2023
Annual Report
Diagnostics for life
Healius Limited ACN 064 530 516
Contents
01
Operating and
financial review
About us
Our network
Our strategy
Key milestones
Building a sustainable business
Chair’s letter
CEO’s letter
Risk management
Group performance
Healius Pathology
Lumus Imaging
02 Directors and senior
management
Board of Directors
Executive Leadership Team
03 Directors’ Report
Directors’ Report
Remuneration Report
Corporate Governance Statement
Auditor’s Independence Declaration
Independent Auditor’s Report
Director’s declaration
04 Finance Report
Financial statements
Notes to the financial statements
05 Other information
Shareholder information
Financial calendar
Corporate information
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Cover image:
Professor Alexander Pitman
BMedSci, MBBS, MMed(Rad)., FRANZCR, FAANMS
Director of Imaging, Northern Beaches Medical Imaging, Lumus Imaging
Awarded Roentgen Medal of the Royal Australian and New Zealand
College of Radiologists (RANZCR) for significant professional
contribution to radiology in Australia, 2019.
We remain focused on
growing our diagnostic
services, supporting
clinical decisions with
personalised insights and
superior customer service.
3.3M+
Radiology
examinations
18M+
Pathology samples
tested in our
laboratories
Fiona Macnaught
Senior Sonographer, Lumus Imaging
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F l o r
About us
Overview
As one of Australia’s leading healthcare
companies, Healius provides quality,
comprehensive, accessible and cost-
efficient diagnostic services through
our Pathology and Imaging businesses.
At Healius, our focus is on
supporting clinical decisions through
personalised insights and superior
customer service, enabled by our
unique footprint of more than 2,200
locations and 10,500+ employees.
We are building a digital future
for diagnostics, transforming the
service experience for our patients
and referrers.
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Pathology
Imaging
Lumus Imaging operates a network of 148 sites across
the country, comprising stand-alone community imaging
centres, and imaging facilities located within private
and public hospitals and in medical centres.
With a highly-trained team of over 160 radiologists,
together with radiographers, sonographers, nuclear
medicine technologists, nurses, centre support and
corporate teams, Lumus Imaging offers a full suite
of modalities and services 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 three
million radiography examinations are conducted
in Lumus Imaging’s sites each year.
Healius Pathology is one of Australia’s leading providers
of private medical laboratory and pathology services.
Healius Pathology operates 95 medical laboratories
and approximately 2,000 patient collection centres
across metropolitan, regional and remote Australia.
It employs around 170 specialist pathologists and
around 6,000 full-time equivalent staff (FTEs) being
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.
With presence in every state and territory across
Australia, Healius Pathology brands include QML,
Laverty, Dorevitch, Western Diagnostic Pathology, TML
and Abbott Pathology which operate in Queensland,
New South Wales (including Australian Capital Territory),
Victoria, Western Australia and Northern Territory,
Tasmania, and South Australia respectively.
Key specialty brands include Genomic Diagnostics, one
of Australia’s leading non-government diagnostic genetic
sequencing facilities; Kossard, leaders in dermatopathology
with an established reputation in the specialist community;
Agilex Biolabs, one of Australia’s largest, most experienced
and scientifically advanced bioanalytical laboratory with
over 25 years’ experience in clinical trials and providing
bioanalytical services for therapeutics, immunoassay
bioanalysis of large molecules, biologics and vaccine
development; and Specialist Veterinary Services, a network
of nationwide veterinary pathology laboratories.
Each year, Healius Pathology provides approximately
one in three Medicare-funded pathology tests in Australia.
Its services extend from exclusively servicing some
of Australia’s largest and most complex private and
public hospitals to regional areas and remote Australian
Indigenous communities.
3
Operating and financial reviewHealius – Annual Report 2023
Our network
Sites as at June 2023
2,057 Approved
Collection Centres
95 Laboratories
35 Hospitals
64 Community centres
49 Medical centres
2,152
Pathology
sites
148
Imaging
sites
4
WA
217 sites
212 Pathology
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Imaging
SA
40 sites
2,057 Approved
Collection Centres
NT
22 sites
22 Pathology
QLD
595 sites
NSW
771 sites
556 Pathology
39
Imaging
709 Pathology
62
Imaging
VIC
595 sites
TAS
24 sites
34 Pathology
6
Imaging
563 Pathology
32
Imaging
24 Pathology
ACT
36 sites
32 Pathology
4
Imaging
NT
QLD
WA
SA
NSW
ACT
VIC
TAS
5
Operating and financial reviewHealius – Annual Report 2023 Our strategy
Diagnostics for life
Our purpose is “Diagnostics for life”, with a vision to become
the pre-eminent comprehensive diagnostics business
in Australia. This means that we support clinical decisions
across the healthcare system through the provision
of personalised insights and superior customer experience.
There are four strategic pillars on which our purpose is founded:
Service
Serving accessible
and high-quality
healthcare experiences
to our clinician referrers,
patients, customers
and payors
Insights
Delivering precise
and comprehensive
diagnostic insights
to realise better
health outcomes for
individuals and the
healthcare system
Operating
leverage
Extracting maximum
value and growth from
our networks in general
pathology, medical
imaging, clinical
trials bioanalysis and
veterinary pathology
People
Providing the best
culture and a fulfilling
career in healthcare
for healthcare industry
professionals and for
support and corporate
staff
We are transforming the service experience for diagnostics, taking an end-to-end approach to deliver a single
leading platform that connects our clinicians, patients, pathologists, radiologists, scientists, and technicians.
To complement our refined vision and focused portfolio, Healius has reset its fixed cost base with a new
operating model consolidating several corporate support functions.
Our capital management framework is aligned to our vision, is disciplined and focused on organic growth.
6
Service
Operating leverage
A key priority is to enhance our service proposition
to referrers and patients. Progress on initiatives
to achieve this includes:
•
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Enhanced and expanded our Electronic Referrals
solution, making it easier for doctors to order Pathology
and Imaging tests and to engage with patients directly
with a mobile web experience.
Introduced additional functionality to the Collections
Portal to address manual and operational pain
points. These include digitising collection workflows
across patient registration, protocoling tests and
specimen collection.
• Developed our Booking System to include
self-service online appointment bookings for
diagnostic imaging services.
Enhanced our patient feedback mechanism with
a high net promoter score emerging.
•
• Progressed with rebranding across Healius and
subsidiary brands to strengthen identity and
better connect to our online offerings.
To drive efficiency and productivity across the business,
during the year we:
• Progressed the new Laboratory Information System
(also referred to as Lab Portal) as we digitise the
end-to-end workflow in clinical departments with
nationally standardised tests, results, instrument
configurations and processes. Histology and Cytology
modules were successfully delivered during the year,
and development is underway for Microbiology,
Haematology, and Biochemistry modules.
Implemented robotic track-based automation in select
pathology laboratory departments that are labour
intensive to leverage economies of scale.
•
• Grew our core network and optimised our collection
centre footprint based on a standardised approach
to gross-margin based analysis.
• Realised savings across a number of procurement
categories including consumables, voice
telecommunications, teleradiology and transcription
services, with additional categories expected
to benefit in FY 2024.
Insights
People
Healius is focused on enabling new diagnostic
technologies to deliver superior clinical insights,
supporting the prevention and treatment of diseases,
and improving health outcomes for patients.
Healius has over 10,000 people serving doctors, patients
and customers across the country. Supporting our people
with the right education, tools and management systems
is a key priority.
During the year we:
During the year we:
• Progressed the build of our Results Portal (also
referred to as Doctors Portal) to provide a modern
experience for doctors to view and share reports,
check history and get clinical support from
Pathologists and Radiologists.
• Progressed the build of a Patient Portal to provide
a modern digital self-service experience for patients
to receive pathology and radiology reports with
simplified visualisation of their diagnostic history and
health insights.
• Developed initiatives to attract and retain technical
and frontline talent through a better employee value
proposition with particular success in the recruitment
of radiologists in the year.
• Continued to progress the digital experience
for our people as well as streamlining workflows
across payroll, recruitment, onboarding, and
communications, in particular addressing
pain points for our team members.
Implemented a new operating model which
consolidates several group and support functions.
This simplified accountability and decision rights,
resulting in faster delivery of the change initiatives.
•
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Operating and financial reviewHealius – Annual Report 2023
Key
milestones
FY 2023
Appointment
of Jenny Macdonald
as first female Chair
at Healius
Agilex
opens new custom-built
toxicology facility
in Brisbane, QLD
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Appointment
of Dr Phil Lucas as Group
Executive, Lumus Imaging
July 2022
Sep 2022
Jan 2023
Veterinary
Digital
Pathology
goes live nationally
Healius Head
Office
moves to Liberty Place,
a carbon neutral building
First Omni Legend
PET/CT located at St Vincent’s
Private Hospital Northside,
QLD – first of its kind
in southern hemisphere
Alejandro Rosales Head of Digital Strategy & Delivery Offic
e, H
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QML Pathology
inducted to QLD Business
Leaders Hall of Fame
C Engineer, H e alius
nior Q
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G uiano Punzala
Appointment
of Maxine Jaquet as MD
& CEO, first female MD
& CEO at Healius
Appointment
of Dr Jan van Rooyen
as Group Executive,
Healius Pathology
QML’s
Murarrie laboratory
goes solar
Mar 2023
May 2023
Jun 2023
Appointment
of Paul Anderson as CFO
Sale
of Day Hospitals
completed
Alejandro Rosales Head of Digital Strategy & Delivery Offic
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Operating and financial reviewHealius – Annual Report 2023
Building
a sustainable
business
Through connected healthcare services,
Healius is committed to delivering
excellence in healthcare, creating value
for consumers, employees, shareholders
and the many communities in which
we operate.
Healius’ mission is to seek and sustain
life-enhancing healthcare, delivered
by people who care.
1010
Dr Parastoo Irandoost, MD, FRCPA, FIAC
Anatomical Pathologist
Head of Cytology Department, Laverty Pathology
Our sustainability vision is to become a leading socially-responsible
company. Five key priority areas have been identified:
Our Customers
Through digitisation, automation
and advanced applications,
improve the way diagnosis is
delivered to referrers and patients
Refine and progress embedded
customer feedback mechanisms
into operations
Constantly monitor and enhance
privacy and cyber security controls
Our Planet
Refine and progress pathway to
carbon neutrality for Scope 1 and
2 emissions through hybrid fleet,
LED’s, solar power and green
power purchasing
Continually improve the use
of resources and the handling
of waste including medical
waste and single-use plastic
Refine and progress other Scope 3
emission reduction opportunities
Our People
Improve employee recognition
and benefits
Foster diversity and inclusion
Foster employee talent training
and career pathways
Our Communities
Continue involvement with local
charities and local communities
Support and enhance the national
charity partnership aligned to
Healius’ brand and vision
Support university partnerships
and student placements
Expand work on human rights
with supply chains with a focus
on reducing risks of modern slavery
Our Shareholders
Grow the business, improve
efficiency and increase returns
Report against
Sustainability Roadmap
Report against UN SDGs and
other global reporting frameworks
Prepare for assurance
of sustainability data
We have identified 7 Sustainable Development Goals (SDGs) that our
sustainability strategy is most aligned to:
More information in relation to Healius’ sustainability strategy and priorities
can be found in the Sustainability Reports available on the Healius website:
www.healius.com.au
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Operating and financial reviewHealius – Annual Report 2023
Chair’s letter
Dear shareholders
On behalf of the Board of Directors, I am
pleased to present Healius’ Annual Report.
This year has been a year of refreshment and
renewal of both the Board and the Executive
Leadership Team (ELT), which positions
us well to focus our agenda of operational
improvement, improving customer experience
and increasing our use of digital tools.
CEO and Managing Director appointment and Board renewal in FY 2023
In March 2023, our CEO, Dr Malcolm Parmenter stepped down from his role and Ms Maxine
Jaquet was appointed as the new Healius CEO and Managing Director.
I would like to acknowledge Malcolm’s contribution to Healius since 2017 and to the
Australian healthcare industry in general. He oversaw a period of significant change in
the Company including streamlining the Healius portfolio, embarking on a foundational
digital agenda and reorienting the business to be truly in service of our patients and
clinicians. The Board is grateful to Malcolm, especially for overseeing our operational
response to the COVID-19 pandemic in what was an unprecedented time for us all.
I also want to acknowledge our former Chair, Rob Hubbard, who stepped away due
to health reasons in September 2022. Rob served on the Board since 2014 and held the
position of Chair for over four years from July 2018. The Board is grateful to Rob for his
oversight and leadership during a period of considerable change. His greatest contribution
was, undoubtedly, his focus on the oversight of the revised Healius strategy and significant
Board renewal – with four new Non-executive Directors appointed during his tenure as Chair.
121212
The Board also farewelled Dr Paul
Jones as a Non-executive Director.
Paul served on the Board from 2010
and on all three Board committees
during his tenure and provided
invaluable insights that greatly
assisted the Company throughout
his time as a Non-executive Director.
On behalf of the Board, I would
like to express our deep gratitude
to Malcolm, Rob and Paul.
As was foreshadowed at the Healius
AGM last October, one of the Board’s
first tasks has been to replace these
outstanding Board members with
new members that will be able
to guide Healius into a stronger
future. As Chair, I have been
extremely pleased to welcome two
new directors to the Board in 2023.
Charlie Taylor, appointed as a Non-
executive Director in March 2023,
brings valuable business skills
and expertise that will further
strengthen the Board – having
advised many of Australia’s leading
private and public sector healthcare
organisations during his long career.
On 1 September 2023, Dr Michael
Stanford was appointed as a Non-
executive Director and although
he has just joined the Board, we are
pleased to welcome Dr Stanford
with his deep understanding of the
healthcare industry, both as a medical
practitioner and with over 20 years’
experience in the management of
health care businesses.
Your Board believes Healius has the
right balance of skills and experience
to guide the Company through its
next exciting chapter.
Executive management
appointments
The Board also has great confidence
in the newly formed Executive
Leadership Team led by our new
CEO and Managing Director, Maxine
Jaquet. Maxine joined Healius in
2015, was appointed CFO in August
2019 and held the role of CFO and
COO since January 2021. Maxine
has made an immediate impact
in her new role and several key
appointments have been made
to the Healius Executive Leadership
Team in FY 2023. These include
Paul Anderson as Group CFO and
Head of People, Dr Jan van Rooyen
1
ACCC Media Release dated 20 July 2023.
as the Group Executive to lead the
Pathology operations and Dr Phil
Lucas as the Group Executive
to lead the Imaging operations,
Lumus Imaging. I encourage you
to read the biographies of all our
Group Executives in the body
of the report as each of them bring
valuable experience and expertise
to the Company.
The ACL unsolicited
takeover offer
In March 2023, all Healius
shareholders received a highly
conditional unsolicited ‘all scrip’
reverse takeover offer from Australian
Clinical Labs Limited (the Offer).
In May 2023, the Board unanimously
recommended that, and at the date
of this letter continues to recommend,
that Healius shareholders reject the
Offer. The Board considers the Offer
as inadequate and opportunistically
timed, and one that would result
in an unfair transfer of value from
Healius shareholders.
Among other conditions, the Offer
is conditional on ACCC approval
(on an unconditional basis). Following
a preliminary review, the ACCC has
confirmed that it has “significant
preliminary competition concerns”
and that its preliminary view is that
the proposed acquisition would
be likely to substantially lessen
competition in Australian pathology
services markets1. At the date of
this letter the Offer remains highly
conditional and uncertain. The
ACCC’s final decision is not expected
until later in the year. The Company
will keep shareholders informed
of developments as they occur.
FY 2023 Financial Results
Our FY 2023 Financial Results
released in late August are starting
to show the strengthening of the
diagnostic platforms with Pathology
revenue recovering and Imaging
revenues outpacing the market.
Our BAU revenues increased 6.3%
to $1.6 billion and we reported an
underlying EBIT of $99 million, in line
with our May 2023 guidance. Our
CEO and Managing Director provides
further insight about the financial
results, the initiatives progressed
during the year and management’s
plans for execution in FY 2024.
While the Board was pleased
to approve the results for the
FY 2023, it also acknowledges that
the Company had to make certain
difficult decisions that we believe
will support the platform for future
growth. It was determined that
a non-cash impairment to goodwill
of $349.8 million be recognised on the
balance sheet at 2H 2023 as Healius
carries significant goodwill relating
to historic acquisitions. This relates
primarily to Agilex, lower forecast
cash flows post-COVID and an
increase in the weighted average
cost of capital (WACC).
After careful deliberation, the Board
resolved not to pay a final dividend
for FY 2023, however, it is our
firm intention to resume dividend
payments as soon as practicable
on the return of more normal market
pathology volumes and improved
operating cashflows.
The year ahead
The Board has full confidence in the
renewed Executive Leadership Team
led by Maxine driving a culture of high
performance, the refreshed Healius
Group goals and actions for growth
to exceed market recovery and, most
importantly, the team deploying
best-in-class technology to improve
the Healius service proposition and
operating performance. The Board
thanks them for the efforts in FY 2023.
I would like to acknowledge the
dedication of the entire Healius team,
which has faced several challenging
years for their unwavering effort
and dedication to the business,
especially through this recent period
of significant transition.
I would like to thank you, our
shareholders, for your continued
loyalty and support. We look forward
to building on our platform for
delivery of growth in FY 2024.
Jenny Macdonald
13
Operating and financial reviewHealius – Annual Report 2023 CEO’s letter
Dear shareholders
This year has been a year of reset for
Healius. We have created a pure-play
diagnostics portfolio, renewed the leadership
team, delivered an efficient cost base
and positioned the business for growth.
An integrated diagnostic portfolio
The Healius team has achieved a lot in this reset year. Now, we are well-positioned
for growth with a compelling diagnostics portfolio.
In Pathology, our incumbent, at-scale and leading network of referrer relationships,
pathologists and technical staff, laboratories and ACCs has been built over decades
and, in a consolidated market, cannot be replicated. Having made a predominantly
fixed-cost network more efficient, our opportunity now is for above-market growth,
especially through a more comprehensive suite of diagnostic tests which meets the
demand with a growing burden of disease in Australia.
In Imaging, the national Lumus Imaging network is a leading player in an attractive and
higher-growth market. With an established national network of 148 sites, our opportunity
is to increase revenue by adding more complex modalities and radiologist hours. This
will grow the margins of the business to industry-competitive levels by greater leverage
of our network infrastructure.
141414
The year also marks the first year
of an integrated services offering.
We are leveraging our clinical
leadership, digital infrastructure and
customer service tools across the
full diagnostics portfolio (pathology,
genomics, imaging and clinical trials).
We have commenced with offerings in
select areas such as foetal medicine
and see this growing over time.
Our offerings are supported by our
Clinical Advisory Board which is
composed of our senior Radiologists
and Pathologists and is focused
on emerging clinical diagnostic
areas. There are several testing
and screening developments that
we are evaluating and pursuing:
•
•
in pathology: genomics,
microbiomics and proteomics
including early detection
of Alzheimer’s and vascular
diseases; and
in imaging: CTCA (Computed
Tomography Coronary
Angiography) and lung cancer
screening, FFR-CT (Fractional
Flow Reserve – Computed
Tomography), mental health
imaging, and new PET
(Positron Emission Tomography)
tracers/techniques.
We are poised to create enduring
clinical and financial value from
growing clinical demand and
scientific/medical progress.
I am enthusiastic about our future
and the growing role Healius will play
in improving health outcomes.
A year of two halves
In FY 2023, we have transitioned to a
post-pandemic environment. There
were well-publicised challenges in
primary care: a GP shortage, less
accessibility, increased wait-times to
make an appointment, and increased
out-of-pocket charges for patients.
These led to a soft year for core
GP-referred diagnostic services.
For Healius, COVID-related revenue
dropped 89% (mirroring market
conditions), while core Pathology
revenue grew by 4%, Agilex Biolabs
(our Clinical Trials business) nearly
tripled off a five-month comparative
period, and Imaging revenue grew by
9%, enjoying a higher proportion of
Specialist referrals.
Earnings and margins for the year
were impacted by the reduction in
COVID revenue which out-paced
growth in core revenue. In response,
we successfully removed the majority
of our COVID-related costs and reset
the labour base. We delivered $99.0
million in underlying EBIT, in line with
our May 2023 guidance.
Pleasingly, the second half of the
year saw an expansion of both
revenue and margins over the first
half. Group underlying EBIT margins
grew 240 basis points from 4.6% to
7.0%, with Pathology up from 4.9% to
7.5% and Imaging from 7.8% to 9.8%.
We finished the year with net debt
of $447 million, having reduced it
by $78 million in the year. Jenny has
explained the tough decisions we
made in the year that we believe will
support our future growth, in writing
down $349.8 million of goodwill on our
balance sheet and in not paying a
final dividend for FY 2023. We are all
focused on driving revenue growth
in FY 2024 and returning to dividend
payments as soon as practicable.
A new leadership and
operating model
This year we have established a
new leadership team that I believe
is the right team to successfully
deliver on our future. We have new
Group Executives for the operating
divisions, both of whom are clinicians
in their fields and come to Healius
with extensive experience in scaling
market-leading pathology and
imaging businesses.
Dr Phil Lucas has led our Imaging
business since January 2023. Under
Phil’s leadership, Lumus Imaging
has out-performed the market this
year, underpinned by recruitment
of new radiologists, a process
which he personally oversees, and
investment in new modalities and site
upgrades. Phil has a clear growth
strategy for Lumus Imaging which
is already delivering value.
Dr Jan van Rooyen joined us in June
2023 to lead our Pathology business
after several decades leading one
of South Africa’s most successful
pathology operations. He views the
pathology business through four
lenses (customer services, logistics,
clinical services and insights) with
each area capable of further
optimisation to deliver growth. As
a Pathologist, Jan is especially
focussed on the increasing role that
Pathologists will play in growing our
business.
Paul Anderson also joined us as CFO
and has many years of restructuring
experience as well as financial and
strategic leadership.
We have also made a number of
changes to our operating model in
the year:
• We see our frontline staff as the
face of Healius and fundamental
to the patient and clinician
experience. We have made
specific investments in our people
and in tools to improve their ways
of working, hear their feedback,
and focus on their recruitment
and retention;
• We have always had a
strong network of clinical
leadership, dedicated to
clinical governance within their
respective sub-specialties.
This has now been augmented
by the newly-established
Clinical Advisory Board which is
exclusively focussed on growth;
The Lumus Imaging network
growth strategy is being
underpinned by a new
radiologist employee value
proposition and we have seen
success in radiologist recruitment
in the year; and
•
• We continue to challenge
ourselves to improve efficiency
of back-office support services,
reducing those labour costs
significantly in the year.
15
Operating and financial reviewHealius – Annual Report 2023 CEO’s letter (continued)
Delivery of our digital agenda
We have been enhancing our
technology platforms to realise
our ambition of being the easiest
Pathology and Radiology company
to deal with, for referrers, patients
and hospital customers alike.
This includes a suite of
external-facing digital products,
such as our new Results Portal which
will provide clinicians with a great
experience for viewing patient
history, gaining more clinical insights,
and collaborating with other doctors.
Everything new we’re doing in
digital is an investment in revenue
growth, operational savings, or both.
Revenue growth will come from our
leading-edge consumer-facing
products, while savings will come
from improving core processes and
removing costs.
We have invested in best
practice tools, processes and
training to deliver improvements
in our cyber security.
Our new data platform will be
fundamental in data-driven AI,
which I see as the next wave of
opportunity for us. There are clear
clinical and productivity benefits
from AI in diagnostics and we have
already deployed some, such as
an AI partnership for tuberculosis
screening. We are currently working
on many more options across both
Pathology and Imaging, such as
cancer screening and detection.
Digitisation has been successfully
rolled out in Imaging for some time
and has promising potential in
Pathology, especially for targeted
histopathology or tissue analysis.
When combined with AI tools, it will
be able to drive real benefits around
greater clinical insights and speed
of processing.
1616
The way ahead:
Diagnostics for life
Looking ahead, we are confident that the medical
diagnostics markets will continue to grow strongly
in Australia in line with demographic-based clinical
need, with the dislocation caused by COVID being
transitory. The underlying demand drivers remain
strong—a growing and ageing population with
greater longevity and more complex health issues,
and a younger generation with interest in wellness
and maintaining good health. Moreover, early
diagnosis, detection, and prevention are the best
ways to reduce downstream healthcare issues
for Australians and costs for the country.
For Healius in FY 2024, our ambition is to grow margins
and profitability as we participate in the market
recovery and drive our own above-market growth.
Our goal is to better leverage our well-established
brands and capabilities in targeted segments.
We aim to optimise the value of our networks and
judiciously manage our funds to improve return on
invested capital. With a high level of expectation in
our newly-formed executive team, I am confident
we can strengthen and grow this clinically-oriented,
national diagnostics business.
I want to thank all our people. They have faced
several challenging years and, for me, the real mark
of our success comes down to the interactions each
one of them has every day with our referrers, patients,
customers, and each other.
Last, but not least, thanks to you, our shareholders,
for your continued support.
Maxine Jaquet
Risk management
Effective risk management is key to Healius achieving its strategic
objectives, building a sustainable business and protecting shareholder value.
Our Risk Management Framework formalises the approach adopted to manage risk and provides Healius
with a consistent methodology to be applied to all strategic, operational and contractual objectives. Healius
assesses the consequence and likelihood of risks in all significant areas of the business including health and
safety, environment, operations, IT and cyber, finance, legal and compliance, and reputation. To ensure best
practice, Healius’ Risk Management Framework is aligned to the International Organisation of Standardisation AS/
NZS ISO31000:2018 ‘Risk Management – Principles and Guidelines’.
A range of risk factors may influence and affect Healius’ future performance, business operations and financial
condition, either individually or in combination. Material risks that apply to the macro environment that we operate
within, and those specific to Healius are summarised in this section.
CONTEXT
RISK PRIORITIES
AIMS AND ACTIONS
Healius strategic objectives include
diversification into non-MBS revenue
streams, whilst maintaining tight control
over costs and continually reviewing
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 the reasons
for any out-of-pocket costs.
Government policy
and revenue
concentration
Economic impacts
As a part of Healius’ commitment
to providing affordable healthcare,
the majority of its services are
bulk-billed. This means that Healius
receives payment through the
Federal Government’s Medicare
Benefits Schedule (MBS) in settlement
of services provided. As a result, the
majority of Healius’ revenue base is
sourced from the MBS and any changes
to the schedule (such as changes
to fees or test availability) can both
positively and/or negatively impact the
company’s revenue and profitability.
In addition, Healius provides pathology
and imaging services to public hospitals
in some states and territories. It is
dependent on the continuation of State
Government policy in connection with
the outsourcing of these public hospital
services to private operators.
Current cost of living pressures
and the relatively high inflation
environment may lead to subdued
patient GP attendance. This may
be compounded by the introduction
of co-payments for consultations,
leading to reduced pathology and
imaging referrals. For some services,
Healius also charges out-of-pocket
fees, which may contribute to a
general perception that healthcare
services are expensive. Consequently,
consumers may delay or not use
services due to affordability concerns,
impacting volumes and revenue.
17
Operating and financial reviewHealius – Annual Report 2023 Risk management (continued)
CONTEXT
RISK PRIORITIES
AIMS AND ACTIONS
Healius is reliant on referrers,
healthcare professionals such
as surgeons and specialists, and
consumers choosing to use its services
and facilities.
Healius has a dedicated commercial
and customer team, who are responsible
for maintaining relationships, increasing
engagement, and addressing any issues
with clients and customers.
Healius is also dependent on its ability
to negotiate and retain private health
fund, public and private hospital, and
other commercial contracts.
Healius has invested in facilities, systems,
people and services in its aim to meet
and exceed the needs and expectations
of its customers.
Healthcare
customers and
consumers
Resource
availability, skills
and capabilities,
and employee
relations
Staff shortages in the healthcare
sector may impact Healius’ ability
to hire and retain staff with the
right experience and skillset, and
hence ability to adequately service
our customers.
New technologies and changing
consumer perceptions are driving the
need for specialist skillsets including
analytics, digital expertise and
cyber security. There is significant
competition to recruit such talent,
which can increase labour costs and
reduce profitability.
Recent legislative amendments,
court decisions and Modern
Award variations have
increased the complexity of the
employee-relations landscape.
Sustainability for Healius is underpinned
by its ability to attract and retain the right
talent. 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.
Healius is investing in the value proposition
to its employees and implementing
employee-related initiatives, such as paid
parental leave across the Group. It is also
enhancing its information systems and
tools to provide an improved experience
for its people and better management
of resources.
Healius’ centralised People & Culture
function is supported by dedicated teams
for talent acquisition and employee
relations to ensure continued compliance
with its employee relations requirements
and obligations.
Pandemic specific business continuity
plans across our operations ensured
that critical healthcare services could
still be provided to the community.
Adherence to best-practice guidelines for
self-isolation, use of personal protective
equipment, hygiene, and office closures
help mitigate the risk of transference and
infections for our people and our patients.
Healius continually monitors issues
affecting the environment, which may
have a direct impact on its business
and structures its operations and
resources accordingly.
Pandemic or
epidemic risks
including COVID-19
Pandemics or epidemics pose a risk
to Healius’ operations and patient
volumes, as experienced during
COVID-19, where stringent restrictions
limiting individual access/mobility may
be imposed, impacting Healius’ ability
to provide crucial diagnostic services.
1818
CONTEXT
RISK PRIORITIES
AIMS AND ACTIONS
Data management
and cyber security
Healius maintains sensitive clinical
and financial information. Failure
to appropriately use and secure
data can have severe operational
and financial consequences.
Healius’ systems and databases are
increasingly subject to security risks
including cyber-attacks. Allegations
of, or actual, unauthorised access
or loss of sensitive data could occur
by way of cyber-attack, data breach
or actions by employees whether
inadvertent or otherwise, resulting
in a breach of Healius’ obligations.
Action against Healius could
be initiated in connection with any
such breaches.
In addition, the breach could impact
patient and other stakeholders’
satisfaction and confidence in Healius’
data security arrangements.
Any such breaches could result
in delays, the loss or corruption
of data, interruptions in and/or
cessation in the availability of systems,
all of which could have a material
and adverse effect on Healius’
financial performance, position and
future prospects, or harm Healius’
business reputation.
Healius understands that protection
of privacy of individual data/personal
information is paramount. It has
an ongoing program to strengthen
defences against unauthorised access
and to protect clinical and financial
data within its systems.
It has:
• established the Healius Cyber Security
Framework aligned to ACSC ISM,
• developed a cyber risk controls
program with board and management
oversight and KPI reporting,
• appointed a Head of Cyber Security
and
fast tracked numerous risk mitigations.
•
Healius’ security program is founded
on a process to Identify, Protect,
Detect, Respond and Recover to data
management and security issues and
is summarised below.
Identify
Programs have been established around
identifying risks, prioritising controls,
allocating adequate resources, and
meeting regulatory obligations.
Protect
A comprehensive set of risk mitigation
tools and processes have been put
in place to reduce the risk of succumbing
to cyber-attacks, which includes (but not
limited to) firewalls, network segmentation,
website security, user access controls,
end point protection, data loss prevention,
training and penetration testing.
Detect
A Security Operations Centre has been
established to continuously monitor
IT systems and some Operational
Technology (OT) assets.
Respond and Recover
A Cyber Incident Response Plan has been
developed for both IT & OT assets.
19
Operating and financial reviewHealius – Annual Report 2023 Risk management (continued)
CONTEXT
RISK PRIORITIES
AIMS AND ACTIONS
Supply chain and
modern slavery
Healius imports consumables,
personal protective and other medical
equipment. Prices and availability
may impact the efficient operating
of its services.
Healius is also cognisant of its modern
slavery obligations within these
supply chains.
Competition
Acquisitions
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 is continually exploring
opportunities to fund strategic
investments in adjacencies to the
current portfolio, to extract synergistic
value and improve operating
leverage across its business.
There is a risk that acquisitions may
not generate the financial returns
or performance hurdles required
to meet Healius benchmarks.
Healius aims to continually manage
known supply chain risks. It has
a dedicated procurement function and
has consolidated spend to a select pool
of reputable suppliers so as to mitigate
risk of supply chain disruption and also
modern slavery risk. In addition, all our
suppliers are expected to comply with
our Supplier Code of Conduct.
Healius’ commitment to human rights and
the eradication of all types of modern
slavery is overseen by the Sustainability
Steering Committee. Its approach
to modern slavery eradication
is multi-faceted and includes supplier
questionnaires, due diligence, risk
assessments and modern slavery training
for our procurement team.
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’ due diligence process assesses
the merits of each proposed acquisition
and our experienced and dedicated
corporate development function
ensures a smooth transition of acquired
businesses into the Group.
2020
CONTEXT
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.
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 government at all levels.
Medical indemnity
claims and costs
Through its provision of pathology and
imaging services, Healius is exposed
to the risk of medical indemnity
or litigation. While all laboratory test
methods must meet scientifically
rigorous criteria before they can be
used in clinical practice, there remains
the possibility for inaccurate test
results. Current or former patients
may, in the normal course of business,
start or threaten litigation for medical
negligence against Healius.
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 has in place medical indemnity
and other insurance arrangements
to mitigate its financial exposure.
Climate change
Healius recognises that climate
change is a global issue. Climate
change risks may be ‘physical’ with
financial implications resulting from
potential damage to assets and sites,
‘indirect’ through impacts from supply
chain disruption and availability
of labour, or ‘transitional’ because
of 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 established detailed business
continuity plans (including contingent
services, alternative courier routes, etc)
in place for key sites, so as to minimise
disruption to operations and ensure our
ability to service patients and doctors.
A sustainability report is produced
annually outlining Healius’ efforts and
progress on material areas/priorities.
In FY 2022, Healius adopted the United
Nations Sustainable Development Goals
framework, and are continually looking
to enhance its reporting by considering
other global reporting frameworks.
21
Operating and financial reviewHealius – Annual Report 2023 Group
performance
The operating and financial review includes an analysis and description of Underlying results which are defined
as Reported results adjusted for non-underlying items. The Directors believe that presentation of Underlying results
(non-IFRS (International Financial Reporting Standards) financial information) is useful for investors to understand the
entity’s core results from operations. A reconciliation is set out on page 24 and in Note A1 to the financial statements for
the year ended 30 June 2023.
BAU revenue
COVID-19 revenue
Total revenue (Underlying)
EBITDA (Underlying) 1
D&A
EBIT (Underlying)
Non-underlying items
Impairment charges
EBIT (Reported)
Interest
Tax
Profit from discontinued operations
NPAT (Reported)
2023
$M
1,623.2
83.8
1,707.0
376.2
(277.2)
99.0
(45.1)
(388.9)
(335.0)
(62.3)
17.3
12.2
(367.8)
2022
$M
BETTER/(WORSE)
%
1,526.8
763.5
2,290.3
758.2
(271.2)
487.0
(23.4)
–
463.6
(49.0)
(122.2)
15.5
307.9
6.3%
(89.0%)
(25.5%)
(50.4%)
(2.2%)
(79.7%)
(92.7%)
–
(172.3%)
(27.1%)
114.2%
(21.3%)
(219.5%)
Market conditions
Healius operates within the Australian healthcare market. This market was impacted by significant changes in the
year ended 30 June 2023 (FY 2023), in particular a substantial lessening in demand for COVID-19 PCR testing and
broad-based GP workforce, supply and access challenges. These led to a significant drop in COVID revenues and
to a soft year for GP-referred pathology services.
Compared to pre-COVID (FY 2023 v FY 2019), both Pathology and Imaging have grown below long-term trends due
to the disruption caused by the pandemic. However, underlying demand drivers remain strong including a growing
and ageing population with greater longevity and more complex health issues. These drivers are expected to underpin
growth in the medium-term.
The underdiagnosis of conditions such as cancers and diabetes during the COVID-19 pandemic also remains an issue
and may drive more diagnosis and more treatment within the population for a period of time.
1
Underlying EBITDA and Underlying EBIT are non-IFRS (International Financial Reporting Standards) financial metrics.
2222
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Group underlying results
For Healius, Group underlying revenue dropped 25.5% between FY 2022 and FY 2023 mirroring the market conditions and
in particular the decline in demand for COVID-19 PCR testing. Earnings and margins for the year were impacted by this
revenue reduction. In response, Healius successfully completed a cost reset program which reduced the labour base
and achieved further procurement savings helping to mitigate the impacts of inflationary pressures in the business.
Healius recorded underlying EBIT of $99.0 million which was in line with consensus. The divisional analysis is as follows:
2023
Segment revenue
Intersegment sales
Total revenue
EBITDA
EBIT
PATHOLOGY
$M
1,272.3
293.5
78.7
IMAGING
$M
431.2
96.2
37.8
OTHER
$M
3.9
(13.5)
(17.5)
TOTAL CONTINUING
OPERATIONS
$M
1,707.4
(0.4)
1,707.0
376.2
99.0
The performance of Healius Pathology and Lumus Imaging is set out on pages 26 to 29.
Other comprises corporate functions which includes the management of centralised support services where those
functions benefit from scale. These services are allocated to Pathology and Imaging in the form of a charge based
on headcount, footprint or usage. The remaining costs are classified as corporate overheads. In FY 2023, corporate
overheads reduced due to tight cost control coupled with lower accrual for management incentives reflecting
depressed market conditions.
23
Operating and financial reviewHealius – Annual Report 2023
Group performance (continued)
Group reported results
Reported EBIT included items which Healius identified as non-underlying. The reconciliation is as follows:
Underlying EBIT
Digital transformation costs
Restructuring, terminations and other costs
Transaction costs
Takeover bid costs
Transactions with discontinued operations
Non-underlying items
Impairment of goodwill
Impairment of leased assets
Impairment charges
Reported EBIT
2023
$M
99.0
(21.7)
(13.9)
(3.2)
(5.4)
(0.9)
(45.1)
(349.8)
(39.1)
(388.9)
(335.0)
2022
$M
487.0
(10.5)
-
(10.3)
-
(2.6)
(23.4)
-
-
-
463.6
The adjustments between underlying and reported EBIT are as follows:
• Digital costs of $21.7 million are part of the multi-year digital transformation program.
• Restructuring, termination and other costs of $13.9 million primarily relate to the reset of the cost base in response to the
•
post-pandemic market conditions.
$5.4 million of takeover bid costs are due to the hostile bid launched by ACL Pathology in March 2023, together with
$3.2 million of other transaction costs.
• A non-cash impairment charge of $349.8 million has been made to goodwill in the Pathology division. This impairment
relates primarily to Agilex, lower forecast cashflows post COVID, and an increase in the Weighted Average Cost
of Capital to 8.5% (previously 7.8%).
• A leased asset impairment of $39.1 million in Lumus Imaging. This relates to the imaging facilities in the Medical Centres
which are no longer owned by Healius but over which Healius has long-term leases. The impairment is due to lower
imaging volumes than were envisaged at the time of entering into the leases.
Interest costs of $62.3 million were 27.1% up on PCP, primarily due to increases in average debt levels and the cost
of borrowing with a pre-tax weighted average cost of debt of 4.8% during the year.
The results of the Day Hospitals division prior to the completion of its sale in May 2023 and the gain on sale of the division,
totalling $12.2 million post-tax, were recognised in discontinued operations.
The reconciliation between Reported and Underlying Profit/(Loss) after tax is as follows:
Underlying NPAT
After-tax adjustments to underlying EBIT
Tax differential for non-deductible items (underlying tax calculated at 30%)
Profit/(Loss) from discontinued operations
Reported NPAT incl. discontinued operations
2023
$M
25.7
(303.8)
(101.9)
12.2
(367.8)
2022
$M
306.6
(16.4)
2.2
15.5
307.9
2424
Cash flow and gearing
Group cash flows (including continuing and discontinued operations) for FY 2023 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
Payments relating to acquisitions
Proceeds from sale of business & PPE
Payments for earn-out, settlement and deferred consideration
Net interest paid and finance costs (including on lease liabilities)
Payment of lease liabilities
Dividends, buyback of shares and shares purchased for LTIP
Net debt funding/(repayment)
Net increase in cash held
2023
$M
404.4
(71.1)
333.3
(40.1)
293.2
(36.0)
–
147.2
(3.8)
(61.6)
(216.8)
(43.2)
(45.0)
34.0
2022
$M
677.1
(90.3)
586.8
(54.6)
532.2
(38.9)
(303.3)
31.9
(36.8)
(48.2)
(214.3)
(259.6)
345.6
8.6
In FY 2023, Healius achieved gross operating cash flow conversion in excess of 100% of underlying EBITDA. Selective
investments were undertaken in growth initiatives including digital customer and referrer portals and capabilities,
extension to the ACC network in Healius Pathology, a new toxicology laboratory and instrumentation upgrades in Agilex,
and upgrades to Lumus Imaging’s facilities.
Group net debt and key ratios on 30 June 2023 were as follows:
REPORTED
Bank loans and financing arrangements 1
Cash 2
Net debt
Bank gearing ratio (covenant <4.0x) 3
Bank interest cover ratio (covenant >3.0x) 4
2023
$M
562.1
(115.3)
446.8
3.48x
4.81x
2022
$M
606.1
(81.3)
524.8
1.0x
44x
The Group’s gearing was within its original debt covenant of 3.5x and within its negotiated increase of 4.0x for FY 2023 and
1H 2024.
Outlook
Healius expects the Pathology market will trend higher in 2H 2024, while the Imaging market will continue with its current
strong growth rates. Healius will continue to deliver on cost-out opportunities, in particular through increased automation,
digitisation and the use of AI and other technology enablers, and expects its gearing to remain within bank covenants
during FY 2024.
Bank loans of $565 million (FY 2022: $610 million) are shown net of unamortised borrowing costs.
FY 2022 cash includes cash in discontinued operations.
1
2
3 Bank gearing ratio is calculated based on EBITDA of $129.3 million (underlying EBITDA of $376.2 million less $247.9 million for AASB 16 plus $1.0
million for AASB 15/gain on sale of assets) and net debt of $449.9 million (net debt of $446.8 million plus unamortised borrowing costs of $2.9
million and parents company guarantees of $0.2 million).
4 Bank interest cover ratio is calculated based on bank underlying EBITDA divided by finance costs (excluding AASB 16 interest).
25
Operating and financial reviewHealius – Annual Report 2023 Healius Pathology
Core revenue was up $40.1 million or 3.6% on prior comparable period (PCP).
Softness in GP pathology referrals impacted Healius due to its greater exposure
to the GP market relative to its key peers. COVID-19 revenue was down $679.7 million
or 89.0%.
The impact of the large drop in volumes on EBITDA and
EBIT margins compared to PCP in a highly leveraged
business is significant.
In FY 2023, Healius undertook a reset of both its COVID and
core costs, in particular COVID labour costs were removed
and core labour costs were held flat, with rightsizing and
leave initiatives offsetting rate increases and legislated
superannuation increases. Domestic FTEs in Pathology
reduced by 11% on PCP.
Healius continues to deploy its customer facing digital
solutions including Referral Hub, Collectors Portal, and
Results Portal. Internally the Laboratory Information
System has been rolled out in two of six main departments.
Healius appointed an experienced pathologist, Dr Jan
van Rooyen, as its new head of pathology in June 2023.
Agilex Biolabs
Agilex Biolabs is a strategic adjacency offering
a capital-light high-growth profile, revenue diversification
away from MBS and complementary capabilities.
Healius remains confident in the market fundamentals,
strategic rationale for the acquisition, and Agilex’s
competitive position.
Revenue for the period was $32.7 million, EBITDA was
$4.4 million and EBIT was $1.3 million. Importantly,
the last quarter of 2023 delivered a strong exit run-rate,
with operational issues from the ownership transition
and scale-up of activities having now been addressed.
Underlying Performance
2023
$M
2022
$M
Revenue – Pathology Core
1,155.8
1,115.7
Revenue – Pathology COVID
Revenue – Agilex
Revenue – Total
EBITDA
Depreciation and amortisation
EBIT
83.8
32.7
1,272.3
293.5
(214.8)
78.7
763.5
11.2
1,890.4
702.6
(204.2)
498.4
BETTER/
(WORSE)
%
3.6%
(89.0%)
192.0%
(32.7%)
(58.2%)
(5.2%)
(84.2%)
2626
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27
Operating and financial reviewHealius – Annual Report 2023
Lumus Imaging
Lumus Imaging’s gross 1 revenue grew above market at 7.3% on PCP. The community
and hospital channels grew by 9.0% while the Medical Centres channel declined
by 1%. Growth in volumes was supported by ongoing use of higher-end modalities
driving higher fees.
Compared to pre-COVID (FY 2019), Lumus Imaging
delivered growth and improved efficiency. The compound
average growth rate (excluding Medical Centres) for gross
revenue per FTE was 4.2% and for exams per FTE was 3.1%.
• appointed a radiologist, Dr Phil Lucas, as Group
•
Executive, Lumus Imaging,
recruited a number of radiologists in the period
supported by the new employment model,
Lumus Imaging’s underlying EBIT nearly doubled in FY 2023,
due to the benefits of cost management and digital
initiatives as well as the leverage impact of higher volumes
on a fixed cost base. Of note in FY 2023, Lumus Imaging:
• developed a greenfield clinic pipeline, with three
committed and a further three with advanced business
cases, and
continued the roll-out of customer-facing digital tools.
•
Underlying Performance
Revenue
EBITDA
Depreciation and amortisation
EBIT
2023
$M
431.2
96.2
(58.4)
37.8
2022
$M
393.9
81.8
(62.7)
19.1
BETTER/(WORSE)
%
9.5%
17.6%
6.9%
97.9%
1 Gross revenue is before, and statutory revenue is after, deduction
for radiologists’ share of revenue under AASB 15.
GE Omni Legend PET/CT
opens for scanning
Lumus Imaging partnered with GE HealthCare to deliver
a new era of PET/CT technology to St Vincent’s Hospital
Northside in Queensland bringing the future to the present
with market-leading lesion sensitivity and scanning speed.
Other improvements include more accurate diagnosis
and treatment planning and earlier detection of disease
all resulting in better outcomes for both our clinicians and
patients plus reducing the injected radiation dose and
scanning times by 50%.
Dr Tom Huang, who leads the Lumus Imaging Nuclear Medicine
Radiologist team at the hospital, reports that in the first two
weeks of operation, over 70 patients were scanned and a 50%
uplift in capacity was seen – running at 12 patients per day.
The Omni Legend delivers excellent PET image quality, better than
other PET/CT machines can produce at this dose/time protocol,
as well as significant improvements in speed and dose reduction.
282828
148
Sites
$431M
Operating revenue
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$38M
Underlying EBIT
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29
Operating and financial reviewHealius – Annual Report 2023 Board of Directors
Ms Macdonald was appointed as a Non-Executive Director in November 2020.
She was appointed Chair of the Board in September 2022 and at that time she
stepped down as Chair of the Audit Committee and as a Member of the Risk
Management Committee.
Jenny brings to the Board extensive financial, regulatory and governance expertise,
coupled with a strong focus on understanding market trends and customer and
consumer behaviour. She has a track record developing and implementing strategy
with a focus on value creation, growth and capital management discipline.
Jenny spent her executive career in customer-facing organisations primarily
in technology, retail, travel services and manufacturing, where she was responsible
for strategic turnarounds and digital transformation.
Her last executive role was interim CEO and CFO at Helloworld Limited, where she
oversaw the merger with AOT Group to create the second largest integrated travel
distribution business in Australia and New Zealand. Before that, she was the CFO
and General Manager International of the REA Group, with responsibility for the
financial growth strategy and execution for operations in Southeast Asia and parts
of Europe, having helped deliver record revenue and net profit for the company.
Jenny holds a Bachelor of Commerce and a Master of Entrepreneurship and
Innovation from Swinburne University, is a Graduate of the Australian Institute
of Company Directors and a Chartered Accountant.
Ms Jaquet was appointed Managing Director and Chief Executive Officer of Healius
in March 2023. Previously, Maxine served as Chief Financial Officer from August 2019.
Her role expanded in January 2021 to include Chief Operating Officer. Maxine joined
Healius in July 2015 as Group Director – Commercial and was appointed Chief Executive
for Health & Co. from March 2016.
As CEO, Maxine has extensive executive experience, and brings a strategic approach.
She has led significant turnaround efforts, generating substantial margin improvement
and business growth. She has also established and managed complex international
partnerships, and has deep commercial and operational line management
experience across industrials and consumer sectors. Maxine’s track record at Healius
includes leading the portfolio strategy which created a pure diagnostics business,
building a dynamic leadership team, investing in leading-edge technology, establishing
and growing the successful private-billing general practitioner network, Health & Co.
prior to its sale and leading two efficiency reviews with significant productivity gains.
Maxine holds a Bachelor of Commerce from Macquarie University.
Mr Davis was appointed as a Non-Executive Director in August 2015 and was appointed
as Chair of the Audit Committee in September 2022. He is a former Chair and member
of the Risk Management Committee, having stepped down as Chair of that committee
in January 2023.
Gordon has been an executive or non-executive director of ASX listed companies
for 17 years. Before becoming a Non-Executive Director, he was Managing Director
of AWB Limited between 2006 and 2010 and had a varied career, managing
international operating businesses in chemicals and agriculture. Gordon joined the
Healius Board at a time of some corporate uncertainty, bringing experience
in governance and business transformation in challenging circumstances.
He served as Policy Advisor to the federal Leader of the Opposition from 1990 to 1993
in the fields of environment, science and resources.
Gordon holds degrees in B Forest Science, Master of Ag. Science, and an MBA from
Melbourne University.
Jenny Macdonald
BCOM, MEI, GAICD, CA ANZ.
NON-EXECUTIVE CHAIR
Maxine Jaquet
BCOM
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
Gordon Davis
B FOREST SC(HONS), MAG
SC, MBA, GAICD.
NON-EXECUTIVE DIRECTOR
3030
Sally Evans
BHSC, FAICD, GAIST.
NON-EXECUTIVE DIRECTOR
John Mattick
AO, FA A, FTSE, FAHMS, FRSN,
FRCPA(HON), GAICD.
NON-EXECUTIVE DIRECTOR
Kate McKenzie
BA, LLB, MAICD.
NON-EXECUTIVE DIRECTOR
Ms Evans was appointed as a Non-executive Director in August 2018. She is Chair of the
People & Governance Committee and a member of the Risk Management 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. With large scale change and growth
leadership experience, Sally moved to asset management in social infrastructure covering
debt and equity raisings, investor relations, acquisitions and governance.
During her career, Sally has frequently been appointed to Ministerial Advisory Committees.
She holds a Bachelor of Applied Science from the University of Otago, is a Fellow of the
Australian Institute of Company Directors, and Graduate of the Australian Institute
of Superannuation Trustees.
Professor Mattick was appointed as a Non-Executive Director in March 2022 and is a member
of the Audit and Risk Management Committees.
John is a Professor in the School of Biotechnology and Biomolecular Science at UNSW Sydney.
From 2018 to 2010, he was Chief Executive of Genomics England, which was established by the
UK government to foster the use of genetic information in healthcare. He was Director of the
Garvan Institute of Medical Research in Sydney from 2012 to 2018, where he established high
throughput NATA accredited DNA sequencing and genome analysis facilities.
John was a member of the Australian Health Ethics Committee (AHEC) of the National
Health & Medical Research Council (NHMRC) from 1997 to 2003, an advisor to the Australian
Law Reform Commission’s Inquiry into the Protection of Human Genetic Information and
Gene Patenting & Human Health, and the AHEC Committee to Revise the Ethical Guidelines
on Assisted Reproductive Technology.
John is a Fellow of the Australian Academies of Science, Technology & Engineering, and
Health & Medical Sciences, and an Honorary Fellow of the Royal College of Pathologists
of Australasia. He was appointed an Officer of the Order of Australia in 2001 for services
to scientific research in the fields of molecular biology, genetics and biotechnology.
Ms McKenzie was appointed as a Non-Executive Director in February 2021. She was
appointed Chair of the Risk Management Committee in January 2023 and is a member
of the People & Governance Committee.
Kate is a highly experienced Chief Executive Officer and Non-Executive Director with
extensive experience in large change management and digital transformation. She started
her career in the public sector, where among other things, she was involved in aspects
of health policy, including a state-based review of health system and re-negotiation
of a Medicare agreement, and had extensive involvement in working with Treasury on health
budget allocations and methodologies.
Kate joined Telstra in 2004 and held a range of senior executive roles in strategy, marketing,
products and operations (responsible for networks, IT, field services and property). She was
CEO of Chorus, a publicly listed NZ telco, for three years from 2017.
Kate holds a Bachelor of Arts and Bachelor of Law from the University of Sydney
and is a Member of the Australian Institute of Company Directors.
Mr Taylor was appointed as a Non-Executive Director in 20 March 2023 and is a member
of the Audit and People & Governance Committees. Charlie has over 30 years’ experience
in international advisory having recently retired as Senior Partner at McKinsey where he led
the Health and Public Sector practices. He has advised many of Australia’s private and
public sector healthcare organisations on topics including strategy, digital, operations and
growth transformations, global expansion and supply chains, mergers and acquisitions
and board governance. Charlie initiated multi-year research efforts on healthcare, COVID
response, productivity and innovation and has published research articles and reports
on healthcare reform lessons from around the globe.
Charlie Taylor
BEC, LLB, MPHIL ECONOMICS
NON-EXECUTIVE DIRECTOR
Charlie is currently a part-time senior board advisor at McKinsey for the Health and Public
Sector practice, a Director of MacLauglin River Pastoral Company, a member of the
strategic advisory committee For Purpose Investment Partners and was recently appointed
as Chair of the NSW Innovation and Productivity Commission. Charlie is the Honorary
Federal Treasurer for the Liberal Party and a Board member on the Federal Executive.
Charlie holds a Bachelor of Economics (First Class) and Laws (Hons) from the University
of Sydney, and a Masters’ in Philosophy Economics from the University of Cambridge.
31
Directors and senior managementHealius – Annual Report 2023 Executive Leadership Team
Maxine Jaquet MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Ms Jaquet was appointed Managing Director and Chief Executive Officer of Healius in March
2023. Previously, Maxine served as Chief Financial Officer from August 2019. Her role expanded
in January 2021 to include Chief Operating Officer. Maxine joined Healius in July 2015 as Group
Director – Commercial and was appointed Chief Executive for Health & Co. from March 2016.
As CEO, Maxine has extensive executive experience, and brings a strategic approach. She has
led significant turnaround efforts, generating substantial margin improvement and business
growth. She has also established and managed complex international partnerships, and has
deep commercial and operational line management experience across industrials and consumer
sectors. Maxine’s track record at Healius includes leading the portfolio strategy which created
a pure diagnostics business, building a dynamic leadership team, investing in leading-edge
technology, establishing and growing the successful private-billing general practitioner network,
Health & Co. prior to its sale and leading two efficiency reviews with significant productivity gains.
Paul Anderson CHIEF FINANCIAL OFFICER AND HEAD OF PEOPLE
Mr Anderson was appointed Chief Financial Officer effective 1 March 2023. Paul was previously
Chief Executive Officer of Network Ten from 2015 to 2020 and was also Executive Vice President
Viacom CBS Networks Australia & New Zealand from 2019 to March 2020. He worked at Network
Ten in a range of finance roles before being appointed Group Chief Financial Officer in 2011
and Chief Financial and Operating Officer in 2014. Before joining Network Ten, Paul worked for
over a decade at CLS Holdings plc in London and KPMG in New Zealand. He is a Chartered
Accountant (ANZ) and a member of the Governance Institute of Australia.
Jan van Rooyen GROUP EXECUTIVE, HEALIUS PATHOLOGY
Dr Van Rooyen was appointed Group Executive, Healius Pathology effective from 19 June 2023.
Jan is both a Pathologist and a business leader and was the Chief Executive Officer of AMPATH
in South Africa for nearly 20 years. Under his leadership, AMPATH was transformed clinically
and operationally from a collection of independent practices to a market-leading business.
During this time, Jan took the lead in bringing together 70 pathologists and support teams
as well as IT systems consolidation and grew the business to 160 pathologists and more than
4,000 staff members. By 2018 AMPATH had around 900 collection facilities and was performing
~24 million tests a year, having become the leading pathology practice in South Africa with
a market share (~40%) and a reputation for ethics and quality.
Phil Lucas GROUP EXECUTIVE, LUMUS IMAGING
Dr Lucas joined Healius as Group Executive, Lumus Imaging in January 2023. Phil is a skilled
radiologist with over 25 years’ experience. Before joining Healius, he was a Director of PRP
Diagnostics Imaging (PRP) for over 15 years. Phil has broad clinical, commercial and leadership
experience with a proven record developing imaging practices, including establishing the first PRP
clinics and growing the PRP group to move than 24 sites. Phil has also held positions as Clinical
Lecturer at the University of NSW, Associate Lecturer at the University of Sydney and Honorary
Radiologist for the 2000 Sydney Olympics and a number of NSW and Australian Rugby, AFL and NRL
teams. He continues as a consultant radiologist part time at Northern Beaches Hospital, Sydney.
Prasad Arav GROUP EXECUTIVE, DIGITAL AND TECHNOLOGY
Mr Arav joined Healius in April 2021 and is the Group Executive for Digital and Technology. Prasad
has over 20 years of experience in technology-focused executive roles and management
consulting. He has successfully managed digitisation of businesses and new market expansions
across Big-4 banking, health, insurance, and retail industries. Prior to joining Healius, Prasad was
Chief Digital Officer and Chief Information Officer for a health insurer and Chief Strategy Officer
for a global technology company. In his role, he is responsible for the CIO function, as well as for
Healius Digital, which is focused on building a leading diagnostics platform across Pathology
and Imaging. This includes modernising Healius’ LIS as well deploying new Digital Health
solutions focused on improving services for doctors and patients.
3232
Jon Eide GROUP EXECUTIVE, COMMERCIAL AND CUSTOMER
Mr Eide was appointed as Group Executive, Commercial and Customer in April 2023. Jon joined
Healius in 2020 and previously held the role of Chief Commercial Officer for Healius Pathology.
In his role, Jon is responsible for leading our Healius-wide Commercial and Customer team,
working across both Imaging and Pathology to deliver our revenue growth and diversification
strategies. Prior to this, Jon held a number of senior commercial roles at Qantas over 12 years,
including leadership of the airline’s strategic partnership portfolio and optimisation of the
$5 billion+ revenue pool associated with the international network. Earlier in his career, Jon
worked as a management consultant serving a global client base across diverse industries
such as financial services, manufacturing, information and communication technology, retail
and aviation.
Steve Humphries GROUP EXECUTIVE, GENERAL AFFAIRS AND DEPUTY CFO
Mr Humphries was appointed as Group Executive, General Affairs and Deputy Chief Financial
Officer in April 2023. Previously, Steve has held the role of Deputy Chief Financial Officer since
February 2020 and before that was contracted to Healius as Acting Chief Financial Officer from
May to August 2017. Steve spent more than 35 years working in professional services including 23
years as Senior Assurance Partner at PwC before retiring in February 2017. While predominately
based in Sydney he has also worked in New Zealand, United Kingdom, Indonesia, Papua New
Guinea and other parts of Southeast Asia. He has extensive experience, commercial acumen
developed working across numerous industries including healthcare, financial services,
manufacturing, construction, technology, media & communications, and resources sectors.
Arjun Narang GROUP EXECUTIVE, OPER ATIONS TR ANSFORMATION
Mr Narang was appointed as Group Executive, Operations Transformation in May 2023.
Arjun joined Healius in November 2021 and previously held the role of General Manager,
Operations Transformation. Arjun has extensive business management, advisory and
start-up experience across Australia, Asia, Europe, Africa and North America. Prior to joining
Healius, Arjun successfully built start-up Internet of Things (IoT) businesses at Ventia and
Taggle Systems enabling low-cost data collection at scale and Big Data analytics to
drive better operational management and capital allocation decisions. He then moved
on to Aurecon in 2019 to become a senior leader in their Asset Management & Performance
Advisory business. Arjun’s career has included running operations for Schlumberger
Wireline and over 15 years advising Boards and senior management teams on operations
transformation and strategy. He started his consulting career at Mitchell Madison Group
going on to become a co-founder of Sourcing Value.
Mark Neeham GROUP EXECUTIVE GOVERNMENT AFFAIRS
Mr Neeham 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, public affairs communications and cultural
change. He also has a military background, serving in the British Army, and continues
to serve, working with the Australian Army to develop the next generation of leaders.
Mark has responsibility for developing and implementing Healius’ relationship strategies
with Government, professional and industry bodies and external stakeholders. Since 2018,
Mark has also been President of Australian Pathology, the peak body for private pathology
in Australia.
Janet Payne GROUP EXECUTIVE CORPOR ATE AFFAIRS
Ms Payne was appointed as Group Executive Corporate Affairs in July 2015. Janet joined
Healius from CIMIC Group Ltd where she was head of investor relations. She has worked
in a range of roles, including investor and media advisory and board advisory. Janet managed
the Initial Public Offering and established investor relations at Qantas Airways Limited.
Her former corporate roles were in the finance industry, having started her career at KPMG
in London and Sydney.
33
Directors and senior managementHealius – Annual Report 2023 The Directors of Healius Limited (referred to as ‘Healius’ or ‘the Company’) submit their Report for the financial year ended
30 June 2023 (referred to as ‘the year’ or ‘FY 2023’), 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
Jenny Macdonald
CONTINUING DIRECTORS DURING FY 2023
•
• Gordon Davis
Sally Evans
•
Kate McKenzie
•
John Mattick
•
NEW DIRECTORS DURING FY 2023
• Maxine Jaquet (from 1 March 2023)
• Charlie Taylor (from 20 March 2023)
DIRECTORS WHO CEASED IN FY 2023
• Robert Hubbard (retired as a Director and Chair 19 September 2022)
•
• Malcolm Parmenter (retired as Managing Director and Chief Executive Officer 1 March 2023)
Paul Jones (retired as a Director 20 October 2022)
Qualifications and experience of Directors
CONTINUING DIRECTORS
The qualifications and experience of each new and continuing Director are set out on pages 30–31 of this Annual Report.
FORMER DIRECTORS
Robert Hubbard BA (Hons), FCA
NON-EXECUTIVE DIRECTOR & 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 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 Birmingham City University. 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.
Paul Jones MB. BS. FAMA
NON-EXECUTIVE DIRECTOR
Dr Jones was appointed as a Non-executive Director in November 2010. During FY 2023, he was a member of the Audit
Committee and the People & Governance Committee and over his tenure as a Director served on all three of the Board’s
committees. 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.
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.
34
Directors’ Reportfor the year ended 30 June 2023 Committees of the Board in FY 2023
AUDIT COMMITTEE
PEOPLE & GOVERNANCE COMMITTEE
RISK MANAGEMENT COMMITTEE
Chair
Jenny Macdonald (until 19 September 2022)
Gordon Davis (from 19 September 2022)
Chair
Sally Evans
Chair
Gordon Davis (until 1 January 2023)
Kate McKenzie (from 1 January 2023)
Members
Gordon Davis (until 19 September 2022)
Robert Hubbard (until 19 September 2022)
Paul Jones (until 19 September 2022)
Jenny Macdonald
John Mattick (from 19 September 2022)
Kate McKenzie (from 19 September 2022
to 1 January 2023)
Charlie Taylor (from 27 June 2023)
Members
Kate McKenzie
Charlie Taylor (from 1 May 2023)
Jenny Macdonald (from 19 September
2022 to 1 May 2023)
Members
Sally Evans
John Mattick
Gordon Davis (from 1 January 2023)
Kate McKenzie (until 1 January 2023)
Jenny Macdonald (until 19 September 2023)
Group Company Secretary
QUALIFICATIONS AND EXPERIENCE OF COMPANY SECRETARIES DURING FY 2023
Mary Weaver BA(Hons)/LLB AGIA ACIS
Mary Weaver was appointed as Group Company Secretary of the Company on 28 March 2023. Mary was admitted as a legal
practitioner in 1996 and has been an Associate of the Governance Institute, Australia since 2009. She held graduate and
associate roles at Allens and Baker & McKenzie, and in-house legal and governance roles in health, construction and property
organisations including Multiplex Limited, Genea Limited and the Aventus Group. She was Company Secretary of Genea Limited
for seven years, the Aventus Group (ASX:AVN) for seven years and the HomeCo Daily Needs REIT (ASX:HDN) for nine months.
Mary Weaver is the person responsible for communications between the Company and ASX.
Steve Humphries BSc (Combined Honours), FICAA and FICAEW
Steve Humphries is the Group Executive, General Affairs and Deputy Chief Financial Officer, a role which commenced in March 2023
when he was also appointed as a Company Secretary of the Company. Mr Humphries has held the role of Deputy Chief Financial
Officer since February 2020 and was contracted to Healius as Acting Chief Financial Officer from May to August 2017. Mr Humphries
spent more than 35 years working in professional services including 23 years as a Senior Assurance Partner at PwC before retiring
in February 2017. He has extensive experience working across numerous industries including the healthcare, manufacturing,
construction, technology, media & communications, and resources sectors. He is a Chartered Accountant and holds a Bachelor
of Science degree in Business Studies and Politics (Combined Honours) from the University of Aston in Birmingham, UK. He is a Fellow
of both the Institute of Chartered Accountants in Australia and The Institute of Chartered Accountants England and Wales, and
is a graduate of the Australian Institute of Company Directors.
Directors’ meetings during FY 2023
The number of meetings of the Board and of each Board committee held during FY 2023 and the number of meetings attended
by each Director are set out below:
BOARD
OF DIRECTORS
AUDIT
COMMITTEE
PEOPLE & GOVERNANCE
COMMITTEE
RISK MANAGEMENT
COMMITTEE
DIRECTOR
ELIGIBLE
ATTENDED
ELIGIBLE
ATTENDED
ELIGIBLE
ATTENDED
ELIGIBLE
ATTENDED
Jenny Macdonald
Gordon Davis 1
Sally Evans
Kate McKenzie
John Mattick
Maxine Jaquet
Charlie Taylor
Malcolm Parmenter 2
Rob Hubbard
Paul Jones
18
18
18
18
18
6
5
12
3
4
18
18
18
18
18
6
5
11
3
4
5
5
N/A
N/A
2
N/A
1
N/A
2
2
5
4
N/A
N/A
2
N/A
1
N/A
2
2
3
N/A
8
8
1
N/A
4
N/A
1
1
3
N/A
8
8
1
N/A
4
N/A
1
1
1
3
3
3
N/A
N/A
N/A
N/A
N/A
N/A
1
3
3
3
N/A
N/A
N/A
N/A
N/A
N/A
1 Gordon Davis was granted leave of absence from one Audit Committee meeting.
2 Malcolm Parmenter was granted leave of absence from one Board meeting.
Any leaves of absence indicated above were typically granted 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 Chair 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.
35
Directors’ Reportfor the year ended 30 June 2023Directors’ ReportHealius – Annual Report 2023 Directorships of other listed companies held by Directors
DIRECTOR
Jenny Macdonald
COMPANY
POSITION
DATE APPOINTED
DATE CEASED
Australian Pharmaceutical Industries Limited
Director
09/11/2017
31/03/2022
Bapcor Limited
Redbubble Limited
Siteminder Limited
Midway Limited
Nufarm Limited
Gordon Davis
Sally Evans
Ingenia Communities Holdings Limited
Kate McKenzie
Oceania Healthcare Limited
AMP Limited
Stockland Corporation Limited
Director
Director
Director
Director and Chair
Director
Director
Director
Director
Director
01/09/2018
19/10/2022
22/02/2018
21/10/2021
06/04/2016
31/05/2011
01/12/2020
23/03/2018
18/11/2020
02/12/2019
Significant change in the state of affairs
During FY 2023 the Group sold its Day Hospitals business in its entirety.
Principal activities
During the year, the Group had two principal continuing activities – pathology and imaging. 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.
Operating and financial review
An operating and financial review of the Group during the year, and the results of those operations, appears on pages 2–29 of this
Report. The review includes an analysis of underlying results which are defined as reported results adjusted for non-underlying items.
The directors believe that the presentation of Underlying results (non-IFRS (International Financial Reporting Standards) is useful for
investors to understand the entity’s financial results from operations.
Events after the end of the year
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.
On-market buyback
Pursuant to ASX listing Rule 4.10.18, the Company notes there is no on-market buyback in progress as at the date of this Report.
Securities purchased for employee incentive scheme
During FY 2023, the Company purchased 975,995 ordinary Shares on-market at an average price of $3.83 per Share to satisfy
the entitlements of the holders of Options issued under the FY 2020 Transformational Long-Term Incentive Plan (an employee
incentive scheme) to acquire ordinary Shares on the exercise of those Options.
36
Directors’ Reportfor the year ended 30 June 2023 Dividends
During FY 2023, the FY 2022 final dividend of 6 cents per share (100% franked) was paid to the holders of fully paid ordinary
Shares on 21 September 2022.
In respect of FY 2023 the Board determined that no dividend would be paid.
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 2023 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.
OPENING
BALANCE
ISSUED SINCE
PRIOR ANNUAL
REPORT
EXERCISED SINCE
PRIOR ANNUAL
REPORT 1
LAPSED SINCE
PRIOR ANNUAL
REPORT 1
CLOSING
BALANCE
Transformation Long-Term Incentive Plan
(TLTIP) FY 2020–22
Balance as at date of this Report
24,262,825
24,262,825
–
–
–
–
12,131,414
12,131,414
12,131,411
12,131,411
1
12,131,414 Options lapsed as no Options exercised in relation to the second tranche of the FY 2020 TLTIP.
Shares issued on the exercise of Options
1,619,909 fully paid ordinary Shares of Healius were issued during, or since the end of, FY 2023 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 2023 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 2023. Healius has not otherwise, during or since the end of FY 2023, 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 106 of this Report.
37
Directors’ Reportfor the year ended 30 June 2023Directors’ ReportHealius – Annual Report 2023 Management of safety risks
Healius as a healthcare provider is dedicated to ensuring a safe work environment for our team members, patients, and
customers. Healius continuously reviews and updates the health and safety management system (WHSMS) to align with its
regulatory and operational requirements.
Healius has adopted a range of key performance indicators, encompassing lead and lag indicators, which are used to monitor
work, health and safety (WHS) performance.
The key indicators, and their targets are as follows:
TARGET
Completion of Health and Safety Plan
activities by worksites
90% of planned activities
completed
Mini audits – measuring compliance
to WHSMS
75% compliance rate
Internal Health and Safety audits – measuring
compliance to National Audit Tool Version 3
80% compliance rate
Number of WHS prosecutions
Lost Time Incidents per Million Hours Worked
(LTIFR)
Zero
Zero
FY 2023
93%
FY 2022
92%
96% of the 160 mini
audits conducted met
or exceeded the target
97% of the 162 mini
audits conducted met
or exceeded the target
94% of the 32 internal
audits conducted met
or exceeded the target
94% of the 33 internal
audits conducted met
or exceeded the target
Zero
7.3 1
Zero
4.2 1
1
Adjusted LTIFR. LTIFR including COVID-19 related exposure incidents is 15.9 (FY 2022: 18.2).
Despite operational challenges during the past year, our performance in key proactive health and safety indicators remains
strong. This is commendable, given a continued reduction in site visits and remote auditing due to the lag effects of COVID-19.
In FY 2023, 93% of planned WHS activities were completed across the Group, surpassing the benchmark of 90%. WHS Audits
play a vital role in assessing our WHSMS implementation. WHS Mini Audits conducted by the team provide an independent
evaluation of workplace implementation.
FY 2023 saw 160 mini audits conducted across Healius Group, with 96% of workplaces achieving or exceeding benchmark
compliance, which is comparable to the previous year. This highlights that the WHS management system’s site-level operation
was maintained. Corrective action plans were established for sites not meeting the benchmark.
Onsite WHS mini audits by WHS coordinators re-commenced in 2H 2023 for local sites with regional sites to resume in FY 2024,
offering greater support and feedback to workplace managers. In summary, proactive safety indicators affirm the maintenance
of the WHS management system’s site-level operation over the past year.
FY 2024 will also focus on enhancing health and safety capabilities, aiming for a proactive, people-centered approach
to maintain mental and physical well-being. A roadmap of WHS activities is under development, incorporating safety indicators
such as hazard management, audit non-conformance corrective actions, and incident investigation completion rates into
quarterly WHS division performance review meetings.
Healius is self-insured for workers’ compensation in certain states, underwriting claims and employing re-insurance policies
to protect against significant cost claims. In other regions, insurance policies for workers’ compensation are held.
Healius provides its people with information on rights, responsibilities, claims procedures, and complaint handling. Accounting
provisions are recognized based on reported and estimated claims, determined through discounted and actuarial valuations.
Reporting on claims and provisions is made to senior management and the Board.
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
www.healius.com.au/invest-in-us/reports/sustainability-report/.
38
Directors’ Reportfor the year ended 30 June 2023 Remuneration Report (Audited)
This report sets out the remuneration arrangements for the Company’s executive Key Management
Personnel (KMP) and Non-executive Directors for the year ended 30 June 2023 (FY 2023).
It is prepared in accordance with section 300A of the Corporations Act 2001 (Corporations Act).
1.
2.
3.
4.
5.
6.
Letter from the Chair of the People & Governance Committee
Healius’ Remuneration Governance
Overview of senior executive remuneration framework
Executive Key Management Personnel FY 2023
Executive KMP – Framework and outcomes FY 2023
4.1
4.2
4.3
4.4
4.5
FY 2023 Fixed Annual Remuneration
FY 2023 Short-Term Incentive Plan (STIP)
FY 2020 Transformation Long-Term Incentive Plan (TLTIP)
FY 2023 Long-Term Incentive Plan (LTIP)
FY 2023 Company performance
Executive KMP – Table of opportunity, awards and receipts
FY 2023 – non-statutory
Executive KMP – Statutory disclosures FY 2023
6.1
6.2
6.3
Executive KMP – Statutory disclosure FY 2023
Executive KMP – Service and Performance Rights and Options awarded,
vested and lapsed during FY 2023
Executive KMP – Equity holdings FY 2023
7.
Non-executive Director (NEDs) shareholding with fee payments summary
7.1
7.2
7.3
7.4
7.5
Non-executive Director remuneration policy
Non-executive Director fees
Other Non-executive Director benefits
Non-executive Director remuneration
Non-executive Director equity holdings as at 30 June 2023
8.
Remuneration policies in detail FY 2023
8.1
8.2
8.3
8.4
8.5
8.6
Senior executive employment terms
Senior executive Short-Term Incentive Plan (STIP) details
Senior executive Transformation Long-Term Incentive Plan (TLTIP) details
Senior executive Long-Term Incentive Plan (LTIP) details
Remuneration-related policies
Transactions with KMP
40
41
42
43
43
43
44
44
45
45
46
48
48
49
50
51
51
52
52
53
53
54
54
54
55
57
58
58
39
Directors’ ReportHealius – Annual Report 2023 Letter from the Chair of the People & Governance Committee
Dear Shareholders,
On behalf of your Board of Directors, I am pleased to
present the audited Remuneration Report for the financial
year ended 30 June 2023 (FY 2023). This Report sets out the
remuneration framework for our senior executives (defined
as Key Management Personnel (KMP) and other members
of the Executive Leadership Team (ELT)) and the specific
outcomes for our KMP in FY 2023.
Our remuneration framework aims to attract, retain and
reward talented employees while aligning their ‘at risk’
arrangements to sustained shareholder value creation.
In FY 2023 the executive succession plan developed
to support the delivery of the Healius Diagnostics for Life
strategy was implemented with the promotion of Maxine
Jaquet to the role of Managing Director and CEO. In addition,
we recruited an experienced CFO and two business unit
leaders with clinical and commercial expertise in their
respective fields of pathology and radiology. We believe
that we have in place an ELT capable of successfully
driving your Company’s future growth, delivering improved
operational and financial outcomes, and enhancing its
culture and sustainability.
In FY 2023, the fixed annual remuneration of our KMP was
established at the time of their respective promotions
and/or appointments, taking into consideration the
Group’s size and complexity, the individual’s skills,
expertise and responsibilities, and market benchmarking.
For our CEO Maxine, this included the recalibration of her
total remuneration package at maximum award levels.
Outcomes are set out in this report.
Following the announcement of an off-market takeover
bid from Australian Clinical Labs Limited (ACL) on 20 March
2023, the Board sought to support retention and give
key executives certainty of their remuneration outcomes
during this extended offer period. For your KMP this meant
determining that, in a change of control event, the Board’s
discretion would be applied to remove performance hurdles
and vest all on-foot Performance Rights and Options.
These arrangements remain on foot up until 30 June 2024.
No STIs have been awarded in FY 2023 since budgetary
outcomes were not met this year amid the difficult market
trading conditions, as described in detail in the Operating
and financial review section of this Annual Report. While some
of the non-financial STI measures were achieved, the board
applied negative discretion to the STI awards for all ELT.
In relation to the LTIPs, FY 2023 was the second (of three)
measurement years for the FY 2020 Transformation LTIP.
No options were exercised under the second tranche of the
TLTIP because the options were out of the money at the
measurement date, with the option value being lower than
the strike price.
A simpler FY 2023 LTIP was approved at the 2022 AGM.
In response to stakeholder feedback, this plan included
the granting of Performance Rights rather than Options,
to be determined at Face Value instead of Fair Value.
The weighting of the rTSR hurdle was increased from
33.3% to 66.7%, with a commensurate reduction in the
EPS percentage, to drive closer alignment to shareholder
returns. This LTIP also expands the number of eligible
participants while maintaining a similar cost to the Company.
Performance Rights have been granted to be measured
after the end of FY 2025 in relation to performance over the
three-year period.
For your Non-Executive Directors (NEDs), we undertook
a review of base fees as these have been unchanged since
FY 2018, with the assistance of an external review. Details
of the proposed fee pool increase is set out in this report.
In terms of equity holdings, your NEDs have a target of one
year’s fees in equity by 30 June 2025 or five years after their
date of appointment.
Before closing I would like to emphasise that your Board
believes that we have the right leadership team and the right
remuneration structures in place to drive your Company’s
future growth through delivery of our Diagnostics for Life
strategy and its four pillars of Service, Insights, Operating
Leverage and People.
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
40
Directors’ Reportfor the year ended 30 June 2023 Healius’ Remuneration Governance
1.
Healius’ Remuneration Governance Framework and the Charter of the People & Governance Committee are available on the
Company’s corporate governance section at: 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 | Kate McKenzie | Charlie Taylor
Appointed and authorised by the Board to assist in fulfilling its statutory and fiduciary duties.
People & Culture
Senior Executive remuneration, recruitment, retention, performance evaluation, incentives and termination
The Committee is responsible for making recommendations to the Board about:
• Healius’ Purpose, Mission and Values
• Governance
•
•
• Diversity
• 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
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.
41
Directors’ Reportfor the year ended 30 June 2023Directors’ ReportHealius – Annual Report 2023 2. Overview of senior executive remuneration framework
Remuneration Principles
Support Healius’ Purpose, Mission and Values and the business strategy
•
• Attract, reward and retain high calibre senior executives being executive Key Management Personnel (KMP)
and other members of the Executive Leadership Team (ELT)
• Align the rewards of these executives to performance and sustained shareholder value
• Continually reviewed to ensure relevance.
Fixed
Remuneration
(FAR)
FY 2023
Short-term Incentive Plan
(STIP)
FY 2023
Long-term Incentive Plan
(LTIP)
•
•
•
25% of TRP and 67% of FAR at maximum
for CEO and CFO
22% of TRP and 56% of FAR at maximum
for other KMP and ELT
To reward achievement over one
financial year
• Measured against an individual’s
scorecard which includes financial,
operational, strategic and sustainability
Key Performance Indicators (KPIs)
with behaviours acting as a gateway
to any award (including the Board’s
discretion to modify any award to zero
if deemed necessary)
• Comprises 67:33 cash and equity. The
equity portion is in the form of Restrictive
Shares which are deferred in equal
portions for a further one and two years
beyond the performance year subject
to on-going employment
•
• Creates senior executive equity
ownership, directly aligns senior
executives with shareholders and
encourages retention
Scaling of financial hurdles to include
stretch or maximum levels incentivises
senior executives to continue
to outperform if a lower goal has
been achieved
STIP payments or vesting 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
•
•
•
•
•
•
•
•
•
•
37.5% of TRP and 100% of FAR
at maximum for CEO and CFO
39% of TRP and 100% of FAR
at maximum for other KMP and ELT
To reward multi-year performance,
achievement of long-term strategic
objectives and help retain key talent
67% measured against relative Total
Shareholder Return (rTSR) and 33%
against underlying Earnings per Share
(EPS) growth, directly aligned with
shareholder interests
Comprises a grant of Performance
Rights which are assessable after the
end of FY 2025
Creates senior executive equity
ownership, directly aligns senior
executives with shareholders and
encourages retention
Scaling of rTSR and EPS hurdles
to include stretch or maximum
levels incentivises senior executives
to continue to outperform if a lower
goal has been achieved
A positive rTSR gate applies to Healius’
rTSR performance such that no award
can be made if Healius’ rTSR over the
measurement period is zero or negative
LTIP vesting 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
•
•
•
•
•
•
37.5% of Total
Remuneration
Package (TRP) at
maximum for CEO
and CFO
39% of TRP at
maximum for other
KMP and ELT
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
Ongoing assessment
against change in
role scope, market
relativities, and
general wage
movements
Ongoing
consideration of
retention preferences
and succession
planning
• Minimum shareholding
policy requiring 1.0x
FAR for KMP and 0.5x
for other members
of the ELT to be held
in shares
42
Directors’ Reportfor the year ended 30 June 2023 TLTIP - EQUITY
STI-EQUITY
STI - CASH
FAR
Executive Key Management Personnel FY 2023
3.
KMP are the Non-executive Directors, the executive Director and employees who have authority and responsibility for planning,
directing and controlling the material activities of the Group, directly or indirectly. The following roles and individuals were
identified as executive KMP for FY 2023 (Non-executive Directors are identified in section 7).
ROLE
NAME
DATES
Managing Director & Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
Group Executive Pathology
Malcolm Parmenter
Maxine Jaquet
Maxine Jaquet
Paul Anderson
John McKechnie
Dr Jan van Rooyen
September 2017 – March 2023
March 2023 – current
August 2019 – February 2023
March 2023 – current
August 2019 – June 2023
June 2023 – current
The Total Remuneration Packages of current Healius KMP at stretch or maximum can be illustrated as follows:
Remuneration Mix (Maximum %)
CEO
CFO
GE Pathology
37.5%
37.5%
39.1%
16.7%
16.7%
8.3%
8.3%
14.5%
7.3%
37.5%
37.5%
39.1%
FAR
STI (Cash) – Variable
STI (Equity) – Variable
LTI (Equity) – Variable
4.
Executive KMP – Framework and outcomes FY 2023
FY 2023 FIXED ANNUAL REMUNERATION
4.1
The fixed annual remuneration (FAR) was reviewed and negotiated at the time of the respective appointments of new KMPs
in FY 2023, taking into consideration the Group’s size and complexity, an individual’s skills, expertise and responsibilities,
and benchmarking of similar companies/divisions. The reviews resulted in the following changes in executive KMP annual FAR,
with amounts paid in FY 2023 pro-rated for the period of service:
POSITION
CEO
CFO
Group Executive Pathology
ANNUAL FAR
FOR NEW APPOINTEE
ANNUAL FAR
FOR PREVIOUS APPOINTEE
$1.500m
$800k
$850k
$1.650m
$900k
$800k
A minimum shareholding policy has been established this year in order to strengthen the alignment between senior executives
and shareholders. The policy requires a shareholding of 1.0x FAR for KMP and 0.5x for other members of the ELT. Participants are
required to hold 50% of their vested Performance Rights or Shares until their minimum level is achieved.
On 1 March 2023, Dr Malcolm Parmenter stepped down from the role of CEO and Managing Director of Healius. The Board
decided that, given Malcolm’s extensive experience and expertise, it was in the best interest of Healius for him to remain
in an advisory capacity during his 12-months’ contractual notice period to assist the incoming executives. In table 6.1
a termination benefit of $1.69 million is set out. Of that figure, $1.65 million represents his fixed annual remuneration during
his contractual notice period.
The balance of $0.04 million relates to accruals under the accounting standards for the rTSR element of the third and final
tranche of the FY 2020 Long-Term Incentive Plan. It remains subject to the performance testing mechanisms outlined in this
report and may not eventuate. The Board used its discretion to allow Malcolm to retain full entitlement to options in relation to
this tranche of the Transformation LTI Plan, given the period outside of his contract amounted to only four months out of a five-
year measurement period. It should also be noted that these options have a strike price of $3.05 and that the second tranche,
assessed for this Remuneration Report, was out of the money and therefore did not vest (see 4.3 below).
Following the announcement of an off-market takeover bid from Australian Clinical Labs Limited (ACL) on 20 March 2023,
the Board sought to give key executives who hold roles critical to delivery of the Healius business plan certainty of their
remuneration outcomes. For KMP this meant determining that in a change of control event, the Board’s discretion will
be applied to remove performance hurdles and vest all on foot Performance Rights and Options.
43
Directors’ Reportfor the year ended 30 June 2023Directors’ ReportHealius – Annual Report 2023
4.2
FY 2023 SHORT-TERM INCENTIVE PLAN (STIP)
•
Framework
Key outline of the FY 2023 STIP for senior executives (primarily executive KMP and other ELT members) is as follows, with further
details set out in section 8 below:
•
The purpose of the STIP is to reward achievement over the course of a single financial year, measured against
an individual’s performance scorecard which includes relevant and tailored financial, operational, strategic and
sustainability KPIs.
The STIP ensures executive KMP are measured and rewarded for initiatives over which they have responsibility, which
contribute directly to the achievement of the Company’s strategic goals and which deliver increased shareholder value.
Leadership behaviours act as a gateway for the STIP award, including the Board’s discretion to modify any award to zero.
The STIP currently equates to 67% of FAR at maximum for CEO and CFO (56% of FAR at maximum for other KMP and ELT).
The STIP maximum opportunity equates to 120% of target for CEO and CFO (112% for other KMP and ELT).
•
•
•
• Under the plans, the Board retains discretion to increase awards above maximum in exceptional circumstances.
•
• Half of the Restricted Shares will be deferred for a further one year and the other half will be deferred for two years beyond
the performance year subject to the participant remaining employed by the Company at the end of the applicable vesting
period (unless the Board determines otherwise).
Two-thirds of any STIP award will be paid in cash and one-third in the form of Restricted Shares.
• Restricted Shares carry dividend and voting rights but may not be traded. After vesting the restrictions are removed and
they become ordinary fully paid Shares.
Outcomes
As set out in the Operating and financial review section of this Annual Report, Healius operates within the Australian healthcare
market which was impacted in the year by a substantial lessening in demand for COVID-19 PCR testing and by widespread GP
workforce, supply and access challenges. These led to a drop in COVID revenues and to a soft year for GP-referred pathology
services for Healius. As a result of the performance, budgetary outcomes were not met and no STI awards were made for the
FY 2023 year.
FY 2020 TRANSFORMATION LONG-TERM INCENTIVE PLAN (TLTIP)
4.3
The FY 2020 Transformation Long-Term Incentive Plan (TLTIP) was established in early FY 2020 by the Board to ensure senior
executives were aligned to shareholder returns over a five-year period given the long-dated nature of the strategic changes
underway at that time including core technology platforms in Pathology. A one-off mega-grant of Options representing
three-years’ worth of LTIs was made in early FY 2020 measured over a period of three, four and five years.
Outcomes
The FY 2023 year is the second of these three measurement years. No options were exercised under the TLTIP because the
options were out-of-the-money at the measurement date, with the option value being lower than the strike price.
44
Directors’ Reportfor the year ended 30 June 2023 FY 2023 LONG-TERM INCENTIVE PLAN (LTIP)
4.4
Vesting conditions
The purpose of the FY 2023 LTIP is to create a link between longer-term performance and reward by providing an at-risk
element of executive remuneration that focuses on a three-year period. Outcomes will be measured after the end of FY 2025.
The FY 2023 LTIP equates to 100% of FAR at maximum for CEO, CFO, other executive KMP and ELT.
A summary of the vesting conditions for the FY 2023 LTIP is set out below with further details set out in section 8. FY 2023 LTIP
awards for executive KMP will be determined using the following ratios:
LTIP PERFORMANCE MEASURE
Group rTSR
CAGR Group Underlying EPS
ALL KMP
66.7%
33.3%
rTSR was selected by the Board to motivate senior executives to drive returns which outperform those of comparable
companies. rTSR has a positive gate. It is measured against a benchmark of the S&P/ASX 100-200 index excluding financial
services, resources and technology stocks and calculated as follows:
PERFORMANCE BAND
Below Entry
Entry
Between Entry and Maximum
At or above Maximum
rTSR RANK (P VALUE)
% OF PERFORMANCE RIGHTS
. 28,844 Shares and all NED Share Rights held
by Sally Evans.
15,000 Shares held by MCK Family Holdings Pty Ltd. 2,008 shares held by Kathryn McKenzie.
27,542 Ordinary Shares held by J & L Mattick Retirement Fundy Holdings Pty Ltd. 7,546 Ordinary Shares held by John Mattick.
FY 2023 NED Share Rights and FY 2022 NED Share Rights issued under the NED Share Plan to participating NEDs through salary sacrifice.
All securities were issued pursuant to shareholder approval under ASX Listing Rule 10.14. During FY 2023, the final 50% of FY 2022 NED Share
Rights vested into Shares in September 2022 following the Company’s FY 2022 results announcement. Also during FY 2023, 50% of FY 2023
NED Share Rights vested into Shares in March 2023 following the Company’s HY 2023 results announcement. The remaining 50% of FY 2023
NED Share Rights vested in FY 2024 following the announcement of the Company’s FY 2023 results.
53
Directors’ Reportfor the year ended 30 June 2023Directors’ ReportHealius – Annual Report 2023 8.
8.1
Remuneration policies in detail FY 2023
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
Six to twelve months, from either party.
Termination
without notice
Termination
payments
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.
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.
8.2
SENIOR EXECUTIVE SHORT-TERM INCENTIVE PLAN (STIP) DETAILS
KEY TERM
Period
Eligibility
SUMMARY OF KEY TERM
1 July 2022 to 30 June 2023 inclusive.
Senior Executives and other persons approved by the Board. NEDs are not eligible to participate.
Potential
annual award
For the CEO and CFO, 67% of FAR, equivalent to 25% of Total Potential Remuneration (at maximum
level performance).
For other executive KMP, 56% of FAR equivalent to 22% of Total Potential Remuneration (at maximum
level performance).
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).
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 2023: Must meet leadership behavioural standards aligned to the Company’s ‘WE CARE’ values.
FY 2024 invitations: To be determined.
Termination
of employment
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 may still vest on Vesting Day.
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.
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, 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.
54
Directors’ Reportfor the year ended 30 June 2023 8.3
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 five 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, equivalent to 50% of Total Potential Remuneration
(at maximum level performance).
For other executive KMP, 130% of FAR, equivalent to 47% of Total Potential Remuneration
(at maximum level performance).
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 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 or FY 2022.
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 is exceeded by 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 higher 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 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.
•
•
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.
55
Directors’ Reportfor the year ended 30 June 2023Directors’ ReportHealius – Annual Report 2023 KEY TERM
SUMMARY OF KEY TERM
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 * 2
• Accent Group Limited
• Ansell Limited *
• ARB Corporation Limited
• Australian Pharmaceutical
Industries Limited * 2
• Australian Clinical Labs
Limited 1
• 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 * 2
• 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 *
• Regis Healthcare Limited *
• Resmed Inc *
• Sigma Healthcare Limited *
• Somnomed Limited *
• Sonic Healthcare Limited *
• Southern Cross Media Group
Limited
• Virtus Health Limited * 2
1
The Board added Australian Clinical Labs Limited to the comparator group following the ASX listing of this direct
competitor of the Company in 2021.
2 Companies which have been delisted or which are subject to a control premium as at the date of assessment
of rTSR may be removed or have their TSR adjusted at the Board’s discretion.
Re-testing
There is no re-testing of Performance Conditions or deferral of the Exercise Date of Options.
Lapse and
transferability
Termination of
employment
Bonus issues, rights
issues and capital
reorganisation
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.
If a participant ceases to be an employee of the Company, 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
on a pro-rata basis 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 Company-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.
56
Directors’ Reportfor the year ended 30 June 2023 8.4
SENIOR EXECUTIVE LONG-TERM INCENTIVE PLAN (LTIP) DETAILS
KEY TERM
Period
Eligibility
SUMMARY OF KEY TERM
1 July 2023 to 30 June 2025 inclusive.
Executive Leadership Team (ELT) and other persons approved by the Board. NEDs are not eligible
to participate.
Potential annual
award
For the CEO, 100% of FAR
For KMP and ELT members, 100% of FAR
For other participants a range of 30% to 40% of FAR
Form of awards
The number of Performance Rights are determined by the following formula:
FAR x Maximum LTIP Allocation/Performance Rights Value
Performance
Conditions
Performance Rights will only vest to the extent the Performance Conditions and the Service Conditions
are satisfied.
Grants are subject to the following performance conditions relating to the Company. The Grant will
be split into two tranches to enable the separate vesting according to the respective conditions:
•
•
1/3 of Performance Rights are subject to an earnings per share (EPS) hurdle; and
2/3 of Performance Rights are subject to a relative total shareholder return (rTSR) hurdle.
The Performance Conditions will be tested after the end of the Performance Period, and the Board will
determine the number of Performance Rights (if any) that will vest.
Any Performance Rights which do not vest following testing of the Performance Conditions will lapse.
rTSR comparator
group
When implementing the LTIP, the Board determined that the comparator group of companies is the ASX
100–200 minus Banks, Technology and Resources.
The Board has the discretion to adjust the comparator group, including to take into account acquisitions,
mergers or other relevant corporate action or delisting.
Termination of
employment
If an LTIP 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
Performance Rights held by the participant will be forfeited and lapse unless and to the extent
otherwise determined by the Board.
If an LTIP participant’s termination is in Special Circumstances, then Performance Rights granted
under the LTIP in the financial year of termination may still vest on Vesting Day.
Performance 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.
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, the Board may:
1.
terminate the LTIP 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
2.
continue the LTIP 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
3.
allow the LTIP to continue.
In the absence of the Board exercising its discretion above, unvested LTIP Performance Rights
immediately vest on at least a pro-rata basis upon the Change of Control.
57
Directors’ Reportfor the year ended 30 June 2023Directors’ ReportHealius – Annual Report 2023 8.5 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 has an equity holding policy applicable to executive KMP and other members of the ELT.
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 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.
• 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.
-
-
• During FY 2022, KMP remuneration options were provided to the Board by an ERC in respect of the
FY 2023 LTI plan. No remuneration recommendations were made by that ERC.
8.6
TRANSACTIONS WITH KMP
KEY TERM
SUMMARY OF KEY TERM
Transactions with
current KMP
•
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 2023.
58
Directors’ Reportfor the year ended 30 June 2023 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.
Jenny Macdonald
Chair
26 September 2023
59
Directors’ Reportfor the year ended 30 June 2023Directors’ ReportHealius – Annual Report 2023 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 2023,
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 2023 Corporate Governance Statement can be viewed at:
www.healius.com.au/about-us/corporate-governance/.
60
Corporate Governance Statement 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 2023, 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;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene 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
Katrina Zdrilic
Partner
26 September 2023
Page | 61
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Auditor’s Independence DeclarationDirectors’ ReportHealius – Annual Report 2023
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 2023, 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 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 2023
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
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 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 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 financial report.
62
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Independent Auditor’s Report
Carrying Value of Goodwill
Why significant
How our audit addressed the key audit matter
At 30 June 2023, the Group’s consolidated balance
sheet includes goodwill and other intangible assets of
$1,970.6m and other non-current assets of $
1,338.3m.
As disclosed in Note B2 the Group performs an annual
impairment test for each cash generating unit (CGU)
to which goodwill is allocated to determine whether
the recoverable value of each CGU exceeds its
carrying amount. The impairment test resulted in an
impairment charge of $349.8m recorded against the
goodwill of the Pathology CGU.
A fair value less cost of disposal model was used to
calculate the recoverable amount of each cash
generating unit. The impairment test incorporates
significant judgement and estimates based on
conditions existing at 30 June 2023. The estimates
and assumptions relate to future performance, market
and economic conditions.
This was considered a key audit matter due to the
value of the balance relative to the Group’s total
assets, extent of audit effort and significant judgment
required to assess the reasonableness of cash flow
forecasts, growth rates, discount rates and terminal
growth rates used by the Group in undertaking the
impairment test.
► 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 reasonableness of future
cash flow forecasts, by considering our
knowledge of the business, the reliability
of previous forecasts and budgets, current
trading performance and corroborating
data with external information where
possible.
► 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 including the consistency
of the cash flow forecasts with Board
approved business budget.
► Performed sensitivity analyses on the key
assumptions including discount rates,
terminal growth rates and EBITDA
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 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 2023 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.
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Independent Auditor’s ReportDirectors’ ReportHealius – Annual Report 2023
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 financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the 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 financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
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 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.
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64
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Independent Auditor’s Report
► Evaluate the overall presentation, structure and content of the 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 entities or
business activities within the Group to express an opinion on the consolidated financial report. We
are responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
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 40 to 58 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Healius Limited for the year ended 30 June 2023,
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
Katrina Zdrilic
Partner
26 September 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page | 65
65
Independent Auditor’s ReportDirectors’ ReportHealius – Annual Report 2023
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
B.
in the Directors’ opinion, the financial statements and notes thereto, for the financial year ended 30 June 2023, are in accordance
with the Corporations Act 2001 (Cth), including section 296 (compliance with accounting standards) and section 297 (true and
fair view)
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
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 2023.
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
Jenny Macdonald
Chair
26 September 2023
66
Directors’ declaration 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 assets
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
E11
Notes to the statement of cash flows
Discontinued operations
Taxation
Contingent liabilities
Share-based payments
Related party disclosures
Key Management Personnel disclosures
Remuneration of auditor
Businesses acquired
Adoption of new and revised standards
Subsequent events
Shareholder information
Financial calendar
Corporate information
68
69
70
71
72
73
74
74
76
76
77
78
79
79
80
82
83
84
84
85
85
86
87
87
88
88
89
89
94
95
95
98
99
100
100
101
102
103
104
106
106
106
107
108
108
109
112
112
67
Finance ReportHealius – Annual Report 2023 Revenue
Employee benefits expense
Property expenses
Consumables
Repairs and maintenance
IT expenses
Insurance
Short-term equipment hire
Other expenses
Depreciation – property, plant and equipment
Depreciation – right of use assets
Amortisation – intangibles
Digital transformation costs
Transaction costs
Takeover bid costs
Impairment of leased assets
Impairment of goodwill
Restructuring, termination and other costs
(Loss)/earnings before interest and tax
Net finance costs
(Loss)/profit before tax
Income tax benefit/(expense)
(Loss)/profit for the year from continuing operations
Profit for the year from discontinued operations
(Loss)/profit for the year
Attributable to:
Equity holders of Healius Limited
Basic (loss)/earnings per share from continuing operations
Basic (loss)/earnings per share from continuing and discontinued operations
Diluted (loss)/earnings per share from continuing operations
Diluted (loss)/earnings per share from continuing and discontinued operations
NOTE
A2
A3
A3
A3
A4
E2
NOTE
A5
A5
A5
A5
2023
$M
2022 1
$M
1,706.9
2,288.9
(864.3)
(56.3)
(223.7)
(30.4)
(46.2)
(7.2)
(3.5)
(100.0)
(40.8)
(220.9)
(15.5)
(21.7)
(3.2)
(5.4)
(39.1)
(349.8)
(13.9)
(335.0)
(62.3)
(397.3)
17.3
(380.0)
12.2
(367.8)
(932.1)
(50.8)
(306.4)
(29.7)
(47.6)
(7.6)
(35.7)
(123.4)
(41.5)
(215.4)
(14.3)
(10.5)
(10.3)
–
–
–
–
463.6
(49.0)
414.6
(122.2)
292.4
15.5
307.9
(367.8)
307.9
2023
CENTS PER
SHARE
2022
CENTS PER
SHARE
(66.7)
(64.6)
(66.7)
(64.6)
50.1
52.8
49.4
52.0
1
The results of entities disposed in FY 2023 are excluded from continuing operations and presented as results from discontinued operations.
Notes to the financial statements are included on pages 73 to 108.
68
Consolidated statement of profit or lossfor the year ended 30 June 2023
(Loss)/profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Fair value gain on cash flow hedges
Reclassification adjustments relating to realised cash flow hedges for amounts
recognised in profit or loss
Income tax relating to items that may be reclassified subsequently to profit or loss
Other comprehensive income for the year, net of income tax
Total comprehensive (loss)/income for the year
2023
$M
(367.8)
2022
$M
307.9
4.1
0.7
(1.4)
3.4
0.8
5.3
(1.8)
4.3
(364.4)
312.2
Notes to the financial statements are included on pages 73 to 108.
69
Consolidated statement of other comprehensive income for the year ended 30 June 2023Finance ReportHealius – Annual Report 2023
Current assets
Cash
Receivables
Consumables
Tax assets
Total current assets
Non-current assets
Goodwill
Right of use assets
Property, plant and equipment
Other intangible assets
Other financial assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Payables
Deferred consideration
Tax liabilities
Provisions
Lease liabilities
Total current liabilities
Non-current liabilities
Provisions
Interest-bearing liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
NOTE
30 JUNE
2023
$M
30 JUNE
2022
$M
E1
B1
E3
B2
B6
B3
B4
E3
B7
B8
E3
B9
B5
B9
C1
B5
115.3
189.5
32.8
6.7
344.3
1,897.5
1,067.3
176.0
73.1
7.1
87.9
3,308.9
3,653.2
218.0
0.9
1.9
145.8
263.0
629.6
14.4
562.1
940.9
1,517.4
2,147.0
1,506.2
C2
2,421.0
8.5
(923.3)
1,506.2
81.3
241.3
49.2
–
371.8
2,344.3
1,074.9
196.0
75.2
5.8
68.8
3,765.0
4,136.8
169.6
5.7
67.3
175.0
223.7
641.3
18.6
606.1
949.2
1,573.9
2,215.2
1,921.6
2,422.9
19.9
(521.2)
1,921.6
Notes to the financial statements are included on pages 73 to 108.
70
Consolidated statement of financial positionas at 30 June 2023
$M
Balance at 1 July 2022
Loss for the year
Fair value gain on 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 loss
Buyback of shares (note C2)
Shares issued via
Non-executive Director (NED)
Share Plan (note C2)
Payment of dividends (note C4)
Shares purchased for Long
Term Incentive Plan (note C2)
Share based payments
Transfers
ISSUED
CAPITAL
2,422.9
–
–
–
–
–
(5.2)
0.3
–
(3.7)
–
6.7
Balance at 30 June 2023
2,421.0
$M
Balance at 1 July 2021
Profit for the year
Fair value gain on
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
Buyback of shares (note C2)
Shares issued via
Non-executive Director (NED)
Share Plan (note C2)
Payment of dividends (note C4)
Shares purchased for Long
Term Incentive Plan (note C2)
Share based payments
Transfers
–
–
–
–
(135.8)
0.2
–
(22.1)
–
5.0
Balance at 30 June 2022
2,422.9
TREASURY
SHARES
CASH FLOW
HEDGE
RESERVE
SHARE-BASED
PAYMENTS
RESERVE
OTHER
RESERVES
ACCUMULATED
LOSSES
20.8
(0.7)
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.2)
–
4.1
0.7
(1.4)
3.4
–
–
–
–
–
–
3.2
–
–
–
–
–
–
–
–
–
(8.1)
(6.7)
6.0
CASH FLOW
HEDGE
RESERVE
SHARE-BASED
PAYMENTS
RESERVE
(4.5)
–
0.8
5.3
(1.8)
4.3
–
–
–
–
–
–
(0.2)
22.1
–
–
–
–
–
–
–
–
–
7.9
(9.2)
20.8
–
–
–
–
–
–
–
–
–
3.6
–
(521.2)
(367.8)
–
–
–
(367.8)
–
–
(34.3)
–
–
–
TOTAL
1,921.6
(367.8)
4.1
0.7
(1.4)
(364.4)
(5.2)
0.3
(34.3)
(3.7)
(8.1)
–
–
–
–
–
–
–
–
–
–
–
–
(0.7)
(923.3)
1,506.2
OTHER
RESERVES
ACCUMULATED
LOSSES
(0.7)
–
(731.6)
307.9
TOTAL
1,857.3
307.9
–
–
–
–
–
–
–
–
–
–
–
–
–
307.9
–
–
(98.1)
–
–
0.6
0.8
5.3
(1.8)
312.2
(135.8)
0.2
(98.1)
(22.1)
7.9
–
(0.7)
(521.2)
1,921.6
ISSUED
CAPITAL
2,575.6
–
TREASURY
SHARES
(3.6)
–
Notes to the financial statements are included on pages 73 to 108.
71
Consolidated statement of changes in equityfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Gross cash flows from operating activities
Net income tax paid
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sale of business (net of cash disposed and transaction costs)
Payment for property, plant and equipment
Payment for other intangibles
Proceeds from the sale of property, plant and equipment and intangibles
Payment for business acquired (net of cash received) – Agilex Biolabs
Payment for business acquired (net of cash received) – Axis Diagnostics
Payments for earn out, settlement and deferred consideration
Net cash from/(used in) investing activities
Cash flows from financing activities
Finance costs on interest-bearing liabilities
Interest received
Interest paid on lease liabilities
Payment of lease liabilities
Payments for buyback of shares
Shares purchased for Long Term Incentive Plan
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash used in financing activities
Net increase in cash held
Cash at the beginning of the year
Cash at the end of the year
NOTE
2023
$M
2022
$M
1,904.8
(1,500.4)
404.4
(71.1)
333.3
116.3
(62.7)
(13.4)
30.9
–
–
(3.8)
67.3
(28.5)
1.6
(34.7)
(216.8)
(5.2)
(3.7)
135.0
(180.0)
(34.3)
(366.6)
34.0
81.3
115.3
2,456.2
(1,779.1)
677.1
(90.3)
586.8
28.2
(81.4)
(12.1)
3.7
(290.7)
(12.6)
(36.8)
(401.7)
(13.3)
0.3
(35.2)
(214.3)
(139.4)
(22.1)
510.6
(165.0)
(98.1)
(176.5)
8.6
72.7
81.3
E1
E2
E9
E1
E1
Notes to the financial statements are included on pages 73 to 108.
72
Consolidated statement of cash flowsfor the year ended 30 June 2023 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 2023 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. Notwithstanding that the Group’s
working capital position is in a net current liability position as at 30 June 2023 of $285.3 million (2022: $269.5 million),
management continually monitor the Group’s working capital position, including forecast working capital requirements and
the available debt facilities. The Group’s financial forecasts demonstrate that there are sufficient financial resources to meet
obligations as they fall due throughout the going concern period.
Where applicable, prior year comparatives have been restated in line with current year presentation.
NEW AND AMENDED STANDARDS ADOPTED
There are no new accounting standards or interpretations that are applicable for the first time in financial year 2023
which have a material impact on the disclosures or amounts recognised in the consolidated financial statements of the
Group. The Group has not early adopted any standards, interpretations or amendments that have been issued but are not
yet effective.
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:
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
80
83
85
86
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.
73
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 A. Group performance
This section contains details of the way the business measures performance for the purpose of internal reporting
and 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. Pursuant to the disposal of the Day Hospitals business, the Group’s continuing operations
comprise the following three divisions or operating segments. The segment results of the prior year have been restated for
consistency with the current year operating segments:
OPERATING SEGMENT
ACTIVITY
Pathology
Imaging
Other
Provider of pathology services, including speciality pathology and clinical trials.
Provider of imaging services from stand-alone imaging sites, hospitals and
medical centres.
Comprises of corporate functions.
The Group operates predominantly in Australia.
Intersegment
Cross segment fees are charged for the use of 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 impairment expenses and 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
2023
Segment revenue
Intersegment sales
Total revenue
EBITDA 1
Depreciation – property, plant and equipment
Amortisation – intangibles
Depreciation – right of use assets
EBIT 2
PATHOLOGY
$M
1,272.3
IMAGING
$M
431.2
293.5
(25.4)
(9.5)
(179.9)
78.7
96.2
(14.7)
(4.6)
(39.1)
37.8
TOTAL
CONTINUING
OPERATIONS
$M
1,707.4
(0.4)
1,707.0
376.2
(40.8)
(15.5)
(220.9)
99.0
OTHER
$M
3.9
(13.5)
(0.7)
(1.4)
(1.9)
(17.5)
1
2
EBITDA is a non-statutory profit measure representing underlying earnings before interest, tax, depreciation and amortisation.
EBIT is a non-statutory profit measure representing underlying earnings before interest and tax.
74
Notes to the financial statementsfor the year ended 30 June 2023 A1. Segment information (continued)
2022
Segment revenue
Intersegment sales
Total revenue
EBITDA 1
Depreciation – property, plant and equipment
Amortisation – intangibles
Depreciation – right of use assets
EBIT 2
PATHOLOGY
$M
1,890.4
IMAGING
$M
393.9
702.6
(22.8)
(8.8)
(172.6)
498.4
81.8
(17.0)
(3.9)
(41.8)
19.1
TOTAL
CONTINUING
OPERATIONS 3
$M
2,290.8
(0.5)
2,290.3
758.2
(41.5)
(14.3)
(215.4)
487.0
OTHER
$M
6.5
(26.2)
(1.7)
(1.6)
(1.0)
(30.5)
1
2
3
EBITDA is a non-statutory profit measure representing underlying earnings before interest, tax, depreciation and amortisation.
EBIT is a non-statutory profit measure representing underlying earnings before interest and tax.
The results of entities disposed in FY 2023 are excluded from continuing operations and presented as results from discontinued operations.
Reconciliation of underlying segment revenue to reported revenue:
Total underlying segment revenue from continuing operations
Transactions with discontinued operations
Reported revenue
SEGMENT RESULT
2023
$M
1,707.0
(0.1)
1,706.9
2022 1
$M
2,290.3
(1.4)
2,288.9
1
The results of entities disposed in FY 2023 are excluded from continuing operations and presented as results from discontinued operations.
Reconciliation of underlying segment result to reported (loss)/profit before tax:
Underlying results from continuing operations before tax
Digital transformation costs
Transaction costs
Takeover bid costs
Impairment of leased assets
Impairment of goodwill
Restructuring, termination and other costs
Transactions with discontinued operations
Reported EBIT
Finance cost
Reported (loss)/profit before tax
SEGMENT RESULT
2023
$M
99.0
(21.7)
(3.2)
(5.4)
(39.1)
(349.8)
(13.9)
(0.9)
(335.0)
(62.3)
(397.3)
2022 1
$M
487.0
(10.5)
(10.3)
–
–
–
–
(2.6)
463.6
(49.0)
414.6
1
The results of entities disposed in FY 2023 are excluded from continuing operations and presented as results from discontinued operations.
75
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023
A2. Revenue
Trading revenue
2023
$M
2022 1
$M
1,706.9
2,288.9
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:
•
•
Provision of pathology services including specialty pathology and clinical trials; and
Provision of imaging services.
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.
Revenue from clinical trials is recognised on a percentage of completion method. As per the contractual terms, revenue
is recognised based on the hours/units incurred relative to the total estimated hours/units delivered for the trial.
A3. Expenses
EMPLOYEE BENEFITS EXPENSE
Employee benefits
Defined contribution superannuation
Share-based payments
2023
$M
806.9
65.2
(7.8)
864.3
2022 1
$M
861.1
63.1
7.9
932.1
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
Other property expenses
NET FINANCE COSTS
Interest expense
Interest on lease liabilities
Amortisation of borrowing costs
2023
$M
22.1
34.2
56.3
2023
$M
27.5
33.7
1.1
62.3
2022 1
$M
18.7
32.1
50.8
2022 1
$M
12.8
33.5
2.7
49.0
1
The results of entities disposed in FY 2023 are excluded from continuing operations and presented as results from discontinued operations.
76
Notes to the financial statementsfor the year ended 30 June 2023
A3. Expenses (continued)
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.
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/(credit) on pre-tax accounting profit/(loss)
reconciles to the income tax expense/(credit) in the financial statements as follows:
(Loss)/profit before tax
Income tax calculated at 30% (2022: 30%)
Tax effect of non-temporary differences:
Non-deductible asset impairment expense
Share related benefit
Non-deductible acquisition costs
Other items
Under provision in prior years
Income tax (benefit)/expense
Comprising:
Current tax
Deferred tax
Under provision in prior years
Income tax (benefit)/expense
2023
$M
2022 1
$M
(397.3)
(119.2)
104.9
(3.5)
-
0.4
0.1
(17.3)
(1.1)
(16.3)
0.1
(17.3)
414.6
124.4
-
(4.2)
1.6
0.3
0.1
122.2
109.6
12.5
0.1
122.2
1
The results of entities disposed in FY 2023 are excluded from continuing operations and presented as results from discontinued operations.
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.
77
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023
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:
(Loss)/profit for the year from continuing operations
(Loss)/profit 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 options and rights
The weighted average number of shares used in the calculation of diluted earnings per share
EARNINGS PER SHARE
Basic (loss)/earnings per share from continuing operations
Basic (loss)/earnings per share from continuing and discontinued operations
Diluted (loss)/earnings per share from continuing operations
Diluted (loss)/earnings per share from continuing and discontinued operations
2023
$M
2022 1
$M
(380.0)
(367.8)
292.4
307.9
2023
000’s
569,756
-
569,756
2023
CENTS
(66.7)
(64.6)
(66.7)
(64.6)
2022
000’s
583,542
8,364
591,906
2022 1
CENTS
50.1
52.8
49.4
52.0
1
The results of entities disposed in FY 2023 are excluded from continuing operations and presented as results from discontinued operations.
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 2023, and is not anti-dilutive.
During the current year, since the company made a net loss, the contingent shares issuable under options and rights are
deemed anti-dilutive, and therefore excluded from the calculation of the diluted EPS.
78
Notes to the financial statementsfor the year ended 30 June 2023 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
2023
$M
2022
$M
143.7
(23.0)
120.7
24.9
35.8
8.1
189.5
61.1
33.5
7.4
41.7
143.7
22.0
11.3
(10.3)
23.0
199.5
(22.0)
177.5
21.6
36.3
5.9
241.3
54.5
36.4
8.7
99.9
199.5
23.1
14.1
(15.2)
22.0
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.
79
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023
B2. Goodwill
Carrying value
Opening balance
Acquisition of businesses
Impairment of goodwill
Business divestments
Closing balance
Goodwill is allocated to the Group’s cash-generating units (CGUs) as follows:
Pathology
Imaging
Day Hospitals
Closing balance
2023
$M
2022
$M
2,344.3
(0.3)
(349.8)
(96.7)
2,042.3
302.0
–
–
1,897.5
2,344.3
1,526.0
371.5
–
1,897.5
1,876.1
371.5
96.7
2,344.3
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.
The accounting for the acquisition of Agilex Biolabs Pty Ltd (note E9) has been finalised and the Group has allocated the
goodwill arising from this acquisition to the Pathology CGU.
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 2024 Board-approved budget; and
for financial years 2025–2028, growth rates have been determined with reference to historical company experience, industry
data and a long-term growth rates expected for the industry.
A non-cash impairment charge of $349.8 million has been made to goodwill in the Pathology division. This impairment relates
primarily to Agilex, lower forecast cashflows post COVID-19, and an increase in the Weighted Average Cost of Capital.
80
Notes to the financial statementsfor the year ended 30 June 2023
B2. Goodwill (continued)
The key assumptions in the Group’s discounted cash flow model as at 30 June 2023 are as follows:
ASSUMPTION
HOW DETERMINED
Forecast revenue
Cumulative average revenue growth rates for FY 2024–FY 2028 are as follows:
•
•
Pathology: 5.8% (30 June 2022: -0.7%)
Imaging: 7.3% (30 June 2022: 5.8%)
Consistent with the prior year, forecast revenue has been determined with reference
to historical company experience and industry data.
Terminal value growth rates
The terminal value growth rates assumed are:
Pathology: 2.75% (30 June 2022: 3.0%)
•
Imaging: 3.0% (30 June 2022: 3.0%)
•
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.
Discount rates
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:
•
•
Pathology: 8.5% (30 June 2022: 7.8%)
Imaging: 8.0% (30 June 2022: 8.0%)
SENSITIVITY ANALYSIS
The Group has conducted a sensitivity analysis on the key assumptions above to assess the effect on the recoverable amount
of changes in the key assumptions.
The carrying value of the Pathology CGU is equal to the recoverable amount after recognising an impairment of $349.8 million
in FY 2023, therefore any negative changes in assumptions would give rise to further impairment.
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 Imaging CGU to equal the recoverable amount.
CGU
Imaging
INCREASE/(DECREASE) IN ASSUMPTIONS REQUIRED FOR
RECOVERABLE AMOUNT TO EQUAL CARRYING AMOUNT
REVENUE
GROWTH PER
ANNUM
TERMINAL
GROWTH PER
ANNUM
(6.2%)
(5.4%)
DISCOUNT
RATE
3.6%
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 apply 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.
81
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 B3. Property, plant and equipment
2023
$M
Net book value
Opening balance
Additions
Capitalisation of assets under construction
Transfers and disposals
Business divestments
Depreciation expense
Closing balance
Cost
Accumulated depreciation and impairment
Closing balance
2022
$M
Net book value
Opening balance
Additions
Business combinations
Capitalisation of assets under construction
Transfers and disposals
Depreciation expense
Closing balance
Cost
Accumulated depreciation and impairment
Closing balance
PLANT AND
EQUIPMENT
LEASEHOLD
IMPROVEMENTS
ASSETS UNDER
CONSTRUCTION
116.9
21.7
29.8
(26.5)
(8.7)
(29.4)
103.8
343.1
(239.3)
103.8
67.0
3.4
7.9
(0.3)
(2.7)
(11.4)
63.9
171.7
(107.8)
63.9
12.1
34.0
(37.7)
–
(0.1)
–
8.3
8.3
–
8.3
PLANT AND
EQUIPMENT
LEASEHOLD
IMPROVEMENTS
ASSETS UNDER
CONSTRUCTION
79.7
39.1
6.2
25.9
(1.5)
(32.5)
116.9
377.2
(260.3)
116.9
72.3
0.8
0.3
6.2
(0.6)
(12.0)
67.0
170.0
(103.0)
67.0
5.7
41.5
0.8
(32.1)
(3.8)
–
12.1
12.1
–
12.1
TOTAL
196.0
59.1
–
(26.8)
(11.5)
(40.8)
176.0
523.1
(347.1)
176.0
TOTAL
157.7
81.4
7.3
–
(5.9)
(44.5)
196.0
559.3
(363.3)
196.0
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.
82
Notes to the financial statementsfor the year ended 30 June 2023
B4. Other intangible assets
2023
$M
Net book value
Opening balance
Additions
Capitalisation of intangible assets under construction
Transfers and disposals
Amortisation expense
Closing balance
Cost
Accumulated amortisation and impairment
Closing balance
2022
$M
Net book value
Opening balance
Additions
Business combinations
Capitalisation of intangible assets under construction
Other
Amortisation expense
Closing balance
Cost
Accumulated amortisation and impairment
Closing balance
IT SOFTWARE
LICENCES
INTANGIBLES
UNDER
CONSTRUCTION
62.7
0.6
3.1
(0.1)
(14.6)
51.7
159.1
(107.4)
51.7
8.2
–
–
–
(0.9)
7.3
40.4
(33.1)
7.3
4.3
13.0
(3.1)
(0.1)
–
14.1
14.1
–
14.1
IT SOFTWARE
LICENCES
INTANGIBLES
UNDER
CONSTRUCTION
64.5
4.2
0.3
7.2
–
(13.5)
62.7
156.5
(93.8)
62.7
9.0
–
–
–
–
(0.8)
8.2
40.4
(32.2)
8.2
2.8
7.9
–
(7.2)
0.8
–
4.3
4.3
–
4.3
TOTAL
75.2
13.6
–
(0.2)
(15.5)
73.1
213.6
(140.5)
73.1
TOTAL
76.3
12.1
0.3
–
0.8
(14.3)
75.2
201.2
(126.0)
75.2
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.
83
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023
B5. Lease liabilities
Opening balance
New leases and remeasurements during the year
Business divestments
Interest
Payments
Closing balance
Presented as:
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
B6. Right of use assets
2023
Opening balance
New leases and remeasurements during the year
Depreciation
Business divestments
Impairment
Closing balance
2022
Opening balance
New leases and remeasurements during the year
Depreciation
Closing balance
2023
$M
1,172.9
287.4
(42.9)
33.7
(247.2)
1,203.9
263.0
940.9
1,203.9
EQUIPMENT
$M
49.5
32.5
(13.6)
–
–
2022
$M
1,177.6
208.6
–
35.2
(248.5)
1,172.9
223.7
949.2
1,172.9
TOTAL
$M
1,074.9
293.0
(220.9)
(40.6)
(39.1)
68.4
1,067.3
EQUIPMENT
$M
68.0
(6.7)
(11.8)
49.5
TOTAL
$M
1,087.2
207.4
(219.7)
1,074.9
PROPERTY
$M
1,025.4
260.5
(207.3)
(40.6)
(39.1)
998.9
PROPERTY
$M
1,019.2
214.1
(207.9)
1,025.4
ACCOUNTING ESTIMATES AND JUDGEMENTS – LEASES
(a) The Group as lessee
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 3.07% (30 June 2022: 3.02%).
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.
84
Notes to the financial statementsfor the year ended 30 June 2023 B6. Right of use assets (continued)
A non-cash impairment charge of $39.1 million has been made to the right of use assets in the Imaging division which has been
determined by comparing the carrying value of the assets to the present value of the projected future cashflows on a site-by-site
basis. Key assumptions have been outlined below:
•
•
Post-tax discount rate 8.0%;
future cashflows have been determined with reference to historical company experience, industry data and a long-term
growth rates expected for the industry.
•
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
Total payables
2023
$M
218.0
218.0
2022
$M
169.6
169.6
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.
B8. Deferred consideration
Current
Other deferred consideration
Total current deferred consideration
2023
$M
0.9
0.9
2022
$M
5.7
5.7
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.
85
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023
B9. Provisions
Current
Provision for employee benefits
Self-insurance provision
Make good provision
Other provisions
Total current provisions
Non-current
Provision for employee benefits
Self-insurance provision
Make good provision
Total non-current provisions
2023
Opening balance
Arising during the year
Utilised
Closing balance
2022
Opening balance
Arising during the year
Utilised
Closing balance
2023
$M
131.3
6.7
–
7.8
145.8
8.4
3.8
2.2
14.4
MAKE
GOOD
$M
4.7
0.8
(3.3)
2.2
MAKE
GOOD
$M
4.7
0.1
(0.1)
4.7
2022
$M
155.5
5.9
3.3
10.3
175.0
10.1
7.1
1.4
18.6
OTHER
$M
10.3
5.9
(8.4)
7.8
OTHER
$M
19.0
7.3
(16.0)
10.3
SELF-
INSURANCE
$M
13.0
1.2
(3.7)
10.5
SELF-
INSURANCE
$M
12.8
3.9
(3.7)
13.0
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 New South Wales, 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.
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.
86
Notes to the financial statementsfor the year ended 30 June 2023
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 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
2023
$M
565.0
–
(2.9)
562.1
2023
Opening balance
Cash draw down
Borrowing repayments
Amortisation
Closing balance
2022
Opening balance
Cash draw down
Borrowing repayments
Borrowing cost on refinancing
Amortisation
Closing balance
GROSS
BANK LOANS
$M
VALUATION
ADJUSTMENT
$M
BORROWING
COSTS
$M
610.0
135.0
(180.0)
–
565.0
0.1
–
–
(0.1)
–
(4.0)
–
–
1.1
(2.9)
GROSS
BANK LOANS
$M
VALUATION
ADJUSTMENT
$M
BORROWING
COSTS
$M
260.0
515.0
(165.0)
–
–
610.0
0.5
–
–
–
(0.4)
0.1
(2.4)
–
–
(4.3)
2.7
(4.0)
2022
$M
610.0
0.1
(4.0)
606.1
TOTAL
$M
606.1
135.0
(180.0)
1.0
562.1
TOTAL
$M
258.1
515.0
(165.0)
(4.3)
2.3
606.1
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.
Interest rate sensitivity and liquidity analysis disclosures relating to the Group’s interest-bearing liabilities are disclosed in note C5.
87
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023
C2. Issued capital
Opening balance
Shares issued via Short Term Incentive Plan (deferred equity)
Shares issued via Non-executive Director (NED) Share Plan
Shares issued via Long Term Incentive Plan
Own shares acquired for Long Term Incentive Plan
Own shares acquired during buy back
Treasury shares cancelled
Closing balance
2023
NO. OF
SHARES
000’s
2022
NO. OF
SHARES
000’s
2023
$M
2022
$M
569,207
599,446
2,422.9
2,575.6
228
61
2,660
(976)
(1,651)
–
569,529
–
62
4,391
(4,391)
(29,529)
(772)
569,207
0.8
0.3
5.9
(3.7)
(5.2)
–
–
0.2
8.6
(22.1)
(135.8)
(3.6)
2,421.0
2,422.9
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 2023, the company had 24,262,825 (2022: 36,394,239) share options on issue, exercisable on a 1:1 basis for
24,262,825 (2022: 36,394,239) ordinary shares of Healius at an exercise price of $3.05. The share options vest between July 2023
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 2023, the company had 246,426 (2022: 228,341) service rights on issue, exercisable on a 1:1 basis for 246,426
(2022: 228,341) ordinary shares of Healius at an exercise price of $nil.
As at 30 June 2023, the company had 6,731,128 (2022: 5,549,056) performance rights on issue, exercisable on a 1:1 basis
for 6,731,128 (2022: 5,549,056) ordinary shares of Healius at an exercise price of $nil. The performance rights vest between
July 2023 and October 2025 subject to the satisfaction of applicable service and performance conditions and carry no rights
to dividends and no voting rights.
As at 30 June 2023, the company had 25,660 (2022: 35,140) Non-Executive Director (NED) share rights on issue, exercisable
on 1:1 basis for 25,660 (2022: 35,140) ordinary shares of Healius at an exercise price of $nil.
RESTRICTED SHARES ON ISSUE
As at 30 June 2023, the company had 78,585 (2022: 76,024) restricted shares on issue.
C3. Treasury shares
Opening balance
Shares cancelled
Closing balance
2023
NO. OF
SHARES
000’s
–
–
–
2022
NO. OF
SHARES
000’s
772
(772)
–
2023
$M
–
–
–
2022
$M
3.6
(3.6)
–
On 9 December 2020 Healius announced an on-market share buyback of up to $200 million to be conducted between
29 December 2020 and 28 December 2021. The treasury shares purchased under the buyback and not cancelled prior
to 30 June 2021 are disclosed in the comparatives above. These shares were cancelled in July 2021.
88
Notes to the financial statementsfor the year ended 30 June 2023
C4. Dividends on equity instruments
Recognised amounts
Final dividend – previous financial year
Interim dividend – this financial year
Unrecognised amounts
Final dividend – this financial year
2023
CENTS PER
SHARE
2022
CENTS PER
SHARE
6.00
–
6.00
6.75
10.00
16.75
–
6.00
2023
$M
34.3
–
34.3
–
2022
$M
40.2
57.9
98.1
34.3
No dividends are expected to be paid for the year ended 30 June 2023. A final dividend of 6.00 cps was paid with regards
to the year ended 30 June 2022.
FRANKING ACCOUNT
Closing balance as at 30 June
2023
$M
178.4
2022
$M
194.4
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 have 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 maintain 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.
89
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 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 $143.7 million (30 June 2022: $199.5 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 practitioners 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), health funds and commercial contracts with public and private hospitals. 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 borrowing 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
2023
$M
2022
$M
565.0
435.0
1,000.0
610.0
390.0
1,000.0
The first tranche of the Syndicated Facility Agreement of $500 million matures on 11 March 2025 and the second tranche
of $500 million matures on 11 March 2027.
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 2023 will be met through the
ordinary working capital cycle of the Group, including the collection of trade receivables (30 June 2023: $143.7 million) and
the unused headroom in the Syndicated Debt Facility (30 June 2023: $435.0 million).
90
Notes to the financial statementsfor the year ended 30 June 2023 C5. Financial instruments (continued)
2023
Consolidated
Non-derivative financial liabilities
Gross bank loan 1
Payables
Deferred consideration
Lease liabilities
2022
Consolidated
Non-derivative financial liabilities
Gross bank loan 1
Payables
Deferred consideration
Lease liabilities
CONTRACTUAL CASH FLOWS
CARRYING
AMOUNT
$M
TOTAL
$M
LESS THAN
1 YEAR
$M
1 TO 5
YEARS
$M
GREATER THAN
5 YEARS
$M
565.0
218.0
0.9
1,203.9
1,987.8
687.1
218.0
0.9
1,341.0
2,247.0
32.1
218.0
0.9
303.1
554.1
655.0
–
–
748.1
1,403.1
–
–
–
289.8
289.8
CONTRACTUAL CASH FLOWS
CARRYING
AMOUNT
$M
TOTAL
$M
LESS THAN
1 YEAR
$M
1 TO 5
YEARS
$M
GREATER THAN
5 YEARS
$M
610.0
169.6
5.7
1,172.9
1,958.2
697.0
169.6
5.7
1,326.1
2,198.4
24.8
169.6
5.7
260.4
460.5
672.2
–
–
819.7
1,491.9
–
–
–
246.0
246.0
1 Contractual cash flows include notional interest and assumes there is no change to the carrying amount.
Interest rate risk
The Group is exposed to interest rate risk as the Group borrows 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.
2023
Financial assets
Cash
Financial liabilities
Gross bank loans
Lease liabilities – equipment
2022
Financial assets
Cash
Financial liabilities
Gross bank loans
Lease liabilities – equipment
AVERAGE
INTEREST
RATE
%
VARIABLE
INTEREST
RATE
$M
3.21
4.02
3.41
115.3
(565.0)
(18.2)
(467.9)
AVERAGE
INTEREST
RATE
%
VARIABLE
INTEREST
RATE
$M
0.57
1.56
2.18
81.3
(610.0)
(19.2)
(547.9)
91
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 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.
2023
Interest rate swaps
Less than 1 year
1 to 2 years
AVERAGE
CONTRACTED
FIXED INTEREST
RATE
%
NOTIONAL
PRINCIPAL
$M
FAIR VALUE
$M
3.00
3.71
90.0
315.0
405.0
2.1
2.4
4.5
The aggregate notional principal amount of the outstanding interest rate swap contracts as at 30 June 2023 was $405.0
million.
2022
Interest rate swaps
1 to 2 years
2 to 5 years
AVERAGE
CONTRACTED
FIXED INTEREST
RATE
%
NOTIONAL
PRINCIPAL
$M
FAIR VALUE
$M
2.37
2.73
200.0
30.0
230.0
(0.2)
(0.1)
(0.3)
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 100 basis
point increase represents management’s assessment of a reasonably possible change in interest rates. If interest rates had
been 100 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:
Consolidated
30 June 2023 – variable rate instruments
30 June 2022 – variable rate instruments
PROFIT AFTER TAX
OTHER COMPREHENSIVE INCOME
100BP
INCREASE
$M
100BP
DECREASE
$M
100BP
INCREASE
$M
100BP
DECREASE
$M
(2.7)
(1.8)
2.7
1.8
7.4
0.4
(7.4)
(0.4)
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.
92
Notes to the financial statementsfor the year ended 30 June 2023 C5. Financial instruments (continued)
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.
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 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
2023
$M
Financial assets
Interest rate swaps
Financial liabilities
Deferred consideration
2022
$M
Financial liabilities
Interest rate swaps
Deferred consideration
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
–
–
4.5
–
–
0.9
4.5
0.9
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
–
–
0.3
–
–
5.7
0.3
5.7
93
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 C5. Financial instruments (continued)
Fair value of other financial instruments
The fair value of cash, receivables, payables and lease liabilities approximates their carrying amount. The fair value
of the non-current interest-bearing liabilities approximates the carrying amount of the gross bank loans of $565.0 million
(2022: $610.0 million).
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
2023
$M
2022
$M
17.1
1.8
18.9
14.3
–
14.3
94
Notes to the financial statementsfor the year ended 30 June 2023
D. Group structure
This section contains details of the way the business is structured including details of controlled entities, 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
Former AP Pty Ltd
Former SDS Pty Limited
The Sydney Diagnostic Services Unit Trust
Healius Nominees Pty Ltd
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
Crystal Eye Clinic (WA) 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
Axis Diagnostic Holdings Pty Ltd
Granite Belt Diagnostic Imaging Pty Ltd
Keperra Diagnostic Imaging Pty Ltd
Toowoomba Diagnostic Imaging Pty Ltd
Whitsunday Radiology Pty Ltd
Northcoast Nuclear Medicine (QLD) Pty Ltd
PET Imaging Services Pty Ltd 1
PROPORTION OF OWNERSHIP
INTEREST AND VOTING POWER
HELD BY THE GROUP
PLACE OF INCORPORATION
AND OPERATION
2023
%
2022
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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
–
95
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 D1. Subsidiaries (continued)
NAME OF SUBSIDIARY
PLACE OF INCORPORATION
AND OPERATION
HLS Pathology Holdings Pty Ltd
Agilex Biolabs Pty Ltd
AME Medical Services Pty Ltd
HLS Pathology Holdings Asia Pty Ltd
SDS Pathology (Singapore) Private Limited
Healius Pathology India Private Limited 2
Healius Pathology Pty Ltd
Moaven & Partners Pathology Pty Ltd
Pathways Unit Trust
Queensland Medical Services Pty Ltd
Australia
Australia
Australia
Australia
Singapore
India
Australia
Australia
Australia
Australia
PROPORTION OF OWNERSHIP
INTEREST AND VOTING POWER
HELD BY THE GROUP
2023
%
100
100
100
100
100
100
100
100
100
100
2022
%
100
100
100
100
100
100
100
100
100
100
SDS Healthcare Solutions Inc. 3
Philippines
99.98
99.98
Jandale Pty Ltd
Integrated Health Care Pty Ltd
Queensland Specialist Services Pty Ltd
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
John R Elder Pty Ltd
Larches Pty Ltd
Kelldale Pty Ltd
MGSF Pty Ltd
Murdoch Haematology & Oncology Clinic Pty Ltd 4
Murdoch Private Hospital Pty Ltd 5
HLS 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
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
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
96
Notes to the financial statementsfor the year ended 30 June 2023 D1. Subsidiaries (continued)
NAME OF SUBSIDIARY
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 6
Albany Day Hospital Pty Ltd 6
Bendigo Day Hospital Pty Ltd 6
Bunbury Day Surgery Pty Ltd 6
Felpet Pty Ltd 6
Montserrat Healthcare Pty. Ltd 6
Montserrat Medical Services Pty Ltd 6
Western Breast Clinic Pty Ltd 6
Western Haematology & Oncology Clinics Pty Ltd 6
North Lakes Day Hospital Pty Ltd 6
Oxford Medical Pty Ltd 6
The Oxford Unit Trust 6
Peel Private Development Pty Ltd 6
Windermere House Pty Ltd 6
Montserrat DH Pty Ltd 6
Brookvale Day Hospital Pty Ltd 6
PHC (No. 01) Pty Ltd
PLACE OF INCORPORATION
AND OPERATION
Australia
Netherlands
United Kingdom
United States
United Kingdom
Australia
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
2023
%
100
100
100
100
100
100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
2022
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
60
100
100
100
100
100
100
100
100
100
Entity incorporated on 9 May 2023.
Entity has a 31 March year end.
Entity has a 31 December year end.
Entity changed ownership from Montserrat Medical Services Pty Ltd to Idameneo (No.789) Limited on 6 December 2022.
Entity changed ownership from MB Healthcare Pty Ltd to Idameneo (No. 789) Limited on 6 December 2022.
1
2
3
4
5
6 Montserrat Day Hospitals entities sold to Nexus Hospitals on 1 May 2023.
Refer to note E2 for the subsidiaries that the Group has ceased control of during the current and prior 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.
97
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 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 2023 are as follows:
ACN 138 935 403 Pty Ltd
Agilex Biolabs Pty Ltd
Crystal Eye Clinic (WA) Pty Ltd
Digital Diagnostic Imaging Pty Ltd
Former AP Pty Ltd
Former SDS Pty Ltd
Healius Limited (holding entity)
Healius Pathology Pty Ltd
Healius Training Institute Pty Ltd
Healthcare Imaging Services 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
Moaven & Partners Pathology Pty Ltd
Queensland Diagnostic Imaging Pty Ltd
Healthcare Imaging Services (SA) Pty Ltd
Queensland Medical Services Pty Ltd
Healthcare Imaging Services (Victoria) Pty Ltd
Specialist Haematology Oncology Services Pty Ltd
Healthcare Imaging Services (WA) Pty Ltd
Specialist Veterinary Services 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 2023 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.
98
Notes to the financial statementsfor the year ended 30 June 2023 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
2023
$M
2022
$M
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 (LOSS)/INCOME
(Loss)/profit for the year
Other comprehensive income
Total comprehensive (loss)/income
2.1
2,053.1
2,055.2
6.7
562.1
568.8
1,486.4
2,441.0
(963.6)
9.0
1,486.4
2023
$M
(145.9)
3.4
(142.5)
–
2,287.2
2,287.2
1.5
605.8
607.3
1,679.9
2,442.8
(783.4)
20.5
1,679.9
2022
$M
15.9
4.3
20.2
A non-cash impairment charge of $349.8 million has been made to the investment held in subsidiaries arising from the
recognition of goodwill impairment in the Pathology CGU.
99
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023
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 as disclosed in the Group statement of cash flows
NOTE
2023
$M
2022
$M
115.3
115.3
81.3
81.3
Reconciliation of profit from ordinary activities after related income tax
to net cash flows from operating activities
(Loss)/profit for the year
Finance costs
Depreciation of plant and equipment
Depreciation of right of use assets
Amortisation of intangibles
Amortisation of HCP upfronts
Share-based payment expense
Gain on sale of Day Hospitals
Gain on sale of Adora
Gain on derecognition of right of use assets
(Gain)/loss on sale of PP&E and intangibles
Impairment of leased assets
Impairment of goodwill
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
FINANCING FACILITIES
Details of financing facilities available to the Group are provided at note C5.
E2
E2
(367.8)
63.4
40.8
220.9
15.5
1.8
(7.8)
(6.8)
–
(4.2)
(1.1)
39.1
349.8
(1.3)
40.1
(31.6)
4.7
(89.3)
14.5
52.6
333.3
307.9
50.7
44.5
219.7
14.3
2.4
7.9
–
(16.5)
(0.5)
0.3
–
–
(1.3)
(36.4)
2.5
2.8
33.9
(12.4)
(33.0)
586.8
100
Notes to the financial statementsfor the year ended 30 June 2023
E2. Discontinued operations
(a) Day Hospital Businesses (Day Hospitals)
On 9 December 2022 the Group announced that it had entered into a binding agreement to sell the Day Hospitals
business to Nexus Hospitals for an enterprise value of up to $138.6 million (including deferred contingent consideration
of up to $11.4 million) on a cash and debt free basis. The sale completed on 30 April 2023.
The results of the business have been presented in the results from discontinued operations in the 2023 financial year,
with comparatives restated accordingly.
(b) Adora IVF and Healius Day Surgeries Businesses (Adora)
The Group sold Adora on 1 June 2022. The results of the business up until this date have been presented in the comparative
results from discontinued operations.
The results of discontinued operations for the year are presented below:
Revenue and other gains
Expenses
Earnings before interest and tax
Finance costs
Earnings before tax
Profit on sale
Profit before tax from discontinued operations
Income tax benefit/(expense)
Profit from discontinued operations
The net cash flows of discontinued operations are:
Operating
Investing
Financing
Net cash inflow
The profit per share attributable to discontinued operations is as follows:
Basic profit per share from discontinued operations
Diluted profit per share from discontinued operations
2023
$M
43.7
(38.1)
5.6
(1.1)
4.5
6.8
11.3
0.9
12.2
2023
$M
6.6
113.2
(4.3)
115.5
2023
CENTS
2.1
2.1
2022
$M
74.9
(72.2)
2.7
(1.7)
1.0
16.5
17.5
(2.0)
15.5
2022
$M
13.3
24.5
(6.0)
31.8
2022
CENTS
2.7
2.6
101
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 E3. Taxation
CURRENT TAX BALANCES
INCOME TAX
Income tax payable is attributable to:
Entities in the tax consolidated group
Other
Income tax receivable is attributable to:
Entities in the tax consolidated group
2023
$M
–
(1.9)
(1.9)
2023
$M
6.7
6.7
2022
$M
(65.5)
(1.8)
(67.3)
2022
$M
–
–
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.
DEFERRED TAXATION
2023
$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
Net temporary differences
Tax losses – revenue
Deferred tax asset
1 JULY 2022
OPENING
BALANCE
CREDITED/
(CHARGED)
TO INCOME
CREDITED/
(CHARGED)
TO EQUITY
ACQUISITIONS
AND OTHER
ADJUSTMENTS
30 JUNE 2023
CLOSING
BALANCE
(5.6)
(14.3)
(0.9)
(4.7)
(322.5)
(1.0)
0.4
7.7
56.2
351.8
0.5
67.6
1.2
68.8
(1.4)
4.1
(0.1)
(3.6)
3.0
4.5
(0.4)
(1.4)
(8.9)
9.3
0.2
5.3
10.9
16.2
–
–
–
–
–
–
–
–
–
–
(1.4)
(1.4)
–
(1.4)
–
0.5
–
1.6
(0.7)
0.8
–
(0.1)
(0.6)
–
(0.2)
1.3
3.0
4.3
(7.0)
(9.7)
(1.0)
(6.7)
(320.2)
4.3
–
6.2
46.7
361.1
(0.9)
72.8
15.1
87.9
102
Notes to the financial statementsfor the year ended 30 June 2023
E3. Taxation (continued)
2022
$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
Net temporary differences
Tax losses – revenue
Deferred tax asset
1 JULY 2021
OPENING
BALANCE
CREDITED/
(CHARGED)
TO INCOME
CREDITED/
(CHARGED)
TO EQUITY
ACQUISITIONS
AND OTHER
ADJUSTMENTS
30 JUNE 2022
CLOSING
BALANCE
(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
(0.9)
(3.9)
0.3
(6.9)
6.7
0.1
(0.4)
(4.6)
3.6
(4.7)
0.1
(10.6)
(1.9)
(12.5)
–
–
–
–
–
–
–
–
–
–
(1.8)
(1.8)
–
(1.8)
(0.9)
–
–
(0.9)
(3.1)
–
–
–
0.9
3.3
–
(0.7)
1.6
0.9
(5.6)
(14.3)
(0.9)
(4.7)
(322.5)
(1.0)
0.4
7.7
56.2
351.8
0.5
67.6
1.2
68.8
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
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
Guarantees
Property related
2023
$M
0.2
0.2
2022
$M
10.5
10.5
Contingent liabilities relate to guarantees provided by the Group for certain property leases entered into by Healius Primary
Care (HPC) & Adora. As part of the sale of the HPC & Adora businesses the majority of these guarantees were extinguished.
103
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023
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. The Board may determine to allow a cashless exercise of Options.
If a participant ceases employment any unvested Options or Rights will lapse unless otherwise determined by the Board.
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 was 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:
•
Earnings Per Share (EPS) cumulative compound annual growth rate (CAGR) 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) Long Term Incentive Plan (LTIP) and previously Transformation Long Term Incentive Plan (TLTIP) – Performance
Rights Plans
In FY 2022 and FY 2021, Performance Rights were granted under the LTIP to senior executives other than members of the
executive team who received Options under the TLTIP as discussed above.
In FY 2023, Performance Rights were granted under the 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 2023 the Performance Rights are subject to EPS growth and rTSR performance conditions (split 1/3 to 2/3 between
EPS and rTSR);
In FY 2022 the Performance Rights are subject to EPS growth and rTSR performance conditions (split 2/3 to 1/3 between
EPS and rTSR);
In FY 2021 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)
•
•
The measurement period for Performance Rights granted under the FY 2023 award is 1 July 2022 to 30 June 2025 (FY 2022 award:
1 July 2021 to 30 June 2024). Retesting will not occur under any of these awards.
104
Notes to the financial statementsfor the year ended 30 June 2023 E5. Share-based payments (continued)
(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 2022, the CEO, CFO and all direct reports to the CEO received 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) was at the discretion of management.
Set out below are summaries of the equity instruments granted under each of the plans as at 30 June 2023:
DESCRIPTION
GRANT DATE 1
BALANCE AS AT
1 JULY 2022
NUMBER
GRANTED
DURING
THE YEAR
NUMBER
EXERCISED
DURING
THE YEAR
NUMBER
FORFEITED
DURING
THE YEAR
NUMBER 2
BALANCE AS AT
30 JUNE 2023
NUMBER
FY 2020 TLTIP – Options
28 February 2020
33,816,116
FY 2020 LTIP – Rights
20 March 2020
FY 2021 LTIP – Rights
26 October 2020
FY 2021 STIP – Rights
20 October 2021
FY 2022 LTIP – Rights
21 May 2022
FY 2022 STIP – Rights
23 September 2022
FY 2023 Retention – Rights 29 July 2022
FY 2023 LTIP – Rights
16 March 2023
1,473,325
1,462,903
228.341
2,024,047
–
–
–
–
–
(9,553,291)
(4,594,396)
19,668,429
(1,070,935)
(10,044)
(228,341)
–
–
–
–
(402,390)
(133,348)
–
–
1,319,511
–
(297,205)
1,726,842
–
–
221,426
25,000
(51,298)
3,010,231
–
–
–
221,426
25,000
3,061,529
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 2023, FY 2022, 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 values of Rights granted during the year are set out below:
DESCRIPTION
FY 2023 LTIP – Rights
FY 2023 LTIP – Rights
TRANCHE
GRANT DATE
MEASUREMENT PERIOD
GRANT DATE FAIR
VALUE PER RIGHT
$
EPS
rTSR
16 March 2023 1 July 2022 to 30 June 2025
16 March 2023 1 July 2022 to 30 June 2025
2.68
0.83
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 and EBIT.
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.
105
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 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.
E7. Key Management Personnel disclosures
KEY MANAGEMENT PERSONNEL COMPENSATION
Key Management Personnel (KMP), including Non-executive Directors, 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
2023
$000
4,368
164
163
1,690
(1,983)
4,402
2022
$000
5,410
156
74
–
4,729
10,369
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
2023
$000
905
5
69
97
162
1,238
40
17
57
2022
$000
745
5
142
413
–
1,305
37
18
55
1,295
1,360
106
Notes to the financial statementsfor the year ended 30 June 2023
E9. Businesses acquired
AGILEX BIOLABS PTY LTD
On 31 January 2022 the Group acquired 100% of the issued capital of Agilex Biolabs Pty Ltd (Agilex). Agilex is one of Australia’s
leading bioanalytical laboratories, with 25 years’ experience in providing bioanalysis services to meet the clinical trial needs
of biotech and pharmaceutical companies.
The amounts presented at 30 June 2022 were based on a provisional assessment of fair value. These amounts have since
been finalised with a reduction of $0.3 million in goodwill recognised in the current year. Final amounts are presented below.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Total consideration
Add: Purchase price adjustments
Cash paid to vendors on acquisition
Less: Cash acquired
Net cash transferred on acquisition
$M
9.1
20.8
(11.0)
(12.5)
6.4
286.5
292.9
0.1
293.0
(2.3)
290.7
107
Notes to the financial statementsfor the year ended 30 June 2023Finance ReportHealius – Annual Report 2023 E10. 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 2023 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.
E11. Subsequent events
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.
108
Notes to the financial statementsfor the year ended 30 June 2023 Number of shareholders
As at 31 August 2023, there were 569,643,263 fully paid ordinary Shares held by 16,017 shareholders.
Distribution of ordinary Shares as at 31 August 2023
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
1,376 shareholders hold less than a marketable parcel of Shares.
Number of Rights holders
As at 31 August 2023, there were 6,767,776 Rights held by 63 persons.
Distribution of Rights as at 31 August 2023
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
Number of Options holders
As at 31 August 2023, there were 24,262,825 Options held by eight persons.
Distribution of Options as at 31 August 2023
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
4,940
5,949
2,145
1,542
65
14,641
INDIVIDUALS
0
1
0
32
30
63
INDIVIDUALS
0
0
0
0
8
8
109
Shareholder informationHealius – Annual Report 2023Other information 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.
Top 20 shareholders as at 31 August 2023
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 LIMITED
ARGO INVESTMENTS LIMITED
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
UBS NOMINEES PTY LTD
RINRIM PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
ECAPITAL NOMINEES PTY LIMITED
ALPHAGEN CAPITAL PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
JOROMADA PTY LTD
NETWEALTH INVESTMENTS LIMITED
MR GREGORY ANTHONY THOMAS BATEMAN
NULIS NOMINEES (AUSTRALIA) LIMITED
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
179,525,030
113,011,084
101,426,357
41,431,994
19,132,634
13,878,419
3,770,723
3,577,160
3,367,888
3,150,206
2,362,047
1,204,931
1,032,081
1,000,000
704,441
680,000
636,689
636,213
580,893
569,088
31.51
19.84
17.80
7.27
3.36
2.44
0.66
0.63
0.59
0.55
0.41
0.21
0.18
0.18
0.12
0.12
0.11
0.11
0.10
0.10
Total
491,677,878
86.30
110
Shareholder information NUMBER OF FULLY
PAID ORDINARY
SHARES AS AT DATE
OF EACH NOTICE
% OF TOTAL ISSUED
CAPITAL AS AT
THE DATE OF EACH
NOTICE
79,312,419
54,173,608
45,549,533
35,155,034
30,485,918
34,968,120
29,374,935
29,374,935
28,642,884
29,214,808
29,004,002
13.92
9.51
7.84
6.17
6.04
6.02
5.06
5.06
5.03
5.03
5.00
Substantial shareholders as at 31 August 2023
NAME
Perpetual Limited 1
Australian Retirement Trust Pty Ltd ATF Australian Retirement Trust 2
Tanarra Capital Australia Pty Ltd and its related entities 3
Host-Plus Pty Limited 4
Dimensional Entities 5
State Street Corporation and its related entities 6
Mitsubushi UFJ Financial Group, Inc 7
First Sentier Holdings Pty Ltd 8
United Super Pty Ltd 9
Commonwealth Back of Australia 10
Vanguard Group 11
Substantial shareholder notice received by the Company on 24 July 2023.
Substantial shareholder notice received by the Company on 2 June 2023.
Substantial shareholder notice received by the Company on 19 January 2023.
Substantial shareholder notice received by the Company on 17 August 2023.
Substantial shareholder notice received by the Company on 6 December 2013.
Substantial shareholder notice received by the Company on 9 December 2022.
Substantial shareholder notice received by the Company on 21 September 2022.
Substantial shareholder notice received by the Company on 20 September 2022.
Substantial shareholder notice received by the Company on 9 August 2023.
1
2
3
4
5
6
7
8
9
10 Substantial shareholder notice received by the Company on 11 January 2023.
11 Substantial shareholder notice received by the Company on 27 July 2022.
Auditor
Ernst & Young
The EY Centre
200 George Street
SYDNEY NSW 2000
111
Shareholder informationHealius – Annual Report 2023Other information 2024
Half year results announcement
Year end
Full year results announcement
27 February
30 June
29 August
Corporate information
Healius Limited
(Company or Healius)
ACN 064 530 516
Company’s Registered Office
(and location of Register of Option Holders)
Level 22
161 Castlereagh Street
SYDNEY NSW 2000
(02) 9432 9400
Share Registry
(and location of Register of Rights Holders)
Computershare Investor Services Pty Ltd
Level 3, 60 Carrington Street
SYDNEY NSW 2000
GPO Box 7045
SYDNEY NSW 1115
Sydney Office: (02) 8234 5000
Investor enquiries: 1300 855 080
112
Financial calendar Our brands
Healius’ businesses operate a number of brands across Australia representing quality, affordability and accessible care.
We are developing number of new brands with a shared aim of becoming the best customer-centric organisation
in healthcare in Australia. Our current brands are set out below:
Pathology
Imaging
www.healius.com.au