Healthia Limited and its Controlled Entities
ACN 626 087 223
Annual Report - 30 June 2023
Healthia Limited and its Controlled Entities
Contents
30 June 2023
Corporate directory
Chairperson's letter
Review of operations
Directors' report
Auditor's independence declaration
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
Note 1. General information
Note 2. Significant accounting policies
Note 3. Critical accounting judgements, estimates and assumptions
Note 4. Segment Information
Note 5. Revenue from contracts with customers
Note 6. Other income
Note 7. Expenses
Note 8. Income tax
Note 9. Cash and cash equivalents
Note 10. Trade and other receivables
Note 11. Inventories
Note 12. Other assets
Note 13. Investments accounted for using the equity method
Note 14. Property, plant and equipment
Note 15. Right-of-use assets
Note 16. Intangibles
Note 17. Trade and other payables
Note 18. Borrowings
Note 19. Lease liabilities
Note 20. Derivative financial instruments
Note 21. Employee benefit obligations
Note 22. Provisions
Note 23. Other liabilities
Note 24. Issued capital
Note 25. Reserves
Note 26. Non-controlling interest
Note 27. Dividends
Note 28. Financial instruments
Note 29. Fair value measurement
Note 30. Key management personnel disclosures
Note 31. Remuneration of auditors
Note 32. Contingent liabilities
Note 33. Related party transactions
Note 34. Parent entity information
Note 35. Business combinations
Note 36. Interests in subsidiaries
Note 37. Cash flow information
Note 38. Earnings per share
Note 39. Share-based payments
Note 40. Events after the reporting period
Directors' declaration
Independent auditor's review report to the members of Healthia Limited
Shareholder information
1 (Annual Report - 30 June 2023)
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Healthia Limited and its Controlled Entities
Corporate directory
30 June 2023
Directors
Company Secretary
Registered office
Share register
Auditor
Solicitors
Dr Glen Richards
Paul Wilson
Lisa Dalton
Wesley Coote
Darren Stewart
Colin Kangisser
Lisa Roach
Julia Murfitt
Chris Banks (Resigned 7 February 2023)
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/
2 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Chairperson's letter
30 June 2023
Dear Fellow Shareholders,
The 2022/2023 financial year has proven to be one in which Healthia has made great progress in its mission to connect our
patients and customers with allied health products and services, assisting them to live happier and healthier lives.
Financial and Operational Performance
In FY23, Healthia continued to deliver solid financial performance with underlying revenues up 26.2% to $255.9m, despite
challenging market conditions.
Statutory net profit after tax (NPAT) recovered from FY22’s COVID-impacted result (FY22: $0.3m) to a record $10.3m result,
despite facing continuing absenteeism from COVID and flu, and one-off non-recurring costs relating to acquisitions,
integrations and restructuring.
Underlying EBITDA increased by 52.7% to $37.5m, a credible result given that guidance of greater than $40m was issued
approximately 18 months earlier.
In FY23, Healthia continued to grow organically and via acquisitive activity, the latter seeing the addition of 29 clinics and
stores to take the overall size of the group to 332 clinics and stores.
The Board remains committed to Healthia’s portfolio expansion through disciplined acquisition of complementary businesses
which support long-term value accretion. Our acquisition pipeline continues to be very robust, with numerous allied health
businesses being reviewed as part of our active pipeline.
People and Culture
During FY23, we continued our focus on the culture and engagement of our teams through education, training and leadership
programs, the positive impact of which was reflected in the findings of our national employee engagement survey which found
that Healthia was “above the norm” when compared against benchmarking norms for (among other things) our culture, our
people, our workplaces and our values.
Our culture engagement score remained steady (FY23: 59% v FY22: 60%), a pleasing result given we have experienced our
toughest period of trading since listing, amid rapid growth and multiple changes on our teams as we further integrate the
network.
We are proud to acknowledge our recent graduate program as the most frequently cited reason as to why our 152 new and
recent graduates chose Healthia as their preferred employer. Furthermore, Healthia’s recent graduate program featured in
two publications in scientific peer reviewed international journals with Healthia’s Chief of Education and Research, Dr Kerrie
Evans, being invited to speak at the Australian Physiotherapy Association’s National Conference in October 2022 and the
World Conference of Physiotherapy in July 2023.
FY23 also saw Healthia run its biannual integrated allied health conference, Inspired 2022 on the Gold Coast. This conference
is a key staff retention strategy for Healthia and was attended by over 1,000 of Healthia’s clinicians and administration staff
as well as internationally renowned presenters.
Professional Development and R&D
New professional development offerings this year included the Early Career Mentoring Program, Accelerated Mentoring
Workshops, the Integrated Leadership Program and a specialised online stream for hand and upper limb therapists.
These programs have been added to our regular suite of online sessions, leadership programs and practical workshops.
Professional development remains a key focus of our business strategy, not only to provide career progression for our team
members but to ensure we are delivering excellence in care to our patients and for our communities.
Healthia is also committed to fostering research and development particularly where the project focuses on clinically
meaningful outcomes, technology-enabled health care or innovative methods of service delivery.
Notably, Healthia’s growing relationship with Australian Universities and other national funding bodies can be seen through an
expanding number of successful grant applications, student placements, and attendances at Open Days and graduation
events.
In addition to Professional Development and Research and Development, the execution of an enhanced Technology Roadmap
has been cited as one our key strategic pillars.
The Roadmap is intended to support Healthia’s team members in an increasingly complex healthcare landscape via the use
of integrated national practice management software and data-driven decision making tools.
3 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Chairperson's letter
30 June 2023
Scheme Implementation Deed
As announced on 31 August 2023, Healthia entered into a Scheme Implementation Deed with Harold BidCo Pty Ltd, an entity
owned by funds advised by Pacific Equity Partners (PEP), to acquire 100% of the fully diluted share capital in Healthia by way
of a scheme of arrangement.
Under the terms of the Scheme, Healthia shareholders will have the option to receive either $1.80 cash per Healthia share,
unlisted scrip consideration or a combination of cash and unlisted scrip consideration. The unlisted scrip consideration
alternative provides Healthia shareholders with the potential to participate in the future of Healthia, subject to rounding and
scale back mechanisms.
For clarity, the cash consideration of $1.80 per Healthia share represents a significant premium of 84.6% to the last closing
price of $0.975 per share prior to the announcement and 73.5% to the 3-month volume weighted average price up to and
including 30 August 2023.
As such, Healthia’s Board has taken a position to unanimously recommend the Scheme, subject to no Superior Proposal
emerging and the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of
Healthia shareholders.
While the Scheme is subject to certain conditions - which must be satisfied or waived before the Scheme can be implemented
– the opportunity to partner with PEP is seen by the Board as one which will enable Healthia to fully deliver value as Australia
and New Zealand’s leading diversified allied healthcare provider.
Dividend
The Directors of Healthia Limited have not yet determined whether to declare a final dividend for FY23 given the terms of the
proposed acquisition of Healthia by way of the aforementioned Scheme Implementation Deed.
Thank You
My thanks extend, once again, to all Healthia staff for their ongoing dedication and commitment - your hard work is reflected
in what has been an outstanding year of service, innovation and growth.
To our shareholders, I would also like to say thank you for your continued belief and support in our vision and mission.
On behalf of the Healthia Board,
Dr Glen Frank Richards
Chairperson
4 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Review of operations
30 June 2023
Commentary
The statutory financial performance of the Consolidated Entity was impacted by staff absenteeism, patient / customer
cancellations (due to spikes in COVID and other illness) and, more recently, uncertain economic conditions, and one-off non-
recurring costs relating to acquisitions and restructuring. The Consolidated Entity’s Underlying Net Profit After Tax and
Amortisation (NPATA)1 amounted to $18.3 million (30 June 2022: profit of $9.2 million), or an increase of 99.5%.
A reconciliation between statutory and underlying financial performance is provided below at Table 4.
1. Significant changes in the state of affairs
Significant changes in the state of affairs of the Consolidated Entity during the financial year include:
i.
Acquisitions
The Consolidated Entity deployed $23.4 million (FY22: $111.3 million) of capital on 29 new allied health clinics and
stores during the Financial Year as set out in Note 35: Business Combinations included in this Annual Report.
ii.
Capital Raising
During the first half of FY23, the Consolidated Entity successfully undertook a capital raising of $11.0 million, providing
funds to support working capital and provide flexibility for further acquisitions.
iii.
Long Term Incentive Performance Rights & Retention Performance Rights
On 29 November 2022, the Consolidated Entity’s shareholders approved the grant of 1,114,594 unlisted performance
rights to Executive Directors with a nil grant and exercise price. The performance rights will vest on 30 June 2025
(subject to satisfaction of the relevant vesting conditions) and expire on 31 October 2025. The vesting conditions include
a number of performance and service conditions. The performance rights were issued on 27 March 2023.
iv.
Impacts from Absenteeism
During FY23, Healthia experienced high levels of team member absenteeism in Financial Quarter 1 of FY23 due to
illness and isolations resulting from COVID. Furthermore, in Q4FY23, Healthia again experienced higher than expected
team member absenteeism due to spikes in COVID and other illness. This saw impacts on trading as team members
were unable to present to work to service the Company’s patients. Chart 1 Sick Leave as % of Wages by financial
quarter depicts these periods of abnormal staff absenteeism:
Chart 1: Sick Leave as a % of Wages by Financial Quarter
1Underlying 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.
5 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Review of operations
30 June 2023
v. Queens Memorial Day
Healthia’s trading performance was further impacted (by c.$1.0 million) during FY23 by the unanticipated special public
holiday (National Day of Mourning for the Queen).
vi. Organic Revenue Growth
While trading performance was impacted by a number of factors including those detailed above, Healthia achieved
strong organic like for like revenue growth during the year, when compared to FY22 which was also impacted by the
effects of staff absenteeism and patient cancellations due to COVID. Table 1 Quarterly Organic Revenue Growth FY23
shows organic like for like revenue growth percentage per quarter for FY23. While organic revenue growth was strong
in H2FY23, it was impacted in Q4FY23 from the higher levels of staff absenteeism as highlighted in Chart 1.
Table 1: Quarterly Organic Revenue Growth FY23
Organic Revenue Growth %
8.8%
0.4%
12.6%
6.8%
Q1FY23
Q2FY23
Q3FY23
Q4FY23
2. Financial Overview - Statutory Performance
The Consolidated Entity’s audited statutory performance is provided in Table 2 below.
Table 2: Statutory Financial Performance
Revenue
Other Income
Net profit/(loss) after income tax expense
Non-controlling interest
NPAT attributable to the owners of Healthia Limited1
1Net profit after income tax expense, net of Non-Controlling Interest (NCI)
3. Financial Overview – Underlying Performance
FY23
$m
FY22
$m
252.6
200.3
Change
Change
$m
52.3
%
26.1%
4.5
10.3
4.9
5.5
4.1
0.3
3.7
(3.3)
0.4
9.7%
10.0
2917.9%
1.2
8.8
32.6%
NA
To assist users of this report, information about the underlying performance of the Consolidated Entity is presented in Table
3 below which excludes the impact of acquisition and integration costs of the 29 (FY22: 95) allied health businesses acquired
during the period and is adjusted for other one-off non-recurring items of income and expense. The Directors believe that this
information is useful for investors and shareholders as it presents the Consolidated Entity’s financial performance as if these
non-recurring transactions or circumstances had not occurred.
The Consolidated Entity’s underlying performance is provided on an unaudited basis in Table 3 and a reconciliation between
statutory and underlying performance is provided further below in Table 4.
6 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Review of operations
30 June 2023
Table 3: Underlying Financial Performance
Unaudited
Underlying Revenue1
FY23
$m
FY22
$m
Change
Change
$m
%
255.9
202.8
53.1
26.2%
Underlying EBITDA3,4 (removing impact of AASB16)
Underlying NPATA2
Non-controlling interest (NCI)
Net post-tax P&L impact of AASB16 adoption6
Underlying NPATA attributable to the owners of Healthia Limited
(removing impact of AASB16)5
37.5
22.3
4.9
0.9
18.3
24.5
12.0
3.7
0.9
9.2
Underlying EBITDA margin (removing impact of AASB16)3,4
14.6%
12.1%
Underlying NPATA margin (removing impact AASB16)5
7.2%
4.5%
12.9
52.7%
10.3
86.2%
1.2
0.0
32.6%
3.1%
9.1
99.49%
2.5%
2.6%
21.0%
58.1%
Underlying Basic EPS (cents, removing impact AASB16)7
13.5ps
7.8cps
5.7cps
72.6%
NCI / Underlying NPATA8
21.0%
28.5%
(7.6%)
(26.5%)
1 For the purposes of underlying performance, the Consolidated Entity calculates underlying revenue as revenue from contracts with customers and other income. The Consolidated
Entity also included $0.6 million NSW JobSaver revenue subsidies received in FY22 only, nil in FY23.
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.
4Underlying EBITDA has been adjusted for the impacts of AASB16. Lease payments of $20.7 million (FY22: $17.8 million) have been included to provide users with a like-for-like
comparison with PCP.
5Underlying 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.
6The net post-tax P&L impact of the 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 increased by $20.0 million (FY22: $17.8 million), depreciation expense increased by $19.0
million (FY22: $16.0 million), and finance costs increased by $3.1 million (FY22: $3.1 million). The net post-tax P&L impact has not been audited.
7Underlying 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 (FY23: 136.3 million, FY22: 117.9 million). Underlying EPS has not been audited.
8Non-Controlling Interest divided by Underlying NPATA. NCI/ Underlying NPATA has not been audited.
7 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Review of operations
30 June 2023
4. Financial Overview - Reconciliation from Underlying NPATA to Statutory NPAT
A reconciliation of underlying NPATA to statutory NPAT performance is detailed in Table 4 below.
Table 4: Reconciliation of Underlying EBITDA to Statutory NPAT
Unaudited
FY23
FY22
Underlying EBITDA (pre-AASB16)
Less: Finance costs (pre-AASB16)
Less: Tax expense (underlying)
Less: Depreciation (pre-AASB16)
Less: NCI (underlying)
Underlying NPATA attributable to the owners of Healthia Limited1
Less: COVID-19 related expenses2
Less: Acquisition costs3
Less: Integration costs4
Less: Restructuring costs and discontinued operations5
Less: Share-based payments expense and associated costs6
Less: Doubtful debts10
Less: Amortisation7
Less: Net impact of AASB168
Add: Fair Value movements of contingent consideration9
Net taxation impact
Statutory NPAT attributable to the owners of Healthia Limited1
$m
37.5
(6.3)
(3.9)
(4.0)
(4.9)
18.3
(1.0)
(3.5)
(0.8)
(3.9)
(1.0)
(0.5)
(1.9)
(0.9)
1.1
(0.4)
5.5
$m
24.5
(2.8)
(5.5)
(3.3)
(3.7)
9.2
(3.4)
(6.9)
(1.5)
(2.2)
(1.4)
(0.0)
(1.7)
(0.9)
1.6
3.9
(3.3)
1 Underlying NPATA is a non-IFRS measure and equals net profit after income tax expense plus amortisation of customer list intangibles. Underlying profit reflects statutory profit
as adjusted to reflect the Directors’ assessment of the result for the ongoing business activities of the Consolidated Entity, in accordance with AICD/Finsia principles of recording
underlying profit. Underlying NPATA has not been audited.
2 The Consolidated Entity incurred $1.0 million (FY22: $3.4 million) of costs directly related to excess staff absenteeism related to illness and COVID.
3 The Consolidated Entity incurred one-off acquisition costs of $3.4 million (FY22: $6.9 million) in relation to the acquisition of the 27 allied health businesses acquired. Acquisition
costs include but are not limited to external legal, financial and taxation professional advisory services, stamp duty and other acquisition compliance costs, property lease assignment
costs and directly attributable wage costs.
When calculated as a percentage of capital deployed for the period (FY23: $23.4 million; FY22: $111.3 million), acquisition costs represent approximately 14.6% (FY22: 6.2%),
which is in line with prior periods (FY21: 5.9%, FY20: 14.8%, FY19: 13.0%).
4 The Consolidated Entity incurred costs of $0.8 million for the integration of new businesses during the period.
5 Restructuring costs of $3.9 million relating to clinics which have been merged, relocated, closed or are in the process of being closed, and the associated earnings contribution of
those clinics during the period.
6 Non-cash share-based payments expense relating to the issuance of Performance Rights to key management personnel, key clinicians and administration staff which remains
subject to the achievement of a number of vesting conditions.
7 Amortisation of customer lists and software intangibles during the current period.
8 AASB 16 ‘Leases’ had a significant impact on the current period financial performance. This impact is comprised of the following changes due the application of AASB 16:
occupancy costs increased by $20.7 million (FY22: $17.8 million), depreciation expense increased by $19.0 million (FY22: $16.0 million), and finance costs increased by $3.1
million (FY22: $3.1 million).
9 Fair value adjustment associated with the reversal of contingent consideration which is no longer expected to be achieved due to lower than expected trading.
10 Doubtful debts relate to a revision in recoverability of trade debtors.
8 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Review of operations
30 June 2023
5. Financial Overview – Underlying Cash Flow
The Consolidated Entity has historically delivered strong cash flow conversion. As shown in Table 5 below, the underlying
cash flow conversion continues to be strong but FY23’s conversion percentage reflects a strategic push into footwear and
footwear accessories by the Feet and Ankles division in preparation for spring and summer of calendar 2023.
Table 5: Underlying Cash Flow
Unaudited
EBITDA(u)(pre-AASB16)1,2
Less: Changes in underlying working capital
Underlying operating cash flow (pre-tax, ungeared)3
Cash Conversion %4
Financing Costs (pre-AASB16)5
Tax Paid
Underlying operating cash flow (pre-tax, ungeared)6
Dividends paid to non-controlling interests
Capital Expenditure
Underlying free cash flow7
FY23
$m
37.5
(7.4)
30.1
FY22
$m
24.5
(1.0)
23.5
80.2%
95.9%
(6.3)
(4.8)
19.0
(4.5)
(7.0)
7.5
(3.0)
(3.8)
16.7
(3.4)
(4.1)
9.2
1 EBTDA(u) is underlying earnings before interest tax and amortisation. EBITDA(u) 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.
2 Underlying EBITDA excludes the impact from the adoption of AASB16 on lease payments of $20.7 million (FY21: $17.8 million).
3 Underlying operating cash flows (pre-tax, ungeared) reflects statutory operating cash flows less lease payments of $20.7 million and before finance costs and tax and excludes
the impact non-recurring income and costs, such as acquisition costs ($3.4 million), integration costs ($0.8 million), restructuring costs ($3.0 million) and COVID related expenses
($1.0 million).
4 Cash conversion % is calculated as EBITDA(u) (pre-AASB16) dividend by Underlying operating cash flow (pre-tax, ungeared).
5 Finance costs include the finance and interest charged on the bank debt only and excludes interest associated with the accounting for AASB16.
6 Underlying cash flows (post tax, geared) reflects statutory operating cash flows lease payments of $20.7 million and before finance costs and tax and excludes the impact non-
recurring income and costs, such as acquisition costs ($3.4 million), integration costs ($0.8 million), restructuring costs ($3.0 million) and COVID related expenses ($1.0 million).
7 Underlying free cash flow is calculated as Underlying cash flow (post-tax, geared) less capital expenditure for ongoing maintenance capex and for capital expansion and reflects
the underlying cash generated by the Consolidated Entity.
6. Risk Management
The Consolidated Entity is committed to identifying and mitigating risks that it faces in relation to its operations, business
strategy and financial prospects to maintain a sustainable business and protect the interests of its shareholders. The
Consolidated Entity has an established Audit and Risk Committee which is responsible for, among other things, identifying
and monitoring significant business risk factors within the Consolidated Entity. More information on how the Consolidated
Entity identifies and manages risks can be found in The Consolidated Entity’s Corporate Governance Statement and under
the Corporate Governance section of our website. A non-exhaustive list of material risks and the mitigation strategies
implemented by the Consolidated Entity are set out below in Table 6.
The Consolidated Entity is not subject to any significant environmental regulations within the areas it operates. All key material
social and governance risks are identified in Table 6.
9 (Annual Report - 30 June 2023)
Consolidated Entity’s Response
Comprehensive internal policies and procedures have
been developed to minimise the risk of patient and staff
member illness.
Targeted recall programs in place to re-book patients
that have cancelled appointments due to COVID.
The scale and geographic diversification of operations
provides a level of risk mitigation with respect to
localised outbreaks and/or restrictions.
is undertaken prior
Extensive internal processes and procedures to ensure
sufficient due diligence
to
completion.
Comprehensive integration plans are put in place for all
acquisitions and are managed by an experienced
internal integrations team. The Consolidated Entity will
continue to be disciplined in executing its growth
strategy taking into consideration current trading
conditions.
The Consolidated Group has developed a Clinician
Retention Program which allows clinicians to have an
ownership interest in clinics (via Clinic Class Shares).
A structured learning and education program is also in
place to provide world class learning and education to
position the Consolidated Entity as an employer of
choice.
The yearly graduate clinician intake is expected to
cover any outstanding vacancies.
The Consolidated Entity actively manages its leverage
position and maintains a close and
transparent
relationship with its financiers to ensure ongoing
support.
Healthia Limited and its Controlled Entities
Review of operations
30 June 2023
Table 6: Material Business Risks
Risk Area
Pandemic Risk
Acquisition Risk
Potential Impact
The economic consequences of the COVID-19
pandemic could become more severe and may impact
revenue and operations resulting from increased
patient appointment cancellations and staff
absenteeism. Further, some of the Consolidated
Entity’s assets and liabilities comprise financial
instruments that are carried at fair value, with changes
in fair value recognised in the Consolidated Entity’s
income statement. Market declines or weakened
trading conditions could negatively impact the value of
such financial instruments (including the impairment of
goodwill).
The Consolidated Entity may be unable to identify
and/or execute suitable acquisition opportunities and a
failure to do so could have an adverse impact on the
Consolidated Entity. Further, new businesses may not
perform in line with expectations and could be
impacted if sufficient due diligence is not performed
and/or if the acquired businesses are not integrated
effectively.
Staff Retention
The Consolidated Entity relies on clinicians to provide
allied health services to patients and a high turnover or
the inability to retain experienced staff, specifically
clinicians, could impact the quality and/or availability of
clinical services.
Funding Risk
The availability of debt funding or an inability to secure
funding or refinance current debt facilities may
adversely impact the financial position of the
Consolidated Entity. In addition, failure to meet
financial covenants under the Consolidated Entity’s
finance facilities, and the occurrence of other specified
events (including goodwill being impaired by 5% or
more or certain changes in key personnel occurring)
may lead to an event of default or review event under
the finance facility. From time to time the Consolidated
Entity seeks waivers of various aspects of its facility
agreements including financial covenants. There is no
guarantee that waivers sought will be granted by the
banking syndicate in which case there is a risk that the
Consolidated Entity will breach its finance facilities. If
an event of default or a review event applicable to any
given facility occurs, there may be a requirement to
make repayments in advance of the relevant maturity
dates and/or termination of the facility which may
impact on the financial performance and position of the
Consolidated Entity and its ability to operate in the
ordinary course of business.
Interest Rate Risk
Changes in interest rates will impact the costs of the
Consolidated Entity’s debt funding with a majority of its
bank borrowings at variable interest rates.
The Consolidated Entity has received waivers from its
financiers with respect to entering into interest rate
swap contracts. The waivers expire 30 September
2023 after which the Consolidated Entity may look to
enter into further interest rate swap contracts to hedge
against potential exposure to fluctuations in interest
rates.
Cyber Security
Risk of the Consolidated Entity’s IT systems being
accessed which could result in a failure of or
interruption to IT systems and the business or a breach
of patient privacy. Any such failures or breaches could
cause reputational damage, regulatory impositions and
financial loss.
The Consolidated Entity has comprehensive policies
and procedures in place regarding the use and storage
of confidential information as well as controls in place
to minimise technology related business interruption.
Cyber security insurance is also in place to mitigate
potential financial losses.
10 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
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 2023.
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
Colin Jonathan Kangisser
Lisa Michelle Roach
Principal activities
During the financial year the principal activities of the Consolidated Entity consisted of the following:
●
●
the operation of podiatry and retail footwear businesses throughout Australia through the Feet and Ankles division;
the operation of physiotherapy, occupational therapy, hand therapy, exercise physiology and speech pathology
businesses throughout Australia and New Zealand through the Bodies and Minds division; and
the operation of optometry and audiology businesses throughout Australia through the Eyes and Ears division.
●
Dividends
Dividends paid during the financial year were as follows:
Interim dividend for the year ended 30 June 2023 of 2.0 cents per ordinary share
Final dividend for the year ended 30 June 2021 of 2.5 cents per ordinary share
Interim dividend for the year ended 30 June 2022 of 2.0 cents per ordinary share
Consolidated
2023
$'000
2022
$'000
2,760
-
-
-
2,255
2,537
2,760
4,792
As at the date of signing the financial report, the Directors of Healthia Limited have not yet determined whether to declare a
final dividend for FY23 given the terms of the proposed acquisition of Healthia by way of a scheme of arrangement.
Review of operations
Please refer to section titled Operating and financial review, immediately before this Directors' report.
Significant changes in the state of affairs
Acquisition of Corio Bay Health Group (Bodies and Minds Division)
On 1 December 2022, the Consolidated Entity acquired the businesses trading under the name Corio Bay Health Group
being a group of nine physiotherapy businesses located in Victoria. Initial consideration paid for the acquisition was $5.4
million including $4.3 million in cash consideration and $1.1 million in Clinic Class Shares consideration, with a fair valued
additional $0.4 million in contingent consideration.
For the 12 month period ended 30 June 2023, Corio Bay Health Group contributed revenue of $3.1 million and EBITDA of
$0.8 million (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $5.3 million and EBITDA
of $1.1 million (pre-AASB 16) to the Consolidated Entity.
Acquisition of Melbourne Hand Rehab (Bodies & Minds Division)
On 2 March 2023, the Consolidated Entity acquired the businesses trading under the name Melbourne Hand Rehab being a
group of 8 hand therapy businesses located in Victoria. Initial consideration paid for the acquisition was $4.4 million including
$3.3 million in cash consideration and $1.1 million in Clinic Class Shares consideration, with a fair valued additional $0.5
million in contingent consideration.
11 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
For the 12 month period ended 30 June 2023, Melbourne Hand Rehab contributed revenue of $1.6 million and EBITDA of
$0.8m (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $4.7 million and EBITDA
of $2.2 million (pre-AASB 16) to the Consolidated Entity.
Acquisition of other Bodies and Minds clinics
The Consolidated Entity acquired an additional 3 hand therapy clinics and 1 physiotherapy clinic during the current period.
Initial consideration paid for the acquisitions was $3.1 million including $2.4 million in cash consideration and $0.7 million in
Clinic Class Share consideration, with a fair value additional $0.1 million in contingent consideration.
For the 12 month period ended 30 June 2023, the acquired businesses contributed revenue of $2.0 million and EBITDA of
$0.4 million (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $3.1 million and EBITDA
of $0.6 million (pre-AASB 16) to the Consolidated Entity.
Acquisition of Kosmac & Clemens (Eyes & Ears Division)
On 20 March 2023, the Consolidated Entity acquired the businesses trading under the name Kosmac & Clemens being a
group of 6 Optometry businesses located in Victoria. Initial consideration paid for the acquisition was $7.5 million in cash
consideration and an additional $1.9 million in deferred consideration.
For the 12 month period ended 30 June 2023, Kosmac & Clemens contributed revenue of $0.6 million and EBITDA of $0.3
million (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $4.8 million and EBITDA
of $2.0 million (pre-AASB 16) to the Consolidated Entity.
Acquisition of Other Eyes & Ears stores
The Consolidated Entity acquired an additional 2 optometry stores during the current period. Initial consideration paid for the
acquisitions was $0.2 million in cash consideration.
For the 12 month period ended 30 June 2023, the acquired businesses contributed revenue of $0.3 million and EBITDA of
$0.03 million (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $1.1 million and EBITDA
of $0.1 million (pre-AASB 16) to the Consolidated Entity.
Long Term Incentive Performance rights
On 29 November 2022, the Consolidated Entity’s shareholders approved the grant of 1,114,594 unlisted performance rights
to Executive Directors with a nil grant and exercise price. The performance rights will vest on 30 June 2025 (subject to
satisfaction of the relevant vesting conditions) and expire on 31 October 2025. The vesting conditions include a number of
performance and service conditions. The performance rights were issued on 27 March 2023.
Retention performance rights
On 29 November 2022, the Consolidated Entity’s shareholders approved the grant of 432,996 unlisted retention performance
rights to Executive Directors with a nil grant and exercise price. The retention performance rights will vest on 30 June 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 performance rights were issued on 27 March 2023.
Finance Facility
On 22 February 2023, the Consolidated Entity signed a variation to its current finance facility agreement with its financiers,
namely ANZ, NAB and BOQ. The change increased its total finance facility from $100.0 million to $120.0 million, with a term
(remaining maturity) of 2.5 years. The increased facility size and term provides further capacity to continue the stated strategy
of pursuing value accretive acquisition opportunities.
Resignation and Appointment of Chief Financial Officer
The Group Chief Financial Officer and Joint Company Secretary, Christopher Banks, gave notice of this resignation from his
position with the Consolidated Entity effective from 7 February 2023.
Julia Murfitt, General Counsel and Joint Company Secretary, takes up the duties of Company Secretary of the Consolidated
Entity effective from 7 February 2023.
The Consolidated Entity appointed Damien Peters as the Group Chief Financial Officer on 20 March 2023.
12 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
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
New Acquisitions
After Reporting Date, the Consolidated Entity entered into binding agreements to acquire and has reached settlement the
following businesses:
● Walk Without Pain Podiatry Clinics (3 podiatry clinics located in Queensland); and,
● Melbourne Hand Therapy (4 hand therapy clinics and an additional 9 sessional locations located in Victoria).
Total upfront consideration of $3.6 million for the acquisitions (plus stock, less employee entitlements) is as follows:
●
●
Upfront cash consideration: $2.8 million; and,
Issue of Clinic Class Shares: $0.8 million.
In addition to the upfront consideration, contingent consideration of up to $0.7million may become payable in cash, subject
to the achievement of pre-defined earnings targets.
Scheme Implementation Deed
On 31 August 2023, the Consolidated Entity entered into a Scheme Implementation Deed (the “Scheme”) with Harold BidCo
Pty Ltd (“Harold BidCo”) ACN 670 606 827, an entity owned by funds advised by Pacific Equity Partners under which it is
proposed that Harold BidCo will acquire 100% of the fully diluted share capital in Healthia by way of a scheme of arrangement.
Under the Scheme, Healthia shareholders will have the option to receive either $1.80 cash per Healthia share or unlisted
scrip consideration, or a mix of cash and unlisted scrip consideration (subject to certain conditions).
The Scheme is subject to certain conditions, which must be satisfied or waived before the Scheme can be implemented,
including obtaining Healthia shareholder approval following receipt of an Independent Expert’s Report concluding (and
continuing to conclude) that the Scheme is in the best interest of the Healthia shareholders.
In the event that the Scheme proceeds, Healthia Shareholders who participate in obtaining script consideration as part of
the transaction may be subject to alternative risks and uncertainties from those as set out in Table 6: Material Business Risks
of the Review of Operations in this report, and general market risks.
In the event the Scheme does not proceed, Healthia Shareholders will continue to be subject to the risks and uncertainties
associated with Healthia’s business and general market risks. Furthermore, if the Scheme does not proceed, and no
comparable proposal or superior proposal is received by the Healthia Board, then Healthia’s share price is likely to be
impacted.
Details of the proposed acquisition are contained in a separate announcement released to the ASX on 31 August 2023.
Impact of Scheme Implementation Deed on Performance Rights
On 30 August 2023, the Healthia Board, using the ability to retrospectively amend the performance rights, determined that
should the Scheme Implementation Deed become Effective, then all vesting conditions on all unvested Performance Rights,
excluding the service condition, will be waived, with such resulting vested Performance Rights being automatically exercised,
and issued, prior to the Scheme Record Date with each holder domiciled in Australia entitled to be issued one Healthia Share
for each vested Performance Right (as applicable) held (that is, on a one for one basis). Such Healthia Shares will be
captured by the Scheme.
No other matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the
Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial
years.
Environmental regulation
The Consolidated Entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
13 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Information on Directors
Name:
Title:
Appointed:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interests in rights:
Dr Glen Frank Richards
Chairman and Non-Executive Director
10 May 2018
Glen is a veterinary surgeon and the founder and former CEO of Greencross Limited,
Australia’s largest pet care company. Glen has spent over 20 years building a multi-
million-dollar integrated pet care empire, which now operates more than 180 veterinary
hospitals and 230 pet care retail stores in Australia and Animates in New Zealand.
Chairman and Non-Executive Director of People Infrastructure Ltd (ASX code: PPE).
Member of the Audit and Risk Committee and the Nomination and Remuneration
Committee.
7,966,777 ordinary shares held at 22 September 2023
None
Name:
Title:
Appointed:
Experience and expertise:
Paul David Wilson
Independent Non-Executive Director
10 May 2018
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.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Chairman of the Audit and Risk Committee and a member of the Nomination and
Remuneration Committee.
1,983,459 ordinary shares held at 22 September 2023
None
Interests in shares:
Interests in rights:
Name:
Title:
Appointed:
Experience and expertise:
Lisa Jane Dalton
Independent Non-Executive Director
10 May 2018
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. In recent times, Lisa has participated in 4 successful ASX listings. Lisa
has strong practical experience in fit for purpose governance, risk management,
strategic planning and motivating teams to find solutions to complex issues.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Chairman of the Nomination and Remuneration Committee and a member of the Audit
and Risk Committee.
47,478 ordinary shares held at 22 September 2023
None
Interests in shares:
Interests in rights:
14 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Name:
Title:
Appointed:
Experience and expertise:
Wesley James Coote
Group Managing Director and Group Chief Executive Officer
29 April 2019
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.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in rights:
1,899,120 ordinary shares held at 22 September 2023
1,270,000 performance rights held at 22 September 2023
Name:
Title:
Appointed:
Experience and expertise:
Darren Lindsey Stewart
Executive Director
10 May 2018
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:
8,021,333 ordinary shares held at 22 September 2023
None
Name:
Title:
Appointed:
Experience and expertise:
Colin Jonathan Kangisser
Executive Director and Chief Executive Officer, Eyes & Ears Division
30 November 2020
Colin is a registered optometrist with over 30 years optical experience. He founded and
grew 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:
5,134,628 ordinary shares held at 22 September 2023
406,268 performance rights held at 22 September 2023
Name:
Title:
Appointed:
Experience and expertise:
Lisa Michelle Roach
Executive Director and Chief Partnerships Officer
22 April 2022
Lisa was a founding partner in several of the Allsports Clinics and has over 29 years'
experience in the allied health industry. Lisa was also a qualified and practicing
physiotherapist for 10 years. Lisa has held an executive role and has been heavily
involved and influential within Healthia since its IPO. Her current role is Chief
Partnership Officer. Lisa holds a Bachelor of Physiotherapy, is a member of the Institute
of Company Directors and has held board positions on Healthia's subsidiary since IPO.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in rights:
1,007,889 ordinary shares held at 22 September 2023
452,322 performance rights held at 22 September 2023
'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.
15 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Company secretary
Christopher Banks - Christopher was the Chief Financial Officer and Joint Company Secretary and resigned on 7 February
2023.
Julia Murfitt - Julia was appointed Company Secretary on 23 February 2022. Julia is a qualified and practicing solicitor with
over 14 years' experience across Australia and New Zealand. Julia joined Healthia as General Counsel in August 2020 and
has been instrumental in Healthia's growth since this time.
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 2023, 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
Colin Jonathan Kangisser
Lisa Michelle Roach
13
13
12
13
13
13
13
13
13
13
13
13
13
13
6
6
6
-
-
-
-
6
6
6
-
-
-
-
5
5
5
-
-
-
-
5
5
5
-
-
-
-
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant
committee.
Remuneration report (audited)
The Board of Directors of the Consolidated Entity present the Remuneration Report (the Report) for the reporting period of
1 July 2022 to 30 June 2023. The Report forms part of the Directors' Report and has been prepared and audited in
accordance with the Corporations Act 2001.
The Report details the key management personnel remuneration arrangements for the Consolidated Entity. Key
management personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling
the activities of the Consolidated Entity, directly or indirectly, including all directors.
16 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
The KMP of the Consolidated Entity covered in this report are:
Name
Position held
Non-Executive Directors:
Glen Richards
Paul Wilson
Lisa Dalton
Executive Directors:
Wesley Coote
Darren Stewart
Colin Kangisser
Lisa Roach
Other KMP:
Roy Walker**
Damien Peters**
Katherine Baker*
Christopher Banks*
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Group Managing Director and Group Chief Executive
Officer
Executive Director
Executive Director and Chief Executive Officer, Eyes &
Ears Division
Executive Director and Chief Operations and People
Officer, Bodies & Minds and Feet & Ankles Divisions
Chief Executive Officer, Bodies & Minds and Feet &
Ankles Divisions
Chief Financial Officer
Chief Executive Officer, Bodies & Minds and Feet &
Ankles Divisions
Chief Financial Officer and Joint Company Secretary
Appointed
10 May 2018
10 May 2018
10 May 2018
10 May 2018
10 May 2018
20 November 2020
21 April 2022
6 March 2023
20 March 2023
1 December 2020 (Resigned 12
December 2022)
10 May 2018 (Resigned 7 February
2023)
* Katherine Baker and Christopher Banks both resigned during the current financial period and any remuneration information
is to date of resignation.
** Roy Walker and Damien Peters were appointed during the financial period and any remuneration information is from date
of appointment.
Role of the Nomination and Remuneration Committee
The Nomination and Remuneration Committee (the Committee) assists and makes recommendations to the Board in relation
to the remuneration and incentive framework for its directors and KMP. The Committee’s responsibilities include, among
other things:
●
Reviewing and advising the Board on the process for overseeing performance accountability and effective monitoring
of KMP including setting and evaluating performance against goals and targets;
Reviewing and advising the Board on the Consolidated Entity’s remuneration structure including short term incentive
(STI) and long term incentive (LTI) arrangements and participation;
Reviewing the incentives and behaviours arising from the Consolidated Entity’s remuneration structure;
Reviewing the succession plans for the Board, Group CEO and other senior executives;
Assisting the Board by co-ordinating a Board performance review annually and to ensure that this review includes an
assessment of a Board skills matrix which sets out the skills, knowledge, experience and diversity that the Board
currently has or is looking to achieve;
Assisting the Board in adopting measurable objectives for having diversity throughout the Consolidated Entity and
assessing progress towards achieving those objectives.
●
●
●
●
●
Under its charter, the Nomination and Remuneration Committee must consist of at least three members, a majority of whom,
including the Committee Chair, are independent non-executive directors. A copy of the charter of the Committee is available
on the Consolidated Entity’s website in the Corporate Governance section. During FY23, the members of the Committee
were:
●
●
●
Lisa Dalton – Independent Non-Executive Director (Chair)
Dr Glen Richards – Non-Executive Director
Paul Wilson – Independent Non-Executive Director
The Nomination and Remuneration Committee may from time to time engage external remuneration consultants or access
benchmarking information to ensure the KMP remuneration framework is market competitive and complementary to the
remuneration strategy of the Consolidated Entity.
17 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Remuneration overview and strategy
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 objective of the Consolidated Entity's executive remuneration 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 all stakeholders, and it is considered to conform to the market best practice
for the delivery of reward.
The Board ensures that executive rewards satisfy the following key criteria for good reward governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The reward framework is designed to align executive reward to stakeholder, including shareholders' interests. The Board
has 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
The Consolidated Entity utilises both short and long term incentives in addition to fixed remuneration to incentivise executives
and reward performance. Fixed remuneration reflects executives’ qualifications, capabilities and experience and is aimed to
attract and retain high performing and high quality experienced executives to ensure shareholder interests are managed in
a responsible and effective manner. The STI’s are to award achievement of specific and challenging targets and key
performance indicators during the financial year.
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 linked to job specific key performance indicators and 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.
Performance rights plan
On 27 March 2023, following shareholder approval at the 2022 Annual General Meeting (AGM), 1,114,594 unlisted
performance rights were granted to Executive Directors (667,500 - Wesley Coote, 245,625 - Colin Kangisser and 201,469
Lisa Roach), with a nil grant and exercise price. The performance rights will vest on 30 June 2025 (subject to satisfaction of
the relevant vesting conditions) and expire on 31 October 2025. The vesting conditions include a number of performance
and service conditions.
Retention performance rights plan
On 27 March 2023, following shareholder approval at the AGM, 432,996 unlisted retention performance rights were granted
to Executive Directors (222,500 - Wesley Coote, 115,643 - Colin Kangisser and 94,853 Lisa Roach), with a nil grant and
exercise price. The retention performance rights will vest on 30 June 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.
18 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
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 performance rights recognised in each reporting period.
Refer to 'Share-based compensation' section of this remuneration report for the vesting conditions of the 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.
Where shares are issued upon the vesting and exercise of the performance rights (within the periods detailed below), 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 2023, the Consolidated Entity engaged a remuneration consultant, Godfrey
Remuneration Group Pty Ltd (GRG), to review its existing remuneration policies for the Chief Executive Office and Managing
Directors remuneration and structure of the performance rights plans. GRG was paid $16,000 plus GST for this advice.
An agreed set of protocols were put in place to ensure that the remuneration recommendations would be free from undue
influence from the Chief Executive Officer and Managing Director. These protocols include requiring that the consultant not
communicate with the Chief Executive Officer and Managing Director without a member of the Nomination and Remuneration
Committee being present, and that the consultant not provide any information relating to the outcome of the engagement
with the Chief Executive Officer and Managing Director. The Board is also required to make inquiries of the consultant's
processes at the conclusion of the engagement to ensure that they are satisfied that any recommendations made have been
free from undue influence. The Board is satisfied that these protocols were followed and as such there was no undue
influence.
Voting and comments made at the Company's 2022 Annual General Meeting ('AGM')
At the AGM, 95.45% of the votes received supported the adoption of the remuneration report for the year ended 30 June
2022. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
19 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Details of remuneration
Details of the remuneration of KMP of the Consolidated Entity are set out in the following tables.
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
$
Other
Cash ^
$
Total
$
2023
Non-Executive
Directors:
Glen Richards
Paul Wilson
Lisa Dalton
Executive
Directors:
Wesley Coote
Darren Stewart
Colin Kangisser
Lisa Roach
Other KMP:
Roy Walker**
Damien Peters**
Katherine Baker*
Christopher
Banks*
130,000
80,000
80,000
397,980
103,779
299,923
245,000
89,904
80,769
132,722
183,846
1,823,923
-
-
-
-
-
-
31,357
-
-
39,196
-
70,553
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34,438
10,695
29,392
26,917
7,619
867
5,475
4,471
220,562
-
34,126
84,099
-
-
-
-
-
-
-
130,000
80,000
80,000
660,599
115,341
368,916
391,844
8,794
8,481
18,008
1,755
1,545
-
20,490
20,490
-
-
-
249,000
120,943
111,285
438,926
18,092
154,817
-
21,732
-
379,767
-
201,938
249,000 2,699,792
*
**
^
Remuneration to date of resignation as KMP
Remuneration from appointment as KMP
Other cash benefits include termination benefits paid to Katherine Baker.
Details of incentives (LTIs) are disclosed in the Additional information section within this remuneration report.
Other than as set out in the above table, no other STI's were paid to KMP during FY23 as a result of them not meeting the
target performance criteria.
20 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
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
60,000
345,000
122,370
295,005
213,077
202,740
-
-
-
-
-
-
34,650
-
220,769
232,500
1,851,461
-
43,312
77,962
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
60,000
60,000
27,500
12,153
26,393
19,269
27,860
6,753
730
5,840
4,380
3,979
137,037
-
12,420
56,290
58,696
516,290
135,253
339,658
327,666
293,275
20,077
27,250
160,502
4,882
4,882
31,446
55,075
61,043
300,803
368,987
380,561 2,501,932
2022
Non-Executive Directors:
Glen Richards
Paul Wilson
Lisa Dalton
Executive Directors:
Wesley Coote
Darren Stewart
Colin Kangisser
Lisa Roach
Anthony Ganter*
Other KMP:
Christopher Banks
Katherine Baker
*
Remuneration is to date of cessation as a director.
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
Colin Kangisser
Lisa Roach
Other KMP:
Roy Walker
Damien Peters
Katherine Baker
Christopher Banks
Fixed remuneration
2022
2023
At risk - STI
At risk - LTI
2023
2022
2023
2022
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
-
-
-
66.6%
100.0%
90.7%
68.7%
83.1%
81.6%
34.3%
100.0%
73.5%
100.0%
96.3%
72.2%
-
-
71.8%
81.7%
-
-
-
8.0%
-
-
65.7%
-
-
-
-
-
-
-
10.8%
-
-
11.7%
-
-
-
-
33.4%
-
9.3%
23.3%
16.9%
18.4%
-
-
-
-
-
26.5%
-
3.7%
17.0%
-
-
16.5%
18.3%
21 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
The proportion of the cash bonus paid/payable or forfeited was as follows:
Name
Executive Directors:
Wesley Coote
Colin Kangisser
Lisa Roach
Other KMP:
Roy Walker
Damien Peters
Katherine Baker
Christopher Banks
Cash bonus paid/payable
2023
2022
Cash bonus forfeited
2022
2023
-
-
26%
-
-
26%
-
-
-
42%
-
-
53%
-
100%
100%
74%
100%
100%
74%
100%
100%
100%
58%
-
-
47%
100%
Executive remuneration overview
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 receive their fixed remuneration in the form of cash.
Short-Term Incentives
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 and challenging annual targets and key
performance indicators ('KPI's') being achieved. KPI's include profit contribution, customer satisfaction, leadership
contribution and product management. Performance hurdles are linked to key performance indicators of the Executive
personnel, key non-financial targets aligned to Healthia’s strategic objectives and Board approval.
Executives are eligible for an annual STIs with an opportunity to earn up to 35% of their annual base fixed remuneration.
Ongoing participation by executives in the STI plan is at the discretion of the Board. With reference to recommendations
from the Nomination and Remuneration Committee, the Board will approve all executive STI payments, and may use its
discretion to adjust STI remuneration up or down, to avoid unattended outcomes.
Long Term Incentives
The long-term incentives ('LTI') take the form of an equity incentive (Performance Rights). Performance Rights are awarded
to executives and subject to performance hurdles over a three year period. Performance hurdles consist of indexed Total
Shareholders Return and growth in 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
2023.
22 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Ongoing participation by executives in the LTI plan is at the discretion of the Board. With reference to recommendations from
the Nomination and Remuneration Committee, the Board will approve all executive LTI payments, and may use its discretion
to adjust the LTIs, to prevent any inappropriate reward outcomes.
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 LTIs are forfeited
Termination of employment (without cause)
$445,000 (effective from 1 October 2022)
Ongoing
6 months
Entitlement to pro-rata STI for the year, subject to meeting
specified performance criteria during the relevant period.
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 LTIs are forfeited
Termination of employment (without cause)
Range between $241,000 and $329,400 (effective from 1
July 2022)
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.
Non-Executive Directors do not receive share options or other performance based pay or incentives.
ASX listing rules require the aggregate Non-Executive Directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the Annual General Meeting held on 4 July 2018, where the shareholders
approved a maximum annual aggregate remuneration of $500,000 per annum.
All non-executive directors are appointed under 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 September 2022. 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 September 2022)
Non-executive directors
Additional allowances:
Chair of Board
Remuneration & Nomination Committee Chair
Audit & Risk Committee Chair
$70,000 (FY22: $50,000)
$60,000 (FY22: $50,000)
$10,000 (FY22: $10,000)
$10,000 (FY22: $10,000)
23 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Share-based compensation
Unlisted long term incentive performance rights
On 29 November 2022, the Consolidated Entity’s shareholders approved the grant of 1,551,260 unlisted performance rights
to Executive Directors and KMP with a nil grant and exercise price. The performance rights will vest on 30 June 2025 (subject
to satisfaction of the relevant vesting conditions) and expire on 31 October 2025. The vesting conditions include a number
of performance and service conditions. The performance rights were issued on 27 March 2023.
Unlisted retention performance rights
On 29 November 2022, the Consolidated Entity’s shareholders approved the grant of 432,996 unlisted retention performance
rights (RPR) to Executive Directors with a nil grant and exercise price. The retention performance rights will vest on 30 June
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 retention performance rights were issued on 27 March 2023.
2022 Grant - Performance Rights
Grant date:
Grant price:
Exercise price:
Vesting date:
Expiry date:
Restriction on shares issued on exercise:
27 March 2023
$nil
$nil
30 June 2025
31 October 2025
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.
24 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Vesting conditions for long term incentive performance rights granted 27 March 2023 for all Key Management Personnel
Service condition
EPS Growth condition
The performance rights will be exercisable upon satisfaction of the Service condition,
being continuous employment with the Company from Grant Date until the Vesting
Date.
The Company’s compounding annual growth in underlying Earnings Per Share
(underlying EPS) for the period from 1 July 2022 to 30 June 2025 based on the
following vesting scale:
- Below threshold and target being less than 4% - Nil Vesting
- Threshold and target being between 4% and 10% - Pro rata vesting
- Stretch being over 10% - 100% vesting
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.
Up to 50% of the Performance Rights will be exercisable if this condition is achieved.
Indexed TSR (iTSR)
Satisfaction of the iTSR performance condition against the S&P/ ASX Small
Industrials Index, based on the following vesting scale:
- Stretch being index movement of greater than 10% - 100% vesting
- Between target and stretch being index movement of between 5% and 10% - pro
rata vesting
- Target being index movement of 5% - 50% vesting
- Between threshold and target being index movement of between 0% and 5% - pro
rata vesting
- Threshold being equal to index movement - 25% vesting
- Below threshold being less than the index movement - Nil vesting
TSR is the sum of the change in share price and dividends (assumed to be reinvested
in shares) during the Vesting Period. It is annualised for the purpose of the
above vesting scale. The TSR of the Company will be calculated and converted to a
compound annual growth rate (CAGR) value for the purpose of assessment against
this scale. During periods of nil dividends being declared, TSR is equal to the change
in share price.
Up to 50% of the performance rights will be exercisable if this condition is achieved.
Grant date:
Grant price:
Exercise price:
Vesting date:
Expiry date:
Restriction on shares issued on exercise:
2022 Grant - Retention Performance Rights
27 March 2023
$nil
$nil
30 June 2023
31 October 2023
Can only be traded in accordance with Securities Trading Policy and
insider trading laws
25 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Vesting conditions retention performance rights granted 27 March 2023 for all Key Management Personnel
Service condition
FY23 EBITDA(u)
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.
Achievement by the Company of EBITDA(u) of greater than $40 million for the
financial year ended 30 June 2023. This reflects the Company's guidance on 31
August 2022 that it expects to deliver EBITDA(u) in FY23 of greater than $40 million.
EBITDA(u) or Underlying EBITDA is statutory earnings before interest, tax,
depreciation and amortisation (EBITDA) 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.
EBITDA(u) is presented on a pre-AASB16 basis. Underlying EBITDA is a non-IFRS
measure and will be determined by the Directors having regard to those principles
and is not audited.
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.
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of Directors and
other KMP in this financial year or future reporting years are as follows:
Name
Number of
rights
granted
Grant date
Vesting date and
exercisable date
Expiry date
Fair value
per right
at grant date
Wesley Coote
Colin Kangisser
Lisa Roach
Roy Walker
Damien Peters
Wesley Coote
Colin Kangisser
Lisa Roach
Roy Walker
Damien Peters
Wesley Coote
Lisa Roach
Colin Kangisser
Wesley Coote (RPR)
Lisa Roach (RPR)
Colin Kangisser
(RPR)
Wesley Coote
Wesley Coote
Lisa Roach
Lisa Roach
333,750 27-Mar-23
122,813 27-Mar-23
100,735 27-Mar-23
109,167 27-Mar-23
109,167 27-Mar-23
333,750 27-Mar-23
122,812 27-Mar-23
100,734 27-Mar-23
109,165 27-Mar-23
109,165 27-Mar-23
187,500 19-Nov-21
66,000 19-Nov-21
45,000 19-Nov-21
222,500 27-Mar-23
94,853 27-Mar-23
115,643
27-Mar-23
96,250 1-Dec-20
96,250 1-Dec-20
45,000 30-Oct-20
45,000 30-Oct-20
30-Jun-25
30-Jun-25
30-Jun-25
30-Jun-25
30-Jun-25
30-Jun-25
30-Jun-25
30-Jun-25
30-Jun-25
30-Jun-25
18-Nov-24
18-Nov-24
18-Nov-24
30-Jun-23
30-Jun-23
30-Jun-23
31-Aug-23
31-Aug-23
31-Aug-23
31-Aug-23
31-Oct-25
31-Oct-25
31-Oct-25
31-Oct-25
31-Oct-25
31-Oct-25
31-Oct-25
31-Oct-25
31-Oct-25
31-Oct-25
31-Dec-24
31-Dec-24
31-Dec-24
31-Oct-23
31-Oct-23
31-Oct-23
31-Oct-23
31-Oct-23
31-Oct-23
31-Oct-23
Performance rights granted carry no dividend or voting rights.
$1.130
$1.130
$1.130
$1.130
$1.130
$0.500
$0.500
$0.500
$0.500
$0.500
$0.420
$0.420
$0.420
$1.210
$1.210
$1.210
$0.910
$0.140
$0.910
$0.140
26 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
Additional disclosures relating to KMP
Shareholding
The number of shares in the Company held during the financial year by each Director and other KMP 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
Colin Kangisser
Lisa Roach
Roy Walker
Damien Peters
Katherine Baker
Christopher Banks
7,456,572
1,738,082
43,267
1,681,510
8,000,924
5,066,600
855,019
-
-
12,857
192,270
25,047,101
-
-
-
161,253
-
-
101,675
-
-
-
-
262,928
510,205
245,377
4,211
56,357
20,409
68,028
51,195
-
-
-
-
955,782
7,966,777
-
1,983,459
-
47,478
-
1,899,120
-
8,021,333
-
5,134,628
-
1,007,889
-
-
-
-
-
-
(12,857)
(192,270)
-
(205,127) 26,060,684
*
Shares issued as a result of performance rights vesting during the year.
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 KMP 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
Colin Kangisser
Lisa Roach
Roy Walker
Damien Peters
Katherine Baker
Christopher Banks
Performance rights over ordinary shares
Wesley Coote
Colin Kangisser
Lisa Roach
Roy Walker
Damien Peters
Katherine Baker
Chris Banks
Balance at
the start of
the year
Granted
-
-
-
552,463
-
45,000
264,840
-
-
236,750
253,600
1,352,653
-
-
-
890,000
-
361,268
296,322
218,333
218,333
-
-
1,984,256
Vested
-
-
-
(172,463)
-
-
(108,840)
-
-
-
(81,906)
(363,209)
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
-
-
(236,750)
(171,694)
(408,444)
-
-
-
1,270,000
-
406,268
452,322
218,333
218,333
-
-
2,565,256
Maximum
value yet to
vest* $
1,028,662
359,012
353,939
177,941
177,941
-
-
2,097,495
27 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
* The maximum value of the deferred shares yet to vest has been determined as the amount of the grant date fair value of
the rights that is yet
to be expensed.
Loans to KMP and their related parties
There were no loans to KMP and their related parties at 30 June 2023.
Other transactions with KMP and their related parties
The following transactions occurred with related parties:
Consideration relating to the acquisition of businesses at the time of acquisition of The
Optical Company:
Deferred cash payment for the acquisition of businesses associated with director Colin
Kangisser
Rent and outgoings paid to entities controlled by Darren Stewart
Rent and outgoings paid to entities controlled by 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
Consolidated Consolidated
2023
$
2022
$
-
1,065,044
309,965
220,401
556,208
-
1,086,574
311,652
235,907
380,470
72,556
1,000,585
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.
Shares under performance rights
Unissued ordinary shares of Healthia Limited under performance rights at the date of this report are as follows:
Grant date
30 October 2020
1 December 2020
19 November 2021
27 March 2023*
27 March 2023**
* Performance Rights
** Retention Performance Rights
Expiry date
31 October 2023
31 October 2023
31 December 2024
31 October 2025
31 October 2023
Number
under rights
180,000
282,500
819,000
2,244,060
730,842
4,256,402
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
The following ordinary shares of Healthia Limited were issued during the year ended 30 June 2023 and up to the date of this
report on the exercise of performance rights granted:
Date performance rights granted
26 October 2022
Exercise
price
Number of
shares issued
$0.00
2,190,837
28 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' report
30 June 2023
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 31 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 31 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional and
Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-
making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
●
Officers of the Consolidated Entity who are former partners of BDO Audit Pty Ltd
There are no officers of the Consolidated Entity who are former partners of BDO Audit Pty Ltd.
Rounding of amounts
The 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.
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 Audit Pty Ltd 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
29 September 2023
29 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Auditor’s independence declaration
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek Street
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY MICHAEL CUTRI TO THE DIRECTORS OF HEALTHIA LIMITED
As lead auditor of Healthia Limited for the year ended 30 June 2023, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Healthia Limited and the entities it controlled during the period.
Michael Cutri
Director
BDO Audit Pty Ltd
Brisbane, 29 September 2023
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.
30 (Annual Report – 30 June 2023)
Healthia Limited and its Controlled Entities
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Revenue from contracts with customers
5
252,556
200,264
Other income
Fair value movement of contingent consideration
6
29
3,358
1,106
2,520
1,550
Note
Consolidated
2023
$'000
2022
$'000
Expenses
Changes in inventories
Raw materials and consumables used
Employee benefits expense
Occupancy costs
Marketing costs
Other expenses
Impairment of receivables
Acquisition costs
Integration and restructuring 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
3,685
(24,293)
(155,196)
(6,816)
(3,470)
(13,447)
(625)
(3,505)
(3,790)
(1,000)
(23,019)
(1,946)
(9,336)
2,527
(20,785)
(129,189)
(4,758)
(3,218)
(11,335)
(268)
(5,219)
(2,183)
(1,395)
(19,341)
(1,685)
(5,895)
39
7
7
7
14,262
1,590
8
(3,926)
(1,247)
10,336
343
-
-
10,336
343
4,869
5,467
3,672
(3,329)
10,336
343
4,869
5,467
3,672
(3,329)
10,336
343
Cents
Cents
Basic earnings per share
Diluted earnings per share
38
38
4.01
3.92
(2.82)
(2.82)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
31 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Consolidated statement of financial position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax refund due
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
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
Accumulated losses
Equity attributable to the owners of Healthia Limited
Non-controlling interest
Total equity
Note
Consolidated
2023
$'000
2022
$'000
9
10
11
8
12
13
14
15
16
8
17
18
19
21
22
23
18
19
20
21
22
23
24
25
26
5,589
12,972
14,217
221
3,833
36,832
21
21,451
63,539
267,334
6,761
359,106
5,666
8,204
10,532
97
3,199
27,698
19
17,075
59,073
246,326
7,845
330,338
395,938
358,036
15,534
2,000
19,165
10,331
1,087
4,203
52,320
95,425
50,434
-
968
2,618
1,939
151,384
19,089
1,954
17,116
11,318
357
2,914
52,748
77,117
46,853
14
904
2,975
4,961
132,824
203,704
185,572
192,234
172,464
159,312
(1,124)
(5,094)
153,094
39,140
146,213
(2,124)
(7,801)
136,288
36,176
192,234
172,464
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
32 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Consolidated statement of changes in equity
For the year ended 30 June 2023
Consolidated
Issued
capital
$'000
Reserves
$'000
Retained
profits/
(accumulated
losses)
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2021
79,578
(3,519)
320
16,148
92,527
Profit/(loss) after income tax expense for the
year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
Transactions with owners in their capacity
as owners:
Contributions of equity, net of transaction
costs
Issue of performance rights
Issue of ordinary shares as consideration
for business combinations (note 35)
Issue of ordinary shares as part of Dividend
Reinvestment Plan
Contributions of clinic class shares
Issue of clinic class shares as consideration
for business combinations (note 35)
Buy-back of clinic class shares
Distributions paid to non-controlling interest
Dividends paid (note 27)
-
-
-
58,128
-
5,771
2,736
-
-
-
-
-
-
-
-
(3,329)
3,672
-
-
(3,329)
3,672
343
-
343
-
1,395
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,792)
-
-
-
-
1,154
18,816
(220)
(3,394)
-
58,128
1,395
5,771
2,736
1,154
18,816
(220)
(3,394)
(4,792)
Balance at 30 June 2022
146,213
(2,124)
(7,801)
36,176
172,464
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
33 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Consolidated statement of changes in equity
For the year ended 30 June 2023
Consolidated
Issued
capital
$'000
Reserves
$'000
Retained
profits/
(accumulated
losses)
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2022
146,213
(2,124)
(7,801)
36,176
172,464
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:
Contributions of equity, net of transaction
costs (note 24)
Issue of ordinary shares in iOrthotics USA
LLC
Issue of performance rights
Issue of ordinary shares as part of Dividend
Reinvestment Plan (note 24)
Contributions of clinic class shares
Issue of clinic class shares as consideration
for business combinations (note 35)
Buy-back of clinic class shares
Distributions paid to non-controlling interest
Dividends paid (note 27)
-
-
-
10,339
-
-
-
-
-
-
-
1,000
2,760
-
-
-
-
-
-
-
-
-
-
-
5,467
4,869
10,336
-
-
-
5,467
4,869
10,336
-
-
-
-
-
-
-
-
(2,760)
-
10,339
268
-
-
1,271
2,869
(1,637)
(4,676)
-
268
1,000
2,760
1,271
2,869
(1,637)
(4,676)
(2,760)
Balance at 30 June 2023
159,312
(1,124)
(5,094)
39,140
192,234
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
34 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Consolidated statement of cash flows
For the year ended 30 June 2023
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
2023
$'000
2022
$'000
251,774
(217,032)
198,056
(171,818)
34,742
46
-
(9,336)
(2,861)
26,238
1
622
(5,895)
(3,770)
Net cash from operating activities
37
22,591
17,196
Cash flows from investing activities
Payment for purchase of businesses, net of cash acquired
Payments of contingent and deferred business purchases consideration
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Share issue transaction costs
Proceeds from issue of clinic class shares
Buy-back of clinic class shares
Proceeds from borrowings
Repayment of lease liabilities
Dividends paid to non-controlling interest
Dividends paid
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
35
14
16
24
24
37
37
27
(17,641)
(3,358)
(7,420)
(141)
-
(79,456)
(1,554)
(3,495)
-
50
(28,560)
(84,455)
13,742
(643)
1,271
(1,637)
18,308
(17,759)
(4,676)
(2,760)
62,570
(2,677)
1,154
(220)
29,065
(14,877)
(3,394)
(4,792)
5,846
66,829
(123)
3,712
(430)
4,142
Cash and cash equivalents at the end of the financial year
9
3,589
3,712
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
35 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 1. General information
The financial statements cover Healthia Limited as a consolidated entity consisting of Healthia Limited ('Company', 'Healthia'
or 'parent entity') and the entities it controlled at the end of, or during, the year (referred to in these financial statements as
the 'Consolidated Entity'). 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 29 September 2023.
Note 2. 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 a 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.
Working capital deficiency and compliance with banking covenants
As presented in the financial statements, the Consolidated Entity generated a profit after tax of $10.3 million (FY22: $0.34
million) and had net cash inflows from operating activities of $22.6 million (FY22: $17.2 million) for the year ended 30 June
2023. As at that date the entity had net current liabilities of $15.5 million (FY22: $25.1 million). Within these current liabilities,
the Directors further note:
●
●
$19.2 million included in current liabilities relates to 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
business sites/clinics and a portion of these cash flows will be used to pay the respective lease liability repayments
(property rents); and
Other current liabilities of $3.3 million includes contingent consideration for business acquisitions (earn-outs), which will
only be achieved if cash flow generation remains as forecast.
The directors also believe that the preparation of the financial statements using the going concern basis of accounting is
appropriate based on cash flow forecasts prepared, which show the Consolidated Entity is expected to be able to pay its
debts as and when they fall due for the next 12 months and to realise the value of its assets and discharge its liabilities in
the ordinary course of business. Therefore, the directors believe that the preparation of the financial statements using the
going concern basis of accounting is appropriate.
36 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
●
●
●
Key to the forecasts are relevant assumptions regarding the business, and about financing and shareholder support; in
particular:
●
Revenue and cash flow targets – the Consolidated Entity has prepared a cash flow forecast based on reasonable
assumptions that the directors believe are achievable;
Future business combinations – the cash flow forecasts do not incorporate any future business combinations, with the
assumption that future acquisitions will be funded through a combination of the bank loan facility and shares;
Capital raising – during the year the Consolidated Entity successfully undertaken a capital raising providing funds to
support working capital and provide flexibility for further acquisitions;
Bank support – in February 2023, the Consolidated Entity has obtained from its financiers:
1. An increase in the allowable cap for adjustments / addbacks during any 12-month period from $3 million to $5 million
when calculating Adjusted EBITDA for the purposes of its bank covenants, in particular for the Leverage Covenant
(Debt Adjusted EBITDA);
2. Waivers in relation to the requirement to enter into a new Hedge Agreement until the end of September 2023; and
3. An increase in the total facility limit from $100.0m to $120.0m.
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 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 3.
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 34.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company as at 30 June
2023 and the results of all subsidiaries for the year then ended.
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.
37 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
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.
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.
38 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
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.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Consolidated Entity for the annual reporting period ended 30 June 2023. The
Consolidated Entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
39 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 3. 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.
Allowance for expected credit losses for trade receivables
The allowance for expected credit losses assessment for trade receivables 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 10, 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 2. 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. Refer to Note 16 for details on impairment testing.
Classification of Clinic Class Shares: Equity vs Financial liability
Clinic Class Shares were issued to (1) the sellers on acquisition of various podiatry and physiotherapy clinics and (2)
clinicians who wish to (i) ‘buy-in’ to existing clinics, or (ii) ‘buy-in’ to a new podiatry or physiotherapy clinic.
The Clinic Class Shares were historically classified as a financial liability based on the fact that My FootDr (Aust) Limited
previously had a contractual obligation to deliver cash in the form of preferential dividends payable to the holders each quarter
by reference to profits derived from the Clinics. The Clinic Class Shares have been reclassified to equity in 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.
40 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Contingent consideration
The contingent consideration liability relates to business combinations and is valued at fair value at the acquisition date as
part of the business combination. 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. Refer to Note
29 for the fair value measurement of contingent consideration.
Business combinations
As discussed in note 35, 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 4. Segment Information
Identification of reportable segments
For management purposes, the Consolidated Entity is organised into business units based on its products and services and
has three reportable segments, as follows: : Feet & Ankles, Bodies & Minds and Eyes & Ears.
These reportable 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.
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. Underlying EBITDA is reported on a pre-AASB16 basis, with property lease
costs recognised as standard occupancy costs.
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.
Types of products and services
The principal products and services of each of these reportable segments are as follows:
Feet and Ankles Division
This division provides podiatry services and podiatry related services including the
manufacturing and sale of orthotics and podiatry related products.
Bodies and Minds Division
This division provides physiotherapy and speciality hand therapy services.
Eyes and Ears Division
This division provides optometry and audiology services.
Presentation of revenue and results
Underlying results exclude the impact of non-recurring income and expenses such as acquisition and integration costs.
Underlying EBITDA is reported on a pre-AASB16 basis, with property lease costs recognised as standard occupancy costs.
41 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 4. Segment Information (continued)
Reportable segment information
Consolidated - 2023
Revenue
Sales to external customers
Total revenue
EBITDA - underlying
Addback property lease costs (**)
Depreciation and amortisation expense
Share-based payments expense
Finance costs
Excess sick leave (flu/COVID)
Acquisition costs
Integration and restructuring costs
Doubtful debts
Fair value movement of contingent
consideration
Profit/(loss) before income tax expense
Income tax expense
Profit after income tax expense
Feet
& Ankles
$'000
Bodies
& Minds
$'000
Eyes
& Ears
$'000
Other*
$'000
Total
$'000
61,039
61,039
13,269
5,173
(6,145)
-
-
-
-
-
-
-
12,297
148,284
148,284
43,233
43,233
-
-
252,556
252,556
28,782
11,020
(13,250)
-
-
-
-
-
-
-
26,552
8,327
4,555
(5,570)
-
-
-
-
-
-
-
7,312
(12,912)
-
-
(1,000)
(9,336)
(1,035)
(3,505)
(4,690)
(527)
1,106
(31,899)
37,466
20,748
(24,965)
(1,000)
(9,336)
(1,035)
(3,505)
(4,690)
(527)
1,106
14,262
(3,926)
10,336
*
**
The ‘Other’ category comprises corporate functions and does not represent an operating segment.
Property lease costs are included in the underlying EBITDA reported to the CODM. This reporting is not consistent with AASB 16, which requires leases to be presented on the
statement of financial position, with the associated expenses to be recognised as depreciation and finance costs. The property leases costs are therefore added back in this reconciliation
between underlying EBITDA and statutory profit/(loss).
Consolidated - 2022
Revenue
Sales to external customers
Total revenue
EBITDA
Addback property lease costs (**)
Depreciation and amortisation expense
Share-based payments expense
Finance costs
COVID related expenses
Acquisition costs
Integration and restructuring costs
Fair value movement of contingent
consideration
Profit/(loss) before income tax expense
Income tax expense
Profit after income tax expense
Feet
& Ankles
$'000
Bodies
& Minds
$'000
Eyes
& Ears
$'000
Other*
$'000
Total
$'000
53,183
53,183
109,825
109,825
37,256
37,256
-
-
200,264
200,264
8,662
5,129
(6,175)
-
-
-
-
-
-
7,616
18,580
8,837
(10,206)
-
-
-
-
-
-
17,211
9,252
3,829
(4,644)
-
-
-
-
-
-
8,437
(11,956)
-
-
(1,395)
(5,895)
(3,383)
(6,859)
(3,736)
1,550
(31,674)
24,538
17,795
(21,025)
(1,395)
(5,895)
(3,383)
(6,859)
(3,736)
1,550
1,590
(1,247)
343
*
**
The ‘Other’ category comprises corporate functions and does not represent an operating segment.
Property lease costs are included in the underlying EBITDA reported to the CODM. This reporting is not consistent with AASB 16, which requires leases to be presented on the
statement of financial position, with the associated expenses to be recognised as depreciation and finance costs. The property leases costs are therefore added back in this reconciliation
between underlying EBITDA and statutory profit/(loss).
42 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 4. Segment Information (continued)
Accounting policy for reportable segments
Reportable 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 segments and assessing their performance.
Note 5. 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
Bodies & Minds
Eyes & Ears
Geographical regions
Australia
United States
New Zealand
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
2023
$'000
2022
$'000
196,379
56,177
154,898
45,366
252,556
200,264
Consolidated
2023
$'000
2022
$'000
61,039
148,284
43,233
53,183
109,825
37,256
252,556
200,264
246,608
1,854
4,094
197,306
1,252
1,706
252,556
200,264
252,556
200,264
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.
43 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 5. 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 6. Other income
Government grants (COVID-19)
Interest
Sub-tenant rent
Dividend income
Other income
Other income
Consolidated
2023
$'000
2022
$'000
-
46
2,321
-
991
622
1
1,284
24
589
3,358
2,520
Government grants (COVID-19)
During the Coronavirus (‘Covid-19’) pandemic, the Consolidated Entity received JobSaver support payments from the NSW
State Government. 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.
Accounting policy for government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
Accounting policy for interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Accounting policy for rent
Rent revenue is recognised on a straight-line basis over the lease term. Lease incentives granted are recognised as part of
the rental revenue. Contingent rentals are recognised as income in the period when earned.
44 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 7. Expenses
Profit before income tax includes the following specific expenses:
Cost of sales
Cost of sales
Depreciation
Leasehold improvements
Plant and equipment
Land and buildings - right-of-use assets
Plant and equipment - right-of-use assets
Total depreciation
Amortisation
Customer lists
Software
Total amortisation
Total depreciation and amortisation
Finance costs
Interest expense - bank
Interest expense - lease liabilities
Finance costs expensed
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
Consolidated
2023
$'000
2022
$'000
20,608
18,258
1,909
2,190
18,920
-
648
2,695
15,755
243
23,019
19,341
1,834
112
1,578
107
1,946
1,685
24,965
21,026
6,259
3,077
2,813
3,082
9,336
5,895
13,585
10,686
1,000
1,395
45 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 8. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Derecognition of DT balance
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease/(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
Reversal of contingent consideration
Derecognition of DT balance
Other
Under/over
Adjustment recognised for prior periods
Income tax expense
Amounts credited directly to equity
Deferred tax assets
Consolidated
2023
$'000
2022
$'000
3,674
347
(95)
-
4,331
(2,681)
(107)
(296)
3,926
1,247
347
(2,681)
14,262
1,590
4,279
477
270
(373)
-
(648)
493
4,021
(95)
1,405
(394)
(296)
(51)
213
1,354
(107)
3,926
1,247
Consolidated
2023
$'000
2022
$'000
-
(803)
46 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 8. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Right-of-use asset
Customer lists
Employee benefits
Leases
Accrued expenses
Blackhole expenses
Other
Losses - Revenue & Capital
Deferred tax asset
Movements:
Opening balance
Credited/(charged) to profit or loss
Credited to equity
Additions through business combinations
Derecognition
Other
Under/over
Closing balance
Income tax refund due
Income tax refund due
Consolidated
2023
$'000
2022
$'000
(19,133)
(1,441)
4,238
20,953
371
697
940
136
(17,722)
(1,772)
5,562
19,191
303
956
68
1,259
6,761
7,845
7,845
(347)
-
378
-
-
(1,115)
4,525
2,681
803
(301)
(296)
143
290
6,761
7,845
Consolidated
2023
$'000
2022
$'000
221
97
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.
47 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 8. 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.
Note 9. 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 18)
Balance as per statement of cash flows
Consolidated
2023
$'000
2022
$'000
252
5,337
225
5,441
5,589
5,666
5,589
(2,000)
5,666
(1,954)
3,589
3,712
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.
Note 10. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables
GST recoverable
Consolidated
2023
$'000
2022
$'000
11,062
(930)
10,132
2,807
33
8,562
(549)
8,013
-
191
12,972
8,204
Allowance for expected credit losses
The Consolidated Entity has recognised a loss of $625,000 (30 June 2022: $268,000) in profit or loss in respect of the
expected credit losses for the year ended 30 June 2023.
48 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 10. Trade and other receivables (continued)
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
2023
%
2022
%
Carrying amount
2022
$'000
2023
$'000
-
-
20%
-
-
22%
4,956
1,455
4,651
4,900
1,172
2,490
11,062
8,562
Allowance for expected
credit losses
2023
$'000
2022
$'000
-
-
930
930
-
-
549
549
The calculation of expected credit losses has been revised as at 30 June 2023 and rates have decreased in the Over 3
months overdue category to 20% (30 June 2022: 22%).
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.
The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting
the ability of the customers to settle the receivables. The Consolidated Entity has identified the following to be the most
relevant factors in determining expected loss rates:
●
●
●
unemployment rate
inflation, and
Reserve Bank of Australia cash rate
Aged debtors greater than 90 days require investigation. Management uses judgment in determining which debtors are
unlikely to be recovered and require write-off
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Note 11. Inventories
Current assets
Consumables at cost
Finished goods at cost
Consolidated
2023
$'000
2022
$'000
1,388
12,829
951
9,581
14,217
10,532
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.
49 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 12. Other assets
Current assets
Prepayments
Other current assets
Note 13. 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
2023
$'000
2022
$'000
3,369
464
2,166
1,033
3,833
3,199
Consolidated
2023
$'000
2022
$'000
21
19
19
2
21
19
-
19
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
2022
2023
%
%
Fracture Holdco Pty Ltd
Australia
25.00%
40.00%
Note 14. Property, plant and equipment
Non-current assets
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
50 (Annual Report - 30 June 2023)
Consolidated
2023
$'000
2022
$'000
14,648
(6,940)
7,708
30,460
(16,717)
13,743
10,368
(5,032)
5,336
26,266
(14,527)
11,739
21,451
17,075
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 14. Property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current financial year are set out below:
Consolidated
Balance at 1 July 2022
Additions
Additions through business combinations (note 35)
Depreciation expense
Balance at 30 June 2023
Leasehold
Plant and
improvements equipment
$'000
$'000
Total
$'000
5,336
3,964
317
(1,909)
11,739
3,456
738
(2,190)
17,075
7,420
1,055
(4,099)
7,708
13,743
21,451
Accounting policy for property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a reducing balance 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 15. 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
2023
$'000
2022
$'000
115,129
(51,590)
63,539
91,668
(32,595)
59,073
622
(622)
-
622
(622)
-
63,539
59,073
51 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 15. Right-of-use assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current financial year are set out below:
Consolidated
Balance at 1 July 2022
Additions
Additions through business combinations (note 35)
Depreciation expense
Balance at 30 June 2023
Land and
buildings -
right-
of-use
$'000
Plant and
equipment -
right-
of-use
$'000
59,073
18,582
4,804
(18,920)
63,539
-
-
-
-
-
Total
$'000
59,073
18,582
4,804
(18,920)
63,539
For other lease disclosures, refer to:
●
●
●
●
note 7 for depreciation on right-of-use assets and interest on lease liabilities;
note 19 for lease liabilities at the reporting date;
note 28 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.
52 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 16. Intangibles
Non-current assets
Goodwill - at cost
Trademarks and brands
Customer lists
Less: Accumulated amortisation
Software - at cost
Less: Accumulated amortisation
Consolidated
2023
$'000
2022
$'000
257,353
235,242
4,855
4,855
10,346
(5,543)
4,803
840
(517)
323
9,646
(3,711)
5,935
699
(405)
294
267,334
246,326
Reconciliations
Reconciliations of the written down values at the beginning and end of the current financial year are set out below:
Consolidated
Goodwill
$'000
Trademarks Customer
and brands
$'000
lists
$'000
Software
$'000
Total
$'000
Balance at 1 July 2022
Additions
Additions through business combinations (note
35)
Amortisation expense
235,242
-
22,111
-
4,855
-
-
-
5,935
-
700
(1,832)
294
141
-
(112)
246,326
141
22,811
(1,944)
Balance at 30 June 2023
257,353
4,855
4,803
323
267,334
A Cash-Generating Unit ('CGU') level summary of the goodwill allocation is presented below:
Feet & Ankles
Bodies & Minds
Eyes & Ears
Total goodwill
Consolidated
2023
$'000
2022
$'000
43,323
155,755
58,275
43,323
142,571
49,348
257,353
235,242
Impairment testing
The Consolidated Entity has tested goodwill, trademarks and brands 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, trademarks and brands have been allocated to the CGU, 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, trademarks and brands. The Consolidated Entity has identified three
CGUs, being the Bodies and Minds, Feet and Ankles and Eyes and Ears divisions.
53 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 16. Intangibles (continued)
Key assumptions used for the value-in-use calculations are those to which the recoverable amount of an asset or CGUs is
most sensitive.
The following key assumptions were used in the discounted cash flow model for both the Bodies & Minds, Feet & Ankles and
Eyes & Ears divisions:
●
The Consolidated Entity tests for impairment of goodwill, trademarks and brands on an annual basis. The recoverable
amount of a 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 2024, based on the financial budget
approved by the Board. Cash flow projections for periods beyond the 2024 period are extrapolated using the estimated
growth rates below.
Goodwill, trademarks and brands have been allocated to the three groupings of CGUs representing Bodies & Minds
('B&M'), Feet & Ankles ('F&A') and Eyes & Ears ('E&E').
Corporate overheads have been apportioned to the CGUs based on the following percentages:
B&M Division: 58%
F&A Division: 24%
E&E Division: 18%
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% (2022: 3.0%) per annum projected revenue growth
3.0% (2022: 3.0%) per annum increase in operating costs and overheads
Maintenance capital expenditures of 1.0% (2022: 1.0%) of revenue per annum
13.9% (2022: 13.0%) pre-tax discount rate
3.0% (2022: 3.0%) terminal value growth rate
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.
The discount rate of 13.9% (2022: 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
$88,508,083.
Based on the above assumptions, the recoverable amount of the Feet & Ankles CGU exceeds the carrying amount by
$62,590,073.
Based on the above assumptions, the recoverable amount of the Eyes & Ears CGU exceeds the carrying amount by
$20,383,803.
Sensitivity
As disclosed in note 3, 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.
54 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 16. Intangibles (continued)
Bodies & Minds division analysis:
●
Growth rates for revenue, costs and terminal value would need to decrease by more than 341 basis points before
goodwill would need to be impaired with all other assumptions remaining constant.
The pre-tax discount rate would be required to increase by 479 basis points before goodwill would need to be impaired,
with all other assumptions remain constant.
FY24 EBITDA would need to decrease by more than 24.7% before goodwill would need to be impaired with all other
assumptions remaining constant.
Feet & Ankles division analysis:
●
Growth rates for revenue, costs and terminal value would need to decrease by more than 800 basis points before
goodwill would need to be impaired with all other assumptions remaining constant.
The pre-tax discount rate would be required to increase by 1,100 basis points before goodwill would need to be impaired,
with all other assumptions remain constant.
FY24 EBITDA would need to decrease by more than 41.0% before goodwill would need to be impaired with all other
assumptions remaining constant.
Eyes & Ears division analysis:
●
Growth rates for revenue, costs and terminal value would need to decrease by more than 210 basis points before
goodwill would need to be impaired with all other assumptions remaining constant.
The pre-tax discount rate would be required to increase by 286 basis points before goodwill would need to be impaired,
with all other assumptions remain constant.
FY23 EBITDA would need to decrease by more than 17.8% before goodwill would need to be impaired with all other
assumptions remaining constant.
●
●
●
●
●
●
As a result of the value-in-use calculation, it was determined no impairment was identified.
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.
Trademarks and Brands
Trademarks and brands are tested annually for impairment.
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.
55 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 17. Trade and other payables
Current liabilities
Trade payables
Accruals
PAYG tax payable
Superannuation payable
Other payables
Consolidated
2023
$'000
2022
$'000
5,702
1,422
2,379
3,439
2,592
4,340
3,267
8,092
2,957
433
15,534
19,089
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 18. Borrowings
Current liabilities
Bank overdraft
Non-current liabilities
Bank loans
Consolidated
2023
$'000
2022
$'000
2,000
1,954
95,425
77,117
97,425
79,071
Refer to note 28 for further information on financial instruments.
Assets pledged as security
The bank overdraft and loan are secured by a General Security Agreement over the Consolidated Entity.
56 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 18. Borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Bank loans
Used at the reporting date
Bank overdraft
Bank loans
Unused at the reporting date
Bank overdraft
Bank loans
Consolidated
2023
$'000
2022
$'000
2,000
120,000
122,000
2,000
100,000
102,000
2,000
95,425
97,425
-
24,575
24,575
1,954
77,117
79,071
46
22,883
22,929
During FY23, the Consolidated Entity increased its total finance facility from $100.00 million to $120.00 million with its
financiers, namely ANZ, NAB and BOQ. At period end, the Consolidated Entity has undrawn facilities of approximately $24.6
million available with a tenor (remaining maturity) of 2.5 years.
Accounting policy for borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Note 19. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Consolidated
2023
$'000
2022
$'000
19,165
17,116
50,434
46,853
69,599
63,969
Refer to note 28 for further information on financial instruments.
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.
57 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 19. Lease liabilities (continued)
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.
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.
Note 20. Derivative financial instruments
Non-current liabilities
Interest rate swap derivative liabilities
Refer to note 28 for further information on financial instruments.
Refer to note 29 for further information on fair value measurement.
Consolidated
2023
$'000
2022
$'000
-
14
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.
58 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 21. Employee benefit obligations
Current liabilities
Annual leave
Long service leave
Non-current liabilities
Long service leave
Consolidated
2023
$'000
2022
$'000
6,869
3,462
8,151
3,167
10,331
11,318
968
904
11,299
12,222
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.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Note 22. Provisions
Current liabilities
Lease make good provision
Non-current liabilities
Lease make good provision
Consolidated
2023
$'000
2022
$'000
1,087
357
2,618
2,975
3,705
3,332
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.
59 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 22. Provisions (continued)
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 23. Other liabilities
Current liabilities
Contingent consideration
Deferred consideration
Other current liabilities
Non-current liabilities
Contingent consideration
Deferred consideration
Consolidated
2023
$'000
2022
$'000
3,297
950
(44)
1,214
1,700
-
4,203
2,914
989
950
4,961
-
1,939
4,961
6,142
7,875
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.
Note 24. Issued capital
Ordinary shares - fully paid
140,192
128,316
159,312
146,213
Consolidated
2023
Shares
'000
2022
Shares
'000
2023
$'000
2022
$'000
60 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 24. Issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
'000
Issue price
$'000
1 July 2021
Balance
Issue of ordinary shares - Institutional Entitlement Offer 28 September 2021
Issue of ordinary shares - acquisition of businesses
Issue of ordinary shares - acquisition of businesses
Issue of ordinary shares - acquisition of businesses
Issue of ordinary shares - Retail Entitlement Offer
Issue of ordinary shares - Dividend Reinvestment Plan
Issue of ordinary shares - acquisition of businesses
Issue of ordinary shares - Dividend Reinvestment Plan
Share issue transaction costs (net of tax)
Balance
5 October 2021
12 October 2021
12 October 2021
13 October 2021
28 October 2021
30 November 2021
24 March 2022
30 June 2022
Issue of ordinary shares - Retail Entitlement Offer
Issue of ordinary shares - Retail Entitlement Offer
Issue of ordinary shares - Exercise of Performance
Rights
Issue of ordinary shares - Dividend Reinvestment Plan
Share issue transaction costs (net of tax)
12 September 2022
5 October 2022
27 October 2022
27 March 2023
90,205
24,717
3,069
65
55
8,634
106
16
1,449
-
128,316
6,719
752
2,191
2,214
$1.80
$1.80
$1.78
$1.78
$1.80
$1.87
$2.15
$1.75
$1.47
$1.47
$0.00
$1.25
79,578
44,491
5,525
116
97
15,542
199
33
2,537
(1,905)
146,213
9,877
1,105
-
2,760
(643)
Balance
30 June 2023
140,192
159,312
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.
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 2022 Annual Report.
Accounting policy for issued capital
Ordinary shares are classified as equity.
61 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 24. Issued capital (continued)
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 25. Reserves
Share-based payments reserve
Transactions with non-controlling interest reserve
Pre-IPO distributions reserve
Consolidated
2023
$'000
2022
$'000
4,230
(2,860)
(2,494)
3,230
(2,860)
(2,494)
(1,124)
(2,124)
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.
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.
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:
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.
Movements in reserves
Movements in each class of reserve during the current financial year are set out below:
Consolidated
Balance at 1 July 2022
Issue of performance rights
Balance at 30 June 2023
Transactions
with non-
controlling
interest
$'000
Share-based
payments
$'000
Pre-IPO
distributions
$'000
Total
$'000
3,230
1,000
(2,860)
-
(2,494)
-
(2,124)
1,000
4,230
(2,860)
(2,494)
(1,124)
62 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 26. Non-controlling interest
Issued equity - Clinic Class shares
Retained profits
Consolidated
2023
$'000
2022
$'000
37,850
1,290
35,079
1,097
39,140
36,176
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 3 for details of the key judgements regarding the accounting treatment.
Note 27. Dividends
Dividends
Dividends paid during the financial year were as follows:
Interim dividend for the year ended 30 June 2023 of 2.0 cents per ordinary share
Interim dividend for the year ended 30 June 2022 of 2.0 cents per ordinary share
Final dividend for the year ended 30 June 2021 of 2.5 cents per ordinary share
Consolidated
2023
$'000
2022
$'000
2,760
-
-
-
2,537
2,255
2,760
4,792
As at the date of signing the financial report, the Directors of Healthia Limited have not yet determined whether to declare a
final dividend for FY23 given the terms of the proposed acquisition of Healthia by way of a scheme of arrangement.
Franking credits
Consolidated
2023
$'000
2022
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
9,577
10,388
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
Accounting policy for dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
63 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 28. Financial instruments
Financial risk management objectives
The Consolidated Entity's activities expose it to a variety of financial risks: market risk (interest rate risk), credit risk and
liquidity risk. The Consolidated Entity's overall risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the Consolidated Entity. The Consolidated
Entity uses derivative financial instruments such as interest rate swaps to hedge certain risk exposures. Derivatives are
exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Consolidated Entity uses
different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the
case of interest rate and other price risks.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Consolidated Entity and appropriate
procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Consolidated Entity's
operating units. Finance reports to the Board on a monthly basis.
Market risk
Interest rate risk
The Consolidated Entity's main interest rate risk arises from long-term borrowings and interest rate swap contracts.
Borrowings obtained at variable rates expose the Consolidated Entity to interest rate risk. Borrowings obtained at fixed rates
expose the Consolidated Entity to fair value interest rate risk.
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
2023
$'000
2022
$'000
95,425
-
77,117
(20,000)
95,425
57,117
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 $95,425,000 (30 June 2022: $77,117,000), are interest only
loans. At the reporting date, $nil (30 June 2022: $20,000,000) of debt was hedged by floating to fixed interest rate swaps.
An official increase in interest rates of 100 (30 June 2022: 100) basis points would have an adverse effect on profit before
tax of $954,250 (30 June 2022: $571,170) per annum. The percentage change is based on the expected volatility of interest
rates using market data and analysts' forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Consolidated Entity. The Consolidated Entity has a strict code of credit, including obtaining agency credit information,
confirming references and setting appropriate credit limits. The Consolidated Entity obtains guarantees where appropriate to
mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying
amount, net of any provisions for impairment of those assets, as disclosed in the Statement of Financial Position and notes
to the financial statements. The Consolidated Entity does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the Consolidated Entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Consolidated Entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
64 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 28. Financial instruments (continued)
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank overdraft
Bank loans
Consolidated
2023
$'000
2022
$'000
-
24,575
24,575
46
22,883
22,929
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 2022: 2.25 years).
Remaining contractual maturities
The following tables detail the Consolidated Entity's remaining contractual maturity for its financial liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the Statement of Financial Position.
Consolidated - 2023
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
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
-
-
-
-
-
-
8.97%
6.76%
2,000
6,383
-
6,383
-
97,617
-
-
-
-
15,534
6,142
15,534
6,142
-
-
2,000
110,383
5.00%
22,594
30,977
19,959
26,342
31,934
129,551
4,258
4,258
-
21,676
78,745
212,804
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
65 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 28. Financial instruments (continued)
Consolidated - 2022
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
Weighted
average
interest rate
%
1 year or
less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5
years
$'000
Non-interest
bearing
$'000
Remaining
contractual
maturities
$'000
-
-
-
-
-
-
7.00%
5.00%
1,954
3,856
-
3,856
-
80,971
-
-
-
-
19,089
7,875
19,089
7,875
-
-
1,954
88,683
5.00%
17,826
23,636
18,310
22,166
30,964
111,935
4,309
4,309
-
26,964
71,409
189,010
1.19%
1.26%
(60)
63
3
-
-
-
-
-
-
-
-
-
-
-
-
(60)
63
3
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 29. 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 - 2023
Liabilities
Interest rate swap
Contingent consideration
Total liabilities
Consolidated - 2022
Liabilities
Interest rate swap
Contingent consideration
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
-
-
-
-
-
-
4,286
4,286
-
4,286
4,286
Level 2
$'000
Level 3
$'000
Total
$'000
14
-
14
-
6,175
6,175
14
6,175
6,189
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.
66 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 29. Fair value measurement (continued)
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. Contingent consideration of between $0 and $19,211,000
may become payable subject to the EBITDA achieved by the various acquired businesses.
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 2021
Additions - new business combinations
Settlement of contingent consideration
Fair value movements - through profit or loss
Balance at 30 June 2022
Additions - new business combinations
Settlement of contingent consideration
Fair value movements - through profit or loss
Balance at 30 June 2023
Contingent
consideration
$'000
2,662
5,552
(489)
(1,550)
6,175
956
(1,739)
(1,106)
4,286
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
$30,000 - $815,000
Contingent consideration of between $0 and
$19,211,000 may become payable subject to the
EBITDA achieved by the various acquired
businesses.
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.
67 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 29. Fair value measurement (continued)
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 30. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Consolidated
Entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Other cash benefits
Note 31. Remuneration of auditors
Consolidated
2023
$
2022
$
1,894,476
154,817
21,732
379,767
249,000
1,929,423
160,502
31,446
380,561
-
2,699,792
2,501,932
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 Pty Ltd
Audit and review of the Group financial statements
Non-audit services - BDO Services Pty Ltd
Taxation and business advisory services
Total remuneration of BDO
Note 32. Contingent liabilities
Consolidated
2023
$
2022
$
532,577
378,249
332,501
532,562
865,078
910,812
The Consolidated Entity has given bank guarantees as at 30 June 2023 of $5,497,360 (30 June 2022: $4,857,945) to various
landlords.
Note 33. Related party transactions
Parent entity
Healthia Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 36.
Associates
Interests in associates are set out in note 13.
68 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 33. Related party transactions (continued)
Key management personnel
Disclosures relating to key management personnel are set out in note 30 and the remuneration report included in the
Directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Consideration relating to the acquisition of businesses at the time of acquisition of The
Optical Company:
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 and 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
Rent and outgoings paid to entities controlled by former director Anthony Ganter*
Note:
* Anthony Ganter was classified as Key Management Personnel in 2022 only.
Consolidated
2023
$
2022
$
-
1,065,044
309,965
311,652
220,401
556,208
-
-
235,907
380,470
72,556
304,127
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
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 34. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Parent
2023
$'000
2022
$'000
1,413
4,333
1,413
4,333
69 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 34. 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
2023
$'000
2022
$'000
3,943
38
241,906
210,181
2,167
1,492
97,592
78,622
114,401
4,117
25,796
101,302
3,115
27,143
144,314
131,559
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 2023 and 30 June 2022.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Consolidated Entity, as disclosed in note 2 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 35. Business combinations
2023
Acquisition of Corio Bay Health Group (Bodies & Minds Division)
On 1 December 2022, the Consolidated Entity acquired the businesses trading under the name Corio Bay Health Group
being a group of nine physiotherapy businesses located in Victoria. Initial consideration paid for the acquisition was $5.4
million including $4.3 million in cash consideration and $1.1 million in Clinic Class Shares consideration, with a fair valued
additional $0.4 million in contingent consideration.
For the 12 month period ended 30 June 2023, Corio Bay Health Group contributed revenue of $3.1 million and EBITDA of
$0.8 million (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $5.3 million and EBITDA
of $1.1 million (pre-AASB 16) to the Consolidated Entity.
Acquisition of Melbourne Hand Rehab (Bodies & Minds Division)
On 2 March 2023, the Consolidated Entity acquired the businesses trading under the name Melbourne Hand Rehab being a
group of 8 hand therapy businesses located in Victoria. Initial consideration paid for the acquisition was $4.4 million including
$3.3 million in cash consideration and $1.1 million in Clinic Class Shares consideration, with a fair valued additional $0.5
million in contingent consideration.
70 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 35. Business combinations (continued)
For the 12 month period ended 30 June 2023, Melbourne Hand Rehab contributed revenue of $1.6 million and EBITDA of
$0.8m (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $4.7 million and EBITDA
of $2.2 million (pre-AASB 16) to the Consolidated Entity.
Acquisition of Other Bodies and Minds Clinics
The Consolidated Entity acquired an additional 3 hand therapy clinics and 1 physiotherapy clinic during the current period.
Initial consideration paid for the acquisitions was $3.1 million including $2.4 million in cash consideration and $0.7 million in
Clinic Class Share consideration, with a fair valued additional $0.1 million in contingent consideration.
For the 12 month period ended 30 June 2023, the acquired businesses contributed revenue of $2.0 million and EBITDA of
$0.4 million (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $3.1 million and EBITDA
of $0.6 million (pre-AASB 16) to the Consolidated Entity.
Acquisition of Kosmac & Clemens (Eyes & Ears Division)
On 20 March 2023, the Consolidated Entity acquired the businesses trading under the name Kosmac & Clemens being a
group of 6 Optometry businesses located in Victoria. Initial consideration paid for the acquisition was $7.5 million in cash
consideration and up to an additional $1.9 million in deferred consideration.
For the 12 month period ended 30 June 2023, Kosmac & Clemens contributed revenue of $0.6 million and EBITDA of $0.3
million (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $4.8 million and EBITDA
of $2.0 million (pre-AASB 16) to the Consolidated Entity.
Acquisition of Other Eyes & Ears stores
The Consolidated Entity acquired an additional 2 optometry stores during the current period. Initial consideration paid for the
acquisitions was $0.2 million in cash consideration.
For the 12 month period ended 30 June 2023, the acquired businesses contributed revenue of $0.3 million and EBITDA of
$0.03 million (pre-AASB 16) to the Consolidated Entity. If these acquisitions had been held for the full 12 month period (by
extrapolating the actual performance) the acquired businesses would have contributed revenue of $1.1 million and EBITDA
of $0.1 million (pre-AASB 16) 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 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 35. Business combinations (continued)
Details of the acquisitions are as follows:
Bodies and Minds Division
Eyes & Ears Division
CorioBay
Fair value
Melbourne
Hand Therapy
Fair value
Others
Fair value
Kosmac &
Clemens
Fair value
Others
Fair value
Inventories
Plant and equipment
Right-of-use assets
Customer lists
Deferred tax asset
Other assets
Deferred tax liability
Employee benefits
Lease liability
Other liabilities
Net assets acquired
Goodwill
Acquisition-date fair value of the
total consideration transferred
Representing:
Cash paid or payable to vendor
Contingent consideration
Deferred consideration
Clinic Class Shares issued to
vendor(s)
Cash used to acquire business,
net of cash acquired:
Acquisition-date fair value of the
total consideration transferred
Less: contingent consideration
Less: deferred consideration
Less: Clinic Class Shares
issued to vendor(s)
$'000
$'000
$'000
$'000
$'000
-
241
2,524
226
923
29
(825)
(394)
(2,524)
(160)
40
5,684
121
235
831
161
303
79
(298)
(177)
(834)
(11)
100
141
867
83
316
8
(285)
(145)
(867)
(53)
200
401
329
190
148
22
(156)
(164)
(329)
(50)
410
4,495
165
3,005
591
8,773
53
37
253
40
101
10
(88)
(85)
(253)
(19)
49
154
Total
$'000
474
1,055
4,804
700
1,791
148
(1,652)
(965)
(4,807)
(293)
1,255
22,111
5,724
4,905
3,170
9,364
203
23,366
4,265
359
-
3,319
492
-
2,390
105
-
7,464
-
1,900
203
-
-
17,641
956
1,900
1,100
1,094
675
-
-
2,869
5,724
4,905
3,170
9,364
203
23,366
5,724
(359)
-
4,905
(492)
-
3,170
(105)
-
9,364
-
(1,900)
203
-
-
23,366
(956)
(1,900)
(1,100)
(1,094)
(675)
-
-
(2,869)
Net cash used
4,265
3,319
2,390
7,464
203
17,641
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.
2022
Acquisition of The Back in Motion Group (Bodies & Minds Division)
On 20 September 2021, it was announced that the Consolidated Entity had entered binding agreements to acquire the Back
In Motion Health Group (BIM), comprising the businesses of the 63 Back In Motion physiotherapy clinics and the shares in
BIM IP Pty Ltd, which owned the brands, trademarks and other intellectual property.
72 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 35. Business combinations (continued)
The Back In Motion clinic acquisitions were settled over the period to 5 October 2021 through 23 December 2021 as landlord
consents and other conditions precedent were satisfied.
The goodwill is attributable mainly to the skills, technical talent and established clinics chain of BIM's work force and the
synergies expected to be achieved from integrating the company into the Group's existing Health Industry business. None
of the goodwill recognised is expected to be deductible for tax purposes.
Initial consideration paid for the acquisitions was $87.65 million including $64.52 million in cash consideration, $15.66 million
in Clinic Class Share consideration, $5.77 million in ordinary Healthia Limited share consideration and $1.70 million payable
in deferred consideration. In addition, a fair value of $4.01 million payable in contingent consideration may become payable
between 12 and 36 months after the completion date.
Healthia shares were issued to the Vendors and were subject to voluntary escrow for 24 months.
Acquisition of PhysioWorks Group (Bodies and Minds Division)
The Consolidated Entity acquired the business named PhysioWorks, a group of five physiotherapy businesses located in
South East Queensland. Initial consideration paid for the acquisition was $2.21 million including $1.81 million in cash
consideration and $0.41 million in Clinic Class Shares consideration.
Acquisition of Other Bodies and Minds Clinics
The Consolidated Entity acquired an additional 11 physiotherapy and hand therapy clinics during the current period. Initial
consideration paid for acquisitions was $8.77 million including $6.06 million in cash consideration, $2.71 million in Clinic
Class Shares, with up to an additional $1.06 million in contingent consideration.
Acquisition of Other Feet and Ankles Clinics
The Consolidated Entity acquired an additional 1 podiatry clinic during the current period. Total consideration paid for the
acquisition was $0.016 million in cash consideration. The acquired clinic was merged into surrounding clinics owned by the
Consolidated Entity and as such, no stand alone earnings are able to be reported for the period.
Acquisition of LensPro Group (Eyes and Ears Division)
During the current period, the Consolidated Entity acquired the LensPro Optometrists Group comprising 8 optical stores.
Initial consideration paid for acquisition was $6.49 million in cash consideration, with up to an additional $0.33 million in
contingent consideration.
Acquisition of Other Eyes and Ears Clinics
The Consolidated Entity acquired additional 4 optical stores during the current period. Initial consideration paid for acquisition
was $0.60 million including $0.56 million in cash consideration and $0.04 million in Clinic Class Shares, with up to an
additional $0.13 million in contingent consideration.
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.
73 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 35. Business combinations (continued)
Details of the acquisitions are as follows:
Eyes & Ears Division
Bodies and Minds Division
Feet &
Ankles
Division
LensPro
Others
PhysioWork
s
BIM
Other
Others
Fair value Fair value Fair value Fair value Fair value Fair value
$'000
$'000
$'000
$'000
$'000
$'000
Total
$'000
Trade receivables
Inventories
Other current assets
Plant and equipment
Right-of-use assets
Brand
Customer lists
Deferred tax asset
Deferred tax liability
Employee benefits
Lease liability
Other liabilities
Net assets/(liabilities) 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: deferred consideration
Less: contingent consideration
Less: Healthia Limited shares
issued to vendor
Less: Clinic Class Shares
issued to vendor
-
291
22
947
2,529
-
300
843
(849)
(282)
(2,529)
(107)
1,165
5,656
-
103
-
255
466
-
80
162
(164)
(74)
(466)
(53)
309
421
-
49
6
123
432
-
109
154
(162)
(82)
(432)
(56)
821
764
407
2,811
13,146
4,600
3,400
5,008
(4,680)
(3,525)
(13,146)
(2,109)
141
2,073
7,497
84,160
-
146
61
508
2,813
-
396
952
(963)
(362)
(2,813)
(175)
563
9,264
-
1
-
8
18
-
-
5
(5)
-
(18)
(11)
821
1,354
496
4,652
19,404
4,600
4,285
7,124
(6,823)
(4,325)
(19,404)
(2,511)
(2)
18
9,673
101,592
6,821
730
2,214
91,657
9,827
16
111,265
6,492
564
1,807
64,515
6,062
16
79,456
-
329
-
-
-
128
-
38
-
-
-
5,771
4,010
1,700
-
1,055
-
407
15,661
2,710
-
-
-
-
5,771
5,522
1,700
18,816
6,821
730
2,214
91,657
9,827
16
111,265
6,821
-
(329)
730
-
(128)
2,214
-
-
91,657
(1,700)
(4,010)
9,827
-
(1,055)
-
-
-
-
(5,771)
-
(38)
(407)
(15,661)
(2,710)
16
-
-
111,265
(1,700)
(5,522)
-
-
(5,771)
(18,816)
Net cash used
6,492
564
1,807
64,515
6,062
16
79,456
74 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 35. Business combinations (continued)
Goodwill arising from business combinations is attributed to the reputation of the business in their local market, the benefit
of marginal profit and synergies expected to be received by integrating into the Consolidated Entity's systems, expected
revenue growth, future market development, the assembled workforce and knowledge of the local markets. These benefits
are not able to be individually identified or recognised separately from goodwill.
Valuation techniques
The valuation techniques used for measuring the fair value of material assets acquired were as follows.
Asset acquired
Valuation technique
Property, plant and
equipment
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.
Intangible assets
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.
Inventories
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 $nil (30 June 2022: $0.8m), which are expected to be
collectable.
Acquisition and integration related costs of $7.3m (30 June 2022: $7.4m) are included in the consolidated statement of profit
or loss and other comprehensive income.
Accounting policy for business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the Consolidated Entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the Consolidated
Entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Consolidated Entity remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount
is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
75 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 35. Business combinations (continued)
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value
of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Note 36. 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 2:
Name
Principal place
of business /
Country of
incorporation
Ownership interest
2022
2023
%
%
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
BIM Physiotherapy Group Holding Ltd (formerly 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
Healthia (Services) Pty Ltd (formally 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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
76 (Annual Report - 30 June 2023)
100%
100%
100%
100%
75%
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%
75%
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%
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 36. Interests in subsidiaries (continued)
Name
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
Motion Health Group Holding Ltd
BIM IP Pty Ltd
Principal place
of business /
Country of
incorporation
Ownership interest
2022
2023
%
%
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
New Zealand
Australia
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%
58%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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 2:
Name
Parent
Principal place
of business /
Country of
incorporation
Ownership
interest
2023
%
Ownership
interest
2022
%
Non-controlling interest
Ownership
interest
2022
%
Ownership
interest
2023
%
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%
77 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
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
Share-based payments
Fair value movement of contingent consideration
Change in operating assets and liabilities:
Decrease/(increase) in deferred tax assets
(Increase)/Decrease in trade and other receivables
(Increase)/Decrease in inventories
Decrease/(Increase) in prepayments
Decrease/(Increase) in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provision for income tax
Decrease in employee benefits
(Decrease)/Increase in other liabilities and provisions
Consolidated
2023
$'000
2022
$'000
10,336
343
24,965
1,000
(1,106)
21,026
1,395
(1,550)
1,223
(4,768)
(3,211)
(1,204)
718
(3,723)
(124)
(1,888)
373
(3,019)
(2,604)
(1,173)
(1,038)
535
3,097
3,765
(507)
(3,074)
Net cash from operating activities
22,591
17,196
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2021
Net cash from/(used in) financing activities
Acquisition/ modification of leases
Changes through business combinations (note 35)
Other changes
Balance at 30 June 2022
Net cash from/(used in) financing activities
Acquisition/ modification of leases
Changes through business combinations (note 35)
Balance at 30 June 2023
Note 38. Earnings per share
Profit after income tax
Non-controlling interest
Bank
loans
$'000
Lease
liabilities
$'000
Total
$'000
48,330
29,065
-
-
(278)
77,117
18,308
-
-
44,119
(14,877)
15,322
19,404
1
63,969
(17,759)
18,582
4,807
92,449
14,188
15,322
19,404
(277)
141,086
549
18,582
4,807
95,425
69,599
165,024
Consolidated
2023
$'000
2022
$'000
10,336
(4,869)
343
(3,672)
Profit/(loss) after income tax attributable to the owners of Healthia Limited
5,467
(3,329)
78 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 38. Earnings per share (continued)
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Performance rights*
Number
Number
'000
'000
136,278
117,892
3,358
-
Weighted average number of ordinary shares used in calculating diluted earnings per share
139,636
117,892
Basic earnings per share
Diluted earnings per share
Cents
Cents
4.01
3.92
(2.82)
(2.82)
*
3,943,000 performance rights have been excluded from the above calculation of diluted earnings per share for the current year as the Consolidated Entity has incurred losses meaning
their inclusion would be anti-dilutive.
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Healthia Limited, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Capital Raising
On 8 September 2022, the Consolidated Entity announced it would raise up to $15.0 million via an accelerated non-
renounceable pro-rata entitlement offer. The offer comprised an Institutional Entitlement Offer to raise approximately $10
million and a Retail Entitlement Offer to raise approximately $5 million.
On 12 September 2022, the Consolidated Entity announced the completion of the Institutional Entitlement Offer and
6,718,785 new ordinary shares were issued at $1.47 per share, raising a total of approximately $9.9 million.
5 October 2022, the Consolidated Entity announced the completion of the Retail Entitlement Offer and 752,657 new ordinary
shares were issued at $1.47 per share, raising a total of approximately $1.1 million. The Retail Entitlement Offer was not
underwritten.
Note 39. Share-based payments
Performance rights
Unlisted long term incentive performance rights
On 29 November 2022, the Consolidated Entity’s shareholders approved the grant of 2,244,060 unlisted performance rights
to Executive Directors, KMP and other staff with a nil grant and exercise price. The performance rights will vest on 30 June
2025 (subject to satisfaction of the relevant vesting conditions) and expire on 31 October 2025. The vesting conditions include
a number of performance and service conditions. The performance rights were issued on 27 March 2023.
Unlisted retention performance rights
On 29 November 2022, the Consolidated Entity’s shareholders approved the grant of 730,842 unlisted retention performance
rights to Executive Directors, KMP and other staff with a nil grant and exercise price. The retention performance rights will
vest on 30 June 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 retention performance rights were issued on 27
March 2023.
79 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 39. Share-based payments (continued)
Details of the performance rights are as follows:
2022 Grant - Performance Rights
Grant date:
Grant price:
Exercise price:
Vesting date:
Expiry date:
Restriction on shares issued on exercise: Can only be traded in accordance with Securities Trading Policy and insider
27 March 2023
$nil
$nil
30 June 2025
31 October 2025
trading laws
The fair value of performance rights (equity settled) with the indexed 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 performance rights granted 27 March 2023
2,244,060 of the 2022 Performance Rights which will vest in accordance with the Performance Rights Plan Rules is
dependent on, and subject to, satisfaction of the following conditions
Service 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 2022 to 30 June 2025 based on the
following vesting scale:
EPS Growth condition
- Below threshold and target being less than 4% - Nil Vesting
- Threshold and target being between 4% and 10% - Pro rata vesting
- Stretch being over 10% - 100% vesting
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.
Indexed TSR (iTSR)
50% of the Performance Rights will be exercisable if this condition is achieved.
Satisfaction of the iTSR performance condition against the S&P/ ASX Small
Industrials Index, based on the following vesting scale:
- Stretch being index movement of greater than 10% - 100% vesting
- Between target and stretch being index movement of between 5% and 10% - pro
rata vesting
- Target being index movement of 5% - 50% vesting
- Between threshold and target being index movement of between 0% and 5% - pro
rata vesting
- Threshold being equal to index movement - 25% vesting
- Below threshold being less than the index movement - Nil vesting
TSR is the sum of the change in share price and dividends (assumed to be reinvested
in shares) during the Vesting Period. It is annualised for the purpose of the
above vesting scale. The TSR of the Company will be calculated and converted to a
compound annual growth rate (CAGR) value for the purpose of assessment against
this scale. During periods of nil dividends being declared, TSR is equal to the change
in share price.
50% of the performance rights will be exercisable if this condition is achieved.
80 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 39. Share-based payments (continued)
2022 Grant - Retention Performance Rights
Grant date:
Grant price:
Exercise price:
Vesting date:
Expiry date:
Restriction on shares issued on exercise: Can only be traded in accordance with Securities Trading Policy and insider
27 March 2023
$nil
$nil
30 June 2023
31 October 2023
trading laws
730,842 of the 2022 Retention Performance Rights which will vest in accordance with the Performance Rights Plan Rules
is dependent on, and subject to, satisfaction of the following conditions
Service 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.
Performance Rights will be exercisable if this condition is achieved.
FY23 EBITDA(u)
Achievement by the Company of EBITDA(u) of greater than $40 million for the
financial year ended 30 June 2023. This reflects the Company's guidance on 31
August 2022 that it expects to deliver EBITDA(u) in FY23 of greater than $40 million.
EBITDA(u) or Underlying EBITDA is statutory earnings before interest, tax,
depreciation and amortisation (EBITDA) 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.
EBITDA(u) is presented on a pre-AASB16 basis. Underlying EBITDA is a non-IFRS
measure and will be determined by the Directors having regard to those principles
and is not audited.
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.
Set out below are summaries of performance rights granted under the plan:
2023
Grant date
Expiry date
27/11/2019
30/10/2020
01/12/2020
19/11/2021
27/03/2023
27/03/2023
31/10/2022
31/10/2023
31/10/2023
31/12/2024
31/10/2023
31/10/2025
Balance at
the start of
the year
Granted
Exercised
Forfeited
Balance at
the end of
the year
2,543,358
378,500
282,500
1,203,500
-
-
4,407,858
-
-
-
-
730,842
2,244,060
2,974,902
(2,190,837)
-
-
-
-
-
(2,190,837)
(352,521)
(198,500)
-
(384,500)
-
-
(935,521)
-
180,000
282,500
819,000
730,842
2,244,060
4,256,402
As at 30 June 2023, no rights had vested as the conditions of vesting had not been satisfied. Refer to note 40 for the impact
on performance rights of the Scheme Implementation Deed entered into by the Consolidated Entity on 31 August 2023.
81 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 39. Share-based payments (continued)
2022
Grant date
Expiry date
27/11/2019
30/10/2020
01/12/2020
19/11/2021
31/10/2022
31/10/2023
31/10/2023
31/12/2024
Balance at
the start of
the year
Granted
Exercised
Forfeited
2,543,358
378,500
282,500
-
3,204,358
-
-
-
1,203,500
1,203,500
-
-
-
-
-
Balance at
the end of
the year
-
-
-
-
-
2,543,358
378,500
282,500
1,203,500
4,407,858
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 1.08
years (30 June 2022: 1.54 years).
Set out below are equity settled payments made during the year:
Equity settled payments
Equity settled payments other
Consolidated
2023
$
2022
$
1,000,000
1,395,000
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.
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.
82 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 39. Share-based payments (continued)
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
Acquisitions
After Reporting Date, the Consolidated Entity entered into binding agreements to acquire and has reached settlement the
following businesses:
●
●
Walk Without Pain Podiatry Clinics (3 podiatry clinics located in Queensland; and,
Melbourne Hand Therapy (4 hand therapy clinics and an additional 9 sessional locations located in Victoria).
Total upfront consideration of $3.6 million for the acquisitions (plus stock, less employee entitlements) is as follows:
●
●
Upfront cash consideration: $2.8 million; and
Issue of Clinic Class Shares: $0.8 million.
In addition to the upfront consideration, contingent consideration of up to $0.7million may become payable in cash, subject
to the achievement of pre-defined earnings targets.
Scheme Implementation Deed
On 31 August 2023, the Consolidated Entity entered into a Scheme Implementation Deed (the “Scheme”) with Harold BidCo
Pty Ltd (“Harold BidCo”) ACN 670 606 827, an entity owned by funds advised by Pacific Equity Partners under which it is
proposed that Harold BidCo will acquire 100% of the fully diluted share capital in Healthia by way of a scheme of arrangement.
Under the Scheme, Healthia shareholders will have the option to receive either $1.80 cash per Healthia share or unlisted
scrip consideration, or a mix of cash and unlisted scrip consideration (subject to certain conditions).
The Scheme is subject to certain conditions, which must be satisfied or waived before the Scheme can be implemented,
including obtaining Healthia shareholder approval following receipt of an Independent Expert’s Report concluding (and
continuing to conclude) that the Scheme is in the best interest of the Healthia shareholders.
In the event that the Scheme proceeds, Healthia Shareholders who participate in obtaining script consideration as part of
the transaction may be subject to alternative risks and uncertainties from those as set out in Table 6: Material Business Risks
of the Review of Operations in this report, and general market risks.
In the event the Scheme does not proceed, Healthia Shareholders will continue to be subject to the risks and uncertainties
associated with Healthia’s business and general market risks. Furthermore, if the Scheme does not proceed, and no
comparable proposal or superior proposal is received by the Healthia Board, then Healthia’s share price is likely to be
impacted.
Details of the proposed acquisition are contained in a separate announcement released to the ASX on 31 August 2023.
83 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Notes to the consolidated financial statements
30 June 2023
Note 40. Events after the reporting period (continued)
Impact of Scheme Implementation Deed on Performance Rights
On 30 August 2023, the Healthia Board, using the ability to retrospectively amend the performance rights, determined that
should the Scheme Implementation Deed become Effective, then all vesting conditions on all unvested Performance Rights,
excluding the service condition, will be waived, with such resulting vested Performance Rights being automatically exercised,
and issued, prior to the Scheme Record Date with each holder domiciled in Australia entitled to be issued one Healthia Share
for each vested Performance Right (as applicable) held (that is, on a one for one basis). Such Healthia Shares will be
captured by the Scheme.
No other matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the
Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial
years.
84 (Annual Report - 30 June 2023)
Healthia Limited and its Controlled Entities
Directors' declaration
30 June 2023
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 2 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 2023 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
Dr Glen Frank Richards
Director
29 September 2023
85 (Annual Report - 30 June 2023)
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek Street
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 2023, 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 2023 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.
86 (Annual Report – 30 June 2023)
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 16.
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 Group
• 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 FY23 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.
87 (Annual Report – 30 June 2023)
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 2023, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a
UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation.
88 (Annual Report – 30 June 2023)
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 28 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Healthia Limited, for the year ended 30 June 2023,
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
Michael Cutri
Director
Brisbane, 29 September 2023
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.
89 (Annual Report – 30 June 2023)
Healthia Limited and its Controlled Entities
Shareholder information
30 June 2023
The shareholder information set out below is current as at 22 September 2023.
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
631
851
351
507
100
0.23
1.68
1.88
10.93
85.28
2,440
100.00
-
-
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BELAROO PTY LTD
BRIDELL PTY LIMITED
MAXIMUM (NQ) PTY LTD
BNP PARIBAS NOMS PTY LTD
DLH TRADING PTY LTD
UBS NOMINEES PTY LTD
JABEZ FUND PTY LTD
ROM GROUP PTY LTD
MAXIMUM (NQ) PTY LTD
MR MILTON ZEVI LEVINE
WILLEESE PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
PACIFIC CUSTODIANS PTY LIMITED
GF & LH RICHARDS SUPER PTY LTD
NATIONAL NOMINEES LIMITED
HGT INVESTMENTS PTY LTD
DPC INVESTMENTS PTY LTD
Unquoted equity securities
Performance rights
90 (Annual Report - 30 June 2023)
Ordinary shares
% of total
shares
issued
Number held
20,948,911
18,024,648
11,317,234
6,963,607
5,134,628
4,923,299
3,812,058
3,495,465
3,420,296
3,069,444
2,373,267
1,815,670
1,625,025
1,547,383
1,409,627
1,316,823
1,177,808
1,078,424
982,800
967,317
14.94
12.86
8.07
4.97
3.66
3.51
2.72
2.49
2.44
2.19
1.69
1.30
1.16
1.10
1.01
0.94
0.84
0.77
0.70
0.69
95,403,734
68.05
Number
on issue
Number
of holders
4,256,402
18
Healthia Limited and its Controlled Entities
Shareholder information
30 June 2023
Substantial holders
Substantial holders in the Company are set out below:
MA Financial Group Limited
Wilson Asset Management Group
Regal Funds Management Pty Ltd
Mr Darren L Stewart
Glen Frank Richards
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Each ordinary share carries the right to one vote.
Ordinary shares
% of total
shares
issued
Number held
13,779,591
10,670,424
8,412,836
8,021,333
7,966,777
9.99
8.32
6.00
5.94
5.56
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
Ordinary shares
Ordinary shares
Ordinary shares
Expiry date
30 September 2023
13 October 2023
30 November 2023
Number
of shares
3,069,444
119,582
15,579
3,204,605
Share Registry
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
91 (Annual Report - 30 June 2023)