Global Health Limited
Annual Report 2015

Plain-text annual report

Connecting clinicians and consumers GLOBAL HEALTH LIMITED CO NSO LIDAT E D EN TIT Y ANNU AL REPORT 2 0 15 Table of Contents GLOBAL HEALTH LIMITED CO NSO LIDAT E D EN TIT Y GLOBAL HEALTH LIMITED CO NSO LIDAT E D EN TIT Y ANNU AL REPORT 2 0 15 ANNU AL REPORT 2 0 15 Review of operations Your Directors submit their report for the financial year ended 30 June 2015. CHAIRMAN’S LETTER Dear Shareholders, I am pleased to report that the Company achieved a Net Profit after Tax in excess of $1m in a very challenging and transformational year. Last year’s Annual General Meeting outlined the Company’s initiative to move to a cloud-based services model (Software-as-a-Service / SaaS). Whilst the Company is part way through this transition from an On-Premises model to SaaS model, early indications are that the take up is being well received. Providing the Company’s solutions as a Cloud service, is enabling healthcare businesses to realise significant improvements and reduce the costs associated with running their businesses. The SaaS model is also presenting opportunities for the Company on an international level. The Company’s acquisition of healthcare software vendor Abaki Pty Ltd announcement in July 2015, has extended the Company’s offering in the healthcare sector, whilst bolstering its development and support capability with an offshore centre in Vietnam. The Company is also progressing its legal action against SA Health for breaches of contract and infringements of copyright by the State of South Australia, arising from the State’s continuing use of the Company’s Chiron Patient Administration System software and Harmony Financial System software after the State’s licence to use expired on 31 March 2015. These events impacted the Company’s gross revenue and corresponding net profit for the full year. Thanks again to all our employees and my fellow Board Members for their loyalty and ongoing commitment to the achievement of the Company’s goals. As always, the Board continues to look for ways to grow shareholder value and we also thank you, our shareholders, for your continued support. Yours faithfully, Steven Leigh Pynt Non-Executive Chairman G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 R E V I E W O F O P E R A T I O N S 1 FINANCIAL SUMMARY Your Directors submit their report for the financial year ended 30 June 2015. The Previous Corresponding Period (PCP) for this report is the twelve months to 30 June 2014. Summary · Increasing customer base across MasterCare ePAS, MasterCare EMR and ReferralNet · Over 500 new customers further reducing reliance on few bulky clients · Net Profit After Tax of $1,059,907 · EPS of 3.24 cents per share in line with guidance announced in November 2014 Operational Review The Company’s core Operational Revenue is derived from the sale of software licences and annual subscriptions to: · Overnight and Day Hospitals (the acute or Hospital sector) and, · Specialists, General Practitioners, Community Health and Allied Health Providers (the non-acute or Community sector). An AusIndustry Research and Development Grant of $531,896 represents the bulk of Other Revenue received in the reporting period. Revenue 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Hospitals Community Other 2013 2014 2015 2,287,973 2,593,842 1,650,504 1,720,747 2,119,686 2,306,270 535,043 537,559 582,335 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 R E V I E W O F O P E R A T I O N S 2 Hospital Segment Customers Customers operating in the Hospital segment are those that use the Company’s Patient Administration System (PAS) to manage patient workflow from pre-admission through to discharge including the management of beds, theatres, medical records, billing and receipting. During the reporting period, the final remaining contract for the use of the Company’s superseded CHIRON PAS expired on 31 March 2015. This contract provided for the use of CHIRON PAS at 68 public hospitals across South Australia. Over the reporting period, the Company implemented MasterCare ePAS (enhanced Patient Administration System) at four new private hospitals consolidating its position as a leading provider of Hospital PAS systems to the private sector in Australia. The maturity of the Company’s MasterCare ePAS and the focus on software as a subscription commodity has resulted in lower average revenue per client because of the minimal customisation and implementation services. In combination with the conclusion of the 20-year legacy contract with SA Health in this reporting period, overall revenue from Hospital customers decreased by $943,338 (-36%). The 36% revenue decline resulted in a 9% drop in operating margins for this segment, to a 70% operating margin pre-R&D (PCP: 79%). This ratio validates the Company’s ‘commodity subscription’ model and augers well for a strong earnings contribution in the future as new customers are acquired. Community Segment Customers Customers operating in this segment are those that use the Company’s ReferralNet connectivity platform and MasterCare clinical and practice management systems in community settings. Revenue from this segment grew by approximately 9% with MasterCare and ReferralNet both contributing equally to the growth. The growth was lower than normal due to a major re-organisation of community health services by the Commonwealth effective from 1 July 2015. This uncertainty inhibited new buying decisions from Community Health providers due to the heavy involvement of the public sector in this segment. Operations related to the Community Segment delivered a 43% (PCP: 51%) operating margin excluding R&D. The reduction in margins is largely through the initiation of ‘freemium’, try-before-you-buy models of customer acquisition which provide a risk-free trial period to new customers who are converted to paid (‘premium’) subscriptions in future periods. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 R E V I E W O F O P E R A T I O N S 3 Earning and Margins Earnings and Margins Operating expenses decreased by $278,791 (-8.4%) over the reporting period with staffing levels maintained at around 30 full-time equivalents. The Company’s EBITDA Margin reduced by 5% to 27% while NPAT (Net Profit After Tax) margins reduced by 4% to an acceptable 23%. This represents Earnings Per Share (EPS) of 3.24 cents for the reporting period. 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Jun-13 Jun-14 Jun-15 Revenue $4,543,763 $5,251,086 $4,539,109 Operating Expense $3,379,338 $3,591,600 $3,312,810 EBITDA $1,164,425 $1,659,486 $1,226,299 EBITDA Margin 26% 32% 27% NPAT $1,096,848 $1,443,513 $1,059,907 NPAT Margin 24% 27% 23% Cash + Net Receivables 1,000,000 800,000 600,000 400,000 200,000 0 Jun-13 Jun-14 Jun-15 Cash + Net Receivables 552,031 951,526 762,004 Financial Position At 30 June 2015, the Company had Net Assets of $3,628,006 – an improvement of $952,954 from 30 June 2014. Closing cash plus Net Receivables was down $189,522 (-20%) to $762,004. The major current liability is represented by Unearned Income of $1,029,282 representing non-refundable Annual Licence Fees (ALFs) paid in advance. In addition to a ‘Right-to-Use’ Licence, the ALF entitles customers to help desk services, software updates and upgrades and is consequently recognised as pro-rata revenue at the end of each month. Other than the remaining balance of short to medium term funding for the new head office fit-out of $67,923, the Company has no debt. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 R E V I E W O F O P E R A T I O N S 4 FORWARD OUTLOOK In line with market trends, the Company is mid-way through a transition from higher-priced, customised product, and process intensive project implementation services to a more volume-based, commodity model based on Commercial-off-the-Shelf (COTS) products delivered as a managed, cloud service (‘Software-as-a- Service/SaaS’). The SaaS model reduces the reliance on few high-value clients requiring physical proximity, to a broader base of lower-value, remote clients that can access commodity-based software as a service, with no or minimal implementation services. This model will provide improved margins over the long term as scale is achieved. The transition from high-value On-Premises to Software as a Service is targeted to be completed by 2017. In support of the longer-term growth objectives, the Company continues to invest approximately 20% of total revenue to the research and development of a connected healthcare eco-system that is consumer centric and offered as a Software Service in the Cloud, across multiple devices. The provision of integrated Cloud applications that connect clinicians and consumers is based on ‘Streamlining the Patient Journey’. This is the focus of our R&D activity with the initial early adopter in the community segment implemented in May 2015. Three additional early adopters in the hospital segment are in various states of implementation as the next phase which will trial further functionality and features. Early feedback has been overwhelmingly positive with considerable productivity gains, improved decision- support and enhanced user experiences for all stakeholders - administrators, clinicians and patients. These pilot projects will integrate our MasterCare Health Provider platform to our LifeCard Patient platform and ReferralNet connectivity platform offering customers a single comprehensive technology partner for the emerging connected healthcare eco-system. Standards-based Inter-connectivity is inherent across all Global Health products enabling our customers to seamlessly integrate to best-of-breed and pre-existing software investments. Over the past 15 months, the Company has commenced business development activities overseas with an initial focus on our ASEAN neighborhood. In July, the Company announced the acquisition of Abaki Pty Ltd - a well-regarded Australian healthcare software vendor with over 400 customers and offshore development and support capability in Vietnam. The provision of integrated Cloud applications extends the Company’s sales reach to the global marketplace and significant new revenue opportunities in subsequent years. Enquiries can be directed to Mathew Cherian, Chief Executive Officer, on +61 3 9675 0600 or alternatively by email to mathew.cherian@global-health.com. For and on behalf of Global Health Limited, Mathew Cherian Chief Executive Officer and Managing Director G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 R E V I E W O F O P E R A T I O N S 5 MasterCare ® A business and clinical solution that supports healthcare delivery across acute and non-acute sectors G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 Directors’ Report Your Directors present their report on Global Health Limited consolidated entity (‘Group’) for the financial year ended 30 June 2015. DIRECTORS The following persons were Directors of Global Health Limited during the whole of the financial year and up to the date of this report (except where indicated otherwise): 1. Steven L. Pynt LLB, BBus, MBA, MTax Age 57 Independent Non-Executive Chairman Mr Pynt has been an independent non-executive director since 2000 and Chairman since 2005. Mr Pynt is Managing Director of Muzz Buzz Franchising Pty Ltd, a drive through coffee store franchisor. Other Listed Company Current Directorships Ephraim Resources Limited Richfield International Limited Gondwana Resources Limited Former Directorships in the last 3 years South East Asia Resources Limited Special Responsibilities Chairman of the Board Member of Audit Committee 2. Mathew Cherian BBus (IS/IT), MACS, MAICD Age 58 Chief Executive Officer Mr Cherian has been in the information technology industry since 1981. In 1985 he established Working Systems Pty Ltd in Perth, Western Australia. Mr Cherian was appointed CEO of Working Systems Solutions Limited in January 2002, to re-focus the Group as a software product developer for the Healthcare sector. The initial phase culminated with the re-branding of the Company as Global Health Limited in December 2007. Mr Cherian plays an active role in product strategy and the development of overseas markets for the Company. Other Current Directorships None Former Directorships in the last 3 years None Special Responsibilities Managing Director G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 7 3. Grant Smith Age 62 Independent Non-Executive Director Mr Smith has worked in insurance, superannuation, investment and funds management for over 30 years. He started with National Mutual (now AMP) in the investments division and was responsible for the establishment of the funds management business for National Mutual. In 1984 he established an independent funds management group and floated Hospitals of Australia – the first healthcare investment fund in Australia. Hospitals of Australia owned and operated a number of hospitals throughout Australia. Mr Smith was intimately involved in the building of a number of hospitals including Strathfield Private, Southern Highlands Private Hospital, Port Macquarie Hospital and the refurbishment of a number of other healthcare facilities. Hospitals of Australia was ultimately acquired by Mayne Nickless Limited. In the past 15 years Mr Smith developed and built the Medica Centre and opened the first digital (paperless) private surgical hospital in Australia. He is currently involved in developing new hospitals in Sydney, Melbourne, Shanghai, Papua New Guinea and Canada. Mr Smith is also involved in utilising digital technology to generate productivity for the healthcare sector. Other Listed Company Current Directorships None Former Directorships in the last 3 years None Special Responsibilities Member of Audit Committee 4. Robert Knowles, AO Age 68 Independent Non-Executive Director Mr Knowles is a director of the Silver Chain Group of Companies, IPG Pty Ltd and Drinkwise Australia Ltd. He is also a Commissioner with the National Mental Health Commission, Chair of the Royal Children’s Hospital and Chair of the Victorian Health Innovation and Reform Council. Other Listed Company Current Directorships None Former Directorships in the last 3 years None Special Responsibilities None G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 8 5. Peter Curigliano BBus (Accounting), CPA Age 47 Chief Financial Officer and Company Secretary Mr Curigliano has in excess of 20 years’ experience in corporate accounting including financial and business planning and compliance and taxation. He was appointed Chief Financial Officer in October 2007 after joining the Company as Financial Controller in May 2004. Mr Curigliano is also the Company Secretary and has held this position since October 2005. In this role he is responsible for the Company’s continuous disclosure requirements, preparation of the Annual Report, Annual General Meetings and announcements to the share market. Other Listed Company Current Directorships None Former Directorships in the last 3 years None MEETING OF DIRECTORS AND COMMITTEES The number of meetings of the Company’s Board of Directors and of each Audit committee held, whereby members could attend in their capacity during the year ended 30 June 2015, and the number of meetings attended by each Director were: Directors Meetings Audit Committee Meetings Number of Meetings Attended Number of Meetings eligible to attend Number of Meetings Attended Number of Meetings eligible to attend M Cherian S L Pynt G Smith R Knowles 5 5 5 4 DIRECTORS’ INTERESTS 5 5 5 5 - 1 1 - - 1 1 - Relevant interests of the Directors and their closely related parties in the shares of the Company at the date of this report are: M Cherian S L Pynt G Smith R Knowles Total Ordinary Shares 18,619,370 232,408 280,000 20,000 19,151,778 There are no options currently issued to Directors. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 9 PRINCIPAL ACTIVITIES During the year the principal activities of the Group consisted of: 1. The development, sales and support of application software for the healthcare sector; and 2. The development of systems integration software that enables data to be securely exchanged between multiple, disparate software applications within an enterprise and across the healthcare value chain. RESULTS AND DIVIDENDS Operating Results The profit of the Group for the financial year after providing for income tax and eliminating non-controlling equity interests amounted to $1,059,907 (2014: $1,443,513). Dividends No dividends have been declared or paid on the ordinary shares for the financial year ended 30 June 2015. REVIEW OF OPERATIONS Information on the operations and financial position of the Group and its business strategies and prospects is set out in the ‘Chief Executive Officer’s Operations Report’ section of this Annual Report. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There are no significant changes in the state of affairs of the Group during the financial year ended 30 June 2015 and up to the date of this report. SIGNIFICANT EVENTS AFTER REPORTING DATE On 29 July 2015, the Company finalised the acquisition of the medical software business and associated assets of Abaki Pty Ltd. The maximum consideration of $500,000 in 4 equal parts of cash and Global Health shares will take place over 37 months. The cash component will be funded out of working capital. LIKELY DEVELOPMENTS The Group will continue to pursue its policy of increasing the profitability and market share of its major business sectors during the next financial year. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 10 SHARE OPTIONS At the date of this report, the unlisted ordinary shares of Global Health Limited under option are: Date of Expiry Exercise Price per option Number Under Option Date of Issue 10 June 2015 5 July 2013 10 June 2020 5 July 2018 19 December 2013 19 December 2018 26 May 2014 26 May 2019 $0.65 $0.15 $0.65 $0.75 390,000 300,000 690,000 300,000 1,680,000 There were no share options which expired during the financial year. REMUNERATION REPORT Principles used to determine the nature and amount of remuneration Remuneration of Directors and key management personnel of the Company is established by the Board. Remuneration is determined as part of an annual performance review, having regard to market factors and a performance evaluation process. The remuneration framework is designed to align executive reward with achievement of strategic objectives and the creation of value of shareholders, and conforms to market best practice for delivery of reward. For Directors and executives, remuneration packages generally comprise salary and superannuation. Executives are also provided with longer-term incentives through the employee share and share option schemes, which act to align the executive’s actions with the interests of the shareholders. Non-Executive Directors are not entitled to performance-based bonuses. The Board meets annually to review its own performance. The Chairman also holds individual discussions with each Director to discuss their performance. The Non-executive Directors are responsible for evaluating the performance of the Chief Executive Officer, who in turn evaluates the performance of all other senior executives. These evaluations are based on specific criteria, including the Group’s business performance and achievement of turnover and NPAT (Net Profit After Tax) targets, whether long-term strategic objectives are being achieved and the achievement of individual performance objectives. · Non-Executive Directors’ remuneration Fees and payments to Non-executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. Non-executive Directors’ fees and payments are reviewed annually by the Board to ensure all payments are appropriate and in line with the market. The maximum amount of remuneration as determined by shareholders at the Company’s Annual General Meeting on 24 November 2009 is $350,000 per annum which may be divided among Non-executive Directors in the manner determined by the Board from time to time. The Chairman’s fees are determined independently to the fees of Non-executive Directors based on comparative roles in similar sized companies and sectors in the external market. The Chairman is not present at any discussions relating to determination of his own remuneration. · Executive Directors’ remuneration The Executive Directors’ salary and conditions are determined by the Board of Directors and reviewed at the expiry of each contract period. · Executive remuneration Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for senior executives is reviewed annually to ensure the executive’s pay is competitive with the market. There is no guaranteed base pay increases included in any senior executive’s contract. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 11 Details of Remuneration Details of the remuneration of the Directors and the key management personnel of Global Health Limited are set out in the following table: Short-Term benefits Performance related Post- Employment Benefits Other long term benefits Share-based Payment Salary and or Fees $ Bonus $ Superannuation $ Accrued Long Service Leave $ Shares $ Total $ 41,284 278,526 32,037 32,037 165,159 122,209 671,252 41,284 277,376 24,554 22,693 Key Management Personnel: - - - - - - - 3,922 23,881 3,043 3,043 15,688 11,610 61,187 - 4,187 - - 2,751 - 6,938 - - - - - - - 45,206 306,594 35,080 35,080 183,598 133,819 739,377 Short-Term benefits Performance related Post- Employment Benefits Other long term benefits Share-based Payment Salary and or Fees $ Bonus $ Superannuation $ Accrued Long Service Leave $ Shares $ Total $ Key Management Personnel: P Curigliano K Jayesuria3 TOTAL 175,138 70,938 611,983 - 25,000 - - - - 25,000 3,819 23,252 2,271 2,099 16,200 6,562 54,203 - 4,751 - - 3,124 - 7,875 - - - - - - - 45,103 330,379 26,825 24,792 194,462 77,500 699,061 2015 Name Directors: S L Pynt M Cherian G Smith R Knowles P Curigliano K Jayesuria TOTAL 2014 Name Directors: S L Pynt M Cherian G Smith1 R Knowles2 1 Appointed as director on 25 September 2013. 2 Appointed as director on 15 October 2013. 3 Commenced employment on 11 November 2013. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 12 Service Agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements with a fixed term of three years except as noted. It is Company policy that employment contracts contain provisions for termination with notice or payment in lieu thereof and for termination by the Company without notice for serious misconduct and breach of contract. The Managing Director is entitled to receive a termination payment in addition to notice where the Company terminates employment on grounds of illness or incapacity. The notice period required to be given by the employee or the Company along with any termination payments are set out in the table below. Notice period by Company Notice period by Employee Termination Payments Managing Director M Cherian Chief Financial Officer P Curigliano Technology Delivery Manager K Jayesuria 6 months 6 months 6 months* 1 month 1 month 1 month 1 month None None * if termination is by reason of the employee’s illness or incapacity. Shares and Options granted to directors and officers of the Company Number of shares issued Number of options granted Key Management Personnel P Curigliano K Jayesuria 2015 - - 2014 - - 2015 - - 2014 300,000 300,000 During the financial year and up to the date of these accounts, the Company, on 10 June 2015, issued 390,000 unlisted employee options to two employees of the Company with an exercise price of 65 cents per option. During the previous financial year, the Company issued the following unlisted employee options to employees of the Company: (a) on 5 July 2013, 300,000 options to one employee with an exercise price of 15 cents per option; (b) on 19 December 2013, 690,000 options to three employees with an exercise price of 65 cents per option; and (c) on 26 May 2014, 300,000 options to one employee with an exercise price of 75 cents per option. All of the unlisted employee options vest in equal one-third parts every 12-months over a period of 36 months from their respective dates of issue and all will expire five years after their respective dates of issue. During the financial year and up to the date of this report, nil options have been exercised. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 13 INDEMNIFICATION OF DIRECTORS AND EXECUTIVES OR AUDITORS During or since the end of the financial year, the Group has not, in any respect for any person who is or has been an officer or director of the parent entity or a related body corporate, indemnified or made any relevant agreement for indemnifying against a liability, including costs and expenses in successfully defending legal proceedings. During or since the end of the financial year the Group has paid premiums in respect of a contract insuring the Directors and officers of all companies in the Group against a liability incurred in their role as Directors and officers of all companies within the Group except where: i. The liability arises out of conduct involving a wilful breach of duty; or ii. There has been a contravention of Sections 232(5) or (6) of the Corporations Act 2001. The total amount of premiums paid by the Group for Directors and Officers Liability Insurance was $24,171 (2014: $31,948). PROCEEDINGS ON BEHALF OF THE COMPANY The Company’s wholly-owned subsidiary, Working Systems Software Pty Ltd commenced legal proceedings against the Crown in right of the State of South Australia by filing originating process in the Adelaide Registry of the Federal Court of Australia on 11 June 2015. Working Systems Software Pty Ltd claims breaches of contract and infringements of copyright by the State of South Australia, arising from the State’s continuing use of the Company’s Chiron Patient Administration System software and Harmony Financial System software after the State’s licence to use expired on 31 March 2015. Working Systems is seeking damages, declarations and a permanent injunction restraining the State from continuing to use Chiron and Harmony. The South Australian Minister for Health has indicated the State’s intention to rely upon the Crown’s compulsory licensing regime for Commonwealth and State governments under the Copyright Act 1968 (Cth) which Working Systems contends does not apply to computer programs. NON-AUDIT SERVICES The Group had a need to employ the auditor on assignments additional to their statutory audit duties as detailed in Note 23. The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed in Note 23 did not compromise the external auditor’s independence for the following reasons: - all non-audit services are reviewed and approved by the Board of Directors prior to the commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and - the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 14 ENVIRONMENTAL ISSUES As the operations of the Group are limited to computer software development and support and professional consulting services, the Group has minimal involvement in and exposure to environmental risks and issues. The Group is not required to comply with any specific Act. CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of the Company support and have adhered to the principles to the extent outlined in the corporate governance statement. The Company’s corporate governance statement is contained in a separate section of this Annual Report. AUDITORS’ INDEPENDENCE DECLARATION A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 accompanies and forms part of this report. Signed in accordance with a resolution of the Directors. Steven Leigh Pynt Non-Executive Chairman Melbourne, 29 September 2015 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 15 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ R E P O R T 16 ReferralNet A cloud-based platform for connectivity across the healthcare sector G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 Corporate Governance Statement Global Health Limited (the Company) and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Accordingly, unless stated otherwise in this document, the Board’s corporate governance arrangements comply with the recommendations of the ASX Corporate Governance Council (including the 2014 amendments) as well as current standards of best practice for the entire financial year ended 30 June 2015. The Company and its controlled entities together are referred to as the Group in this statement. The Board of Directors of the Company is responsible for the corporate governance of the Group. The Directors are responsible to the shareholders for the performance of the Group in both the short and the longer term and seek to balance sometimes competing objectives in the best interests of the Group as a whole. The Board is also responsible for setting the strategic direction and establishing the policies of the Group. The focus is to enhance the interests of shareholders and other key stakeholders and to ensure the Group is properly managed. Day to day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the Board to the Managing Director and senior executives. A description of the Company’s main corporate governance practices is set out below. All these practices, unless otherwise stated, were in place for the entire year. Global Health Limited is listed on the Australian Securities Exchange (ASX). Accordingly, unless stated otherwise in this document, the Board’s corporate governance arrangements comply with the recommendations of the ASX Corporate Governance Council (including the 2014 amendments) as well as current standards of best practice for the entire financial year ended 30 June 2015. Ethical Standards The Board is committed to its core governance values of integrity, respect, trust and openness among and between board members, management, employees, customers and suppliers. These values are enshrined in the Board’s Code of Conduct policy. The Code of Conduct policy requires all directors, management and employees to, at all times: · act honestly and in good faith; · exercise due care and diligence in fulfilling the functions of office; · avoid conflicts and make full disclosure of any possible conflict of interest; · comply with both the letter and spirit of the law; · encourage the reporting and investigation of unlawful and unethical behaviour; and · comply with the share trading policy outlined in the Code of Conduct. Directors are obliged to be independent in judgment and ensure all reasonable steps are taken to ensure that the Board’s core governance values are not compromised in any decisions the Board makes. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 18 Diversity Policy Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The Company is committed to diversity and recognises the benefits arising from employee and Board diversity and the importance of benefiting from all available talent. The policy outlines requirements for the Board to develop measurable objectives for achieving diversity, and annually assess both objectives and the progress in achieving those objectives. As Director and senior executive positions become vacant and appropriately qualified candidates become available, the Board has developed the following objectives: · Achieve a diverse and skilled workforce leading to continuous improvement; · The development of clear criteria for behavioural expectations in relation to promoting diversity in the work environment; · Ensure that personnel responsible for recruitment take diversity issues into account when considering vacancies; · Create a work environment that values and utilises the contributions of employees with diverse backgrounds, experiences and perspectives; · Create awareness in all employees of their rights and responsibilities with regards to fairness, equity and respect for all aspects of diversity The Board believes it has been successful in implementing these objectives throughout the Company’s workforce and continues to monitor and assess the Company’s efforts in this regard. The number of women employed by the Company and their employment classifications are as follows: 2015 2014 Number Percentage Number Percentage Women on the Board Women in senior management Women employees in the Company - 1 10 0% 12% 37% - 3 11 0% 38% 34% G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 19 COMPOSITION OF THE BOARD There were four directors on the Board at any one time throughout the year. Of these, three were non- executive directors and one was executive director – the latter being the Managing Director/Chief Executive Officer. Each year one-third of directors and any director (excluding the Managing Director) who has held office for three years or three annual general meetings (whichever is longer) must retire from office. A retiring director is eligible to seek re-election if so minded. The skills, experience and expertise relevant to the position of each director who is in office at the date of the Annual Report and their term of office are detailed in the Directors’ Report. The Board strives to achieve a mix of commercial, financial, legal, management, health industry and IT skills and experience among its members. The composition of the Board is determined in accordance with the following principles and guidelines: · The Board should comprise at least three Directors and should maintain a majority of independent and Non-executive Directors; · The Chairman must be an independent and Non-executive Director; · The roles of Chief Executive Officer and Chairman must not be performed by the same individual; · The Board should comprise Directors with an appropriate range of qualifications and expertise; and · The Board shall meet regularly and have available all necessary information to participate in an informed discussion of all agenda items. When considering potential candidates for directorship, the Board assesses qualified professionals and experienced business people in industry. The Company does not engage any consultants to source potential Board members, but relies on the Directors’ industry contacts to identify potential candidates based on an individual’s professional and business reputation, health care services industry experience and other areas of expertise. The Company seeks to maintain a diverse range of members of the Board by having only one director drawn from any one professional background at any one time. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 20 BOARD MEMBERS The Directors in office at the date of this statement are: Name Mr S L Pynt Mr M Cherian Mr G Smith Position Non-executive Chairman Chief Executive Officer and Managing Director Non-executive Director Mr R Knowles AO Non-executive Director There are three Non-executive Directors who are deemed independent under the principles set out below, and one Executive Director, at the date of signing the Directors’ Report. The Board seeks to ensure that: · At any point in time, its membership represents an appropriate balance between Directors with experience and knowledge of the Group and Directors with an external or fresh perspective. · The size of the Board is conducive to effective discussion and efficient decision-making. As a Board, the Directors need to provide the following skills and knowledge: · A balance of proven expertise, diverse skills and experience in commerce, finance, health care innovation and other areas where software technology can improve the experience of consumers and providers of health care services · Understanding of the roles, duties and responsibilities of directors under the Corporations Act · Leadership skills, experience making decisions at the highest levels, strategic thinking and long-term planning abilities · An understanding of current issues affecting the Australian health care industry in particular, and in general a wider understanding of international medical and technological trends in health care provision and consumption · Flexible, consultative and innovative approaches to communicating and achieving corporate goals · A passion for and strong commitment to the success of the activities of Global Health Limited As Global Health Limited has a relatively small Board, the full Board acts as a nomination committee and reviews Board memberships including an assessment of necessary and desirable competencies, particularly in consideration of appointments and removals. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 21 BOARD RESPONSIBILITIES The responsibilities of the Board include: 1. providing strategic guidance to the Company including contributing to the development of and approving the corporate strategy; 2. reviewing and approving business plans, the annual budget and financial plans including available resources and major capital expenditure initiatives; 3. overseeing and monitoring: a. organisational performance and the achievement of the Group’s strategic goals and objectives b. progress of major capital expenditures and other significant corporate projects including any acquisitions or divestments; 4. monitoring financial performance including approval of the annual and half-year financial reports and liaison with the Company’s auditors; 5. appointment, performance assessment and, if necessary, removal of the Managing Director; 6. ratifying the appointment and/or removal and contributing to the performance assessment of the members of the senior management team; 7. ensuring there are effective management processes in place and approving major corporate initiatives; 8. enhancing and protecting the reputation of the organisation; 9. overseeing the operation of the Group’s system for compliance and risk management reporting to shareholders. NON-EXECUTIVE DIRECTORS’ INDEPENDENCE The Board has adopted specific principles in relation to Non-Executive Directors’ independence. These state that to be deemed independent, a Director must be a Non-executive and; · Not be a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company. · Within the last three years, not have been employed in an executive capacity by the Company or any other Group member or been a Director after ceasing to hold any such employment. · Within the last three years not have been a principal of a material professional advisor or a material consultant to the Company or any other Group member, or an employee materially associated with the service provided. · Not be a material supplier or customer of the Company or any other Group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer. · Must have no material contractual relationship with the Company or a controlled entity other than as a Director of the Group. · Not have been on the Board for any 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. · Be 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. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 22 TRADING POLICY Directors are subject to the Corporations Act 2001 relative to restrictions applying to acquiring and disposing of securities of the Company, if they are in possession of information which is not generally available, and which, if generally available, a reasonable person would expect to have a material effect on the price of the securities of the Company. The Company’s policy restricts Directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the security’s prices. CHAIRMAN AND CHIEF EXECUTIVE OFFICER (CEO) The Chairman is responsible for leading the Board, ensuring Directors are properly briefed in all matters relevant to their role and responsibilities, facilitating Board discussions and managing the Board’s relationship with the Company’s senior executives. The CEO is responsible for implementing Group strategies and policies. The Board charter specifies that these are separate roles to be undertaken by separate people. COMMITMENT The Board held five Board meetings during the year. The number of meetings of the Company’s Board of Directors and of each Board committee held during the year ended 30 June 2015, and the number of meetings attended by each Director is disclosed in the Directors’ Report. The three Non-executive Directors meet during the year, in scheduled sessions without the presence of management, to discuss the operation of the Board and a range of other matters. Relevant matters arising from this meeting was shared with the full Board. It is the Company’s practice to allow its Executive Directors to accept appointments outside the Company with prior written approval of the Board. Prior to appointment or being submitted to for re-election, each Non-executive Director is required to specifically acknowledge that they have and will continue to have the time available to discharge their responsibilities to the Company. CORPORATE REPORTING The Managing Director and Chief Financial Officer have made the following certifications to the Board: · that the Group’s financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Group and are in accordance with relevant accounting standards; and · that the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board and that the Group’s risk management and internal compliance and control is operating efficiently and effectively in all material respects. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 23 AUDIT COMMITTEE The Board has established an audit committee which acts in accordance with its charter. The audit committee consists of the following Non-executive Directors: Mr S L Pynt Mr G Smith Due to the small number of Board members, the Board has agreed to allow the audit committee to be made up of two independent non-executive Directors. Details of these Directors’ qualifications and attendance at audit committee meetings are set out in the Directors’ Report. The audit committee has appropriate financial expertise and all members are financially literate and have an appropriate understanding of the industries in which the Group operates. The audit committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party. It is the committee’s responsibility to ensure that an effective internal control framework exists within the Group. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes. This includes the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information. REMUNERATION The Board does not have a separate remuneration committee due to the small number of Board members. Consequently the issue of remuneration is under the control of the Board which has the responsibility of reviewing and approving remuneration of the Non-Executive Chairman and other executives of the Group. Remuneration levels will be competitively set to attract the most qualified and experienced Directors and senior executives. Where necessary the Board may obtain independent advice on the appropriateness of remuneration packages and obtain any necessary shareholder approvals. The amount of remuneration for all Directors is detailed in the Directors’ Report section. Payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders. The Board expects that the remuneration structure implemented will result in the Company being able to attract and retain the best executives to run the Group. It will also provide executives with the necessary incentives to work to grow long term shareholder value. MONITORING OF THE BOARD’S PERFORMANCE The Board has adopted a code of conduct for Directors in keeping with the Company’s desire to remain a good corporate citizen and appropriately balance, protect and preserve all stakeholders’ interests. In order to ensure that the Board continues to discharge its responsibilities in an appropriate manner, the Chairman reviews the performance of all Directors annually. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 24 COMMUNICATION TO SHAREHOLDERS The Board aims to ensure that the shareholders, on behalf of whom they act, are informed of all information necessary to assess the performance of the economic entity. Information is communicated to the shareholders through: - the Annual Report which is distributed to all shareholders; - the Annual General Meeting and other meetings called to obtain approval for Board action as appropriate; - regular release of media and market updates to the ASX; and - the Company’s website: www.global-health.com. The Company Secretary is the person responsible for communications with the Australian Stock Exchange (ASX). This role includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX Listing Rules and overseeing and coordinating information disclosure to the ASX, analysts, brokers, shareholders, the media and the public. All information disclosed to the ASX is posted on the Company’s website as soon as it is disclosed to the ASX. When analysts are briefed on aspects of the Group’s operations, the materials used in the presentation are released to the ASX and posted on the Company’s website. All shareholders are entitled to receive a copy of the Company’s annual and half yearly reports. In addition, the Company seeks to provide opportunities for shareholders to participate through electronic means. Initiatives to facilitate this include making all Company announcements, media briefings, details of Company meetings, press releases for the last three years and financial reports for the last three years available on the Company’s website. The website also includes an option for shareholders to register their email address for direct email updates on Company matters. INDEPENDENT PROFESSIONAL ADVICE Each Director is entitled to seek independent professional advice at the expense of the Company in carrying out his duties as a Director. Prior to obtaining such advice, if at the expense of the economic entity, the Chairman will be advised of the matter and an estimate of the cost. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 25 ASX RECOMMENDATIONS 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2.1 2.2 2.3 2.4 2.5 2.6 3.1 4.1 A listed entity should disclose: (a) the respective roles and responsibilities of its Board and management; and (b) those matters expressly reserved to the Board and those delegated to senior management A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. The company secretary of a listed entity should be accountable directly to the Board, through the chair, on all matters to do with the proper functioning of the Board. A listed entity should have a diversity policy which includes requirements for the Board or a relevant committee of the Board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the Board or a relevant committee of the Board in accordance with the entity’s diversity policy and its progress towards achieving them, and either: the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or if the entity is a ‘relevant employer’ under the Workplace Gender Equality Act, the entity’s most recent ‘Gender Equality Indicators’, as defined in and published under that Act. A listed entity should have and disclose the process for periodically evaluating the performance of the Board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. A listed entity should have and disclose the process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. A listed entity should disclose: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director. A majority of the Board of a listed entity should be independent Directors The Chair of the Board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it. The Board of a listed entity should: (a) have an Audit Committee which: (1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. Complied Note       - 1        2 3 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 26 4.2 4.3 5.1 6.1 6.2 6.3 6.4 7.1 7.2 7.3 7.4 8.1 8.2 8.3 The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. A listed entity should: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it. A listed entity should provide information about itself and its governance to investors via its website. A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. The Board or a committee of the Board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place. A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. The Board of a listed entity should : (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. A listed entity should separately disclose its policies and practices regarding the remuneration of non- executive directors and the remuneration of executive directors and other senior executives. A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it. Complied Note          -  -   4 5 Note 1: The Board of Directors of the Company does not have a Nomination Committee. The Board is of the opinion that due to the nature and size of the Company, the functions performed by a Nomination Committee can be adequately handled by the full Board. Note 2: The Company did not have a formal written code/policy but has had one in place since 1 September 2015. Note 3: The Company has three non-executive Directors, of whom two comprise the Audit Committee. The Board is of the opinion that due to the nature and size of the Company, this function can be adequately handled with less than the three members recommended under ASX guidelines. Note 4: The Company does not have an Internal Audit Function. The Board is of the opinion that due to the nature and size of the Company, the functions performed by an internal auditor are being adequately served by the Company’s independent external auditors. Note 5: The Company does not have a Remuneration Committee. The Board is of the opinion that due to the nature and size of the Company, the functions performed by a Remuneration Committee can be adequately handled by the full Board. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 27 LifeCard A personal health record that empowers consumers to be more proactive about their health and wellness G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 Directors’ Declaration 1. In the opinion of the Directors of Global Health Limited (‘the Company’): (a) the financial statements and notes, set out on pages 36 to 73 are in accordance with the Corporations Act 2001 including: i. giving a true and fair view of financial position of the consolidated entity as at 30 June 2015 and of its performance, as represented by the results of its operations and its cash flows, for the year ended on that date; ii. complying with Accounting Standards in Australia and the Corporations Regulations 2001; iii. complying with International Reporting Standards as disclosed in Note 1; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. There are reasonable grounds to believe that the Company and the controlled entities identified in Note 19 will be able to meet any obligations or liabilities to which they are or may become subject. 3. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the year ended 30 June 2015. This declaration is made in accordance with a resolution of the Directors. On behalf of the Board Steven Leigh Pynt Non-Executive Chairman Melbourne, 29 September 2015 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S ’ D E C L A R A T I O N 29 HotHealth An e-health portal for healthcare organisations to engage with their providers and patients online G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 Annual Financial Report 2015 This Global Health Limited consolidated entity (‘Group’) financial report is presented in the Australian currency. Global Health Limited is a company limited by shares, incorporated and domiciled in Australia. With effect from 1 September 2014, the Company’s registered office and principal place of business is: Global Health Limited Level 2, 607 Bourke Street Melbourne, Victoria 3000 Australia. A description of the nature of the Group’s operations and its principal activities is included in the review of operations and activities in the Directors’ Report which are part of this financial report. The financial report was authorised for issue by the Directors on 29 September 2015. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 A N N U A L F I N A N C I A L R E P O R T 31 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015 Revenue from the sale of licenses and maintenance contracts Revenue from professional services Other revenues Total revenue from continuing operations Salaries and related costs Direct external costs General and administration costs Earnings before interest, tax, depreciation and amortisation Finance costs Depreciation Amortisation Non-operating foreign exchange gains/(losses) Profit before income tax Income tax benefit/(expense) Net profit for the period Other comprehensive income Exchange differences on translating foreign operations Total comprehensive profit for the period Net profit/(loss) for the period attributable to: Owners of the parent Non-controlling interest Total comprehensive profit/(loss) attributable to: Owners of the parent Non-controlling interest Earnings per share Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Note 2 2 2 3 3 3 3 3, 9 4 17 18 25 25 Consolidated Group 2015 $ 2014 $ 3,504,313 450,023 584,773 4,539,109 (2,508,020) (27,436) (777,354) 1,226,299 (17,759) (47,502) (211,371) 110,240 1,059,907 - 4,102,836 666,065 482,185 5,251,086 (2,614,639) (136,803) (840,158) 1,659,486 31,397 (8,402) (209,953) (29,015) 1,443,513 - 1,059,907 1,443,513 (106,953) 952,954 1,060,120 (213) 1,059,907 953,243 (289) 952,954 Cents 3.246 3.240 28,494 1,472,007 1,443,725 (212) 1,443,513 1,472,135 (128) 1,472,007 Cents 4.420 4.420 The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 A N N U A L F I N A N C I A L R E P O R T 32 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015 Note Consolidated Group 2015 $ 2014 $ Current Assets Cash and cash equivalents Receivables Other Total Current Assets Non-Current Assets Receivables Property, plant and equipment Intangibles Total Non-Current Assets Total Assets Current Liabilities Payables Interest bearing liabilities Provisions Unearned income Total Current Liabilities Non-Current Liabilities Interest bearing liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets/(Liabilities) Equity Contributed equity Reserves Accumulated losses Total Parent Entity Interest Non-controlling interest Total Equity 5 6 7 6 8 9 11 12 13 14 12 13 15 16 17 18 548,404 931,730 235,989 1,716,123 135,047 146,971 4,025,198 4,307,216 6,023,339 718,130 28,508 452,510 1,029,282 2,228,430 39,415 127,488 166,903 2,395,333 1,117,444 500,899 166,479 1,784,822 97,680 10,664 3,080,101 3,188,445 4,973,267 666,817 44,715 455,439 997,646 2,164,617 - 133,598 133,598 2,298,215 3,628,006 2,675,052 20,656,242 79,256 (16,969,316) 3,766,182 (138,176) 3,628,006 20,656,242 186,133 (18,029,436) 2,812,939 (137,887) 2,675,052 The above statement of financial position should be read in conjunction with the accompanying notes. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 A N N U A L F I N A N C I A L R E P O R T 33 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015 Consolidated Group Issued capital ordinary Option reserve Currency translation reserve Retained earnings Total attributable to owners of the parent Non- Controlling interest Total equity Balance 1 July 2014 20,656,242 29,978 156,155 (18,029,436) 2,812,939 (137,887) 2,675,052 Share based payments Transactions with owners Profit/(loss) for the period Other comprehensive income: Exchange difference on translation of foreign operations Total comprehensive profit/(loss) for the period - - - - - - - - - - - - - - - - - - - - - 1,060,120 1,060,120 (213) 1,059,907 (106,877) - (106,877) (76) (106,953) (106,877) 1,060,120 953,243 (289) 952,954 Balance 30 June 2015 20,656,242 29,978 49,278 (16,969,316) 3,766,182 (138,176) 3,628,006 Balance 1 July 2013 20,656,242 29,978 127,745 (19,473,161) 1,340,804 (137,759) 1,203,045 Share based payments Transactions with owners Profit/(loss) for the period Other comprehensive income: Exchange difference on translation of foreign operations Total comprehensive profit/(loss) for the period - - - - - - - - - - - - - - - - - - - - - 1,443,725 1,443,725 (212) 1,443,513 28,410 - 28,410 84 28,494 28,410 1,443,725 1,472,135 (128) 1,472,007 Balance 30 June 2014 20,656,242 29,978 156,155 (18,029,436) 2,812,939 (137,887) 2,675,052 The above statement of changes in equity should be read in conjunction with the accompanying notes. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 A N N U A L F I N A N C I A L R E P O R T 34 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015 Note Consolidated Group 2015 $ 2014 $ Cash Flows from Operating Activities Receipts from customers Receipts from Research and Development Grants Payments to suppliers and employees Sub-total Interest received Interest and finance costs paid Net cash inflow from operating activities 28 Cash Flows from Investing Activities Proceed from sale of plant and equipment Purchase of property, plant and equipment Purchase of intangibles Net cash outflow from investing activities 3,921,599 531,896 (3,711,475) 742,020 22,506 (17,759) 746,767 1,650 (184,711) (1,156,469) (1,339,530) 5,121,084 413,833 (4,167,132) 1,367,785 14,921 31,397 1,414,103 - (11,188) (1,100,460) (1,111,648) Net cash inflow/(outflow) from operating and investing activities (592,763) 302,455 Cash Flows from Financing Activities Proceeds from borrowings Repayment of borrowings Net cash inflow/(outflow) from financing activities Net increase in cash and cash equivalents held Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 5 176,337 (152,614) 23,723 (569,040) 1,117,444 548,404 66,301 (76,666) (10,365) 292,090 825,354 1,117,444 The above statement of cash flows should be read in conjunction with the accompanying notes. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 A N N U A L F I N A N C I A L R E P O R T 35 Notes to the Financial Statements Global Health Limited and its controlled entities is a for-profit company domiciled in Australia. The financial statements were authorised for issue by the Board of Directors on 29 September 2015. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. The separate financial statements and notes of the parent entity, Global Health Limited, have not been presented within this financial report as permitted by amendments made to the Corporations Act 2001. The parent entity summary is included in Note 32. 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements cover Global Health Limited and its controlled entities as a consolidated entity (‘Group’). Global Health Limited is a for-profit public listed company limited by shares, incorporated and domiciled in Australia. The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. (a) Basis of preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Compliance with IFRSs Compliance with Australian Accounting Standards ensures that the financial statements and notes of Global Health Limited and its controlled entities comply with International Financial Reporting Standards (IFRSs). Historical cost convention These financial statements have been prepared under the historical cost convention and are also prepared on an accruals basis. Critical Accounting Estimates and Judgements The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current 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. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 36  Key estimates (i) Impairment The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. With respect to cash flow projections in Australia and overseas, modest growth rates have been factored into valuation models for the next five years on the basis of management’s expectations around the Group’s continued ability to capture market share from competitors. Key judgments (i) Provision for Impairment of Receivables Provision for impairment of trade receivables has been included in Note 6 Receivables. (b) Principles of Consolidation A controlled entity is any entity that Global Health Limited has the power to control the financial and operating policies of the entity so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered. A list of controlled entities is contained in Note 19 to the financial statements. All controlled entities have a June financial year end. As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. Where controlled entities have entered (left) the Group during the year, their operating results have been included (excluded) from the date control was obtained (ceased). All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity. Non-controlling interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity interests held by persons outside the Group, are shown separately within the equity section of the consolidated statement of financial position and in the consolidated statement of profit or loss. 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 identified as the acquirer (ie 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 identifiable assets acquired and liabilities assumed. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 37 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. 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 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. 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 equity interests issued by the acquirer. Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of profit or loss. Where changes in the value of such equity holdings had been previously been recognised in other comprehensive income, such amounts are recycled to profit or loss. Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds or consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is re-measured each reporting period to fair value through the statement of profit or loss and other comprehensive income unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the business combination are expensed to the statement of profit or loss and other comprehensive income. 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. 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 equity interests issued by the acquirer. Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of profit or loss. Where changes in the value of such equity holdings had been previously been recognised in other comprehensive income, such amounts are recycled to profit or loss. Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds or consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is re-measured each reporting period to fair value through the statement of profit or loss and other comprehensive income unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the business combination are expensed to the statement of profit or loss and other comprehensive income. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 38 (c) Impairment of non-financial 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. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income. (d) Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for the major business activities as follows: Sales Revenue Sales revenue comprises revenue earned (net of returns, discount and allowances) from the provision of products or services to entities outside the consolidated entity. Sales revenue is categorised and recognised as follows: · Initial Licence Fees and Upgrade Fees Initial Licence Fees and Upgrade Fees are brought to account on the earlier of: 1. The date of signing the contract or agreement or; 2. The date stipulated in the executed contract or agreement. The entity is able to recognise the revenue when the significant risks of ownership are transferred from the entity to the buyer and one of the above conditions is met. · Maintenance Fees Maintenance fees are a non-refundable deferred revenue stream. Clients subscribe to their licences in advance – ranging from monthly, quarterly, half-yearly to annual payments. They are proportionally accrued in arrears, at the end of each month. These entitle the customer to a usage licence, help desk telephone support and rights to extended warranty and product enhancements. · Professional Services Professional services are brought to account on the issue of invoice on completion of work that may be performed on a time and materials or a project milestone basis. This includes work done in the health and non-health segments. Grants Grant monies are not recognised until there is reasonable assurance that the consolidated entity will comply with the conditions attaching to it, and that the grant will be received. Receipt of a grant does not of itself provide conclusive evidence that the conditions attaching to the grant have been or will be fulfilled. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 39  Rent recharge Revenue received from the sub-let of office premises is recognised monthly. Interest Income Interest revenue is recognised using the effective interest method. Asset Sales The net profit or loss on asset sales is included as revenue of the consolidated entity. The profit or loss on disposal of assets is brought to account at the date an unconditional contract of sale is signed. All revenue is stated net of the amount of goods and services tax. (e) Goods and services tax Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the Australian Taxation Office are classified as operating cash flow. (f) Income Tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying values in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are substantially enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Current and deferred tax balances attributable to amounts directly in equity are also recognised directly in equity. Tax consolidation legislation Global Health Limited and its wholly-owned Australian entities have implemented the tax consolidation legislation. These were formally adopted on lodgement of the 2004 income tax returns. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 40  On forming a tax consolidated group, Global Health Limited is now responsible for recognising the deferred tax assets relating to tax losses for the Tax Consolidated Group. The Tax Consolidated Group has entered into a tax-sharing agreement whereby each company in the Group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the Tax Consolidated Group. (g) Intangible assets Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs. Other development expenditure is recognised in profit or loss as incurred. Capitalised development costs are measured at cost less accumulated amortisation and accumulated impairment losses. Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project which is 10 years. (h) Plant and Equipment Cost and valuation Plant and equipment, leasehold improvements and furniture and fittings are carried at cost. Asset are carried at cost less any accumulated depreciation and any impairment losses. Costs include purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and restoring the asset, where applicable. Depreciation Plant and equipment, leasehold improvements and furniture and fittings of the consolidated entity are depreciated on a diminishing value basis. Rates of depreciation are calculated to allocate the cost, less estimated residual value at the end of the useful lives of the assets. The depreciation rates used for each class of depreciable assets are: Class of Asset Leasehold Improvements Plant & Equipment Furniture and Fittings Motor Vehicles Diminishing Value (%) 25 - 35 27 - 40 13 22.5 The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the assets’ 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 statement of profit or loss and other comprehensive income. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 41 (i) Trade Receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the impairment loss is recognised in the statement of profit or loss within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against general and administrative expenses in the statement of profit or loss and other comprehensive income. (j) Foreign Currency Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Global Health Limited’s functional and presentation currency. Translation of controlled foreign entities The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: · Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; · Income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and · All resulting exchange differences are recognised as a separate component of equity. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 42  On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and borrowings and other currency instruments, are taken to shareholders’ equity. When a foreign operation is sold or borrowings repaid, a proportionate share of such exchange differences are recognised in the statement of profit or loss and other comprehensive income as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. (k) Leases Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership. Finance leases, which effectively transfer to the Group, substantially all of the risks and benefits incidental to ownership of the leased item, are capitalised at the present value of the minimum lease payments and amortised over the period the Group is expected to benefit from the use of the leased assets. Operating lease payments, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased items, are included in the determination of the operating profit or loss in equal instalments over the lease term. (l) Employee Benefits Provision is made for benefits accruing to employees in respect of salaries and wages, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. Wages, Salaries & Annual Leave Liabilities arising in respect of wages, salaries, annual leave and other employee benefits expected to be settled within 12 months represent the amount which the Group has a present obligation to pay resulting from employees’ services provided up to the reporting date. Liabilities have been calculated at the amounts expected to apply at the time of settlement. On-costs are included in this amount. Long Service Leave The liability for employee benefits to long service leave represents the present value of the estimated future cash outflows to be made by the employer resulting from employees’ services provided up to the reporting date. Liabilities for employee benefits which are not expected to be settled within twelve months are discounted using the rates attaching to national government securities at reporting date, which most closely match the terms of maturity of the related liabilities. In determining the liability for long service leave, consideration has been given to future increases in wage and salary rates, and the Group’s experience with staff departures. Related on-costs have also been included in the liability. Share-based payments Share-based compensation benefits are provided to employees via the Company’s Employee Option Plan and an employee share scheme. Information relating to these schemes is set out in Note 27. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 43  The fair value of options granted under the Company’s Employee Option Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is independently determined using an option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The fair value of the options granted excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital. The market value of shares issued to employees for no cash consideration under the employee share scheme is recognised as an employee benefits expense with a corresponding increase in equity when the employees become entitled to the shares. (m) Accounts Payable Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Group. The amounts are unsecured and are usually paid within 30 days of recognition. (n) Financial Instruments Initial recognition and measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instrument classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below. Effective interest rate method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets, or, where appropriate, a shorter period. Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value through profit or loss’. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 44  Classification and subsequent measurement Financial assets at fair value through profit or loss Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in the period in which they arise. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Held-to-maturity investments These investments have fixed maturities, and it is the Group’s intention to hold these investments to maturity. Held-to-maturity investments held by the Group are stated at amortised cost using the effective interest rate method. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are held at fair value with changes in fair value taken through the financial assets reserve directly to other comprehensive income. Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method. 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 of financial assets At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant or prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the statement of profit or loss. The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment loss through the use of an allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 45  With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in other comprehensive income. Financial Guarantees Where material, financial guarantees issued, which require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at fair value on initial recognition. The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 118 Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 118. The fair value of financial guarantee contracts has been assessed using the probability weighted discounted cash flow approach. The probability has been based on: · · the likelihood of the guaranteed party defaulting in a 12-month period; the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and · the maximum loss exposed if the guaranteed party were to default. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial 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 profit or loss. (o) Contributed Equity Issued and paid up capital is recognised at the fair value of the consideration received by Global Health Limited. Transaction costs arising on 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. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 46 (p) Earnings Per Share Basic earnings per share (EPS) is calculated as the net result attributable to members, adjusted to exclude costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted EPS is calculated as the net result attributable to members, adjusted for: · Costs of servicing equity (other than dividends) and preference share dividends; · The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and · Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (q) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities with three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (r) Going Concern At 30 June 2015, the Company reported an EBITDA profit of $1,226,299 (2014: $1,659,486). A net asset surplus of $3,628,006 (2014: $2,675,052) and a net current asset deficiency of $512,307 (2014: $379,795) was also recorded. This net current asset deficiency is primarily represented by unearned revenue of $1,029,282. Unearned revenue comprises annual subscriptions (licence to use, help desk telephone support, rights to enhancements and extended warranties) paid in advance but recognised monthly. These subscriptions in advance are not subject to refunds or cancellation but do incur an obligation by the Group to provide monthly help-desk and warranty services. The reporting of unearned revenue on the Company’s balance sheet has always been shown and is a normal business operation. The Board believes it is appropriate to prepare the financial statements on a going concern basis. (s) Comparatives When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Comparatives are consistent with prior years, unless otherwise stated. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 47 (t) Government Grants Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognised as income on the date of receipt of the grant. The Government has the right to review grants paid and may clawback funds in the event of an excess claim. Research and Development Grant The Company received a federal government Research and Development Tax Incentive of $531,896 (2014:$ 413,833) in relation to its research and development activities for the 2015 financial year. (u) Borrowing Costs Borrowing costs are expensed as incurred. (v) Legal Fees Legal costs will be incurred from time to time. Their treatment will be classified under the following scenarios: 1. Ordinary Course of Business; Where legal fees are incurred in the ordinary course of business they will be expensed to the Statement of Profit and Loss. 2. Protection of Intellectual Property; Where legal fees incurred are directly related to the protection of Intellectual Property, the costs will be capitalised and shown as a Non-Current Asset on the Company’s Statement of Financial Position where there is a reasonable expectation that the claim will succeed. Should this condition not be met, legal fees for the protection of Intellectual Property will be expensed to the Profit and Loss Statement. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 48 (w) New accounting standards and Australian Accounting Interpretations In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to its operations and effective for the current annual reporting. There are no significant effects on current, prior or future periods arising from the first-time application of the standards discussed above in respect of presentation, recognition and measurement of accounts. At the date of authorisation of the financial statements, the following Australian Accounting Standards/ Accounting Interpretations have been issued or amended and are applicable to the Group but are not yet effective and have not been adopted in preparation of the financial statements. Standard/Interpretation Impact on the Group AASB 2015-3 Amendments to Australian Accounting Standards arising from the withdrawal of AASB 1031 Materiality AASB 2015-2 Disclosure Initiative – Amendment to AASB 101 AASB 15 Revenue from contracts with customers AASB 2014-5 Amendment to Australian Accounting Standards arising from AASB 15 There is not expected to be any changes to the reported financial position, performance or cash flows of the entity No impact on reported financial position or performance is expected The changes in revenue recognition requirements in AASB 15 might cause changes to the timing and amounts of revenue recorded in the financial statements as well as additional disclosures. The impact of AASB 15 has not yet been quantified. Effective for annual reporting periods beginning on or after First applied in the year ending 1 July 2015 30 June 2016 1 January 2016 30 June 2016 1 January 2018 30 June 2018 AASB 9 Financial Instruments No significant impact is expected 1 January 2018 30 June 2019 AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instrument G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 49 2. REVENUE AND OTHER INCOME Revenue Sales of licences Maintenance contracts Professional services Other Income Interest received on financial assets at amortised cost Research and Development grants Rental recharge Other Note: All revenue is attributed to controlling interests 3. EXPENSES Profit before income tax includes the following specific expenses Cost of sales Depreciation of non-current assets Amortisation of Development Asset Impairment losses on financial assets - Trade receivables Consolidated Group 2015 $ 2014 $ 917,488 2,586,825 450,023 3,954,336 22,506 531,896 903 29,468 584,773 1,682,444 2,420,392 666,065 4,768,901 14,921 413,833 8,957 44,474 482,185 4,539,109 5,251,086 Consolidated Group 2015 $ 2014 $ 27,436 47,502 211,371 136,803 8,402 209,953 - 15,337 Wages and salaries, net of Capitalised Development cost 2,508,020 2,614,639 Travel and accommodation Operating lease payments Interest expense on financial liabilities carried at amortised cost 91,028 180,725 17,759 87,864 214,403 (31,397) G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 50 4. INCOME TAX EXPENSE A The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows: Prima facie income tax payable on profit/(loss) before income tax at 30% 317,972 433,054 Consolidated Group 2015 $ 2014 $ Increase/(decrease) in income tax expense due to: - other non-allowable items - foreign subsidiary losses not booked - recoupment of losses Deferred tax asset/(liabilities) not brought to account B Deferred tax asset not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1(f) occur - from temporary differences - from unused tax losses 5. CASH AND CASH EQUIVALENTS Cash at bank and on hand Deposits at call Balance per Statement of Cash Flows 6. RECEIVABLES Current Trade receivables Impairment of receivables Non-Current Trade receivables 133,883 3,133 (195,538) (259,450) (514,899) 1,243,767 728,868 216,686 3,822 (404,170) (249,392) (255,449) 1,463,764 1,208,315 Consolidated Group 2015 $ 2014 $ 548,404 - 548,404 1,108,754 8,690 1,117,444 Consolidated Group 2015 $ 2014 $ 932,641 (911) 931,730 135,047 135,047 507,909 (7,010) 500,899 97,680 97,680 1,066,777 598,579 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 51 Provision for Impairment of Current Trade Receivables Current trade receivables are non-interest bearing receivable and generally on 30-day terms. A provision for impairment is recognised when there is objective evidence that an individual trade receivable is impaired. Movements in the provision are as follows: Balance at beginning of year Charge for year Amounts written off Amounts reversed Closing balance Trade receivables that are impaired Consolidated Group 2015 $ 2014 $ 7,010 - - (6,099) 911 9,530 - - (2,520) 7,010 As at 30 June 2015, the following trade receivables of the Group were past due and impaired (2014: $7,010). The ageing of trade receivables which have been impaired are as follows: 1 to 3 months 3 to 6 months Over 6 months Consolidated Group 2015 $ 2014 $ - 867 44 - 5,369 1,641 Trade receivables that are past due but not impaired As of 30 June 2015, trade receivables of $53,598 (2014: $9,074) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows: 1 to 3 months 3 to 6 months Over 6 months Fair Values Consolidated Group 2015 $ 2014 $ 44,550 9,048 - 344 8,730 - The carrying value less impairment provision of trade receivables are assumed to approximate fair value. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 52 7. OTHER ASSETS Current Prepayments Security bonds 8. PROPERTY, PLANT AND EQUIPMENT Leasehold improvements – at cost Accumulated amortisation Plant and equipment – at cost Accumulated depreciation Consolidated Group 2015 $ 2014 $ 123,967 112,022 235,989 110,384 56,095 166,479 Consolidated Group 2015 $ 2014 $ 173,217 (40,769) 132,448 460,750 (446,227) 14,523 9,500 (9,500) - 718,479 (707,815) 10,664 Property, plant and equipment (net) 146,971 10,664 Reconciliation of the carrying amounts or each class of property, plant and equipment are set out below: Leasehold improvements Carrying amount – as at 1 July Additions Amortisation Carrying amount – as at 30 June Plant and equipment Carrying amount – as at 1 July Additions Disposal, net Depreciation Carrying amount – as at 30 June - 173,217 (40,769) 132,448 10,664 11,495 (903) (6,733) 14,523 2,542 - (2,542) - 5,336 11,188 - (5,860) 10,664 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 53 9. INTANGIBLES Non-Current Development expenditure – at cost* Accumulated amortisation Consolidated Group 2015 $ 2014 $ 4,460,104 (526,981) 3,933,123 3,395,711 (315,610) 3,080,101 Legal fees – protection of Intellectual Property 92,075 - Total Intangibles, net 4,025,198 3,080,101 Intangibles Carrying amount – as at 1 July Additions Amortisation Carrying amount – as at 30 June 4,025,198 3,080,101 1,156,468 (211,371) 4,025,198 3,080,101 2,189,594 1,100,460 (209,953) 3,080,101 * This represents costs arising from the development phase of internal projects. Amortisation has been charged to the accounts as it has been determined that the products have been launched and are ready for sale. 10. FAIR VALUE MEASUREMENT The introduction of AASB 13 provided guidance for determining the fair value of assets and liabilities. It did not change when the Company is required to use fair value but, rather, provides guidance on how to determine fair value when fair value is required or permitted. It also expands the disclosure requirements for all assets or liabilities carried at fair value. The Company reviewed its policies for measuring fair values and the application of AASB 13 has not resulted in any change in the fair value measurements of the Company. 11. PAYABLES Trade creditors Other creditors and accruals Consolidated Group 2015 $ 2014 $ 416,755 301,375 718,130 343,881 322,936 666,817 The carrying value of trade payables is assumed to approximate fair value. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 54 12. INTEREST BEARING LIABILITIES Current Loan – Premium funded policies Loan for Leasehold Improvements Non-Current Loan for Leasehold Improvements Consolidated Group 2015 $ 2014 $ - 28,508 28,508 39,415 39,415 44,715 - 44,715 - - The Premium Funded Policies are 12-month terms in line with the term of the premiums and are unsecured. Whilst policies remain current and in place, the funding arrangement expired on 31 March 2015 and was not renewed. The Loan for Leasehold Improvements relates to work done for Level 2, 607 Bourke Street, Melbourne. The Company’s head office relocated to these premises on 1 September 2014. Fair Values Loan – Premium funded policies Loan for Leasehold Improvements 13. PROVISIONS Analysis of Provisions Consolidated Group Opening balance at 1 July 2014 Amounts taken during the year Amount provided during the year Closing Balance 30 June 2015 Current Employee benefits Non-Current Employee benefits Consolidated Group 2015 $ 2014 $ - 67,923 67,923 44,715 - 44,715 Consolidated Group 2015 $ 2014 $ 589,037 (244,730) 235,691 579,998 521,312 (200,361) 268,086 589,037 452,510 455,439 127,488 579,998 133,598 589,037 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 55 14. UNEARNED INCOME Consolidated Group 2015 $ 2014 $ Annual licence and maintenance in advance 1,029,282 997,646 Annual licence and maintenance in advance revenue comprises fees for the right to use our software, minor fixes, rights to updated versions and limited help line support. These are invoiced up to 12 months in advance. The revenue is recognised monthly as the services are provided to clients. 15. CONTRIBUTED EQUITY Consolidated Group 2015 Number 2015 $ 2014 Number 2014 $ Issued and paid up capital 32,659,758 $20,656,242 32,659,758 $20,656,242 Ordinary shares Opening balance 32,659,758 $20,656,242 32,659,758 $20,656,242 Add: Shares issued as part of renounceable rights issue Add: Shares issued as part of management service agreement - - - - - - - - Total number of shares on issue post-consolidation 32,659,758 $20,656,242 32,659,758 $20,656,242 (a) Ordinary shares The holders of ordinary shares are entitled to receive dividends as they are declared from time to time and are entitled to one vote per share at the shareholders meeting. In the event of winding up the Company ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any net proceeds of liquidation. There is no par value attributed to the shares of the Company. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 56 (b) Options The movement in the number of unlisted options on issue throughout the year is as follows: (i) $2.25 options exercisable on or before 31 July 2013 Opening balance Issued Exercised Cancelled/Expired Closing balance (ii) $2.25 options exercisable on or before 8 October 2013 Opening balance Issued Exercised Cancelled/Expired Closing balance (iii) $0.15 options exercisable on or before 5 July 2018 Opening balance Issued Exercised Cancelled/Expired Closing balance (iv) $0.65 options exercisable on or before 19 December 2018 Opening balance Issued Exercised Cancelled/Expired Closing balance (v) $0.75 options exercisable on or before 26 May 2019 Opening balance Issued Exercised Cancelled/Expired Closing balance (vi) $0.65 options exercisable on or before 10 June 2020 Opening balance Issued Exercised Cancelled/Expired Closing balance TOTAL Consolidated Group 2015 Number 2014 Number - - - - - - - - - - 300,000 - - - 4,000 - - (4,000) - 106,667 - - (106,667) - - 300,000 - - 300,000 300,000 690,000 - - - - 690,000 - - 690,000 690,000 300,000 - - - - 300,000 - - 300,000 300,000 - 390,000 - - 390,000 1,680,000 - - - - - 1,290,000 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 57  During the financial year and up to the date of these accounts, the Company issued 390,000 unlisted employee share options exercisable at 65 cents on or before 10 June 2020 which will vest in equal one- third parts (ie 130,000) every 12 months over a period of 36 months. During the previous financial year, the Company issued to its employees a total of 1,290,000 unlisted employee options: · on 5 July 2013: 300,000 unlisted employee options with an exercise price of 15 cents which will vest in equal one-third parts (ie 100,000 options) every 12 months over a period of 36 months; · on 19 December 2013: 690,000 unlisted share options exercisable at 65 cents on or before 19 December 2018 which will vest in equal one-third parts (ie 230,000) every 12 months over a period of 36 months; and · on 26 May 2014: 300,000 unlisted employee options with an exercise price of 75 cents which will vest in equal one-third parts (ie 100,000 options) every 12 months over a period of 36 months. (c) Capital management Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. The Group’s debt and capital comprises ordinary share capital, supported by financial assets. There are no externally imposed capital requirements. A loan at commercial terms was secured to fund the Company’s office fit-out at new premises. Refer to Note 12. 16. RESERVES Nature and purpose of reserve Currency Translation Reserve The foreign currency translation reserve records the foreign currency differences arising from the translation of foreign operations. Option Reserve The option reserve records the accumulated cost of options on issue for the Company. 17. ACCUMULATED LOSSES Accumulated losses at the beginning of the financial year Net profit attributable to the members of the parent entity Accumulated losses at the end of the financial year Consolidated Group 2015 $ (18,029,436) 1,060,120 (16,969,316) 2014 $ (19,473,161) 1,443,725 (18,029,436) G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 58 18. NON-CONTROLLING INTEREST Global Health Limited has a 93.8% (2014: 93.8%) interest in the subsidiary Working Systems Solutions (Malaysia) Sdn Bhd. Retained earnings attributable to the non-controlling interest are as follows: Consolidated Group 2015 $ 2014 $ Balance at the beginning of the financial year (137,887) (137,759) Non-controlling interests attributable to this entity is as follows: - share of losses - share of currency translation reserve Balance at the end of the financial year (213) (76) (212) 84 (138,176) (137,887) 19. PARTICULARS IN RELATION TO CONTROLLED ENTITIES Global Health Limited, incorporated in Australia, is the ultimate parent entity. Its legal form is a public company and the Company is domiciled in Victoria. Controlled Entity Place of Incorporation Type of Security Interest 2015 Interest 2014 Global Health (Australia) Sdn Bhd Kuala Lumpur Ordinary Shares Working Systems Solutions (Malaysia) Sdn Bhd Kuala Lumpur Ordinary Shares Working Systems Solutions Pty Ltd Victoria Ordinary shares Uni U International Pty Ltd Western Australia Ordinary shares Working Systems Solutions (Singapore) Pte Ltd Singapore Ordinary shares Bourke Johnston Systems Pty Ltd Victoria Ordinary shares Working Systems Software Pty Ltd Western Australia Ordinary shares Statewide Unit Trust Western Australia Units 100% 94% 100% 100% 100% 100% 100% 100% 100% 94% 100% 100% 100% 100% 100% 100% 20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Group’s financial instruments consist primarily of trade receivables, trade payables and borrowings. The Group does not have significant risk exposure to financial instruments and as such risk exposures are generally managed as part of the Group’s overall strategic and operational risk management strategies. Consequently, there is currently no specific risk mitigating techniques employed. However, as the Group expands both domestically and internationally, management continues to monitor its exposure and will implement suitable policies when deemed necessary. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 59 The current financial instruments held by the Group are as follows: Financial Assets - Cash and cash equivalents - Receivables Financial Liabilities - At amortised cost Financial liabilities measured at amortised cost consist of: - Current payables - Current interest-bearing liabilities Consolidated Group 2015 $ 2014 $ 548,404 931,730 1,480,134 1,117,444 500,899 1,618,343 (746,638) (711,532) (718,130) (28,508) (746,638) (666,817) (44,715) (711,532) 5 6 11 12 The Group is exposed to foreign currency fluctuations due to loan accounts between related entities being unhedged and requiring payment in AUD at an undetermined date in the future. (a) Credit risk Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group and essentially arises from holdings of cash and deposits, trade receivables and loans receivable as well as from the parent’s potential obligations under the indemnity guarantee provided to banks. The risk is largely managed through a policy of only dealing with creditworthy counterparties. Periodic assessments of debtor balances are undertaken and provisions for impairment are recognised where appropriate. Maximum exposure to credit risk without taking account of any collateral held or other credit enhancements arising from the Group’s recognised financial assets is considered to be equivalent to their carrying values at reporting date. Maximum exposures arising from the indemnity guarantee are as disclosed at Note 24: Commitments and Contingencies. The Group does not have any significant credit risk exposure to any single counterparty or groups of counterparties having similar characteristics. The majority of customers have long standing business relationships with the Group and their credit quality with respect to trade receivables is assessed as high. All cash and cash equivalents are held with large reputable financial institutions within Australia, Malaysia and Singapore and therefore credit risk is considered very low. Cash at Bank and deposits Australian banks Malaysian banks Singaporean banks Consolidated Group 2015 $ 2014 $ 544,445 3,959 - 548,404 1,105,079 3,875 8,490 1,117,444 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 60 (b) Liquidity risk Liquidity risk is managed through monitoring current funds available, undrawn facilities and anticipated recovery of receivables and comparing with future funding requirements contained in management budgets and forecasts. In this regard, the timing of expected settlement of liabilities is also analysed so as to minimise risk with respect to obligations becoming past due. This is consistent with the prior year. The maturity profile of the Group’s financial liabilities is presented in the following table based on contractual maturity dates and represent undiscounted cash flows. Consolidated at 30 June 2015 Weighted average effective rate Variable amount at call <6 months 6 – 12 months 1 – 2 years 2 – 5 years >5 years Total contracted cash flows Carrying value of financial liability % $ $ $ $ $ $ $ $ Trade and Other Payables Loan – Premium Funded Policies Loan for Leasehold Improvements Totals - - 11.5% - - - - 718,130 - - - - - - - 11,457 17,052 32,215 7,199 729,587 17,052 32,215 7,199 Consolidated at 30 June 2014 Weighted average effective rate Variable amount at call <6 months 6 – 12 months 1 – 2 years 2 – 5 years >5 years % $ $ $ $ $ $ Trade and Other Payables - Loan – Premium Funded Policies 3.47% Loan for Leasehold Improvements Totals - - - - 666,817 - 27,706 17,009 - - 694,523 17,009 - - - - - - - - - - - - - - - - 718,130 718,130 - - 67,923 67,923 786,053 786,053 Total contracted cash flows Carrying value of financial liability $ $ 666,817 666,817 44,715 44,715 - - 711,532 711,532 (c) Market risk The Group is exposed to interest rate and foreign currency risk. Details are provided in the following paragraphs. There are no known exposures to other risks that are material to the financial statements. (i) Interest rate risk Fair values of financial instruments held have been disclosed at Note 20. The Group also has exposure to variable interest rates on monies that are kept in at-call bank accounts. The table provided at Note 20(b) details the Group’s exposure to interest rate risk. For sensitivities relating to interest rate risk, refer to paragraph (iii) below. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 61 (ii) Foreign exchange risk The Group controls subsidiaries in Malaysia and Singapore and participates in a joint venture in Malaysia. The Group is therefore exposed to foreign exchange risk arising from exposure to currencies of these respective countries. Such risk arises from future transactions and assets and liabilities that are denominated in functional currencies other that the Australian dollar. Management does not engage in an active program of hedging exposure to foreign currencies. The exposure to foreign currency risk at reporting date is represented by the following balances: Assets denominated in foreign currency Liabilities denominated in foreign currency Net exposure to foreign currency Consolidated Group 2015 2014 MYR SGD MYR SGD 11,866 (19,310) (7,444) 12,889 (4,710) 8,179 12,091 (17,399) (5,308) 12,889 (4,710) 8,179 For sensitivities relating to foreign currency risk, refer to paragraph (iii) below. (iii) Sensitivity Analysis Interest Rate Risk and Foreign Currency Risk The following sensitivity analysis demonstrates the effect on the current year results and equity which could result from a reasonably possible change in interest rate and foreign currency risks. The analysis is indicative only and assumes that the movement in the particular variable is independent of the other variables and that all other variables remained constant. Change in profit after tax +/- in interest rate by 0.5% +/- in $A/MYR rate by 15% Change in Equity +/- in interest rate by 0.5% +/- in $A/MYR rate by 15% (iv) Capital Risk Management Consolidated Group 2015 $ 2014 $ +/-200 +/-0 +/-200 +/-28,000 +/-200 +/-0 +/-200 +/-28,000 Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. The Group’s debt and capital comprises ordinary share capital supported by financial assets. The Group does not currently have significant debt capital employed in the business. There are no externally imposed capital requirements. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 62  Net Fair Values Fair value estimation The fair values of financial assets and financial liabilities are as presented in the statement of financial position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Fair values derived may be based on information that is estimated or subject to judgment, where changes in assumptions may have a material impact on the amounts estimated. 21. DIRECTORS The names of each person holding the position of Director of Global Health Limited at any one time during the year ended 30 June 2015 are Mathew Cherian, Steven Leigh Pynt, Grant Smith and Robert Knowles. (a) Contracts involving Directors’ interests Apart from the details disclosed in this note, no Director has entered into any material contract with the Group and there are no material contracts involving Directors’ interests subsisting at the end of the current financial period. Transactions with the Group: (i) Mr Cherian’s son is employed by Global Health Limited under standard employment terms. (b) Transactions of Directors and Director-related entities concerning shares and options Shares The interest of Directors and their related entities in shares of the Company as at 30 June 2015 are: Total number of shares Number of shares sold Number of shares acquired 2015 2014 2015 2014 2015 2014 Mr M Cherian 18,619,370 18,619,370 Mr S L Pynt Mr G Smith Mr R Knowles 232,408 280,000 20,000 232,408 280,000 20,000 19,151,778 19,151,778 - - - - - - - - - - - - - - - 3,334 - 280,000 20,000 303,334 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 63  Options The interests of Directors and their related entities in options of the Company as at 30 June 2015 are: No. of Options granted Exercise price per Option ($) Option type (Listed / Unlisted) Number of Options vested/ exercisable at report date Number of Options exercised Total number of Options Mr M Cherian4 150,000 $0.65 Unlisted Mr S L Pynt Mr G Smith Mr R Knowles - - - 150,000 - - - - - - - - - - - - - - - - - - 150,000 - - - 150,000 22. KEY MANAGEMENT PERSONNEL DISCLOSURES (a) Directors The following persons were Directors of the Company during the financial year: Parent Entity Directors: Mr S Pynt Chairman – Independent Non-Executive Mr M Cherian Chief Executive Officer and Managing Director Mr G Smith Director – Independent Non-Executive Mr R Knowles Director – Independent Non-Executive (b) Key management personnel compensation Refer to the Remuneration Report in the Directors’ Report for details of the remuneration paid or payable to each member of the Group’s key management personnel for the year ended 30 June 2015. The total remuneration paid to key management personnel of the Company and the Group during the year are as follows: Short-term employee benefits Other long-term benefits Post-employment benefits Consolidated Group 2015 $ 2014 $ 671,252 6,938 61,187 739,377 636,983 7,875 54,203 699,061 4 Through a related party, Kye Cherian. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 64  Shares The interest of key management personnel and their related entities in shares of the Company as at 30 June 2015 are: P Curigliano K Jayesuria Options Total number of shares Number of shares sold Number of shares acquired 2015 2014 2015 2014 2015 2014 55,459 55,459 - - 55,459 55,459 - - - - - - - - - - - - The interest of key management personnel and their related entities in options of the Company as at 30 June 2015 are: Total number of options Number of options granted during the year Number of options exercised during the year 2015 2014 2015 2014 2015 2014 P Curigliano K Jayesuria 300,000 300,000 600,000 300,000 300,000 600,000 - - - 300,000 300,000 600,000 - - - - - - 23. REMUNERATION OF AUDITORS Amounts received, or due and receivable by the auditors of the entity for: - MSI Ragg Weir (Australia) Auditing or reviewing the financial report Taxation services - TY Teoh International (Malaysia) Auditing or reviewing the financial report of controlled entities Taxation services for controlled entities - J Wong and Associates (Singapore) Auditing or reviewing the financial report Consolidated Group 2015 $ 2014 $ 48,082 7,840 3,313 855 1,446 61,536 47,140 7,650 3,391 1,147 1,527 60,855 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 65 24. COMMITMENTS AND CONTINGENCIES (a) Operating lease commitments Future operating lease rentals not provided for in the financial statements and payable: Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years Consolidated Group 2015 $ 2014 $ 91,061 709,746 193,229 994,036 14,124 614,113 379,924 1,008,161 The parent entity’s operating lease for the Melbourne office expired on 1 May 2014 and a new lease was negotiated for reduced floor space in the same building commencing on 14 July 2014. In 2015, revenue of $903 (2014: $8,957) was earned from a sub-lease of the Melbourne office premises and recorded in the Company’s gross revenue. The sub-lease agreement expired on 21 August 2014 and was not renewed. (b) Guarantees Consolidated Group 2015 $ 2014 $ The parent has provided a cash security bond in favour of the property owner of the parent entity’s leased premises in Melbourne, Australia. 102,187 56,095 (c) Legal contingencies The Company has commenced legal action against the Crown in right of the State of South Australia pertaining to breaches of contract and infringements of copyright. At this stage, the expected cost of this action and any damages are uncertain and accordingly the directors do not make a disclosure as to the estimated costs or proceeds of this action. 25. EARNINGS PER SHARE The following reflects the income and share data used in the calculations of basic and diluted earnings (loss) per share: Net earnings Adjustment Net loss attributable to outside equity interests Earnings used in calculating basic and diluted earnings per share Weighted average number of ordinary shares used in calculating basic earnings per share: Weighted average number of ordinary shares used in calculating diluted earnings per share: Basic Earnings Per Share Diluted Earnings Per Share Consolidated Group 2015 $ 2014 $ 1,059,907 1,443,513 (213) 1,060,120 (212) 1,443,725 Number of Shares Number of Shares 32,659,758 32,659,758 32,719,544 32,659,758 2015 cents 2014 cents 3.246 3.240 4.420 4.420 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 66 26. SEGMENT INFORMATION Operating Segments The Group operates in the computer technology, software and services industry with particular emphasis on healthcare and associated professional services. The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive management team (‘the chief operating decision maker’) in assessing performance and in determining the allocation of resources. The operating segments are identified by management based on the nature of the service provided. Discrete financial information about each of these operating service lines is reported to the executive management team on at least a monthly basis. The reportable segments are based on aggregated operating segments determined by the similarity of the services provided, the similarity of the customer bases, the common reporting and management systems used and the common regularity environment applicable to each reportable segment. There is a clear designation of responsibility and accountability by the chief operating decision makers for the management and performance of these reportable segments. The Group comprises the following main operating segments: Hospitals/Day Surgeries Information system applications for the hospital and day surgery market to deliver better and more integrated health care. e-Health Other Comprehensive suite of applications that provide the management of population outcomes for communities of common interest. Products and services delivered to non-healthcare customers and include revenues and expenses associated with third party products and cost recoveries from customers. Corporate Expenditure associated with Corporate, Sales and Marketing activities. Segment accounting policies The Group generally accounts for inter-segment sales and transfers as if the sales or transfers were to third parties at current market prices. Revenues are attributed to geographic areas based on the location of the assets producing the revenues. During the financial year there were no changes in segment accounting policies that had a material effect on the segment information. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 67 Geographical Segments Although the Group’s divisions are managed on a global basis they operate in two main geographical areas: Australia This is the home country of the main operating entity. The corporate head office is based in Melbourne, Victoria. The Company also has a presence in Western Australia for the provision of professional services and product development. Malaysia In prior years, the Group operated in the ASEAN region with local resources employed to provide support to Southeast Asian clients of the Group. Currently, there is a presence in the region with a view to future engagement in the market. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets. Primary Reporting Business Segments Revenue Sales to customers outside the consolidated entity Total segment revenue Total consolidated revenue Results Segment result Income tax expense Non-controlling interests Net profit/(loss) Assets Segment assets Liabilities Segment liabilities Cash flows from operating activities Cash flows from investing activities (Acquisition of property, plant & equipment, intangible assets and other non- current assets) Cash flows from financing activities Hospitals/Day Surgeries e-Health Other Corporate Consolidated 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 1,650,504 2,593,842 2,306,270 2,119,686 582,335 537,559 1,650,504 2,593,842 2,306,270 2,119,686 582,335 537,559 - - - - 4,539,109 5,251,087 4,539,109 5,251,087 4,539,109 5,251,087 1,412,339 1,449,478 850,240 1,341,072 406,160 198,870 (1,608,832) (1,545,907) 1,059,907 1,443,513 2,190,198 2,456,609 3,060,391 2,007,539 772,750 509,119 870,987 1,135,232 1,217,042 927,711 307,304 235,271 - - - - 6,023,339 4,973,267 2,395,333 2,298,214 34,655 408,101 318,676 271,858 34,397 83,536 409,337 650,608 797,065 1,414,103 (60,427) (320,812) (555,670) (213,710) (59,978) (65,668) (713,753) (511,458) (1,389,828) (1,111,648) 1,031 (2,995) 9,485 (1,995) 1,024 (613) 12,183 (4,762) 23,723 (10,365) Other segment information: Depreciation 2,065 2,425 18,992 1,615 2,050 740 24,395 3,622 47,502 8,402 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 68 26. SEGMENT INFORMATION (CONTINUED) Secondary Reporting Geographical Australia International Consolidated 2015 2014 2015 2014 2015 2014 Segment revenue 4,534,731 5,251,086 4,378 - 4,539,109 5,251,086 Segment assets Segment Result Other segment information Acquisition of property, plant and equipment, intangible assets and other non-current assets Major Client 7,158,377 6,089,142 (1,135,038) (1,115,875) 6,023,339 4,973,267 1,059,907 1,443,513 1,389,828 1,111,648 - - - - 1,059,907 1,443,513 1,389,828 1,111,648 The Company’s former major client, SA Health, which contributed more than 10% of the Company’s revenue in previous years, ceased being a client from 1 April 2015 although the Company’s obsolete CHIRON and Harmony software applications continue to be used at SA Health hospitals. Legal proceedings are currently on foot in the Federal Court in Adelaide to determine the parties’ respective rights. Refer to Note 24(c) 27. SHARE-BASED PAYMENTS (a) Employee Share Option Plan The Employee Share Option Plan was adopted when the Company was listed. The plan allows the Company to grant options over shares to key executives and directors and other employees as selected by the Directors to enable them to participate in the future growth and profitability of the Company, to provide an incentive and reward for their contributions and to attract and maintain personnel. The options are issued at no consideration. The exercise price of options is based on the weighted average market price of the Company’s Shares during the five trading days up to and including the date of grant of the option or each other date or period as the Directors consider appropriate. Set out below are summaries of options granted under the plan: Grant Date Expiry Date Exercise Price Consolidated and parent entity – 2015 5 July 2013 5 July 2018 19 Dec 2013 19 Dec 2018 26 May 2014 26 May 2019 10 June 2015 10 June 2020 $0.15 $0.65 $0.75 $0.65 Weighted average exercise price $0.56 TOTALS 1,290,000 Balance at start of the year Number Granted during the year Number Exercised during the year Number Expired/ forfeited during the year Number Balance at the end of the year Number Exercisable at the end of the year Number 300,000 690,000 300,000 - - - - 390,000 390,000 $0.65 - - - - - - - - - - - - 300,000 690,000 300.000 390,000 1,680,000 $0.58 100,000 230,000 100,000 - 430,000 $0.56 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 69 Balance at start of the year Number Granted during the year Number Exercised during the year Number Balance at the end of the year Number Exercisable at the end of the year Number Expired/ forfeited during the year Number (4,000) (106,667) - - - - - - - - - - - - 300,000 690,000 300.000 (110,667) 1,290,000 $2.25 $0.56 - - - - - - - Grant Date Expiry Date Exercise Price Consolidated and parent entity – 2014 31 July 2008 31 July 2013 8 Oct 2008 8 Oct 2013 5 July 2013 5 July 2018 19 Dec 2013 19 Dec 2018 26 May 2014 26 May 2019 $2.25 $2.25 $0.15 $0.65 $0.75 4,000 5 106,667 6 - - 0 - - 300,000 690,000 300,000 Weighted average exercise price $2.25 $0.56 TOTALS 110,667 1,290,000 (b) Exempt Employee Share Plan A plan under which shares may be issued by the Company to employees for no cash consideration was adopted when the Company was listed. All directors, officers or employees who are from time to time engaged in full or part time work for the Company are eligible to participate in the Exempt Employee Share Plan. Under the plan, eligible employees may be granted up to $1,000 worth of fully paid ordinary shares in the Company for no cash consideration. The market value of the shares will be measured as the market price quoted for buyers of the Company shares at the close of trading on the day immediately preceding the date of the offer by the Directors as published by the ASX. Offers under the plan are at the discretion of the Company and the shares shall not be transferred or assigned by the holder within the period of three years from the date of issue or transfer to the holder unless the holder ceases employment with the Company earlier than that date except that the holder may at any time transfer all or any of his Shares to his spouse or to a company the majority of the issued shares in which are beneficially owned by him or to any trust that the holder is a beneficiary of. (c) Expenses arising from share-based payment transactions There were no employee share-based payment transactions during the year. 5 Post-15:1 share consolidation, options previously issued to a director who has since resigned. 6 Post-15:1 share consolidation, options previously issued to employees who have since resigned. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 70 28. CONSOLIDATED STATEMENT OF CASH FLOWS Reconciliation of Operating Profit/(Loss) before Income Tax to Net Cash provided by Operating Activities Consolidated Group 2015 $ 2014 $ Operating profit/(loss) after income tax 1,059,907 1,443,513 Add (deduct) non-cash items: Amortisation of Development Cost Depreciation of fixed assets Bad debt written off Net loss/(gain) on disposal of plant and equipment Movement in foreign currency translation Net cash inflow/(outflow) from operating activities before change in assets and liabilities Change in assets and liabilities during the period: (Increase)/Decrease in receivables (increase)/Decrease in other assets Increase/(Decrease) in provisions Increase/(Decrease) in payables and deferred income Net cash inflow from operating activities 211,371 47,502 - (597) (106,877) 1,211,306 (468,199) (70,249) (9,039) 82,948 746,767 209,953 8,402 15,337 - 28,494 1,705,699 (49,198) (41,177) 67,725 (268,946) 1,414,103 29. EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS (a) Employee Share and Option Plans The parent entity has adopted two incentive plans to enable employees and directors to participate in ownership of Global Health Limited. The directors have determined that the total number of securities which may be issued pursuant to the Exempt Employee Share Plan and Employee Share Option Plan in any five year period must not exceed 5% of the total number of securities on offer from time to time. This limitation only applies to new offers of securities by the parent entity and not to existing securities purchased on market under the Exempt Employee Share Plan. (b) Employee Share Option Plan (‘ESOP’) The options issued under the ESOP are not quoted on the Australian Stock Exchange. Employee Share Options are issued under the terms and conditions of the Plan as disclosed on the Company’s website. Should an employee cease employment before the completion of 2 years after the issue of any employee option, the option issued automatically lapses, except where cessation is due to death or total permanent disability, retirement, redundancy or any other reason, based on which the directors believe is fair and reasonable to warrant the employee maintaining their right to exercise the option in which case they will have six (6) months to exercise the options. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 71 Opening balance Issued Exercised Cancelled Closing balance Consolidated Group 2015 Number 2014 Number 1,290,000 390,000 - - 1,680,000 110,667 1,290,000 - (110,667) 1,290,000 During the financial year and up to the date of these accounts, 390,000 options were issued (2014: 1,290,000 issued7; 110,667 cancelled). The value ascribed to the options issued was determined using an options valuation pricing model. The market price of the ordinary shares of Global Health Limited was $0.375 on 30 June 2015 (2014: $0.54). (c) The Exempt Employee Share Plan (‘EESP’) The EESP is open to all eligible employees including directors (but subject first to shareholder approval in general meeting), be they full-time or part-time. The EESP allows for the allocation of up to $1,000 worth (market value) of shares per annum per eligible employee. The shares can either be newly issued or purchased on market. The shares are issued free of consideration. Participants will not be permitted to dispose of their shares until three years after the date of acquisition unless they leave the employment of the Company. The number of shares issued to participants in the plan is the offer amount divided by the weighted average price at which the Company’s shares are traded on the Australian Stock Exchange during the week up to and including the date of grant. (d) Superannuation Plans The Company contributes to various superannuation plans under which its employees are entitled to benefits on retirement, disability or death. The parent entity makes contributions as specified by Australian legislation. Employees contribute at various percentages of their wages and salaries. 30. EVENTS SUBSEQUENT TO REPORTING DATE On 29 July 2015, the Company finalised the acquisition of the medical software business and associated assets of Abaki Pty Ltd. The maximum consideration of $500,000 in 4 equal parts of cash and Global Health shares will take place over 37 months. The cash component will be funded out of working capital. 31. DIVIDENDS No provision is made for dividends on or before the end of the year. 7 300,000 on 5 July 2013, 690,000 on 19 December 2013 and 300,000 on 26 May 2014. G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 72 32. GLOBAL HEALTH LIMITED PARENT COMPANY INFORMATION Assets Current Assets Non-Current Assets Total Assets Liabilities Current Liabilities Non-Current Liabilities Total Liabilities Net Assets/Liabilities Equity Contributed equity Reserves Accumulated Losses Total Equity Financial Performance Profit /(Loss) for the year Other comprehensive income Total Comprehensive income/ (loss) Global Health Limited 2015 $ 2014 $ 1,647,790 4,364,658 6,012,448 2,409,749 166,903 2,576,652 3,435,796 20,656,242 29,979 (17,250,425) 3,435,796 951,492 - 951,492 1,867,364 3,097,909 4,965,273 2,347,371 133,598 2,480,969 2,484,304 20,656,242 29,979 (18,201,917) 2,484,304 1,448,083 - 1,448,083 Other than that stated in Note 24 to the financial statements, the Company is not subject to any contingent liabilities or contractual commitments G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 73 Shareholder Information This shareholder information is made up to 14 September 2015. SHAREHOLDING 1. Distribution of Shareholder Numbers Category (size of holding) Number of Holders Ordinary Shares 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over TOTAL 471 328 119 145 29 1,092 210,137 801,198 957,823 4,383,456 26,454,048 32,806,662 2. The number of security investors holding less than a marketable parcel of 1,785 securities ($0.28 per share on 14 September 2015) is 598 and they hold 382,531 securities. An unmarketable parcel of shares is generally a parcel of shares with a total value of less than $500. 3. The names of the twenty largest holders of ordinary shares are: Shareholder Micron Holdings Pty Ltd Micron Holdings Pty Ltd National Nominees Limited Mrs Elizabeth May Priscilla Thomas Alumootil Mathew Cherian Mr David Leroy Boyles Dr Serene Lim Chris Bell Investments Pty Ltd Roxanne Investments Pty Ltd B & R James Investments Pty Limited Ms Serene Lim & Mr Nicholas Russell Ward Simkar Pty Ltd Asket Pty Ltd Holder Super Pty Ltd Lomas Superannuation Pty Ltd Pacific Nominees Limited Ranjenco Pty Ltd Ubs Wealth Management Australia Nominees Pty Ltd Abaki Pty Ltd Bujo Pty Ltd Mr Mark David Holder No. of shares held % of issued shares 13,558,334 3,804,602 1,809,734 1,530,702 1,256,434 400,000 400,000 300,000 280,000 240,000 215,000 212,266 201,074 199,528 195,000 190,742 180,000 150,000 146,904 130,000 125,736 41.33 11.60 5.52 4.67 3.83 1.22 1.22 0.91 0.85 0.73 0.66 0.65 0.61 0.61 0.59 0.58 0.55 0.46 0.45 0.40 0.38 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 S H A R E H O L D E R I N F O R M A T I O N 74 SUBSTANTIAL SHAREHOLDERS Shareholder Micron Holdings Pty Ltd Micron Holdings Pty Ltd National Nominees Limited No. of Ordinary shares Percentage 13,558,334 3,804,602 1,809,734 41.33 11.60 5.52 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 S H A R E H O L D E R I N F O R M A T I O N 75 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 I N D E P E N D E N T A U D I T O R ’ S R E P O R T 76 G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 I N D E P E N D E N T A U D I T O R ’ S R E P O R T 77 Corporate Directory Directors Share Registrar Mr Steven Leigh Pynt (Independent Non-Executive Chairman) Mr Mathew Cherian (Chief Executive Officer and Managing Director) Mr Grant Smith (Independent Non-Executive Director Mr Robert Knowles AO (Independent Non-Executive Director) Company Secretary Mr Peter Curigliano CPA Head Office Level 2, 607 Bourke Street Melbourne, Victoria 3000 Australia Telephone: +61 (3) 9675 0600 Facsimile: +61 (3) 9675 0699 Email: Website: www.global-health.com info@global-health.com Malaysia Registered Office No.6 Jalan Bangsar Utama 9 Bangsar Utama 59000 Kuala Lumpur, Malaysia Telephone: +60 (3) 2287 6833 Facsimile: +60 (3) 2287 1032 Auditors MSI Ragg Weir Chartered Accountants 2/108 Power Street Hawthorn, Victoria 3122, Australia Telephone: +61 (3) 9819 4011 Facsimile: +61 (3) 9819 6780 Website: www.raggweir.com.au Link Market Services Limited Locked Bag A14 Sydney South, NSW 1235, Australia Telephone: 1300 554 474 Facsimile: +61 (2) 9287 0303 Website: www.linkmarketservices.com.au Email: registrars@linkmarketservices.com.au Solicitors Finlaysons, Adelaide, Australia McDonald Pynt Lawyers, Perth, Australia Davies Collison Cave, Melbourne, Australia Bankers Bank of Western Australia Ltd HSBC Ltd Stock Exchange Listing Global Health Limited shares trade on the Australian Stock Exchange Code: GLH The home exchange is Australian Stock Exchange (Melbourne) Limited Further Information For further information about Global Health Limited and its operations, refer to Company announcements to the Australian Stock Exchange. Information is also available on our website: G L O B A L H E A L T H L I M I T E D C O N S O L I D A T E D E N T I T Y A N N U A L R E P O R T 2 0 1 5 C O R P O R A T E D I R E C T O R Y 78 

Continue reading text version or see original annual report in PDF format above