Healthia Limited and its Controlled Entities
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ACN:
Reporting period:
Previous period:
Healthia Limited
626 087 223
For the year ended 30 June 2020
For the year ended 30 June 2019
2. Results for announcement to the market
Revenues from ordinary activities
Profit from ordinary activities after tax attributable to the owners of
Healthia Limited
Profit for the year attributable to the owners of Healthia Limited
up
up
up
Basic earnings per share
Diluted earnings per share
Dividends
$'000
34.0% to
87,225
N/A to
N/A to
2,691
2,691
2020
Cents
2019
Cents
4.27
4.10
(2.25)
(2.25)
As at the date of signing the financial report, the Directors of Healthia Limited have recommended the payment of a
final fully franked dividend of 2.00 cents per share to the ordinary shareholders of Healthia Limited.
2020 final dividend dates:
●
●
●
Ex-dividend date: 8 September 2020
Record date: 9 September 2020
Payment date: 28 September 2020
A fully underwritten Dividend Reinvestment Plan (DRP) has been put in place for the final dividend to preserve cash
reserves.
The interim dividend of 1 cent per share originally declared on 24 February 2020 was subsequently cancelled on 24 March
2020 to preserve cash reserves for working capital and acquisitions in light of COVID-19 developments.
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 profit for the Consolidated Entity after providing for income tax and non-controlling interest amounted to $2,691,000
(30 June 2019: loss of $1,238,000).
During the 2020 Financial Year, the Consolidated Entity acquired 31 allied health businesses (18 Podiatry Clinics, 9
Physiotherapy Clinics and 4 Hand Therapy Clinics). This should be considered when interpreting the statutory financial
results.
During the Financial Year ended 30 June 2019, the Consolidated Entity underwent significant corporate and capital
restructuring to allow it to ultimately list on the Australian Securities Exchange ('ASX') on 11 September 2018. In
conjunction with 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 and comparative period 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.
(Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Appendix 4E
Preliminary final report
3. Net tangible assets
Net tangible assets per ordinary security
Note that Right of Use assets are included in the net tangible asset calculations above.
4. Control gained over entities
Refer to note 38 for details of business combinations in the year.
5. Loss of control over entities
Not applicable.
6. Dividends
Reporting
Previous
period
Cents
period
Cents
(38.54)
(20.89)
Current period
As at the date of signing the financial report, the Directors of Healthia Limited have recommended the payment of a
final fully franked dividend of 2.00 cents per share to the ordinary shareholders of Healthia Limited.
A fully underwritten Dividend Reinvestment Plan (DRP) has been put in place for the final dividend to preserve cash
reserves.
The interim dividend of 1 cent per share originally declared on 24 February 2020 was subsequently cancelled on 24 March
2020 to preserve cash reserves for working capital and acquisitions in light of COVID-19 developments.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
7. Dividend reinvestment plans
The following dividend or distribution plans are in operation:
The legal parent company, Healthia Limited, has a dividend reinvestment plan under which holders of ordinary shares may
elect to have all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather than by being paid
in cash. Shares are issued under the plan at a discount to the market price, as the Directors may determine.
A 2.5% discount will apply to the Dividend Reinvestment Plan for the final dividend and the DRP pricing period will be the 5
trading days immediately prior to the record date.
A copy of the Dividend Reinvestment Plan rules can be found on Healthia’s Website https://healthia.com.au/s/Dividend-
Reinvestment-Plan-Rules.pdf.
(Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Appendix 4E
Preliminary final report
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%
45.00%
Group's aggregate share of associates and joint venture
entities' profit/(loss) (where material)
Profit/(loss) from ordinary activities before income tax
On 29 May 2019, the Consolidated Entity acquired an interest in Fracture Holdco Pty Ltd.
-
-
-
-
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 2020 is attached.
12. Signed
Signed ___________________________
Date: 26 August 2020
Glen Frank Richards
Director
(Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
ACN 626 087 223
Annual Report - 30 June 2020
Healthia Limited and its Controlled Entities
Corporate directory
30 June 2020
Directors
Dr Glen Richards
Paul Wilson
Lisa Dalton
Darren Stewart
Anthony Ganter
Wesley Coote
Company Secretary
Christopher Banks
Notice of annual general meeting
The Annual General Meeting of Healthia Limited is expected to be held on 18
November 2020.
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
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 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Chairperson letter
30 June 2020
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 Healthia’s Annual Report for the year ended 30 June 2020.
The financial year has presented some unique challenges with the onset of the COVID-19 pandemic and associated social
distancing measures in Australia. I am extremely proud of our teams for banding together and implementing safety
measures for the well-being of our patients and people.
Operational Highlights
Healthia owns and operates a portfolio of allied health businesses throughout Australia. The focus of the Healthia is to
operate and expand a network of allied health businesses in Australia, with a current focus on the podiatry and
physiotherapy industries. At the reporting date, Healthia owned the following allied health businesses:
●
●
●
●
●
93 podiatry clinics (FY19: 75);
43 physiotherapy clinics (FY19: 34);
13 hand therapy clinics (FY19: 9);
2 orthotics laboratories trading as iOrthotics (FY19:1); and
75% of a podiatry and foot care supplies and equipment wholesale business trading as D.B.S. Medical.
Key operational highlights for the year include:
●
●
●
●
Patient engagement strategies and the robust nature of allied health businesses, helped deliver adjusted organic
revenue growth of 5.3%1 during the financial year, comprised of 6.8% in physiotherapy and 4.5% in podiatry;
Continued improvement and evolution of Healthia’s industry leading education platform, including the graduate
training program (45 new graduates enrolled), Clinical Leadership Program (33 clinicians enrolled), Business
Leadership Program (34 clinicians enrolled) and inaugural Healthia conference (437 team members attended);
Customer led expansion of iOrthotics into North America with the launch of a 3D printed orthotics manufacturing
laboratory in New York (58% equity ownership), which provides the opportunity to capture market share in the USD
$1.3BN United States foot orthotics insoles market; and
Clinician engagement strategies were refined with staff retention rates increasing to 85% (FY19: 83%). The Clinician
Retention Program, being local clinic ownership, was further developed and expanded and saw a further 25 clinicians
admitted to the program in FY20.
Financial Highlights
Healthia delivered strong financial results during the period with the key highlights being:
●
●
●
●
●
●
●
Strong organic revenue growth of 5.3%2;
Underlying revenue growth over prior year of 40.3%;
Underlying EBITDA3 (removing the impact of AASB16) growth over prior year of 47.6%;
Underlying NPATA4 growth over prior year of 36.9%;
Underlying EBITDA margin improvements over prior year of 70 bps;
Underlying cash flow conversion of 113.8%5; and
Underlying Basic EPS growth of 1.19 cents per share or 19.3% over prior year.
These strong financial results during the COVID-19 pandemic emphasise the robust, repeatable nature of the earnings of
the allied health businesses that Healthia owns and operate.
Statutory Income and Net Profit After Tax (NPAT) attributable to the owners of Healthia Limited for the period was $96.4M
and $2.7M respectively.
Underlying Revenue and Net Profit After Tax plus Amortisation (NPATA) for the period was $92.5M and $4.6M
respectively. The underlying performance is provided on an unaudited basis and a reconciliation between statutory and
underlying performance is provided further below in Table 5.
1 Adjusted for the impacts of COVID-19 by excluding the months of April & May 2020. If included, the organic revenue growth for the Consolidated Entity
for the year would have been 1.8%.
2 Adjusted for the impacts of COVID-19 by excluding the months of April & May 2020. If included, the organic revenue growth for the Consolidated Entity
for the year would have been 1.8%.
3 EBITDA means earnings before interest tax depreciation and amortisation.
4 NPATA means net profit after tax plus amortisation.
5 Underlying cash flow conversion is calculated as Underlying operating cash-flows (pre-tax, ungeared) divided by underlying EBITDA. See Table 9 in the
Review of Operations for further detail.
2 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Chairperson letter
30 June 2020
Dividends
The interim dividend of 1 cent per share originally declared on 24 February 2020 was subsequently cancelled on 24 March
2020 to preserve cash reserves due to uncertainty at the time caused by the COVID-19 pandemic.
As at the date of signing the Annual Report, the Directors of Healthia Limited have recommended the payment of a fully
franked dividend of 2.00 cents per share to the ordinary shareholders of Healthia Limited; representing approximately 27%
of underlying NPATA for the period.
The final dividend declared is fully underwritten by a Dividend Reinvestment Plan (DRP) to preserve cash reserves.
Dates for the 2020 final dividend are as follows:
Ex-dividend date of 8 September 2020;
●
Record date of 9 September 2020; and
●
Payment date of 28 September 2020.
●
Impact of COVID-19
Healthia is a provider of a number of essential community health care services and as such, the Directors made the
decision to continue trading from all of its 152 allied health clinics when Australia’s Prime Minister imposed several
progressive restrictive lockdown measures in April 2020. During this period, minimal changes to the trading hours of
Healthia’s clinics were made.
The largest impact on trading was felt during the months of April 2020 and May 2020, which in turn, qualified Healthia for
JobKeeper payments from April through September 2020.
The JobKeeper payments received have ensured the following:
●
continuity of patient care was maintained for those who needed these essential health care services during this period
of uncertainty;
the essential health care services provided were available to the communities that Healthia operates in, allowing
pressure to be taken off hospitals and other primary care and front-line health workers; and
the livelihoods of Healthia’s employees were not materially affected, with minimal changes to clinic rosters as a result
of the COVID-19 pandemic.
●
●
Portfolio Acquisitive Growth
During the 2020 Financial Year, Healthia acquired 31 allied health businesses (18 Podiatry Clinics, 9 Physiotherapy Clinics
and 4 Hand Therapy Clinics), deploying capital of $18.2M at an average EBITDA (removing the impact of AASB16)
multiple of 4.32x.
Healthia will continue to acquire well-established allied health businesses and assess opportunities on a case by case
basis with reference to its existing network of clinics, strategic objectives and disciplined acquisition criteria. As the allied
health industries emerge from the COVID-19 pandemic, we expect increased acquisition enquiries as industry participants
place greater value on the support and stability that a larger group such as Healthia can offer.
Healthia expects to deploy a minimum of $15.0 million of new capital in the 2021 Financial Year on new
acquisitions. These acquisitions are expected to be funded from a combination of bank debt, free cash and clinic class
shares. During the period, Healthia increased its finance facility limit from $37.0M to $50.0M with ANZ and BOQ (with a
tenor extension to September 2022) providing significant headroom for future growth.
Outlook
Healthia owns and operates 23 podiatry clinics and 1 physiotherapy clinic in Victoria. At the date of reporting, these clinics
remain fully operational as an essential health care service, however, they are experiencing some impact on their trading
due to the Stage 4 lockdown restrictions imposed in Victoria. The geographical diversification of Healthia’s portfolio (84% of
Healthia’s clinics are outside of Victoria) has meant that the group has seen immaterial impacts on its overall trading during
July and August 2020. The Directors and management are confident of the continued robust trading conditions for
Healthia’s business due to the essential nature of the allied health services it provides.
With the return to pre-COVID levels of trading from June 2020 and the revised eligibility requirements for JobKeeper
beyond September 2020, Healthia is not expecting to receive JobKeeper payments after this period.
3 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Chairperson letter
30 June 2020
As the world emerges from the COVID pandemic, Healthia will continue to focus on its 4-tiered strategy being:
1. patient focused outcomes;
2. organic growth;
future accretive acquisitions; and
3.
4. vertically integrated businesses units.
Finally, I would like to take this chance to thank all the team members of Healthia for their continued dedication to each
other, their patients, clinic, communities and Healthia during these challenging times. It has been a true team effort and this
is reflected in the results presented within this financial report.
Dr Glen Richards
Chairperson
4 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
as the 'Consolidated Entity') consisting of Healthia Limited (referred to hereafter as the 'Company' or 'parent entity') and the
entities it controlled at the end of, or during, the year ended 30 June 2020.
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 Richards
Paul Wilson
Lisa Dalton
Wesley Coote
Darren Stewart
Anthony Ganter
Principal activities
The principal activities of the Consolidated Entity consists of the following:
the operation of podiatry businesses throughout Australia; and
●
the operation of physiotherapy businesses throughout Australia.
●
Review of operations
The profit for the Consolidated Entity after providing for income tax and non-controlling interest amounted to $2,691,000
(30 June 2019: loss of $1,238,000).
1. Significant changes for the period ended 30 June 2020
Adoption of AASB 16
The Consolidated Entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for
lessees eliminates the classifications of operating leases and finance leases. Straight-line operating lease expense
recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest
expense on the recognised lease liabilities (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 improve as the operating expense is now
replaced by interest expense and depreciation in profit or loss.
Novel Coronavirus (COVID-19)
The Novel Coronavirus ('COVID-19') has been declared a pandemic in March 2020 by the World Health Organisation
('WHO'). During the 2020 Financial Year there have been considerable economic impacts in Australia and globally arising
from the outbreak of COVID-19 and Government actions to reduce the spread of the virus. The outbreak of COVID-19 and
the subsequent quarantine measures imposed by the Australian Government in early 2020 have caused disruption to
business and economic activities.
Acquisitive Growth
During the 2020 Financial Year ('FY20'), the Consolidated Entity acquired 31 allied health businesses (18 Podiatry Clinics,
9 Physiotherapy Clinics and 4 Hand Therapy Clinics). This should be considered when interpreting the statutory financial
results.
5 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
2. Financial Overview – Statutory Performance
The FY20 statutory performance compared to the prior period ended 30 June 2019 ('FY19') is as follows:
Table 1: FY20 statutory performance compared to FY19 statutory performance
JobKeeper Revenue Subsidies
The Consolidated Entity is a provider of a number of essential community services. As such, the Directors made the
decision to continue trading from all of its 152 allied health businesses, and to make minimal changes to the clinics trading
hours.
In April 2020, Australia’s Prime Minister imposed several progressive restrictive lockdown measures which saw an impact
on the trading of the Consolidated Entity. The largest impact on trading was felt during the months of April 2020 and May
2020, before the Consolidated Entity returned to pre-COVID-19 trading levels.
The Australian Government announced the JobKeeper Payment scheme on 30 March 2020 which provided entities with a
$1,500 a fortnight subsidy per qualifying employees if the entity had seen a reduction in trading revenue of more than
30%. The Commissioner of Taxation determined that entities that have “acquired or disposed of part of the business after
the relevant comparison period” should use the Commissioner of Taxation's “Alternative Test” when assessing its eligibility
for JobKeeper payments. Using the Alternative Test, the Consolidated Entity qualified for JobKeeper payments in April
2020. Once an entity had qualified for JobKeeper there is no requirement for it to retest until October 2020. As such, the
Consolidated Entity has qualified for JobKeeper payments for the period April 2020 to September 2020.
The Consolidated Entity has recorded $7.92M of JobKeeper payments as Other Income in the current period to 30 June
2020. The Consolidated Entity expects to record a further $6.37M of JobKeeper payments for the period 1 July 2020 to 30
September 2020.
At the time of this report, the Directors do not believe the Consolidated Entity will qualify for JobKeeper when retesting is
required in October 2020.
The JobKeeper payments received have ensured the following:
(1) continuity of patient care was maintained for those who needed these essential health care services;
(2) the essential health care services provided were available to the communities the Consolidated Entity operates in,
allowing pressure to be taken off hospitals and other primary care and front-line health workers;
(3) the livelihoods of the Consolidated Entity's employees of the Consolidated Entity were not materially affected. The
Directors are pleased that minimal changes to team members' rosters have been made during COVID-19; and
(4) the Consolidated Entity and its employees positively contributed back to the communities that they are part of.
6 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Revenue and Other Income
The Consolidated Entity’s revenue and other income increased by $30.44M to $96.37M or 46.2%, in comparison to FY19
statutory revenue. This increase in revenue can be attributed to the following drivers:
●
Acquisitions:
The 31 acquired allied health businesses during the period;
Timing of Initial Public Offering:
The prior period excludes approximately 3 months of financial contribution from the businesses acquired at the time of
Initial Public Offering (11 September 2018), specifically the 23 physiotherapy clinics, 16 podiatry clinics and 7 hand
therapy clinics acquired at this time;
Strong organic growth*:
Organic growth of 5.3% comprising of 6.8% in physiotherapy and 4.5% in podiatry (excluding trading from April and
May 2020 due to the impacts of COVID-19). Organic growth, including the COVID-19 impacted months of April and
May 2020, was 1.8% (3.5% in physiotherapy and 0.8% in podiatry). The organic growth demonstrates the resilient,
repeatable nature of the income of the Consolidated Entity and essential nature of allied health services provided; and
JobKeeper subsidies:
$7.92M of JobKeeper payments is recognised as Other Income in the current period.
Organic revenue growth has been calculated by excluding any closed businesses, businesses not held during the
prior period and JobKeeper related payments
●
●
●
*
Profit Attributable to Non-Controlling Interests
The Consolidated Entity's non-controlling interest in FY20 of $2.46M (FY19: $0.96M) represents growth over the prior
period of $1.5M or 157.3%. The increase in non-controlling interest can be attributed to the following factors:
●
JobKeeper subsidies:
JobKeeper payments related to team members in each of the Consolidated Entity’s clinics and support office team. As
such, JobKeeper payments are applied to the clinic in which the team member works. This has increased the non-
controlling interest's share of profit for FY20. These payments are non-recurring and will cease once JobKeeper
payments stop being received by the Consolidated Entity (expected to be 27 September 2020).
Increase in clinic class shareholder ('CCS') ownership:
CCS ownership has grown to a total of 2,505 Clinic Class Shares on issue for the period ended 30 June 2020, from
1,935 in FY19. All Clinic Class Shares were issued to clinicians as either part consideration of a newly acquired clinic
and / or for consideration.
●
Statutory Margins
The Consolidated Entity’s Statutory FY20 NPAT margin of 2.79% represents an increase of 467 bps over the prior period.
Both periods have been affected by significant non-recurring costs incurred by the Consolidated Entity. In particular,
acquisition and integration costs of $2.67M (FY19: $4.73M) were incurred during the period.
Depreciation
The Consolidated Entity’s depreciation expense was $9.10M (FY19: $1.55M), an increase of $7.6M over the prior period.
Depreciation expense associated with the adoption of AASB16 in FY20 was $6.91M (FY19: $0.0M).
3. Financial Overview - Underlying Performance
To assist users, information about the underlying performance of the Consolidated Entity is presented, which excludes the
impact of acquisition and integration costs, adjusted for the impacts of COVID-19 and other one-off income and
expenses. The underlying performance is provided on an unaudited basis in Table 2 and a reconciliation between statutory
and underlying performance is provided further below in Table 5.
The following table highlights the underlying performance of the Consolidated Entity:
7 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Table 2: Underlying FY20 performance compared to Underlying FY19 performance
Underlying Revenue
The Consolidated Entity’s revenue increased by $26.56M, or 40.3%, in comparison to the FY19 underlying revenue. This
increase in revenue can be attributed to the following drivers:
●
Acquisitions:
The 31 acquired allied health businesses during the period;
Timing of Initial Public Offering:
The prior period excludes approximately 3 months of financial contribution from the businesses acquired at the time of
Initial Public Offering (11 September 2018), specifically the 23 physiotherapy clinics, 16 podiatry clinics and 7 hand
therapy clinics acquired at this time;
Strong organic growth*:
Organic growth of 5.3% comprising of 6.8% in physiotherapy and 4.5% in podiatry (excluding trading from April and
May 2020 due to the impacts of COVID-19). Organic growth, including the COVID impacted months of April and May
2020, was 1.8% (3.5% in physiotherapy and 0.8% in podiatry). The organic growth demonstrates the resilient,
repeatable nature of the income of the Consolidated Entity and the essential nature of allied health services; and
JobKeeper payments:
For the purposes of underlying results, the Consolidated Entity has applied $4.16M (of $7.92M total) of JobKeeper
revenue subsidies. The inclusion of this income normalises the Consolidated Entity’s revenue for the impacted of the
COVID-19 pandemic during the period 1 March 2020 to 31 May 2020. This adjustment assumes the Consolidated
Entity would have achieved the same organic growth experienced pre and post the COVID affected period.
●
●
●
*Organic revenue growth has been calculated by excluding any closed businesses, businesses not held during the prior
period and JobKeeper related payments.
8 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Underlying EBITDA
The Consolidated Entity's underlying FY20 EBITDA (excluding the impact of AASB 16) of $13.23M (FY19: $8.97M)
represents growth over the prior period of $4.27M or 47.6%. The increase in underlying EBITDA is primarily driven by the
following:
●
Acquisitions:
31 clinic acquisitions made during the financial year;
Timing of Initial Public Offering:
The prior period excludes approximately 3 months of financial contribution from the businesses acquired at the time of
Initial Public Offering (11 September 2018), specifically the 23 physiotherapy clinics, 16 podiatry clinics and 7 hand
therapy clinics acquired at this time;
Strong organic growth:
Organic revenue growth achieved by the Consolidated Entity;
Margin improvement:
Margin improvement achieved from improved cost controls by the Consolidated entity; and
JobKeeper subsidies:
The inclusion of JobKeeper revenue subsidies to normalise the Consolidated Entity’s revenue for the impact of the
COVID-19 pandemic during the period 1 March 2020 to 31 May 2020. This adjustment assumes the Consolidated
Entity would have achieved the same organic growth experienced pre and post the COVID affected period.
●
●
●
●
Depreciation
The Consolidated Entity’s depreciation expense was $9.10M (FY19: $1.55M), an increase of $7.6M over the prior period.
Removing the periods depreciation expense of $6.91M associated with the adoption of AASB 16, the like-for-like
depreciation expense was $2.19M (FY19: $1.55M). Table 3 below sets out the Depreciation Expense.
The ratio of pre-AASB 16 depreciation expense divided by revenue has increased from 2.35% in the prior period to 2.37%
during the current period.
Table 3: Depreciation Expense
Underlying Non-Controlling Interest
The Consolidated Entity's non-controlling interest in FY20 EBITDA of $2.04M (FY19: $0.96M) represents growth over the
prior period of $1.09M or 113.7%. The increase in non-controlling interest is primarily due to the the following:
●
Increase in clinic class shareholder ownership:
Increase in clinic class share ownership from newly acquired clinics settled by the Consolidated Entity during the
period. CCS ownership has grown to a total of 2,505 Clinic Class Shares on issue for the period ended 30 June 2020
(FY19: 1,935). All Clinic Class Shares were issued to clinicians as either part consideration of a newly acquired clinic
and / or for consideration;
During the current period, Clinic Class Shares on issue increased to represent an economic interest of approximately
31.56% (FY19: 22.02%) in the underlying earnings of the Consolidated Entity (calculated as NCI / underlying NPATA
detailed in Table 2).
●
Note that underlying non-controlling interest excludes distributions related to non-recurring JobKeeper payments, to the
extent that they have not been included in the underlying results, which will cease once JobKeeper payments stop being
received by the Consolidated Entity (expected to be 27 September 2020). The Consolidated Entity made a conscious
decision to support its clinic partners and employees through the COVID-19 period and pass on JobKeeper payments to its
minority equity partners. A reconciliation of Underlying Non-Controlling Interest to Statutory Non-Controlling Interest is
detailed in Table 4 below.
9 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Table 4: Underlying Profit attributable to Non-Controlling Interests
Underlying Margins
The Consolidated Entity’s Underlying EBITDA margin (removing the impact of AASB 16) increased by 70 bps from FY19 to
14.30% for the period ended 30 June 2020.
The Consolidated Entity’s Underlying NPATA margin decreased by 13 bps from FY19 to 5.00% for the period ended 30
June 2020.
Underlying Earnings per Share
The Consolidated Entity’s underlying basic earnings per share attributable to the owners of Healthia Limited increased by
1.19 cents per share or 19.3% to 7.34 cents per share (FY19: 6.15 cents per share).
4. Dividends
As at the date of signing the financial report, the Directors of Healthia Limited have recommended the payment of a final
fully franked dividend of 2.0 cents per share to the ordinary shareholders of Healthia Limited, representing approximately
27% of underlying NPATA for the period.
A fully underwritten Dividend Reinvestment Plan (DRP) has been put in place for the final dividend to preserve cash
reserves.
Dates for the 2020 final dividend are as follows:
Ex-dividend date of 8 September 2020;
●
Record date of 9 September 2020; and
●
Payment date of 28 September 2020.
●
The interim dividend of 1 cent per share originally declared on 24 February 2020 was subsequently cancelled on 24 March
2020 to preserve cash reserves due to the uncertainty at the time caused by the COVID-19 pandemic.
5. Financial Overview – Reconciliation from Statutory to Underlying NPATA
A reconciliation of underlying NPATA and underlying EBITDA performance to statutory NPAT performance and statutory
EBITDA is detailed below.
10 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Table 5: Reconciliation of Underlying NPATA & EBITDA to Statutory NPAT & EBITDA
(1) Underlying NPATA is a non-IFRS measure and equals net profit after income tax expense plus amortisation of
customer list intangibles. Underlying profit reflects statutory profit as adjusted to reflect the Directors’ assessment of
the result for the ongoing business activities of the Consolidated Entity, in accordance with AICD/Finsia principles of
recording underlying profit. Underlying NPATA has not been audited;
(2) Underlying EBITDA is a non-IFRS measure and equals Earnings Before Interest, Tax, Depreciation and Amortisation;
(3) The Consolidated Entity incurred a number of one-off acquisition and integration costs in relation to the acquisition of
the 31 allied health businesses acquired. Further detail is provided in Table 6;
(4) Non-recurring costs incurred during the COVID-19 pandemic, including JobKeeper top-ups and other payments to
employees. Under JobKeeper, eligible employees who are ordinarily paid less than $1,500 per fortnight must be paid
a 'top-up' to bring their taxable gross income to at least $1,500 per fortnight for pay days within the JobKeeper
fortnights;
(5) Distribution to Non-Controlling Interests of JobKeeper payments which will cease once JobKeeper payments stop
being received by the Consolidated Entity (expected to be 27 September 2020). The Consolidated Entity made a
conscious decision to support its clinic partners and employees through the COVID-19 period and pass on JobKeeper
payments to its minority equity partners;
(6) The adoption of AASB 16 'Leases' had a significant impact on the current period financial performance. This impact is
comprised of the following changes due the adoption of AASB 16: occupancy costs decreased by $7.84M,
depreciation expense increased by $6.91M, and finance costs increased by $1.22M;
(7) Share-based payments relate to the one-off grant of Performance Rights to key clinicians and administration staff, but
excludes the costs associated with the executive performance rights (as these form part of the Consolidated Entity’s
ongoing remuneration structure). Further detail is provided in Table 7;
(8) Bad debt expense relates to the one-off impact of the COVID-19 on outstanding trade receivables (e.g. receivables
from sporting clubs of $0.12M);
(9) The loss from insurance write-off relates to the impairment of an insurance claim receivable. Healthia's 4
physiotherapy clinics in Townsville were heavily impacted by the 2019 Townsville floods and compensation was
previously expected to be received from the Consolidated Entity's insurer for this natural disaster event. The
Consolidated Entity was unable to recover $0.088M of its losses from its insurer;
(10) Amortisation of customer lists and software intangibles during the current period; and
(11) Income from JobKeeper, which is not considered by the Consolidated Entity to represent its underlying financial
performance. For the purposes of underlying results, the Consolidated Entity has included $4.16M (of $7.92M total) of
JobKeeper income, which represents the normalised Consolidated Entity’s revenue for the impact of the COVID-19
pandemic during the period 1 March 2020 to 31 May 2020.
11 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Table 6: Actual FY20 Acquisition and Integration Costs (pre-tax)
Table 7: Share-based Payments Expense and Associated Costs (pre-tax)
6. Impact of AASB 16 on Financial Position
The adoption of AASB 16 had a significant impact on the Consolidated Entity's financial position for the period ended 30
June 2020, reducing net assets by $2.39M and reducing the Current Ratio from 1.0 to 0.7. This impact is comprised of the
following changes due to the adoption of AASB 16:
Right-of-use assets increased by $24.22M;
●
Current lease liabilities increased by $6.59M; and
●
Non-current lease liabilities increased by $20.01M.
●
A summary of the impact is displayed below as follows:
Table 8: Impact of AASB 16 adoption on the Consolidated Statement of Financial Position at 30 June 2020
Notwithstanding the impact of AASB 16 on the Current Ratio, the Directors are satisfied that the Consolidated Entity is
forecast to generate sufficient operating cash flows to satisfy short-term leasing and other current liabilities.
12 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
7. Cash flow
The Consolidated Entity’s underlying cash flow conversion for the financial year is detailed in Table 9 below.
Table 9: Underlying cash flow conversion for the period ended 30 June 2020
The Consolidated Entity produced strong underlying cash flow to underlying EBITDA (removing the impact of AASB 16)
conversion of 113.8% during the period (FY19: 83.3%).
8. Capital Management
In February 2020, the Consolidated Entity signed formal documentation to increase its total syndicated finance facility from
$37.0M to $50.0M with Australia and New Zealand Bank (ANZ) and the Bank of Queensland Limited (BOQ). The facility
term was also extended to 30 September 2022.
The key financial covenants of the finance facility remain unchanged. They are as follows:
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 or equal to 50%.
●
Note that for the purposes of covenant testing, AASB 16 'Leases' does not apply and covenants are calculated as they
were prior to the adoption of this new accounting standard by the Consolidated Entity.
The Consolidated Entity remains in compliance with covenants as at the date of reporting.
In February 2020, the Consolidated Entity also restructured its interest rate swap to take advantage of favourable market
conditions. The previous $11.0M interest rate swap with a fixed rate of 2.15% expiring on 12 December 2020, was
restructured via a 'blend and extend' transaction into a $20.0M interest rate swap with a fixed rate of 1.21% expiring on 30
September 2022 (representing a saving of 0.94%).
9. Business Overview
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 current focus on the
podiatry and physiotherapy industries. At the reporting date, the Consolidated Entity owned the following allied health
businesses:
●
●
●
●
●
93 podiatry clinics;
43 physiotherapy clinics;
13 hand therapy clinics;
2 orthotics laboratories trading as iOrthotics; and
75% of a podiatry and foot care supplies and equipment wholesale business trading as D.B.S. Medical.
13 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
At reporting date, the Consolidated Entity’s businesses were located in the following geographic areas:
Table 10: Clinic Overview by Geography
The Consolidated Entity’s portfolio remains concentrated in Queensland (61.8% of the total portfolio), being the origins of
the My FootDr (podiatry) and Allsports (physiotherapy) businesses.
Highlights
Acquisitive growth
●
Acquired 31 allied health businesses (18 podiatry, 9 physiotherapy and 4 hand therapy) and deployed capital of
$18.2M at an average EBITDA (removing the impact of AASB16) multiple of 4.32x. Acquisitions completed during the
current financial period are set out in Table 11 below.
Table 11: Summary of Acquisitions between 1 July 2019 and 30 June 2020
Growth
●
●
●
●
●
Robust organic growth of 5.3% achieved for the 2020 Financial Year, comprised of 6.8% in physiotherapy and 4.5% in
podiatry (adjusted for the impacts of COVID-19 by excluding the months of April and May 2020);
Increased finance facility limit from $37.0M to $50.0M with ANZ and BOQ, with a tenor extension to September 2022;
and
Customer led expansion of iOrthotics into North America with the launch of a 3D printed orthotics manufacturing
laboratory in New York (58% equity ownership), which provides the opportunity to capture market share in the USD
$1.3 billion United States foot orthotics insoles market.
Recruitment and retention
●
●
●
Clinician staff retention rate of 85% (FY19: 83%);
Total growth in clinicians of 99 physiotherapists and 23 podiatrists over the prior period;
45 new clinician graduates commenced during the period, comprising of 26 physiotherapy graduates, 16 podiatry
graduates, 2 occupational therapy graduates and 1 exercise physiologist graduate;
Clinic Class Share ownership grew to a total of 2,505 Clinic Class Shares on issue for the period ended 30 June
2020, from 1,935 in FY19. The corresponding number of CCS owners also increased from 63 to 88; and
Career pathways for clinicians have been mapped to provide all staff with improved long-term career progression,
including a clear pathway to clinic ownership. This includes structured education relating to clinical and business
leadership.
14 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Education and development
●
●
Continued improvement and evolution of Healthia’s industry leading education platform;
The Clinic Leadership Program has been developed to provide clinicians with the skills they need to provide
exceptional health care to their patients. This program first commenced in January 2020 with 33 clinicians;
The Business Leadership Program has been developed to provide the future leaders and aspiring clinic owners with
the skills required to manage and run a successful clinic. This program first commenced in February 2020 with 34
clinicians;
The Consolidated Entity held its inaugural, industry leading education conference in October 2019. 437 of the groups
clinicians and support team members attended this event, which boasted industry and world leading speakers on a
range of clinical and business topics; and
All 45 new clinicial graduates attended the graduate induction and training program held in February 2020.
Operational efficiency
●
In February 2020, project approval was received by iOrthotics for a research and development grant of $0.45M from
the Australian Government’s Advanced Manufacturing Growth Centre. The grant will fund continued collaboration with
the University of Queensland to test new 3D printable materials for use in the production of foot orthotics;
Implementation of a new, cloud-based payroll system, allowing for significant improvements in processing time; and
Centralisation of support services, including information technology integration, for all newly acquired clinics.
●
●
●
●
●
10. Outlook
COVID-19 impact and JobKeeper subsidies
The Consolidated Entity is expected to continue receiving JobKeeper payments until September 2020. With the return to
pre-COVID levels of trading from June 2020 and the revised eligibility requirements for JobKeeper beyond September
2020, the Consolidated Entity is not expecting to receive JobKeeper payments after this period.
The Consolidated Entity owns and operates 23 podiatry clinics and 1 physiotherapy clinic in Victoria. At the date of
reporting, these clinics remain fully operational as essential health care services. These clinics are experiencing some
impact on their trading due to the Stage 4 lockdown restrictions imposed in Victoria. However, with JobKeeper payments
being received until the end of September 2020 and the geographical diversification of Healthia’s portfolio (84% of
Healthia’s clinics are outside of Victoria), the Consolidated Entity is confident of continued robust trading conditions for the
business in aggregate.
The Consolidated Entity continues to take preventative measures against the spread of COVID-19 and has implemented
comprehensive internal policies and procedures to protect its patients and team members against the spread of COVID-19,
including a range of workplace preventative health and safety measures. Providing a safe environment for our patients and
team members is a priority, and the Consolidated Entity is following the recommendations of the Australian Government.
Future accretive acquisitions
Given the fragmented nature of the targeted allied health industries, acquisitions 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 disciplined
acquisition criteria.
As the allied health industries emerge from the COVID-19 pandemic, we expect increased acquisition enquiries as industry
participants place greater value on the support and stability that a larger group such as Healthia can offer.
The Consolidated Entity has entered into agreements to acquire 3 additional physiotherapy clinics in Queensland and 1
additional podiatry clinic in South Australia, with customary conditions precedent including due diligence and assignment of
property leases. Consideration for the acquisitions is $5.05M including $4.01M in cash consideration and $1.04M in clinic
class share consideration. These clinics are expected to contribute Revenue and EBITDA (less lease payments or pre-
AASB 16 change) of $5.58M and $1.16M respectively on a pro-forma basis.
The Consolidated Entity expects to deploy $15M of capital for the acquisition of new allied health businesses over the next
12 months.
15 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Funding
The Consolidated Entity expects to use a combination of the following to fund acquisitions:
●
●
●
Undrawn debt amount: headroom of $23.3M in the syndicated finance facility with ANZ and BOQ;
Future operating cash flow: underlying operating cash flows of $15.06M were generated during the financial year; and
Clinic Class Shares: non-voting shares, which provide the holder with an economic interest in the performance of the
Clinic they work in and assist with the retention of key clinicians.
At the date of reporting, the Consolidated Entity has cash reserves of $4.2M, undrawn senior debt facility of $23.3M and an
undrawn overdraft facility of $1.0M.
Significant changes in the state of affairs
Acquisition of Physiotherapy and Hand Therapy Clinics
The Consolidated Entity acquired an additional 9 physiotherapy and 4 hand therapy clinics since 30 June 2019. Initial
consideration paid for the acquisitions was $7.99M including $4.99M in cash consideration, $3.00M in clinic class share
consideration, with up to an additional $1.15M payable in contingent consideration.
These clinics are expected to contribute Revenue and EBITDA (less lease payments or pre-AASB 16 change) of $10.31M
and $2.18M respectively on a pro-forma basis.
Acquisition of Podiatry Clinics
The Consolidated Entity acquired an additional 18 podiatry clinics since 30 June 2019. Initial consideration paid for the
acquisitions was $8.39M including $7.99M in cash consideration, $0.40M in clinic class share consideration, with up to an
additional $0.70M payable in contingent consideration.
These clinics are expected to contribute Revenue and EBITDA (less lease payments or pre-AASB 16 change) of $8.66M
and $2.04M respectively on a pro-forma basis.
Performance rights
On 27 November 2019, 2,102,500 unlisted performance rights were granted to employees and 575,858 unlisted
performance rights were granted to key management personnel with a nil grant and exercise price. The performance rights
will vest on 31 August 2022 (subject to satisfaction of the relevant vesting conditions) and expire on 31 October 2022. The
vesting conditions include a number of performance and service conditions.
Novel Coronavirus (COVID-19)
The Novel Coronavirus ('COVID-19') was declared a pandemic in March 2020 by the World Health Organisation ('WHO').
During the financial year there have been considerable economic impacts in Australia and globally arising from the
outbreak of COVID-19 and Government action to reduce the spread of the virus. The outbreak of COVID-19 and the
subsequent quarantine measures imposed by the Australian and other governments, as well as the travel and trade
restrictions imposed by Australia and other countries in early 2020 have caused disruption to business and economic
activities.
Cancellation of dividend
The interim dividend of 1 cent per share originally declared on 24 February 2020 was subsequently cancelled on 24 March
2020 to preserve cash reserves for working capital and acquisitions in light of COVID-19 developments.
There were no other significant changes in the state of affairs of the Consolidated Entity during the financial year.
Matters subsequent to the end of the financial year
The Consolidated Entity has entered into agreements to acquire 3 additional physiotherapy clinics in Queensland and 1
additional podiatry clinic in South Australia, with customary conditions precedent including due diligence and assignment of
property leases. Consideration for the acquisitions is $5.05M including $4.01M in cash consideration and $1.04M in clinic
class share consideration.
These clinics are expected to contribute Revenue and EBITDA (less lease payments or pre-AASB 16 change) of $5.58M
and $1.16M respectively on a pro-forma basis.
As at the date of signing the financial report, the Directors of Healthia Limited have recommended the payment of a
final fully franked dividend of 2.00 cent per share to the ordinary shareholders of Healthia Limited. A fully underwritten
Dividend Reinvestment Plan (DRP) has been put in place for the final dividend to preserve cash reserves.
16 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
The Consolidated Entity owns and operates 23 podiatry clinics and 1 physiotherapy clinic in Victoria. At the date of
reporting, these clinics remain operational as an essential health care service. These clinics are experiencing some impact
on their trading due to the Stage 4 lockdown restrictions imposed in Victoria. However, with JobKeeper payments being
received until the end of September 2020 and the geographical diversification of Healthia’s portfolio (84% of Healthia’s
clinics are outside of Victoria), the Consolidated Entity is confident of continued robust trading conditions for the business
in aggregate.
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 expects to deploy $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.
Information on Directors
Name:
Title:
Experience and expertise:
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.
Other current directorships:
Chairman and Non-Executive Director of People Infrastructure Ltd (ASX code: PPE).
Former directorships (last 3 years): Non-Executive Director of Regeneus Ltd (ASX code: RGS) (24 February 2015 to 3
June 2020)
Non-Executive Director of Greencross Ltd (ASX code: GXL) (26 April 2007 to 27
February 2019)
Non-Executive Director of 1300 Smiles Ltd (ASX code: ONT) (1 May 2015 to 23
November 2017)
Member of the Audit and Risk Committee and the Remuneration and Nomination
Committee.
4,995,329 ordinary shares held at 30 June 2020
None
Special responsibilities:
Interests in shares:
Interests in rights:
17 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Name:
Title:
Experience and expertise:
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) (5 February 2014 to 27
Special responsibilities:
Interests in shares:
Interests in rights:
February 2019)
Chairman of the Audit and Risk Committee and a member of the Remuneration and
Nomination Committee.
374,104 ordinary shares held at 30 June 2020
None
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.
22,500 ordinary shares held at 30 June 2020
None
Interests in shares:
Interests in rights:
Name:
Title:
Experience and expertise:
Darren Lindsey Stewart (appointed 10 May 2018)
Executive Director
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:
Interests in rights:
4,457,664 ordinary shares held at 30 June 2020
None
Name:
Title:
Experience and expertise:
Anthony (Tony) Peter Ganter (appointed 10 May 2018)
Director and Chief Operating Officer
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.
None
Other current directorships:
Former directorships (last 3 years): None
Interests in shares:
Interests in rights:
1,108,007 ordinary shares held at 30 June 2020
128,115 performance rights held at 30 June 2020
the ongoing creation of varied career
journeys
to
18 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
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 (ASX code: NVL) (18 August
Interests in shares:
Interests in rights:
2015 to 1 March 2017)
1,557,764 ordinary shares held at 30 June 2020
172,463 performance rights held at 30 June 2020
'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. Chris joined the Healthia Group
(previously My FootDr) 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 2020, and the number of meetings attended by each Director were:
Full Board
Remuneration and
Nomination Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
Dr Glen Richards
Paul David Wilson
Lisa Jane Dalton
Wesley Coote
Darren Lindsay Stewart
Anthony Peter Ganter
11
11
11
11
11
11
11
11
11
11
11
11
1
1
1
-
-
-
1
1
1
-
-
-
2
2
2
-
-
-
2
2
2
-
-
-
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant
committee.
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
19 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
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 Chairperson's fees are
determined independently to the fees of other Non-Executive Directors based on comparative roles in the external market.
The Chairperson 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.
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.
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.
20 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
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 2020, 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 Operating Officer
Darren Stewart - Executive Director
Chris Banks - Chief Financial Officer and Company Secretary
Lisa Roach - General Manager of Physiotherapy
Dean Hartley - Chief Technology Officer
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees bonus**
Cash
Non-
Super-
monetary annuation
$
$
$
$
Long
service
leave
$
Equity-
settled
$
Total
$
77,646
47,500
47,500
-
-
-
224,992
173,078
176,610
56,250
-
45,000
155,847
155,971
160,032
1,219,176
40,000
40,000
40,000
221,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77,646
47,500
47,500
26,327
16,832
21,539
4,106
3,285
3,285
1,555
-
1,155
313,230
193,195
247,589
18,934
19,049
19,049
121,730
2,920
2,920
2,920
19,436
790
981
711
218,491
218,921
222,712
5,192 1,586,784
2020
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
Dean Hartley
21 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
*
**
The Non-Executive Director's fees to be paid in the financial year ended 30 June 2020 were set as $100,000 per
annum (increased from $60,000 per annum effective 1 January 2020) for the Chair and $60,000 per annum
(increased from $40,000 per annum effective 1 January 2020) 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. Directors
decreased their fees by 25% during the quarter ended 30 June 2020 in response to COVID-19 developments.
Cash bonuses remain subject to strong trading performance to 30 September 2020 and Board approval at that time.
The proportion of remuneration disclosed above that is performance-based for all Directors and other key management
personnel is $221,250 or 13.9% of total remuneration for the current period.
Cash bonuses of $221,250 have been accrued at 30 June 2020 in respect of key management personnel, however, not yet
paid. These cash bonuses are Short Term Incentives or STIs.
Details of incentives (LTIs) are disclosed in the Additional Information section.
No LTIs have vested in the year.
Short-term benefits
Post-
employment
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.
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.
22 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Share-based compensation
Issue of shares
Equity Settled
Equity settled payments made during the prior period 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.
Unlisted performance rights
On 27 November 2019, the Consolidated Entity issued 575,858 performance rights to key management personnel. Details
of the performance rights are as follows:
Grant date:
Grant price:
Exercise price:
Vesting date:
Expiry date:
Restriction on shares issued on
exercise:
27 November 2019
$nil
$nil
31 August 2022
31 October 2022
Can only be traded in accordance with Securities Trading Policy and insider trading
laws
The fair value of performance rights (equity settled) with the relative TSR condition is calculated at the date of grant using
the Monte-Carlo simulation model, taking into account the impact of the TSR condition and dividends during the vesting
period. The value disclosed is the portion of fair value of the rights recognised in each reporting period.
Vesting conditions for key management personnel
Service condition
EPS Growth condition
The performance rights will be exercisable upon satisfaction of the Service condition,
being continuous employment with the Company from Grant Date until the Vesting
Date.
The Consolidated Entity's compounding annual growth in underlying earnings per
share (underlying EPS) for the period from quotation of the Consolidated Entity's
shares on ASX to 30 June 2022 is greater than 10% per annum. The underlying EPS
results to be used will be Basic EPS recorded in the Consolidated Entity's audited
financial statements in the relevant years, adjusted for one-off and non-recurring
items and the amortisation of customer lists, as determined by the Board at its
discretion. 50% of the performance rights will be exercisable if this condition is met.
Total Shareholder Return condition Total Shareholder Return ('TSR') to exceed 150% for the period from quotation of the
Consolidated Entity's shares on the ASX to 30 June 2022, with TSR calculated as
follows:
TSR = (Price End - Price Begin + Dividends)/Price Begin
Where:
Price Begin = share price at quotation of the Consolidated Entity's shares on ASX;
Price End = share price at 30 June 2022; and
Dividends = total dividends paid per share during the period from listing to 30 June
2022.
50% of the performance rights will be exercisable if this condition is achieved.
The performance rights do not rank equally with existing ordinary shares quoted. Prior to vesting, the performance rights
do not carry a right to vote or receive dividends.
Where shares are issued upon the vesting and exercise of the performance rights (within the periods detailed above),
those shares will rank equally with existing ordinary shares of Healthia Limited.
To participate in a dividend, the ordinary shares must be issued prior to the record date for the dividend.
23 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of Directors and
other key management personnel in this financial year or future reporting years are as follows:
Name
Wesley Coote
Anthony Ganter
Chris Banks
Lisa Roach
Dean Hartley
Number of
rights
granted
Grant date
Vesting date and
exercisable date
Expiry date
172,463 27 November 2019
128,115 27 November 2019
87,600 27 November 2019
108,840 27 November 2019
78,840 27 November 2019
31 August 2022
31 August 2022
31 August 2022
31 August 2022
31 August 2022
31 October 2022
31 October 2022
31 October 2022
31 October 2022
31 October 2022
Fair value
per right
at grant date
$0.090
$0.090
$0.090
$0.090
$0.090
Performance rights granted carry no dividend or voting rights.
Additional information
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 their 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 with 6 months’ notice.
Key management personal employed under these agreements include:
●
●
●
●
●
●
Wesley Coote - Group Managing Director and Chief Executive Officer
Anthony Ganter - Director and Chief Operating Officer
Darren Stewart - Executive Director
Christopher Banks - Chief Financial Officer and Company Secretary
Lisa Roach - General Manager of Physiotherapy
Dean Hartley - Chief Technology Officer
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 key management personnel
of the Consolidated Entity, including their personally related parties, is set out below:
Balance at Received
as part of
the start of
the year
remuneration Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares
Glen Richards
Paul Wilson
Lisa Dalton
Wesley Coote
Darren Stewart
Anthony Ganter
Chris Banks
Lisa Roach
Dean Hartley
4,995,329
324,104
-
1,557,764
4,457,664
1,108,007
266,070
630,548
3,787,676
17,127,162
-
-
-
-
-
-
-
-
-
-
-
50,000
22,500
-
-
-
74,228
-
-
146,728
4,995,329
-
374,104
-
22,500
-
1,557,764
-
4,457,664
-
1,108,007
-
340,298
-
630,548
-
-
3,787,676
- 17,273,890
24 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Performance rights holding
The number of performance rights over ordinary 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:
Performance rights over ordinary shares
Glen Richards
Paul Wilson
Lisa Dalton
Wesley Coote
Darren Stewart
Anthony Ganter
Chris Banks
Lisa Roach
Dean Hartley
Balance at
the start of
the year
Granted
Expired/
forfeited/
other
Balance at
the end of
the year
Vested
-
-
-
-
-
-
-
-
-
-
-
-
-
172,463
-
128,115
87,600
108,840
78,840
575,858
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
172,463
-
128,115
87,600
108,840
78,840
575,858
Loans to key management personnel and their related parties
There were no loans issued to, or repaid by, key management personnel during the financial year.
A reconciliation of key management personnel loans are as follows:
Chris Banks
200,000
-
-
200,000
Balance at
the start of
the year
$
Loans
issued
$
Loans
repaid
$
Balance at
the end of
the year
$
25 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
Other transactions with key management personnel and their related parties
The following transactions occurred with related parties:
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
Rent and outgoings paid to entities controlled by key management personnel Lisa Roach
Payment for services (outsourced accounts payable processing) to an entity associated with key
management personnel and Director Wesley Coote
This concludes the remuneration report, which has been audited.
Consolidated
2020
$
333,683
174,213
160,771
170,461
232,821
Shares under option
There were no unissued ordinary shares of Healthia Limited under option outstanding at the date of this report.
Shares under performance rights
Unissued ordinary shares of Healthia Limited under performance rights at the date of this report are as follows:
Grant date
27 November 2019
Expiry date
31 October 2022
Number
under rights
2,678,358
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate
in any share issue of the Company or of any other body corporate.
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 2020
and up to the date of this report.
Shares issued on the exercise of performance rights
There were no ordinary shares of Healthia Limited issued on the exercise of performance rights during the year ended 30
June 2020 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the Directors and executives of the Consolidated Entity 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 Consolidated Entity 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.
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 33 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.
26 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2020
The Directors are of the opinion that the services as disclosed in note 33 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 (including Independence Standards) 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 Consolidated Entity who are former partners of BDO Audit Pty Ltd
There are no officers of the Consolidated Entity who are former partners of BDO Audit Pty Ltd.
Rounding of amounts
The Consolidated Entity 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 Consolidated Entity 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
26 August 2020
27 (Annual Report - 30 June 2020)
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 CAMERON HENRY TO THE DIRECTORS OF HEALTHIA LIMITED
As lead auditor of Healthia Limited for the year ended 30 June 2020, 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; and
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.
Cameron Henry
Director
BDO Audit Pty Ltd
Brisbane, 26 August 2020
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.
28 (Annual Report – 30 June 2020)
Healthia Limited and its Controlled Entities
Contents
30 June 2020
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
30
31
32
34
35
83
84
86
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 26 August 2020.
29 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
Revenue from contracts with customers
Other income
Expenses
Changes in inventories
Raw materials and consumables used
Employee benefits expense
Occupancy costs
Marketing costs
Other expenses
Education and training
Impairment of receivables
Acquisition and integration costs
Insurance write-off
Share-based payments expense and associated costs
Depreciation expense
Amortisation expense
Finance costs
Profit before income tax expense
Income tax expense
Profit/(loss) after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit/(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
Note
Consolidated
2020
$'000
2019
$'000
4
5
6
6
6
7
87,225
65,084
9,141
845
258
(7,106)
(57,450)
(2,267)
(1,248)
(4,841)
(657)
(308)
(2,665)
(88)
(254)
(9,101)
(661)
(2,725)
1,111
(6,408)
(38,943)
(7,853)
(814)
(3,271)
(485)
-
(4,733)
-
(275)
(1,549)
(395)
(1,331)
7,253
983
(2,105)
(1,266)
5,148
(283)
-
-
5,148
(283)
2,457
2,691
955
(1,238)
5,148
(283)
2,457
2,691
955
(1,238)
5,148
(283)
Basic earnings per share
Diluted earnings per share
Cents
Cents
43
43
4.27
4.10
(2.25)
(2.25)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
30 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Consolidated statement of financial position
As at 30 June 2020
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
Right-of-use assets
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Income tax
Employee benefits
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
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
2020
$'000
2019
$'000
8
9
10
11
12
13
14
15
7
16
17
18
7
19
20
21
22
23
24
25
26
27
28
29
4,159
6,398
3,736
932
15,225
19
7,676
24,216
79,275
2,874
114,060
2,610
3,396
3,478
1,218
10,702
10
7,643
-
62,221
2,074
71,948
129,285
82,650
5,728
-
7,203
2,808
3,970
281
1,845
21,835
26,735
20,549
224
332
754
1,000
49,594
3,397
72
412
1,051
2,718
162
1,715
9,527
19,606
433
92
260
728
878
21,997
71,429
31,524
57,856
51,126
49,884
(4,190)
(1,793)
43,901
13,955
49,884
(4,395)
(3,240)
42,249
8,877
57,856
51,126
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
31 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Consolidated statement of changes in equity
For the year ended 30 June 2020
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 27)
Issue of ordinary shares as consideration for
business combinations, net of transaction costs
(note 27)
Issue of ordinary shares as consideration for
acquisition of non-controlling interest, net of
transaction costs (note 27)
Conversion from clinic class shares to ordinary
shares (note 27)
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 38)
Transactions with non-controlling interests
(note 28)
Share based payments (note 45)
Pre-IPO distributions
Dividends paid
-
-
-
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
32 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Consolidated statement of changes in equity
For the year ended 30 June 2020
Consolidated
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2019
49,884
(4,395)
(3,240)
8,877
51,126
Adjustment for change in accounting policy
(note 1)
-
-
(1,244)
-
(1,244)
Balance at 1 July 2019 - restated
49,884
(4,395)
(4,484)
8,877
49,882
Profit 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:
Issue of performance rights
Issue of ordinary shares in iOrthotics USA LLC
Contributions of clinic class shares
Issue of clinic class shares as consideration for
business combinations (note 38)
Buy-back of clinic class shares
Distributions paid to non-controlling interest
-
-
-
-
-
-
-
-
-
-
-
-
205
-
-
-
-
-
2,691
2,457
5,148
-
-
-
2,691
2,457
5,148
-
-
-
-
-
-
-
103
1,311
3,398
(567)
(1,624)
205
103
1,311
3,398
(567)
(1,624)
Balance at 30 June 2020
49,884
(4,190)
(1,793)
13,955
57,856
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
33 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Consolidated statement of cash flows
For the year ended 30 June 2020
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers (inclusive of GST)
Interest received
Government grants (Covid-19)
Interest and other finance costs paid
Income taxes paid
Note
Consolidated
2020
$'000
2019
$'000
88,261
(72,441)
66,616
(66,318)
15,820
-
4,737
(2,725)
(499)
298
1
-
(1,331)
(644)
Net cash from/(used in) operating activities
41
17,333
(1,676)
Cash flows from investing activities
Payment for purchase of businesses, net of cash acquired
Payment for purchase of non-controlling interest, net of cash acquired
Payments of contingent business purchases consideration
Payments for property, plant and equipment
Payments for intangibles
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 ordinary shares in iOrthotics USA LLC
Proceeds from issue of clinic class shares
Buy-back of clinic class shares
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Pre-IPO distributions
Dividends paid to non-controlling interest
Net cash from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
38
13
27
42
42
(12,974)
-
(550)
(1,389)
-
-
(23,332)
(1,094)
(10)
(2,741)
(15)
7
(14,913)
(27,185)
-
-
103
1,311
(567)
7,130
-
(7,152)
-
(1,624)
28,817
(1,747)
-
1,911
-
19,948
(14,510)
-
(2,494)
(692)
(799)
31,233
1,621
2,538
2,372
166
Cash and cash equivalents at the end of the financial year
8
4,159
2,538
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
34 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
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 2020-4 Amendment to Australian Accounting Standards - COVID-19-Related Rent Concessions
The Consolidated Entity has early adopted the amendment to AASB 16 from 1 July 2019. The amendment provides a
practical expedient for lessees to account for COVID-19-related rent concessions that: result in lease payments that are
substantially the same as, or less than, the consideration for the lease immediately prior to the change; where any
reduction in the lease payments affects only payments originally due on or before 30 June 2021; and where there is no
substantive change to other terms and conditions of the lease. The practical expedient allows an entity not to assess rent
concessions meeting the criteria as a lease modification. As a result, to the extent that lease concessions represent a
forgiveness or waiver of lease payments, such concessions are treated as variable lease payments recognised in the profit
or loss with a corresponding adjustment to the lease liability. To the extent that the lease concession in substance
represents a delay in lease repayments such that lease consideration is not changed, the lease liability is not extinguished.
Interest continues to accrue for that period. The Consolidated Entity has applied the practical expedient to all rent
concessions that meet the abovementioned criteria and and the profit or loss impact from the adoption of this amendment
is detailed in note 5.
AASB 16 Leases
The Consolidated Entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for
lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of
low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial
position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets
(included in operating costs) and an interest expense on the recognised lease liabilities (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
improve as the rental expense is now replaced by interest expense and depreciation in profit or loss. For classification
within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the
lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially
change how a lessor accounts for leases.
In applying AASB 16 for the first time, the Consolidated Entity has used the following practical expedients permitted by the
standard:
●
●
●
The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
The exclusion of initial direct costs from the measurement of right-of-use assets at the date of initial application; and
No requirement to recognise leases when the term ends within 12 months of the date of initial application.
For those leases previously classified as finance leases, the lease liability and right-of-use asset are measured on 1 July
2019 at the same amounts as under AASB 117 on 30 June 2019.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach as permitted by AASB 16 C8(b)(i), where the right-of-use
asset is measured at its carrying amount as if the Standard had been applied since the commencement date, but
discounted using the lessee’s incremental borrowing rate at the date of initial application, and as such, the comparatives
have not been restated.
35 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 1. Significant accounting policies (continued)
The following is a reconciliation of the financial statement line items from AASB 117 to AASB 16 at 1 July 2019.
Right-of-use assets
Lease liabilities
Lease incentive liabilities
Deferred tax asset
Accumulated losses
Carrying
amount as 30
June 2019
$'000
Reclassifi-
cation
$'000
Change on
adoption of
AASB 16
$'000
AASB 16
carrying
amount at 1
July 2019
$'000
-
(845)
(1,009)
2,074
(3,240)
-
-
-
-
-
21,760
(24,688)
1,009
675
(1,244)
21,760
(25,533)
-
2,749
(4,484)
The following is a reconciliation of total operating and finance lease commitments at 30 June 2019 (as disclosed in the
financial statements at 30 June 2019) to the lease liabilities recognised at 1 July 2019:
Operating lease commitments as at 1 July 2019 (AASB 117)
Finance lease commitments as at 1 July 2019 (AASB 117)
Adjustment to operating lease commitments at 1 July 2019
Operating lease commitments discount based on the weighted average incremental borrowing rate of 5.0%
(AASB 16)
Total lease liabilities recognised under AASB 16 on 1 July 2019
The lease liabilities recognised at 1 July 2019 are as follows:
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
1 July
2019
$'000
18,958
845
8,852
(3,122)
25,533
1 July
2019
$'000
6,787
18,746
25,533
Going concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and settlement of liabilities in the normal course of business.
The Consolidated Entity has a working capital deficiency of $6,610,000 as at 30 June 2020. The reason for the working
capital deficiency at 30 June 2020 is due to the impact of AASB 16 being adopted. Healthia has recognised a current
liability of $7,203,000 which is predominately related to property leases.
Notwithstanding the working capital deficiency, the Directors are satisfied the Consolidated Entity is a going concern as the
Consolidated Entity is forecast to generate sufficient operating cash flows to be able to pay short-term leasing and other
liabilities.
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').
36 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
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 37.
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 2020 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.
37 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 1. Significant accounting policies (continued)
Deferred tax assets and liabilities are always classified as non-current.
Associates
Associates are entities over which the Consolidated Entity has significant influence but not control or joint control.
Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or
losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other
comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-
acquisition changes in the Consolidated Entity's share of net assets of the associate. Goodwill relating to the associate is
included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends
received or receivable from associates reduce the carrying amount of the investment.
When the Consolidated Entity's share of losses in an associate equals or exceeds its interest in the associate, including
any unsecured long-term receivables, the Consolidated Entity does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.
The Consolidated Entity discontinues the use of the equity method upon the loss of significant influence over the associate
and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value
of the retained investment and proceeds from disposal is recognised in profit or loss.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the
initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured
at either amortised cost or fair value depending on their classification. Classification is determined based on both the
business model within which such assets are held and the contractual cash flow characteristics of the financial asset
unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
Consolidated Entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, it's carrying value is written off.
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.
Impairment of financial assets
The Consolidated Entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance
depends upon the Consolidated Entity's assessment at the end of each reporting period as to whether the financial
instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable
information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where
it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected
credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is
recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss
allowance reduces the asset's carrying value with a corresponding expense through profit or loss.
38 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 1. Significant accounting policies (continued)
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.
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 2020.
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.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and
early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new
guidance on measurement that affects several Accounting Standards. Where the Consolidated Entity has relied on the
existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt
with under the Australian Accounting Standards, the Consolidated Entity may need to review such policies under the
revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact on
the Consolidated Entity's financial statements.
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.
39 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 2. Critical accounting judgements, estimates and assumptions (continued)
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may
have, on the Consolidated Entity based on known information. This consideration extends to the nature of the products and
services offered, customers, supply chain, staffing and geographic regions in which the Consolidated Entity operates.
Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the
financial statements or any significant uncertainties with respect to events or conditions which may impact the
Consolidated Entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19)
pandemic.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected
credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact
of the Coronavirus (COVID-19) pandemic and forward-looking information that is available. The allowance for expected
credit losses, as disclosed in note 9, is calculated based on the information available at the time of preparation. The actual
credit losses in future years may be higher or lower.
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.
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 the prior
period following amendments to the terms and conditions that result in the instruments having the characteristics of equity.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement
is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the
underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods
to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical
incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease
commencement date. Factors considered may include the importance of the asset to the Consolidated Entity's operations;
comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant
leasehold improvements; and the costs and disruption to replace the asset. The Consolidated Entity reassesses whether it
is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or
significant change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to
discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such
a rate is based on what the Consolidated Entity estimates it would have to pay a third party to borrow the funds necessary
to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.
40 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 2. Critical accounting judgements, estimates and assumptions (continued)
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.
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.
Note 3. Operating segments
Identification of reportable operating segments
The Consolidated Entity has two operating segments: Podiatry and Physiotherapy.
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 2020 exclude the impact of non-recurring income and expenses such
as acquisition and integration costs.
41 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 3. Operating segments (continued)
Operating segment information
Consolidated - 2020
Revenue and other income
Sales to external customers
Other income
Total revenue and other income
EBITDA
Depreciation and amortisation expense
Finance costs
Acquisition and integration costs
Insurance write-off
Share based payments and associated costs
Profit/(loss) before income tax expense
Income tax expense
Profit after income tax expense
Podiatry
$'000
Physio-
therapy
$'000
Other*
$'000
Total
$'000
45,478
3,296
48,774
16,816
(5,765)
-
-
-
-
11,051
41,747
5,845
47,592
12,278
(3,997)
-
-
-
-
8,281
-
-
-
(6,347)
-
(2,725)
(2,665)
(88)
(254)
(12,079)
87,225
9,141
96,366
22,747
(9,762)
(2,725)
(2,665)
(88)
(254)
7,253
(2,105)
5,148
*
The ‘Other’ category comprises corporate functions and does not represent an operating segment.
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
Physio-
therapy
$'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)
*
The ‘Other’ category comprises corporate functions and does not represent an 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.
42 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
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
United States
Timing of revenue recognition
Goods and services transferred at a point in time
Accounting policy for revenue recognition
The Consolidated Entity recognises revenue as follows:
Consolidated
2020
$'000
2019
$'000
80,338
6,887
55,384
9,700
87,225
65,084
Consolidated
2020
$'000
2019
$'000
45,478
41,747
-
39,868
25,215
1
87,225
65,084
87,028
197
65,084
-
87,225
65,084
87,225
65,084
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.
43 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 4. Revenue from contracts with customers (continued)
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
Government grants (COVID-19)
Interest
Sub-tenant rent
Other income
Other income
Consolidated
2020
$'000
2019
$'000
7,920
-
923
298
9,141
-
1
844
-
845
Government grants (COVID-19)
During the Coronavirus (‘Covid-19’) pandemic, the Consolidated Entity has received JobKeeper support payments from the
Australian Government which are passed on to eligible employees. These are recognised as government grants in the
financial statements as other income when there is reasonable assurance that the grant will be received and all attached
conditions will be complied with. It is recognised as other income on a systematic basis over the periods that the related
employee benefits expense, for which it is intended to compensate, are expensed.
The JobKeeper payment scheme in its current form runs for the fortnights from 30 March until 27 September 2020. The
Consolidated Entity is eligible for JobKeeper support from the government on the condition that employee benefits continue
to be paid.
Accounting policy for interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Accounting policy for rent
Rent revenue is recognised on a straight-line basis over the lease term. Lease incentives granted are recognised as part of
the rental revenue. Contingent rentals are recognised as income in the period when earned.
44 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 6. Expenses
Profit before income tax includes the following specific expenses:
Cost of sales
Cost of sales
Depreciation
Leasehold improvements
Plant and equipment
Land and buildings - right-of-use assets
Plant and equipment - right-of-use assets
Total depreciation
Amortisation
Customer lists
Software
Total amortisation
Total depreciation and amortisation
Finance costs
Interest expense - bank
Interest expense - lease liabilities
Finance costs expensed
Net loss on disposal
Net loss on disposal of property, plant and equipment
Consolidated
2020
$'000
2019
$'000
6,848
5,297
794
1,397
6,650
260
539
1,010
-
-
9,101
1,549
571
90
661
395
-
395
9,762
1,944
1,378
1,347
1,331
-
2,725
1,331
-
85
45 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 7. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Increase in deferred tax assets
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Capital costs expensed
Sundry items
Adjustment recognised for prior periods
Income tax expense
Amounts credited directly to equity
Deferred tax assets
Consolidated
2020
$'000
2019
$'000
2,793
(245)
(443)
1,583
(397)
80
2,105
1,266
(245)
(397)
7,253
2,176
356
16
2,548
(443)
983
295
852
39
1,186
80
2,105
1,266
Consolidated
2020
$'000
2019
$'000
(748)
(527)
46 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 7. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Right-of-use asset
Customer lists
Employee benefits
Accrued income
Leases
Accrued expenses
Blackhole expenses
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 38)
Additions through business combinations (other)
Current year loss
Other
Closing balance
Provision for income tax
Provision for income tax
Consolidated
2020
$'000
2019
$'000
1,003
(7,265)
(551)
1,914
(1,121)
8,193
160
652
(111)
-
-
(524)
894
-
-
300
853
551
2,874
2,074
2,874
-
601
1,473
2,874
2,074
2,074
245
748
37
-
-
(230)
830
397
527
2
38
259
21
2,874
2,074
Consolidated
2020
$'000
2019
$'000
2,808
1,051
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.
●
47 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 7. Income tax (continued)
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
2020
$'000
2019
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
2,030
2,627
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
Note 8. Cash and cash equivalents
Current
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 17)
Balance as per statement of cash flows
Consolidated
2020
$'000
2019
$'000
78
4,081
64
2,546
4,159
2,610
4,159
-
2,610
(72)
4,159
2,538
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.
48 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 9. Trade and other receivables
Current
Trade and other receivables
Less: Allowance for expected credit losses
Other receivables
Government grant (COVID-19) receivable
Related party loan receivable
GST recoverable
Consolidated
2020
$'000
2019
$'000
2,258
(73)
2,185
553
3,183
200
277
2,027
-
2,027
629
-
200
540
6,398
3,396
Related party loan receivable relates to money owing by Christopher Banks following the vesting of the My FootDr (Aust)
Limited non-recourse employee loan shares.
Allowance for expected credit losses
The Consolidated Entity has recognised a loss of $73,000 for FY20 in profit or loss in respect of the expected credit losses
for the year ended 30 June 2020.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Not overdue
0 to 3 months overdue
Over 3 months overdue
Expected credit loss rate
2020
%
2019
%
Carrying amount
2019
$'000
2020
$'000
Allowance for expected
credit losses
2020
$'000
2019
$'000
-
-
15%
-
-
-
1,138
647
473
1,171
409
447
2,258
2,027
-
-
73
73
-
-
-
-
The Consolidated Entity has increased its monitoring of trade receivables recovery as there is an increased probability of
customers delaying payment or being unable to pay, due to the Coronavirus (COVID-19) pandemic. As a result, the
calculation of expected credit losses has been revised as at 30 June 2020 and rates have increased in the Over 3 months
overdue category to 15% (FY19: 0%).
Generally, trade receivables are written off when there is no reasonable expectation of recovery and $308,000 of trade
receivables were written off during the current period (FY19: $0).
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.
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.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
49 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 10. Inventories
Current
Consumables
Finished goods
Consolidated
2020
$'000
2019
$'000
1,389
2,347
1,026
2,452
3,736
3,478
Accounting policy for inventories
Consumables and finished goods are stated at the lower of cost and net realisable value on a 'first in first out' basis. Cost
comprises of direct materials and delivery costs, direct labour, import duties and other taxes, an appropriate proportion of
variable and fixed overhead expenditure based on normal operating capacity, and, where applicable, transfers from cash
flow hedging reserves in equity. Costs of purchased inventory are determined after deducting 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
Current
Prepayments
Other current assets
Note 12. Investments accounted for using the equity method
Non-current
Consolidated
2020
$'000
2019
$'000
620
312
932
796
422
1,218
Consolidated
2020
$'000
2019
$'000
Investment in associate - Fracture Holdco Pty Ltd
19
10
Reconciliation
Reconciliation of the carrying amounts at the beginning and end of the current and previous
financial year are set out below:
Opening carrying amount
Profit after income tax
Additions
Closing carrying amount
Refer to note 40 for further information on interests in associates.
10
9
-
19
-
-
10
10
50 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 13. Property, plant and equipment
Non-current
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Consolidated
2020
$'000
2019
$'000
4,517
(1,690)
2,827
9,806
(4,957)
4,849
4,417
(1,049)
3,368
7,727
(3,452)
4,275
7,676
7,643
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 2018
Additions
Additions through business combinations (note 38)
Depreciation expense
Balance at 30 June 2019
Additions
Additions through business combinations (note 38)
Disposals
Reclassified to intangible assets (note 15)
Depreciation expense
Leasehold
Plant and
improvements equipment
$'000
$'000
Total
$'000
1,659
1,311
937
(539)
3,368
98
155
-
-
(794)
3,097
1,430
758
(1,010)
4,275
1,291
1,035
(133)
(222)
(1,397)
4,756
2,741
1,695
(1,549)
7,643
1,389
1,190
(133)
(222)
(2,191)
Balance at 30 June 2020
2,827
4,849
7,676
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 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.
51 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 14. Right-of-use assets
Non-current
Land and buildings - right-of-use
Less: Accumulated depreciation
Plant and equipment - right-of-use
Less: Accumulated depreciation
Consolidated
2020
$'000
2019
$'000
30,519
(6,650)
23,869
607
(260)
347
24,216
-
-
-
-
-
-
-
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 2018
Balance at 30 June 2019
Recognised on transition to AASB 16
Additions through business combinations (note 38)
Additions
Transfers in/(out)
Depreciation expense
Land and
buildings -
right-
of-use
$'000
Plant and
equipment -
right-
of-use
$'000
-
-
21,153
6,831
2,535
-
(6,650)
-
-
607
-
-
-
(260)
Total
$'000
-
-
21,760
6,831
2,535
-
(6,910)
Balance at 30 June 2020
23,869
347
24,216
Accounting policy for right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred and except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is shorter. Where the Consolidated Entity expects to obtain ownership of the leased asset at the
end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The Consolidated Entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to
profit or loss as incurred.
52 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 15. Intangibles
Non-current
Goodwill - at cost
Trademarks
Customer lists
Less: Accumulated amortisation
Software - at cost
Less: Accumulated amortisation
Consolidated
2020
$'000
2019
$'000
77,173
60,485
20
19
3,108
(1,248)
1,860
337
(115)
222
2,394
(677)
1,717
-
-
-
79,275
62,221
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Goodwill
$'000
Trademarks
$'000
lists
$'000
Software
$'000
Total
$'000
Customer
Consolidated
Balance at 1 July 2018
Additions
Additions through business combinations (note
38)
Amortisation expense
Balance at 30 June 2019
Additions through business combinations (note
38)
Reclassified from property, plant and
equipment (note 13)
Amortisation expense
26,385
-
34,100
-
60,485
16,688
-
-
5
15
-
-
665
-
1,446
(395)
20
1,716
-
-
-
715
-
(571)
Balance at 30 June 2020
77,173
20
1,860
A CGU level summary of the goodwill allocation is presented below:
Podiatry
Physiotherapy
Total goodwill
53 (Annual Report - 30 June 2020)
-
-
-
-
-
-
222
-
222
27,055
15
35,546
(395)
62,221
17,403
222
(571)
79,275
Consolidated
2020
$'000
2019
$'000
39,208
37,965
31,398
29,087
77,173
60,485
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 15. Intangibles (continued)
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.
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.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 5 years.
Impairment of goodwill
At the end of each reporting period, or annually, 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 Board
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 the value-in-use calculations are those to which the recoverable amount of an asset or Cash-
Generating Units is most sensitive.
54 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 15. Intangibles (continued)
The following key assumptions were used in the discounted cash flow model for both the Podiatry and Physiotherapy
divisions:
●
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 2021, based on the financial budget
approved by the Board. Cash flow projections for periods beyond the 2021 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
3.0% (2019: 3.0%) per annum projected revenue growth
3.0% (2019: 3.0%) per annum increase in operating costs and overheads
Maintenance capital expenditures of 1.0% (2019: 1.0%) of revenue per annum
13.0% (2019: 13.0%) pre-tax discount rate
3.0% (2019: 3.0%) terminal value growth rate
The discount rate of 13.0% pre-tax reflects management’s estimate of the time value of money and the Consolidated
Entity’s weighted average cost of capital, the long-term risk-free rate and the volatility of the share price relative to market
movements.
The Board believes the projected 3.0% revenue growth rate is prudent and justified, based on the organic growth of 5.3%
achieved for the financial year (excluding trading from April and May 2020 due to the impacts of COVID-19) and long-term
industry growth rates for the Podiatry and Physiotherapy divisions.
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.
The sensitivities are as follows:
●
Revenue growth would need to decrease to less than 0.35% (than the base case or expected scenario) for the
podiatry division before goodwill would need to be impaired, with all other assumptions remaining constant including
3.0% per annum cost growth; and
Revenue growth would need to decrease to less than 1.25% (than the base case or expected scenario) for the
physiotherapy division before goodwill would need to be impaired, with all other assumptions remaining constant
including 3.0% per annum cost growth.
●
As a result of the value-in-use calculation, it was determined no impairment was identified.
Note 16. Trade and other payables
Current
Trade payables
Accruals
Income tax payable
GST collected
Superannuation payable
Other payables
Consolidated
2020
$'000
2019
$'000
1,447
2,013
1,090
88
1,044
46
886
979
417
199
916
-
5,728
3,397
55 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 16. Trade and other payables (continued)
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 17. Borrowings
Current
Bank overdraft
Refer to note 30 for further information on financial instruments.
Note 18. Lease liabilities
Current
Lease liability
Refer to note 30 for further information on financial instruments.
Note 19. Employee benefits
Current
Annual leave
Long service leave
Consolidated
2020
$'000
2019
$'000
-
72
Consolidated
2020
$'000
2019
$'000
7,203
412
Consolidated
2020
$'000
2019
$'000
3,037
933
2,144
574
3,970
2,718
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 20. Other current liabilities
Current
Deferred lease incentives
Contingent consideration
Consolidated
2020
$'000
2019
$'000
-
1,845
220
1,495
1,845
1,715
56 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 20. Other current liabilities (continued)
Accounting policy for deferred lease incentives - pre 1 July 2019
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 21. Borrowings
Non-current
Bank loans
Refer to note 30 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank overdraft
Bank loans
Consolidated
2020
$'000
2019
$'000
26,735
19,606
Consolidated
2020
$'000
2019
$'000
-
26,735
72
19,606
26,735
19,678
Key Terms of the Bank Loan
On 13 February 2020, the Consolidated Entity signed formal documentation to increase its total syndicated finance facility
from $37.0 million to $50.0 million with Australian and New Zealand Bank and the Bank of Queensland Limited. In addition,
the facility term was extended to 30 September 2022.
The key financial covenants of the finance facility remain unchanged. They are as follows:
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%.
●
Note that for the purposes of covenant testing, AASB 16 'Leases' does not apply and covenants are calculated as they
were prior to the adoption of this standard by the Consolidated Entity.
At the reporting date, the Consolidated Entity had met all its obligations under the finance facility.
As at 30 June 2020, the Consolidated Entity has drawn down $26.7 million out of the finance facility. An amount of $23.3
million remains undrawn 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.
57 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 21. Borrowings (continued)
On 5 February 2020, the Consolidated Entity restructured its interest rate swap to take advantage of favourable market
conditions. The previous $11.0 million interest rate swap with a fixed rate of 2.15% expiring on 12 December 2020, was
restructured via a 'blend and extend' transaction into a $20.0 million interest rate swap with a fixed rate of 1.21% expiring
on 30 September 2022 (representing a saving of 0.94%).
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
2020
$'000
2019
$'000
1,000
50,000
51,000
-
26,735
26,735
1,000
23,265
24,265
1,000
37,000
38,000
72
19,606
19,678
928
17,394
18,322
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.
Note 22. Lease liabilities
Non-current
Lease liability
Consolidated
2020
$'000
2019
$'000
20,549
433
Refer to note 30 for further information on financial instruments.
Accounting policy for lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or if that rate cannot be readily determined, the Consolidated Entity's incremental borrowing rate. Lease payments
comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a
rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise
of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do
not depend on an index or a rate are expensed in the period in which they are incurred.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are
incurred. Variable lease payments include rent concessions in the form of rent forgiveness or a waiver as a direct
consequence of the Coronavirus (COVID-19) pandemic and which relate to payments originally due on or before 30 June
2021.
58 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 22. Lease liabilities (continued)
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
Note 23. Derivative financial instruments
Non-current
Interest rate swap contracts liabilities
Refer to note 30 for further information on financial instruments.
Refer to note 31 for further information on fair value measurement.
Accounting policy for derivative financial instruments
Consolidated
2020
$'000
2019
$'000
224
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.
The Consolidated Entity entered into interest rate swap contracts totalling $20.0 million under which it is obliged to receive
interest at variable rates and pay interest at fixed rates. These hedges expire in September 2022.
Note 24. Employee benefits
Non-current
Long service leave
Consolidated
2020
$'000
2019
$'000
332
260
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 high quality corporate bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
59 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 25. Provisions
Non-current
Lease make good provision
Consolidated
2020
$'000
2019
$'000
754
728
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 26. Other non-current liabilities
Non-current
Deferred lease incentives
Contingent consideration
Consolidated
2020
$'000
2019
$'000
-
1,000
1,000
878
-
878
Accounting policy for deferred lease incentives - pre 1 July 2019
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.
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 27. Issued capital
Consolidated
2020
Shares
2019
Shares
2020
$'000
2019
$'000
Ordinary shares - fully paid
63,034,653 63,034,653
49,884
49,884
60 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 27. Issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares '000 Issue price
$'000
1 July 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
30-Jul-18
29-Aug-18
30-Aug-18
31-Aug-18
31-Aug-18
3-Sep-18
4-Sep-18
11-Sep-18
Balance
Balance
30 June 2019
30 June 2020
11,229
919
200
14,079
2,225
1,585
2,720
1,017
294
360
480
27,927
-
-
63,035
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
49,884
*
Healthia Limited acquired all of the ordinary shares in My FootDr (Aust) Ltd (the MFDA Group) on 30 July 2018.
My FootDr (Aust) Ltd (the MFDA Group)
In accordance with Australian Accounting Standards the acquisition of MFDA Group by the Consolidated Entity 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.
Movements in non-recourse employee shares (NRE)
Details
Date
Shares
Issue price
$'000
Balance
Vesting of non-recourse employee share loans
1 July 2018
5 July 2018
919,166
(919,166)
$0.00
Balance
Balance
30 June 2019
30 June 2020
-
-
-
-
-
-
61 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 27. Issued capital (continued)
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 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.
The capital risk management policy remains unchanged from the 2019 Annual Report.
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.
Note 28. Reserves
Share-based payments reserve
Transactions with non-controlling interest reserve
Pre-IPO distributions reserve
Consolidated
2020
$'000
2019
$'000
655
(2,351)
(2,494)
450
(2,351)
(2,494)
(4,190)
(4,395)
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 $254,000 (2019: $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:
62 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 28. Reserves (continued)
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 was $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.
Note 29. Non-controlling interest
Issued equity - Clinic Class shares and minority interests
Retained profits
Consolidated
2020
$'000
2019
$'000
12,685
1,270
8,440
437
13,955
8,877
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 prior financial year following amendments to the terms and
conditions that result in the instruments having the characteristics of equity.
63 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 30. 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.
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.
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
2020
$'000
2019
$'000
26,735
(20,000)
19,606
(11,000)
6,735
8,606
An analysis by remaining contractual maturities is shown in 'liquidity and interest rate risk management' below.
For the Consolidated Entity the bank loans outstanding, totalling $26.74 million (2019: $19.6 million), are interest only
loans. At reporting date, $20.0 million (2019: $11.0 million) of debt was hedged by floating to fixed interest rate swaps.
An official increase in interest rates of 100 (2019: 100) basis points would have an adverse effect on profit before tax of
$67,350 (2019: $86,055) 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.
64 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 30. Financial instruments (continued)
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank overdraft
Bank loans
Consolidated
2020
$'000
2019
$'000
1,000
23,265
24,265
928
17,394
18,322
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 2.25 years (2019: 2 years).
Remaining contractual maturities
The following tables detail the Consolidated Entity's remaining contractual maturity for its financial 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 - 2020
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - variable
Bank loans
Interest-bearing - fixed rate
Lease liability
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
-
4.90%
5.00%
0.14%
1.26%
-
-
-
-
-
26,735
7,203
7,203
20,549
20,549
-
26,735
(28)
252
224
(35)
315
280
-
-
-
-
-
-
-
-
-
-
5,731
5,731
-
26,735
-
5,731
27,752
60,218
-
-
-
(63)
567
504
65 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 30. Financial instruments (continued)
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.
Note 31. 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
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
92
-
92
-
1,495
1,495
92
1,495
1,587
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within level 2 and level 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.
66 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 31. Fair value measurement (continued)
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 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2018
Additions
Disposals
Balance at 30 June 2019
Additions
Disposals
Balance at 30 June 2020
Clinic class
shares
debt
$'000
Contingent
consideration
$'000
Total
$'000
3,966
-
(3,966)
-
-
-
-
220
1,600
(325)
1,495
1,850
(500)
4,186
1,600
(4,291)
1,495
1,850
(500)
2,845
2,845
The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:
Description
Unobservable inputs
Range
(weighted average)
Sensitivity
Contingent
consideration
Expected EBITDA of
acquired clinics
$127,000 - $1,000,000 If expected EBITDA were 10% higher, there
would be no increase in fair value.
If expected EBITDA was 10% lower, there would
a decrease in fair value of $550,000.
Accounting policy for 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.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
67 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 32. 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 33. Remuneration of auditors
Consolidated
2020
$
2019
$
1,440,426
121,730
19,436
5,192
1,276,731
122,445
21,251
235,013
1,586,784
1,655,440
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 and review of the Group financial statements
Other assurance services - investigating accountant advisory fees
Total remuneration for audit and other assurance services
Non-audit services - BDO
Taxation and business advisory services
Indirect tax advisory services
R&D advisory services
Total remuneration for non-audit services
Total remuneration of BDO
Note 34. Contingent liabilities
Consolidated
2020
$
2019
$
218,723
-
165,000
151,961
218,723
316,961
205,485
-
7,500
116,640
72,852
25,920
212,985
215,412
431,708
532,373
The Consolidated Entity has given bank guarantees as at 30 June 2020 of $1,992,498 (30 June 2019: $1,794,086) to
various landlords.
68 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 35. 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
Consolidated
2020
$'000
2019
$'000
-
-
-
-
-
-
-
-
-
6,279
11,133
1,546
18,958
442
456
898
(53)
845
AASB 16 was adopted from 1 July 2019 using the modified retrospective approach. Accordingly, current year leases are
accounted for on the face of the Statement of Financial Position in accordance with AASB 16. Comparative years leases
are not disclosed on the face of the Statement of Financial Position but detailed above in accordance with AASB 117.
Note 36. Related party transactions
Subsidiaries
Interests in subsidiaries are set out in note 39.
Associates
Interest in associates are set out in note 38.
Key management personnel
Disclosures relating to key management personnel are set out in note 32 and the remuneration report included in the
Directors' report.
69 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 36. Related party transactions (continued)
Transactions with related parties
The following transactions occurred with related parties:
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
Consolidated
2020
$
2019
$
-
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 (outsourced accounts payable processing) to an entity associated with
Director and key management personnel Wesley Coote
333,683
174,213
381,769
162,664
160,771
170,461
131,643
144,803
232,821
80,350
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 2020 and
previous reporting date 30 June 2019.
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Current receivables:
Loan to Chris Banks
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 37. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
70 (Annual Report - 30 June 2020)
Consolidated
2020
$
2019
$
200,000
200,000
Parent
2020
$'000
2019
$'000
(338)
(338)
(218)
(218)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 37. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Parent
2020
$'000
2019
$'000
76
14
59,845
51,604
2
-
26,961
19,082
33,604
205
(925)
32,740
-
(218)
32,884
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 2020 and 30 June 2019.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019.
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 38. Business combinations
2020
Acquisition of The Foot & Ankle Clinic
The Foot and Ankle Clinic comprising of 12 podiatry clinics in Victoria, was acquired on 8 May 2020. Initial consideration
paid for the acquisition was $4.86M in cash consideration, with up to an additional $0.50M payable in contingent
consideration.
The acquired businesses contributed revenues of $0.54M and EBITDA (pre-AASB16) of $0.23M to the Consolidated Entity
for the period from the date of the acquisition to 30 June 2020.
Acquisition of other podiatry acquisitions
The Consolidated Entity acquired an additional 6 podiatry clinics since 30 June 2019. Initial consideration paid for the
acquisitions was $3.73M including $3.13M in cash consideration, $0.40M in Clinic Class Share consideration, with up to an
additional $0.20M payable in contingent consideration.
The acquired businesses contributed revenues of $3.44M and EBITDA (pre-AASB16) of $0.95M to the Consolidated Entity
for the period from the dates of the acquisition to 30 June 2020.
71 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 38. Business combinations (continued)
Acquisition of Momentum Health
Momentum Health comprising of 3 physiotherapy clinics in Toowoomba, was acquired on 23 August 2019. Initial
consideration paid for the acquisition was $2.16M including $1.01M in cash consideration, $1.15M in Clinic Class Share
consideration, with up to an additional $0.40M payable in contingent consideration.
The acquired businesses contributed revenues of $2.51M and EBITDA (pre-AASB16) of $0.67M to the Consolidated Entity
for the period from the date of the acquisition to 30 June 2020.
Acquisition of Hand Therapy NSW
Hand Therapy Group comprising of 4 hand therapy clinics in Sydney, was acquired on 13 August 2019. Initial
consideration paid for the acquisition was $3.09M including $2.16M in cash consideration, $0.93M in Clinic Class Share
consideration, with up to an additional $0.50M payable in contingent consideration.
The acquired businesses contributed revenues of $2.23M and EBITDA (pre-AASB16) of $0.63M to the Consolidated Entity
for the period from the date of the acquisition to 30 June 2020.
Acquisition of other physiotherapy acquisitions
The Consolidated Entity acquired an additional 6 physiotherapy clinics since 30 June 2019. Initial consideration paid for the
acquisitions was $2.74M including $1.82M in cash consideration and $0.92M in clinic class share consideration, with up to
an additional $0.25M payable in contingent consideration.
The acquired businesses contributed revenues of $2.21M and EBITDA (pre-AASB16) of $0.73M to the Consolidated Entity
for the period from the dates of the acquisition to 30 June 2020.
Acquisition rationale
All podiatry and physiotherapy acquisitions made during the period were consistent with the Consolidated Entity's stated
strategic objective of acquiring and integrating allied health clinics. Given the fragmented nature of the targeted allied
health industries, acquisitions will continue to be a central pillar of the Consolidated Entity’s growth strategy.
Financial Contribution
The acquired businesses contributed revenues of $10.94M and EBITDA (pre-AASB16) of $3.21M to the Consolidated
Entity for the period from the dates of the acquisition to 30 June 2020. If the above acquisitions had occurred on 1 July
2019 (the beginning of the financial year), the full year (or annualised) contributions of revenue would have been $16.94M
and EBITDA (pre-AASB16) would have been $5.34M.
72 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 38. Business combinations (continued)
Details of the acquisitions are as follows:
Physiotherapy
Podiatry
Momentum
Health
Hand Therapy
NSW
Fair value
Fair value
Other
physiotherapy
acquisitions
Fair value
The Foot &
Ankle Clinic
Fair value
Other podiatry
acquisitions
Fair value
$'000
$'000
$'000
$'000
$'000
Trade receivables
Inventories
Plant and equipment
Right-of-use assets
Customer lists
Deferred tax asset
Other assets
Deferred tax liability
Employee benefits
Lease liability - current
Lease liability - non-current
Other liabilities
-
30
40
512
113
74
1
(34)
(247)
(140)
(372)
(17)
-
102
69
242
141
57
23
(42)
(191)
(73)
(169)
(34)
Net assets/(liabilities) acquired
Goodwill
(40)
2,602
125
3,461
-
46
160
1,898
134
38
(2)
(40)
(99)
(299)
(1,599)
(65)
172
2,815
69
345
619
2,607
168
45
6
(50)
(150)
(334)
(2,279)
(109)
937
4,422
-
89
302
1,572
159
37
6
(48)
(124)
(201)
(1,370)
(82)
340
3,388
Total
$'000
69
612
1,190
6,831
715
251
34
(214)
(811)
(1,047)
(5,789)
(307)
1,534
16,688
Acquisition-date fair value of the
total consideration transferred
2,562
3,586
2,987
5,359
3,728
18,222
Representing:
Cash paid or payable to vendor
Contingent consideration *
Clinic Class Shares issued to
vendor
1,010
400
1,152
2,156
500
1,822
250
4,859
500
3,127
200
12,974
1,850
930
915
-
401
3,398
2,562
3,586
2,987
5,359
3,728
18,222
Cash used to acquire business,
net of cash acquired:
Acquisition-date fair value of the
total consideration transferred
Less: contingent consideration
Less: Clinic Class Shares
issued to vendor
2,562
(400)
3,586
(500)
2,987
(250)
5,359
(500)
3,728
(200)
18,222
(1,850)
(1,152)
(930)
(915)
-
(401)
(3,398)
Net cash used
1,010
2,156
1,822
4,859
3,127
12,974
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.
2019
73 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 38. Business combinations (continued)
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 $15.732M including $8.953M in cash
consideration, $0.450M in contingent consideration, $1.717M in Clinic Class Share consideration and $4.611M in Healthia
Limited ordinary share consideration.
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 $2.257M including $1.087M in cash consideration, $0.450M in contingent consideration,
$0.360M in Clinic Class Share consideration and $0.360M 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 $12.682M including $8.191M in cash consideration, $0.900M in contingent
consideration, $2.407M in Clinic Class Share consideration and $1.183M 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 $5.275M in cash consideration, $0.302M in Clinic Class
Share consideration and $0.008M in Healthia Limited ordinary share consideration.
Financial Contribution
The acquired businesses contributed revenues of $29.381M and NPAT of $2.596M 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 $40.852M and
NPAT would have been $4.097M.
74 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 38. Business combinations (continued)
Details of the acquisitions are as follows:
Physiotherapy
Podiatry
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
Fair value
Extend
Rehabilitation
Fair value
Other
Physiotherapy
Acquisitions
Fair value
Other
Podiatry
Acquisitions
Fair value
$'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)
-
Total
$'000
176
9
687
1,695
1,447
436
69
(223)
(434)
(1,462)
(443)
538
15,192
132
2,125
752
11,731
535
5,051
1,957
34,099
15,730
2,257
12,483
5,586
36,056
8,952
4,611
450
1,717
1,087
360
450
360
8,193
1,183
700
2,407
5,276
8
-
302
23,508
6,162
1,600
4,786
15,730
2,257
12,483
5,586
36,056
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.
75 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 38. Business combinations (continued)
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 integration costs of $2.67M are included as acquisition costs in the statement of profit and loss and other
comprehensive income.
Note 39. 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
2019
2020
%
%
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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
76 (Annual Report - 30 June 2020)
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%
75.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 39. Interests in subsidiaries (continued)
Name
Principal place of business /
Country of incorporation
Ownership interest
2019
2020
%
%
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
Healthia USA INC
iOrthotics USA LLC
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
United States
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%
58.00%
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%
-
-
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
2020
%
Ownership
interest
2019
%
Parent
Non-controlling interest
Ownership
interest
2019
%
Ownership
interest
2020
%
Name
D.B.S, Australia Pty Ltd
Foot Care Solutions Australia
Pty Ltd
iOrthotics USA LLC
Australia
Australia
United States
Note 40. Interests in associates
75.00%
75.00%
25.00%
25.00%
75.00%
58.00%
75.00%
-
25.00%
42.00%
25.00%
-
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
2019
2020
%
%
Fracture Holdco Pty Ltd
Australia
45.00%
45.00%
77 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 41. Reconciliation of profit/(loss) after income tax to net cash from/(used in) operating activities
Profit/(loss) after income tax expense for the year
5,148
(283)
Consolidated
2020
$'000
2019
$'000
Adjustments for:
Depreciation and amortisation
Net loss on disposal of property, plant and equipment
Share of profit - associates
Share-based payments
Fair value movements in interest rate swap instrument
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease/(increase) in inventories
Increase in deferred tax assets
Decrease in prepayments
Increase in other operating assets
Increase/(decrease) in trade and other payables
Increase in provision for income tax
Increase in employee benefits
(Decrease)/Increase in other liabilities and provisions
9,762
42
(9)
205
132
(3,195)
353
(764)
530
-
2,179
1,757
514
679
1,944
-
-
275
92
(2,149)
(424)
(1,242)
-
(726)
(1,090)
1,072
180
675
Net cash from/(used in) operating activities
17,333
(1,676)
Note 42. Changes in liabilities arising from financing activities
Bank
loans
$'000
Lease
liabilities
$'000
Clinic class
share debt
$'000
Total
$'000
Consolidated
Balance at 1 July 2018
Net cash from financing activities
Reclassification of Clinic Class Shares from debt to equity
Balance at 30 June 2019
Net cash from/(used in) financing activities
Leases recognised on adoption of AASB 16
Acquisition of leases
Changes through business combinations (note 38)
Other changes
14,495
5,111
-
19,606
7,130
-
-
-
(1)
503
342
-
845
(7,152)
24,688
2,535
6,836
-
Balance at 30 June 2020
26,735
27,752
Note 43. Earnings per share
Profit/(loss) after income tax
Non-controlling interest
3,965
-
(3,965)
-
-
-
-
-
-
-
18,963
5,453
(3,965)
20,451
(22)
24,688
2,535
6,836
(1)
54,487
Consolidated
2020
$'000
2019
$'000
5,148
(2,457)
(283)
(955)
Profit/(loss) after income tax attributable to the owners of Healthia Limited
2,691
(1,238)
78 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 43. Earnings per share (continued)
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
63,034,653 54,991,800
Performance rights
2,678,358
-
Weighted average number of ordinary shares used in calculating diluted earnings per share 65,713,011 54,991,800
Number
Number
Basic earnings per share
Diluted earnings per share
Accounting policy for earnings per share
Cents
Cents
4.27
4.10
(2.25)
(2.25)
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 44. Share-based payments
Performance rights
On 27 November 2019, the Consolidated Entity issued 2,678,358 performance rights to employees and key management
personnel. Details of the performance rights are as follows:
Grant date:
Grant price:
Exercise price:
Vesting date:
Expiry date:
Restriction on shares issued on
exercise:
27 November 2019
$nil
$nil
31 August 2022
31 October 2022
Can only be traded in accordance with Securities Trading Policy and insider trading
laws
The fair value of performance rights (equity settled) with the relative TSR condition is calculated at the date of grant using
the Monte-Carlo simulation model, taking into account the impact of the TSR condition and dividends during the vesting
period. The value disclosed is the portion of fair value of the rights recognised in each reporting period.
The total fair value of performance rights issued is $896,576, comprising of performance rights issued to Key Management
Personnel (fair value of $22,690) and Support Staff & Key Clinicians (fair value of $873,886).
79 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 44. Share-based payments (continued)
Vesting conditions for key management personnel:
Service condition
EPS Growth condition
The performance rights will be exercisable upon satisfaction of the Service condition,
being continuous employment with the Company from Grant Date until the Vesting
Date.
The Consolidated Entity's compounding annual growth in underlying earnings per
share (underlying EPS) for the period from quotation of the Consolidated Entity's
shares on ASX to 30 June 2022 is greater than 10% per annum. The underlying EPS
results to be used will be Basic EPS recorded in the Consolidated Entity's audited
financial statements in the relevant years, adjusted for one-off and non-recurring
items and the amortisation of customer lists, as determined by the Board at its
discretion. 50% of the performance rights will be exercisable if this condition is met.
Total Shareholder Return condition Total Shareholder Return ('TSR') to exceed 150% for the period from quotation of the
Consolidated Entity's shares on the ASX to 30 June 2022, with TSR calculated as
follows:
TSR = (Price End - Price Begin + Dividends)/Price Begin
Where:
Price Begin = share price at quotation of the Consolidated Entity's shares on ASX;
Price End = share price at 30 June 2022; and
Dividends = total dividends paid per share during the period from listing to 30 June
2022.
50% of the performance rights will be exercisable if this condition is achieved.
Vesting conditions for support staff and key clinicians
Service condition
Performance conditions
50% of the performance rights will be exercisable upon satisfaction of the service
condition, being continuous employment from grant date until the vesting date.
50% of the performance rights will be exercisable if the performance condition is
achieved, with the relevant performance condition to be tailored to the participant, as
follows:
Support staff:
The Healthia Limited Consolidated Entity delivering positive (greater than zero)
compounding annual growth in underlying earnings per share (underlying EPS), as
determined by the Board in its discretion, for the period from quotation of the
Consolidated Entity's shares on the ASX to 30 June 2022.
Key clinicians:
The respective clinic delivering a positive EBITDA growth over the next 3 years,
whereby EBITDA growth is calculated as (FY22 EBITDA - FY20 EBITDA) / FY20
EBITDA.
Set out below are summaries of performance rights granted under the plan:
2020
Grant date
Expiry date
27/11/2019
31/10/2022
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
2,678,358
2,678,358
-
-
-
-
2,678,358
2,678,358
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 2.33
years.
No equity settled payments were made during the financial year.
80 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 44. Share-based payments (continued)
Set out below are equity settled payments made during the year:
Equity settled payments
Equity settled payments to associates of Paul Wilson *
Equity settled payments to Chris Banks *
Equity settled payments other *
Equity settled payments other
Total share-based payments expense for the year
Consolidated
2020
$
2019
$
-
-
-
254,000
75,000
100,000
100,000
-
254,000
275,000
*
Equity settled payments in the prior period were 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.
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.
81 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2020
Note 44. Share-based payments (continued)
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.
Note 45. Events after the reporting period
The Consolidated Entity has entered into agreements to acquire 3 additional physiotherapy clinics in Queensland and 1
additional podiatry clinic in South Australia, with customary conditions precedent including due diligence and assignment of
property leases. Consideration for the acquisitions is $5.05M including $4.01M in cash consideration and $1.04M in clinic
class share consideration.
These clinics are expected to contribute Revenue and EBITDA (less lease payments or pre-AASB 16 change) of $5.58M
and $1.16M respectively on a pro-forma basis.
As at the date of signing the financial report, the Directors of Healthia Limited have recommended the payment of a
final fully franked dividend of 2.00 cent per share to the ordinary shareholders of Healthia Limited. A fully underwritten
Dividend Reinvestment Plan (DRP) has been put in place for the final dividend to preserve cash reserves.
Dates for the 2020 final dividend are as follows:
Ex-dividend date of 8 September 2020;
●
Record date of 9 September 2020; and
●
Payment date of 28 September 2020.
●
The Consolidated Entity owns and operates 23 podiatry clinics and 1 physiotherapy clinic in Victoria. At the date of
reporting, these clinics remain operational as an essential health care service. These clinics are experiencing some impact
on their trading due to the Stage 4 lockdown restrictions imposed in Victoria. However, with JobKeeper payments being
received until the end of September 2020 and the geographical diversification of Healthia’s portfolio (84% of Healthia’s
clinics are outside of Victoria), the Consolidated Entity is confident of continued robust trading conditions for the business
in aggregate.
No other matter or circumstance has arisen since 30 June 2020 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.
82 (Annual Report - 30 June 2020)
Healthia Limited and its Controlled Entities
Directors' declaration
30 June 2020
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 2020 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
26 August 2020
83 (Annual Report - 30 June 2020)
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 2020, 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 2020 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 (including Independence Standards) (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.
84 (Annual Report – 30 June 2020
Impairment assessment of Goodwill and Other Intangible Assets and determination of Cash
Generating Units (“CGU’s”)
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 15.
The carrying value of intangible assets represent
a significant asset of the Group.
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
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,
including the determination of CGU’s, is complex,
highly judgmental and includes estimates and
assumptions relating to expected future market
or economic conditions.
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 FY20 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.
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.
85 (Annual Report – 30 June 2020
Business combination accounting including determination 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 38, as part of these business
combination transactions, the Group recognised
the following additional intangible assets:
Our procedures included, amongst others:
Reviewing purchase documentation including
contracts and business sale agreements
Obtaining a detailed understanding of the
acquired businesses
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.
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 1,2,15 and 38
Accounting for AASB16 Leases
Key audit matter
How the matter was addressed in our audit
The audit of the accounting for leases under
AASB16 is a key audit matter due to the
significant amount of data required to be input
into management’s model, and the judgements
necessary in establishing the underlying key
assumptions.
Our procedures included, amongst others:
Verifying the accuracy of the underlying lease
data by agreeing to lease contracts.
Assessing the appropriateness of the discount
rates applied in determining lease liabilities
and other assumptions in respect of lease
terms and future lease payments.
Performing tests over the mathematical
accuracy of the model and underlying
calculations.
Assessing the adequacy of the Group’s
disclosures included in Notes 1,2,14,18 and 22
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.
86 (Annual Report – 30 June 2020
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 2020, 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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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.
87 (Annual Report – 30 June 2020
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 19 to 26 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Healthia Limited, for the year ended 30 June 2020,
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, 26 August 2020
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.
88 (Annual Report – 30 June 2020
Healthia Limited and its Controlled Entities
Shareholder information
30 June 2020
The shareholder information set out below are current as at 18 August 2020
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
166
383
144
303
28
103,996
1,112,031
1,224,962
9,691,046
16,761,870
1,024
28,893,905
59
19,609
MY FOOTDR HOLDINGS PTY LTD
MAXIMUM (NQ) PTY LTD
DLH TRADING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
VIBURNUM FUNDS PTY LTD
ROM GROUP PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
SANDHURST TRUSTEES LTD
LEGGS PTY LTD
DPC INVESTMENTS PTY LTD
GF & LH RICHARDS SUPER PTY LTD
VASSALLO CORPORATE HOLDINGS
ABC INVESTING PTY LTD
MAXIMUM (NQ) PTY LTD
LISA SILVER
SPIRO VITHOULKAS & ANASTASIA VITHOULKAS
DEMSUPER PTY LTD
WESLEY COOTE
Unquoted equity securities
Performance rights
89 (Annual Report - 30 June 2020)
Ordinary shares
Number held
% of total
shares
issued
6,990,694
4,053,083
3,787,676
3,405,789
3,314,559
3,173,254
3,037,674
1,982,717
1,782,199
1,245,119
962,317
962,317
942,246
763,654
749,731
665,670
501,384
460,775
460,775
458,033
39,699,666
11.09
6.43
6.01
5.40
5.26
5.03
4.82
3.15
2.83
1.98
1.53
1.53
1.49
1.21
1.19
1.06
0.80
0.73
0.73
0.73
63.00
Number
on issue
Number
of holders
2,678,358
111
Healthia Limited and its Controlled Entities
Shareholder information
30 June 2020
Substantial holders
Substantial holders in the Company are set out below:
MY FOOTDR HOLDINGS PTY LTD
MAXIMUM (NQ) PTY LTD & GF & LH RICHARDS SUPER PTY LTD
DLH TRADING PTY LTD
VIBURNUM FUNDS PTY LTD
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number held
% of total
shares
issued
6,990,961
4,995,329
3,787,676
3,173,254
11.09
7.92
6.01
5.03
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.
Performance rights
The performance rights do not rank equally with existing ordinary shares quoted. Prior to vesting, the performance rights
do not carry a right to vote or receive dividends.
There are no other classes of equity securities.
Securities subject to voluntary escrow
Class
Performance rights
Share Registry
Expiry date
30 October 2022
Number
of shares
2,678,358
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
90 (Annual Report - 30 June 2020)