Leading Australia to a
healthier
future
Healius Limited ACN 064 530 516
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Contents
01 Overview
About Healius
Our network
Building a sustainable business
Our strategy
Key milestones
Continuing to support
communities through COVID-19
02 The year in review
Chairman and CEO’s letter
Group performance
Pathology
Imaging
Day Hospitals
Corporate
Group reported results
03 Directors & senior
management
Board of Directors
Executive Leadership Team
Risk management
04 Directors’ Report
Directors’ Report
Remuneration Report
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43
Corporate Governance Statement
70
Auditor’s Independence Declaration 71
Independent Auditor’s Report
72
Director’s declaration
05 Finance Report
Financial statements
Notes to the financial statements
06 Other information
Shareholder information
Financial calendar
Corporate information
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b
T he
greatest
care
for the
greatest number
Healius is committed
to delivering excellence
in healthcare and
leading Australia
to a healthier future.
Every year:
1 in 3
Pathology samples
tested in our
laboratories
3.3M+
Radiography
examinations
50,000+
Procedures in our
day hospitals
OVERVIEW
About us
Pathology
Healius Pathology is one of Australia’s leading providers
of private medical laboratory and pathology services.
Healius Pathology operates 95 medical laboratories and
over 2,000 patient collection centres across metropolitan,
regional and remote Australia. It employs around 200
specialist pathologists and over 6,000 scientists, technicians,
collectors and team members.
Through a variety of established state-based and specialty
brands, Healius Pathology provides leading medical laboratory
and pathology services across key diagnostic activities. These
include: anatomical pathology (histopathology and cytology),
clinical pathology (biochemistry, haematology, immunology and
microbiology), genomic diagnostics and veterinary pathology.
Healius Pathology brands include QML, Laverty, Dorevitch and
Western Diagnostic Pathology which operate in Queensland,
New South Wales, Victoria and South Australia, Western
Australia and Northern Territory respectively. Key specialty
brands include Genomic Diagnostics, Australia’s leading
non-government diagnostic genetic sequencing facility.
Each year, Healius Pathology provides one in every three
pathology services in Australia. These services extend from
exclusively servicing some of Australia’s largest and most
complex private and public hospitals to regional areas and
remote Australian Aboriginal communities.
Healius Pathology has also played a pivotal role in Australia’s
public health response to the COVID-19 pandemic. It has
conducted more than six million COVID-19 tests to-date.
The extensive community COVID-19 testing, collected
through the division’s 89 dedicated sites as well as in several
hospital and aged care facilities, was supplemented by
Healius Pathology’s commercial and direct-to-consumer
initiatives, which included testing at workplaces and
sporting codes.
Healius is one of
Australia’s leading
healthcare companies
providing high quality,
accessible and
cost-efficient healthcare
services through our
Pathology, Imaging and
Day Hospital businesses.
With a unique footprint
of more than 2,000
locations and 11,000+
employees, Healius
provides speciality
diagnostic services
to consumers and their
referring practitioners,
as well as enabling
a range of independent
healthcare professionals
to deliver patient care
in partnership with
Healius’ nurses and
support teams.
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Imaging
Day Hospitals
Healius’ Imaging division, now known as Lumus Imaging,
operates a network of sites across the country, in partnership
with over 110 independent radiologists.
Lumus Imaging manages over 130 sites in total, comprising
stand-alone community imaging centres, and imaging
facilities located within private and public hospitals and
in medical centres.
Lumus Imaging provides professional and support services
to radiologists, enabling them to focus on providing
quality care to their patients. It employs a highly-trained
team of radiographers, sonographers, nuclear medicine
technologists, nurses, centre support and corporate teams.
A full suite of modalities and services are offered which
include: X-ray, ultrasound, computerised tomography
(CT), mammography, magnetic resonance imaging (MRI),
nuclear medicine, positron emission tomography (PET) and
interventional radiology (including treatment by spinal and
joint injections).
Radiologists undertake a range of imaging services including
specialist women’s health, cardiac, neurology, vascular,
musculoskeletal and dental imaging. Over 3.3 million
radiography examinations are conducted in Lumus Imaging’s
sites each year.
The Montserrat Day Hospitals business comprises 11 day
hospitals, 10 of these are stand-alone and one, called
Warringah Day Surgery, is located within a medical centre
in Brookvale Sydney. The stand-alone hospitals comprise
one multi-specialist, short stay hospital called Westside
Private, six smaller stand-alone day hospitals and three
haematology/oncology clinics, collectively conducting over
50,000 procedures a year.
Founded in 1996, Montserrat Day Hospitals operates well-run
facilities that are strategically located and accessible
to both specialists and patients. Approximately 500 doctors
work across Day Hospitals providing services in speciality
types including: Dermatology, ENT, Gastroenterology,
General Surgery, Gynaecology, Haematology, IVF, Oncology,
Ophthalmology, Oral Surgery, Plastic Surgery, and Urology.
Westside Private Hospital is a short stay overnight facility
located in Taringa, Brisbane which has ~50 specialists
operating out of it and offers services across 25 specialty
areas including Orthopaedics.
For the Healius Group, the business delivers referrals
to the pathology business and diversifies funding into
non-Medicare revenue.
Adora Fertility (held for sale)
Healius announced the sale of four Adora Fertility IVF
clinics, together with three co-located Healius Day
Hospitals in August 2021.
Healius’ IVF business model, which brings together
a team of IVF specialists, GPs, nurses and scientists,
delivers excellence in patient care at a more affordable
cost. The business has four major clinics around
the country and a footprint of satellite clinics that
enable wider access to high quality and affordable
fertility services for couples residing outside of major
treatment centres.
Healius – Annual Report 2021
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OVERVIEW
Our network
2,105 Pathology sites
2,010 ACC1
95 Laboratories
134 Imaging sites
30 Hospitals
55 Community centres
49 Medical centres
11 Day Hospital sites
1 Short stay hospital
7 Day hospitals
3 Haematology/Oncology clinics
Pathology
Imaging
Day Hospitals
Approved Collection Centres.
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Sites as at July 2021.
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WA
196 s ites
187 Pathology
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4
Imaging
Day Hospitals
NT
14 sites
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Pathology
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QLD
611 sites
576 Pathology
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Imaging
Day Hospitals
NSW
758 sites
700 Pathology
56
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Imaging
Day Hospital
SA
39 sites
33 Pathology
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Imaging
VIC
568 sites
534 Pathology
34
Imaging
ACT
37 sites
34 Pathology
3
Imaging
TAS
27 sites
27 Pathology
Healius – Annual Report 2021
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OVERVIEW
Building a
sustainable
business
Through accessible,
high-quality,
consumer-centric
healthcare services,
Healius is committed
to delivering excellence
in healthcare and
leading Australia
to a healthier future,
creating value for
consumers, employees,
investors and the
many communities
in which we operate.
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Our Business
Our Shareholders
Sustainable Improvement
Program aptly named
with investment to drive
growth in:
• Data-led operations
• Consumer-centricity
• Product innovation
• Network optimisation
• Core competencies
for the future
Streamlined portfolio
delivering higher returns
and cash flows
Organic growth in Day
Hospitals and diagnostic
commercial streams
$101 million in share
buy-back and $80.6
million in FY 2021 dividends
Strong capital position
to fund growth
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Our People
Our Communities
Our Customers
Extra three days leave
to all over Christmas
New parental leave policy
New resources hub
Rewards for hard work
across the Group
Flexible ways of working
to help manage COVID-19
pressures
Focus went far beyond
budgeted metrics to
ensuring we played a pivotal
role in Australia’s public
health response to the
pandemic
Non-COVID healthcare
services delivered safely,
efficiently and effectively
despite lockdowns
Commitment to carbon
neutrality by 2025, with
emissions reductions in train
Innovation in COVID-19
improved consumer
interaction
Investing in leading-edge
applications to permanently
change for the better
how consumers access
diagnostic healthcare
in Australia
Healius – Annual Report 2021
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OVERVIEW
Our strategy
Healius strives to deliver long-term sustainable growth
through the improvement of existing businesses and
development of new opportunities, while putting the
consumer at the centre of everything we do.
Portfolio management
Over the past two years, Healius has pursued a strategy
to realign its portfolio in order to deliver higher returns and
a strong growth profile, strengthen its balance sheet, and focus
on its core diagnostic and growing day hospitals businesses.
This has resulted in the following deliverables:
•
Successful completion of the Healius Primary Care (HPC)
divestment in November 2020
• Adora IVF brought to market in May 2021 and a sale
announced in August 2021
• Acquisition of Axis radiology, an Imaging bolt-on, in FY 2021
(completed in July 2021)
• Development of a pipeline of opportunities to capture the
emerging demand for short-stay hospitals
• On-going assessment of synergistic opportunities
to further scale the diagnostics businesses
Capital management
A capital management review was undertaken in December
2020 to consider:
• Options to deploy the HPC sale proceeds
•
Sustainable dividend policy providing certainty
to shareholders and flexibility to the business
• Capital needs of the portfolio and SIP initiatives
• Headroom for short and medium-term growth scenarios,
•
including a buffer for any future shocks
Elimination of surplus debt facilities and hedges, together
with optimisation of funding costs
The outcomes of the review were as follows:
• On-market share buy-back aiming to return up to $200 million
in 2021, with $101 million completed by June 2021 and primarily
funded from operating cash flow
• Revised dividend payout target of 50–70% of reported NPAT,
together with stated aim of growing dividends in real terms
• Medium-term gearing target of 1.7x–2.2x
• Debt facilities reduction in line with reduced borrowing
requirements and gearing targets
• Closing out of ineffective interest rate swaps
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Sustainable Improvement Program
SIP Phase I
SIP Phase II
The Sustainable Improvement Program (SIP) was introduced at
the end of FY 2019 to systematically reduce costs and improve
efficiencies across the Group. Pathology and Imaging labour,
Pathology property and consumables were identified as the
largest addressable opportunities. A target of $70 million
in savings, representing 4–5% of the cost base, was set for
Phase I with a focus on immediately addressable cost reduction.
In 1H 2021, the Phase I target was met with $68 million
annualised savings delivered (including $10 million savings
in HPC up to 30 June 2020), which was about a year ahead
of schedule. In total, over 200 initiatives were delivered. Key
initiatives included the delayering of middle management,
role consolidations, laboratory consolidations in Pathology,
and move to zero film in Imaging.
Removal of stranded costs
Complementing SIP Phase I, a cost-out program was initiated
at the end of FY 2020 to reduce the cost overhang arising from
the sale of HPC. A target of $15 million was set to be delivered
by FY 2022. This was achieved in FY 2021 ahead of schedule.
Healius support costs now benchmark favourably compared
with other healthcare and services companies. In total,
$83 million in savings to the Healius cost base have been
delivered between FY 2020 and FY 2021 ($73 million in continuing
operations). The result is a leaner and more flexible business.
With the initial cost saving and containments targets met,
in FY 2021 the strategic focus was expanded to the delivery
of margin growth. The target is for 300 bps EBIT margin growth
in Pathology and Imaging by FY 2023, as well as building
longer-term capabilities in spend and capital management,
data-led operations, customer-centricity, product and
innovation, and network optimisation. To achieve these
broader outcomes, higher-value structural improvements
are required, together with growth in non-Medicare revenue.
Outcomes are also dependent on the extent and timing of the
COVID-19 pandemic and its on-going impact on operations.
Notwithstanding the COVID-related operational challenges,
delivery highlights in SIP Phase II include:
• Digitisation and automation
- Development of an e-commerce platform (see page 10)
Improving fuel efficiency in our collection fleet through
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installing monitors
Implementation of first large scale AI-radiology read
assistance tool for chest X-rays
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• Network optimisation
- Optimisation of the Pathology ACC network
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Rationalisation of Imaging footprint and shift to cluster-
based multimodality clinics
• Workforce management
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Embedding richer data reporting for management and
front-line staff
•
Sourcing
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Re-tendering categories including consumables, after
hours reporting, and equipment maintenance
Healius – Annual Report 2021
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Our strategy (continued)
Rebranding to Lumus Imaging
Supporting Healius’ aim to be a customer centric healthcare
business, Healius recently rebranded its diagnostic imaging
division from Healthcare Imaging Services to Lumus Imaging,
unifying its imaging businesses under one national brand.
Lumus Imaging speaks to the notion of a brighter future
for our business and the communities it cares for.
The rebrand, with a new logo and colour scheme aligned
to Healius, will see a stronger customer focus, improvements
to the business’ online presence, and delivery of a more
modern service.
In addition to refreshing its brand identity, Lumus Imaging
is updating services, focusing on digital capabilities and
enhancing the way the business interacts with its patients
and referrers.
Digitisation
The current Pathology Laboratory Information System (LIS)
is working well and has supported six million COVID tests
conducted to-date, over and above business-as-usual
pathology volumes. Innovations undertaken in support
of COVID testing have included:
• Deploying a QR-code based digital order automation
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Launching the e-commerce platform suitable for existing
and future COVID and non-COVID products, broadening
our reach and improving access to services for customers
Healius is also continuing its technology modernisation program
in Pathology to deliver an end-to-end, customer-centric platform
with the following priorities:
• One national smart instrument manager to standardise test
panels and results
• Modular approach with a blend of in-house solutions and
proven off-the-shelf products
Prioritising patient and doctor touchpoints
Leveraging synergies across Pathology and Imaging
•
•
As part of this modernisation, Healius is expanding internal
technology capabilities and partnering with high calibre
technology service providers to augment internal capacity.
The program is expected to cost within the $85–90 million
envelope previously announced and to take between two
to three years to complete, sequenced to deliver benefits
along the way in operating cost efficiencies as well
as increased referral revenue.
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Short stay hospitals
Driven by improving surgical technology, lower costs and
comparable, or often superior, patient outcomes, the
healthcare industry is starting to shift away from higher
cost overnight procedures towards short stay hospital
procedures, with the number of private day hospital
admissions in Australia doubling in the last 10 years.
Cancer treatments, cardiology, orthopaedic procedures and
general surgery are projected to grow strongly in the short
stay hospital setting. This mirrors the trend in USA where over
5,000 Ambulatory Surgical Centers exist offering a wide
variety of surgeries.
At Westside Private Hospital, Healius has successfully
trialled hip and knee replacements in a short stay setting
(refer to page 25).
Short stay hospitals are seen as a key growth area for the
business, albeit one which needs to be developed rather
than acquired. Accordingly, Healius is progressing a pipeline
of greenfield and partnership opportunities to capture
growth in this emerging market.
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Creating value
for shareholders
With a strong capital position,
Healius is well placed to fund
targeted growth investments,
where there are synergies with
existing businesses.
During the year Healius Pathology
invested in a new laboratory
in Western Australia and acquired
a small histopathology business
in NSW. Lumus Imaging invested
in regional NSW, opening
a comprehensive imaging centre
in Orange, and in July 2021
acquired a small radiology practice
in Queensland to complement
its existing footprint.
In December 2020, Healius
announced an on-market share
buy-back aiming to return up
to $200 million to shareholders
in 2021, with $101 million completed
by June 2021, funded primarily from
operating cash flow.
Healius is also committed to
sustainable dividends, with the
Board announcing a dividend
payout ratio of 50–70% of reported
NPAT, with a stated aim of growing
dividends in real terms over time.
Healius – Annual Report 2021
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OVERVIEW
FY 2021
Key milestones
Appointed
Jenny Macdonald as
Non-executive Director
OCT 2020
Commenced
on market
share buy-back
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Completed
SIP Phase I ahead of time
—
Commenced
SIP Phase II targeting
300 bps margin expansion
in Pathology and Imaging
by FY 2023
DEC 2020
Completion
of sale
of Healius Primary Care
NOV 2020
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Renamed
SDS Pathology to Healius
Pathology
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Opening
of Western Diagnostic
Pathology’s new
laboratory in Jandakot,
Western Australia
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Announced
reviewing potential sale
of Adora Fertility
MAY 2021
Appointed
Kate McKenzie
as Non-executive Director
FEB 2021
On market
share buy-back
reached $101 million
JUN 2021
Opening
of new community
Imaging site at
Bloomfield,
Orange NSW
APR 2021
Healius – Annual Report 2021
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OVERVIEW
Continuing to
support communities
through COVID-19
“Never before has pathology testing made such a contribution
to the wellbeing of the community as it has now, during this
COVID-19 pandemic. The entire healthcare system has been
able to wisely use the knowledge gained from COVID-19
testing to locate the virus and protect the community.”
The Royal College of Pathologists of Australasia
Since the start of the COVID-19
pandemic in early 2020, Healius has
performed over six million COVID
tests and continues to provide critical
COVID-19 testing services across the
country to help keep Australians safe.
Community COVID testing
As the COVID pandemic continues to
impact countries globally, Australia
is managing its outbreaks, primarily
through Polymerase Chain Reaction
(PCR) testing and contact tracing
together with lockdowns and social
distancing rules. Healius partners with
the public sector in the fight against
COVID-19, working with government,
businesses and our communities to help
maintain public health and safety.
In FY 2021, Healius Pathology responded
to COVID-19 community outbreaks,
increasing testing capacity in a number
of laboratories and establishing
dedicated COVID testing sites in addition
to testing in several hospital and aged
care facilities. In response to the latest
COVID outbreak in NSW, in July, Healius
established the first 24-hour COVID-19
drive-through testing facility in the state.
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Through our state-based pathology
brands: Dorevitch Pathology in Victoria,
Laverty in NSW and ACT, QML Pathology
in Queensland and Western Diagnostic
Pathology in Western Australia and
Northern Territory, Healius continues
to open pop-up, drive-through testing
clinics in convenient metro and regional
locations, responding to areas of high
demand and working closely with public
health authorities.
The business has been agile in meeting
surge demand, opening new sites and/
or ramping up in response to needs, with
laboratories operating 24 hours a day
when required. Through heat waves,
snow and rain, our people have worked
tirelessly to provide COVID-19 testing
for Australians, wherever and whenever
it’s needed.
Commercial testing
Healius performs a range of commercial
COVID testing for parliamentarians and
their staff, diplomats, sporting cohorts
and film crews. During the year, Healius
also signed a partnership with Flight
Centre to undertake COVID testing for
their customers, helping to make overseas
travel safer. Our pathology operations
are well equipped to handle additional
testing as and when borders reopen.
AFL
Healius has a long-standing relationship
with many sporting codes, including the
AFL. During the 2020–2021 AFL season,
Healius played a crucial role in supporting
the AFL COVID risk management strategy,
performing COVID testing for all AFL
players across the country to ensure the
safety of players, officials, administration
staff and fans.
Healius is proud to have contributed
to the success of the Premiership
season, allowing games to kick on.
Thank you to our people
For many of our people, the COVID
pandemic has brought many challenges
in their working and personal lives.
With the threat of illness, the isolation
and trials of lockdown as well as the
challenges presented by working in the
healthcare industry at this time, our
people have responded magnificently
with hard work and sacrifice.
Collectively, this has played a key role
in Healius’ success over the past year,
full and part-time team members were
provided with three days of additional
leave over the 2020 Christmas period.
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Thanking our virus testers
BY MATT WATSON
They’ve put in the hard yards at Mount Panorama in a Bathurst winter – and they’ve been thanked for their efforts. Mayor
Ian North and Western NSW Local Health District Chief Executive Officer Scott McLachlan have both paid tribute to the
Laverty Pathology COVID testers who have been staffing Bathurst’s drive-through clinic at Mount Panorama. They are
not the only COVID testers in the city, but they have had some of the more challenging conditions on Bathurst winter
days where the temperature hasn’t broken into the double figures.
“The efforts at Mount Panorama, and all over town, have been tremendous,” Cr North said. “They are very much the
frontline.” Cr North said he is outside well before dawn a couple of times a week and he knows what the Bathurst winter
can throw at you. “For the nursing staff and people doing testing, you can’t thank them enough,” he said. “Thank you
does not seem good enough when you think about what these people are doing.”
The testers’ job has become more important and more challenging with the confirmation that Bathurst now has
a number of active COVID cases. Health district CEO Mr McLachlan echoed the mayor’s comment. “All of our testing
teams, health staff generally, are just amazing,” he said. “There are some real heroes among them. The team that is
at Bathurst, at the Mount Panorama testing clinic, I just take my hat off to them. They are quite incredible.“ I know there
is a bit of cold weather coming… and we really appreciate everything they’re doing.”
Healius – Annual Report 2021
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THE YEAR IN REVIEW
Chair and CEO’s
letter
Dear shareholder,
We would like to reflect on
the extraordinary times we
have been living through over
the last 18 months or so and,
in particular, how Healius has
risen to the challenge.
The overriding aim of your
Company has gone far
beyond any financial metrics
to ensuring we were at the
front and centre of Australia’s
public health response to
the COVID-19 pandemic,
in addition to keeping core
healthcare services running
safely and efficiently.
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We have reconfigured our laboratories and added new
equipment. We have established pop-up drive-through
clinics for safe and easy public access. We have run our
laboratories often 24/7 as we undertook, at its peak, more
than 34,000 tests a day during FY 2021.
We’re pleased to say people have responded with unwavering
and selfless dedication, extending far beyond any normal
capacities and capabilities.
We thank all of them, especially our frontline staff for their
tremendous achievements over the last year. Collectively
we have also kept each other safe through sound clinical
practice and caring for our mutual wellbeing. It has been
a remarkable performance all round and we are very proud
to be a part of the Healius family.
In appreciation, full and part-time team members were
given three days of additional leave last year and we
have implemented a raft of initiatives including a new
parental leave policy across the Group and a reward
scheme which goes deep within the Company, as we
recognise the integral role of our people in building
a sustainable future for Healius.
We would also like to thank the Federal Government for
its support of the private sector pathology providers,
in recognition for their indispensable role in response to
the pandemic, and the collaboration and support of state
governments. It was heartening to see how well the private
sector is working with the various states’ public healthcare
systems, coordinating drive-throughs, ensuring positive results
were reported reliably and quickly, and assisting each other
when needed.
COVID-19 ongoing impacts
At Healius, we have performed over six million COVID-19 tests
since the start of the pandemic to the time of writing. Our
community testing is being increasingly supplemented with
commercial testing through contracts with sporting codes,
the Federal Government, the film industry and the operators
of remote mine sites. We have also signed a partnership with
Flight Centre to undertake COVID-19 testing for their customers
and this will grow when our international borders are open.
We believe that our current testing regime will continue to
be part of our national response to the pandemic. This regime
is based on Polymerase Chain Reaction or ‘PCR’ testing in
a laboratory, which has the highest sensitivity and specificity
rates of all tests for COVID-19. The key to its success is in
the rapid delivery of results, and this is why we are currently
investing in more equipment and digital resources.
The recent surge in testing in NSW and Victoria with the arrival
of the Delta strain has seen yet higher testing levels being
undertaken in this financial year, which is likely to continue for
some time to come. We believe PCR testing, as well as other
testing measures, will run hand-in-hand with the roll-out of the
vaccination program and the opening up of our borders over
the rest of financial year 2022 and beyond.
2021 in review
In FY 2021, Healius grew revenue 22% to nearly $2 billion while
underlying EBIT grew to a record $266.5 million. Pathology and
Day Hospitals were up significantly on the prior period and
Imaging improved from a lock-down impacted prior year.
Group underlying results excluded Healius Primary Care (HPC)
and Adora Fertility and three co-located Healius Day Hospitals
(Adora). In line with the Group’s strategy of streamlining the
business, the sale of HPC was completed in November 2020
while we announced Adora’s sale to Virtus in August 2021.
Pleasingly some $526 million was generated in operating cash
flow and a further $387 million in net capital recycling, with
a targeted program of capital investment, including a pathology
laboratory in Western Australia, an imaging centre in Orange,
NSW and the acquisition of Axis Diagnostics, a small but
high-value radiology operation in Queensland.
The strong cash inflow enabled your Company to significantly
reduce its debt, reward shareholders with the current $200
million share buy-back program and improved dividends,
whilst maintaining a strong balance sheet to fund future
growth and buffer any potential shocks as the country returns
to a post-pandemic new ‘normal’.
A fully franked final dividend of 6.75 cents per share was
determined by the Board, bringing dividends for FY 2021
to 13.25 cents per share at a payout ratio of 62% of statutory
NPAT, the highest annual dividends for several years.
Sustainable Improvement Program
During the year, Healius progressed its strategic goals including
the aforementioned portfolio and capital management. This was
combined with delivery in the Sustainable Improvement Program,
including the optimisation of the pathology and imaging
networks, the development of a digital e-commerce platform
and order automation based on QR codes, and removal
of overhead costs following the HPC sale. Of note, normalised
labour costs increased by under 3% on revenue growth of 22%.
Progress here was especially pleasing given that the COVID-19
imperative has kept the teams very busy.
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GOING FORWARD
Your Company continues to have a strong
commitment to delivering what governments
and health departments need during this pandemic.
The health and safety of our people, healthcare
professionals, our patients and the Australian
community remain our priority.
In addition to this, our focus is on growth through
margin expansion, as we look to achieve a 300-basis
point improvement (measured against pre-COVID
FY 2019 levels) in our EBIT performance in Pathology and
Imaging by FY 2023. We are also delivering a modular
approach to technology modernisation in Pathology,
which is the lowest risk and the most efficient pathway
to our goal with benefits including inter-laboratory
operability, improved consumer experience and
a reduction in operating costs.
As important, we are looking to build a sustainable
Healius through our focus on data-led operations,
consumer-centricity, product innovation, network
optimisation and the necessary organisational
competencies for the future. We have committed
to being carbon-neutral by 2025 and are in the
middle of an in-depth review to identify and embed
sustainability programs across the Group. We look
forward to telling you about these programs in our
next Sustainability Report towards the end of the year.
We are exploring opportunities to fund strategic
investments in adjacencies to our current portfolio,
thereby extracting synergistic value from our strong
balance sheet. To this end, the business continues
its disciplined review of potential M&A options and
has a pipeline of sites for development of new short
stay hospitals. As we have said before, we are looking
to create the short stay hospitals of the 21st century in
Australia and to benefit from economic, technological
and regulatory tailwinds in this sector, after successfully
trialling hip and knee replacements in our flagship
short-stay hospital this year.
What’s more, with the revenue we are receiving from
COVID testing, we have a real opportunity to invest
in the future health of the nation, implementing
a raft of leading-edge applications which should
permanently change for the better how consumers
access diagnostic healthcare in Australia, from
e-appointments to e-results via a patient portal.
We would like to thank everyone in the Healius family
for their continued commitment and tireless efforts
in this extraordinary year. Finally, and as importantly,
we thank you, our shareholders for your continued
support and look forward to another year of growth.
ROBERT HUBBARD
CHAIRMAN
MALCOLM PARMENTER
CEO
Healius – Annual Report 2021
17
THE YEAR IN REVIEW
Group
performance
Revenue
EBIT
NPAT (Reported incl. discontinued operations)
Cash flow from operating and investing activities
Dividends cps 100% franked
30 JUNE 2021
$M
UNDERLYING 1
1,913.1
266.5
148.4
30 JUNE 2020
$M
1,572.4
129.0
53.1
30 JUNE 2021
$M
REPORTED
30 JUNE 2020
$M
1,900.7
1,557.0
255.4
43.7
912.8
13.25
92.1
(70.5)
285.0
2.6
Group underlying results
In the year ended 30 June 2021 (FY 2021), Healius played a pivotal role in Australia’s public health response to the COVID-19 pandemic,
performing over six million COVID-19 tests to-date, through dedicated community collection centres and drive-throughs as well
as extensive commercial COVID-19 testing at workplaces, for sporting codes, for governments and for travellers.
The various state lockdowns, including the extended lockdown in Victoria in the winter of 2020, had an impact on non-COVID
pathology volumes as well as imaging volumes and, to a lesser degree, day hospital surgery numbers. Nevertheless, throughout
the pandemic Healius has continued to provide critical healthcare services to its communities while ensuring its people
remained safe.
In FY 2021, Healius achieved strong revenue growth of $340.7 million to $1,913.1 million while underlying EBIT grew by $137.5 million
to a record $266.5 million. Pathology and Day Hospitals were up significantly on the prior period and Imaging improved from
a lock-down impacted FY 2020. Underlying NPAT was up by $95.3 million, a 179.5% increase on the prior period.
The Sustainable Improvement Program (SIP), through both cost control and revenue growth, contributed to the delivery of this
strong result. Of particular note, labour costs have increased by only 2.8% on FY 2020, after normalising both years for the impact
of staff leave initiatives, while revenue increased 22.1% during the same period.
Group results for continuing operations in both years exclude the trading of Healius Primary Care (HPC), and Adora Fertility and
three co-located Healius Day Hospitals (Adora), as these assets were held for sale. The sale of HPC was completed in November
2020 while Adora was held for sale at the end of the year, with a sale announced in August 2021. This is in line with the Group’s
strategy to streamline the business, strengthen its balance sheet and focus on its specialist core diagnostic and growing Day
Hospitals businesses.
The underlying results include the impacts of AASB 16, with FY 2020 underlying results restated for comparability.
Reported results for the year ended 30 June 2021 include a small number of non-underlying items, including investment in pathology
information systems. Importantly the quantum of adjustments between reported and underlying has reduced to a 4% differential
between reported and underlying EBIT in FY 2021.
In FY 2021, $525.9 million was generated in operating cash flow and $386.9 million in capital recycling net of investments (primarily
the HPC sale proceeds), enabling the Company to reduce its debt position and meet the on-going capital needs of the business
and value-generating investments, as well as reward its shareholders with sustainable and growing dividends and the current
share buy-back program.
Taking into consideration the strong performance of the Company, a final dividend of 6.75 cents per share (cps) fully franked was
determined by the Board. This brings dividends for FY 2021 to 13.25 cps representing a payout ratio for FY 2021 of 62% of reported
NPAT (after making a positive adjustment of $63.1 million for the non-cash impact of the ATO case 2 in the year).
All comments in this Year in Review section relate to underlying results for continuing operations unless otherwise noted. For a reconciliation
and analysis, refer to ‘Group reported results’ on page 28.
Refer to ‘ATO case’ on page 29.
1
2
18
Cash flow and gearing
Group cash flows (including continuing and discontinued operations) for FY 2021 were as follows:
REPORTED
Gross cash flows from operating activities
Net income tax paid
Net cash flows from operating activities
Maintenance capex
Free cash flow
Growth capex
Proceeds from capital recycling (primarily HPC sale proceeds)
Cash flow after investing activities
Net interest paid including lease liabilities
Payment of lease liabilities
Dividends
Payments for buyback of shares
Debt funding/(reduction)
Net increase/(decrease) in cash held
Opening cash
F/X
Closing cash
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30 JUNE 2021
$M
30 JUNE 2020
$M
571.9
(46.0)
525.9
(39.9)
486.0
(33.6)
460.4
912.8
(72.1)
(203.1)
(56.3)
(97.5)
(555.7)
(71.9)
144.5
0.1
72.7
405.2
1.7
406.9
(55.9)
351.0
(66.1)
0.1
284.8
(67.7)
(186.4)
(21.2)
–
15.0
24.7
119.7
0.1
144.5
In FY 2021, Healius achieved strong gross operating cash flows, 41.1% above the prior year, representing a conversion of 106% of EBITDA.
Net income tax paid increased due to the settlement of taxes deferred in FY 2020 at the beginning of the COVID-19 pandemic.
Importantly, the Group has materially lower capital intensity following the divestment of HPC. It invested $59.9 million 1 in maintenance
and growth capital programs in the year. Investments included:
• a new pathology laboratory in WA,
• a greenfield imaging facility in Orange, NSW, and upgraded imaging equipment, and
• developed core IT systems in payroll/time management and in IT security.
Healius received a total of $460.4 million in proceeds, primarily for the settlement of the HPC sale. Together with the strong operating
cash flows, this capital recycling significantly strengthened the Group’s balance sheet, reduced its debt, and positioned it to meet
the on-going capital needs of the business and value-generating investments, as well as rewarding its shareholders with dividends
and with the current share buy-back program. In the year Healius:
•
• paid $56.3 million in dividends, being the deferred FY 2020 and FY 2021 interim dividends, and
• bought back shares totalling $97.5 million (with additional $3.5 million settled in July).
reduced its loan positions by $555.7 million with annual interest savings equating to $9.2 million,
Group net debt and key ratios at 30 June 2021 were as follows:
REPORTED
Bank loans and financing arrangements 2
Cash
Net debt
Bank gearing ratio (covenant <3.5x) 3
Bank interest ratio (covenant >3.0x)
30 JUNE 2021
$M
30 JUNE 2020
$M
277.9
(72.7)
205.2
0.7x
10.0x
810.1
(144.5)
665.6
2.7x
8.9x
Healius has delivered a significant improvement in its net debt and key bank ratios underpinned by the aforementioned strong
free cash flow generation and capital recycling. During the year, debt facilities were reduced by $495 million to $600 million in line
with reduced borrowing requirements. The Group remains well within its covenants and has a significant liquidity buffer to manage
uncertainties that may arise due to unforeseen events.
1
$10 million was also spent on payments for medical centre practices and upfront payments to health care practitioners in 1H 2021, prior to the
HPC sale completion, and $3.5 million on capital items in Adora. These amounts will not recur.
2 Bank loans shown net of unamortised borrowing costs together with $19.8 million of parent company guarantees.
3 Bank gearing ratio is calculated based on underlying EBITDA before the impact of AASB 15 and 16 and adjusted for share-based payments.
Healius – Annual Report 2021
19
BUSINESS REVIEW
Pathology
Healius Pathology is a well-run business, with strong
state-based brands which are all number one or two
in their markets. Pathology is Healius’ largest division.
The strength of Healius Pathology is well known, with long-term underlying drivers,
strong market share, network and scale.
Healius Pathology has conducted more than six million COVID-19 tests to-date,
playing a pivotal role in the national COVID-19 testing regime. The extensive
community COVID-19 testing, collected through the division’s 89 dedicated sites
as well as in several hospital and aged care facilities, was supplemented by Healius
Pathology’s commercial and direct-to-consumer initiatives, which included testing
at workplaces and sporting codes.
Overall Healius Pathology delivered a strong result for the year with revenue up
25.2% to $1.45 billion (76% of Group revenue) and EBIT up 103.2% to an historic level
of $252.8 million.
COVID revenue was the prime driver of growth, while non-COVID revenue was also
up in the year, on an 8% smaller Approved Collection Centre (ACC) footprint. Good
growth was achieved in veterinary testing, which was up 21%, and genetics testing,
up 17%. The average fee on non-COVID revenue also increased.
Underlying Performance
Revenue
EBITDA
Depreciation
Amortisation
EBIT
Total capital expenditure
30 JUNE 2021
$M
30 JUNE 2020
$M
BETTER/(WORSE)
%
1,452.1
1,160.1
428.3
(168.2)
(7.3)
252.8
32.5
274.2
(143.5)
(6.3)
124.4
36.9
25.2%
56.2%
(17.2%)
(15.9%)
103.2%
11.9%
$1.45B
OPERATING
REVENUE
$253M
UNDERLYING EBIT
89
DEDICATED
COVID-19 SITES
20
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Western Diagnostic Pathology opens world
class laboratory in Perth
Western Diagnostic Pathology (WDP) has supported the
medical community in Western Australia for almost 50 years.
With the largest service delivery footprint in the state,
WDP reports up to 10,000 tests per day.
In line with Healius’ growth strategy and commitment
to delivering excellence in healthcare, Western Diagnostic
Pathology opened its newly built laboratory facility in
Jandakot, Perth, in May. The largest private laboratory in the
state was officially opened by Attorney General of Australia,
Senator the Honourable Michaela Cash.
Despite the challenges presented by COVID-19, the project
was delivered on time and on budget. This required gaining
travel exemptions for Siemens engineers to enter Western
Australia, who then worked in personal protective equipment
(PPE) and in complete isolation during a 4-week period while
state borders were closed.
The laboratory was designed utilising the most modern
technology available to enable WDP to deliver high quality,
timely and accessible pathology services, enhancing
the opportunities for the provision of advanced health
care across Western Australia and the Northern Territory.
The facility replaces the previous lab at Myaree, bringing
greater efficiencies, economies of scale and improved
service to WDP’s referring clinicians and their patients.
WDP’s expansive network supports critical industries working
closely with the resources sector, the FIFO community and
regional and remote areas of Western Australia and the
Northern Territory. WDP is proud to be the largest provider
of diagnostic services to the indigenous communities in the
NT and WA. In addition, the facility delivers the broadest
veterinary reference service in the state.
Last year, WDP moved rapidly to develop the technical
capacity to perform COVID-19 PCR testing and was the first
pathology practice (public or private), in WA, to receive NATA
accreditation to perform these tests.
In April 2020, WDP gained first hand pandemic experience,
in both testing and clinical management of COVID-19,
through their involvement with the Artania cruise ship patients
at Joondalup. WDP’s laboratory team, led by Consultant
Pathologists trained in both Clinical Microbiology and
Infectious diseases were recognised for the high quality,
and responsive support they gave in the treatment and
containment of this episode.
Importantly, the new laboratory has increased capacity
for COVID-19 testing. WDP has also worked closely with WA
Health, providing pop-up and surge testing capacity reaching
a peak of 5,500 PCR COVID-19 tests per day, with an average
turnaround time of less than 10 hours in June 2021.
Healius – Annual Report 2021
21
Pathology received an additional $9.8 million in
deferred government grants relating to payments
under the Pathology Agreement for April and
May 2020. The EBIT benefit was, however, offset
by additional bad debts expense of $9.0 million
provided for during the year after a detailed review
of old account balances such as debts relating
to overseas health funds and private accounts.
EBIT rose significantly delivering a margin of 17.4%.
Despite incurring higher people and consumables
expenses through its COVID-19 initiatives, the
business maintained its focus on cost control.
Pathology improved its EBIT through a successful
optimisation of the network which saw ~175 poorly
performing and low margin sites closed in the year.
A total of $32.5 million in capital was spent in the
year primarily on a new laboratory in WA together
with strategic digital initiatives and a small
acquisition. Upgrade to the main laboratory testing
equipment, called the Serum Work Area, is now
complete in all states other than Dorevitch in Victoria
which is expected to be finalised in 1H 2022.
The performance of the division is detailed in the
table on the left.
BUSINESS REVIEW
Imaging
Lumus Imaging partners with independent
radiologists who undertake a full range of medical
imaging services including cardiac, neurological,
vascular, musculoskeletal and dental imaging.
$407M
OPERATING
REVENUE
$31M
UNDERLYING EBIT
134
SITES
22
Imaging delivered revenue growth in all of its channels: hospitals, community sites and
medical centres, with a strong second half up 18% on the prior comparable period due
to a soft performance in 2H 2020.
During the year, the division’s revenue was affected by the lockdowns in Victoria,
where it has a large hospital portfolio and a strong presence in metropolitan areas,
and by an 8% reduction in the network with the closure of 14 poorly performing and
low margin sites. On a normalised basis, revenue growth was close to market, with
the on-going ramp-up of the Northern Beaches Hospital in Sydney being a highlight.
Underlying Performance
Revenue
EBITDA
Depreciation
Amortisation
EBIT
Total capital expenditure
30 JUNE 2021
$M
30 JUNE 2020
$M
BETTER/(WORSE)
%
406.9
376.7
84.5
70.2
(50.8)
(45.8)
(2.8)
(2.5)
30.9
18.6
21.9
13.4
8.0
20.4
(10.9)
(12.0)
41.1
(38.8)
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Divisional EBIT increased 41.1% to $30.9 million.
Of note, the division improved profit due to the
aforementioned network optimisation and delivered
SIP productivity gains in NSW, under a prototype
to be rolled out nationwide. However, the headline
EBIT margin was impacted by the decline in activity
in Victoria, historically the division’s strongest
performer, together with additional COVID-19
personal protective equipment (PPE) and one-off
investments in SIP projects.
A total of $18.6 million in capital was spent in
the year on high-end facilities at Orange NSW
and South Tweed, upgraded equipment, which
was purchased outright rather than leased, and
preparation for the launch of the Lumus Imaging
brand in August 2021. The Imaging Core Application
Refresh roll-out was broadly completed in the year,
delivering productivity savings and an improved
referrer and consumer interface. The division is
strategically extending its footprint and announced
the acquisition of Axis Radiology in Queensland
in FY 2021.
The performance of the division is detailed in the
table on the left.
Opening of new flagship site in regional NSW
In April, Lumus Imaging opened its new flagship site in
Bloomfield near Orange, NSW. The second Lumus Imaging
facility in the Central West region comprises advanced
radiology imaging and scanning equipment, including
a Magnetom Lumina MRI system and a Somatom Flash CT
scanner. This equipment is capable of imaging any heart
within a single beat, reducing the need for Beta blocker
medications to reduce blood pressure and heart rates,
and can perform a whole-body scan in five seconds.
The facility is located within the purpose-built Bloomfield
Medical Precinct that includes a private hospital, GP and
specialist suites and a medi-hotel.
Artificial Intelligence supporting chest X-ray process
and TB screening
Lumus Imaging continues to progress its Artificial Intelligence
(AI) capability as part of a pilot program in partnership with
BUPA. It has partnered with Qure.AI, a global leader in chest
X-ray/TB screening AI algorithms. Qure.AI has developed
a product known as “qXR”, which is a specialised chest x-ray
AI algorithm software that focuses on tuberculosis screening.
This program will assist with many cases Lumus Imaging
performs in the immigration screening process.
The qXR software is a deep learning-based chest X-ray
interpretation software that analyses chest radiographs.
It is used during the review of digital chest radiographic
images, integrating with the radiology workflow (IntelePACS).
Although it is not intended to be used as a source of medical
advice, it will be used as a support tool to assist radiologists’
decision-making and improve efficiency, accuracy and
turnaround time in tuberculosis screening.
Healius – Annual Report 2021
23
BUSINESS REVIEW
Day Hospitals
The Day Hospitals division includes Montserrat
and Brookvale Day Hospital, following the decision
to sell Adora Fertility and three co-located Healius
Day Hospitals.
The Day Hospitals division operates in a sector where advancements in medicine and
technology and on-going cost pressures are moving patients away from high-cost
overnight hospitals into short-stay day hospitals.
Montserrat’s flagship hospital, Westside Private Hospital, has equivalent high-level
facilities to the Ambulatory Surgical Centres in the USA, which perform same-day
outpatient surgical care and have become an integral part of that country’s
healthcare system.
In FY 2021, the Day Hospitals division grew revenue by 32.4% to $49.5 million with
Montserrat contributing $45.8 million, up 33.9%, and Brookvale $3.7 million up 15.6%.
Montserrat’s growth came primarily from the on-going ramp-up of its multi-specialist
Westside Private Hospital, which accounts for around a third of divisional revenue
and delivered 62.2% growth in the year. Westside recruited new surgeons and
undertook record surgery numbers, nearing 1,000 procedures in the month of March.
It successfully trialled short-stay orthopaedic surgery.
Underlying Performance
Revenue
EBITDA
Depreciation
Amortisation
EBIT
Total capital expenditure
30 JUNE 2021
$M
30 JUNE 2020
$M
BETTER/(WORSE)
%
49.5
15.5
(6.5)
–
9.0
2.9
37.4
9.7
(6.0)
–
3.7
2.9
32.4
59.8
(8.3)
n.a
143.2
–
$50M
OPERATING
REVENUE
$9M
UNDERLYING EBIT
11
DAY HOSPITAL
SITES
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Partnering to perform full hip and knee
replacements in a short-stay setting
Complex orthopaedic procedures, traditionally performed
in overnight hospital settings, are now being performed
at our Westside Private Hospital in Brisbane, as part of a trial
with Medibank Private for total hip and knee replacements
in the short-stay setting.
This doctor-led and designed program offers an early-to-home
discharge, where clinically appropriate, and is set up to
provide patients with more choice and transparency on
affordable care options when undergoing a joint replacement.
The procedures completed to-date have resulted in very
successful patient outcomes.
As part of the trial, the Westside clinical team is placing
greater emphasis on rehabilitation prior to undergoing
surgery and using advances in surgical techniques and pain
management. Rehabilitation and recovery takes place in the
home setting rather than in hospital.
“Patients have to be active in their care and
can no longer be a passive partner. They need
to be motivated and willing to undergo the
education that is required, shifting a lot more
responsibility on them to actively manage
their pain management for their own recovery.”
Dr Cameron Cooke
Another important factor in the success of the procedures
is a thorough screening process, which assess factors such
as age and other underlying health issues, to ensure patients
are suitable to undergo procedures in a short-stay setting.
The results of this trial are encouraging and demonstrate that
complex orthopaedic work can be performed in a short-stay
setting with benefits for all parties.
“It’s reported that the patients are much
happier recovering at home, contributing
to their overall faster recovery.”
Dr Cameron Cooke
The trial also reflects the strong interest from consumers,
private health insurers and governments in potential new
models of care. Healius is actively working with health funds
and governments to produce savings in the surgical setting.
The same orthopaedic work performed in a long-stay setting
generally costs 20-30% more than the current trials.
With an ageing population and increasing healthcare costs,
cancer treatments, cardiology, orthopaedic procedures and
general surgery are projected to grow strongly in the day
hospital setting, due to reduced hospital costs, improved
patient satisfaction and clinical outcomes and the option
to recover at home.
Healius – Annual Report 2021
25
Overall, Montserrat achieved EBITDA of $14.8 million
and EBIT of $8.3 million. The results were materially
above FY 2020 due to the abovementioned strong
revenue growth combined with good cost control
and despite COVID-19 lockdowns occasionally
impacting procedure numbers. Brookvale delivered
a profitable result in the year, with EBITDA and
EBIT of $0.7 million, under the management of the
Montserrat team.
Capital expenditure of $2.9 million was in line
with the previous year, with the majority spent
on medical equipment and technology. Montserrat
is focused on further ramp up of its four new sites
which have collectively more than doubled their
EBITDA contribution in FY 2021. The division also
has a pipeline of both greenfield and brownfield
sites under consideration as it looks to capitalise
in this growing sector. Medical and technological
advancements and on-going cost pressures
are seeing patients move away from traditional
overnight hospitals into short-stay hospitals, with
strong interest from private health insurers and
governments in potential new models of care.
The division repaid the JobKeeper received from
the Federal Government in 1H 2021.
The performance of the division is detailed in the
table on the left.
BUSINESS REVIEW
Corporate
Healius completed the right-sizing of its support
function cost base in FY 2021 to reflect its more
streamlined portfolio.
$15M
REDUCTION IN
SUPPORT SERVICES
<2%
OF GROUP
COST BASE
26
Corporate functions include the management of centralised support services, where
those functions benefit from scale, and core corporate costs including strategy,
capital and stakeholder management, group finance and treasury, Board costs and
executive incentives. Overheads are allocated to the divisions in the form of a charge
based on headcount, footprint, or usage and the remaining costs are classified
as corporate overheads.
In FY 2021, revenue was earned on subleases to discontinued operations and from the
transitional services agreement following the sale of HPC, both of which were offset
by higher cost of delivery. Corporate overheads remained tightly controlled at under
2% of the Group’s total cost base. Core costs were well managed notwithstanding
on-going pressures in insurance, particularly directors and officers, and IT.
Underlying Performance
30 JUNE 2021
$M
30 JUNE 2020
$M
BETTER/(WORSE)
%
Revenue
EBITDA
Depreciation
Amortisation
EBIT
6.8
0.1
(14.5)
(10.4)
(8.0)
(3.7)
(7.5)
(3.1)
(26.2)
(21.0)
Total capital expenditure
5.8
9.7
n.a
(39.4)
(6.7)
(19.4)
(24.8)
40.2
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Healius – Annual Report 2021
27
Healius delivered a $15 million reduction in
centralised support services from its operating
model redesign for the ‘stranded’ costs after
Medical Centres sale. This was delivered ahead
of its targeted timeframe and ensured there was
no increase in unallocated costs due to the sale.
In the fourth quarter of the year, Healius
commenced a capability ramp up in strategy,
corporate development including M&A, data
analytics, together with improved IT and HR
support. It is expected that core corporate
costs will rise by ~$5 million in FY 2022 to deliver
enhanced capabilities to manage the existing
portfolio and growth options, while remaining
below 2% of the total cost base. Corporate
spent a total of $5.8 million on capital in the
year, primarily on IT systems in payroll/time
management and in IT security, as the Group
repairs historic technology debt.
The performance of corporate is detailed in the
table on the left.
THE YEAR IN REVIEW
Group
reported results
Revenue
EBIT
NPAT (Reported incl. discontinued operations)
30 JUNE 2021
$M
UNDERLYING
1,913.1
266.5
148.4
30 JUNE 2020
$M
1,572.4
129.0
53.1
30 JUNE 2021
$M
REPORTED
1,900.7
255.4
43.7
30 JUNE 2020
$M
1,557.0
92.1
(70.5)
This Year in Review section focuses on the underlying results of Healius which adjust for items not considered to be part of core trading
performance. The quantum of adjustments between reported and underlying has reduced in FY 2021, with a 4% differential between
underlying and reported EBIT. The reconciliation between reported and underlying for FY 2021 is set out in the following sections.
REVENUE
Underlying revenue
Reclassification of grant income from revenue to other income
Transactions with discontinued operations
Reported revenue
EBIT
Underlying EBIT
Strategic projects (including Pathology information systems upgrades)
Montserrat deferred consideration expense
Other (including impairments)
Reinstatement of transactions with discontinued operations
Total non-underlying items
Reported EBIT
NPAT
Underlying NPAT
After-tax adjustments to underlying EBIT (set out above)
Finance costs – debt facility reduction and close out of interest rate swaps
ATO case – tax
ATO case – interest
Tax differential for non-deductible items (underlying tax calculated at 30%)
Total adjustments
Discontinued operations
Reported NPAT
28
2021
$M
1,913.1
(9.8)
(2.6)
1,900.7
2021
$M
266.5
(11.3)
(3.0)
(1.1)
4.3
(11.1)
255.4
2021
$M
148.4
(7.8)
(6.6)
(46.6)
(16.5)
(4.6)
(82.1)
(22.6)
43.7
2020
$M
1,572.4
(12.4)
(3.0)
1,557.0
2020
$M
129.0
(18.3)
(14.5)
(12.6)
8.5
(36.9)
92.1
2020
$M
53.1
(25.8)
–
46.6
16.5
(7.0)
30.3
(153.9)
(70.5)
ATO CASE
Healius recognised an income tax benefit and a tax receivable of $46.6 million and associated interest receivable of $23.6 million
(less $7.1 million tax) in its FY 2020 financial statements. This was based on a favourable decision received from the Federal Court
of Australia in respect to its tax objections for the 2003 to 2007 years regarding lump sum payments made to healthcare practitioners
during those years, as required by IFRIC 23, “Uncertainty over Income Tax Treatments”.
However, on appeal the Full Federal Court overturned the earlier decision and decided in favour of the Commissioner. Healius’
subsequent application for special leave to appeal was dismissed by the High Court in March 2021. Healius has therefore reversed
the income tax benefit of $46.6 million and associated interest of $23.6 million (less $7.1 million tax) in its FY 2021 accounts. This has
resulted in a $126.2 million negative non-cash movement between FY 2020 and FY 2021 reported NPAT.
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DISCONTINUED OPERATIONS
The Group’s reported results account for HPC and Adora as discontinued operations. The associated loss of $22.6 million is set out
below with further details in Note E2 to the accounts:
HPC
Adora
Loss from discontinued operations
2021
$M
(24.0)
1.4
(22.6)
2020
$M
(142.5)
(11.4)
(153.9)
The loss on HPC sale of approximately $13 million since the completion of the sale in 1H 2021 primarily relates to an indemnification
to the purchaser in connection with backpay for certain employees. It follows the Fair Work Commission’s amendment to the
appropriate method of calculating casual loading on overtime to align the Health Professionals and Support Services Award to the
Nurses Award. Once an appeal against the amendment was lost in January 2021, Healius accrued for the expense.
Adoption of AASB 16
AASB 16 was adopted by Healius from 1 July 2019. The adoption of AASB 16 has no economic impact on Healius, nor on its banking
covenants or cash flows. The underlying results of the business are now stated inclusive of the impact of AASB 16, with FY 2020
restated for comparative purposes.
The impact of AASB 16 for FY 2021 is set out below.
P&L
Property & other expenses
EBITDA
Depreciation
EBIT
Finance costs
Profit before tax
Tax @ 30%
NPAT
30 JUNE 2021
$M
217.9
30 JUNE 2021
$M
Operating lease expense reversed
(195.4)
(34.0)
3.4
217.9
22.5
(11.5)
(8.0)
Depreciation of right of use asset recognised
Interest paid on lease liability recognised
CASH FLOW
Gross cash flows from operating activities
30 JUNE 2021
$M
242.6
30 JUNE 2021
$M
Net cash flows from operating activities
Interest paid on lease liabilities
Payments of lease liabilities
Net cash used in financing activities
BALANCE SHEET
Right of use assets
Total assets
Current interest-bearing lease liabilities
Non-current interest-bearing lease liabilities
(39.5)
(203.1)
30 JUNE 2021
$M
1,087.2
(224.4)
(953.2)
242.6
(242.6)
30 JUNE 2021
$M
1,087.2
Total Liabilities
(1,177.6)
Operating lease payment reversed from gross
operating cash flows
Interest payments recognised in financing
Principal payments on lease liability
recognised in financing cash flows
Leases recognised as an asset and depreciated
Leases recognised as a liability representing
future lease payments
Leases recognised as a liability representing
future lease payments
Healius – Annual Report 2021
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Board
of Directors
Robert
Hubbard
BA (HONS), FCA.
NON-EXECUTIVE
CHAIR
Mr Hubbard was appointed as a Non-executive Director in December
2014 and Chair of the Audit Committee in February 2015. He was
appointed Chair of the Board on 24 July 2018, at which time he retired
as Chair of the Audit Committee. He remains a member of the Audit
Committee, joined the People & Governance Committee on 24 July 2018
and was a member of the Risk Management Committee up to that date.
Rob holds a Bachelor of Accounting (Honours) degree from the
University of Birmingham. He is a Fellow of the Institute of Chartered
Accountants in Australia. He previously held partnership positions
in the accounting, corporate finance, assurance and audit divisions
of PricewaterhouseCoopers and acted as external auditor for some
of Australia’s largest ASX-listed companies.
Malcolm
Parmenter
MB, BS, MAICD.
MANAGING DIRECTOR
& CHIEF EXECUTIVE
OFFICER
Dr Parmenter joined Healius as Managing Director and Chief
Executive Officer (CEO) in September 2017. He has a wealth of
knowledge and practical experience in the operation of frontline
care, with over nine years’ tenure as CEO of Independent Practitioner
Network Limited (IPN), both as a listed company and under the
ownership of Sonic Healthcare Limited, and subsequently two years
as CEO of Sonic Clinical Services.
Malcolm has a strong understanding of healthcare delivery,
both in Australia and abroad, and has spent more than 20 years
as a General Practitioner.
Gordon
Davis
B FOREST SC(HONS),
MAG SC, MBA, GAICD.
Mr Davis was appointed as a Non-executive Director in August 2015.
He was appointed as a member of the Risk Management Committee
in March 2016, as Chair of the Audit Committee on 24 July 2018, and as
Chair of the Risk Management Committee on 19 August 2019, at which
time he ceased as Audit Committee Chair but remained a member
of that committee.
NON-EXECUTIVE
DIRECTOR
Gordon holds a Bachelor of Forest Science (Honours) and a Master
of Business Administration from the University of Melbourne and
a Master of Agricultural Science from the University of Tasmania.
He is a Graduate of the Australian Institute of Company Directors.
Prior to becoming a Non-executive Director, Gordon was Managing
Director of AWB Limited between 2006 and 2010. He has also served
in a senior capacity on various industry associations.
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Sally Evans
BHSC, FAICD, GAIST.
NON-EXECUTIVE
DIRECTOR
Paul Jones
MB, BS, FAMA.
NON-EXECUTIVE
DIRECTOR
Jenny
Macdonald
BCOM, MEI, GAICD,
CA ANZ.
NON-EXECUTIVE
DIRECTOR
Kate
McKenzie
BA, LLB, MAICD.
NON-EXECUTIVE
DIRECTOR
Ms Evans was appointed as a Non-executive Director in August
2018, also being appointed as a member of the Nomination and
Remuneration Committee and the Risk Management Committee.
On 19 August 2019, she was appointed as Chair of the newly renamed
People & Governance Committee. Sally has over 30 years’ experience
in private, government and social enterprise sectors and has worked
in Australia, New Zealand, the United Kingdom and Hong Kong with
responsibilities across the broader Asia Pacific region.
Sally has served as a Non-executive Director of Gateway Lifestyle
Operations Limited. She is a Fellow of the Australian Institute of Company
Directors, Graduate of the Australian Institute of Superannuation Trustees,
and holds a Bachelor of Applied Science from the University of Otago.
Dr Jones was appointed as a Non-executive Director in November
2010. During FY 2021, he was a member of the Audit Committee
(from 25 February 2021), the People & Governance Committee and
the Risk Management Committee (the latter until 25 February 2021).
Paul has over 35 years’ experience in a broad range of general medical
practice, including 15 years’ experience in Healius Group medical
centres. He originally trained at the Repatriation and General Hospital,
Concord NSW and subsequently at Calvary Public Hospital, Bruce ACT.
He has been a Director and Federal Councillor of the Australian Medical
Association (AMA), a past President of AMA ACT and a member of the
Federal AMA Council of General Practice. He was formerly a general
practitioner adviser to Calvary Public Hospital and held roles as GPVMO
and Director, Medical Education Program. He is a former Chair of ACT GP
Workforce Working Group and was a member of the ACT Health Minister’s
GP Task Force in 2009. In 2010 he was awarded Fellowship of the AMA.
Ms Macdonald was appointed as a Non-executive Director and Chair of the
Audit Committee effective 3 November 2020. Jenny has a strong background
in financial and general management roles across a range of industry
sectors including fast moving consumer goods, resources, travel and digital
media. Jenny commenced her career with KPMG, working in the London and
Melbourne offices in a number of practice areas, including audit, she spent
more than ten years with that firm.
After gaining experience in the resources sector, Jenny held executive roles
in the travel and tourism industries and digital media at Flight Centre and
REA Group. From 2014–2016 Jenny was the Chief Financial Officer and then
Interim Chief Executive Officer of Helloworld, an ASX-listed multi-channel
travel company. Jenny holds a Bachelor of Commerce from Deakin
University, a Master of Entrepreneurship and Innovation from Swinburne
University, a Graduate Diploma from the Securities Institute of Australia
and is a Graduate of the Australian Institute of Company Directors.
Ms McKenzie was appointed as a Non-executive Director effective
25 February 2021. Kate was appointed as a member of the People
& Governance Committee and as a member of the Risk Management
Committee on the same date.
Kate is a highly experienced Chief Executive Officer and Non-executive
Director with extensive experience in large change management. After
starting her career in the public sector, Kate joined Telstra in 2004 as Group
Managing Director Regulatory, Public Policy & Communications. In her 12
years at Telstra, Kate held a range of executive roles in strategy, marketing,
products and wholesale. Prior to leaving Telstra, Kate was Chief Operating
Officer, responsible for networks, IT, field services, property and NBN relations
and delivery. In 2017 Kate was appointed Chief Executive Officer of Chorus,
a New Zealand listed telecommunications company. Kate is passionate
about innovation and technology, and co-founded muru-D, an incubator
which has produced 44 graduating companies, with 41 still in operation;
Gurrowa, a co-creation lab, and partnerships with universities, such as
investment in Quantum Computing with the University of New South Wales.
Former Board members: Arlene Tansey, Non-executive Director, ceased 22 October 2020.
Healius – Annual Report 2021
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Executive
Leadership Team
Left to right: Peter Wilson, Ben Korst, Malcolm Parmenter, John McKechnie,
Janet Payne, Maxine Jaquet, Mark Neeham and Dean Lewsam.
Malcolm Parmenter
Maxine Jaquet
MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
CHIEF FINANCIAL OFFICER & CHIEF OPERATING OFFICER
Dr Parmenter joined Healius as Managing Director and Chief
Executive Officer (CEO) in September 2017.
He has a wealth of knowledge and practical experience
in the operation of frontline care, with over nine years’ tenure
as CEO of Independent Practitioner Network Limited (IPN),
both as a listed company and under the ownership of Sonic
Healthcare Limited, and subsequently two years as CEO
of Sonic Clinical Services.
Malcolm has a strong understanding of healthcare delivery,
both in Australia and abroad, and has spent more than
20 years as a General Practitioner.
Ms Jaquet was appointed Chief Financial Officer in August
2019 and her role was expanded to include Chief Operating
Officer in January 2021. She joined Healius in July 2015 as
Group Director – Commercial and Chief Executive for Health
& Co from March 2016. Maxine has extensive commercial and
operational line management experience in the consumer
goods and industrials sectors.
Maxine has managed a number of significant transformations
generating substantial margin improvement and business
growth, including the turnaround of the International business
for Qantas in her prior role as Head of Alliances.
With a depth of expertise in developing customer-centric
growth, she has led a customer transformation program in
a global FMCG and managed the Qantas Group’s multi-brand
commercial structure. Maxine also a background in providing
financial and strategic advice.
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John McKechnie
CHIEF EXECUTIVE PATHOLOGY
Mr McKechnie was appointed Chief Executive Pathology
in August 2019 following more than 35 years with the Healius
Pathology division both in Western Australia and more recently
in Queensland.
Commencing his career as a Medical Scientist, John has also
worked as a laboratory and operations manager. In 1998 he
was appointed the state operations manager of WDP, before
joining the QML team in 2002. Since 2015 John has been the
CEO of both QML Pathology and TML Pathology, responsible
for their strong performance, successful strategic direction,
executive recruitment, and people-management. He has also
been a member of the Group Executive team in Pathology.
Throughout his career John has developed strong financial,
analytical, change management, and people skills.
Dean Lewsam
CHIEF EXECUTIVE IMAGING
Mr Lewsam joined Healius in April 2012 and held various
operational management roles in the Imaging Division.
In October 2015, Dean was appointed Chief Executive
for Imaging where he has continued to advocate for the
expansion and advancement of Healius’ Imaging network.
Dean has over 30 years’ experience in the Australian healthcare
sector having previously held executive management roles
with major listed groups in the pathology, general practice and
diagnostic imaging industries.
Ben Korst
CHIEF EXECUTIVE DAY HOSPITALS
Mr Korst has extensive experience in the management and
operations of day hospitals within Australia. Ben has been
the CEO at Montserrat since 2010, during which time he has
grown the business from three to 11 hospitals.
Ben has a background in Finance, being a graduate
of Commerce from the University of Queensland and
having worked at Ernst & Young in Corporate Finance.
He has also worked at BSM Steel, and immediately prior
to joining Montserrat, at Informa Australia Pty Ltd as
its Managing Director.
Janet Payne
GROUP EXECUTIVE CORPORATE AFFAIRS
Appointed as Group Executive Corporate Affairs in July 2015,
Ms Payne joined Healius from CIMIC Group Ltd where she
was Head of Investor Relations. Prior to this, Janet worked
in a range of market-facing roles, including investor and media
advisory, and board advisory.
Janet managed the Initial Public Offering and established
investor relations at Qantas Airways Limited. She was formerly
in the finance industry, having started her career at KPMG
in London and Sydney.
Peter Wilson
GROUP EXECUTIVE PEOPLE & SHARED SERVICES
Mr Wilson has been responsible for leading large businesses
through transition and transformation within the aviation
industry, having been Chief Operating Officer and Chief Pilot
for Qantas Airways and later working with Virgin Australia and
Tigerair. Peter was key in driving process and productivity
improvements at Qantas to deliver a leaner operation
while setting strategic direction and delivering on financial,
customer, safety, people and regulatory objectives.
He was appointed as Interim CEO with Tigerair to restructure
business fundamentals, identify revenue opportunities and
areas for cost reduction for the incoming CEO.
Mark Neeham
GROUP EXECUTIVE GOVERNMENT & EXTERNAL AFFAIRS
Mr Neeham has responsibility for developing and implementing
Healius’ relationship strategies with Government, professional
and industry bodies and external stakeholders.
Mark joined Healius in May 2015 from the Crosby|Textor
Group where he was the group’s Executive Director. Having
worked in senior professional positions for political parties
in Australia and the UK, Mark has extensive experience
in executive leadership, organisational management, strategy,
communications and cultural change.
Since 2018, Mark has also been President of Australian
Pathology, the peak body for private pathology in Australia.
Healius – Annual Report 2021
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Risk
management
Healius has designed a Risk Management Framework
consistent with current best practice.
Identifying and mitigating risk is key to Healius achieving its objectives, building a sustainable business and
protecting shareholder value. The Risk Management Framework formalises the approach adopted by Healius’
businesses to manage risk and provides Healius with a consistent methodology that can be applied to all
strategic, operational and contractual objectives. Healius assesses the consequence and likelihood of risks in
all areas including health and safety, environment, operations, finance, legal and compliance, and reputation.
The future performance of Healius, including share performance, may be influenced by a range of risk factors,
many of which are outside the control of Healius and its Directors. A non-exhaustive list of key risks, including
those specific to Healius and those of a more general nature, is set out in this section. Healius’ business, financial
condition, or results of operations could be affected by any of these risks, either individually or in combination.
Risk Management — Principles and Guidelines
Healius has adopted the International Organisation for Standardisation AS/NZS ISO 31000:2018
‘Risk Management – Principles and Guidelines’ approach to risk management, ensuring each division
considers risk when making key decisions that drive our business, and maintains a disciplined focus
on operational excellence and effective risk management.
IDENTIFY
REVIEW AND
MONITOR
ASSESS/
EVALUATE
CONTROL/
MITIGATE
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CONTEXT
RISK PRIORITIES
AIMS AND ACTIONS
Pandemic
risks including
COVID-19
Pandemics such as COVID-19 pose a risk
to Healius as community shutdowns may
adversely impact demand for its traditional
healthcare services. In addition, Healius
may be unable to provide crucial services
if people or facilities are impacted.
Healius continually monitors daily volumes
across all businesses and structures resources
accordingly.
Adherence to best-practice guidelines for
self-isolation, use of personal protective
equipment, hygiene, and office closures help
mitigate the risk of infections.
Government
policy and
economic
impacts
Healthcare
customers and
consumers
People
capabilities
and employee
relations
Healius is committed to providing affordable
healthcare. Bulk-billing its services to
patients and receiving reimbursement
through the Federal Government’s Medicare
Benefits Schedule (MBS) is a key feature
of this commitment and a substantial
proportion of the Group’s revenue is derived
from the MBS. Any changes to the MBS
or any other government funding initiatives
could impact profitability (both positively
or negatively) through changes to fees
or test availability within the MBS system.
Healius also charges out-of-pockets on
some services and there may be a general
perception that some healthcare services
are expensive. Consequently, consumers may
delay or not use services due to affordability
concerns, impacting volumes and revenue.
Healius aims to diversify into non-MBS
revenue streams, maintain tight control over
costs and continually reviews the range
of service offerings available to patients.
Healius monitors legislative and regulatory
developments and engages proactively
to manage this risk. It maintains an active
role in industry associations to ensure its
voice is heard by governments at all levels.
Healius advertises that its services are
bulk-billed where appropriate and educates
the consumer on any out-of-pocket costs.
Healius is reliant upon referrers,
healthcare professionals such as
surgeons, and consumers choosing
to use its services and facilities.
Healius is also dependent on its ability
to negotiate and retain private health
fund, public and private hospital, and
other commercial contracts.
Healius has people dedicated to
maintaining relationships, increasing
engagement and addressing any issues
with its clients and customers.
Healius has invested in facilities, systems,
people and services in its aim to meet
and exceed the needs of its customers.
Sustainability for Healius is underpinned
by its ability to attract and retain the
right talent and capabilities.
Healius aims to be a workplace of choice, to live
its WE CARE values, and to meet gender and
other diversity, inclusion and equality goals.
New technologies and changing consumer
perceptions are driving the need for
specialist skillsets including analytics,
digital expertise and cybersecurity.
There is significant competition to
recruit such talent, which can increase
labour costs and reduce profitability.
A number of recent legislative amendments,
Court decisions and Modern Award
variations have increased the complexity
of the employee-relations landscape.
Healius is investing in the value proposition to its
employees and implementing employee-related
initiatives, such as the introduction of paid
parental leave across the Group this year.
It is also enhancing its people information
tools to better manage its people.
Healius has created a dedicated function
to assist it in remaining compliant with its
employee relations requirements and obligations.
Healius – Annual Report 2021
35
Risk management
CONTEXT
RISK PRIORITIES
AIMS AND ACTIONS
Data
management
and cyber
security
Healius maintains sensitive clinical and financial
information and failure to appropriately use and
secure data can have severe consequences.
Healius understands that protection of privacy
of individuals whose personal information
is collected is paramount.
Healius’ systems and databases are increasingly
subject to security risks including cyberattacks.
It has an ongoing program to strengthen
defences against unauthorised access and
to protect clinical and financial data within
these systems.
Supply chain
and modern
slavery
Healius is reliant upon the importation
of consumables, such as reagents, and
equipment. Prices and availability may
impact the efficient operating of its services.
Healius aims to continually manage known
supply chain risks. It has a dedicated
procurement function and a range of
suppliers which helps to reduce disruption.
There is also a risk of modern slavery
within these supply chains.
Competition may come from new entrants
into the market, existing competitors,
or from disruptive technologies that may
change the way services are delivered.
A change in competition may impact
Healius’ profitability, the ability to
attract and retain people, or secure
attractive locations for its businesses.
Healius’ commitment to human rights and the
eradication of all types of modern slavery is
overseen by the Group Sustainability Committee.
Its approach to modern slavery eradication is
multi-faceted and includes supplier questionnaires,
due diligence, risk assessments and specific
terms included in supplier agreements.
Healius aims to maintain its competitive edge
through a focus on and investment in data-led
operations, consumer-centricity, product
innovation, network optimisation and developing
organisational competencies for the future.
Healius is exploring opportunities to fund
strategic investments in adjacencies to the
current portfolio and to extract synergistic
value from its strong balance sheet. There is
a risk that the acquisitions may not generate
the financial returns or performance hurdles
required to meet Healius benchmarks.
Healius has a due diligence process
to assess the merits of each proposed
acquisition and the transition of the
acquired business into the Group.
Competition
Acquisitions
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RISK PRIORITIES
AIMS AND ACTIONS
Reputation
and regulatory
compliance
Healius recognises that its reputation
can take time to build but can be easily
eroded. Healius’ reputation may be
impacted by an event that creates adverse
perception of the Group by the public,
consumers and customers, investors,
regulators, or rating agencies that directly
or indirectly impacts earnings and value.
Healius operates in sectors which are
subject to extensive laws and significant
levels of regulation relating to the
development, licencing and accreditation
of facilities and services.
Healius aims to maintain quality standards and
a culture of accountability through its risk and
governance systems, policies and procedures,
with effective involvement of executive and
clinical management to ensure it provides
quality healthcare and minimises the risk
of reputational damage.
Healius aims to continually meet licencing and
accreditation standards across all businesses.
Climate change
Healius recognises that climate change
is a global issue. Climate change risks may
be either ‘physical’ with financial implications
resulting from potential damage to assets,
‘indirect’ through impacts from supply chain
disruption, or ‘transitional’ through changes
to regulations and consumer behaviour.
Healius aims to manage its operations
in an environmentally sustainable manner,
adapting to changes in consumer behaviour
and reducing its carbon footprint. Healius has
the stated aim to be carbon neutral by 2025.
In the event of extreme weather conditions
impacting operations, Healius has a network
of facilities which can continue operations
in alternative locations.
Healius – Annual Report 2021
37
Directors’ Report
for the year ended 30 June 2021
The Directors of Healius Limited (referred to as “Healius” or “the Company”) submit their Report for the financial year ended
30 June 2021 (referred to as “the year” or “FY 2021”), accompanied by the Financial Report of Healius and the entities it controlled
(referred to as “the Healius Group” or “the Group”) from time to time during the year. Pursuant to the requirements of the
Corporations Act 2001 (Cth) (Corporations Act), the Directors report as follows:
Directors
CONTINUING DIRECTORS DURING FY 2021
• Robert Hubbard
• Malcolm Parmenter
• Gordon Davis
•
•
Sally Evans
Paul Jones
NEW DIRECTORS DURING FY 2021
•
Jenny Macdonald (from 2 November 2020)
•
Kate McKenzie (from 25 February 2021)
DIRECTORS WHO CEASED DURING FY 2021
• Arlene Tansey (retired as Director 22 October 2020)
Qualifications and experience of Directors
CONTINUING DIRECTORS
The qualifications and experience of each continuing Director are set out on pages 30–31 of this Annual Report.
FORMER DIRECTORS
Arlene Tansey, Juris Doctor (JD), MBA, BBUS (ADMIN), FAICD
NON-EXECUTIVE DIRECTOR
Ms Tansey was appointed as a Non-executive Director in August 2012. During FY 2021, she was Chair of the Audit Committee and
a member of the Risk Management Committee.
Previously, Arlene worked in commercial and investment banking in Australia and in investment banking and law in the United
States, including senior roles at Macquarie Bank and ANZ. She has a Juris Doctorate (Law) from University of Southern California
and an MBA in finance and international business from New York University. Arlene is a Member of Chief Executive Women,
International Women’s Forum Australia and a Fellow of the Australian Institute of Company Directors.
Group Company Secretary
QUALIFICATIONS AND EXPERIENCE OF COMPANY SECRETARIES DURING FY 2021
Charles Tilley B.Sc (Hons) LLB (Hons) FGIA FCIS
Mr Tilley has been Group Company Secretary since February 2015. Mr Tilley joined Healius in 2014 as a Senior Legal Counsel,
advising the Healius Group on various matters concerning litigation and employment law. Prior to joining Healius, Mr Tilley had
15 years’ experience in the financial services industry, advising a Big Four institution on corporate law, litigation, commercial and
employment law.
Alison Stephenson BA Grad Dip Corp Gov AGIA ACIS
Ms Stephenson was formally appointed as a Company Secretary of the Company in August 2019. Ms Stephenson has served
as Assistant Company Secretary of the Healius Group since August 2016. Prior to joining the Group, Ms Stephenson had 15 years’
experience in company secretarial roles in various organisations, primarily in the financial services industry.
38
Directors’ Report
for the year ended 30 June 2021
Directors’ meetings during FY 2021
The number of meetings of the Board and of each Board committee held during FY 2021 and the number of meetings attended
by each Director are set out below:
BOARD
OF DIRECTORS
AUDIT
COMMITTEE
PEOPLE & GOVERNANCE
COMMITTEE
RISK MANAGEMENT
COMMITTEE
FY 2021
ELIGIBLE
ATTENDED
ELIGIBLE
ATTENDED
ELIGIBLE
ATTENDED
ELIGIBLE
ATTENDED
Robert Hubbard
Gordon Davis
Sally Evans
Paul Jones
Malcolm Parmenter
Jenny Macdonald
Kate McKenzie
Arlene Tansey 1
20
20
20
20
20
12
6
8
20
20
20
20
20
12
6
7
6
6
N/A
1
N/A
4
N/A
2
6
6
N/A
1
N/A
4
N/A
2
4
N/A
4
4
N/A
N/A
1
N/A
4
N/A
4
4
N/A
N/A
1
N/A
N/A
N/A
5
5
3
5
5
3
N/A
N/A
2
2
1
2
2
1
1
Arlene Tansey was granted leave of absence from one Board of Directors meeting.
Any leaves of absence indicated above were typically granted, or apologies made, in circumstances where the relevant meeting
was called at short notice and other unavoidable commitments precluded the relevant Director from attending.
Further meetings occurred during the year on specific issues, including meetings of the Chairman with the CEO and meetings
of Directors with management. From time to time, Directors attend meetings of committees of which they are not currently members.
Committees of the Board in FY 2021
AUDIT COMMITTEE
PEOPLE & GOVERNANCE COMMITTEE
RISK MANAGEMENT COMMITTEE
Chair
Arlene Tansey (until 22 October 2020)
Chair
Sally Evans
Jenny Macdonald (from 2 November 2020)
Members
Gordon Davis
Robert Hubbard
Members
Sally Evans
Robert Hubbard
Chair
Gordon Davis
Members
Gordon Davis
Sally Evans
Paul Jones (from 25 February 2021)
Paul Jones
Paul Jones (until 25 February 2021)
Jenny Macdonald (from 2 November 2020)
Kate McKenzie (from 25 February 2021)
Jenny Macdonald (from 25 February 2021)
Arlene Tansey (until 22 October 2020)
Kate McKenzie (from 25 February 2021)
Arlene Tansey (until 22 October 2020)
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Healius – Annual Report 2021
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Directors’ Report
for the year ended 30 June 2021
Directorships of other listed companies held by Directors
DIRECTOR
Gordon Davis
COMPANY
Midway Limited
Nufarm Limited
Sally Evans
Ingenia Communities Holdings Limited
POSITION
Director
Director
Director
Robert Hubbard
Jenny Macdonald
Kate McKenzie
Arlene Tansey
Director
Oceania Healthcare Limited
Director
Bendigo and Adelaide Bank Limited
Director
Orocobre Limited
Director
Bapcor Limited
Redbubble Limited
Director
Australian Pharmaceutical Industries Limited Director
Director
Redflow Limited
Director
AMP Limited
Director
Stockland Corporation Limited
Director
Allianz Australia Limited
Director
Chorus Limited
Director
ADBRI Limited
Director
Aristocrat Leisure Limited
Director
TPG Telecom Limited
Director
Wisetech Global Limited
DATE APPOINTED
DATE CEASED
06/04/2016
31/05/2011
01/12/2020
23/03/2018
02/04/2013
30/11/2012
01/09/2018
22/02/2018
09/11/2017
22/12/2017
18/11/2020
02/12/2019
01/01/2012
20/02/2017
05/04/2011
21/07/2016
13/07/2020
01/06/2020
30/09/2019
30/06/2020
20/11/2019
04/10/2019
Significant change in the state of affairs
During the year, the Company elected to sell its Healius Primary Care business and this sale completed in November 2020.
There was no other significant change in the state of affairs of the Group during the year.
Principal activities
During the year, the Group had three principal continuing activities – pathology, imaging and day hospitals. The Group provides
facilities and support services to independent radiologists and a range of other healthcare professionals, enabling them in turn
to deliver care to their patients in partnership with the Group’s pathologists, nurses and other employees.
Review and results of operations
A review of the operations of the Group during the year, and the results of those operations, appears on pages 16–29 of this Report.
Events after the end of the year
On 23 August 2021 the Group announced that it had entered into a binding agreement to sell the Adora IVF and Healius Day
Surgeries Businesses, except for Brookvale Day Hospital, for a consideration of $45 million on a cash and debt-free basis. These
businesses are classified as discontinued operations as at 30 June 2021. Completion of the transaction is expected to occur before
the end of 2021 and remains subject to a number of customary conditions.
There has not been any other matter or circumstance that has arisen since the end of the financial year that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group
in future financial years.
Future developments
Disclosure of information regarding likely developments in the operations of the Group in future financial years (including the
Group’s business strategies) and the expected results of those operations other than as disclosed in this Report is likely to result
in unreasonable prejudice to the Group. Accordingly, no further information is included in this Report.
Proceedings on behalf of the Company
There are no proceedings brought or intervened in, or applications to bring or intervene in proceedings, on behalf of the Company
by a member or other person entitled to do so under section 237 of the Corporations Act.
Rounding of amounts
The Company is an entity of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Report) Instrument 2016/191,
dated 24 March 2016, and in accordance with that Instrument, amounts in this Report and the Financial Report are rounded off
to the nearest hundred thousand dollars, or where the amount is $500,000 or less, zero in accordance with that Instrument.
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Directors’ Report
for the year ended 30 June 2021
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Dividends
During FY 2021, the FY 2020 interim dividend of 3.4 cents per share (100% franked) was paid to the holders of fully paid ordinary shares
on 15 October 2020.
In respect of FY 2021 an interim dividend of 6.5 cents per share (100% franked), was paid to the holders of fully paid ordinary shares
on 15 April 2021. The Board determined a final dividend of 6.75 cents per share (100% franked), to be paid to the holders of fully paid
ordinary shares on 8 October 2021.
Healius operates a Dividend Reinvestment Plan (DRP) and a Bonus Share Plan (BSP). These plans were suspended effective close
of business on 16 February 2016 until further notice and consequently no shares were issued in FY 2021 under either the DRP or the BSP.
Shares under option
Options are held by employees of the Group. Details of all unissued ordinary shares of Healius under option at the date of this
Report are set out below. No option holder has any right under the options to participate in any other share issue of Healius
or of any other entity.
TLTIP FY 2020–22
Balance as at date of this Report
–
–
36,394,239
36,394,239
–
–
–
–
36,394,239
36,394,239
OPENING BALANCE
ISSUED SINCE
PRIOR ANNUAL
REPORT
EXERCISED SINCE
PRIOR ANNUAL
REPORT
LAPSED SINCE
PRIOR ANNUAL
REPORT
CLOSING BALANCE
Shares issued on the exercise of options
No ordinary shares of Healius were issued during, or since the end of, FY 2021 on the exercise of options.
Indemnification of officers and auditors
Subject to the following, no insurance premium was paid during or since the end of FY 2021 for a person who is or has been
an officer or auditor of the Group.
During the year, Healius paid a premium in respect of a contract insuring the Directors and Executive Officers of Healius and
of any related body corporate, against liability incurred that is permitted to be covered by section 199B of the Corporations Act.
It is a condition of the insurance contract that its limits of indemnity, the nature of the liability indemnified, and the amount of the
premium, not be disclosed.
The Constitution of Healius provides that each officer of Healius must be indemnified by Healius against any liability incurred
by that person in that capacity. However, Healius must not indemnify that person if to do so would be prohibited by section 199A
of the Corporations Act, any other statutory provision, or judge-made law. Pursuant to this requirement, each Director of Healius
is party to a Deed of Indemnity, Board Papers Inspection and D&O Coverage, which provides for indemnity against liability
as a Director, except to the extent of indemnity under an insurance policy or where prohibited by statute.
To the extent permitted by law, Healius has agreed to indemnify its auditor, Ernst & Young (Australia) (EY), as part of the terms of its
audit engagement agreement, against claims by third parties arising from the audit (for an unspecified amount). No payment has
been made to indemnify EY during or since FY 2021.
Healius has not otherwise, during or since the end of FY 2021, indemnified or agreed to indemnify an officer or auditor of Healius
or any related body corporate against a liability as such an officer or auditor.
Past employment with external auditor
There is no person who has acted as an officer of the Group during the year who has previously been a partner at EY when that
firm conducted Healius’ audit.
Non‑audit services
During the year EY performed certain other services in addition to their statutory duties as auditor.
The Audit Committee reviews the non-audit services performed by the auditor on a case-by-case basis. In accordance with
advice received from the Audit Committee, the Directors are satisfied that the provision of these non-audit services by the auditor
(or by another person or firm on the auditor’s behalf) is compatible with, and did not compromise, the auditor independence
requirements of the Corporations Act. The Directors are so satisfied because the Audit Committee or its delegate has assessed
each service, having regard to auditor independence requirements of applicable laws, rules and regulations, and concluded
in respect of each non-audit service or type of non-audit service that the provision of that service or type of service would not
impair the auditor’s independence.
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act is included in this Report.
Details of amounts paid or payable to the auditor of the Group for audit and non-audit services provided during the year are given
in Note E8 on page 118 of this Report.
Healius – Annual Report 2021
41
Directors’ Report
for the year ended 30 June 2021
Management of safety risks
Healius is committed to ensuring that the health and safety of employees, contractors and all people attending Healius’ facilities
is given the highest priority. Healius’ goal is to continually improve the safety environment for our employees, contractors and
patients. Healius’ Workplace Health and Safety (WHS) performance is constantly monitored through the setting of targets
against which actual performance is measured, and this performance is reported via regular monthly reports being provided
to senior management, monthly WHS Dashboard provided to the Board and quarterly performance reporting to the Board.
WHS is incorporated into business planning, purchasing and contracting policies and the design of workplaces.
In order to improve Healius’ health and safety performance, resources are allocated to the maintenance and improvement of the
WHS management system. Professional health and safety staff work very closely with the Employee Representative Committees
which have been established over a number of years in order to incorporate employee representation and consultation into health
and safety initiatives as well as a forum for disseminating information to improve health and safety across all business units. During
FY 2021 Healius completed a number of initiatives including a continuing review of COVID-19 safe-work practices and chemical
handling in order to improve the safety environment.
Healius recognises its responsibilities to contractors. As part of the Group’s health and safety procedures, contractors are required
to provide evidence that they have WHS management systems in place and the Company has monitoring procedures in place
for addressing any health and safety issues that may arise from contractor performance. Workplace induction is provided
to contractors prior to the commencement of any work through the online Contractor Induction Program.
Key health and safety performance indicators are as follows:
TARGET
Completion of Health and Safety Plan
activities by worksites
90% of planned activities
completed
Mini audits – measuring compliance
to Health & Safety Management System
75% Compliance Rate
Internal Health & Safety audits – measuring
compliance to National Audit Tool Version 3
80% Compliance Rate
FY 2021
98%
FY 2020
94%
97% of the 218 mini
audits conducted met
or exceeded target
94% of the 189 mini
audits conducted met
or exceeded target
91% of the 35 internal
audits conducted met
or exceeded target
96% of the 33 internal
audits conducted met
or exceeded target
Number of WHS prosecutions
Lost Time Incidents per Million Hours Worked
Zero
Zero
Zero
5.8
Zero
5.0
The number of mini audits and Internal Audits conducted in FY 2021 were reduced due to COVID-19 restrictions on travel to workplaces.
For FY 2021, all incidents were investigated and there was no systematic breakdown in the WHS Management System.
Healius has a comprehensive program of health and safety internal audits that are conducted during the course of the year. Audit
findings may be either areas of nonconformance with WHS procedures or be areas for improvement. All findings are discussed with
auditees before being finalised. The final reports are presented to senior management and include the findings, recommendations
to address findings, persons responsible for implementation of recommendations and timeframes for implementation.
Training in health and safety is provided to staff at induction to ensure staff perform their duties safely. There is an established
training program that provides regular training, refresher training and information. Further training is provided when specific issues
are identified through regular workplace supervision, hazard reporting and risk assessment.
Healius is self-insured for workers’ compensation in NSW, Victoria, Queensland and Western Australia. Healius underwrites workers
compensation claims in these States, with re-insurance policies in place in each of these States to provide protection against large
cost claims. In the other States and territories Healius holds insurance policies for workers compensation.
Healius makes available to its people information on: Rights, Responsibilities and Obligations; Making a Claim; and Complaints
Handling Procedures in relation to claims. As part of its management of claims, accounting provisions are recognised based
on claims reported; and an estimate of claims incurred but not reported. These provisions are determined on a discounted basis and
having regard to actuarial valuations. Reporting on current claims and provisions is made to senior management and to the Board.
Healius is engaged in continuous improvement to raise health and safety standards. Strategic projects are identified through the
monitoring of incidents trends, employee feedback and WHS audit findings. In FY 2022 Healius is planning to continue its review of the
WHS Management Systems, WHS policies and procedures and review WHS resource allocation.
Environmental regulation
The operations of the Group are not subject to any site-specific environmental licences or permits which would constitute particular
or significant environmental regulation under the laws of the Australian Government or an Australian Territory.
Healius, through its internal policy and processes, is committed to managing operations in an environmentally sustainable manner
to maximise resource efficiency in relation to the consumption of energy and natural resources and minimise waste.
More information on the Group’s sustainability initiatives are available in the Sustainability Report, available at https://www.healius.
com.au/invest-in-us/reports/sustainability-report/.
42
Remuneration Report
1.
2.
3.
4.
5.
6.
7.
8.
9.
Letter from the Chair of the People & Governance Committee
Summary of decisions and outcomes in FY 2021
Overview of senior executive remuneration framework
2.1
2.2
Overview
Notable components of the variable plans
Healius’ Remuneration Governance
Executive Key Management Personnel in FY 2021
Executive KMP – Framework and outcomes in FY 2021
5.1
5.2
5.3
5.4
5.5
FY 2021 Fixed Annual Remuneration
Executive KMP – FY 2021 Short-term Incentive Plan
FY 2019 Long-term Incentive Plan (completed)
FY 2020 Transformation Long-term Incentive Plan (in progress)
Company performance
Executive KMP – Table of opportunity, awards and receipts in FY 2021
Executive KMP – Statutory disclosures in FY 2021
7.1
7.2
Executive KMP – statutory disclosure for FY 2021
Executive KMP – service and performance rights and options awarded,
vested and lapsed during FY 2021
Executive KMP – equity holdings in FY 2021
7.3
Non‑executive Directors (NEDs)
8.1
8.2
8.3
8.4
8.5
Non-executive Director remuneration policy
Non-executive Director fees
Other Non-executive Director benefits
Non-executive Director remuneration
Non-executive Director equity holdings in FY 2021
Remuneration policies in detail in FY 2021
9.1
9.2
9.3
9.4
9.5
Senior Executive employment terms
Senior Executive Short-term Incentive Plan (STIP) details
Senior Executive transformation Long-term Incentive Plan (TLTIP) details
Remuneration-related policies
Transactions with KMP
44
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47
48
49
49
49
49
52
54
55
56
58
58
59
60
61
61
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Directors’ Report
for the year ended 30 June 2021
Letter from the Chair of the People & Governance Committee
Dear Shareholder,
On behalf of your Board of Directors, I am pleased to present
the audited Remuneration Report for the financial year
ended 30 June 2021 (FY 2021) which sets out the remuneration
framework for our senior executives and specific outcomes
for our Key Management Personnel (KMP). It is prepared
in accordance with section 300A of the Corporations Act.
Our framework aims to attract, retain and reward talented
employees, while reinforcing Healius’ Purpose and Mission,
supporting our strategy, and aligning rewards to sustained
shareholder value creation. We continually review both our
framework and the disclosures in this Report to ensure they
remain relevant to Healius’ circumstances and respond
to feedback from shareholders and other stakeholders.
Our framework takes a holistic view of KMP performance.
Company values act as a gateway to the award of
any short-term incentives (STIs) with the Board retaining
discretion to reduce any award to zero for poor behaviours.
Sustainability targets will be included in KMP performance
measures from FY 2022 following an in-depth review of our
sustainability goals and objectives.
There were no general increases in executive KMP Fixed
Annual Remuneration (FAR) in FY 2021 with the CFO receiving
an increase due to role expansion to include Chief Operating
Officer (COO). We will be undertaking a review of KMP FAR
in FY 2022 which will consider the Group’s size and complexity,
an individual’s skills, expertise and responsibilities, and
benchmarking including against the rTSR comparator group
for the Transformation Long-Term Incentive Plan (TLTIP).
Incentives, under our variable remuneration plans, are not
a guaranteed component of executive KMP remuneration at
Healius. FY 2021 is the first year since FY 2014 that Long-Term
Incentives (LTIs) have vested, and the first year since FY 2018
for which we have awarded STIs. Furthermore, this is the first
year the Board has ever applied its discretion to the STI award
having considered the outperformance of the STI stretch
targets and associated improvement in shareholder returns.
Pleasingly, this significant turnaround in FY 2021 included:
•
•
• material reduction in debt, and
•
over 50% increase in the share price over the prior year,
completion of $101 million in share buybacks,
simplification of the portfolio through the divestment
of Healius Primary Care.
These substantial achievements were considered by the
Board in determining incentive outcomes for FY 2021. Based
on its assessment, the Board awarded FY 2021 STIs to the
four executive KMP ranging from 35% to 167% of their stretch
opportunities with the CEO awarded 167% of his stretch STI
opportunity. Board discretion of this magnitude is unlikely
to be exercised again in the near-term.
In relation to the application of rules to the FY 2019 LTI Plan,
the Board considered a suite of principles relevant not only
in reviewing existing incentive calculations but also in the
application of the TLTIP and in the design of future plans.
These principles include consistency, fairness for stakeholders,
transparency in calculations, and ensuring individual
achievements are not rewarded, in any material sense, more
than once. 90% of the FY 2019 LTI grants to executive KMP
vested in FY 2021 based on strong performance against
relative total shareholder return (rTSR) and cumulative returns
on invested capital (ROIC) hurdles.
FY 2021 LTIs for KMP are covered by the three-year mega-grant
under the TLTIP which will be assessed from FY 2022 onwards
and provides the Board with effective tools to incentivise
management over an extended period.
In FY 2022, in addition to the review of executive KMP FAR,
the Board intends to review the Non-Executive Director (NED)
fees and to develop a new executive LTI plan to be considered
by shareholders at the 2022 AGM.
As Chair of the People & Governance Committee, I look forward
to engaging further with you and considering your valuable
feedback. I hope you will continue to support us by voting
to adopt this Remuneration Report at our upcoming Annual
General Meeting.
Yours sincerely
Sally Evans
Independent Non-executive Director
Chair of the People & Governance Committee
The capital and portfolio management of the Group has
been an outstanding success of the current executive
team, in particular our CEO and CFO/COO. This has been
coupled with:
•
cost control and margin expansion through the
Sustainable Improvement Program (SIP),
reduction in technology debt,
significantly improved free cash flow, and
•
•
• most important, the successful delivery of our part
in Australia’s public health response to COVID-19.
44
Directors’ Report
for the year ended 30 June 2021
1.
Summary of decisions and outcomes in FY 2021
Current
Executive KMP
• Malcolm Parmenter
Managing Director and Chief Executive Officer (CEO)
• Maxine Jaquet
Group Chief Financial Officer and Chief Operating Officer (CFO & COO)
•
John McKechnie
Chief Executive Pathology
• Dean Lewsam
Chief Executive Imaging
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Fixed
Remuneration
•
• A review of FAR resulted in no general increases for executive KMP in FY 2021. However, Maxine Jaquet was
awarded an increase in her FAR to $800,000 as a result of an expanded portfolio encompassing COO
as well as CFO for the Group.
In relation to the CEO’s FAR in comparison to the median of the S&P/ASX 100-150 index in which Healius
currently sits, the Board notes that:
- Malcolm was recruited when Healius was in the S&P/ASX 100 index and required a major transformation
to deliver long-term growth. His FAR was based on his extensive healthcare experience and capabilities,
rather than index benchmarking.
Since Malcolm’s appointment, the market capitalisation of the Company has grown from $1.7 billion
to $2.9 billion at 30 June 2021. This equates to a 71% growth in market capitalisation, compared to a 35%
increase in the S&P/ASX 200 which is a proxy for the market as a whole. This growth has been achieved
through Malcolm’s enterprise management together with fundamental improvements in the organisational
structure, operations, people capabilities, IT platforms and consumer focus.
-
• A review of FAR will be undertaken in FY 2022 considering the group’s size and complexity, an individual’s skills,
expertise and responsibilities, and benchmarking including against the comparator group used to assess
relative Total Shareholder Return (rTSR) in the TLTIP.
STIP
•
In determining the executive KMP STIP awards for FY 2021, the Board considered the instrumental role Healius
has played in Australia’s public health response to the pandemic, which extended the Company beyond
business-as-usual capacities and capabilities, as well as its ability to keep core operations running safely and
efficiently. It also considered the momentum maintained on the strategic initiatives in the year, including the
completion of the Healius Primary Care sale and execution of the SIP. In combination these delivered significant
strong financial outcomes, share price appreciation, and completion of $101 million in share buybacks.
LTIP
• Based on its assessment, the Board awarded STIs to the four executive KMP ranging from 35% to 167% of the
•
stretch STIP.
For Malcolm Parmenter, the Board exercised its discretion to award above stretch STIP given he:
- demonstrated exceptional leadership during an unprecedented period,
- achieved exceptional outcomes in the carriage of the enterprise strategy at Healius,
-
-
consistently exceeded expectations on all KPIs, and
his financial KPIs were strongly above stretch.
• Malcolm’s award under the STIP totalled $1,452,000. The award above stretch amounted to an additional
•
•
•
•
$580,000, compared to the delivery of an additional $52.2 million of underlying EBIT above stretch.
The STIP awards will be paid as 2/3 in cash and 1/3 equity in the form of Service Rights which will vest after
a one-year deferral period.
For the measurement of Long-Term incentives, the Board’s focus is on consistency of application, minimisation
of adjustments, transparency of calculations, and ensuring individual achievements are not rewarded, in any
material sense, more than once. Of note, no adjustment has or will be made for the impacts of AASB 16 for
either the FY 2019 LTIP or the three-year FY 2020 TLTIP in order to minimise adjustments, notwithstanding a likely
negative impact on the FY 2020 TLTIP.
The FY 2019 LTIP was tested at 30 June 2021. Relative TSR performance was between target and stretch, and
80% of these Performance Rights vested. The average annual ROIC performance exceeded the stretch target
and 100% of these Performance Rights vested. Overall 90% of the Performance Rights vested, with the vested
shares to be provided to KMP in FY 2022.
The FY 2021 LTIP is covered by the three-year mega-grant under the TLTIP which will be measured and,
if achieved, vest in equal tranches in FY 2022–2024 inclusive. Based on the performance in FY 2021, the
Company is currently on track to meet the criteria for the first tranche, however, the outcome is dependent
on performance in FY 2022.
Healius – Annual Report 2021
45
Directors’ Report
for the year ended 30 June 2021
2. Overview of senior executive remuneration framework
2.1
OVERVIEW
Remuneration Principles
Support Healius’ Purpose, Mission and Values and the business strategy
•
• Attract, reward and retain high calibre senior executives
• Align the rewards of these executives to performance and sustained shareholder value
• Continually reviewed to ensure relevance
Fixed Remuneration
(FAR)
•
Externally
benchmarked against
market relativities
• Based on individual
experience with
awards above the
mid-point only where
an individual has
extensive experience
in the industry, the role,
and due to the scope
of responsibilities
• Reviewed against
change in role scope,
market relativities,
and general wage
movements
• Market relativities
including comparator
group for rTSR in TLTIP
• Consideration of
retention preferences
in a tightening
recruitment market
STIP
LTIP
•
•
45% of FAR at stretch (52.8% for CEO and
CFO/COO)
To reward achievement over the course
of a single financial year
• Measured against an individual’s
scorecard which includes financial
(Group and/or division), operational and
strategic Key Performance Indicators
(KPIs) with leadership behaviours acting
as a gateway to any award
• Comprises cash (two-thirds) and equity
(one-third) in the form of Service Rights
which are deferred for one year
• Creates senior executive equity ownership
Scalability, included when appropriate
•
in the financial metrics, incentivises senior
executives to continue to outperform when
a lower goal has already been achieved
•
•
130% of FAR at stretch (152% for CEO
and CFO)
Fixed mega-grant based on FAR at
commencement of TLTIP and not indexed
to any increases in FAR over the duration
of the TLTIP
• Aligned with shareholder interests
•
To reward multi-year performance and
strategic objectives and retain key talent
• Measured by rTSR and underlying Earning
per Share (EPS) growth (also underlying
EBIT growth for divisional senior executives)
TLTIP comprises a one-off grant of
Options which cover a three-year period
from FY 2020 with Options exercisable
in equal tranches at the end of FY 2022,
FY 2023 and FY 2024
•
• Creates senior executive equity ownership
Scalability, included when appropriate
•
in the financial metrics, incentivises senior
executives to continue to outperform when
a lower goal has already been achieved
Executive remuneration mix
The following diagram illustrates the remuneration mix of the Healius KMP at stretch or maximum potential:
CEO & CFO
Divisional CEOs
33%
Fixed 33%
36%
Fixed 36%
11%
6%
50%
Variable 67%
11%
6%
47%
Variable 64%
FAR
STI – cash
STI – equity
TLTIP – equity
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Directors’ Report
for the year ended 30 June 2021
2.2
NOTABLE COMPONENTS OF THE VARIABLE PLANS
Link to shareholder value
The remuneration of Senior Executives is designed to link
reward with shareholder value, both current year and
longer-term sustained value creation.
The link is achieved through the at-risk pay elements,
or variable remuneration, of a Senior Executive’s package.
These incentives are aligned to shareholder value through
the financial, operational and strategic KPIs in the STIP and
rTSR and EPS Growth targets in the TLTIP.
Use of underlying earnings in plan targets
In the TLTIP, underlying earnings are to be used in the
measurement of EPS growth and divisional EBIT, rather than
statutory earnings, to ensure management do not benefit
from a lower starting point in FY 2019 and hence a higher
delta over time.
Up to FY 2019, Healius was undergoing a period of significant
transition and statutory earnings were consistently lower than
underlying earnings as the latter excluded, for example, the
costs of turning around the Healius Primary Care business
before its sale. From FY 2020 onwards, Healius has focused on
reducing the gap between statutory and underlying earnings.
In order to provide investors with confidence in underlying
results, adjustments between underlying and statutory results
are limited to the investment in the Pathology information
systems from FY 2022 onwards for the purposes of the TLTIP.
The Pathology information systems implementation will form
part of the STIP KPIs and hence project management, cost
control and benefits realisation will be incorporated into
remuneration considerations through this mechanism.
No adjustment will be made for the impact of AASB 16 in the
measurement period as this would become a further variance
between statutory and underlying earnings. This decision has
been made notwithstanding the expected negative impact
on EPS and hence TLTIP performance during the period.
Balanced scorecards for STIP
For the FY 2021 STIP, each KMP was assigned specific objectives
around financial, operational and strategic outcomes, ensuring
they were measured and rewarded for initiatives over which they
have responsibility, which contribute directly to the Company’s
strategy and which deliver increased shareholder value.
Leadership behaviours were a gateway for the STIP award,
including the Board’s retained discretion (not exercised) to modify
any award to zero in the case of poor leadership behaviours.
In FY 2022 the Board aims to expand the KPIs to include
achievements towards key sustainability targets.
Multi‑year vesting of equity
The rolling nature of remuneration payments encourages
executive retention. STIP equity is deferred for one year and
LTIP Options are measured and vest after three, four or five
years, subject to the achievement of performance.
FAR
STI Cash
STI Equity
LTI Equity
Salary plus
superannuation
and benefits
67% of Y1 STI
Award
33% of Y1 STI
Award
0–100% of Y1
LTI Award
(performance tested)
Year 1
Year 2
Year 3
Year 4
Clawback provisions
Payments or vesting related to STIP and LTIP in the prior
three financial years are subject to Healius’ clawback policy
if it transpires that they were based on materially incorrect
performance information or that actions taken by the relevant
Senior Executive to secure a benefit were, are or will be
detrimental to the best interests of Healius.
Positive gate for rTSR
A positive TSR gate applies to the vesting of LTIP relating
to Healius’ TSR performance against its comparator group.
No award can be made if Healius’ TSR over the measurement
period is zero or negative, even if Healius has performed better
than the comparator group.
Comparator group for rTSR
As part of the introduction of the TLTIP in FY 2020, the rTSR
comparator group was reviewed, extended and updated
to better reflect comparable market capitalisation, growth
profiles, consumer surrogates and investment substitutes.
In order to keep the comparator group up-to-date, Australian
Clinical Labs Limited (ACL), which is a direct peer of Healius,
will be included in the comparator group following its listing
on the ASX on 14 May 2021.
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3. Healius’ Remuneration Governance
Healius’ Remuneration Governance Framework and the Charter of the People & Governance Committee are available on the
Company’s remuneration governance portal at: http://www.Healius.com.au/about-us/corporate-governance/.
In summary the remuneration governance framework is as follows:
Healius Board
Ultimate responsibility for all remuneration‑related matters
People & Governance Committee
Sally Evans – Chair | Robert Hubbard | Paul Jones | Kate McKenzie
Appointed and authorised by the Board to assist in fulfilling its statutory and fiduciary duties.
People and culture.
Senior Executive remuneration, recruitment, retention, performance evaluation, incentives and termination.
The Committee is responsible for making recommendations to the Board about:
• Diversity.
• Healius’ Purpose, Mission and Values.
• Governance.
•
•
• Remuneration framework for Non-executive Directors.
• Board succession planning and leadership development.
•
• Required competencies of Directors.
• Appointment and re-election of Directors.
Performance evaluation of the Board, its committees and Directors.
Officers or employees
External Consultants
inc. remuneration
consultants
Other stakeholders
•
•
•
To assist it in meeting its responsibilities, the Committee has the authority to seek information and retain legal,
accounting or other advisers, consultants or experts.
The Committee communicates with Senior Executives about remuneration-related matters, to ensure that Senior
Executives are aware of the Board’s performance expectations and the connection between the achievement of the
Board’s strategy for Healius, shareholder value and financial rewards for management.
The Committee consults widely with stakeholders including shareholders, proxy advisers and other stakeholders on their
views on remuneration policy and disclosures.
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Executive Key Management Personnel in FY 2021
4.
KMP are the Non-executive Directors, the executive Director and employees who have authority and responsibility for planning,
directing and controlling the activities of the Group, directly or indirectly. The following roles and individuals were identified
as executive KMP for FY 2021 (Non-executive Directors are identified in section 8).
NAME
ROLE
DATES
Malcolm Parmenter
Managing Director & Chief Executive Officer (CEO)
September 2017
Maxine Jaquet
Chief Financial Officer & Chief Operating Officer (CFO & COO)
Chief Financial Officer (CFO)
John McKechnie
Chief Executive Pathology
Dean Lewsam
Chief Executive Imaging
January 2021
August 2019
August 2019
October 2015
Executive KMP – Framework and outcomes in FY 2021
FY 2021 FIXED ANNUAL REMUNERATION
5.
5.1
The review of fixed annual remuneration (FAR) resulted in no across-the-board increases in executive KMP base pay for FY 2021.
Maxine Jaquet was awarded an increase in her FAR during FY 2021 to $800,000 due to her expanded portfolio encompassing
Chief Operations Officer as well as Chief Financial Officer for the Group.
The Board has noted stakeholder comments in connection with the FAR of Malcolm Parmenter and the level of his remuneration
when compared to the median of the index in which Healius currently sits (S&P/ASX 100-150). The Board noted that Malcolm was
recruited at a time when Healius was in the ASX 100 index and required a major transformation to deliver long-term growth. His FAR
was based on his extensive healthcare experience and capabilities, rather than on index benchmarking. Since that time, Malcolm
has overseen a period of significant improvement in the performance and sustainability of the Group. This has been achieved
through Malcolm’s carriage of enterprise management together with fundamental improvements in the organisational structure,
operations, people, IT platforms, and consumer focus. The market capitalisation of the Company has grown from $1.7 billion on his
appointment to $2.9 billion at 30 June 2021, a 71% growth compared to a 35% increase in the S&P/ASX200 which is a proxy for the
market as a whole, with Healius’ drop into the ASX 100–150 index driven by the boom in resource and technology stocks rather than
any inherent company underperformance.
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A comprehensive review of FAR will be undertaken in FY 2022 as part of an ongoing evaluation of our remuneration policies and
outcomes. This review will consider the Group’s size and complexity, the individual’s skills, expertise and responsibilities, and
benchmarking including against the same comparator group as for rTSR under the TLTIP.
When making comparison to the FY 2020 FAR, it should be noted that the executive KMP accepted a pay reduction for part
of FY 2020 equivalent to an annualised 20% reduction (30% for the CEO) through cuts to their base pay and agreed annual leave
adjustments as a result of the early stages of the COVID-19 pandemic.
5.2
EXECUTIVE KMP – FY 2021 SHORT‑TERM INCENTIVE PLAN
Structure
Key outline of the FY 2021 STIP is as follows, with further details set out in section 9 below:
•
The purpose of the STIP is to reward achievement over the course of a single financial year, measured against an individual’s
scorecard which includes relevant and tailored financial, operational and strategic KPIs.
The Board selects KPIs that it considers will incentivise the individual to drive maximum value for shareholders. Financial KPIs
include Group EBIT, EBIT margin and Operating Cash Flow. Operational KPIs include delivery of targets under the SIP and
measures specific to the individual’s role. Strategic KPIs include development of the Group’s portfolio and risk management.
The STIP ensures executive KMP are measured and rewarded for initiatives over which they have responsibility, which contribute
directly to the Company’s strategy and which deliver increased shareholder value.
Leadership behaviours acted as a gateway for the STIP award, including the Board’s retained discretion to modify any award
to zero in the case of poor leadership.
The STIP currently equates to 45% of FAR at stretch (52.8% for CEO and CFO/COO) and the stretch opportunity equates to 120%
of target.
•
•
•
•
• Under the plans, the Board retains discretion to increase awards above stretch in exceptional circumstances.
•
Two-thirds of the STIP is paid in cash and one-third in the form of Service Rights which are deferred for one year.
Healius – Annual Report 2021
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for the year ended 30 June 2021
Rationale
In assessing the FY 2021 STIP awards, the Board acknowledged the uncertainty around the level of pathology COVID-19 testing
in June 2020 when the financial, operational and strategic KPIs were set. It was also aware of the potential misinterpretation
of the positive financial returns in the year being purely a windfall gain from COVID-19 testing. Hence the Board undertook
a comprehensive analysis rather than accepting the positive financial returns achieved in the year and rewarding accordingly.
First, the overriding aim of your Company throughout the COVID-19 pandemic went far beyond budgeted metrics to ensuring
Healius played an instrumental role in Australia’s public health response, which extended the team well beyond its normal
capacities and capabilities. Particular importance was also placed on protecting the safety, health and wellbeing of the Group’s
people. The Board’s view is that Healius has delivered on this.
Secondly, while initiatives towards business goals could have been deferred given the abovementioned COVID-19 imperative,
these initiatives were, in fact, delivered. FY 2021 was a pivotal year in shareholder returns.
Measurable achievements over and above the COVID-19 imperative included:
•
Portfolio rationalisation with the finalisation of the Healius Primary Care sale and bringing Adora Fertility to market, with the
sale announced in August 2021,
• Growth of the Day Hospitals business and development of new commercial revenue streams including direct-to-consumer
COVID-19 testing,
Focus on SIP and margin expansion, including rationalising the pathology property footprint,
•
• Management of capital, debt facilities and cash flow, including completion of a $101 million share buyback,
•
Targeted program of capital investment including the successful redevelopment of the main pathology laboratory
in Western Australia,
• Development of future growth plans, including systematic review of potential growth areas and specific inorganic options,
• Regular communication with all stakeholders, including employees, investors and government,
•
Strengthening the organisational health of the Group, including recruitment to fill capability gaps such as in the digital
space, and
Encouraging resilience, supporting the frontline and maintaining unity in the face of the COVID-19 pandemic.
•
Malcolm Parmenter outcomes
Malcolm Parmenter’s STI is assessed primarily against a scorecard which includes relevant and tailored financial, operational and
strategic KPIs as set out below. In awarding his STI, the Board exercised its discretion to award an STI of 167% of stretch given the
rationale set out above and, in particular, because Malcolm:
• demonstrated exceptional leadership during an unprecedented period,
• achieved exceptional outcomes in his carriage of the enterprise strategy at Healius including portfolio and capital management,
•
•
consistently exceeded expectations on all KPIs, and
financial KPIs were strongly above stretch.
CEO STIP outcomes are as follows:
CEO
STRETCH
OPPORTUNITY
$871,200
ACTUAL
$1,452,000
CASH
$968,000
DEFERRED
EQUITY
$484,000
% OF STRETCH
OPPORTUNITY
167%
While the Board undertook a comprehensive analysis rather than simply accepting the positive financial returns achieved in the
year, the following table of comparative financial data shows that Malcolm was awarded $580,000 additional STI in return for
delivering $52.2 million of additional underlying EBIT in FY 2021:
Group EBIT
CEO STIP award
TARGET
OPPORTUNITY
$178.6m
$726,000
STRETCH
OPPORTUNITY
$214.3m
$871,200
ACTUAL
$266.5m
$1,452,000
$ ABOVE STRETCH
OPPORTUNITY
% OF STRETCH
OPPORTUNITY
$52.2m
$580,000
124%
167%
Other KMP outcomes
The following table provides the STIP outcomes for the other KMP in FY 2021. All three KMP were assessed against tailored KPIs
within Financial, Operational and Strategic categories.
In line with the CEO, the Board exercised its discretion in awarding Maxine Jaquet, CFO and COO, 167% of stretch because Maxine:
• demonstrated exceptional skills in assisting Malcolm to lead the company during an unprecedented period,
• achieved exceptional outcomes in her co-carriage of the enterprise strategy at Healius including portfolio and capital management,
•
•
consistently exceeded expectations on all KPIs, and
financial KPIs were significantly above stretch.
STRETCH
OPPORTUNITY
$422,400
$326,250
$326,250
ACTUAL
$704,000
$326,250
$115,819
CASH
$469,333
$217,500
$77,213
DEFERRED
EQUITY
$234,667
$108,750
$38,606
% OF STRETCH
OPPORTUNITY
167%
100%
35%
CFO/COO
CEO Pathology
CEO Imaging
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Malcolm Parmenter
Managing Director and Chief Executive Officer
VALUE DRIVERS
KPI NAME
Financial 50%
TARGET
($M)
STRETCH
($M)
ACTUAL ($M)
STRETCH
ACHIEVED
% OF STRETCH
Results
Group EBIT
178.6
214.3
266.5
Gross operating cash flow
383.3
460.0
571.9
EBIT margin
9%
11%
14%
Operational 25%
Profit
Deliver SIP targets
70
84
Ensure Healius’
continued good
relationships with
Government
Strategic 25%
Enterprise/
Portfolio
Develop portfolio and
growth strategies
$68m of SIP Phase 1 target launched
FY 19 and due FY 21–22. Delivered
ahead of schedule in 1H21. As a result,
Phase II announced targeting 300 bps
improvement by FY 23.
Throughout COVID-19, played proactive
and key role in discussions with Federal
and State governments and involved
in several major initiatives including use
of BGI equipment.
Completion of Healius Primary Care
sale at an excellent price in a difficult
environment. IVF brought to market.
Imaging business purchased. Pipeline
of potential day hospital opportunities
developed. Potential M&As assessed with
disciplined pricing. $101m buyback to
shareholders. New dividend payout ratio.
Risk
reduction
Remove stranded costs
after Healius Primary
Care sale
Risk
reduction
Lead improvement of
Organisational Health
Leadership (Gateway)
15
18
$15m target by FY 22 completed ahead
of schedule in FY21.
On-going improvement including
filling capability gaps such as digital,
improving bench strength in strategy
and M&A, succession planning.
124%
124%
129%
Ahead of
schedule
50%+
share price
appreciation;
55% 1-year
TSR
Ahead of
schedule
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Y
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n/a
Y
Y
n/a
Behaviours & Leadership
Gateway met.
n/a
n/a
Alignment
to We Care
values
People (Gateway)
People plan People plan + KPIs
recorded
Gateway met.
n/a
n/a
Healius – Annual Report 2021
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for the year ended 30 June 2021
5.3
FY 2019 LONG‑TERM INCENTIVE PLAN (COMPLETED)
Vesting conditions
The FY 2019 LTIP measurement period ended on 30 June 2021 and was tested at 1 July 2021 for the performance period FY 2019
to FY 2021 inclusive. Under the plan, the LTIP participants were granted Performance Rights that vest based on two equally
weighted criteria, ROIC and rTSR.
Relative Total Shareholder Return (rTSR) was selected by the Board to motivate Senior Executives to drive returns which outperform
those of comparable companies and thereby make Healius a superior investment. TSR is calculated by adding share price movement
(using 10-trading-day Volume Weighted Average Price) plus dividends over the three-year measurement period, as a percentage
of the starting share price. To obtain relative TSR, Healius’ TSR is then ranked against companies in the comparator group.
The rTSR performance criteria for the FY 2019 LTIP were as follows:
PERFORMANCE BAND
Below Target
Target
Between Target and Stretch
At or above Stretch
rTSR VESTING CONDITIONS FOR FY 2019 LTI
rTSR RANK FY19‑21 (P VALUE)
% OF rTSR RIGHTS TO VEST
. 3,586 Shares and all NED Share Rights held by Sally Evans.
40,588 Shares held by Pannly Pty Ltd ATF Jones Family Trust. 2,869 Shares and all NED Share Rights held by Paul Jones.
2 All Shares held by GR & G Davis Superannuation Fund.
3
4
5 All Shares held by Jennifer Macdonald.
6 All Shares held by MCK Family Holdings Pty Ltd.
7 Closing Balance is the balance as at the date of cessation as a Director. 11,920 Shares held by Mantan Nominees Pty Ltd . 4,000 Shares held by Arpat Pty Ltd .
8 NED Share Rights issued in December 2020 under the NED Share Plan were taken up by the NEDs through salary sacrifice. 33% of the NED Share
Rights vested into Restricted Shares issued in March 2021 following the Company’s HY 2021 results announcement. (The remaining 67% vested into
Restricted Shares issued in August 2021 following the Company’s FY 2021 results announcement, which will be reflected in the Company’s 2022
Remuneration Report.) All securities were issued pursuant to shareholder approval under ASX Listing Rule 10.14.
Other than Restricted Shares issued under the NED Share Plan through salary sacrifice, there were no shares granted to or forfeited
by NEDs during FY 2021 in connection with their remuneration. No NEDs held Options over Healius shares in FY 2021. NEDs held NED
Share Rights over Healius shares in FY 2021 as set out in the above table.
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9.
9.1
Remuneration policies in detail in FY 2021
SENIOR EXECUTIVE EMPLOYMENT TERMS
KEY TERM
SUMMARY OF KEY TERM
Senior Executives
The CEO, other KMP who hold executive roles, and other direct reports to the CEO.
Employing company
Idameneo (No 789) Ltd. (This is the service company in the Healius Group and a large number
of Group employees are employed by this entity.)
Basis of employment
Permanent full time. No fixed or maximum term.
Period of notice
Twelve months, from either party.
Termination without notice
Healius may terminate the Senior Executive’s employment without notice if, in the opinion of Healius,
the Senior Executive engages in misconduct, fraud, commits a serious or persistent breach of the
agreement, or other specified circumstances occur.
Termination payments
Capped at 12 months Fixed Annual Remuneration (Healius is not required to pay or provide,
or procure the payment or provision, of any payment or benefit to the Senior Executive which
would require shareholder approval). The treatment of incentives under the STIP and TLTIP in the
case of termination is addressed in separate sections of this Report.
9.2
SENIOR EXECUTIVE SHORT‑TERM INCENTIVE PLAN (STIP) DETAILS
KEY TERM
Period
Eligibility
SUMMARY OF KEY TERM
1 July 2020–30 June 2021 inclusive.
Senior Executives and other persons approved by the Board. NEDs are not eligible to participate.
Plan gate and Board
discretion
The Board retains the discretion to either abandon the plan or modify outcomes to ensure that
they are appropriate given the circumstances that have prevailed over the measurement period
(this is intended to ensure alignment between performance and reward outcomes).
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Termination
of employment
Change of Control
including takeover
A specified “gate” condition may apply to offers of STI such that no award will be payable in relation
to any KPI if the gate condition is not met or exceeded.
FY 2021
FY 2022 invitations
Must meet behavioural measures designed to promote the Company’s
“WE CARE” values.
Likely to include an additional sustainability gate (tbc).
If a STIP participant ceases to be an employee of the Healius Group, and the termination of their
employment is in circumstances other than Special Circumstances (defined below), then all unvested
Rights held by the participant will be forfeited and lapse unless and to the extent otherwise
determined by the Board.
If an STIP participant’s termination is in Special Circumstances, then Service Rights granted under the
STIP in the financial year of termination will be forfeited in the same proportion that the remainder
of the financial year bears to the full financial year, unless otherwise determined by the Board.
Service Rights that do not lapse at the termination of employment will continue to be held
by participants with a view to testing for vesting at the end of the relevant measurement period.
Special Circumstances means death, total and permanent disablement as determined by
the Board, retirement with the prior consent of the Board, redundancy, retrenchment or other
Company-initiated terminations other than for cause.
In the event of a Change of Control (defined in section 9.3 below) the Board may:
•
terminate the STIP for the measurement period and pay pro-rata awards based on the
completed proportion of the measurement period and taking into account performance
up to the date of the Change of Control; or
continue the STIP but make interim non-refundable pro-rata awards based on the completed
proportion of the measurement period and taking into account performance up to the date
of the Change of Control; or
•
• allow the STIP to continue.
In the absence of the Board exercising its discretion above, unvested STIP Service Rights
immediately vest on at least a pro-rata basis upon the Change of Control.
Healius – Annual Report 2021
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for the year ended 30 June 2021
9.3
SENIOR EXECUTIVE TRANSFORMATION LONG‑TERM INCENTIVE PLAN (TLTIP) DETAILS
KEY TERM
Purpose
SUMMARY OF KEY TERM
The purpose of the TLTIP is to create a strong link between performance and reward by providing
an at-risk element of executive remuneration that focuses on performance over the strategic plan
period, up to 5 years. The TLTIP aims to align management rewards with shareholder value, thereby
incentivising management to deliver the Company’s current strategic plan.
Eligibility
Senior Executives and other persons approved by the Board. NEDs are not eligible to participate.
Potential annual award
For the CEO and CFO, 152% of FAR (at Stretch/maximum level performance), equivalent to 50%
of Total Potential Remuneration.
For other executive KMP, 130% of FAR (at Stretch/maximum level performance), equivalent to 47%
of Total Potential Remuneration.
Form of awards
Under the TLTIP, awards to executive KMP are made in the form of Options.
The number of Options to be issued is calculated using the fair market value of the Options
as calculated by an independent external accountant using standard methodologies.
The number of Options issued is sufficient to satisfy Stretch/maximum level performance.
Multiple year grant
For Senior Executives, the years FY 2020–FY 2022 inclusive were the subject of a multiple year grant,
in which three years’ worth of TLTIP Options were granted, split into three equal Tranches, in FY 2020.
No additional grants were made in FY 2021.
The measurement period for the Performance Conditions for each Tranche is as follows:
•
•
•
Tranche 1 (1/3 of the Options issued to the relevant participant): FY 2020–FY 2022 inclusive;
Tranche 2 (1/3 of the Options issued to the relevant participant) FY 2020–FY 2023 inclusive; and
Tranche 3 (1/3 of the Options issued to the relevant participant) FY 2020–FY 2024 inclusive.
Exercise of Options
Any Option issued under the TLTIP is an option to purchase an ordinary Share of the Company
on a specified future date (the Exercise Date) for a specified price (the Exercise Price).
If the Exercise Price on the Exercise Date exceeds the Company’s traded Share price on the
Exercise Date, the Option is “in the money” and can be exercised and the issued Shares sold by
the relevant participant for a profit. If the Exercise Price on the Exercise Date is less than or equal
to the Company’s traded Share price on the Exercise Date, the Option is “out of the money” and will
generally not be exercised (and so will lapse).
For the FY 2020–FY 2022 multiple year grant of Options, the Exercise Price was set by the Board
at the standard volume weighted average price (VWAP) for the Company’s Shares for the 10 trading
days following 1 July 2019, the starting point for each measurement period, which was $3.05.
The relevant TLTIP participant has the choice as to whether or not an Option is exercised on the
Exercise Date. The Board may determine to allow a cashless exercise of Options.
Exercise of Options is also conditional on the Performance Conditions being satisfied.
The Exercise Date Schedule for FY 2020 TLTIP Options is as follows:
•
Tranche 1 (1/3 of the Options issued to the relevant participant) will be exercisable at the end
of FY 2022;
Tranche 2 (1/3 of the Options issued to the relevant participant) will be exercisable at the end
of FY 2023; and
Tranche 3 (1/3 of the Options issued to the relevant participant) will be exercisable at the end
of FY 2024.
•
•
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KEY TERM
SUMMARY OF KEY TERM
Expiry date of Options
The Options expire on the first to occur of:
(a) 3 March 2035;
(b) the Option lapsing in accordance with a provision of the Equity Incentive Plan Rules (including
in accordance with a term of an offer under the TLTIP);
(c) failure to meet a vesting condition or any other condition applicable to the Option within the
vesting period; or
(d) the receipt by the Company of a notice in writing from a participant to the effect that the
participant has elected to surrender the Option.
rTSR comparator group
When implementing the TLTIP, the Board determined to update the comparator group of companies
used to assess rTSR. The comparator group was extended from 21 to 36, removing previous
companies which were not considered comparable, and including non-healthcare companies from
the ASX 51–150 in order to better reflect comparable market capitalisation, growth profiles, consumer
surrogates and investment substitutes. The comparator group is as follows (an asterisk denotes
the relevant company was also part of the previous comparator group used under the Company’s
previous Long-Term Incentive Plan):
•
1300 Smiles Limited *
• Accent Group Limited
• Ansell Limited *
• ARB Corporation Limited
• Australian Pharmaceutical Industries Limited *
• Bapcor Limited
• Bega Cheese Limited
• Blackmores Limited
• Bravura Solutions Limited
• Breville Group Limited
• Capitol Health Limited *
• Carsales.Com Limited
• Clinuvel Pharmaceuticals Limited
• Collins Foods Limited
• Corporate Travel Management Limited
•
•
•
Eagers Automotive Limited
Estia Limited *
Event Hospitality & Entertainment Limited
•
•
•
•
•
Inghams Group Limited
Invocare Limited
Japara Healthcare Limited *
JB Hi-Fi Limited
Link Administration Holdings Limited
• McMillan Shakespeare Limited
• Metcash Limited
•
•
Pacific Smiles Group Limited *
Pact Group Holdings Limited
•
Premier Investments Limited
• Ramsay Health Care Limited *
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• Regis Healthcare Limited *
• Resmed Inc *
•
Sigma Healthcare Limited *
Somnomed Limited *
Sonic Healthcare Limited *
•
•
•
•
Southern Cross Media Group Limited
Virtus Health Limited *
The Board also intends to add Australian Clinical Labs Limited to the comparator group, following
the ASX listing of this direct peer of the Company in 2021.
Re‑testing
There is no re-testing of Performance Conditions or deferral of the Exercise Date of Options.
Lapse and transferability
Any Option not exercised on the Exercise Date automatically lapses.
Other than in limited circumstances, Options may not be disposed of, transferred or otherwise
dealt with, and lapse immediately on a purported disposal, transfer or dealing.
Healius – Annual Report 2021
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KEY TERM
SUMMARY OF KEY TERM
Termination of employment
Bonus issues, rights issues
and capital reorganisation
If a participant ceases to be an employee of the Group, and the termination of their employment
is in circumstances other than Special Circumstances (defined below), then all unvested Options
held by the participant will be forfeited and lapse unless and to the extent otherwise determined
by the Board. If a participant’s termination is in Special Circumstances, then Options on issue will
be forfeited in the same proportion that the remainder of the measurement period after the date
of termination bears to the full measurement period, unless otherwise determined by the Board.
Options that do not lapse at the termination of employment will continue to be held by participants
with the same Performance Conditions, Exercise Date and Exercise Price.
Special Circumstances means death, total and permanent disablement as determined by the Board,
retirement with the prior consent of the Board, redundancy, retrenchment or other Group-initiated
terminations other than for cause.
In cases of bonus Share issues by the Company, the number of Options held by a participant will
be increased by the same number as the number of bonus Shares that would have been received
by the participant had the Options been fully paid ordinary Shares in the Company (except in the
case that the bonus Share issue is in lieu of a dividend payment, in which case no adjustment will
apply). In the case of general rights issues to shareholders there will be no adjustment to Options.
In the case of an issue of rights other than to the Company’s shareholders, there will be no adjustment
to Options.
In the case of other capital reconstructions, the Board may make such adjustments to Options
as it considers appropriate.
Change of Control
including takeover
A Change of Control occurs when the Board advises participants that one or more persons acting
in concert have acquired, or are likely to imminently acquire “control” of the Company as defined
in section 50AA of the Corporations Act.
In the event of a Change of Control of the Company, the Board has discretion to determine that
vesting of all or some of the Options should be accelerated. If a Change of Control occurs before
the Board has exercised its discretion, a pro rata portion of Options will vest, calculated based
on the portion of the relevant performance period that has elapsed up to the Change of Control,
and the Board retains a discretion to determine if the remaining Options will vest or lapse.
Amendment
The Board may amend or terminate the TLTIP at any time provided that the rights of participants
to awards earned prior to the amendment or termination are not affected, unless otherwise agreed
in writing by the participants.
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9.4
REMUNERATION‑RELATED POLICIES
KEY TERM
SUMMARY OF KEY TERM
Securities Trading Policy
KMP may only trade during a “trading window” (with some limited exceptions as set out in the
policy). The following periods in a calendar year are “trading windows”, unless otherwise determined
by the Board:
•
Four weeks commencing one trading day after the day of release of the Appendix 4D
(half-year report), typically in mid-February.
Four weeks commencing one trading day after the day of release of the Appendix 4E
(preliminary final report), typically in late August.
Four weeks commencing one trading day after the day of Healius’ Annual General Meeting,
typically in late October or November.
The duration of the offer period for an offer of securities made pursuant to a prospectus
or cleansing statement.
•
•
•
• Any other period declared by the Board in its discretion to be a trading window.
Equity Holding Policy
Healius does not currently have an equity holding policy applicable to KMP; the adoption of such
a policy remains under consideration by the Board.
Executive Remuneration
Consultant Policy
and Payments
• Healius’ policy requires that Executive Remuneration Consultants (ERCs) are approved and
engaged by the Board before any advice is received. This policy enables the Board to state
whether or not the advice received from ERCs has been independent and why. Interactions
between management and the ERC must be approved, and are supervised by the People
& Governance Committee when appropriate.
• During FY 2021, no KMP remuneration recommendations (as defined in section 9B of the
Corporations Act) were provided to the Board by an ERC.
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R
S
’
R
E
P
O
R
T
• Where KMP remuneration recommendations are received from an ERC, the Board can be satisfied
that those KMP remuneration recommendations are free from undue influence from KMP to whom
the recommendations related because:
-
the Board is confident that the policy for engaging ERCs is being adhered to and is operating
as intended;
the Board is closely involved in all dealings with ERCs; and
each KMP remuneration recommendation received is accompanied by a declaration from the
ERC to the effect that their advice has been provided free from undue influence from the KMP
to whom the recommendation relates.
-
-
Healius – Annual Report 2021
67
Directors’ Report
for the year ended 30 June 2021
9.5
TRANSACTIONS WITH KMP
KEY TERM
SUMMARY OF KEY TERM
Transactions with current
KMP
• During the years ended 30 June 2021 and 30 June 2020 the Group provided medical centre
management services (Services) to Dr Paul F Jones Pty Ltd, a company controlled by Paul Jones,
a Non-executive Director of Healius. The Services were provided to Dr Jones’ general medical
practice, which was conducted at one of Healius’ former medical centres, on ordinary arm’s
length terms. The Service fees received by the Group for FY 2021 were $44,831 (FY 2020: $96,839).
This Service fee revenue was accounted for by Healius in the same way as revenue from other
healthcare practices. There were no amounts payable or receivable as at 30 June 2021 (2020:
nil). The Healius Group has since disposed of the Healius Primary Care business and no longer
conducts medical centre management services.
•
From time to time, KMPs (and their personally-related entities) enter into transactions with
the Healius Group, including the use or provision of services under normal customer, supplier
or employee relationships. These transactions:
-
occur within a normal employee, customer or supplier relationship on terms and conditions
no more favourable than those which it is reasonable to expect the Group would have
adopted if dealing at arm’s length with an unrelated person;
- do not have the potential to adversely affect decisions about the allocation of scarce
resources made by users of the financial report, or the discharge of accountability by the
KMP; and
- are trivial or domestic in nature.
Loans to current KMP
• No loans have been made to any of the KMP or their related parties during FY 2021.
68
Directors’ Report
for the year ended 30 June 2021
Signing of Directors’ Report
Signed in accordance with a resolution of the Directors made pursuant to section 298(2) of the Corporations Act 2001.
On behalf of the Directors.
Robert Hubbard
Chair
14 September 2021
I
D
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E
C
T
O
R
S
’
R
E
P
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Healius – Annual Report 2021
69
Corporate Governance Statement
Healius is committed to ensuring that its policies and practices reflect a high standard of corporate governance.
The Board has adopted a comprehensive framework of Corporate Governance Guidelines. Throughout FY 2021, Healius’
governance arrangements were generally consistent with the Corporate Governance Principles and Recommendations
(4th edition) published by the ASX Corporate Governance Council.
In accordance with ASX Listing Rule 4.10.3, Healius’ FY 2021 Corporate Governance Statement can be viewed at:
https://www.healius.com.au/about-us/corporate-governance/.
70
Auditor’s Independence Declaration
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of Healius Limited
As lead auditor for the audit of the financial report of Healius Limited for the financial year ended 30 June 2021, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Healius Limited and the entities it controlled during the financial year.
Ernst & Young
Douglas Bain
Partner
14 September 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Healius – Annual Report 2021
71
Independent Auditor’s Report
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor’s report to the Members of Healius Limited
Report on the audit of the financial report
Opinion
We have audited the consolidated financial report of Healius Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2021,
the consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes to the financial statements, including a
summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying consolidated financial report of the Group is in accordance with the
Corporations Act 2001, including:
a.
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and of its
consolidated financial performance for the year ended on that date; and
b.
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 auditor independence requirements of 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 consolidated financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
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 judgment, were of most significance in our audit of
the consolidated financial report of the current year. These matters were addressed in the context of our audit of
the consolidated financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report
section of our report, including in relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the consolidated
financial report. The results of our audit procedures, including the procedures performed to address the matters
below, provide the basis for our audit opinion on the accompanying consolidated financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
72
Independent Auditor’s Report
CARRYING VALUE OF GOODWILL
Why significant
As disclosed in Note B2 of the consolidated financial
report and in accordance with the requirements of
Australian Accounting Standards, the Group
performed an annual impairment test of all cash
generating units (CGUs) to which goodwill of $2,042
million was allocated to determine whether the
recoverable value of each CGU exceeded its carrying
amount at 30 June 2021.
A fair value less cost of disposal model was used to
calculate the recoverable amount of each cash
generating unit.
This was considered a Key Audit Matter due to the
materiality of the balance to the financial statements,
extent of audit effort and significant judgment, based
on conditions as at 30 June 2021, specifically
concerning factors such as cash flow forecasts,
growth rates, discount rates and terminal growth rates
used by the Group in undertaking the impairment
review.
How our audit addressed the key audit matter
Our audit procedures included the following:
► Assessed whether the impairment testing
methodology used by the Group met the
requirements of Australian Accounting
Standards.
► Assessed the basis of preparing cash flow
forecasts, by considering the reliability of
previous forecasts and budgets, current trading
performance and the impact of COVID-19.
► Assessed the appropriateness of other key
assumptions such as the discount and growth
rates applied with reference to publicly available
information on comparable companies in the
industry and markets in which the Group
operates.
► Tested the mathematical accuracy of the cash
flow models.
► Performed sensitivity analyses on the key
assumptions including discount rates, terminal
growth rates and EBIT forecasts for each of the
Group’s CGUs.
► Assessed the implied EBITDA multiples as a
cross‑check of the recoverable amount derived
from the discounted cashflow models against a
range from comparable companies and
transactions.
► We involved our valuation specialists in
performing these procedures.
► Assessed the adequacy of the financial report
disclosures contained in Note B2.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s 2021 annual report, but does not include the consolidated financial report and our
auditor’s report thereon.
Our opinion on the consolidated financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our
related assurance opinion.
In connection with our audit of the consolidated financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Healius – Annual Report 2021
73
Independent Auditor’s Report
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 Group are responsible for the preparation of the consolidated 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 consolidated
financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating 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
have 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 consolidated 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 consolidated
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the consolidated financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial report or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the consolidated financial report, including the
disclosures, and whether the consolidated financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the business activities
within the entity to express an opinion on the consolidated financial report. We are responsible for the
direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
74
Independent Auditor’s Report
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated to the directors, we determine those matters that were of most significance in
the audit of the consolidated financial report of the current year and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 43 to 68 of the directors’ report for the year ended
30 June 2021.
In our opinion, the Remuneration Report of Healius Limited for the year ended 30 June 2021, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Group 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.
Ernst & Young
Douglas Bain
Partner
Sydney
14 September 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Healius – Annual Report 2021
75
Directors’ declaration
The Directors of Healius Limited (Healius) declare that:
A.
in the Directors’ opinion, there are reasonable grounds to believe that Healius will be able to pay its debts as and when they
become due and payable; and
B.
in the Directors’ opinion, the financial statements and notes thereto are in accordance with the Corporations Act 2001 (Cth),
including section 296 (compliance with accounting standards) and section 297 (true and fair view); and
C. the financial statements and notes thereto are in compliance with International Financial Reporting Standards issued
by the International Accounting Standards Board as provided in the introduction to the Notes to the consolidated financial
statements; and
D. there are reasonable grounds to believe that Healius and the controlled entities identified in Note D2 will be able to meet
any obligations or liabilities to which they are, or may become, subject to by virtue of the Deed of Cross Guarantee between
Healius and those controlled entities pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785; and
E. the Directors have been given the declarations required by section 295A of the Corporations Act 2001 (Cth) from the Chief
Executive Officer and Chief Financial Officer for the year ended 30 June 2021.
Signed in accordance with a resolution of the Directors made pursuant to section 295(4) of the Corporations Act 2001 (Cth).
On behalf of the Directors
Robert Hubbard
Chair
14 September 2021
76
Financial statements
Consolidated statement of profit or loss
Consolidated statement of other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
About this Report
A
B
C
D
E
Group performance
A1
A2
A3
A4
A5
Segment information
Revenue
Expenses
Income tax expense
Earnings per share
Operating assets and liabilities
B1
B2
B3
B4
B5
B6
B7
B8
B9
Receivables
Goodwill
Property, plant and equipment
Other intangible assets
Lease liabilities
Right of use asset
Payables
Deferred consideration
Provisions
Financing and capital structure
Interest-bearing liabilities
C1
Issued capital
C2
Treasury shares
C3
Dividends on equity instruments
C4
Financial instruments
C5
Commitments for expenditure
C6
Group structure
D1
D2
D3
Subsidiaries
Deed of cross guarantee
Parent entity disclosures
Other disclosures
E1
E2
E3
E4
E5
E6
E7
E8
E9
E10
Notes to the statement of cash flows
Discontinued operations
Tax balances
Contingent liabilities
Share-based payments
Related party disclosures
Key management personnel disclosures
Remuneration of auditor
Adoption of new and revised standards
Subsequent events
Shareholder information
Financial calendar
Corporate information
78
79
80
81
82
83
83
84
84
86
86
87
88
89
89
90
92
93
94
94
95
95
96
98
98
99
99
100
100
105
106
106
109
110
111
111
112
114
115
115
117
117
118
119
119
120
123
124
F
I
N
A
N
C
E
R
E
P
O
R
T
Healius – Annual Report 2021
77
Consolidated statement of profit or loss
for the year ended 30 June 2021
Revenue
Other income and gains
Employee benefits expense
Property expenses
Consumables
Repairs and maintenance
IT expenses
Insurance
Other expenses
Depreciation
Depreciation – right of use assets
Amortisation of intangibles
Earnings before interest and tax
Net finance costs
Profit before tax
Income tax (expense)/benefit
Profit for the year from continuing operations
Loss for the year from discontinued operations
Profit/(loss) for the year
Attributable to:
Equity holders of Healius Limited
Basic earnings per share from continuing operations
Basic earnings/(loss) per share from continuing and discontinued operations
Diluted earnings per share from continuing operations
Diluted earnings/(loss) per share from continuing and discontinued operations
2021
$M
1,900.7
13.5
(856.3)
(59.6)
(270.6)
(29.1)
(42.7)
(7.6)
(145.6)
(38.1)
(195.4)
(13.8)
255.4
(87.6)
167.8
(101.5)
66.3
(22.6)
43.7
RESTATED
2020 1
$M
1,557.0
12.8
(800.2)
(65.3)
(198.5)
(27.0)
(37.6)
(5.0)
(129.4)
(39.8)
(163.0)
(11.9)
92.1
(29.3)
62.8
20.6
83.4
(153.9)
(70.5)
43.7
(70.5)
2021
CENTS PER
SHARE
10.7
7.1
10.6
7.0
2020
CENTS PER
SHARE
13.4
(11.3)
13.4
(11.3)
NOTE
A2
A3
A3
A3
A4
E2
NOTE
A5
A5
A5
A5
1
The prior year comparatives have been restated to reflect the reclassification of Adora’s results to discontinued operations.
Notes to the financial statements are included on pages 83 to 119.
78
Consolidated statement of other comprehensive income
for the year ended 30 June 2021
Profit/(loss) for the year
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Fair value loss on open cash flow hedges
Reclassification adjustments relating to realised cash flow hedges for amounts recognised
in profit or loss
Reclassification adjustments relating to ineffective cash flow hedges
Exchange differences arising on translation of foreign operations
Income tax relating to items that may be reclassified subsequently to profit or loss
Other comprehensive income/(loss) for the year, net of income tax
Total comprehensive income/(loss) for the year
2021
$M
43.7
(1.8)
7.8
11.3
(0.4)
(5.2)
11.7
55.4
2020
$M
(70.5)
(9.7)
8.1
–
0.2
0.5
(0.9)
(71.4)
F
I
N
A
N
C
E
R
E
P
O
R
T
Notes to the financial statements are included on pages 83 to 119.
Healius – Annual Report 2021
79
Consolidated statement of financial position
as at 30 June 2021
NOTE
E1
B1
A4
A4
E2
B2
B6
B3
B4
E3
B7
B8
E3
B9
C5
B5
E2
B8
B9
C5
C1
B5
C2
C3
30 JUNE
2021
$M
70.1
199.8
–
35.9
–
25.1
330.9
2,042.3
1,087.2
157.7
76.3
5.6
82.2
3,451.3
3,782.2
205.9
38.9
46.8
155.3
–
224.4
13.4
684.7
–
22.5
6.4
258.1
953.2
30 JUNE
2020
$M
137.5
191.4
23.6
26.9
46.6
915.6
1,341.6
2,040.2
876.9
166.7
79.3
9.2
74.4
3,246.7
4,588.3
219.2
2.0
23.2
119.6
9.5
173.9
447.9
995.3
33.5
40.0
14.2
810.1
763.9
1,240.2
1,924.9
1,857.3
1,661.7
2,657.0
1,931.3
2,575.6
2,672.3
(3.6)
16.9
(731.6)
1,857.3
–
(3.4)
(737.6)
1,931.3
Current assets
Cash
Receivables
Interest receivables
Consumables
Tax receivable
Assets held for sale
Total current assets
Non-current assets
Goodwill
Right of use assets
Property, plant and equipment
Other intangible assets
Other financial assets
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Payables
Deferred consideration
Tax liabilities
Provisions
Other financial liabilities
Lease liabilities
Liabilities held for sale
Total current liabilities
Non-current liabilities
Deferred consideration
Provisions
Other financial liabilities
Interest bearing liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Treasury shares
Reserves
Accumulated losses
Total equity
Notes to the financial statements are included on pages 83 to 119.
80
Consolidated statement of changes in equity
for the year ended 30 June 2021
Balance at 30 June 2021
2,575.6
(3.6)
(4.5)
(0.7)
(731.6)
1,857.3
TREASURY
SHARES
CASH FLOW
HEDGE
RESERVE
SHARE-BASED
PAYMENTS
RESERVE
OTHER
RESERVES
ACCUMULATED
LOSSES
(16.6)
13.5
$M
Balance at 1 July 2020
Profit for the year
Exchange differences arising on
translation of foreign operations
Fair value loss on open cash
flow hedges
Reclassification adjustments
relating to realised cash flow
hedges recognised in profit or loss
Reclassification adjustments
relating to ineffective cash
flow hedges
Income tax relating to components
of other comprehensive income
Total comprehensive income
Buy-back of shares (Note C2 & C3)
Shares issued via Short Term
Incentive Plan
Payment of dividends
Share based payments
Transfers
ISSUED
CAPITAL
2,672.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(97.4)
(3.6)
0.7
–
–
–
–
–
–
–
–
–
(1.8)
7.8
11.3
(5.2)
12.1
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.7)
–
11.8
(2.5)
22.1
$M
Balance at 1 July 2019
Impact of AASB 16 adoption
Balance at 1 July 2019
Loss for the year
Exchange differences arising on
translation of foreign operations
Fair value loss on open cash flow
hedges
Reclassification adjustments
relating to realised cash flow
hedges recognised in profit or loss
Income tax relating to components
of other comprehensive income
Total comprehensive income
Shares issued via Short Term
Incentive Plan
Payment of dividends
Share based payments
Transfers
2,671.1
–
2,671.1
–
–
–
–
–
–
1.2
–
–
–
Balance at 30 June 2020
2,672.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(15.5)
–
(15.5)
–
–
(9.7)
8.1
0.5
(1.1)
–
–
–
–
(16.6)
7.2
–
7.2
–
–
–
–
–
–
(1.2)
–
9.7
(2.2)
13.5
(0.3)
–
(0.4)
–
–
–
–
(737.6)
43.7
–
–
–
–
–
(0.4)
43.7
–
–
–
–
–
–
–
(40.2)
–
2.5
0.7
–
0.7
–
0.2
–
–
–
(612.4)
(20.5)
(632.9)
(70.5)
–
–
–
–
TOTAL
1,931.3
43.7
(0.4)
(1.8)
7.8
11.3
(5.2)
55.4
(101.0)
–
(40.2)
11.8
–
F
I
N
A
N
C
E
R
E
P
O
R
T
TOTAL
2,051.1
(20.5)
2,030.6
(70.5)
0.2
(9.7)
8.1
0.5
0.2
(70.5)
(71.4)
–
–
–
(1.2)
(0.3)
–
(37.6)
–
3.4
–
(37.6)
9.7
–
(737.6)
1,931.3
ISSUED
CAPITAL
TREASURY
SHARES
CASH FLOW
HEDGE
RESERVE
SHARE-BASED
PAYMENTS
RESERVE
OTHER
RESERVES
ACCUMULATED
LOSSES
Notes to the financial statements are included on pages 83 to 119.
Healius – Annual Report 2021
81
Consolidated statement of cash flows
for the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Gross cash flows from operating activities
Net income tax (paid)/refund received
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sale of business – net of cash disposed
Payment for property, plant and equipment
Payment for Day Hospital practices and subsidiaries
Payment for Imaging healthcare professionals
Payment for Pathology healthcare practices and subsidiaries
Payment for other intangibles
Proceeds from the sale of property, plant and equipment and intangibles
Payment for Healius Primary Care (HPC) healthcare professionals – discontinued
operations
Payment for Healius Primary Care (HPC) practices and subsidiaries – discontinued
operations
Net cash from/(used in) investing activities
Cash flows from financing activities
Finance costs on interest bearing liabilities
Interest paid on ineffective hedge close out
Interest paid on lease liabilities
Interest received
Payments for buyback of shares
(Repayments of)/proceeds from borrowings
Payment of lease liabilities
Dividends paid
Net cash used in financing activities
Net (decrease)/increase in cash held
Cash at the beginning of the year
Effect of exchange rate movements on cash held in foreign currencies
Cash at the end of the year
NOTE
2021
$M
2020
$M
2,129.6
(1,557.7)
571.9
(46.0)
525.9
459.3
(48.4)
–
(0.7)
(1.5)
(12.9)
1.1
(5.3)
(4.7)
386.9
(21.9)
(11.3)
(39.5)
0.6
(97.5)
(555.7)
(203.1)
(56.3)
(984.7)
(71.9)
144.5
0.1
72.7
1,899.9
(1,494.7)
405.2
1.7
406.9
–
(49.3)
(11.0)
(1.1)
(5.2)
(23.1)
0.1
(21.9)
(10.4)
(121.9)
(27.5)
–
(41.0)
0.8
–
15.0
(186.4)
(21.2)
(260.3)
24.7
119.7
0.1
144.5
E1
E1
E1
Note: In prior years interest paid and received were classified as part of cash flows from operating activities. Management believes
it is more appropriate to classify those items as part of cash flows from financing activities. This change in classification has been
affected for both current and comparative periods.
Notes to the financial statements are included on pages 83 to 119.
82
Notes to the financial statements
for the year ended 30 June 2021
About this Report
OVERVIEW
Healius Limited (Healius), is a for-profit entity domiciled in Australia. These financial statements represent the consolidated financial
statements of Healius for the financial year ended 30 June 2021 and comprise Healius and its subsidiaries (together referred
to as “the consolidated entity” or “the Group”).
STATEMENT OF COMPLIANCE
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001,
Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board.
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board.
BASIS OF PREPARATION
The financial report has been prepared on the basis of historical cost, except for the revaluation of certain financial instruments.
Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars.
The financial report has been prepared on a going concern basis. Where applicable, prior year comparatives have been restated
in line with current year presentation.
NEW AND AMENDED STANDARDS ADOPTED
A number of accounting standards and interpretations have been published that are not effective for the Group in the current
financial year. The Group has elected not to early adopt these new standards or amendments in the financial report. The Group
has assessed these standards and concluded that they will not have a material impact on the amounts reported by the Group.
ROUNDING OF AMOUNTS
Healius is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Report) Instrument 2016/191,
dated 24 March 2016, and in accordance with that Instrument, amounts in the financial report are rounded to the nearest hundred
thousand dollars, unless otherwise indicated.
SIGNIFICANT ACCOUNTING POLICIES
Accounting policies have been consistently applied to all the years presented, unless otherwise stated. Accounting policies are
selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and
reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. Significant accounting
policies are included within the relevant notes to the financial statements.
Preparation of the financial report requires management to make judgements, estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions
and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected
in future periods. Information on key accounting estimates and judgements can be found in the following notes:
F
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ACCOUNTING ESTIMATE AND JUDGEMENT
Carrying value of goodwill
Recognition and recoverability of other intangible assets
Measurement of deferred consideration
Provisions
NOTE
PAGE
B2
B4
B8
B9
90
93
95
96
BASIS OF CONSOLIDATION – SUBSIDIARIES
Subsidiaries are those entities controlled by Healius. The financial statements of subsidiaries are included in the consolidated
financial report from the date that control is obtained until the date that control ceases. All inter-entity transactions, balances
and any unrealised gains and losses arising from inter-entity transactions have been eliminated on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
Investments in subsidiaries are carried at their cost of acquisition in the parent company’s financial statements.
Healius – Annual Report 2021
83
Notes to the financial statements
for the year ended 30 June 2021
A. Group performance
This section contains details of the way the business measures performance for the purpose of internal reporting along with
details of the key elements of the consolidated statement of profit or loss, earnings per share, accounting policies and key
assumptions relevant to the consolidated statement of profit or loss.
A1. Segment information
Operating segments are identified based on the way that the Chief Executive Officer and Board of Directors (also collectively
known as the chief operating decision makers) regularly review and assess the financial performance of the business and
determine the allocation of resources. For internal management reporting purposes, the Group is organised into the following
three divisions or operating segments:
OPERATING SEGMENT
ACTIVITY
Pathology
Imaging
Provider of pathology services.
Provider of imaging and scanning services from stand-alone imaging sites, hospitals and
medical centres.
Day Hospitals
Operator of day hospitals.
The other category comprises corporate functions. The Group operates predominantly in Australia.
Intersegment
The Day Hospital division charges the Pathology division a fee for use of its facilities and services. These charges are eliminated
on consolidation.
Presentation of segment revenue and results
Segment revenues and segment results are presented on an underlying basis.
Underlying results exclude the impact of non-underlying items relating to:
•
• Other significant non-recurring items.
Strategic initiatives; and
Underlying results include the payment for rent, recharging of costs and other transactions with discontinued activities which are
required to be excluded from reported results.
UNDERLYING RESULTS
2021
Segment revenue
Intersegment sales
Total revenue
EBITDA 1
Depreciation
Amortisation of intangibles
Depreciation – right of use assets
EBIT 2
PATHOLOGY
$M
1,452.1
IMAGING
$M
DAY HOSPITALS
$M
406.9
49.5
428.3
(20.8)
(7.3)
(147.4)
252.8
84.5
(10.7)
(2.8)
(40.1)
30.9
15.5
(2.7)
–
(3.8)
9.0
TOTAL
CONTINUING
OPERATIONS
$M
1,915.3
(2.2)
1,913.1
513.8
(38.1)
(13.8)
(195.4)
266.5
OTHER
$M
6.8
(14.5)
(3.9)
(3.7)
(4.1)
(26.2)
1
2
EBITDA is a non-statutory profit representing earnings before interest, tax, depreciation and amortisation.
EBIT is a non-statutory profit representing earnings before interest and tax.
84
Notes to the financial statements
for the year ended 30 June 2021
A1. Segment information (continued)
RESTATED 2020
Segment revenue
Intersegment sales
Total revenue
EBITDA 1
Depreciation
Amortisation of intangibles
Depreciation – right of use assets
EBIT 2
PATHOLOGY
$M
1,160.1
IMAGING
$M
376.7
DAY
HOSPITALS 3
$M
37.4
274.2
(20.9)
(6.3)
(122.6)
124.4
70.2
(12.1)
(2.5)
(33.7)
21.9
9.7
(2.4)
–
(3.6)
3.7
TOTAL
CONTINUING
OPERATIONS
$M
1,574.3
(1.9)
1,572.4
343.7
(39.8)
(11.9)
(163.0)
129.0
OTHER
$M
0.1
(10.4)
(4.4)
(3.1)
(3.1)
(21.0)
EBITDA is a non-statutory profit representing earnings before interest, tax, depreciation and amortisation.
EBIT is a non-statutory profit representing earnings before interest and tax.
1
2
3 Day Hospital segment has been restated because Adora has been classified as a discontinued operations. Refer to Note E2.
Reconciliation of underlying segment revenue to reported revenue:
Segment revenue from continuing operations
Reclassification of grant income from revenue to other income
Transactions with discontinued operations
Reported revenue
Reconciliation of underlying segment result to reported profit before tax:
Segment result from continuing operations before tax
Strategic, initiatives and other non-recurring items
Reported EBIT
Net finance cost
Reported profit before tax
SEGMENT RESULT
2021
$M
2020
$M
1,913.1
1,572.4
(9.8)
(2.6)
(12.4)
(3.0)
1,900.7
1,557.0
SEGMENT RESULT
2021
$M
266.5
(11.1)
255.4
(87.6)
167.8
2020
$M
129.0
(36.9)
92.1
(29.3)
62.8
F
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Healius – Annual Report 2021
85
Notes to the financial statements
for the year ended 30 June 2021
A2. Revenue
Revenue from contracts with customers
2021
$M
2020
$M
1,900.7
1,557.0
ACCOUNTING POLICIES – REVENUE
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer.
The Group recognises revenue when it transfers control of goods or services to a customer.
The Group recognises revenue from the following major sources:
•
•
• Hospital Provider Agreements.
Provision of pathology services;
Provision of imaging and scanning services; and
(a) Provision of pathology services and provision of imaging services
Revenue from the provision of pathology services and the provision of imaging services is recognised at the point in time
when the relevant test has been completed.
(b) Hospital Provider Agreements
Day Hospitals negotiate Hospital Provider Agreements with private health funds, from which the majority of revenue is generated.
Transactions with private health funds primarily involve the provision of day medical procedures. These transactions reflect the
performance of a single obligation and revenue is recognised on the date the service is provided to the patient.
A3. Expenses
EMPLOYEE BENEFITS EXPENSE
Employee benefits
Defined contribution superannuation
Share-based payments
2021
$M
787.8
54.8
13.7
856.3
RESTATED
2020
$M
739.8
53.6
6.8
800.2
Healius and its related entities meet their obligations under the Superannuation Guarantee Charge Act 1992 by making
superannuation contributions, at the statutory rate, to complying defined contribution superannuation funds on behalf of its
employees. Contributions to defined contribution funds are recognised as an expense as they become payable.
PROPERTY EXPENSES
Short-term lease payments excluded in AASB 16
COVID-19 rent concessions
Other property expenses
IMPAIRMENT AND OTHER RELATED ITEMS
Other asset impairments, provisions and related items
86
2021
$M
26.9
–
32.7
59.6
2021
$M
0.8
RESTATED
2020
$M
38.9
(6.0)
32.4
65.3
RESTATED
2020
$M
2.8
Notes to the financial statements
for the year ended 30 June 2021
A3. Expenses (continued)
NET FINANCE COSTS
Interest cost/(benefit) from FY 2003–2007 tax case
Interest expense
Interest on lease liabilities
Unwinding of discounting on provisions
Ineffective cash flow hedge
Amortisation of borrowing costs
2021
$M
23.6
17.4
34.0
1.1
7.6
3.9
87.6
RESTATED
2020
$M
(23.6)
20.9
29.5
0.8
–
1.7
29.3
For more information on the interest impact from FY 2003–2007 tax case, refer to Note A4.
Interest expense comprises the interest expense on interest-bearing liabilities and gains/losses arising on interest rate swaps
accounted for as cash flow hedges reclassified from equity.
Unwinding of the interest component of discounted non-current provisions is classified as a finance cost.
Other borrowing costs associated with arranging interest bearing liabilities are initially recognised in the consolidated statement
of financial position (refer Note C1) and are subsequently amortised through the consolidated statement of profit or loss
on a straight-line basis over the term of the interest bearing liability they relate to.
A4.
Income tax expense
The prima facie income tax expense on pre-tax accounting profit reconciles to the income
tax expense in the financial statements as follows:
Profit before tax
Income tax calculated at 30% (2020: 30%)
Tax effect of amounts which are not deductible in calculating taxable income:
Share related expense
Other items
2003–2007 tax objection (see note below)
Over provision in prior years
Income tax expense/(benefit)
Comprising:
Current tax
Deferred tax
Under/(over) provision in prior years
Income tax expense/(benefit)
2021
$M
2020
$M
167.8
50.3
4.1
1.7
5.8
46.6
(1.2)
101.5
69.0
(12.9)
45.4
101.5
F
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A
N
C
E
R
E
P
O
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T
62.8
18.8
2.0
5.2
7.2
(46.6)
–
(20.6)
30.9
(4.9)
(46.6)
(20.6)
Current and deferred tax is recognised as an expense or income in the consolidated statement of profit or loss, except when
it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity,
or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination
of goodwill.
NOTE: ATO OBJECTION DECISIONS – YEARS 2003–2007
Healius had recognised an income tax benefit and a tax receivable of $46.6 million and associated interest receivable of
$23.6 million in its 30 June 2020 financial statements based on a favourable decision received from the Federal Court of Australia
in respect to its tax objections for the 2003 to 2007 years regarding lump sum payments made to healthcare practitioners during
those years.
The Tax Commissioner appealed the Federal Court of Australia’s decision and on 9 October 2020 the Full Federal Court decided
in favour of the Commissioner. On 6 November 2020 Healius applied for special leave to appeal the Full Court’s decision however
on 4 March 2021 the High Court of Australia dismissed the special leave application.
Healius has therefore reversed the income tax benefit and tax receivable of $46.6 million and associated interest receivable
of $23.6 million (less $7.1 million tax) in its 30 June 2021 financial statements.
Healius – Annual Report 2021
87
Notes to the financial statements
for the year ended 30 June 2021
A5. Earnings per share
BASIC AND DILUTED EARNINGS PER SHARE
EARNINGS
The earnings used in the calculation of basic and diluted earnings per share are the same
and can be reconciled to the consolidated statement of profit or loss as follows:
Profit for the year from continuing operations
Profit/(loss) attributable to equity holders of Healius Limited
WEIGHTED AVERAGE NUMBER OF SHARES
The weighted average number of shares used in the calculation of basic earnings per share
Effects of dilution from service rights
The weighted average number of shares used in the calculation of diluted earnings per share
EARNINGS PER SHARE
Basic earnings per share from continuing operations
Basic earnings/(loss) per share from continuing and discontinued operations
Diluted earnings per share from continuing operations
Diluted earnings/(loss) per share from continuing and discontinued operations
2021
$M
66.3
43.7
2021
000’s
618,819
7,715
626,534
2021
CENTS
10.7
7.1
10.6
7.0
2020
$M
83.4
(70.5)
2020
000’s
622,741
266
623,007
2020
CENTS
13.4
(11.3)
13.4
(11.3)
Any share options and performance rights on issue are contingently issuable shares and are included in the calculation of diluted
earnings per share only where the performance conditions have been met as at 30 June 2021.
88
Notes to the financial statements
for the year ended 30 June 2021
B. Operating assets and liabilities
This section provides information on the assets used by the Group to generate operating profits and the liabilities incurred.
B1. Receivables
Measured at amortised cost
Current
Trade receivables
Allowance for expected credit losses
Prepayments
Accrued revenue
Other receivables
Ageing of trade receivables
Current
30–60 days
60–90 days
90 days +
Movement in allowance for expected credit losses
Balance at beginning of year
Provision for the year
Amounts written off during the year as uncollectable
Transfer to assets held for sale
2021
$M
2020
$M
170.6
(23.1)
147.5
15.7
33.9
2.7
199.8
84.2
26.7
11.8
47.9
170.6
23.0
20.3
(19.6)
(0.6)
23.1
155.2
(23.0)
132.2
12.8
37.6
8.8
191.4
76.3
15.7
9.1
54.1
155.2
17.0
13.2
(3.8)
(3.4)
23.0
Trade and other receivables are initially recognised at fair value and are subsequently carried at amortised cost, using the
effective interest rate method, less an allowance for expected credit losses (allowance for doubtful debts).
No interest is charged on trade receivables. The Group’s policy requires customers to pay the Group in accordance with agreed
payment terms. All credit and recovery risk associated with trade receivables has been provided for in the consolidated statement
of financial position. Trade receivables have been aged according to their original due date in the above ageing analysis.
The Group applies a simplified approach in calculating expected credit losses using a provision matrix based on its historical credit
loss experience and adjusting for any known forward-looking issues specific to the debtors and the economic environment.
Further discussion of the credit risk associated with trade receivables is included in Note C5.
F
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Healius – Annual Report 2021
89
Notes to the financial statements
for the year ended 30 June 2021
B2. Goodwill
Carrying value
Opening balance
Acquisition of businesses
Transferred to assets held for sale
Closing balance
Impairment tests
Goodwill is allocated to the Group’s cash-generating units (CGUs) as follows:
Pathology
Imaging
Day Hospitals
2021
$M
2020
$M
2,040.2
2.1
–
2,042.3
1,589.0
356.6
96.7
2,042.3
2,482.5
9.7
(452.0)
2,040.2
1,586.9
356.6
96.7
2,040.2
Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the business combination
over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised at the date
of the acquisition. Goodwill is subsequently measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the CGUs, or group of CGUs, expected to benefit from the
synergies of the business combination.
On disposal of an operation within a CGU, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal of the operation.
IMPAIRMENT OF GOODWILL AND OTHER NON-FINANCIAL ASSETS
The carrying amount of goodwill is tested for impairment annually at 30 June and whenever there is an indicator that the asset
may be impaired. Where an asset is deemed to be impaired, it is written down to its recoverable amount.
In its impairment assessment, the Group determines the recoverable amount based on a fair value less costs of disposal
calculation, under a five year discounted cash flow model cross checked to available market data (level 3 fair value measurement
in the fair value hierarchy – refer note C5 for further details on the hierarchy). The five year discounted cash flow uses:
•
•
year one cash flows derived from the financial year 2022 Board-approved budget; and
for financial years 2023–2026, growth rates have been determined with reference to historical company experience, industry
data and a long term growth rate consistent with historic industry trend levels.
The Board-approved budget takes into account the Group’s view with regards to the potential economic impacts of COVID-19
on the business. In determining the FY 2022 cash flow projections, management has considered the impact of COVID-19 on trading
results in FY 2021, and potential impact in FY 2022.
90
Notes to the financial statements
for the year ended 30 June 2021
B2. Goodwill (continued)
The key assumptions in the Group’s discounted cash flow model as at 30 June 2021 are as follows:
ASSUMPTION
HOW DETERMINED
Forecast revenue
Cumulative average revenue growth rates for FY 2022–FY 2026 are as follows:
•
•
• Day Hospitals: 7.7% (30 June 2020: 10.9%)
Pathology: 2.3% (30 June 2020: 4.6%)
Imaging: 6.2% (30 June 2020: 6.3%)
Forecast revenue in the current year and prior year has been determined with reference
to historical company experience and industry data.
Terminal value growth rates
The terminal value growth rates assumed are:
Pathology: 3.0% (30 June 2020: 3.0%)
•
•
Imaging: 3.0% (30 June 2020: 3.0%)
• Day Hospitals: 3.0% (30 June 2020: 3.0%)
Discount rates
The terminal value growth rates have been determined with reference to historical company
experience for the CGU and expectations of long-term operating conditions. The growth rates
do not exceed long term growth rates for the industry in which the business operates.
Post-tax discount rates for each CGU reflect the Group’s estimate of the time value of money
and risks specific to each CGU.
In determining the appropriate discount rate for each CGU, consideration has been given to the
estimated weighted average cost of capital (WACC) for the Group, adjusted for business risks
specific to that CGU. The post-tax discount rate for each CGU is:
•
•
• Day Hospitals: 8.75% (30 June 2020: 9.3%)
Pathology: 7.8% (30 June 2020: 8.0%)
Imaging: 8.0% (30 June 2020: 8.0%)
SENSITIVITY ANALYSIS
The Group has conducted sensitivity analysis on the key assumptions above to assess the effect on the recoverable amount
of changes in the key assumptions.
The following table sets out the change in revenue growth rates, terminal value growth and discount rates that would be required
in order for the carrying value of the Pathology, Imaging and Day Hospitals CGUs to equal the recoverable amount.
F
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CGU
Pathology
Imaging
Day Hospitals
INCREASE/(DECREASE) IN ASSUMPTIONS REQUIRED FOR
RECOVERABLE AMOUNT TO EQUAL CARRYING AMOUNT
REVENUE
GROWTH PER
ANNUM
TERMINAL
GROWTH PER
ANNUM
(1.2%)
(1.2%)
(1.3%)
(3.2%)
(2.0%)
(2.4%)
DISCOUNT
RATE
2.4%
1.6%
1.7%
ACCOUNTING ESTIMATES AND JUDGEMENTS: IMPAIRMENT OF GOODWILL
Determining whether goodwill is impaired requires an estimation of the fair value of the CGUs or Group of CGUs to which goodwill
has been allocated. The valuation model used to estimate the fair value of each CGU or Group of CGUs requires the Directors
to estimate the future cash flows expected to arise from the CGU or Group of CGUs and a suitable discount rate in order
to calculate net present value. The key assumptions used to estimate fair value of the Group’s CGUs are disclosed above.
Healius – Annual Report 2021
91
Notes to the financial statements
for the year ended 30 June 2021
B3. Property, plant and equipment
2021
$M
Net book value
Opening balance
Additions
Capitalisation of assets under construction
Disposals
Depreciation expense
Transferred to assets held for sale
Closing balance
Cost
Accumulated depreciation and impairment
Closing balance
2020
$M
Net book value
Opening balance
Additions
Capitalisation of assets under construction
Disposals
Impairment
Depreciation expense
Transferred to assets held for sale
Closing balance
Cost
Accumulated depreciation and impairment
Closing balance
PLANT AND
EQUIPMENT
LEASEHOLD
IMPROVEMENTS
ASSETS UNDER
CONSTRUCTION
86.2
21.8
1.3
(1.5)
(26.8)
(1.3)
79.7
315.0
(235.3)
79.7
75.4
1.2
20.1
(1.3)
(13.0)
(10.1)
72.3
170.3
(98.0)
72.3
5.1
22.7
(21.4)
(0.7)
–
–
5.7
5.7
–
5.7
PLANT AND
EQUIPMENT
LEASEHOLD
IMPROVEMENTS
ASSETS UNDER
CONSTRUCTION
116.0
21.8
11.1
(1.0)
(10.0)
(31.0)
(20.7)
86.2
311.5
(225.3)
86.2
184.4
3.2
21.1
(0.4)
(0.3)
(23.8)
(108.8)
75.4
168.5
(93.1)
75.4
26.6
23.8
(32.2)
(0.8)
(0.4)
–
(11.9)
5.1
5.1
–
5.1
TOTAL
166.7
45.7
–
(3.5)
(39.8)
(11.4)
157.7
491.0
(333.3)
157.7
TOTAL
327.0
48.8
–
(2.2)
(10.7)
(54.8)
(141.1)
166.7
485.1
(318.4)
166.7
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the item.
Depreciation commences once an asset is available for use and is calculated on a straight-line basis so as to write off the net
cost of each asset to its estimated residual value over its expected useful life. The estimated useful lives, residual values and
depreciation methods are reviewed at the end of each annual reporting period. Where, as a result of this review, there is a change
in the estimated remaining useful life of an asset, it is accounted for on a prospective basis with depreciation in future periods
based on the written down value of the asset as at the date the change in useful life is determined.
The following estimated useful lives are used in the calculation of depreciation:
CLASS OF PROPERTY, PLANT AND EQUIPMENT
Leasehold improvements
Plant and equipment
USEFUL LIFE
1–20 years
3–20 years
Property, plant and equipment is reviewed at each reporting period to determine whether there is any indication that the assets may
have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). The recoverable amount is the higher of fair value less costs of disposal and value in use.
An impairment loss is recognised in profit or loss for the amount by which an asset’s carrying amount exceeds its recoverable amount.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount
of the cash generating unit (CGU) to which the asset belongs.
92
Notes to the financial statements
for the year ended 30 June 2021
B4. Other intangible assets
2021
$M
Net book value
Opening balance
Additions
Capitalisation of intangible assets under construction
Disposals
Amortisation expense
Transferred to assets held for sale
Closing balance
Cost
Accumulated amortisation and impairment
Closing balance
2020
$M
Net book value
Opening balance
Additions
Capitalisation of intangible assets under construction
Disposals
Impairment
Amortisation expense
Transferred to assets held for sale
Closing balance
Cost
Accumulated amortisation and impairment
Closing balance
IT SOFTWARE
LICENCES
OTHER
INTANGIBLES
UNDER
CONSTRUCTION
63.1
4.0
11.1
(0.3)
(13.3)
(0.1)
64.5
146.9
(82.4)
64.5
9.8
–
–
–
(0.8)
–
9.0
40.3
(31.3)
9.0
0.1
–
–
(0.1)
–
–
–
–
–
–
6.3
8.2
(11.1)
(0.6)
–
–
2.8
2.8
–
2.8
IT SOFTWARE
LICENCES
OTHER
INTANGIBLES
UNDER
CONSTRUCTION
44.9
3.1
31.6
(0.7)
(0.3)
(11.8)
(3.7)
63.1
135.6
(72.5)
63.1
10.6
–
–
–
–
(0.8)
–
9.8
40.3
(30.5)
9.8
3.2
2.1
0.1
(0.2)
–
(1.9)
(3.2)
0.1
0.1
–
0.1
19.2
23.3
(31.7)
(0.3)
(2.7)
–
(1.5)
6.3
6.3
–
6.3
TOTAL
79.3
12.2
–
(1.0)
(14.1)
(0.1)
76.3
190.0
(113.7)
76.3
TOTAL
77.9
28.5
–
(1.2)
(3.0)
(14.5)
(8.4)
79.3
182.3
(103.0)
79.3
F
I
N
A
N
C
E
R
E
P
O
R
T
Intangible assets acquired separately or developed internally are recognised initially at cost. Intangible assets acquired
in a business combination are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition intangible assets are recognised at cost less amortisation and impairment (if any).
An internally-generated intangible asset arising from development is only recognised once the feasibility, intention and ability
to complete the intangible asset can be demonstrated. Any expenditure on research activities is recognised as an expense
when incurred.
All intangible assets have a finite life and are amortised on a straight-line basis over their estimated useful life. The estimated useful
lives and amortisation methods are reviewed at the end of each annual reporting period. Where, as a result of this review, there
is a change in the estimated remaining useful life of an asset, it is accounted for on a prospective basis with amortisation in future
periods based on the net written down value of the asset as at the date the change in useful life is determined. The following
estimated useful lives have been used for each class of asset:
CLASS OF OTHER INTANGIBLES
Licences
IT software
USEFUL LIFE
3–8 years
3–10 years
Intangible assets are reviewed at each reporting period to determine whether there is any indication that the assets may have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). The recoverable amount is the higher of fair value less costs of disposal and value
in use. An impairment loss is recognised in profit or loss for the amount by which an asset’s carrying amount exceeds its
recoverable amount.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount
of the cash generating unit (CGU) to which the asset belongs.
ACCOUNTING ESTIMATES AND JUDGEMENTS – OTHER INTANGIBLE ASSETS
Judgement must be exercised when determining whether it is appropriate to capitalise costs related to internally developed
intangible assets, in particular costs related to the development of IT software. Judgement is also required when estimating
the expected useful life of other intangible assets and the period over which these assets are amortised.
Healius – Annual Report 2021
93
Notes to the financial statements
for the year ended 30 June 2021
B5. Lease liabilities
Opening balance
New leases and remeasurement of leases during the year
Interest
Payments
Transfer to assets held for sale
Closing balance
Presented as:
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
B6. Right of use assets
2021
Opening balance
New and remeasurement of leases during the year
Depreciation
Transfer to assets held for sale
Closing balance
2020
Opening balance
New leases and remeasurement of leases during the year
Depreciation
Net impairment reversal
Transfer to assets held for sale
Closing balance
ACCOUNTING ESTIMATES AND JUDGEMENTS – LEASES
(a) The Group as lessee
2021
$M
937.8
439.8
34.4
(225.5)
(8.9)
1,177.6
224.4
953.2
1,177.6
PROPERTY
$M
EQUIPMENT
$M
793.5
415.1
(181.4)
(8.0)
1,019.2
PROPERTY
$M
1,152.8
128.7
(173.8)
10.1
(324.3)
793.5
83.4
(0.4)
(15.0)
–
68.0
EQUIPMENT
$M
79.3
19.3
(15.2)
–
–
83.4
2020
$M
1,344.9
149.8
40.4
(210.3)
(387.0)
937.8
173.9
763.9
937.8
TOTAL
$M
876.9
414.7
(196.4)
(8.0)
1,087.2
TOTAL
$M
1,232.1
148.0
(189.0)
10.1
(324.3)
876.9
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a lease liability
and right of use asset arrangements in which it is the lessee, except for short-term leases (being leases with a lease term of less
than 12 months) and leases of low value items (generally small items of IT equipment). For these leases, the Group recognises the
lease payment as an operating expense on a straight-line basis over the term of the lease.
The lease liability is initially measured as the present value of the lease payments not paid at the commencement date. Lease
payments include:
•
•
•
Fixed lease payments less any lease incentives receivable;
Variable lease payments that depend on an index (such as CPI) initially measured using the index at the commencement date;
In relation to equipment leases the amount expected to be payable on the exercise of purchase options where it is reasonably
certain that the option will be exercised.
Lease payments are discounted using the rate implicit in the lease. If this rate cannot be readily determined (which is the case for
all property leases) the Group uses its incremental borrowing rate of 3.11% (30 June 2020: 3.32%).
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The right of use assets comprise the initial measurement of the corresponding lease liability less any lease incentives received.
They are subsequently measured at cost less accumulated depreciation and impairment losses. Right of use assets are
depreciated over the lease term unless the Group expects to exercise a purchase option (primarily in relation to Imaging
equipment leases) where the right of use asset is depreciated over the useful life of the underlying asset.
94
Notes to the financial statements
for the year ended 30 June 2021
B6. Right of use assets (continued)
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right of use asset) whenever:
•
The lease term has changed in which case the lease liability is remeasured by discounting the revised lease payments using
a revised discount rate.
The lease payments change due to changes in an index (such as CPI) in which case the lease liability is remeasured
by discounting the revised lease payments using an unchanged discount rate.
The lease contract is modified and the lease modification is not accounted for as a separate lease in which case the lease
liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised
discount rate effective at the date of the modification.
•
•
(b) The Group as lessor
The Group enters into lease agreements as lessor in respect of some property leases. In this situation, where the Group is an intermediate
lessor, it accounts for the head lease and the sub-lease as two separate contracts.
The sub-lease is a finance lease where it transfers substantially all the risks and rewards of ownership to the lessee. All other
sub-leases are operating leases. The determination of whether a sub-lease is classified as a finance or operating lease is made
by reference to the right of use asset arising from the head lease.
The majority of sub-leases have lease terms substantially shorter than the head lease and accordingly are classified as operating
leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.
B7. Payables
Current
Trade payables and accruals
Dividend payable
Total payables
NOTE
C4
2021
$M
205.9
–
205.9
2020
$M
203.0
16.2
219.2
Trade payables and other accounts payable are recognised when the Group becomes obliged to make future payments resulting
from the purchase of goods and services.
F
I
N
A
N
C
E
R
E
P
O
R
T
B8. Deferred consideration
Current
Montserrat Day Hospitals
Other deferred consideration
Total current deferred consideration
Non-current
Montserrat Day Hospitals
Other deferred consideration
Total non-current deferred consideration
2021
$M
36.0
2.9
38.9
–
–
–
2020
$M
–
2.0
2.0
31.9
1.6
33.5
Montserrat Day Hospitals deferred consideration comprises $32.1 million payable under the terms of the earn-out clause in the
Montserrat/Healius share sale agreement, plus $3.9 million being a settlement sum negotiated with the vendors with regards
to other commercial matters.
Deferred consideration relates to businesses acquired and is initially measured at fair value as at the acquisition date. Subsequent
to initial recognition, deferred consideration continues to be measured at fair value with any changes in fair value recognised in the
profit or loss.
ACCOUNTING ESTIMATES AND JUDGEMENTS – DEFERRED CONSIDERATION
The measurement of deferred consideration requires management to estimate the amount likely to be paid in the future. This requires
the exercise of judgement, in particular where the amount payable is dependent on the future financial performance of the business
that has been acquired.
Healius – Annual Report 2021
95
Notes to the financial statements
for the year ended 30 June 2021
B9. Provisions
Current
Provision for employee benefits
Self-insurance provision
Onerous contract provision
Make good provision
Other provisions
Total current provisions
Non-current
Provision for employee benefits
Self-insurance provision
Onerous contract provision
Make good provision
Total non-current provisions
2021
Opening balance
Arising during the year
Reclassification to right of use asset
Utilised
Closing balance
2020
Opening balance
Adjustment on adoption of AASB 16
Arising during the year
Reclassification
Utilised
Transfer to liabilities held for sale
Closing balance
2021
$M
2020
$M
129.3
103.0
6.4
–
0.6
19.0
5.0
2.9
1.0
7.7
155.3
119.6
12.0
6.4
–
4.1
22.5
OTHER
$M
7.7
18.4
–
(7.1)
19.0
OTHER
$M
12.3
–
1.1
(1.5)
(4.2)
–
7.7
10.8
6.7
18.4
4.1
40.0
TOTAL
$M
45.8
20.5
(21.3)
(8.5)
36.5
TOTAL
$M
70.4
(26.6)
28.9
–
(4.9)
(22.0)
45.8
SELF-
INSURANCE
$M
ONEROUS
CONTRACT
$M
11.7
1.9
–
(0.8)
12.8
21.3
–
(21.3)
–
–
SELF-
INSURANCE
$M
ONEROUS
CONTRACT
$M
6.5
–
3.8
1.5
(0.1)
–
11.7
44.4
(26.6)
20.9
–
–
(17.4)
21.3
MAKE
GOOD
$M
5.1
0.2
–
(0.6)
4.7
MAKE
GOOD
$M
7.2
–
3.1
–
(0.6)
(4.6)
5.1
Provisions are recognised when:
•
•
• a reliable estimate can be made of the amount of the obligation.
the Group has a present obligation (legal or constructive) as a result of a past event;
it is probable that the Group will be required to settle the obligation; and
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting
date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time
value of money is material).
EMPLOYEE BENEFITS
A liability is recognised for benefits accruing to employees in respect of annual leave and long service leave when it is probable
that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration
rate expected to apply at the time of settlement. Liabilities recognised in respect of long-term employee benefits are measured
as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees
up to reporting date.
SELF-INSURANCE
The Group is self-insured for workers’ compensation in NSW, Victoria, Queensland and Western Australia. Provisions are recognised
based on claims reported, and an estimate of claims incurred but not reported. These provisions are determined on a discounted
basis and having regard to actuarial valuations.
96
Notes to the financial statements
for the year ended 30 June 2021
B9. Provisions (continued)
ONEROUS CONTRACT PROVISION
The Group recognises onerous contract provisions whereby the unavoidable cost of future payments under non-cancellable
contracts, exceeds the future economic benefits expected to be obtained under the contract. Where an onerous contract
relates to a right of use asset, it is offset against the carrying value of that asset.
The calculation of the onerous contract provision requires management to estimate the future economic benefits expected
to be obtained for each of the relevant contracts.
MAKE GOOD PROVISION
The Group recognises make good provisions where under certain lease agreements the Group has an obligation to restore the
leased premises to a specified condition at the end of the lease term.
F
I
N
A
N
C
E
R
E
P
O
R
T
Healius – Annual Report 2021
97
Notes to the financial statements
for the year ended 30 June 2021
Financing and capital structure
C.
This section contains details of the way the business is financed including details around debt and equity, the key financial
risks that Healius faces and how they are managed, and accounting policies and key assumptions relevant to the borrowings
and equity.
C1.
Interest-bearing liabilities
Non-current
Gross bank loans
Refinancing valuation adjustment
Unamortised borrowing costs
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
2021
$M
260.0
0.5
(2.4)
258.1
2021
Opening balance
Borrowing repayments
Borrowing cost on refinancing
Borrowing cost written off
Amortisation
Closing balance
2020
Opening balance
Net cash draw down
Borrowing cost on refinancing
Borrowing cost written off
Amortisation
Closing balance
GROSS
BANK LOANS
$M
VALUATION
ADJUSTMENT
$M
BORROWING
COSTS
$M
815.0
(555.0)
–
–
–
260.0
0.9
–
–
–
(0.4)
0.5
(5.8)
–
(0.7)
1.9
2.2
(2.4)
FINANCE LEASE
LIABILITIES
$M
GROSS
BANK LOANS
$M
VALUATION
ADJUSTMENT
$M
BORROWING
COSTS
$M
0.8
(0.8)
–
–
–
–
800.0
15.0
–
–
–
815.0
1.5
–
–
–
(0.6)
0.9
(4.4)
–
(3.2)
0.3
1.5
(5.8)
2020
$M
815.0
0.9
(5.8)
810.1
TOTAL
$M
810.1
(555.0)
(0.7)
1.9
1.8
258.1
TOTAL
$M
797.9
14.2
(3.2)
0.3
0.9
810.1
Interest-bearing liabilities are recorded initially at fair value (usually the amount of the proceeds received) less transaction costs.
Subsequent to initial recognition, interest-bearing liabilities are measured at amortised cost with any difference between the initial
recognised amount and the redemption value being recognised in profit and loss over the term of the interest-bearing liability
using the effective interest method.
In December 2020, the Group reduced the first tranche of its Syndicated Facility Agreement by $295 million and made a further
reduction of $200 million in June 2021 (see note C5).
Interest rate sensitivity and liquidity analysis disclosures relating to the Group’s interest-bearing liabilities are disclosed in Note C5.
98
Notes to the financial statements
for the year ended 30 June 2021
C2. Issued capital
Opening balance
Shares issued via Short Term Incentive Plan
Shares issued via Non-executive Director (NED) Share Plan
Own shares acquired during buy back
Closing balance
2021
NO. OF
SHARES
000’s
2020
NO. OF
SHARES
000’s
2021
$M
2020
$M
622,743
622,323
2,672.3
2,671.1
265
14
(23,576)
599,446
420
–
–
622,743
0.7
–
(97.4)
2,575.6
1.2
–
–
2,672.3
Issued capital consists of fully paid ordinary shares carrying one vote per share and the right to dividends.
Transaction costs that are incurred directly in connection with the issue of equity instruments are recognised directly in equity
as a reduction of the proceeds of the equity instruments to which the costs relate.
SHARE OPTIONS ON ISSUE
As at 30 June 2021, the company has 36,394,239 (2020: 36,394,239) share options on issue, exercisable on a 1:1 basis for 36,394,239
(2020: 36,394,239) ordinary shares of Healius at an exercise price of $3.05. The share options will vest in three equal tranches
between July 2022 and July 2024 subject to the satisfaction of applicable service and performance conditions and carry no rights
to dividends and no voting rights.
RIGHTS ON ISSUE
As at 30 June 2021, the company has nil (2020: 265,634) service rights on issue, exercisable on a 1:1 basis for nil (2020: 265,634)
ordinary shares of Healius at an exercise price of $nil.
As at 30 June 2021, the company has 9,731,935 (2020: 12,429,568) performance rights on issue, exercisable on a 1:1 basis for 9,731,935
(2020: 12,429,568) ordinary shares of Healius at an exercise price of $nil. The performance rights will vest between July 2021 and
July 2023 subject to the satisfaction of applicable service and performance conditions and carry no rights to dividends and
no voting rights.
RESTRICTED SHARES ON ISSUE
As at 30 June 2021, the company has 13,627 (2020: nil) restricted shares on issue, exercisable on a 1:1 basis for 13,627 (2020: nil)
ordinary shares of Healius at an exercise price of $nil.
C3. Treasury shares
Opening balance
Own shares acquired during buy back
Closing balance
2021
NO. OF
SHARES
000’s
–
772
772
2020
NO. OF
SHARES
000’s
–
–
–
2021
$M
–
3.6
3.6
2020
$M
–
–
–
On 9 December 2020 Healius announced an on-market share buy-back of up to $200 million to be conducted between 29 December
2020 and 28 December 2021. The treasury shares purchased under the buy-back and not cancelled prior to 30 June 2021 are disclosed
above. These shares were cancelled in July 2021.
F
I
N
A
N
C
E
R
E
P
O
R
T
Healius – Annual Report 2021
99
Notes to the financial statements
for the year ended 30 June 2021
C4. Dividends on equity instruments
Recognised amounts
Final dividend – previous financial year
Interim dividend – this financial year
Unrecognised amounts
Final dividend – this financial year
2021
CENTS PER
SHARE
2020
CENTS PER
SHARE
–
6.5
6.5
6.75
3.4
2.6
6.0
–
2021
$M
–
40.2
40.2
40.4
2020
$M
21.4
16.2
37.6
-
In respect of FY 2021:
• an FY 2020 interim dividend of $16.2 million, originally payable on 15 April 2020, was deferred and subsequently paid
on 13 October 2020.
no final dividend was paid with regards to the year ended 30 June 2020.
•
• an FY 2021 interim dividend of 6.5 cents per share (100% franked) was paid to the holders of fully paid ordinary shares
on 15 April 2021.
The Dividend Reinvestment Plan and Bonus Share Plan were suspended effective 16 February 2016 until further notice.
FRANKING ACCOUNT
Closing balance as at 30 June
2021
$M
125.6
2020
$M
25.7
The above amounts are calculated from the balance of the franking account as at the end of the reporting period, adjusted for
franking credits and debits that will arise from the settlement of liabilities or receivables recognised for income tax and dividends
as at the reporting date.
C5. Financial instruments
FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk
•
• Market risk, including interest rate, currency and price risk.
Liquidity risk
This note presents information about the Group’s exposure to each of the above risks, its objectives, policies and procedures for measuring
and managing risk and the management of capital. Further quantitative disclosures are included throughout this financial report.
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of risk management and this is delegated
through the Group’s:
• Risk Management Committee, which is responsible for developing and monitoring the Group’s risk management policies
(excluding financial reporting risks); and
• Audit Committee, which is responsible for developing and monitoring the Group’s financial risk management policies and
financial reporting risks.
These committees report regularly to the Board of Directors on their activities.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly
to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards
and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles
and obligations.
The Group’s Risk Management Committee (in relation to material business risks excluding financial reporting risks) and Audit
Committee (in relation to financial reporting risks) oversee how management monitors compliance with the Group’s risk management
policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
100
Notes to the financial statements
for the year ended 30 June 2021
C5. Financial instruments (continued)
Credit risk
Credit risk is the risk of financial loss if a customer or counterparty to a financial asset held by the Group fails to meet its contractual
obligations under the terms of the financial asset (to deliver cash to the Group).
The Group’s exposure to credit risk arises principally from cash and derivatives held with financial institutions and trade receivables
due from external customers. The credit risk on cash and derivative financial instruments is limited because the counterparties
are banks with high credit-ratings assigned by international credit-ratings agencies. The Group’s maximum exposure to credit risk
from trade receivables is equal to the carrying amount of the Group’s trade receivables as at the reporting date of $170.6 million
(30 June 2020: $155.2 million). The ageing of the Group’s trade receivables and an analysis of the Group’s provision for expected
credit losses is provided in Note B1.
The Group’s exposure to credit risk is also influenced by the bulk billing of services by medical practioners to whom the Group
charges service fees for the use of imaging facilities. A large proportion of the Group’s receivables are due from Medicare Australia
(bulk-billed services) and health funds. The remaining trade receivables are due from individuals. The concentration of credit risk
relating to this remaining debt is limited due to the customer base being large and unrelated.
Liquidity risk
Liquidity risk refers to the risk that the Group will encounter difficulties in meeting obligations associated with financial liabilities
that are settled by delivering cash or another financial liability.
The Group manages liquidity risk by continually monitoring forecast and actual cash flows, and by matching the maturity profiles
of financial assets and financial liabilities and ensuring that sufficient unused facilities are in place should they be required
to refinance any short term financial liabilities.
The Group had access to the following financing facilities as at the end of the reporting period.
Financing facilities
Non-current
Unsecured Syndicated Debt Facilities
Amount used
Amount unused
Total financing facilities
2021
$M
2020
$M
260.0
340.0
600.0
815.0
280.0
1,095.0
F
I
N
A
N
C
E
R
E
P
O
R
T
The first tranche of the Syndicated Facility Agreement of $75.0 million matures in January 2024 and the second tranche of $525.0 million
matures in January 2023.
Amounts unused on non-current facilities are able to be drawn during the course of the ordinary working capital cycle of the Group.
The following tables detail the Group’s remaining contractual maturity for its non-derivative and derivative financial liabilities.
The tables include the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can
be required to pay. The tables include both interest and principal cash flows except for expected interest payments which
have already been recorded in trade and other payables. The cash flows for the interest rate swaps represent the net amounts
to be paid.
The repayment of contractual cash flows due in the period less than one year from 30 June 2021 will be met through the ordinary
working capital cycle of the Group, including the collection of trade receivables (30 June 2021: 170.6 million) and the unused
headroom in the Syndicated Debt Facility (30 June 2021: $340.0 million).
Healius – Annual Report 2021
101
Notes to the financial statements
for the year ended 30 June 2021
C5. Financial instruments (continued)
2021
Consolidated
Non-derivative financial liabilities
Gross bank loan
Payables
Deferred consideration
Lease liabilities
Derivative financial liabilities
Interest rate swaps
2020
Consolidated
Non-derivative financial liabilities
Gross bank loan
Payables
Deferred consideration
Lease liabilities
Derivative financial liabilities
Interest rate swaps
CONTRACTUAL CASH FLOWS
CARRYING
AMOUNT
$M
TOTAL
$M
LESS THAN
1 YEAR
$M
1 TO 5
YEARS
$M
GREATER THAN
5 YEARS
$M
260.0
206.1
38.9
1,177.6
1,682.4
275.6
206.1
38.9
1,317.8
1,838.2
4.2
206.1
38.9
256.3
505.3
271.4
–
–
686.0
957.4
–
–
–
375.5
375.5
6.4
6.4
–
6.4
–
CONTRACTUAL CASH FLOWS
CARRYING
AMOUNT
$M
TOTAL
$M
LESS THAN
1 YEAR
$M
1 TO 5
YEARS
$M
GREATER THAN
5 YEARS
$M
815.0
219.2
35.5
937.8
2,007.5
874.5
219.2
36.8
1,021.5
2,152.0
15.7
2192
2.0
196.7
433.6
858.8
–
34.8
535.2
1,428.8
–
–
–
289.6
289.6
23.7
23.7
9.5
14.2
–
Interest rate risk
The Group is exposed to interest rate risk as entities in the Group borrow funds at floating interest rates plus a fixed margin.
Interest rate risk is managed by the Group by the use of interest rate swap contracts (cash flow hedges), executed by authorised
representatives of the Group within limits approved by the Risk Management Committee.
The following tables detail the Group’s exposure to interest rate risk on non-derivative financial assets and financial liabilities
as at 30 June. Lease liabilities below relate to financing arrangements for equipment with a variable interest component.
2021
Financial assets
Cash
Financial liabilities
Gross bank loans
Lease liabilities
2020
Financial assets
Cash
Financial liabilities
Gross bank loans
Lease liabilities
102
FIXED INTEREST RATE
AVERAGE
INTEREST
RATE
%
VARIABLE
INTEREST
RATE
$M
LESS THAN
1 YEAR
$M
0.55
1.71
2.28
70.1
(260.0)
(48.4)
(238.3)
–
–
(4.5)
(4.5)
1 TO 5
YEARS
$M
–
–
(14.5)
(14.5)
FIXED INTEREST RATE
AVERAGE
INTEREST
RATE
%
VARIABLE
INTEREST
RATE
$M
LESS THAN
1 YEAR
$M
1.07
2.19
2.78
137.5
(815.0)
(69.6)
(747.1)
–
–
–
–
1 TO 5
YEARS
$M
–
–
(14.1)
(14.1)
TOTAL
$M
70.1
(260.0)
(67.4)
(257.3)
TOTAL
$M
137.5
(815.0)
(83.7)
(761.2)
Notes to the financial statements
for the year ended 30 June 2021
C5. Financial instruments (continued)
The Group uses interest rate swaps to hedge its interest rate risks. The following table details the notional principal amounts and
the remaining terms of interest rate swap contracts outstanding at the end of the reporting period. The average interest rate
disclosed in the table represents the average rate payable by the Group on the notional principal value hedged using cash flow
hedges plus the fixed margin on the underlying debt which reflects the cost of funds to the Group.
2021
Interest rate swaps
1 to 2 years
2 to 5 years
AVERAGE
CONTRACTED
FIXED INTEREST
RATE
%
2.37
2.73
NOTIONAL
PRINCIPAL
$M
FAIR VALUE
$M
200
30
230
(5.6)
(0.8)
(6.4)
The aggregate notional principal amount of the outstanding interest rate swap contracts as at 30 June 2021 was $230 million.
2020
Interest rate swaps
Less than 1 year
1 to 2 years
2 to 5 years
AVERAGE
CONTRACTED
FIXED INTEREST
RATE
%
2.04
–
2.21
NOTIONAL
PRINCIPAL
$M
FAIR VALUE
$M
200
–
400
600
(9.5)
–
(14.2)
(23.7)
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the Group’s exposure to variable interest rates during the financial
year, projecting a reasonably possible change taking place at the beginning of the financial year, held constant throughout the
financial year and applied to variable interest payments made throughout the financial year. A 50 basis point increase represents
management’s assessment of a reasonably possible change in interest rates. If interest rates had been 50 basis points higher
or lower and all other variables were held constant, the impact on the profit after tax and other comprehensive income would
have been as follows:
F
I
N
A
N
C
E
R
E
P
O
R
T
Consolidated
30 June 2021 – variable rate instruments
30 June 2020 – variable rate instruments
PROFIT AFTER TAX
OTHER COMPREHENSIVE INCOME
50BP
INCREASE
$M
50BP
DECREASE
$M
50BP
INCREASE
$M
50BP
DECREASE
$M
(0.2)
(0.9)
0.2
0.9
1.3
3.2
(1.3)
(3.2)
Cash flow hedges (Interest rate swap contracts)
The Group uses interest rate swap contracts to hedge its interest rate risks, predominantly arising from financing activities.
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts
calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the cash flow exposures on the
variable rate debt and are accounted for as cash flow hedges. The fair value of interest rate swaps at the end of the reporting
period is determined by discounting the future cash flows using the yield curves at the end of the reporting period and the credit
risk inherent in the contract, and is disclosed below.
The Group’s cash flow hedges settle on a monthly basis. The Group settles the difference between the fixed and floating interest
rate payable/(receivable) under each cash flow hedge on a net basis.
ACCOUNTING POLICY
All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash
flow hedges as they reduce the Group’s cash flow exposure resulting from variable interest rates on its gross bank loans.
Interest rate swap contracts are initially recognised at fair value on the date the contract is entered into and are subsequently
re-measured to their fair value at the end of each reporting period. The effective part of any gain or loss on the interest rate swap
is recognised directly in equity. Any gain or loss relating to the ineffective portion (if any) of the interest rate swap is recognised
immediately in the consolidated statement of profit or loss.
Healius – Annual Report 2021
103
Notes to the financial statements
for the year ended 30 June 2021
C5. Financial instruments (continued)
Payments under the interest rate swaps and the interest payments on the underlying financial liability occur simultaneously and
the amount accumulated in equity is reclassified to the statement of profit or loss over the period that the floating rate interest
payments on the underlying financial liability affect the statement of profit or loss.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship
but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and
is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected
to take place, then the cumulative unrealised gain or loss recognised in equity is immediately recognised in the consolidated
statement of profit or loss.
Fair value of financial instruments
Basis for determining fair value
The determination of fair values of the Group’s financial instruments that are not measured at cost or amortised cost in the financial
statements are summarised as follows:
(i) Cash flow hedges (interest rate swap contracts)
The fair value of the Group’s cash flow hedges are measured as the present value of future cash flows estimated and discounted
based on applicable yield curves derived from quoted interest rates at the end of the financial year.
Fair value measurement – valuation methods
The table below analyses the Group’s financial instruments carried at fair value, by valuation method. The definition of each “level”
below is as required by accounting standards as follows:
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that
are not based on observable market data (unobservable inputs).
•
•
Deferred consideration relates to previous business combinations. The fair value of deferred consideration is measured as the
present value of the estimated future cash outflows which are based on Board-approved budgets and earnings multiples as set
out in the relevant acquisition documentation.
Carrying amount
2021
$M
Financial liabilities
Interest rate swaps
Deferred consideration
2020
$M
Financial assets
Other
Financial liabilities
Interest rate swaps
Deferred consideration
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
–
–
6.4
–
–
38.9
6.4
38.9
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
–
–
–
1.2
23.7
–
–
–
35.5
1.2
23.7
35.5
Fair value of other financial instruments
The fair value of cash, receivables and payables approximates their carrying amount. The fair value of the non-current interest
bearing liabilities approximates the carrying amount of the gross bank loans of $260.0 million (2020: $815.0 million).
104
Notes to the financial statements
for the year ended 30 June 2021
C5. Financial instruments (continued)
Other risks
Currency risk
The Group transacts predominately in Australian dollars and has a relatively small exposure to offshore assets or liabilities.
The Group predominately uses the spot foreign currency market to service any foreign currency transactions. A sensitivity analysis
has not been performed on the currency risk as this is not considered material.
Capital management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and equity balance and providing a stable capital base from
which Healius can pursue its corporate strategic objectives.
The capital structure of the Group consists of debt, which includes the interest-bearing liabilities disclosed in Note C1, cash and
equity attributable to equity holders of the parent, comprising of issued capital, reserves and retained earnings as disclosed in the
consolidated statement of changes in equity. The Group’s policy is to borrow centrally on a long term basis from committed long
term revolving bank facilities and through recycling capital in order to meet anticipated funding requirements.
C6. Commitments for expenditure
Capital commitments
Commitments for the acquisition of plant and equipment contracted for at the reporting date
but not recognised as liabilities, payable:
Within 1 year
Later than 1 year but not later than 5 years
Lease commitments
Commitments for leases that will be entered into following the sale of the Healius Primary Care
business but which are not recognised as lease liabilities:
Within 1 year
Later than 1 year but not later than 5 years
Later than 5 years
2021
$M
6.1
1.7
7.8
2021
$M
–
–
–
–
2020
$M
23.5
–
23.5
2020
$M
49.9
143.9
51.9
245.7
F
I
N
A
N
C
E
R
E
P
O
R
T
The comparative lease commitments relate to the leases that were to be entered into following the sale of Healius Primary Care
(HPC). These commitments have been recognised as lease liabilities by the Group in the current year.
Healius – Annual Report 2021
105
Notes to the financial statements
for the year ended 30 June 2021
D. Group structure
This section contains details of the way the business is structured including details of controlled entities and changes to the
group structure during the year and the financial impact of these changes.
D1. Subsidiaries
Details of the Group’s subsidiaries at the end of the reporting period are as follows:
NAME OF SUBSIDIARY
Healius Limited
Adora Fertility Pty Ltd
Former AP Pty Ltd
Former SDS Pty Limited
The Sydney Diagnostic Services Unit Trust
Healius Nominees Pty Ltd1
Healius Training Institute Pty Ltd
Idameneo (No. 124) Pty Ltd
Idameneo (No. 789) Ltd
ACN 063 535 884 Pty Ltd
ACN 063 535 955 Pty Ltd
ACN 138 935 403 Pty Ltd
Digital Diagnostic Imaging Pty Ltd
Healius Health Care Institute Pty Ltd
HLS Camden Pty Ltd
Primary (Camden) Property Trust
HLS Healthcare Holdings Pty Ltd
HLS Imaging Holdings Pty Ltd
ACN 088 631 949 Pty Ltd
Orana Service Unit Trust
Amokka Java Pty Limited
Brystow Pty Ltd
Healthcare Imaging Services (SA) Pty Ltd
Healthcare Imaging Services (Victoria) Pty Ltd
Healthcare Imaging Services (WA) Pty Ltd
Healthcare Imaging Services Pty Ltd
Campbelltown MRI Pty Ltd
Queensland Diagnostic Imaging Pty Ltd
Northcoast Nuclear Medicine (QLD) Pty Ltd
HLS Pathology Holdings Pty Ltd
AME Medical Services Pty Ltd
HLS Pathology Holdings Asia Pty Ltd
SDS Pathology (Singapore) Private Limited
Healius Pathology Pty Ltd2
Moaven & Partners Pathology Pty Ltd
106
PROPORTION OF OWNERSHIP
INTEREST AND VOTING POWER
HELD BY THE GROUP
PLACE OF INCORPORATION
AND OPERATION
2021
%
2020
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Notes to the financial statements
for the year ended 30 June 2021
D1. Subsidiaries (continued)
NAME OF SUBSIDIARY
Pathways Unit Trust
Queensland Medical Services Pty Ltd
SDS Healthcare Solutions Inc.3
Jandale Pty Ltd
Integrated Health Care Pty Ltd
John R Elder Pty Ltd
Queensland Specialist Services Pty Ltd
Specialist Diagnostic Services Pathology (India) Private Limited 4
Specialist Haematology Oncology Services Pty Ltd
Specialist Veterinary Services Pty Ltd
HLS Millers Point Pty Ltd
Primary Millers Point Property Trust
HLS Richmond Pty Ltd
HLS PST Pty Ltd
Primary (Greensborough) Property Sub Trust
Primary (Richmond) Property Trust
Primary (Robina) Property Sub Trust
Larches Pty Ltd
Kelldale Pty Ltd
MGSF Pty Ltd
PHC Employee Share Acquisition Plan Pty Ltd
Senior Executive Short Term Incentive Plan Trust
Symbion Employee Share Acquisition Plan Trust
Symbion Executive Short Term Incentive Plan Trust
PHC Finance (Australia) Pty Ltd
PSCP Holdings Pty Ltd
Saftsal Pty Ltd
Aksertel Pty Ltd
Onosas Pty Ltd
Sumbrella Pty Ltd
HLS Health Insurance Pty Ltd
The Ward Corporation Pty Ltd
Symbion International BV
Idameneo UK Ltd
Mayne Nickless Incorporated
Symbion Holdings (UK) Ltd
Wellness Holdings Pty Ltd
MB Healthcare Pty Ltd
Albany Day Hospital Pty Ltd
Bunbury Day Surgery Pty Ltd
PROPORTION OF OWNERSHIP
INTEREST AND VOTING POWER
HELD BY THE GROUP
PLACE OF INCORPORATION
AND OPERATION
Australia
Australia
2021
%
100
100
2020
%
100
100
Philippines
99.98
99.98
Australia
Australia
Australia
Australia
India
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Netherlands
United Kingdom
United States
United Kingdom
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
F
I
N
A
N
C
E
R
E
P
O
R
T
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Healius – Annual Report 2021
107
Notes to the financial statements
for the year ended 30 June 2021
D1. Subsidiaries (continued)
NAME OF SUBSIDIARY
Felpet Pty Ltd
Montserrat Healthcare Pty. Ltd
Montserrat Medical Services Pty Ltd
Western Breast Clinic Pty Ltd
Western Haematology & Oncology Clinics Pty Ltd
North Lakes Day Hospital Pty Ltd
Oxford Medical Pty Ltd
The Oxford Unit Trust
Peel Private Development Pty Ltd 5,6
Windermere House Pty Ltd
Montserrat DH Pty Ltd
Brookvale Day Hospital Pty Ltd
Craigie Day Hospital Pty Ltd
Crystal Eye Clinic (WA) Pty Ltd
Darlinghurst Day Hospital Pty Ltd
Greensborough Day Hospital Pty Ltd
PHC (No. 01) Pty Ltd
PLACE OF INCORPORATION
AND OPERATION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Transport Security Insurance (Pte) Limited
Singapore
PROPORTION OF OWNERSHIP
INTEREST AND VOTING POWER
HELD BY THE GROUP
2021
%
100
100
100
100
60
100
100
100
100
100
100
100
100
100
100
100
100
100
2020
%
100
100
100
100
60
100
100
100
100
100
100
100
100
100
100
100
100
100
Name changed from PHC Nominees Pty Ltd to Healius Nominees Pty Ltd on 9 March 2021.
1
2 Name changed from Specialist Diagnostic Services Pty Ltd to Healius Pathology Pty Ltd on 18 March 2021.
3
4
5 ACN 008 103 599 Pty Ltd changed ownership from Idameneo (No.789) Limited to MB Healthcare Pty Ltd on 7 June 2021.
6 Name changed from ACN 008 103 599 Pty Ltd to Peel Private Development Pty Ltd on 8 June 2021.
Entity has a 31 December year end.
Entity has a 31 March year end.
Refer to Note E2 for the subsidiaries that the Group has ceased control of during the year.
All entities are domiciled in their country of incorporation. No controlled entities carry on material business operations other than
in their country of incorporation.
No Australian controlled entities are required to prepare financial statements or to be audited for statutory purposes. These entities
have obtained relief from these requirements because:
•
•
•
they have entered into a Deed of Cross Guarantee (refer Note D2); or
they are small proprietary companies; or
their trust deeds do not specify these requirements.
108
Notes to the financial statements
for the year ended 30 June 2021
D2. Deed of cross guarantee
Pursuant to ASIC Corporations Instrument (Wholly-owned Companies) Instrument 2016/785, the wholly-owned subsidiaries listed
below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and
Directors’ reports.
It is a condition of the Instrument that the relevant holding entity and each of the relevant subsidiaries enter into a Deed of Cross
Guarantee. The effect of the Deed is that each holding entity guarantees to each creditor payment in full of any debt in the event
of winding up of any of the subsidiaries in each Group under certain provisions of the Corporations Act 2001. If a winding up occurs
under other provisions of the Corporations Act 2001, each holding entity will only be liable in the event that after six months any
creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that each holding entity
is wound up.
HEALIUS GROUP – DEED OF CROSS GUARANTEE
Healius Limited has entered into a Deed of Cross Guarantee with certain of its wholly-owned subsidiaries. The holding entity and
subsidiaries, subject to the Deed of Cross Guarantee as at 30 June 2021 are as follows:
ACN 138 935 403 Pty Ltd
Adora Fertility Pty Ltd
Albany Day Hospital Pty Ltd
Brookvale Day Hospitals Pty Ltd
Craigie Day Hospital Pty Ltd
Crystal Eye Clinic (WA) Pty Ltd
Darlinghurst Day Hospital Pty Ltd
Digital Diagnostic Imaging Pty Ltd
Felpet Pty Ltd
Former AP Pty Ltd
Former SDS Pty Ltd
Greensborough Day Hospital Pty Ltd
Healius Limited (holding entity)
Healius Pathology Pty Ltd
Healius Training Institute Pty Ltd
HLS Healthcare Holdings Pty Ltd
HLS Imaging Holdings Pty Ltd
HLS Pathology Holdings Pty Ltd
Idameneo (No. 124) Pty Ltd
Idameneo (No.789) Limited
Integrated Health Care Pty Ltd
MB Healthcare Pty Ltd
Moaven & Partners Pathology Pty Ltd
Montserrat DH Pty Ltd
Montserrat Healthcare Pty Ltd
Montserrat Medical Services Pty Ltd
North Lakes Day Hospital Pty Ltd
Oxford Medical Pty Ltd
Queensland Diagnostic Imaging Pty Ltd
Queensland Medical Services Pty Ltd
Healthcare Imaging Services (SA) Pty Ltd
Specialist Haematology Oncology Services Pty Ltd
Healthcare Imaging Services (Victoria) Pty Ltd
Specialist Veterinary Services Pty Ltd
Healthcare Imaging Services (WA) Pty Ltd
Healthcare Imaging Services Pty Ltd
Western Breast Clinic Pty Ltd
Windermere House Pty Ltd
Consolidated income statements and consolidated balance sheets, comprising holding entities and subsidiaries which are parties
to the above Deed, after eliminating all transactions between parties to the Deed, at 30 June 2021 are materially consistent with
the Group’s consolidated statement of profit or loss and consolidated statement of financial position disclosed elsewhere in this
financial report.
F
I
N
A
N
C
E
R
E
P
O
R
T
Healius – Annual Report 2021
109
Notes to the financial statements
for the year ended 30 June 2021
D3. Parent entity disclosures
The accounting policies of the parent entity, Healius Limited, which have been applied in determining the information shown below,
are the same as those applied in the consolidated financial statements except in relation to investments in subsidiaries which are
accounted for at cost less any impairment losses in the financial statements of Healius Limited.
The summary statement of financial position of Healius Limited at the end of the financial year is as follows:
STATEMENT OF FINANCIAL POSITION
Assets
Current
Non-current
Total assets
Liabilities
Current
Non-current
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Other reserves
Total equity
The statement of comprehensive income of Healius Limited for the financial year is as follows:
STATEMENT OF COMPREHENSIVE INCOME
Profit for the year
Other comprehensive income
Total comprehensive income
2021
$M
–
2,208.2
2,208.2
42.5
258.1
300.6
2020
$M
23.6
2,786.7
2,810.3
26.2
862.2
888.4
1,907.6
1,921.9
2,591.9
(701.9)
17.6
1,907.6
2021
$M
103.6
11.7
115.3
2,692.2
(767.2)
(3.1)
1,921.9
2020
$M
22.3
(0.9)
21.4
Parent company guarantees
Healius Limited had previously provided parent company guarantees (PCGs) in relation to certain property leases entered into
by Healius Primary Care (HPC). As part of the sale of the HPC business the majority of these PCGs were extinguished. As at 30 June
2021 the value provided by Healius to certain landlords of Healius Primary Care in relation to property leases was $19.8 million.
Refer to Note E4 for further details.
110
Notes to the financial statements
for the year ended 30 June 2021
E. Other disclosures
This section contains details of other items required to be disclosed in order to comply with accounting standards and
other pronouncements.
E1. Notes to the statement of cash flows
Reconciliation of cash
For the purpose of the statement of cash flows, cash includes cash on hand and
in banks.
Cash at the end of the financial year as shown in the statement of cash flows
is reconciled to the related items in the statement of financial position as follows:
Cash as disclosed in the statement of financial position
Cash classified as asset held for sale
Cash as disclosed in the Group statement of cash flows
Reconciliation of profit/(loss) from ordinary activities after related income tax to net
cash flows from operating activities
Profit/(loss) for the year
Net finance costs
Depreciation of plant and equipment
Depreciation of right of use assets
Amortisation of HCP upfronts
Amortisation of intangibles
Share-based payment expense
Impairment of assets other than receivables
Deferred consideration
Loss on sale of Healius Primary Care
Gain on derecognition of right of use assets
Loss on sale of property plant and equipment and intangibles
Net exchange differences
Other non-cash items
Increase/(decrease) in:
Trade payables and accruals
Provisions
Deferred revenue
Income tax and deferred taxes
Decrease/(increase) in:
Consumables
Receivables and prepayments
Net cash provided by operating activities
NOTE
2021
$M
RESTATED
2020
$M
E2
70.1
2.6
72.7
137.5
7.0
144.5
E2
43.7
99.2
39.8
196.4
12.8
14.1
11.8
–
3.0
8.3
(5.2)
1.0
0.2
–
(56.8)
34.4
(0.8)
86.8
(8.9)
46.1
525.9
F
I
N
A
N
C
E
R
E
P
O
R
T
(70.5)
67.7
54.8
188.6
35.8
14.5
9.6
121.1
14.0
–
–
0.4
(0.2)
1.0
60.9
23.8
0.5
(36.1)
(4.6)
(74.4)
406.9
NON-CASH INVESTING AND FINANCING
During the financial year 265,634 (2020: 420,114) shares were issued pursuant to the Short-Term Incentive Plan. These transactions are
not reflected in the cash flow statement.
FINANCING FACILITIES
Details of financing facilities available to the Group are provided at Note C5.
Healius – Annual Report 2021
111
Notes to the financial statements
for the year ended 30 June 2021
E2. Discontinued operations
(a) Healius Primary Care (HPC)
On 26 February 2020, the Group announced the decision of its Board of Directors to sell HPC. At that time, the Group classified HPC
as a disposal group held for sale, accounted for HPC as a discontinued operation from that date, and ceased the depreciation
and amortisation of non-current assets.
On 15 June 2020 the Group announced that it had entered into a binding agreement to sell HPC. The sale of HPC completed
on 23 November 2020. The Group disposed of 100% of its shareholding of the entities within HPC on that date and control passed
to the acquirer. The entities disposed of are:
• Bourke Street Clinic Ltd (ACN 123 076 906);
• Brindabella Medical Practice Services Pty Ltd (ACN 618 932 291);
• Cooper Street Clinic Pty Ltd (ACN 002 974 058);
• Health & Co Pty Ltd (ACN 614 349 585);
• Healthyu Corporation Pty Ltd (ACN 123 076 915);
• HLS Medical Centre Holdings Pty Ltd (ACN 088 128 787);
Idameneo (No 123) Pty Ltd (ACN 002 968 185) in its personal capacity;
•
Idameneo (No 123) Pty Ltd as a trustee of the Artlu Unit Trust (ABN 26 855 078 645);
•
Idameneo (No 125) Pty Ltd (ACN 162 662 919);
•
•
Logic Enterprise (WA) Pty Ltd (ACN 154 027 559);
• Medical Centre Services Pty Ltd (ACN 621 584 067);
• Occupational Health Holdings Pty Ltd (ACN 626 660 795);
•
•
•
•
Pacific Medical Centres Pty Ltd (ACN 002 866 382);
Park Family Practice Services Pty Ltd (ACN 617 747 725);
Primary Health Care Pty Ltd (ACN 169 588 096); and
Sidameneo (No. 456) Pty Ltd (ACN 089 995 817).
(b) Adora IVF and Healius Day Surgeries Businesses (Adora)
In May 2021 Healius announced its intention to divest Adora and issued an Information Memorandum to interested parties.
Consequently, Adora has been accounted for as a discontinued operation at 30 June 2021. On 23 August 2021 the sale of this
business was announced. Refer to Note E10 for further details.
The table below summarises the carrying value of Adora:
2021
$M
2.6
0.8
0.1
1.8
9.5
0.1
6.4
3.8
25.1
3.6
0.9
8.9
13.4
11.7
Cash
Receivables
Consumables
Contract assets
Property, plant and equipment
Other intangible assets
Right of use assets
Deferred tax asset
Assets held for sale
Payables
Provisions
Lease liabilities
Liabilities directly associated with assets held for sale
Net assets directly associated with disposal group
112
Notes to the financial statements
for the year ended 30 June 2021
E2. Discontinued operations (continued)
HPC represented the entirety of the previously reported Medical Centres operating segment, except for Adora which has been
accounted for as a discontinued operation at 30 June 2021. The results of these businesses for the year are presented below:
Revenue and other gains
Expenses
Earnings before interest, tax and impairment
Net finance costs
(Loss)/profit before tax and impairment
Impairment loss recognised on the remeasurement to fair value less costs to sell
Loss on sale
(Loss)/profit before tax from discontinued operations
Income tax (expense)/benefit
(Loss)/profit from discontinued operations
Revenue and other gains
Expenses
Earnings before interest, tax and impairment
Net finance costs
Loss before tax and impairment
Impairment loss recognised on the remeasurement to fair value less costs to sell
Loss before tax from discontinued operations
Income tax benefit
Loss from discontinued operations
The net cash flows of discontinued operations are:
Operating
Investing
Financing
Net cash inflow/(outflow)
The loss per share attributable to discontinued operations is as follows:
Basic loss per share from discontinued operations
Diluted loss per share from discontinued operations
Recognition of impairment loss
HPC
104.6
(103.7)
0.9
(11.3)
(10.4)
–
(8.3)
(18.7)
(5.3)
(24.0)
HPC
253.7
(236.3)
17.4
(21.5)
(4.1)
(151.0)
(155.1)
12.6
(142.5)
ADORA
30.2
(26.7)
3.5
(0.3)
3.2
(2.3)
–
0.9
0.5
1.4
ADORA
27.6
(43.6)
(16.0)
(0.2)
(16.2)
–
(16.2)
4.8
(11.4)
2021
$M
28.8
(16.5)
5.3
17.6
2021
$M
(3.7)
(3.6)
2021
$M
134.8
(130.4)
4.4
(11.6)
(7.2)
(2.3)
(8.3)
(17.8)
(4.8)
(22.6)
2020
$M
281.3
(279.9)
1.4
(21.7)
(20.3)
(151.0)
(171.3)
17.4
(153.9)
2020
$M
113.7
(45.0)
(70.7)
(2.0)
2020
$M
(24.7)
(24.7)
F
I
N
A
N
C
E
R
E
P
O
R
T
The impairment loss recognised for HPC in FY 2020 was determined based on the sale price under the binding sale agreement plus
estimated costs of sale.
The impairment loss recognised for Adora in FY 2021 relates to specific assets whose fair value is deemed lower than carrying amount.
Healius – Annual Report 2021
113
Notes to the financial statements
for the year ended 30 June 2021
E3. Tax balances
CURRENT TAX BALANCES
Income tax (payable)/receivable is attributable to:
Tax payable excluding 2003–2007 tax objection
2003–2007 tax objection receivable
Total tax (payable)/receivable for the tax consolidated group
Other
2021
$M
(45.2)
–
(45.2)
(1.6)
(46.8)
2020
$M
(21.8)
46.6
24.8
(1.6)
23.2
Current tax assets and liabilities for the current and prior year are measured at the amount expected to be paid to or recovered
from the taxation authorities based on the current year’s taxable income. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted by the reporting date.
RECONCILIATION OF DEFERRED TAX BALANCES
1 JULY 2020
OPENING
BALANCE
CREDITED/
(CHARGED)
TO INCOME
ACQUISITIONS
AND OTHER
ADJUSTMENTS
30 JUNE 2021
CLOSING
BALANCE
(13.8)
(7.8)
(1.1)
8.4
(263.1)
(7.0)
1.2
16.4
51.1
281.2
7.2
72.7
1.7
74.4
10.0
(2.6)
(0.1)
(2.5)
(63.0)
2.6
(0.4)
(4.0)
0.9
72.0
0.2
13.1
(0.2)
12.9
–
–
–
(2.8)
–
3.3
–
(0.1)
(0.3)
–
(5.2)
(5.1)
–
(5.1)
(3.8)
(10.4)
(1.2)
3.1
(326.1)
(1.1)
0.8
12.3
51.7
353.2
2.2
80.7
1.5
82.2
1 JULY 2019
OPENING
BALANCE
CREDITED/
(CHARGED)
TO INCOME
ADOPTION OF
AASB 16
ACQUISITIONS
AND OTHER
ADJUSTMENTS
30 JUNE 2020
CLOSING
BALANCE
(1.9)
(6.5)
(2.0)
25.8
–
(30.0)
1.6
19.6
58.8
–
6.7
72.1
1.8
73.9
(11.2)
(1.3)
0.7
2.4
(6.4)
2.7
(0.4)
2.7
8.2
8.0
–
5.4
(0.1)
5.3
–
–
–
–
(256.7)
–
–
(6.7)
(6.9)
273.2
–
2.9
–
2.9
(0.7)
–
0.2
(19.8)
–
20.3
–
0.8
(9.0)
–
0.5
(7.7)
–
(7.7)
(13.8)
(7.8)
(1.1)
8.4
(263.1)
(7.0)
1.2
16.4
51.1
281.2
7.2
72.7
1.7
74.4
2021
$M
Receivables
Consumables
Prepayments
Property, plant and equipment
Right of use assets
Intangibles and capitalised costs
Entitlement offer
Payables
Provisions
Lease liabilities
Other financial liabilities 1
Net temporary differences
Tax losses – revenue
Deferred tax asset
2020
$M
Receivables
Consumables
Prepayments
Property, plant and equipment
Right of use assets
Intangibles and capitalised costs
Entitlement offer
Payables
Provisions
Lease liabilities
Other financial liabilities 1
Net temporary differences
Tax losses – revenue
Deferred tax asset
1 Other financial liabilities are credited to equity.
114
Notes to the financial statements
for the year ended 30 June 2021
E3. Tax balances (continued)
Deferred tax arises when there are temporary differences between the carrying amount of assets and liabilities and the
corresponding tax base of those items. Deferred taxes are not recognised for temporary differences relating to:
•
the initial recognition of assets and liabilities that is not a business combination which affects neither taxable income
nor accounting profit;
the initial recognition of goodwill; and
investments in subsidiaries where the Group is able to control the timing of the reversal of the temporary difference and
it is probable that they will not reverse in the foreseeable future. Deferred tax assets are recognised to the extent that
it is probable that future taxable amounts will be available against which the assets can be utilised.
•
•
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the periods when the asset is realised
or the liability is settled based on tax rates and tax laws that have been enacted or substantively enacted by reporting date.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net basis.
TAX CONSOLIDATION
Healius Limited and its wholly-owned Australian entities elected to form an income tax consolidated group as of 1 July 2002.
The entities in the income tax consolidated group entered into a tax sharing agreement which, in the opinion of the Directors,
limits the entities’ joint and several liability in the case of an income tax payment default by the head entity, Healius Limited.
The entities continue to adopt the stand-alone taxpayer method in measuring current and deferred tax amounts for each entity,
as if it continued to be a taxable entity in its own right.
The entities have also entered into a tax funding agreement under which the entities fully compensate Healius Limited for any
current income tax payable assumed and are compensated by Healius Limited for any current tax receivable and deferred
tax assets relating to unused tax losses or unused tax credits that are transferred to Healius Limited under the income tax
consolidation legislation.
E4. Contingent liabilities
Treasury bank guarantees
Workers compensation statutory requirement
Property related
Parent company guarantees
Healius Primary Care – property leases
2021
$M
19.6
14.8
34.4
19.8
19.8
F
I
N
A
N
C
E
R
E
P
O
R
T
2020
$M
17.1
15.1
32.2
7.6
7.6
E5. Share-based payments
The Group uses Options, Performance Rights and Service Rights to remunerate Senior Executives.
Options and Performance Rights are subject to both service and performance conditions whilst Service Rights are subject to service
conditions only. Details of service conditions and performance conditions for each share-based payment plan are set out below.
Options and Rights will vest if the relevant conditions are met. Each Performance Right is an entitlement to one fully-paid ordinary
share in Healius.
Options and Performance Rights carry no rights to dividends and no voting rights.
On vesting, Options may be exercised by the participant at the exercise price. For the FY 2020 Options Plan the exercise price is the
standard volume weighted average price (VWAP) for the Company’s shares for the 10 trading days following 1 July 2019 which was
$3.05. The Options must be exercised on the relevant Exercise Date as set out below.
On vesting, Performance Rights and Service Rights are exercised automatically for nil consideration and convert to fully-paid
ordinary shares in the Company.
If a participant ceases employment any unvested Options or Rights will lapse unless otherwise determined by the Board.
Healius – Annual Report 2021
115
Notes to the financial statements
for the year ended 30 June 2021
E5. Share-based payments (continued)
The Group operate the following share-based payment plans:
(a) Transformation Long Term Incentive Plan (TLTIP) – Options Plan
The purpose of the TLTIP is to retain and motivate the executive team to deliver over the term of the strategic plan. The strategic
plan aims to deliver a sustainable increase in shareholder returns over time. The key components of the TLTIP are a close alignment
to cumulative shareholder returns and a measurement period of five years.
The TLTIP is granted as Options with a one-off grant of Options to cover a three-year period from FY 2020 with options exercisable
in equal tranches at the end of FY 2022, FY 2023 and FY 2024. The vesting of the Options is subject to continued employment
throughout the relevant measurement period and the following performance conditions:
• Cumulative Earnings Per Share (EPS) growth and relative Total Shareholder Return (rTSR) for the CEO, CFO and members of the
executive team in functional roles (split 2/3 to 1/3 between EPS and rTSR); and
• Divisional Earnings Before Interest and Tax (EBIT) growth as well as EPS growth and rTSR for the divisional CEOs (split 40%/20%/40%
between EPS, rTSR and EBIT).
The Options granted in FY 2020 are allocated evenly to three tranches with the measurement period being 1 July 2019 to 30 June 2022
for Tranche 1, 1 July 2019 to 30 June 2023 for Tranche 2 and 1 July 2019 to 30 June 2024 for Tranche 3.
The relevant Exercise Date for each tranche is as follows:
•
•
•
Tranche 1: the day following the release of the FY 2022 results;
Tranche 2: the day following the release of the FY 2023 results; and
Tranche 3: the day following the release of the FY 2024 results;
Further details of the TLTIP Options Plan can be found in the Remuneration Report.
(b) Transformation Long Term Incentive Plan (TLTIP) and previous Long Term Incentive Plan (LTIP) – Performance
Rights Plans
In FY 2021 and FY 2020 Performance Rights were granted under the TLTIP to senior executives other than members of the executive
team who received Options under the TLTIP as discussed above.
In FY 2019 Performance Rights were granted under the previous LTIP to senior executives including members of the executive team.
The Performance Rights are subject to continued employment throughout the measurement period and the following
performance conditions:
•
In FY 2021 and FY 2020 the Performance Rights are subject to EPS growth and rTSR performance conditions for executives
in functional roles (split 2/3 to 1/3 between EPS and rTSR) and EBIT growth, EPS growth and rTSR performance conditions for
executives in operation roles (split 40%/20%/40% between EPS, rTSR and EBIT); and
In FY 2019 50% of the Performance Rights are subject to return on invested capital (ROIC) performance condition and 50% of the
Performance Rights are subject to a rTSR performance condition.
•
The measurement period for Performance Rights granted under the FY 2021 award is 1 July 2020 to 30 June 2023 (FY 2020 award:
1 July 2019 to 30 June 2022). Retesting will not occur under any of these awards.
(c) Short Term Incentive Plan (STIP)
The purpose of the STIP is to motivate Senior Executives to achieve the short-term annual objectives linked to Company success
and shareholder value creation and to create a strong link between performance and reward. Awards made under the STIP are
subject to various financial and non-financial performance conditions (KPIs) measured over a 12 month period ending 30 June.
In FY 2018 75% of awards were paid in cash. The remaining 25% of awards were granted in the form of Service Rights with 50% of this
deferred amount subject to a service period of 12 months following the end of the measurement period and 50% of this deferred
amount subject to a service period of 24 months following the end of the measurement period.
In the current year the CEO, CFO and all direct reports to the CEO will receive two-thirds of any STIP award in cash and one-third
in equity which is subject to a service period of 12 months following the end of the measurement period. For all other members
of the STIP the nature of any award (cash or equity) is at the discretion of management.
116
Notes to the financial statements
for the year ended 30 June 2021
E5. Share-based payments (continued)
Set out below are summaries of the equity instruments granted under each of the plans as at 30 June 2021:
DESCRIPTION
FY 2018 STIP
FY 2018 LTIP
FY 2019 LTIP
GRANT DATE 1
18 October 2018
18 September 2018
1 March 2019
FY 2020 TLTIP – Options
28 February 2020
FY 2020 LTIP – Rights
20 March 2020
BALANCE AS AT
1 JULY 2020
NUMBER
265,634
3,395,048
5,154,104
36,394,239
1,940,878
GRANTED
DURING
THE YEAR
NUMBER
–
–
–
–
–
FY 2021 LTIP
26 October 2020
–
1,447,346
EXERCISED
DURING
THE YEAR
NUMBER
(265,634)
–
–
–
–
–
FORFEITED
DURING
THE YEAR
NUMBER
–
(3,395,048)
BALANCE AS AT
30 JUNE 2021
NUMBER
–
–
(295,525)
4,858,579
(2,578,123)2
33,816,116
(467,553)
(163,033)
1,473,325
1,284,313
1 Grant date has been determined in accordance with the requirements of AASB 2 Share‑based Payment. These dates may differ from the
dates on which notice was given to the ASX of the proposed issue of securities.
2 Options forfeited will remain on the Company’s Options Register until the Exercise Date for the relevant Options tranche, at which time they
will lapse.
FAIR VALUE OF RIGHTS GRANTED
The fair value of the Options and Performance Rights granted under the FY 2021 and FY 2020 Plans were estimated at the grant
date using a Monte-Carlo simulation model taking into account the terms and conditions on which the Options and Performance
Rights were granted including the rTSR performance condition where applicable. As the EPS and EBIT performance conditions are
non-market conditions they are not taken into account when determining the fair value of the Options and Performance Rights
but rather are considered when determining the number of Options and Performance Rights that will ultimately vest.
The fair value of Performance Rights granted under the FY 2019 Plan is subject to a non-market based performance condition that
was estimated based on the market price of Healius’ shares on the grant date, with a downward adjustment to take into account
the value of dividends that will not be received during the vesting period. The fair value of the Performance Rights granted under
the FY 2019 Plans subject to the rTSR market based performance condition has been calculated using a Black-Scholes option
pricing model.
The fair values of Rights granted during the year are set out below:
DESCRIPTION
FY 2021 TLTIP – Rights
FY 2021 TLTIP – Rights
FY 2021 TLTIP – Rights
TRANCHE
GRANT DATE
MEASUREMENT PERIOD
EPS
rTSR
EBIT
26 October 2020
1 July 2021 to 30 June 2023
26 October 2020
1 July 2021 to 30 June 2023
26 October 2020
1 July 2021 to 30 June 2023
F
I
N
A
N
C
E
R
E
P
O
R
T
GRANT DATE FAIR
VALUE PER RIGHT
$
3.37
2.25
3.37
ACCOUNTING POLICY
Options and Performance Rights granted to employees are measured at the fair value of the equity instruments at the grant date.
The fair value is recognised as an employee benefits expense on a straight-line basis over the vesting period with a corresponding
increase in the share-based payments reserve. The fair value of the Rights granted includes any market performance conditions
such as rTSR and the impact of any non-vesting conditions, but excludes the impact of service and non-market performance
conditions such as EPS, EBIT and ROIC.
At the end of each reporting period, in relation to service and non-market performance conditions, the Group revises its estimate of the number
of Options and Rights that are expected to vest. The impact of the revision to the original estimate, if any, is recognised in profit or loss
such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share-based payments reserve.
E6. Related party disclosures
TRANSACTIONS WITHIN THE WHOLLY-OWNED GROUP
Loans between wholly-owned entities in the Group are repayable at call. If both parties to the loan are within the same tax
consolidated Group, no interest is charged on the loan. If this is not the case, interest is charged on the loan at normal commercial rates.
During the financial year rental of premises occurred between wholly-owned entities within the Group at commercial rates.
Healius – Annual Report 2021
117
Notes to the financial statements
for the year ended 30 June 2021
E7. Key management personnel disclosures
KEY MANAGEMENT PERSONNEL COMPENSATION
Key Management Personnel (KMP) compensation details are set out in the Remuneration Report section of the Directors’ Report.
Short-term employee benefits
Post-employment benefits
Other long-term employee benefits
Termination payments
Share-based payments
2021
$000
5,622
87
103
–
5,391
11,203
2020
$000
4,059
97
(195)
2,093
3,343
9,397
TRANSACTIONS WITH PAUL JONES
During the years ended 30 June 2021 and 30 June 2020 the Group provided medical centre management services (Services)
to Dr Paul F Jones Pty Limited, a company controlled by Dr Paul Jones, a Non-executive Director of Healius. The Services were
provided to Dr Jones’ general medical practice, which is conducted at one of Healius’ former medical centres, on ordinary arm’s
length terms. These services ceased following the sale of Healius Primary Care.
The Service fees received by the Group for FY 2021 were $44,831 (FY 2020: $96,839). This Service fee revenue was accounted for
by Healius in the same way as revenue from other healthcare practices.
There were no amounts payable or receivable as at 30 June 2021 (30 June 2020: $nil).
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
From time to time, KMPs (and their personally-related entities) enter into transactions with entities in the Group, including the use
or provision of services under normal customer, supplier or employee relationships. These transactions:
•
occur within a normal employee, customer or supplier relationship on terms and conditions no more favourable than those
which it is reasonable to expect the Group would have adopted if dealing with the KMP or their personally-related entity
at arm’s length in the same circumstances;
• do not have the potential to adversely affect decisions about the allocation of scarce resources made by users of the financial
report, or the discharge of accountability by the KMP; and
• are trivial or domestic in nature.
E8. Remuneration of auditor
Fees to Ernst & Young (Australia)
Fees for auditing the statutory financial report of the Group
Fees for other assurance and agreed-upon-procedures services
Internal controls and compliance
Fees for other services
Tax consulting
Due diligence
Advisory
Total fees to Ernst & Young (Australia)
Fees to overseas member firms of Ernst & Young (Australia)
Fees for auditing the financial report of the Group’s controlled entities
Fees for other services
Tax consulting
Total fees to overseas member firms of Ernst & Young (Australia)
Total auditor’s remuneration
118
2021
$000
789
27
56
300
27
1,199
46
6
52
1,251
2020
$000
1,201
5
55
377
–
1,638
16
–
16
1,654
Notes to the financial statements
for the year ended 30 June 2021
E9. Adoption of new and revised standards
STANDARDS AFFECTING AMOUNTS REPORTED IN THE CURRENT PERIOD (AND/OR PRIOR PERIODS)
A number of amendments to Standards issued by the Australian Accounting Standards Board (AASB) and Interpretations are
applicable for the first time in the 2021 financial year, however adoption does not have a material impact on the disclosures
or amounts recognised in the consolidated financial statements of the Group.
STANDARDS ON ISSUE NOT YET ADOPTED
At the date of authorisation of the financial statements, a number of Standards and Interpretations were on issue but not yet
effective for the Group. In the Directors’ opinion, the Accounting Standards on issue but not yet effective, will not have a material
impact on the amounts reported by the Group in future financial periods.
E10. Subsequent events
On 23 August 2021 the Group announced that it had entered into a binding agreement to sell the Adora IVF and Healius Day
Surgeries businesses, except for Brookvale Day Hospital, for a consideration of $45 million on a cash and debt-free basis.
These businesses are classified as discontinued operations as at 30 June 2021 (refer to Note E2). Completion of the transaction
is expected to occur before the end of 2021 and remains subject to a number of customary conditions.
Other than the events described above there has not been any matter or circumstance that has arisen since the end of the
financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those
operations, or the state of affairs of the Group in future financial years.
F
I
N
A
N
C
E
R
E
P
O
R
T
Healius – Annual Report 2021
119
Shareholder information
Number of shareholders
As at 31 August 2021, there were 598,836,768 fully paid ordinary shares held by 14,200 shareholders.
Distribution of ordinary shares as at 31 August 2021
NUMBER OF SHARES HELD
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001–999,999,999
Total
754 shareholders hold less than a marketable parcel of shares.
Number of Rights holders
As at 31 August 2021, there were 9,731,935 Rights held by 75 persons.
Distribution of Rights as at 31 August 2021
NUMBER OF RIGHTS HELD
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001–999,999,999
Total
INDIVIDUALS
4,777
6,165
1,903
1,290
65
14,200
INDIVIDUALS
0
0
0
46
29
75
120
Shareholder information
Number of Options holders
As at 31 August 2021, there were 36,394,239 Options held by eight persons.
Distribution of Options as at 31 August 2021
NUMBER OF OPTIONS HELD
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001–999,999,999
Total
INDIVIDUALS
0
0
0
0
8
8
Securities Exchange Listing
Healius Limited is a listed public company, incorporated and operating in Australia. The shares of Healius Limited are listed on the
Australian Securities Exchange Limited (ASX) under the code “HLS”.
Voting Rights
Votes of members are governed by Healius’ Constitution. In summary, each member is entitled either personally or by proxy
or attorney or representative, to be present at any general meeting of Healius and to vote on any resolution on a show of hands
or upon a poll. Every member present in person, by proxy or attorney or representative, has one vote for every Share held.
Healius fully paid ordinary Shares carry voting rights of one vote per Share.
Healius Options carry no voting rights.
Healius Rights carry no voting rights.
O
T
H
E
R
I
N
F
O
R
M
A
T
O
N
I
Healius – Annual Report 2021
121
Shareholder information
Top 20 shareholders as at 31 August 2021
RANK
NAME
SHARES
% OF SHARES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
National Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
Argo Investments Limited
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees (Australia) Limited
CS Third Nominees Pty Limited
Citicorp Nominees Pty Ltd
RinRim Pty Ltd
BNP Paribas Nominees Pty Ltd Six Sis Ltd
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
AMP Life Limited
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd
Nulis Nominees (Australia) Limited
Joromada Pty Ltd
Navigator Australia Ltd
20.
Merrill Lynch (Australia) Nominees Pty Limited
Total
175,386,356
112,031,380
89,264,817
71,170,798
20,574,535
16,320,664
11,463,079
10,184,406
6,229,569
4,285,700
2,392,047
1,761,260
1,057,466
997,257
811,628
799,450
784,767
710,000
708,490
695,511
527,629,180
29.29
18.71
14.91
11.88
3.44
2.73
1.91
1.70
1.04
0.72
0.40
0.29
0.18
0.17
0.14
0.13
0.13
0.12
0.12
0.12
88.11
Substantial shareholders as at 31 August 2021
NAME
Dimensional Entities 1
Vinva Investment Management 2
1
2
Substantial shareholder notice received by the Company on 6 December 2013.
Substantial shareholder notice received by the Company on 26 July 2021.
NUMBER OF FULLY
PAID ORDINARY
SHARES AS AT DATE
OF EACH NOTICE
% OF TOTAL ISSUED
CAPITAL AS AT
THE DATE OF EACH
NOTICE
30,485,918
31,595,448
6.04
5.07
Auditor
Ernst & Young
The EY Centre
200 George Street
SYDNEY NSW 2000
122
Financial calendar
2021
Half year results announcement
Record date for interim dividend
Interim dividend payable
Year end
Full year results announcement
Record date for final dividend
Final dividend payable
2022
Half year results announcement
Year end
Full year results announcement
24 February
26 March
15 April
30 June
30 August
14 September
8 October
23 February
30 June
19 August
O
T
H
E
R
I
N
F
O
R
M
A
T
O
N
I
Healius – Annual Report 2021
123
Corporate information
Company’s Registered Office
Level 6
203 Pacific Highway
ST LEONARDS NSW 2065
(02) 9432 9400
Company’s Principal Administrative Office
(and location of Register of Option Holders)
Level 6
203 Pacific Highway
ST LEONARDS NSW 2065
(02) 9432 9400
Share Registry
(and location of Register of Rights Holders)
Computershare Investor Services Pty Ltd
Level 4, 60 Carrington Street
SYDNEY NSW 2000
GPO Box 7045
SYDNEY NSW 1115
Sydney Office: (02) 8234 5000
Investor Enquiries: 1300 855 080
124
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www.healius.com.au