional consultation fees decreased by 29.3% and 16.7%, respectively. Accordingly, AALC’s revenue declined 15.9% or S$2.5 million from S$15.7 million to S$13.2 million for the year. AALC accounted for 86.9% (2016: 91.6%) of the Group’s overall revenue. During the year we re-allocated S$1.3 million payroll cost to the Management and Consultancy Segment to better refl ect our accounting of human capital resources. As a result, employment expense for this segment reduced by S$1.7 million. We also recorded S$0.4 million savings by reducing the number of doctors to two from three previously. Net Loss Before Tax for this segment narrowed to S$0.6 million in FY2017 (FY2016: S$1.0 million). The Net Loss After Tax (including an income tax expense of $0.2 million due to the reversal of deferred tax benefi t in FY2016) was S$0.8 million, unchanged from FY2016. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 In relation to the cancer treatment center, we announced the Subscription Agreement on 20 October 2017 under which Million Health Ventures Pte. Ltd., a wholly-owned AAMG subsidiary, has agreed to subscribe for 19,408,163 new RM1.00 ordinary shares in HDSB, representing 95.1% of the HDSB’s enlarged share capital. The payment will be satisfi ed by cash payment of RM5,606,963 and issue of 40 million new AAMG shares at AUD0.105 (approximately RM13,801,200). This development is highly signifi cant and will require approval from shareholders at our upcoming Annual General Meeting. After you approve, we intend to engage with property developers and explore fundraising options to develop this project. For shareholders, the signifi cance is that the cancer centre will open up a major new dimension of growth for AAMG. The potential is signifi cant as this project is very close to Singapore, will involve renowned international partners such as UPMC, and is conceived to be a world-class institution serving Johoreans, Malaysians as well as patients from the region. I am indeed proud of the speed and dedication of our team in concluding these highly signifi cant agreements within a single year. I believe these projects will lead to more exciting regional expansion opportunities in the years to come. On behalf of the Board, I wish to express my heartfelt appreciation to so many people who have made FY2017 a signifi cant year – our patients, partners, and the management and staff who have been kept busy. Most of all I want to thank you, our valued shareholders, for your patience and support. Our transformation has begun on a sound footing; let us all look forward to a better tomorrow. 09 Dato’ Dr Kai Chah Tan Executive Chairman Management and Consultancy Segment Over the past few years – to address the challenges outlined above and to leverage on our key management team’s network and experience – we have been building up this segment. The resulting partnership agreement in Myanmar was concluded at the end of FY2016, which contributed to our regional expansion (as I will elaborate later) in the year under review. In the absence of new major consulting engagements, this segment recorded revenue of S$30,000 compared S$0.4 million the previous year. As discussed above, a cost of S$1.3 million was re-allocated to this division from the Liver Segment. As a result, Other Operating Expenses under this arm increased to S$1.6 million (FY2016: S$0.8 million). This segment reported Net Loss of S$1.5 million in FY2017 (FY2016: Net Profi t of S$0.7 million). The Group recorded a Net Loss of S$3.0 million in FY2017 (FY2016: Net loss of S$2.1 million) which included a goodwill impairment of S$0.3 million. Group turnover declined 11.2% to S$15.2 million (FY2016: S$17.0 million). Due to the loss, intangible and deferred tax assets written-off , our shareholders’ funds declined to S$9.6 million from S$12.1 million over the comparative periods. EXPANSION STRATEGY To overcome the challenges outlined above, beyond growing AARO, we also accelerated our regional expansion in the year under review. Myanmar AAMG’s 51%-owned Gold Bell Healthcare Ventures Company Limited (in partnership with a subsidiary of the Lat War Group) formed a 50:50 joint venture with Grand Hantha Company Limited during the year under review. The latter is a Myanmar business group which operates the Grand Hantha International Hospital, one of the largest in the former capital city of Yangon. AAMG’s role is to provide services in areas such licensing, marketing, advice on equipment as procurement and personnel recruitment and training, to establish a dedicated liver centre, and improve the oncology department within the hospital. This expansion to Myanmar and partnership with this leading healthcare provider in the country of 55 million people is a signifi cant step in our regionalisation strategy. We look forward to more of such opportunities – for our Management and Consultancy division as well as for our two primary medical disciplines. Malaysia During the year under review, AAMG’s wholly owned Asian American Medical Group Pte. Ltd. (“AAMGPL”) entered into a Services Agreement with Hippocrates Development Sdn. Bhd. (“HDSB”). The services involve strategic planning, design and consultancy to develop the fi rst premium cancer treatment centre in Iskandar, in the southern Malaysian state of Johor. Under the Services Agreement, AAMGPL will receive fees of RM3.0 million based on milestone achievements over 12 months from 26 September 2017, and costs plus a 20% service fee on expenses and fees incurred by AAMGPL or third parties appointed for the project. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 PROFILE OF BOARD OF DIRECTORS Dato’ Dr Kai Chah Tan Executive Chairman D.P.M.P., MBBS (MAL), FRCS (EDIN), FAMS Mr Evgeny Tugolukov Non-Executive Director B Econ 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 Strongbow Investments Pte Ltd (“Strongbow”) which was founded to create more linkages between Russia and Singapore/ Southeast Asia to create new business visions and ideas as well as strengthen bilateral cultural communications. Mr Tugolukov has over 20 years of rich entrepreneurial background in various businesses. Under his management, several sizeable holdings were created, including one of Russia’s largest power machine-building 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. companies, Mr Tugolukov was appointed as Non-Executive Director of AAMG on 3 June 2013 and is also a member of the Nomination and Remuneration Committee. 10 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 Radiation & Oncology Pte Ltd (“AARO”) Asian American Medical Group Pte Ltd (“AAMGPL”), Million Health Ventures Pte Ltd (“MHV”) and Asian American Oncology Management Sdn Bhd (“AAOM”), all of which are subsidiaries of AAMG. Dr Tan is the Lead Surgeon (Hepatobiliary/Transplant) of AALC. Dr Tan graduated from the University of Malaya in 1978 before obtaining his Surgical Fellowship from the Royal College of Surgeons, Edinburgh in 1982. From 1984 to 1987, he received advanced training in paediatric surgery in Manchester and Southampton, 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. Pioneering various liver transplant procedures in the U.K. for both adults and paediatric patients from the fi rst ‘split-liver’ transplant and the fi rst auxiliary liver graft to fi ve liver-kidney and two heart-liver transplants. Dr Tan has received many accolades from his peers, patients and their families alike. Having completed more than 400 liver transplant procedures in the UK under his belt, Dr Tan set up his practice, the Asian Centre for Liver Diseases & in Gleneagles Hospital, Transplantation (“ACLDT”), Singapore in 1994. Dr Tan was also appointed the Director of the Liver Transplant Programme, National University Hospital (“NUH”), Singapore from 1995 to 2002. In April 2002, the fi rst successful adult-adult LDLT in Southeast Asia was performed in Gleneagles Hospital, Singapore. Dr Tan and his team have successfully performed more than 200 LDLTs – the only private centre in Southeast Asia to reach this historic 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 Mr Kong Meng Ang Non-Executive Director FCA (S’pore), FCCA (UK) Mr Heng Boo Fong Independent Non-Executive Director B Acc (Hons) Mr Kong Meng Ang is the founder and Partner at Ang & Co. PAC, an independent accounting and business advisory fi rm established in 1980 and has 40 years of experience in fi nance and accounting. Mr Heng Boo Fong is an Independent Non-Executive Director and is also the Chairman of the Audit Committee and Nomination and Remuneration Committee of AAMG. Mr Ang graduated from the University of Singapore (now known as the National University of Singapore, “NUS”) with a Bachelor of Accountancy in 1976. Mr Ang is a fellow and practising member of the Institute of Singapore Chartered Accountants (“ISCA”) and a fellow member of the Association of Chartered Certifi ed Accountants (United Kingdom) (“ACCA”). Mr Ang is also an accredited tax advisor (Income Tax, GST) from the Singapore Institute of Accredited Tax Professionals. Mr Ang Kong Meng was appointed as Non-Executive Director of AAMG on 22 February 2016. Mr Fong studied at the University of Singapore (now known as the National University of Singapore, “NUS”) and graduated in 1973 with an Honours Degree in Accountancy. He has over 43 years of working experience in auditing, fi nance, business development and corporate governance. 11 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 includes membership of Audit Committees of Statutory Boards and Advisory Committees of the School of Accountancy of Nanyang Technological University, Singapore and Ngee Ann Polytechnic, Singapore. Mr Fong was 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 the Institute of Singapore Chartered Accountants (“ISCA”)), and ICPAS awarded him a silver medal in 1999. Mr Fong is also presently an Independent Director of three companies listed on the SGX-ST, namely, Colex Holdings Limited, CapitaRetail China Trust Management Limited and Sapphire Corporation Limited. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 PROFILE OF BOARD OF DIRECTORS Mr Paul Vui Yung Lee Independent Non-Executive Director B Bus (MIS) Ms Jeslyn Jacques Wee Kian Leong Independent Non-Executive Director FCCA (UK) 12 Mr Paul Vui Yung Lee has over 20 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 diverse experience across a broad range of industries and international businesses that includes 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 is a member of the Nomination and Remuneration Committee and Audit Committee. Ms Jeslyn Leong is a Fellow of the Association of Chartered Certifi ed Accountants (United Kingdom) with 25 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 on Australian Securities Exchange, “ASX”), a leading Australian distributor and manufacturer of steel, tubes and pipes. In this role, she obtained extensive experience in manufacturing management. Ms Leong is a member of the Audit Committee. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 PROFILE OF DOCTORS AND KEY MANAGEMENT 13 Dr Kang Hoe Lee Respiratory Physician & Intensivist (Critical Care & Liver Transplant) MA (UK), MBBChir (UK), MRCP (UK), FRCP (EDIN), FAMS (SIN), EDIC (EUR) Dr Kang Hoe Lee graduated from University of Cambridge, UK. He was a scholar at Jesus College, Cambridge and a recipient of the Duckworth Prize. He also received support from Kuok Foundation, Malaysia for his medical studies. Dr Lee interned with Professor Sir Roy Calne at Addenbrooke’s Hospital and fi nished his general medicine training at Cambridge before coming to Singapore. In 1990, he joined the Department of Medicine at the National University Hospital (“NUH”), Singapore. Dr Lee completed his Fellowship in Critical Care Medicine at the UPMC in the USA from 1993 to 1995, and was awarded Fellow of the Year in 1994. From 1994 to 1995, Dr Lee performed research with Professor Michael Pinsky at UPMC on acute lung injury. On his return to Singapore, Dr Lee joined NUS as a Lecturer in Medicine and was promoted to Associate Professor. He was also the Medical Director of the ICU at NUH, where he started the liver dialysis programme in 2000. Dr Lee was with NUS until 2005 when he joined Gleneagles Hospital, Singapore as Director of the ICU. Since then, he has been working together with AALC. Dr Lee has expanded the liver dialysis programme to include other devices and also helped set up the dedicated liver ICU where he has been active in the management of liver failure and liver transplant patients. Dr Lee was one of the founding members of the Society of Intensive Care Medicine and was also a previous member of the Specialist Training Intensive Care Medicine and Committee Respiratory Medicine. for He has published extensively in the areas of critical care and liver transplant, and has also been involved in various research protocols together with scientists at NUS and A*STAR in Singapore. Dr Daniel Yat Harn Tan Radiation Oncologist & Medical Director (Stereotactic Radiosurgery (SRS/SBRT), Brain and Spine, Breast and Prostate Cancers MBBS (SIN), FRCR (Clinical Oncology, UK), FAMS (Radiation Oncology) Dr Daniel Yat Harn Tan is consultant radiation oncologist and medical director of AARO, the radiotherapy and oncology division of AAMG. Before joining AARO, he was consultant radiation oncologist at the National Cancer Centre Singapore (“NCCS”) and clinical lecturer at the Yong Loo Lin School of Medicine at NUS. His clinical interest is in stereotactic radiosurgery (“SRS”) and stereotactic body radiation therapy (“SBRT”), and he specialises in the management of the central nervous system, prostate and breast cancers. After completing his MBBS at the NUS in 2002, he went on to obtain the FRCR in Clinical Oncology in 2011 at the Royal College of Radiologists, U.K. He then underwent training with a focus on neuro-oncology at international premier centres, which included Proton Therapy at University of Pennsylvania’s Roberts Proton Therapy Center, USA, Spine Radiosurgery at Princess Margaret Hospital and Sunnybrook’s Odette Cancer Centre, Toronto, and Advanced Radiation Technologies at Tokyo Metropolitan Komagome Hospital in Japan. Together with his mentors, he was instrumental in the development of the Novalis Brain Stereotactic Radiosurgery Program at NCCS and subsequently developed the Novalis Spine Stereotactic Radiosurgery Program after his return from his Health Manpower Development Programme (“HMDP”) Award training. His research involves the application of SRS and SBRT in benign and malignant tumours of the brain and spine, as well as in oligometastatic and prostate cancers. His research have been presented at major international conferences, and he is frequently invited to lecture on these subjects in regional meetings. He has written and published on the topics of neuro-oncology, SRS and SBRT. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 PROFILE OF DOCTORS AND KEY MANAGEMENT Dr Jonathan Yi Hui Teh Radiation Oncologist MBBS (SIN), FRCR (Clinical Oncology, UK), FAMS (Radiation Oncology) Mr Cherinjit Kumar Shori Group Chief Operating Offi cer B Acc, PGDip Marketing & Healthcare Mr Cherinjit Kumar Shori has held the position of Group Chief Operating Offi cer at AAMG since 2009. He is responsible for the company’s marketing, business development and operations. Before joining AAMG, Mr Shori was the Group Vice President/Deputy Chief Marketing Offi cer for Parkway Pantai where he served for 10 years’ in strategic marketing, business development and regional expansion to increase the market share for its group of hospitals in Singapore. In total, Mr Shori has more than 20 years’ experience in the healthcare and hospitality industries covering business development and marketing in various companies including Sun Cruises and Sembawang Leisure (a subsidiary of Sembawang Corporation). He holds a Bachelor of Accountancy degree from the Nanyang Technological University in Singapore as well as an Graduate Diploma in Marketing from the Singapore Institute of Management and a Certifi cate in Healthcare Management from Georgetown University, U.S. Mr Shori has also been invited to speak at international conferences such as Internationale Tourismus-Börse Berlin (ITB Berlin) Conference, where he shared his experience in the future of global medical tourism. 14 Dr Jonathan Yi Hui Teh is a consultant radiation oncologist at AARO, the radiotherapy and oncology division of AAMG. Before to joining AARO, he was a consultant at NCCS, where he had served in various roles since 2006. He specialises in genitourinary and gastrointestinal cancers, as well as bone and soft tissue sarcomas and paediatric cancers. After completing his MBBS at NUS in 2002, Dr Teh commenced a Radiation Oncology residency at NCCS in 2007. He received the Singhealth HMDP Award for Advanced Training in Clinical Oncology in 2009 and was an Honorary Clinical Fellow in the University College Hospital London Oncology department from 2009 to 2011. He was also active in the London Sarcoma Service, providing patient care and participating in clinical trials. In 2011, he received the Fellowship of the Royal College of Radiologists (“FRCR UK”) in Clinical Oncology. Upon returning to Singapore, Dr Teh was admitted as a Fellow of the Academy of Medicine of Singapore’s (“FAMS”) Chapter of Radiation Oncology and commenced work as a Consultant Radiation Oncologist at NCCS. In 2012, he joined the NCCS Blood Transfusion Committee until July 2017 and also received the Singhealth Doctor’s Long Service Award. Dr Teh’s research include advanced interests radiotherapy for prostate cancer treatment. He was the Principal Investigator of a Phase II Trial in Stereotactic Ablative Body Radiotherapy for Low- Intermediate Risk Prostate Cancer from 2013 to 2017, which was Southeast Asia’s fi rst trial of this non-invasive technique. Dr Teh’s research has been presented at international conferences, and he has also been invited to speak on these subjects in regional meetings. He has written and published extensively on the subject of sarcoma treatment. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 Mr Meng Yau Yeoh Group Chief Financial Offi cer FCA (S’pore), FCCA (UK), CA (M’sia) Angela Choong Chief Commercial Offi cer CA (S’pore), FCMA (UK) Ms Angela Choong joined AAMG as Chief Commercial Offi cer in August 2015 to head the Commercial Division, responsible for the project and commercial management. Before joining AAMG, Ms Choong held the positions of fi nance director and regional fi nancial controller with a European MNC in manufacturing. She has over 25 years’ of regional business partnering experience with a strong track record of fi nance, risk management, management of new factory construction projects, and implementation of improvement projects across China, business Taiwan, Hong Kong and Southeast Asia. Ms Choong is a fellow member of Chartered Institute of Management Accountants United Kingdom (“CIMA”) and member of the Institute of Singapore Chartered Accountants (“ISCA”). 15 Mr Meng Yau Yeoh obtained his professional accounting qualifi cation from the Association of Chartered Certifi ed Accountants (United Kingdom) (“ACCA”) in 1994 and has over 21 years’ experience in auditing, fi nance and business development. He started his career at the then, KPMG Peat Marwick in 1995 and left as an Audit Senior in 1998. After spending four years in the Big 4 audit fi rm, Mr Yeoh spent the decade spanning 1999 to 2009 working in senior positions in several listed and privately-owned companies involved in a wide range of industries ranging from property development, construction, information technology and investment holdings to service and hospitality in Singapore, Malaysia and Australia. During that period, he was involved in two successful main board Initial Public Off erings in Singapore as well as listing exercises and trade sales in Germany and U.K. Mr Yeoh is a Fellow Member of the Institute of (“ISCA”), Singapore Chartered Accountants Fellow Member of the ACCA and a Chartered Accountant registered with the Malaysian Institute of Accountants (“MIA”). He joined AAMG as Group Financial Controller in December 2009 and subsequently appointed as Group Chief Financial Offi cer in March 2013. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 FINANCIAL REVIEW Year ended 31 August Revenue Other income Direct costs and operating expenses Loss from continuing operations Taxation Loss after taxation Loss attributable to: Members of the parent entity Non-controlling interest 2017 S$'000 15,167 207 2016 S$'000 17,083 171 (18,255) (19,465) (2,881) (150) (3,031) (2,211) 150 (2,061) (3,093) (2,062) 62 1 (3,031) (2,061) Changes % (11.2) 21.1 (6.2) 30.3 n.m 47.1 50.0 n.m 47.1 Total share capital and reserves 9,605 12,111 (20.1) 16 Basic loss per share Net asset value per share Net tangible asset value per share n.m – not meaningful 2017 S Cents (1.04) 3.23 3.23 2016 S Cents (0.74) 4.07 3.98 The Group made notable progress in its regional geographical expansion and enhancement of its operational capacity during the fi nancial year ended 31 August 2017 (“FY2017”). The Group partnered Lat War Group, an established business group based in Yangon, to tap healthcare opportunities in Myanmar. This partnership has resulted in the joint-venture agreement with Grand Hantha Company Limited to provide clinical services for the Grand Hantha International Hospital. With 700 beds, this is one of the largest private hospital in Yangon and is expected to lead to increase patient traffi c while affi rming the AAMG brand of medical excellence in the region. Our radiation oncology segment has seen a steady ramp-up in volume in FY2017 and is expected to improve further with the recruitment of an additional radiation oncologist in July 2017. The Group continues to face tough challenges such as rising costs and competition from emerging healthcare operators in the region. The Group’s total revenue declined 11.2% or S$1.9 million from S$17.1 million in FY2016 to S$15.2 million in this fi nancial year. The Group recorded a decline of 12.7% in overall patient transactions to 6,903 from 7,906 in FY2016. The Group recorded Net Loss of S$3.0 million in FY2017 (FY2016 Net Loss: S$2.1 million), after deducting a write-off of the Group’s goodwill of S$0.3 million and reversal of deferred tax benefi t recognised last year of S$0.2 million. LIVER SEGMENT Patient fl ow for the Group’s liver treatment and transplantation segment, operating under the Group’s wholly- owned subsidiary AALC, declined 15.6% from 7,733 in FY2016 to 6,530 in FY2017. Accordingly, AALC’s revenue declined 15.9% or S$2.5 million from S$15.7 million to S$13.2 million, respectively. AALC accounted for 86.9% (2016: 91.6%) of the Group’s overall revenue. The decrease in patient and surgical activities, including fewer LDLT, led to lower overall segment revenue in FY2017. AALC performed six successful LDLTs in FY2017 compared to 13 in FY2016. Sales of medication and professional consultation fees decreased by 29.3% and 16.7%, respectively, over the comparative periods. While surgical cases declined by 32.0% in FY2017 the cases of liver dialysis performance during the year increased 63.9% from FY2016 but this increase was insuffi cient to cover the declines in other revenue streams. Direct costs decreased 11.5%, or S$1.1 million, from S$9.7 million in FY2016 to S$8.6 million in FY2017 in line with lower revenue. As a result, Gross Profi t Margin fell from 38.4% to 35.1%, respectively. Employment expense reduced by S$1.7 million due mainly to the reallocation of S$1.3 million personnel related expenses to the management and consultancy segment to better refl ect the allocation of human resources across the Group’s business segments. The segment and Group also recorded S$0.4 million savings from reducing the number of doctors from three to two. Other operating expenses – predominantly non-variable – decreased 11.7% or S$0.1 million. As a result, the Net Loss Before Tax for the liver segment narrowed to S$0.6 million for FY2017 from S$1.0 million in FY2016. After recording an income tax expense of S$0.2 million (due to reversal of deferred tax benefi t in FY2016) the Net Loss After Tax (“Net Loss”) was S$0.8 million, unchanged from FY2016. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 RADIATION ONCOLOGY SEGMENT Revenue for AARO, the Group’s subsidiary which operates the radiation oncology segment, rose 84.1% from S$1.1 million in FY2016 to S$2.0 million in FY2017. Of AARO’s revenue, provision of clinical services to patients accounted for 76.6% with the balance from overseas project management and consultancy services. The higher revenue was driven by the 115.6% increase in the number of patient transactions to 373 in FY2017 from 173 in FY2016. Direct and other operating expenses was S$1.8 million in FY2017 (FY2016: S$1.1 million), with S$1.2 million being direct cost of sales and S$0.6 million being mostly personnel related expenses, representing increases of 76.3% and 47.2%, respectively, from FY2016. As a result, AARO recorded a Net Profi t of S$0.2 million in FY2017 compared to S$4,000 during its fi rst full year of operations in FY2016. MANAGEMENT AND CONSULTANCY SEGMENT Revenue for the Management and Consultancy segment declined from S$0.4 million in FY2016 to S$30,000 in FY2017. Apart from partnership agreements in Myanmar concluded close to the end of the fi nancial year, there were no other major projects. Total direct expenses decreased from S$0.3 million to S$4,000, accordingly. Other operating expenses increased by S$0.8 million to S$1.6 million in FY2017 (FY2016: S$0.8 million), due mainly to the reallocation of S$1.3 million payroll cost under the liver segment (as discussed earlier). This was partially off set by the recovery of a portion of bad debt from Rich Tree Land of S$150,000 (S$224,000 bad debts written off in FY2016) and receipt of government grant of S$0.1 million. The Net Loss for this segment in FY2017 was S$1.5 million in FY2017 (FY2016: Net Profi t of S$0.7 million). REVENUE EBITDA AND PROFIT/(LOSS) AFTER TAX 25000 20000 15000 10000 5000 0 Revenue (S$'000) (( 1500 1000 500 0 -500 -1000 -1500 -2000 -2500 -3000 -3500 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 EBITDA (S$'000) (cid:296)(cid:12)(cid:43)(cid:47)(cid:47)(cid:297)(cid:293)(cid:44)(cid:46)(cid:43)(cid:252)(cid:48)(cid:3)(S$'000) SHARE CAPITAL AND RESERVES EPS AND NAV 17 12000 10000 8000 6000 4000 2000 0 2013 2014 2015 2016 2017 Share capital and reserves (S$'000) 5 4 3 2 1 0 -1 -2 Net asset value per share (S cents) Basic (Loss)/Earnings per share (S cents) For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 FINANCIAL REVIEW REVIEW OF FINANCIAL POSITION Net assets for the Group decreased by S$2.5 million to S$9.6 million (FY2016: S$12.1 million) due to the Net Loss for the year of S$3.0 million, partially off -set by the increase in foreign currency translation reserve of S$0.5 million due to the strengthening of the AUD against the SGD. Signifi cant changes during the year under review were: a) Decrease in cash and cash equivalents by S$2.1 million to S$9.2 million due mainly to the net loss for the year; Increase of trade and other receivables by S$1.5 million from S$4.6 million last year to S$6.1 million as a result of slower collection for patients from the United Arab Emirates (“UAE”) which are on credit terms ranging between 60-120 days; Higher trade and other payables, which increased correspondingly by S$1.4 million from S$4.5 million in FY2016 to S$5.9 million in FY2017 due mainly to the slower collection of trade receivables thus aff ecting our ability to pay timely; and A decrease in non-current assets as a result of the write-off of intangible asset and deferred tax asset of S$0.3 million and S$0.2 million respectively. b) c) d) As a result, Net Asset Value per share decreased by S 0.9 cents to S 3.2 cents from S 4.1 cents last year. RUSSIAN 0.8% OTHERS 7.1% RUSSIAN 0.5% OTHERS 8.1% SINGAPORE 13.5% SINGAPORE 12.3% 18 S O U T H A SIA 4.7 IA 4.7 % % FY2017 MALAYSIA 13.3% M O N G O L I A N 2 . 2 % M O NM S O U T H A SIA 3.4 IA 3.4 % % FY2016 MALAYSIA 10.6% M O N G O L I A N 3 . 2 % M O N G O L I M OM OM INDONESIA 24.1% INDONESIA 24.1% I % % 4 4 . . 3 3 A D O B M A C & M A N T E I V % E S 2.5 PIN HILIP P UAE 27.3% INDONESIA 22.2% INDONESIA 22.2% S 3.3 % % % 4 4 . . 3 3 A I D O B M A C & M A N T E I V E PIN HILIP P UAE 32.1% MYANMAR 1.1% MYANMAR 0.9% PATIENT NATIONALITY MIX FOR LIVER SEGMENT Patients from the UAE continues to be signifi cant revenue generator for AALC in FY2017, accounting for 27% of all patients, compared to 32% of all patients in FY2016. The revenue contribution from UAE patients made up an even higher proportion and, contributing more than two-third or 71% of AALC’s overall revenue, a signifi cant increase from 59% in fi nancial year 2016. This is due to the fact that UAE patients made up all of AALC’s transplanted patients for the current fi nancial year. Besides UAE, our liver segment’s other core patients comprise mainly of patients from Indonesia, Singapore and Malaysia which form 24.1%, 13.5% and 13.3% respectively, with a combined total of 50.9%. OTHERS 29.6% SINGAPOREAN 47.5% FY2017 INDONESIA INDONESIAA 8.0% MALAYSIA 12.4% VIETNAM 2.5% OTHERS 29.7% 29.7% SINGAPOREAN 35.8% FY2016 INDONESIA INDONESIA 13.9% MALAYSIA MALAYSIA 13.3% VIETNAM 7.3% PATIENT NATIONALITY MIX FOR RADIATION ONCOLOGY SEGMENT AARO’s patients are mostly made up of Singaporeans, Indonesians and Malaysians. Cumulatively, they made up 67.9% and 63.0% of the total patient transactions for the current and previous fi nancial years respectively. As the number of patient transactions for the year increased from 173 last year to 373 in FY2017, the number of local Singaporean patients also increase and made up almost half of the total number of patient transactions now, up from 35.8% previously. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 WHAT IS LIVING DONOR LIVER TRANSPLANTATION? Living donor liver transplantation (“LDLT”) is a procedure that involves a living donor giving a portion of his or her liver to a family member or close friend in need of a liver transplant. The LDLT procedure at AALC is performed by an experienced team of liver transplant surgeons, supported by the most up-to-date facilities and seamless post-surgery care to ensure the best liver clinical outcome for the patients. At AALC, the LDLT Journey is specially designed for the best possible clinical outcomes. Our experienced Transplant coordinators work alongside doctors to educate and guide patients, donors and their families through every step of the journey. 19 Post-Transplant Evaluation & Care, include: medications, vaccinatons, diet, follow-up consultations with specialists Liver patient and (cid:36)(cid:37)(cid:47)(cid:293)(cid:36)(cid:33)(cid:46)(cid:3)(cid:34)(cid:28)(cid:41)(cid:37)(cid:40)(cid:53)(cid:3)(cid:252)(cid:42)(cid:32)(cid:47)(cid:3) a compatible healthy living liver donor Pre-Transplant Assessment Living Donor & Recipient Family conference: Meeting with the patient & his/her family Optimising medical condition for transplant surgery Seek approval from the Transplant Ethics Committee (required by the Ministry of Health’s Human Organ Transplant Act, HOTA, in Singapore Transplant Surgery Patient evaluation Preparing for treatment: molding of immobilization device, CT simulation Computer treatment planning THE RADIOTHERAPY JOURNEY Radiation treatment plan quality assurance check The radiotherapy process involves a number of complex steps and a patient may be recommended diff erent procedures or sequences. At AARO, our radiation oncologist leads a clinical team of physicists and dosimetrists in providing the best possible treatment and aftercare for the patient Post treatment surveillance Post-radiation therapy review Weekly on-treatment reviews Commencement of radiation therapy Daily/weekly QA check For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 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 Corporate Governance Principles and Recommendations (3rd edition) 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. 20 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 senior management. The Board is responsible for: • Setting the strategic direction of the Company and establishing goals to ensure these strategic objectives are met; • Appointing the senior management, setting objectives for the senior management 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 DIRECTORS IN OFFICE At the date of this statement the following directors are considered independent by the Board: Name Mr Heng Boo Fong Ms Jeslyn Jacques Wee Kian Leong Mr Paul Vui Yung Lee Position Independent Non-Executive Director Non-Executive Director 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. 21 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 CORPORATE GOVERNANCE STATEMENT EVALUATION OF SENIOR EXECUTIVES Senior executives, including the Group Chief Operating Offi cer, Group Chief Financial Offi cer or Chief Commercial 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. 22 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. 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 18 2 2 % 67 33 33 Number 19 1 1 % 70 17 17 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 SAFEGUARD INTEGRITY The Board has established an Audit Committee (“AC”) comprised of the three 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 AC are: • Mr Heng Boo Fong (Chairman) • Mr Paul Vui Yung Lee • Ms Jeslyn Jacques Wee Kian Leong 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 AC 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 AC 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. 23 The AC 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. 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 performance 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 CORPORATE GOVERNANCE STATEMENT 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 AC. 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: Implementation of Board approved operating plans and budgets; • • Board monitoring of progress against these budgets, including the monitoring of key performance indicators of both a fi nancial and non-fi nancial nature; and The establishment of committees to report on specifi c risk as identifi ed. • 24 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. 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 shareholders. 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOMINATION AND REMUNERATION Nomination and Remuneration Committee The Nomination and Remuneration Committee (“NRC”) is comprised of three non-executive directors. The members of the NRC are: • Mr Heng Boo Fong (Chairman) • Mr Paul Vui Yung Lee • Mr Evgeny Tugolukov 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 NRC 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, Chief Commercial Offi cer and senior executives; and • Responsible for considering general remuneration policies and practices, recruitment and termination policies and superannuation requirements. 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. 25 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 DIRECTORS’ REPORT The directors present their report, together with the fi nancial statements of the Asian American Medical Group Limited (“AAMG” or the “Group”) for the year ended 31 August 2017. 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) Mr Evgeny Tugolukov (Non-Executive Director) Mr Kong Meng Ang (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 AAMG and its controlled entities are that of provision of specialised medical services for liver diseases and transplantation, radiation oncology and healthcare project management and consultancy services. There has been no change in the principal activity of the Group during the fi nancial year. COMPANY SECRETARY 26 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 20 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’s message found on pages 8 and 9 and Financial Review section on pages 16 to 18, which forms part of this Annual 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, two (2) Audit Committee meetings and one (1) Nomination and Remuneration Committee meetings were held. Directors’ Meetings Audit Committee Meetings Nomination and Remuneration Committee Meetings Number Eligible to attend Number Attended Number Eligible to attend Number Attended Number Eligible to attend Number Attended 5 5 5 5 5 5 5 5 5 5 5 5 - - - 2 2 2 - - - 2 2 2 - 1 - 1 1 - - 1 - 1 1 - Dato’ Dr Kai Chah Tan Mr Evgeny Tugolukov Mr Kong Meng Ang Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 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 Mr Evgeny Tugolukov Mr Kong Meng Ang Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong ^ Indirect interest through RusSing Med Holdings Pte Ltd. None of the directors have share options in the Company. DIVIDENDS PAID OR RECOMMENDED Number of shares 115,798,180 ^ 21,000,000 46,062,300 - - - No interim or fi nal dividend has been paid or recommended by the Directors for the fi nancial year ended 31 August 2017 (2016 : Nil). SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no signifi cant changes in the state of aff airs of the Group during the year. 27 EVENTS SUBSEQUENT TO REPORT DATE Subsequent to year end, Asian American Liver Centre Pte Ltd disposed of its 50% stake in PT Asian Liver Center Indonesia for S$1.00 on 12 September 2017. The entity has been dormant since its incorporation. On 20 October 2017, Million Health Ventures Pte. Ltd. (“MHV”) entered into a conditional agreement to subscribe for 19,408,163 new shares in Hippocrates Development Sdn. Bhd. (“HDSB”), an investment holding company incorporated in Malaysia, representing 95.1% of HDSB’s enlarged share capital. MHV’s subscription for 19,408,163 Ordinary Shares of HDSB at an issue price of RM1.00 each will be satisfi ed by payment of RM5,606,963 in cash and the remaining RM13,801,200 by the issuance of 40,000,000 new AAMG shares at AUD0.105 each. The Group will seek shareholders’ approval for the acquisition at the upcoming annual general meeting. 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 message on pages 8 and 9. These are mainly in line with the Group’s growth strategies as follows: 1. 2. 3. 4. Continue with the Group’s geographical expansion plans and build on existing presence overseas such as in Malaysia, Russia and Myanmar, in the area of specialised clinical services and project management; Enhance AARO’s comprehensive suite of capabilities as a regional provider of one-stop solutions in radiology and oncology and to leverage on these capabilities to expand; Strengthen our position in our core markets for liver services; and Explore investment opportunities in the region in the healthcare sector. OPTIONS At the date of this report, there are no unissued ordinary shares of AAMG. Option holders do not have any rights to participate in any issues of shares or other interests in the company or any other entity. There have been no unissued shares or interests under option of any controlled entity within the Group during or since reporting date. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 DIRECTORS’ REPORT 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 Myanmar during the fi nancial year. 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 KMP, 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 2017 are listed below. Directors: Dato’ Dr Kai Chah Tan – Executive Director and Chairman Mr Evgeny Tugolukov - Non-Executive Director Mr Kong Meng Ang - 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 28 Other key management personnel: Mr Cherinjit Kumar Shori – Group Chief Operating Offi cer Mr Meng Yau Yeoh – Group Chief Financial Offi cer Ms Angela Choong Chiew Foong – Chief Commercial Offi cer The skills, experience, expertise and tenure of each director and KMP are disclosed in the profi le of directors and KMP 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 (“NRC”) 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 NRC, 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 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 A$15,450-A$25,750 (2016: A$15,450-A$25,750). 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 NRC 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 NRC 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. 29 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 97% of ‘yes’ votes on its Remuneration Report for the fi nancial year ended 31 August 2016. 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$000) Share price (A$) *continued operations 2017 (1.04) - 2016 (0.74) - (3,031) (2,061) 0.11 0.12 2015 0.49 - 559 0.08 2014 (1.09) - (2,493) 0.08 2013 0.12 0.20 231 0.14 USE OF REMUNERATION CONSULTANTS AAMG did not make use of Remuneration Consultants during the fi nancial year. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 DIRECTORS’ REPORT B. DETAILS OF REMUNERATION Details of the nature and amount of each element of the remuneration of each KMP of AAMG are shown in the table below: Short term employee benefit Post- employment benefit Cash salary and fees Cash bonus Non- monetary benefits Central Provident Fund 31 August 2017 S$ S$ S$ S$ Performance based percentage of remuneration % Total S$ Executive Director Dato’ Dr Kai Chah Tan 2,400,000 4,467 30 Non-Executive Directors Mr Wing Kwan Teh (1) Mr Evgeny Tugolukov Mr Kong Meng Ang Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong 5,976 16,400 10,020 23,700 16,400 16,400 - - - - - - Other Key Management Personnel Mr Cherinjit Kumar Shori 259,560 43,260 Mr Meng Yau Yeoh 190,500 32,667 Ms Angela Chiew Foong Choong 192,000 21,333 3,130,956 101,727 (1) Mr Wing Kwan Teh resigned on 11 January 2016. n.m. = not meaningful - - - - - - - - - - - 8,280 2,412,747 0.2% - - - - - - 5,976 16,400 10,020 23,700 16,400 16,400 17,340 320,160 17,340 240,507 9,420 222,753 52,380 3,285,063 - - - - - - 14% 14% 10% - For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 Short term employee benefit Post- employment benefit Cash salary and fees Cash bonus Non- monetary benefits Central Provident Fund 31 August 2016 S$ S$ S$ S$ Performance based percentage of remuneration % Total S$ Executive Director Dato’ Dr Kai Chah Tan 2,400,000 65,000 Non-Executive Directors Mr Wing Kwan Teh Mr Evgeny Tugolukov Mr Kong Meng Ang (2) Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong 22,323 15,663 - 22,323 15,663 15,663 - - - - - - Other Key Management Personnel Mr Cherinjit Kumar Shori 258,300 65,730 Mr Meng Yau Yeoh 181,998 48,279 Ms Angela Chiew Foong Choong 191,000 28,000 3,122,933 207,009 (2) Mr Kong Meng Ang was appointed on 22 January 2016. - - - - - - - - - - - 8,145 2,473,145 3% - - - - - - 22,323 15,663 - 22,323 15,663 15,663 15,810 339,840 15,810 246,087 9,441 228,441 49,206 3,379,148 31 - - - - - - 19% 20% 12% 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. C. SERVICE AGREEMENTS Remuneration and other terms of employment for the Executive Directors and other KMP are formalised in a service agreement. The major provisions of the agreements relating to remuneration are set out below: Name Base salary per month (S$) Term of agreement Notice period Dato’ Dr Kai Chah Tan Mr Cherinjit Kumar Shori Mr Meng Yau Yeoh Ms Angela Chiew Foong Choong 200,000 21,630 16,000 16,000 Unspecifi ed Unspecifi ed Unspecifi ed Unspecifi ed 3 months 3 months 3 months 3 months For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 DIRECTORS’ REPORT 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. 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: 32 31 August 2017 Dato’ Dr Kai Chah Tan Mr Evgeny Tugolukov Mr Kong Meng Ang Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong Mr Cherinjit Kumar Shori Mr Meng Yau Yeoh Ms Angela Chiew Foong Choong 31 August 2016 Dato’ Dr Kai Chah Tan Ms Pamela Anne Jenkins (1) Mr Wing Kwan Teh (2) Mr Evgeny Tugolukov Mr Kong Meng Ang (3) Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong Mr Cherinjit Kumar Shori Mr Meng Yau Yeoh Ms Angela Chiew Foong Choong (2) Balance at beginning of year Granted as remuneration during the year Exercised during the year Lapsed/ cancelled Balance at end of year Balance vested as end of year Vested during the year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Balance at beginning of year Granted as remuneration during the year Exercised during the year Lapsed/ cancelled Balance at end of year Balance vested as end of year Vested during the year - - - - - - - - 842,000 457,000 - 1,299,000 - - - - - - - - - - - - - - - - - - - - (842,000) (457,000) - (1,299,000) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (1) Ms Pamela Anne Jenkins resigned on 30 September 2015 (2) Mr Wing Kwan Teh resigned on 11 January 2016 (3) Mr Kong Meng Ang appointed on 22 January 2016 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 KMP Shareholdings The number of ordinary shares in Asian American Medical Group Limited held by each KMP of the Group during the fi nancial year is as follows: 31 August 2017 Dato’ Dr Kai Chah Tan Mr Evgeny Tugolukov Mr Kong Meng Ang Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong Mr Cherinjit Kumar Shori Mr Meng Yau Yeoh Ms Angela Chiew Foong Choong Balance at beginning of year 107,298,250 21,000,000 34,000,000 - - - 842,000 457,000 - 163,597,250 Issued during the year Issued on exercise of options during the year Other changes during the year Balance at end of year - - - - - - - - - - - - - - - - - - - - 8,499,930 115,798,180 - 21,000,000 12,062,300 46,062,300 - - - - - - - - - 842,000 457,000 - 20,562,230 184,159,480 33 31 August 2016 Balance at beginning of year Issued during the year Issued on exercise of options during the year Other changes during the year Dato’ Dr Kai Chah Tan 102,298,250 5,000,000 Ms Pamela Anne Jenkins Mr Wing Kwan Teh Mr Evgeny Tugolukov Mr Kong Meng Ang Mr Heng Boo Fong Mr Paul Vui Yung Lee Ms Jeslyn Jacques Wee Kian Leong Mr Cherinjit Kumar Shori Mr Meng Yau Yeoh Ms Angela Chiew Foong Choong 21,324,600 4,084,090 21,000,000 - - - - - - - - - - - - - - - - - - - - - - - - - 842,000 457,000 - Balance at end of year - 107,298,250 ^(21,324,600) *(4,084,090) - - - 21,000,000 #34,000,000 34,000,000 - - - - - - - - - 842,000 457,000 - 148,706,940 5,000,000 1,299,000 8,591,310 163,597,250 ^ Ms Pamela Anne Jenkins resigned on 30 September 2015 * Mr Wing Kwan Teh resigned on 11 January 2016 #Mr Kong Meng Ang appointed on 22 January 2016 Other KMP Transactions There have been no other transactions involving equity instruments other than those described in the tables above. There have been no other related party transactions in the current fi nancial year. End of audited remuneration report. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 DIRECTORS’ REPORT INDEMNIFICATION AND INSURANCE OF OFFICERS During the year, AAMG paid a premium to insure offi cers of the Group. The offi cers of the Group covered by the insurance policy include all Directors. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the offi cers in their capacity as offi cers of the Group, and any other payments arising from liabilities incurred by the offi cers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the offi cers or the improper use by the offi cers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group. Details of the amount of the premium paid in respect of insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract. The Group has not otherwise, during or since the end of the fi nancial year, except to the extent permitted by law, indemnifi ed or agreed to indemnify any current or former offi cer of the Group against a liability incurred as such by an offi cer. 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. 34 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 7 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 2017 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. The Report of Directors Dato’ Dr Kai Chah Tan Dato’ Dr Kai Chah Tan Executive Chairman 3 November 2017 For personal use only Grant Thornton House Level 3 170 Frome Street Adelaide, SA 5000 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 2017, I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b no contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON AUDIT PTY LTD Chartered Accountants S K Edwards Partner – Audit & Assurance Adelaide, 3 November 2017 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 firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms 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. For personal use only Asian American Medical Group Limited ABN NUMBER 42 091 559 125 Annual report for the year ended 31 August 2017 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 August 2017 Revenue Other operating income Changes in inventories Inventories Purchase services Employment benefits expense Operating lease expense Depreciation Directors’ fees Recovery of doubtful debts Provision for doubtful debts Write-off of goodwill Other expenses Loss before income tax Income tax (expense)/benefit Loss for the year Other comprehensive income: Items that may be reclassified subsequently to profit or loss Net effect of foreign currency translation Total comprehensive loss for the year Loss attributable to: Members of the parent entity Non-controlling interest Total comprehensive loss attributable to: Members of the parent entity Non-controlling interest Loss per share Basic loss per share (S cents) Diluted loss per share (S cents) 37 Consolidated Group Year ended Year ended Note 31 August 2017 31 August 2016 S$ S$ 3 3 11 11 14 5 4 15,166,882 17,082,845 207,412 (25,110) 170,992 27,061 (1,122,839) (1,781,511) (8,592,330) (8,865,759) (6,201,273) (6,268,352) (492,993) (492,391) (53,551) (81,596) 150,078 (75,301) (190,315) - - (224,087) (266,123) - (1,569,988) (1,594,305) (2,881,431) (2,211,123) (149,379) 150,000 (3,030,810) (2,061,123) 525,350 220,956 (2,505,460) (1,840,167) (3,093,383) (2,062,338) 62,573 1,215 (3,030,810) (2,061,123) (2,568,033) (1,841,382) 62,573 1,215 (2,505,460) (1,840,167) 9 9 (1.04) (0.74) (1.04) (0.74) These fi nancial statements should be read in conjunction with the accompany notes. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 August 2017 ASSETS 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 Deferred tax benefi t Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Total current liabilities Total liabilities Net assets EQUITY 38 Equity attributable to members of the parent entity: Issued capital Reserves Accumulated losses Non-controlling interest Total equity Note Consolidated Group 2017 S$ 2016 S$ 10 11 12 16 13 14 16 9,174,730 11,307,905 6,127,377 4,598,694 165,618 8,334 190,728 8,334 15,476,059 16,105,661 69,934 - - 69,934 118,636 266,123 150,000 534,759 15,545,993 16,640,420 15 5,940,733 4,529,700 5,940,733 4,529,700 5,940,733 4,529,700 9,605,260 12,110,720 17 18 12,932,538 12,932,538 150,793 (374,557) (3,652,505) (559,122) 9,430,826 11,998,859 174,434 111,861 9,605,260 12,110,720 These fi nancial statements should be read in conjunction with the accompany notes. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For year ended 31 August 2017 (Accumulated losses)/ Retained earnings Foreign currency translation reserve Employee share option reserve Non- controlling interest S$ S$ S$ S$ Issued capital S$ Total S$ Balance at 1.9.2015 7,458,090 1,431,037 (595,513) 72,179 110,646 8,476,439 Total comprehensive income: (Loss)/Profit for the year Other comprehensive income Transactions with owners in their capacity as owners: Exercise of employee share option Issue of share capital (net of share cost) - - - (2,062,338) - - 220,956 (2,062,338) 220,956 - - - 1,215 (2,061,123) - 220,956 1,215 (1,840,167) 115,340 72,179 5,359,108 5,474,448 - 72,179 - - - (72,179) - (72,179) - - - 115,340 39 5,359,108 5,474,448 Balance at 31.8.2016 12,932,538 (559,122) (374,557) Balance at 1.9.2016 12,932,538 (559,122) (374,557) Total comprehensive income: (Loss)/profit for the year Other comprehensive income - - - (3,093,383) - - 525,350 (3,093,383) 525,350 Balance at 31.8.2017 12,932,538 (3,652,505) 150,793 - - - - - - 111,861 12,110,720 111,861 12,110,720 62,573 (3,030,810) - 525,350 62,573 (2,505,460) 174,434 9,605,260 These fi nancial statements should be read in conjunction with the accompany notes. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF CASH FLOWS For year ended 31 August 2017 Cash fl ows from operating activities Receipts from customers Payments to suppliers and employees Income tax refunded/(paid) Net cash used in operating activities Cash fl ows from investing activities Interest income Purchase of plant and equipment Net cash generated from investing activities 40 Cash fl ows from fi nancing activities Fixed deposits release Proceeds from issue of new shares Share issues expenses Net cash generated from fi nancing activities Consolidated Group Year ended Year ended Note 31 August 2017 31 August 2016 S$ S$ 14,103,279 20,534,206 (16,607,227) (21,082,572) 621 (21,493) 22 (2,503,327) (569,859) 100,617 (4,849) 95,768 79,019 (4,150) 74,869 - - - - 121,886 5,838,220 (363,772) 5,596,334 (cid:428) 17 17 (cid:428) Net change in cash and cash equivalents held Cash and cash equivalents at beginning of fi nancial year (2,407,559) 5,101,344 11,307,905 6,127,480 Eff ect of exchange rate change on cash held in foreign currencies 274,384 79,081 Cash and cash equivalents at end of fi nancial year (cid:428)10 9,174,730 11,307,905 These fi nancial statements should be read in conjunction with the accompany notes. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 August 2017 1. 2. (a) Principle activities 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 2017 comprises the Company and its controlled entities. The principal activity of AAMG is that of provision of specialised medical services for liver diseases and transplantation, radiation oncology and healthcare project management and consultancy services. AAMG is a for-profi t entity for the purpose of preparing fi nancial statements. Statement of signifi cant accounting policies This fi nancial report includes the consolidated fi nancial statements and notes of AAMG and controlled entities (“Consolidated Group” or “Group”). 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. 41 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 2017. (b) Principles of consolidation The Group fi nancial statements consolidate those of the Parent company and all of its subsidiaries as of 31 August 2017. 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. For personal use only 42 ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS (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. (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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 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. 43 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. 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS (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. (h) 44 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 (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. 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. Intangibles Goodwill Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of: (i) (ii) (iii) the consideration transferred; any non-controlling interest; and 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. (i) (j) (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. 45 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS 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. (l) Employee benefi ts Provision is made for the Group’s liability for employee benefi ts arising from services rendered by employees to report 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 high quality corporate bonds with terms to maturity that match the expected timing of cash fl ows. 46 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) (o) 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. 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. Management service fees are recognised upon the rendering of management and consultancy services to and accepted by the customer. All revenue is stated net of goods and services tax (“GST”). For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 (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. (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. 47 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS (t) Standards and Interpretations issued but not yet eff ective Eff ective date (annual reporting periods beginning on or after...) 1 January 2018 Likely impact on initial application The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the fi nancial statements when it is fi rst adopted for the year ending 31 August 2019. New / revised pronouncement Superseded pronouncement Nature of change AASB 9 Financial Instruments (December 2014) AASB 139 Financial Instruments: Recognition and Measurement 48 AASB 9 introduces new requirements for the classifi cation and measurement of fi nancial assets and liabilities and includes a forward-looking ‘expected loss’ impairment model and a substantially- changed approach to hedge accounting. These requirements improve and simplify the approach for classifi cation and measurement of fi nancial assets compared with the requirements of AASB 139. The main changes are: a Financial assets that are debt instruments will be classifi ed based on: (i) the objective of the entity’s business model for managing the fi nancial assets; and (ii) the characteristics of the contractual cash fl ows. b Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profi t or loss). Dividends in respect of these investments that are a return on investment can be recognised in profi t or loss and there is no impairment or recycling on disposal of the instrument. c Introduces a ‘fair value through other comprehensive income’ measurement category for particular simple debt instruments. d Financial assets can be designated and measured at fair value through profi t or loss at initial recognition if doing so eliminates or signifi cantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on diff erent bases. e Where the fair value option is used for fi nancial liabilities the change in fair value is to be accounted for as follows: • the change attributable to changes in credit risk are presented in Other Comprehensive Income (OCI) • the remaining change is presented in profi t or loss For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 New / revised pronouncement Superseded pronouncement Nature of change Eff ective date (annual reporting periods beginning on or after...) Likely impact on initial application (As above) AASB 9 Financial Instruments (December 2014) continued AASB 15 Revenue from Contracts with Customers AASB 118 Revenue AASB 111 Construction Contracts Int. 13 Customer Loyalty Programmes Int. 15 Agreements for the Construction of Real Estate Int. 18 Transfer of Assets from Customers Int. 131 Revenue – Barter Transactions Involving Advertising Services Int. 1042 Subscriber Acquisition Costs in the Telecommunications Industry If this approach creates or enlarges an accounting mismatch in the profi t or loss, the eff ect of the changes in credit risk are also presented in profi t or loss. Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into AASB 9: • classifi cation and measurement of fi nancial liabilities; and • derecognition requirements for fi nancial assets and liabilities AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that enable entities to better refl ect their risk management activities in the fi nancial statements. Furthermore, AASB 9 introduces a new impairment model based on expected credit losses. This model makes use of more forward- looking information and applies to all fi nancial instruments that are subject to impairment accounting. AASB 15: • replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations: - establishes a new revenue recognition model - changes the basis for deciding whether revenue is to be recognised over time or at a point in time - provides new and more detailed guidance on specifi c topics (e.g. multiple element arrangements, variable pricing, rights of return, warranties and licensing) - expands and improves disclosures about revenue 49 1 January 2018 The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the fi nancial statements when it is fi rst adopted for the year ending 31 August 2019. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS Eff ective date (annual reporting periods beginning on or after...) 1 January 2019 New / revised pronouncement Superseded pronouncement Nature of change AASB 16 Leases AASB 117 Leases Int. 4 Determining whether an Arrangement contains a Lease Int. 115 Operating Leases—Lease Incentives Int. 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease AASB 16: • replaces AASB 117 Leases and some lease-related Interpretations • requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low value asset leases • provides new guidance on the application of the defi nition of lease and on sale and lease back accounting largely retains the existing lessor accounting requirements in AASB 117 • requires new and diff erent disclosures about leases • 50 Likely impact on initial application the reported The entity is yet to undertake a detailed assessment of the impact of AASB 16. However, based on the entity’s preliminary assessment, the likely impact on the fi rst time adoption of the Standard for the year ending 31 August 2020 includes: • there will be a signifi cant increase in lease assets and fi nancial liabilities recognised on the balance sheet • equity will reduce as the carrying amount of lease assets will reduce more quickly than the carrying amount of lease liabilities • statement of profi t or loss and other comprehensive income will be higher as the implicit interest in lease payments for former off balance sheet leases will be presented as part of fi nance costs rather than being included in operating expenses operating • cash outfl ows will be lower and fi nancing cash fl ows will be higher in the statement of cash fl ows as principal repayments on all lease liabilities will now be included in fi nancing activities rather than operating activities. Interest can also be included within fi nancing activities EBIT in the For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 (u) New and revised standards that are eff ective for these fi nancial statements A number of new and revised standards became eff ective for the fi rst time to annual periods beginning on or after 1 September 2016. Information on the more signifi cant standard(s) is presented below. • • • • • AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations AASB 2014-4 Amendments to Australian Accounting Standards – Clarifi cation of Acceptable Methods of Depreciation and Amortisation AASB 2014-6 Amendments to Australian Accounting Standards – Agriculture: Bearer Plants AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 Based on preliminary assessment, the adoption of these amendments has not had a material impact on the Group. (v) 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. (w) Key Estimates and Judgements 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 11 and 14 with respect to Management’s consideration of impairment of trade and other receivables and goodwill respectively, as at 31 August 2017. 51 3 Revenue Operating activities Provision of services Sale of medication Management fee Total revenue from operating activities Other operating income Interest received Other income Total other operating income Consolidated Group 2017 S$ 2016 S$ 12,800,020 13,776,576 1,965,929 2,740,879 400,933 565,390 15,166,882 17,082,845 100,617 106,795 207,412 79,019 91,973 170,992 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS 4 Loss for the year The loss for the year has been arrived at after (charging)/crediting the following items: Expenses Cost of sales Net foreign exchange loss Administrative expenses include rental expense on operating leases as follows: -(cid:428)(cid:428)(cid:428) premises Depreciation Recovery of doubtful debts (note 11 (a)) Provision for doubtful debts (note 11 (a)) Professional fees Management fees Credit card charges 52 Central Provident Fund Consolidated Group 2017 S$ 2016 S$ (9,740,279) (10,620,209) (371,148) (149,312) (492,993) (492,391) (53,551) 150,078 (75,301) - - (224,087) (540,202) (509,471) (83,634) (59,033) (60,381) (166,163) (59,730) (211,554) For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 5 Income Tax Expense/(Benefi t) a. The components of tax expense/(benefi t) comprise: Current tax Deferred tax Over provision in respect of prior years Consolidated Group 2017 S$ 2016 S$ 4,079 - 150,000 (150,000) (4,700) 149,379 - (150,000) b. The prima facie tax on (loss)/profi t before income tax is reconciled to the income tax as follows: Prima facie tax payable/(refundable) on (loss)/profi t before income tax at Australian tax rate of 30% (2016 : 30%) (864,430) (663,337) Add: Eff ect of tax rates in foreign jurisdiction 248,069 223,158 Tax eff ect of: - derecognition of deferred tax assets - write-off of goodwill - non-deductible expenses - non-taxable incomes - over-provision for income tax in prior years - withholding tax deducted at source - utilisation of deferred tax assets previously not recognised - deferred tax asset not recognised - others 53 150,000 79,837 3,270 (3,620) (4,700) 4,079 (5,224) 575,012 (32,914) - - 67,165 (11,322) - - 9,305 225,031 - Income tax expense/(benefi t) 149,379 (150,000) The value of tax losses and capital allowances not recognised is S$9,941,000 and S$214,000 (2016: S$6,768,000 and S$426,000). 6 Key Management Personnel Compensation The key management personnel (“KMP”) compensation included in employment expenses includes: Short-term benefi ts Post-employment benefi t Total compensation Detailed remuneration disclosures are provided in the remuneration report. 2017 S$ 2016 S$ 3,232,683 3,329,942 52,380 49,206 3,285,063 3,379,148 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS 7 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 other auditors: - auditing or reviewing the fi nancial report of subsidiaries - taxation services 8 Dividends Consolidation Group 2017 S$ 37,815 6,157 2016 S$ 26,865 7,238 57,548 9,995 69,300 8,900 No interim or fi nal dividend has been paid during the year or recommended by the Directors following the completion of accounts for the fi nancial year ended 31 August 2017 (2016 : Nil). 54 9 Earnings per Share Basic earnings or loss per share amounts are calculated by dividing the profi t or loss 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 or loss per share amounts are calculated by dividing the profi t or loss 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: Loss after income tax attributable to the owners of Asian American Medical Group Limited Weighted average number of ordinary shares during the year used in calculating basic/diluted EPS Basic loss per share (S cents) Diluted loss per share (S cents) Consolidation Group 2017 S$ 2016 S$ (3,093,383) (2,062,338) Number of shares Number of shares 297,752,754 277,126,277 (1.04) (0.74) (1.04) (0.74) For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 10 Cash and Cash Equivalents Cash and bank balances Fixed deposits Consolidation Group 2017 S$ 2016 S$ 5,434,804 4,579,031 3,739,926 6,728,874 Cash and cash equivalents per consolidated statement of cash fl ows 9,174,730 11,307,905 The eff ective interest rate on short-term bank deposits was 0.45% - 2.75% (2016: 0.68% - 2.75%) per annum. 11 Trade and Other Receivables Current Trade receivables Less: Provision for doubtful debts Trade receivables - net Other receivables Deposits Total current trade and other receivables Consolidation Group 2017 S$ 2016 S$ 5,718,574 4,635,006 - (224,087) 5,718,574 4,410,919 253,366 155,437 40,028 147,747 6,127,377 4,598,694 55 a Provision for impairment of receivables Included in last fi nancial year’s trade receivable was an amount of S$224,087 due from Rich Tree Land Pte Ltd (“RTL”) which were billings by Asian American Medical Group Pte Ltd (“AAMGPL”) for work performed as the appointed Project Lead Manager (“PLM”) for the Zhuhai Project. Following the termination of the PLM Agreement during the year, RTL has disputed our billings and as a result, we had to resort to legal proceedings to recover this debt. To be prudent, we made a full provision for doubtful debts last fi nancial year and we managed to agree on a settlement and recovered S$150,078 during the fi nancial year under review. Apart from the above, current trade and term receivables are non-interest bearing loans and generally on 60 - 120 days terms. A provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired. Apart from the abovementioned debt, no trade or other receivables are considered past due or impaired. The Group reviews its trade receivables for evidence of impairment on a regular basis. The trade receivable consists mainly amounts owning by the United Arab Emirates (“UAE”) government agencies. Management holds regular meetings with the agencies relating to patient care feedback and collection of amounts outstanding. Management is of the opinion that the trade receivables are recoverable and hence, no further impairment is required. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS b Credit risk The group has no signifi cant concentration of credit risk with respect to any single counter party or group of counter parties. The following table details the Group’s trade receivables exposed to credit risk with ageing analysis. Amounts are considered as ‘past due’ when the debt has not been settled, with the terms and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are specifi c circumstances indicating that the debt may not be fully repaid to the Group. The balances of receivables that remain within initial trade terms are considered to be high credit quality. Current Due 1 - 30 days Due 31- 60 days Due over 60 days 56 12 Inventories Consolidation Group 2017 S$ 1,518,501 760,021 2016 S$ 2,119,473 681,611 1,014,633 588,580 2,425,419 1,021,255 5,718,574 4,410,919 Consolidated Group 2017 S$ 2016 S$ Medical Supplies at cost 165,618 190,728 For personal use only 13 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 ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 Consolidated Group 2017 S$ 7,735 (6,333) 1,402 2016 S$ 9,534 (7,400) 2,134 338,929 338,929 (334,262) (325,162) 4,667 13,767 169,975 167,425 (129,721) (107,891) 40,254 59,534 57 15,311 15,311 (14,074) (13,670) 1,237 1,641 240,856 240,856 (218,482) (199,296) 22,374 41,560 Total plant and equipment 69,934 118,636 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS 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. Offi ce equipment Medical Furniture equipment Computers and fi ttings Renovations Total S$ S$ S$ S$ S$ S$ Consolidated Group Balance at 31 August 2016 2,134 13,767 Additions Disposals Write-off s - - - - - - 59,534 4,849 - - 1,641 41,560 118,636 - - - - - - 4,849 - - Depreciation expense (732) (9,100) (24,129) (404) (19,186) (53,551) Carrying amount at 31 August 2017 1,402 4,667 40,254 1,237 22,374 69,934 Balance at 31 August 2015 3,126 42,534 Additions Disposals Write-off s 58 - - - - - - 82,577 2,950 - - 804 1,200 - - 60,746 189,787 - - - 4,150 - - Depreciation expense (992) (28,767) (25,993) (363) (19,186) (75,301) Carrying amount at 31 August 2016 2,134 13,767 59,534 1,641 41,560 118,636 There was no asset purchased under fi nance lease arrangement during the year (2016: $ Nil). 14 Intangible Assets Total Intangible Assets Goodwill Goodwill, at cost Less: Goodwill written-off Net carrying amount Impairment test for goodwill Consolidated Group 2017 S$ 2016 S$ 266,123 266,123 (266,123) - - 266,123 Goodwill is allocated to cash generating units (CGU’s) according to applicable business operations. In the current fi nancial year, the liver segment incurred a loss and as the Management is uncertain about the profi tability of AALC in the coming years, the Group wrote-off its goodwill of S$266,123. In the prior year, the recoverable amount of a CGU is based on value-in-use calculations. These calculations are based on projected cash fl ows approved by management covering a period not exceeding fi ve years. Management’s determination of cash fl ow projections and gross margins are based on past performance and its expectation for the future. The present value of future cash fl ows has been calculated using a discount rate of 10% and a growth rate of 5% per annum to determine value-in-use. For personal use only 15 Trade and Other Payables Current Trade payables Patients’ deposits Provision for employee benefi ts Sundry payables and accrued expenses Total current trade and other payables ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 Consolidated Group 2017 S$ 2016 S$ 5,029,622 3,938,457 85,063 165,826 660,222 57,462 188,560 345,221 5,940,733 4,529,700 The provision for employee benefi ts relates to the provision for cash bonus to employees for the period from January to August 2017 (2016: January to August 2016) and is payable by December 2017 (2016: December 2016). 16 Taxation Current assets Income tax refundable Non-current Consolidated Group 2017 S$ 2016 S$ 59 8,334 8,334 Deferred tax assets: Tax allowances relating to unabsorbed losses Net deferred tax asset 1 September 2016 Recognised in profi t or loss S$ 150,000 150,000 S$ (150,000) (150,000) 31 August 2017 S$ - - For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS 17 Issued Capital Opening share balance Shares issued during the year Share issue expenses Share option exercised Total capital a. Ordinary Shares At the beginning of reporting year 60 Shares issued during year Share options exercised At reporting date Consolidated Group 2017 S$ 2016 S$ 12,932,538 7,458,090 - - - 5,722,880 (363,772) 115,340 12,932,538 12,932,538 Consolidated Group 2017 2016 Number of shares Number of shares 297,752,754 239,453,754 - - 57,000,000 1,299,000 297,752,754 297,752,754 Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. 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. During the last fi nancial year, following the approval received from Shareholders at the Annual General Meet- ing held on 3 December 2015, the Company issued a total of 57,000,000 new ordinary shares at A$0.10 per share for A$5,700,000 which were fully paid in January 2016. In addition, 1,299,000 new ordinary shares were issued in January 2016 under the Group’s Incentive Option Scheme. b. Capital Management Management controls the capital of the Group in order to provide shareholders with adequate returns and en- sure that the Group can fund its operations and continue as a going concern. Currently the Group has no debt. There are no externally imposed capital requirements. There have been no changes in the strategy adopted by management to control the capital during the year. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 18 Reserves a. Nature and purpose of reserve (i) Share-based payments The share-based payments reserve is used to recognise: • • • At grant date of the fair value of options issued to employees but not exercised At grant date the fair value of shares issued to employees The issue of shares held by the AAMG Employee Share Trust to employees (ii) Foreign currency translation Exchange diff erence arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note 2(k) and accumulated in a separate reserve within equity. The cumulative amount is reclassifi ed to profi t or loss when the net investment is disposed of. b. Movements in reserves (i) Employee share option reserve Beginning of fi nancial year Employee share option exercised (Note 19) End of fi nancial year (ii) Foreign currency translation reserve Beginning of fi nancial year Net currency translation diff erence of fi nancial statements of foreign subsidiaries End of fi nancial year Total as at the end of fi nancial year 61 Consolidated Group 2017 S$ - - - 2016 S$ 72,179 (72,179) - (374,557) (595,513) 525,350 150,793 150,793 220,956 (374,557) (374,557) 19 Share-Based Employee Remuneration As at 31 August 2017 the Group maintained an equity settled share-based payment schemes for employee remuneration. For the options granted to vest, persons eligible to participate in this programme have to remain employed for the agreed vesting period. The maximum term of the options granted under the Scheme ended on 17 January 2016. Upon vesting, each option allows the holder to purchase one ordinary share at a discount of 20% of the market price determined at grant date. All share-based employee remuneration was settled in equity. The Group has no legal or constructive obligation to repurchase or settle the options. There no outstanding share options at the end of the current and previous reporting years. No employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in profi t or loss for FY2017 and credited to share option reserve (2016: Nil). For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS 20 a. Controlled Entities Controlled entities consolidated Name Country of incorporation Principle activities Percentage owned (%) Asian American Medical Group Limited Australia Investment holding 2017 2016 100 100 Subsidiary of Asian American Medical Group Limited: Asian American Medical Group Inc. British Virgin Islands Investment holding 100 100 Subsidiary of Asian American Medical Group Inc.: Asian American Liver Centre Pte. Ltd. Singapore Asian American Radiation & Oncology Pte. Ltd. (formerly known as Asian American Radiation Oncology Pte. Ltd.) Singapore 62 Asian American Medical Group Pte. Ltd. Singapore Million Health Ventures Pte. Ltd. Singapore Subsidiary of Million Health Ventures Pte. Ltd.: Asian American Oncology Management Sdn. Bhd. Malaysia Liver specialist clinic 100 100 Radiation oncology services Management and consultancy Investment Holding 70 100 100 70 100 100 Healthcare management services 100 - Associate of Asian American Liver Centre Pte. Ltd.: PT. Asian Liver Center Indonesia Indonesia Dormant 50 50 b. Acquisition of controlled entities On 1 November 2016, Million Health Ventures Pte Ltd, a subsidiary of Asian American Medical Group Inc., in- corporated a fully-owned subsidiary in Malaysia called Asian American Oncology Management Sdn Bhd, with the intention of providing healthcare management services in the area of oncology. c. Disposal of controlled entity There were no disposals during the financial year. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 21 Commitments Consolidated Group 2017 S$ 2016 S$ a. 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 415,018 33,000 448,018 489,902 448,018 937,920 The leases for the Group’s offi ce premises at Gleneagles Hospital will expire in June 2018 and February 2019. b. Finance leases There is no outstanding fi nance lease balance at report date. c. Capital Commitments Capital expenditures contracted for at the reporting date but not recognised in the fi nancial statements are as follows: a) b) c) amounting to S$27,000 (US$20,000) 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. However, the liver clinic has commenced operations during the year but is temporarily operating on a diff erent revenue sharing model until the joint venture company is set up. amounting to S$35,000 (US$25,500) in respect of investment of 51% share in a company in Myanmar called Gold Bell Asia American Healthcare Ventures Co., Ltd. amounting to S$35,000 (US$25,500) in respect of the Group’s share in the investment of 50% share in a joint venture company in Myanmar between Gold Bell Asia American Healthcare Ventures Co., Ltd and Grand Hantha Company Limited. There is no other capital commitment as at reporting date. 63 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS 22 Cash Flow Information Reconciliation of cash fl ow from operations with loss after income tax Loss after income tax Adjustment for: Depreciation Provision for doubtful debts Write-off of goodwill Foreign exchange (loss)/gain- net Finance income Changes in assets and liabilities: (Increase)/decrease in trade and other receivables Decrease/(increase) in inventories Increase/ (decrease) in trade and other payables 64 Consolidated Group 2017 S$ 2016 S$ (3,030,810) (2,061,123) 53,551 75,301 - 224,087 266,123 (98,138) - 44,870 (100,618) (79,019) (1,173,537) 3,583,475 25,111 (27,061) 1,404,991 (2,158,896) Increase/(decrease) in deferred and current tax liabilities 150,000 (171,493) Net cash used in operating activities (2,503,327) (569,859) 23 Events After the Report Date Subsequent to year end, Asian American Liver Centre Pte Ltd disposed of its 50% stake in PT Asian Liver Center Indonesia for S$1.00 on 12 September 2017. On 20 October 2017, Million Health Ventures Pte. Ltd. (“MHV”) has entered into a conditional agreement to subscribe for 19,408,163 new shares in Hippocrates Development Sdn. Bhd. (“HDSB”), an investment holding company incorporated in Malaysia, representing 95.1% of HDSB’s enlarged share capital. MHV’s subscription for 19,408,163 Ordinary Shares of HDSB at an issue price of RM1.00 each will be satisfi ed by payment of RM5,606,963 in cash and the remaining RM13,801,200 by the issuance of 40,000,000 new AAMG shares at AUD0.105 each. The Group will seek shareholders’ approval for the acquisition at the upcoming annual general meeting. 24 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 20, have been eliminated on consolidation and are not disclosed in this note. Disclosures relating to KMP are set out in note 6 and in the remuneration report. There are no related party transaction or balances incurred in the current fi nancial year (2016: Nil). For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 25 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) (iii) Provision of medical consultation and services in the hepatology and related fi elds (liver segment); and Provision of medical consultation and services in the radiation oncology and related fi elds (radiation oncology segment); Provision of healthcare management and consultancy services (management and consultancy segment); and 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 current Consolidated Group operates primarily in three businesses, namely the provision of medical consultation and services in the hepatology, radiation oncology and healthcare management and its related fi eld advisory. Details of the performance of each of these operating segments for the fi nancial years ended 31 August 2017 and 31 August 2016 are set out in the following pages: 65 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS (i) Segment Performance 66 31 August 2017 External sales revenue Inter segment sales Total segment revenue Segment net (loss)/profi t before tax Other expenses Income tax expense Total Group net loss after tax 31 August 2016 External sales revenue Inter segment sales Total segment revenue Inter-segment eliminations Total Group revenue Segment net (loss)/profi t before tax Other expenses Income tax benefi t Total Group net loss after tax Liver S$ Radiation Oncology Management & Consultancy S$ S$ Total S$ 13,171,254 1,966,084 29,544 15,166,882 3,957 - - 3,957 13,175,211 1,966,084 29,544 15,170,839 (3,957) 15,166,882 (851,213) 208,578 (1,529,742) (2,172,377) (709,054) (149,379) (3,030,810) Liver S$ Radiation Oncology Management & Consultancy S$ S$ Total S$ 15,640,633 1,060,819 381,393 17,082,845 - 6,884 - 6,884 15,640,633 1,067,703 381,393 17,089,729 (6,884) 17,082,845 (1,011,359) 4,051 (709,290) (1,716,598) (494,525) 150,000 (2,061,123) For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 (ii) Segment assets Liver S$ Radiation Oncology Management & Consultancy S$ S$ Others S$ Total S$ 31 August 2017 Segment assets 7,119,366 895,093 5,457,186 3,647,853 17,119,498 Reconciliation of segment assets to Group assets: Inter-segment eliminations Total Group assets Segment asset increases in the year (1,573,505) 15,545,993 Capital expenditure 4,849 - - - 4,849 Liver S$ Radiation Oncology Management & Consultancy S$ S$ Others S$ Total S$ 31 August 2016 Segment assets 5,986,052 579,796 6,045,209 10,758,360 23,369,417 67 Reconciliation of segment assets to Group assets: Inter-segment eliminations Unallocated assets intangible Total Group assets Segment asset increases in the year (6,995,120) 266,123 16,640,420 Capital expenditure 2,950 1,200 - - 4,150 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS (iii) Segment liabilities Liver S$ Radiation Oncology Management & Consultancy S$ S$ Others S$ Total S$ 31 August 2017 Segment liabilities (5,836,637) (242,827) (7,293,295) (4,610,249) (17,983,008) Reconciliation of segment liabilities to Group liabilities: Inter-segment eliminations Total Group liabilities 12,042,275 (5,940,733) Liver S$ Radiation Oncology Management & Consultancy S$ S$ Others S$ Total S$ 31 August 2016 Segment liabilities (3,964,150) (136,108) (6,356,287) (1,061,670) (11,518,215) 68 Reconciliation of segment liabilities to Group liabilities: Inter-segment eliminations Total Group liabilities (iv) Revenue by geographical location 6,988,515 (4,529,700) Revenue attributable to external customers is disclosed below, based on the location of where the revenue was derived: Singapore Asia (ex-Singapore) Others Total revenue (v) Assets by geographical location Assets by geographical location: Australia Singapore Total assets Consolidated Group 2017 S$ 2016 S$ 14,694,885 16,525,263 154,632 317,365 426,825 130,757 15,166,882 17,082,845 Consolidated Group 2017 S$ 2016 S$ 3,118,012 4,131,154 12,427,981 12,509,266 15,545,993 16,640,420 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 (vi) Major Customers The Group is not reliant on any one major customer to whom it provides its products or services. 26 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 Cash and cash equivalents Trade and other receivables Total fi nancial assets Financial liabilities Trade and other payables Total fi nancial liabilities Consolidated Group 2017 S$ 2016 S$ 9,174,730 11,307,905 6,127,377 4,598,694 15,302,107 15,906,599 (5,940,733) (4,529,700) (5,940,733) (4,529,700) 69 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 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 allowance for credit losses. 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. Apart from the allowance for credit losses as disclosed in note 11, no other 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 2017 fi nancial year. The Group manages liquidity risk by monitoring forecast cash fl ows. (d) 70 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. For personal use only 27 Parent Company Information Parent entity Assets Current assets Non-current assets Total assets Liabilities Current liabilities Total liabilities Total net assets Equity Issued capital Accumulated losses Foreign currency revaluation reserve Total equity Financial performance Loss for the year Other comprehensive income Total comprehensive loss ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 2017 S$ 2016 S$ 3,649,838 10,758,347 6,246,612 1,390,826 9,896,450 12,149,173 (291,190) (291,190) (38,453) (38,453) 9,605,260 12,110,720 26,019,305 26,019,305 (16,484,479) (13,475,546) 70,434 (433,039) 9,605,260 12,110,720 71 (4,421,664) (1,741,093) 503,472 214,564 (3,918,192) (1,526,529) Included in the loss for the year is a S$3,798,212 write down (2016: S$1,412,731) 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. For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 28 Company Details The registered office 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 Pte Ltd 6A Napier Road, Gleneagles Hospital Annexe Block #02-37, Singapore 258500 Asian American Radiation Oncology Pte Ltd 6A Napier Road, Gleneagles Hospital Annexe Block #02-37, Singapore 258500 Asian American Medical Group Pte Ltd 6A Napier Road, Gleneagles Hospital Annexe Block #02-37, Singapore 258500 Malaysia centre: iHEAL Medical Centre Level 7 & 8, Annexe Block, Menara IGB, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia 72 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 DIRECTORS’ DECLARATION The directors of Company declare that: (a) the fi nancial statements and notes, as set out on pages 37 to 72, are in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the fi nancial position as at 31 August 2017 and of the performance for the year ended on that date of the Consolidated Group; and complying with Accounting Standards. (b) the Executive Director and Group Chief Financial Offi cer have declared that: (i) (ii) 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 (iii) The fi nancial statements and notes for the fi nancial year give a true and fair view. (c) (d) 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. 73 Dato’ Dr Kai Chah Tan Director 3 November 2017 For personal use only Grant Thornton House Level 3 170 Frome Street Adelaide, SA 5000 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 American Medical Group Limited Report on the audit of the financial report Opinion We have audited the financial report of Asian American Medical Group Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 August 2017, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a Giving a true and fair view of the Group’s financial position as at 31 August 2017 and of its performance for the year ended on that date; and b Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms 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. For personal use only Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter Revenue recognition – Note 2(o) The Group recognises revenue from the sale of medication at the point of delivery. Revenue from rendering medical services is recognised upon completion of the consultation or procedure. Revenue is the largest item in the Statement of Profit or Loss and is a key performance measurement. This area is a key audit matter due to the significant balance of revenue and appropriate recognition being a significant risk. How our audit addressed the key audit matter Our procedures included, amongst others: (cid:120) Documenting the processes and assessing the internal controls relating to revenue processing and recognition for significant revenue streams; (cid:120) Testing key controls in the revenue cycle for Asian American Liver Centre Pte Ltd; (cid:120) Performing analytical procedures by comparing current year balances against audit expectations to understand the movements and trends in revenue; (cid:120) Agreeing a sample of revenue transactions from the general ledger to source data to confirm appropriate revenue recognition had been applied; (cid:120) Performing cut off testing to ensure that revenue transactions around year end have been recorded in the correct period; (cid:120) Confirming a sample of customer balances to subsequent receipts and signed contracts; and (cid:120) Assessing the adequacy of the Group's revenue disclosures within the financial statements. Information Other than the Financial Report and Auditor’s Report Thereon The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 31 August 2017, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors’ for the Financial Report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. For personal use only Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 31 August 2017. In our opinion, the Remuneration Report of Asian American Medical Group Limited, for the year ended 31 August 2017, complies with section 300A of the Corporations Act 2001. Responsibilities 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. GRANT THORNTON AUDIT PTY LTD Chartered Accountants S K Edwards Partner – Audit & Assurance Adelaide, 3 November 2017 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 SHAREHOLDER INFORMATION The shareholder information set out below was applicable as at 1 November 2017. A. Distribution of holders of equity securities 1 1,001 5,001 10,001 - - - - 1,000 5,000 10,000 100,000 100,001 and over Ordinary Shares Employee Options 151 56 48 53 36 344 - - - - - - There were 205 holders of less than marketable parcel of ordinary shares. The percentage of the total holdings of the twenty largest holders of ordinary shares was 98.32 per cent. 77 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 B. Equity security holders The names of the twenty largest holders of quoted equity securities are listed below: Name Citicorp Nominees Pty Limited Kong Meng Ang HSBC Custody Nominees (Australia) Limited Russing Med Holdings Pte Ltd Zhi Cheng Ang Chin Soon Ong Tye Wee Thin Aspire Strategy Pte Ltd BNP Paribas Noms Pty Ltd (DRP) Khai Ping Wun J P Morgon Nominees Australia Limited Dr Kang Hoe Lee 78 Unusual Investment & Trading Pte Ltd Mr Robert John Wood & Mrs Stella Agnes Wood (Bob & Stella Wood S/F A/C) Dr Huat Seong Saw Hiroshi Tatara Cherinjit Kumar Shori Ravindran Govindan Harry Vui Khiun Lee Meng Yau Yeoh C. Substantial holders Substantial holders in the company are set out below: Citicorp Nominees Pty Limited Kong Meng Ang HSBC Custody Nominees (Australia) Limited Russing Med Holdings Pte Ltd D. Voting rights Please refer note 17. E. On-market buy back There are no current on-market buy back. Ordinary shares Number held Percentage 147,851,150 46,062,300 32,209,068 21,000,000 12,062,300 5,000,000 5,000,000 4,000,000 3,806,406 3,000,000 2,550,001 2,500,040 2,000,000 1,140,415 1,000,000 1,000,000 842,000 699,483 561,915 457,000 49.66 15.47 10.82 7.05 4.05 1.68 1.68 1.34 1.28 1.01 0.86 0.84 0.67 0.38 0.34 0.34 0.28 0.23 0.19 0.15 Number held Percentage 147,851,150 46,062,300 32,209,068 21,000,000 49.66 15.47 10.82 7.05 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 79 For personal use only ASIAN AMERICAN MEDICAL GROUP LIMITED ANNUAL REPORT 2017 80 THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK For personal use only For personal use only 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 For personal use only