EMPOWERING PEOPLE
WITH TECHNOLOGY
Annual Report
2021
Integral Diagnostics Annual Report 2021
CONTENTS
01 Company Highlights
02 Group Structure
03 Our Locations
04 Chair’s Report
06
Managing Director and Chief
Executive Officer’s Report
13
Directors’ Report
22
Remuneration Report
38
39
54
Auditor’s Independence
Declaration
Operating and Financial Review
Consolidated Statement
of Profit or Loss
55 Consolidated Statement of
Comprehensive Income
56
57
58
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
59 Notes to the Consolidated
Financial Statements
102 Directors’ Declaration
103 Independent Audit Report
109 Shareholder Information
113 Corporate Directory
ABN 55 130 832 816
COMPANY HIGHLIGHTS
Integral Diagnostics Annual Report 2021 01
Integral Diagnostics Annual Report 2020
PATIENTS FIRST
MEDICAL LEADERSHIP
EVERYONE COUNTS
2 million
examinations for over 797,000
patients and 35,264 referrers
206
reporting
radiologists
554
stakeholders consulted in our
materiality assessment
WE PRIDE OURSELVES
IN THE QUALITY CARE AND
SERVICE THAT WE DELIVER,
IN THE TRUST THAT OUR
REFERRERS HAVE IN US,
AND IN BEING THE PREFERRED
PROVIDER TO OUR PATIENTS.
WE ALWAYS PUT OUR
PATIENTS FIRST, AND IN SO
DOING WE ALSO PUT OUR
SHAREHOLDERS FIRST.
02 Integral Diagnostics Annual Report 2021
GROUP STRUCTURE
S R G RADIOLOGY
C A V E N D I S H
IDXtteleradiology OUR LOCATIONS
Apex Radiology (WA)
> Established 1997
> 5 locations (2 comprehensive sites)
> 164 employees
55
SITES IN AUSTRALIA
Lake Imaging (VIC)
> Established 2002
> 19 locations (6 comprehensive sites)
> 389 employees
Integral Diagnostics Annual Report 2021 03
Imaging Queensland (QLD)
> Established 2007
> 17 locations (7 comprehensive sites)
> 310 employees
South Coast Radiology (QLD)
> Established 1967
> 14 locations (7 comprehensive sites)
> 403 employees
12
SITES IN
NEW ZEALAND
SRG / Trinity MRI / Ascot Radiology
> Established 1999 (Ascot Radiology),
2007 (SRG/Trinity MRI)
> 12 locations (5 comprehensive sites)
> 172 employees
04 Integral Diagnostics Annual Report 2021
CHAIR’S REPORT
LTM EBITDA ratio of 1.4x reflects our strong balance sheet
with reduced leverage to support our clear and on-going
growth strategy.
We declared a fully franked final dividend of 7.0cps, a total
of 12.5cps for FY21, an increase of 31.6% on the prior year
reflecting the performance and cashflow position of your
Company.
Quality Growth
IDX continues to deliver organic and inorganic growth
in line with our clear strategy.
In September 2020, we completed the acquisition of
the highly regarded Ascot Radiology Group in Auckland,
New Zealand. Ascot Radiology comprises nine diagnostic
imaging clinics, including key sites at Ascot Private Hospital
and 22 doctors and staff. Despite the high challenge of travel
restrictions, we have made progress with the integration
of Ascot into our group.
In February 2021, we announced our joint venture
with UK based Medica Group Plc to provide teleradiology
reporting services and additional reporting capacity in
Australia, New Zealand, the United Kingdom and Ireland.
While this venture is not expected to impact earnings in the
near term, it is a step forward in expanding our reach and
technology driven services.
Total capital expenditure was $23.1m, including conservative
growth capex of $6.3m in FY21 reflecting the COVID-19
environment. $16.8m was spent on equipment replacements
and upgrades to continue to deliver highest quality to
patients and referrers.
Governance
Our governance model is proud to specifically include two
medical radiologist specialists who are on the frontline
servicing patients and referrers using technology and
equipment, and as such are valuable inclusions on our Board
as we set and execute on strategy. As part of its succession
planning, Dr Nazar Bokani was appointed as an Executive
Director, effective 26 April 2021 taking over from Dr Chien
Ho who retired from the Board on 1 March 2021. I would like
to warmly thank Dr Ho for his contributions over nearly 13
years as not only a Board member but as a clinical leader of
the Company and the inaugural Chair of the Integral Clinical
Leadership Committee (ICLC). Dr Bokani brings radiologist
experience in the Netherlands, UK and Australia, has led our
introduction of artificial intelligence (AI) into IDX workflows
since 2019, now Chairs our AI Steering Committee and is a
member of the ICLC.
Dear fellow shareholders,
On behalf of the Board, I present to you the 2021 Annual
Report for Integral Diagnostics (IDX) Limited and I would
like to welcome the 1,539 new shareholders as at the end
of this financial year. You are part of a company with a noble
purpose providing over two million diagnostic imaging
services to patients and referrers, in order to diagnose and
treat illness and injury.
Again COVID-19 has impacted our world, having a significant
impact on our lives and the way we do things which has
produced challenges for everyone, including your specialist
healthcare company. I am proud of the resilience of our
people who have continued to focus on our values and
strategic priorities for the benefit of stakeholders to
provide another set of solid results.
Financial Results
In the 12 months ended 30 June 2021 (FY21), your Company
achieved a 25.3% increase in operating NPAT of $38.1m.
Statutory NPAT of $31.3m was 36.1% higher than prior year.
Diluted operating earnings per share grew 14.5% to 19.0cps.
Operating revenue grew 27.3% to $348.8m, driven by organic
growth, investments in high end modalities, an additional
four months of Imaging Queensland revenue when compared
to the prior year and a ten-month contribution from Ascot
Radiology who became part of IDX this financial year.
Management of the impact of government-imposed
restrictions due to COVID-19 continued to be a feature of
the year. The Australian Government provided JobKeeper
assistance ($4.7m after tax) which was partially utilised
to offset the impacts of COVID-19 in FY21 and retain and
support our highly skilled workforce, and that portion that
was not used was voluntarily returned to the Government
($2.0m after tax). We did not profit from JobKeeper.
In December 2020, we negotiated an extension of our finance
facilities with $407.0m committed and a further $105m in an
accordion with a 5-year term to February 2026. As at 30 June
2021, our debt to equity ratio was 0.54:1 and the Net Debt/
We also appointed New Zealand (NZ) Board Advisory
Members to provide input to the IDX Board on NZ matters at
its meetings on a regular basis. The inaugural members are
Dr David Rogers, the founding managing partner of Ascot
Integral Diagnostics Annual Report 2021 05
YOU ARE PART OF A COMPANY WITH A NOBLE PURPOSE PROVIDING OVER
TWO MILLION DIAGNOSTIC IMAGING SERVICES TO PATIENTS AND REFERRERS,
IN ORDER TO DIAGNOSE AND TREAT ILLNESS AND INJURY.
25%
In the 12 months ended 30 June 2021 (FY21), your Company
achieved a 25.3% increase in operating NPAT of $38.1m.
I would like to thank my colleagues on the Board for their
formidable commitment during the year as I do to the whole
team led by our Managing Director & CEO Dr Ian Kadish.
Integral Diagnostics will continue on its path to advance our
strategy, culture and ambitions as significant technological
advancements in medicine evolve, enabling diagnostic
imaging services to further assist in saving lives and
contribute to a healthier world.
To our shareholders, thank you for your continuing support
of the Company. Take care and stay safe.
Radiology and Dr James Caldwell from Trinity MRI.
Your Board is continuing its commitment to its environmental,
social and governance (ESG) responsibilities and commend
to you our second stand-alone ESG Report and first report
prepared in accordance with the Global Reporting Initiative
(GRI) Standards: Core Option. We undertook a materiality
assessment to determine what is important to 554
stakeholders, measured our carbon footprint for
both the FY20 and FY21 years and have developed
an explicit ESG Strategy.
Helen Kurincic
Chair
27 August 2021
06 Integral Diagnostics Annual Report 2021
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER’S REPORT
Our IDX teams, doctors and staff across all 7 IDX businesses
in Australia and New Zealand, responded magnificently and
continue to do so, demonstrating their commitment to our
calling as healthcare professionals, and personifying our
IDX purpose and values.
Creating value, delivering results
IDX performed strongly in FY21. Your company served
797,118 patients last year, performing more than 2 million
exams for 35,264 referrers. We invested $23 million dollars
in capital expenditure to ensure that we continued to provide
our patients and referrers with access to world class
technology and equipment solutions. We increased company
revenue by 27.3% to $348.8m, and increased our operating
Net Profit After Tax by 25.3% to $38.1m. We also returned
$2.9m ($2.0m after tax) of the Jobkeeper we received, but
did not use, to Government.
We acknowledged a major milestone in FY21, IDX’s 5th
anniversary since our IPO on the Australian Securities
Exchange (ASX) on 21 October 2015. Our 5th anniversary
coincided with the year that we were included in the ASX
Top 300, demonstrating 5 years of growth and achievement
as a listed healthcare company. Your company’s value
has increased more than fourfold over the past 4 years,
and the number of IDX shareholders has increased more
than fourfold over the past 2 years, increasing from 1,123
shareholders in FY19 to 5,355 shareholders in FY21.
Eighty-five of our doctors are now shareholders in IDX.
During our short history, we have continued to build on the
strong medical imaging brands that we have developed or
acquired, growing organically and through acquisitions in
Australia and New Zealand.
We have also consistently promoted the increased use of
diagnostic imaging in the early detection of disease in order
to facilitate faster and less invasive treatment options which
lower overall healthcare costs, improves quality of life, and
saves lives.
Growth and acquisitions
In September last year, we completed the acquisition of
Ascot Radiology in Auckland, New Zealand and welcomed
the Ascot radiologists and staff into the IDX family. The
acquisition of Ascot Radiology consolidated our Auckland
presence by providing the IDX NZ practices with leading
specialists and modalities in complementary areas, including
our first PET-CT in New Zealand, and three more MRIs in
Auckland.
Dear fellow shareholders,
The past year has been a challenging period for the world.
Your company, too, has had a challenging year but our
doctors, staff and management team stepped up to the
challenge and delivered a strong set of results.
Our financial performance in FY21 was strong. Our patients
and referrers were well taken care of, and our teams
across the business delivered all that was asked, and
more. COVID-19 outbreaks and associated government
lockdowns and border closures all took a toll, team morale
was impacted, but the professionalism, dedication and
commitment of our doctors and staff has been inspiring.
Our doctors and staff and all healthcare providers who are
on the frontlines fighting this unrelenting pandemic, at IDX
and elsewhere, are true heroes.
Living our Values
IDX’s vision is to build a healthier world, and we do this
by delivering the best health outcome for every patient we
serve. Our frontline staff across the business provide our
patients and referrers with a level of diagnostic excellence,
specialist care and service, that is unsurpassed.
IDX is and will always be, a healthcare company dedicated
to putting patients first, to demonstrating medical
leadership, ensuring that everyone counts, creating value
for all stakeholders, and embracing change. These are our
company’s enduring values and they guide the way we live
and work at IDX.
Over the past year, we have been called on to demonstrate
these values on a regular basis. We have seen colleagues,
friends and patients afflicted by COVID-19, we have endured
government-imposed lockdowns, and have had to ask
doctors and staff to stand down and take up annual leave
entitlements or leave without pay, to work and report
remotely when possible, and to take full PPE precautions
on a regular basis.
Integral Diagnostics Annual Report 2021 07
OUR PEOPLE, THE 1,524 INDIVIDUALS EMPLOYED BY IDX, WILL ALWAYS BE THE
HEART OF OUR BUSINESS. THESE ARE THE DOCTORS AND STAFF WHO WORK
EVERY DAY TO PROVIDE THE BEST POSSIBLE HEALTH OUTCOME TO EVERY
PATIENT, IN ORDER TO REALISE OUR VISION OF BUILDING A HEALTHIER WORLD.
4x
Your company’s value has increased more than fourfold over the
past 4 years, and the number of IDX shareholders has increased
more than fourfold over the past 2 years, increasing from 1,123
shareholders in FY19 to 5,355 shareholders in FY21. Eighty-five
of our doctors are now shareholders in IDX.
Early last year, IDX founded a new teleradiology division,
called IDXt. This division provides teleradiology support to
IDX practices across the group. The development of IDXt
was accelerated by market developments in Victoria during
the state’s second wave of COVID-19 in early FY21. We
experienced significant reductions in patient volumes in
Victoria during the second wave. Several of IDX’s Victorian
radiologists were then set up to report for Western Australia
and Queensland where the company required additional
radiologist capacity to service growing patient volumes.
The teleradiology system worked well and we were able to
utilise spare radiologist resources to good effect. Currently
IDXt provides after hours teleradiology support to several
IDX businesses, replacing the use of external teleradiology
contractors. Going forward, we believe that growth prospects
for teleradiology are solid and expect that IDXt will play a
greater role in the growth of our business.
In February, we announced an innovative joint venture
with the Medica Group PLC. The Medica Group is the UK’s
market leader in the provision of teleradiology services. The
company is listed on the London Stock Exchange (LSE:MGP),
and it provides teleradiology support to more than 50% of
National Health Service (NHS) organisations. The Medica-
IDX Joint Venture, known as MedX, will provide teleradiology
services and increased reporting capacity in Australia, New
Zealand, the UK and Ireland, and in time will also pursue
international teleradiology opportunities further afield. IDX
and Medica will also collaborate in other areas of mutual
interest, including the deployment of Artificial Intelligence
(AI) solutions. MedX is not expected to impact earnings
in the short term.
08 Integral Diagnostics Annual Report 2021
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
IDX participated in several acquisition processes in the
second half of the financial year that we did not execute
on, given the high acquisition multiples being offered in the
market. Consequently we focussed even more attention
on organic growth through greenfield and brownfield
expansions.
Brownfield expansions (addition of technology
to existing sites):
We initiated several important people and culture initiatives
this year, including leadership development programs for
middle and senior management, diversity and inclusion
initiatives, and several online training programs for
important clinical, technical and leadership roles.
We also made two key appointments to the IDX Senior
Leadership Team this year to support the company’s ongoing
growth and development:
• Installed a 3T non-rebateable MRI at the Spine Centre
• Paul McCrow was appointed as Chief Operating Officer
on the Gold Coast
• Installed a 2nd CT in Toowoomba
• Installed a Cardiac CT in Busselton
• Initiated an MRI service for the Western Australia Health
Service (WACHS) on the Kalgoorlie Health Campus
• Replaced an older MRI with a new 3T MRI at Ascot
Radiology in Auckland
Greenfield expansions (opening of new clinic locations):
• Completed development of the Hope Island site on the
Gold Coast
• Commenced construction on an $8m comprehensive
site at Benowa on the Gold Coast, near Pindara Private
Hospital
• Approved plans for the development of 4 new greenfield
sites in FY22 in Victoria, Queensland, Western Australia
and New Zealand
Greenfield and brownfield developments take a lot more
time than the potential immediate returns derived through
acquisition. A new greenfield will typically take 2 or 3 years
to ramp up, but the projected returns are far higher than the
returns offered at acquisition multiples than other acquirers
have recently paid for large radiology assets.
People and technology
Our people, the 1,524 individuals employed by IDX, will
always be the heart of our business. These are the doctors
and staff who work every day to provide the best possible
health outcome to every patient, in order to realise our vision
of building a healthier world.
It has been challenging for our teams, working in 67 regional
clinics across 2 countries and 4 states, to stay connected
across IDX in a world where state and country borders
have often been closed for longer periods than they have
been open. Our teams have introduced virtual clinical and
management team meetings, virtual multi-disciplinary
meetings and training sessions, and virtual townhalls and
tea-room sessions, in an effort to stay connected across
the group.
(COO) in November 2020. Paul was previously the General
Manager of the IDX business in Western Australia, Apex
Radiology. Under Paul’s leadership Apex consistently
produced the highest operational engagement scores in
the business, coupled with the highest earnings growth for
3 consecutive years.
• Dr Lisa Sorger was appointed as Chief Medical Officer
(CMO) in June 2021. Dr Sorger graduated from the
University of Western Australia and trained as a radiologist
with special interests in women’s and body imaging. Lisa
has extensive experience as a radiologist, a director of
medical services and a clinical leader for over 15 years
in Australia and the United Kingdom; most recently in
lead clinical roles in Western Australia and the Northern
Territory. Dr Sorger also holds numerous leadership
roles within the Royal Australian New Zealand College
of Radiologists (RANZCR) and was elected to the Faculty
of Clinical Radiology Council of RANZCR in 2019. Lisa is
also a member of the Diagnostic Economics Committee
advocating and finalising MSAC applications for new
diagnostic imaging items.
Lisa and Paul bring a wealth of knowledge, insight,
experience, and clinical leadership skills to the Integral
Senior Leadership Team.
As advised to the ASX on 4 August 2021, our Chief Financial
and Commercial Officer (CFCO), Anne Lockwood, will be
leaving us early next year. Anne has been an invaluable
contributor to the growth and development of IDX over the
last 5 years, a respected and admired leader within the
business, and an outstanding partner to work with. Anne
and I have worked together closely, shoulder to shoulder,
through good times and tough times. I wish her all the very
best in her future endeavours, hopefully after some well-
deserved time off.
Artificial Intelligence (AI): Three years ago, IDX implemented
the first radiology AI solutions in Australia, solutions that
improved quality and workflow and saved lives. IDX has
continued to roll out these solutions across our group, and
to evaluate new AI products. We select the best of the best AI
products offered in the international radiology market, based
on their ability to improve patient care, quality, service and
efficiency.
Integral Diagnostics Annual Report 2021 09
Digitisation: The radiology industry is being digitised faster
than most areas of healthcare. Our patient information,
scans and images are already in digital form. Over the
past few years we have introduced patient apps, e-referral
pathways, unified call centres and digital marketing
applications in selected practices. We are currently
incorporating subspecialty reporting into more IDX practices.
Subspecialty reporting provides patients and referrers with
reports that incorporate additional expertise in specialist
areas, eg neurology, cardiology, oncology or orthopaedic
expertise. Going forward, we see our digital strategy and
increased digital investment becoming more important and
assuming a central role in the patient care pathway.
Diagnostic Imaging Industry Developments
Diagnostic Imaging is an integral and essential component
of quality medical care. All medical practitioners, GP’s
and Specialists, will continue to rely on quality imaging to
make every important diagnosis. We believe IDX and our
component businesses are the quality leader in every
market we serve.
The growing elderly population, the increased prevalence
of chronic disease, particularly cardiovascular disease and
oncology, and the introduction of promising new digital,
imaging and AI technologies, position specialist healthcare
providers like IDX very well.
MRI, CT and PET scans are particularly well positioned
to grow from new diagnostic applications in the fields of
oncology, cardiology and neurology. For example, PET
scans are now a non-invasive early method of diagnosing
neurogenerative disease causing dementia. Earlier diagnosis
allows earlier intervention, and earlier intervention improves
outcomes for patients and their families, and decreases
costs for society. The use of PET scans in the diagnosis of
dementia is scheduled to be recognised on the Medicare
Benefit Schedule within the next year.
Healthcare payors around the world are increasingly
recognising the central role that diagnostic imaging plays in
improving quality of life, reducing overall healthcare costs
through early diagnosis, and saving lives. We currently
receive annual price indexation increases from our major
funders in Australia and New Zealand. However, the 0.9%
indexation provided by Medicare Australia this year was
disappointing when compared to an increase in the CPI
that was several times larger at 3.8%, with Health CPI
increasing 4.8%.
Our industry also faces important workforce challenges.
First and foremost, we will continue to face the challenges of
skill shortages, for specialist radiologists and for key clinical
staff. These shortages have been exacerbated by our closed
borders. The shortages may abate over time as borders open
and technology improves efficiencies.
Cyber-security and privacy of patient data: The last year has
shown that healthcare data around the world is vulnerable
to cyber-attacks. Public and private health systems have
been infiltrated in several countries including Australia,
New Zealand, the UK and Ireland. In several instances,
service delivery was significantly impacted. IDX will continue
to focus on and invest in ensuring that we provide strong
cyber security protections to safeguard the privacy and
integrity of our data.
Medical Leadership
IDX differentiates itself as a diagnostic imaging provider that
retains key attributes of a traditional radiology partnership,
but also provides efficient access to capital markets for
growth. Our business model includes some of the finest
radiologists in the world as owners and shareholders of the
company. We encourage selected radiologists to pursue
equity ownership by offering a favourable loan plan (for
Australia) and option plan (for New Zealand) that matches
the radiologist’s investment in IDX shares on a 2:1 basis.
We cap the plan at $3m in IDX-funded loans or options
each year, matched with $1.5m in radiologist self-funded
equity. The IDX-funded shares and options are escrowed
for a minimum 4 year period. To date the plan has been
oversubscribed in each of the 4 years that it has been
offered.
Radiology saves lives and there can be no greater testament
to the value of any endeavour than the ability it has to
extend quality human life. Earlier this year, the Australian
Diagnostic Imaging Association (ADIA) commissioned a
study to analyse and quantify the value of radiology. ADIA
commissioned Deloitte Access Economics to perform the
study with several leading radiologists across the country,
including two senior radiologists at IDX, Dr Ross Breadmore
and Dr Manish Mittal. The study compellingly demonstrates
that radiology is cost effective in increasing Quality Adjusted
Life Years for 6 common and important diagnoses (breast
cancer, thyroid cancer, stable angina, lymphoma, prostate
cancer and fatty liver disease).
10 Integral Diagnostics Annual Report 2021
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
My heartfelt gratitude, once again, to those heroes on the
healthcare frontline of all IDX businesses, who work every
day to deliver the best health outcomes for our patients,
our doctors and staff who put our patients first. I could not
be prouder of the people I am honoured to work with.
My sincere thanks also, to our Chair, Board and management
team, for their wise counsel, insight, commitment and
support.
My thanks also to our patients who put their trust in us, to
our loyal referrers who trust their patients to us, and to you,
our shareholders, who put your faith in us.
Good medicine is good business.
Sincerely,
Dr Ian Kadish
Managing Director and
Chief Executive Officer
27 August 2021
We face potential challenges also from a changing legislative
and competitive landscape. These changes may lead to a
proliferation in medical imaging technologies provided by
new imaging competitors including hospitals and referrers:
• New referral practices have emerged in New Zealand
where hospitals and referrers own equity interests in
radiology equipment. We expect that payors and regulators
will review these practices and will undertake the
necessary actions to manage conflicts of interest, ensure
quality is maintained and patient choice is retained, and
that patients and payors are not subject to over-servicing
and unnecessary imaging
• Similar developments may emerge in Australia where
hospitals or referrers acquire diagnostic imaging assets.
The current legislative environment in Australia, the
Medicare legislation and MRI license regimen offer some
protections for patients and payors.
IDX’s quality orientation, our highly trained staff, subspeciality
skillset, focus on high value-add modalities backed up by
a comprehensive practice network, position us well to
compete although we will face short-term challenges
as the markets evolve.
FY22 Priorities
Over the next financial year, our major priorities are to:
• Manage the ongoing impact of COVID-19
• Manage the changing competitive landscape with regard
to hospitals and referrers
• Drive further organic growth and efficiency gains
• Educate patients, payors and referrers on MRI and PET
technologies
• Accelerate digital technology and Artificial Intelligence
that enhance our service offering
• Drive our ESG agenda
• Develop leadership capabilities across the Group
• Build a strong, supportive, collegiate culture, the IDX way
• Commence new greenfield opportunities in QLD, WA,
Victoria and NZ. Greenfield developments take time to
generate earnings
• Execute on greenfield and brownfield development
opportunities while we continue to pursue acquisitions
that are a clinical and cultural fit, strategically aligned
and earnings accretive
Integral Diagnostics Annual Report 2021 11
12 Integral Diagnostics Annual Report 2021
Integral Diagnostics Annual Report 2021 13
DIRECTORS’ REPORT
For the year ended 30 June 2021
The Directors present their Report, together with the financial statements, on the consolidated entity the (‘Group’) consisting
of Integral Diagnostics Limited (IDX or the ‘Company’) and the entities it controlled for the year ended 30 June 2021.
The information referred to below forms part of, and is to be read in conjunction with, this Directors’ Report:
• the Operating and Financial Review (OFR) on pages 39 to 53; and
• the Remuneration Report on pages 22 to 37.
Directors
The following persons were Directors of Integral Diagnostics Limited during the whole of the financial year and up to the date
of this Report, unless otherwise stated:
Helen Kurincic (Independent Non-Executive Chair)
Dr Ian Kadish (Managing Director and Chief Executive Officer)
John Atkin (Independent Non-Executive Director)
Rupert Harrington (Independent Non-Executive Director)
Raelene Murphy (Independent Non-Executive Director)
Dr Jacqueline Milne (Executive Director)
Dr Chien Ping Ho (Executive Director) ceased 1 March 2021
Dr Nazar Bokani (Executive Director) commenced 26 April 2021
Principal activities
During the financial year, the principal activity of the Group was the provision of diagnostic imaging services.
Business strategies, prospects and likely developments
The OFR on pages 39 to 53 of the Annual Report sets out information on the business strategies, prospects and likely
developments for future financial years.
Review and results of operations
A review of the operations of the Group during the financial year, the results of those operations and the financial position
of the Group is contained in the OFR on pages 39 to 53.
Dividends paid in the year ended 30 June 2021
Dividends paid/payable during the financial year were as follows:
Dividend paid 5 cents per share on 2 October 2019
Dividend paid 5.5 cents per share on 7 April 2020
Dividend paid 4 cents per share on 1 October 2020
Dividend paid 5.5 cents per share on 6 April 2021
30 June 2021
$’000
-
-
7,734
10,824
18,558
30 June 2020
$’000
7,843
10,625
-
-
18,648
14
Integral Diagnostics Annual Report 2021
DIRECTORS’ REPORT CONTINUED
For the year ended 30 June 2021
Significant changes in the state of affairs
The Group continued to navigate the impacts of the COVID-19 pandemic. Details of the operating and financial impacts of
COVID-19 are included in the OFR. As at the date of this Directors’ Report it is not expected that COVID-19 will significantly
impact the long-term underlying fundamentals of the diagnostic imaging industry.
Effective from 1 September 2020 the Group completed the acquisition of Ascot Radiology. Details of the acquisition are
included in Note 34 to the financial statements.
There were no other significant changes to the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
Subsequent to year end a dividend of 7.0 cents per share was declared and will be paid on 6 October 2021.
On 30 July 2021 Anne Lockwood gave the Company notice of her resignation. Under the terms of her contract of employment
that notice will take effect on 30 January 2022. Ms Lockwood’s entitlements on termination of her employment will be lawfully
determined in accordance with her contract of employment, the LTI Plan and related correspondence. The financial effect of
Ms Lockwood’s notice of resignation cannot be estimated at this time.
Following approval of their participation, on the 5 August 2021, $1.5 million of Radiologist contributions were received in
connection with the Radiologist Loan Funded Share Plan and the New Zealand Matching Options plan. These contributions
are to be matched by an IDX contribution of $3.0 million, resulting in $4.5 million of share capital/options to be issued on 6
September 2021. The number of shares/options to be issued will be determined by the 30-day VWAP up to the 1 September 2021.
COVID-19 and associated government responses can be expected to continue to have an impact on the Group, which cannot
be accurately projected at this time. To date 1H22 has been affected as a result of the impacts of COVID-19 and government-
lockdowns and border closures across all geographic areas in which we operate. Up until the 25th August, year to date
trading is down approximately 5% from expectations, this includes the impacts of the Level 4 lockdowns in New Zealand from
the 18th August. The New Zealand guidelines from the Ministry of Health included that scanning is only to be undertaken “to
preserve life or limb only”. This has resulted in reductions in trading in New Zealand of up to 75% from expectations, which is
consistent with past experience during New Zealand Level 4 lockdowns.
Other than those detailed above, no other matter or circumstances have arisen since 30 June 2021 that has significantly
affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs until
future financial years.
Environmental regulations
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. During the
financial year the Group was not convicted of any breach of environmental regulations.
Integral Diagnostics Annual Report 2021 15
Information on Directors
Helen Kurincic
Independent Non-Executive Chair
MBA, FAICD, FGIA, MBA, Grad Dip
Wom Stud, PBC Crit Care,
Cert Nsg
Former directorships
(in the last three years)
Special responsibilities
Ms Helen Kurincic was appointed as an independent Non-Executive Director and Chair
of the Company in December 2014, preceding listing on the ASX on 21 October 2015.
Helen has deep Executive and Board-level experience across the healthcare industry.
Previously, Helen was the Chief Operating Officer and Director of Genesis Care from its
earliest inception, creating and developing the first and largest radiation oncology and
cardiology business across Australia. Prior to that, Helen held various Executive and
Non-Executive healthcare sector roles including Non-Executive Director of DCA Group
Ltd (diagnostic imaging services in Australia and the United Kingdom), Non-Executive
Director of AMP Capital Investors Domain Principal Group, CEO of Benetas and Non-
Executive Director of Melbourne Health and Orygen Research Centre.
Helen has also been actively involved in healthcare government policy reform including
appointments by health ministers as Chair of the Professional Programs and Services
Committee for the Fourth Community Pharmacy Agreement and Member of the
Minister’s Implementation Taskforce and Minister’s Reference Group for the Long Term
Reform of Aged Care. She is currently the Independent Non-Executive Chair of
McMillian Shakespeare Limited (ASX:MMS), a Non-Executive Director of Estia Health
Limited (ASX:EHE), HBF Health Limited, and the Victorian Clinical Genetics Service.
She is also a senior advisor in the healthcare sector.
Sirtex Medical Limited (ASX:SRX) – Non Executive Director 2017 to 2018
Member of the Audit Risk and Compliance Committee
Member of the People and Remuneration Committee
Chair of the Nomination Committee
Interests in shares
492,084 ordinary shares (indirectly)
Dr Ian Kadish was appointed Managing Director and Chief Executive Officer of IDX
on 22 May 2017.
Ian began his career as a medical doctor in Johannesburg, South Africa. He subsequently
completed an MBA at the Wharton Business School at the University of Pennsylvania
(Dean’s List, May 1990) and followed this with several roles overseas including McKinsey
and Company, CSC Healthcare in New York City, and Netcare, a major hospital group
in South Africa and the United Kingdom, where Dr Kadish was an Executive Director
from 1997 to 2006. Ian was instrumental in growing the group from five hospitals with
a market capitalisation of $60 million, to 119 hospitals and a market capitalisation
of $3 billion. Since migrating to Australia in 2006, Dr Kadish’s roles have included CEO
and MD of Healthcare Australia, CEO and MD of Pulse Health Group (previously ASX-
listed hospital group) and CEO of Laverty Pathology.
Ian is also a Non-Executive Director of Teaminvest Private Group Limited (ASX:TIP).
None
Dr Ian Kadish
Managing Director and
Chief Executive Officer
MBBCh, MBA
Former directorships
(in the last three years)
Special responsibilities
Member of the Integral Clinical Leadership Committee
Interests in shares
89,379 ordinary shares and 982,773 rights (directly)
16
Integral Diagnostics Annual Report 2021
DIRECTORS’ REPORT CONTINUED
For the year ended 30 June 2021
John Atkin was appointed as an independent Non-Executive Director of IDX on
1 October 2015.
John is an experienced company director and in 2018, John was appointed Chair
of the Australian Institute of Company Directors. John was Chief Executive Officer
and Managing Director of The Trust Company Limited from 2009 to 2013 prior to its
successful merger with Perpetual Limited. Prior to joining the Trust Company, John
was the managing partner and Chief Executive Officer of leading Australasian law firm
Blake Dawson (now Ashurst). Before this, John was a senior mergers and acquisitions
partner of Mallesons Stephen Jaques (now King & Wood Mallesons).
He is currently a Non-Executive Director of IPH Limited (ASX:IPH). John is also a
director of a number of unlisted entities including Qantas Superannuation Limited,
trustee of the Qantas Superannuation Fund and Outward Bound International Inc.
None
Chair of the People and Remuneration Committee
Member of the Audit, Risk and Compliance Committee
Member of Nomination Committee
John Atkin
Independent Non-Executive
Director BA, LLB, FAICD
Former directorships
(in the last three years)
Special responsibilities
Interests in shares
158,891 ordinary shares (indirectly)
Rupert Harrington was appointed as an independent Non-Executive Director of IDX
on 1 October 2015.
Mr Harrington has a wealth of experience in business strategy and mergers and
acquisitions. His early career was in operational management in the United Kingdom
and Australia. His career from 1987 was in private equity where he has an excellent
track record of delivering results for investors in sectors including health, technology,
services and manufacturing. This included Advent’s healthcare investments in Primary
Health Care and Genesis Care. Mr Harrington is Chair of the Company’s Mergers
& Acquisitions Working Group which is convened to review and assess merger and
acquisition opportunities.
Rupert Harrington
Independent Non-Executive
Director BTech, MSc, CDipAF
Mr Harrington is currently Chairman of Clover Corporation (ASX:CLV) and Non-Executive
Director of Pro-Packaging (ASX:PPG). At the end of 2017 he resigned as Non-Executive
Director of Bradken Limited following its successful acquisition by Hitachi.
Former directorships
(in the last three years)
Special responsibilities
None
Member of the Audit, Risk and Compliance Committee
Member of the People and Remuneration Committee
Member of the Nomination Committee
Chair of Merger and Acquisitions Working Group
Interests in shares
146,150 ordinary shares (directly) and 211,498 ordinary shares (indirectly)
Integral Diagnostics Annual Report 2021 17
Ms Raelene Murphy was appointed as an independent Non-Executive Director
of IDX on 1 October 2017.
Raelene has over 30 years experience in strategic, financial and operational leadership
in both industry and professional advisory after beginning her career in audit. She was
formerly a Partner in a national accounting firm, Managing Director of Korda Mentha
and CEO of the Delta Group. In her professional advisory career she specialised in
operational and financial restructuring with a particular emphasis on merger and
acquisition integration across a range of significant public and private companies.
Raelene is a Fellow of Chartered Accountants Australia and New Zealand and has
extensive experience as Chair of Audit and Risk Committees for ASX Listed companies.
She is currently a Non-Executive Director of ASX listed Altium Limited (ASX:ALU),
Bega Limited (ASX:BGA) and Elders Limited (ASX:ELD).
Service Stream Limited (ASX:SSM) – Non Executive Director 2016 to 2019
Clean Seas Seafood Limited (ASX:CSS) – Non-Executive Director 2018 to 2020
Chair of the Audit, Risk and Compliance Committee
Member of the People and Remuneration Committee.
Raelene Murphy
Independent Non-Executive
Director BBus, FCA, GAICD
Former directorships
(in the last three years)
Special responsibilities
Interests in shares
30,945 ordinary shares (indirectly)
Dr Nazar Bokani
Executive Director
MBChB, FRANZCR, MD
Dr Nazar Bokani was appointed as a Director of IDX on 26 April 2021. Dr Bokani is a full
time employed radiologist of the Company based in Western Australia and is therefore
considered by the Board to be a Non-Independent Executive Director. While Dr Bokani
is not an independent director by virtue of his employment, he is independent of senior
management and his responsibilities do not extend to the day-to-day management of
the Company.
Dr Bokani graduated in Medicine (MBChB) in 1991 at Baghdad University and obtained
his MD degree from the University of Leiden in The Netherlands. He completed his
radiology training at Maastricht University Hospital in The Netherlands and consulted as
a radiologist in the UK before coming to Australia. Dr Bokani is qualified as a radiologist
in Australia, the UK and the Netherlands, where he has practiced.
Besides general radiological and interventional work Dr Bokani covers cross-sectional
CT & MRI work, Cardiac CT, Ultrasound and symptomatic breast sessions both
diagnostic and interventional. Dr Bokani is also an active member of the IDX Western
Australian radiologist group being a member of the Western Australian Clinical
Leadership Committee.
Dr Bokani is the Chair of the Company’s Artificial Intelligence (AI) Steering Committee
and has been instrumental in the implementation of AI across the Company. He has
also played a key role in the in the establishment of the Company’s teleradiology
offering.
Former directorships
(in the last three years)
None
Special responsibilities
Member of the Integral Clinical Leadership Committee
Interests in shares
277,716 ordinary shares
18
Integral Diagnostics Annual Report 2021
DIRECTORS’ REPORT CONTINUED
For the year ended 30 June 2021
Dr Jacqueline Milne was appointed as a Director of IDX on 1 November 2019. Dr Milne is
a full-time permanently employed radiologist of the Company based in Queensland and
is therefore considered by the Board to be a Non-Independent Executive Director. While
Dr Milne is not an independent director by virtue of her employment, she is independent
of senior management and her responsibilities do not extend to the day-to-day
management of the Company.
Dr Milne graduated from the University of Queensland with a medical degree and
completed her radiology fellowship at the Gold Coast University Hospital. Dr Milne
began her medical career as a practicing radiographer at South Coast Radiology prior
to commencing her medical degree and radiology qualifications. The multidisciplinary
experience Dr Milne brings as both a radiographer and radiologist to the Board is
invaluable.
Dr Milne’s specialty interests include women’s imaging, medical training and general
procedural work. Dr Milne is also an active member of the IDX Queensland radiologist
group being a member of the Queensland Clinical Leadership Committee.
Dr Jacqueline Milne
Executive Director
BASc., MBBS, FRANZCR
Former directorships
(in the last three years)
None
Special responsibilities
Member of the Integral Clinical Leadership Committee
Interests in shares
None
Other current directorships quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
Former directorships (last three years) quoted above are directorships held in the last three years for listed entities only and
exclude directorship of all other types of entities, unless otherwise stated.
Integral Diagnostics Annual Report 2021 19
Company Secretary
Kirsty Lally (BEcon, CA,) was appointed Company Secretary on 5 July 2019. Kirsty is an experienced executive with experience
across listed small market capitalisation, unlisted and private companies, specialising in governance, compliance and other
corporate matters.
Meetings of Directors
Board
Audit, Risk and
Compliance Committee
Director
Helen Kurincic
Dr Ian Kadish
John Atkin
Rupert Harrington
Raelene Murphy
Dr Chien Ping Ho1
Dr Jacqueline Milne
Dr Nazar Bokani2
Held
16
16
16
16
16
10
16
5
Attended
16
16
15
16
16
10
16
4
Held
8
-
8
8
8
-
-
-
Attended
8
-
8
8
8
-
-
-
People and
Remuneration
Committee
Held
6
-
6
6
6
-
-
-
Attended
6
-
6
6
6
-
-
-
Nomination
Committee
Held
3
-
3
3
-
-
-
-
Attended
3
-
3
3
-
-
-
-
Held: represents the number of meetings held during the time a Director held office and was eligible to attend.
1. Dr Chien Ping Ho ceased his position as a Director of the Company on 1 March 2021.
2. Dr Nazar Bokani was appointed as a Director of the Company on 26 April 2021.
The Board has also established a group wide Clinical Leadership Committee which is made up of Executive Directors Dr Ian
Kadish, Dr Nazar Bokani, and Dr Jacqueline Milne, together with radiologist leaders from across IDX. Its role is to promote
and support a collegiate culture across all practices and to provide advice on all clinical governance matters including patient
care, clinical standards and quality assurance.
The ICLC met 5 times during the year and Executive Directors’ attendance is noted below:
Director
Dr Ian Kadish
Dr Chien Ping Ho1
Dr Jacqueline Milne
Dr Nazar Bokani2
ICLC
Held
5
3
5
1
Attended
5
3
4
1
1. Dr Chien Ping Ho ceased his position as a Director of the Company on 1 March 2021.
2. Dr Nazar Bokani was appointed as a Director of the Company on 26 April 2021.
The Board has also established a Mergers and Acquisitions Working Group. The working group is chaired by Mr Harrington
and its members include Dr Ian Kadish and Mrs Anne Lockwood Chief Financial and Commercial Officer (CFCO). The Chair
also attends the meetings when relevant. The Mergers and Acquisitions Working Group met 9 times during the year.
20
Integral Diagnostics Annual Report 2021
DIRECTORS’ REPORT CONTINUED
For the year ended 30 June 2021
Indemnity and insurance of officers
The Company’s Constitution requires the Company to indemnify any person who is, or has been, an officer of the Company,
including the Directors, Executives and the Company Secretary of the Company, on a full indemnity basis and to the full extent
permitted by law, against all losses or liabilities (including all reasonable legal costs) incurred by the officer as an officer of
the Company or of a related body corporate.
In accordance with the Company’s Constitution, the Company has entered into a deed of indemnity, insurance and access
with each of the Company’s Directors. Under the deeds of indemnity, insurance and access, the Company must maintain
a directors’ and officers’ insurance policy insuring a Director (among others) against liability as a director and officer of the
Company and its related bodies corporate until seven years after a director ceases to hold office as a director or of a related
body corporate (or the date any relevant proceedings commenced during the seven-year period have been finally resolved).
No Director or officer of the Company has received benefits under an indemnity from the Company during or since the end
of the financial year.
During the financial year, the Company has paid a premium in respect of a contract insuring officers of the Company or of a
related body corporate and its related bodies corporate against all liabilities that they may incur as an officer of the Company
or of a related body corporate, including liability for costs and expenses incurred by them in defending civil or criminal
proceedings involving them as such officers, with some exceptions. Due to confidentiality obligations and undertakings of the
policy, no further details in respect of the premium or the policy can be disclosed.
Indemnity and insurance of the auditor
The Company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the Company or
any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company
or any related entity.
Proceedings on behalf of the Company
No person has applied to the court under section 237 of the Corporations Act 2001 (Cth) (Corporations Act) for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of
taking responsibility on behalf of the Company for all or part of those proceedings.
Integral Diagnostics Annual Report 2021 21
Non-audit services
Details of the amounts paid or payable to the auditor of the Company for audit and non-audit services during the year by the
auditor are disclosed in Note 29 to the financial statements.
In accordance with its Policy for Non-Audit Services Provided by the External Auditor, the Company may decide to employ
the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with
the Company and/or the Group are important. The non-audit services provided were largely for work performed pertaining
to tax advisory and compliance services and due diligence on transactions.
The Board, in accordance with advice provided by the Audit Risk and Compliance Committee (ARCC), is satisfied that the
provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act. The directors are satisfied that the provision of non-audit services by the auditor did not compromise
the auditor independence requirements of the Corporations Act for the following reasons:
• all non-audit services have been reviewed by the ARCC to ensure they do not impact the impartiality and objectivity
of the auditor, and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants.
Officers of the Company who are former partners of PricewaterhouseCoopers
There are no officers of the Company who are former audit partners of PricewaterhouseCoopers.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act is set out
on page 38.
Auditor
PricewaterhouseCoopers continues in office as the auditor of the Company in accordance with section 327 of the Corporations Act.
Rounding of amounts
The Company is a kind referred to in Australian Securities and Investments Commission Legislative Instrument 2016/191,
relating to ‘rounding off’. Amounts in this Report and in the financial statements have been rounded off, stated, in accordance
with that Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
This Directors’ Report is made in accordance with a resolution of Directors.
On behalf of the Directors
Helen Kurincic
Chair
27 August 2021
Melbourne
Dr Ian Kadish
Managing Director and Chief Executive Officer
22
Integral Diagnostics Annual Report 2021
REMUNERATION REPORT
For year ended 30 June 2021
Introduction from the People and Remuneration Committee Chair
Dear Shareholders,
On behalf of the Board, I am pleased to present the Remuneration Report for the 2021 financial year. We will seek your
approval of the report at our Annual General Meeting to be held on 5 November 2021.
As explained in prior years, our remuneration framework has a deliberate bias to the achievement of growth in earnings
over the longer term. FY21 marks the completion of four years of strong performance for the Group. Over that period Diluted
Operating Earnings per Share have increased from 10.41 to 19.00 cents per share representing a compound annual growth
rate of 16.3%. This exceeds the stretch target of 15% set for the FY18 LTI Performance Rights resulting in the full vesting of
those performance rights. This outcome aligns well with the enhancement in the underlying value of the Company over that
period. Given its timing, the financial reporting of this vesting will be reflected in our FY22 Remuneration Report and the
accumulating interest of our Executives under our LTI program is set out in this year’s report.
This year was, in itself, another year of strong performance by the Group, notwithstanding the impacts of COVID-19. Operating
NPAT exceeded the threshold target set by the Board at the commencement of the period. This resulted in partial vesting of
the financial component of the STI program for our Executives. The receipt of JobKeeper had no impact on our assessment of
this achievement. In other words, in assessing achievement of this goal our Executives were not advantaged in any way by the
JobKeeper receipts. The Company also voluntarily repaid to the Federal Government surplus JobKeeper receipts of $2.9m.
No discretion was applied to the outcome of the financial component of the STI awards which were paid. The reasons for the
Board’s decisions, including disclosure of the FY21 financial targets, are more fully set out in the report.
The fixed remuneration of the CEO, CFCO and COO has been increased for FY22. The reasons for those increases are set
out in the report. In summary, they reflect the increased size and value of the roles they discharge and the need to align
remuneration appropriately with comparable benchmarks. The Board has also determined to increase the fees paid to the
Chair, Non-Executive and Executive Directors, noting the deferral of any increase last year and the significant increase in
the size, value and complexity of the Group since they were last reviewed in FY19. Details of those changes are set out in this
report.
Over the years we have had the opportunity to meet with shareholders and proxy advisors to receive their feedback on
remuneration matters and address any comments arising from earlier reports. We have also included disclosure of the
financial targets underpinning the STI awards for FY21.
The People and Remuneration Committee (PRC) provides oversight of the relevant sustainability initiatives that form part of
our Environmental, Social and Governance (ESG) Strategy and considers how we integrate ESG outcomes in our remuneration
framework. Whilst noting the relatively small quantum of our STI program for Executives, in FY21 people related targets were
incorporated in strategic goals. In addition, for FY22 behavioural adherence to our values has been made an explicit modifier
for determining awards under our STI program and improvement in the Group engagement score has been made an overall
modifier for the financial component of STI awards.
As the Company continues to grow and develop, we will continue to apply a fit for purpose remuneration framework that
supports our cultural values and execution of the Board’s strategy, and that is balanced in its ability to attract, motivate
and retain talent and is aligned with the creation of sustainable shareholder value and broader stakeholder outcomes.
We look forward to your support and welcome your feedback on our Remuneration Report.
John Atkin
People and Remuneration Committee Chair
27 August 2021
Integral Diagnostics Annual Report 2021 23
The Remuneration Report, which has been audited, outlines the Director and Executive KMP remuneration arrangements
for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key Management Personnel (KMP) of the Group are those persons having authority and responsibility for planning, directing
and controlling the activities of the entity, directly or indirectly, including all Directors. The table below lists the KMP for the
year ended 30 June 2021 (FY21). All KMP held their position for the duration of FY21, unless otherwise noted.
Name
Non-Executive Directors
Helen Kurincic
John Atkin
Rupert Harrington
Raelene Murphy
Executive Directors
Dr Ian Kadish
Dr Jacqueline Milne
Dr Chien Ping Ho
Dr Nazar Bokani
Executives
Anne Lockwood
Paul McCrow
Position
Independent, Non-Executive Chair
Independent, Non-Executive Director
Independent, Non-Executive Director
Independent, Non-Executive Director
Managing Director and Chief Executive Officer
Executive Director
Executive Director (ceased KMP position 1 March 2021)
Executive Director (commenced KMP position 26 April 2021)
Chief Financial and Commercial Officer
Chief Operating Officer (commenced KMP position 1 November 2020)
The Remuneration Report is set out under the following main headings:
a. Overview of Executive Remuneration Framework
b. Alignment of remuneration with Company performance
c. Remuneration outcomes for FY21
d. Adjustments in remuneration settings for FY22
e. Cumulative interest of Executives under the LTI program
f.
Other transactions with KMP and their related parties
g. Executive service agreements
h. KMP shareholding and minimum shareholding policy for KMP
a. Overview of Executive Remuneration Framework
The Board of Directors (‘the Board’) work to ensure that Executive reward satisfies the following key criteria:
• competitive, fair and equitable;
• performance linked and consistent with the Group’s values and strategy;
• aligned with the interests of shareholders and other stakeholders,
• appropriate transparency in application, particularly to KMP.
The Company’s remuneration policy for Non-Executive Directors (NEDs) aims to ensure that the Company can attract and
retain suitably qualified and experienced NEDs and recognises the specific governance of this medical specialist company
and the higher workload with four independent NEDs.
24
Integral Diagnostics Annual Report 2021
REMUNERATION REPORT CONTINUED
For year ended 30 June 2021
Remuneration Framework
The objective of the Group’s Executive reward framework is to align Executive reward with the achievement of strategic
objectives, the creation of value for shareholders and ensure the reward for performance is competitive and appropriate for
the results delivered. Figure 1 outlines the components of Executive KMP remuneration and their purpose.
FY2021 EXECUTIVE KMP REMUNERATION FRAMEWORK
Figure 1:
Fixed Remuneration
Cash, superannuation,
non-monetary rewards
STI
Cash
LTI
Performance rights converted to shares after 4 years
Year 1
Year 2
Year 3
Year 4
FY2021 EXECUTIVE KMP REMUNERATION COMPONENTS
Fixed
Variable ‘at risk’
Fixed Remuneration
Short term Incentive
Long Term Incentive
PURPOSE AND ALIGNMENT
Market competitive to attract
and retain key talent.
To drive achievement of short term
financial and strategic priorities as
agreed by the Board.
To reward and incentivise Executive
KMP to drive the sustainable
creation of shareholder value.
Fixed remuneration is comparable
to market. The market is defined
around similar companies (based
on revenue, comparable industries,
and business size).
Fixed remuneration may deviate
from the market depending
on individual alignment to
corporate values, capabilities,
experience and performance.
VALUE TO INDIVIDUAL
Operating NPAT gateway
determines capacity to pay.
Awards based on financial
performance and individual
performance to strategic KPIs.
Board discretion to moderate award
for factors such as alignment
to corporate values, leadership
framework and risk management.
Vesting is based on achievement of
operating earnings per share (EPS)
performance against targets.
Integral Diagnostics Annual Report 2021 25
People and Remuneration Committee
The People and Remuneration Committee (PRC) is governed by the PRC Charter and is responsible for reviewing
and recommending to the Board compensation arrangements for the Non-Executive Directors, Executive Directors,
other KMP and Senior Management including:
a. Contract terms, annual remuneration and participation in any short and long-term incentive plans.
b. Major changes and developments in the Company’s remuneration, superannuation, talent attraction, retention and
termination policies and procedures.
c. Remuneration strategy, performance targets and bonus payments for the CEO and the Executives that report to the CEO.
d. Remuneration arrangements for the Chair, Non-Executive and Executive Directors of the Board.
The PRC also reviews and makes recommendations to the Board in regards to ‘people’ by monitoring and reviewing the
Senior Management performance assessment process, reviewing major changes and developments in the personnel
practices and industrial relations strategies of the Group, senior leadership succession planning, and overseeing the
effectiveness of the Diversity Policy.
The following Non-Executive Directors, all of whom are regarded as independent, were members of the PRC for the entire
financial year:
John Atkin – Chair
Independent, Non-Executive Director
Helen Kurincic
Independent, Non-Executive Director
Rupert Harrington
Independent, Non-Executive Director
Raelene Murphy
Independent, Non-Executive Director
Use of remuneration consultants
The Board ensures that any recommendations made by consultants in relation to remuneration arrangements of KMP
must be made directly to the Board without any influence from management. The arrangements in place ensure any advice
is independent of management and includes management not being able to attend Board or Committee meetings where
recommendations relating to their remuneration are discussed.
To inform its decision making during the 2021 financial year the Board engaged consultants to provide benchmarking analysis
comparative to the market for both Executive remuneration and Non-Executive Director fees. None of the advice received
included a remuneration recommendation as defined by the Corporations Act 2001.
The total paid for Executive benchmarking was $25,000 and for Non-Executive Director fee benchmarking was $10,000,
excluding GST.
Non-Executive Directors’ remuneration arrangements
Under the Constitution, the Board determines the remuneration to which each Director is entitled for his or her service as a
Director. However, the total aggregate amount provided to all Non-Executive Directors for their services as Directors must not
exceed in any financial year the amount fixed by the Company in general meeting. This amount has been fixed at $1,000,000.
Fees to Non-Executive Directors reflect the demands and responsibilities of their role, the specialist nature of a diagnostic
imaging business and the deliberate structure of our Board with four independent Non-Executive Directors and two Executive
Directors employed as radiologists. Non-Executive Directors’ fees are reviewed periodically by the PRC. The PRC may,
from time to time, receive advice from independent remuneration consultants to ensure Non-Executive Directors’ fees are
appropriate and in line with the market.
The Chair’s fees are determined independently from the fees of other Non-Executive Directors based on comparative roles in
the external market and the specific nature of the expertise and role for this company. Non-Executive Directors do not receive
share options or other incentives and their remuneration must not include a commission on, or a percentage of, operating revenue.
26
Integral Diagnostics Annual Report 2021
REMUNERATION REPORT CONTINUED
For year ended 30 June 2021
Executive Directors’ remuneration arrangements
Dr Jacqueline Milne, Dr Chien Ping Ho and Dr Nazar Bokani are deemed to be Executive Directors as they are employed
as radiologists by the Group. However, it is important to note that they do not report to the Chief Executive or the other
Executives. The key terms of their employment contracts are consistent with employed radiologists and include a fixed
salary at market rate plus allowances where appropriate and in line with market.
In addition, they receive an Executive Director Board fee which is set by reference to the fees paid to the Non-Executive Directors.
Executive remuneration arrangements
The Executive remuneration and reward framework for the 2021 financial year has three components:
• fixed remuneration (including base salary and superannuation) and non-monetary benefits;
• short-term performance incentives; and
• long-term performance incentives.
The combination of these comprises the Executives’ total remuneration.
An Executive’s remuneration arrangement is reviewed annually by the PRC, based on individual and business performance,
the overall performance of the Group and comparable market data. At risk remuneration consists of the short-term (STI)
and long-term (LTI) incentive programs, which have been designed to align Executive remuneration with the creation of
shareholder value through achievement of strategic and financial objectives.
Remuneration mix
The target remuneration mix is shown below. It reflects the STI opportunity that will be available if the performance conditions
are satisfied at target, and the face value of the LTI performance rights granted during the year, as determined at grant
date. The target remuneration mix has a deliberate weighting to the LTI consistent with the Company’s strategy of delivering
increased earnings per share over the longer term.
Executives
Dr Ian Kadish
Anne Lockwood
Paul McCrow
Fixed remuneration
Delivery mechanism
Fixed
Remuneration
(%)
46.1%
51.7%
72.8%
STI
(%)
10.8%
12.1%
10.9%
LTI
(%)
43.1%
36.2%
16.3%
Total
Remuneration
100%
100%
100%
• 100% cash payment including base salary, allowances, other non monetary and fringe benefits
and employer superannuation contributions.
Considerations
• Role scope and complexity.
• The Executive’s skills and experience.
Strategic objective
Governance
• Industry benchmarking.
• To attract and retain high quality Executives to deliver Company objectives.
• Reward capability and experience.
• Fixed remuneration is reviewed annually by the PRC with regard to market rates
and individual performance and is approved by the Board.
• There are no guaranteed increases to fixed remuneration in employment contracts.
Integral Diagnostics Annual Report 2021 27
Short term incentive (STI)
Delivery mechanism
Performance period
Gateway, modifier and
performance measures
STI opportunity
• 100% cash payment.
• The FY21 STI targets were set at the commencement of FY21 and assessed by the PRC after
the end of the financial year, based on the Company’s audited annual results and individual
performance against non-financial targets.
Gateway
• A gateway is in place for all Executives, which means a minimum Operating1 NPAT target must
be achieved before any STI will be paid, unless Board discretion is applied.
Modifier
• Behavioural adherence to core values of the Company is an explicit modifier.
Financial performance target
• 50% of STI will be available based on achievement of year-on-year Operating1 NPAT growth.
• Operating NPAT growth was selected because it is linked to the creation of shareholder returns.
Strategic priority targets
• 50% of STI will be available on achievement of non-financial strategic objectives and priorities
identified by the Board. Measures to assess performance against those objectives are also set
at that time.
The PRC reviews each Executive’s performance against these metrics to ensure Executives
consider non-financial objectives when making strategic decisions. All are essential to positive
outcomes for the Company and its stakeholders.
Maximum STI opportunities are outlined below:
Executive
Dr Ian Kadish
Anne Lockwood
Paul McCrow
Maximum opportunity
25% of fixed remuneration
25% of fixed remuneration
25% of fixed remuneration
Strategic objective
• The Financial Performance Target and Strategic Priority Targets were chosen because they
are aligned with the short-term objectives of the business whilst consistent with the long-term
strategy of the Company.
Governance
• Performance measures and objectives are clearly defined and measurable.
• Targets are recommended by the PRC and approved by the Board.
• Any incentive payment is not an entitlement and provided at the complete discretion of the
Board.
Long term incentive (LTI)
Strategic objective
• The LTI Plan is designed to encourage Executives to focus on the key performance drivers
which underpin sustainable growth in shareholder value within the boundaries of the Company’s
risk management framework. It is also designed to align the interests of Executives with
the interests of shareholders by providing an opportunity for Executives to receive an equity
interest in the Company.
28
Integral Diagnostics Annual Report 2021
REMUNERATION REPORT CONTINUED
For year ended 30 June 2021
Long term incentive (LTI)
LTI award
• Each year the LTI award is delivered in the form of zero exercise priced options
(Performance Rights).
• The number of Performance Rights granted to participants is determined by use of a face
value methodology. In the absence of special circumstances warranting another pricing
method, a participant’s LTI award is divided by the 30-day VWAP for the period up to and
including 30 June in the prior financial year and rounded up to the nearest whole number
to determine the number of Performance Rights granted.
• Each Performance Right entitles the holder to one ordinary share in the Company (or an
equivalent cash payment in lieu of an allocation of shares) subject to the satisfaction of an
earnings per share performance condition. Performance Rights are granted by the Company
at no cost to the participant and no payment is required to be made on vesting and exercise
of the Performance Rights.
• Performance Rights will automatically be exercised on vesting.
• Performance Rights do not carry any voting or dividend entitlements prior to vesting
and exercise.
Performance Period
Performance condition
and measures
The FY21 LTI Performance Rights will be tested based on performance over a four year period
commencing on 1 July in the year they are granted.
The FY21 Performance Rights will vest subject to the satisfaction of an earnings per share (EPS)
performance condition.
The EPS performance condition will be measured by reference to the compound annual growth
rate (CAGR) of the Company’s EPS over the Performance Period. EPS measures the earnings
generated by the Company attributable to each share on issue on a fully diluted basis. The EPS
performance condition was selected because of its correlation with long-term shareholder
return and its lower susceptibility to short-term share price volatility. Calculation of EPS, the
CAGR of the EPS and achievement against the performance condition will be determined by the
Board in its absolute discretion, having regard to any matters that it considers relevant (including
any adjustments for unusual or non-recurring items that the Board consider appropriate).
The Threshold and Stretch target levels of achievement are reviewed each year at the time
of grant. The vesting at Threshold is 20% and the Threshold target is set at a level which
the Board regards as readily attainable. The Stretch target is set at a level which the Board
regards as demonstrating clear outperformance. Full vesting occurs when performance
equals or exceeds Stretch.
The risks of using a single measure of performance for the LTI have been assessed. The Board
does not favour a relative Total Shareholder Return metric as it is both unnecessary and subject
to the vagaries of market factors present at the end of the test period.
The Board has also considered the possible inclusion of a performance condition based on
Return on Invested Capital (ROIC) as an addition to the current performance condition based
on Earnings Per Share (EPS). While return on capital is a key consideration both in driving
improvements in the organic business and in any acquisition, the Board determined the
complexities of the measurement and its susceptibility to change due to extraneous timing
effects did not warrant its inclusion. The Board has continued to ensure that the Group
maintains a conservative gearing and that acquisitions and investments generate an
appropriate return on capital as part of its oversight of management.
If management are successful in achieving compound EPS growth at or towards stretch,
shareholders can reasonably expect to see an increase in dividends and over the longer-term
share price appreciation in line with or ahead of market indices.
• EPS growth rate is to be calculated with reference to underlying earnings (operating1).
• The method of assessing the EPS performance condition has been chosen as the Board
believes it is the most appropriate way to assess the true financial performance of the
Company and determine remuneration outcomes. The Board is mindful of exercising its
discretion to adjust underlying earnings in a manner that ensures managements’ performance
is rewarded on its merits.
Assessment of
performance condition
Integral Diagnostics Annual Report 2021 29
Long term incentive (LTI)
Testing of performance
condition
Additional restrictions
• Testing of the Performance Rights is expected to occur, shortly after the end of the
Performance Period.
• Any Performance Rights that vest will be automatically exercised, and participants are
not required to pay an exercise price. Any remaining Performance Rights that do not
vest will lapse.
• If some of the FY21 Performance Rights fail to vest following testing after the end of the
Performance Period due to some extreme event or circumstance, the Board may decide
to re-test the performance condition at the end of a further one-year period. Any Performance
Rights that do not vest after the re-test will lapse immediately.
• In any re-test, the Threshold and Stretch levels of achievement will be determined by applying
the CAGRs as specified by the Board at the time the Rights were granted over the full 5 years.
In other words, to achieve Stretch, the EPS achieved would need to equal or exceed the level
representing 5 years of compound growth at the relevant rate.
• In exercising its discretion to re-test, the Board will be mindful of ensuring the re-test does not
unfairly advantage management or disadvantage shareholders.
• Participants in the LTI Plan may elect to place an additional dealing restriction, by way of
a holding lock, foregoing the right to trade on any shares they may receive on vesting and
exercise of the Performance Rights.
• The minimum additional restriction periods which may be chosen range from 1 to 7 years
after vesting.
Treatment of cessation2
• Where a participant ceases employment for cause or due to resignation (other than due to
death, permanent disability or serious illness) all unvested Performance Rights will lapse.
Change of control3
Forfeiture and clawback
• In all other circumstances, a pro-rata portion of Performance Rights (based on the portion of
the Performance Period that has elapsed) will remain on foot and be subject to the original
performance condition (including that the Performance Rights will be eligible for re-testing),
as though the participant had not ceased employment, unless the Board determines otherwise.
• Where there is a takeover bid or other transaction, event or state of affairs that in the Board’s
opinion is likely to result in a change of control of the Company, the Board has the discretion
to accelerate vesting of some or all of the Performance Rights (but not less than a pro-rata
portion calculated based on the portion of the Performance Period that has elapsed and tested
based on performance against the performance condition to that date). Where only some of
the Performance Rights are vested on a change of control, the remainder of the Performance
Rights will immediately lapse.
• If an actual change of control occurs before the Board exercises its discretion, a pro-rata
portion of the Performance Rights (equal to the portion of the relevant Performance Period
that has elapsed up to the change of control) will be tested based on performance against
the performance condition to that date. The Board retains a discretion to determine whether
the remaining unvested Performance Rights will vest or lapse.
• The Board has broad ‘clawback’ powers to determine that any Performance Rights granted
under the LTI Plan may lapse, shares allocated on vesting and exercise be forfeited, or cash
payments or dividends be repaid in certain circumstances (e.g. in the case of fraud or gross
misconduct). This protects the Company against the payment of benefits where participants
have acted inappropriately.
Governance
• The performance condition and objectives are clearly defined and measurable.
• Any grant is not an entitlement and provided at the complete discretion of the Board.
1. Operating is defined as NPAT before one-off costs and as included in the Operating and Financial Review.
2. For each of the FY19, FY20 and FY21 grants the Board has determined that if the CEO ceases employment and he is deemed by the Board to be a
“Good Leaver”, his full FY19, FY20 and FY21 Performance Rights would stay on foot. The Board has made the same determination in relation to
CFCO’s FY19 and FY20 Performance Rights and the COO’s FY20 and FY21 Performance Rights.
3. In view of the strong performance of the Company over FY19, 20 and 21, the Board has also determined that, absent of malus, if there is a change
of control it would exercise discretion to fully accelerate vesting of FY19 , FY20 and FY21 Performance Rights held by the CEO. The Board has made
the same determination in relation to the FY19 and FY20 Performance Rights held by the CFCO and the COO’s FY20 and FY21 Performance Rights.
30
Integral Diagnostics Annual Report 2021
REMUNERATION REPORT CONTINUED
For year ended 30 June 2021
b. Alignment of remuneration with Company performance
The Company aims to align its Executive remuneration to its strategic and business objectives and the creation of shareholder
value. The table below shows measures of the Group’s financial performance over the last four years. Consistent with
Company strategy, the table shows improvement in Company performance over that period generating significant benefits
for shareholders both in terms of increasing dividends and appreciating share price.
The link between the Company’s performance and STI and LTI outcomes is considered in the sections below.
Key measures of the Group
Operating EBITDA1 as a % of revenue
Operating NPAT2 as a % of revenue
Operating EPS3 (cents per share)
Return on operating assets4
(based on operating NPAT)
Closing share price5
Dividends paid or declared per share
Declared dividend payout ratio7
FY2021
26.8%
10.9%
19.0cps
14.7%
5.20
12.5cps
68.8%
FY2020
27.6%
11.14%
16.6cps
13.9%
3.90
9.5cps
80.0%
FY20196
22.9%
11.1%
16.2cps
17.9%
3.16
10.0cps
74.72%
FY20186
20.3%
9.7%
12.6cps
14.5%
3.02
8.0cps
79.59%
FY20176
18.8%
8.3%
10.4cps
11.6%
1.66
7.0cps
65.6%
1. Operating EBITDA defined as EBITDA before one-off costs.
2. Operating NPAT defined as NPAT before one-off costs.
3. Operating Diluted EPS calculation for FY20 has been adjusted in order for the weighted average calculation of shares on the capital raise to align
with the settlement date of the Imaging Queensland acquisition being 1 November 2019 from 4 September 2019 for the Institutional placement and
30 September 2019 for the Retail entitlement offer. Aligning the dates provides a more accurate reflection of the underlying EPS and increases the
Diluted EPS by 0.3cps to 17.0cps.
4. Return on operating assets for FY20 has been calculated using the LTM organic operating NPAT (plus trailing acquisitions NPAT) of $33.8m
5. The opening share price on 21 October 2015 was $1.91.
6. Key measures for the period are measured on a pre-AASB 16 basis.
7. Dividend payout ratio is calculated on statutory NPAT adjusted for non-cash customer contract amortisation
c. Remuneration outcomes for FY21
Non-Executive Director and Executive Director Board fees for FY21
Notwithstanding the increase in the size, value and complexity of the Group, the PRC determined it would not recommend
any increase in the fees paid to the radiologist Executive Directors, the Non-Executive Directors and the Chair having regard
to the current economic environment with COVID-19 impact uncertainty. Accordingly, the following annual fees were paid to
Executive Directors, Non-Executive Directors and the Chair for their services:
• for Executive Directors (excluding the MD/CEO), $62,500;
• for Non-Executive Director, $125,000 (inclusive of all Committee Chair and Committee member roles), and
• for the Chair, $250,000 (inclusive of all Committee Chair and Committee member roles).
• All Non-Executive Directors’ fees include superannuation where applicable.
The PRC has recently reviewed Director’s fees and determined that there will be an increase for the 2022 financial year.
Details of this review are set out later in the report.
Executive Remuneration
As disclosed in last year’s report, the remuneration for the CEO and CFCO for FY21 was reviewed having regard to the
significant growth in the size and complexity of the business including entry into the ASX300, the strong performance of both
Executive KMP in role, outcomes achieved for shareholders and other stakeholders, and market benchmarks from the report
provided from Guerdon Associates.
Integral Diagnostics Annual Report 2021 31
The fixed remuneration for the CEO for FY21 was increased by 12.78% to $720,000 and the CFCO by 11.03% to $500,000.
The Board recognised when adjusting FY21 remuneration this was the second year in a row where both the CEO and the
CFCO received increases in their Fixed Remuneration exceeding 10%. However, in the Board’s view those increases were
warranted by the factors mentioned above and still placed the Executive KMP appropriately by reference to comparable
benchmarks. In assessing the reasonableness of the fixed remuneration of the Executive KMP it is also important to bear
in mind the overall remuneration structure which has a relatively low level of STI potential which remains at 25% of their
fixed remuneration and a higher weighting to the longer term with a four year LTI at 100% & 75% of their fixed remuneration
respectively.
Prior to commencing as COO, Paul McCrow was employed by the Group as General Manager for Apex Radiology. The COO’s
fixed annual remuneration for FY21 was set as $375,000, pro rata for the 2021 financial year.
STI Outcomes and Payments
Consistent with our general principles, the CEO, CFCO and COO were set a financial goal based on achievement of year-on-year
operating NPAT growth at threshold $36.8m, target $38.7m and stretch $40.6m. They were also each set strategic goals.
The CEO’s strategic goals focused on:
• business development;
• acquisition integration;
• organic growth and cost structure; and
• radiologist and referrer engagement (including clinical leadership and building industry leading culture).
The CFCO’s strategic goals were focused on:
• integration of the Ascot and IQ acquisitions and pursuit of further acquisition targets;
• establishment of the MedX JV;
• debt refinancing; and
• development of stronger controls around and enhancement of finance and risk systems and resourcing; and
• integrating the COO role.
The COO’s strategic goals were focused on:
• improving operational performance;
• growth strategies including IDXt, MedX JV and supporting local greenfield and brownfield strategies; and
• radiologist and employee engagement.
The COO’s KPIs for FY21 also included financial and strategic KPIs in line with his role as General Manager for Apex Radiology
until commencement as COO on 1 November 2020.
For each strategic goal the Board established criteria by which achievement of that goal could be assessed. This was
designed to ensure that as far as possible the achievement was capable of objective determination.
The operating NPAT, adjusted for the impacts of voluntary JobKeeper repayments was $40.0m, exceeding the threshold of
$36.8m and target of $38.7m but falling short of stretch which had been set at $40.6m. This represented 86% achievement
and the financial components of the STI awards were paid accordingly. The receipt of JobKeeper had no impact on our
assessment of this achievement. In other words, in assessing achievement of this goal our Executives were not advantaged in
any way by the JobKeeper receipts. No discretion was applied to the outcome of the financial component of the STI awards.
32
Integral Diagnostics Annual Report 2021
REMUNERATION REPORT CONTINUED
For year ended 30 June 2021
The Executives largely achieved all aspects of their strategic goals which in the circumstances, particularly given the ongoing
challenges COVID-19 presented in FY21, was a commendable achievement. Given the number of different strategic goals that
were set, the relatively small percentage of remuneration attributable to the achievement of the individuals goals and in many
cases the commercial sensitivity of the more detailed criteria, the Board has determined that disclosure of its reasoning for
achievement of the strategic goals should be limited to FY21 disclosure of the focus area of those goals.
The table below shows the STI payment to each Executive for the current and preceding financial years:
Executives
Dr Ian Kadish
Anne Lockwood
Paul McCrow
STI Foregone
%
16%
14%
19%
FY2021
STI Paid
%
84%
86%
81%
STI Payment
$
151,200
107,500
67,318
STI Foregone
%
13%
13%
-
FY2020
STI Paid
%
87%
87%
-
STI Payment
$
138,852
97,949
-
LTI Performance Rights granted in FY21
For FY21, the Board maintained the metrics used to set vesting levels for the LTI consistent with those adopted for FY20.
The Board also determined the number of FY21 LTI Performance Rights awarded was by use of the 30 day VWAP prior to
30 June consistent with the FY19 grant.
The table below shows the LTI details for each Executive for the financial year ended 30 June 2021:
Executives
Dr Ian Kadish
Anne Lockwood
Paul McCrow3
Grant date
31/10/2020
17/08/2020
17/08/2020
Number of
Performance
Rights granted1
184,616
96,154
23,270
Fair value on
grant date
3.75
3.35
3.35
Aggregate
fair value1
692,310
322,116
77,955
Vesting and
exercise date2
30/06/2024
30/06/2024
30/06/2024
Performance
Rights expiry
date
30/06/2025
30/06/2025
30/06/2025
1. The FY21 Performance Rights granted were made with reference to the 30 day VWAP of the Company’s shares traded up to, and including
30 June 2020, calculated fair value was made on grant date.
2. The FY21 LTI Performance Rights are zero exercise price options and the Performance Rights are automatically exercised on vesting.
3. Paul McCrow was appointed as COO on 1 November 2020, prior to this he was General Manager of Apex Radiology, the Group’s Western Australian
operations. Mr McCrow received LTI grants in his capacity as General Manager.
LTI Performance Rights granted in FY20
The table below shows the LTI details for each Executive for the financial year ended 30 June 2020:
Executives
Dr Ian Kadish
Anne Lockwood
Paul McCrow3
Number of
Performance
Rights granted1
235,572
124,633
30,443
29,336
Grant date
20/11/2019
26/08/2019
26/08/2019
17/12/2019
Fair value on
grant date
3.01
2.75
2.75
3.08
Aggregate
fair value1
709,072
342,741
83,718
90,355
Vesting and
exercise date2
30/06/2023
30/06/2023
30/06/2023
30/06/2023
Performance
Rights expiry
date
30/06/2024
30/06/2024
30/06/2024
30/06/2024
1. The FY20 Performance Rights granted were made with reference to the price offered under the Entitlement Offer announced to the market on
the 26 August 2019, calculated fair value was made on grant date.
2. The FY20 LTI Performance Rights are zero exercise price options and the Performance Rights are automatically exercised on vesting.
3 Paul McCrow was appointed as COO on 1 November 2020, prior to this he was General Manager of Apex Radiology, the Group’s Western Australian
Integral Diagnostics Annual Report 2021 33
operations. Mr McCrow received LTI grants in his capacity as General Manager. Mr McCrow received an additional grant of performance rights in
FY20 in line with the Company’s remuneration guidelines.
Summary of KMP remuneration for FY21
Details of the remuneration received by the Group’s KMP for FY21 and the prior financial year are set out in the following tables.
Short term benefits
Post-
employment
benefits
Long
term
benefits
Cash
salary
and
fees4
$
228,311
114,155
114,155
121,385
Cash
incentive
$
Super-
annuation
$
n/a
n/a
n/a
n/a
21,689
10,845
10,845
3,861
21,694
21,694
16,271
3,861
736,429
781,895
381,695
171,048
151,200
n/a
n/a
n/a
Long
service
leave
$
n/a
n/a
n/a
n/a
Share based
payments5
$
Total
remuneration
$
n/a
n/a
n/a
n/a
250,000
125,000
125,000
125,000
11,974
17,447
10,619
985
626,424
n/a
n/a
7,573
1,547,722
821,036
408,584
183,467
Proportion
of total
remuneration
related to
performance
%
n/a
n/a
n/a
n/a
50.2%
n/a
n/a
n/a
496,766
247,477
107,500
67,318
21,694
16,271
17,091
3,597
259,107
40,546
902,158
375,209
40.6%
28.7%
FY2021
Non-Executive Directors
Helen Kurincic
John Atkin
Rupert Harrington
Raelene Murphy
Executive Directors
Dr Ian Kadish
Dr Jacqueline Milne
Dr Chien Ping Ho1
Dr Nazar Bokani2
Other Key Management
Personnel
Anne Lockwood
Paul McCrow3
1. Dr Chien Ping Ho ceased KMP position 1 March 2021.
2. Dr Nazar Bokani commenced KMP position 26 April 2021.
3. Paul McCrow commenced KMP position 1 November 2020.
4. Cash salary and fees, include movements in annual leave entitlements and Executive Director fees.
5. Share-based payments reflect the benefits by Dr Ian Kadish, Anne Lockwood and Paul McCrow from their participation in the LTI plan
and Dr Nazar Bokani’s participation in the radiologist loan-funded share scheme.
34
Integral Diagnostics Annual Report 2021
REMUNERATION REPORT CONTINUED
For year ended 30 June 2021
Summary of KMP remuneration for FY20
Short term benefits
Post-
employment
benefits
Long
term
benefits
Cash
incentive
$
Super-
annuation
$
Long
service
leave
$
Performance
Rights
granted
$
Total
remuneration
$
Proportion
of total
remuneration
related to
performance
%
20,103
12,393
11,691
n/a
21,003
21,003
10,501
10,501
n/a
n/a
n/a
n/a
9,463
8,598
16,305
6,952
n/a
n/a
n/a
n/a
237,500
118,750
118,750
118,750
407,263
n/a
n/a
n/a
1,211,876
580,217
379,359
535,860
n/a
n/a
n/a
n/a
45.1%
n/a
n/a
n/a
Cash
salary
and fees6
$
217,397
106,357
107,059
118,750
n/a
n/a
n/a
n/a
635,295
550,617
352,553
518,407
138,852
n/a
n/a
n/a
FY2020
Non-Executive Directors4
Helen Kurincic
John Atkin
Rupert Harrington
Raelene Murphy
Executive Directors1
Dr Ian Kadish5
Dr Chien Ping Ho1
Dr Sally Sojan1,2
Dr Jacqueline Milne1,3
Other Key Management
Personnel6
Anne Lockwood5
424,361
97,949
21,003
8,191
182,160
733,644
38.2%
1. Remuneration is as a radiologist of IDX and includes Executive Director fees which are net of 20% reductions applied for the months
of April-June (inclusive) as part of the Group’s response to COVID-19 for Dr’s Ho and Milne.
2. Dr Sally Sojan ceased KMP position 1 November 2019.
3. Dr Jacqueline Milne commenced KMP position 1 November 2019.
4. Non-Executive Director fees are shown net of 20% reductions applied for the months of April – June (inclusive) as part of the Group’s
response to COVID-19.
5. Cash salaries for these Executive KMP are net of 20% reductions applied for the months of April and May (inclusive) as part of the Group’s
response to COVID-19.
6. Cash salary and fees, include movements in annual leave entitlements.
d. Adjustments in remuneration settings for FY22
Review of Non-Executive Director and Executive Director Board fees for FY22
Last year the Board determined there would be no increase in the fees paid to the Chair, Non-Executive Directors or Executive
Directors, notwithstanding the significant increase in the size, value and complexity of the Group since they were last reviewed
in FY19. During FY21 the PRC reviewed the quantum and structure of fees paid to the Chair, Non-Executive Directors or
Executive Directors. The Group was seen to be relatively unusual paying a bundled fee to Non-Executive Directors which
limited the ability to draw direct comparisons. It was also noted that the quantum of Non-Executive Directors fees at $125,000
had not increased significantly from the average level of $124,000 which applied at the time of the IPO in 2015.
The Board determined that for FY22:
• The Non-Executive Director fees be altered from a bundled fee of $125,000 per annum to a base fee of $100,000 per annum,
a committee member fee of $12,500 per committee (excluding the Nomination Committee which receives no fee) and a
committee chair fee of $25,000 and a fee for Rupert Harrington for convening the Mergers and Acquisitions Working Group
of $12,500 per annum. In other words the Non-Executive Director fees would move from a bundled fee of $125,000 each to
a total fee of $137,500 each representing a 10% increase.
• The Executive Director fees be increased from $62,500 to $68,750 per annum in line with the increase in the Non-Executive
Director fees.
• The Chair fee be increased by 14% from $250,000 to $285,000 per annum slightly ahead of the proportional increase in
Non-Executive Director fees reflecting the value of the Chair’s contribution appropriately by reference to comparable
benchmarks.
In making these adjustments, the Board also had regard to the relatively small number of Non-Executive Directors and that
the total fees paid to the Non-Executive Directors (including Chair) of $697,500 would still be significantly below the cap of
$1million established at the time of the Group’s IPO in 2015.
Integral Diagnostics Annual Report 2021 35
Review of Executive Remuneration for FY22
The PRC has reviewed the remuneration payable to the CEO, CFCO and COO for FY22. That review had regard to the
continuing marked growth in the size and complexity of the business, the strong performance of the Executive KMP in role,
outcomes achieved for shareholders and other stakeholders, and market benchmarks. The fixed remuneration for the CEO
for FY22 has been increased by 9.7% to $790,000 and the CFCO by 8.6% to $543,000 and the COO by 5% to $393,750. While
these increases follow double digit increases for the CEO and CFCO in the two prior years, in the Board’s view the increases
are warranted by the factors mentioned above and still place the Executive KMP by reference to comparable benchmarks. In
assessing the reasonableness of the fixed remuneration of the Executive KMP it is also important to bear in mind the overall
remuneration structure which has a relatively low level of STI potential which remains at 25% of their fixed remuneration and
a higher weighting to the longer term with a four year LTI at 100% & 75% of their fixed remuneration.
For FY22 behavioral adherence to our values has been made an modifying discretionary factor for determining awards under
our STI program.
e. Cumulative interest of Executives under the LTI program
The LTI program is the key element of the ‘at risk component’ of the Executives’ remuneration. The following table sets out
the movement of Performance Rights held by each Executive and their related parties. None of the Performance Rights
vested or lapsed during the reporting period and none of the Performance Rights are presently capable of being exercised.
As the LTI is tested over 4 years and the first grant was made in FY18, the first test for vesting will occur based on the
results for FY21 as set out in this report. Diluted Operating Earnings per Share have increased from 10.4 to 19.0 cents per
share representing a compound annual growth rate of 16.3%. This exceeds the stretch target of 15% set for the FY18 LTI
Performance Rights resulting in the full vesting of those performance rights. The Board will notify participants of the
vesting outcomes and automatic exercise of any FY18 rights. The date for issuing shares to participants is expected
to be 30 August 2021.
Movements in Performance Rights held by Executives
The following table sets out the movement of Performance Rights held by each Executive and their related parties. None
of the Performance Rights vested or lapsed during the reporting period and none of the Performance Rights are presently
capable of being exercised. However, as noted above the Executives have achieved full vesting of their FY18 Performance
Rights and this will be reflected in next year’s report.
Name
Dr Ian Kadish
Anne Lockwood
Paul McCrow
Year
granted
2021
2020
2019
2018
2021
2020
2019
2018
2021
2020
Balance
at start
of year
Granted
during year1
Rights to deferred shares
Vested
Forfeited
Number Number
184,616
798,157
235,572
562,585
200,000
362,585
362,585
-
96,154
309,173
124,633
184,540
84,386
100,154
100,154
-
23,270
59,779
59,779
-
$ Number
-
-
-
-
-
-
-
-
-
-
692,310
709,072
478,000
558,381
322,116
342,741
199,151
194,299
77,955
174,073
% Number
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Value
yet to be
recognised
in profit
or loss2
$
558,776
395,081
119,500
-
259,986
190,696
49,788
-
62,919
96,990
Balance at
end of year
(unvested)
Number
982,773
798,157
562,585
362,585
405,327
309,173
184,540
100,154
83,049
59,779
%
-
-
-
-
-
-
-
-
-
-
1. The value of the LTI Performance Rights granted in each year is the fair value of the Performance Rights calculated at the grant date using the
Black Scholes Pricing Model.
2. No grants will vest if the performance conditions are not satisfied, hence, the minimum value of grants yet to vest is nil. The maximum value of
grants yet to vest has been estimated based on the fair value per grant at the maximum achievement of the vesting scale less amounts already
recognised as an expense.
36
Integral Diagnostics Annual Report 2021
REMUNERATION REPORT CONTINUED
For year ended 30 June 2021
LTI Plan EPS CAGR Target Summary
LTI Plan
Beginning of Period
End of Period
Diluted operating EPS at Beginning of Period
Threshold 5% CAGR
Stretch (12%) CAGR
Stretch (15%) CAGR
FY18
1/07/2017
30/06/2021
10.41
12.65
n/a
18.21
FY19
1/07/2018
30/06/2022
12.48
15.17
n/a
21.95
FY20
1/07/2019
30/06/2023
16.21
19.7
25.51
n/a
FY21
1/07/2020
30/06/2024
16.60
20.18
26.12
n/a
f. Other transactions with KMP and their related parties
All transactions with KMP are made on commercial arm’s length terms and conditions, and in the ordinary course of
business. The Board has an established Related Party Transaction Policy, that is overseen by the Audit, Risk and Compliance
Committee (ARCC), to ensure that related party transactions are managed and disclosed in accordance with the Corporations
Act, ASX Listing Rule 10.1, accounting requirements and in accordance with good governance practices, to ensure that a
financial benefit is not provided to related parties without approval by the Board, and where required, shareholders. It is the
Board’s policy that independent reviews will be undertaken on any renewals and these reviews will be overseen by the ARCC.
Related party transactions
Consolidated
30 June 20211
$
% interest
$ interest
Payment for goods and services
Payment for rental of buildings to Eleven Eleven How Pty Ltd of which
Dr Chien Ping Ho is related
Payment for rental of buildings to Kiwi Blue Pty Ltd of which Dr Chien
Ping Ho is related
250,077
148,388
6.25%
9.09%
15,630
13,488
1. Amounts presented are for the period Dr Chien Ping Ho was a director – having resigned as a Director on 1 March 2021.
The above related party transactions are historic in nature and relate to leases assumed from previous vendors when the
business was privately held. Dr Chien Ho has a 6.25% interest in Eleven Eleven How Pty Ltd and a 9.09% interest in Kiwi Blue
Pty Ltd. The leases cover four properties located in Ballarat, Ocean Grove and Melton.
Financial Accommodation
Dr Nazar Bokani
Balance on
appointment
470,747
Balance at
30 June 2021
470,747
Interest paid
and payable
-
The above loan relates to Dr Bokani’s participation in the Radiologist Loan Funded Share Plan (Loan Plan) in 2019, prior to his
appointment as a Director. The Loan was made on an interest free basis enabled the purchase shares in the Company. Shares
issued attaching to the loan are subject to a continued employment condition of 4 years. The loan can be repaid after the
employment condition is satisfied and any time up to 1 March 2029. The Shares are subject to a holding lock until the loan is
repaid. The dividend streams relating to the loan funded shares are allocated, net of tax, to the repayment of the loan. These
terms and conditions are consistent with those offered to other radiologists under the rules governing the Loan Plan.
Loans
No KMP has entered into a loan made, guaranteed or secured, directly or indirectly, with or by the Company or any of its
subsidiaries during the reporting period.
g. Executive service agreements
Remuneration arrangements for Executive KMP are formalised in employment agreements. Key conditions for Executive KMP
are outlined below:
Name
Dr Ian Kadish
Agreement commenced
22 May 2017
Agreement expiry
No fixed end date
Employee notice
Six months
Notice of termination by Group
Six months, or 12 months
if change of control event
Six months
Six months
Six months
Six months
Anne Lockwood
Paul McCrow
1 December 2017
1 November 2020
No fixed end date1
No fixed end date
1. On 30 July 2021 Anne Lockwood gave the Company notice of her resignation. Under the terms of her contract of employment that notice will take
effect on 30 January 2022. Ms Lockwood’s entitlements on termination of her employment will be determined by the Board in accordance with her
contract of employment, the terms of her incentive grants, and having regard to all relevant information at that time. Details of Ms Lockwood’s final
arrangements will be included in the Company’s 2022 Remuneration Report.
Integral Diagnostics Annual Report 2021 37
h. KMP shareholding and minimum shareholding policy for KMP
KMP Shareholding
The number of shares in the Company held during the financial year by each Director and other members of the KMP of the
Group, including their personal related parties, is set out below:
Ordinary shares
Helen Kurincic
Dr Ian Kadish
John Atkin
Rupert Harrington
Raelene Murphy
Dr Chien Ping Ho
Dr Nazar Bokani1
Dr Jacqueline Milne
Anne Lockwood
Paul McCrow
Balance at
1 July 2020
492,084
89,379
155,440
357,648
24,945
2,164,375
-
-
-
Additions
-
-
3,451
-
6,000
-
277,716
-
-
-
Number of
shares held
upon ceasing
to be KMP
-
-
-
-
-
2,074,375
-
-
-
Disposals/
other
-
-
-
-
-
90,000
-
-
-
Balance at
the end of
the year
492,084
89,379
158,891
357,648
30,945
-
277,716
-
-
-
1. Dr Bokani was appointed as a director on 26 April 2021.
Minimum Shareholding Policy
To ensure Board members and KMP are aligned with the interests of shareholders, from 1 July 2018 the Board introduced
a Minimum Shareholding Policy that requires Non-Executive Directors, Executive Directors and other KMP to build and
maintain a minimum shareholding by the later of the fifth anniversary of the policy or the fifth anniversary of the KMP’s
appointment as a KMP. During the year this Policy was reviewed and was updated. The CFCO is now required to hold 75%
of total fixed remuneration within 5 years of the implementation of the change in Policy in IDX Shares.
KMP and Directors are required to meet a minimum shareholding equivalent as per the prescribed percentage of their total
fixed remuneration or fees as outlined below:
Managing Director and CEO:
100%
CFCO:
Other Executive KMP:
Non-Executive Directors:
Executive Directors:
Minimum Shareholding
75%
50%
100%
100%
l
e
n
n
o
s
r
e
P
t
n
e
m
e
g
a
n
a
M
y
e
K
Helen Kurinic
Dr Ian Kadish
John Atkin
Rupert Harrington
Raelene Murphy
Jacquline Milne
0%
Nazar Bokani
Anne Lockwood
Paul McCrow
0%
0%
65%
100%
100%
100%
100%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% achieved
% to achieve
The Remuneration Report has been audited.
38
Integral Diagnostics Annual Report 2021
AUDITOR’S INDEPENDENCE DECLARATION
For year ended 30 June 2021
PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s Independence Declaration As lead auditor for the audit of Integral Diagnostics Limited for the year ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Integral Diagnostics Limited and the entities it controlled during the period. Jason Perry Melbourne Partner PricewaterhouseCoopers 27 August 2021 Integral Diagnostics Annual Report 2021 39
OPERATING AND FINANCIAL REVIEW
For the year ended 30 June 2021
The purpose of this Operating and Financial Review is to provide shareholders with additional information regarding the
Company’s operations, financial position, business strategies and prospects. The review complements the Financial Report
on pages 54 to 102 and the ASX announcement and full year results presentation dated 27 August 2021.
Integral Diagnostics Limited (ASX: IDX) is an Australian and New Zealand healthcare services company whose main activity is
providing diagnostic imaging services to referrers (general practitioners, medical specialists, and allied health professionals)
and their patients.
IDX has a diversified revenue mix and focusses on providing a full range of diagnostic imaging modalities. IDX has 67 sites of
which 27 are comprehensive sites that are located close to specialist referrers who require higher complexity imaging and
make greater use of MRI, PET, CT, and interventional procedures throughout our business. During the year under review IDX
operated in five key markets.
S R G RADIOLOGY
C A V E N D I S H
Geographic
Market
Victoria
Queensland
and NSW
Western
Australia
New Zealand
Queensland
Core markets
Sites
Comprehensive
sites4
MRI machines
MRI Licences
PET Scanners
Employed
Radiologists1
Employees3
Ballarat, Geelong,
Warrnambool and
outer western areas
of Melbourne
19
6
8
4 full
0 partial
2
46
389
Gold Coast,
Toowoomba
and Mackay
South West
Western
Australia
Auckland
Sunshine Coast,
Rockhampton
and Gladstone
14
7
8
4 full
2 partial
2
37
403
5
2
2
2 full
0 partial
1
13
164
12
5
6
N/A
1
402
172
17
7
7
3 full
2 partial
–
21
310
67
27
31
13 full
4 partial
6
157
1,438
Note: Reflects current data as at 30 June 2021
1. Relates to employed radiologists only. In addition IDX has had 80 contractor radiologists provide services over FY21
2. Consistent with the NZ private radiology model, all Doctors work across the public and private sector and meet the criteria to be classified
as contractors but are on terms and conditions similar to IDX employed Radiologists
3. This number represents the number of employees on employment contracts on either part time or full-time arrangements. It does not represent
the number of full-time equivalent employees or individual casual/contract arrangements. In addition, there are 86 employees in the corporate
office and IDXt totalling 1,524 employees
4. Comprehensive sites include a range of radiology equipment including MRI’s and CT’s and are located with or near major specialist referrers
Diagnostic imaging is the branch of medicine that utilises a range of non-invasive imaging technology to create images of
bones, tissues and organs within the human body in order to diagnose and treat illness and injury. Images can be produced
using a variety of modalities including;
• nuclear medicine (which includes positron emission tomography (PET);
• single positron emission tomography (SPECT);
• magnetic resonance imaging (MRI);
• computed tomography (CT);
• mammography;
• interventional radiology (IR);
• ultrasound (US); and
• radiography (X-ray) &EOS.
40
Integral Diagnostics Annual Report 2021
OPERATING AND FINANCIAL REVIEW CONTINUED
For the year ended 30 June 2021
The images produced by diagnostic imaging are a critical tool for referrers in reaching a diagnosis and deciding on the most
effective and efficient form of treatment for patients. In this way, appropriate use of diagnostic imaging can significantly
enhance medical outcomes for patients whilst at the same time reducing the overall cost of healthcare.
Year in Review
Financial performance
A summary income statement providing details of non-operating transactions and reconciling to the statutory income
statement is outlined in the following table:1
Summary income statement ($m)
Operating revenue
Other revenue
Total revenue
EBITDA prior to non-operating transactions
EBITA prior to non-operating transactions
NPAT prior to non-operating transactions
Non-operating transactions net of tax
Transaction and integration costs
Share based payments
Amortisation of customer contracts
Write off of Brand name (Western District Radiology)
Statutory NPAT
Operating EBITDA as a % of operating revenue
Operating NPAT as a % of operating revenue
Operating diluted EPS (earnings per share)
Statutory diluted EPS (earnings per share)
Return on operating assets (based on operating NPAT)2
30 June 2021
Actual
348.8
1.9
350.7
30 June 2020
Actual
274.1
1.5
275.6
93.5
62.8
38.1
(1.4)
(2.1)
(3.3)
-
31.3
26.8%
10.9%
19.0
15.6
14.5%
75.7
51.1
30.4
(4.8)
(1.3)
(1.2)
(0.1)
23.0
27.6%
11.1%
16.6
12.3
13.9%
1. The operating and financial review includes references to pro-forma results to exclude the impact of the adjustments detailed above. The Directors
believe the presentation of non-IFRS financial measures are useful for the users of this financial report as they provide additional and relevant
information that reflect the underlying financial performance of the business. Non-IFRS financial measures contained within this report are not
subject to audit or review
2. Return on operating assets has been calculated using the LTM organic operating NPAT (plus trailing acquisitions NPAT) of $38.9m (FY20$33.0m)
The FY21 operating performance of IDX continued to deliver growth.
Operating NPAT grew by $7.7m or 25.3% and operating diluted earnings per share grew by 14.5% to 19.0 cents per share.
The operating margin of 26.8% is 0.8% lower than the prior year which is largely driven by radiologist cost pressures
present in the industry and increased use of paid quarantine/isolation leave in a COVID-19 environment as well as increased
consumable costs for higher end modalities and increased usage of PPE due to COVID-19. IDX continues to deliver strong
margins compared to published industry results.
The statutory performance of $31.3m NPAT improved by 36.1%. Non-operating costs relating to transaction costs include
costs of external advisors for mergers and acquisitions activity. A proportion of these transaction costs are not tax deductible
as they are on the capital account, creating a greater impact on statutory earnings.
Integral Diagnostics Annual Report 2021 41
Financial overview
• Operating revenue of $348.8m increased by 27.3%.
• Australian organic revenue growth of 12.2%. The Medicare 12 month rolling growth rates for the states in which we operate,
adjusted for working days was 14.6% for benefits. Reflective of our focus on higher end modalities that drive stronger
bottom-line results, the modalities in which IDX trailed Medicare most in revenues were Ultrasound 4.3% lower and Xray
2.4% lower.
• Average fees per exam in Australia increased by 3.3% in FY21, reflective of indexation and an on-going move to higher
end modalities.
• New Zealand revenue (in Australian $) contribution of $46.4m for FY21 increased by $21.4m from $24.8m in FY20 with
Ascot Radiology contributing $18.3m and an organic growth of $3.1m or 12.5%.
• The Imaging Queensland acquisition contributed $23.0m of operating revenue for the additional 4 months July-Oct 2020
compared to prior comparative period and Ascot Radiology contributed $18.3m for the 10 months September 2020 to
June 2021.
• Operating margin of 26.8% has decreased 0.8% from 27.6% due to employee and consumables cost pressures:
– IDX continued to deliver strong margins across Australia and New Zealand compared to comparative published
industry results;
– Employee benefits, consumables and equipment all increased.
› employee costs increased by 0.3% ($1.1m) of revenues driven by radiologist cost pressures present in the industry and
increased use of paid quarantine/isolation leave in a COVID-19 environment
› consumables increased by 0.3% ($1.1m) of revenues reflecting the higher cost of consumables for higher end
modalities and increased usage of PPE due to COVID-19 and
› equipment increased by 0.4% of revenues despite better pricing achieved due to some equipment coming out of
warranty and increasing the level of service cover on equipment.
• Occupancy costs remained relatively consistent as a % of revenue and other costs declined by 0.2% due to shared service
costs being leveraged over a larger revenue base.
• IDX voluntarily repaid $2.9 ($2.0m after tax) in surplus JobKeeper in June 2021. The amount repaid was assessed as the net
benefit of JobKeeper after assessing the impacts of COVID-19 on the business in FY21 and the use of JobKeeper to retain
and support our highly skilled workforce. IDX has not profited from JobKeeper.
• Australian Government JobKeeper assistance of $6.6m ($4.7m after tax) was utilised to offset the impacts of COVID-19
in FY21 and allowed IDX to retain and support our highly skilled workforce.
• IDX declared a fully franked final dividend of 7.0cps, totalling dividends declared or paid of 12.5cps for FY21 (FY20: 9.5cps)
an increase of 31.6%, reflecting the performance and cashflow position of the Company.
42
Integral Diagnostics Annual Report 2021
OPERATING AND FINANCIAL REVIEW CONTINUED
For the year ended 30 June 2021
Operating performance overview
Drove organic growth, business integration and further efficiency gains
• Installed an MRI (non-rebateable) at the Spine Centre of Excellence on the Gold Coast.
• Installed a 2nd CT in Toowoomba to capitalise on demand and improve workflow efficiencies.
• Installed a Cardiac CT in Busselton to provide access to state-of-the-art imaging in a fast-growing region.
• Completed development of the Hope Island site on the Gold Coast.
• Started to invest in developing high performing patient booking hubs in Victoria and on the Sunshine Coast, leveraging off
the fully developed Gold Coast booking hub systems and processes.
• Launched IDXt, IDX’s teleradiology platform to reduce use of third-party reporting services and to drive sub-speciality
reporting across IDX.
• Assisted the Western Australian Government to install a fully licenced MRI at the Kalgoorlie public hospital, now operational
and to which Apex Radiology provides radiology services under our contracts with WA Country Health Service (WACHS).
• Continued the integration of Imaging Queensland with operating performance largely in line with expectations.
• Completed the acquisition of Ascot Radiology on 1 September 2020. Integration and operating performance have been in
line with expectations:
– Replaced a MRI at Ascot Radiology to deliver better image quality and improved workflows.
– Started to extract revenue synergies in NZ from integrating Ascot Radiology with the existing NZ business by driving cross
referrals and maximising the use of equipment across the expanded footprint.
Used digital and AI technology to improve the patient and referrer experience
• Expanded the roll out of proven AI software to improve clinical workflows and patient outcomes across the business.
• Established an AI Steering Committee, led by Dr Nazar Bokani to continue to drive the identification, assessment
and implementation of further AI software that leads to better patient outcomes and workflow efficiencies.
• Completed the implementation of the Patient App across the Australian practices, improving access, knowledge,
and flexibility of service for patients and referrers.
• Continued to work on leveraging the consolidated reporting platform to develop subspecialty workflows for complex
clinical cases to deliver best in class comprehensive reports to referrers and patients.
• Continued to test and enhance cyber-security protections to ensure protections in place remain relevant.
• Introduced a state-of-the-art voice recognition application to build upon our standard templated reporting strategy
to enhance the referrer’s clinical experience and improve our report turnaround times.
Continued to develop our environment, social and governance (ESG) agenda
• Completed our first materiality assessment stakeholder survey by engaging with 554 stakeholders both externally
and internally to determine where our focus should be in regards to ESG.
• Completed our first carbon footprint review, measuring our carbon emissions for FY20 and FY21.
• Developed our first ESG Strategy.
• Completed our first supplier screening risk rating review.
• Completed and submitted our first Modern Slavery Statement.
• Established a Waste Management Committee and reviewed our waste management processes and initiated a formal
Operational Waste Management Plan.
Integral Diagnostics Annual Report 2021 43
Nurtured and developed culture and leadership across our people
• Appointed Dr Nazar Bokani to the IDX board from 26 April 2021, Dr Lisa Sorger as Chief Medical Officer from 3 June 2021,
Mr Paul McCrow as Chief Operating Officer from 1 November 2020, Nynne Beck Pederson as Group Integration and Strategy
Manager from 1 September 2020 and Hayley Tacon as Group Business Development Manager from 1 March 2021.
• Implemented a Leadership development program with future IDX business leaders.
• Issued Healthcare Hero Awards in August 2020 and again in June 2021 to recognise the tremendous contributions from
the healthcare frontline and those who support the frontline. IDX reimbursed frontline and support staff with up to 2 days
of remuneration in recognition of the additional work, effort and sacrifices made to optimally support our patients and
referrers during extended lockdowns.
Evaluated further strategic acquisitions that were a clinical fit, strategically aligned and earnings accretive
• Undertook thorough analyses and due diligence on a number of selected acquisitions in an increasingly competitive market.
IDX maintained strong discipline in regard to ensuring that offers made included an assessment of clinical fit, strategic
alignment and earning accretion to ensure sustainable value to our shareholders.
• Continuing to assess growth opportunities in a very active healthcare sector.
Capital expenditure
Total expenditure on tangible assets was $23.1m (FY20: $26.1m) of which $16.8m related to replacement and $6.3m
related to growth opportunities. The capital expenditure included the installation of an MRI at the Spine Centre on the Gold
Coast, installation of a 2nd CT in Toowoomba in Queensland, a new Cardiac CT in Busselton in Western Australia and the
replacement of an MRI at Ascot Radiology in New Zealand that delivers better quality imaging and more efficient workflows.
Acquisitions
The acquisition of Ascot Radiology in New Zealand was completed on 1 September 2020. Integration and operating
performance have been in line with expectations.
The integration of Imaging Queensland continued during FY21 and operating performance continues to be largely in
line with expectations. We continue to work through the payment for Earn Out A which is measurable on the operating
performance of the Imaging Queensland Group over the 2020 calendar year and for which we have $12m provided.
The payment is now subject to the dispute settlement process as provided for in the Share Sale Contract. IDX remains
confident and has received preliminary external expert accountant advice that the amount provided in the financial
statements for settlement of the Earn Out A payment is calculated in accordance with the requirements of our
contractual obligations under the Share Sale Contract.
44
Integral Diagnostics Annual Report 2021
OPERATING AND FINANCIAL REVIEW CONTINUED
For the year ended 30 June 2021
Taxation
The effective tax rate on operating earnings is 29.5% (FY20: 29.6%), the decrease in the effective tax rate is largely due
to the acquisition of Ascot Radiology whose earnings are subject to the New Zealand Corporate tax rate of 28%
The statutory effective tax rate of 30.9% (FY20: 34.6%) is driven by the higher level of non-deductible transaction costs
incurred and treated as non-operational costs.
In FY21 IDX paid corporate tax of $16.7m (FY20: $10.2m) in Australia and New Zealand. In addition payroll tax of $6.7m
(FY20: $4.9m) was paid across the states in which we operate in Australia and $50.2m (FY20: $39.9m) of tax was withheld
and remitted to the Australian and New Zealand tax offices on behalf of our employees.
Cash flows
Increase in free cash flows by 19.3% to $66.5m (FY20: $55.7m). Free cash flow conversion net of replacement capex was
89.1% (FY20: 86%). The growth of free cash flows is in line with growth in overall earnings due to nominal non-cash items
in EBITDA and minimal working capital movements.
Capital Management
Net debt increased by $13m to $137.4m (FY20: $124.4m). This was due to the debt draw down to fund the Ascot Radiology
acquisition of $35m offset by a growth in cash on hand due to strong operational cashflows and conservative dividend
payment made at the half year.
At 30 June 2021 IDX has cash reserves of $62.2m and committed facilities of which $207m remains undrawn and access to
a further $105m under an accordion facility. Current debt facilities are not due until February 2026 and we are in compliance
with all the covenants under our debt facility.
Net debt to equity ratio as at 30 June 2021 is 0.54:1 (FY20: 0.54:1) and Net Debt/LTM EBITDA ratio of 1.4x at 30 June 2021
(FY20:1.5x) reflects strong capital management to support IDX’s on-going growth strategy.
As at 30 June 2021 IDX has 5,355 shareholders (30 June 2020:3,892).
Earnings per share
On a statutory basis, basic earnings per share increased by 27.1% to 15.80 cents per share (FY20: 12.43 cents per share).
Diluted earnings per share in FY20 considering the FY18, FY19, FY20 and FY21 performance rights issues as well as the
New Zealand based Radiologist Option Plan was 15.60 cents per share (FY20: 12.31 cents per share). The increasing
earnings per share at a statutory level is reflective of the increase in Statutory earnings of 36.1% to $31.3m.
On an Operating NPAT performance, adjusted1 Diluted Earnings per Share increased 14.5% to 19.0 cents per share
(FY20: 16.6 cents per share).
Dividend
Dividend paid or declared of 12.5 cents per share (FY20: 9.5 cents per share) totalling $24.7m fully franked dividends have
been paid or declared for FY21. An increase on dividends of 31.6% reflects the performance and the cashflow position of
the company. A dividend of 7.0 cents per share fully franked will be paid on 6 October 2021 to shareholders on the register
at 3 September 2021. This represents 68.8% of Statutory NPAT (adding back non-cash customer contract amortisation)
(FY20: 80%), the higher pay-out ratio in FY20 takes into consideration the high level of non-recurring transaction costs
reducing statutory profits for FY20.
The dividend reinvestment plan (DRP) will operate for the FY21 full year dividend.
1. Operating Diluted EPS calculation for FY20 has been adjusted in order for the weighted average calculation of shares on the capital raise to align
with the settlement date of Imaging Queensland acquisition being 1 November 2019 from 4 September 2019 for the Institutional placement and
30 September 2019 for the Retail entitlement offer. Aligning the dates provides a more accurate reflection of the underlying EPS and increases the
Diluted EPS by 0.3cps to 16.6cents per share
Integral Diagnostics Annual Report 2021 45
Impacts of COVID-19 on FY21
During FY21 we continued to manage the on-going impacts of COVID-19. Our focus, as always was to keep our patients
and employees safe. We continued to secure adequate supply of personal protective equipment for all our sites with strict
screening, hygiene, and infection control protocols in place and have adapted to the new normal for healthcare practices
for COVID-19.
• Net JobKeeper receipts of $6.6m ($4.7 after tax and net of repayment) were utilised to offset the impacts of COVID-19 in
FY 21 and allowed IDX to retain and support our highly skilled workforce
• IDX voluntarily repaid $2.9m ($2.0m after tax) in surplus JobKeeper receipts in June 2021
• Patient activity continued to be impacted by government imposed restrictions
– Victoria had significant reductions from July to September that impacted revenues.
– Despite on-going sporadic lockdowns over October - June across Victoria, Western Australia and Queensland, the overall
performance was largely in line with pre COVID-19 expectations for this period.
Company outlook
The long-term industry fundamentals in Australia and New Zealand are strong and continue to underpin attractive on-going
growth opportunities. Both Australia and New Zealand have growing and ageing populations requiring greater healthcare
support. At the same time, community expectations for higher quality diagnosis and care continue to increase, whilst new
imaging technologies improve efficiency and aid diagnosis and early detection of disease.
The increased use of diagnostic imaging in the early detection of disease facilitates earlier and less invasive treatment options
which ultimately lowers overall healthcare costs.
COVID-19 and associated government responses can be expected to continue to have an impact on the Group, which cannot
be accurately projected at this time. To date 1H22 has been affected as a result of the impacts of COVID-19 and government-
lockdowns and border closures across all geographic areas in which we operate. Up until the 25th August, year to date
trading is down approximately 5% from expectations, this includes the impacts of the Level 4 lockdowns in New Zealand from
the 18th August. The New Zealand guidelines from the Ministry of Health included that scanning is only to be undertaken
“to preserve life or limb only”. This has resulted in reductions in trading in New Zealand of up to 75% from expectations,
which is consistent with past experience during New Zealand Level 4 lockdowns.
The Company’s focus in FY22 will be to:
Increased focus on organic growth through brownfields and greenfields
• execute on identified and approved greenfield and brownfield opportunities with $20m-$24m of growth Capex expected
to be spent in FY22 with at least 5 new sites to be developed in 1HFY22;
• invest $8m on a new comprehensive site at Benowa on the Gold Coast. The site is 500m from the current Pindara Hospital
and will include a full MRI licence, the latest technology equipment across all DI modalities and offer easier access to
patients. We will continue to work on on-going lease arrangements post 31 Dec 2021 at Pindara Hospital.
• continue to develop teleradiology services in IDXt to improve our service offering and capabilities in this important
diagnostic sector;
• develop the MedX JV with our partner Medica Group PLC to identify and tender for large tele-reporting opportunities,
or for international opportunities, where we can leverage off the broader capabilities of the combined group;
• investigate and review our current service offering to identify opportunities for diversification that leverages off our
radiologist’s sub-speciality skill sets; and
• install a new SPECT and hot lab in New Zealand.
46
Integral Diagnostics Annual Report 2021
OPERATING AND FINANCIAL REVIEW CONTINUED
For the year ended 30 June 2021
Accelerate use of digital and AI technology
• execute on a digital strategy with a focus on the patient and referrer experience;
• continue to identify, assess and implement AI software under the leadership of the AI Steering Committee;
• complete a roll out of e-referrals across the Group;
• select a single Radiology Information System (RIS) across New Zealand with a view to implement in FY23;
• complete the roll out of the Patient App across New Zealand; and
• begin the transition of our business to a single radiologist reporting platform to capture the expertise of our sub speciality
skills across the Company group and build upon our teleradiology footprint.
Continue to evaluate further strategic expansion opportunities through partnerships and/or acquisitions
• continue to undertake thorough analyses and due diligence on selected opportunities through partnerships and/or
acquisitions that are a clinical fit, strategically aligned and earnings accretive; and
• consider and develop strategic plans for potential growth opportunities in a very active healthcare sector.
Nurture and develop culture and leadership across our people
• focus on radiologist engagement including support, education, and remuneration strategies;
• continue to develop leaders, build capability, and enhance performance of people across our Company, including
management, radiologists, clinical and administrative staff;
• prioritise areas of improvement identified in the annual Culture Survey to improve staff engagement; and
• develop a Diversity and Inclusion Strategy to create a culture that enhances inclusion and values diversity of thinking,
experience, and background.
Execute on our ESG Strategy
• leverage off the measurement of our FY20 and FY21 carbon emissions to develop a roadmap for us to measure the future
success of our endeavours to reduce and offset our greenhouse gas emissions;
• launch the Operational Waste Management Plan developed by the Waste Management Committee;
• launch the Workplace Giving Initiative that allows our people to support charities and clubs in our communities that
are aligned to our vision of a healthier world. IDX will donate $2 to every $1 donated by our people to approved charities
and clubs, with IDX’s contribution up to $100,000;
• continue to work with our suppliers to better understand and address potential risk areas in downstream supply
and manufacturing and cleaning contracts; and
• work with Radiology Across Borders to identify and agree on additional project partners in developing nations
and communities.
Integral Diagnostics Annual Report 2021 47
Regulatory outlook
In Australia IDX continues to monitor, assess and help shape the regulatory landscape through its participation in the
executive of the Australian Diagnostic Imaging Association (ADIA) and radiologist’s membership in the Royal Australian and
New Zealand College of Radiologists (RANZCR), including our CMO Dr Lisa Sorger who is on the RANZCR Faculty Council,
the Diagnostic Economics Committee and the Theranostics Working Group and Dr Sally Sojan who is the Treasurer of the
Australiasian Musculoskeletal Imaging Group (AMSIG) and a member of the Diagnostic Imaging Accreditation Scheme
Advisory Committee. In New Zealand Dr Quentin Reeves’ is the President of the AMSIG and a New Zealand committee
member of the New Zealand branch of RANZCR.
In Australia in June 2021 indexation of 0.9% of approximately 90% of CMBS items was announced against a CPI rate of 3.8%
and Healthcare CPI of 4.8%.
The Australian Federal Budget announced that indexation will be applied to MRI items from 1 July 2022. However the bulk
billing incentive on MRI will be reduced to 95% of Commonwealth Medical Benefits Scheme (CMBS) from 100%, along with
the introduction of clear rules on co-claiming of MRI to be developed with the sector and introduced on 1 November 2021.
The Australian Government expects to deliver $107m of savings over 4 years. The rules on co-claiming of MRI have not
yet been published and as such IDX has not been able to measure their potential impact, if any.
FDG-PET for early detection and diagnosis of Alzheimer’s disease is to be introduced onto the CMBS from 1 November 2021.
The item descriptor has not yet been finalised. This study has been introduced in New Zealand and we are successfully
performing these studies on our PET at Ascot Radiology. The provision of this study is to the benefit of all Australian and
New Zealand patients.
In New Zealand IDX participates in an association of independent radiologists to closely monitor and influence advocacy
outcomes on the regulatory landscape. This is a newly formed association, and is planned to operate in a similar manner
to ADIA across New Zealand.
In New Zealand annual indexation is currently provided for in all contracts. The Auckland DI market has historically grown
volumes at around 6% pa, driven by strong net migration, ageing demographics and adoption of new technologies that
improve patient outcomes.
Emerging market practices in New Zealand where referrers are acquiring ownership interests in radiology practices or
equipment has the potential to change the competitor dynamics. We expect that New Zealand payors and regulators will
review these practices against their published guidelines on non-arm’s length referrals and will undertake the necessary
actions to manage referrer conflicts of interest. IDX supports the upholding of the current published guidelines to ensure
that quality is maintained, that patients choice is retained, and that payors are not subjected to over-servicing and
unnecessary imaging.
48
Integral Diagnostics Annual Report 2021
OPERATING AND FINANCIAL REVIEW CONTINUED
For the year ended 30 June 2021
Balance Sheet
A summary of the balance sheet as at 30 June 2021 and a comparison, to the prior year is outlined in the following table.
Balance sheet
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Property, plant and equipment
Right of use assets – AASB 16
Intangible assets
Deferred tax asset
Total non-current assets
Total assets
Trade and other payables
Current tax liabilities
Borrowings
Lease obligations – AASB 16
Deferred Considerations
Provisions
Total current liabilities
Deferred Consideration
Borrowings
Provisions
Lease obligations – AASB 16
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
30 June 2021
Actual
$’m
62.2
14.3
5.9
82.4
30 June 2020
Actual
$’m
58.0
10.4
8.0
76.4
111.1
100.4
344.7
16.3
572.5
654.9
20.3
4.5
6.5
10.4
15.9
20.3
77.9
7.2
192.2
9.8
99.2
13.8
322.2
400.1
254.8
101.0
88.6
307.3
13.5
510.4
586.9
18.6
5.0
13.2
9.6
13.3
16.6
76.2
8.0
168.6
7.8
86.5
11.5
282.3
358.5
228.4
• Working capital of $4.5m is driven by the cash holding of $62.2m which will be utilised to fund the FY21 final dividend and
planned FY22 capex spend, as well as to continue to fund working capital requirements in line with our treasury policy that
provides that at least one month of working capital expenditure should be held in easily accessible liquid form.
• Provisions (excluding tax) have increased $5.7m. This increase is due to increased employees annual leave provision of
$4m due to lower-than-expected levels of leave being taken during FY21 due to COVID-19 related travel restrictions driving
employee’s reluctance to take extended leave.
• Deferred consideration of $23.1m relates to $18m relating to Imaging Queensland Earn out A and B, $0.7m to Geelong
Medical Imaging and $2.5m that relates to Ascot Radiology and $1.9m to the SRG/Trinity NZ acquisition which is recognised
through the profit and loss as it is earned.
• The increase in net debt to $138.5m (30 June 2020: $124.4m) is the result of a draw-down of $35m to fund the Ascot
Radiology acquisition offset by a growth in cash on hand due to strong operational cashflows and conservative dividend
payment made at the half year.
Integral Diagnostics Annual Report 2021 49
Cash flow
A summary of the cash flows as at 30 June 2021 are presented below.
Summary of cash flow ($m)
Free cash flow
Growth capital expenditure
Net cash flow before financing and taxation
Tax paid
Interest and other costs paid on borrowings
Net change in borrowings
Payments for acquisitions
Working capital acquired
Proceeds from the issue of equity
Deferred consideration paid
Dividends paid
Transaction costs in equity
Net cash flows
30 June 2021
Actual
$’m
66.5
(6.3)
60.2
(16.7)
(4.6)
18.4
(35.4)
-
1.8
(0.9)
(17.8)
-
5.0
30 June 2020
Actual
$’m
55.7
(16.7)
39.0
(10.2)
(5.6)
31.6
(66.9)
(2.8)
73.4
(0.8)
(18.0)
(3.6)
36.1
• Free cash flows of $66.5m are $10.8m or 19.3% higher than FY20 which is reflective of growth from operations even though
$7.4m more of replacement capex was incurred
• Growth capital expenditure was $6.3m
• Dividends of $17.9m (9.5 cents per share fully franked) were paid in FY21
Business risks
IDX has a Risk Management Framework which is used to identify the IDX risk profile, setting out the way key risks are
assessed, managed, monitored, measured and reported. IDX’s core financial and non-financial risks are described below and
these risks are continuously assessed and reported on monthly. However, this is not a comprehensive list of all actual and
potential risks that may impact IDX’s financial and operating results in future periods.
Risk Area
Strategic Growth
Mergers and acquisitions. It is IDX’s strategy to
drive growth organically and through mergers and
acquisitions (M&A). This strategy may place significant
demands on management, resources, internal
controls and systems resulting in the failure to realise
anticipated benefits or effectively integrate acquisitions.
Future acquisition pipeline. IDX has a mature process
that regularly reviews a number of acquisition
opportunities that may be at various stages of
evaluation. Risks exist regarding whether identified
acquisitions are able to be completed on terms
and conditions that deliver appropriate returns to
stakeholders in line with the Company’s strategy.
Risk Management Strategy
• Program of oversight for M&A activity, due diligence and
integration led by the M&A committee.
• Detailed due diligence processes and procedures, including the
development of integration and resourcing plans.
• Engagement of external advisors to ensure risks, challenges and
opportunities of acquisitions have been identified, and to ensure
the structure of earn out arrangements in sale agreements are
appropriate and that earn out calculations are in accordance with
the contract terms.
• On-going analysis undertaken for prospective M&A opportunities
to determine scope, fit and likelihood of success.
• Engagement of external advisors to assist in monitoring
and assessing market activity and the impact on potential
acquisitions.
50
Integral Diagnostics Annual Report 2021
OPERATING AND FINANCIAL REVIEW CONTINUED
For the year ended 30 June 2021
Risk Area
Risk Management Strategy
Maintaining strong referrer relationships. The risk of
a material loss of, or lack of growth in, referrals to IDX
would impact financial and operational performance of
the Company.
• Maintenance of existing relationships across IDX’s referrer
network through a process of continuous engagement.
• Continuous investment in new technology to enhance access
and service for referrers and patients.
Performance of greenfield and brownfield initiatives
to drive growth. IDX regularly invests in greenfield
and brownfield initiatives to support growth within
our existing business units. There is a risk that these
investments do not perform as expected or in the
planned time frames.
Regulation and Contracts
• Clinical Leadership Committees are established in each business
unit which are supported by the CMO and COO to drive clinical
governance to support referrer confidence.
• Established processes for business case development,
review and approval, including alignment of business cases
to strategic objectives.
• Regular reporting to Senior Management and the Board on
performance against business cases.
Funding change to revenue stream. Changes to
funding and government policies and regulations may
have a material adverse impact on the financial and
operational performance of the Company.
• Regular monitoring of funding and regulatory changes and
industry developments.
• Membership of, and participation in, the Australian Diagnostic
Imaging Association.
• Participation in a discussion group with other private radiology
providers in New Zealand.
• Membership of, and participation in, the Royal Australian
New Zealand College of Radiologists (RANZCR).
Regulatory compliance. Not meeting industry or
regulatory compliance requirements may lead to the
loss of licenses and accreditation and the inability to
provide services or offer rebates which will reduce
the provision of services.
• Use of internal and external audit functions to provide assurance
that compliance obligations in key areas are being met.
• Regular monitoring of compliance by Senior Management across
key areas, including regular reporting to the Company’s Audit,
Risk and Compliance Committee and to the Board.
Contracts and service agreements. Contracts and
service agreements may be breached, terminated or
not renewed resulting in loss of capacity and revenue.
• Regular review of all IDX contracts to ensure completeness of
information, renewal dates, contract owners and performance
against SLA’s.
Property leases. IDX has 82 property leases across the
Group, including clinic, hospital and corporate sites.
There is a risk that we may not always be able to renew
or replace property leases.
Governance, Risk and Compliance
• Continual management and renegotiation of leases throughout
the normal course of business. Where commercially acceptable
terms are not available IDX will seek alternative options.
Clinical risk management. The risk of patient harm
due to human error or a lack of effective clinical
governance and processes.
• Establishment of the Company’s Integral Clinical Leadership
Committee to manage and advise on clinical governance matters,
including patient care, clinical standards and quality assurance.
• Consistent clinical risk and incident reporting process in place
across the Company and business units with a focus on reviewing
incident data and resulting recommendations at all management
levels, through to the Board.
• Recent appointment of CMO to further strengthen focus on
clinical governance within IDX.
Integral Diagnostics Annual Report 2021 51
Risk Area
Risk Management Strategy
Health and safety. The risk of harm to employees
due to a lack of effectiveness in workplace health
and safety systems.
Privacy and confidentiality. The Company relies
on appropriate access and secure processing,
transmission and storage of confidential, proprietary
and other information in its IT infrastructure. The loss
or misuse of personal information, or inadequate and
insecure data protection and privacy protocols, may
result in a breach of a patient or referrer privacy
and confidentiality with consequential reputational and
trust impact to the Company.
Business Continuity, disaster recovery and crisis
management. The risk of an ineffective response
to a business continuity or disaster recovery event
impacting on operations, patients, and other
stakeholders. This includes IDX’s ability to respond
to the impact of COVID-19.
Technology and Security
Contemporary technology and innovation. The failure
to adapt or respond to contemporary disruptive
innovations and technologies will see an increase
in competition and a decline in referrals.
Cyber security. The risk of a material cyber security
event or attack on IDX or the inability of IDX to
respond to the continually evolving threats affecting
its operations and involving significant remediation
resources.
• Establishment of a group wide Safety Management System in line
with industry standards.
• Provision of specific training programs for all staff to build
knowledge and capability on safety matters, including hazard
identification, risk management and incident reporting.
• Investment in injury prevention programs.
• Regular incident reporting to Senior Management and the Board
on health and safety matters.
• Consistent privacy policies and practices in place across the
Company that have been reviewed by external privacy experts
to ensure compliance with the required laws in Australia and
New Zealand.
• Provision of annual training in place for all staff tailored for roles
and responsibilities.
• Appointment of an IDX Privacy Officer.
• Regular internal checks for privacy process compliance.
• Engagement with key partners and third parties to ensure
appropriate privacy provisions in place.
• Cyber security and IT infrastructure controls in place and
continually reviewed.
• Business Continuity (BCP) and Disaster Recovery (DR) plans
in place for key areas such as Business Unit Plans, IT recovery,
COVID-19 responses etc.
• Establishment of a Business Continuity Steering Committee
to drive continuous improvement in BCP and DR.
• Testing of BCP and DR scenarios.
• Appointment of a CIO.
• Proactive monitoring of technology developments and changes.
• Continued focus on nurturing existing relationships with
technology business partners and vendors to keep abreast
of market changes.
• Investment in leading edge/premium technology and equipment.
• Provision of cyber security training including phishing training
and simulations for all staff.
• Performance by external party of ongoing penetration testing
to ensure protections are relevant to increasing threats.
• Establishment of Cyber Security Steering Committee.
• Alignment of the Company’s cyber security framework and
controls to industry standards.
• Inclusion of cyber security events in BCP and DR planning.
• Cyber security insurance coverage in place.
52
Integral Diagnostics Annual Report 2021
OPERATING AND FINANCIAL REVIEW CONTINUED
For the year ended 30 June 2021
Risk Management Strategy
• Investment in attraction and retention strategies.
• Investment in employee engagement and professional
development activities.
• Proactive monitoring of changes in the market including to stay
abreast of and responding to identified changes.
• Infection control and safety process for patients and staff and
encouragement of COVID-19 vaccination, designed to reduce the
likelihood of staff contracting COVID-19 or the spread of COVID-19
between staff and patients in our locations.
• Protocols that enable the Company to quickly respond to a
COVID-19 situation and ensure that any affected sites are able
to be safely reopened as soon as possible.
Risk Area
Recruitment and Retention
Attraction and retention of talent. The risk of the
inability to attract or retain quality radiologists,
management and staff due to competition across
the market, geographical location of some sites
or other factors.
Market Trends
Changing market trends. The risk that changing
trends in the radiology market, in both Australia and
New Zealand, e.g. the emergence of specialist groups
such as cardiology purchasing their own diagnostics
equipment, or new market entrants, will have a
negative impact on market share and revenue.
COVID-19
Recurrence of decline in revenue and increasing cost,
due to:
• On-going or intermittent community lockdowns or
restrictions impacting elective surgery, sport, medical
and allied health visits, and travel in the geographies
in which we operate; and/or
• Significant COVID-19 breakouts among employees
requiring sites to shut down for prolonged periods.
• The Company does not take adequate precautions or
fails to follow Government directives to manage the
risk of COVID-19 infection to staff and patients.
• Potential adverse impacts on our highly skilled
workforce through prolonged or recurring
restrictions.
Integral Diagnostics Annual Report 2021 53
Risk management
The Company’s Risk Management Framework is overseen by the ARCC and is actively managed by the members of Senior
Management with input from the ICLC. The framework is consistent with ISO 31000:2018 Risk Management – Guidelines
and is subject to review at least annually.
The framework is used to enable a consistent and rigorous approach to identifying, analysing and evaluating risks.
Details of IDX’s Risk Management Framework can be found in our ESG Statement on the Company’s website:
www.integraldiagnostics.com.au/reports/
During FY21 we continued to review, assess and strengthen our policies and procedures over our processes and controls
in relation to health and safety, privacy and confidentiality and cyber security. Ongoing reviews consider how our approach
meets best practices, in line with our industry profile and how risks are being managed to ensure the best outcomes for all
stakeholders. We will continue this review in FY22 as well as implementing identified improvements.
A key component of the Company’s risk management is clinical governance which is managed through the ICLC and Business
Unit Clinical Leadership Committees (BU CLCs) under the ICLC Charter. A copy of the ICLC Charter can be found on the
Company’s website: www.integraldiagnostics.com.au/corporate-governance
The ICLC Charter provides a framework for the ICLC and BU CLCs to work together to develop and implement policies and
work practices to enable clinical best practice. The responsibilities of the ICLC include reviewing any recommendations
arising from any adverse incidents from the BU CLCs and to share learnings to prevent recurrence.
The ICLC works within the Clinical Governance and Quality Framework which is the overarching framework directing the
delivery of safe and high-quality diagnostic imaging services across the Group while maximising outcomes for patients and
referrers through quality of care, continuous improvement, risk mitigation and fostering an environment of excellence in care.
The Clinical Governance and Quality Framework is supported through the elements of governance and leadership, systems
and structures, roles and responsibilities, culture and transparency, and performance review and reporting. The principles
of the Clinical Governance and Quality Framework meet the requirements of ISO 9001:2015 Quality Management Systems –
Requirements and ISO 31000:2018 Risk Management – Guidelines.
A copy of the Company’s Audit Risk and Compliance Committee Charter can be found on the Company’s website:
www.integraldiagnostics.com.au/corporate-governance
54
Integral Diagnostics Annual Report 2021
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 30 June 2021
Revenue
Revenue
Interest and other income
Total revenue and other income
Expenses
Consumables
Employee benefits expense
Depreciation expense
Amortisation expense
Transaction and integration expenses
Share based payment expense
Equipment related expenses
Occupancy expenses
Other expenses
Finance costs
Share of net profits of joint ventures accounted for using the equity method
Total expenses
Note
30 June 2021
$’000
30 June 2020
$’000
5
5
6
6
6
6
24
6
16
350,696
267
350,963
(17,017)
(197,992)
(18,747)
(16,167)
(2,219)
(2,080)
(12,152)
(7,492)
(22,984)
(8,909)
18
(305,741)
275,566
289
275,855
(12,481)
(154,262)
(14,819)
(10,861)
(5,135)
(1,341)
(8,408)
(5,593)
(19,136)
(8,559)
-
(240,595)
Profit before income tax expense
45,222
35,260
Income tax expense
7
(13,954)
(12,227)
Profit for the year from continuing operations
31,268
23,033
Profit is attributable to:
Owners of Integral Diagnostics Limited
Earnings per share attributable to the owners of Integral Diagnostics Limited
Basic earnings per share
Diluted earnings per share
38
38
31,268
23,033
Cents
15.80
15.60
Cents
12.43
12.31
The above Consolidated Statement of Profit or Loss should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2021
Integral Diagnostics Annual Report 2021 55
Profit for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Net (loss)/gain on cash flow hedges
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income is attributable to:
Owners of Integral Diagnostics Limited
Note
30 June 2021
$’000
31,268
30 June 2020
$’000
23,033
(163)
-
31,105
31,105
(1,090)
19
21,962
21,962
31,105
21,962
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
56
Integral Diagnostics Annual Report 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Inventory
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible asset
Deferred tax asset
Investments accounted for using the equity method
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Income tax payable
Contingent consideration
Provisions
Total current liabilities
Non-current liabilities
Contingent consideration
Borrowings
Lease liabilities
Deferred tax liability
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed capital
Reserves
Retained profits
Total equity
Note
30 June 2021
$’000
30 June 2020
$’000
8
9
10
11
12
13
14
15
16
17
18
13
20
19
20
21
13
15
22
23
24
25
62,203
14,260
4,874
914
82,251
111,094
100,391
344,729
16,335
99
572,648
57,965
10,404
7,086
1,002
76,457
101,005
88,571
307,271
13,607
-
510,454
654,899
586,911
20,271
6,543
10,427
4,509
15,863
20,286
77,899
7,246
192,185
99,199
13,826
9,805
322,261
18,616
13,177
9,608
4,968
13,317
16,556
76,242
7,971
168,564
86,499
11,515
7,790
282,339
400,160
358,581
254,739
228,330
219,219
(8,883)
44,403
254,739
207,437
(10,800)
31,693
228,330
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Integral Diagnostics Annual Report 2021 57
Balance at 1 July 2019
Adjustment on first time adoption of AASB 16,
net of tax effects – Note 13
Adjusted balance at 1 July 2019
Profit after income tax expense
Movement in FV of derivative financial instrument
Movement in translation of foreign operations
Total comprehensive income
Transactions with owners in their
capacity as owners:
Unwinding of DTA in equity (Note 15)
Transaction costs recognised in equity (Note 23)
Issue of ordinary shares under Radiologist
incentive scheme (Note 23)
Issue of ordinary shares as consideration
for a business combination, net of transaction
costs and tax (Note 23)
Issue of shares under shareholder entitlement
offers (Note 23)
Share based payments (Note 24)
Dividends paid (Note 26)
Balance at 30 June 2020
Balance at 1 July 2020
Profit after income tax expense
Movement in translation of foreign operations
Total comprehensive income
Transactions with owners in their
capacity as owners:
Net tax effect of transaction costs
recognised in equity
Transaction costs recognised in equity (Note 23)
Issue of ordinary shares under Radiologist
incentive scheme (Note 23)
Issue of ordinary shares as consideration
for a business combination, net of transaction
costs and tax (Note 23)
Share based payments (Note 24)
Dividends paid and reinvested in equity (Note 26)
Balance at 30 June 2021
Contributed
capital
$’000
109,507
-
109,507
-
-
-
-
1,032
(3,508)
1,460
26,484
72,023
-
439
207,437
Contributed
capital
$’000
207,437
-
-
-
(108)
(139)
1,500
9,857
-
672
219,219
Reserves
$’000
(11,070)
-
(11,070)
-
19
(1,090)
(1,071)
-
-
-
-
-
1,341
-
(10,800)
Reserves
$’000
(10,800)
-
(163)
(163)
-
-
-
2,080
-
8,883
Retained
profits
$’000
28,782
(1,654)
27,128
23,033
-
-
23,033
-
-
-
-
-
-
(18,468)
31,693
Retained
profits
$’000
31,693
31,268
-
31,268
-
-
-
-
(18,558)
44,403
Total equity
$’000
127,219
(1,654)
125,565
23,033
19
(1,090)
21,962
1,032
(3,508)
1,460
26,484
72,023
1,341
(18,029)
228,330
Total equity
$’000
228,330
31,268
(163)
31,105
(108)
(139)
1,500
9,857
2,080
(17,886)
254,739
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
58
Integral Diagnostics Annual Report 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Transaction and integration costs relating to acquisition of subsidiaries
Interest and other finance costs paid
Interest received
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payments for purchase of subsidiary, net of cash acquired
Payments in settlement of contingent consideration
Payments for property, plant and equipment
Payments for registration of brand names
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Transaction costs paid on issue of share capital
Proceeds from borrowings drawn
Repayment of borrowings
Repayment of the principal element of lease liabilities
Dividends paid to Company shareholders
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
Note
30 June 2021
$’000
30 June 2020
$’000
347,504
(248,752)
(2,219)
(10,315)
88
(16,734)
69,572
(35,459)
(931)
(20,259)
(14)
(56,663)
1,792
(139)
35,180
(16,786)
(9,995)
(17,886)
(7,834)
5,075
57,965
(837)
62,203
277,819
(199,914)
(5,135)
(8,559)
267
(10,228)
54,250
(66,891)
(766)
(25,876)
-
(93,533)
73,484
(3,509)
45,731
(14,068)
(8,209)
(18,029)
75,400
36,117
20,967
881
57,965
37
34
23
23
8
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Integral Diagnostics Annual Report 2021 59
Note 1. General information
The Financial Report covers Integral Diagnostics Limited as a Group consisting of Integral Diagnostics Limited (‘Company’
or ‘parent entity’) and the entities it controlled at the end of, or during, the year (collectively referred to as the ‘Group’).
The financial statements are presented in Australian dollars, which is Integral Diagnostics Limited’s functional and
presentation currency and are rounded to the nearest thousand dollars ($‘000) unless otherwise stated.
Integral Diagnostics Limited is a listed public Group limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Suite 9.02, Level 9, 45 William Street
MELBOURNE VIC 3000
A description of the nature of the consolidated entity’s operations and its principal activities are included in the Directors’
Report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 26th August 2021.
The Directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective
notes or below.
Basis of preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards
(IFRSs) as issued by the International Accounting Standards Board (IASB).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for derivative financial instruments
which have been measured at fair value.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary
information about the parent entity is disclosed in Note 33.
New, revised or amending accounting standards and interpretations adopted
The Group has adopted all new, revised or amended accounting standards and interpretations issued by the Australian
Accounting Standards Board (AASB) that are mandatory for the current reporting period. There is no material impact from the
adoption of these new standards.
Any new, revised or amending accounting standards or interpretations that are not yet mandatory have not been early adopted.
Principles of consolidation and equity accounting
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Integral Diagnostics Limited
as at 30 June 2021 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and can affect those returns through its power to
direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
Inter-Group transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
60
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 2. Significant accounting policies continued
Where the Group loses control over a subsidiary, it derecognises the assets (including goodwill), liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises
the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
(ii) Joint arrangements
The Group’s interests in joint ventures are accounted for using the equity method (see (iii) below), after initially being
recognised at cost in the consolidated balance sheet.
(iii) Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise
the group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the group’s share of movements
in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from
associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
Where the group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including
any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations
or made payments on behalf of the other entity.
Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the extent of
the group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary
to ensure consistency with the policies adopted by the group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described later
in this note.
Current and non-current classification
Assets and liabilities are presented in the Consolidated Statement of Financial Position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in a normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting
period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is expected to be settled in a normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right
to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified
as non-current.
Foreign currencies
The Group’s consolidated financial statements are presented in Australian dollars, which is also the parent Company’s
functional currency. For each entity, the Group determines the functional currency and items included in the financial
statements of each entity are measured using that functional currency. The Group uses the direct method of consolidation
and on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss reflects the amount that arises
from using this method.
(i) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot
rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates
of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised
in profit or loss.
Integral Diagnostics Annual Report 2021 61
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item
(i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income (“OCI”) or
profit or loss are also recognised in OCI or profit or loss, respectively).
(ii) Group companies
On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate of exchange
prevailing at the reporting date and their statements of profit or loss are translated at average exchange rates for the period.
The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign operation,
the component of OCI relating to that particular foreign operation is reclassified to profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets
and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot
rate of exchange at the reporting date.
Impairment of non-financial assets
Goodwill and other intangible assets that have indefinite useful lives are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Share-based payments
Employees (including senior management and radiologists) of the Group receive remuneration and benefits in the form of
share-based payments. These employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate
valuation model.
That cost is recognised in expense, together with a corresponding increase in equity (share based payment reserves), over the
period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative
expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which
the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest.
The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised
as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of
awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity
instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other
conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions.
Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless
there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions
have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested
irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
62
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 2. Significant accounting policies continued
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of the
unmodified award, provided the original vesting terms of the award are met. An additional expense, measured as at the date
of modification, is recognised for any modification that increases the total fair value of the share-based payment transaction,
or is otherwise beneficial to the employee. Where an award is cancelled by the entity or by the counterparty, any remaining
element of the fair value of the award is expensed immediately through profit or loss.
The dilutive effect of outstanding performance rights is reflected as additional share dilution in the computation of diluted
earnings per share.
The loan associated with loan funded shares is non-recourse in nature and it is held off balance sheet and no corresponding
amounts held in equity for the issued shares. The cost of the loan is recorded in the income statement over the service period,
with the corresponding amount charged to equity. This equity value is recorded as share capital when the holder of the loan
funded shares repays the loan in full which is at their election in years 5 to year 10 from grant date.
Investments and other financial assets
Classification
The group classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through OCI, or through profit or loss), and
• those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms
of the cash flows.
Financial assets at amortised cost
Loans and receivables are initially recognised at fair value and subsequently at amortised cost using the effective interest rate
method less any allowance under the expected credit loss (ECL) model.
All loans and receivables with maturities greater than 12 months after the balance date are classified as non-current assets.
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group
uses judgement when determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECL. The Group considers reasonable and supportable information that is relevant and
available. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience,
current market conditions as well as forward looking estimates at the end of each reporting period.
Debts that are known to be uncollectable are written off when identified.
Revenue
Revenue from diagnostic imaging services is recognised on completion and reporting of imaging to the referring doctor.
For diagnostic imaging services provided under contract, revenue is recognised based on the actual service provided to the
end of the reporting period. This is determined based on the actual volume of exams reported.
Refer to note 5 for further details in relation to the point of revenue recognition for the Group’s specific revenue streams.
Government grants
Government grants are recognised only after eligibility conditions have been met and the Group has assessed these will be
received. Consistent with the income approach applicable under AASB 120, government grants are recognised in profit or
loss as a deduction against the employee benefits expenses for which they are intended to compensate.
Integral Diagnostics Annual Report 2021 63
Property leases
Property leases are recognised as a right-of-use asset and a corresponding liability at the date at which the property is
available for use by the group. Lease payments are allocated between the liability and finance cost. The finance cost is charged
to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability
for each period. The corresponding right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease
term on a straight-line basis.
Assets and liabilities arising from property leases are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
• fixed payments, less any lease incentives receivable;
• variable lease payments that are based on an index or a rate; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the Group’s incremental borrowing rate, being the rate that would be
paid to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar
terms and conditions.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs, and
• restoration costs.
Payments associated with short-term leases are recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less.
Extension and termination options are included in most property leases across the group. These terms are used to maximise
operational flexibility in terms of managing contracts. Most extension and termination options held are exercisable only by
the group and thus it has been assumed that these are to be exercised in the measurement of lease liabilities and right
of use assets, as is expected to be the case with future lease renewals.
Rounding of amounts
The Group is of a kind referred to in Legislative Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to the ‘rounding off’. Amounts in this Report have been rounded off in accordance with that Instrument
to the nearest thousand dollars, or in certain cases, the nearest dollar.
New accounting standards and interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2021. None of these new standards
and interpretations are expected to have a material impact on the Group’s financial statements.
64
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year
are discussed below.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and
equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or
some other event.
The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives,
or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated
in Note 14.
The recoverable amounts of cash-generating units have been determined based on value-in-use (VIU) calculations. These
calculations require the use of assumptions, including anticipated sales growth, long-term growth rate and the post-tax
discount rate. These assumptions have taken into account uncertainty arising due to COVID-19 as outlined in Note 14.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group assessed impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each
reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an
impairment trigger exists, the recoverable amount of the asset is determined. This involves value-in-use (ViU) calculations,
in conjunction with the goodwill impairment testing which incorporates a number of key estimates and assumptions,
including the continuation of the stable regulatory environment and current competitive practices for healthcare services
in both Australia and New Zealand.
Provision for make good
The Group records a provision for make good costs of lease properties. Make Good costs are provided for at the present value
of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the relevant
asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the make good liability. The
unwinding of the make good is expensed as incurred and recognised in the statement of profit or loss. The estimated future
costs of the make good are reviewed annually and adjusted as appropriate. Changes in the estimated future costs, or in the
discount rate applied, are added to or deducted from the cost of the asset.
Impacts of COVID-19
The Group has performed an assessment of the impacts of COVID-19 on the financial performance and position of the Group.
It has been determined that the net impact has been neither significant or prolonged and that the ongoing ability of the Group
to generate sufficient cash flows to support the carrying value of assets has not been impacted.
Should there be ongoing impacts from COVID-19 across the Group’s operations and the impacts of this pandemic are
significant or prolonged this may impact the Group in the longer term.
Business combination accounting
In applying business combination accounting to its acquisitions, the Group makes estimations of future cash flows and applies
an appropriate discount rate to measure identified assets, including brand names and customer contracts. The Group is also
required to estimate contingent considerations, involving the estimation of future earnings to be generated by the acquired
business for a defined period. These liabilities are further detailed in Note 20.
Integral Diagnostics Annual Report 2021 65
Note 4. Operating segments
Identification of reportable operating segments
The Group comprises the single reportable operating segment of the operation of diagnostic imaging facilities.
Major customers
During the year ended 30 June 2021, there was no external revenue greater than 10% to any one customer (2020: nil).
Accounting policy for operating segments
Operating segments are presented using the ‘management approach’, where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers (CODM) which includes the KMP of the Company.
The CODM are responsible for the allocation of resources to operating segments and assessing their performance.
Operating segment information
Revenue is attributable to the country where the service was transacted. The consolidated entity operates in two main
geographical areas, being Australia and New Zealand.
Total revenue and other income from continuing operations
Australia
New Zealand
Total non-current assets
Australia
New Zealand
Note 5. Revenue
Sales revenue
Services revenue
Other revenue
Other revenue
Revenue
Interest and other income
Interest income
Realised FX gain
Total revenue and other income
Timing of revenue recognition
At a point in time
Over time
Consolidated
30 June 2021
$’000
30 June 2020
$’000
304,562
46,401
350,963
410,740
161,908
572,648
251,023
24,832
275,855
408,025
102,429
510,454
Consolidated
30 June 2021
$’000
30 June 2020
$’000
348,808
274,081
1,888
350,696
88
179
267
350,963
334,722
15,974
350,696
1,485
275,566
267
22
289
275,855
266,775
8,791
275,566
66
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 5. Revenue continued
Accounting policy for revenue recognition
Revenue is recognised when the Group has fulfilled its contractual performance obligations to its customers. Revenue is
measured at the fair value of the consideration received or receivable, and except for specific customer contracts where
service revenues are recognised over time, revenue recognised is at a point in time.
Rendering of services
Rendering of services revenue is recognised when the service is rendered for the provision of medical imaging services.
For some specific customer contracts service revenues are recognised over time on a straight-line basis, which reflects the
contract requirement for services to be delivered evenly over the term. All other service revenues are recognised at the time
the images are read and reported on.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established. Other revenue largely
includes compensation payments received under equipment and leasehold contracts as well as labour cost charges to
hospitals and Government (trainees and paid parental leave).
Note 6. Expenses
Profit before income tax includes the following specific expenses:
Depreciation expense
Leasehold improvements
Plant and equipment
Motor vehicles
Office furniture and equipment
Total depreciation
Amortisation expense
Customer contracts
Right-of-use assets
Total amortisation
Total depreciation and amortisation
Net loss on disposal of property, plant and equipment
Transaction and integration costs relating to acquisition of subsidiaries
Professional fees and other costs
Total transaction costs
Finance costs
Interest and finance charges paid/payable
Unwinding of the effect of discounting provisions
Finance costs expensed
Employee benefits expense
Employee benefits
Government grants
Superannuation contributions
Labour supply
Total employee benefits expense
Costs of inventories recognised as expense were $17.0 million (2020: $12.5 million).
Consolidated
30 June 2021
$’000
30 June 2020
$’000
2,705
13,373
32
2,637
18,747
4,474
11,692
16,167
34,914
390
2,219
2,219
8,817
92
8,909
1,999
10,925
21
1,874
14,819
1,387
9,474
10,861
25,680
1,460
5,135
5,135
8,559
-
8,559
173,630
(6,695)
10,862
20,195
197,992
137,761
(9,595)
9,004
17,092
154,262
Integral Diagnostics Annual Report 2021 67
Accounting policy for finance costs
Borrowing costs are expensed in the period in which they are incurred. Amounts relating to the unwinding of discounting are
classified as finance costs.
Government grants
The Group elected to make a voluntary return of surplus JobKeeper funds to government of $2.9 million pre-tax (2020: nil),
being the assessed the benefit received by the Group after making allowance for the impact of COVID-19 and the cost of
retaining staff during these disruptions. The amount of government grants disclosed in the above table is presented net
of this return.
JobKeeper payments, New Zealand Wage Subsidy and payroll tax refunds received as part of the government response to
the COVID-19 pandemic of $10.2 million (2020: $9.6 million) were partially offset by $0.7 million (2020: $0.8 million) of top up
payments included in the employee benefits line item. The JobKeeper payments and New Zealand Wage Subsidy are taxable
income, the net benefit to the Group after top up payments, voluntary return of JobKeeper and related tax effects was
$4.7 million (2020: $6.1 million). There are no unfulfilled conditions or other contingencies attached to these grants. During
the reporting period, the group has also benefited from the other government assistance in the form of deferred payroll
tax to the extent as outlined in Note 17.
In accordance with the legislative requirements, JobKeeper payment eligibility was assessed at the level of the group’s
individual subsidiary employment service entities. The eligibility of these entities for JobKeeper payments was assessed by
applying the basic turnover test to their expected management service fee turnover. The projected turnover declines in these
entities were commensurate with overall declines in revenue and operating returns experienced in the employment service
entities corresponding trading subsidiary for the same period.
Note 7. Income tax expense
Income tax expense
Current tax
Deferred tax – origination and reversal of temporary differences
Total income tax expense
Deferred tax included in income tax expense comprises:
(Increase) in deferred tax assets (Note 15)
Increase/(decrease) in deferred tax liabilities (Note 15)
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the Australian statutory rate of 30% (2020:30%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Entertainment costs
Transaction costs
Customer contract amortisation
Share based payments
Share of profits of joint ventures Instrument
Transactions costs deducted in equity
Adjustment recognised for prior periods
Impact of lower tax rate in New Zealand
Income tax expense
Consolidated
30 June 2021
$’000
30 June 2020
$’000
15,827
(1,873)
13,954
(2,728)
855
(1,873)
45,222
13,412
49
131
-
621
(5)
(5)
14,208
(99)
(155)
13,954
12,803
(576)
12,227
(656)
80
(576)
35,260
10,578
51
623
248
403
-
326
12,229
142
(144)
12,227
68
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 7. Income tax expense continued
Accounting policy for income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Note 8. Current assets – cash and cash equivalents
Cash on hand
Cash at bank
Consolidated
30 June 2021
$’000
16
62,187
62,203
30 June 2020
$’000
21
57,944
57,965
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
Note 9. Current assets – trade and other receivables
Trade receivables
Less: loss allowance
Other receivables
Impairment of receivables
Movements in the loss allowance for trade receivables are as follows:
Opening balance
Recognised on business combination
Additional allowance recognised
Receivables written off during the year as uncollectable
Closing balance
Consolidated
30 June 2021
$’000
14,788
(546)
14,242
30 June 2020
$’000
10,610
(235)
10,375
18
14,260
29
10,404
Consolidated
30 June 2021
$’000
235
313
85
(87)
546
30 June 2020
$’000
81
-
205
(51)
235
The ageing of receivables past due is as follows:
Past due 31 to 60 days
Past due 61 to 90 days
Past due more than 91 days
Integral Diagnostics Annual Report 2021 69
Consolidated
30 June 2021
$’000
785
335
1,034
2,154
30 June 2020
$’000
437
201
811
1,449
Accounting policy for trade and other receivables
Trade receivables are amounts due from customers for services rendered. They are generally due for settlement within 30 to
60 days and are therefore all classified as current. Trade receivables are initially recognised at the amount of consideration
that is unconditional. None of the Group’s trade receivables have a significant financing component. The group holds these
receivables to collect the contractual cash flows and thus subsequently measures these at amortised cost less any loss
allowance. Due to the short-term nature of these receivables, their carrying amount is assumed to approximate fair value.
Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The group applies the simplified approach to measuring expected credit losses using a lifetime expected credit losses (ECL)
using a lifetime ECL allowance for all trade receivables. The expected credit loss rates are based on the payment profile of
sales in recent periods and historical loss rates. The historical loss rates are adjusted to reflect current and forward looking
information on factors affecting the ability of customers to settle the receivable, including an increased risk associated with
collection of outstanding amounts based on additional factors such as probability of bankruptcy or financial reorganization
and consideration of the impact of COVID-19.
Other receivables are recognised at amortised cost, less any provision for impairment.
Note 10. Current assets – other
Accrued income
Prepayments
Security deposits
Other current assets
Note 11. Inventory
Contrast, drugs, needles & personal protective equipment
Accounting policy for inventory
Consolidated
30 June 2021
$’000
1,557
2,623
401
293
4,874
30 June 2020
$’000
4,075
2,654
345
12
7,086
Consolidated
30 June 2021
$’000
914
30 June 2020
$’000
1,002
Inventory is valued at the lower of cost and net realisable value. Inventory has been recognised based on categories of
high-value items used in the production of medical images that the Company holds in large volumes including contrast,
drugs, needles and personal protective equipment. Costs of inventories recognised as an expense was $17.0 million
(2020: $12.4 million).
70
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 12. Non-current assets – property, plant and equipment
Work in progress – at cost
Leasehold improvements – at cost
Less: Accumulated depreciation
Plant and equipment – at cost
Less: Accumulated depreciation
Motor vehicles – at cost
Less: Accumulated depreciation
Office furniture and equipment – at cost
Less: Accumulated depreciation
Consolidated
30 June 2021
$’000
2,025
30 June 2020
$’000
998
43,298
(11,541)
31,757
119,769
(52,354)
67,415
322
(172)
150
21,690
(11,943)
9,747
111,094
37,303
(9,058)
28,245
106,916
(42,408)
64,508
285
(162)
123
16,616
(9,485)
7,131
101,005
Reconciliations
Reconciliations of the written down values of property, plant and equipment at the beginning and end of the current and
previous financial year are set out below:
Consolidated
Balance at 30 June 2019
Business combination – Note 34(b)
Additions
Transfers
Disposals/write offs
Depreciation expense
Exchange differences
Balance at 30 June 2020
Work in
progress
$’000
9,864
-
26,013
(34,879)
-
-
-
998
Leasehold
improvements
$’000
12,869
5,619
-
13,293
(1,397)
(1,999)
(140)
28,245
Plant and
equipment
$’000
43,394
13,925
-
18,230
(52)
(10,925)
(64)
64,508
Business combination – Note 34(a)
Additions
Transfers
Disposals/write offs
Depreciation expense
Exchange differences
Balance at 30 June 2021
-
20,687
(19,660)
-
-
-
2,025
2,975
-
3,269
(108)
(2,705)
81
31,757
5,292
-
11,407
(514)
(13,373)
95
67,415
Office
furniture
and
equipment
$’000
4,586
1,166
-
3,302
(11)
(1,874)
(38)
7,131
Motor
Vehicles
$’000
69
21
-
54
-
(21)
-
123
-
-
59
(32)
-
150
321
-
4,925
(9)
(2,637)
16
9,747
Total
$’000
70,782
20,731
26,013
-
(1,460)
(14,819)
(242)
101,005
8,588
20,687
-
(631)
(18,747)
192
111,094
Property, plant and equipment secured under asset financing facility
Refer to Note 21 for further information on property, plant and equipment secured under asset financing.
Integral Diagnostics Annual Report 2021 71
Accounting policy for property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Leasehold improvements
5 – 20 years
Plant and equipment
Motor vehicles
4 – 15 years
5 – 8 years
Office furniture and equipment 3 – 15 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter. Leasehold improvements include the expected future cost of making good leasehold premises at the
conclusion of the lease term.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Costs which are necessarily incurred whilst commissioning new asset, in the period before they are capable of operating in
the manner intended by management, are capitalised as Work in Progress. Upon completion of the asset and all associated
costs being recognised, the Work in Progress is transferred to the correct property, plant and equipment classification at
which point it is accounted for in accordance with the policy set out above.
Note 13. Leases
The balance sheet shows the following amounts in respect of leases:
Right-of-use assets
Property leases
Lease liabilities
Current
Non-current
Additions to the right-of-use assets during the year were $14.5m (2020: $24.1m).
The statement of profit or loss shows the following amounts relating to leases:
Depreciation charge against right-of-use assets (included in depreciation and
amortisation expense)
Interest expense (included in finance cost)
Expense relating to short-term leases (included in occupancy expenses)
Credits received as rent concessions due to COVID-19 (included in occupancy expenses)
Consolidated
30 June 2021
$’000
30 June 2020
$’000
100,391
88,571
10,427
99,199
109,626
9,608
86,499
96,107
Consolidated
30 June 2021
$’000
30 June 2020
$’000
11,692
3,728
768
-
9,474
2,972
522
(641)
72
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 13. Leases continued
Reconciliation of movements in lease liabilities during the period
Lease liabilities recognised at 1 July 2020
Lease liabilities assumed on acquisition
Remeasurement of liability for CPI adjustments
Early termination of leases
New leases entered into during the period
Repayment of lease liabilities, net of interest
Lease liabilities recognised at 30 June 2021
Note 14. Non-current assets – intangibles
Goodwill – at cost
Brand names and trademarks – at cost
Customer contracts – at cost
Less: Accumulated amortisation
30 June 2021
$’000
96,107
12,527
1,824
(5,379)
14,542
(9,995)
109,626
30 June 2020
$’000
63,478
21,857
375
(5,449)
24,055
(8,209)
96,107
Consolidated
30 June 2021
$’000
315,790
24,745
15,320
(11,126)
4,194
344,729
30 June 2020
$’000
280,017
24,768
9,171
(6,685)
2,486
307,271
Reconciliations
Reconciliations of the written-down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 30 June 2019
Assets recognised on business combination
acquisitions
Amortisation expense
Write off expense
Foreign currency exchange
Balance at 30 June 2020
Assets recognised on business combination
acquisition – Note 34(a)
Additions
Amortisation expense
Foreign currency exchange
Balance at 30 June 2021
Goodwill
$’000
184,112
Brand names
& trademarks1
$’000
17,246
Customer
contracts
$’000
895
97,742
-
-
(1,837)
280,017
35,388
-
-
385
315,790
7,900
-
(155)
(223)
24,768
-
14
-
(37)
24,745
2,900
(1,387)
-
78
2,486
6,044
-
(4,474)
138
4,194
Total
$’000
202,253
108,542
(1,387)
(155)
(1,982)
307,271
41,432
14
(4,474)
486
344,729
1. Brand names of $24.77 million are distributed across the SCR ($7.0m), Lake Imaging ($0.17m), NZ ($9.7m) and Imaging Queensland ($7.9m) CGUs.
Reconciliations of the carrying values by cash generating unit are set out below:
Consolidated
Goodwill
Brand names and trademarks
Customer contracts
Balance at 30 June 2021
Australia
$’000
200,210
15,085
1,864
217,159
New Zealand
$’000
115,580
9,660
2,330
127,570
Total
$’000
315,790
24,745
4,194
344,729
Integral Diagnostics Annual Report 2021 73
Impairment test for goodwill and intangibles
Goodwill and brand names are tested for impairment annually (as at 30 June) and when circumstances indicate the carrying
value may be impaired. The Group’s impairment test for goodwill and intangible assets with indefinite lives is based on value
in use calculations.
An assessment of identifiable cash generating units and a review of allocations of goodwill to the identified cash generating
units is conducted annually.
Management have concluded that the current centralised structure of operations in Australia, and the ongoing synergies
and opportunities this delivers to the Group’s Australian operations warrants the continued allocation of goodwill to form
one cash-generating unit in Australia, and a second cash generating unit in New Zealand for impairment testing purposes.
Brand names and trademarks are allocated to brand level cash-generating units.
Key assumptions for value-in-use calculations
The recoverable amount is determined based on value-in-use calculations which require the use of assumptions.
The calculations use cash flow projections based on financial budgets approved by the Board. Cash flows beyond the five-year
period are extrapolated using the estimated growth rates stated below. These growth rates do not exceed the average growth
rates for the industry in which the Group operates and assume a continuation of the stable regulatory environment for
healthcare services in both Australia and New Zealand.
The following table sets out the key assumptions for impairment testing for each geographic segment:
Australia
Long-term growth rate
Pre-tax discount rate
New Zealand
Long-term growth rate
Pre-tax discount rate
Australia
2021
%
1.9
10.6
1.5
12.1
2020
%
2.2
12.8
2.2
13.1
Within the value-in-use calculation for the five-year forecast period revenues have been forecast to grow between 1.9% – 8.9%
(2020: 2.1% – 6.1%) and 1.9% (2020: 2.2%) into perpetuity. The forecast cash flows also include ongoing investment in property,
plant and equipment to maintain the existing base and cash flows for the forecast period.
The pre-tax discount rate would need to increase by more than 670 basis points (2020: 420 basis points) or the revenue
growth rate decline by more than 160 basis points (2020: 270 basis points) in the five-year forecast period for there to be any
impairment of the goodwill balance.
New Zealand
Within the value-in-use calculation for the five-year forecast period revenues have been forecast to grow between 1.5% – 17.8%
(2020: 2.2% – 7.3%) and 1.5% (2020: 2.2%) into perpetuity. The forecast cash flows also include ongoing investment in property,
plant and equipment to maintain the existing base and cash flows for the forecast period.
The pre-tax discount rate would need to increase by more than 580 basis points (2020: 330 basis points) or the revenue
growth rate decline by more than 360 basis points (2020: 340 basis points) in the five-year forecast period for there to be any
impairment of the goodwill balance.
74
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 14. Non-current assets – intangibles continued
Accounting policy for intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less an impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and
the carrying amount of the intangible asset. The method of amortisation and useful lives of finite life intangible assets are
reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing
the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried
at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Brand names and trademarks
Significant costs associated with brand names and trademarks are not amortised but are tested for impairment annually
on the same basis and within the same ViU calculation as outlined above and are carried at cost.
Customer contracts
Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being the remaining term of the contract as at the date of acquisition. The balance remaining consists
of the contracts held with the Central Queensland Hospital and Health Service, and the Southern Cross Health Insurance,
Accident Compensation Corporation and healthAlliance in New Zealand.
Note 15. Deferred tax
Deferred Tax Assets
Deferred tax asset comprises temporary differences attributable to:
Employee benefits and other provisions
Provisions for lease make good
Transaction costs in equity
Transaction costs
Tax losses available
Leases
Total Deferred Tax Asset
Amount expected to be recovered within 12 months
Amount expected to be recovered after more than 12 months
Movements:
Opening balance
Credited to profit or loss (Note 7)
Credited to equity
Amounts recognised on transition to AASB 16
Amounts recognised through business combination (Note 34)
Closing balance
Deferred Tax Liabilities
Deferred tax liability comprises temporary differences attributable to:
Property, plant and equipment
Brand names and customer contracts
Total Deferred Tax Liability
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Movements:
Opening balance
Credited to profit or loss (Note 7)
Additions through business combinations (Note 34)
Closing balance
Integral Diagnostics Annual Report 2021 75
Consolidated
30 June 2021
$’000
30 June 2020
$’000
10,770
1,035
665
834
268
2,763
16,335
4,116
12,219
16,335
13,607
2,728
-
-
-
16,335
(5,384)
(8,442)
(13,826)
(538)
(13,288)
(13,826)
(11,515)
(855)
(1,456)
(13,826)
8,638
954
842
697
267
2,209
13,607
3,376
10,231
13,607
7,798
656
1,609
1,893
1,651
13,607
(3,533)
(7,982)
(11,515)
(540)
(10,975)
(11,515)
(7,952)
80
(3,643)
(11,515)
76
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 15. Deferred tax continued
Accounting policy for deferred tax
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
• when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in
a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
• when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Integral Diagnostics Limited (the ‘head entity’) and its wholly owned Australian subsidiaries have formed an income tax-
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax-consolidated group
continue to account for their own current and deferred tax amounts. The tax-consolidated group has applied the ‘separate
taxpayer within group’ approach in determining the appropriate amount of taxes to allocate to members of the tax-
consolidated group. In addition to its own current and deferred tax amounts, the head entity also recognises the current
tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed
from each subsidiary in the tax-consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax-consolidated group. The tax consolidated group has a tax sharing
agreement in place to limit the liability of subsidiaries in the tax-consolidated group, arising under the joint and several
liability provisions of the tax consolidation system, in the event of default by the head entity to meet its payment obligations.
Note 16. Interests in other entities
Interests in joint ventures
Set out below are the joint ventures of the Group as at 30 June 2021. The entities listed below have share capital consisting
solely of ordinary shares, which are held directly by the Group. The country of incorporation or registration is also their
principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.
Name of joint venture
MedX
Ascot at Maranui
Place of
incorporation
Australia
New Zealand
Ownership interest
Carrying amount
2021
%
50%
50%
Measurement
method
2020
%
- Equity method
- Equity method
2021
$’000
-
99
2020
$’000
-
-
Integral Diagnostics Annual Report 2021 77
Summarised financial information for joint ventures
The tables summarise the financial information for those joint ventures of the group accounted for using the equity method.
Aggregate carrying amount of individual immaterial joint ventures
Aggregate share of amounts of the group’s share of:
Profit from continuing operations
Other comprehensive income
Total comprehensive income
Note 17. Current liabilities – trade and other payables
Trade payables
Other payables and accruals
Refer to Note 27 for further information on financial instruments.
Accounting policy for trade and other payables
Consolidated
30 June 2021
$’000
99
30 June 2020
$000
-
18
-
18
-
-
-
Consolidated
30 June 2021
$’000
4,753
15,518
20,271
30 June 2020
$’000
4,616
14,000
18,616
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. They are recognised at their fair value. The amounts are unsecured and are usually paid within 30 days
of recognition. Due to the short-term nature of these payables, their carrying amount is assumed to approximate fair value.
Government assistance
In addition to the government grants outlined in note 6, the Group has taken advantage of payroll tax deferral measures
offered by various state governments to alleviate the impacts of COVID-19. Deferred payroll tax liabilities of $Nil (2020:
$1.3 million) are included in the other payables and accruals balance above.
Note 18. Current liabilities – borrowings
Asset financing facility
Consolidated
30 June 2021
$’000
6,543
30 June 2020
$’000
13,177
Refer to Note 21 for accounting policy on borrowings and further information on assets pledged as security and
financing arrangements.
Refer to Note 27 for further information on financial instruments.
78
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 19. Current liabilities – provisions
Annual leave
Long service leave
Employee benefits
Lease make good1
Consolidated
30 June 2021
$’000
13,891
5,935
282
178
20,286
30 June 2020
$’000
9,906
6,146
119
385
16,556
1. Refer to note 22 for the accounting policy for lease make good and long service leave provisions.
Accounting policy for employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled
within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
The leave obligations cover the group’s liability for long service leave, annual leave and rostered days off. The current
provision of this liability includes all accrued annual leave, the unconditional entitlements to long service leave where
employees have completed the required period of service and also those where employees are entitled to pro-rata
payments in certain circumstances.
Note 20. Contingent consideration
Current portion
Non-current portion
Consolidated
30 June 2021
$’000
15,863
7,246
23,109
30 June 2020
$’000
13,317
7,971
21,228
The movements in each element of contingent consideration during the financial are set out below:
Consolidated
Carrying amount at the start of the year
Recognised on business combination – Note 34
Remeasurements charged through profit or loss1
Amounts paid during the year
Balance at 30 June 2021
1. These amounts are included in the employee benefits expense disclosed in Note 6.
Total
$’000
21,228
2,556
256
(931)
23,109
Integral Diagnostics Annual Report 2021 79
Contingent consideration
Contingent consideration arises from contractual commitments entered into on the acquisition of businesses. Where
contingent consideration payments are significantly linked to requirements for ongoing employment the cost of the deferred
payment is charged to profit or loss as earnt. Where contingent consideration is linked to the enterprise value of the entity
acquired and each vendor is entitled to the payment of the earn our regardless of their employment status, the amounts are
recognised in goodwill as part of the business combination accounting and based on expectation of payment. Any increment
or decrement arising from remeasurement of these liabilities is charged to profit or loss.
We continue to work through the payment for Earn Out A on the Imaging Queensland acquisition which is measurable on the
operating performance of the Imaging Queensland Group over the 2020 calendar year and for which we have $12.4m provided.
The Earn Out calculation has been complicated by the COVID-19 pandemic including the receipt of JobKeeper by Imaging
Queensland. The payment is now subject to the dispute settlement process as provided for in the Share Sale Contract. IDX
remains confident, and has received preliminary external expert advice, that the amount provided in the financial statements
for settlement of the Earn Out A payment is fair and reasonable and calculated in line with the requirements of our
contractual obligations under the Share Sale Contract.
Note 21. Non-current liabilities – borrowings
Club debt facility
Asset financing facility
Consolidated
30 June 2021
$’000
187,969
4,216
192,185
30 June 2020
$’000
157,004
11,560
168,564
The fair values of these borrowings are not materially different from their carrying amounts, as the interest payable on those
borrowings reflect either current market rates or the borrowings are of a short-term nature.
Refer to Note 27 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Club debt facility
Asset financing facility
Assets pledged as security
Consolidated
30 June 2021
$’000
187,969
10,759
198,728
30 June 2020
$’000
157,004
24,737
181,741
The asset finance liabilities are effectively secured as the financiers have rights to the assets under finance in the event
of default. Under the club debt facility the financiers have security over the cash flows of the business.
80
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 21. Non-current liabilities – borrowings continued
Financial arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Asset finance facility
Cash advance facility
Cash advance facility NZD
Standby letter of credit or guarantee facility
Commercial cards facility
Electronic payaway facility
Used at the reporting date
Asset finance facility
Cash advance facility
Cash advance facility NZD
Standby letter of credit or guarantee facility
Commercial cards facility
Electronic payaway facility
Unused at the reporting date
Asset finance facility
Cash advance facility
Cash advance facility NZD
Standby letter of credit or guarantee facility
Commercial cards facility
Electronic payaway facility
Accounting policy for borrowings
Consolidated
30 June 2021
$’000
30 June 2020
$’000
80,000
260,000
60,000
7,000
340
3,075
410,415
10,728
137,573
52,429
2,273
14
-
203,017
69,272
122,427
7,571
4,727
326
3,075
207,398
65,000
180,000
60,000
7,000
338
3,075
315,413
24,737
105,000
52,635
2,102
59
-
184,533
40,263
75,000
7,365
4,898
279
3,075
130,880
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs incurred.
They are subsequently measured at amortised cost using the effective interest method. During the year, the terms of the
Group’s facilities were renegotiated with the lenders. There were no substantial changes to the terms of the agreement.
Under the current lending arrangement the cash advance facilities expire in February 2026.
Integral Diagnostics Annual Report 2021 81
Consolidated
30 June 2021
$’000
4,703
5,102
9,805
30 June 2020
$’000
3,301
4,489
7,790
Note 22. Non-current liabilities – provisions
Long service leave
Lease make good
Lease make good
The provision represents the present value of the estimated costs to make good the premises leased by the Group at the end
of the respective lease terms. Property lease agreements include various obligations at the end of the respective lease terms,
such as removal of tenant installations and making good any damage caused by installation or removal, removing signage,
and other general maintenance obligations (e.g. painting, cleaning). These costs and probability of lease renewals have been
estimated for each location, based on specific terms of individual leases, size of the individual sites, and historical experience
of costs incurred when vacating a site.
Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Consolidated – 2021
Carrying amount at the start of the year
Provision recognised on business combination
Additional provisions
Amounts used
Accounting adjustment for revision of underlying estimates and unwinding of discounting
Carrying amount at the end of the year
Lease
make good
$’000
4,874
334
24
(62)
110
5,280
Accounting policy for provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event,
it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of
the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a finance cost.
Accounting policy for other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured as the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated
future cash outflows
82
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 23. Equity – contributed capital
Ordinary shares – fully paid
Movement in ordinary share capital
Balances at 1 July 2019
Shares issued under Radiologist Loan & Option
Share Scheme1 – Self-Funded
Shares issued under Radiologist Loan Share
Scheme1 – Loan Shares
Shares issues under institutional entitlement offer
Shares issued under retail entitlement offer
Shares issued as part of Imaging Queensland
acquisition (Note 34)
Shares issued under dividend reinvestment plan (DRP)
Capital raising costs
Transaction costs on acquisitions in equity
Balance at 30 June 2020
Shares issued for cash consideration as part
of Ascot Radiology acquisition (Note 34)
Shares issued as consideration as part of Ascot
Radiology acquisition (Note 34)
Shares issued under Radiologist Loan & Option
Share Scheme1 – Self-funded2
Shares issued under Radiologist Loan Share
Scheme1 – Loan Shares
Shares issued under dividend reinvestment
plan (DRP)
Shares issued under dividend reinvestment
plan (DRP)
Capital raising costs
Net income tax effect of transaction costs in equity
Balance at 30 June 2021
Consolidated
Consolidated
30 June 2021
Shares
198,628,698
30 June 2020
Shares
194,684,039
30 June 2021
$’000
219,219
30 June 2020
$’000
207,437
Date
Number
of Shares
157,065,810
538,745
590,453
15,157,587
11,419,345
9,772,724
139,375
194,684,039
1 September
85,790
1 September
2,809,625
2 September
383,804
2 September
509,180
1 October
6 April
72,675
83,585
Issue Price
2.71
-
2.71
2.71
2.71
3.15
3.40
3.40
3.91
-
4.08
4.47
Total
$’000
109,507
1,460
-
41,077
30,946
26,484
439
(3,508)
1,032
207,437
292
9,565
1,500
-
298
374
(139)
(108)
198,628,698
219,219
1. Eligible Radiologists in Australia are invited to participate in a Loan funded share scheme where participants will be granted fully paid ordinary
shares in the Company. Participants are required to make a cash contribution towards the purchase of shares (self-funded shares). Subject to a
4-year service condition, in return these employees receive a 10 year limited recourse loan from the company and are issued Loan Shares. The
number of Loan Shares employees are granted is twice the number of self-funded shares.
2. Eligible Radiologists in New Zealand resident are invited to participate in an Option share scheme where participants will be granted options over
fully paid ordinary shares in the Company. Participants are required to make a cash contribution towards the purchase of shares (self-funded
shares). Subject to a 4-year service condition, in return these employees receive Options with a 10 year expiry and a strike price equivalent to the
purchase price of the self-funded shares. The number of Options granted is twice the number of Self-funded shares purchased. Refer to Note 24
for details of the options issued.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company
does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and on a poll one vote
for each fully paid ordinary share held.
Integral Diagnostics Annual Report 2021 83
Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the
cost of capital.
Capital is regarded as total equity, as recognised in the Consolidated Statement of Financial Position, plus net debt.
Net debt is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, adjustments may be made to the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt. The Group has also initiated a dividend
reinvestment plan (DRP) during the prior year to provide its shareholders the ability to reinvest their dividends into additional
share capital.
The Group looks to raise capital when an opportunity to invest in a business or company is seen as value adding relative to
the current company’s share price at the time of the investment. During the prior year, and in line with internal policy, the
Group raised additional share capital to fund the acquisition of Imaging Queensland whilst maintaining net debt to equity
lower than 2.5x EBITDA.
The Group is subject to certain financing arrangement covenants and meeting these is given priority in all capital risk
management decisions. Under the terms of the major borrowing facilities, the Group is required to comply with the
following financial covenants;
• Net debt to pre-AASB 16 EBITDA not greater than 3.25
• Fixed charge cover greater than 1.75
The Group has complied with the covenants throughout the reporting period. The calculation basis provided for in the terms
to the Group’s borrowing facilities allows for the exclusion of the impacts of AASB 16 Leases and the adoption of AASB 16
Leases has not impacted compliance with these financial covenants, nor have the financial impacts of COVID-19.
Accounting policy for contributed capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Note 24. Equity – reserves
Share-based payments reserve
Capital reorganisation reserve
Transactions with non-controlling interest
Foreign currency translation reserve
Share-based payments reserve
Consolidated
30 June 2021
$’000
4,100
(3,849)
(8,013)
(1,121)
(8,883)
30 June 2020
$’000
2,019
(3,849)
(8,013)
(957)
(10,800)
The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their
remuneration, and as part of their compensation for services.
Capital reorganisation reserve
The reserve is used to account for historical capital reorganisation of Lake Imaging Pty Ltd whereby the assets and liabilities
of the acquired party are recorded at their previous book values and no goodwill is recognised. Any difference between the
cost of the transaction and the carrying amount of the assets and liabilities are recorded directly in this reserve.
84
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 24. Equity – reserves continued
Transactions with non-controlling interest
Transactions with non-controlling interest reserve is used to record the differences arising as a result of transactions with
non-controlling interests that do not result in a loss of control.
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation
reserve, as described in Note 2. The reserve is recognised in profit and loss when the net investment is disposed of.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2019
Recognition of share-based payments
Movement in translation of foreign operations
Balance at 30 June 2020
Recognition of share-based payments
Movement in translation of foreign operations
Balance at 30 June 2021
Share-
based
payment
reserve
$’000
679
1,341
-
2,020
2,080
-
4,100
Capital re-
organisation
reserve
$’000
(3,849)
-
-
(3,849)
-
-
(3,849)
Transaction
with non-
controlling
interest
$’000
(8,013)
-
-
(8,013)
-
-
(8,013)
Foreign
currency
translation
reserve
$’000
132
-
(1,090)
(958)
(163)
(1,121)
Total
$’000
(11,050)
1,341
(1,090)
(10,800)
2,080
(163)
(8,883)
The expense recognised for share based payments during the year was based on valuations using the Black Scholes model.
Share-based payment expense – Long Term Incentive (LTI) Scheme
Share-based payment expense – Radiologist Loan Funded Share Plan (LFSP)
Total expense arising from equity-settled share-based payment transactions
There were no cancellations or modifications to the awards in 2021 or 2020.
Long-term incentive (LTI) scheme
30 June 2021
$’000
1,265
815
2,080
30 June 2020
$’000
835
506
1,341
The following table illustrates the number of, and movements in performance rights issued under long term incentive scheme
(LTI) to executives and members of the senior management team during the year. The exercise price of these rights is $Nil.
Under the plan, performance rights only vest with an equity settlement if an EPS growth hurdle and a 4-year service condition
are met. Participation in the plan is at the board’s discretion and no individual has a contractual right to participate in the plan
or to receive any guaranteed benefits.
Outstanding at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 June
Exercisable at 30 June
2021
Number
1,538,873
396,065
-
-
-
1,934,938
-
2020
Number
974,088
564,785
-
-
-
1,538,873
-
Integral Diagnostics Annual Report 2021 85
The following table lists the inputs to the valuation model used for the LTI plan. In FY2021 the LTI plan was granted to
members of the Senior Management Team and the Senior Leadership Team on 17 August 2020 and CEO on 30 October 2020.
The varying dates resulted in different valuation metrics applicable to each LTI grant which are set out respectively below.
Weighted average fair values
at the measurement date ($)
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of share (years)
Weighted average share price ($)
Model used
2021
LTI (1) Plan
2020
LTI (1) Plan
2020
LTI (2) Plan
2019
LTI grants
3.35/3.75
3.0
N/A
0.27/0.13
4
3.91
Black Scholes
2.75/3.01
3.5
N/A
0.72/0.77
4
2.71
Black Scholes
3.08/3.53
3.5
N/A
0.71/0.72
4
2.71
Black Scholes
2.38
4.6
N/A
2.18
4
2.79
Black Scholes
Radiologist Loan Funded Share & Option Plan (LFSP)
The following tables the number of, and movements in shares and options issued under the Radiologist Loan Funded
Share Plan (LFSP). For the year ended 30 June 2021, shares and options were issued to participating radiologists on
2 September 2020.
The value of the shares issued under the plan was $3.91 and a loan equivalent to the issued shares is due and payable at the
Radiologists option. This option can be exercised between 4-10 years from the issue date, once the loan is fully paid the loan
shares are released from Escrow and will no longer be subject to Escrow restrictions.
Options were issued in lieu of loan shares to the Group’s New Zealand resident radiologists. These options were issued with
a strike price of $3.91 and an expiry date of 2 September 2030.
Outstanding at 1 July 2019
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 June 2020
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 June 2021
Exercisable at 30 June
2021
Options
-
505,202
-
-
-
505,202
258,428
-
-
-
763,630
-
2021
WAEP1
-
2.71
-
-
-
2.71
3.91
-
-
-
3.12
-
2021
Shares
1,110,858
584,398
-
-
-
1,695,256
509,180
-
-
-
2,204,436
-
2021
WAEP1
2.70
2.71
-
-
-
2.70
3.91
-
-
-
2.98
-
1. Weighted average exercise price (WAEP).
The following table lists the inputs to the models used for the LFSP.
Weighted average fair values
at the measurement date ($)
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of share (years)
Weighted average share price ($)
Model used
2021
LFSP Options
2021
LFSP Shares
2020
LFSP Options
2020
LFSP Shares
1.59
N/A
40
0.43
4.5
3.91
Black Scholes
1.66
N/A
40
0.43
5
3.91
Black Scholes
1.09
N/A
35
0.71
4.5
2.71
Black Scholes
1.13
N/A
35
0.71
4
2.71
Black Scholes
86
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 25. Equity – retained profits
Retained profits at the beginning of the financial year
Adjustment on first time adoption of AASB 16, net of tax effects (Note 13)
Profit after income tax expense for the year
Dividend paid (Note 26)
Retained profits at the end of the financial year
Note 26. Equity – dividends
Dividends
Full franked Dividends paid during the financial year were as follows:
Dividend paid 5 cents per share on 2 October 2019
Dividend paid 5.5 cents per share on 7 April 2020
Dividend paid 4 cents per share on 1 October 2020
Dividend paid 5.5 cents per share on 6 April 2021
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
Consolidated
30 June 2021
$’000
31,693
-
31,268
(18,558)
44,403
30 June 2020
$’000
28,782
(1,654)
23,033
(18,468)
31,693
Consolidated
30 June 2021
$’000
-
-
7,734
10,824
18,558
30 June 2020
$’000
7,843
10,625
-
-
18,468
Consolidated
30 June 2021
$’000
25,934
30 June 2020
$’000
19,781
The amount recorded above as the franking credit amount is based on the amount of Australian income tax paid in respect
of the liability for income tax at the balance date.
Accounting policy for dividends
Dividends are recognised when declared during the financial year and payment is no longer at the discretion of the Company.
Note 27. Financial instruments
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including interest rate and foreign exchange risk),
credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different
methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of
interest rate and foreign currency risks and ageing analysis for credit risk.
Risk management is carried out by management under policies approved by the Board of Directors (‘the Board’). These
policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk
limits. Finance reports to the Board on a monthly basis.
Integral Diagnostics Annual Report 2021 87
Market risk
Interest rate risk
The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to
interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.
As at the reporting date, the Group had the following interest-bearing financial assets and liabilities:
Consolidated
Cash at bank and on deposit
Club debt facility
Asset finance facility
Net exposure to cash flow interest rate risk
2021
2020
Weighted
average
interest rate
%
0.13
1.88
3.43
Weighted
average
interest rate
%
0.61
2.43
3.70
Balance
$’000
62,203
(187,969)
(10,759)
(136,525)
Balance
$’000
57,965
157,004
(24,737)
123,776
An analysis by remaining contractual maturities is shown in ‘liquidity and interest rate risk management’ below.
If interest rates were to increase/decrease by 100 (2020: 100) basis points from rates used to determine fair values as at the
reporting date, assuming all other variables that might impact on fair value remain constant, then the impact on profit for
the year and equity is as follows:
Basis points increase effect on
Basis
points
change
100
100
Profit
before tax
$’000
2,031
1,608
Effect on
equity post tax
$’000
1,422
1,126
2021
2020
Foreign currency risk
Basis points decrease effect on
Basis
points
change
(100)
(100)
Profit
before tax
$’000
(2,031)
(1,608)
Effect on
equity post tax
$’000
(1,422)
(1,126)
Foreign currency risk is the risk that the fair value or future cash flows on an exposure will fluctuate because of changes in
foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s
operating activities (when revenue or expense is denominated in a foreign currency) and the Group’s net investments in
foreign subsidiaries.
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures to the
New Zealand dollar (NZD). The Group manages its exposure to fluctuations on the translation into Australian dollars of
its foreign operations by holding net borrowings in foreign currencies, creating a natural hedging relationship. The Group
assessed the remaining risk exposure and given the exchange rate is not expected to fluctuate significantly, has not entered
into other hedging relationships. The Group will monitor this risk on an on-going basis.
88
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 27. Financial instruments continued
Foreign Currency Sensitivity
2021
2020
Change in
NZD Rate
Effect on
profit post tax
$’000
Effect on
equity
$’000
+2.5c
-2.5c
+2.5c
-2.5c
(166)
166
(125)
125
(1,770)
1,770
(1,153)
1,153
The following table demonstrates the sensitivity to a reasonably possible change in NZD exchange rates, with all other
variables held constant. The impact on the Group’s profit before tax is due to changes in translation rates. The impact
on the Group’s equity is due to changes in the fair value of the net investment.
Credit risk
Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to the
Group. Credit risk for cash deposits is managed by holding all cash deposits with major Australian banks. Credit risk for trade
receivables is managed by completing credit checks for new customers. Outstanding receivables are regularly monitored for
payments in accordance with credit terms. The maximum exposure to credit risk at the reporting date to recognised financial
assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the Consolidated Statement
of Financial Position and notes to the financial statements. The Group does not hold any collateral.
The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial
instruments entered into by the Group.
The credit risk for derivative financial instruments arises from the potential failure of the counter-party to meet its
obligations. The credit risk exposure of forward contracts is the net fair value of these contracts.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Subject to the continuance of satisfactory credit ratings and compliance with banking covenants, the bank loan facilities
may be drawn at any time and have a maturity of 4 years, 8 months (2020: 18 months). The bank loan facilities are
interest-only repayments.
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Integral Diagnostics Annual Report 2021 89
As at 30 June 2021
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Deferred consideration
Interest-bearing – variable
Club debt facility
Asset financing facility
Property lease liabilities
Total non-derivatives
As at 30 June 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Deferred consideration
Interest-bearing – variable
Club debt facility
Asset financing facility
Property lease liabilities
Total non-derivatives
Weighted
average
interest rate
%
1 year
or less
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over 5 years
$’000
-
-
-
1.88
3.43
3.50
4,753
15,518
15,863
4,949
6,916
14,273
62,272
-
-
526
4,949
3,642
13,873
22,990
-
-
6,720
204,852
512
26,305
238,389
-
-
-
-
-
84,654
84,654
Weighted
average
interest rate
%
1 year
or less
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over 5 years
$’000
-
-
-
2.43
3.70
3.50
4,544
1,400
6,800
-
14,055
12,437
39,236
-
-
6,633
157,635
7,009
12,131
183,408
-
-
-
-
4,475
35,385
39,860
-
-
-
-
-
55,765
55,765
Total
contracted
cashflows
$’000
4,753
15,518
23,109
214,750
11,070
139,105
408,305
Total
contracted
cashflows
$’000
4,544
1,400
13,433
157,635
25,539
115,718
318,269
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
Note 28. Key management personnel disclosures
Compensation
The aggregate compensation paid to Directors and other members of the Key Management Personnel of the Group
is set out below:
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Share-based payments
Consolidated
30 June 2021
$
3,719,334
148,479
61,713
933,650
4,863,176
30 June 2020
$
3,347,813
127,348
59,323
589,423
4,123,907
90
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 29. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers, the auditor
of the Company:
Audit services
PricewaterhouseCoopers Australia
Audit and review of the financial statements
– Consolidated group
– Controlled entities
Other services
PricewaterhouseCoopers Australia
Due diligence and tax advisory services
Tax compliance services
Network firms of PricewaterhouseCoopers
Tax compliance and company secretarial services
Due diligence and tax advisory services
Total other services
Total remuneration
Consolidated
30 June 2021
$
30 June 2020
$
337,000
30,000
367,000
133,266
150,148
283,414
78,828
2,525
81,353
364,767
731,767
324,500
-
324,500
54,500
73,240
127,740
67,682
172,568
240,250
367,990
692,490
Non-audit fees during the year reflect the level of activity the Group has undertaken in completing the due diligence over
prospective acquisition targets and on integrating the recently acquired Imaging Queensland and Ascot Radiology businesses.
The Company has considered and approved the nature of the non-audit fees and, in line with the Company’s Non-Audit
Services Policy, are satisfied with the independence of PricewaterhouseCoopers as auditor and are comfortable that the
$364,767 of non-audit fees are appropriate and justified given the level of integration activity undertaken in FY21 including
cross border transactions.
Note 30. Contingent liabilities
The Group has given bank guarantees as at 30 June 2021 of $2.5 million (2020: $2.3 million) to various landlords.
Note 31. Commitments
As at 30 June 2021, there were capital commitments for plant and equipment and leasehold improvements of $8.9 million
(2020: nil).
Note 32. Related party transactions
Parent entity
Integral Diagnostics Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in Note 35.
Joint ventures
Interests in joint ventures are set out in Note 16.
Key management personnel
Disclosures relating to Key Management Personnel are set out in Note 28 and the Remuneration Report on pages 22 to 37.
Integral Diagnostics Annual Report 2021 91
Note 32. Related party transactions continued
All transactions with KMP are made on commercial arm’s length terms and conditions, and in the ordinary course of
business. The Board has an established Related Party Transaction Policy, that is overseen by the Audit, Risk and Compliance
Committee (ARCC), to ensure that related party transactions are managed and disclosed in accordance with the Corporations
Act, ASX Listing Rule 10.1, accounting requirements and in accordance with good governance practices, to ensure that a
financial benefit is not provided to related parties without approval by the Board, and where required, shareholders. It is the
Board’s policy that independent reviews will be undertaken on any renewals and these reviews will be overseen by the ARCC.
The following transactions occurred with related parties:
30 June 2021
Payment for rental of buildings to Eleven Eleven How Pty Ltd of which
Dr Chien Ping Ho is related
Payment for rental of buildings to Kiwi Blue Pty Ltd of which Dr Chien
Ping Ho is related
30 June 2020
Payment for rental of buildings to Eleven Eleven How Pty Ltd of which
Dr Chien Ping Ho is related
Payment for rental of buildings to Kiwi Blue Pty Ltd of which Dr Chien
Ping Ho is related
Consolidated
$
%
interest
KMP interest
$
250,0772
148,3882
357,5351
237,0661
6.25%
9.09%
6.25%
9.09%
15,630
13,488
22,346
21,549
1. Amounts presented are net of COVID-19 rental concessions granted for April 2020 of $4,563 and $3,022 by Eleven Eleven How Pty Ltd and Kiwi Blue
Pty Ltd respectively.
2. Amounts represent the rental payments for the period of the year in which Dr. Ho was a member of KMP (1 July 2020 through 1 April 2021 inclusive).
The above related party transactions are historic in nature and relate to leases assumed from previous vendors when the
business was privately held. Dr Chien Ho has a 6% interest in Eleven Eleven How Pty Ltd and a 9% interest in Kiwi Blue Pty
Ltd. The leases cover four properties located in Ballarat, Ocean Grove and Melton.
Loans to related party
Loan to key management personnel
Balance at the beginning of the year
Loans balance held on appointment as KMP
30 June 2021
$
-
470,747
470,747
30 June 2020
$
-
-
-
Dr. Bokani is a full-time radiologist employed by the Group. The loan above arose on Dr Bokani’s participation in the
radiologist loan share scheme in 2019, prior to his appointment as a director. The non-recourse loan was made on an
interest-free basis, is subject to a 4-year continuous service condition, has a 10-year term, and is repayable in full on 1 March
2029 and is thus accounted for as a share option. These terms are consistent with those offered to other radiologists under
rules governing the loan share scheme.
92
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 33. Parent entity information
Summary financial information
The individual financial statements for the parent entity, Integral Diagnostics Limited, show the following aggregate amounts.
Statement of Profit or Loss and Other Comprehensive Income
Profit after income tax
Total comprehensive income
Statement of Financial Position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed capital
Share-based payments reserve
Retained profits
Total equity
Parent
30 June 2021
$
25,328
25,328
30 June 2020
$
20,938
20,938
Parent
30 June 2021
$
12,558
365,662
9,636
116,071
30 June 2020
$
15,554
344,285
6,979
115,326
219,219
4,100
26,272
249,591
207,438
2,019
19,502
228,959
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity is party to the deed of cross guarantee, as disclosed in Note 36.
Contingent liabilities
Except as disclosed in Note 30, there are no other contingent liabilities of the parent entity as at 30 June 2021 and
30 June 2020.
Capital commitments – property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 2, except for
the following:
• investments in subsidiaries are accounted for at cost, less an impairment, in the parent entity;
• investments in associates are accounted for at cost, less any impairment, in the parent entity; and
• dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 34. Business combinations
(a) Acquisition completed in the current period
Effective 1 September 2020, the Group acquired the shares of the Ascot Radiology which:
• Comprises nine diagnostic imaging clinics, including key sites at Ascot Private Hospital;
• Contracts 22 of Auckland’s leading diagnostic imaging specialists in oncology, gynaecology obstetrics, paediatrics,
breast, chest and musculoskeletal imaging; and
• Has high growth opportunities and strong margins expected to generate cost and revenue synergy benefits.
Integral Diagnostics Annual Report 2021 93
The key terms of the acquisition included:
• Upfront purchase consideration of NZ$50.7m on a cash and debt free basis, comprising NZ$40.3m in cash and NZ$10.4m
in escrowed ordinary IDX shares;
• A calendar year 2021 earn-out of up to NZ$2.8m subject to the earnings performance of the Group’s combined New Zealand
businesses; and
• 100% of the equity consideration will be held in escrow for up to five years.
The purchase price accounting has now been finalised, with the final values identified in relation to the being:
Plant and equipment
Right of use assets
Customer contracts
Deferred tax
Lease liabilities
Employee benefits
Provisions
Cash assets
Investments accounted for using the equity method
Working capital assets
Working capital liabilities
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Integral Diagnostics Limited shares issued to vendor
Contingent consideration
Net cash acquired with subsidiary
Cash paid
Net cash flow on acquisition
Acquisition-related costs
Provisional
acquisition
fair value
$’000
9,017
12,082
5,334
(1,257)
(12,082)
(431)
(652)
1,325
55
938
(919)
13,410
35,466
48,876
36,755
9,565
2,556
48,876
1,325
(36,755)
(35,430)
Adjustments
to fair value
$’000
(429)
445
710
(199)
(445)
-
-
(29)
24
-
-
78
(78)
-
-
-
-
-
(29)
-
(29)
Final
acquisition
fair value
$’000
8,588
12,527
6,044
(1,456)
(12,527)
(431)
(652)
1,296
79
938
(919)
13,488
35,388
48,876
36,755
9,565
2,556
48,876
1,296
(36,755)
(35,459)
Acquisition-related costs of $169,115 have been expensed in transaction and integration costs for the period.
Contingent consideration
The contingent consideration arrangement requires the Group to pay the vendors of Ascot Radiology Limited a percentage
of the calendar 2021 EBITDA of the Group’s aggregate New Zealand business, up to a maximum undiscounted amount of
$2,555,560. There is no minimum amount payable.
The fair value of the contingent consideration arrangement was estimated at $2,555,560 calculating the present value
of the future expected cash flows.
Acquired receivables
The fair value of acquired trade receivables is $750,121. The gross contractual amount for trade receivables due is $1,063,177,
with a loss allowance of $313,056 recognised on acquisition.
94
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 34. Business combinations continued
Revenue and profit contribution
Ascot Radiology has contributed revenues of $18,323,973 to the Group for the period from 1 September 2020 to 30 June 2021.
The net profit contribution cannot be reliably measured due to this requiring the use of estimates and judgements around
extracted synergies and allocation of shared costs for which objective information is limited. Similarly, it is impracticable to
provide pro-forma revenue and net profit as if the acquisition of Ascot Radiology had occurred on 1 July 2020 as this would
require assessment of the impact of COVID-19 lockdowns in Auckland in the proforma period which would be judgemental
and hypothetical.
(b) Previous acquisition finalised in the period
On 1 November 2019 the Group acquired the Imaging Queensland Group (IQ), which:
• Is a scale provider of diagnostic imaging services primarily operating in the major centres along Sunshine Coast, Moreton
Bay, Rockhampton and Gladstone;
• Has 19 strategically located radiology sites;
• Has an experienced team of 16 long-tenured radiologists and approximately 270 employees; and
• Has 3 full and 2 partial MRI licenses.
The key terms of the acquisition included:
• Upfront purchase consideration of $94.4m on a cash and debt free basis, comprising $67.9m in cash and $26.4m in
escrowed ordinary IDX shares;
• 80% of the equity will be held in escrow for up to five years; and
• A five-year staged earn-out for vendor radiologists based on earnings outperformance.
In completing the provisional purchase price allocation in the prior financial period, preliminary judgements relating
to contingent consideration were made, as well as the assets and liabilities acquired. The Group has since finalised
its assessment over the factors in existence at acquisition date that were relevant to the determination of contingent
consideration, as well as the assets and liabilities acquired, which are reflected below:
Plant and equipment
Right of use assets
Brand names
Customer contracts
Deferred tax
Borrowings
Lease liabilities
Employee benefits
Provisions
Cash assets
Working capital assets
Working capital liabilities
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Integral Diagnostics Limited shares issued to vendor
Contingent consideration
Provisional
acquisition
fair value
$’000
20,731
21,857
7,900
2,900
(1,993)
(11,029)
(21,857)
(4,069)
(1,590)
1,627
3,786
(2,585)
15,678
91,325
107,003
68,518
26,485
12,000
107,003
Adjustments
to fair value
$’000
-
-
-
-
-
-
-
-
-
-
29
(71)
(42)
6,417
6,375
Final
acquisition
fair value
$’000
20,731
21,857
7,900
2,900
(1,993)
(11,029)
(21,857)
(4,069)
(1,590)
1,627
3,815
(2,656)
15,636
97,742
113,378
-
-
6,375
6,375
68,518
26,485
18,375
113,378
Integral Diagnostics Annual Report 2021 95
(b) Previous acquisition finalised in the period continued
Net cash acquired with subsidiary
Cash paid
Net cash flow on acquisition
Provisional
acquisition
fair value
$’000
1,627
(68,518)
(66,891)
Adjustments
to fair value
$’000
-
-
-
Final
acquisition
fair value
$’000
1,627
(68,518)
(66,891)
In completing the provisional purchase price allocation in the prior financial period, preliminary judgements relating
to contingent consideration were made, as well as the assets and liabilities acquired. The Group has since finalised
its assessment over the factors in existence at acquisition date that were relevant to the determination of contingent
consideration, as well as the assets and liabilities acquired, which are reflected in the above adjustments.
The balances previously reported at 30 June 2020 in the Statement of Financial Position and relevant notes within the financial
statements have been restated to reflect the final adjustments to fair value detailed above.
Accounting policy for business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree. For each business combination, the non-
controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable
net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or
accounting policies and other pertinent conditions in existence at the acquisition date.
Deferred consideration to be transferred by the acquirer is recognised at the acquisition date fair value. Subsequent changes
in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Refer to Note 20
for further details on the Group’s accounting policy for deferred consideration.
The difference between the acquisition date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill.
Business combinations are initially accounted for on a provisional basis. The provisional opening balance amounts are
only adjusted retrospectively during the measurement period, and based on new information obtained about the facts and
circumstances that existed at the acquisition date. The measurement period ends on either the earlier of (i) twelve months
from the date of the acquisition or (ii) when the acquirer received all the information possible to determine fair value.
Business combinations under common control use the principals of corporate reorganisation. The difference between
the acquisition-date historical book value of assets acquired, liabilities assumed and any non-controlling interest in the
acquired and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree
is recognised as a capital reorganisation in reserves, and not as goodwill.
96
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 35. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in Note 2:
Ownership interest
Name of entity
Lake Imaging Pty Ltd
Radploy Pty Ltd
Radploy 2 Pty Ltd
Radploy 3 Pty Ltd
Radploy 4 Pty Ltd
Global Diagnostics (Australia) Pty Ltd
SCR Corporate Pty Ltd
RAD Corporate Pty Ltd
Integral Diagnostics No. 1 Pty Ltd
Imaging Queensland Pty Ltd
Queensland Nuclear Medicine Pty Ltd
Advanced Women’s Imaging Pty Ltd
Imaging Queensland IP Pty Ltd
Radiology 24/7 Pty Ltd
Sunshine Coast Radiology Pty Ltd
SC Radiology Pty Ltd
Central Queensland Radiology Pty Ltd
CQ Radiology Pty Ltd
IQ Radiology Pty Ltd
IQ Radiology Services Pty Ltd
Integrated Pain Management Pty Ltd
Bodyscreen Pty Ltd
Specialist Radiology Group Limited
Trinity MRI Limited
Cavendish Radiology Limited
Integral Diagnostics New Zealand Limited
Ascot Radiology Limited
Insight Radiology Limited
Principal place of business/
country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
2021
%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
2020
%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
-
Integral Diagnostics Annual Report 2021 97
Note 36. Deed of cross guarantee
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:
• Integral Diagnostics Limited (formerly known as Lake Imaging Holdings Pty Ltd)
• Lake Imaging Pty Ltd
• Radploy Pty Ltd
• Radploy 2 Pty ltd
• Radploy 3 Pty Ltd
• Radploy 4 Pty Ltd
• Global Diagnostics (Australia) Pty Ltd
• SCR Corporate Pty Ltd
• RAD Corporate Pty Ltd
• Integral Diagnostics No. 1 Pty Ltd
• Imaging Queensland Pty Ltd
• Queensland Nuclear Medicine Pty Ltd
• Advanced Women’s Imaging Pty Ltd
• Imaging Queensland IP Pty Ltd
• Radiology 24/7 Pty Ltd
• Sunshine Coast Radiology Pty Ltd
• SC Radiology Pty Ltd
• Central Queensland Radiology Pty Ltd
• CQ Radiology Pty Ltd
• IQ Radiology Pty Ltd
• IQ Radiology Services Pty Ltd
• Integrated Pain Management Pty Ltd
• Bodyscreen Pty Ltd
By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare financial statements
and a Directors’ Report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments
Commission (ASIC).
The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no other parties to the
deed of cross guarantee that are controlled by Integral Diagnostics Limited, they also represent the ‘extended closed group’.
The consolidated statement of profit or loss, consolidated statement of comprehensive income, summary of movements in
consolidated retained earnings and consolidated statement of financial position of the entities that are members of the Closed
Group are as follows:
98
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 36. Deed of cross guarantee continued
Consolidated Statement of Profit or loss and Comprehensive income
Revenue
Revenue
Interest, management fees and dividends eliminated on consolidation
Interest and other income
Total revenue and other income
Expenses
Consumables
Employee benefits expense
Depreciation expense
Amortisation expense
Transaction and integration expenses
Share based payment expense
Equipment related expenses
Occupancy expenses
Other expenses
Finance costs
Total expenses
Profit before income tax expense
Income tax expense
Profit for the year from continuing operations
Profit is attributable to:
Owners of Integral Diagnostics Limited
Comprehensive income
Items that may be reclassified to profit & loss:
Net (loss)/gain on cash flow hedges
Total comprehensive income
Note
30 June 2021
$’000
30 June 2020
$’000
304,482
2,309
80
306,871
(14,892)
(178,519)
(16,771)
(11,166)
(2,219)
(2,080)
(10,587)
(6,262)
(20,904)
(6,539)
(269,939)
250,792
4,795
260
255,847
(11,811)
(144,753)
(13,805)
(9,501)
(5,638)
(835)
(7,687)
(5,087)
(17,989)
(6,740)
(223,846)
36,932
32,001
(11,845)
(9,939)
25,087
22,062
25,087
22,062
-
25,087
19
22,081
Integral Diagnostics Annual Report 2021 99
Consolidated Statement of Financial Position
Note
30 June 2021
$’000
30 June 2020
$’000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Inventory
Total current assets
Non-current assets
Investment
Property, plant and equipment
Right-of-use assets
Intangibles
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Income tax payable
Provisions
Contingent consideration
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Contingent consideration
Deferred tax liability
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed capital
Reserves
Retained profits
Total equity
51,174
12,357
13,814
849
78,194
39,681
95,782
82,523
217,159
15,276
450,421
52,007
9,332
6,879
909
69,127
39,681
94,814
82,609
217,772
12,830
447,706
528,615
516,833
17,795
6,543
9,206
3,707
19,548
13,020
69,819
107,504
82,142
5,514
10,113
9,142
214,415
17,206
13,177
9,219
4,229
16,259
13,175
73,265
116,041
80,751
6,633
8,667
7,485
219,577
284,234
292,842
244,381
223,991
219,219
(7,764)
32,926
244,381
207,438
(9,843)
26,396
223,991
100
Integral Diagnostics Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Note 37. Reconciliation of profit after income tax to net cash from operating activities
Consolidated
30 June 2021
$’000
31,268
30 June 2020
$’000
23,033
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Loan establishment costs amortisation/write-off
Share-based payments
Loss on the sale of assets
Remeasurement of make good provisions
Recognition of contingent consideration
Bad debts
FX gain realisation
Share of profits of joint ventures
Capitalised refinance costs
Change in operating assets and liabilities, net of the effects of business combinations:
Increase in trade and other receivables
Increase in deferred taxes
Increase in other operating assets and inventory
Increase/(decrease) in trade and other payables
Increase/(decrease) in contingent consideration
Increase/(decrease) in provision for income tax
Increase/(decrease) in other provisions
Net inflow cash from operating activities
Reconciliation of liabilities arising from financing activities
34,914
429
2,080
419
(41)
735
87
(179)
(18)
(1,835)
(2,918)
(1,873)
2,300
736
(735)
(799)
5,002
69,572
Consolidated
Balance as at 1 July 2019
Recognised on transition to AASB 16
Business combination
New leases net of terminations
Impact of liability maturity for period
Cash flows
FX
Balance as at 30/06/2020
Business combination
New leases net of terminations
Impact of liability maturity for period
Cash flows
FX
Balance as at 30 June 2021
Property
leases due
within 1 year
$’000
-
7,335
2,458
1,510
6,538
(8,209)
(24)
9,608
739
-
9,850
(9,995)
225
10,427
Property
leases due
after 1 year
$’000
-
56,143
19,399
17,495
(6,538)
-
-
86,499
11,788
10,762
(9,850)
-
-
99,199
Borrowings
due within
1 year
$’000
8,929
-
3,255
-
15,061
(14,068)
-
13,177
-
-
9,724
(16,786)
428
6,543
Borrowings
due after
1 year
$’000
130,120
-
7,774
-
(15,061)
45,731
-
168,564
-
-
(9,724)
33,345
-
192,185
25,680
403
1,341
266
230
724
51
(23)
-
-
(1,711)
(2,246)
(4,246)
4,380
-
3,244
3,124
54,250
Total
$’000
139,049
63,478
32,886
19,005
-
23,454
(24)
277,848
12,527
10,762
-
6,564
653
308,354
Net debt reconciliation
Cash and cash equivalents
Borrowings – repayable within one year
Borrowings – repayable after one year1
Net Debt
Cash and liquid investments
Gross debt – variable interest rates
Net Debt
Integral Diagnostics Annual Report 2021 101
30 June 2021
$’000
62,203
(6,543)
(194,221)
(138,561)
30 June 2020
$’000
57,965
(13,177)
(169,194)
(124,406)
62,203
(200,764)
(138,561)
57,965
(182,371)
(124,406)
1. Non-current borrowings per Note 20 includes $2.04m (2020: $0.63m) of capitalised funding/establishment costs.
Note 38. Earnings per share
Profit after income tax
Non-controlling interest
Profit after income tax attributable to the owners of Integral Diagnostics Limited
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Weighted average number of performance rights over ordinary shares
Weighted average number of options over ordinary shares
Weighted average number of ordinary shares used in calculating diluted earnings per share
Basic earnings per share attributable to the owners of Integral Diagnostics Limited
Diluted earnings per share attributable to the owners of Integral Diagnostics Limited
30 June 2021
$’000
31,268
-
31,268
30 June 2020
$’000
23,033
-
23,033
Number
197,919,010
Number
185,277,537
1,799,299
718,317
200,436,626
1,352,783
416,861
187,047,181
Cents
15.80
15.60
Cents
12.43
12.31
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Integral Diagnostics Limited,
excluding any costs of servicing equity other than ordinary shares, by weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Note 39. Events after the reporting period
Subsequent to year end a dividend of 7.0 cents per share was declared and will be paid on 6 October 2021.
On 30 July 2021 Anne Lockwood gave the Company notice of her resignation. Under the terms of her contract of employment
that notice will take effect on 30 January 2022. Ms Lockwood’s entitlements on termination of her employment will be lawfully
determined in accordance with her contract of employment, the LTI Plan and related correspondence. The financial effect of
Ms Lockwood’s notice of resignation cannot be estimated at this time.
Following approval of their participation, on the 5 August 2021, $1.5 million of Radiologist contributions were received in
connection with the Radiologist Loan Funded Share Plan and the New Zealand Matching Options plan. These contributions
are to be matched by an IDX contribution of $3.0 million, resulting in $4.5 million of share capital/options to be issued on 6
September 2021. The number of shares/options to be issued will be determined by the 30-day VWAP up to 1 September 2021.
COVID-19 and associated government responses can be expected to continue to have an impact on the Group, which cannot
be accurately projected at this time. To date 1H22 has been affected as a result of the impacts of COVID-19 and government-
lockdowns and border closures across all geographic areas in which we operate. Up until the 25th August, year to date
trading is down approximately 5% from expectations, this includes the impacts of the Level 4 lockdowns in New Zealand from
the 18th August. The New Zealand guidelines from the Ministry of Health included that scanning is only to be undertaken
“to preserve life or limb only”. This has resulted in reductions in trading in New Zealand of up to 75% from expectations,
which is consistent with past experience during New Zealand Level 4 lockdowns.
No other matter or circumstances has arisen since 30 June 2021 that has significantly affected, or may significantly affect
the Group’s operations, the results of those operations, or the Group’s state of affairs until future financial years.
102
Integral Diagnostics Annual Report 2021
DIRECTORS’ DECLARATION
In the Directors’ opinion:
• the attached financial statements and notes comply with the Corporations Act 2001, the accounting standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
• the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in Note 2 to the financial statements;
• the attached financial statements and notes give a true and fair view of the Group’s financial position as at 30 June 2021
and of its performance for the financial year ended on that date;
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
• at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group
will be able to meet any obligations or liabilities to which they are, or may become, subject to virtue of the deed of cross
guarantee described in Note 36 to the financial statements.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
Helen Kurincic
Chair
27 August 2021
Melbourne
Ian Kadish
Managing Director and Chief Executive Officer
INDEPENDENT AUDIT REPORT
Integral Diagnostics Annual Report 2021 103
Independent auditor’s report
To the members of Integral Diagnostics Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Integral Diagnostics Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
•
the consolidated statement of financial position as at 30 June 2021
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of profit or loss for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
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 & 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.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
104
Integral Diagnostics Annual Report 2021
INDEPENDENT AUDIT REPORT CONTINUED
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
•
For the purpose of our audit we used overall Group materiality of $2.26 million, which represents
approximately 5% of the Group’s profit before tax.
• We applied this threshold, together with qualitative considerations, to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on
the financial report as a whole.
• We chose Group profit before tax because, in our view, it is the benchmark against which the performance
of the Group is most commonly measured.
• We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
• Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
•
The Group operates in Australia and New Zealand. The locations in Australia include Queensland, Victoria
and Western Australia. Within New Zealand, the Group operates in Auckland.
• All audit procedures were performed by the Group team.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
Integral Diagnostics Annual Report 2021 105
Key audit matter
How our audit addressed the key audit
matter
Valuation of goodwill and brand names
(Refer to note 14) $340.5m
At 30 June 2021, the Group has a goodwill balance of
$315.8m and brand names of $24.7m, which
represents approximately 52% of the total assets of
the Group.
At least annually, an impairment test is performed by
the Group over the goodwill and brand names in each
of the Group’s cash generating units (“CGU’s”) based
on value in use discounted cash flow models (the
models).
The Group’s goodwill and brand names are recognised
in two CGUs – Australia and New Zealand. A CGU is
the smallest identifiable group of assets that generate
cash inflows that are largely independent of the cash
inflows from other assets or group of assets.
Significant judgement is required by the Group to
estimate the key assumptions in the models to
determine the recoverable amount of goodwill and
brands, and the amount of any resulting impairment
(if applicable). The key assumptions applied by the
Group include:
• Discount rates which reflect economic and
financial market conditions
•
•
Five-year cash flow projections (Cash flow
forecasts)
Earnings growth rates applied beyond the
initial five-year period (Long term growth
rates)
We considered the carrying value of goodwill and
brand names to be a Key Audit Matter they are
significant to the consolidated statement of financial
position and there is significant judgement involved in
estimating discounted future cash flows.
We assessed whether the division of the Group into
CGUs was appropriate under the requirements of
Australian Accounting Standards and consistent with
our knowledge of the Group’s operations and internal
Group reporting. We focused in particular on the
treatment of the Ascot business acquired during the
year and the appropriateness of its inclusion into the
existing New Zealand CGU.
To evaluate the Group’s discounted cash flow
forecasts and the process by which they were
developed, we performed the following procedures,
amongst others:
•
Compared revenue growth assumptions to
third party industry projections.
• With assistance from PwC valuations
experts, we assessed the discount rates and
terminal growth rates applied in the Group’s
value-in-use calculations for each CGU. This
assessment was made with reference to
externally derived data, including market
expectations of investment returns, projected
economic growth and interest rates.
•
•
•
Considered the historical accuracy of the
Group’s cash flow forecasts by comparing the
forecasts used in the prior year value-in-use
calculations to the actual performance of the
Group in the year to 30 June 2021.
Compared the 12-month cash flow forecasts
used in the value-in-use calculations with the
Board approved budget.
Considered whether the discount rates and
terminal growth rates used in the value-in-
use calculations were subject to oversight
from the directors.
• Re-performed a selection of calculations in
the value-in-use models to assess the
mathematical accuracy of the models.
106
Integral Diagnostics Annual Report 2021
INDEPENDENT AUDIT REPORT CONTINUED
Key audit matter
How our audit addressed the key audit
matter
•
Assessing the sensitivity to change of key
assumptions used in the models that
individually or collectively would result in an
impairment of assets.
We evaluated the reasonableness of the
disclosures made in Note 14, including those
regarding key assumptions in light of the
requirements of Australian Accounting
Standards.
Accounting for business combinations
(Refer to note 34)
With assistance from PwC valuation experts we
performed the following procedures, amongst others:
During the year, the Group acquired Ascot Radiology
(Ascot) for consideration of $48.9m in a combination
of cash, issue of new escrowed shares and a
contingent earn out. It also finalised the business
combination accounting in respect of the acquisition
of Imaging Queensland (IQ). The details of these
acquisitions are disclosed in Note 34 of the financial
report.
The Group has recognised the fair value of assets and
liabilities for the Ascot business, which included
goodwill of $35.4m.
We considered this a Key Audit Matter given the
financial significance of the acquisitions and the
complex judgements required by the Group in
accounting for the acquisitions, including:
•
•
Identifying all assets and liabilities of the
newly acquired businesses and estimating
the fair value of each asset and liability for
initial recognition by the Group. This
requires management to make assumptions
around discount rate, asset useful life and
forecast results. The Group was assisted by
an external valuation expert in this process.
Identifying whether consideration paid
relates to the recipients’ role as a shareholder
or employee and the associated accounting
treatment of the consideration.
•
Evaluated the Group’s accounting by
considering the requirements of Australian
Accounting Standards, key transaction
agreements, our understanding of the
business acquired and its industry and
selected legal correspondence.
•
Assessed the fair values of the acquired
assets and liabilities recognised, including:
o
Identifying and assessing the fair
values of the acquired assets and
liabilities recognised including the
existence of identifiable intangible
assets.
o Assessing the competence and
capability of the Group’s external
valuation expert.
We evaluated the reasonableness of the
disclosures made in Note 34, in light of the
requirements of Australian Accounting
Standards.
In relation to the estimation of contingent earn out
consideration, our procedures included, amongst
others:
• Assessing if the calculation of the contingent
earn out consideration was in accordance
with the contractual arrangements and the
Integral Diagnostics Annual Report 2021 107
Key audit matter
How our audit addressed the key audit
matter
•
Estimating the purchase price consideration,
particularly in respect of the contingent
earnout consideration payable on the
achievement of certain performance targets.
requirements of Australian Accounting
Standards.
• Assessing the Group’s evaluation of whether
the conditions required for the contingent
earn out consideration to be paid were likely
to be met in the future based upon actual
performance since acquisition, current
Group forecasts and market forecasts.
• Assessing the Group’s forecasting accuracy
by comparing past forecasts with actual
performance and developing an
understanding of the causes of differences.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2021, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
108
Integral Diagnostics Annual Report 2021
INDEPENDENT AUDIT REPORT CONTINUED
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 the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 22 to 37 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the remuneration report of Integral Diagnostics Limited for the year ended 30 June
2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Jason Perry
Partner
Melbourne
27 August 2021
SHAREHOLDER INFORMATION
Integral Diagnostics Annual Report 2021 109
Additional information required under ASX Listing Rule 4.10 and not shown elsewhere in this Annual Report follows.
This information is current as at 2 August 2021.
a. Top 20 shareholders – ordinary shares
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd
Peter J Ansley + St Leger M Reeves + Stephen Eichsteadt + Thomas Q St Leger
Reeves
BNP Paribas Nominees Pty Ltd
New Imaging Pty Ltd
Lethean Holdings Pty Ltd
Firbar Pty Ltd
Wyndham Salter Pty Ltd
Mr Vincent Michael O'sullivan
Mittal Holdings Pty Ltd
Lockwood Ridge Pty Ltd
NW3 Pty Ltd
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Willowbay Rise Pty Ltd
JBWere (NZ) Nominees Limited <57259 A/C>
Rounding
Top 20 holders of ordinary fully paid shares (total)
Total remaining holders balance
Number of
fully paid
ordinary
shares
35,091,908
24,201,530
19,851,055
11,501,438
7,248,733
3,831,101
3,747,786
3,108,210
3,001,725
2,467,230
2,357,230
2,293,174
2,128,000
2,085,907
2,080,133
2,074,375
1,806,118
1,654,326
1,617,402
1,484,961
133,632,342
64,996,356
% of issued
capital
17.67
12.18
9.99
5.79
3.65
1.93
1.89
1.56
1.51
1.24
1.19
1.15
1.07
1.05
1.05
1.04
0.91
0.83
0.81
0.75
0.02
67.28
32.72
110
Integral Diagnostics Annual Report 2021
SHAREHOLDER INFORMATION CONTINUED
b. Register of substantial shareholdings
Shareholder
Integral Diagnostics Limited1
Viburnum Funds Pty Ltd
Number of
fully paid
ordinary
shares
22,386,708
13,192,609
% of issued
capital
11.27
6.68
1. Restriction on disposal of shares under voluntary escrow arrangements disclosed in Integral Diagnostics Limited’s Prospectus dated 9 October 2015
and announcements to ASX on 27 October 2015, 1 July 2016, 16 February 2018, 2 July 2018, 21 December 2018,1 March 2019, 2 September 2019,
8 November 2019, 28 August 2020 and 3 September 2020 (and as set out in the IPO Restriction Deed, WDR Restriction Deed, NZ1 Restriction Deed,
NZ Boyer Restriction Deed, NZ Gee Restriction Deed, GMI Restriction Deed, IQ Restriction Deeds and Ascot Restriction Deeds, Regional Incentive
Plan, and the Radiologist Loan Share Scheme) gives Integral Diagnostics a relevant interest in its own shares under section 608(1)(c) of the
Corporations Act. Integral Diagnostics has no right to acquire these shares or to control the voting rights attached to these shares.
c. Distribution of shareholders – ordinary shares
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Rounding
Total
Total holders
1,818
2,319
722
589
118
Shares
860,931
6,158,694
5,323,972
14,625,305
171,659,796
5,566
198,628,698
% Issued
capital
0.43
3.10
2.68
7.36
86.42
0.01
100.00
d. Less than marketable parcels of ordinary shares
There are 140 shareholders holding less than a marketable parcel of ordinary shares (i.e. less than $500 per parcel of shares)
based on the Company’s closing share price of $5.34 at the 2 August 2021.
Integral Diagnostics Annual Report 2021 111
e. Distribution of unquoted securities – performance rights
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over1
Total
Number of
performance
rights over
ordinary
shares
-
-
-
148,556
1,786,382
1,934,938
Number of
holders of
performance
rights
-
-
-
3
5
8
%
-
-
-
7.68
92.32
100.00
%
-
-
-
37.50
62.50
100.00
1. All Performance Rights are issued under the Company’s Equity Incentive Plan. Dr Ian Kadish holds greater than 20% of the performance rights;
982,773. Mrs Anne Lockwood also holds greater than 20% of the performance rights: 405,327.
f. Distribution of unquoted securities – options
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total2
Number
of options
-
-
-
253,400
510,230
763,630
Number
of holders
of options
-
-
-
5
3
8
%
-
-
-
33.18
66.82
100.00
%
-
-
-
62.50
37.50
100.00
2. All options have been issued under the Company’s Equity Incentive Plan.
g. Voting rights
In accordance with the Company’s Constitution, each member present at a meeting, whether in person, by proxy, by power
of attorney or by a duly authorised representative in the case of a corporate member, shall have one vote on a show of hands
and one vote for each fully paid ordinary share on a poll.
Holders of performance rights and options do not have voting rights.
h. On-market buy-backs
There is no current on market buy back.
112
Integral Diagnostics Annual Report 2021
SHAREHOLDER INFORMATION CONTINUED
i. Securities subject to voluntary escrow
Number of securities
Date of expected
release from
escrow or
holding lock1
27-Aug-21
1-Sep-21
30-Sep-21
01-Mar-22
02-Jul-22
03-Jul-22
31-Jul-22
1-Sep-22
30-Sep-22
8-Nov-22
28-Feb-23
01-Mar-23
02-Jul-23
03-Jul-23
1-Sep-23
8-Nov-23
02-Jul-24
1-Sep-24
7-Nov-24
1-Sep-25
Undated
Subject to
conditions
being met
and loan
repayment2
6,758
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,758
Subject to
non-compete
-
-
50,559
-
-
-
336,144
-
50,559
-
-
-
-
-
-
-
-
-
-
-
-
437,262
Unconditional
-
-
-
-
43,946
2,659,178
-
-
-
3,257,577
-
-
43,946
2,659,183
965,141
3,257,574
43,946
965,133
3,257,573
965,141
-
18,118,338
Conditional
upon continued
employment
-
232,157
-
138,855
-
-
-
232,150
-
-
-
138,855
-
-
232,144
-
-
95,948
-
-
-
1,070,109
Conditional
upon continued
employment
and loan
repayment
-
-
-
-
-
-
-
-
-
-
1,110,858
-
-
-
584,398
-
-
509,180
-
-
-
2,204,436
Total shares on issue subject to voluntary escrow or holding lock
1. Shares are released from escrow or holding lock on or around this date.
2. Conditions include a continued service and an EBIT Hurdle to 30 June 2021.
3. Values are calculated in accordance with the relevant Restriction Deed.
Subject to
long term
non-compete
permanent
retirement3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
213,660
213,660
22,050,563
Integral Diagnostics Annual Report 2021 113
CORPORATE DIRECTORY
Directors
Helen Kurincic – Independent Non-Executive Chair
Ian Kadish – Managing Director and Chief Executive Officer
John Atkin – Independent Non-Executive Director
Rupert Harrington – Independent Non-Executive Director
Raelene Murphy – Independent Non-Executive Director
Dr Chien Ping Ho – Executive Director – ceased 1 March 2021
Dr Jacqueline Milne – Executive Director
Auditor
PricewaterhouseCoopers
Level 19, 2 Riverside Quay
Melbourne, Victoria 3006
Solicitors
Herbert Smith Freehills
80 Collins Street
Melbourne, Victoria 3000
Dr Nazar Bokani – Executive Director – commenced
26 April 2021
Bankers
Company Secretary
Mrs Kirsty Lally
Annual General Meeting
Date: 5 November 2021
Time 10:00am
Registered office
Suite 9.02 Level 9, 45 William Street
Melbourne, Victoria 3000
T + 61 3 5339 0704
Share register
Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, Victoria 3067
T 1300 787 272
Westpac Banking Group
Commonwealth Bank of Australia
Stock exchange listing
Integral Diagnostics Limited shares are listed on the
Australian Securities Exchange (ASX code: IDX)
Website
integraldiagnostics.com.au
Corporate Governance Statement
The Corporate Governance Statement was approved by the
Board of Directors on 27 August 2021 and can be found at:
www.integraldiagnostics.com.au/corporate-governance
ESG Report
The ESG Report was approved by the Board of Directors on
27 August 2021 and can be found at:
www.integraldiagnostics.com.au/reports
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