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 2021
For the year ended 30 June 2020
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
57.0% to
136,946
91.6%
to
91.6% to
5,157
5,157
2021
Cents
2020
Cents
6.48
6.23
4.27
4.10
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 2.50 cents per share to the ordinary shareholders of Healthia Limited.
Dates for the 2021 final dividend declared are as follows:
●
●
●
●
Ex-date: 7 September 2021;
Record date: 8 September 2021;
DRP election date: 8 September 2021; and
Payment date: 27 October 2021.
A Dividend Reinvestment Plan will operate for the 2021 Final Dividend. A 2.5% discount will apply to the Dividend
Reinvestment Plan for the final dividend. A copy of the Dividend Reinvestment Plan rules can be found on Healthia’s website
at the following address: https://healthia.com.au/s/Dividend-Reinvestment-Plan-Rules.pdf.
Dividends (distributions)
Amount per security
Franked amount per security
Current period
Interim dividend
Final dividend
Previous corresponding period
Interim dividend
Final dividend
2 cents per share
2.50 cents per share
N/A
2 cents per share
100%
100%
N/A
100%
Record date for determining entitlements to the final dividends
8 September 2021
Comments
The profit for the Consolidated Entity after providing for income tax and non-controlling interest amounted to $5,157,000 (30
June 2020: $2,691,000).
During the 2021 Financial Year, the Consolidated Entity acquired 61 allied health businesses (43 Eyes and Ears clinics, 11
Bodies and Minds clinics, and 7 Feet and Ankles clinics). This should be considered when interpreting the statutory financial
results.
Healthia Limited and its Controlled Entities
Appendix 4E
Preliminary final report
An explanation of the statutory and pro-forma underlying figures is contained in 'Review of operations' included within the
Directors’ report in the attached Financial Report of Healthia Limited.
Reporting
Previous
period
Cents
period
Cents
(54.91)
(38.54)
Consolidated
2021
$'000
2020
$'000
92,527
(137,534)
(4,525)
(49,532)
57,856
(79,275)
(2,874)
(24,293)
90,205,433 63,034,653
3. Net tangible assets
Net tangible assets per ordinary security
Calculated as follows:
Net assets
Less: Intangibles
Less: Deferred tax asset
Net tangible assets
Total shares issued
4. Control gained over entities
Refer to note 34 for details of business combinations in the year.
5. Loss of control over entities
Not applicable.
6. Dividends
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 2.50 cents per share to the ordinary shareholders of Healthia Limited.
Dates for the 2021 final dividend declared are as follows:
●
●
●
●
Ex-date: 7 September 2021;
Record date: 8 September 2021;
DRP election date: 8 September 2021; and
Payment date: 27 October 2021.
A Dividend Reinvestment Plan will operate for the 2021 Final Dividend. A 2.5% discount will apply to the Dividend
Reinvestment Plan for the final dividend. A copy of the Dividend Reinvestment Plan rules can be found on Healthia’s
website at the following address: https://healthia.com.au/s/Dividend-Reinvestment-Plan-Rules.pdf.
Previous period
A Final Dividend for the year ended 30 June 2020 of 2.00 cents per share was paid on 28 September 2020.
Healthia Limited and its Controlled Entities
Appendix 4E
Preliminary final report
7. 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
-
-
-
-
8. Foreign entities
Details of origin of accounting standards used in compiling the report:
Not applicable.
9. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unmodified opinion has been issued.
10. Attachments
Details of attachments (if any):
The Annual Report of Healthia Limited for the year ended 30 June 2021 is attached.
11. Signed
Signed ___________________________
Date: 30 August 2021
Dr Glen Frank Richards
Director
Healthia Limited and its Controlled Entities
ACN 626 087 223
Annual Report - 30 June 2021
Healthia Limited and its Controlled Entities
Corporate directory
30 June 2021
Directors
Dr Glen Richards
Paul Wilson
Lisa Dalton
Wesley Coote
Darren Stewart
Anthony Ganter
Colin Kangisser (appointed 30 November 2020)
Company Secretary
Christopher Banks
Notice of annual general meeting
The Annual General Meeting of Healthia Limited is expected to be held on 17
November 2021.
Registered office
Share register
Auditor
Solicitors
Level 4, East Tower
25 Montpelier Road
Bowen Hills QLD 4006
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
www.linkmarketservices.com.au
BDO Audit Pty Ltd
Level 10, 12 Creek Street
Brisbane QLD 4000
www.bdo.com.au
Clayton Utz
Level 28, Riparian Plaza
71 Eagle Street
Brisbane QLD 4000
www.claytonutz.com.au
Colin Biggers & Paisley
Level 35, 1 Eagle Street
Brisbane QLD 4000
www.cbp.com.au
Website
www.healthia.com.au
Corporate Governance Statement
The Consolidated Entity's directors and management are committed to conducting
the company's business in an ethical manner and in accordance with the highest
standards of corporate governance. The Consolidated Entity has adopted and
substantially complies with the ASX Corporate Governance Principles and
Recommendations (4th 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/
1
Healthia Limited and its Controlled Entities
Chairperson's letter
30 June 2021
Dear Fellow Shareholders,
On behalf of the Board of Healthia Limited ('Healthia' or the 'Consolidated Entity'), it is my pleasure to present the Annual
Report for the year ended 30 June 2021.
Impact of COVID-19 and associated lockdowns
During the second half of financial year 2021, we have seen an increasing number of lockdown restrictions imposed in key
areas of Australia, including Sydney, Melbourne, Brisbane, Perth and Darwin and it is estimated that lockdowns impacted
over 1,533 clinic trading days1 during this period, representing approximately 5.0% of total clinic trading days. 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 its allied health clinics through the various lockdowns encountered.
With this context, the strong financial and operational performance delivered during the year demonstrates the robust and
essential nature of the allied health businesses which Healthia owns and operates. Healthia has taken its next steps towards
delivering on its vision of building Australia’s leading allied health care business.
FY21 Highlights
Healthia has delivered strong full year financial performance and portfolio growth via strategic acquisitions. Key highlights
for the period include:
●
●
●
●
●
●
Underlying revenue growth over prior year of 51.8%;
Strong organic revenue growth of 9.1% 2;
Underlying EBITDA (removing the impact of AASB16) growth over prior year of 62.3%;
Underlying NPATA (attributable to owners) growth over prior year of 91.4%;
Underlying Basic EPS growth of 3.79 cents per share or 51.6% over prior year;
Fully franked final dividend of 2.50 cents per share.
During the period, Healthia acquired 61 allied health businesses (43 Eyes and Ears businesses, 11 Bodies and Minds
businesses and 7 Feet and Ankles businesses) and deployed capital of $62.3 million. A key strategic acquisition during the
period was that of The Optical Company on 30 November 2020. This saw Healthia enter the optical industry via this well-
established optical business which owns and operates 43 optical stores. Furthermore, it increased Healthia’s addressable
industry revenue market from $6.5 billion to $9.8 billion, or by 51%.
This takes the total number of allied health businesses owned by the Consolidated Entity, from 104 at the time of Initial
Public Offering in September 2018 to 212 at 30 June 2021, representing portfolio growth of 104%. The allied health
businesses are operated across the following business divisions:
●
Feet and Ankles (F&A): comprising 94 podiatry clinics, 6 retail footwear stores (trading as Natural Fit Footwear), 2
orthotics laboratories (trading as iOrthotics) and an allied health wholesale supplies business (trading as D.B.S.
Medical);
Bodies and Minds (B&M): comprising 52 physiotherapy clinics and 14 hand therapy clinics; and
Eyes and Ears (E&E): comprising 42 optometry stores and 1 wholesale eyewear frame distribution business (trading
as AED).
●
●
Despite the portfolio growth of over 100% since listing, Healthia still represents less than 1.5% of its addressable revenue
market.
1 Calculated as working days impacted by COVID-19 related lockdowns multiplied by the number of clinics owned by the Consolidated Entity (for each
respective lockdown).
2 Organic revenue growth has been calculated by excluding any closed businesses and businesses not held during the prior corresponding period.
Organic revenue growth has been adjusted to remove the impact of COVID related lockdowns in the current and prior financial years. Organic revenue
growth has not been presented for the acquired Eyes & Ears Division as the Consolidated Entity did not hold the Eyes & Ears businesses for a whole 12
months.
2
Healthia Limited and its Controlled Entities
Chairperson's letter
30 June 2021
Vertical Integrated Businesses
Healthia’s operates a vertically integrated business model through ownership of the following businesses:
●
●
iOrthotics, which manufactures and 3D prints orthotics, including supplying orthotics into the North American market;
D.B.S Medical, which sources and distributes medical consumables and capital equipment specializing in podiatry
supplies;
Australian Eyewear Distributors (AED), which sources and distributes a diverse range of eyewear frames including
private label brands.
●
Each of the above businesses are scalable and provide significant benefits and cost savings from newly acquired clinics.
Clinician Retention
A key focus of the Healthia is to retain and incentivise its clinicians. We have developed a clinician retention program
(Clinician Retention Program) which allows our clinicians to have an ownership interest in clinics. Under the Clinician
Retention Program, the clinicians are given the opportunity to acquire clinic class shares (Clinic Class Shares).
Clinic Class Shares are non-voting shares which entitle the holder to a share of any dividend declared, which arise from and
is calculated on the performance of the clinic in which the Clinic Class Shares are issued. The Clinic Class Shares are
designed to create alignment between the interests of clinicians and shareholders. We consider this model as a compelling
proposition for our patients, our clinicians and our investors.
Clinic Class Share ownership grew to a total of 2,984 Clinic Class Shares on issue for the period ended 30 June 2021, from
2,505 in FY20. The additional shares have been issued to clinicians as part consideration for newly acquired clinics and/ or
for cash consideration paid to the Consolidated Entity.
In addition to the Clinician Retention Program, Healthia has continued to build on its structured learning and education
programs. In now has in place the following:
1.
2.
3.
4.
5.
Recent Graduate Program;
Clinic Leadership Program;
Business Leadership Program;
Practice Management Program;
Biennial conference.
Healthia will continue to build on each of these programs with an aim to provide its team members with world class learning
and education.
Validation of the various clinician and staff retention programs put in place has come via Healthia’s strong clinician retention
rate of 85% (FY20: 85%) and through its recently conducted culture survey. Healthia engaged Best Practice Australia to do
a follow up on its previous survey which was conducted in 2019. Engagement of the Healthia team has improved, returning
a score of 62% on a recent people survey 3 categorising Healthia as a culture of success.
Outlook
Healthia provides essential healthcare services to the community and has grown at a compounding annual growth rate of
46% since our Initial Public Offering in September 2018. Healthia will continue to focus on its 4-tiered strategy being:
1.
2.
3.
4.
patient focused outcomes;
organic growth;
future accretive acquisitions; and
vertically integrated business units.
With an addressable market in excess of $9.8 billion, we are confident of deploying the stated target of $20.0 million of capital
in the FY2022 on new acquisitions in line with Healthia’s strategic criteria.
3 Healthia “Flex Your Voice” staff survey undertaken by independent consultants, BPA Analytics, in the calendar year 2021.
3
Healthia Limited and its Controlled Entities
Chairperson's letter
30 June 2021
Healthia owns and operates 37 businesses in New South Wales and 40 businesses in Victoria, representing 17.5% and
18.9% respectively of Healthia’s total portfolio. At the date of reporting, all but six of these businesses remain operational
due to their classification as essential health care services, however, these businesses are experiencing some impact on
their trading due to the lockdown restrictions imposed. The timing of, and length of time in, these lockdowns vary and are
unpredictable.
With Australia now on a vaccination path, we are optimistic about the outlook for Healthia and the allied health sectors more
generally. I would again like to thank the team members of Healthia for their resilience and continued dedication during these
challenging times. Our strong financial and operational performance during FY21 is a reflection of the exemplary group of
people we have brought together under the Healthia banner.
Dr Glen Richards
Chairperson
4
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
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 2021.
Directors
The following persons were Directors of Healthia Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Dr Glen Frank Richards
Paul David Wilson
Lisa Jane Dalton
Wesley James Coote
Darren Lindsey Stewart
Anthony Peter Ganter
Colin Kangisser (appointed 30 November 2020)
Principal activities
The principal activities of the Consolidated Entity consists of the following:
●
●
●
the operation of podiatry businesses throughout Australia through the Feet and Ankles division;
the operation of physiotherapy businesses throughout Australia through the Bodies and Minds division; and
the operation of optometry businesses throughout Australia through the Eyes and Ears division (from 1 December
2020).
Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2020 of 2 cents per ordinary share
Interim dividend for the year ended 30 June 2021 of 2 cents per ordinary share
Consolidated
2021
$'000
2020
$'000
1,261
1,783
3,044
-
-
-
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 2.50 cents per share to the ordinary shareholders of Healthia Limited and has determined that Healthia’s
Dividend Reinvestment Plan will operate for the final dividend
5
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
Review of operations
The profit for the Consolidated Entity after providing for income tax and non-controlling interest amounted to $5,157,000 (30
June 2020: $2,691,000).
1. Significant changes for the period ended 30 June 2021
Impact of COVID-19 and associated ‘lockdowns’
As a result of Healthia providing a number of essential health care services to the community, the Directors made the decision
to continue trading from its allied health clinics when Australia’s Prime Minister imposed several progressive restrictive
lockdown measures in April 2020. 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 continued
period of lockdowns and 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.
During the financial year, it is estimated that lockdowns impacted over 1,533 clinic trading days for Healthia during the second
half of financial year 2021, through lockdowns being imposed across the regions of VIC, QLD, NSW, WA and NT. During
this period, minimal changes were made to the trading hours and rosters of Healthia’s clinics.
The impacts of lockdowns from COVID-19 are unpredictable given that the timing of, and length of time in, lockdowns
vary. However, the experience of prior lockdowns has shown that any short-term reduction in patient volumes is quickly
recovered with the pent-up demand typically experienced after such restrictions ease or end.
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 continues to follow the recommendations of the Australian and State
Governments.
2. Financial Highlights
The financial highlights for FY21 for the Consolidated Entity are the follows:
●
●
●
●
●
●
Underlying revenue of $140.41 million representing growth over prior year of 51.8% 1;
Organic revenue growth of 9.1% (comprised of 9.9% in Bodies and Minds Division and 8.3% in the Feet and Ankles
Division) 2;
Underlying FY21 EBITDA (removing the impact of AASB16) of $21.47 million, representing growth over prior year of
62.3% 3;
Underlying FY21 NPATA (attributable to owners) of $8.86 million, representing growth over prior year of 91.4% 4;
Underlying FY21 Basic EPS of 11.13 cents per share, representing growth over prior year of 51.6% 5
;
Fully franked final dividend of 2.50 cents per share.
(1) For the purposes of underlying results, the Consolidated Entity has excluded $5.61M (of $7.61M total) JobKeeper revenue subsidies from underlying results. The remaining $1.99M is the
Directors assessment of the impact on trading from lockdowns. Underlying revenue has not been audited.
(2) Organic revenue growth has been calculated by excluding any closed businesses and businesses not held during the prior corresponding period. Adjusted organic revenue growth has
been adjusted to remove the impact of COVID related lockdowns in the current and prior financial years. Adjusted organic revenue growth has not been presented for the acquired Eyes &
Ears Division due to the impact of lockdowns in the period prior to ownership by the Consolidated Entity. Organic growth is a non-IFRS financial measure and has not been audited.
(3) Underlying EBITDA is a non-IFRS measure and equals earnings before interest, tax, depreciation and amortisation. Underlying EBITDA has not been audited.
(4) Underlying NPATA is a non-IFRS measure and equals net profit after income tax expense plus amortisation of customer list intangibles. Underlying NPATA has not been audited.
(5) Underlying basic EPS or earning per share is calculated as NPATA attributable to the owners of Healthia Limited divided by weighted average number of ordinary shares on issue
(FY21:79.63M, FY20: 63.04M). Underlying basic EPS has not been audited.
6
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
During the period, Healthia deployed capital of $62.3 million on new acquisitions at an effective multiple of 6.9x EBITDA
(removing the impact of AASB16). During the period, the acquired businesses contributed underlying revenue of $30.90
million and EBITDA (less lease payments or pre-AASB 16 change) of $6.68 million to the Consolidated Entity. If these
acquisitions had been held for a full 12 month period (by annualising contribution to FY21), the acquired businesses would
have contributed underlying revenue of $54.14 million and EBITDA (less lease payments or pre-AASB 16 change) of $8.99
million to the Consolidated Entity.
3. Operational Highlights
Key operational highlights for FY21 included:
●
●
●
●
●
●
●
●
●
●
●
Acquisition of The Optical Company, comprising 41 optical stores and eyewear frame distributor, Australian Eyewear
Distributors or AED (the Consolidated Entity’s performance for FY21 included 7 months of trading). The acquisition
delivered a number of strategic benefits, including a vertically integrated platform to grow in the optical and audiology
industries, which increased the Consolidated Entity’s addressable market by 51% (from $6.5 billion to $9.8 billion). The
vertically AED business, which sources and distributes private label eyewear frames, provides significant cost savings
when acquiring additional optometry stores;
Integration of The Optical Company, including incorporation into the Consolidated Entity’s Clinician Retention Program,
which encompasses both a comprehensive education program and the Clinic Class Share model, alignment of
marketing strategies and customer retention programs and consolidation of the acquired entities to improve
accounting/support efficiencies;
Launch of audiology services in an existing Healthia owned optometry clinic in Geelong. The business will operate via
a hub and spoke model with surrounding clinics referring patients;
Acquisition of Natural Fit Footwear, a specialty footwear retailer offering comfort and support footwear, comprising six
stores in New South Wales, one store in Victoria and an e-commerce footwear site. Given the geographic footprint of
these stores and the retail nature of the product offering, the business has been significantly impacted by lockdowns.
Management remains committed to extending the service offering inside of the Natural Fit Footwear stores to include
podiatry services. There is also a significant opportunity to build upon the specialised value proposition and established
e-commerce platform developed by Natural Fit Footwear to extend an online retail footwear offering to the patients of
the Consolidated Entity’s 94 podiatry clinics;
Acquisition of an additional 19 allied health clinics, including 11 Bodies and Minds businesses, 7 Feet and Ankles
businesses and 1 additional Eyes and Ears business;
The Consolidated Entity has continued to build on its structured learning and education programs. It now has in place
the following: (1) Recent Graduate Program (2) Clinic Leadership Program (3) Business Leadership Program (4)
Practice Management Program (5) Biennial conference;
The Consolidated Entity recruited 60 new graduate health professionals in February 2021, comprising 27
physiotherapists, 14 podiatrists, 10 occupational therapists, 5 exercise physiologists, 3 speech pathologists and 1
dietitian. These graduates support the Consolidated Entity’s continued organic growth and all new graduates completed
the graduate induction and training program;
Clinician staff retention rate of 85% (FY20: 85%), driven by high cultural engagement as demonstrated by the recent
cultural survey where staff scored Healthia as a culture of success;
Clinic Class Share ownership grew to a total of 2,984 Clinic Class Shares on issue for the period ended 30 June 2021,
from 2,505 in FY20. Clinic Class Shares are designed to create alignment between the interests of clinicians and the
ordinary shareholders of the Consolidated Entity. The Clinic Retention Program allows clinicians to acquire an
ownership interest in the Consolidated Entity’s clinics (via Clinic Class Shares). Clinic Class Shares enable the holder
to participate in dividends declared, calculated on the performance of the clinic in which the Clinic Class Shares are
issued;
Recruitment of Healthia's Chief Marketing Officer and refinement of the marketing strategy to support centralisation of
the digital strategy across all brands. These changes have facilitated tailored marketing plans and a data driven strategy
to improve the patient experience, retention rates and cross-sell opportunities across all allied health disciplines;
During the period from 1 July 2021 to 30 August 2021, the Consolidated Entity also announced the subsequent
acquisitions of 3 optometry clinics and 2 physiotherapy clinics. The acquisitions are expected to contribute the following
pro-forma revenue and EBITDA of $3.95 million and $0.64 million respectively to the Consolidated Entity.
7
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
4. Financial Overview - Statutory Performance
The FY21 statutory performance compared to the prior comparative period (ended 30 June 2020 (‘FY20’ or ‘PCP’)) is shown
in Table 1 below.
Table 1: 30 June 2021 statutory performance compared to PCP.
Revenue and Other Income
The Consolidated Entity’s revenue and other income increased by 51.5% to $146.03 million (FY20: $96.37 million). This
increase in revenue can be attributed to the following drivers:
●
●
Continued acquisitive growth:
The 61 acquired allied health businesses during the FY21 period (comprising 43 Eyes and Ears businesses, 11 Bodies
and Minds businesses and 7 Feet and Ankles businesses).
Robust organic growth(1):
Adjusted organic growth of 9.1%, comprising 9.9% in Bodies and Minds Division and 8.3% in Feet and Ankles Division
(adjusting for the impact of COVID related lockdowns in the current and prior financial years). Adjusted organic revenue
growth has not been presented for the acquired Eyes & Ears Division as the Consolidated Entity did not own the
business 12 months ago.
The robust organic growth can be attributed to the following:
- the resilient and essential nature of the allied health services provided;
- organic growth initiatives such as targeted marketing and patient/ customer attraction, conversion, retention strategies,
structured education and professional development strategies and the introduction of additional services into existing
clinics;
- strong cultural engagement and clinician retention rates.
●
Government subsidies:
$7.61 million of JobKeeper payments is recognised as Other Income in the current period (FY20: $7.92m)
(1) Organic revenue growth has been calculated by excluding any closed businesses and businesses not held during the prior corresponding period. Organic revenue growth has been
adjusted to remove the impact of COVID related lockdowns in the current and prior financial years. Organic revenue growth has not been presented for the acquired Eyes & Ears Division as
the Consolidated Entity did not hold the Eyes & Ears businesses for a whole 12 months.
Profit Attributable to Non-Controlling Interests
The Consolidated Entity's non-controlling interest in FY21 of $4.02 million (FY20: $2.46 million) represents growth over the
prior period of 63.6%. The increase in non-controlling interest can be attributed to the following factors:
8
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
●
●
Increase in Clinic Class Shareholder ('CCS') ownership:
CCS ownership has grown to a total of 2,984 Clinic Class Shares on issue for the period ended 30 June 2021, from
2,505 as at 30 June 2020. All Clinic Class Shares were issued to clinicians as either part consideration of a newly
acquired clinic and / or for consideration.
Note that Statutory non-controlling interest includes distributions related to non-recurring JobKeeper payments, which
ceased once JobKeeper payments stopped being received by the Consolidated Entity (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.
5. 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 non-recurring income
and expenses. The Directors believe that this information is useful for investors and shareholders as it presents the
Consolidated Entity’s financial performance as if these transactions or circumstances had not occurred.
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:
Table 2: Underlying 30 June 2021 performance compared to PCP
This table has not been audited
30/06/2021
$'000's
30/06/2020
$'000's
Change
$'000
Change
%
Underlying Revenue 1
Underlying 2 Underlying 2
140,407 92,493 47,914
Underlying EBITDA 3,4 (removing impact of AASB16)
21,468 13,230 8,238
Underlying net profit before income tax expense
15,080
9,239 5,841
Underlying net profit after income tax expense
10,251
5,806 4,445
Amortisation expense
Underlying NPATA 5
1,017
661
356
11,268
6,467 4,801
Underlying non-controlling interest (NCI) 9
2,995
2,041
954
51.8%
62.3%
63.2%
76.6%
53.8%
74.2%
46.7%
Net post-tax P&L impact of AASB16 adoption 6
588
203
385
189.6%
Underlying NPATA attributable to the owners of
Healthia Limited (removing impact of AASB16) 5
8,861
4,629 4,232
91.4%
Underlying EBITDA margin (removing impact of AASB16) 3,4
Underlying NPATA margin (removing impact AASB16) 5
Underlying Basic EPS (cents, removing impact AASB16) 7
Underlying NCI / Underlying NPATA 8,9
Notes
15.29%
6.31%
11.13
26.58%
14.30%
5.00%
7.34
31.56%
0.99%
1.31%
3.79
-4.98%
99 bps
131 bps
51.6%
-498 bps
1. For the purposes of underlying results, the Consolidated Entity has excluded $5.61M (of $7.61M total) JobKeeper revenue subsidies
from underlying results. The remaining $1.99M is the Directors assessment of the impact on trading from lockdowns.
2.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 profit has not
been audited
3.Underlying EBITDA is a non-IFRS measure and equals earnings before interest, tax, depreciation and amortisation. Underlying
EBITDA has not been audited
4.Underlying EBITDA has been adjusted for the impacts of AASB16. Lease payments of $11.48m have been included to provide users
with a like-for-like comparison with PCP.
5.Underlying NPATA is a non-IFRS measure and equals net profit after income tax expense plus amortisation of customer list
intangibles. Underlying NPATA has not been audited
6.The net post-tax P&L impact of the new leasing standard, AASB16, has been added back to NPATA to provide users with a like-for-
like comparison with PCP. The pre-tax impact of AASB 16 'Leases' in the current period is comprised of the following: occupancy costs
decreased by $11.48M, depreciation expense increased by $10.31M, and finance costs increased by $2.01M. The net post-tax P&L
impact has not been audited.
7.Underlying EPS or earnings per share is calculated as underlying NPATA attributable to the owners of Healthia Limited divided by the
weighted average number of ordinary shares on issue for the period (FY21: 79.63M, FY20: 63.04M). Underlying EPS has not been
8.Underlying non-Controlling Interest divided by Underlying NPATA. NCI/ Underlying NPATA has not been audited
9.Underlying NCI reflects statutory NCI removing the non-recurring distribution of JobKeeper payments to Clinics Class Shareholders.
Refer to Table 4 for reconciliation between statutory NCI and underlying NCI. Underlying NCI has not been audited.
9
Healthia Limited and its Controlled Entities
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30 June 2021
Underlying Revenue
The Consolidated Entity’s underlying revenue increased by 51.8% to $140.4 million vs PCP of $92.49 million. This increase
in revenue can be attributed to the following drivers:
●
●
●
Continued acquisitive growth:
The 61 acquired allied health businesses during the FY21 period (comprising 43 Eyes and Ears businesses, 11 Bodies
and Minds businesses and 7 Feet and Ankles businesses). Had all acquisitions completed in the current period been
held for a full 12-month period, underlying revenue would have increased by $23.23 million (by annualising the
contribution in FY21).
Organic growth:
Robust organic revenue growth of 9.1% achieved by the Consolidated Entity(1)
Government subsidies:
The Consolidated Entity has excluded $5.61M (of $7.61M total) JobKeeper revenue subsidies from underlying
results. The remaining $1.99M is the Directors’ assessment of the impact on trading from lockdowns. Lockdowns have
impacted over 1,533 clinic trading days for Healthia during the second half of financial year 2021, representing
approximately 5.0% of total clinic trading days during this period (as detailed in Table 3 below). This adjustment
assumes the Consolidated Entity would have achieved the same organic growth experienced pre and post the COVID
affected periods
(1) Organic revenue growth has been calculated by excluding any closed businesses and businesses not held during the prior corresponding period. Organic revenue growth has been
adjusted to remove the impact of COVID related lockdowns in the current and prior financial years. Organic revenue growth has not been presented for the acquired Eyes & Ears Division as
the Consolidated Entity did not hold the Eyes & Ears businesses for a whole 12 months.
Table 3: Impact of Lockdowns during H2 2021
10
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
Underlying EBITDA
The Consolidated Entity's underlying FY21 EBITDA (excluding the impact of AASB 16) of $21.47 million (FY20: $13.23
million) represents growth of 62.3% vs PCP. The increase in underlying EBITDA is primarily driven by the following:
●
●
●
Continued acquisitive growth:
The 61 acquired allied health businesses during the FY21 period. Had all acquisitions completed in the current period
been held for a full 12-month period, underlying EBITDA would have increased by $5.15 million (by annualising the
contribution in FY21);
Organic growth:
Robust organic revenue growth of 9.1% achieved by the Consolidated Entity;
Margin improvement:
The underlying EBITDA margin increase of 99 bps over PCP (from 14.30% to 15.29%) was achieved through disciplined
cost controls implemented by the Consolidated Entity and higher profitability margins from the recently acquired Optical
Company.
The Eyes & Ears division, which was owned for 7 months during the financial year, achieved an underlying EBITDA
margin of 27.1% for the period. This margin is higher than industry averages due to the vertically integrated business
model achieved through ownership of established eyewear frame distributor, Australian Eyewear Distributors (AED).
Underlying Non-Controlling Interests
The Consolidated Entity's underlying non-controlling interest in FY21 of $3.00 million (FY20: $2.04 million) represents growth
over the prior period of 46.7%.
The underlying profit attributable to Non-Controlling Interests (+46.7% vs PCP) increased at a slower rate than the underlying
earnings of the Consolidated Entity (NPATA +74.2% vs PCP). This was largely driven by the acquisition of the 42 optical
stores which contained no NCI. As a result, the proportion of economic interests attributable to underlying NCI decreased
from 31.56% in FY20 to 26.58% in the current period (calculated as underlying 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 ceased once JobKeeper payments stop being
received by the Consolidated Entity (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.
Table 4: Underlying Profit Attributable to Non-Controlling Interests
(1) The JobKeeper payments distributed to Clinic Class Shareholders were net of income tax payable
Underlying NPATA and Earnings per Share
The Consolidated Entity's underlying NPATA attributable to the owners of Healthia Limited of $8.86 million (FY20: $4.63
million) represents growth over the prior period of 91.4%.
The Consolidated Entity's underlying EPS1 of 11.13 cents per share (FY20: 7.34 cents per share) represents growth over
the prior period of 51.6%.
(1) Underlying EPS or earnings per share is calculated as NPATA attributable to the owners of Healthia Limited divided by the weighted average number of ordinary shares on issue for the
period (FY21: 79,627,000; FY20: 63,034,653).
11
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
6. Financial Overview – Reconciliation from Underlying NPATA to Statutory NPATA
A reconciliation of underlying NPATA to statutory NPAT performance is detailed below.
Table 5: Reconciliation of Underlying NPATA to Statutory NPAT
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
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;
Income from JobKeeper, net of non-recurring COVID related costs, which is not considered to represent underlying financial performance. For the purposes of underlying financial
performance, $1.99m (of $7.61m total) of JobKeeper income has been included in underlying revenue.
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;
The Consolidated Entity incurred a number of one-off acquisition and integration costs in relation to the acquisition of the 61 allied health businesses acquired. Acquisition and integration
costs of $4.2m represent 6.7% of fair value consideration paid for the financial year ($62.9m);
Distribution to Non-Controlling Interests of JobKeeper payments ceased once JobKeeper payments were no longer received by the Consolidated Entity on 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 (net of income tax) to its
minority equity partners;
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);
Amortisation of customer lists and software intangibles during the current period;
AASB 16 'Leases' had a significant impact on financial performance. This impact is comprised of the following changes due the adoption of AASB 16: occupancy costs decreased by
$11.4m, depreciation expense increased by $10.2M, and finance costs increased by $2.0M;
Bad debt expense relates to the one-off impairment of a loan receivable; and
(9)
(10) Net income taxation impact of non-recurring items.
7. Funding
During the year, the Consolidated Entity increased its total finance facility from $50.0 million to $70.0 million. As part of this
facility increase, the National Australia Bank (‘NAB’) became part of the existing finance facility alongside Australia and New
Zealand Bank (‘ANZ’) and the Bank of Queensland Limited (‘BOQ’). The facility term was also extended to January 2024.
The increased facility size and tenor, as well as the addition of the National Australia Bank to the Consolidated Entity’s
finance facility, provides further capacity to continue the stated strategy of pursuing value accretive acquisition opportunities.
At 30 June 2021, the Consolidated Entity had utilised $48.33 million of the $70.00 million finance facility, providing headroom
of $21.67 million.
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Directors' report
30 June 2021
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 bank covenant calculations:
●
Adjusted EBITDA includes the earnings contribution of recent acquisitions where the businesses have not been held
for a 12-month period; and
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.
8. Outlook
Revenue growth
Healthia provides essential healthcare services to the community and has grown at a compounding annual growth rate of
46% since our Initial Public Offering in September 2018.
Organic growth continues to accelerate as a result of focus and investment in industry leading education, tools and support
for our clinicians and team members. Organic growth by period was as follows:
●
●
●
2.0% in FY19;
5.3% in FY20; and
9.1% in FY21.
(1) Organic revenue growth has been calculated by excluding any closed businesses and businesses not held during the prior corresponding period. Organic revenue growth has been
adjusted to remove the impact of COVID related lockdowns in the current and prior financial years. Organic revenue growth has not been presented for the acquired Eyes & Ears Division as
the Consolidated Entity did not hold the Eyes & Ears businesses for a whole 12 months.
The Consolidated Entity will continue to build on this momentum by further enhancing its centralised support functions, finding
additional opportunities to co-locate services and introducing services into existing locations (e.g. audiology services into
existing optometry stores and podiatry services into existing physiotherapy clinics).
Continued industry consolidation
Given the fragmented nature of the targeted allied health industries and significant opportunity for continued consolidation,
acquisitions will continue to be a central pillar of the 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.
With an addressable market in excess of $9.8 billion and a current market share of less than 1.5%, management of the
Consolidated Entity are confident of deploying the stated target of $20.0 million of capital in FY2022 on new acquisitions
which align with Healthia’s disciplined strategic criteria.
The Consolidated Entity has a range of funding sources which can be utilised for acquisitions. These include:
●
●
●
Undrawn debt amount: headroom of $21.67M in the finance facility with ANZ, NAB and BOQ;
Future operating cash flow: underlying operating cash flows of $18.09 million were generated during FY21; 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.
COVID-19 related lockdowns
The Consolidated Entity owns and operates 37 businesses in New South Wales and 40 businesses in Victoria, representing
17.5% and 18.9% respectively of Healthia’s total portfolio. At the date of reporting, all but six of these businesses remain
operational due to their classification as essential health care services, however, these businesses are experiencing some
impact on their trading due to the lockdown restrictions imposed. The six closed businesses relate to stores which operate
under the brand of Natural Fit Footwear, a specialty footwear retailer offering comfort and support footwear.
The experience of prior lockdowns has shown that any short-term reduction in patient volumes is quickly recovered with the
pent-up demand typically experienced after such restrictions end.
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Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
Significant changes in the state of affairs
Acquisition of The Optical Company (Eyes and Ears Division)
Healthia successfully completed the acquisition of The Optical Company ('TOC') on 30 November 2020, representing 41
optical stores and eyewear frame distributor, AED (note: the Consolidated Entity’s results for the period ending 30 June
2021, include 7 months of TOC trading).
Initial consideration paid for the acquisitions was $44.16 million including $32.03 million in cash consideration, $12.13 million
in ordinary Healthia Limited share consideration, with an additional $2.60 million payable in deferred consideration.
Acquisition of Other Eyes and Ears Clinics
The Consolidated Entity acquired an additional optometry clinic during the current period. Consideration paid for the
acquisition was $0.26 million in cash consideration, with up to an additional $0.11 million payable in contingent consideration.
Acquisition of Bodies and Minds Clinics
The Consolidated Entity acquired an additional 11 physiotherapy clinics during the current period. Initial consideration paid
for the acquisitions was $8.63 million including $7.04 million in cash consideration, $1.58 million in clinic class share
consideration, with up to an additional $0.92 million payable in contingent consideration.
Acquisition of Feet and Ankles Clinics
The Consolidated Entity acquired an additional 6 retail footwear stores and 1 podiatry clinic since 30 June 2020. Initial
consideration paid for the acquisitions was $4.31 million including $2.99 million in cash consideration, $1.32 million in ordinary
Healthia Limited share consideration, with up to an additional $1.35 million payable in contingent consideration.
Capital Raising
On 30 October 2020, it was announced that Healthia had entered into a binding agreement to acquire The Optical Company,
a leading Australian optometry business.
To assist with the funding of the acquisition, a capital raising was undertaken via a non-renounceable pro-rata entitlement
offer at 95 cents per share. The offer was split into the two following components:
●
The Institutional Entitlement Offer, which completed on 3 November 2020, raised approximately $9.5 million through
the issue of 9,983,740 new Healthia ordinary shares; and
The Retail Entitlement Offer, which completed on 17 November 2020, raised approximately $3.7 million through the
issue of 3,939,372 new Healthia ordinary shares.
●
Performance rights
On 30 October 2020, 378,500 unlisted performance rights were granted to key management personnel and other senior
managers with a nil grant and exercise price. The performance rights will vest on 31 August 2023 (subject to satisfaction of
the relevant vesting conditions) and expire on 31 October 2023. The vesting conditions include a number of performance
and service conditions.
On 1 December 2020, following shareholder approval at the 2020 AGM, 282,500 unlisted performance rights were granted
to Directors, Wesley Coote and Anthony Ganter, with a nil grant and exercise price. The performance rights will vest on 31
August 2023 (subject to satisfaction of the relevant vesting conditions) and expire on 31 October 2023. 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 have caused disruption to business and economic activities.
14
Healthia Limited and its Controlled Entities
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30 June 2021
JobKeeper Wage Subsidies
The Australian Government announced the JobKeeper legislation on 30 March 2020 which provided entities with a $1,500
a fortnight subsidy per qualifying employee if the entity had seen a reduction in trading revenue of more than 30%. The
Consolidated Entity qualified for JobKeeper payments from April to September 2020, however, did not re-qualify under the
revised eligibility criteria and the receipt of JobKeeper ceased in September 2020.
The Consolidated Entity has recorded $7.61 million of JobKeeper payments as Other Income in FY21. In accordance with
the legislation, $2.54 million of these subsidies were passed directly through to employees where they did not work sufficient
hours to be paid more than the subsidy received ($1,500 per fortnight).
The effects of COVID-19 are ongoing with outbreaks resulting in State Government imposed lockdowns. Despite the
Consolidated Entity ceasing to receive JobKeeper payments in September 2020, the financial flexibility of the payments
received continues to ensure that:
●
●
●
continuity of patient care is maintained for those who needed these essential health care services;
the essential health care services provided are 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;
the livelihoods of the Consolidated Entity's employees are not materially affected. The Consolidated Entity has
continued to pay employees their contracted hours during several lockdowns during FY21 where State Government
mandated lockdowns have forced clinic closures or significantly reduced trading hours.
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
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
Acquisition Settlements
During the period from 1 July 2021 to 30 August 2021, the Consolidated Entity announced the subsequent acquisition of 3
optometry clinics and 2 physiotherapy clinics. Total consideration for the acquisitions (plus stock, less employee entitlements)
was as follows:
●
●
●
Upfront cash consideration: $1.74m
Issue of Clinic Class Shares: $0.72m
Total upfront consideration: $2.46m
In addition to the upfront consideration, contingent consideration of up to $0.37m will become payable in cash, subject to the
achievement of pre-defined earnings targets.
The acquisitions are expected to contribute the following pro-forma earnings to the Consolidated Entity:
●
●
Revenue: $3.95m
EBITDA: $0.64m
COVID-19 related lockdowns
The Consolidated Entity owns and operates 37 businesses in New South Wales and 40 businesses in Victoria, representing
17.1% and 18.4% respectively of Healthia’s total portfolio. At the date of reporting, all but six of these businesses remain
operational due to their classification as essential health care services, however, these businesses are experiencing some
impact on their trading due to the lockdown restrictions imposed. The six closed businesses relate to stores which operate
under the brand of Natural Fit Footwear, a specialty footwear retailer offering comfort and support footwear.
The impacts of lockdowns from COVID-19 are unpredictable given that the timing of, and length of time in, lockdowns
vary. However, the experience of prior lockdowns has shown that any short-term reduction in patient volumes is quickly
recovered with the pent-up demand typically experienced after such restrictions ease or end.
15
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
Final Dividend
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 2.5 cents per share to the ordinary shareholders of Healthia Limited.
A Dividend Reinvestment Plan will operate for the 2021 Final Dividend. A 2.5% discount will apply to the Dividend
Reinvestment Plan for the final dividend. A copy of the Dividend Reinvestment Plan rules can be found on Healthia’s
website at the following address: https://healthia.com.au/s/Dividend-Reinvestment-Plan-Rules.pdf.
Apart from the matters discussed above, no other matter or circumstance has arisen since 30 June 2021 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 affair in future financial years.
Likely developments and expected results of operations
The Consolidated Entity will continue to focus on delivering growth via its four-tiered growth strategy:
(1) patient focused outcomes;
(2) organic growth;
(3) future accretive acquisitions; and
(4) vertically integrated business units.
The Consolidated Entity expects to continue to acquire well-established allied health businesses throughout Australia. The
Consolidated Entity expects to deploy $20 million 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
Special responsibilities:
Interests in shares:
Interests in rights:
June 2020)
Non-Executive Director of Greencross Ltd (ASX code: GXL) (26 April 2007 to 27
February 2019)
Member of the Audit and Risk Committee and the Nomination and Remuneration
Committee.
6,306,572 ordinary shares held at 30 August 2021
None
16
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
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 Nomination and
Remuneration Committee.
1,348,366 ordinary shares held at 30 August 2021
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 Nomination and Remuneration Committee and a member of the Audit
and Risk Committee.
34,335 ordinary shares held at 30 August 2021
None
Interests in shares:
Interests in rights:
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
business 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): None
Interests in shares:
Interests in rights:
1,998,550 ordinary shares held at 30 August 2021
364,963 performance rights held at 30 August 2021
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 Feet & Ankles business division.
None
Other current directorships:
Former directorships (last 3 years): None
Interests in shares:
Interests in rights:
4,457,664 ordinary shares held at 30 August 2021
None
17
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
Name:
Title:
Experience and expertise:
Anthony (Tony) Peter Ganter (appointed 10 May 2018)
Director and Group Chief Business Development & Strategy 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.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in rights:
1,186,057 ordinary shares held at 30 August 2021
218,115 performance rights held at 30 August 2021
the ongoing creation of varied career
journeys
to
Name:
Title:
Experience and expertise:
Colin Kangisser (appointed 30 November 2020)
Director and Chief Executive Officer, Eyes & Ears Division
Colin is a registered optometrist with over 30 years optical experience. He founded,
grew and exited multiple retail chains including Optic Express and Kays Optical prior to
holding executive leadership positions with the OPSM Group and founding TOC in
2005.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in rights:
5,066,600 ordinary shares held at 30 August 2021
None
'Other current directorships' quoted above are current directorships for listed entities only and exclude 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 exclude
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 2021, and the number of meetings attended by each Director were:
Full Board
Nomination and
Remuneration Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
Dr Glen Frank Richards
Paul David Wilson
Lisa Jane Dalton
Wesley James Coote
Darren Lindsey Stewart
Anthony Peter Ganter
Colin Kangisser
12
12
12
12
12
12
7
12
12
12
12
12
12
7
3
3
3
-
-
-
-
3
3
3
-
-
-
-
3
3
3
-
-
-
-
3
3
3
-
-
-
-
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant
committee.
18
Healthia Limited and its Controlled Entities
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30 June 2021
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 disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Consolidated Entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward
governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Nomination and Remuneration 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 Nomination and Remuneration Committee may from time to time engage 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.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the Consolidated Entity. A portion of cash bonus
and incentive payments are dependent on defined earnings per share targets being met. The remaining portion of the cash
bonus and incentive payments are at the discretion of the Nomination and Remuneration Committee.
The Nomination and Remuneration Committee is of the opinion that the continued financial performance of the Consolidated
Entity can be attributed in part to the adoption of performance based compensation and is satisfied that this will continue to
increase shareholder wealth if maintained over the coming years.
19
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
Performance rights plan
On 30 October 2020, 378,500 unlisted performance rights were granted to key management personnel and other senior
managers with a nil grant and exercise price. The performance rights will vest on 31 August 2023 (subject to satisfaction of
the relevant vesting conditions) and expire on 31 October 2023. The vesting conditions include a number of performance
and service conditions.
On 1 December 2020, following shareholder approval at the 2020 Annual General Meeting, 282,500 unlisted performance
rights were granted to Directors, Wesley Coote and Anthony Ganter, with a nil grant and exercise price. The performance
rights will vest on 31 August 2023 (subject to satisfaction of the relevant vesting conditions) and expire on 31 October 2023.
The vesting conditions include a number of performance and service conditions.
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 Performance Rights
Service condition
The performance rights will only be exercisable upon satisfaction of the Service
condition, being continuous employment with the Company from Grant Date until the
Vesting Date.
EPS Growth condition
The Company’s compounding annual growth in underlying Earnings Per Share
(underlying EPS) for the period from 1 July 2020 to 30 June 2023 greater than 10%
per annum.
The underlying EPS results to be used will be the Basic EPS recorded in the
Company’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 in its discretion.
50% of the Performance Rights will be exercisable if this condition is achieved.
Total Shareholder Return condition Total Shareholder Return (TSR) to exceed 150% for the period from 1 July 2020 to 30
June 2023, with TSR calculated as follows:
TSR = (Price End – Price Begin + Dividends)/Price Begin
Where
Price Begin = share price at 1 July 2020
Price End = share price as at 30 June 2023; and
Dividends = total dividends paid per share during the period from 1 July 2020 to 30
June 2023.
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.
Use of remuneration consultants
During the financial year ended 30 June 2021, the Consolidated Entity did not engage a remuneration consultant to review
its existing remuneration policies
Voting and comments made at the Company's 2020 Annual General Meeting ('AGM')
At the 30 November 2020 AGM, 98.92% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2021. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
20
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
Details of remuneration
Remuneration expenses for executive KMP
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
Darren Stewart - Executive Director
Anthony Ganter - Director and Group Chief Business Development and Strategy Officer
Colin Kangisser - Director and Chief Executive Officer, Eyes & Ears Division (appointed 30 November 2020)
Chris Banks - Chief Financial Officer and Company Secretary
Lisa Roach - Chief People Officer
Dean Hartley - Chief Technology Officer
Katherine Baker - Chief Operating Officer (appointed into current position 1 December 2020)
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
$
100,000
60,000
57,692
306,154
274,497
193,731
172,083
-
-
-
-
-
-
-
148,462
183,076
210,962
101,923
1,808,580
-
-
-
38,188
38,188
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
60,000
57,692
31,103
27,344
25,088
14,583
4,583
1,643
3,422
2,385
58,562
-
36,265
-
400,402
303,484
258,506
189,051
16,954
20,388
22,891
13,926
172,277
3,285
3,285
4,106
2,920
25,629
125,173
29,148
23,534
6,701
293,874
235,897
261,493
173,103
279,383 2,324,057
2021
Non-Executive Directors:
Glen Richards
Paul Wilson
Lisa Dalton
Executive Directors:
Wesley Coote
Darren Stewart
Anthony Ganter
Colin Kangisser *
Other Key Management
Personnel:
Christopher Banks**
Lisa Roach
Dean Hartley
Katherine Baker ***
*
**
Remuneration is from the date of appointment as a director to 30 June 2021.
$100,000 of the $125,173 equity-settled remuneration related to the write-off of a loan owing for a loan funded share
plan. Of the $200,000 loan owing, $100,000 was repaid and $100,000 of the balance was written off during the period.
*** Remuneration is from 1 December 2020 to 30 June 2021, being the period Katherine was classified as a KMP
(previously employed in another role with the Consolidated Entity). The $38,188 cash bonus related to a sign-on bonus
for the new position accepted during the period.
Other than the sign-on bonus noted, the Directors have resolved not to award short-term bonuses or other short-term
incentives for the current period.
Details of incentives (LTIs) are disclosed in the Additional Information section.
No LTIs have vested in the year.
21
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
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
$
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
*
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 of $221,250 were accrued at 30 June 2020 in respect of key management personnel and paid during FY21.
These cash bonuses are Short Term Incentives or STIs.
No LTIs have vested in the year.
The proportion of remuneration linked to performance and the fixed proportion was as follows:
Name
Non-Executive Directors:
Glen Richards
Paul Wilson
Lisa Dalton
Executive Directors:
Wesley Coote
Darren Stewart
Anthony Ganter
Colin Kangisser
Other Key Management
Personnel:
Chris Banks
Lisa Roach
Dean Hartley
Katherine Baker
Fixed remuneration
2020
2021
At risk - STI
At risk - LTI
2021
2020
2021
2020
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
85.4%
100.0%
86.0%
100.0%
81.5%
100.0%
81.3%
-
-
-
-
-
-
-
-
57.4%
87.6%
91.0%
72.4%
81.3%
81.3%
81.7%
-
-
-
-
23.5%
22
-
-
-
18.0%
-
18.2%
-
18.3%
18.3%
18.0%
-
-
-
-
14.6%
-
14.0%
-
42.6%
12.4%
9.0%
4.1%
-
-
-
0.5%
-
0.5%
-
0.4%
0.4%
0.3%
-
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
The proportion of the cash bonus paid/payable or forfeited was as follows:
Name
Executive Directors:
Wesley Coote
Anthony Ganter
Colin Kangisser
Other Key Management Personnel:
Christopher Banks
Lisa Roach
Dean Hartley
Katherine Baker
Executive remuneration overview
Cash bonus paid/payable
2021
2020
Cash bonus forfeited
2020
2021
-
-
-
-
-
-
50%
50%
50%
-
50%
50%
50%
-
100%
100%
100%
100%
100%
100%
50%
50%
50%
-
50%
50%
50%
-
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.
●
●
●
●
Base pay and non-monetary benefits
Short-term performance incentives
Share-based payments
Other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by The
Nomination and Remuneration 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.
Short-Term Incentives
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.
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.
Long Term Incentives
The long-term incentives ('LTI') include long service leave and share-based payments. Performance Rights are awarded to
executives over a period of three years based on long-term incentive measures. These include increases in Total
Shareholders Return and Earnings Per Share of the Consolidated Entity. The Nomination and Remuneration Committee
reviewed the long-term equity-linked performance incentives specifically for executives during the year ended 2021.
23
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
Contractual arrangements with executive KMPs
Group Chief Executive Officer
Fixed remuneration
Contract duration
Notice by the individual / company
Termination of employment (with cause) or by the individual STI is not awarded and all unvested LTI will lapse
Termination of employment (without cause)
$370,000 (effective from 1 January 2021)
Ongoing
6 months
Entitlement to pro-rata STI for the year
All unvested LTI will lapse, unless the Board determines
otherwise in its absolute discretion.
Post-employment restraint for 18 months preventing the
Group CEO from being employed or involved in a competing
business.
Restrictive covenants
Other Senior Executives
Fixed remuneration
Contract duration
Notice by the individual / company
Termination of employment (with cause) or by the individual STI is not awarded and all unvested LTI will lapse
Termination of employment (without cause)
Range between $218,000 and $320,000 (effective from 1
January 2021)
Ongoing contract
6 months
All unvested LTI will lapse, unless the Board determines
otherwise in its absolute discretion.
Post-employment restraints between 12 and 18 months
Restrictive covenants
Non-executive director arrangements
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 Nomination and Remuneration Committee. The Nomination and
Remuneration 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 performance based pay or incentives. Directors do not receive additional fees
for participating in or chairing committees.
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.
All non-executive directors enter into a service agreement with the Consolidated Entity in the form of a letter of appointment.
The letter summarises the board policies and terms, including remuneration, relevant to the office of director.
The current base fees, detailed below, were reviewed with effect from 1 January 2020. Directors may also be reimbursed for
all travel and other expenses they incur in connection with the Consolidated Entity.
Non-executive directors
Per annum director fees (from 1 January 2020)
Chair
Other non-executive directors
$100,000
$60,000
24
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
Share-based compensation
Equity Settled
Equity settled payments made during the prior period to Directors and Key Management Personnel were one-off payments
for advisory and other fees in 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 30 October 2020, 324,250 unlisted performance rights were granted to key management personnel with a nil grant and
exercise price. The performance rights will vest on 31 August 2023 (subject to satisfaction of the relevant vesting conditions)
and expire on 31 October 2023. The vesting conditions include a number of performance and service conditions.
On 1 December 2020, following shareholder approval at the 2020 Annual General Meeting, 282,500 unlisted performance
rights were granted to Directors, Wesley Coote and Anthony Ganter, with a nil grant and exercise price. The performance
rights will vest on 31 August 2023 (subject to satisfaction of the relevant vesting conditions) and expire on 31 October 2023.
The vesting conditions include a number of performance and service conditions.
Grant dates:
Grant price:
Exercise price:
Vesting date:
Expiry date:
Restriction on shares issued on
exercise:
30 October 2020 and 1 December 2020
$nil
$nil
31 August 2023
31 October 2023
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
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 Company’s compounding annual growth in underlying Earnings Per Share
(underlying EPS) for the period from 1 July 2020 to 30 June 2023 greater than 10%
per annum.
The underlying EPS results to be used will be the Basic EPS recorded in the
Company’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 in its discretion.
50% of the Performance Rights will be exercisable if this condition is achieved.
Total Shareholder Return condition Total Shareholder Return (TSR) to exceed 150% for the period from 1 July 2020 to 30
June 2023, with TSR calculated as follows:
TSR = (Price End - Price Begin + Dividends)/Price Begin
Where:
Price Begin = share price at 1 July 2020;
Price End = share price at 30 June 2023; and
Dividends = total dividends paid per share during the period from 1 July 2020 to 30
June 2023.
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.
25
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
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.
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
Wesley Coote
Anthony Ganter
Anthony Ganter
Chris Banks
Chris Banks
Lisa Roach
Lisa Roach
Dean Hartley
Dean Hartley
Katherine Baker
Katherine Baker
Wesley Coote
Wesley Coote
Anthony Ganter
Anthony Ganter
Chris Banks
Chris Banks
Lisa Roach
Lisa Roach
Dean Hartley
Dean Hartley
Number of
rights
granted
Grant date
Vesting date and
exercisable date
Expiry date
Fair value
per right
at grant date
96,250 01 December 2020
96,250 01 December 2020
45,000 01 December 2020
45,000 01 December 2020
45,000 30 October 2020
45,000 30 October 2020
45,000 30 October 2020
45,000 30 October 2020
45,000 30 October 2020
45,000 30 October 2020
27,125 30 October 2020
27,125 30 October 2020
86,232 27 November 2019
86,231 27 November 2019
64,057 27 November 2019
64,058 27 November 2019
43,800 27 November 2019
43,800 27 November 2019
54,420 27 November 2019
54,420 27 November 2019
39,420 27 November 2019
39,420 27 November 2019
31 August 2023
31 August 2023
31 August 2023
31 August 2023
31 August 2023
31 August 2023
31 August 2023
31 August 2023
31 August 2023
31 August 2023
31 August 2023
31 August 2023
31 August 2022
31 August 2022
31 August 2022
31 August 2022
31 August 2022
31 August 2022
31 August 2022
31 August 2022
31 August 2022
31 August 2022
31 October 2023
31 October 2023
31 October 2023
31 October 2023
31 October 2023
31 October 2023
31 October 2023
31 October 2023
31 October 2023
31 October 2023
31 October 2023
31 October 2023
31 October 2022
31 October 2022
31 October 2022
31 October 2022
31 October 2022
31 October 2022
31 October 2022
31 October 2022
31 October 2022
31 October 2022
$0.270
$1.150
$0.270
$1.150
$0.140
$0.910
$0.140
$0.910
$0.140
$0.910
$0.140
$0.910
$0.920
$0.050
$0.920
$0.050
$0.920
$0.050
$0.920
$0.050
$0.920
$0.050
Performance rights granted carry no dividend or voting rights.
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
Colin Kangisser
Chris Banks
Lisa Roach
Dean Hartley
Katherine Baker
4,995,329
374,104
22,500
1,557,764
4,457,664
1,108,007
-
340,298
630,548
3,787,676
3,873
17,277,763
26
-
-
-
-
-
-
-
-
-
-
-
-
1,311,243
974,262
11,835
440,786
-
78,050
5,066,600
-
-
232,255
2,000
8,117,031
-
-
-
-
-
-
-
(148,028)
-
-
-
6,306,572
1,348,366
34,335
1,998,550
4,457,664
1,186,057
5,066,600
192,270
630,548
4,019,931
5,873
(148,028) 25,246,766
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
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
Colin Kangisser
Chris Banks
Lisa Roach
Dean Hartley
Katherine Baker
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
-
-
-
192,500
-
90,000
-
90,000
90,000
90,000
54,250
606,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
364,963
-
218,115
-
177,600
198,840
168,840
54,250
1,182,608
Loans to key management personnel and their related parties
A reconciliation of key management personnel loans are as follows:
Balance at
the start of
the year
$
Loans
written off
$
Loans
repaid
$
Balance at
the end of
the year
$
Chris Banks
200,000
(100,000)
(100,000)
-
Other transactions with key management personnel and their related parties
The following transactions occurred with related parties:
Consideration relating to the acquisition of The Optical Company (Aust) Pty Ltd
Ordinary shares issued for the acquisition of businesses associated with director Colin Kangisser
Cash payment for the acquisition of businesses associated with director Colin Kangisser
Deferred cash payment for the acquisition of businesses associated with director Colin Kangisser
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
Rent and outgoings paid to entities controlled by key management personnel Lisa Roach
Payment for bookkeeping services to an entity associated with Wesley Coote
Payment for orthotics and prosthetics to an entity associated with Darren Stewart
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
This concludes the remuneration report, which has been audited.
27
Consolidated
2021
$
12,126,000
32,028,000
1,537,085
45,691,085
320,144
238,338
139,556
219,496
263,930
336,378
1,517,842
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
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
30 October 2020
1 December 2020
Expiry date
31 October 2022
31 October 2023
31 October 2023
Number
under rights
2,543,358
378,500
282,500
3,204,358
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 performance rights
There were no ordinary shares of Healthia Limited issued on the exercise of performance rights during the year ended 30
June 2021 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 30 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 30 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.
28
Healthia Limited and its Controlled Entities
Directors' report
30 June 2021
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
___________________________
Dr Glen Frank Richards
Director
30 August 2021
29
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 T R MANN TO THE DIRECTORS OF HEALTHIA LIMITED
As lead auditor of Healthia Limited for the year ended 30 June 2021, 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 Healthia Limited and the entities it controlled during the period.
T R Mann
Director
BDO Audit Pty Ltd
Brisbane, 30 August 2021
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.
Healthia Limited and its Controlled Entities
Contents
30 June 2021
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
32
33
34
35
36
84
85
89
The financial statements cover Healthia Limited as a Consolidated Entity consisting of Healthia Limited and the entities it
controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Healthia
Limited's functional and presentation currency.
Healthia Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business is:
Level 4, East Tower
25 Montpelier Road
Bowen Hills QLD 4006
A description of the nature of the Consolidated Entity's operations and its principal activities are included in the Directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 30 August 2021.
31
Healthia Limited and its Controlled Entities
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
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
Impairment of receivables
Acquisition and integration costs
Share-based payments expense
Depreciation expense
Amortisation expense
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit 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
2021
$'000
2020
$'000
4
5
136,946
87,225
9,080
9,141
4,279
(18,194)
(82,833)
(3,402)
(1,837)
(7,356)
(271)
(4,208)
(1,180)
(13,183)
(1,017)
(3,674)
258
(7,106)
(57,450)
(2,267)
(1,248)
(5,586)
(308)
(2,665)
(254)
(9,101)
(661)
(2,725)
39
6
6
6
13,150
7,253
7
(3,973)
(2,105)
9,177
5,148
-
-
9,177
5,148
4,020
5,157
2,457
2,691
9,177
5,148
4,020
5,157
2,457
2,691
9,177
5,148
Basic earnings per share
Diluted earnings per share
Cents
Cents
38
38
6.48
6.23
4.27
4.10
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
32
Healthia Limited and its Controlled Entities
Consolidated statement of financial position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other 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 benefit obligations
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Employee benefit obligations
Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits/ (accumulated losses)
Equity attributable to the owners of Healthia Limited
Non-controlling interest
Total equity
Note
Consolidated
2021
$'000
2020
$'000
8
9
10
11
12
13
14
15
7
16
17
18
7
20
21
22
17
18
19
20
21
22
23
24
25
5,816
4,779
8,005
2,200
20,800
19
12,320
40,345
137,534
4,525
194,743
4,159
6,398
3,736
932
15,225
19
7,676
24,216
79,275
2,874
114,060
215,543
129,285
11,800
1,674
11,212
3,668
6,840
310
1,745
37,249
48,330
32,907
240
660
1,648
1,982
85,767
5,728
-
7,203
2,808
3,970
281
1,845
21,835
26,735
20,549
224
332
754
1,000
49,594
123,016
71,429
92,527
57,856
79,578
(3,519)
320
76,379
16,148
49,884
(4,190)
(1,793)
43,901
13,955
92,527
57,856
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
33
Healthia Limited and its Controlled Entities
Consolidated statement of changes in equity
For the year ended 30 June 2021
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)
(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
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
Consolidated
Issued
capital
$'000
Reserves
$'000
Retained
profits
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2020
49,884
(4,190)
(1,793)
13,955
57,856
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:
Contribution of equity, net of transaction cost
Issue of performance rights
Issue of ordinary shares as consideration for
business combinations (note 34)
Issue of ordinary shares as part of Dividend
Reinvestment Plan (note 23)
Issue of ordinary shares as consideration for
acquisition of non-controlling interest (note 23)
Contributions of clinic class shares
Issue of clinic class shares as consideration for
business combinations (note 34)
Buy-back of clinic class shares
Transactions with non-controlling interests
Distributions paid to non-controlling interest
Dividends paid (note 26)
-
-
-
12,596
-
13,448
3,044
606
-
-
-
-
-
-
-
-
-
5,157
4,020
9,177
-
-
-
5,157
4,020
9,177
-
1,180
-
-
-
-
-
-
(509)
-
-
-
-
-
-
-
-
-
-
-
-
(3,044)
-
-
-
-
-
2,767
1,584
(1,707)
-
(4,471)
-
12,596
1,180
13,448
3,044
606
2,767
1,584
(1,707)
(509)
(4,471)
(3,044)
Balance at 30 June 2021
79,578
(3,519)
320
16,148
92,527
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
34
Healthia Limited and its Controlled Entities
Consolidated statement of cash flows
For the year ended 30 June 2021
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
2021
$'000
2020
$'000
139,928
(115,618)
88,261
(72,441)
24,310
5
10,792
(3,674)
(5,155)
15,820
-
4,737
(2,725)
(499)
Net cash from operating activities
37
26,278
17,333
Cash flows from investing activities
Payment for purchase of businesses, net of cash acquired
Payments of contingent and deferred business purchases consideration
Payment for acquisition of non-controlling interest
Payments for property, plant and equipment
Payments for intangibles
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 lease liabilities
Dividends paid to non-controlling interest
Dividends paid
Proceeds from related party loan
34
13
15
23
23
37
37
26
(39,737)
(3,719)
(446)
(2,919)
(310)
(12,974)
(550)
-
(1,389)
-
(47,131)
(14,913)
16,271
(631)
-
2,767
(1,707)
21,595
(10,044)
(4,471)
(3,044)
100
-
-
103
1,311
(567)
7,130
(7,152)
(1,624)
-
-
Net cash from/ (used in) financing activities
20,836
(799)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
(17)
4,159
1,621
2,538
Cash and cash equivalents at the end of the financial year
8
4,142
4,159
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
35
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
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.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
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.
As at 30 June 2021, whilst the Consolidated Entity has a working capital deficiency of $16,449,000 as at 30 June 2021 (30
June 2020: $6,610,000), $11,212,000 of which relates to current liabilities of property leases (under AASB16) where the
associated right-of-use assets are recognised as non-current assets. Cash flow from customers will be generated from the
Consolidated Entity's 212 business sites/ clinics and a portion of these cash flows will be used to pay the respective lease
liability repayments (property rents).
Notwithstanding the working capital deficiency, the Directors are satisfied the Consolidated Entity is a going concern after
considering the following factors:
●
An internal cashflow forecast is prepared and regularly monitored, which shows adequate cash generation to cover
current liabilities for at least the next twelve month period;
Current Contingent Consideration Liability of $680,000 will only be achieved if cash flow generation for certain business
acquisitions remains as forecast; and
Employee benefit obligations of $6,840,000 relate to Annual Leave and Long Service Leave accrued and the realisation
of which is within the Consolidated Entity's control (i.e. by managing employee leave).
●
●
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').
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 33.
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 2021 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'.
36
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 1. Significant accounting policies (continued)
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.
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.
37
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 1. Significant accounting policies (continued)
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, its 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.
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.
38
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 1. Significant accounting policies (continued)
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 2021. The
Consolidated Entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
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.
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 CGUs,
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 three CGUs, being the Bodies&
Minds, Feet& Ankles, Eyes& Ears 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.
39
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 2. Critical accounting judgements, estimates and assumptions (continued)
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 2019 Financial
year 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.
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. 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.
Note 3. Operating segments
Identification of reportable operating segments
The Consolidated Entity has three operating segments: Feet & Ankles (previously Podiatry), Bodies & Minds (previously
Physiotherapy) and Eyes & Ears.
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). Underlying EBITDA
also excludes the impact of acquisition and integration costs, the revenue and expense impacts of 'COVID-19' and other
one-off non-recurring income and expenses. The accounting policies adopted for internal reporting to the CODM are
consistent with those adopted in the financial statements.
The Consolidated Entity has included underlying EBITDA. This measure is not defined under IFRS and are, therefore, termed
"non-IFRS" measures and are not audited.
The information is reported to the CODM on a monthly basis.
40
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 3. Operating segments (continued)
Types of products and services
The principal products and services of each of these operating segments are as follows:
Feet and Ankles Division
(previously Podiatry)
Bodies and Minds Division
(previously Physiotherapy)
Eyes and Ears Division
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.
This division provides optometry services.
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 2021 exclude the impact of non-recurring income and expenses such
as acquisition and integration costs.
Operating segment information
Consolidated - 2021
Revenue
Sales to external customers
Total revenue
EBITDA
Depreciation and amortisation expense
Share-based payments expense
Finance costs
Acquisition and integration costs
Profit/(loss) before income tax expense
Income tax expense
Profit after income tax expense
Other profit and loss disclosure
Employee benefits expenses
Feet
& Ankles
$'000
Bodies
& Minds
$'000
Eyes
& Ears
$'000
Other*
$'000
Total
$'000
57,363
57,363
19,445
(6,285)
-
-
-
13,160
59,258
59,258
18,338
(4,899)
-
-
-
13,439
20,325
20,325
6,731
(3,016)
-
-
-
3,715
-
-
136,946
136,946
(8,102)
-
(1,180)
(3,674)
(4,208)
(17,164)
36,412
(14,200)
(1,180)
(3,674)
(4,208)
13,150
(3,973)
9,177
25,367
40,513
10,251
6,702
82,833
*
The ‘Other’ category comprises corporate functions and does not represent an operating segment.
Consolidated - 2020
Revenue
Sales to external customers
Total revenue
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
Other profit and loss disclosure
Employee benefits expense
Podiatry
$'000
Physio-
therapy
$'000
Other*
$'000
Total
$'000
45,478
45,478
16,816
(5,765)
-
-
-
-
11,051
41,747
41,747
12,278
(3,997)
-
-
-
-
8,281
-
-
(6,347)
-
(2,725)
(2,665)
(88)
(254)
(12,079)
87,225
87,225
22,747
(9,762)
(2,725)
(2,665)
(88)
(254)
7,253
(2,105)
5,148
22,196
31,013
4,241
57,450
*
The ‘Other’ category comprises corporate functions and does not represent an operating segment.
41
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 3. Operating segments (continued)
Accounting policy for operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Note 4. Revenue from contracts with customers
Rendering of services
Sale of goods
Revenue from contracts with customers
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Segment Revenue
Feet & Ankles (previously Podiatry)
Bodies & Minds (previously Physiotherapy)
Eyes & Ears
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
2021
$'000
2020
$'000
109,698
27,248
80,338
6,887
136,946
87,225
Consolidated
2021
$'000
2020
$'000
57,363
59,258
20,325
45,478
41,747
-
136,946
87,225
136,159
787
87,028
197
136,946
87,225
136,946
87,225
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.
42
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 4. Revenue from contracts with customers (continued)
Revenue from the sale of goods from the orthotics laboratory and podiatry wholesale business goods is recognised when
control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the
goods have been shipped to the specific location, and the risks of obsolescence and loss have been transferred to the
customer.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional.
Rendering of services
Revenue from a contract to provide services is recognised as the services are rendered based on either a fixed price or an
hourly rate.
Note 5. Other income
Government grants (Covid-19)
Interest
Sub-tenant rent
Other income
Other income
Consolidated
2021
$'000
2020
$'000
7,606
5
989
480
7,920
-
923
298
9,080
9,141
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 commenced 30 March 2020. The Consolidated Entity ceased being eligible for JobKeeper
payments on 27 September 2020.
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.
43
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
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
Defined contribution superannuation expense
Finance costs
Interest expense - bank
Interest expense - lease liabilities
Finance costs expensed
Consolidated
2021
$'000
2020
$'000
13,915
6,848
607
2,267
10,190
119
794
1,397
6,650
260
13,183
9,101
887
130
1,017
571
90
661
14,200
9,762
6,857
5,454
1,662
2,012
1,378
1,347
3,674
2,725
44
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
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
Under/over
Sundry items
Adjustment recognised for prior periods
Income tax expense
Amounts credited directly to equity
Deferred tax assets
Consolidated
2021
$'000
2020
$'000
5,890
(1,855)
(62)
2,793
(245)
(443)
3,973
2,105
(1,855)
(245)
13,150
7,253
3,945
2,176
204
(114)
-
4,035
(62)
356
-
16
2,548
(443)
3,973
2,105
Consolidated
2021
$'000
2020
$'000
(239)
(748)
45
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
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
Losses - Revenue & Capital
Deferred tax asset
Amount expected to be settled within 12 months
Movements:
Opening balance
Credited to profit or loss
Credited to equity
Additions through business combinations (note 34)
Other
Under/over
Closing balance
Provision for income tax
Provision for income tax
Consolidated
2021
$'000
2020
$'000
-
(12,099)
(914)
3,353
-
13,224
116
592
43
210
1,003
(7,265)
(551)
1,914
(1,121)
8,193
160
652
(111)
-
4,525
2,874
4,525
2,874
2,874
1,855
239
129
(171)
(401)
2,074
245
748
37
(230)
-
4,525
2,874
Consolidated
2021
$'000
2020
$'000
3,668
2,808
Accounting policy for income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
●
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
46
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 7. Income tax (continued)
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
Franking credits available for subsequent financial years based on a tax rate of 30%
10,479
2,030
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
Consolidated
2021
$'000
2020
$'000
Note 8. Cash and cash equivalents
Current assets
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
2021
$'000
2020
$'000
132
5,684
78
4,081
5,816
4,159
5,816
(1,674)
4,159
-
4,142
4,159
Accounting policy for cash and cash equivalents
Cash and cash equivalents include 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 include bank overdrafts, which are shown within borrowings in current liabilities on the Statement
of Financial Position.
47
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 9. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Government grant (COVID-19) receivable
Related party loan receivable
GST recoverable
Consolidated
2021
$'000
2020
$'000
4,578
(377)
4,201
-
-
-
578
2,258
(73)
2,185
553
3,183
200
277
4,779
6,398
Related party loan receivable relates to money owed 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 $271,000 (30 June 2020: $308,000) in profit or loss in respect of the
expected credit losses for the year ended 30 June 2021.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Current
0 to 3 months overdue
Over 3 months overdue
Expected credit loss rate
2021
%
2020
%
Carrying amount
2020
$'000
2021
$'000
-
-
28%
-
-
15%
2,362
876
1,340
1,138
647
473
4,578
2,258
Allowance for expected
credit losses
2021
$'000
2020
$'000
-
-
377
377
-
-
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 2021 and rates have increased in the Over 3 months
overdue category to 28% (30 June 2020: 15%).
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.
48
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 10. Inventories
Current assets
Consumables at cost
Finished goods at cost
Consolidated
2021
$'000
2020
$'000
1,134
6,871
1,389
2,347
8,005
3,736
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. 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 assets
Current assets
Prepayments
Other current assets
Note 12. Investments accounted for using the equity method
Non-current assets
Investment in associate - Fracture Holdco Pty Ltd
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
Closing carrying amount
Consolidated
2021
$'000
2020
$'000
1,128
1,072
2,200
620
312
932
Consolidated
2021
$'000
2020
$'000
19
19
19
-
19
10
9
19
49
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 12. Investments accounted for using the equity method (continued)
Interests in associates
Interests in associates are accounted for using the equity method of accounting. Information relating to associates that are
material to the Consolidated Entity are set out below:
Name
Principal place of business /
Country of incorporation
Ownership interest
2020
2021
%
%
Fracture Holdco Pty Ltd
Australia
45.00%
45.00%
Note 13. Property, plant and equipment
Non-current assets
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Consolidated
2021
$'000
2020
$'000
8,530
(4,384)
4,146
20,007
(11,833)
8,174
4,517
(1,690)
2,827
9,806
(4,957)
4,849
12,320
7,676
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 2019
Additions
Additions through business combination
Disposals
Reclassified to intangible assets (note 15)
Depreciation expense
Balance at 30 June 2020
Additions
Additions through business combinations (note 34)
Disposals
Depreciation expense
Leasehold
Plant and
improvements equipment
$'000
$'000
Total
$'000
3,368
98
155
-
-
(794)
2,827
1,082
844
-
(607)
4,275
1,291
1,035
(133)
(222)
(1,397)
4,849
1,837
3,810
(55)
(2,267)
7,643
1,389
1,190
(133)
(222)
(2,191)
7,676
2,919
4,654
(55)
(2,874)
Balance at 30 June 2021
4,146
8,174
12,320
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.
50
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 13. Property, plant and equipment (continued)
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.
Note 14. Right-of-use assets
Non-current assets
Land and buildings - right-of-use
Less: Accumulated depreciation
Plant and equipment - right-of-use
Less: Accumulated depreciation
Consolidated
2021
$'000
2020
$'000
56,942
(16,840)
40,102
622
(379)
243
30,519
(6,650)
23,869
607
(260)
347
40,345
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 2019
Additions through business combination
Additions
Depreciation expense
Balance at 30 June 2020
Additions
Additions through business combinations (note 34)
Depreciation expense
Land and
buildings -
right-
of-use
$'000
Plant and
equipment -
right-
of-use
$'000
21,153
6,831
2,535
(6,650)
23,869
9,922
16,501
(10,190)
607
-
-
(260)
347
15
-
(119)
Total
$'000
21,760
6,831
2,535
(6,910)
24,216
9,937
16,501
(10,309)
Balance at 30 June 2021
40,102
243
40,345
51
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 14. Right-of-use assets (continued)
For other lease disclosures, refer to:
●
●
●
●
note 6 for depreciation on right-of-use assets and interest on lease liabilities;
note 18 for lease liabilities at the reporting date;
note 27 for maturity analysis of lease liabilities; and
consolidated statement of cash flows for repayment of lease liabilities.
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.
Note 15. Intangibles
Non-current assets
Goodwill - at cost
Trademarks
Customer lists
Less: Accumulated amortisation
Software - at cost
Less: Accumulated amortisation
Consolidated
2021
$'000
2020
$'000
133,650
77,173
255
20
5,361
(2,133)
3,228
699
(298)
401
3,108
(1,248)
1,860
337
(115)
222
137,534
79,275
52
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 15. Intangibles (continued)
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 2019
Additions through business combination
Reclassified from property, plant and
equipment (note 13)
Amortisation expense
Balance at 30 June 2020
Additions
Additions through business combinations (note
34)
Amortisation expense
Balance at 30 June 2021
Goodwill
$'000
Trademarks
$'000
lists
$'000
Software
$'000
Total
$'000
Customer
60,485
16,688
-
-
77,173
-
56,477
-
133,650
20
-
-
-
20
1
234
-
255
1,716
715
-
(571)
1,860
-
2,255
(887)
3,228
-
-
62,221
17,403
222
-
222
309
-
(130)
222
(571)
79,275
310
58,966
(1,017)
401
137,534
A CGU level summary of the goodwill allocation is presented below:
Feet & Ankles (previously Podiatry)
Bodies & Minds (previously Physiotherapy)
Eyes & Ears
Total goodwill
Consolidated
2021
$'000
2020
$'000
43,305
47,071
43,274
39,208
37,965
-
133,650
77,173
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.
Trademarks
Significant costs associated with trademarks are deferred. Trademarks are tested annually for impairment.
53
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 15. Intangibles (continued)
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 estimated 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 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 CGUs,
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 three CGUs, being the Bodies
and Minds, Feet and Ankles and Eyes and Ears 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.
The following key assumptions were used in the discounted cash flow model for both the Bodies and Minds, Feet and Ankles
and Eyes and Ears divisions:
●
The Consolidated Entity tests for goodwill impairment on an annual basis. The recoverable 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 2022, based on the financial budget
approved by the Board. Cash flow projections for periods beyond the 2022 period are extrapolated using the estimated
growth rates below
Goodwill has been allocated to the three groupings of CGUs representing Bodies and Minds, Feet and Ankles and Eyes
and Ears
Corporate overheads have been apportioned to the CGUs based on the following percentages:
F&A Division: 55%
B&M Division: 23%
E&E Division: 22%
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% (2020: 3.0%) per annum projected revenue growth
3.0% (2020: 3.0%) per annum increase in operating costs and overheads
Maintenance capital expenditures of 1.0% (2020: 1.0%) of revenue per annum
13.0% (2020: 13.0%) pre-tax discount rate
3.0% (2020: 3.0%) terminal value growth rate
It is inherently difficult to predict the impact of any future COVID-19 developments. Whilst temporary measures, such as
lockdowns, may have a short-term impact, it is expected to be immaterial to the longer term and aggregate cashflows of the
Consolidated Entity.
The Consolidated Entity believes that the assumptions adopted in the value-in-use calculations are appropriate.
Management has determined the projected growth rates for revenue, operating costs and overheads over the five-year
forecast period based on past performance and management's expectation of market development.
The maintenance capital expenditure rate has been determined based on the historical experience of management, and the
planned capital expenditure.
54
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 15. Intangibles (continued)
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 terminal value growth rate is consistent with forecasts included within industry reports.
Based on the above assumptions, the recoverable amount of the Bodies & Minds CGU exceeds the carrying amount by
$56,361,378.
Based on the above assumptions, the recoverable amount of the Feet & Ankles CGU exceeds the carrying amount by
$50,721,917.
Based on the above assumptions, the recoverable amount of the Eyes & Ears CGU exceeds the carrying amount by
$31,083,182.
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.
Bodies & Minds division analysis
●
●
Growth rates for revenue, costs and terminal value would need to decrease by more than 6% before goodwill would
need to be impaired with all other assumptions remaining constant.
The discount rate would be required to increase by 660 basis points before goodwill would need to be impaired, with all
other assumptions remain constant.
Feet & Ankles division analysis
●
●
Growth rates for revenue, costs and terminal value would need to decrease by more than 7% before goodwill would
need to be impaired with all other assumptions remaining constant.
The discount rate would be required to increase by 560 basis points before goodwill would need to be impaired, with all
other assumptions remain constant.
Eyes & Ears division analysis
●
●
Growth rates for revenue, costs and terminal value would need to decrease by more than 4% before goodwill would
need to be impaired with all other assumptions remaining constant.
The discount rate would be required to increase by 400 basis points before goodwill would need to be impaired, with all
other assumptions remain constant.
As a result of the value-in-use calculation, it was determined no impairment was identified.
Note 16. Trade and other payables
Current liabilities
Trade payables
Accruals
PAYG tax payable
GST collected
Superannuation payable
Other payables
55
Consolidated
2021
$'000
2020
$'000
4,000
2,413
3,443
-
1,718
226
1,447
2,013
1,090
88
1,044
46
11,800
5,728
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
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 liabilities
Bank overdraft
Non-current liabilities
Bank loans
Refer to note 27 for further information on financial instruments.
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
2021
$'000
2020
$'000
1,674
-
48,330
26,735
50,004
26,735
Consolidated
2021
$'000
2020
$'000
2,000
70,000
72,000
1,674
48,330
50,004
326
21,670
21,996
1,000
50,000
51,000
-
26,735
26,735
1,000
23,265
24,265
Assets pledged as security:
The bank overdraft and loan are secured by a General Security Agreement over the Consolidated Entity.
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.
56
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 18. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Consolidated
2021
$'000
2020
$'000
11,212
7,203
32,907
20,549
44,119
27,752
Refer to note 27 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. Lease payments to be made under reasonably certain
extension options are also included in the measurement of the liability. The variable lease payments that do not depend on
an index or a rate are expensed in the period in which they are incurred.
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.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The Consolidated Entity's leasing activities
The Consolidated Entity leases various clinics, retail stores, offices and warehouses. Rental contracts are typically made for
a fixed period of 3 to 5 years but may have extension options.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessors.
Lease assets may not be used as security for borrowing purposes.
Extension and termination options
Extension and termination options are included in a number of property and equipment leases across the Consolidated
Entity. These are used to maximise operational flexibility in terms of managing the assets used in the group's operations.
The majority of extension and termination options held are exercisable only by the Consolidated Entity and not by the
respective lessor.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options)
are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
Most extension options in clinics, retail stores, offices and warehouses have not been included in the lease liability because
the Consolidated Entity replaces the assets without significant cost or business disruption.
57
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 19. Derivative financial instruments
Non-current liabilities
Interest rate swap contracts liabilities
Refer to note 27 for further information on financial instruments.
Refer to note 28 for further information on fair value measurement.
Consolidated
2021
$'000
2020
$'000
240
224
Accounting policy for derivative financial instruments
The Consolidated Entity uses derivative financial instruments, such as interest rate swaps, to hedge its interest rate risks.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered
into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive
and as financial liabilities when the fair value is negative.
Note 20. Employee benefit obligations
Current liabilities
Annual leave
Long service leave
Non-current liabilities
Long service leave
Consolidated
2021
$'000
2020
$'000
4,941
1,899
3,037
933
6,840
3,970
660
332
7,500
4,302
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.
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.
58
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 21. Provisions
Current liabilities
Lease make good provision
Non-current liabilities
Lease make good provision
Consolidated
2021
$'000
2020
$'000
310
281
1,648
754
1,958
1,035
Lease make good
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.
Accounting policy for provisions
Provisions are recognised when the Consolidated Entity has a present (legal or constructive) obligation as a result of a past
event, it is probable the Consolidated Entity will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The
increase in the provision resulting from the passage of time is recognised as a finance cost.
Note 22. Other liabilities
Current liabilities
Contingent consideration
Deferred consideration
Non-current liabilities
Contingent consideration
Consolidated
2021
$'000
2020
$'000
680
1,065
1,845
-
1,745
1,845
1,982
1,000
3,727
2,845
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 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.
59
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 23. Issued capital
Consolidated
2021
Shares
'000
2020
Shares
'000
2021
$'000
2020
$'000
Ordinary shares - fully paid
90,205
63,035
79,578
49,884
Movements in ordinary share capital
Details
Balance
Balance
Issue of ordinary shares - Dividend Reinvestment
Plan
Issue of ordinary shares - Dividend Reinvestment
Plan
Issue of ordinary shares - Retail Entitlement Offer
Issue of ordinary shares - Institutional Entitlement
Offer
Issue of ordinary shares - acquisition of The Optical
Company (refer to Note 34)
Issue of ordinary shares - acquisition of the non-
controlling interest
Issue of ordinary shares - acquisition of Natural Fit
Footwear (refer to note 34)
Issue of ordinary shares - Dividend Reinvestment
Plan
Share issue transaction costs (net of tax)
Balance
Date
1 July 2019
30 June 2020
Shares
'000
63,035
63,035
Issue price
$'000
49,884
49,884
24 September 2020
1,156
$0.99
1,147
28 September 2020
3 November 2020
17 November 2020
30 November 2020
115
9,984
3,939
9,400
$0.99
$0.95
114
9,485
$0.95
3,742
$1.29
12,126
1 December 2020
469
$1.29
606
17 December 2020
1,066
$1.24
1,322
23 March 2021
30 June 2021
1,041
-
90,205
$1.71
$0.00
1,783
(631)
79,578
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.
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.
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.
60
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 23. Issued capital (continued)
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 30 June 2020 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 24. Reserves
Share-based payments reserve
Transactions with non-controlling interest reserve
Pre-IPO distributions reserve
Consolidated
2021
$'000
2020
$'000
1,835
(2,860)
(2,494)
655
(2,351)
(2,494)
(3,519)
(4,190)
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 $1,180,000 (30 June 2020: $254,000) was recognised in the year. Refer to note 39 for
further details.
Pre-IPO distribution reserve
The reserve records any differences between the acquired net assets and the consideration under continuation accounting.
The transaction relevant to the understanding of this reserve account is detailed below:
Accounting for the MFDA Acquisition
Healthia Limited was incorporated on 10 May 2018 as a holding company to acquire the podiatry and physiotherapy service
business as part of the Initial Public Offer of Healthia Limited. In this respect, Healthia Limited acquired all of the ordinary
shares in My FootDr (Aust) Ltd (the MFDA Group) on 30 July 2018. In accordance with AASB3 Business Combinations, the
acquisition of MFDA Group by Healthia Limited did not meet the definition of a business combination. Therefore, Healthia
Limited's first issued financial statements applied the continuation method of accounting for the combination of the MFDA
Group.
Under continuation accounting, the Consolidated Entity effectively adopted book value accounting whereby the assets and
liabilities of the legal acquiree (MFDA Group) were recognised at their previous carrying amounts. No adjustments were
made to reflect fair values and no new assets (including goodwill) and liabilities of the legal acquiree were recognised at the
date of the business combination. Any difference between the acquired net assets and the consideration were recognised
through the pre-IPO distribution reserve account 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 interest reserve are 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.
An increase of $509,000 was recorded to this reserve during the year from the acquisition of the non-controlling interest of
Mount Gambier Optical Pty Ltd.
61
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 25. Non-controlling interest
Issued equity - Clinic Class shares
Retained profits
Consolidated
2021
$'000
2020
$'000
15,329
819
12,685
1,270
16,148
13,955
Classification of Clinic Class Shares: Equity
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, physiotherapy, and optical clinic. In accordance with the substance
of the contractual arrangements and the definition of an equity instrument, the Clinic Class Shares are classified as equity
instruments.
Refer to Note 2 for details of the key judgements regarding the accounting treatment.
Note 26. Dividends
Dividends paid during the financial year were as follows:
Final dividend for the year ended 30 June 2020 of 2 cents per ordinary share
Interim dividend for the year ended 30 June 2021 of 2 cents per ordinary share
Consolidated
2021
$'000
2020
$'000
1,261
1,783
3,044
-
-
-
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 2.50 cents per share to the ordinary shareholders of Healthia Limited.
Accounting policy for dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Note 27. 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.
62
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 27. Financial instruments (continued)
Market risk
Interest rate risk
The Consolidated Entity's main interest rate risk arises from long-term borrowings and interest rate swap contracts.
Borrowings obtained at variable rates expose the Consolidated Entity to interest rate risk. Borrowings obtained at fixed rates
expose the Consolidated Entity to fair value interest rate risk.
At the reporting date, the Consolidated Entity had the following variable rate borrowings and interest rate swap contracts
outstanding:
Bank loans
Interest rate swaps (notional principal amount)
Net exposure to cash flow interest rate risk
Consolidated
2021
$'000
2020
$'000
48,330
(20,000)
26,735
(20,000)
28,330
6,735
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 $48,330,000 (30 June 2020: $26,735,000), are interest only
loans. At the reporting date, $20,000,000 (30 June 2020: $20,000,000) of debt was hedged by floating to fixed interest rate
swaps.
An official increase in interest rates of 100 (30 June 2020: 100) basis points would have an adverse effect on profit before
tax of $283,300 (30 June 2020: $67,350) per annum. The percentage change is based on the expected volatility of interest
rates using market data and analysts’ forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Consolidated Entity. The Consolidated Entity has a strict code of credit, including obtaining agency credit information,
confirming references and setting appropriate credit limits. The Consolidated Entity obtains guarantees where appropriate to
mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying
amount, net of any provisions for impairment of those assets, as disclosed in the Statement of Financial Position and notes
to the financial statements. The Consolidated Entity does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the Consolidated Entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Consolidated Entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank overdraft
Bank loans
Consolidated
2021
$'000
2020
$'000
326
21,670
21,996
1,000
23,265
24,265
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
2.50 years (30 June 2020: 2.25 years).
63
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 27. Financial instruments (continued)
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 - 2021
Non-derivatives
Non-interest bearing
Trade and other payables
Other liabilities
Interest-bearing - variable
Bank overdraft
Bank loans
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Derivatives
Interest rate swaps inflow
Interest rate swaps outflow
Total derivatives
Consolidated - 2020
Non-derivatives
Non-interest bearing
Trade and other payables
Other liabilities
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
-
-
-
-
-
-
-
-
7.00%
4.90%
1,674
2,368
-
2,368
-
49,711
-
-
-
-
11,800
3,727
11,800
3,727
-
-
1,674
54,447
5.00%
13,331
17,373
11,790
14,158
22,111
71,822
4,306
4,306
-
15,527
51,538
123,186
0.06%
1.26%
(12)
252
240
(3)
63
60
-
-
-
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
-
-
-
-
-
-
-
-
4.90%
1,310
1,310
27,063
-
-
-
-
-
-
-
-
-
(15)
315
300
Non-interest
bearing
$'000
Remaining
contractual
maturities
$'000
5,728
2,845
5,728
2,845
-
29,683
5.00%
8,326
9,636
8,372
9,682
18,152
45,215
5,343
5,343
-
8,573
40,193
78,449
0.14%
1.26%
(28)
252
224
(35)
315
280
-
-
-
-
-
-
-
-
-
(63)
567
504
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
64
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 28. 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 - 2021
Liabilities
Interest rate swap
Contingent consideration
Total liabilities
Consolidated - 2020
Liabilities
Interest rate swap
Contingent consideration
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
-
-
240
-
240
-
2,662
2,662
240
2,662
2,902
Level 2
$'000
Level 3
$'000
Total
$'000
224
-
224
-
2,845
2,845
224
2,845
3,069
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. Consideration is capped at the values disclosed in the
financial statements.
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 2019
Additions - new business combinations
Settlement of contingent consideration
Balance at 30 June 2020
Additions - new business combinations
Settlement of contingent consideration
Amounts reversed in year
Balance at 30 June 2021
65
Contingent
consideration
$'000
1,495
1,850
(500)
2,845
2,386
(2,324)
(245)
2,662
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 28. Fair value measurement (continued)
The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:
Description
Unobservable inputs
Range
(weighted average)
Sensitivity
Contingent
consideration
Expected EBITDA (pre-
AASB 16) of acquired
clinics
$25,000 - $900,000
Consideration is capped at values disclosed in
the financials. No sensitivity adjustments
required.
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.
Note 29. 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
Consolidated
2021
$
2020
$
1,846,768
172,277
25,629
279,383
1,440,426
121,730
19,436
5,192
2,324,057
1,586,784
66
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 30. Remuneration of auditors
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
Non-audit services - BDO
Taxation and business advisory services
R&D advisory services
Total remuneration for non-audit services
Total remuneration of BDO
Note 31. Contingent liabilities
Consolidated
2021
$
2020
$
221,447
218,723
232,447
-
205,485
7,500
232,447
212,985
453,894
431,708
The Consolidated Entity has given bank guarantees as at 30 June 2021 of $3,032,151 (30 June 2020: $1,992,498) to various
landlords.
As at 30 June 2021, the subsidiary of the Consolidated entity My FootDr (Aust) Limited (MFD) is a defendant in proceedings
in the District Court of New South Wales. The estimated potential liability of MFD in connection with the Proceedings, in a
worst case scenario, where judgement is entered against MFD is $328,000.
Note 32. Related party transactions
Subsidiaries
Interests in subsidiaries are set out in note 35.
Associates
Interests in associates are set out in note 12.
Key management personnel
Disclosures relating to key management personnel are set out in note 29 and the remuneration report included in the
Directors' report.
67
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 32. Related party transactions (continued)
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2021
$
2020
$
Consideration relating to the acquisition of businesses at the time of acquisition of The
Optical Company
Ordinary shares issued for the acquisition of businesses associated with director Colin
Kangisser
Cash payment for the acquisition of businesses associated with director Colin Kangisser
Deferred cash payment for the acquisition of businesses associated with director Colin
Kangisser
12,126,000
32,028,000
1,537,085
-
-
-
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
Rent and outgoings paid to entities controlled by key management personnel Lisa Roach
Payment for bookkeeping services to an entity associated with Wesley Coote
Payment for orthotics and prosthetics to an entity associated with Darren Stewart
320,144
238,338
139,556
219,496
263,930
336,378
333,683
174,213
160,771
170,461
232,821
-
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
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 key management personnel, Chris Banks
$100,000 was repaid and $100,000 of the balance was written off during the period.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 33. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
68
Consolidated
2021
$
2020
$
-
200,000
Parent
2021
$'000
2020
$'000
1,812
1,812
(338)
(338)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 33. 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
2021
$'000
2020
$'000
60
76
109,811
59,845
1,413
2
50,614
26,961
34,667
1,720
22,810
33,604
205
(925)
59,197
32,884
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 2021 and 30 June 2020.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Consolidated Entity, as disclosed in note 1 and
within the different notes to the financial statement, 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 34. Business combinations
2021
Acquisition of the Optical Company (Eyes and Ears Division)
Healthia successfully completed the acquisition of The Optical Company ('TOC') on 30 November 2020, representing 41
optical stores and eyewear frame distributor, AED (note: the Consolidated Entity’s results for the period ending 30 June
2021, include 7 months of TOC trading).
The goodwill is attributable mainly to the skills, technical talent and established clinics chain of TOC's work force and the
synergies expected to be achieved from integrating the company into the Group's existing business. None of the goodwill
recognised is expected to be deductible for tax purposes.
Initial consideration paid for the acquisitions was $44.16 million including $32.03 million in cash consideration, $12.13 million
in ordinary Healthia Limited share consideration, with up to an additional $2.60 million payable in deferred consideration
which is due in 12 months after the completion date.
69
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 34. Business combinations (continued)
The increase in acquisition-date fair value of consideration from the contract price of $43.00 million is due to an increase in
the share price from $0.95 per share at time of signing Share Sale Documentation (and pre capital raising/public
announcement of the deal) and the share price of $1.29 at the date of settlement. This share price increase resulted in a
$3.36 million increase in acquisition-date fair value of consideration. The remaining difference in purchase consideration is
due to cash and working capital delivered in the acquired entities at settlement.
Healthia shares were issued to the Vendors and were subject to voluntary escrow for between 6 months and 24 months.
For the period ended 30 June 2021, the acquired businesses contributed revenue of $20.30 million and EBITDA (less lease
payments or pre-AASB 16 change) of $4.75 million to the Consolidated Entity. If these acquisitions had been held for a full
12 month period (by annualising the actual performance), the acquired businesses would have contributed revenue of $34.80
million and EBITDA (less lease payments or pre-AASB 16 change) of $8.14 million to the Consolidated Entity.
Acquisition of CQ Physio (Bodies and Minds Division)
The Consolidated Entity acquired the business named CQ Physiotherapy, on 16 October 2020, comprising 3 physiotherapy
clinics during the current period. Initial consideration paid for the acquisition was $4.66 million including $3.67 million in cash
consideration and $0.99 million in Clinic Class Share consideration.
For the period ended 30 June 2021, the acquired businesses contributed revenue $4.45 million and EBITDA of $0.64 million
(less lease payments or pre-AASB 16 change) to the Consolidated Entity. If these acquisitions had been held for a full 12
months period (by annualising the actual performance), the acquired businesses would have contributed revenue of $6.29
million and EBITDA (less lease payments or pre-AASB 16 change) of $0.90 million to the Consolidated Entity.
Acquisition of Other Bodies and Minds Clinics
The Consolidated Entity acquired an additional 7 physiotherapy clinics during the current period. Initial consideration paid for
the acquisition was $3.97 million including $3.38 million in cash consideration, $0.59 million in Clinic Class Share
consideration, with up to an additional $0.92 million payable in contingent consideration.
For the period ended 30 June 2021, the acquired businesses contributed revenue of $2.75 million and EBITDA (less lease
payments or pre-AASB 16 change) of $0.30 million to the Consolidated Entity. If these acquisitions had been held for a full
12 months period (by annualising the actual performance), the acquired businesses would have contributed revenue of $6.29
million and EBITDA (less lease payments or pre-AASB 16 change) of $0.75 million to the Consolidated Entity.
Acquisition of Natural Fit (Feet and Ankles Division)
The Consolidated Entity acquired the business named Natural Fit on 17 December 2020, comprising 6 retail footwear stores
during the current period. Initial consideration paid for the acquisition was $4.21 million including $2.89 million in cash
consideration, $1.32 million in ordinary Healthia Limited share consideration, with up to an additional $1.35 million payable
in contingent consideration.
The increase in acquisition-date fair value of consideration from the contract price is due to an increase in the share price
from $0.95 per share at time of signing Share Sale Documentation and the share price of $1.24 at the date of settlement.
This share price increase resulted in a $0.31 million increase in acquisition-date fair value of consideration. The remaining
difference in purchase consideration is due to settlement adjustments, including the value of inventory delivered at settlement
of $1.14 million.
For the period ended 30 June 2021, the acquired businesses contributed revenue of $2.16 million and EBITDA (less lease
payments or pre-AASB 16 change) of $(0.03) million to the Consolidated Entity. Note that this business has experienced
store closures during the various NSW and VIC lockdowns as a result of being predominantly a retail business.
Acquisition of Other Feet and Ankles Clinics
The Consolidated Entity acquired an additional podiatry clinic during the current period. Total consideration paid for the
acquisition was $0.10 million in cash consideration.
For the period ended 30 June 2021, the acquired business contributed revenue of $0.14 million and EBITDA (less lease
payments or pre-AASB 16 change) of $(0.01) million to the Consolidated Entity.
70
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 34. Business combinations (continued)
Acquisition of Other Eyes and Ears Clinics
The Consolidated Entity acquired an additional optometry clinic during the current period. Consideration paid for the
acquisition was $0.26 million in cash consideration, with up to an additional $0.11 million payable in contingent consideration.
For the period ended 30 June 2021, the acquired businesses contributed revenue of $0.11 million and EBITDA of $0.05
million (less lease payments or pre-AASB 16 change) to the Consolidated Entity. If these acquisitions had been held for a
full 12 month period (by annualising the actual performance), the acquired businesses would have contributed revenue of
$0.89 million and EBITDA (less lease payments or pre-AASB 16 change) of $0.42 million to the Consolidated Entity.
Acquisition Rationale
All 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.
71
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 34. Business combinations (continued)
Details of the acquisitions are as follows:
Eyes & Ears Division
Bodies and Minds Division
Feet & Ankles Division
Cash and cash equivalents
Trade receivables
Inventories
Other current assets
Plant and equipment
Right-of-use assets
Patents and trademarks
Customer lists
Deferred tax asset
Trade payables
Other payables
Provision for income tax
Deferred tax liability
Employee benefits
Lease liability
Other liabilities
Less: non-controlling interest
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
Deferred consideration
Clinic Class Shares issued to
vendor
Cash used to acquire business,
net of cash acquired:
Acquisition-date fair value of the
total consideration transferred
Less: cash and cash equivalents
Less: deferred / contingent
consideration
Less: Healthia Limited shares
issued to vendor
Less: Clinic Class Shares issued
to vendor
TOC
Others
Fair value
Fair value
CQ Physio
Fair value
Others
Fair value
Natural Fit
Fair value
Others
Fair value
$'000
$'000
$'000
$'000
$'000
$'000
2,577
886
2,316
48
3,807
10,175
234
1,350
3,864
(2,287)
(414)
(719)
(3,698)
(1,825)
(10,171)
(1,878)
(536)
3,729
43,027
-
-
46
-
53
234
-
30
68
-
-
-
(77)
(2)
(225)
(9)
-
118
247
-
-
30
12
138
971
-
258
397
-
-
-
(369)
(350)
(971)
(33)
-
83
4,576
-
-
43
37
497
2,242
-
225
793
-
(34)
-
(740)
(401)
(2,243)
(54)
-
365
4,530
2
-
1,139
119
103
2,768
-
384
839
-
-
-
(946)
(30)
(2,768)
(98)
-
1,512
4,049
-
-
-
2
56
111
-
8
34
-
-
-
(36)
(2)
(111)
(10)
-
52
48
Total
$'000
2,579
886
3,574
218
4,654
16,501
234
2,255
5,995
(2,287)
(448)
(719)
(5,866)
(2,610)
(16,489)
(2,082)
(536)
5,859
56,477
46,756
365
4,659
4,895
5,561
100
62,336
32,028
12,126
-
2,602
254
-
111
-
3,669
3,376
2,889
100
42,316
-
-
-
-
925
-
594
1,322
1,350
-
-
-
-
-
-
13,448
2,386
2,602
1,584
-
-
990
46,756
365
4,659
4,895
5,561
100
62,336
46,756
(2,577)
365
-
4,659
-
4,895
-
5,561
(2)
100
-
(2,602)
(111)
(12,126)
-
-
-
-
-
(925)
(1,350)
-
(1,322)
(990)
(594)
-
-
-
-
62,336
(2,579)
(4,988)
(13,448)
(1,584)
Net cash used
29,451
254
3,669
3,376
2,887
100
39,737
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.
72
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 34. Business combinations (continued)
The valuation techniques used for measuring the fair value of material assets acquired were as follows.
Asset acquired
Valuation technique
Property, plant and equipment
Intangible assets
Inventories
Market comparison technique and cost technique:
The valuation model considers market prices for similar items when they are
available, and depreciated replacement cost when appropriate. Depreciated
replacement cost reflects adjustments for physical deterioration as well as functional
and economic obsolescence.
The fair value of an intangible asset will reflect market participants' expectations at
the acquisition date about the probability that the expected future economic benefits
embodied in the asset will flow to the entity. There are three approaches to valuing
intangible assets that correspond to the valuation approaches:
- Market approaches;
- Income approaches; and
- Cost approaches.
Market comparison technique:
The fair value is determined based on the estimated selling price in the ordinary
course of business less the estimated costs of completion and sale, and a reasonable
profit margin based on the effort required to complete and sell the inventories.
The trade receivables comprise gross contractual amounts due of $1.236 million, of which $0.35 million was expected to be
uncollectable at the date of acquisition.
Acquisition and integration related costs of $4,208,000 are included in the consolidated statement of profit or loss and other
comprehensive income.
Note 35. 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
2020
2021
%
%
My FootDr (Aust) Limited
Allsports (Aust) Limited
Extend Rehab Pty Ltd
iOrthotics Pty Ltd
D.B.S. AUSTRALIA PTY. LTD.
Allsports Physiotherapy Forest Lake Pty Ltd
Allsports Pilates Sherwood Pty Ltd
Southside Manipulative Physiotherapy Centre Pty Ltd
Allsports Physiotherapy The Gap Pty Ltd
Allsports Physiotherapy Toowong Pty Ltd
My FootDr (Brookwater) Pty Ltd
My FootDr (Camp Hill) Pty Ltd
My FootDr Granda Pty Ltd
My FootDr (Fortitude Valley) Pty Ltd
My FootDr (Indooroopilly) Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
73
100%
100%
100%
100%
75%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 35. Interests in subsidiaries (continued)
Name
Principal place of business /
Country of incorporation
Ownership interest
2020
2021
%
%
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
Australian Eyewear Distributors Pty Ltd
TOC Hearing Pty Ltd
Blink Optical Gordon Pty Ltd
Blink Optical Pty Ltd
Blink Optical Robina Pty Ltd
Blink Optical St Ives Pty Ltd
Easer Pref Pty Ltd
Eyewear Australia (S.E. Regional) Pty Ltd
Glasses Galore Pty Ltd
Kpfe - Malop St Pty Ltd
Kpfe - Packington Street Pty Ltd
Leopold Optical Pty Ltd
Level 28 Pty Ltd
Mount Gambier Optical Pty Ltd
Point Cook Optical Pty Limited
Stacey & Stacey Pty Ltd
The Optical Company (International) Pty Ltd
The Optical Company (NSW) Pty Ltd
The Optical Company (Pacific) Pty Ltd
The Optical Company Pty Ltd
The Optical Company (Aust) Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
74
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
100%
100%
100%
100%
58%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
100%
100%
100%
100%
58%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 35. Interests in subsidiaries (continued)
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries with non-
controlling interests in accordance with the accounting policy described in note 1:
Principal place of business /
Country of
incorporation
Ownership
interest
2021
%
Ownership
interest
2020
%
Parent
Non-controlling interest
Ownership
interest
2020
%
Ownership
interest
2021
%
Name
D.B.S, Australia Pty Ltd
Foot Care Solutions Australia
Pty Ltd
iOrthotics USA LLC
Australia
Australia
United States
75%
75%
58%
75%
75%
58%
25%
25%
42%
25%
25%
42%
Note 36. Deed of cross guarantee
The following entities are party to a deed of cross guarantee, made on 31 May 2021, under which each company guarantees
the debts of the others:
Healthia Limited
The Optical Company Pty Ltd
Australian Eyewear Distributors Pty Ltd
The Optical Company (NSW) Pty Ltd
The Optical Company (Aust) Pty Ltd
ACN 626 087 223
ACN 115 778 366
ACN 127 427 007
ACN 153 741 970
ACN 621 019 369
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements
and Directors' report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
The above companies represent a 'Closed Group' for the purposes of the ASIC Corporations Instrument, and as there are
no other parties to the deed of cross guarantee that are controlled by Healthia Limited, they also represent the 'Extended
Closed Group'.
75
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 36. Deed of cross guarantee (continued)
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial
position of the 'Closed Group'.
2021
$'000
20,325
4,502
(3,805)
(9,403)
(244)
(516)
(1,301)
(141)
(438)
(1,066)
(2,606)
(179)
(1,853)
3,275
409
3,684
-
3,684
2021
$'000
14,816
3,684
(3,044)
15,456
Statement of profit or loss and other comprehensive income
Revenue
Other income
Raw materials and consumables used
Employee benefits expense
Occupancy costs
Marketing costs
Other expenses
Impairment of receivables
Acquisition and integration costs
Share-based payments expense
Depreciation expense
Amortisation expense
Finance costs
Profit before income tax benefit
Income tax benefit
Profit after income tax benefit
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Equity - retained profits
Retained profits at the beginning of the financial year
Profit after income tax benefit
Dividends paid
Retained profits at the end of the financial year
76
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 36. Deed of cross guarantee (continued)
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Non-current assets
Trade and other receivables
Investments in subsidiaries
Property, plant and equipment
Right-of-use assets
Intangibles
Deferred tax
Total assets
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Income tax
Employee benefit obligations
Provisions
Other liabilities
Non-current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Employee benefit obligations
Provisions
Other liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
77
2021
$'000
1,451
827
2,726
300
5,304
62,098
4,005
3,676
8,371
44,713
1,280
124,143
129,447
3,111
1,674
2,734
(45)
1,579
225
620
9,898
48,330
5,824
240
163
405
632
55,594
65,492
63,955
46,779
1,720
15,456
63,955
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 37. Cash flow information
Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
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:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
(Increase) in deferred tax assets
Decrease/(increase) in prepayments
Increase in other operating assets
Increase in trade and other payables
Increase in provision for income tax
Increase in employee benefits
(Decrease)/Increase in other liabilities and provisions
Consolidated
2021
$'000
2020
$'000
9,177
5,148
14,200
-
-
1,180
16
2,405
(695)
(1,651)
(508)
(542)
1,081
141
588
886
9,762
42
(9)
205
132
(3,195)
353
(764)
530
-
2,179
1,757
514
679
Net cash from operating activities
26,278
17,333
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2019
Net cash from/(used in) financing activities
Leases recognised on adoption of AASB 16
Acquisition of leases
Changes through business combinations
Other changes
Balance at 30 June 2020
Net cash from/(used in) financing activities
Acquisition of leases
Changes through business combinations (note 34)
Bank
loans
$'000
Lease
liabilities
$'000
Total
$'000
19,606
7,130
-
-
-
(1)
26,735
21,595
-
-
845
(7,152)
24,688
2,535
6,836
-
27,752
(10,044)
9,922
16,489
20,451
(22)
24,688
2,535
6,836
(1)
54,487
11,551
9,922
16,489
Balance at 30 June 2021
48,330
44,119
92,449
78
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 38. Earnings per share
Profit after income tax
Non-controlling interest
Profit after income tax attributable to the owners of Healthia Limited
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Performance rights
Consolidated
2021
$'000
2020
$'000
9,177
(4,020)
5,148
(2,457)
5,157
2,691
Number
Number
'000
'000
79,627
63,035
3,204
2,678
Weighted average number of ordinary shares used in calculating diluted earnings per share
82,831
65,713
Basic earnings per share
Diluted earnings per share
Accounting policy for earnings per share
Cents
Cents
6.48
6.23
4.27
4.10
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.
79
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 39. Share-based payments
Performance rights
On 30 October 2020, 378,500 unlisted performance rights were granted to key management personnel with a nil grant and
exercise price. The performance rights will vest on 31 August 2023 (subject to satisfaction of the relevant vesting conditions)
and expire on 31 October 2023. The vesting conditions include a number of performance and service conditions.
On 1 December 2020, following shareholder approval at the 2020 Annual General Meeting, 282,500 unlisted performance
rights were granted to Directors, Wesley Coote and Anthony Ganter, with a nil grant and exercise price. The performance
rights will vest on 31 August 2023 (subject to satisfaction of the relevant vesting conditions) and expire on 31 October 2023.
The vesting conditions include a number of performance and service conditions.
Details of the performance rights are as follows:
Grant date:
Grant price:
Exercise price:
Vesting date:
Expiry date:
Restriction on shares issued on
exercise:
30 October 2020 and 1 December 2020
$nil
$nil
31 August 2023
31 October 2023
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:
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 Company’s compounding annual growth in underlying Earnings Per Share
(underlying EPS) for the period from 1 July 2020 to 30 June 2023 greater than 10%
per annum.
The underlying EPS results to be used will be the Basic EPS recorded in the
Company’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 in its discretion.
Total Shareholder Return condition Total Shareholder Return (TSR) to exceed 150% for the period from 1 July 2020 to 30
50% of the Performance Rights will be exercisable if this condition is achieved.
June 2023, with TSR calculated as follows:
TSR = (Price End - Price Begin + Dividends)/Price Begin
Where:
Price Begin = share price at 1 July 2020;
Price End = share price at 30 June 2023; and
Dividends = total dividends paid per share during the period from 1 July 2020 to 30
June 2023.
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.
80
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 39. Share-based payments (continued)
Set out below are summaries of performance rights granted under the plan:
2021
Grant date
Expiry date
27/11/2019
30/10/2020
01/12/2020
31/10/2022
31/10/2023
31/10/2023
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
$0.00
$0.00
$0.00
2,678,358
-
-
2,678,358
-
378,500
282,500
661,000
-
-
-
-
(135,000)
-
-
(135,000)
2,543,358
378,500
282,500
3,204,358
*
Performance rights of 135,000 have been cancelled due to the Service condition not being met.
2020
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
27/11/2019
31/10/2022
$0.00
-
-
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 1.54
years (30 June 2020: 2.33 years).
No equity settled payments were made during the financial year.
Set out below are equity settled payments made during the year:
Equity settled payments
Equity settled payments other
Consolidated
2021
$
2020
$
1,180,000
254,000
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.
81
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 39. Share-based payments (continued)
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Consolidated Entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the Consolidated Entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Note 40. Events after the reporting period
Acquisition Settlements
During the period from 1 July 2021 to 30 August 2021, the Consolidated Entity announced the subsequent acquisition of 3
optometry clinics and 2 physiotherapy clinics. Total consideration for the acquisitions (plus stock, less employee entitlements)
was as follows:
●
●
●
Upfront cash consideration: $1.74m
Issue of Clinic Class Shares: $0.72m
Total upfront consideration: $2.46m
In addition to the upfront consideration, contingent consideration of up to $0.37m will become payable in cash, subject to the
achievement of pre-defined earnings targets.
The acquisitions are expected to contribute the following pro-forma earnings to the Consolidated Entity
●
●
Revenue: $3.95m
EBITDA: $0.64m
COVID-19 related lockdowns
The Consolidated Entity owns and operates 37 businesses in New South Wales and 40 businesses in Victoria, representing
17.5% and 18.9% respectively of Healthia’s total portfolio. At the date of reporting, all but six of these businesses remain
operational due to their classification as essential health care services, however, these businesses are experiencing some
impact on their trading due to the lockdown restrictions imposed. The six closed businesses relate to stores which operate
under the brand of Natural Fit Footwear, a specialty footwear retailer offering comfort and support footwear.
The impacts of lockdowns from COVID-19 are unpredictable given that the timing of, and length of time in, lockdowns
vary. However, the experience of prior lockdowns has shown that any short-term reduction in patient volumes is quickly
recovered with the pent-up demand typically experienced after such restrictions ease or end.
82
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2021
Note 40. Events after the reporting period (continued)
Final Dividend
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 2.5 cents per share to the ordinary shareholders of Healthia Limited.
A Dividend Reinvestment Plan will operate for the 2021 Final Dividend. A 2.5% discount will apply to the Dividend
Reinvestment Plan for the final dividend. A copy of the Dividend Reinvestment Plan rules can be found on Healthia’s website
at the following address: https://healthia.com.au/s/Dividend-Reinvestment-Plan-Rules.pdf.
83
Healthia Limited and its Controlled Entities
Directors' declaration
30 June 2021
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 2021 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in note 36 to the financial statements.
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
___________________________
Dr Glen Frank Richards
Director
30 August 2021
84
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 2021, 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 2021 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.
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.
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.
Our procedures included, amongst others:
Evaluating management’s determination of
the Group’s Cash Generating Units ("CGU's")
to ensure they are appropriate, including
being at a level no higher than the operating
segments of the entity
Evaluating management’s process regarding
the valuation of the Group’s goodwill and
other intangible assets
Assessing the Group’s assumptions and
estimates relating to forecast revenue, costs,
capital expenditure and discount rates used
to determine the recoverable amount of its
assets
Assessing the historical accuracy of
forecasting of the Group by comparing the
current year actual results with FY21 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.
Business combination accounting including determination of goodwill
Key audit matter
How the matter was addressed in our audit
During the year, the group acquired The Optical
Company (‘TOC’), representing a group of 41
optical stores and an eyewear frame distributor.
The group also acquired a number of podiatry and
physiotherapy clinics.
As disclosed in Note 34, as part of these business
combination transactions, the Group recognised
the following additional intangible assets:
Goodwill
Customer lists
Business combinations is a key audit matter due
to the significant audit effort to test the group’s
acquisitions during the year and the level of
judgement applied in evaluating management’s
assessment of goodwill allocated in the purchase.
Our procedures included, amongst others:
Obtaining an understanding of the transaction
including an assessment of the accounting
acquirer and whether the transaction
constituted a business or an asset acquisition
Reviewing purchase documentation including
contracts and business sale agreements and
obtaining a detailed understanding of the
acquired businesses
Assessing the appropriateness of the valuation
methodology of the assets acquired
Reviewing management’s assessment of the
fair value of the consideration paid and the
recognition of any deferred consideration
upon the acquisition date
Evaluating management’s assessment of the
identifiable assets and liabilities acquired
including reviewing independent intangible
asset valuation for the acquisition of TOC
Engaging with internal experts on the
appropriateness of the calculation of
identifiable intangible assets
Assessing the adequacy of the Group's
disclosures of the acquisition.
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 2021, 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.
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.
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.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 19 to 27 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of Healthia Limited, for the year ended 30 June 2021,
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
T R Mann
Director
Brisbane, 30 August 2021
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.
Healthia Limited and its Controlled Entities
Shareholder information
30 June 2021
The shareholder information set out below is current as at 11 August 2021.
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
Equity security holders
Ordinary shares
% of total
Number
of holders
shares
issued
360
528
249
449
86
0.24
1.79
2.25
16.26
79.46
1,672
100.00
55
0.01
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
shares
issued
Number held
10,565,917
8,434,029
6,990,694
5,078,764
5,066,600
4,333,400
3,771,465
2,577,232
2,132,972
1,208,558
1,177,808
967,317
962,317
812,000
809,330
781,310
763,654
757,267
669,209
663,212
11.71
9.35
7.75
5.63
5.62
4.8
4.18
2.86
2.36
1.34
1.31
1.07
1.07
0.9
0.9
0.87
0.85
0.84
0.74
0.74
58,523,055
64.88
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
My Footdr Holdings Pty Ltd
Maximum (NQ) Pty Limited
Bridell Pty Limited
Chester-LGL Pty Limited
DLH Trading Pty Ltd
ROM Group Pty Ltd
HLA Directors' Holdings
Willeese Pty Limited
GF & LH Richards Super Pty Ltd
DPC Investments Pty Ltd
LEGGS Pty Ltd
ZQN Pty Ltd
Mr Christopher Angel & Ms Gina Richman
ABC Investing Pty Ltd
Vassallo Corporate Holdings Pty Ltd
Matthew John Roach
BNP Paribas Nominees Pty Ltd
Mr Anthony Peter Ganter & Ms Deborah Lee Huber
Unquoted equity securities
There are no unquoted equity securities.
89
Healthia Limited and its Controlled Entities
Shareholder information
30 June 2021
Substantial holders
Substantial holders in the Company are set out below:
Mr Darren L Stewart
Mr Gregory D Dower
Dr Glen F Richards
MA Asset Mgt
Mr & Mrs Colin J Kangisser
Ordinary shares
% of total
shares
issued
Number held
8,028,011
7,953,011
6,306,572
5,542,881
5,066,600
8.90
8.82
6.99
6.14
5.62
Voting rights
The voting rights attached to ordinary shares are set out below:
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
Expiry date
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Share Registry
1 December 2021
1 June 2022
17 October 2022
30 November 2022
1 December 2022
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
Number
of shares
-
117,369
117,369
1,065,790
5,066,600
117,369
6,484,497
90