Healthia Limited and its Controlled Entities
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ACN:
Reporting period:
Previous period:
Healthia Limited
608 550 607
For the year ended 30 June 2019
For the year ended 30 June 2018
2. Results for announcement to the market
Revenues from ordinary activities
up
89.6% to
65,084
Loss from ordinary activities after tax attributable to the owners of
Healthia Limited
Loss for the year attributable to the owners of Healthia Limited
down
down
38.3%
to
38.3% to
(1,238)
(1,238)
$'000
Basic earnings per share
Diluted earnings per share
2019
Cents
2018
Cents
(2.25)
(2.25)
(*)
(*)
*Despite the Consolidated Entity applying the continuation method of accounting for the acquisition of My FootDr (Aust)
Limited (see Note 2 for further details), FY18 basic earnings per share and diluted earnings per share 30 June 2018
comparatives have not been presented, due to incomparable operations and capital structure.
Dividends
There were no dividends paid, recommended or declared during the current financial period to the ordinary shareholders of
Healthia Limited.
Dividends were paid during the current financial year to non-controlling interests, being the clinic class shareholders of
Healthia Limited subsidiaries.
There were no dividends paid, recommended or declared during the previous financial period to the ordinary shareholders
of Healthia Limited. Dividends were paid during the previous financial year to non-controlling interests.
Comments
The loss for the Consolidated Entity after providing for income tax and non-controlling interest amounted to $1,238,000 (30
June 2018: $2,007,000).
Healthia Limited and its Controlled Entities
Appendix 4E
Preliminary final report
Healthia Limited was incorporated on 10 May 2018 as a holding company to acquire the podiatry and physiotherapy service
businesses as part of the Initial Public Offer (IPO) of Healthia Limited.
During the financial year, the Consolidated Entity underwent significant corporate and capital restructuring to allow it to
ultimately list on the (ASX) on 11 September 2018. At the same time as listing the Consolidated Entity acquired 48 allied
health businesses. A further 12 allied health businesses were acquired between September 2018 and June 2019. These
significant events should be considered when interpreting the statutory financial results.
An explanation of the statutory and pro-forma underlying figures is contained in 'Review of Operations' included within the
Director's report in the attached Financial Report of Healthia Limited.
In accordance with Australian Accounting Standards the acquisition of My FootDr (Aust) Ltd (the owner of the My FootDr
podiatry clinics) by Healthia Limited does not meet the definition of a business combination within the provisions of AASB 3
Business Combinations as Healthia Limited was established for the sole purpose of acquiring the My FootDr (Aust) Ltd by
way of equity. Therefore, the Consolidated Entity applied the continuation method of accounting for the acquisition of My
FootDr (Aust) Ltd in this Financial Report of Healthia Limited. Therefore, all comparative figures stated in this Appendix 4E
and the attached Financial Report of Healthia Limited are in relation to My FootDr (Aust) Ltd for the corresponding
comparative period.
3. Net tangible assets
Net tangible assets per ordinary security
4. Control gained over entities
Reporting
Previous
period
Cents
period
Cents
(20.89)
(149.59)
For details of the control gained over entities in the year, refer to Note 36 Business Combination and Note 37 Interests in
Subsidiaries in the Annual Report attached.
5. Loss of control over entities
Not applicable.
6. Dividends
Current period
There were no dividends paid, recommended or declared during the current financial period to the ordinary shareholders of
Healthia Limited.
Dividends were paid during the current financial year to non-controlling interests, being the clinic class shareholders of
Healthia Limited subsidiaries.
Previous period
There were no dividends paid, recommended or declared during the previous financial period to the ordinary shareholders
of Healthia Limited.
Dividends were paid during the previous financial year to non-controlling interests.
Healthia Limited and its Controlled Entities
Appendix 4E
Preliminary final report
7. Dividend reinvestment plans
Not applicable.
8. Details of associates and joint venture entities
Name of associate / joint venture
Reporting entity's
percentage holding
Contribution to profit/(loss)
(where material)
Reporting
Previous
Reporting
Previous
period
%
period
%
period
$'000
period
$'000
Fracture Holdco Pty Ltd
45.00%
-
-
-
On 29 May 2019, the Consolidated Entity acquired an interest in Fracture Holdco Pty Ltd. This entity did not trade during the
current financial year and therefore made no contribution to profit
9. Foreign entities
Details of origin of accounting standards used in compiling the report:
Not applicable.
10. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unqualified opinion has been issued.
11. Attachments
Details of attachments (if any):
The Annual Report of Healthia Limited for the year ended 30 June 2019 is attached.
12. Signed
Signed ___________________________
Date: 30 August 2019
Healthia Limited and its Controlled Entities
ACN 608 550 607
Annual Report - 30 June 2019
Healthia Limited and its Controlled Entities
Corporate directory
30 June 2019
Directors
Dr Glen Richards
Paul Wilson
Lisa Dalton
Darren Stewart
Anthony Ganter
Wesley Coote (Appointed 29 April 2019)
Company secretary
Christopher Banks (Appointed 21 June 2019)
Notice of annual general meeting
The Annual General Meeting of Healthia Limited will be held on 20 November 2019.
Registered office
Share register
Auditor
Solicitors
Level 4 East Tower
25 Montpelier Road
Bowen Hills QLD 4006
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
www.linkmarketservices.com.au
BDO Audit Pty Ltd
Level 10, 12 Creek Street
Brisbane QLD 4000
www.bdo.com.au
Clayton Utz
Level 28, Riparian Plaza
71 Eagle Street
Brisbane QLD 4000
www.claytonutz.com.au
Colin Biggers & Paisley
Level 35, 1 Eagle Street
Brisbane QLD 4000
www.cbp.com.au
Website
www.healthia.com.au
Corporate Governance Statement
The Consolidated Entity's directors and management are committed to conducting
the company's business in an ethical manner and in accordance with the highest
standards of corporate governance. The Consolidated Entity has adopted and
substantially complies with the ASX Corporate Governance Principles and
Recommendations (3rd Edition) to the extent appropriate to the size and nature of the
company's operations
The Consolidated Entity's policies can be found on its website:
https://www.healthia.com.au/corporate-governance/
ASX Listing Rule 4.10.19 Statement The Consolidated Entity confirms that, in accordance with ASX Listing Rule 4.10.19,
that it has used the cash (and assets in a form readily convertible to cash) from the
time of admission in a way that is consistent with its business objectives during the
period from admission to the reporting date.
1
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Dear fellow shareholders,
On behalf of the Board of Healthia Limited (Healthia or HLA or Company or Group or the Consolidated Entity), it is my
pleasure to present the Consolidated Entity's first annual report for the year ended 30 June 2019.
After successfully listing on the Australian Securities Exchange on 11 September 2018, it has been a transformational year
for the Consolidated Entity with our key focus on building solid foundations for ongoing growth.
Targeted Allied Health Markets
The Consolidated Entity is focused on building its profile through the consolidation of the podiatry and physiotherapy
industries. Both industries continue to experience increasing demand due to the ageing Australian population, the rise in
disposable incomes and an increase in health consciousness.
The addressable industry revenue for the podiatry and physiotherapy industries is circa $2.5b. Both industries remain highly
fragmented with no competitor holding more than 3.0% market share.
Given the characteristics of the podiatry and physiotherapy industries, and the fragmented nature of both, the Board believes
there is significant opportunity for the Consolidated Entity to continue to consolidate these industries.
Portfolio Growth
At listing, the Consolidated Entity's portfolio consisted of 104 allied health businesses, encompassing the following well
established businesses:
1. 72 podiatry clinics, including 54 My FootDr clinics;
2. 23 physiotherapy clinics, including 14 Allsports Physiotherapy clinics;
3. 7 speciality hand therapy clinics trading as Extend Rehabilitation;
4. 1 orthotics laboratory trading as iOrthotics; and
5. 75% of a podiatry and foot care supplies and equipment wholesale business trading as D.B.S. Medical.
In less than 12 months since listing in September 2018, the Consolidated Entity has grown its portfolio through the acquisition
of an additional 5 podiatry clinics, 15 physiotherapy clinics and 4 speciality hand therapy clinics. This has seen the business
deploy approximately $14.466m of new capital to acquire an additional $17.485m of revenue and $3.373m of EBITDA
between September 2018 and August 2019.
Acquisition Funding
At the reporting date, the Consolidated Entity has $17.4m of additional head room in its $37m finance facility with the
Australian and New Zealand Bank (ANZ) and the Bank of Queensland (BOQ). We will continue to use this debt, future
operating cash flow and clinic class shares to fund future acquisitions.
Increase in Service Offering
During the financial year, the Consolidated Entity leveraged its podiatry and speciality hand therapy workforce to expand and
co-locate podiatry and speciality hand therapy services inside existing physiotherapy clinics. Introducing these services into
physiotherapy clinics allows the business to better leverage productivity from the clinical and administration teams, whilst
utilising existing space to generate more revenue.
Vertical Integrated Businesses
The Consolidated Entity's ownership of iOrthotics and its 75% ownership interest in D.B.S. Medical has allowed the
Company to vertically integrate a number of the core supply functions of the podiatry segment, allowing for cost savings
and margin improvements to occur. As an example, during the reporting period iOrthotics produced over 20,000 pairs of
orthotics for the Company’s podiatry clinics. The orthotics are produced by iOrthotics at a cost that is 40% to 60% lower
than what the clinic could typically purchase those orthotics from an external lab. This model is scalable and is expected to
produce significant savings for the Company, as newly acquired podiatry clinics transition their orthotics manufacturing to
iOrthotics.
2
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Clinic Retention Program
A key focus of the Consolidated Entity is to retain and incentivise its clinicians. the Consolidated Entity has developed a
clinician retention program (Clinician Retention Program) which, in addition to a series of structured learning and education
programs, allows our clinicians to have an ownership interest in the Company’s clinics. Under the Clinician Retention
Program, the clinicians are given the opportunity to acquire clinic class shares (Clinic Class Shares).
Clinic Class Shares are non-voting shares which entitle the holder to a share of any dividend declared, which arise from and
is calculated on the performance of the clinic in which the Clinic Class Shares are issued. The Clinic Class Shares are
designed to create alignment between the interests of clinicians and shareholders. We consider this model as a compelling
proposition for our patients, our clinicians and our investors.
At Listing, there was 1,267 Clinic Class shares in 49 different classes on issue in the Company’s subsidiaries. At the reporting
date, this had increased to 1,935 Clinic Class Shares, in 70 different classes. The additional shares have been issued to
clinicians as part consideration for newly acquired clinics and/ or for cash consideration paid to the Consolidated Entity.
As at 30 June 2019, the Clinic Class Shares on issue represented an economic interest of approximately 19.4% in the
earnings of the Company.
Operational Highlights
Key operational highlights for the Consolidated Entity since listing include:
●
●
●
●
●
●
Each of the clinics systems have been centralised and integrated into those of the Consolidated Entity's shared services
The Podiatry Clinical Advisory Committee and Physiotherapy Clinical Advisory Committee, comprising of experienced
clinicians, has been established to oversee the clinical governance, compliance and education programs of the
Consolidated Entity and its clinicians
The recruitment and training of 33 new graduate clinicians (16 podiatrists and 17 physiotherapists). All graduates started
in early 2019 and have been put through our comprehensive new graduate induction program. These new team
members are the future leaders and future clinic class shareholders of the Consolidated Entity
In addition to the graduate program, each clinician of the Consolidated Entity has participated in various clinical
education. Furthermore, we have finalised plans for our inaugural Healthia clinical conference which is scheduled to
place between 12-13 October 2019. This conference will provide team members with a unique opportunity to attend a
collaborative and collegial professional development event unlike any other.
An additional HP Fusion Jet 3D printer was purchased by iOrthotics allowing for additional orthotic manufacturing
capacity.
Plans are being finalised to take iOrthotics 3D printing technology to North America and Europe.
Results
In the Company’s first year of reporting, the Consolidated Group recorded a loss after providing for income tax and non-
controlling interest of $1.238m. Pro-forma underlying net profit after tax and before amortisation was $6.113m, exceeding
the pro-forma prospectus net profit after tax and before amortisation of $5.515m.
3
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Table 1: Pro-forma Underlying Financial Performance to Prospectus Pro-forma Forecast FY19
This table has not been audited
Pro-forma
Underlying
Year to 30
June 2019
(1,2)
$'000
Prospectus
Pro-forma
Forecast
2019
$'000
Change
$'000
Change
%
Revenue from continuing operations
Direct and operating expenses
EBITDA (3)
EBITDA Margin %
Depreciation
Amortisation
Profit before finance costs and income tax expenses
Net finance expense
Profit before income tax expense
Income tax expense
Profit after income tax expense
Amortisation
Profit after income tax expense and before amortisation (4)
Non-controlling interest
Net profit after tax and before amortisation attributed to the
owners of the Consolidated Entity (5)
76,555
(64,892)
11,663
15.3%
(1,794)
(458)
9,411
(1,331)
8,080
(2,424)
5,656
458
6,113
(1,242)
71,802
(61,533)
10,269
14.3%
(1,431)
(366)
8,472
(959)
7,513
(2,364)
5,149
366
5,515
(752)
4,871
4,763
4,753
3,359
1,394
363
92
939
372
567
60
507
(92)
598
490
108
6.62%
5.46%
13.57%
25.39%
25.03%
11.08%
38.79%
7.54%
2.53%
9.84%
25.03%
10.85%
65.21%
2.26%
Notes
1. After excluding the impact of acquisition, IPO, restructuring and integration costs
2. Proforma basis as if the acquisitions made during the financial year were all completed on 1 July 2018
3. Pro-forma Underlying EBITDA is a non-IFRS measure and equals Earnings before interest, tax, depreciation,
amortisation, acquisition costs, IPO costs, restructuring and integration costs
4. Pro-forma Underlying Profit after income tax expense and before amortisation is a non-IFRS measure
5. Pro-forma Underlying Net profit after tax and before amortisation attributed to the owners of the Consolidated
Entity is a non-IFRS measure
A reconciliation between Pro-forma Underlying results and Statutory results can be found in the Review of Operations in
the Directors report.
The results are the reward of significant effort and focus from the Consolidated Entity team to integrate not only the listed
portfolio of clinics but also those clinics that have joined the Consolidated Entity since listing. Furthermore, the Board and
Management are pleased that during a period of significant change the clinics have been able to exceed prospectus
forecast earnings. These results demonstrate the robust nature of the earnings of our allied health businesses and
confirms the Consolidated Entity's business model, including our Clinic Retention Program.
The Board and Management would like to thank our clinic teams and administration staff for their dedication and hard working
during the year. All the milestones the Consolidated Entity was able to achieve during the year would not have been possible
without them.
Outlook
The Consolidated Entity will continue to focus on delivering growth from its four-tiered growth strategy: patient focused
outcomes, organic growth, future accretive acquisitions and vertically integrated businesses units.
Key organic growth drivers for the Consolidated Entity include:
4
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
●
●
●
Increasing revenue of acquired clinics, including the introduction of podiatry services and speciality hand therapy
services into physiotherapy clinics where these services do not already exist however a demand for the service does
Investment in equipment and technology upgrades to expand the services provided in the clinics
New graduate recruitment for CY2020 is currently underway with all new graduates expected to commence in late
●
January 2020 and will complete our structured new graduate training program
Utilisation of the vertically integrated businesses of iOrthotics and D.B.S Medical to drive buying synergies and margin
improvement
● Continue working on optimisation of existing clinics, refine current marketing initiatives, generating cost efficiencies
through scale and improved clinic management, and
● Education of all clinicians to ensure standards of care are maintained and patient outcomes are optimal
The Consolidated Entity will continue to acquire well-established allied health businesses throughout Australia. The
Consolidated Entity will assess opportunities on a case by case basis with reference to its existing network of clinics, strategic
objectives and disciplined acquisition criteria. During the financial year ended 30 June 2020, we expect to deploy a further
$15m of capital for new allied health business acquisitions, with $10.5m already deployed at the date of this report.
FY19 was the foundation year for the Consolidated Entity which saw our time and effort spent on the integration of our
existing and newly acquired clinics. We can now look forward with confidence that we have built a good foundation to acquire
further quality businesses, and we continue to evolve our corporate support to ensure optimal workplaces for our clinicians
(including through our education platform) which helps us to deliver and deliver returns to shareholders while educating our
clinicians and optimising exceptional patient outcomes
Dr Glen Richards
Chairperson
5
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
The directors present their report, together with the financial statements, of Healthia Limited and its controlled entities (the
'Consolidated Entity') for the period ended 30 June 2019.
Directors
The following persons were Directors of Healthia Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Dr Glen Frank Richards
Paul David Wilson
Lisa Jane Dalton
Wesley Coote (appointed 29 April 2019)
Darren Lindsey Stewart
Anthony Peter Ganter
Principal activities
The principal activities of the Consolidated Entity consist of the following:
●
●
the operation of podiatry service businesses throughout Australia; and
the operation of physiotherapy service businesses throughout Australia.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial period to the ordinary
shareholders of Healthia Limited.
Dividends were paid during the current and previous financial year to non-controlling interests, being the clinic class
shareholders of Healthia Limited subsidiaries.
Review of operations
The loss for the Consolidated Entity after providing for income tax and non-controlling interest amounted to $1,238,000 (30
June 2018: $2,007,000).
ASX Listing
Healthia Limited was incorporated on 10 May 2018 as a holding company to acquire the podiatry and physiotherapy service
businesses as part of the Initial Public Offer (IPO) of Healthia Limited. On 11 September 2018, the Consolidated Entity raised
$34.391 million ($26.849 million underwritten offer and $7.542 million clinician participation offer) and was admitted to the
Australian Securities Exchange (ASX).
Relevant matters in relation to the IPO and ASX listing are as follows:
Acquisition of the MFDA Group
Healthia Limited acquired all of the ordinary shares in My FootDr (Aust) Ltd (the MFDA Group) on 30 July 2018.
Accounting for the MFDA Acquisition
In accordance with Australian Accounting Standards the acquisition of MFDA Group by Healthia Limited does not meet the
definition of a business combination within the provisions of AASB 3 Business Combinations as Healthia Limited was
established for the sole purpose of acquiring the MFDA Group by way of equity. Therefore, the Consolidated Entity applied
the continuation method of accounting for the combination of the MFDA Group in this Financial Report of Healthia Limited.
Therefore, all comparative periods are in relation to the MFDA Group.
Under continuation accounting the Consolidated Entity is effectively adopting book value accounting whereby the assets and
liabilities of the legal acquiree (MFDA Group) are recognised at their previous carrying amounts. No adjustments are made
to reflect fair values and no new assets (including goodwill) and liabilities of the legal acquiree are recognised at the date of
the business combination. Any difference between the acquired net assets and the consideration are recognised through
reserves in equity.
6
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Acquisition of Physiotherapy Group Holdings Ltd
Healthia Limited acquired all of the ordinary shares in Physiotherapy Group Holdings Ltd (PHL) on 18 July 2018. PHL did
not trade during the financial year ended 30 June 2018 and held no business assets at the time of acquisition by Healthia
Limited. PHL is the operating entity and the acquirer of the physiotherapy service businesses.
Physiotherapy Group Holdings Ltd was subsequently renamed to Allsports (Aust) Limited.
Acquisition of HTPL
Healthia Limited acquired all of the ordinary shares of A.C.N. 146 471 678 Pty Ltd (HTPL) on 18 July 2018. HTPL did not
trade during the financial year ended 30 June 2018 and held no business assets at the time of acquisition by the Consolidated
Entity. HTPL is the operating entity and the acquirer of the Extend Rehabilitation businesses.
A.C.N. 146 471 678 Pty Ltd was subsequently renamed to Extend Rehab Pty Ltd.
Financial Overview – Statutory Performance
The directors are pleased to report the results for the first year of trading results as a listed entity.
During the financial year, the Consolidated Entity underwent significant corporate and capital restructuring to allow it to
ultimately list on the (ASX) on 11 September 2018. At the same time as listing the Consolidated Entity acquired 48 allied
health businesses. A further 12 allied health businesses were acquired between September 2018 and June 2019. These
significant events should be considered when interpreting the statutory financial results.
The FY19 statutory performance compared to the FY18 statutory performance of the Consolidated Entity is as follows:
Table 1: FY19 statutory performance compared to FY18 statutory performance
7
Year to 30 June 2019Year to 30 June 2018ChangeChange$'000$'000$'000%Revenue from continuing operations65,08434,32530,75989.6%Direct and operating expenses(60,826)(34,527)26,29976.2%EBITDA4,258(202)4,460NAEBITDA Margin %6.5%-0.6%Depreciation(1,549)(1,011)53853.2%Amortisation(395)(173)222128.3%Profit before finance costs and income tax2,314(1,386)3,700NANet finance expense(1,331)(1,052)27926.5%Profit before income tax expense983(2,438)3,421NAIncome tax expense(1,266)4991,765NAProfit after income tax expense(283)(1,939)1,65685.4%Amortisation395173(222)128.3%Profit after income tax expense and before amortisation112(1,766)1,878106.3%
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Revenue
Statutory revenue was up $30.759m, or 89.6%, compare to FY18 statutory revenue. The increase in the Consolidated Entity’s
revenue compared with the statutory revenue from FY18 was primarily driven by the acquisitions made at the time of listing
on the ASX and the further 12 acquisitions made throughout the financial year.
The Consolidated Entity experienced some disruption while consolidating the initial listed portfolio of businesses, integrating
systems and processes. The impact on revenue has not been quantified by the directors and management of the
Consolidated Entity.
EBITDA Margin %
Statutory FY19 EBITDA margin of 6.5% was up on Statutory FY18 EBITDA margin of (0.6%). However, both years have
been affected by the significant one-off acquisition and IPO costs incurred by the Consolidated Entity.
Other factors effecting the Statutory FY19 EBITDA margin are:
●
●
●
One-off restructuring costs in relation to the changes to a number of the Consolidated Entity’s clinics, including merging
two clinics and closing one, and the cost of redundant systems.
The Consolidated Entity's recruitment and training of 33 new graduate clinicians (16 podiatrists and 17 physiotherapists
in early 2019. These new clinicians were not forecasted for in the prospectus and were recruited to assist with the
continued growth of the clinics. This increased salary and wages for the Consolidated Entity as the new graduate
clinicians are not as productive as their peers. These new graduate clinicians are the future leaders and clinic class
shareholders and are an important investment for the Consolidated Entity.
There was an increase in support office costs of the Consolidated Entity during the financial year to manage the growth
of the Consolidated Entity.
2019 Pro-forma Underlying Results
To assist users, information about the pro-forma underlying performance of the Consolidated Entity is presented, which
excludes the impact of one-off acquisition costs, integration costs, restructuring costs and other one-off costs. The pro-forma
underlying performance is provided on an unaudited basis and a reconciliation between statutory and pro-forma underlying
performance is provided further below in table 2. These numbers presented below are an annualised estimate.
The following table highlights the pro-forma underlying performance of the Consolidated Entity:
Table 2: Pro-forma Underlying Financial Performance to Proforma Prospectus Forecast FY19
8
This table has not been auditedPro-forma Underlying Performance Year to 30 June 2019 1,2Prospectus Pro-forma Forecast FY19ChangeChange$'000$'000$'000%Revenue from continuing operations76,55571,8024,7536.6%Direct and operating expenses(64,892)(61,533)3,3595.5%EBITDA 311,66310,2691,39413.6%EBITDA Margin %15.2%14.3%+90bpsDepreciation(1,803)(1,431)37226.0%Amortisation(460)(366)9425.6%Profit before finance costs and income tax expenses9,4008,47292810.9%Net finance expense(1,331)(959)37238.8%Profit before income tax expense8,0697,5135567.4%Income tax expense(2,421)(2,364)572.4%Profit after income tax expense5,6485,1494999.7%Amortisation460366(94)25.6%Profit after income tax expense and before amortisation 46,1085,51559310.8%Non-controlling interest(1,239)(752)48764.7%Net profit after tax and before amortisation attributed to the owners of Healthia 54,8694,7631062.2%
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Revenue
The change in the Consolidated Entity’s revenue compared with the above tables was primarily driven by the 12 acquisitions
made between September 2018 and June 2019.
Organic revenue growth of 2.0% (Podiatry Segment 1.3% and Physiotherapy Segment 3.0%) was achieved by the
Consolidated Entity. Organic revenue growth is calculated by excluding any closed clinics and the clinics acquired after listing
on the ASX between September 2018 and June 2019.
The pro-forma prospectus forecast FY19 results illustrated in the tables above estimated that consolidation elimination entries
from internally generated revenue from iOrthotics and DBS would be $2.814m. The actual eliminated revenue upon
consolidation was $3.573m, or $0.759m more than forecast. This has had the effect of reduced pro-forma underlying
revenue, increasing pro-forma underlying EBITDA Margin % but has not impacted pro-forma underlying EBITDA.
Consolidating the initial listed portfolio of businesses and integrating systems and processes was challenging. This, in turn,
impacted the speed of new acquisitions post listing and revenue generation during the reporting period. The impact on
revenue has not been quantified by the directors of the Consolidated Entity, however building solid foundations and
integrating systems and processes was seen as paramount in setting the Consolidated Entity up for the future.
EBITDA
The Consolidated Entity's pro-forma underlying FY19 EBITDA of $11.663m outperformed pro-forma prospectus forecast
FY19 EBITDA by $1.394m, or 13.6%. The increase in pro-forma underlying EBITDA was primarily driven by the 12 allied
health business acquisitions made between September 2018 and June 2019.
During the financial year, corporate overheads increased over the pro-forma prospectus forecast FY19 corporate overheads
by $0.347m. This had the effect of reducing pro-forma underlying FY19 EBITDA. The scale up in corporate overheads has
allowed the Consolidated Entity to rapidly integrate the podiatry and physiotherapy clinics acquired at listing, as well as
facilitating the acquisitions and integration of an additional 29 clinics since listing. Furthermore, these scaled up corporate
overheads have set the Consolidated Entity up to manage its continued growth, including continued growth from
acquisitions.
EBITDA Margin %
Pro-forma underlying EBITDA Margin % of 15.2% was higher than the pro-forma prospectus forecast FY19 EBITDA margin
of 14.3%. The EBITDA Margin % increase was largely due to the increase in EBITDA Margin % of the Physiotherapy
Segment.
The Consolidated Entity increased EBITDA Margin % despite the following factors which had a negative impact during the
year:
●
●
Recruitment and training of 33 new graduate clinicians (16 podiatrists and 17 physiotherapists) in early 2019. These
new clinicians were not forecast and were recruited to assist with the continued growth of the clinics. This increased
salary and wages as the new graduate clinicians are not as productive as their peers in their first 3 to 6 months of
employment.
The increase in corporate overheads of the Consolidated Entity over that forecast in the prospectus. The corporate
overheads increased to assist the Consolidated Entity in realising its growth strategies.
9
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Depreciation
Depreciation expense increased by $0.372m, or 26.0% over prospectus due to acquisitions not included in the prospectus,
an increase in capital equipment costs for the integration of the clinic portfolio and the addition of an additional HP 3D fusion
jet printer.
To assist users, information about the pro-forma underlying performance of the Consolidated Entity is presented, which
excludes performance attributed to period before the Consolidated Entity's ownership, the impact of one-off acquisition costs,
integration costs, restructuring costs and other one-off costs. A reconciliation of statutory performance to pro-forma
underlying performance is as follows:
Table 3: Reconciliation of Statutory Performance to Proforma Underlying Performance
The Consolidated Entity incurred a number of one-off acquisition and IPO related costs in relation to the listing on the ASX
and the acquisition of the podiatry and physiotherapy businesses. These acquisition and IPO related costs are detailed in
the table below.
Table 4: Actual FY19 Acquisition and IPO Costs to Acquisition and IPO costs forecast in the Prospectus
This table has not been audited
Acquisition advisory and transaction costs
Stamp duty associated with IPO and further acquisitions
IPO advisory and transaction costs
ASX listing fees
2019
$000
2019
Prospectus
$000
Change
$000
2,418
1,358
351
134
1,003
914
-
-
1,415
444
351
134
4,261
1,917
2,344
The Consolidated Entity incurred a number of one-off costs to rapidly integrate and centralise the systems of the allied
health businesses acquired as part of the listing on the ASX. Furthermore, during the year the Consolidated Entity incurred
a number of costs to restructure some of the existing clinics, including the merger of 2 clinics and closure of 1 clinic. These
restructure and integration costs are detailed in the table below.
10
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Table 5: One-off restructure and integration costs
This table has not been audited
Rent and closure costs of clinics
Staff restructuring costs and redundancies
Payouts or duplication of costs for a number of redundant systems
Write-off of assets and inventory for closed clinics
2019
$000
2019
Prospectus
$000
Change
$000
213
153
61
45
472
-
-
-
-
-
213
153
61
45
472
Capital Management
The Consolidated Entity has drawn down $19.6M out of its total finance facility of $37.0M with Australian and New Zealand
Bank and the Bank of Queensland at 30 June 2019.
The key financial covenants of the finance facility are:
●
●
●
Leverage Ratio: (Debt: Adjusted EBITDA) must remain below or equal to 2.50 times;
Fixed Charge Cover Ratio: (Adjusted EBITDA + rent expense) / (interest + rent expense) must remain above or equal
to 1.75 times; and
Debt to Capitalisation Ratio: Debt / (Debt + Book Value of Equity) must remain below than or equal to 50%.
At the reporting date, the Consolidated Entity had met all its obligations under the finance facility.
An amount of $17.4M remains underdrawn under the finance facility at the reporting date. The Consolidated Entity expects
to use a combination of the undrawn debt amount, future operating cash flow and clinic class shares to fund future
acquisitions.
Business Overview
The Consolidated Entity listed on the Australian Securities Exchange (ASX) on 11 September 2018 with an aim of becoming
one of Australia’s leading allied health providers. The Consolidated Entity owns and operates a portfolio of allied health
businesses throughout Australia. The focus of the Consolidated Entity is to operate and expand a network of allied health
businesses in Australia, with a focus on the podiatry and physiotherapy industries. At the reporting date, the Consolidated
Entity owned the following allied health businesses:
●
●
●
●
●
80 podiatry clinics.
38 physiotherapy clinics.
13 speciality hand therapy clinics.
One orthotics laboratory trading as iOrthotics.
75% of a podiatry and foot care supplies and equipment wholesale business trading as D.B.S. Medical.
Podiatry Segment Highlights
At the reporting date, the Consolidated Entity owned and operated the following podiatry businesses which make up the
podiatry reporting segment of the Consolidated Entity:
●
●
●
80 podiatry clinics
One orthotics laboratory trading as iOrthotics
75% of a podiatry and foot care supplies and equipment wholesale business trading as D.B.S. Medical
11
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Operational highlights for the Podiatry Segment include:
●
●
●
●
●
8 additional podiatry clinics were acquired and integrated, growing the Consolidated Entity’s estimated share of podiatry
industry revenue in Australia to approximately 5%
Recruitment of 17 podiatry graduates who attended and completed the Consolidated Entity’s structured new graduate
program
The conversion of all podiatry clinics acquired at listing to the same practice management software system. Newly
acquired clinics have either converted or are in the process of converting to the same centralised system. At the date
of reporting, 74 of the 80 podiatry clinics where on the same practice management software
2 additional podiatry clinics were opened inside of existing physiotherapy clinics of the Consolidated Entity
iOrthotics purchased an additional 3D HP Fusion Jet printer allowing for additional capacity to produce orthotics for the
Consolidated Entity's clinics and external customers
Physiotherapy Segment Highlights
At the reporting date, the Consolidated Entity owned and operated the following physiotherapy businesses which make up
the physiotherapy reporting segment of the Consolidated Entity:
●
●
38 physiotherapy clinics
13 speciality hand therapy clinics
Operational highlights for the Physiotherapy Segment include:
●
●
●
●
●
The integration of the 14 Allsports Physiotherapy clinics, the 9 other physiotherapy clinics and 7 speciality hand therapy
clinics acquired at the time of listing on the ASX, into the Consolidated Entity's centralised systems
An additional 15 physiotherapy clinics acquired and integrated post listing on the ASX. 13 of the newly acquired
physiotherapy clinics were located in Queensland. The remaining 2 clinics were the Consolidated Entity’s first
physiotherapy clinics acquired outside of Queensland and are located in New South Wales and Victoria
4 additional speciality hand therapy clinics were acquired. The 4 clinics are located in Sydney, New South Wales
The recruitment of 17 physiotherapy graduates who all attended and completed the Consolidated Entity's structured
new graduate program
2 new Extend Rehabilitation specialist hand therapy clinics were opened inside of existing physiotherapy clinics of the
Consolidated Entity
Organic growth Strategies
The Consolidated Entity aims to drive organic growth from its allied health businesses through the following four-tiered growth
strategy:
1. patient focused outcomes
2. organic activities
3. future accretive acquisitions
4. vertically integrated businesses units
Key aspects of each of the four growth strategies are as follows:
1. Patient focused outcomes
The Consolidated Entity has adopted a patient charter which brings a collaborative approach to allied health care and is
focussed on achieving quality patient outcomes. Through this approach, The Consolidated Entity expects its clinics, and its
clinicians, will optimise patient outcomes. In addition to focussing on patient outcomes, the Consolidated Entity has in place
programs to assist in increasing patient retention rates.
2. Organic activities
The Consolidated Entity is expected to continue to drive organic growth through a number of key operational strategies and
via efficiencies gained from managing a larger portfolio of clinics. These organic growth strategies include:
12
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
●
●
●
●
●
●
●
●
The delivery of world class education programs to increase standards of care across the portfolio of clinics
The Clinical Advisory Committees, responsible for driving clinical standards
Via our clinic class shareholders who continue to have a vested interest in the clinic in which they work
Increasing revenue of acquired clinics by introducing additional services, including introducing podiatry or speciality
hand therapy services into physiotherapy clinics
Patient engagement via improved patient retention, satisfaction and communication
Continued investment in equipment to introduce additional services into clinics
Centralised administration freeing up clinical staff to deliver services to patients
Operating from a common clinic management software allowing for ease of management of the Consolidated Entity,
enhanced financial reporting and delivery of benchmarking metrics, as well as providing for stronger internal controls
then that of a decentralised model
3. Future accretive acquisitions
Given the fragmented nature of the targeted allied health industries, growth by acquisition will continue to be a central pillar
of the Consolidated Entity's growth strategy. The Consolidated Entity will continue to assess opportunities on a case by case
basis with reference to its existing network of clinics, strategic objectives and the Consolidated Entity’s acquisition criteria.
4. Vertically integrated businesses units
The Consolidated Entity’s ownership of iOrthotics and its 75% interest in D.B.S. Medical allows for the Consolidated Entity
to vertically integrate a number of the core supply functions, allowing for cost savings and margin improvements.
Geographical Spread
At reporting date, the Consolidated Entity’s clinics were located in the following geographic areas:
Table 6: Clinic Overview by Geography
Queensland
New South Wales
Victoria
Tasmanian
South Australia
Western Australia
Northern Territory
Podiatry
Clinics
Physiotherap
y Clinics
Hand
Therapy
Clinics
Other
Businesses
Total
43
9
11
2
8
5
2
80
36
1
1
-
-
-
-
38
9
4
-
-
-
-
-
13
1
1
-
-
-
-
-
2
89
15
12
2
8
5
2
133
The Consolidated Entity sees significant opportunities to continue to acquire podiatry and physiotherapy clinics in all states
and territories of Australia.
Clinician Retention Program
A key focus for the Consolidated Entity is the retention and engagement of its workforce. The Consolidated Entity has
developed its Clinician Retention Program to help achieve this. The Clinician Retention Program allows clinicians to have
continued ownership in the Clinic in which they work through the issue to them (or their Board approved nominee) of Clinic
Class Shares.
Clinic Class Shares have and will be issued to:
●
●
●
Clinicians (or their nominees approved by the relevant board), as part consideration for the acquisition of a clinic by the
Consolidated Entity
Clinicians (or their nominees approved by the relevant board) for consideration and
Any other holder that is approved by the relevant board for consideration
13
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
The Clinic Class Shares are designed to create alignment between the economic interests of clinicians and that of the
Shareholders by providing the holder with an economic interest in the performance of the Clinic in the Consolidated Entity.
The Clinic Class Shares are non-voting shares.
Holders of Clinic Class Shares will receive a cash dividend calculated by reference to the earnings derived from the Clinic
relating to that class of Clinic Class Share in circumstances where, at the directors’ discretion, a dividend is declared by the
relevant Subsidiary to the Consolidated Entity. Each Clinic Class Share will entitle the holder to a dividend of up to 1% of the
earnings generated by the Clinic to which the Clinic Class Share relates.
No more than 48 Clinic Class Shares can be issued in any class. As each Clinic Class Share entitles the holder to up to 1%
of the after-tax profits generated by the clinic in which the clinician works, the effect of this is that the clinicians working in a
clinic will not hold an economic interest of greater than 48% of the earnings generated by any clinic, ensuring that the
Consolidated Entity retains economic control over its subsidiaries, in addition to owning all of the voting shares in them.
At Listing, there was 1,267 Clinic Class Shares, in 49 different classes on issue in the Consolidated Entity's operating
subsidiaries. An additional 668 Clinic Class Shares, in 21 different classes have been issued by the Consolidated Entity’s
subsidiaries since listing. These additional shares have been issued to clinicians as part consideration for newly acquired
clinics and/ or for consideration.
At 30 June 2019, the Clinic Class Shares on issue represent an economic interest of approximately 19.4% in the earnings
of the Consolidated Entity.
Material Business Risks
The key risks that the Consolidated Entity faces that have the potential to have a material impact on the performance of the
Consolidated Entity, and how they are managed are detailed below. The Consolidated Entity is committed to managing the
potential risks it faces in a continuous and proactive way.
Retention and effective utilisation of clinicians
The Consolidated Entity's primary sources of earnings is generated from professional services provided by its clinicians.
Performance will be influenced by the Consolidated Entity’s ability to attract and retain, and by the efforts and actions of, its
clinicians.
Under the terms of the standard employment agreement, clinicians can generally terminate their employment agreement
without cause, subject to the provision of an agreed period of written notice to the Consolidated Entity.
14
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
If a significant number of clinicians ceased their employment with the Consolidated Entity, and the Consolidated Entity was
unable to adequately replace these clinicians, this could have a material detrimental impact on the Company’s ability to
generate revenue, its ability to deliver on its business strategy, and its future financial performance.
Market attractive remuneration packages including incentive plans are offered to key personnel. Furthermore, the clinician
retention program allows for clinicians to have ownership in their clinic. These factors are expected to encourage retention
of key staff and also help attract new talent to the Consolidated Entity.
Private healthcare insurance coverage and membership
Material reductions in private health insurance coverage, composition of policy coverage and/or decreases in membership
rates could impact total expenditure in the allied health industries targeted by The Consolidated Entity. If private health
insurance membership, or the insured amounts, reduce, then this could potentially impact demand for the Consolidated
Entity’s services and put downward pressure on fees charged to patients.
Competition
There is a risk that increased competition from existing and new industry participants may impact The Consolidated Entity’s
revenue and profits. The Consolidated Entity may also face competition from other participants in the acquisition of
clinics. This competition may increase the price that The Consolidated Entity must pay in order to secure the acquisition of
new clinics or limit the clinics that The Consolidated Entity can acquire.
The Consolidated Entity, and its revenue, is also affected by competition between individual clinics operating within the same
trade area of any of the Consolidated Entity's clinics.
The new graduate induction program, clinical education programs, the establishment of the Clinical Advisory Committees
and the clinician retention program are key strategies used by the Consolidated Entity to mitigate this risk. Furthermore, the
fragmented nature of the podiatry and physiotherapy industries in Australia means there is considerable opportunity for
consolidation.
Integration Risks
The Consolidated Entity will continue to acquire new clinics and seek to integrate their systems into those the Consolidated
Entity. Key integration risks include higher than expected integration costs, potential disruption to management time and the
existing operations of the Consolidated Entity's businesses, lower than expected cost and revenue synergies from the
vertically integrated B2B Businesses, the loss of patients and impairment of business relationships (such as with staff and
suppliers). Potential issues could also arise from the inability to maintain uniform standards, controls, procedures and
policies. Such integration risks can detract from the expected benefits contemplated by the Consolidated Entity and affect
financial performance and growth.
The Consolidated Entity uses the following to help mitigate some of this risk:
●
●
●
●
A detailed checklist used by the integrations and operations team
An extensive due diligence process
Clinic retention program and
Vendor deferred payments
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Consolidated Entity other than those addressed in the Review
of operations and Business overview sections of this Directors’ Report.
15
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Matters subsequent to the end of the financial year
Acquisition of Physiotherapy and Hand Therapy Clinics
The Consolidated Entity acquired an additional 7 physiotherapy and hand therapy clinics since 30 June 2019. Initial
consideration paid for the acquisitions was $6.63 million including $4.01 million in cash consideration, $2.62 million in clinic
class share consideration, with up to an additional $1.05 million payable in contingent consideration. The Consolidated Entity
is yet to complete the business combination accounting for these newly acquired clinics.
These clinics are expected to contribute Revenue and EBITDA of $7.60 million and $1.79 million respectively on a pro-forma
basis.
Acquisition of Podiatry Clinics
The Consolidated Entity acquired an additional 5 podiatry clinics since 30 June 2019. Initial consideration paid for the
acquisitions was $2.62 million including $2.40 million in cash consideration, $0.22 million in clinic class share consideration,
with up to an additional $0.20 million payable in contingent consideration. The Consolidated Entity is yet to complete the
business combination accounting for these newly acquired clinics.
These clinics are expected to contribute Revenue and EBITDA of $3.40 million and $0.65 million respectively on a pro-forma
basis.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the
Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial
years.
Likely developments and expected results of operations
The Consolidated Entity will continue to focus on delivering growth via its four-tiered growth strategy:
1.patient focused outcomes
2.organic growth
3.future accretive acquisitions and
4. vertically integrated businesses units
The Consolidated Entity expects to continue to acquire well-established allied health businesses throughout Australia. The
Consolidated Entity expect to deploy a further $15m of capital for the acquisition of new allied health businesses over the
next 12 months. The Consolidated Entity expects to use a combination of the undrawn debt amount, future operating cash
flow and clinic class shares to fund these acquisitions.
No other information on likely developments in the operations of the Consolidated Entity and the expected results of
operations have not been included in this report because the Directors believe it would be likely to result in unreasonable
prejudice to the Consolidated Entity.
Information on the Consolidated Entity's performance during the year can be found in the review of operations.
Environmental regulation
The Consolidated Entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
16
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Information on Directors
Name:
Title:
Experience and expertise:
Other current directorships:
Dr Glen Frank Richards (appointed 10 May 2018)
Chairman and Non-Executive Director
Glen is a veterinary surgeon and the founder and former CEO of Greencross Limited,
Australia’s largest pet care company. Glen has spent over 20 years building a multi-
million-dollar integrated pet care empire, which now operates more than 180 veterinary
hospitals and 230 pet care retail stores in Australia and Animates in New Zealand.
Chairman and non-executive director of People Infrastructure Ltd (ASX code: PPE) and
Regeneus Ltd (ASX code: RGS).
Former directorships (last 3 years): Non-executive director of 1300 Smiles Ltd (ASX code: ONT)
Special responsibilities:
Interests in shares:
Name:
Title:
Experience and expertise:
Non-executive director of Greencross Ltd (ASX code: GXL)
Member of the Audit and Risk Committee and the Remuneration and Nomination
Committee.
4,995,329
Paul David Wilson (appointed 10 May 2018)
Independent Non-Executive Director
Paul was a co-founder, director and shareholder of Mammoth Pet Holdings Pty Ltd (Pet
Barn) prior to the merger with Greencross Limited. Prior to founding Mammoth, Paul
was the Chief Operating Officer of ShopFast, Australia’s largest online grocery retailer
(sold to Coles in 2003). Paul has worked in the retail industry for 26 years with roles
including, General Manager of Caltex/Boral JV, Vitalgas.
None
Other current directorships:
Former directorships (last 3 years): Non-executive director of Greencross Ltd (ASX code: GXL)
Special responsibilities:
Chairman of the Audit and Risk Committee and a member of the Remuneration and
Nomination Committee.
324,104
Interests in shares:
Name:
Title:
Experience and expertise:
Lisa Jane Dalton (appointed 10 May 2018)
Independent Non-Executive Director
Lisa is an experienced director, senior executive and company secretary with expertise
in the healthcare, medical, utilities, manufacturing, childcare, energy, mining and
construction sectors.
She has experience in leading teams responsible for strategy, governance, risk
management, human resources, communication, stakeholder relations and program
management. Lisa has participated in 4 successful ASX listings in the past 5 years.
Lisa has strong practical experience in fit for purpose governance, risk management,
strategic planning and motivating teams to find solutions to complex issues.
None
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Chairman of the Remuneration and Nomination Committee and a member of the Audit
and Risk Committee.
None
Interests in shares:
Name:
Title:
Experience and expertise:
Darren Lindsey Stewart (appointed 10 May 2018)
Chief Executive Officer Podiatry
Darren is a registered podiatrist and in 2004 co-founded the My FootDr Business with
Greg Dower. The two had grown the group to 13 clinics by December 2015. In 2015,
Darren and Greg saw the opportunity to grow their network of Clinics through the
acquisition of well-established podiatry clinics. Before merging with Balance Podiatry
Group in December 2016, they had grown the network to 19 clinics. Today, Darren
provides strategic leadership and direction to the My FootDr Business.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
4,457,664
17
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Name:
Title:
Experience and expertise:
Anthony (Tony) Peter Ganter (appointed 10 May 2018)
Chief Executive Officer Physiotherapy
Tony has over 25 years’ experience in the management and operation of private
physiotherapy and sports medicine clinics and high performance medical teams in
professional sport. He possesses knowledge of the professional, administrative and
management skills required to operate physiotherapy and sports medicine centres.
Tony remains active as a treating physiotherapist which enables him to keep in touch
with the challenges of both professional health care and clinic ownership. He has a
strong commitment
for
physiotherapists.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
the ongoing creation of varied career
1,108,007
journeys
to
Name:
Title:
Experience and expertise:
Wesley Coote (appointed 29 April 2019)
Group Managing Director and Chief Executive Officer
Wesley is the former Chief Financial Officer and Company Secretary of Greencross
Ltd. Prior to Greencross, Wesley worked in Chartered Accounting where he provided
businesses advice within the health sector, property sector and financial services
industry. Wesley holds a Bachelor of Commerce from the University of Queensland
and is a member of the Institute of Chartered Accountants, as well as a member of the
Governance Institute of Australia. Wesley joined the Group in December 2015 as Chief
Financial Officer and Company Secretary and was appointed Group Managing Director
and Chief Executive Officer on 29 April 2019.
None
Other current directorships:
Former directorships (last 3 years): Non-executive director of National Veterinary Care Ltd
Interests in shares:
1,557,764
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Christopher Banks - Chris is the Chief Financial Officer and Company Secretary and has experience in aggregating and
integrating professional services businesses. He joined the MFDA Group in July 2017 as Chief Commercial Officer and was
appointed Chief Financial Officer and Company Secretary on 29 April 2019.
Meetings of Directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the
year ended 30 June 2019, and the number of meetings attended by each Director were:
Dr Glen Richards
Paul Wilson
Lisa Dalton
Darren Stewart
Anthony Ganter
Wesley Coote *
Remuneratio
n and
Nomination
Audit and
Risk
Full Board
Committee Committee Attended
Held
1
1
1
1
1
1
1
1
1
1
1
1
12
11
11
11
12
12
12
12
12
12
12
12
* Wesley Coote was appointed Group Managing Director and CEO on 29 April 2019. Prior to his appointment he attended
all meetings as Company Secretary.
18
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Consolidated Entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the Consolidated Entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Consolidated Entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward
governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Remuneration and Nomination Committee is responsible for determining and reviewing remuneration arrangements for
its directors and executives. The performance of the Consolidated Entity depends on the quality of its directors and
executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
The Remuneration and Nomination Committee from time to time engages external remuneration consultants to ensure the
executive remuneration framework is market competitive and complementary to the reward strategy of the Consolidated
Entity.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors'
fees and payments are reviewed annually by the Remuneration and Nomination Committee. The Remuneration and
Nomination Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-
executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined
independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman
is not present at any discussions relating to the determination of his own remuneration. Non-executive directors do not
receive share options or other incentives.
19
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the Annual General Meeting held on 4 July 2018, where the shareholders
approved a maximum annual aggregate remuneration of $500,000 per annum.
The non-executive Director's fees to be paid in the financial year ended 30 June 2019, have been set as $65,000 per annum
(inclusive of statutory superannuation) for the Chair and $45,000 per annum (inclusive of statutory superannuation) for the
other non-executive Directors. Directors may also be reimbursed for all travel and other expenses they incur in connection
with the company's business.
Executive remuneration
The Consolidated Entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Remuneration and Nomination Committee based on individual and business unit performance, the overall performance of
the Consolidated Entity and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the Consolidated Entity and provides additional value to the
executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the performance hurdles
of executives. STI payments are granted to executives based on specific annual targets and key performance indicators
('KPI's') being achieved. KPI's include profit contribution, customer satisfaction, leadership contribution and product
management.
Use of remuneration consultants
During the financial year ended 30 June 2019, the Consolidated Entity did not engage a remuneration consultant to review
its existing remuneration policies.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Consolidated Entity are set out in the following tables.
The key management personnel of the Consolidated Entity consisted of the following:
●
●
●
●
●
●
●
●
●
●
Glen Richards - Chairman and Non-Executive Director
Paul Wilson - Non-Executive Director
Lisa Dalton - Non-Executive Director
Wesley Coote – Group Managing Director and Chief Executive Officer
Anthony Ganter – Director and Chief Executive Officer Physiotherapy
Darren Stewart - Director and Chief Executive Officer Podiatry
Chris Banks – Chief Financial Officer and Company Secretary
Lisa Roach – Chief Operating Officer Physiotherapy
Glen Evangelista – Chief Commercial Officer
Dean Hartley – Chief Information Officer
20
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Short-term benefits
Post-
employme
nt benefits
Long-term
benefits
Share-
based
payments
Cash
salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled **
$
Total
$
65,990
45,250
37,618
176,344
187,949
145,383
153,069
129,230
167,949
167,949
1,276,731
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,927
4,750
3,574
-
-
-
-
75,000
-
72,917
125,000
41,192
16,761
17,855
13,811
4,106
3,285
2,700
28,466
-
-
225,677
209,089
161,894
14,580
12,277
15,955
15,955
122,445
2,920
2,400
2,920
2,920
21,251
131,547
-
-
-
302,116
143,907
186,824
186,824
235,013 1,655,440
2019
Non-Executive Directors:
Glen Richards
Paul Wilson
Lisa Dalton
Executive Directors:
Wesley Coote
Darren Stewart
Anthony Ganter *
Other Key Management
Personnel:
Christopher Banks
Lisa Roach *
Glen Evangelista
Dean Hartley
* Remuneration disclosed is from 3 September 2018 to 30 June 2019.
** Equity settled payments are one-off payments for advisory and other fees in relation to the initial public offering of the
Consolidated Entity.
While the Consolidated Entity applied the continuation method of accounting for the My FootDr (Aust) Limited acquisition
(see Note 2 for further details), no FY2018 comparative remuneration for each Director and Key Management Personnel is
applicable as Healthia Limited was only incorporated and the Directors appointed on 10 May 2018.
The proportion of remuneration disclosed above that is performance-based for all Directors and other key management
personnel is 0%.
No cash bonuses have been paid to any key management personnel in the year.
Details of incentives (STIs and LTIs) are disclosed in the Additional Information section.
No STIs or LTIs have vested in the year.
21
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Share-based compensation
Issue of shares
Equity Settled
Equity settled payments made during the current financial year to Directors and Key Management Personnel are one-off
payments for advisory and other fees relation to the initial public offering of the Consolidated Entity. No additional shares of
this nature are expected to be issued in the future.
Performance Rights Plan
As outlined in the Healthia Limited prospectus for the Initial Public Offering (section 11.6.2 of the Prospectus), the Company
has approved the terms of a Healthia Performance Rights Plan (Performance Rights Plan) as a means of encouraging
employees to share in the ownership of the Company and promotes its long-term success as a common goal. The Board will
make offers to selected eligible participants to participate in the Performance Rights Plan following listing based on their
contribution to the Company. No offer of an award may be made to the extent it breaches the Constitution, the ASX Listing
Rules, the Corporations Act or any other applicable law.
The Board will have the discretion to set the terms and conditions to which it will offer performance rights under the
Performance Rights Plan including any vesting conditions. Vesting conditions may include conditions relating to continuous
employment, financial performance of the participant or the Group, or the occurrence of specified events.
A participant is entitled to exercise an award on or after the exercise date defined in the offer, provided they have satisfied
any vesting conditions. Upon exercise, the participant must pay the applicable exercise price. Any Shares issued under, or
in accordance with, the Performance Rights Plan will, upon allotment, rank equally with the existing issued Shares at that
time.
Shares allocated to participants under the Performance Rights Plan may be issued by the Company or acquired on or off
market by the Company or its nominees. As soon as practicable after the date of any allotment of Shares in conjunction with
the plan, the Company will, unless the Board resolves otherwise, apply for official quotation of such Shares on the ASX.
The Performance Rights Plan also contains customary and usual terms having regard to Australian law for dealing with
administration, variation, suspension and termination of the plan.
Options
There were no options over ordinary shares issued to Directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2019.
There were no options over ordinary shares granted to or vested by Directors and other key management personnel as part
of compensation during the year ended 30 June 2019.
22
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Additional information
The company entered into a new executive employment agreement with Wesley Coote on 29 April 2019 for the role of Group
Managing Director and Chief Executive Officer.
Summary of Key Terms of the Executive Agreement of Wesley Coote
Based Fixed Remuneration
Annual base fixed remuneration of $225,000. This is exclusive of superannuation which will be paid at the statutory rate.
Short-Term Incentive
Eligible for an annual short-term incentive (STI) with an opportunity to earn up to 75% of his annual base fixed
remuneration. Performance hurdles are linked to an increase in Healthia’s underlying earnings per share growth over prior
year, key non-financial targets aligned to Healthia’s strategic objectives and Board approval.
Long-Term Incentives
Annual long-term incentive under Healthia’s Performance Rights Plan representing 70% of his annual base fixed
remuneration. The Performance Rights will be subject to applicable vesting conditions which are linked to Total Shareholders
Returns (TSR).
Termination
The executive agreement may be terminated by either party at any time on 6 months’ notice. Wes Coote’s employment may
also be terminated immediately without notice under certain circumstances.
Restrictive Covenants
Post-employment restraint for 12 months preventing Wes from being employed or involved in a competing business.
Other Senior Management
The Company’s Senior Management are engaged under employment agreements which provide for an annual fixed
remuneration and short term performance based incentives.
Short-Term Incentive
Senior Management are eligible for an annual short-term incentive with an opportunity to earn up to 75% of his annual base
fixed remuneration. Performance hurdles are linked to key performance indicators of the Senior Management personnel, key
non-financial targets aligned to Healthia’s strategic objectives and Board approval.
Generally, these arrangements are terminable by the Company or the senior manager on 6 months’ notice.
Key management personal employed under these agreements include:
- Darren Stewart - Chief Executive Officer - Podiatry
- Anthony Ganter - Chief Executive Officer - Physiotherapy
- Christopher Banks- Chief Financial Officer and Company Secretary
- Glen Evangelista - Chief Commercial Officer
- Lisa Roach - Chief Operating Officer - Physiotherapy
- Dean Hartley - Chief Information Officer
23
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each Director and other members of key management
personnel of the Consolidated Entity, including their personally related parties, is set out below:
Ordinary shares
Glen Richards
Paul Wilson
Wesley Coote
Darren Stewart
Anthony Ganter
Chris Banks
Lisa Roach
Dean Hartley
Glen Evangelista
Balance at Received
the start of as part of
the year
remuneratio
n
Disposals/
Balance at
the end of
Additions
other
the year
-
-
-
-
-
-
-
-
-
-
-
75,000
-
-
-
100,000
-
-
-
4,995,329
249,104
1,557,764
4,457,664
1,108,007
166,070
630,548
3,787,676
3,037,674
175,000 19,989,836
4,995,329
-
324,104
-
1,557,764
-
4,457,664
-
1,108,007
-
266,070
-
630,548
-
3,787,676
-
-
3,037,674
- 20,164,836
Loans to key management personnel and their related parties
During the financial year there were loans to key management personnel in relation to the non-recourse employee shares
with My FootDr (Aust) Limited that vested during the year.
A reconciliation of these loans are as follows:
Wesley Coote
Chris Banks
Opening
Loan
Balance 1
July 2018
$
Loans
issued
during the
year
$
Loans repaid
during the
year
$
Closing Loan
Balance 30
June 2019
$
-
-
-
359,000
200,000
(359,000)
-
-
200,000
559,000
(359,000)
200,000
This concludes the remuneration report, which has been audited.
Shares under option
There were no unissued ordinary shares of Healthia Limited under option outstanding at the date of this report.
Shares issued on the exercise of options
There were no ordinary shares of Healthia Limited issued on the exercise of options during the year ended 30 June 2019
and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
Post the end of the financial year, the company paid a premium in respect of a contract to insure the directors and executives
of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
24
Healthia Limited and its Controlled Entities
Directors' report
30 June 2019
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 31 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 31 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risks and rewards.
●
Officers of the Company who are former partners of BDO Audit Pty Ltd
There are no officers of the Company who are former partners of BDO Audit Pty Ltd.
Rounding of amounts
The Company is of a kind referred to in the Australian Securities and Investment Commission's (ASIC) Corporations
Instrument 2016/191, relating to Rounding in Financial/Directors' Reports. Amounts in this report have been rounded off in
accordance with ASIC's Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this Directors' report.
Auditor
BDO was appointed as the auditor of the company during the period and continues in office in accordance with section 327
of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
___________________________
Glen Frank Richards
Director
30 August 2019
25
Healthia Limited and its Controlled Entities
Auditor's independence declaration
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY C K HENRY TO THE DIRECTORS OF HEALTHIA LIMITED
As lead auditor for the audit of Healthia Limited for the year ended 30 June 2019, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit.
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Healthia Limited and the entities it controlled during the period.
C K Henry
Director
BDO Audit Pty Ltd
Brisbane, 30 August 2019
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation.
26
Healthia Limited and its Controlled Entities
Contents
30 June 2019
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of Healthia Limited
Shareholder information
General information
28
29
30
32
33
73
74
78
The financial statements cover Healthia Limited as a Consolidated Entity consisting of Healthia Limited and the entities it
controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Healthia
Limited's functional and presentation currency.
Healthia Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business is:
Level 4 East Tower
25 Montpelier Road
Bowen Hills QLD 4006
A description of the nature of the Consolidated Entity's operations and its principal activities are included in the Directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 30 August 2019.
27
Healthia Limited and its Controlled Entities
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue from contracts with customers
Other income
Expenses
Cost of sales
Restructure and integration costs
Acquisition and IPO costs
Employee benefits expense
Depreciation expense
Amortisation expense
Loss on disposal of assets
Other expenses
Finance costs
Marketing costs
Occupancy costs
Note
Consolidated
2019
$'000
2018
$'000
4
5
6
6
6
65,084
34,325
845
-
(5,297)
(472)
(4,261)
(39,218)
(1,549)
(395)
(85)
(3,671)
(1,331)
(814)
(7,853)
(5,357)
-
(3,008)
(17,794)
(1,011)
(173)
(167)
(3,447)
(1,052)
(1,051)
(3,703)
Profit/(loss) before income tax (expense)/benefit
983
(2,438)
Income tax (expense)/benefit
7
(1,266)
499
Loss after income tax (expense)/benefit for the year
(283)
(1,939)
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Loss for the year is attributable to:
Non-controlling interest
Owners of Healthia Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of Healthia Limited
-
-
(283)
(1,939)
26
955
(1,238)
68
(2,007)
(283)
(1,939)
955
(1,238)
68
(2,007)
(283)
(1,939)
Cents
Cents
Basic earnings per share
Diluted earnings per share
42
42
(2.25)
(2.25)
(*)
(*)
* Despite the Consolidated Entity applying the continuation method of accounting for the acquisition of My FootDr (Aust)
Limited (see Note 2 for further details), FY18 basic earnings per share and diluted earnings per share comparatives have
not been presented due to incomparable operations and capital structures.
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
28
Healthia Limited and its Controlled Entities
Consolidated statement of financial position
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Investments accounted for using the equity method
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Income tax
Employee benefits
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax
Employee benefits
Provisions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of Healthia Limited
Non-controlling interest
Total equity
Note
Consolidated
2019
$'000
2018
$'000
8
9
10
11
12
13
14
7
15
16
7
17
18
19
20
7
21
22
23
24
25
26
27
2,610
3,396
3,478
1,218
10,702
10
7,643
62,221
2,598
72,472
741
1,238
2,367
424
4,770
-
4,756
27,055
1,036
32,847
83,174
37,617
3,397
484
1,051
2,718
162
1,715
9,527
20,039
92
524
260
728
878
22,521
4,264
15,267
(21)
1,179
328
274
21,291
4,287
-
206
157
262
328
5,240
32,048
26,531
51,126
11,086
49,884
(4,395)
(3,240)
42,249
8,877
13,406
(696)
(2,002)
10,708
378
51,126
11,086
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
29
Healthia Limited and its Controlled Entities
Consolidated statement of changes in equity
For the year ended 30 June 2019
Consolidated
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2017
12,973
90
(91)
496
13,468
Profit/(loss) after income tax benefit for the
year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 43)
Issue of ordinary shares as consideration for
acquisition of non-controlling interest
Transactions with non-controlling interest
Dividends paid (note 28)
-
-
-
-
433
-
-
-
-
-
85
-
(871)
-
(2,007)
-
68
-
(1,939)
-
(2,007)
68
(1,939)
-
-
96
-
-
-
(96)
(90)
85
433
(871)
(90)
Balance at 30 June 2018
13,406
(696)
(2,002)
378
11,086
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
30
Healthia Limited and its Controlled Entities
Consolidated statement of changes in equity
For the year ended 30 June 2019
Consolidated
Issued
capital
$'000
Reserves
$'000
Accumulated
Losses
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2018
13,406
(696)
(2,002)
378
11,086
Profit/(loss) after income tax expense for the
year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 24)
Issue of ordinary shares as consideration for
business combinations, net of transaction costs
(note 24)
Issue of ordinary shares as consideration for
acquisition of non-controlling interest, net of
transaction costs (note 24)
Conversion from clinic class shares to ordinary
shares (note 24)
Reclassification of existing clinic class shares
from debt to equity
Contributions of clinic class shares
Issue of clinic class shares as consideration for
business combinations (note 36)
Transactions with non-controlling interests
(note 25)
Share based payments (note 43)
Pre-IPO distributions
Dividends paid (note 28)
-
-
-
27,797
6,162
294
2,225
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,480)
275
(2,494)
-
(1,238)
-
(1,238)
955
-
955
(283)
-
(283)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,225)
3,968
1,911
4,786
(204)
-
-
(692)
27,797
6,162
294
-
3,968
1,911
4,786
(1,684)
275
(2,494)
(692)
Balance at 30 June 2019
49,884
(4,395)
(3,240)
8,877
51,126
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
31
Healthia Limited and its Controlled Entities
Consolidated statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other finance costs paid
Income taxes paid
Note
Consolidated
2019
$'000
2018
$'000
66,616
(66,318)
34,444
(31,637)
298
1
(1,331)
(644)
2,807
-
(1,052)
(529)
Net cash (outflows)/inflows from operating activities
40
(1,676)
1,226
Cash flows from investing activities
Payment for purchase of businesses, net of cash acquired
Payments for property, plant and equipment
Payments for intangibles
Payment for interest in associate
Payment for purchase of non-controlling interest, net of cash acquired
Proceeds from disposal of investments
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Share issue transaction costs
Proceeds from issue of clinic class shares
Proceeds from borrowings
Pre-IPO distributions
Dividends paid to non-controlling interest
Repayment of borrowings
Net cash from financing activities
36
13
24
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
8
(23,332)
(2,741)
(15)
(10)
(1,094)
-
7
(3,908)
(1,532)
-
-
-
111
-
(27,185)
(5,329)
28,817
(1,747)
1,911
19,948
(2,494)
(692)
(14,510)
-
-
-
4,134
-
(90)
(159)
31,233
3,885
2,372
166
2,538
(218)
384
166
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
32
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective
notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Consolidated Entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the Consolidated Entity.
The following Accounting Standards and Interpretations are most relevant to the Consolidated Entity:
AASB 9 Financial Instruments
The Consolidated Entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification and
measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business
model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are
solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is
held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on
specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial
assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on
initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration
recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset
may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an
accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion
of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an
accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting
treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL')
model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial
instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For
receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.
The Consolidated Entity adopted the ECL model from 1 July 2018. Due to the credit profile of Healthia's customers, and the
short term nature of trade and other receivables, there has been no material impact on the financial performance and position
of the consolidated entity.
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for
revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of
promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model
with a measurement approach that is based on an allocation of the transaction price. This is described further in Note 4.
Credit risk is presented separately as an expense rather than adjusted against revenue.
Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset,
or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer
acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over
the contract period.
The impact on the financial performance and position of the consolidated entity from the adoption of these Accounting
Standards is detailed in Note 4.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
33
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Consolidated Entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in Note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Consolidated Entity only.
Supplementary information about the parent entity, Healthia Limited, is disclosed in Note 35.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Healthia Limited ('Company'
or 'parent entity') as at 30 June 2019 and the results of all subsidiaries for the year then ended. Healthia Limited and its
subsidiaries together are referred to in these financial statements as the 'Consolidated Entity'.
Subsidiaries are all those entities over which the Consolidated Entity has control. The Consolidated Entity controls an entity
when the Consolidated Entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Consolidated Entity. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Consolidated Entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Consolidated Entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the Consolidated Entity.
Losses incurred by the Consolidated Entity are attributed to the non-controlling interest in full, even if that results in a deficit
balance.
Where the Consolidated Entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
Consolidated Entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Consolidated Entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within
12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Consolidated Entity's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
34
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Deferred tax assets and liabilities are always classified as non-current.
Investments and other financial assets
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business
model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial
asset represent contractual cash flows that are solely payments of principal and interest.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and
best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable
inputs.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the Consolidated Entity will obtain ownership at the end
of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
35
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Consolidated Entity for the annual reporting period ended 30 June 2019. The
Consolidated Entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most
relevant to the Consolidated Entity, are set out below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions,
a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable
future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and
leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists
whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability
corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received,
initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating
lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and
an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the
expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117.
However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating
expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the
statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either
operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor
accounts for leases. The Consolidated Entity will adopt this standard from 1 July 2019.
Impact of AASB 16
AASB 16 will impact the accounting for Consolidated Entity’s operating leases. The Consolidated Entity performed its initial
assessment of potential impact of AASB 16 on its non-cancellable operating lease commitments based on the different
requirements of the standard. In particular, the different treatment of variable lease payments and of extension and
termination options. At the date of initial application of AASB 16, that is 1 July 2019, Healthia estimated that it will record in
its Statement of Financial Position right-of-use assets and lease liabilities amounting to $19.6 million and $20.4 million
respectively. Further, the potential impact on EBITDA would be an increase of $6.3 million and a decrease of $0.9 million on
Net Profit After Tax.
36
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results.
Goodwill and other indefinite life intangible assets
The Consolidated Entity tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting
policy stated in note 1. The recoverable amounts of cash-generating units have been determined based on value-in-use
calculations. These calculations require the use of assumptions, including estimated discount rates based on the current
cost of capital and growth rates of the estimated future cash flows.
For the purpose of impairment testing, goodwill has been allocated to the Cash-Generating Units (CGUs), or groups of
CGU's, that are expected to benefit from the synergies of the business combination and which represent the level at which
management will monitor and manage the goodwill. The Consolidated Entity has identified two CGUs, being the
Physiotherapy and Podiatry divisions.
Accounting for the MFDA Acquisition
In accordance with Australian Accounting Standards the acquisition of MFDA Group by Healthia Limited does not meet the
definition of a business combination within the provisions of AASB 3 Business Combinations as Healthia Limited was
established for the sole purpose of acquiring the MFDA Group by way of equity. Therefore, the Consolidated Entity applied
the continuation method of accounting for the combination of the MFDA Group in this Financial Report of Healthia Limited.
Therefore, all comparative periods are in relation to the My FootDr (Aust) Ltd.
Under continuation accounting the Consolidated Entity is effectively adopting book value accounting whereby the assets and
liabilities of the legal acquiree (MFDA Group) are recognised at their previous carrying amounts. No adjustments are made
to reflect fair values and no new assets (including goodwill) and liabilities of the legal acquiree are recognised at the date of
the business combination. Any difference between the acquired net assets and the consideration are recognised through
reserves in equity.
Classification of Clinic Class Shares: Equity vs Financial liability
Clinic Class Shares were issued to (1) the sellers on acquisition of various podiatry and physiotherapy clinics and (2)
clinicians who wish to (i) ‘buy-in’ to existing clinics, or (ii) ‘buy-in’ to a new podiatry or physiotherapy clinic.
The Clinic Class Shares were historically classified as a financial liability based on the fact that My FootDr (Aust) Limited
previously had a contractual obligation to deliver cash in the form of preferential dividends payable to the holders each quarter
by reference to profits derived from the Clinics. The Clinic Class Shares have been reclassified to equity in current financial
year following amendments to the terms and conditions that result in the instruments having the characteristics of equity.
Contingent consideration
The contingent consideration liability relates to business combinations and is valued at fair value at the acquisition date as
part of the business combination. When the contingent consideration meets the definition of a financial liability, it is
subsequently re-measured to fair value at each reporting date. Any reassessment of the liability during the earlier of the
finalisation of the provisional accounting or 12 months from acquisition-date is adjusted for retrospectively as part of the
provisional accounting rules in accordance with AASB 3 'Business Combinations'. Thereafter, at each reporting date,
the contingent consideration liability is reassessed against revised estimates and any increase or decrease in the net present
value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the liability resulting from the
passage of time is recognised as a finance cost.
Business combinations
As discussed in note 1, business combinations are initially accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are initially estimated by the Consolidated Entity taking into
consideration all available information at the reporting date. Fair value adjustments on the finalisation of the business
combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact
on the assets and liabilities, depreciation and amortisation reported.
37
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 3. Operating segments
Identification of reportable operating segments
The company has two operating segments: The Podiatry Operating Segment and the Physiotherapy Operating Segment.
These operating segments are based on the internal reports reviewed and used by the Board of Directors (who are identified
as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.
There is no aggregation of operating segments.
The other category comprises of corporate functions.
The CODM reviews underlying EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting
policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.
The information is reported to the CODM on a monthly basis.
Types of products and services
The principal products and services of each of these operating segments are as follows:
Podiatry
This division provides podiatry services and podiatry related services including the
manufacturing and sale of orthotics and podiatry related products.
This division provides physiotherapy and speciality hand therapy services.
Physiotherapy
Presentation of revenue and results
Segment revenues and segment results are presented on an underlying basis.
Underlying results for the 12 months ended 30 June 2019 exclude the impact of non-underlying items relating to one off,
non-recurring expenses, IPO and acquisition costs.
Operating segment information
Consolidated - 2019
Revenue
Sales to external customers
Total revenue
EBITDA - underlying
Depreciation and amortisation expense
Gain / (Loss) on disposal of assets
Finance costs
Acquisition and IPO costs
Restructure and integration costs
Unrealised loss on Interest Rate Swap
Profit/(loss) before income tax expense
Income tax expense
Loss after income tax expense
Podiatry
$'000
Physiotherap
y
$'000
Other
$'000
Total
$'000
39,868
39,868
10,272
(1,038)
7
-
-
(472)
-
8,769
25,215
25,215
4,210
(311)
-
-
-
-
-
3,899
1
1
65,084
65,084
(5,407)
(594)
-
(1,331)
(4,261)
-
(92)
(11,685)
9,075
(1,943)
7
(1,331)
(4,261)
(472)
(92)
983
(1,266)
(283)
38
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 3. Operating segments (continued)
Consolidated - 2018
Revenue
Sales to external customers
Total revenue
Underlying EBITDA
Depreciation and amortisation
Finance costs
Acquisition costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Podiatry
$'000
Total
$'000
34,325
34,325
2,633
(1,011)
(1,052)
(3,008)
(2,438)
34,325
34,325
2,633
(1,011)
(1,052)
(3,008)
(2,438)
499
(1,939)
In FY2018, there was only one operating segment.
Accounting policy for operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Note 4. Revenue from contracts with customers
Rendering of services
Sale of goods
Revenue from contracts with customers
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Segment Revenue
Podiatry
Physiotherapy
Other
Geographical regions
Australia
Timing of revenue recognition
Goods and services transferred at a point in time
39
Consolidated
2019
$'000
2018
$'000
55,384
9,700
25,797
8,528
65,084
34,325
Consolidated
2019
$'000
2018
$'000
39,868
25,215
1
34,325
-
-
65,084
34,325
65,084
34,325
65,084
34,325
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 4. Revenue from contracts with customers (continued)
Accounting policy for revenue recognition
The Consolidated Entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Consolidated Entity is expected to be entitled
in exchange for transferring goods or services to a customer. For each contract with a customer, the Consolidated Entity:
identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price
which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to
the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to
be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services promised.
Sale of goods
Revenue from the sale of goods is recognised at a point in time when the customer obtains control of the goods, which is
generally at the time of delivery.
Revenue from the sale of goods from the orthotics laboratory and podiatry wholesale business goods is recognised when
control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the
goods have been shipped to the specific location, and the risks of obsolescence and loss have been transferred to the
customer.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional.
Rendering of services
Revenue from a contract to provide services is recognised as the services are rendered based on either a fixed price or an
hourly rate.
Note 5. Other income
Interest income
Sub-tenant rent
Other income
Consolidated
2019
$'000
2018
$'000
1
844
845
-
-
-
40
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 6. Expenses
Profit/(loss) before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Total depreciation
Amortisation
Customer lists
Total depreciation and amortisation
Finance costs
Interest expense - bank
Interest expense - clinic class shares
Finance costs expensed
Net loss on disposal
Net loss on disposal of property, plant and equipment
Superannuation expense
Defined benefit superannuation expense
Consolidated
2019
$'000
2018
$'000
539
1,010
299
712
1,549
1,011
395
172
1,944
1,183
1,331
-
618
434
1,331
1,052
85
167
3,193
1,460
41
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 7. Income tax
Income tax expense/(benefit)
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense/(benefit)
Deferred tax included in income tax expense/(benefit) comprises:
Increase in deferred tax assets
Decrease in deferred tax liabilities
Deferred tax - origination and reversal of temporary differences
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Profit/(loss) before income tax (expense)/benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Tax offset for franked dividends
Non-deductible transaction costs
Temporary differences brought to account
Sundry items
Adjustment recognised for prior periods
Income tax expense/(benefit)
Amounts credited directly to equity
Deferred tax assets
Consolidated
2019
$'000
2018
$'000
1,583
(397)
80
1,266
(289)
(108)
(397)
983
295
-
852
-
39
1,186
80
1,266
171
(644)
(26)
(499)
(621)
(23)
(644)
(2,438)
(731)
(39)
131
54
112
(473)
(26)
(499)
Consolidated
2019
$'000
2018
$'000
(527)
-
42
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 7. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Employee benefits
Accrued expenses
Non-deductible transaction costs
Other
Deferred tax asset
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Movements:
Opening balance
Credited to profit or loss
Credited to equity
Additions through business combinations (note 36)
Additions through business combinations (other)
Current year loss
Other
Closing balance
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Customer lists
Deferred tax liability
Movements:
Opening balance
Credited to profit or loss
Additions through business combinations (note 36)
Other
Closing balance
43
Consolidated
2019
$'000
2018
$'000
894
300
853
551
400
139
384
113
2,598
1,036
1,125
1,473
523
513
2,598
1,036
1,036
289
527
436
38
259
13
365
621
-
50
-
-
-
2,598
1,036
Consolidated
2019
$'000
2018
$'000
524
524
206
(108)
434
(8)
524
206
206
228
(23)
32
(31)
206
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 7. Income tax (continued)
Provision for income tax/ (tax receivable)
Provision for income tax/ (tax receivable)
Consolidated
2019
$'000
2018
$'000
1,051
(21)
Accounting policy for income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
●
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
●
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.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Franking credits
Consolidated Consolidated
2018
$'000
2019
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
2,627
1,408
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
●
●
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
44
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 8. Cash and cash equivalents
Cash on hand
Cash at bank
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial
year as shown in the statement of cash flows as follows:
Balances as above
Bank overdraft (note 16)
Balance as per statement of cash flows
Consolidated
2019
$'000
2018
$'000
64
2,546
2,610
2,610
(72)
2,538
35
706
741
741
(575)
166
Accounting policy for 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 of 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. For the statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement
of financial position.
Note 9. Trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
GST paid
Related party loan receivable *
Other receivables
Consolidated
2019
$'000
2018
$'000
2,027
540
200
629
821
(71)
488
-
-
3,396
1,238
* Related party loan receivable relates to money owing by Chris Banks following the vesting of the My FootDr (Aust) Limited
non-recourse employee loan shares.
Allowance for expected credit losses
The ageing of receivables is set out below. All receivables are expected to be collected.
Current
1 to 3 months overdue
Over 3 months overdue
TOTAL
Expected
credit loss
rate
%
Carrying
amount
2019
$'000
Allowance
for expected
credit loss
$'000
-
-
-
-
1,170
409
447
2,027
-
-
-
-
45
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 9. Trade and other receivables (continued)
Accounting policy for trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
On adoption of AASB 9, the Consolidated Entity has applied the simplified approach to measuring expected credit losses,
which uses a lifetime expected credit loss allowance. To measure the expected credit losses, trade receivables have been
grouped based on days overdue.
Note 10. Inventories
Finished Goods
Consumables
Raw Materials
Consolidated
2019
$'000
2018
$'000
2,161
1,026
291
1,656
711
-
3,478
2,367
Accounting policy for inventories
Raw materials, consumables and finished goods are stated at the lower of cost and net realisable value. Cost comprises of
purchase and delivery costs, net of rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
Note 11. Other current assets
Prepayments
Loan - Related Parties
Other current assets
Consolidated
2019
$'000
2018
$'000
796
-
422
1,218
278
68
78
424
Accounting policy for prepayments
Payments for goods and services which are to be provided in future years are recorded as prepayments.
Note 12. Investments accounted for using the equity method
Investments accounted for using the equity method
10
-
Refer to Note 39 for further information on investments accounted for using the equity method.
Consolidated
2019
$'000
2018
$'000
46
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 13. Property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Consolidated
2019
$'000
2018
$'000
4,417
(1,049)
3,368
7,727
(3,452)
4,275
2,169
(510)
1,659
5,372
(2,275)
3,097
7,643
4,756
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions
Additions through business combinations
Depreciation expense
Balance at 30 June 2018
Additions
Additions through business combinations (note 36)
Depreciation expense
Plant and
equipment
$'000
Leasehold
improvement
s
$'000
Total
$'000
2,140
1,070
599
(712)
3,097
1,430
758
(1,010)
1,497
461
-
(299)
1,659
1,311
937
(539)
3,637
1,531
599
(1,011)
4,756
2,741
1,695
(1,549)
Balance at 30 June 2019
4,275
3,368
7,643
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Leasehold improvements
Plant and equipment
3-10 years
3-7 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Consolidated Entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
47
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 14. Intangibles
Goodwill - at cost
Patents and trademarks - at cost
Customer lists
Less: Accumulated amortisation
Consolidated
2019
$'000
2018
$'000
60,485
26,385
19
2,394
(677)
1,717
5
947
(282)
665
62,221
27,055
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions
Additions through business combinations
Amortisation expense
Balance at 30 June 2018
Additions
Additions through business combinations (note 36)
Amortisation expense
Balance at 30 June 2019
Goodwill
Trademarks Customer
$'000
$'000
Lists
$'000
Total
$'000
21,208
-
5,177
-
26,385
-
34,100
-
60,485
4
1
-
-
5
15
-
-
20
665
-
173
(173)
665
-
1,446
(395)
21,877
1
5,350
(173)
27,055
15
35,546
(395)
1,716
62,221
A CGU level summary of the goodwill allocation is presented below:
Podiatry
Physiotherapy
Total goodwill
Consolidated
2019
$'000
2018
$'000
31,398
29,087
26,385
-
60,485
26,385
Accounting policy for intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
48
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 14. Intangibles (continued)
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment,
or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.
Goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination's synergies.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.
Impairment losses on goodwill cannot be reversed.
Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the period
of their expected benefit, being their finite life of 10 years.
Customer list
Customer lists acquired in a business combination are amortised on a straight-line basis over the period of their expected
benefit, being their estimate useful life of 5 years.
Impairment of goodwill
At the end of each reporting period the Group assesses whether there is any indication that individual assets are impaired.
Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss
where the asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value
less costs of disposal and value in use. For the purpose of 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.
Where it is not possible to estimate recoverable amount for an individual asset, recoverable amount is determined for the
cash-generating unit to which the asset belongs.
Impairment testing
The Consolidated Entity has tested goodwill for impairment, in accordance with the accounting policy stated in Note 2. The
recoverable amount has been determined based on value-in-use calculations using cash flow projections based on
management approved financial budgets and cover a five-year period. Cash flows beyond the 5-year period to the end of
the assets useful life are estimated by extrapolating the management projections using a steady growth rate based on long
term industry expectations.
For the purpose of impairment testing, goodwill has been allocated to the Cash-Generating Units (CGUs), or groups of
CGU's, that are expected to benefit from the synergies of the business combination and which represent the level at which
management will monitor and manage the goodwill. The Consolidated Entity has identified two CGUs, being the
Physiotherapy and Podiatry divisions.
Key assumptions used for value-in-use calculations
●
●
●
●
●
The group tests for goodwill impairment on an annual basis. The recoverable of amount of a cash generating unit
(‘CGU’) is determined based on a value-in-use calculation which require the use of assumptions.
The calculations use cash flow projections over a five year period, the first being 2020, based on the financial budget
approved by the Board. Cash flow projections for periods beyond the 2020 period are extrapolated using the estimated
growth rates below.
Goodwill has been allocated to the two groupings of CGUs representing Podiatry and Physiotherapy
Corporate overheads have been apportioned to the CGUs
Sensitivity analyses on growth and discount rates has been performed to assess the impact on the outcome of the
model
Significant assumptions for the purposes of the value-in-use calculation include:
●
●
●
●
Period of cash flows: 5 years
Average revenue growth during the forecast period 3.0%
Pre-tax discount rate: 13.0%
Terminal value growth rate of 3.0%
49
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 14. Intangibles (continued)
Sensitivity
As disclosed in note 2, the directors have made judgements and estimates in respect of impairment testing of goodwill.
Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease.
As a result of the value-in-use calculation, it was determined no impairment was identified.
Note 15. Trade and other payables
Trade payables
Accruals
Other creditors
GST collected
Superannuation payable
Consolidated
2019
$'000
2018
$'000
886
979
417
199
916
1,870
1,312
761
128
193
3,397
4,264
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial
year and which are unpaid. They are measured at amortised cost. The amounts are unsecured and are usually paid within
30 days of recognition.
Note 16. Borrowings
Current
Bank overdraft
Bank loans
Lease liability
Refer to note 29 for further information on financial instruments.
Note 17. Employee benefits
Current
Annual leave
Long service leave
50
Consolidated
2019
$'000
2018
$'000
72
-
412
575
14,495
197
484
15,267
Consolidated
2019
$'000
2018
$'000
2,144
574
914
265
2,718
1,179
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 17. Employee benefits (continued)
Accounting policy for employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Note 18. Other current liabilities
Current
Deferred lease incentives
Contingent consideration
Consolidated
2019
$'000
2018
$'000
220
1,495
1,715
54
220
274
Accounting policy for deferred lease incentives
The liability represents operating lease incentives received. The incentives are allocated to profit or loss in such a manner
that the rent expense is recognised on a straight-line basis over the lease term.
Accounting policy for contingent consideration
The contingent consideration liability relates to business combinations and is valued at fair value at the acquisition date as
part of the business combination. When the contingent consideration meets the definition of a financial liability, it is
subsequently re-measured to fair value at each reporting date. Any reassessment of the liability during the earlier of the
finalisation of the provisional accounting or 12 months from acquisition-date is adjusted for retrospectively as part of the
provisional accounting rules in accordance with AASB 3 'Business Combinations'. Thereafter, at each reporting date,
the contingent consideration liability is reassessed against revised estimates and any increase or decrease in the net present
value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the liability resulting from the
passage of time is recognised as a finance cost.
Note 19. Borrowings
Non-current
Bank loans
Clinic class shares debt
Loan - Related Parties
Lease liability
Refer to note 29 for further information on financial instruments.
Classification of Clinic Class Shares: Equity vs Financial liability
51
Consolidated
2019
$'000
2018
$'000
19,606
-
-
433
-
3,966
15
306
20,039
4,287
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 19. Borrowings (continued)
Clinic Class Shares were issued to (1) the sellers on acquisition of various podiatry clinics and (2) clinicians who wish to (i)
‘buy-in’ to existing clinics, or (ii) ‘buy-in’ to a new podiatry clinic. The Clinic Class Shares were historically classified as a
financial liability based on the fact that My FootDr (Aust) Limited previously had a contractual obligation to deliver cash in the
form of preferential dividends payable to the holders each quarter by reference to profits derived from the Clinics. The Clinic
Class Shares have been reclassified to equity in current financial year following amendments to the terms and conditions
that result in the instruments having the characteristics of equity.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank overdraft
Bank loans
Clinic class shares debt
Loan - Related Parties
Lease liability
Key Terms of the Bank Loan
Consolidated
2019
$'000
2018
$'000
72
19,606
-
-
845
575
14,495
3,966
15
503
20,523
19,554
The Consolidated Entity has at total finance facility of $37.0M with Australian and New Zealand Bank and the Bank of
Queensland at 30 June 2019. This finance facility was established on 29 August 2018, with a 3 year term expiring on 28
August 2021. The previous finance facility that existed at 30 June 2018 was settled in full during the year.
At reporting date, the Consolidated Entity has drawn down $19.6M out of its total finance facility of $37.0M, leaving $17.4m
undrawn.
The key financial covenants of the finance facility are:
●
●
●
Leverage Ratio: (Debt: Adjusted EBITDA) must remain below or equal to 2.50 times
Fixed Charge Cover Ratio: (Adjusted EBITDA + rent expense) / (interest + rent expense) must remain above or equal
to 1.75 times
Debt to Capitalisation Ratio: Debt / (Debt + Book Value of Equity) must remain below than or equal to 50%
At the reporting date, the Consolidated Entity had met all its obligations under the finance facility.
52
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 19. Borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Bank loans
Used at the reporting date
Bank overdraft
Bank loans
Unused at the reporting date
Bank overdraft
Bank loans
Consolidated
2019
$'000
2018
$'000
1,000
37,000
38,000
72
19,606
19,678
928
17,394
18,322
700
15,000
15,700
575
14,495
15,070
125
505
630
Accounting policy for borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
Note 20. Derivative financial instruments
Non-current
Interest rate swap contracts liabilities
Refer to note 29 for further information on financial instruments.
Accounting policy for derivative financial instruments
Consolidated
2019
$'000
2018
$'000
92
-
The Consolidated Entity used derivative financial instruments (interest rate swaps) during the year to hedge its risk
associated with interest rate fluctuations on the bank loans. The following accounting policies have been adopted to
determine the accounting for the derivative financial instruments:
●
●
●
Derivatives are initially measured at fair value on the date a derivative contract is entered into and are subsequently
measured at fair value at each reporting date. The net fair value of derivative financial instruments outstanding at
reporting date is recognised in the consolidated statement of financial position as either a financial asset or liability.
The derivative instruments do not qualify for hedge accounting. Changes to the fair value of any derivative that does
not quality for hedge accounting are recognised immediately in profit or loss.
The full fair value of the hedging derivative is classified as a non-current asset or liability when the remaining maturity
of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of
the hedged item is less than 12 months.
53
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 20. Derivative financial instruments (continued)
The Consolidated Entity entered into interest rate swap contracts totalling $11.0 million under which it is obliged to receive
interest at variable rates and pay interest at fixed rates. These hedges expire in December 2020.
Note 21. Employee benefits
Non-current
Long service leave
Consolidated
2019
$'000
2018
$'000
260
157
Accounting policy for other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Note 22. Provisions
Non-current
Lease make good provision
Consolidated
2019
$'000
2018
$'000
728
262
Lease make good provision
The provision represents the present value of the estimated costs to make good the premises leased by the Consolidated
Entity at the end of the respective lease terms.
Note 23. Other non-current liabilities
Non-current
Deferred lease incentives
Accounting policy for deferred lease incentives
Consolidated
2019
$'000
2018
$'000
878
328
The provision represents operating lease incentives received. The incentives are allocated to profit or loss in such a manner
that the rent expense is recognised on a straight-line basis over the lease term.
54
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 24. Issued capital
Consolidated
2019
Shares
2018
Shares
2019
$'000
2018
$'000
Ordinary shares - fully paid
Non-recourse employee loan shares
63,034,653 11,229,856
919,166
-
49,884
-
13,406
-
63,034,653 12,149,022
49,884
13,406
Movements in ordinary share capital
Details
Date
Shares '000 Issue price
$'000
Balance
Issue of ordinary shares - Trepar Acquisition
Issue of ordinary shares - Brisbane Podiatry and
Footwear Acquisition
30 June 2017
4-Jul-17
10,956
130
$1.58
12,973
206
7-Jul-17
143
$1.58
227
30 June 2018
Balance
5-Jul-18
Vesting of non-recourse employee share loan
Issue of ordinary shares - issued by MFDA
30-Jul-18
Issue of ordinary shares - MFDA Group Acquisition* 30-Jul-18
Issue of ordinary shares - MFDA Group Acquisition
rollover of Clinic Class Shares
Issue of ordinary shares - acquisition of businesses
Issue of ordinary shares - acquisition of businesses
Issue of ordinary shares - acquisition of businesses
Issue of ordinary shares - acquisition of additional
25% interest in DBS
Issue of ordinary shares - acquisition of businesses
Issue of ordinary shares - acquisition of businesses
Issue of ordinary shares - Initial Public Offer
Less: share issue transaction costs
Tax recognised in equity
31-Aug-18
3-Sep-18
4-Sep-18
11-Sep-18
30-Jul-18
29-Aug-18
30-Aug-18
31-Aug-18
Balance
30 June 2019
Movements in non-recourse employee shares (NRE)
11,229
919
200
14,079
2,225
1,585
2,720
1,017
294
360
480
27,927
-
-
63,035
$0.91
$1.00
$1.00
$1.00
$1.00
$1.00
$1.00
$1.00
$1.00
$1.00
$1.00
$0.00
$0.00
13,406
890
200
-
2,225
1,585
2,720
1,017
294
360
480
27,927
(1,747)
527
49,884
Date
Shares
Issue price
$'000
719,166
200,000
919,166
(919,166)
-
$0.00
$0.00
-
-
-
-
-
Details
Balance
issue of NRE shares
1 July 2017
26 July 2017
Balance
Vesting of non-recourse employee share loans
30 June 2018
5 July 2018
Balance
30 June 2019
55
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 24. Issued capital (continued)
*Healthia Limited acquired all of the ordinary shares in My FootDr (Aust) Ltd (the MFDA Group) on 30 July 2018.
In accordance with Australian Accounting Standards the acquisition of MFDA Group by the company does not meet the
definition of a business combination within the provisions of AASB 3 Business Combinations Healthia Limited was
established for the sole purpose of acquiring the MFDA Group by way of equity.
Therefore, the Consolidated Entity applied the continuation method of accounting for the combination of the MFDA Group in
this Financial Report of Healthia Limited. Under continuation accounting the Consolidated Entity is effectively adopting book
value accounting whereby the assets and liabilities of the legal acquiree (MFDA Group) are recognised at their previous
carrying amounts.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company
does not have a limited amount of authorised capital.
Non-recourse employee shares (NRE)
My FootDr (Aust) Limited non-recourse employee shares (NRE) plan was approved by the My FootDr (Aust) Limited
shareholders in December 2015. All loan shares are shares in My FootDr (Aust) Limited ranking pari passu in all respects
with the ordinary issued shares of My FootDr (Aust) Limited, were the subscription price is funded by way of a loan from My
FootDr (Aust) Limited. All NRE shares vested on 5 July 2018 and the My FootDr (Aust) Limited NRE plan was wound up.
Capital risk management
The Consolidated Entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Consolidated Entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Consolidated Entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current Company's share price at the time of the investment. The Consolidated Entity is not
actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in
order to maximise synergies.
The Consolidated Entity is subject to certain financing arrangements covenants and meeting these is given priority in all
capital risk management decisions. There have been no events of default on the financing arrangements during the financial
year.
Accounting policy for issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
56
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 25. Reserves
Share-based payments reserve
Transactions with non-controlling interest reserve
Pre-IPO distributions reserve
Consolidated
2019
$'000
2018
$'000
450
(2,351)
(2,494)
175
(871)
-
(4,395)
(696)
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
A share-based payments expense of $275,000 was recognised in the year. Refer to Note 44 for further details.
Pre-IPO distribution reserve
The reserve records any differences between the acquired net assets and the consideration under continuation accounting.
The significant transaction that accounts for the increase in the reserve is detailed below:
Accounting for the MFDA Acquisition
In accordance with Australian Accounting Standards the acquisition of MFDA Group by Healthia Limited does not meet the
definition of a business combination within the provisions of AASB 3 Business Combinations as Healthia Limited was
established for the sole purpose of acquiring the MFDA Group by way of equity. Therefore, the Consolidated Entity applied
the continuation method of accounting for the combination of the MFDA Group in this Financial Report of Healthia Limited.
Therefore, all comparative periods are in relation to the MFDA Group.
Under continuation accounting the Consolidated Entity is effectively adopting book value accounting whereby the assets and
liabilities of the legal acquiree (MFDA Group) are recognised at their previous carrying amounts. No adjustments are made
to reflect fair values and no new assets (including goodwill) and liabilities of the legal acquiree are recognised at the date of
the business combination. Any difference between the acquired net assets and the consideration are recognised through
reserves in equity.
The total of the $2.494 million in cash consideration was recorded in the Pre-IPO distribution reserve.
Transactions with non-controlling interest reserve
The transactions with non-controlling interests reserve is used to record differences which may arise as a result of increases
or decreases in non-controlling interests that do not result in a loss of control. The significant transactions with non-controlling
interests that account for the increase in the reserve in this year are detailed below:
Acquisitions of Additional 25% Interest in D.B.S. Medical and Additional 50% Interest in My FootDr (Cleveland) Pty Ltd by
the MFDA Group
The MFDA Group acquired a further 25% interest in D.B.S. Medical and a further 50% of My FootDr (Cleveland) Pty Ltd on
31 August 2018.
Total consideration for the additional 25% interest in D.B.S. Medical was $0.587 million including $0.29 million in cash
consideration and $0.294 million in share consideration. Total consideration for the additional 50% interest in My FootDr
(Cleveland) Pty Ltd is $1.094 million in cash consideration.
Total consideration for the two transactions of $1.681 million, with $0.201 million of net assets to the non-controlling interests
being acquired. The difference of $1.480 million was recorded in the transactions with non-controlling interest reserve.
57
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 26. Accumulated losses
Retained profits/(accumulated losses) at the beginning of the financial year
Loss after income tax (expense)/benefit for the year
Accumulated losses at the end of the financial year
Note 27. Non-controlling interest
Issued equity - Clinic Class Shares*
Retained profits
Consolidated
2019
$'000
2018
$'000
(2,002)
(1,238)
5
(2,007)
(3,240)
(2,002)
Consolidated
2019
$'000
2018
$'000
8,440
437
8,877
-
378
378
Classification of Clinic Class Shares: Equity vs Financial liability
Clinic Class Shares were issued to (1) the sellers on acquisition of various podiatry clinics and (2) clinicians who wish to (i)
‘buy-in’ to existing clinics, or (ii) ‘buy-in’ to a new podiatry clinic. The Clinic Class Shares were historically classified as a
financial liability based on the fact that My FootDr (Aust) Limited previously had a contractual obligation to deliver cash in the
form of preferential dividends payable to the holders each quarter by reference to profits derived from the Clinics. The Clinic
Class Shares have been reclassified to equity in current financial year following amendments to the terms and conditions
that result in the instruments having the characteristics of equity.
Note 28. Dividends
There were no dividends paid, recommended or declared during the current or previous financial period to the ordinary
shareholders of Healthia Limited.
Dividends were paid during the current and previous financial year to non-controlling interests, being the clinic class
shareholders of Healthia Limited subsidiaries.
Accounting policy for dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Note 29. Financial instruments
Financial risk management objectives
The Consolidated Entity's activities expose it to a variety of financial risks: market risk (interest rate risk), credit risk and
liquidity risk. The Consolidated Entity's overall risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the Consolidated Entity. The Consolidated
Entity uses derivative financial instruments such as interest rate swaps to hedge certain risk exposures. Derivatives are
exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Consolidated Entity uses
different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the
case of interest rate and other price risks.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Consolidated Entity and appropriate
procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Consolidated Entity's
operating units. Finance reports to the Board on a monthly basis.
58
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 29. Financial instruments (continued)
Market risk
Interest rate risk
The Consolidated Entity's main interest rate risk arises from long-term borrowings and interest rate swap contracts.
Borrowings obtained at variable rates expose the Consolidated Entity to interest rate risk. Borrowings obtained at fixed rates
expose the Consolidated Entity to fair value interest rate risk. The policy is to maintain between 30% and 60% of current
borrowings at fixed rates using interest rate swaps to achieve this when necessary.
As at the reporting date, the Consolidated Entity had the following variable rate borrowings and interest rate swap contracts
outstanding:
Consolidated
Bank loans
Interest rate swap (notional principal amount)
Net exposure to cash flow interest rate risk
2019
2018
Balance
Balance
$'000
$'000
19,606
(11,000)
14,495
-
8,606
14,495
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
For the Consolidated Entity the bank loans outstanding, totalling $19.6 million (2018: $14.5 million), are interest only loans.
At balance date, $11.0m of debt was hedged by floating to fixed interest rate swaps.
An official increase in interest rates of 100 (2017: 100) basis points would have an adverse effect on profit before tax of
$86,055 (2018: $144,953) per annum. The percentage change is based on the expected volatility of interest rates using
market data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Consolidated Entity. The Consolidated Entity has a strict code of credit, including obtaining agency credit information,
confirming references and setting appropriate credit limits. The Consolidated Entity obtains guarantees where appropriate to
mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying
amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to
the financial statements. The Consolidated Entity does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the Consolidated Entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Consolidated Entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank overdraft
Bank loans
Consolidated
2019
$'000
2018
$'000
928
17,394
18,322
125
505
630
The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the
continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time and have an average maturity of
2 years (2018: 1.5 years).
59
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 29. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Consolidated Entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 2019
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - variable
Bank overdraft
Lease liabilities
Bank loans
Total non-derivatives
Derivatives
Interest rate swaps inflow
Interest rate swaps outflow
Total derivatives
Weighted
average
interest
rate
%
1 year or
less
$'000
Between 1
and 2
years
$'000
Between 2
and 5
years
$'000
Over 5
years
$'000
Non-
interest
bearing
$'000
Remaining
contractual
maturities
$'000
-
-
-
-
7.00%
5.02%
3.77%
1.22%
2.15%
72
442
739
1,253
(173)
236
63
-
456
739
1,195
-
-
19,729
19,729
(79)
108
29
-
-
-
-
-
-
-
-
-
-
-
3,397
3,397
-
-
-
3,397
72
898
21,207
25,574
-
-
-
(252)
344
92
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Fair value measurement
Fair value hierarchy
The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three
level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 2019
Liabilities
Interest rate swap
Contingent consideration
Total liabilities
Level 1
Level 2
Level 3
Total
-
-
-
92
-
92
-
1,495
92
1,495
1,495
1,587
60
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 29. Financial instruments (continued)
Consolidated - 2018
Liabilities
Clinic class shares debt
Contingent consideration
Total liabilities
Level 1
Level 2
Level 3
Total
-
-
-
-
-
-
3,966
220
3,966
220
4,186
4,186
Valuation techniques for fair value measurements categorised within level 2 and 3
Derivative financial instruments have been valued using quoted market rates. This valuation technique maximises the use
of observable market data where it is available and relies as little as possible on entity specific estimates.
Contingent consideration has been valued based on expected EBITDA of the clinics, based on the knowledge of the business
and how the current economic environment is likely to impact it.
Clinic class shares were valued based on the expected future profits of the clinics and the discounted expected future
preferential dividends payable to the holders.
Level 3 liabilities
Movements in level 3 liabilities during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Additions
Balance at 30 June 2018
(Gains)/losses recognised in profit or loss
Additions
Disposals
Clinic class
shares debt
$'000
Contingent
consideratio
n
$'000
Interest rate
swaps
$'000
Total
$'000
1,694
2,272
3,966
-
-
(3,966)
100
120
220
-
1,600
(325)
-
-
-
92
-
-
92
1,794
2,392
4,186
92
1,600
(4,291)
1,587
Balance at 30 June 2019
-
1,495
The level 3 liabilities unobservable inputs and sensitivity are as follows:
Description
Unobservable inputs
Inputs
Sensitivity
Contingent consideration
Expected EBITDA of acquired
clinics
$127,000 - $11,000,000
Interest rate swaps
BBSY interest rates
1.22%
If expected EBITDA were
10% higher, there would be
an increase in fair value of
$2,500,000.
If expected EBITDA was 10%
lower, there would a decrease
in fair value of $200,000.
1.00% change would
increase/decrease fair value
by $160,000
61
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 30. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Consolidated
Entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Note 31. Remuneration of auditors
Consolidated
2019
$
2018
$
1,276,731
122,445
21,251
235,013
976,597
92,777
36,547
28,467
1,655,440
1,134,388
During the financial year the following fees were paid or payable for services provided by BDO, the auditor of the Company:
Audit and other assurance services - BDO
Audit or review of the financial statements
Other assurance services – investigating accountant advisory fees
Total remuneration for audit and other assurance services
Other services - BDO
Taxation and business advisory services
Indirect tax advisory services
R&D advisory services
Total remuneration for other services
Total remuneration of BDO
Note 32. Contingent liabilities
Consolidated
2019
$
2018
$
165,000
151,961
92,000
245,134
316,961
337,134
116,640
72,852
25,920
107,362
36,868
7,500
215,412
151,730
532,373
488,864
The Consolidated Entity has given bank guarantees as at 30 June 2019 of $1,794,086 to various landlords.
62
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 33. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Lease commitments - finance
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Lease liability - current (note 16)
Lease liability - non-current (note 19)
Note 34. Related party transactions
Subsidiaries
Interests in subsidiaries are set out in note 37.
Associates
Interest in associates are set out in note 38.
Consolidated
2019
$'000
2018
$'000
6,279
11,133
1,546
2,534
7,044
85
18,958
9,663
442
456
898
(53)
845
412
433
845
219
323
542
(39)
503
197
306
503
Key management personnel
Disclosures relating to key management personnel are set out in note 30 and the remuneration report included in the
Directors' report.
63
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 34. Related party transactions (continued)
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2019
$
2018
$
Consideration relating to the acquisition of businesses at the time of Initial Public Offering:
Ordinary shares issued for the acquisition of businesses to director Anthony Ganter
Ordinary shares issued for the acquisition of businesses to key management personnel Lisa
Roach
Cash payment for the acquisition of businesses to director Anthony Ganter
Cash payment for the acquisition of businesses to director Darren Stewart
Cash payment for the acquisition of businesses to key management personnel Lisa Roach
Cash payment for the acquisition of businesses to key management personnel Glen
Evangelista
Cash payment for the acquisition of businesses to key management personnel Dean Hartley
1,103,322
630,548
1,260,366
500,000
638,391
1,000,000
161,846
-
-
-
-
-
-
-
Other transactions:
Rent and outgoings paid to entities controlled by director Darren Stewart
Rent and outgoings paid to entities controlled by director Anthony Ganter
Rent and outgoings paid to entities controlled by key management personnel Dean Hartley
and Glen Evangelista
Rent and outgoings paid to entities controlled by key management personnel Lisa Roach
Payment for services to an entity associated with Wesley Coote
Repayment of loan to a related party of Glen Evangelista
381,769
162,664
360,054
-
131,643
144,803
80,350
46,004
136,990
-
-
-
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current reporting date 30 June 2019 and
previous reporting date 30 June 2018.
Loans to/from related parties
There was a loan advanced to Chris Banks during the year that remains receivable at year-end.
Receivables owing to the Consolidated Entity from Dean Hartley at 30 June 2018 have been repaid.
Borrowings owing to a related party of Glen Evangelista at 30 June 2018 have been repaid by the Consolidated Entity.
Current receivables:
Loan to Dean Hartley
Loan to Chris Banks
Current borrowings:
Loan from Glen Evangelista
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Consolidated
2019
$
2018
$
-
200,000
67,778
-
-
15,289
64
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 35. Parent entity information
Set out below is the supplementary information about the parent entity, Healthia Limited.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Total equity
Parent
2019
$'000
2018
$'000
(218)
(218)
Parent
2019
$'000
2018
$'000
13
52,127
-
19,606
32,740
(218)
32,522
-
-
-
-
-
-
-
-
-
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Consolidated Entity, as disclosed in note 1,
except for the following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 36. Business combinations
Allsports Physiotherapy
Between 29 August 2018 and 4 September 2018 Healthia Limited acquired 100% of the business assets of the 9 Allsports
Physiotherapy clinics, and 100% of the ordinary shares in the 5 entities that owned the business assets of a further 5 Allsports
Physiotherapy clinics, for the total consideration transferred of $15.732 million including $8.953 million in cash consideration,
$0.450 million in contingent consideration, $1.717 million in Clinic Class Share consideration and $4.611 million in Healthia
Limited ordinary share consideration
65
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 36. Business combinations (continued)
Extend Rehabilitation
On 4 September 2018 Healthia Limited acquired 100% of the business assets of the 7 Extend Rehabilitation clinics for the
total consideration transferred of $2.257 million including $1.087 million in cash consideration, $0.450 million in contingent
consideration, $0.360 million in Clinic Class Share consideration and $0.360 million in Healthia Limited ordinary share
consideration
Other physiotherapy clinics
Between 29 August 2018 and 30 June 2019 Healthia Limited acquired 100% of the business assets of 15 physiotherapy
clinics for the total consideration transferred of $12.682 million including $8.191 million in cash consideration, $0.900 million
in contingent consideration, $2.407 million in Clinic Class Share consideration and $1.183 million in Healthia Limited ordinary
share consideration.
Other podiatry clinics
Between 29 August 2018 and 30 June 2019 Healthia Limited acquired 100% of the business assets of 8 podiatry clinics for
the total consideration transferred of $5.585 million including $5.275 million in cash consideration, $0.302 million in Clinic
Class Share consideration and $0.008 million in Healthia Limited ordinary share consideration.
Financial Contribution
The acquired businesses contributed revenues of $29.381m and NPAT of $2.596m million to the Consolidated Entity for the
period from the dates of the acquisition to 30 June 2019. If the above acquisitions had occurred on 1 July 2018 (the beginning
of the financial year), the full year (or annualised) contributions of revenue would have been $40.852 million and NPAT would
have been $4.097 million.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade receivables
Inventories
Plant and equipment
Customer lists
Deferred tax asset
Other Assets
Trade payables
Deferred tax liability
Employee benefits
Other liabilities
Net assets acquired
Goodwill
Acquisition-date fair value of the total
consideration transferred
Representing:
Cash paid or payable to vendor
Healthia Limited shares issued to vendor
Contingent Consideration *
Clinic Class Shares issued to vendor
Allsports
Physiotherapy
Extend
Rehabilitation
Other
Physiotherapy
Acquisitions
Other
Podiatry
Acquisitions
Total
Fair value
Fair value
Fair value
Fair value
Fair value
$'000
$'000
$'000
$'000
$'000
176
9
144
996
373
189
33
(223)
(112)
(639)
(408)
-
-
114
30
109
38
1
-
(33)
(127)
-
-
-
206
506
704
186
17
-
(211)
(621)
(35)
-
-
223
163
261
23
18
-
(78)
(75)
-
176
9
687
1,695
1,447
436
68
(223)
(434)
(1,462)
(443)
538
15,192
132
2,125
752
11,731
535
5,051
1,956
34,100
15,730
2,257
12,483
5,586
36,056
8,953
4,611
450
1,717
1,087
360
450
360
8,191
1,183
700
2,407
5,275
8
-
302
23,508
6,162
1,600
4,786
15,731
2,257
12,481
5,585
36,056
66
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 36. Business combinations (continued)
Goodwill arising from business combinations is attributed to the reputation of the business in their local market, the benefit
of marginal profit and synergies expected to be received by integrating into the Consolidated Entity's systems, expected
revenue growth, future market development, the assembled workforce and knowledge of the local markets. These benefits
are not able to be individually identified or recognised separately from goodwill.
* Where the Consolidated Entity has recorded contingent consideration in the table above, the Consolidated Entity has a
contractual obligation to pay the former owner of the businesses in the event the contractual performance hurdles are
achieved in accordance with the business sale agreement. These performance hurdles are typically linked to the businesses
profit and an overachievement of this profit.
The contingent consideration is assessed and recorded at fair value. Any reassessment of the liability during the earlier of
the finalisation of the provisional accounting or 12 months from acquisition-date is adjusted for retrospectively as part of the
provisional accounting rules in accordance with AASB 3 'Business Combinations'. Thereafter, at each reporting date,
the contingent consideration liability is reassessed against revised estimates and any increase or decrease in the net present
value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the liability resulting from the
passage of time is recognised as a finance cost.
Accounting policy for business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the Consolidated Entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the Consolidated
Entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Consolidated Entity remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount
is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value
of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Acquisition and IPO related costs of $4.261 million are included as acquisition costs in the statement of profit and loss and
other comprehensive income.
67
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 37. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries
in accordance with the accounting policy described in note 1:
Name
Principal place of business /
Country of incorporation
Ownership interest
2018
2019
%
%
100.00%
100.00%
100.00%
100.00%
75.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
75.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
-
-
-
-
-
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
50.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
My FootDr (Aust) Limited
Allsports (Aust) Limited
Extend Rehab Pty Ltd
iOrthotics Pty Ltd
D.B.S. AUSTRALIA PTY. LTD.
Allsports Physiotherapy Forest Lake Pty Ltd
Allsports Pilates Sherwood Pty Ltd
Southside Manipulative Physiotherapy Centre Pty Ltd
Allsports Physiotherapy The Gap Pty Ltd
Allsports Physiotherapy Toowong Pty Ltd
My FootDr (Brookwater) Pty Ltd
My FootDr (Camp Hill) Pty Ltd
My FootDr Granda Pty Ltd
My FootDr (Fortitude Valley) Pty Ltd
My FootDr (Indooroopilly) Pty Ltd
My FootDr (Mackay) Pty Ltd
My FootDr (Newmarket) Pty Ltd
My FootDr (Oxenford) Pty Ltd
My FootDr (Redcliffe) Pty Ltd
My FootDr (Shailer Park) Pty Ltd
MyFootDr Administration Pty Ltd
Orthema Australasia Pty Ltd
Footwear Enterprises Pty Ltd
PinPointe FootLaser Australia Pty Ltd
MFD IP Pty Ltd
Mackay Foot Centre Pty Ltd as trustee for the Mackay
Foot Centre Unit Trust
Balpod Holdings Pty Ltd
My FootDr (Cleveland) Pty Ltd
Foot Care Solutions Australia Pty Ltd
Trepar Pty Ltd
Brisbane Podiatry & Footwear Pty Ltd as trustee for
Brisbane Podiatry & Footwear Unit Trust
Foot Focus (Aust) Pty Ltd
Foot Focus (NSW) Pty Ltd
Foot Focus 4 Kids Pty Ltd
Foot Focus Narellan Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
68
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 37. Interests in subsidiaries (continued)
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries with non-
controlling interests in accordance with the accounting policy described in note 1:
Principal place of
business /
Country of
incorporation
Ownership
interest
2019
%
Principal activities
Ownership
interest
2018
%
Parent
Non-controlling interest
Ownership
interest
2018
%
Ownership
interest
2019
%
Name
D.B.S, Australia Pty
Ltd
Foot Care Solutions
Australia Pty Ltd
Australia
Australia
Podiatry equipment
and supplies
wholesaler
Podiatry equipment
and supplies
wholesaler
75.00%
50.00%
25.00%
50.00%
75.00%
50.00%
25.00%
50.00%
Note 38. Interests in associates
Interests in associates are accounted for using the equity method of accounting. Information relating to associates to the
Consolidated Entity are set out below:
Name
Principal place of business /
Country of incorporation
Ownership interest
2018
2019
%
%
Fracture Holdco Pty Ltd
Australia
45.00%
-
Note 39. Events after the reporting period
Acquisition of Physiotherapy and Hand Therapy Clinics
The Consolidated Entity acquired an additional 7 physiotherapy and hand therapy clinics since 30 June 2019. Initial
consideration paid for the acquisitions was $6.63 million including $4.01 million in cash consideration, $2.62 million in clinic
class share consideration, with up to an additional $1.05 million payable in contingent consideration. The Consolidated Entity
is yet to complete the business combination accounting for these newly acquired clinics.
These clinics are expected to contribute Revenue and EBITDA of $7.60 million and $1.79 million respectively on a pro-forma
basis.
Acquisition of Podiatry Clinics
The Consolidated Entity acquired an additional 5 podiatry clinics since 30 June 2019. Initial consideration paid for the
acquisitions was $2.62 million including $2.40 million in cash consideration, $0.22 million in clinic class share consideration,
with up to an additional $0.20 million payable in contingent consideration. The Consolidated Entity is yet to complete the
business combination accounting for these newly acquired clinics.
These clinics are expected to contribute Revenue and EBITDA of $3.40 million and $0.65 million respectively on a pro-forma
basis.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the
Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial
years.
69
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 40. Reconciliation of loss after income tax to net cash from operating activities
Loss after income tax (expense)/benefit for the year
(283)
(1,939)
Consolidated
2019
$'000
2018
$'000
Adjustments for:
Depreciation and amortisation
Share-based payments
Fair value movements in interest rate swap instrument
Change in operating assets and liabilities:
(Increase)/Decrease in trade and other receivables
(Increase)/Decrease in inventories
Decrease/(increase) in other assets
Decrease/(increase) in deferred tax asset
(Decrease)/Increase in trade and other payables
(Decrease)/Increase in provision for income tax
(Decrease)/Increase in deferred tax liabilities
(Decrease)/Increase in employee benefits
(Decrease)/Increase in other liabilities and provisions
1,944
275
92
(2,149)
(424)
(726)
(1,126)
(1,090)
1,072
(116)
180
675
1,184
-
-
67
319
(205)
(623)
2,361
(328)
74
316
-
Net cash from operating activities
(1,676)
1,226
Note 41. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2017
Net cash from/(used in) financing activities
Clinic class shares issued through business
combinations
Balance at 30 June 2018
Reclassification of clinic class shares from debt
to equity
Cash from/(used in) financing activities
Balance at 30 June 2019
Note 42. Earnings per share
Loss after income tax
Non-controlling interest
Bank
Loans
$'000
Lease
Liabilities
$'000
Clinic class
share debt
$'000
Total
$'000
10,370
4,125
928
(425)
1,694
-
12,992
3,700
-
-
2,271
2,271
14,495
-
5,111
19,606
503
-
342
845
3,965
18,963
(3,965)
-
(3,965)
5,453
-
20,451
Consolidated
2019
$'000
2018
$'000
(283)
(955)
(1,939)
(68)
Loss after income tax attributable to the owners of Healthia Limited
(1,238)
(2,007)
70
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 42. Earnings per share (continued)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
54,991,800
Weighted average number of ordinary shares used in calculating diluted earnings per share 54,991,800
Basic earnings per share
Diluted earnings per share
Cents
Cents
(2.25)
(2.25)
(*)
(*)
(*)
(*)
* Despite the Consolidated Entity applying the continuation method of accounting for the acquisition of My FootDr (Aust)
Limited (see Note 2 for further details), FY18 weighted average number of ordinary shares, basic earnings per share and
diluted earnings per share 30 June 2018 comparatives have not been presented due to incomparable operations and capital
structure.
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Healthia Limited, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Note 43. Share-based payments
Set out below are equity settled payments made during the financial year
Equity settled payments
Equity settled payments to associates of Paul Wilson *
Equity settled payments to Chris Banks *
Equity settled payments other *
Total share-based payments expense for the year
Consolidated
2019
$
2018
$
75,000
100,000
100,000
-
-
85,002
275,000
85,002
* Equity settled payments are one-off payments for advisory and other fees in relation to the initial public offering of the
Consolidated Entity.
Accounting policy for share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
71
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2019
Note 43. Share-based payments (continued)
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, 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, together with non-vesting conditions that do not determine
whether the Consolidated Entity receives the services that entitle the employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Consolidated Entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the Consolidated Entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
72
Healthia Limited and its Controlled Entities
Directors' declaration
30 June 2019
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the Consolidated Entity's financial position as
at 30 June 2019 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
___________________________
Glen Frank Richards
Director
30 August 2019
73
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Healthia Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Healthia Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation.
74
1.
Impairment assessment of Goodwill and Other Intangible Assets
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures in respect to intangible assets,
including the impairment assessments of goodwill and
other intangible assets are included in Note 14.
The carrying value of intangible assets represent a
significant asset of the Group.
The Group is required to annually test the amount of
goodwill and indefinite useful life intangible assets for
impairment and assess other intangible assets for
impairment indicators. This annual impairment test
was significant to our audit because the goodwill and
intangible assets balance is material to the financial
statements and because management’s assessment
process is complex, highly judgmental and includes
estimates and assumptions relating to expected future
market or economic conditions.
Our procedures included, amongst others:
•
•
•
•
•
•
Evaluating management’s determination of the
Group’s Cash Generating Units ("CGU's") to ensure
they are appropriate, including being at a level no
higher than the operating segments of the entity
Evaluating management’s process regarding the
valuation of the Group’s goodwill and other
intangible assets
Assessing the Group’s assumptions and estimates
relating to forecast revenue, costs, capital
expenditure and discount rates used to determine
the recoverable amount of its assets
Assessing the historical accuracy of forecasting of
the Group by comparing the current year actual
results with FY19 figures included in prior year
forecasts to consider whether any forecasts
included assumptions, that with hindsight, had
been optimistic
Involving our internal specialists to assess the
discount rates and terminal growth rates against
comparable market information
Challenging key assumptions by performing
sensitivity analysis on the growth rates and
discount rate assumptions used.
2. Business combinations – including allocation of goodwill
Key audit matter
How the matter was addressed in our audit
During the year, the group acquired a number of
podiatry and physiotherapy clinics.
As disclosed in Note 36, as part of these business
combination transactions, the Group recognised the
following additional intangible assets:
Goodwill
Customer lists
Business combinations is a key audit matter due to the
significant audit effort to test the group’s acquisitions
during the year and the level of judgement applied in
evaluating management’s assessment of goodwill
allocated in the purchase.
Our procedures included, amongst others:
•
•
•
•
•
Reviewing purchase documentation including
contracts and business sale agreements
Obtaining a detailed understanding of the
acquired businesses
Assessing the appropriateness of the valuation
methodology of the assets acquired
Reviewing management’s assessment of the fair
value of the consideration paid and the
recognition of any deferred consideration upon
the acquisition date
Assessing the appropriateness of the disclosures in
relation to both the business combinations and
intangible assets acquired included in Notes 1,2,
14 and 36
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation.
75
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation.
76
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 19 to 24 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Healthia Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
Cameron Henry
Director
Brisbane, 30 August 2019
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation.
77
Healthia Limited and its Controlled Entities
Shareholder information
30 June 2019
The shareholder information set out below are current as at August 2019
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Number
of holders
of ordinary
shares
Number of
ordinary
shares
82
220
110
304
35
54,237
704,418
978,175
11,260,922
15,782,001
751
28,779,753
29
11,623
Ordinary shares
Number held
% of total
shares
issued
6,990,694
3,787,676
3,500,000
3,387,323
3,037,674
2,371,505
1,204,314
1,158,030
975,000
962,317
942,246
942,246
863,212
763,654
749,731
665,670
630,548
616,955
534,550
467,244
34,550,589
11.09
6.01
5.55
5.37
4.82
3.76
1.91
1.84
1.55
1.53
1.49
1.49
1.37
1.21
1.19
1.06
1.00
0.98
0.85
0.74
54.81
MY FOOTDR HOLDINGS PTY LTD
DLH TRADING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MAXIMUM (NQ) PTY LTD
ROM GROUP PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CHRISTOPHER ANGEL & GINA RICHMAN
MRS TRACEY LEE CUNNINGHAM
LEGGS PTY LTD
DPC INVESTMENTS PTY LTD
GF & LH RICHARDS SUPER PTY LTD
MR ANTHONY PETER GANTER & MS DEBORAH LEE HUBER
VASSALLO CORPORATE HOLDINGS PTY LTD
ABC INVESTING PTY LTD
MAXIMUM (NQ) PTY LTD
MATTHEW JOHN ROACH
SARGON CT PTY LTD
LISA SILVER
COMFOOT INVESTMENTS PTY LTD
Unquoted equity securities
There are no unquoted equity securities.
78
Healthia Limited and its Controlled Entities
Shareholder information
30 June 2019
Substantial holders
Substantial holders in the Company are set out below:
MY FOOTDR HOLDINGS PTY LTD
DLH TRADING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MAXIMUM (NQ) PTY LTD
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number held
% of total
shares
issued
6,990,694
3,787,676
3,500,000
3,387,323
11.09
6.01
5.55
5.37
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
Class
Ordinary shares
Share Registry
Expiry date
11 September 2020
Number
of shares
34,254,904
Securityholders who have any questions regarding their holding should contact the company's registrar:
Link Market Services Limited
P: 1300 554 474 (in Australia) or +61 1300 554 474 (from overseas)
F: +61 2 9287 0303
E: registrars@linkmarketservices.com.au
www.investorcentre.linkmarketservices.com.au
79