Annual financial report
for the year ended
30 June 2018
MedAdvisor Limited
ABN 17 145 327 617
MedAdvisor Limited (ASX:MDR) delivers a connected health system that empowers patients. Our
purpose is to relentlessly innovate to improve access and convenience to healthcare to help people
be healthier.
Contents
Chairman’s letter
FY18 Results summary & highlights
Directory
Directors’ reports
Auditor’s independence declaration
Corporate governance statement
Financial report for year ended 30 June 2017
Directors’ declaration
Independent auditor’s report
Shareholder information
1
3
9
10
25
26
27
63
64
68
Chairman’s Letter
Dear Shareholders,
Thank you to our shareholders who continue to support
us and a warm welcome to shareholders who have joined
us this year.
We are deli ghted that l eading Australasian healthcare
company, EBOS Group, joined us as a strategic investor
during the year, taking a $9.5m share placement to
become one of our largest shareholders with a holding of
14.1%. EBOS have joined several pharmacy groups that
recognize MedAdvisor’s
linking
patients with their health practitioners.
strategic position
We have continued to improve services and products for
pharmacies, attracting new pharmacies, and increased
patient numbers resulting in revenue growth.
increased 52% to $7.4m
Total revenue
for the
financial year and operating revenue up 52% to $7.2m,
a second consecutive year of delivering +50% revenue
growth.
We are investing strongly into the business to pursue
international and domestic growth opportunities.
A year of expansion opportunities
Domestically
-
Our strategic partnership with EBOS provided a number
of new avenues for MedAdvisor to bolster its market
presence and revenue. Services to the hospital sector are
a key growth area for the Company.
It is estimated that 50% of medication errors occur at the
transition of care, and a formal process to record and
manage all records and prescriptions could reduce errors
by up to 94% (Source: Australian Commission on Safety
and Quality of HealthCare).
MedAdvisor brings efficient processes to hospitals to
improved patient admission and discharge
provide
ensuring that all medical practitioners involved in the
process have a full and accurate view of that patient’s
medical history.
We are working towards a program that leverages
increase medication
MedAdvisor’s capabilities to
adherence through better connectivity between
hospitals, doctors and pharmacies. We are confident
that this will result in a reduction in the number of
improved patient
hospital
outcomes.
readmissions
and
in making patients’
To assist
lives simpler through
improved convenience we are investing further to build
connectivity with GPs. Nearly 7,500 GPs who process
scripts on behalf of MedAdvisor pharmacies and patients
and a growing the proportion of these are connecting
through our online portal.
We are working closely
through marketing and
educational programs to help our pharmacy customers
increase their revenues by better utilising our software’s
capabilities, which in turn earns revenue for MedAdvisor.
By promoting awareness and understanding of our
services for our pharmacy network our patient user base
will grow as pharmacists advocate and promote the app
to their customers. A growing user base is key to our
ability to attract further manufacturers to run Patient
Engagement Programs (PEPs) on the platform, which
continue to be an important part of our business and
revenue base.
Internationally
Further afield, we are also ramping up our efforts to
advance our entry into new international markets and
have commenced expansion into the US. We have
partnered with PDX Inc., a leading US provider of
pharmacy dispense software to integrate our technology.
PDX’s software is used by over 10,000 US pharmacies and
completion of the integration will allow us to provide our
platform to these pharmacies. Furthermore, PDX will
support us in our marketing efforts under the Co-
Marketing and Licence Agreement.
The integration with a major US dispensary is a key step
towards bringing our product to market. We have scaled
up our development team to increase the capacity to
execute the integration, which we anticipate completing
by the end of this calendar year.
Driving engagement
This year we achieved a milestone of one million patients
using MedAdvisor and our pharmacy network has
continued to expand. We now have over 50% of the
Australian pharmacy market using our PlusOne software.
Our pharmacy customers, both existing and new, are one
of the strongest drivers of patient acquisition and we now
have an average of nearly 400 patients per pharmacy, up
from 300 at the end of FY17.
The growth in engagement from our users this year has
been encouraging and as we improve in our delivery of
convenience to our users this engagement will continue to
grow.
Page | 1
Looking ahead
are
aggressively
international
We
opportunities and advancing our entry into the US
through the integration with PDX.
assessing
Domestically, a
large addressable market remains.
MedAdvisor’s technology has a key role to play in
increasing the connectivity and driving better health
outcomes for all patients. Our domestic expansion plans
include entering the hospital market; providing existing
customers with better services; and driving patient
engagement.
I am optimistic for our outlook over the coming 12
months and look forward to sharing further progress
and achievements. I thank shareholders for their
continued support and extend thanks to all our
partners, customers and our creative staff who are
unstintingly striving to make MedAdvisor’s patient’s
lives better
Yours Sincerely
Peter Bennetto
Chairman
Camberwell, 30 August 2018.
Page | 2
Summary of 2018 financial year results
Revenue breakdown by financial year
SaaS revenue has increased from
an increased pharmacy network
along with price increases.
User based revenues are growing
in line with user growth.
Fixed v user based operating revenue
User based revenue is tracking
at 37% of total operating revenues.
2016
2017
2018
SaaS revenues
User based revenues
Growth in operating revenues
The business continues to enjoy strong
organic growth in revenues.
FY17 had stronger percentage growth
compared to FY16 as a result of the
acquisition of Healthnotes and
OzDocsOnline.
There were no acquisitions in FY18.
Page | 3
Gross Margins by year
Gross Margins have expanded over the
last 3 financial years as the business more
effectively manages platform costs and
builds scale.
Operating and growth expenses to gross margin
Coverage of our fixed operating
expenses is increasing as a result of the
growth in our margins.
The investment in growth includes the
expenses associated with both
domestic and international market
development
We have seen strong growth and
engagement from pharmacies
with our new Professional
Pharmacy Services offering in
PlusOne.
Page | 4
Operating performance to cash
Cash collections from the underlying
business continue to be strong and
support the growth of the business.
Page | 5
Full year profit and loss highlights
Page | 6
Summary balance sheet
Current assets
Cash & cash equivalents
Other current assets
Non-current assets
Property plant & equipment
Intangible assets
Current liabilities
Trade & other payables
Income in advance
Employee benefits
Non-current liabilities
Employee benefits
2018
2017
Change
$ 000's
$ 000's
$ 000's
%
10,475
1,195
11,670
370
5,340
5,710
4,835
612
5,447
190
5,463
5,653
5,640
117%
583
95%
6,223
114%
180
(123)
57
Total assets
17,380
11,100
6,280
1,248
1,016
389
441
285
394
2,078
1,695
231
104
47
383
133
133
50
50
84
84
169%
169%
Total liabilities
2,211
1,745
467
27%
Net assets
Net tangible assets
15,168
9,828
9,355
3,892
5,813
62%
5,936
153%
Summary operating cash flow
Operating cash inflows
Receipts from customers
R&D tax concession
Government grants
Interest
Operating cash outflows
Payments to suppliers
Payments to employees
2018
2017
Change
$ 000's
$ 000's
$ 000's
6,422
634
-
155
4,949
522
41
90
7,212
5,602
5,146
5,334
10,480
4,259
3,743
8,002
1,473
112
66
1,610
886
1,591
2,477
(41)
-100%
Net operating cash flows
(3,268)
(2,401)
(867)
95%
-2%
1%
57%
23%
37%
12%
23%
%
30%
22%
74%
29%
21%
43%
31%
36%
Cash flows from operations remain
robust but have been affected at
year end by manufacturers that
take longer than our standard
terms to pay their invices.
We continue to invest in growth
and cost increases have been in
line with our expectations.
Page | 7
The net operating cash flows and cash collections have been normalised by adjusting for the effects of receipt of the
R&D Tax Concession, annual subscriptions receipts and PEP receipts by averaging those receipts over the year to which
they relate.
Page | 8
Corporate directory
Directors
Mr Peter Bennetto Non-executive Chairman
Mr Robert Read Managing Director & CEO
Mr Joshua Swinnerton Founder & Executive Director
Mr Jim Xenos Non-executive Director
Ms Sandra Hook Non-executive Director
Company secretary
Mr Carlo Campiciano CFO
Notice of annual general meeting
Details of the annual general meeting of MedAdvisor Limited are:
At the offices of HWL Ebsworth Lawyers
Level 23, 530 Collins Street
Melbourne Vic 3000
9:00 a.m. on Tuesday 23rd October, 2018.
Registered office
Level 2, 971 Burke Road
Camberwell Vic 3124
Principal place of business
Level 2, 971 Burke Road
Camberwell Vic 3124
Share register
Computershare Investor Services Pty Ltd
Auditor
Lawyers
Yarra Falls
1152 Johnston Street
Abbotsford Vic 3067
RSM Australia Partners
Level 21, 55 Collins Street
Melbourne Vic 3000
HWL Ebsworth - Lawyers
Level 26, 530 Collins Street
Melbourne Vic 3000
Stock exchange listing
MedAdvisor Limited shares are listed on the Australian Securities Exchange
(ASX:MDR)
Website
www.medadvisor.com.au
Page | 9
Directors’ report
The Directors of MedAdvisor Limited (‘MedAdvisor’) present their report, together with financial statements of the
consolidated entity, being MedAdvisor Limited (‘the Company’) and its Controlled Entities (‘the Group’) for the year
ended 30 June 2018.
Directors
The names of Directors in office at any time during or since the end of the year are:
Peter Bennetto
Robert Read
Joshua Swinnerton
Jim Xenos
Sandra Hook
Non-Executive Chairman
Executive Director / Chief Executive Officer
Executive Director / Founder
Non-Executive Director
Non-Executive Director
Peter Bennetto, Non-Executive Chairman.
GAICD, SA Fin. Director since 2013.
Member of Audit and Risk Committee
Member of the People and Remuneration Committee
Peter Bennetto is an experienced company director,
with skills
in banking, corporate finance and
governance. Peter has held a number of company
director positions
in exploration, mining and
manufacturing companies listed on the ASX since
1990. Mr Bennetto has been Non-Executive
Chairman at MedAdvisor Limited (formerly Exalt
Resources Limited) since November 28, 2013.
Mr Bennetto is currently non-executive Chairman of
Ironbark Zinc Ltd.
Robert Read, Executive Director/ CEO.
BComm(Mgt), BA(Psych), GAICD. Director since 2015.
Member of Audit and Risk Committee
Member of the People and Remuneration Committee
Robert Read has extensive commercial experience in
a wide range of businesses, including Director of
Commercial Strategy and Operations in one of the
world’s leading pharmaceutical companies, and roles
in Venture Capital and Private Equity. Robert brings a
wide range of skills to the position of CEO - in
financial
leadership,
performance
deep
understanding of the requirements to successfully
grow early stage businesses.
and marketing,
improvement
sales
and
a
Joshua Swinnerton, Executive Director/ Founder.
MEI, GradCert Eng., BE, BCS(Hons). Director since
2015.
Joshua Swinnerton has extensive experience leading
and managing sizeable IT ventures, both within large
companies, as a consultant, and as the technical and
operational lead of start-up companies. Prior to
founding MedAdvisor, led a technology start-up
which he also founded and sold into the US as well as
raising funds in the US for the company’s expansion
and managed software development. During this
time Mr Swinnerton has gained valuable experience
in bridging the gap between innovative technology
and business objectives. Josh also has extensive skills
in building and managing exceptional development
teams.
Jim Xenos, Non-Executive Director.
BSc, DipEd, AFAIM, GAICD. Director since 2015.
Member of Audit and Risk Committee
Member of the People and Remuneration Committee
leading high performing
Jim Xenos is an experienced general manager with
sales and marketing expertise and a track record in
building and
teams
delivering market share and profit growth in national
and multinational companies. Mr Xenos has a strong
reputation in forming brand and portfolio strategies,
developing new product launches with innovative go
to market activities in existing and new channels. He
in establishing high
has
strength
performing sales teams
in highly competitive
categories. Mr Xenos also brings pharmaceutical
experience to the board having held senior
management positions in national and multinational
pharmaceutical companies.
significant
Sandra Hook, Non-Executive Director.
GAICD. Director since 2016.
Member of the People and Remuneration Committee
Member of Audit and Risk Committee
Sandra Hook has a track record in driving customer-
centred business transformation and transitioning
traditional organisations in rapidly evolving
environments. She has extensive operational, digital,
financial management and strategic experience built
over 25 years as a CEO and in senior executive roles
Page | 10
Market. She is a trustee of the Sydney Harbour
Federation Trust and the Royal Botanic Gardens and
Domain Trust
Ms Hook is currently a non-executive director of RXP
Services (ASX:RXP); IVE Group (ASX:IGL); .au Domain
Administration Ltd.; the Sydney Fish Markets and is a
Trustee of the Royal Botanic Gardens & Domain Trust
and the Sydney Harbour Federation Trust.
for some of Australia’s largest media
companies including News Limited, Foxtel, Federal
Publishing Company, Murdoch Magazines and
Fairfax.
Since 2000 she has also served as a non-executive
director on listed, public and private companies and
government bodies. Sandra is currently director of
digital/technology companies RXP Services Ltd,
MedAdvisor Ltd and .au Domain Administration Ltd as
well as IVE Group Limited and the Sydney Fish
Company secretary
Carlo Campiciano, Company Secretary/ CFO
MEI, GradDip(Comp), Bbus(Acc), GIA(cert), MIPA.
Carlo Campiciano is a qualified accountant with extensive experience working with business on a wide range of areas
including taxation, finance, operations, planning, operational and financial strategy. Mr Campiciano commenced his
career with Coopers & Lybrand where he completed his Professional Year of Study which qualified him for admittance
to the Institute of Chartered Accountants before moving onto roles in professional services firms as well as roles in
industry which extended both his technical as well as practical business skills. Mr Campiciano was a Director of
MedAdvisor International Pty Ltd prior to the relisting of MedAdvisor Limited and has been the CFO since the company
was founded in 2012.
Directors’ meetings
2018
Peter Bennetto
Robert Read
Joshua Swinnerton
Jim Xenos
Sandra Hook
Committee Meetings
2018
Peter Bennetto
Robert Read
Jim Xenos
Sandra Hook
Principal activities
Board Meetings
Meetings
held
Meetings
attended
10
10
10
10
10
10
9
10
10
10
Meetings
People & Remuneration
Meetings
attended
1
held
1
1
1
1
1
1
1
Audit & Risk
Meetings
held
3
3
3
3
Meetings
attended
3
3
3
3
The principal activities of the Entity have continued to be the development and deployment of the MedAdvisor
medication and adherence platform. The MedAdvisor platform is focused on improving health outcomes by
connecting health professionals with their patients using mobile and web technologies.
Page | 11
Operating results
During the year, the Company reported a net loss of $4,454,211 (2017 $3,429,927). Operating revenue totaled
$7,239,030, growing 52% from the prior financial year (2017 $4,764,776).
Dividends
No dividends have been paid or declared by the Company since the beginning of the year.
Review of operations
The pharmacy market in Australia has approximately 5,500 pharmacies owned by 3,500 owners. Fragmentation has
increased as is evidenced by the fact there are over 11 pharmacy dispensing systems in the market. In FY18
MedAdvisor continued to build its position in this highly fragmented market. We have achieved a more than 50% share
of the pharmacy market with over 3,000 pharmacies using MedAdvisor to connect more effectively with their patients
or to deliver important professional services.
The PlusOne platform for pharmacy allows pharmacies to connect with patients via SMS, App, Web/Email or Landline.
PlusOne has smart algorithms that allows it to send reminders to the specific patients at the right time from the
information it interprets about a patient’s medication and their supply from the pharmacies dispense system.
Pharmacies using PlusOne have signed up over 1m patients on to the MedAdvisor platform.
The MedAdvisor platform helps patients take their medication safely, effectively and on time. In addition, it allows
patients to “skip the queue” and order their medications in advance. The smart algorithms used to understand
medication profiles automates significant functionality within the platform and allows patients to communicate with
their pharmacy via app, SMS or email.
Adherence to medications is a global problem. The World Health Organisation estimates that ~50% of prescribed
chronic medications are taken in developed countries. MedAdvisor has further assessed from the de-identified data
of 1.3m patients on chronic medications in Australia that Australians only take their medications 54% of the time. This
means that patients are not getting the health benefits that their doctors intend, the Government is not getting what
they pay for in terms of keeping people out of the Health System and pharmacies and manufacturers are missing out
on vital revenues.
MedAdvisor has been shown to improve medication adherence by over 20% for many common chronic medications,
which we believe can be further improved through programs run through MedAdvisor. This increase in adherence is
a much-needed benefit for pharmacists who have been facing funding cuts from traditional dispensing fees.
PlusOne also launched new features in FY18 that allow Pharmacists to record and claim their professional services
activity. This is an important revenue stream for pharmacy and PlusOne has given pharmacists a fast and efficient way
of managing the recording and claiming of these services. However, whilst this is a strong benefit, we also aimed to
assist pharmacies stimulate demand for the services they offer; PlusOne uses smart algorithms to identify, recruit and
book eligible patients into the right services. This incremental opportunity can now also be extended to both
Government Funded (6CPA) Programs and to Manufacturer Funded Programs through what we call the Health
Services Hub, which operates much like a marketplace for pharmacy.
The Health Services Hub platform allows manufacturers to offer pharmacist intervention programs which are
delivered face to face with patients. For the first time, funders can provide programs to the pharmacy market in a
consolidated way through a platform that helps patients achieve better health management and allows pharmacy to
drive more revenue. This opportunity is being extended to our Manufacturer client base who have been running with
digital programs through the MedAdvisor App. This also creates a new revenue opportunity for MedAdvisor to
participate in the incremental upside created by Health Services Hub.
The number of pharmacies using the Professional Services Platform has continued to grow as have the services
recorded in the platform, which can be seen in Professional Services Growth graph on page 4. During FY18 we
Page | 12
launched the Flu Program resulting in a near doubling of flu shots recorded in pharmacy from the prior year (excluding
Chemist Warehouse). MedAdvisor recorded over 83,000 flu shots via PlusOne.
Pharmacy
The platform was white-labelled by Discount Drug Stores (DDS) across its stores nationwide, allowing them to offer
their customers a DDS branded application. MedAdvisor also launched a customized version of MedAdvisor for
TerryWhite Chemmart. The ability to white-label the platform provided MedAdvisor with further opportunities in the
pharmacy sector to offer larger pharmacy chains a branded product to help them better engage with their customers
and manage their customer base.
SaaS fees were increased in January 2018 and by delivering more value through improved software, the business
believes that pharmacies will be prepared to pay for improved functionality over time.
We have seen volume of Tap to Refill scripts grow by 40% and total scripts ordered via MedAdvisor of $235m (FY
17 $167m). This included the full year impact of the Healthnotes acquisition.
Connected Platform
During the year more GPs used the MedAdvisor platform including via GP Connect and OzDocsOnline to handle scripts.
With approximately 7,500 GPs connected during FY18, and 26% of these GP’s are using our online platform to process
the requests either on behalf of nursing home patients or patients directly.
We also announced a MOU with HPS in Q2 FY18. We have been working with HPS on ways to transition patient care
from Community Pharmacy to Hospital and back again to a community setting. MedAdvisor believes this to be a long-
term revenue opportunity due to our ability to help save the health system from unnecessary spending from
complications arising from medication misadventure.
Throughout the year, MedAdvisor has successfully grown its domestic operations and enhanced its technical
capabilities and offering to pharmacies. It has also progressed its international expansion initiative having begun
integration with a leading dispense software provider in the United States (US) that will allow it to provide its products
to a significant portion of the US pharmacy market.
MedAdvisor has continued to invest in the development of its platform to improve the pharmacy and patient user
experience. Further development of the technology has seen the launch of new capabilities and functionality that
have increased the revenue generation potential for the pharmacy channel.
International Expansion
This year, MedAdvisor focused its efforts on its international expansion initiatives with the appointment of two
regional advisors in the UK and the US to advance its market entry in the two regions. Mr Jamal Butt, former Head of
Pharmacy with Walgreens Boots Alliance, Boots UK and Celesio UK, has been in discussions with UK pharmacies,
hospitals and health departments to determine the optimal market entry method for MedAdvisor. Since the
appointment, MedAdvisor has received approval from the U.K’s National Health Service (NHS) to integrate its
technology interface with the four principal clinical systems providers.
In the US, Mr Keith Kiarsis, former senior executive of Adheris Health has been advancing MedAdvisor’s market entry
into the region. MedAdvisor has now announced the signing of a Co-Marketing and Licence agreement with PDX Inc,
who have 10,000 pharmacy customers. Integration with a leading US dispense software provider, PDX will allow
MedAdvisor to target their customer base with a digital ordering solution that is fully integrated with their day to day
dispense systems and can be white labelled as appropriate.
Once integrated with PDX’s systems, MedAdvisor’s pharmacy software can be easily deployed into the 10,000+
pharmacies that use PDX’s software, making it faster and simpler to commence roll-out in the U.S market and begin
customer acquisition.
Page | 13
EBOS Investment
MedAdvisor received a strategic investment of $9.5m from one of Australasia’s leading healthcare companies, EBOS
Group Limited (EBOS). The investment saw EBOS become one of the largest shareholder with a 14.1% holding and
opened up new opportunities for MedAdvisor to collaborate with other healthcare companies and pharmacies under
the EBOS umbrella.
Two agreements were subsequently signed with EBOS subsidiaries; Terry White Chemmar t (TWCM) and Zest. The
agreement with TWCM is a 3-year agreement to roll out a customised TWCM-branded version of the MedAdvisor app
that will be promoted to its customers throughout its pharmacies, this was delivered in Q4 FY18. The PlusOne software
is also deployed in TWCM stores and is helping to streamline processes and deliver additional services to patients.
Under the 3-year agreement with Zest, MedAdvisor will provide a digital communication channel for Zest’s healthcare
programs. Both companies have been working together to deliver communications programs for Zest clients and will
also explore potential collaboration on tailored hospital discharge programs as MedAdvisor targets expansion into the
hospital market.
Platform Growth
During the year, MedAdvisor hit the one million patient user milestone. It began the year with a user base of ~ 830,000
and closed the reporting period with over one million patients. The growth in users was driven by the Company’s
marketing efforts and promotion of the app via our pharmacy network. This growth has been purely organic,
compared to the prior financial year where the acquisition of Healthnotes bought an additional 300,000 users, which
significantly increased the user base in the prior year and was a key driver of patient growth in FY17.
Through the Health Services Hub, program funders can deliver face to face pharmacist programs to over 7m patients
via the pharmacy to complement digital health programs run via the app or SMS.
MedAdvisor’s software is now used in over 50% of
agreements. Leading pharmacy brands using the platform include Discount Drug Stores, Blooms, Good Price Pharmacy
Warehouse, Amcal, Optimal and TerryWhite Chemmart. Impressively, MedAdvisor’s PlusOne software is interacts
with ~70% of the total script volume in Australia via its connected pharmacies, demonstrating both the higher volumes
of scripts at MedAdvisor pharmacies and the capability of the software to handle it.
Australian pharmacies, including through white-labeling
Patient Engagement Programs (PEPs) continued to grow throughout the year, with contracted programs being
extended and new programs initiated from new and existing clients. During FY18 we had a total of 32 PEP campaigns
delivered or committed to by manufacturers. Feedback from patients has been positive, with the programs being both
informative and valuable.
Through the re-ordering function that allows patients to re-fill their existing scripts at the click of a button and have it
waiting in store at pharmacy (tap-to-refill) MedAdvisor processed a total of $235m in annualised prescription
value. This volume demonstrated the increasing engagement from patients that are using the app to re-order and
collect their medications, versus those that are still going in store to re-order with their pharmacist, who then
uses the PlusOne software to log the order.
Average patients per pharmacy at the end of the financial year totaled 393. This is a 25% increase in the prior year,
which is reflective of the growing engagement in store and strong advocacy from pharmacists to recommend the app
to their customers. As the new pharmacies are added to the pharmacy network, the average number of patients are
diluted and therefore skew this metric until those new pharmacies have increased their users.
New management appointments
Dr David Chatterton was appointed as Chief Technology Officer at the end of FY17 to lead further development and
enhancement of the platform as the Company enters the next phase of continued domestic growth and international
expansion. Dr Chatterton was previously CTO at Aconex (ASX:ACX) which was recently sold to Oracle for $1.6b.
Page | 14
Significant changes in state of affairs
There were no significant changes in the state of affairs.
Likely Developments
Over the coming months, MedAdvisor is progressing the globalisation of its technology platform. The integration
with PDX’s dispensary software is expected to be complete by the end of H1 and the business is scaling to deliver a
US ready product. MedAdvisor will then work with PDX to co-market its platform to PDX’s +10,000 pharmacy
customers in the US.
MedAdvisor will continue its evaluation of the optimal market entry strategy into the UK and will continue to
progress discussions with potential partners. With the globalisation of the platform, MedAdvisor can adjust focus
towards clients in either market.
Domestically, MedAdvisor has executed agreement with HPS, subsidiary of EBOS and provider of pharmacy services
to hospitals. The agreement is to implement a patient admission and discharge process that leverages MedAdvisor’s
technology to improve the standard of patient care at the point of transition from hospital to community care.
MedAdvisor is already working closely with its partner Zest to develop a program that would use MedAdvisor’s
technology to connect the parties and manage and record the medical history and previous prescriptions.
MedAdvisor’s technology has a key role to play in enhancing the connectivity within the healthcare system and
helping to put control back into the patient’s hands.
MedAdvisor expanded its partnerships with not-for-profit and disease state groups and now has partnerships with
Glaucoma Australia, Diabetes Australia, Asthma Australia, Osteoporosis Australia, the Stroke Foundation, Parkinson’s
Australia, Epilepsy Action Australia, National Asthma Council Australia, Epilepsy Queensland, Epilepsy Foundation,
Bowel Cancer Australia and PainAustralia. These partnerships are an important validation of the role that
MedAdvisor plays in helping manage chronic disease. These bodies represent approximately 6.5m patients living
with health conditions.
Financial position
The Group has $10,474,777 in cash as of 30 June 2018 following a net cash increase of $5,640,117 for the year.
The net assets of the Group at 30 June 2018 were $15,168,462, an increase in net assets of $5,814,169 from 30 June
2017.
Proceedings
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings
to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of
those proceedings. The Group was not a party to any such proceedings in the period.
Matters subsequent to the end of the financial year
There have been no matters or circumstances which have arisen since the end of the financial period that significantly
affected, or may significantly affect the operations of the Entity, the results of those operations or the state of affairs
of the Entity, in future years.
Auditor’s independence declaration
In accordance with section 307C of the Corporations Act 2001 the auditor’s independence declaration for the year
ended 30 June 2018 has been received and can be found on page 25 of the Annual Report and forms part of this
report.
Page | 15
Unissued ordinary shares under option
Grant date
Expiry date
Exercise price
# of Options
25-Sep-15
10-Dec-15
15-Apr-16
26-Oct-16
15-Dec-16
15-Dec-16
15-Dec-16
27-Oct-17
19-Dec-17
12-Apr-18
11-Nov-18
17-Dec-18
15-Apr-31
26-Oct-19
12-Sep-19
12-Sep-19
14-Dec-31
27-Oct-32
19-Dec-32
12-Apr-33
$0.03
$0.03
$0.00
$0.08
$0.04
$0.08
$0.00
$0.00
$0.00
$0.00
10,000,000
24,000,000
6,899,999
5,000,000
5,000,000
10,000,000
12,383,333
11,760,000
310,000
880,000
Class
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Remuneration report - audited
The Directors of MedAdvisor Limited (the Group) present the Remuneration Report for Non-Executive Directors,
Executive Directors and other Key Management Personnel, prepared in accordance with the Corporations Act 2001
and the Corporations Regulations 2001 Remuneration Philosophy.
The Remuneration Report is set out under the following main headings:
Principles used to determine the nature and amount of remuneration
a.
b. Details of remuneration
Service agreements
c.
d.
Share-based remuneration; and
e. Other information
a. Principles used to determine the nature and amount of remuneration
The principles of the Group’s executive strategy and supporting incentive programs and frameworks are:
•
•
•
to align rewards to business outcomes that deliver value to shareholders;
to drive a high-performance culture by setting challenging objectives and rewarding high performing
individuals; and
to ensure remuneration is competitive in the relevant employment market place to support the attraction,
motivation and retention of executive talent.
MedAdvisor Limited has structured a remuneration framework that is market competitive and complementary to the
reward strategy of the Group. The remuneration structure that has been adopted by the Group consists of the
following components:
•
•
•
fixed remuneration being annual salary;
short term incentives, being bonuses; and
long term incentives, being employee share schemes.
The payment of bonuses, share options and other incentive payments are reviewed by the Board prior to approval
by the Board annually as part of the review of executive remuneration. All bonuses, options and incentives must be
linked to pre-determined performance criteria.
Short Term Incentive (STI) and Long-Term Incentive (LTI)
MedAdvisor performance measures involve the use of annual performance objectives, metrics, performance
appraisals and continuing emphasis on living the Company values. The performance measures are set annually after
Page | 16
consultation with the Directors and executives and are specifically tailored to the areas where each executive has a
level of control. The measures target areas the Board believes hold the greatest potential for expansion and profit
and cover financial and non-financial measures.
The Key Performance Indicators (KPI’s) for the Executive Team are summarised as follows:
Performance areas
•
•
financial – revenues and operating results; and
non-financial – strategic goals set for each business unit based on job descriptions
The STI and LTI Program’s incorporate both cash and share-based components for the Executive Team and other
employees. The Board may, at its discretion, award bonuses for exceptional performance in relation to each person’s
pre-agreed KPIs.
b. Details of remuneration
2018
Cash Salary
& Fees
$
Cash
Bonus
$
Super-
annuation
$
in 2018
Financial Year1
$
from prior
years1
$
Total
$
Value of Share Value of Share
Based Awards Based Awards
Executive Directors
R Read
J Swinnerton
Non-Executive Directors
P Bennetto
J Xenos
S Hook
Other Key Management Personnel
C Campiciano
280,711
209,332
81,000
45,000
45,000
221,074
882,117
-
-
-
-
-
-
-
20,049
19,887
7,695
4,275
4,275
19,224
75,405
-
-
-
-
-
*
242,309
-
543,069
229,219
-
-
-
88,695
49,275
49,275
30,726
30,726
-
242,309
271,024
1,230,557
∗ Mr Read’s performance linked Share Based Entitlements are in accordance with his Employment Agreement dated 30 June 2015
which were disclosed in the Company’s Prospectus dated 8 September 2015. These Share Based Entitlements are brought to
account based on a probability of all the performance milestones under his Employment Agreement being achieved. During the
financial year 8,500,000 Read Performance Rights had vested based on the milestones having been achieved. The value brought
to account of the Vested Read Rights in the current financial year is $81,072 (2017 $73,472).
1 Share based entitlements have been measured at fair value on grant date determined in accordance with the Binomial or Black-
Scholes option pricing model.
Page | 17
The proportion of the cash bonus paid/payable or forfeited is as follows:
Executive Directors
R Read
Cash bonus paid/payable
Cash bonus forfeited
2018
2017
2018
2017
0%
100%
0%
0%
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
`
Fixed Remuneration
At Risk - STI
At Risk - LTI
2018
2017
2018
2017
2018
2017
Executive Directors
R Read
J Swinnerton
Non-Executive Directors
P Bennetto
J Xenos
S Hook
Other Key Management Personnel
C Campiciano
c. Service agreements
55%
100%
100%
100%
100%
41%
100%
100%
100%
45%
89%
99%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
0%
0%
45%
0%
0%
0%
0%
11%
55%
0%
0%
0%
55%
1%
Remuneration and other terms of employment for the Executive Directors and other Key Management Personnel
are formalised in a Service Agreement. The major provisions of the agreements relating to remuneration are set out
below:
Name
Directors
R Read
J Swinnerton
Other Key Management Personnel
Base salary
Term of agreement
Notice period
$280,711
$209,333
Undefined
Undefined
9 months
9 months
C Campiciano
$231,460
Undefined
6 months
Note: Base salary noted above is exclusive of superannuation which under the applicable service agreements is
capped in accordance with the maximum superannuation contribution base for superannuation guarantee purposes.
The remuneration of non-executive Directors is set by the Board at a level that provides the Board with the ability to
attract and retain directors of the highest calibre whilst incurring a cost that is acceptable to shareholders. At the
Annual General Meeting held on 18 December 2015 shareholders approved aggregate remuneration of non-
executive directors of $350,000 per annum.
The amount each non-executive director is remunerated is set by the Board based on the recommendation from the
People and Remuneration Committee. Individual remuneration is set having regard to the director’s experience and
their role on the Board and Committees.
Page | 18
d. Share-based remuneration
MedAdvisor employee incentive option plan
All options refer to options over ordinary shares of the Company, which are exercisable at no cost on a one-for-one
basis under the terms of the Employee Share Option Plan that was approved by shareholders at the 2015 annual
general meeting.
Options granted to employees under the MedAdvisor Employee Incentive Option Plan will vest subject to the service
period’s conditions under the plan. Unvested options will expire on the termination of the individual’s employment;
vested options will expire on the expiry date, which is 15 years.
Non-executive director incentives
Read Rights
All of the Read Rights refer to rights over ordinary shares of the Company, which are exercisable on a one-for-one
basis at no cost under the terms of the Mr Read’s employment agreement.
Rights issued to Mr Read under his employment agreement are exercisable subject to the meeting the following
conditions:
•
•
Continuous employment over a 5-year period for the date of his employment with MedAdvisor International
Pty Ltd
Achievement of predetermined revenue, activated patients and active medical practitioner targets within 3
years from the date of relisting of the Company on the Australian Securities Exchange.
The following table provides a breakdown of Mr Read’s Rights:
Page | 19
Note: These Rights are cumulative on attainment of each of the continuous service milestones or performance
targets.
At the end date of this report Mr Read became entitled to exercise his rights over 15,500,000 shares having met the
required milestones in accordance with his employment agreement of which Mr Read exercised 7,000,000 in
September 2017.
Bonuses included in remuneration
During the financial year Mr Read was paid his short-term incentive cash bonus of $30,000 which was accrued at the
end of the previous financial year. There were no other bonuses paid and or payable in the current financial year.
Other information
Options held by directors and key management personnel
The number of options and rights to acquire shares in the Company held during the 2018 reporting period by each
of the directors and key management personnel of the Group; including their related parties are set out below.
2018
Balance at
start of the
reporting period
Granted as
remineration
Vested and
Vested and
exerciseable at un-exerciseable at
end of the
end of the
Exercised
reporting period reporting period
Executive Directors
R Read1
Non-Executive Directors
P Bennetto
S Hook
Other Key Management Personnel
C Campiciano
1Read Rights
42,500,000
10,000,000
5,000,000
-
-
-
500,000
1,000,000
7,000,000
8,500,000
27,000,000
-
-
-
-
-
10,000,000
5,000,000
166,667
1,333,333
Shares held by directors and key management personnel
Ordinary Shares
The number of ordinary shares in the Company held during the 2018 reporting period by each of the directors and
key management personnel of the Group; including their related parties are set out below.
Page | 20
Balance at
start of the
Granted as
2018
reporting period remuneration
Received or
Exercised
Other
changes
Held
at end of the
reporting period
Executive Directors
R Reada
J Swinnertonb
Non-Executive Directors
P Bennetto
S Hook
J Xenosc
Other Key Management Personnel
C Campicianod
6,423,888
106,837,500
1,332,754
1,250,000
88,050,000
13,125,000
-
-
-
-
-
-
7,000,000
68,225,102
-
-
56,036,062
-
-
-
-
-
13,423,888
175,062,602
1,332,754
1,250,000
144,086,062
8,381,562
500,000
22,006,562
a 8,166,667 shares of Mr Read’s holding is subject to voluntary escrow until 1 December 2018.
b 145,062,602 shares of Mr Swinnerton’s holding is subject to voluntary escrow until 1 December 2018.
c 126,236,062 shares of Mr Xenos’ holding is subject to voluntary escrow until 1 December 2018.
d 21,506,562 shares of Mr Campiciano’s holding is subject to voluntary escrow until 1 December 2018.
11,666,666 of the shares held by Mr Read and/or parties related to Mr Read are subject to escrow for a period of 24 months from the date of
re-listing of the Company.
2 all of the shares held Messrs Swinnerton, Xenos and Campiciano and/or parties related to Messrs. Swinnerton, Xenos and Campiciano are
subject to escrow for a period of 24 months from the date of re-listing of the Company.
* Shares held by Messrs Swinnerton, Xenos and Campiciano and/or parties related to Messrs. Swinnerton, Xenos and Campiciano at the
beginning of the previous reporting period were subject to a share split pursuant to the re-organisation of the capital of MedAdvisor
International Pty Ltd preceding the completion of the reverse takeover of the listed entity.
+ Mr Xenos and/or parties related to Mr Xenos were issued bonus shares pursuant to the re-organisation of the capital of MedAdvisor
International Pty Ltd preceding the completion of the reverse takeover of the listed entity during the previous reporting period.
Founder Performance Shares
The number of Founder Performance Shares in the Company held during the 2018 reporting period by each of the
directors and key management personnel of the Group; including their related parties are set out below.
Page | 21
2018
Balance at
start of the
reporting period
Granted as
remuneration
Received or
Exercised
Other
changes
Held
at end of the
reporting period
Executive Directors
J Swinnerton
Non-Executive Directors
J Xenos
Other Key Management Personnel
C Campiciano
68,225,102
56,036,062
8,381,462
-
-
-
-
-
-
(68,225,102)
(56,036,062)
(8,381,462)
-
-
-
2017
Balance at
start of the
reporting period
Granted as
remuneration
Received or
Exercised
Other
changes
Held
at end of the
reporting period
Executive Directors
J Swinnerton
Non-Executive Directors
J Xenos
Other Key Management Personnel
C Campiciano
-
-
-
-
-
-
-
-
-
68,225,102
68,225,102
56,036,062
56,036,062
8,381,462
8,381,462
Founder Performance Shares converted to ordinary shares upon satisfaction of both of the following milestones in
October 2017:
-
-
50% of the Founder Performance Shares shall convert upon the “MedAdvisor Platform” being activated at
2,500 pharmacies within a period of 2 years from the issue of the Founder Performance Shares; and
50% of the Founder Performance Shares shall convert upon the Company receiving annualised revenue
from the MedAdvisor business (calculated over two consecutive calendar quarters) of no less than
$5,000,000, within a period of 3 years from the issue of the Founder Performance Shares.
Other transactions with directors and key management personnel:
-
-
During 2018 the Group used the services of NostraData Pty Ltd of which Mr Jim Xenos is a director and has
significant influence. The amounts billed relate to the provision of Data Services by NostraData Pty Ltd and
amounted to $120,345 (2017 $70,305).
Swintech Property Consulting Services
End of audited Remuneration Report
Page | 22
Additional information
The earnings of the group since the incorporation of MedAdvisor International Pty Ltd are summarized below:
Revenue from services
6,604,762
4,242,746
1,425,781
1,145,712
2018
$
2017
$
2016
$
2015
$
Revenue from Actavis license fee (non recurring)
-
789,829
7,394,590
5,783,128
(4,256,876)
(4,453,869)
(4,454,211)
-
659,341
4,902,087
3,508,881
(3,288,317)
(3,428,643)
(3,429,927)
-
336,704
1,762,485
1,043,258
(3,032,376)
(3,066,196)
(3,071,062)
2014
$
606
1,000,000
88,667
500,000
258,744
1,904,456
1,089,273
511,677
(536,311)
(546,123)
(546,123)
979,757
(826,453)
(835,453)
(835,453)
$
0.0490
$
0.0320
$
0.0380
n/a
n/a
Other revenue
Total revenue
Total margin
EBITDA
EBIT
Profit after income tax
Share Price
Environmental issues
In the previous financial year the two mining tenements that the Company held had been surrendered and full
refunds of the associated Exploration Bonds had been received. The Company undertook remediation works to the
satisfaction of the land owners.
The Company’s operations are no longer subject to significant environmental and other regulations.
Indemnities given to, and insurance premiums paid for 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 year, 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.
Indemnities and insurance premiums of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor
of the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
Non-audit services
During the year, RSM Australia Partners, the Company’s auditors, performed certain other services in addition to
their statutory audit duties.
The Board has considered the non-audit services provided during the year by the auditor and the Board is satisfied
that the provision of those non-audit services during the year is compatible with, and did not compromise, the
auditor independence requirements of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services were reviewed and approved to ensure that they do not impact upon the integrity
and objectivity of the auditor
the non-audit services do not undermine the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing
the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an
advocate for the Company or jointly sharing risks and rewards
Page | 23
Details of the amounts paid to the auditors of the Company, RSM Australia Partners, and its related practices for audit
and non-audit services provided during the year are set out in Note 11 to the financial statements.
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.
Auditor’s independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out immediately after this directors' report.
Auditor
RSM Australia Partners 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,
Peter Bennetto
Chairman
30 August 2018
Sydney, NSW.
Page | 24
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of MedAdvisor Limited for the year ended 30 June 2018, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
P A RANSOM
Partner
Dated:30 August 2018
Melbourne, Victoria
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Page | 25
Corporate governance statement
Corporate governance
The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such,
MedAdvisor Limited and its Controlled Entities (‘the Group’) have adopted the third edition of the Corporate
Governance Principles and Recommendations which was released by the ASX Corporate Governance Council on 27
March 2014 and became effective for financial years beginning on or after 1 July 2014.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2018 is dated as at 30 June 2018
and date of last review and Board approval was on 23 August 2018. The Corporate Governance Statement is
available on MedAdvisor’s website at:
http://medadvisor.com.au/Investors/CorporateDirectory#governance-policies
Page | 26
Consolidated financial report for the year ended 30 June 2018
Page | 27
MEDADVISOR LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR YEAR ENDED 30 JUNE 2018
Revenues from services
Other revenue
Total revenues
Direct Expenses
Development Costs
Notes
8 a.
8 b.
9 a.
Consolidated
Jun-18
$
6,604,762
789,829
7,394,590
Jun-17
$
4,242,746
659,341
4,902,087
(821,634)
(733,865)
(893,037)
(295,367)
Employee benefits expense
9 b.
(6,288,151)
(4,302,321)
Marketing expense
(2,179,311)
(1,398,425)
Depreciation and amortisation expense
Directors fees
Other expenses
Finance costs
Profit / (loss) before income tax
from continuing operations
Income tax (expense) / income
Profit / (loss) for the year
Other comprehensive income
Total comprehensive income (loss)
9 c.
9 b.
(196,993)
(140,327)
(181,131)
(193,826)
(1,276,242)
(1,194,821)
9 d.
(12,304)
(73,062)
(4,454,211)
(3,429,927)
10
-
-
(4,454,211)
(3,429,927)
-
-
(4,454,211)
(3,429,927)
Earning per share for loss from continuing operations
of MedAdvisor Limited
Basic loss per share
Diluted loss per share
3
3
Cents
(0.36)
(0.36)
Cents
(0.40)
(0.40)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
Page | 28
MEDADVISOR LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Property, plant & equipment
Intangible Assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income in advance
Employee benefits
Total current liabilities
Non-current liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits / (losses)
Total equity
Consolidated
Jun-18
$
Jun-17
$
10,474,777
4,834,660
890,879
303,912
429,636
182,644
11,669,567
5,446,940
369,876
5,340,258
5,710,134
189,517
5,463,139
5,652,656
17,379,701
11,099,597
1,247,513
1,016,210
389,440
440,954
285,065
394,444
2,077,907
1,695,719
133,332
133,332
49,586
49,586
2,211,239
1,745,305
15,168,462
9,354,292
25,979,898
16,184,549
1,732,305
1,259,273
(12,543,741)
(8,089,530)
15,168,462
9,354,292
12
13
14
15
16
17
18
19
19
4
5
20
The above statement of financial position should be read in conjunction with the accompanying notes.
Page | 29
MEDADVISOR LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR YEAR ENDED 30 JUNE 2018
2018
Contributed
Share Options
Retained
Equity
$
Reserve
Earnings
$
$
Total
Equity
$
Balance at 1 July 2017
16,184,549
1,259,273
(8,089,530)
9,354,292
Transactions with equity holders
in their capacity as equity holders
Ordinary shares issued
Capital raising costs
Share options issued
Share options exercised
Net profit / (loss)
9,548,375
(100,626)
347,600
820,632
(347,600)
9,548,375
(100,626)
820,632
-
(4,454,211)
(4,454,211)
Balance at 30 June 2018
25,979,898
1,732,305
(12,543,741)
15,168,462
2017
Contributed
Share Options
Retained
Equity
$
Reserve
Earnings
$
$
Total
Equity
$
Balance at 1 July 2016
6,508,117
615,914
(4,659,603)
2,464,428
Transactions with equity holders
in their capacity as equity holders
Ordinary shares issued
Capital raising costs
Share options issued
Share options exercised
Net profit / (loss)
10,200,000
(537,068)
13,500
656,859
(13,500)
10,200,000
(537,068)
656,859
(3,429,927)
(3,429,927)
Balance at 30 June 2017
16,184,549
1,259,273
(8,089,530)
9,354,292
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Page | 30
MEDADVISOR LIMITED
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR YEAR ENDED 30 JUNE 2018
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Income tax paid
Notes
Consolidated
Jun-18
$
Jun-17
$
7,056,328
5,512,056
(10,479,634)
(8,002,444)
155,387
-
89,665
(3,923)
Net cash inflow (outflow) from operating activities
22
(3,267,919)
(2,404,646)
Cash flows from investing activities
Secuity bonds - cash on deposit with banks
Payments for property, plant and equipment
Payments for intangibles
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from new share issue
Capital raising costs (net of GST)
Payments to related parties
Net cash (outflow) inflow from financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning
Cash and cash equivalents at the end of the year
(115,757)
(405,580)
-
(521,337)
-
(36,139)
(2,982,071)
(3,018,210)
9,530,000
(100,626)
-
8,000,000
(537,068)
(94,405)
9,429,374
7,368,527
5,640,117
4,834,660
10,474,777
1,945,671
2,888,989
4,834,660
The above statement of cash flows should be read in conjunction with the accompanying notes.
Page | 31
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 1: Statement of Significant Accounting Policies
The financial statements cover the Company of MedAdvisor Limited. MedAdvisor Limited is a listed public
company limited by shares, incorporated and domiciled in Australia.
The financial statements were authorized for issue on the 30 August 2018 by the Directors of the Company.
Basis of preparation
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the
Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Company is a for-profit entity for
financial reporting purposes under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial
statements containing relevant and reliable information about transactions, events and conditions. Compliance
with Australian Accounting Standards ensures that the financial statements and notes also comply with International
Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of
these financial statements are presented below and have been consistently applied unless otherwise stated.
The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
Accounting Policies
(a)
Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent
MedAdvisor Limited and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an
entity when it 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 over the entity. A list of controlled entities is contained in Note 6 of the
Financial Statements.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from
the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date
that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between
Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and
adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling
interests”. The Group initially recognises non-controlling interests that are present ownership interests
in
subsidiaries and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair
value or at the non-controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial
recognition, non-controlling interests are attributed their share of profit or loss and each component of other
comprehensive income. Non-controlling interests are shown separately within the equity section of the statement
of financial position and statement of comprehensive income.
(b)
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the
same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is
responsible for the allocation of resources to operating segments and assessing their performance.
Page | 32
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
(c)
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.
License fees
License fees are charged for the use of the MedAdvisor platform and the revenue recognized at the point at which
the customer has agreed to the terms and conditions of use of the platform and installs the interface on their
computer equipment and is able to benefit from and be rewarded for the use of the platform.
Rendering of services
Rendering of services revenue from computer maintenance fees is recognised by reference to the stage of
completion of the contracts. Stage of completion is measured by reference to labour hours incurred to date as a
percentage of total estimated labour hours for each contract. Where the contract outcome cannot be reliably
estimated, revenue is only recognised to the extent of the recoverable costs incurred to date.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
(d)
Income tax
The income tax expense (revenue) for the period comprises current income tax expense (income) and deferred tax
expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax
liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant
taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the
year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or
loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where
amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised
from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the
reporting period. Their measurement also reflects the manner in which management expects to recover or settle
the carrying amount of the related asset or liability.
Page | 33
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint
ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary
difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax
assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable
entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to
be recovered or settled.
(e)
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realized within
12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it
is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
(f)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less.
(g)
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.
Page | 34
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
(h)
Work in progress
Work in progress on services contract’s in progress comprises the cost of labour directly related to the performance
of the contract plus any other direct costs incurred in delivering the contract services.
(i)
Plant and equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and
any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated
recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and
impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate
to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present
(refer to Note 1 (l) for details of impairment).
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash
flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have
been discounted to their present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of
the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss
during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land,
is depreciated over the asset’s useful life to the Company commencing from the time the asset is held ready for use.
Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the
estimated useful lives of the improvements.
The depreciation rates and method of deprecation is as follows:
• Office equipment – diminishing value at 30% p.a.
• Office furniture – straight line at 20% p.a.
•
Leasehold improvements – straight line over the unexpired period of the lease
(j)
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.
Page | 35
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-
line basis.
(k)
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair
value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite
life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life
intangible assets are subsequently measured at cost less amortization and any impairment. The gains or losses
recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference
between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite
life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are
accounted for prospectively by changing the amortization method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is
carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are
not subsequently reversed.
Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the
period of their expected benefit, being their finite life of 10 years.
(l)
Impairment of assets
At the end of each reporting period, the Company assesses whether there is any indication that an asset may be
impaired. The assessment will include the consideration of external and internal sources of information including
dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition
profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable
amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s
carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately
in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (e.g. in
accordance with the revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of a
revalued asset is treated as a revaluation decrease in accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets
not yet available for use.
(m)
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
(n)
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
Page | 36
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
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.
(o)
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to
be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when
the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting
date are measured as the present value of expected future payments to be made in respect of services provided by
employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market yields at the
reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange
for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the
amount of cash is determined by reference to the share price.
The cost of equity-settled transactions is 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 is recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award,
the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The
amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less
amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying
either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on
which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as
follows:
•
•
during the vesting period, the liability at each reporting date is the fair value of the award at that date
multiplied by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the
liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash
paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market
Page | 37
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
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.
(p)
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.
(q)
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.
(r)
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any
non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree
is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition
costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed
for appropriate classification and designation in accordance with the contractual terms, economic conditions, the
consolidated entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-
date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous
carrying amount is recognised in profit or loss.
Page | 38
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
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.
(s)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of MedAdvisor Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the
financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
(t)
Financial instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related
contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out
below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market and are stated at amortised cost using the effective interest rate method.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments
and amortization.
Page | 39
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
(u)
Goods and services tax (GST)
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.
(v)
New standards and interpretations issued but not yet effective
At the date of this financial report the following standards and interpretations, which may impact the entity in the
period of initial application, have been issued but are not yet effective. Other than changes to disclosure formats, it is
not expected that the initial application of these new standards in the future will have any material impact on the
financial report, except AASB 16 Leases. This standard requires operating leases which are currently held off balance
sheet to be brought onto the balance sheet. Future expected lease payments should be capitalized and brought onto
the balance sheet as an asset (right of use) and also reflect an lease liability. The asset is amortised whilst the lease is
reduced as payments are made, adjusted for any lease incentives applicable and interest costs of winding the lease
liability to present value. The expected value of such assets and liabilities at 30 June 2018 is $3,162,351 (30 June 2017
$733,120) and the group has not brought such assets or liabilities to account.
Reference
Title
Summary
AASB 15
Revenue from Contracts with
Customers
It contains a single model
for
contracts with customers based on a
five-step analysis of transactions for
revenue
two
approach, a single time or over time,
for revenue recognition.
recognition,
and
The adoption of AASB 15 will not have
a material impact on the financial
statements.
Application date
(financial years
beginning)
1 January 2018
Page | 40
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Reference
Title
Summary
AASB 9
Financial Instruments
AASB 16
Leases
This Standard supersedes both AASB
9 (December 2010) and AASB 9
(December 2009) when applied. It
introduces a “fair value through other
comprehensive income” category for
contains
debt
requirements
impairment of
financial assets, etc.
instruments,
for
The adoption of AASB 9 will not have
a material impact on the financial
statements.
AASB 16 sets out the principles for
the
recognition, measurement,
presentation and disclosure of leases.
Application
(financial
beginning)
date
years
1 January 2018
1 January 2019
and
leases
This standard removes the current
distinction between operating and
financing
requires
recognition of an asset (the right to
use the leased item) and a financial
liability to pay rentals for almost all
lease contracts, effectively resulting
in the recognition of almost all leases
on
financial
statement of
the
position.
The accounting by lessors, however,
will not significantly change.
The adoption of AASB 16 will have an
estimated impact on the financial
statements as set out in note 1(v)
above.
(w)
Comparative figures
Where required by Accounting standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
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
Page | 41
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
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.
Goodwill and other indefinite life intangible assets
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the
accounting policy stated in note 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.
The recoverable amount of the consolidated entity's goodwill has been determined by a value-in-use calculation
using a discounted cash flow model, based on a 3 year projection period approved by management and extrapolated
for a further 2 years using a steady rate, together with a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
The following key assumptions were used in the discounted cash flow model for the business:
(a) 19.78% (2017: 19.78%) pre-tax discount rate;
(b) 5.0% (2017: 5.0%) per annum projected revenue growth rate;
(c) 5.0% (2017: 5.0%) per annum increase in operating costs and overheads.
The discount rate of 19.78% pre-tax reflects management’s estimate of the time value of money and the consolidated
entity’s weighted average cost of capital, the risk-free rate and the volatility of the share price relative to market
movements.
Management believes the projected revenue and cost growth rate of 5% in the fourth and fifth years is prudent and
justified based on current and expected growth in the business.
Based on the above an impairment charge has not been applied as the carrying amount of goodwill does not exceed
its recoverable amount for the business.
Sensitivity
The directors have made judgements and estimates in respect of impairment testing of goodwill. Should these
judgements and estimates not occur the resulting goodwill carrying amount may decrease. The sensitivities are as
follows:
(a) Revenue would need to decrease by more than 17.7% for the business before goodwill would need to be
impaired, with all other assumptions remaining constant.
(b) The discount rate would be required to increase by 44.3% for the business before goodwill would need to be
impaired, with all other assumptions remaining constant.
Management believes that other reasonable changes in the key assumptions on which the recoverable amount of
the goodwill is based would not cause the cash-generating unit’s carrying amount to exceed its recoverable amount.
If there are any negative changes in the key assumptions on which the recoverable amount of goodwill is based, this
would result in a further impairment charge for the goodwill.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair
Page | 42
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
value of the equity instruments at the date at which they are granted. The fair value is determined by using either
the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no
impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit
or loss and equity.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
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.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it
is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Note 3: Earnings per share
Both the basic and diluted loss per share have been calculated using the loss attributable to shareholders of
MedAdvisor Limited as the numerator, i.e. no adjustments to profits were necessary during the year ended 30 June
2018.
Earning per share for loss from continuing operations
of MedAdvisor Limited
Loss for the year
Basic loss per share
Diluted loss per share
Weighted average number of ordinary shares
Weighted average number of ordinary shares used in
calculating basic earnings per share
Adjustment for calculation of diluted earnings per share
Options over ordinary shares
Performance rights vested but not exercised
Performance rights not vested
Consolidated
Jun-18
$
Jun-17
$
(4,454,211)
(3,429,927)
Cents
(0.36)
(0.36)
Cents
(0.40)
(0.40)
1,224,549,739
861,554,707
85,996,804
62,543,080
6,003,950
3,076,600
27,000,000
35,500,000
1,343,550,493
962,674,387
Page | 43
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 4: Issued Capital
a. Fully paid ordinary shares
Ordinary shares fully paid
Movements in ordinary share capital
Balance
New Share Issue
Consideration shares for Health Enterprises 2 Acquisition
EIP Options Exercised
Share issue transaction costs, net of tax
Balance
EIP Options Exercised
Read Rights Exercised
New Share Issue (as Consideration)
Founder Performance Shares Issued
New Share Issue(EBOS)
EIP Options Exercised
EIP Options Exercised
EIP Options Exercised
Peloton Options Exercised
Share issue transaction costs, net of tax for the year
b.
Performance shares
Jun-18
Shares
1,317,927,982
Jun-17
Shares
945,381,426
Jun-18
$
25,979,898
Jun-17
$
16,184,549
Date
# of shares
Issue price
$
30-Jun-16
26-Oct-16
26-Oct-16
24-May-17
26-Oct-16
30-Jun-17
05-Sep-17
05-Sep-17
05-Sep-17
05-Sep-17
24-Oct-17
12-Apr-18
12-Apr-18
12-Apr-18
12-Apr-18
686,986,688
200,000,000
$
0.040
57,894,738
$
0.038
500,000
$
0.027
945,381,426
66,666
$
0.027
7,000,000
$
0.030
612,500
$
0.030
195,000,000
165,217,390
$
0.058
2,500,000
$
0.040
900,000
$
0.027
250,000
$
0.046
1,000,000
$
0.030
30-Jun-18
1,317,927,982
6,508,117
8,000,000
2,200,000
13,500
(537,068)
16,184,549
1,800
210,000
18,375
-
9,500,000
100,000
24,300
11,500
30,000
(100,626)
25,979,898
Balance
Balance
Conversion of founder performance shares to ordinary shares1
Conversion of Peloton Capital Pty Ltd performance shares to ordinary shares2
Balance
Date
01-Jul-16
30-Jun-17
05-Sep-17
05-Sep-17
30-Jun-18
Issued
#
250,000,000
250,000,000
(170,000,000)
(25,000,000)
55,000,000
1 Founder performance shares converted to ordinary shares upon in October 2017 upon the satisfaction of both of the following
milestones:
50% of the founder performance shares shall convert upon the “MedAdvisor Platform” being activated at 2,500 pharmacies
within a period of 2 years from the issue of the founder performance shares; and
50% of the founder performance shares shall convert upon the Company receiving annualised revenue from the MedAdvisor
business (calculated over two consecutive calendar quarters) of no less than $5,000,000, within a period of 3 years from the
issue of the founder performance shares.
Page | 44
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 4: Issued Capital - continued
At the date of this report both the pharmacy and revenue milestones have been achieved and all founder performance shares
are eligible to be converted to ordinary shares.
2 Peloton Capital Pty Ltd performance converted to ordinary shares upon in October 2017 upon the satisfaction of both of
the following milestones:
50% of the Peloton performance shares shall convert upon the “MedAdvisor Platform” being activated at 2,500 pharmacies
within a period of 2 years from the issue of the Peloton performance shares; and
50% of the Peloton performance shares shall convert upon the Company receiving annualised revenue from the MedAdvisor
business (calculated over two consecutive calendar quarters) of no less than $5,000,000, within a period of 3 years from the
issue of the Peloton performance shares.
At the date of this report both the pharmacy and revenue milestones have been achieved and all Peloton performance shares
are eligible to be converted to ordinary shares.
3Macmillan Gold Pty Ltd performance shares will convert to ordinary shares upon satisfaction of any one of the following
milestones:
5,000,000 MMG performance shares shall convert upon the achievement of the following milestones:
(i) MMG will assist MedAdvisor in the development of the MedAdvisor Home Medication Review platform by
facilitating an advisory panel of no less than eight experienced and reputable medical practitioners, and
(ii)
Following development and testing of the MedAdvisor Home Medication Review platform, MMG will facilitate a
Pilot Study of no less than forty experienced and reputable medical practitioners to test the commercial and
technical feasibility of viability MedAdvisor Home Medication Review platform, and
(iii) MMG will assist Peloton Capital Pty Ltd to raise between $750,000 and $1,000,000 from third parties through a
subscription for Convertible Notes in MedAdvisor International Pty Ltd prior to the commencement of the Pilot
Study.
50,000,000 MMG performance shares shall convert upon the achievement of the following gross revenue generated by
MedAdvisor from the commercialization of the MedAdvisor Home Medication Review platform:
Revenue
target
Shares to be
issued
Aggregate
shares issued
$
1,000,000
10,000,000
10,000,000
$
2,000,000
10,000,000
20,000,000
$
4,000,000
12,500,000
32,500,000
$
7,000,000
17,500,000
50,000,000
At the date of this report no MMG performance shares were eligible to be converted or had been converted to ordinary
shares.
Page | 45
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 4: Issued Capital - continued
c.
Read rights
Balance
Employment rights
Performance rights
Balance
Employment rights
Performance rights
Employment rights
Balance
Issued
#
42,500,000
-
-
42,500,000
-
-
-
Vested
#
1,000,000
1,000,000
5,000,000
7,000,000
5,000,000
2,500,000
1,000,000
42,500,000
15,500,000
Balance
#
41,500,000
40,500,000
35,500,000
35,500,000
30,500,000
28,000,000
27,000,000
27,000,000
01-Jul-16
03-Jan-17
06-Mar-17
30-Jun-17
30-Aug-17
10-Apr-18
30-Jun-18
30-Jun-18
The Read Rights will vest on the achievement of the following milestones:
Operative
Date
31-Dec-15
31-Dec-16
30-Jun-18
30-Jun-19
30-Jun-20
# of
Rights
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
5,000,000
Latest
Date
# of
Rights
Continuous Service:
6 months service
18 months service
36 months service
48 months service
60 months service
Total employment related rights
Performance Targets:
Revenue Targets -
$5,000,000
$6,500,000
$8,000,000
Activated Patients Targets -
500,000
750,000
1,000,000
30-Nov-18
30-Nov-18
30-Nov-18
30-Nov-18
30-Nov-18
30-Nov-18
Active Medical Practitioner Targets -
2,500
3,750
5,000
30-Nov-18
30-Nov-18
30-Nov-18
Total performance related rights
5,000,000
5,000,000
2,500,000
12,500,000
5,000,000
5,000,000
2,500,000
12,500,000
5,000,000
5,000,000
2,500,000
12,500,000
37,500,000
Page | 46
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 4: Issued Capital - continued
At the date of this report a total of 3,000,000 employment related rights had vested of which Mr. Read has exercised
2,000,000 of the vested options.
The Read performance rights are cumulative upon achievement of each of the performance milestones. At the date
of this report a total of 12,500,000 performance related rights had vested of which Mr. Read has exercised 5,000,000
of the vested options.
d.
Options over unissued shares
Balance
Hook options3
Employee incentive options
Chamberlain options4
Read rights vested2
Employee incentive options exercised
Read rights vested2
Employee incentive options expired
Balance
Employee incentive options
Employee incentive options
Employee incentive options
Read rights vested2
Read rights vested2
Employee incentive options exercised
Employee incentive options exercised
Read rights vested2
Peloton options exercised1
Read rights vested2
Employee incentive options expired
Balance
Date
01-Jul-16
26-Oct-16
15-Dec-16
15-Dec-16
03-Jan-17
24-May-17
06-Mar-17
30-Jun-17
30-Jun-17
27-Oct-17
19-Dec-17
12-Apr-18
30-Aug-17
10-Apr-18
05-Sep-17
12-Apr-18
05-Sep-17
12-Apr-18
30-Jun-18
30-Jun-18
30-Jun-18
Issued
#
45,050,000
5,000,000
15,510,000
15,000,000
1,000,000
(500,000)
5,000,000
(856,667)
85,203,333
12,550,000
310,000
1,130,000
5,000,000
2,500,000
(66,666)
(3,650,000)
(7,000,000)
(1,000,000)
1,000,000
(1,243,335)
94,733,332
1 Peloton unlisted options are exercisable at $0.03 and expire 17 December 2018
2 Read unquoted employment rights are exercisable at no cost and have vested and are exercisable immediately
3 Hook unlisted options are exercisable at $0.08 and expire 26 October 2019
4 Chamberlain unlisted options expire 12 September 2019; 5,000,000 are exercisable at $0.04 and 10,000,000 are exercisable at
$0.08.
Employee Incentive Options
Employee incentive plan options are unquoted and will vest in accordance with the rules of the plan. Cancellation of
unvested employee incentive options occurs on termination of employment.
Page | 47
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 4: Issued Capital - continued
Issue
Date
14-Apr-16
15-Dec-16
23-Oct-17
14-Nov-17
12-Apr-18
Expiry
Date
14-Apr-31
14-Dec-31
23-Oct-32
14-Nov-32
12-Apr-33
e.
Capital management
Vested Not
Issued
#
9,050,000
15,510,000
12,550,000
310,000
1,130,000
38,550,000
Cancelled
Exercised
Balance
Exercised
Unvested
#
683,335
626,667
790,000
-
250,000
2,350,002
#
#
1,466,666
6,899,999
2,500,000
12,383,333
4,166,666
9,176,664
-
-
-
11,760,000
310,000
880,000
-
-
-
2,733,333
3,206,669
11,760,000
310,000
880,000
3,966,666
32,233,332
13,343,330
18,890,002
Management’s objective is to maintain optimal returns to shareholders and benefits for other stakeholders.
Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.
Management adjusts the capital structure to the extent possible to take advantage of favourable costs of capital or
high returns on assets. As the market is constantly changing, management may change the amount of dividends to
be paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company is not subject to any externally imposed capital requirements, nor does it focus on obtaining debt as a
key capital management tool.
Note 5: Reserves
Share options reserve
Balance
Value of Hook options
Value of Chamberlain rights
Value of Employee Incentive options
Value of Read rights
Value of Employee Incentive options exercised
Balance
Value of Chamberlain rights
Value of Employee Incentive options
Value of Read rights
Value of Read rights exercised
Value of Employee Incentive options exercised
Balance
01-07-16
26-10-16
30-06-17
30-06-17
30-06-17
24-05-17
30-07-17
30-06-18
30-06-18
30-06-18
30-06-18
30-06-18
30-06-18
$
615,914
60,000
65,756
146,086
385,017
(13,500)
1,259,273
304,758
273,565
242,309
(210,000)
(137,600)
1,732,305
Page | 48
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 6: Controlled entity
Name of controlled entity:
Health Enterprises 2 Pty Ltd
Date on which controlled gained
31 October 2016
(ACN: 141 345 904)
Additional information
The comparative figures in this financial report include the activities of Health
Enterprises 2 Pty Ltd since the date of the acquisition, 1 November 2016.
Name of controlled entity:
MedAdvisor Welam USA Inc.
Date on which controlled gained
9 April 2018
Additional information
The entity was formed to conduct operations in the United States of America.
From the date of incorporation to the end of the financial year the entity did not
enter into any financial transactions.
Name of controlled entity:
MedAdvisor Welam UK Ltd.
Date on which controlled gained
5 April 2018
Additional information
The entity was formed to conduct operations in the United Kingdom. From the
date of incorporation to the end of the financial year the entity did not enter
into any financial transactions.
Note 7: Operating segments
The Board has determined that the Company presently has two reporting segments. The first being the business
activities of the MedAdvisor medication management and adherence platform (MedAdvisor Platform) and the
second being the corporate function associated with being an ASX listed company. The Board monitors the Company
based on actual versus budgeted revenue and expenditure incurred. This internal reporting framework is the most
relevant to assist the Board with making decisions regarding the Company and its ongoing activities.
Segment revenues
Segment operating loss
Segment assets
Total assets
Segment liabilities
Total liabilities
Net assets
2018
MedAdvisor
Platform
Corporate
$
7,394,590
$
Total
$
-
7,394,590
(4,027,378)
(426,833)
(4,454,211)
17,325,119
17,325,119
54,582
54,582
17,379,700
17,379,701
2,173,954
37,285
2,211,239
15,151,166
17,296
15,168,462
Page | 49
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 7: Operating segments - continued
Segment revenues
Segment operating loss
Segment assets
Total assets
Segment liabilities
Total liabilities
Net assets
Note 8: Revenues
a. From continuing operations
Sale of services
b. Other Revenue
Interest received
Sundry income - Government Grants
Sundry income - R&D Tax Concession
Total revenues
Note 9: Expenses
Profit (loss) before income tax from continuing operation
includes the following specific expenses:
a. Direct costs
Direct transaction costs
Direct costs of sms services
Managed services costs for the MedAdvisor Platform
2017
MedAdvisor
Platform
Corporate
$
4,902,087
$
Total
$
-
4,902,087
(2,892,705)
(537,222)
(3,429,927)
11,060,002
11,060,002
39,595
39,595
11,099,597
11,099,597
1,740,382
9,319,620
4,923
1,745,305
34,672
9,354,292
Consolidated
Jun-18
$
Jun-17
$
6,604,762
6,604,762
4,242,746
4,242,746
155,561
-
634,268
789,829
96,500
40,810
522,030
659,340
7,394,590
4,902,087
49,642
449,412
322,579
821,634
207,481
392,833
133,551
733,865
Page | 50
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 9: Expenses - continued
b. Employee Benefits Expenses:
Development
Marketing
Administration
Share based employee remuneration
Governance - Directors fees
c. Depreciation & Amortization
Depreciation
Leasehold improvements
Office equipment
Office furniture
Total depreciation
Amortization
Software
Copyrights
Total amortization
d. Finance costs
Interest and finance charges paid/payable
Other bank charges
Other listing costs
Other listing costs (2018 $87,158) costs are now included as part of Other expenses
in the Consolidated Statement of Profit or Loss and Other Comprehensive Income
e. Rental expenses on operating leases
Minimum lease payments
f. Superannuation expense
2,768,719
1,947,069
751,732
820,632
6,288,151
181,131
6,469,282
1,514,368
1,491,339
639,755
656,859
4,302,321
193,826
4,496,147
7,013
21,762
12,445
41,220
146,775
9,000
155,775
196,995
342
11,962
-
12,304
23,411
9,952
6,284
39,647
91,681
9,000
100,681
140,327
1,283
5,549
66,230
73,062
245,061
169,128
Defined contribution superannuation expense
469,292
318,558
Page | 51
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 10: Income tax expense
a. Tax expense/(income) comprises:
Current tax
Deferred tax
-
-
-
-
-
-
b. The prima facie tax on profit / (loss) before income tax is
reconciled to the income tax as follows:
Profit / (loss) from continuing operations
(4,454,211)
(3,429,927)
Prima facie tax payable on profit / (loss)
from ordinary activities before income
tax at 27.5% (2017: 28.5%)
Less:
Tax effect of:
(1,224,908)
(977,529)
- deferred tax assets not brought to account
Income tax expense / (benefit) attributable to entity
1,224,908
977,529
-
-
The applicable weighted average tax rates are as follows:
0%
0%
The value of tax losses which have not been recognised in
the statement of financial position
3,600,319
2,375,411
Note 11: Auditors remuneration
During the year the following fees were paid or payable for services
provided by the auditor.
Audit and review of financial report
Other Services
72,000
250
72,250
67,600
12,100
79,700
Page | 52
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 12: Cash and cash equivalents
Cash on hand
Cash at bank
Note 13: Trade and other receivables
Trade debtors
Other debtors
The consolidated entity has recognised a loss in the profit
or loss in respect of impairment of receivables for the year
ended 30 June 2018 of $65,037 (30 June 2017 $32,166)
Past due but not impaired
Customers with balances past due but without provision
for impairment of receivables amount to $52,965 as at 30
June 2018 (Nil as at 30 June 2017).
The consolidated entity did not consider a credit risk on
the aggregate balances after reviewing the credit terms of
customers based on recent collection practices.
303
303
10,474,473
4,834,358
10,474,777
4,834,660
890,879
-
890,879
422,473
7,163
429,636
The ageing of the past due but not impaired receivables are as follows:
0 to 3 months overdue
52,965
-
Note 14: Other assets
Security bonds - cash on deposit with banks
Prepayments
Work in progress
115,757
188,155
-
303,912
25,610
137,980
19,054
182,644
Page | 53
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 15: Property, plant and equipment
Office equipment at cost
Less: Accumulated depreciation
Leasehold improvements at cost
Less: Accumulated depreciation
Office furniture at cost
Less: Accumulated depreciation
139,778
(36,557)
103,220
199,081
(7,013)
192,068
97,981
(23,394)
74,587
59,143
(14,795)
44,348
155,140
(39,534)
115,606
40,513
(10,949)
29,564
Total property, plant and equipment
369,876
189,517
Reconciliation of written down values at the beginning and end of the current and previous financial year:
Balance at 1 July 2016
Additions
Depreciation
Balance 30 June 2017
Additions
Write-off on lease termination
Depreciation
Balance 30 June 2018
Office
Leasehold
Office
Equipment
Improvements
Furniture
$
29,402
24,896
(9,952)
44,346
80,637
-
(21,762)
103,221
$
108,725
30,292
(23,411)
115,606
199,081
(115,606)
(7,013)
192,068
$
29,409
6,439
(6,283)
29,565
57,467
-
(12,445)
74,587
Total
$
167,536
61,627
(39,646)
189,517
337,185
(115,606)
(41,220)
369,876
Page | 54
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note16: Intangible assets
Intellectual property at cost
Less: Accumulated amortization
Software at cost
Less: Accumulated amortization
Goodwill at cost
Total intangible assets
128,189
(45,000)
83,189
1,481,656
(238,455)
1,243,202
113,260
(36,000)
77,260
1,463,692
(91,681)
1,372,011
4,013,868
4,013,868
5,340,258
5,463,139
Reconciliation of written down values at the beginning and end of the current and previous financial year:
Balance at 1 July 2016
Additions
Depreciation
Balance 30 June 2017
Additions
Amortization
Balance 30 June 2018
Copyright
Trademarks
Software
Goodwill
$
$
63,000
-
(9,000)
54,000
-
(9,000)
45,000
9,140
14,120
-
23,260
14,917
-
38,177
$
-
1,463,692
(91,681)
1,372,011
17,975
(146,773)
1,243,213
$
-
4,013,868
-
4,013,868
-
-
4,013,868
Total
$
72,140
5,491,679
(100,681)
5,463,139
32,892
(155,773)
5,340,258
Note 17: Trade and other payables
Trade creditors
Other creditors & accruals
Note 18: Income in advance
Gross pharmacy subscriptions in advance
Patient engagement program (PEP) fees in advance
Total income in advance
417,224
830,290
379,810
636,400
1,247,513
1,016,210
315,057
74,383
389,440
128,294
156,771
285,065
Page | 55
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 19: Employee benefits
Current
Provision for employee leave
Non-Current
Provision for employee leave
Note 20: Accumulated losses
Accumulated losses at the beginning of the year
Net profit / (loss)
Accumulated losses at the end of the year
Note 21: Financial risk management
The company’s financial instruments consist mainly of deposits with
banks, trade receivable and trade payables.
The totals for each category of financial instruments, measured in
accordance with AASB 139 as detailed in the accounting policies to these
financial statements, are as follows:
Financial Assets
Cash and equivalents
Trade and other receivables
Financial Liabilities
Financial liabilities at amortised cost
- Trade and other payables
Financial Risk Management Policies
440,954
394,444
133,332
49,586
(8,089,529)
(4,454,211)
(12,543,741)
(4,659,603)
(3,429,927)
(8,089,529)
10,474,777
890,879
11,365,655
4,834,660
429,636
5,264,297
1,247,513
1,247,513
1,016,210
1,016,210
The Directors' overall risk management strategy seeks to assist the company in meeting its financial targets,
whilst minimising potential adverse effects on financial performance. Risk management policies are approved
and reviewed by the Directors' on a regular basis. These include credit risk policies and future cash flow
requirements.
Specific Financial Risk Exposures and Management
The main risks the Entity is exposed to through its financial instruments are interest rate risk, liquidity risk, credit
risk and equity price risk.
Page | 56
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 21: Financial risk management - continued
Interest Rate Risk
a.
Exposure to interest risk arises on financial assets and financial liabilities recognised at reporting date whereby a
future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments
b. Liquidity Risk
Liquidity risk arises from the possibility that the company might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities. The Entity manages this risk through the following
mechanisms:
Preparing forward looking cash flow analysis in relation to its operational, investing and financing activities.
Financial liabilities due for payment
Trade and other payables
Financial assets - cash flows realisable
Cash and equivalents
Trade and other receivables
Within 1 Year Within 1 Year
30-06-18
30-06-17
$
$
1,247,513
1,247,513
1,016,210
1,016,210
10,474,777
890,879
11,365,655
4,834,660
429,636
5,264,297
Net (outflow)/inflow on financial instruments
10,118,142
4,248,086
Credit Risk
c.
Exposure to credit risk relating to financial assets arises from the potential non−performance by counter par(cid:415)es of
contract obligations that could lead to a financial loss to the Entity.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems
for the approval, granting and removal of credit limits, regular monitoring of exposures against such limits and
monitoring of the financial stability of significant customers and counter parties), ensuring to the extent possible,
that customers and counter parties to transactions are of sound credit worthiness. Such monitoring is used in
assessing receivables for impairment. Credit terms are generally 30 days from the invoice date. Customers who
do not meet the Entity's strict credit policies may only purchase in cash or only use recognised credit cards.
Credit Risk Exposures
The maximum exposure to credit risk by class of recognised financial assets at balance date is equivalent to the
carrying value and classification of those financial assets (net of any provisions) as presented in the balance sheet.
Trade and other receivables that are neither past due or impaired are considered to be of high credit quality.
Aggregates of such amounts are as detailed in Note 13.
F i
l
i
i
Page | 57
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 21: Financial risk management - continued
Net Fair Values
Fair value estimation
Fair values derived may be based on information that is estimated or subject to judgment, where changes in
assumptions may have a material impact on the amounts estimated. Areas of judgment and the assumptions have
been detailed below. Where possible, valuation information used to calculate fair value is extracted from the
market, with more reliable information available from markets that are actively traded. In this regard, fair values for
listed securities are obtained from quoted market bid prices. Where securities are unlisted and no market quotes
are available, fair value is obtained using discounted cash flow analysis and other valuation techniques commonly
used by market participants.
Differences between fair values and carrying amounts on financial instruments with fixed interest rates are due to
the change in discount rates being applied by the market since their initial recognition by the company. Most of the
instruments which are carried at amortised cost are to be held until maturity and therefore the net fair value figures
calculated bear little relevance to the company.
Financial Assets
Cash and equivalents
Trade and other receivables
Financial Liabilities
Financial liabilities at amortised cost
- Trade and other payables
Financial Assets
Cash and equivalents
Trade and other receivables
Financial Liabilities
Financial liabilities at amortised cost
- Trade and other payables
Jun-18
Net Carrying
Value
$
Net Fair
Value
$
10,474,777
10,474,777
890,879
890,879
11,365,655
11,365,655
1,247,513
1,247,513
1,247,513
1,247,513
Jun-17
Net Carrying
Value
$
Net Fair
Value
$
4,834,660
429,636
5,264,297
4,834,660
429,636
5,264,297
1,016,210
1,016,210
1,016,210
1,016,210
Page | 58
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 22: Reconciliation of profit/(loss) after tax to net cash flow from operations
(a) Reconciliation of cash to the statement of cash flows:
Cash assets - Note 12
10,474,777
4,834,660
(b) Reconciliation of profit from ordinary activities to net cash used in operating activities
Profit after income tax
Add: non cash items
(4,454,211)
- Depreciation and amortisation
- Doubtful debts
- Non cash share based payments
- Non cash loss on termination of lease
196,993
65,037
820,632
115,607
(3,429,927)
140,327
32,166
656,859
-
1,198,268
829,352
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
- (Increase) decrease in receivables
- (Increase) decrease in other assets
- Increase (decrease) in payables / creditors
(468,632)
19,054
437,603
(11,976)
181,979
(14,785)
28,736
195,930
Net cash flows used in operating activities
(3,267,919)
(2,404,646)
Note 23: Acquisition of Health Enterprises 2 Pty Ltd
On 28 October 2016 the Company completed the acquisition of Health Enterprises 2 Pty Ltd. The final consideration
for the acquisition was as follows:
Purchase price - cash free / debt free
Working capital adjustment at settlement
Net purchase price
Purchase price allocation:
Cash at bank
Trade debtors
Security deposits
Software
Goodwill
$
5,500,000
(454,405)
5,045,595
25,798
323,548
25,610
1,300,000
4,013,868
Page | 59
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 23: Acquisition of Health Enterprises 2 Pty Ltd - continued
Trade creditors
Other creditors & accruals
Employee entitlements
Composition of net purchase price
Cash
Shares
Due diligence and legal fees relation to the acquisition
Note 24: Contingencies
$
(288,461)
(207,914)
(146,853)
5,045,596
2,845,595
2,200,000
5,045,595
111,269
There were no contingent liabilities or contingent assets at the date of this report to affect the financial statements.
Note 25: Capital and leasing commitments
On 21 July 2015 the Company entered into a non-cancellable operating lease for new offices. On the 26 April 2018
the Company assigned this operating lease to an unrelated third party. The assignment of the lease transferred all of
the Company’s obligation under the operating lease to the third party while at the same time transferring the rights
of ownership of the leasehold improvements made by the Company. The effect of this transaction was that the
Company has brought to account a loss of $115,607 from the write-off of the leasehold improvements.
On 28 December 2017 the Company entered into a non-cancellable operating lease for replacement offices
commencing on 1 January 2018 for a term of 7 years. The lease has provided for an initial rent-free period of 12
months together with a cash contribution from the landlord of $68,900 to over make good costs from the previous
tenant.
Operating lease commitments
- not later than one year
- later than one year and not later than five years
- later than 5 years
331,092
2,006,963
824,296
3,162,351
220,904
512,215
-
733,120
Page | 60
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 26: Events subsequent to the reporting date
There have been no matters or circumstances which have arisen since the end of the financial period that significantly
affected, or may significantly affect the operations of the Entity, the results of those operations or the state of affairs
of the Entity, in future years.
Note 27: Other related party transactions
Other related parties include close family members of key management personnel and entities that are controlled
or jointly controlled by those key management personnel individually or collectively with their close family members.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other persons unless otherwise stated.
NostraData Pty Ltd is an associated entity of the Company which has entered into the following related party
transaction with the Company during the financial year.
2018
$
2017
$
Total value of consulting , data and marketing services
120,345
70,305
Amounts due and payable to NostraData Pty Ltd at the
end of the financial year included in trade and other
payables
11,625
44,731
SwinTech Pty Ltd is an associated entity of the Company which has entered into the following related party
transaction with the Company during the financial year.
Total value of property consulting services
Amounts due and payable to SwinTech at the end of the
financial year included in trade and other payables
2018
$
23,647
-
2017
$
-
-
Page | 61
MEDADVISOR LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 30 JUNE 2018
Note 28: 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
Net assets
Equity
Issued capital
Share options reserve
Accumulated losses
Total equity
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2018 and 30 June
2017.
Capital commitments – property plant & equipment
The parent entity had no capital commitments for property plant & equipment
as at 30 June 2018 and 30 June 2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the
consolidated entity as disclosed in Note 1.
Note 29: 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
Share based entitlements
Total compensation
2018
$
2017
$
(1,074,411)
(1,074,411)
(742,286)
(742,286)
55,359
39,595
24,037,998
14,815,420
33,530
33,530
4,923
4,923
24,004,467
14,810,497
24,549,872
14,754,523
1,732,305
1,259,273
(2,277,710)
(1,203,299)
24,004,467
14,810,497
957,522
273,035
965,334
448,075
1,230,557
1,413,409
Page | 62
MEDADVISOR LIMITED
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
The consolidated financial statements and notes, as set out on pages 28 to 62, are in accordance with the
Corporations Act 2001 and:
(a)
(b)
comply with Accounting Standards which as stated in accounting policy Note 1 to the financial
statements, constitutes explicit and unreserved compliance with International Financial Reporting
Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2018 and of the performance for the
year ended on that date of the Company;
2.
the Director’s have declared that:
(a)
(b)
(c)
the financial records of the Company for the financial year have been properly maintained in
accordance with section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the Accounting Standards; and
the financial statements and notes for the financial year give a true and fair view; and
3.
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Peter Bennetto
Chairman
30 August 2018
Camberwell, VIC.
Page | 63
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
To the Members of MedAdvisor Limited
Opinion
We have audited the financial report of MedAdvisor Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit
or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies, and the directors' declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
I.
giving a true and fair view of the Group's financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
II.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Page | 64
Key Audit Matters (Continued.)
Key Audit Matter
How our audit addressed this matter
Recognition of Revenue
Refer to Note 8 in the financial statements
Revenue recognition was considered a key audit
matter. MedAdvisor receives revenue from two core
income streams, and the accounting for each of
these differs.
While subscription revenues are not complex and do
not involve significant management judgements, the
recognition of revenue generated from Patient
Education Programs (“PEP”) involves management
estimates around the timing of delivery of services.
Impairment of Goodwill
Refer to Note 16 in the financial statements
The consolidated entity has goodwill of $4,013,868
relating to its acquisition of Healthnotes during the
prior financial year.
We identified this area as a key audit matter due to
the size of the goodwill balance and because the
directors’ assessment of the ‘value in use’ of the
cash generating unit
this
Goodwill involves judgements about the future
underlying cash flows of the business and the
discount rate applied to them.
(“CGU”) containing
Management performed an impairment assessment
over the balance of intangible assets by calculating
the value in use for the individual CGU identified
using a discounted cash flow model and comparing
the resulting value in use of the CGU to its carrying
value.
Management also performed a sensitivity analysis
over the value in use calculations by varying the
assumptions used (growth rates, terminal growth
rate and WACC) to assess the impact on the
valuations.
Our audit procedures in relation to the recognition of
revenue included:
• Assessing whether the Group’s revenue
recognition policies were in compliance
with Australian Accounting Standards;
• Evaluating the operating effectiveness of
management’s controls related to revenue
recognition;
• The inspection of sales contracts for a
sample of PEP revenues recognised and a
review of the allocation of revenue to
various elements in the contracts; and
• A review of sales transactions before and
after year-end to ensure that revenue is
recognised in the correct period.
Our audit procedures in relation to management’s
impairment assessment included:
• Assessing management’s determination that
the Goodwill should be allocated to a single
CGU based on the nature of the Group’s
business and the manner in which results are
monitored and reported;
• Assessing the overall valuation methodology
used to determine the value in use;
• Challenging
the
reasonableness of key
flow
the cash
assumptions,
projections, revenue growth rates, discount
rates, and sensitivities used; and
including
• Checking the mathematical accuracy of the
cash flow model, and reconciling input data to
supporting evidence such as approved
budgets, and considering the reasonableness
of these budgets.
Page | 65
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2018 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 accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
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_responsibilities/ar2.pdf.
This description forms part of our auditor's report.
Page | 66
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of MedAdvisor Limited, for the year ended 30 June 2018, 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.
RSM AUSTRALIA PARTNERS
P A RANSOM
Partner
Dated: 30 August 2018
Melbourne, Victoria
Page | 67
MEDADVISOR LIMITED
SHAREHOLDER INFORMATION
30 JUNE 2018
The shareholder information set out below was applicable as at 24 August 2018.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Equity security holders
Twenty largest quoted security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Page | 68
The names of the twenty largest security holders of quoted equity securities are listed below: - continued
Unquoted equity securities
Options over ordinary shares issued
Escrowed securities
Restricted securities
Page | 69
Substantial shareholders
Substantial shareholders in the company are set out below:
Page | 70