Jayex Healthcare Ltd
ANNUAL REPORT 2016
Jayex Healthcare Ltd
ANNUAL REPORT - Contents
31 December 2016
Corporate directory
Directors' report
Auditor's independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of Jayex Healthcare Ltd
Shareholder information
General information
2
3
18
19
20
21
22
23
64
65
69
The financial statements cover Jayex Healthcare Ltd as a consolidated entity consisting of Jayex Healthcare Limited ("the
Company") and the entities it controlled at the end of, or during, the period. The financial statements are presented in
Australian dollars, which is Jayex Healthcare Limited's functional and presentation currency.
During the previous financial period, Jayex Healthcare Limited changed its financial year end from 30 June to 31
December, in order to align the consolidated entity's financial year end with that of its major subsidiary, Jayex Technology
Limited, which is based in the United Kingdom. The financial year ends of Jayex Healthcare Limited's other subsidiaries,
and of the consolidated entity, were also amended to 31 December in order to synchronise them with the financial year end
of Jayex Healthcare Limited.
As a result of these changes:
- the previous financial year, for which comparative information is disclosed in these financial statements, is the six month
period ended 31 December 2015;
- the amounts presented in these financial statements are not entirely comparable, as the current period amounts disclosed
in the statement of profit and loss and other comprehensive income, statement of changes in equity, statement of cash flow
and supporting information are for the twelve month period ended 31 December 2016, whereas the comparative
information is for the six month ended 31 December 2015.
Jayex Healthcare Ltd is a for-profit company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business is:
Suite 3
53 Coppin Street
Richmond VIC 3121
The financial statements were authorised for issue, in accordance with a resolution of directors, on 28 February 2017. The
directors have the power to amend and reissue the financial statements.
1
Jayex Healthcare Ltd
Corporate directory
31 December 2016
Directors
Registered office
Principal place of business
Share register
Michael Boyd
Brian Renwick
Agam Jain
Suite 3
53 Coppin Street
Richmond Victoria 3121
Suite 3
53 Coppin Street
Richmond Victoria 3121
Boardroom Pty Ltd
Level 12, Grosvenor Place
225 George Street
Sydney NSW 2000
Phone: 1300 737 760 (in Australia); +61 29290 9600 (international)
Auditor
Solicitors
Grant Thornton Audit Pty Ltd
The Rialto
Level 30, 525 Collins Street
Melbourne VIC 3000
McCabes Lawyers
41-45 Newcomen Street
Newcastle NSW 2300
Stock exchange listing
Jayex Healthcare Ltd shares are listed on the Australian Securities Exchange (ASX
code: JHL)
Website
http://jayexhealthcare.com.au
2
Jayex Healthcare Ltd
Directors' report
31 December 2016
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity') consisting of Jayex Healthcare Ltd (referred to hereafter as the 'Company' or 'parent entity') and
the entities it controlled at the end of, or during, the period ended 31 December 2016.
Directors
The following persons were directors of Jayex Healthcare Ltd during the whole of the financial period and up to the date of
this report, unless otherwise stated:
Michael Boyd (Executive Chairman)
Brian Renwick (Non-Executive Director)
Agam Jain (Executive Director) (appointed 14 January 2016)
John Allinson (Non-Executive Director) (resigned 29 July 2016)
Shane Tanner (Non-Executive Director) (resigned 12 July 2016)
Principal activities
During the financial year the principal continuing activities of the consolidated entity consisted of the development and
provision of healthcare industry service technologies and the development of integrated dispensing automation systems for
the pharmaceutical and healthcare sectors.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial period.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $5,063,000 (31 December 2015:
$2,671,000).
The 2016 year proved to be a challenging one for the consolidated entity following its round of business acquisitions and
ASX listing in 2015.
Overall, the Group focussed on the integration of the businesses acquired during 2015 and, in particular, growing the
Australian-based operations.
The overall financial result for the year and financial position at year end were influenced by the following matters:
-
-
-
The Australian overall operations generated an overall operating loss, due mainly to lower than expected sales,
coupled with the costs of establishing a sales and administrative base to support the Australian operations and
corporate function following the Company’s ASX listing in late 2015;
intangible assets decreased by a net amount of $6.6m, from $16.108 million to $9.508 million due mainly to the
following:
impairment of $4.085 million to goodwill in relation to the Appointuit business, following an assessment by
the Board; and
foreign exchange-related adjustments to the carrying value of goodwill and other intangible assets related
to the Jayex United Kingdom business. Following the decline in the UK Pound relative to the Australian
dollar during the year, the intangible assets were revalued downward by $1.923 million to reflect the
exchange rate movement, with the amount of the revaluation being transferred to the revaluation reserve
in the consolidated entity’s Statement of Financial Position;
recording of amortisation expenses;
o
o
o
re-measurement of the contingent consideration payable in relation to the prior period's acquisition of Appointuit
Pty Ltd, which resulted in a $2.116 million other income item in the consolidated entity’s Statement of Profit or
Loss.
3
Jayex Healthcare Ltd
Directors' report
31 December 2016
Australian operations
The Australian operation undertook a program to expand its management team and to increase sales of its Enlighten and
Appointuit products.
Sales of the Enlighten patient workflow platform increased in the year to 31 December 2016, with a total of approximately
115 subscriptions sold during the year, compared to approximately 60 subscriptions in the corresponding 2015 period. The
majority of these were placed with GP clinics. In addition, the platform was successfully deployed into a third major hospital
in Melbourne following a successful trial period and required a unique customisation of the Enlighten platform to serve the
Hospitals individual requirements. Up to the end of December 2016, the Company had deployed approximately 230
Enlighten services to approximately 170 locations across Australia.
In addition to the above sales, the Australian operation successfully tendered for the provision of Enlighten to Cohealth, a
major not for profit community health organisation located in Melbourne’s western suburbs. The system is scheduled to be
commissioned in in March 2017 and the accompanying service contract is for a term of four years.
The Company also submitted proposals for the supply of Enlighten to other hospitals, both in Australia and in Sri Lanka,
and is awaiting decisions on these, expected to be made during 2017.
In addition, Enlighten was marketed into the New Zealand territory during the year and a number of Enlighten services
were deployed there on a trial basis. The results of those trials were promising and have resulted in orders for the system
being placed from New Zealand clinics. Supply of Enlighten to New Zealand is therefore expected to commence in H1
2017.
While sales of Enlighten showed strong growth over previous periods, sales did not reach targeted levels for a number of
reasons, including delays in securing a stable sales team and marketing resources, and integration issues with the Group’s
new-acquired Appointuit product.
The Group acquired the Appointuit product, a patient engagement solution enabling payments to easily communicate with
their doctors and make on-line appointments, via its acquisition of Appointuit Pty Ltd in September 2015. Sales of
Appointuit grew in 2016, with clinical subscribers growing from 254 locations and 2,318 GPs at the time of the Company’s
prospectus in September 2015, to 325 locations and 2,998 GPs at the end of December 2016. However, a number of
difficulties arose with the integration of the Appointuit product with the other Group technologies which resulted in the
Appointuit operational and financial results falling below expectations. In addition, Mr Gordon Cooper and Ms Rosemary
Cooper, the founders of Appointuit who continued as employees of Appointuit following its acquisition by the Group, and a
company owned by them, served the Company with a Federal Court application during the year, which remains in progress
at the date of this report. The employment of Mr Cooper and Ms Cooper has been terminated. These matters proved to
be a significant distraction for the Group plan during the year. It is hoped that reorganisation of the Appointuit
administrative structure and implementation of system improvements will result in improved Appointuit results during the
coming year.
Development of the Group’s P2U prescription processing and delivery solution is proceeding as planned, with successful
trials taking place during the year. Completion work on the product is underway with product roll-out currently expected in
H2 2017.
Development of the Company’s Bluepoint Remote Dispensing Terminal technology for pharmacy products took a lower
priority during the year, while the Company concentrated its resources on its other technologies. The Company continues
to investigate opportunities for application of this technology.
4
Jayex Healthcare Ltd
Directors' report
31 December 2016
United Kingdom operations
The operations of the Group’s United Kingdom-based subsidiary, Jayex technology Limited (“Jayex UK”), for the 2016
were pleasing. Jayex UK was acquired by the Group in December 2015 and had a history of strong profit results,
delivering strong revenues and customer growth. In 2016 revenue increased to £3.85m, up 6% on the previous year and
full year EBITDA increased by 69% over the same period.
Jayex UK successfully delivered and commissioned more than 40 live systems to a Health Board in Wales, with similar
commissionings to clinical commission groups (CCGs) in the North-East of England, West of England, and three CCGs in
the South-East of England. Jayex UK was also awarded a number of significant deployments of Enlighten services in
major Acute hospitals in England. As well as updating existing customers to the latest Patient Check-in and Patient Calling
solutions, Jayex UK signed up 283 new GP surgeries/clinics and 12 new hospital deployments in 2016.
Jayex UK undertook significant developments to the Enlighten product, releasing a new version in September, while
undertaking a number of bespoke system enhancements for specific clients. In addition NHS Digital approved and certified
the integration of Enlighten with SystmOne’s Clinical Management System, enabling practices using SystmOne to
implement Enlighten.
Profitability was enhanced by a program of cost control and reduction, including a re-focusing of activity on more profitable
areas. Jayex UK also invested in its internal infrastructure, customer service, software development and sales and
marketing capabilities. It also implemented a strategic planning and management framework to support growth.
Significant changes in the state of affairs
- issued 125,000 shares in the Company upon the exercise of share options in June 2016;
- issued 1,000,000 shares in the Company upon the exercise of share options in October 2016.
There were no other significant changes in the state of affairs of the consolidated entity during the financial period.
Matters subsequent to the end of the financial period
No matter or circumstance has arisen since 31 December 2016 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the consolidated entity and the expected results of operations are
as follows:
The business objectives for 2017 will be a continued focus on the successful commercialisation of the Enlighten patient
workflow platform, and ongoing development and commercialisation of the Appointuit patient engagement solution in the
Australian market. The Company will continue to target growth in its market share for its products through Australian GP
clinics and hospitals. The Group also plans to complete development of it P2U script management product during 2017
and introduce it to the market in the second half of the year. The Group will also continue to pursue opportunities in the
Asia-Pacific region.
With regards to the United Kingdom business, the Company’s aim is to continue to grow the profitability of the business
through gaining greater market share with Enlighten product and continue to explore opportunities to introduce some of the
Company’s other technologies to the UK market. Further, the UK business is examining opportunities in both Europe and
North America in which to extend the Enlighten product range.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
5
Jayex Healthcare Ltd
Directors' report
31 December 2016
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Michael Boyd
Executive Chairman
B.Comm (UWA) Grad. Dip App Fin
Michael Boyd is the Chairman of the Company and has been involved since its
inception in 2004. Based in Melbourne, he has led the corporate structuring of the
Company and the development of the Group’s strategic vision. On a practical level he
has initiated contacts with all stakeholder groups including professional bodies,
regulatory boards, wholesale distributors and pharmacy groups and individuals.
Mr. Boyd has been involved in the creation of new enterprises, both in the private and
public sectors, for over 25 years. Mr. Boyd has been successful in developing and
growing new projects in diverse areas including healthcare, telecommunications and
finance.
Trained as a Chartered Accountant, he was a founding Director and Chairman of
Sonic Healthcare Ltd, now an ASX listed top 50 company. After leaving Sonic he
started Foundation Healthcare, growing it to over 800 healthcare professionals before
it was acquired by Sonic. He was also a founding partner of Iridium Satellite bringing
it out from bankruptcy to now a NASDAQ listed company.
Other current directorships:
-
Former directorships (last 3 years): -
Interests in shares:
80,937,685 fully paid ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Brian Renwick
Non-Executive Director
MBA, FCA, B.Bus (Accounting) Monash
Mr. Renwick is very broadly experienced across the pharmaceutical and healthcare
sector in Australia. His involvement with sector commenced in finance roles that led
into commercial analysis, marketing and sales. From this broad commercial
experience in the manufacturing end of the supply chain he moved into the
wholesaling segment with various business development roles in retail and hospital
pharmacy. Mr Renwick’s roles broadened into commercial and business development
including as general manager for a corporate pharmacy business. He has completed
two Business Development roles within the CSL Limited group.
With his detailed commercial knowledge and broad experience across the healthcare
segment, Brian has provided consulting advice to Jayex since 2006 and is an
important member of the team.
Other current directorships:
-
Former directorships (last 3 years): -
Special responsibilities:
Chairman of Audit and Risk Committee, member of Remuneration and Nomination
Committee
115,000 fully paid ordinary shares
Interests in shares:
6
Jayex Healthcare Ltd
Directors' report
31 December 2016
Name:
Title:
Qualifications:
Experience and expertise:
Agam Jain (appointed 14 January 2016)
Executive Director
B Sc.
Based in London, Mr Jain has over 30 years’ experience as Managing Director of
Jayex Technology Limited, with extensive hands on experience in mentoring
management teams, sales, international business, CRM and Accounting systems.
He is a graduate in Physics from Imperial College, London and had many years of
sales experience with multinationals in his early career, subsequently progressing to
managing diverse business operations.
Mr Jain has been the founder of several successful companies in IT, finance,
electronics and media.
Other current directorships:
-
Former directorships (last 3 years): -
-
Special responsibilities:
19,003,763 fully paid ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
John Allinson (resigned 29 July 2016)
Non-Executive Director
B.Design (Industrial) RMIT, P.Cert (Tech Comm) Melb Uni, MAICD
Mr. Allinson has worked as a new product development consultant, business
manager and director with technology start-up companies, small to medium
enterprises and multinational corporations both in Australia and internationally. He
held the positions of General Manager of Solectron Technical Centre, Singapore,
OEM Product Development Manager and Industrial Design Manager of Patria Design
and Group General Manager, Inventure Development responsible for operations in
the US and Singapore. Prior to joining Jayex Healthcare he was the interim CEO of
BioSenz Pty Ltd involved in the early stage commercialisation of a rapid pathogen
detection system.
He presently holds the position of Manager Automated Medication Dispensing
Solutions for Lamson Healthcare Solutions P/L.
-
Other current directorships:
Former directorships (last 3 years): -
Special responsibilities:
Member of Remuneration and Nomination Committee, member of Audit and Risk
Committee
75,000 fully paid ordinary shares (as at date of resignation)
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Shane Tanner (resigned 12 July 2016)
Non-executive director
FCPA, ACIS
Mr Tanner is a former senior executive of the Mayne Group of companies, including
inaugural CEO of Symbion Health, one of Australia’s leading Pathology, Diagnostic
Imaging and Primary Care businesses. He is also a former Optus Communications
Board member and led the IPO of Optus.
Mr Tanner has vast commercial experience and is a leading healthcare professional,
focusing on growing and consolidating various sectors of the Australian healthcare
market.
Other current directorships:
Paragon Care Limited (appointed December 2005), Funtastic Limited (appointed
March 2009), Zenitas Heathcare Limited (appointed November 2014)
Former directorships (last 3 years): Vision Eye Institute Limited (appointed December 2001 – retired November 2015),
Special responsibilities:
Interests in shares:
IPB Petroleum Limited (appointed October 2010 – retired May 2014)
Chairman of Remuneration and Nomination Committee, member of Audit and Risk
Committee
Nil
7
Jayex Healthcare Ltd
Directors' report
31 December 2016
'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 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Ms Melanie Leydin was appointed Company Secretary on 19 August 2015. Ms Leydin graduated from Swinburne
University in 1997, became a Chartered Accountant in 1999 and since February 2000 has been the principal of chartered
accounting firm, Leydin Freyer. Ms Leydin has over 24 years’ experience in the accounting profession and has extensive
experience in relation to public company responsibilities, including ASX and ASIC compliance, control and implementation
of corporate governance, statutory financial reporting, reorganisation of Companies and shareholder relations and is a
director and company secretary for a number of technology, oil and gas, junior mining and exploration entities listed on the
Australian Securities Exchange.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the
period ended 31 December 2016, and the number of meetings attended by each director were:
Full Board
Attended
Held
Audit & Risk
Committee
Attended
Audit & Risk
Committee
Held
Remuneration
& Nomination
Committee
Attended
Remuneration
& Nomination
Committee
Held
Michael Boyd
Brian Renwick
Agam Jain
John Allinson
Shane Tanner
11
10
11
6
7
11
11
11
7
7
1
3
1
1
2
1
3
1
2
2
-
1
-
1
1
-
1
-
1
1
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the
delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for
good reward governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
8
Jayex Healthcare Ltd
Directors' report
31 December 2016
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements
for its directors and executives. The performance of the consolidated entity depends on the quality of its directors and
executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
In past consultation with external remuneration consultants, the Nomination and Remuneration Committee has structured
an executive remuneration framework that is market competitive and complementary to the reward strategy of the
consolidated entity.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination and
Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure
non-executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are
determined independently to the fees of other non-executive directors based on comparative roles in the external market.
The chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive
directors do not receive share options or other incentives.
Directors may also be reimbursed for travel and other expenses reasonably incurred in attending to the Company’s affairs.
Non-Executive Directors may be paid such additional or special remuneration as the Directors decide is appropriate where
a Director performs extra work or services which are not in the capacity as Director of the Company or a subsidiary.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
9
Jayex Healthcare Ltd
Directors' report
31 December 2016
Consolidated entity performance and link to remuneration
The remuneration of the Non-Executive Directors is not linked to the performance, share price or earnings of the
consolidated entity.
Remuneration for certain executives is expected to be directly linked to the performance of the consolidated entity. As
noted above the Company is currently reviewing proposals for the STI and LTI programs, which may be linked to the
performance, share price or earnings of the consolidated entity.
Refer to the section 'Additional information' below for details of the earnings and total shareholders return for the last five
years or, if the Company has been listed on the ASX for less than five years, the period from ASX listing to the date of this
report.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
Unless otherwise noted, the named persons were key management personnel for the whole of the period ended 31
December 2016.
The key management personnel of the consolidated entity consisted of the following directors of Jayex Healthcare Ltd:
● Michael Boyd (Executive Chairman)
●
●
●
●
Brian Renwick (Non-Executive Director)
Agam Jain (Executive Director)
John Allinson (Non-Executive Director) - resigned 29 July 2016
Shane Tanner (Non-Executive Director) - resigned 12 July 2016
And the following persons:
●
●
●
●
Nick Fernando (Chief Executive Officer - Jayex Technology Limited)
Tony Panther (Chief Financial Officer) - appointed 8 August 2016
Cameron Knox (Chief Financial Officer) - appointed 1 February 2016, resigned 17 August 2016
Rob Mantel (Chief Executive Officer - Jayex Australia Pty Ltd) - changed roles within the company effective 1 July
2016 and ceased to be a member of key management personnel as from that date
10
Jayex Healthcare Ltd
Directors' report
31 December 2016
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
Cash
Cash
Super-
Long service
and fees
$
bonus
$
allowance
$
annuation
$
leave
$
Equity-
settled -
options
$
2016
Non-Executive
Directors:
Mr B Renwick
Mr J Allinson*
Mr S Tanner*
Executive
Directors:
Mr M Boyd
Mr A Jain
Other Key
Management
Personnel:
Mr N Fernando
Mr T Panther**
Mr C Knox**
Mr R Mantel***
30,000
17,500
35,000
180,000
49,213
246,292
65,352
101,156
90,000
814,513
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000
10,000
-
6,208
9,610
8,550
24,368
-
-
-
-
-
-
-
-
-
-
Total
$
30,000
17,500
35,000
180,000
49,213
-
-
-
-
-
-
-
-
128,000
128,000
246,292
71,560
110,766
236,550
976,881
*
**
Mr Allinson resigned 29 July 2016; Mr Tanner resigned 12 July 2016
Mr Knox was appointed as Chief Financial Officer 1 February 2016 and resigned 17 August 2016; Mr Panther was
appointed as Chief Financial Officer 8 August 2016.
*** Mr Mantel changed roles within the company effective 1 July 2016 and ceased to be a member of key management
personnel as from that date. His remuneration as disclosed relates only to the period during which he was a member
of key management personnel.
11
Jayex Healthcare Ltd
Directors' report
31 December 2016
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Long service
leave
$
Equity-
settled
$
Total
$
7,500
7,500
15,000
30,000
82,500
8,882
151,382
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,167
-
9,167
7,837
-
7,837
-
-
-
-
-
-
-
-
-
-
-
7,500
7,500
15,000
30,000
448,000
547,504
-
448,000
8,882
616,386
2015
Non-Executive
Directors:
Mr B Renwick
Mr J Allinson
Mr S Tanner *
Executive
Directors:
Mr M Boyd
Other Key
Management
Personnel:
Mr R Mantel
Mr N Fernando
**
*
**
Mr Tanner was appointed as Non-Executive Director on 17 September 2015
Mr Jain and Mr Fernando became a members of key management personnel on 15 December 2015, the date the
consolidated entity acquired Jayex Technology Limited. Mr Jain was appointed as an Executive Director on 16
January 2016.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Mr B Renwick
Mr J Allinson
Mr S Tanner
Executive Directors:
Mr M Boyd
Mr M Jain
Other Key Management
Personnel:
Mr N Fernando
Mr T Panther
Mr C Knox
Mr R Mantel
Fixed remuneration
2015
2016
At risk - STI
At risk - LTI
2016
2015
2016
2015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54%
-
-
-
82%
100%
100%
100%
100%
100%
100%
100%
100%
46%
100%
100%
100%
100%
-
100%
-
-
18%
12
Jayex Healthcare Ltd
Directors' report
31 December 2016
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Michael Boyd
Executive Chairman
1 November 2015
No fixed term. Company may terminate agreement with 10 business days' notice. Mr
Boyd may terminate the agreement with 30 business days' notice.
For the year ended 31 December 2016, fees payable were $15,000 per month
(including superannuation) for provision of Executive Chairman services. As from 1
January 2017 fees payable are $5,000 per month (including superannuation).
Nick Fernando
Chief Executive Officer, Jayex Technology Limited
Effective commencement date with Jayex Healthcare Limited Group - 15 December
2015
No fixed term. Each party may terminate the agreement by giving one months'
notice. The Company may make payment in lieu of part of all of the notice period.
Base salary £135,000 per annum.
Tony Panther
Chief Financial Officer
8 August 2016
Fixed term of eight months. Each party may terminate the agreement by giving one
months' notice.
Base salary at rate of $185,000 per annum plus superannuation at 9.5%
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 31 December 2016.
13
Jayex Healthcare Ltd
Directors' report
31 December 2016
Options
There were no options over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 31 December 2016.
However, a grant of options to Mr R Mantel made on 2 February 2016 was made in accordance with an executive service
agreement made prior to 31 December 2015. Accordingly a relevant amount of the options was recorded as an expense
during the period ended 31 December 2015 and is included in the details of Mr Mantel's remuneration for that period
disclosed in this report. Mr Mantel's role with the Group changed as from 1 July 2016 and he therefore ceased as a
member of key management personnel as from that date. Accordingly the amount of the relevant options expense for the
period up to that date is included in the details of Mr Mantel's current period remuneration disclosed in this report.
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial period or future reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price at grant date
Fair value
per option
2 February 2016 - 1,000,000
options
2 February 2016 - 750,000
options
2 February 2016 - 750,000
options
2 February 2016
2 February 2019
31 December 2016, subject
to continued employment at
that date
31 December 2017, subject
to continued employment at
that date
2 February 2019
2 February 2019
$0.00
$0.320
$0.00
$0.320
$0.00
$0.320
For details of movements in these options for the period during which the option holder was a member of key management
personnel, refer to the “Additional disclosures relating to key management personnel” section of the Remuneration Report
below.
Options granted carry no dividend or voting rights.
The number of options over ordinary shares granted to and vested by directors and other key management personnel as
part of compensation during the period ended 31 December 2016 are set out below:
Name
Mr R Mantel
Number of
options
granted
during the
period
2016
Number of
options
granted
during the
period
2015
Number of
options
vested
during the
period
2016
Number of
options
vested
during the
period
2015
2,500,000
-
1,750,000
-
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel
as part of compensation during the period ended 31 December 2016 are set out below:
Name
Mr R Mantel
Value of
options
granted
during the
period
$
Value of
options
exercised
during the
period
$
Value of
options
lapsed
during the
period
$
Remuneration
consisting of
options
for the
period
%
800,000
-
-
54%
14
Jayex Healthcare Ltd
Directors' report
31 December 2016
Details of options over ordinary shares granted, vested and lapsed for directors and other key management personnel as
part of compensation during the period ended 31 December 2016 are set out below:
Name
Grant date
Vesting date
Number of
options
granted
Value of
options
granted
$
Value of
options
vested
$
Number of
options
lapsed
Value of
options
lapsed
$
Mr R Mantel
Mr R Mantel
Mr R Mantel
2 February
2016
2 February
2016
2 February
2016
2 February
2016
31 December
2016
31 December
2017
1,000,000
320,000
320,000
750,000
240,000
240,000
750,000
240,000
-
-
-
-
-
-
-
Additional information
The earnings of the consolidated entity for the two years to 31 December 2016 are summarised below:
Sales revenue
EBITDA
EBIT
Loss after income tax
2016
$'000
2015
$'000
8,747
(4,555)
(5,346)
(5,063)
1,181
(2,468)
(2,535)
(2,671)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2016
2015
Listing date -
17 December
2015
Share price at listing date/financial year end ($)
0.05
0.30
0.30
As the Company was first listed on the Australian Securities Exchange (ASX) on 17 December 2015, there is limited
relevant information regarding the consolidated entity's earnings and performance for past financial years. The tables
above show, for information purposes:
- earnings data for the six month financial reporting period ended 31 December 2015 and the financial year ended 31
December 2016; and
- the closing market price of the Company's shares on the ASX on the listing date of 17 December 2015 and the last day of
the following reporting periods.
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial period by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Ordinary shares
Mr M Boyd
Mr B Renwick
Mr A Jain
Mr J Allinson
Mr R Mantel
Balance at
the start of
the period
Received
as part of
remuneration
Shares
acquired
Disposals/
other*
Balance at
the end of
the period
80,937,385
95,000
19,003,378
75,000
150,000
100,260,763
-
-
-
-
-
-
550,000
20,000
210,000
-
-
780,000
-
-
-
81,487,385
115,000
19,213,378
-
(75,000)
(150,000)
-
(225,000) 100,815,763
*
Includes shares held when the person ceased to be a member of key management personnel.
15
Jayex Healthcare Ltd
Directors' report
31 December 2016
Option holding
The number of options over ordinary shares in the Company held during the financial period by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Options over ordinary shares
Mr R Mantel
Balance at
the start of
the period
Granted
Exercised
Expired/
forfeited/
other*
Balance at
the end of
the period
-
-
2,500,000
2,500,000
-
-
(2,500,000)
(2,500,000)
-
-
*
Includes options held when the person ceased to be a member of key management personnel
Other transactions with key management personnel and their related parties
During the financial period:
- existing loans from directors were repaid by the consolidated entity; and
- payments of rental of premises were made to a related entity of a director of the consolidated entity.
Details of these transactions are disclosed in note 31 of the accompanying financial statements.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Jayex Healthcare Ltd under option at the date of this report are as follows:
Grant date
2 February 2016
Expiry date
2 February 2019
Exercise
price
Number
under option
$0.00
1,750,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the Company or of any other body corporate.
Shares issued on the exercise of options
The following ordinary shares of Jayex Healthcare Ltd were issued during the period ended 31 December 2016 and up to
the date of this report on the exercise of options granted:
Date options granted
2 February 2016
Exercise
price
Number of
shares issued
$0.00
1,125,000
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial period, the Company paid a premium in respect of a contract to insure the directors and executives of
the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial period, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial period, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
16
Jayex Healthcare Ltd
Directors' report
31 December 2016
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial period by the
auditor are outlined in note 29 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial period, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 29 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risks and rewards.
●
Officers of the Company who are former partners of Grant Thornton Audit Pty Ltd
There are no officers of the Company who are former partners of Grant Thornton Audit Pty Ltd.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 18.
Auditor
Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
Michael Boyd
Executive Chairman
28 February 2017
Melbourne
17
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Jayex Healthcare Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Jayex Healthcare Limited for the year ended 31 December 2016, I
declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B. A. Mackenzie
Partner - Audit & Assurance
Melbourne, 28 February 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Jayex Healthcare Ltd
Statement of profit or loss and other comprehensive income
For the period ended 31 December 2016
Note
Consolidated
2016
$'000
2015
$'000
Revenue and other income
Other income
Expenses
Raw materials and consumables used
Employee benefits expense
Professional services expenses
Depreciation and amortisation expense
Impairment of assets
Consultancy expenses
Travel expenses
Marketing expenses
Net foreign exchange loss
Rental expense
Other expenses
Finance costs
Listing and acquisition expenses
Loss before income tax (expense)/benefit
Income tax (expense)/benefit
5
6
7
7
15
7
8
Loss after income tax (expense)/benefit for the period attributable to the
owners of Jayex Healthcare Ltd
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the period, net of tax
Total comprehensive income for the period attributable to the owners of Jayex
Healthcare Ltd
8,750
1,181
2,116
-
(2,564)
(5,388)
(749)
(791)
(4,085)
(614)
(323)
(309)
(282)
(288)
(816)
(21)
-
(521)
(942)
(212)
(67)
-
(313)
(127)
(29)
-
(39)
(244)
(110)
(1,222)
(5,364)
(2,645)
301
(26)
(5,063)
(2,671)
(1,730)
(1,730)
(49)
(49)
(6,793)
(2,720)
Cents
Cents
Basic earnings per share
Diluted earnings per share
38
38
(3.3)
(3.3)
(2.6)
(2.6)
Refer to note 3 for detailed information on Restatement of comparatives.
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
19
Jayex Healthcare Ltd
Statement of financial position
As at 31 December 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Non-current assets
Receivables
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Employee benefits
Provisions
Other
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax
Payables
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2016
$'000
2015
$'000
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
1,334
1,122
359
65
2,880
43
94
9,508
9,645
4,637
1,446
273
75
6,431
-
128
16,108
16,236
12,525
22,667
1,470
620
60
278
1,532
3,960
-
934
-
934
3,066
32
85
272
1,492
4,947
17
1,415
2,214
3,646
4,894
8,593
7,631
14,074
24
25
26
24,940
(1,333)
(15,976)
24,588
399
(10,913)
7,631
14,074
Refer to note 3 for detailed information on Restatement of comparatives.
The above statement of financial position should be read in conjunction with the accompanying notes
20
Jayex Healthcare Ltd
Statement of changes in equity
For the period ended 31 December 2016
Consolidated
Issued
capital
$'000
Options
reserve
$'000
Foreign
exchange
reserve
$'000
Accumulated
losses
$'000
Total equity
$'000
Balance at 1 July 2015
7,650
Loss after income tax expense for the period
Other comprehensive income for the period,
net of tax
Total comprehensive income for the period
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 24)
Share-based payments (note 39)
Balance at 31 December 2015
-
-
-
-
-
-
-
16,938
-
24,588
-
448
448
-
-
(49)
(49)
-
-
(8,242)
(592)
(2,671)
(2,671)
-
(49)
(2,671)
(2,720)
-
-
16,938
448
(49)
(10,913)
14,074
Refer to note 3 for detailed information on Restatement of comparatives.
Consolidated
Issued
capital
$'000
Options
reserve
$'000
Foreign
exchange
reserve
$'000
Accumulated
losses
$'000
Total equity
$'000
Balance at 1 January 2016
24,588
448
(49)
(10,913)
14,074
Loss after income tax benefit for the period
Other comprehensive income for the period,
net of tax
Total comprehensive income for the period
Transactions with owners in their capacity as
owners:
Share-based payments (note 39)
Exercise of options
-
-
-
-
-
-
-
(5,063)
(5,063)
(1,730)
-
(1,730)
(1,730)
(5,063)
(6,793)
-
352
350
(352)
-
-
-
-
350
-
Balance at 31 December 2016
24,940
446
(1,779)
(15,976)
7,631
The above statement of changes in equity should be read in conjunction with the accompanying notes
21
Jayex Healthcare Ltd
Statement of cash flows
For the period ended 31 December 2016
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
R&D tax incentive received
Interest received
Interest and other finance costs paid
Note
Consolidated
2016
$'000
2015
$'000
10,747
(13,028)
(2,281)
-
3
(7)
1,261
(3,449)
(2,188)
82
-
(4)
Net cash used in operating activities
36
(2,285)
(2,110)
Cash flows from investing activities
Payment for business acquisitions (net of cash acquired upon acquisitions)
Payments for property, plant and equipment
Payments for intangibles
14
15
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from issues of convertible notes
Proceeds from borrowings
Repayment of borrowings
Repayment of shareholders loan
Mortgage payments
Share issue transaction costs
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Effects of exchange rate changes on cash and cash equivalents
(1,196)
(16)
(168)
(1,380)
-
-
600
(5)
-
(28)
-
567
(3,098)
4,637
(205)
(511)
-
(7)
(518)
8,000
1,000
-
(1,241)
(216)
(5)
(240)
7,298
4,670
29
(62)
Cash and cash equivalents at the end of the financial period
9
1,334
4,637
The above statement of cash flows should be read in conjunction with the accompanying notes
22
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the periods presented, unless otherwise stated.
During the previous financial period, Jayex Healthcare Limited changed its financial year end from 30 June to 31
December, in order to align the consolidated entity's financial year end with that of its major subsidiary, Jayex Technology
Limited, which is based in the United Kingdom. The financial year ends of Jayex Healthcare Limited's other subsidiaries,
and of the consolidated entity, were also amended to 31 December in order to synchronise them with the financial year end
of Jayex Healthcare Limited.
As a result of these changes:
- the previous financial year, for which comparative information is disclosed in these financial statements, is the six month
period ended 31 December 2015; and
- the amounts presented in these financial statements are not entirely comparable, as the current period amounts disclosed
in the statement of profit and loss and other comprehensive income, statement of changes in equity, statement of cash flow
and supporting information are for the twelve month period ended 31 December 2016, whereas the comparative
information is for the six month period ended 31 December 2015.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
Going concern
The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities
and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The working capital position as at 31 December 2016 of the consolidated entity, as disclosed in the Statement of financial
position, is an apparent excess of current liabilities over current assets of $1,080,000 (2015: $1,484,000 surplus).
However, the current liabilities as at 31 December 2016 contain a number of liability accounts, including provision
accounts, revenue received in advance accounts and unearned revenue accounts, which represent the results of
accounting adjustments and do not represent amounts payable, or likely to become payable, to third parties. If these
liability accounts are removed from the calculation of working capital at 31 December 2016, the adjusted working capital
has a surplus of approximately $1,000,000.
The cash balance at 31 December 2016 was $1,334,000 (2015: $4,637,000).
The consolidated entity incurred a net loss after tax for the financial year ended 31 December 2016 of $5,063,000 (financial
period ended 31 December 2015: $2,671,000) and had net cash outflows from operating activities of $2,285,000 (financial
period ended 31 December 2015: $2,110,000). However It should be noted that approximately $1,969,000 of this loss was
due to non-operating matters, in particular:
- impairments of goodwill relating to the acquisition of Appointuit Pty Ltd, amounting to $4,085,000; and
- a partially offsetting adjustment of $2,116,000 reducing the non-current liability for contingent consideration payable for
the Appointuit acquisition.
Notwithstanding these results, the directors believe that the company will be able to continue as a going concern and as a
result the financial statements have been prepared on a going concern basis. The accounts have been prepared on the
assumption that the company is a going concern for the following reasons:
23
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies (continued)
●
●
●
●
●
the operating and financial results of the consolidated entity in the 2016 financial year were adversely affected by
integration issues arising from the Appointuit acquisition made in the preceding financial year. The Board is confident
that those integration issues will not recur in the coming financial year and expects improved operational and financial
performance;
the Company expects to have access to a new loan facility of $2 million to be made available during early 2017;
the ability of the Group to scale back parts of its operations and reduce costs if required;
the Board is of the opinion that the consolidated entity has, or shall have access to, sufficient funds to meet the
planned corporate activities and working capital requirements; and
as the Company is an ASX-listed entity, the consolidated entity has the ability to raise additional funds if required.
This financial report does not include any adjustments relating to the recoverability and classification of recorded asset
amounts or to the amounts and classification of liabilities that might be necessary should the Company not continue as a
going concern.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 2.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Jayex Healthcare Ltd
('Company' or 'parent entity') as at 31 December 2016 and the results of all subsidiaries for the period then ended. Jayex
Healthcare Ltd and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'. Details
of subsidiaries are included in Note 34.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Jayex Healthcare Ltd's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
24
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies (continued)
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue
can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the goods, the
risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are
net of sales returns and trade discounts.
Sale of contracted services
Revenue from sales of contracted software services is recognised on a basis reflecting the pattern of the provision of those
services to the client and the relative costs thereof. These include: initial setting up of those services, such as the provision,
delivery, installation and commissioning of on-site kiosks to deliver the software services, initial software preparation and
systems integration, software costs and training; and ongoing supply of software, maintenance and client service. Where
contract fees are invoiced at the commencement of the contract period, the component of the fees representing initial set
up services are recognised as revenue at that time and where, for accounting purposes, such initial service provision takes
the accounting form of the provision of a finance lease, the relevant revenue is recognised at the commencement of the
contract. Any remaining fees representing the provision of future services, including ongoing provision of software,
maintenance and customer support, are brought to account as a revenue received in advance liability in the statement of
financial position and the relevant revenue is recognised on a straight line basis across the term of the contract.
Rendering of services
Rendering of services revenue from computer maintenance/service fees is recognised by reference to the stage of
completion of the contracts.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets 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 tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
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.
25
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies (continued)
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is
objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of
the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the
trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Inventories
Stock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
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:
Motor vehicles
Computer equipment
Office equipment
Furniture and fittings
4 - 5 years
3 years
3 - 5 years
4 - 5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end
of the lease term.
26
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies (continued)
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
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.
Intangible assets with indefinite useful lives are not amortised, but treated for impairment annually, either individually or at
the cash generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite
life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis
Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. Amortisation
expense is included in depreciation and amortisation expense in the Statement of profit or loss and other comprehensive
income.
The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the
difference between net disposal proceeds and the carrying amount of the intangible asset.
The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of
consumption or useful life are accounted for prospectively by changing the amortisation method or period.
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition
date).
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount
recognised for any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity
interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the
liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the
consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s
previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain
purchase gain.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the
Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or
loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of
the operation disposed of and the portion of the cash generating unit retained.
Patents and trademarks
All patent and trademark costs for the year are capitalised in the statement of financial position at cost. The patents and
trademarks have not yet commenced to be amortised as the technology related to the relevant patents and trademarks is
still under development and has not yet reached the stage where it is ready for use by the company as intended by
management.
27
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies (continued)
Software
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute
to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and
systems. Costs capitalised include external direct costs of materials and service and direct payroll and payroll related
costs of employees’ time spent on the project. Amortisation is calculated on a straight-line basis generally over 5-7 years.
IT development costs include only those costs directly attributable to the development phase and are only recognised
following completion of technical feasibility and where the Group has an intention and ability to use the asset.
When these assets are acquired as part of a business combination they are recognised separately from goodwill. The
assets are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses.
Customer relationships
When these assets are acquired as part of a business combination they are recognised separately from goodwill. The
assets are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses.
Amortisation is calculated on a straight-line basis generally over the assets’ estimated useful lives of 10 years.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to
benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for
impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable
amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit.
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.
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past
event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The
increase in the provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
28
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies (continued)
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
29
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies (continued)
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to
profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated
entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement
period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Jayex Healthcare Ltd, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial period, adjusted for share splits or bonus elements in ordinary shares issued during the financial
period.
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.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
30
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies (continued)
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations issued, not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 31 December
2016. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall
be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets
are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on
initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive
income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the
entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge
accounting requirements are intended to more closely align the accounting treatment with the risk management activities of
the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance.
Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased
significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional
new disclosures. The consolidated entity will adopt this standard from 1 January 2018. The impact of its adoption is yet to
be assessed in detail by the consolidated entity but is not expected to have material impact on the consolidated entity.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a
single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or
implied) to be identified, together with the separate performance obligations within the contract; determine the transaction
price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate
performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation
approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied.
Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance
obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is
satisfied when the service has been provided, typically for promises to transfer services to customers. For performance
obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue
should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's
statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship
between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required
to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to
those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated
entity will adopt this standard from 1 January 2018. The impact of its adoption is yet to be assessed in detail by the
consolidated entity but is not expected to have material impact on the consolidated entity.
31
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 1. Significant accounting policies (continued)
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019.
This standard:
- replaces AASB 117 Leases and some lease-related Interpretations;
- requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low value asset leases;
- provides new guidance on the application of the definition of lease and on sale and lease back accounting;
- largely retains the existing lessor accounting requirements in AASB 117;
- requires new and different disclosures about leases.
The consolidated entity will adopt this standard from 1 January 2019. The entity is yet to undertake a detailed assessment
of the impact of AASB 16. However, based on the entity’s preliminary assessment, the likely impact on the first time
adoption of the Standard for the year ending 31 December 2019 includes:
- there will be a significant increase in lease assets and financial liabilities recognised on the balance sheet;
- the reported equity will reduce as the carrying amount of lease assets will reduce more quickly than the carrying amount
of lease liabilities;
- EBIT in the statement of profit or loss and other comprehensive income will be higher as the implicit interest in lease
payments for former off balance sheet leases will be presented as part of finance costs rather than being included in
operating expenses; and
- Operating cash outflows will be lower and financing cash flows will be higher in the statement of cash flows as principal
repayments on all lease liabilities will now be included in financing activities rather than operating activities.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. 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 (Notes 14 and 15)
The consolidated entity 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 (Note 15)
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the
accounting policy stated in note 1. The recoverable amounts of cash-generating units have been determined based on
value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on
the current cost of capital and growth rates of the estimated future cash flows.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets (Note 15)
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to the consolidated entity 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
fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and
assumptions.
32
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 2. Critical accounting judgements, estimates and assumptions (continued)
Contingent consideration (Note 23)
The contingent consideration liability is the difference between the total purchase consideration, usually on an acquisition
of a business combination, and the amounts paid or settled up to the reporting date, discounted to net present value. The
consolidated entity applies provisional accounting for any business combination. Any reassessment of the liability during
the earlier of the finalisation of the provisional accounting or 12 months from acquisition-date is adjusted for retrospectively
as part of the provisional accounting rules in accordance with AASB 3 'Business Combinations'. Thereafter, at each
reporting date, the contingent consideration liability is reassessed against revised estimates and any increase or decrease
in the net present value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the liability
resulting from the passage of time is recognised as a finance cost.
Business combinations (Note 33)
As discussed in note 1, business combinations are initially accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are initially estimated by the consolidated entity taking into
consideration all available information at the reporting date. Fair value adjustments on the finalisation of the business
combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact
on the assets and liabilities, depreciation and amortisation reported.
The business combinations also included estimations to be made regarding the probability of contingent consideration
payments. These estimations will be assessed at each reporting date and adjusted as required.
Revenue recognition - Primary sales (Note 5)
Recognition of revenue on sales of Enlighten subscriptions to primary care customers reflects the expected pattern of
provision of relevant goods and services pursuant to those subscription contracts. Management have determined that the
value of goods and services provided to customers at the commencement of those contracts reflects 80 to 85 percent of
the total value of services to be provided over the life of those subscription contracts, with the remaining 15 to 20 percent of
the total contract service value being provided over the three year term of the respective contracts. Accordingly, 80 to 85
percent of the value of those sales is recognised as revenue at the inception of the contracts, while the remaining 15 to 20
percent is recognised on a straight line basis over the three year lives of the contracts.
Note 3. Restatement of comparatives
Retrospective fair value adjustments on finalisation of business combination accounting
During the financial period ended 31 December 2015 the consolidated entity made a number of business acquisitions,
details of which are set out in Note 33.
In relation to the business acquisitions, the consolidated entity originally performed a provisional assessment of the fair
value of the assets and liabilities as at the date of the acquisition and for the purposes of the balance sheet as at 31
December 2015, the assets and liabilities were originally recorded at provisional fair values.
Under Australian Accounting Standards, the consolidated entity had up to 12 months from the date of acquisition to
complete its initial acquisition accounting. The consolidated entity has completed this exercise to consider the fair value of
intangible assets acquired in the acquisitions and, in accordance with Accounting Standards, has retrospectively adjusted
the values of the relevant identifiable intangible assets and has transferred the differences between the provisional
valuation and the finalised fair value to the respective Goodwill accounts.
The adjustments to the fair values have an equal and opposite impact on the goodwill recorded on acquisition.
Accordingly, such adjustments have no impact on the aggregate of the net assets or the consolidated entity's net profit
after tax with the exception of any amortisation charges.
Details of specific adjustments are set out in Note 33.
33
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 3. Restatement of comparatives (continued)
Statement of profit or loss and other comprehensive income
Extract
Expenses
Depreciation and amortisation expense
Loss before income tax (expense)/benefit
Income tax (expense)/benefit
Consolidated
2015
$'000
$'000
2015
$'000
Reported
Adjustment Restated
(397)
(2,975)
73
330
330
(99)
(67)
(2,645)
(26)
Loss after income tax (expense)/benefit for the period attributable to the
owners of Jayex Healthcare Ltd
(2,902)
231
(2,671)
Other comprehensive income
Foreign currency translation
Other comprehensive income for the period, net of tax
(84)
(84)
35
35
(49)
(49)
Total comprehensive income for the period attributable to the owners of
Jayex Healthcare Ltd
(2,986)
266
(2,720)
Basic earnings per share
Diluted earnings per share
Cents
Cents
Cents
Reported
Adjustment Restated
(2.8)
(2.8)
0.2
0.2
(2.6)
(2.6)
34
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 3. Restatement of comparatives (continued)
Statement of financial position at the end of the earliest comparative period
Extract
Assets
Non-current assets
Intangibles
Total non-current assets
Total assets
Liabilities
Non-current liabilities
Deferred tax
Total non-current liabilities
Total liabilities
Net assets
Equity
Reserves
Accumulated losses
Total equity
Note 4. Operating segments
Consolidated
2015
$'000
$'000
2015
$'000
Reported
Adjustment Restated
17,161
17,289
(1,053)
(1,053)
16,108
16,236
23,720
(1,053)
22,667
2,734
4,965
(1,319)
(1,319)
1,415
3,646
9,912
(1,319)
8,593
13,808
266
14,074
364
(11,144)
13,808
35
231
266
399
(10,913)
14,074
Identification of reportable operating segments
The consolidated entity is organised into two operating segments: Australia and United Kingdom (UK). These operating
segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the
Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.
There is no aggregation of operating segments.
The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation), excluding capital-raising
expenses and share-based payments. The accounting policies adopted for internal reporting to the CODM are consistent
with those adopted in the financial statements.
The information reported to the CODM is on a monthly basis.
No changes to the policy above have occurred during the financial year.
Intersegment transactions
Intersegment transactions were made at market rates. The Australian operating segment charges a management fee to
the United Kingdom operating segment. Intersegment transactions are eliminated on consolidation.
Major customers
The consolidated entity does not have a major customer that contributes more than 10% or more to the consolidated entity's
revenue.
35
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 4. Operating segments (continued)
Operating segment information
Consolidated December 2016
Revenue
Sales to external customers
Total sales revenue
Other revenue
Australia
$'000
United
Kingdom
$'000
Total reportable
segments
$'000
1,719
1,719
155
7,028
8,747
7,028
8,747
-
155
Segment operating expenses
(5,377)
(5,761)
(11,138)
Fair value adjustment to financial liabilities
2,116
- 2,116
Impairment of goodwill
(4,085)
-
(4,085)
EBITDA
(5,472)
1,267
(4,205)
Consolidated December 2015
Revenue
Sales to external customers
Total sales revenue
Australia
$'000
United
Kingdom
$'000
Total reportable
segments
$'000
827
827
354
1,181
354
1,181
Operating expenses
(1,586)
(393)
(1,979)
EBITDA
(759)
(39)
(798)
36
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 4. Operating segments (continued)
The total Revenue and Loss after income tax presented in the Consolidated Entity's operating
segments reconcile to the corresponding key financial figures as presented in its Statement of profit or
loss and other comprehensive income as follows:
Revenue
Total reportable segment revenues
Interest income
Other revenue
31 December
2016
$'000
31 December
2015
$'000
8,747
3
-
1,181
-
-
Group revenues
8,750
1,181
Profit or loss
Total reportable segment EBITDAs
Interest income
Depreciation and amortisation expense
Share-based payments expense
31 December
2016
$'000
31 December
2015
$'000
(4,205)
(798)
3
-
(791)
(350)
(67)
(448)
Capital raising and acquisition expenses
-
(1,222)
Interest expense
Income tax (expense)/benefit
(21)
301
(110)
(26)
Group profit/(loss) after income tax expense/benefit
(5,063)
(2,671)
Geographical information
Australia
United Kingdom
Sales to
external
customers
Sales to
external
customers
31 December
2016
$'000
31 December
2015
$'000
Geographical
non-current
assets
31 December
2016
$'000
Geographical
non-current
assets
31 December
2015
$'000
1,719
827
659
4,927
7,028
354
8,986
11,309
8,747
1,181
9,645
16,236
The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred tax assets,
post-employment benefits assets and rights under insurance contracts.
37
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 5. Revenue and other income
Sales revenue
Sales revenue
Other income
Interest
Revenue and other income
Consolidated
2016
$'000
2015
$'000
8,747
1,181
3
-
8,750
1,181
Sales revenue is revenue generated from the consolidated entity's healthcare industry service provision businesses.
Some parts of these businesses were acquired at different times during the previous reporting period and relevant revenue
for that period, as disclosed in the comparative financial information, was recognised by the consolidated entity from the
respective acquisition dates as follows:
- Appointuit (through acquisition of Appointuit Pty Ltd): 22 September 2015;
- Enlighten UK (through acquisition of Jayex Technology Limited): 15 December 2015.
Note 6. Other income
Fair value remeasurement of financial liabilities
Consolidated
2016
$'000
2015
$'000
2,116
-
During the year ended 31 December 2016 the Company remeasured the contingent consideration payable in relation to
the prior period's acquisition of Appointuit Pty Ltd, reducing the payable to nil as at 31 December 2016. The amount of the
reduction in the liability arising from the remeasurement adjustment was recorded as Other Income. Refer to Note 23 for
further details.
38
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Amortisation
Development
Software
Customer relationships
Total amortisation
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
Employee benefits expense excluding superannuation and share based payments
Employee benefits expense excluding superannuation and share based payments
Total employee benefits
Consolidated
2016
$'000
2015
$'000
31
-
257
503
760
791
5
29
12
21
62
67
21
110
288
299
39
29
350
448
4,739
5,388
465
942
39
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 8. Income tax expense/(benefit)
Income tax expense/(benefit)
Current tax
Deferred tax - origination and reversal of temporary differences
Aggregate income tax expense/(benefit)
Deferred tax included in income tax expense/(benefit) comprises:
Decrease in deferred tax liabilities (note 22)
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Loss before income tax (expense)/benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Impairment of goodwill
Share-based payments
Fair value remeasurement of financial liability
Non-assessable R&D tax incentive receivable
Difference in overseas tax rates
Sundry items
Current period tax losses not recognised
Prior period tax losses not recognised now recouped
Current period temporary differences not recognised
Prior period temporary differences not recognised now recognised
Income tax expense/(benefit)
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
Consolidated
2016
$'000
2015
$'000
(27)
(274)
(301)
36
(10)
26
(274)
(10)
(5,364)
(2,645)
(1,609)
(794)
1,225
105
(635)
(85)
(146)
(37)
(1,182)
1,169
(103)
(111)
(74)
-
134
-
-
8
52
(600)
269
-
357
-
(301)
26
Consolidated
2016
$'000
2015
$'000
8,650
4,916
2,595
1,475
The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax
losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test
is passed.
Note 9. Current assets - cash and cash equivalents
Cash at bank
40
Consolidated
2016
$'000
2015
$'000
1,334
4,637
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 10. Current assets - trade and other receivables
Trade receivables
Other receivables
GST receivable
Consolidated
2016
$'000
2015
$'000
1,047
14
61
1,326
17
103
1,122
1,446
As at 31 December 2016 there were no material receivables amounts past due therefore there were no amounts past due
but not impaired (31 December 2015 - Nil).
Note 11. Current assets - inventories
Stock on hand - at cost
Note 12. Current assets - other
Prepayments
Note 13. Non-current assets - receivables
Other receivables
Consolidated
2016
$'000
2015
$'000
359
273
Consolidated
2016
$'000
2015
$'000
65
75
Consolidated
2016
$'000
2015
$'000
43
-
41
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 14. Non-current assets - property, plant and equipment
Motor vehicles - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
Furniture and fittings - at cost
Less: Accumulated depreciation
Consolidated
2016
$'000
2015
$'000
69
(37)
32
-
-
-
236
(187)
49
53
(40)
13
94
76
(29)
47
8
(6)
2
278
(204)
74
52
(47)
5
128
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial period are set out
below:
Consolidated
Balance at 1 July 2015
Additions through business combinations (note
33)
Depreciation expense
Balance at 31 December 2015
Additions
Exchange differences
Write off of assets
Depreciation expense
Balance at 31 December 2016
Furniture &
fittings
$'000
Office
equipment
$'000
Computer
equipment
$'000
Motor vehicle
$'000
Total
$'000
-
75
(1)
74
2
(11)
-
(16)
49
-
2
-
2
3
-
(4)
(1)
-
30
21
(4)
47
-
(3)
-
(11)
33
30
103
(5)
128
16
(15)
(5)
(30)
94
-
5
-
5
11
(1)
(1)
(2)
12
42
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 15. Non-current assets - intangibles
Goodwill - at cost
Less: Impairment
Patents and trademarks - at cost
Software platform - at cost
Less: Accumulated amortisation - software
Customer relationships - at cost
Less: Accumulated amortisation - Customer relationships
Consolidated
2016
$'000
2015
$'000
9,624
(4,085)
5,539
586
1,009
(269)
740
3,166
(523)
2,643
10,856
-
10,856
586
960
(12)
948
3,738
(20)
3,718
9,508
16,108
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial period are set out
below:
Consolidated
Balance at 1 July 2015
Additions through business combinations (note
33)
Additions
Amortisation expense
Balance at 31 December 2015
Additions
Exchange differences
Impairment of assets
Amortisation expense
Balance at 31 December 2016
Goodwill
$'000
Patents &
trademarks
$'000
Software
platform
$'000
Customer
relationships
$'000
Total
$'000
-
586
10,856
-
-
10,856
-
(1,232)
(4,085)
-
5,539
-
-
-
586
-
-
-
-
586
-
953
7
(12)
948
168
(119)
-
(257)
-
586
3,738
-
(20)
3,718
-
(572)
-
(503)
15,547
7
(32)
16,108
168
(1,923)
(4,085)
(760)
740
2,643
9,508
In 2015 the consolidated entity acquired Jayex Technology Limited (JUK), which is based in the United Kingdom, and
Appointuit Pty Ltd (Appointuit). Both of these companies operate technologies which are complementary to the technology
which is the subject of the patents and therefore enhanced technology business relationships upon which to pursue
discussions in key world markets. The majority of the consolidated entity's technologies were acquired through the
acquisitions of JUK and Appointuit.
43
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 15. Non-current assets - intangibles (continued)
The valuation of intangibles recognised as part of the various business combinations was initially provisionally measured
as at 31 December 2015. The company finalised the acquisition accounting during the current financial period.
The estimated useful lives of the Software Platform and Customer Relationships of Appointuit were reassessed during the
period resulting in an increase in the amortisation charge of $194,000 (2015: Nil). Descriptions of these items and their
estimated remaining useful lives are as follows:
- Software Platform - value attributed to the respective Enlighten/Appointuit computer software systems and all
enhancements, based on the net earnings/cost savings they are expected to generate over their useful lives (estimated
remaining useful life - JUK: 4 years; Appointuit: Nil)
- Customer Relationships - value attributed to the respective existing JUK/Appointuit customer bases based on the net
earnings they are expected to generate over their useful lives (estimated remaining useful life - JUK: 9 years; Appointuit:
Nil)
Patents & trademarks
The carrying value of patents & trademarks has been assessed on a fair value less costs to sell methodology. An
independent valuation was obtained during the year ended 30 June 2015 which made several key assumptions about the
potential sizes of the markets for the patents and trademarks, adoption rates and revenues and costs associated with
transactions. The directors have re-considered the carrying value in reference to this report and believe that there have
been no material changes to the assumption used that would result in impairment to the patents and trademarks.
Goodwill
The factors comprising goodwill include the following:
- certainty over access to the Enlighten and Appointuit products and the Jayex brand;
- control of, and access to technical expertise which has created more opportunities for the Group to market its product to a
wider range of potential clients in Australia and elsewhere;
- acquisition of management expertise and R&D experience in relation to the Enlighten product;
- enhanced ability For the Company to integrate its other products (including P2U and Bluepoint, and Appointuit) into
Enlighten;
- in relation to Jayex, 30 years of experience, a proven product and a trusted name and service;
- acquiring new services that complemented the Group's existing product offering to create an “end-to-end” value chain in
relation to provision of services to patients;
- operational and administrative efficiencies.
Goodwill
For the purpose of ongoing annual impairment testing goodwill is allocated to the following cash-generating units, which
are the units expected to benefit from the synergies of the business combinations in which the goodwill arises:
Jayex Technology (United Kingdom)
Appointuit (Australia)
Goodwill allocation at period end
Consolidated
2016
$'000
2015
$'000
5,539
-
6,771
4,085
5,539
10,856
44
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 15. Non-current assets - intangibles (continued)
Methodology
An impairment loss expense in the profit or loss is recognised when the carrying amount of an asset exceeds its
recoverable amount. The Company determined the recoverable amounts of both the Appointuit CGU and Jayex
Technology CGU using a value in use approach.
The recoverable amounts of both CGUs have been determined by valuation models that estimated the future cash flows
relying on historical performance and growth, discounted to their present value using a discount rate that reflects current
market assessments of the time value of money and the risks specific to each particular CGU.
The discounted cash flow model used in the assessment of value in use is sensitive to a number of key assumptions,
including revenue growth rates, discount rates, operating costs and foreign exchange rates. These assumptions can
change over short periods of time and can have a significant impact on the carrying value of the assets.
Based on the estimated recoverable amount for the Appointuit CGU, the Group has recognised an impairment to goodwill,
due primarily to the effect of changes in competition and market conditions, expectations around performance and growth
not being achieved, and ongoing difficulties regarding integration. For the Appointuit CGU, while the recoverable amount
represents management’s best estimate at 31 December 2016, any variation in the key assumptions used to determine
value in use would result in a change of the assessed recoverable amount. If the variation in assumptions were to have a
negative impact on the recoverable amount, it could, in the absence of other factors indicate a requirement for additional
write down to non-current assets.
Impairment testing for CGUs containing goodwill
Goodwill arose in the business combinations for the acquisition of Jayex Technologies and Appointuit Pty Ltd in 2015. It
represented the excess of the cost of the acquisition over the fair value of the Group’s share of the identifiable net assets
acquired and contingent liabilities assumed at the date of acquisition. Goodwill is allocated to the Group’s cash generating
units (CGUs) identified according to the Group’s operating segments for impairment testing purposes.
In assessing whether an impairment adjustment is required for the carrying value of an asset, its carrying value is
compared with its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and
value-in-use.
Value in use and key assumptions
The Company estimates the value-in-use of the Appointuit CGU and Jayex Technology CGU using discounted cash flows.
The calculation of value-in-use used the following assumptions:
•
•
•
•
•
compared to revenues
•
Discount rate – 14.75%
Foreign exchange rate - £/$A 0.5842
Period over which cash flows projected - 5 years
Growth projections - revenue increase at average rates of 5 - 5.5% per annum, based on past trends
Expenses increase at average rates of 3.2 - 3.8% per annum, based on past trends of reducing cost base
Long term growth rate used to extrapolate cash flow projections beyond forecast period – 2% per annum
Impairment
Company has performed an impairment assessment based on its cash generating units (CGU), which were the Appointuit
CGU and Jayex Technology CGU.
As a result of the assessment the Company has recognised an impairment to goodwill asset of $4.085 million in relation to
the Appointuit CGU for the year ended 31 December 2016.
The Company determined that the recoverable amount in relation the Jayex Technology CGU exceeded its carrying value
of assets as at 31 December 2016, therefore no adjustment to its carrying value was required.
45
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 16. Current liabilities - trade and other payables
Trade payables
Accrued expenses
Current consideration payable on business acquisition
GST payable
Other payables
Consolidated
2016
$'000
2015
$'000
756
339
-
114
261
1,419
231
1,098
93
225
1,470
3,066
Refer to note 27 for further information on financial instruments.
The current consideration payable on business acquisition disclosed at previous period end related to the acquisition of
Jayex Technology Limited and was paid in full during the current financial year. Refer Note 33 for further information.
Note 17. Current liabilities - borrowings
Short term loans
Loans
Chattel mortgage
Refer to note 27 for further information on financial instruments.
Total secured liabilities
The total secured current liabilities are as follows:
Chattel mortgage
Consolidated
2016
$'000
2015
$'000
613
7
-
620
-
21
11
32
Consolidated
2016
$'000
2015
$'000
-
28
The chattel mortgage had a term of 4 years from September 2014 and was paid out during the current financial year.
The carrying amounts of assets pledged as security for current borrowings are:
Motor vehicle
Note 18. Current liabilities - employee benefits
Annual leave
46
Consolidated
2016
$'000
2015
$'000
-
27
Consolidated
2016
$'000
2015
$'000
60
85
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 19. Current liabilities - provisions
Provision for warranties
Provision for credit notes
Consolidated
2016
$'000
2015
$'000
237
41
278
219
53
272
Warranties
The provision represents the estimated warranty claims in respect of products sold which are still under warranty at the
reporting date. The provision is estimated based on historical warranty claim information, sales levels and any recent
trends that may suggest future claims could differ from historical amounts.
Credit notes
The provision represents the estimated credit notes which may be granted in future periods in respect of products sold
prior to the reporting date. The provision is estimated based on historical credit note information, sales levels and any
recent trends that may suggest future issues of credit notes could differ from historical amounts.
Movements in provisions
Movements in each class of provision during the current financial period, other than employee benefits, are set out below:
Consolidated - 2016
Carrying amount at the start of the period
Additional provisions recognised
Reduction in provision required
Carrying amount at the end of the period
Note 20. Current liabilities - other
Contingent consideration
Deferred revenue
Revenue received in advance
Deferred revenue represents sales invoiced in advance of the provision of contracted services.
Note 21. Non-current liabilities - borrowings
Chattel mortgage
Refer to note 27 for further information on financial instruments.
47
Warranties Credit notes
$'000
$'000
219
18
-
237
53
-
(12)
41
Consolidated
2016
$'000
2015
$'000
-
1,461
71
100
1,392
-
1,532
1,492
Consolidated
2016
$'000
2015
$'000
-
17
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 22. Non-current liabilities - deferred tax
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Intangible assets arising from business combinations
Property, plant and equipment
Development costs
Carry forward tax losses
Deferred tax liability
Movements:
Opening balance
Credited to profit or loss (note 8)
Additions through business combinations (note 33)
Credited to equity
Consolidated
2016
$'000
2015
$'000
962
11
35
(74)
934
1,415
(274)
-
(207)
1,415
-
-
-
1,415
-
(10)
1,425
-
Closing balance
934
1,415
Included in the above balance is the recognised benefit of carry forward tax losses of Jayex Technology Ltd (JUK), the
consolidated entity's UK-based subsidiary. The benefit has been recognised as it is expected that JUK will generate
sufficient future taxable profits to utilise these tax losses, and will comply with the relevant regulatory requirements for the
utilisation of those losses.
Note 23. Non-current liabilities - payables
Consolidated
2016
$'000
2015
$'000
Contingent consideration payable on business acquisition
-
2,214
Contingent consideration payable on business acquisition
The contingent consideration payable on business acquisition related to the acquisition of Appointuit Pty Ltd. Refer Note
33 for further information.
During the year ended 31 December 2016 the Company re-measured the contingent consideration payable in relation to
the prior period's acquisition of Appointuit Pty Ltd. This resulted in a $2.116 million other income item in the consolidated
entity’s Statement of Profit or Loss. The amount of the reduction in the liability arising from the re-measurement
adjustment was recorded as Other Income. In assessing the fair value of the contingent consideration payable, the
Company has reviewed the components that calculate the contingent consideration, these being discount rate, probability
factor, share price and timing of first payment. Management agreed that a significant change to the probability was
required due to changes in the competitive market place and difficulties with the integration of the product with other Group
technologies. These factors have had a substantial impact on the subsidiary’s ability to achieve the EBITDA Targets set as
part of the contingent consideration payable.
48
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 24. Equity - issued capital
Consolidated
2016
Shares
2015
Shares
2016
$'000
2015
$'000
Ordinary shares - fully paid
152,122,874 150,997,874
24,940
24,588
Movements in ordinary share capital
Details
Date
No of shares Issue price
$'000
Balance
Issue of shares in lieu of Directors fees
Share split 1:5
Issue of shares to Appointuit vendors
Conversion of convertible notes
Issue of shares to JUK vendors
Initial public offering
Capital raising costs
1 July 2015
21 August 2015
21 August 2015
22 September 2015
15 December 2015
15 December 2015
15 December 2015
19,342,114
45,000
77,548,456
6,286,187
3,772,739
19,003,378
25,000,000
-
Balance
Issue of shares upon exercise of options
Issue of shares upon exercise of options
31 December 2015
20 June 2016
18 October 2016
150,997,874
125,000
1,000,000
Balance
31 December 2016
152,122,874
$1.30
$0.00
$0.32
$0.27
$0.32
$0.32
$0.00
$0.25
$0.32
7,650
59
-
2,012
1,026
6,081
8,000
(240)
24,588
32
320
24,940
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure
to reduce the cost of capital. No external requirements have been imposed on the consolidated entity in regards to capital
management.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
No changes to what is regarded as capital nor how it is managed have occurred during the financial year.
49
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 25. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Consolidated
2016
$'000
2015
$'000
(1,779)
446
(1,333)
(49)
448
399
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial period are set out below:
Consolidated
Balance at 1 July 2015
Foreign currency translation
Amortisation of share based employee incentives
Balance at 31 December 2015
Foreign currency translation
Amortisation of share based employee incentives
Exercise of options
Foreign
currency
reserve
$'000
Share-based
payments
reserve
$'000
Total
$'000
-
(49)
-
(49)
(1,730)
-
-
-
-
448
448
-
350
(352)
-
(49)
448
399
(1,730)
350
(352)
Balance at 31 December 2016
(1,779)
446
(1,333)
Note 26. Equity - accumulated losses
Accumulated losses at the beginning of the financial period
Loss after income tax (expense)/benefit for the period
Accumulated losses at the end of the financial period
Note 27. Financial instruments
Consolidated
2016
$'000
2015
$'000
(10,913)
(5,063)
(8,242)
(2,671)
(15,976)
(10,913)
Financial risk management objectives
The entity’s principal financial instruments comprise cash and cash equivalents and loans receivable and payable. The
main purpose of these financial instruments is to finance the entity’s operations. The entity has various other financial
assets and liabilities such as receivables and trade payables, which arise directly from its operations. It is, and has been
throughout the entire period, the entity’s policy that no trading in financial instruments shall be undertaken.
There are no major risks arising from the entity’s financial instruments, as no term deposits/cash investments are
maintained. Minor risks are summarised below. The Board reviews and agrees policies for managing each of these risks.
50
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 27. Financial instruments (continued)
Financial assets and liabilities
Financial assets
Cash at bank
Trade and other receivables - current
Receivables - non-current
Financial liabilities
Trade and other payables
Deferred revenue
Short term loans
Chattel mortgage - current
Chattel mortgage - non-current
Consideration payable on business acquisition - current
Contingent consideration payable on business acquisition
Market risk
Consolidated
2016
$'000
2015
$'000
1,334
1,122
43
2,499
1,470
1,532
620
-
-
-
-
3,622
4,637
1,446
-
6,083
1,968
1,392
21
11
17
1,098
2,214
6,721
Foreign currency risk
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
The consolidated entity derives approximately 80% of its revenue and 51% its operating costs, and has 92% of its assets
and 36% of its liabilities located in, or arising from activities carried out by, a subsidiary company, Jayex Technology
Limited (JUK), incorporated in the United Kingdom. The activities, assets and liabilities of JUK are denominated in its
functional currency, the Pound Sterling (GBP). (Note: for the purposes of this comparison, the JUK-related Goodwill
intangible asset is deemed not to be denominated in GBP as this asset essentially arises on consolidation and accrues to
the benefit of the JHL consolidated entity as a whole, rather than specifically to the JUK entity.)
This exposure could have a material effect on the results of the consolidated entity in the long term, in particular the
exchange differences arising from the translation of the consolidated entity's net investment in JUK, and its future revenue
and expense streams.
The average exchange rates and reporting date exchange rates applied were as follows:
Australian dollars
Pound sterling (GBP)
Average
exchange
rate
2016
Average
exchange
rates
2015
Reporting
date
exchange
rate
2016
Acquisition
date
exchange
rate
2015
0.5481
0.4843
0.5842
0.4929
As noted above, foreign currency risk arises when future commercial transactions and recognised financial assets and
liabilities are denominated in a currency that is not the entity's functional currency. As there is no material exposure to
foreign currency risk within the financial assets and financial liabilities outside of each operating entity's functional currency,
the consolidated entity as a whole did not face a material foreign currency risk as at reporting date and no sensitivity
analysis has been prepared.
51
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 27. Financial instruments (continued)
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The consolidated entity is not exposed to any significant interest rate risk.
As at reporting date the consolidated entity has cash at bank of $1,334,000 and borrowings of $620,000. Cash at bank as
at reporting date is held in a number of bank accounts, operated by the consolidated entity's parent entity and its
subsidiaries and its head office function. Interest on bank accounts is insignificant. The interest rate on borrowings is a
fixed rate of 8 percent per annum. Any feasible change in rates is not expected to have a material impact on the financial
results of the consolidated entity.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying
amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes
to the financial statements. The consolidated entity does not hold any collateral.
The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The maximum exposure to credit risk at the reporting date to recognised financial assets is
the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial
position and notes to the financial statements. The Consolidated Entity does not hold any collateral.
The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group
and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings
and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with
creditworthy counterparties.
Other than trade receivables, the consolidated entity's main counterparties are major, reputable banks and government
sales tax authorities. The consolidated entity is satisfied that the risk of default on the part of these counterparties is low.
The Group’s management considers that all of the financial assets referred to above that are not impaired or past due at
the reporting date are of good credit quality.
Liquidity risk
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
52
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 27. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the consolidated entity'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.
Consolidated - 2016
Non-derivatives
Non-interest bearing
Trade and other payables
Accruals
Deferred revenue
Interest-bearing - fixed rate
Other loans
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
Remaining
contractual
maturities
$'000
-
-
-
8.00%
1,131
339
1,532
620
3,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,131
339
1,532
620
3,622
Consolidated - 2015
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
Remaining
contractual
maturities
$'000
Non-derivatives
Non-interest bearing
Trade and other payables
Accruals
Deferred revenue
Current consideration payable
on business acquisition
Contingent consideration
payable on business acquisition
Interest-bearing - fixed rate
Other loans
Chattel mortgage
Total non-derivatives
-
-
-
-
-
10.00%
7.65%
1,737
231
1,392
1,098
100
5
12
4,575
-
-
-
-
-
-
12
12
-
-
-
-
2,649
-
8
2,657
-
-
-
-
-
-
-
-
1,737
231
1,392
1,098
2,749
5
32
7,244
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
53
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 28. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 29. Remuneration of auditors
Consolidated
2016
$
2015
$
824,513
24,368
128,000
160,549
7,837
448,000
976,881
616,386
During the financial period the following fees were paid or payable for services provided by Grant Thornton Audit Pty Ltd,
the auditor of the Company, and its network firms:
Audit services - Grant Thornton
Audit or review of the financial statements
Other services - Grant Thornton
Investigating Accountant's Report and due diligence review
Tax consulting
Audit services - network firms
Audit of the financial statements
Note 30. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2016
$
2015
$
79,000
50,000
-
25,230
123,000
14,600
25,230
137,600
104,230
187,600
42,000
48,000
146,230
235,600
Consolidated
2016
$'000
2015
$'000
275
610
885
182
615
797
The operating lease commitments relate to leases of business premises used by the consolidated entity in Australia and
the United Kingdom to accommodate its business activities. The leases are non-cancellable and have terms ranging from
6 months to 4 years.
54
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 31. Related party transactions
Parent entity
Jayex Healthcare Ltd is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 34.
Key management personnel
Disclosures relating to key management personnel are set out in note 28 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties. All transactions were carried out on arm's length terms on a basis
which is no more or less favourable than if the transactions had occurred with non-related entities.
Consolidated
2016
$
2015
$
Other transactions:
Interest accrued to Lirho Pty Ltd (an entity related to director Michael Boyd)
Interest accrued to Zezall Pty Ltd trading as Product Partners International Pty Ltd (an entity
related to director John Allinson)
Premises rent paid or payable by Jayex Technology Limited to Jayex Group Limited (an
entity controlled by Agam Jain, a director of the consolidated entity
4
-
2,805
84
136,829
6,453
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
2016
$
2015
$
Current payables:
Trade payables to Michael Boyd (director)
Trade payables to Covenant Holdings (WA) Pty Ltd (an entity related to director Michael
Boyd)
-
-
12,222
143,934
The trade payables due to related parties were payable on demand and did not bear interest.
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Current borrowings:
Loan from Lirho Pty Ltd (an entity related to director Michael Boyd)
Consolidated
2016
$
2015
$
-
4,722
55
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 31. Related party transactions (continued)
Terms and conditions
The loan to the Company from Lirho Pty Ltd was repaid in 2016. The terms of the loan were as follows:
a. The period of the Lirho Loan commenced at the time of advancing of funds to Jayex Healthcare Limited (JHC), and
ceases with the final payment being received by Lirho.
b. JHC could draw down loaned funds by making a written request to Lirho. At Lirho’s discretion, the request funds may be
loaned. Lirho will not unreasonably withhold requested funds.
c. The loan shall be repaid within 2 years of the date of ASX listing of JHC shares (Listing Date) in equal quarterly
instalments, or in lump sum in full within 2 years of the Listing Date if the net cash balance of JHC is sufficient to repay the
loan in full.
d. Simple Interest payable of 10% per annum applies.
Note 32. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Parent
2016
$'000
2015
$'000
(4,559)
(2,460)
(4,559)
(2,460)
Parent
2016
$'000
2015
$'000
164
2,776
11,799
19,380
958
958
2,116
4,330
24,940
446
(14,545)
24,588
448
(9,986)
10,841
15,050
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 31 December 2016 or 31 December
2015.
Contingent liabilities
With the exception of any matter referred to Note 40 Contingent liabilities, the parent entity had no contingent liabilities as
at 31 December 2016 or 31 December 2015.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2016 or 31 December
2015.
56
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 32. Parent entity information (continued)
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1,
except for the following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity.
Note 33. Business combinations
There were no business combinations completed during the year ended 31 December 2016.
During the period ended 31 December 2015, the Consolidated Group undertook two separate acquisitions of businesses
owned by Jayex Technology Limited (Jayex UK) and Appointuit Pty Ltd (Appointuit) as part of its business strategy to
acquire a set of complementary technologies in the health services sector.
Full details of these acquisitions were disclosed in the Consolidated Group's Annual Report for the period ended 31
December 2015.
In relation to the business acquisitions, the Consolidated Group initially performed a provisional assessment of the fair
value of the assets and liabilities as at the date of the acquisition. For the purposes of the balance sheet, the assets and
liabilities were recorded at their provisional fair values. Under Australian Accounting Standards, the Consolidated Group
has up to 12 months from the date of acquisition to complete its initial acquisition accounting.
The Consolidated Group has carried out this exercise to consider the fair value of intangible assets acquired in the
acquisitions. This has resulted in Purchase Price Adjustments to the carrying values of certain intangible assets, and a
restatement of the amortisation of those assets as from the respective dates of acquisition, as set out below. In all cases,
the amounts of the adjusted values have been reallocated from the valued assets to the Goodwill asset of the relevant
business. Accordingly, the adjustments have no impact on the aggregate of the net assets or the Consolidated Group's net
profit after tax with the exception of any amortisation charges.
57
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 33. Business combinations (continued)
Enlighten Business - Jayex Technology Limited
Jayex Technology Limited (Jayex UK), was established in 1978 and has developed a number of technologies, including a
patient self-arrival and check-in solution which has been developed into its current form as ‘Enlighten’. On 15 December
2015 Jayex Healthcare Limited (JHL) acquired 100% of the shares in Jayex UK. The total consideration paid by JHL for
the Jayex UK shares was $9,165,000, comprising: 19,003,378 JHL shares issued at their IPO issue price of $0.32, totalling
$6,081,000; and cash of $3,084,000, $2,038,000 of which was payable upon acquisition date, and $1,046,000 of which
was payable in January 2016.
Following completion of acquisition accounting the following purchase price adjustments were made:
•
•
•
•
an amount of $4,455,000 was reallocated from the acquisition value of Software;
an amount of $2,597,000 was reallocated to the acquisition value of Customer relationships;
an amount of $214,000 was reallocated from the deferred tax liability relating to the acquired intangible assets;
net of these adjustments increasing amount allocated to goodwill by $1,644,000.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Plant and equipment
Software
Customer relationships
Trade and other payables
Provisions
Revenue received in advance
Bank loans
Deferred tax liability
Deferred tax liability relating to acquired intangible assets
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Jayex Healthcare Ltd shares issued to vendor
Acquisition costs expensed to profit or loss (Acquisition expenses)
Cash used to acquire business, net of cash acquired:
Cash paid
Cash acquired
Net cash used
58
Fair value
$'000
1,501
1,228
317
213
101
865
3,591
(1,067)
(277)
(1,491)
(1,232)
(18)
(1,337)
2,394
6,771
9,165
3,084
6,081
9,165
168
2,037
(1,501)
536
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 33. Business combinations (continued)
Appointuit Business - Appointuit Pty Ltd
Appointuit is a patient engagement solution that optimises clinic workflow, replaces appointment systems, enables staff to
engage with patients to provide tailored health care services, and allows patients to control booking of their medical
appointments at their convenience with an on-line appointment booking function. The Appointuit business was developed
and owned by Appointuit Pty Ltd.
On 22 September 2015 Jayex Healthcare Limited (JHL) acquired 100% of the shares in Appointuit Pty Ltd. The total
consideration for the Appointuit Pty Ltd shares acquisition comprised:
•
•
•
6,286,187 JHL shares issued to the vendors upon acquisition. The shares were issued at their IPO issue price of
$0.32, totalling $2,012,000;
contingent consideration of up to 3,384,870 JHL shares to be issued to the vendors upon the Appointuit business
achieving certain earnings targets over the period 1 July 2015 to 30 June 2019. The acquisition date fair value of
this consideration component was estimated to be $411,000; and
contingent consideration of a cash incentive payment of up to $10,000,000 to be paid to the vendors upon the
Appointuit business achieving certain earnings targets over the period 1 July 2015 to 30 June 2019. The
acquisition date fair value of this consideration component was estimated to be $1,803,000.
Following completion of acquisition accounting the following purchase price adjustments were made:
•
•
•
•
an amount of $3,669,000 was reallocated from the acquisition value of Software;
an amount of $346,000 was reallocated from the acquisition value of Customer relationships;
an amount of $1,205,000 was reallocated from the deferred tax liability relating to the acquired intangible assets;
net of these adjustments increasing amount allocated to goodwill by $2,810,000.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Plant and equipment
Software
Customer relationships
Trade and other payables
Provisions
Deferred tax liability relating to acquired intangible assets
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Jayex Healthcare Ltd shares issued to vendor
Contingent consideration
Acquisition costs expensed to profit or loss (Acquisition expenses)
Cash used to acquire business, net of cash acquired:
Cash acquired
59
Fair value
$'000
25
109
2
88
147
(96)
(64)
(70)
141
4,085
4,226
2,012
2,214
4,226
76
(25)
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 33. Business combinations (continued)
Reconciliation of Business Combinations cash paid to acquire businesses and cash acquired
acquired/(paid)
Business combination
$000s
Net cash
Jayex Technology Limited (536)
Appointuit Pty Ltd 25
Total cash paid for business acquisitions
(net of cash acquired) as per Statement of cash flows (511)
Note 34. 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 1:
Name
Bluepoint International Pty Ltd
P2U Pty Ltd
Jayex Australia Pty Ltd
Express RX Pty Ltd
Jayex Technology Limited
Appointuit Pty Ltd
Note 35. Events after the reporting period
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
United Kingdom
Australia
Ownership interest
2015
2016
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
No matter or circumstance has arisen since 31 December 2016 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
60
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 36. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax (expense)/benefit for the period
(5,063)
(2,671)
Consolidated
2016
$'000
2015
$'000
Adjustments for:
Depreciation and amortisation
Impairment of goodwill
Write off of non-current assets
Share-based payments
Non-cash interest expense
Interest expense on convertible notes settled by share issues
Fair value remeasurement of financial liabilities
Change in operating assets and liabilities:
Decrease in trade and other receivables
Decrease/(increase) in inventories
Decrease/(increase) in prepayments
(Increase)/Decrease in Other receivables - non-current
Decrease in trade and other payables
Decrease in deferred tax liabilities
Increase/(decrease) in employee benefits
Decrease in other provisions
Increase/(decrease) in deferred revenue
791
4,085
5
350
13
-
(2,116)
282
(86)
10
(43)
(360)
(274)
(25)
6
140
67
-
-
448
80
26
-
89
80
139
-
(274)
(11)
21
(5)
(99)
Net cash used in operating activities
(2,285)
(2,110)
Note 37. Non-cash investing and financing activities
Shares issued as consideration for business acquisitions
Deferred consideration payable for business acquisitions
Conversion of convertible notes and accrued interest to shares
Consolidated
2016
$'000
2015
$'000
-
-
-
-
8,093
3,260
1,026
12,379
61
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 38. Earnings per share
Loss after income tax attributable to the owners of Jayex Healthcare Ltd
(5,063)
(2,671)
Weighted average number of ordinary shares used in calculating basic earnings per share
151,269,390 104,442,834
Weighted average number of ordinary shares used in calculating diluted earnings per share 151,269,390 104,442,834
Number
Number
Consolidated
2016
$'000
2015
$'000
Basic earnings per share
Diluted earnings per share
Note 39. Share-based payments
(a) Employee options
Cents
Cents
(3.3)
(3.3)
(2.6)
(2.6)
A share option plan has been established by the consolidated entity and approved by shareholders at a general meeting,
whereby the consolidated entity may, at the discretion of the Nomination and Remuneration Committee, grant options over
ordinary shares in the Company to certain key management personnel of the consolidated entity. The options are issued
for nil consideration and are granted in accordance with performance guidelines established by the Nomination and
Remuneration Committee.
As at 31 December 2015 no options had been issued under the share option plan, however options granted on 2 February
2016 to the Chief Executive Officer of Jayex Australia after 31 December 2015 were determined to relate to services
performed during the period ended 31 December 2015 and, in accordance with Accounting Standards, amortisation of the
value of the options was recognised as a share based payment expense during that period as well as during the current
period. The amount of the expense recognised in the previous financial year was $448,000.
Set out below are summaries of options granted under the plan:
2016
Grant date
Expiry date
price
Exercise
Balance at
the start of
the period
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the period
02/02/2016
02/02/2019
$0.00
-
-
2,875,000
2,875,000
(1,125,000)
(1,125,000)
-
-
1,750,000
1,750,000
Of the options shown in the above table, 750,000 remain unvested as at 31 December 2016.
The options issued on 2 February 2016, and exercised during the financial year, had nil exercise price, therefore the
weighted average exercise price of options issued, exercised and outstanding at year end was nil.
The weighted average share price during the financial period was $0.15 (2015: $0.32).
The weighted average remaining contractual life of options outstanding at the end of the financial period was 2.09 years
(2015: N/A).
62
Jayex Healthcare Ltd
Notes to the financial statements
31 December 2016
Note 39. Share-based payments (continued)
For the options granted during the current financial period, the valuation model inputs used to determine the fair value at
the grant date, are as follows:
Grant date
Expiry date
Deemed
share price at
effective grant
date
Exercise price
Expected
volatility
Dividend yield
Risk-free
interest rate
Fair value at
grant date
02/02/2016
02/02/2016
02/02/2019
02/02/2019
$0.32
$0.25
$0.00
$0.00
100.00%
100.00%
-
-
1.87%
1.87%
$0.320
$0.250
(b) Shares issued to employees and third parties in return for services
The Company may, from time to time, issue shares to employee and third parties as consideration for goods and/or
services provided to the consolidated entity by those parties. All such transactions are settled in equity and vest
immediately, unless otherwise stated.
During the period ended 31 December 2015 the Company issued shares to directors to settle prior years' outstanding
directors' fees, in accordance with shareholder approval given in August 2015.
Details of these issues are as follows:
Shares issued to directors to settle outstanding prior year fees
-
58,500
The fair value of the shares issued was based on other recent share transactions. The full amount detailed above was
recognised as an expense in the statement of profit or loss and other comprehensive income.
Consolidated
2016
2015
Note 40. Contingent liabilities
(a) Federal Court application
In October 2016 the Company was served with an Application filed with the Federal Court of Australia by Australian
Medical Consulting Group Pty Ltd and its owners, Mr Gordon Cooper and Ms Rosemary Cooper. Australian Medical
Consulting Group Pty Ltd represented 59.8% of the legal vendors of Appointuit Pty Ltd. Appointuit Pty Ltd was 100%
acquired by the Company on 22 September 2015. As at the date of this report the application is progressing through
preliminary procedural stages.
The Company and its advisors do not believe there is any merit to the claims and will defend them vigorously.
(b) Contingent consideration on acquisition of Appointuit Pty Ltd
The contingent consideration payable on business acquisition related to the acquisition of Appointuit Pty Ltd ("Appointuit")
made by the consolidated entity in 2015. Refer Note 33 for further information.
As noted in Note 23, during the year ended 31 December 2016 the Company remeasured the contingent consideration
payable in relation to the Appointuit acquisition, reducing the payable from $2.214 million as at 31 December 2015 to nil as
at 31 December 2016 due to a number of factors having a substantial impact on Appointuit's ability to achieve the EBITDA
targets during the period 1 July 2015 to 30 June 2019, set as part of the contingent consideration payable.
In the event that Appointuit achieves the relevant EBITDA targets during the relevant future time period, then an amount of
contingent consideration would then become payable and would be recognised as a liability at that time.
63
Jayex Healthcare Ltd
Directors' declaration
31 December 2016
In the directors' opinion:
●
●
●
●
the attached consolidated financial statements and notes comply, and the Remuneration report set out on pages 8
to 16 of the Directors’ report, with the Corporations Act 2001, the Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting requirements;
the attached consolidated financial statements and notes comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board as described in note 1 to the financial statements;
the attached consolidated financial statements and notes give a true and fair view of the consolidated entity's
financial position as at 31 December 2016 and of its performance for the financial period ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Michael Boyd
Executive Chairman
28 February 2017
Melbourne
64
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To The Directors of JAYEX HEALTHCARE LIMITED
Report on The Audit of The Financial Report
Opinion
We have audited the financial report of Jayex Healthcare Limited (the Company), and its
subsidiaries (the Group) which comprises the consolidated statement of financial position as
at 31 December 2016, the consolidated statement of profit or loss and other comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash
flows for the year then ended, and notes to the consolidated financial statements, including
a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying consolidated financial report of Jayex Healthcare Limited,
is in accordance with the Corporations Act 2001, including:
a Giving a true and fair view of the Group’s financial position as at 31 December 2016
and of its performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Report section of our report. We are independent of the Group in
accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial statements, which identifies that during the
year ended 31 December 2016 the Group incurred a net loss of $5.063m, had net cash
outflows from operating activities of $2.285m, and that the Group’s current liabilities
exceeded its current assets by $1.080m. As stated in Note 1, these events or conditions,
along with other matters as set forth in Note 1, indicate that a material uncertainty exists
that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial report of the current period. These
matters were addressed in the context of our audit of the consolidated financial report as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter
Goodwill and intangible balances
Note 1 and 15
At 31 December 2016, the Group has goodwill and
other intangible assets amounting to $9.508m
following an impairment of $4.085m to the Appointuit
Cash Generating Unit.
The Group is required to consider triggers for
impairment in accordance with AASB 136: Impairment
of Assets. The assessment of impairment of the
Group’s goodwill and other intangible assets
incorporated significant judgement in assumptions
included, such as discount rates, future cash inflows
and outflows and changes to working capital.
This is a key audit matter due to the Group’s use of a
value-in-use model for impairment and the subjectivity
relating to assumptions and key inputs.
How our audit addressed the key audit matter
Our procedures included, amongst others:
•
•
•
•
•
•
•
•
Assessment of management’s determination of the
Group’s Cash Generating Unit (CGUs) based on our
understanding of the Group’s business and the
economic environment in which the Group operates;
Evaluation of management’s process for the
preparation and review of value-in-use model, taking
into consideration the impacts of the sector specific
challenges that the Group faces;
Utilised valuations specialists to review the
appropriateness of the value-in-use model,
appropriateness of benchmarks to external data and
its compliance with the requirements of AASB 136;
Challenging the Group’s assumptions and estimates
used in the value-in-use model to determine the
recoverable value of its assets, including those
relating to forecast revenue, expenses, and discount
rates;
Verification of the mathematical accuracy of the
cash flow models and agreeing of relevant data to
the latest forecasts;
Assessment of the historical accuracy of forecasting
of the Group;
Performance of sensitivity analysis in two main
areas. These included the discount rate and
terminal growth assumptions on the CGUs with a
higher risk of impairment; and
Assessing the adequacy of the Group’s disclosures
within the financial statements.
Key audit matter
How our audit addressed the key audit matter
Acquisition of Jayex Technology Ltd and
Appointuit Pty Ltd
Note 1 and 33
During the year, the company completed the purchase
accounting of Jayex Technology Limited (Jayex UK)
and Appointuit Pty Ltd (Appointuit) which was acquired
in the prior year for purchase consideration of $9.165m
and $4.226m respectively. The company employed
provisional accounting for 31 December 2015.
The Group engaged an valuation specialist to assist in
the measurement of the fair value of intangible assets
acquired.
This is a key audit matter as the acquisition accounting
required complex judgements, including requiring
management to determine the fair value of acquired
assets and liabilities. In particular the assessment and
allocation of purchase consideration to goodwill and
separately identifiable intangible assets (such as
customer contracts and relationships).
Our procedures included, amongst others:
•
•
•
•
Reviewing the sale and purchase agreements to
understand key terms and conditions;
Evaluation of the assumptions and methodology
used by the independent valuation specialist
engaged by the Group, such as forecast revenues,
operating costs and discount rates, used to
determine the fair value of software and customer
relationships to the Group;
Consultation with our valuation specialist to assess
certain assumptions with external benchmarks ;
Consideration of the Group’s determination of the
final fair value adjustments at 31 December 2016,
comparing them to the provisionally reported
values at 31 December 2015. We performed
testing on material fair value adjustments to
understand how they related to new information
obtained about facts and circumstances that
existed on acquisition date, their eligibility for
recognition, resulting in a net adjustment to net
assets of $266k; and
•
Assessing the adequacy of the Group’s disclosures
in respect of business acquisitions.
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises
the information in the Group’s annual report for the year ended 31 December 2016, but
does not include the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained in the audit or otherwise
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in
this regard.
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the Directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s
ability 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.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at
the Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_files/ar2.pdf. This description forms part of our
auditor’s report.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 16 of the directors’ report
for the year ended 31 December 2016.
In our opinion, the Remuneration Report of Jayex Healthcare Limited, for the year ended
31 December 2016, 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.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B.A. Mackenzie
Partner - Audit & Assurance
Melbourne, 28 February 2017
Jayex Healthcare Ltd
Shareholder information
31 December 2016
The shareholder information set out below was applicable as at 14 February 2017.
Use of Cash
In accordance with ASX Listing Rule 4.10.10, the Consolidated Entity reports that, for the whole of the reporting period, it
used the cash and assets readily convertible to cash that it had at the time of admission in a way consistent with its
business objectives.
Corporate governance
to
Refer
governence/.
the Company's Corporate Governance statement at: http://jayexhealthcare.com.au/investor/corporate-
There is no current on-market buy-back.
Distribution of equity securities
Analysis of number of equity security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Number of
holders of
shares - ASX
escrowed to
17 December
2017
Number of
holders of
ordinary
shares
Number of
unquoted
options
-
-
-
-
2
2
-
-
-
-
3
3
6
-
8
52
146
213
69
488
7
69
Jayex Healthcare Ltd
Shareholder information
31 December 2016
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
COVENANT HOLDINGS (WA) PTY LTD (BOYD#4 A/C)
MR DEAN HENRY CLEARY (THE CLEARWAY INVESTMENT A/C)
STAINTON PTY LTD (BOYD FAMILY A/C)
MR MUN KEE CHANG
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR PETER HOWELLS
MR ROBERT JOHN MANTEL
DR CHOON-JOO KHO
DONOVAN PRODUCTS PTY LTD (FAMILY ACCOUNT)
BERNE NO 132 NOMINEES PTY LTD (W 1253672 A/C)
DONOVAN PRODUCTS PTY LTD (THE DONOVAN PRODUCTS FAM A/C)
HSBC CUSTODY NOMINEES
HENSLOW PTY LTD
CITICORP NOMINEES PTY LIMITED
EQUITAS NOMINEES PTY LIMITED (PB- 601187 A/C)
MR DENNIS CRAIG TELFORD
DR CHOON HUAT LEE
E2GO LTD
MR DUNCAN STUART MCLAUCHLAN
TRUEBELL CAPITAL PTY LTD (TRUEBELL INVESTMENT FUND)
Unquoted equity securities
Options over ordinary shares issued
Shares - ASX Escrowed 24 Months to 17 December 2017
The following persons hold 20% or more of unquoted equity securities:
Ordinary shares
Number held
% of total
shares
issued
16,127,280
4,140,000
3,353,256
2,651,433
1,801,365
1,401,993
1,400,000
1,158,500
1,075,000
1,053,750
1,025,000
1,010,314
994,236
820,834
810,000
800,000
765,000
756,262
700,000
625,000
42,469,223
10.60
2.72
2.20
1.74
1.18
0.92
0.92
0.76
0.71
0.69
0.67
0.66
0.65
0.54
0.53
0.53
0.50
0.50
0.46
0.41
27.89
Number
on issue
Number
of holders
1,750,000
87,647,307
2
7
Name
Class
Number held
COVENANT HOLDINGS (WA) PTY LTD (BOYD#4
A/C)
VECTOR CAPITAL LIMITED
Shares - ASX Escrowed 24 Months to 17 December
2017
Shares - ASX Escrowed 24 Months to 17 December
2017
58,304,575
19,003,378
Substantial holders
Substantial holders in the Company are set out below:
Michael Boyd/Covenant Holdings (WA) Pty Ltd
Agam Jain/Vector Capital Limited
70
Ordinary shares
Number held
% of total
shares
issued
80,937,385
19,003,378
53.21
12.49
Jayex Healthcare Ltd
Shareholder information
31 December 2016
The Company is also regarded as being substantial holder in relation to 87,647,307 of the Company's shares as, due to
escrow arrangements over those shares, the Company has a "relevant interest" in its own shares as defined by the
Corporations Act. However the Company has no right to acquire those shares or to control the voting rights attaching to
those shares.
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Shares subject to escrow (Restricted Securities)
Voting rights relating to shares subject to escrow are the same as for ordinary shares except that, during a breach of the
ASX Listing Rules relating to Shares which are Restricted Securities, or a breach of a restriction agreement, the holder of
the relevant Restricted Securities is not entitled to any voting rights in respect of those Restricted Securities.
Options
Options do not have voting rights attached.
There are no other classes of equity securities.
Restricted securities
Class
Expiry date
Shares - ASX Escrowed 24 Months to 17 December
2017
17 December 2017
Number
of shares
87,647,307
71
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Jayex Healthcare Ltd
Phone No: 1300 330 611
Adress: 3/53 Coppin St, Richmond VIC 3121
PO Box 343, Richmond, VIC 3121 Australia
ABN 15 119 122 477