(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:27)(cid:24)(cid:23)(cid:22)(cid:21)
2020
ANNUAL REPORT
MEDILAND PHARM LIMITED
ABN 83 628 420 824
Contents
AGM
Chairman ’s Report
Managing Director’s Report
Directors’ Report
1
2
3
15 Auditor’s Independence Declaration
16 Financial Statements
21
42 Directors’ Declaration
43
47 Additional Information
49 Corporate Directory
Notes to the Financial Statements
Independent Auditor’s Report
The Annual General Meeting (AGM) of
Mediland Pharm Limited will be held on
25 November 2020. The Company has
considered the implications of COVID-19,
government restrictions and prioritising
health and safety of its shareholders and
employees and has determined that this
year’s AGM will be held physically however,
online participation is encouraged. Further
details can be found in the Notice of Meeting
and on the Mediland Pharm website.
Chairman’s Report
On behalf of the Board of Directors (the “Board”) of Mediland Pharm
Limited (the “Company” or “Mediland Pharm”) I present our second
Annual Report after the Company’s initial listing on the Australian
Securities Exchange in February 2019.
1
Dr. Peter French
Chairman
Dear Shareholders,
On behalf of the Board of Directors (the
“Board”) of Mediland Pharm Limited (the
“Company” or “Mediland Pharm”) I present
our second Annual Report after the
Company’s initial listing on the Australian
Securities Exchange in February 2019.
The financial year to 30 June 2020 was
challenging for Mediland Pharm, as it was
for the world’s economy. We started the year
confident in the potential of our business
model and strategy and were very pleased
with the company’s first half revenue of
$19.3 million, a 45% increase over the first half
of FY2019 despite the impact of the bushfires
on tourism to Australia’s eastern states. We
felt we were well-set for a stronger, profitable
second half.
However, in February the Company was
thrown off-course by the COVID-19 pandemic.
Following border closures there have
been no tourists to visit our shops and our
business has effectively been on hold since
mid-February.
As a result, revenue in the second half fell to
$4.0 million, bringing the total for the year to
$23.3 million, and we reported an after-tax
loss of $4.1 million for the year after adding
back share-based payments of $1.0 million,
compared with break-even in FY2019. The
Board and Management rapidly instituted
an aggressive cost cutting strategy in order
to preserve cash. One of those measures
was to cease payment of all directors’
fees from 1 May 2020 and to reduce the
Managing Director’s salary by 50% until the
end of the financial year. From 1 July 2020,
non-executive directors’ fees have been
reduced by 75% until further notice.
The Board has been very impressed by
management’s prompt actions, faced by this
unprecedented situation, to reduce costs
significantly and focus on opportunities
to generate revenue through our online
platform. It is a great credit to their agility that
we finished the financial year with cash of
$7.3 million, only $0.66 million less than at the
half year, and with net assets of $8.8 million.
The Company had begun to diversify its
revenue base before the pandemic struck,
with the acquisition of an e-commerce
platform in July 2019 and the opening of
a flagship store in Sydney in November
2019. We have seen online sales increasing
steadily over the past few months, but in the
short-term we do not expect that this will be
able to make up for revenue lost through the
closure of our five shops. In order to address
this, the Board and Management are actively
investigating additional diversification
opportunities, revenue streams and products
and look forward to updating shareholders
on progress at our Annual General Meeting
in November 2020.
In November 2019, we were very pleased
to welcome Mr Leo Cui to the Board as a
non-executive director and I would like
to thank him, our other directors and our
management team for their commitment
and contributions during a very challenging
year. I also thank you, our shareholders, for
your support and assure you that we are
determined to weather the current storm and,
when conditions allow, continue to pursue our
growth strategy.
Dr. Peter French
Chairman
Mediland Pharm Limited 2020 Annual Report Managing Director’s Report
2
Every crisis presents opportunities and while the last six months of
the financial year ended 30 June 2020 have been very challenging,
we have been working hard to diversify our business and introduce
new health and well-being products under our own brands so we are
in a stronger position to take advantage of borders re-opening and
in-bound tourism recovering.
Yesh Mudaliar
Managing
Director
We are fast-tracking the development of
our e-commerce business, taking advantage
of the growth in online purchases as a result
of the pandemic. The Mediland Pharm app
is now available on Apple and Android
platforms, enabling customers in Australia,
New Zealand and overseas to buy over
100 products around the clock. Numbers of
online sales, followers and registered online
customers are increasing steadily, driven by
endorsements by social media ‘influencers’.
Our new range of Mediland-branded
health and well-being products, introduced
during the year, is already stocked by
five pharmacies in Sydney and wider
distribution is expected soon. To meet
high demand during the pandemic, we
launched our own hand-sanitiser in February,
which subsequently was adopted by
InterContinental Hotels Group for use in its
Australian hotels. Further products are under
development for sale through our online
platform and our stores when they re-open.
We acted quickly to contain costs in
response to the pandemic, closing our
stores and, regrettably, standing down staff
in February as tourism from China waned.
Since then we have controlled all expenditure
rigidly to preserve the company’s cash
resources, and we are grateful to those
landlords who have agreed to rent reductions
and lease incentives.
While our stores are closed, we are remaining
in touch with the travel operators with whom
we have long and fruitful partnerships and
thanking them for their understanding. This
will enable us to re-engage and re-open
our stores as soon as conditions normalise.
We are very confident in the potential of our
business model and, backed by our strong
cash position, look forward to resuming
revenue growth when in-bound tourism
starts again.
Yesh Mudaliar
Managing Director
The above reports contain forward looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’,
‘estimates’, ‘expects’, ‘intends’ and other similar words that involve risks and uncertainties. These forward looking
statements are not guarantees of future performance or development and involve known and unknown risks,
uncertainties, assumptions and other important factors that could cause actual events or outcomes to differ materially
from the events or outcomes expressed or anticipated in these statements, many of which are beyond the control of
the Company.
The Board cannot and do not give any assurance that the results, performance or achievements expressed or implied
by the forward-looking statements contained in this Letter will occur and investors are cautioned not to place undue
reliance on such forward-looking statements. These forward-looking statements speak only as at the date of this Letter.
The Company does not intend to update or revise forward looking statements, or to publish prospective financial
information in the future, regardless of whether new information, future events or any other factors affect the information
contained in this Letter, except where required by law.
Mediland Pharm Limited 2020 Annual Report Directors’ Report
for the year ended 30 June 2020
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as ‘the Group’) consisting of Mediland Pharm Limited (referred to hereafter as the ‘company’ or ‘parent entity’)
and the entities it controlled at the end of, or during, the year ended 30 June 2020.
Directors
The following persons were directors of Mediland Pharm Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
3
Jhon Shen (Executive Director)
Yeshween Mudaliar (Managing Director)
Dr. Peter French (Non-executive Director and Chairman)
Tracey Cray (Non-executive Director)
Theo Renard (Non-executive Director)
Leo Cui (Non-executive Director, appointed 28 November 2019)
Principal activities
The Group operates a retail business, with four retail outlets in Australia and New Zealand focused on serving inbound
Chinese tourists, who typically visit the outlets during an organised group tour. In July 2019, the Group completed
acquisition of Enti Financial Pty Ltd which has well-established E-commerce platforms and retail franchise stores
in China. These include one direct store in Australia, six franchise shops in China, three WeChat accounts and four
E-commerce platforms. In October 2019, Enti Financial Pty Ltd operating as Ian’s Health Lounge opened its new flagship
direct store in Sydney, Australia. There were no other significant changes in the principal activities of the consolidated
entity during the period under review.
Dividends
Dividends paid during the financial year were as follows:
Dividend paid to PMG before admission to ASX
There were no dividends paid, recommended or declared during the current financial year.
Consolidated
2020
$
2019
$
–
5,302,233
Review of operations
The loss for the Group after providing for income tax amounted to $5,109,041 (30 June 2019: loss of $11,244). Once-off
costs incurred during the year include share-based payment expenses of $990,560. The Group has spent $15,366,550
in marketing and $3,439,141 in administrative expenses.
The novel coronavirus (COVID-19), was declared a world-wide pandemic by the World Health Organisation in
March 2020. The Company closed four of its retail shops in early February, which has impacted the revenue in the
last six months to the financial year ended 30 June 2020. Whilst the absence of Chinese tourists, led to substantial
reduction in revenue, Enti Financial which was acquired in early part of the financial year, has contributed to revenue.
COVID-19 affected all facets of the Group such as operating costs in relation to leases, employee costs, remuneration
for executives and directors and carrying values of assets. The Company continues to monitor the potential impact of
COVID-19, if any on the carrying value of certain assets. Detailed review of operations and the Company’s activities is
included in the Chairman’s and Managing Director’s report which is not part of the Directors Report.
Significant changes in the state of affairs
During the year ended 30 June 2020, the Group completed the acquisition of Enti Financial Pty Ltd (“Ian’s Health
Lounge”), and established a new subsidiary, Share We Do Platform Technology Services Co, Ltd in China. This will
accelerate Mediland’s growth and E-commerce strategy, as well as expanding its own branded product range. In
November 2019, Ian’s Health Lounge’s flag ship shop has been launched in Sydney CBD area. The company anticipates
this flagship shop will become a “hub” for its online business and “a way to connect” with customers in Australia
and China.
Matters subsequent to the end of the financial year
On 7 July 2020, Performance Rights totalling 4,433,333 granted under the FY 2019 Long Term Incentive Plan (LTIP) have
lapsed or been forfeited.
Mediland Pharm Limited 2020 Annual Report No other matter or circumstance has arisen since 30 June 2020, that has significantly affected the Group’s operations,
results or the state of affairs or may do so in future years.
Likely developments and expected results of operations
Information on likely developments in the operations of the Group and the expected results of operations have not been
included in this report because the directors believe it would be likely to result in unreasonable prejudice to the Group.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
4
Information on Directors
Experience and expertise:
Mr Shen is a businessman with a track record of developing profitable businesses
and incubating new business opportunities through acquisition in the retail, tourism,
travel and hospitality sectors. He has first-hand experience within the Chinese
retail sector, as he worked in both operational and management level within the
Company since March 2015. During this time he has gained extensive knowledge
and experience, which has assisted him to better understand in how to operate a
successful retail operation within Australia through offering high appealing products
to the Chinese consumer.
Jhon Shen
None
Other current directorships:
Executive Director
Master of Finance and
Accounting from the University
of New South Wales
Former directorships (last 3 years):
None
Interests in shares:
250,000,000
Special responsibilities:
Member of Remuneration and Nominations Committee
Experience and expertise:
Mr Mudaliar is a professional hospitality executive with 16 years’ industry experience.
Over the past 16 years, he has successfully fulfilled senior executive roles with
leading hotel chains including Marriott, Accor and IHG, in both managed and
franchise operational models. With outstanding excellence in sales and business
development focusing on increasing revenue and profitability, he naturally
progressed his career to an asset management and business acquisition specialist.
His vast network of relationships across a number of industries has supported
his expertise to increase his clients’ business portfolios with highly profitable
acquisitions, mergers and ensuring corporate compliance.
Yeshween Mudaliar
Managing Director
Diploma of Travel and Tourism
from Sir George Seymour
National College in New
Zealand, a certificate in Senior
Development Executive
Program and Hotel Real
Estate Investments and Asset
Management from Cornell
University
Other current directorships:
None
Former directorships (last 3 years):
None
Interests in shares:
Nil
Directors’ Report (continued)for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Experience and expertise:
Dr. Peter French is an experienced senior executive and director in public and
private companies primarily in the biotechnology and healthcare sector. His roles
have included:
● Founder and non-executive director of Cryosite Limited (ASX:CTE) 2000-2006;
● Managing director of Probiomics Limited (ASX:PCC) 2003-2006;
● CEO and Managing director of Benitec Biopharma Limited(ASX:BLT) 2010-2015
5
Dr. Peter French
Non-executive director
and Chairman
BSc (Sydney University, 1977);
MSc (Sydney University, 1982),
PhD Deakin University, 1986),
MBA (Deakin University, 2001)
Other current directorships:
Chairman of PENAO Pty Limited
Former directorships (last 3 years):
Executive director of Bioxyne Limited (ASX:BXN) from 2016 – 2018
Interests in shares:
Nil
Special responsibilities:
Member of Audit, Risk and Governance Committee
Experience and expertise:
Mrs Cray is an Afflliate of Australian Institute of Directos and a strategic business
professional with over 16 years experience in the hospitality and tourism industry.
Working with leading hotel brands including Choice Hotels, IHG, Mantra Group and
Accor, including franchise operating models.
Mrs Cray holds qualifications in Human Resources and Workplace Health and
Safety and has a history of achieving success in delivering and exceeding company
objectives, driving performance and increasing business efficiencies. Her key
strengths include operational and compliance requirements in Human Resources,
Workplace Health and Safety, Learning and Development, Holistic Customer Service
and Brand Awareness.
Other current directorships:
None
Former directorships (last 3 years):
None
Interests in shares:
Nil
Special responsibilities:
Chair of Remuneration and Nominations Committee
Member of Audit, Risk and Governance Committee
Tracey Cray
Non-executive Director
Qualifications in Human
Resources and Workplace
Health and Safety
Mediland Pharm Limited 2020 Annual Report 6
Theo Renard
Non-executive Director
Experience and expertise:
Mr Renard is a Chartered Accountant and has over 20 years experience in credit
and relationship banking in commercial and investment banking with Nedcor in
South Africa and Asia and ABN AMRO in Australia and Asia. He spent over two years
as CFO and Company Secretary with a retail group with retail and manufacturing
operations in Asia and the Subcontinent, during that time he was a Director of several
of the listed companies and affiliates. Mr Renard has over 10 years experience in the
resources sector as Chief Financial Officer and Company Secretary.
Other current directorships:
None
Former directorships (last 3 years):
1) Director, CFO and Company Secretary of Realm Resources Limited (ASX:RRP)
from 2008 – 2018
2) Vice president finance of Atrum Coal NL (ASX:ATU) from 2014 – 2017
Interests in shares:
Nil
Special responsibilities:
Chair of Audit, Risk and Governance Committee
Member of Remuneration and Nominations Committee
Experience and expertise:
Mr Cui has substantial experience in Financial Services Industry mainly responsible
for Group Dealing, Risk Management, responsibility for compliance with respect
to ASIC and specific compliance obligations under Australian Financial Services
License. Previous work experience also includes sales and marketing, financial
product advice to and dealing with wholesale and retail clients, derivative products
and foreign exchange contracts. Mr Cui’s key strength includes his financial services
background which has foreign investors in Australian Companies. He also has
network and relations in Hong Kong and China.
Leo Cui
None
Other current directorships:
Non-executive Director
Former directorships (last 3 years):
None
Interests in shares:
61,000
Special responsibilities:
Member of Audit, Risk and Governance Committee
Member of Remuneration and Nominations Committee
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of
all other types of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Ms Naidu has over 16 years experience, in audit and assurance, risk management, financial reporting, corporate
governance and internal audit within retail, manufacturing and not-for-profit sectors. Her expertise has been gained
through auditing and corporate advisory services to multinational and Australian listed entities. She also holds the
position of Finance Manager and Assistant Company secretary in a entity with dual listing on ASX and Nasdaq. She has
expertise in Publicly Listed Entity Reporting and Statutory Reporting. Ms Naidu is a member of the Institute of Chartered
Accountants Australia and New Zealand (CA ANZ) and Australian Institute of Company Directors (AICD).
Directors’ Report (continued)for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Meetings of directors
The number of meetings of the Group’s Board of Directors (‘the Board’) and of each Board committee held during the
year ended 30 June 2020, and the number of meetings attended by each director were:
Board
Nomination and
Remuneration Committee
Audit, Risk and Governance
Committee
Attended
Held
Attended
Held
Attended
Held
7
Jhon Shen
Yeshween Mudaliar
Tracey Cray
Peter French
Theo Renard
Leo Cui (appointed 28 Nov 2019)
10
11
11
11
11
7
11
11
11
11
11
7
1
*
2
1
2
2
2
*
2
2
2
2
*
*
3
3
3
2
*
*
3
3
3
3
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
*= Not a member of the relevant committee
Remuneration report (audited)
The remuneration report details the key management
personnel remuneration arrangements for the Group, in
accordance with the requirements of the Corporations Act
2001 and its Regulations.
Key management personnel are those persons having
authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly,
including all directors.
The remuneration report is set out under the following
main headings:
● Principles used to determine the nature and amount
of remuneration
● Details of remuneration
● Service agreements
● Share-based compensation
Principles used to determine the nature and
amount of remuneration
The objective of the Group’s executive reward framework
is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework
aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders, and
it is considered to conform to the market best practice for
the delivery of reward. The Board of Directors (‘the Board’)
ensures that executive reward satisfies the following key
criteria for good reward governance practices:
The Remuneration & Nominations Committee is
responsible for determining and reviewing remuneration
arrangements for its directors and executives. The
performance of the Group depends on the quality of its
directors and executives. The remuneration philosophy is
to attract, motivate and retain high performance and high
quality personnel.
The Remuneration & Nominations Committee has
structured an executive remuneration framework that is
market competitive and complementary to the reward
strategy of the consolidated entity.
The reward framework is designed to align executive
reward to shareholders’ interests. The Board have
considered that it should seek to enhance shareholders’
interests by:
● having economic profit as a core component of
plan design
●
focusing on sustained growth in shareholder wealth,
consisting of dividends and growth in share price, and
delivering constant or increasing return on assets as
well as focusing the executive on key non-financial
drivers of value
● attracting and retaining high calibre executives
Additionally, the reward framework should seek to
enhance executives’ interests by:
● rewarding capability and experience
● reflecting competitive reward for contribution to
growth in shareholder wealth
● competitiveness and reasonableness
● providing a clear structure for earning rewards
● acceptability to shareholders
● performance linkage / alignment of
executive compensation
●
transparency
In accordance with best practice corporate governance,
the structure of non-executive director and executive
director remuneration is separate.
Mediland Pharm Limited 2020 Annual Report 8
vehicle benefits) where it does not create any additional
costs to the Group and provides additional value to
the executive.
The long-term incentives (‘LTI’) include long service
leave and share-based payments. Shares are awarded
to executives over a period of three years based on
long-term incentive measures. These include increase in
shareholders value relative to the entire market and the
increase compared to the consolidated entity’s direct
competitors. The Remuneration & Nominations Committee
reviewed the long-term equity-linked performance
incentives specifically for executives during the year
ended 30 June 2020.
Group performance and link to remuneration
Remuneration is not directly linked to the performance of
the Group.
Voting of shareholders at last year’s annual
general meeting
The Company received more than 61.51% of “yes” and
21.21% undirected proxies open to the Chair to vote in
favor of the resolution on its remuneration report for the
2019 financial year. The Company did not receive any
specific feedback at the AGM or throughout the year on
its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel
of the Group are set out in the following tables.
The key management personnel of the Group consisted of
the following directors of Mediland Pharm Limited:
Non-executive directors
● Peter French – Chairman
● Tracey Cray
● Theo Renard
● Leo Cui
Executive directors
● Jhon Shen
● Yeshween Mudaliar – Managing Director
Other executives
● Jessie Tao (Chief Financial Officer)
●
Indira Naidu (Company Secretary)
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the
demands and responsibilities of their role. Non-executive
directors’ fees and payments are reviewed annually
by the Remuneration & Nominations Committee. The
Remuneration & Nominations Committee may, from time
to time, receive advice from independent remuneration
consultants to ensure non-executive directors’ fees and
payments are appropriate and in line with the market. The
chairman’s fees are determined independently to the fees
of other non-executive directors based on comparative
roles in the external market. The chairman is not present
at any discussions relating to the determination of his
own remuneration. Non-executive directors do not receive
performance-based bonuses and prior shareholder
approval is required to participate in the issue of equity.
ASX listing rules require the aggregate non-executive
directors’ remuneration be determined periodically by a
general meeting. The most recent determination was in
the Prospectus dated 23 November 2018. This amount
has initially been fixed by the Company at $700,000.
The 4th edition of the Corporate Governance principles
and Recommendations released by the ASX Corporate
Governance Council specifies that it is generally
acceptable for non-executive directors to receive
securities as part of their remuneration to align their
interest with the interest of other security holders,
however non-executive directors should not receive
performance-based remuneration as it may lead to bias
in their decision making and constraints of a newly listed
company, the Board has chosen to grant equity in the form
of Non Executive Director Rights (NED Rights) which vest
based only on meeting continuous service conditions.
Executive remuneration
The Group aims to reward executives based on
their position and responsibility, with a level and
mix of remuneration which has both fixed and
variable components.
The executive remuneration and reward framework has
four components:
● base pay and non-monetary benefits
● short-term performance incentives
● share-based payments
● other remuneration such as superannuation and long
service leave
The combination of these comprises the executive’s
total remuneration.
Fixed remuneration, consisting of base salary,
superannuation and non-monetary benefits, are reviewed
annually by the Nomination and Remuneration Committee
based on individual and business unit performance,
the overall performance of the consolidated entity and
comparable market remunerations.
Executives may receive their fixed remuneration in the
form of cash or other fringe benefits (for example motor
Directors’ Report (continued)for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Fixed remuneration
Variable remuneration
Cash, salary
and fees
$
Non-
monetary
$
Super-
annuation
$
Long term
benefits
Long
service
leave
$
Sub-total
$
Share based
payments
$
Total
$
9
2020
Non-Executive Directors:
Peter French
Tracey Cray
Theo Renard
Leo Cui
Executive Directors:
Jhon Shen
Yeshween Mudaliar
53,273
38,052
38,052
9,132
51,923
100,209
Other Key Management Personnel:
Jessie Tao
Indira Naidu
63,927
32,234
386,802
–
–
–
–
–
–
–
–
–
5,061
3,615
3,615
868
4,933
9,500
6,073
3,062
36,727
–
–
–
–
–
–
–
–
–
58,334
41,667
41,667
10,000
56,856
11,295
69,629
11,295
13,604
–
–
52,962
55,271
10,000
56,856
109,709
221,946
331,655
70,000
35,296
44,389
114,389
–
35,296
423,529
302,529
726,058
Fixed remuneration
Variable remuneration
Cash, salary
and fees
$
Non-
monetary
$
Super-
annuation
$
Long term
benefits
Long
service
leave
$
Sub-total
$
Share based
payments
$
Total
$
2019
Non-Executive Directors:
Peter French
Tracey Cray
Theo Renard
Executive Directors:
Jhon Shen
Yeshween Mudaliar
47,668
33,072
20,811
122,175
75,000
Other Key Management Personnel:
Jessie Tao
Indira Naidu
56,675
35,140
390,541
–
–
–
–
–
–
–
–
3,455
2,530
1,529
12,825
7,125
5,950
2,805
36,219
–
–
–
–
–
–
–
–
51,123
35,602
22,340
11,647
11,647
7,661
62,770
47,249
30,001
135,000
–
135,000
82,125
140,869
222,994
62,625
37,945
28,174
–
90,799
37,945
426,760
199,998
626,758
Mediland Pharm Limited 2020 Annual Report Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
10
Jhon Shen
Executive Director
Agreement commenced:
15 October 2018
Term of agreement:
Not fixed
Details:
For the period ended 30 June 2020, Mr Shen received $56,856 salary. Pursuant
to Mr Shen’s executive agreement, Mr Shen may resign from his position by giving
6 months’ notice in writing.
Yeshween Mudaliar
Agreement commenced:
Managing Director
15 October 2018
Term of agreement:
Not fixed
Details:
For the period ended 30 June 2020, Mr Mudaliar received a salary of $109,709.
Pursuant to Mr Mudaliar’s executive agreement, Mr Mudaliar may resign from his
position by giving 6 months’ notice in writing.
Tracey Cray
Non-executive Director
Agreement commenced:
1 November 2018
Term of agreement:
Not fixed
Details:
For the period ended 30 June 2020, Ms Cray received a salary of $41,667. Pursuant to
Ms Cray’s appointment letter, Ms Cray is offered a total of $80,000 as remuneration
as non-executive director, of which $50,000 is in the form of cash and $30,000 in
the form of shares, to be issued if exercised at each anniversary date within the three
years from date of commencement.
Dr. Peter French
Agreement commenced:
Non-executive Director
1 November 2018
Term of agreement:
Not fixed
Details:
For the period ended 30 June 2020, Dr French received a salary of $58,334.
Pursuant to Dr French’s appointment letter, Dr French is offered a total of $100,000 as
remuneration as non-executive director, of which $70,000 is in the form of cash and
$30,000 is in the form of shares to be issued if exercised at each anniversary date
within the three years from date of commencement.
Directors’ Report (continued)for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report 11
Theo Renard
Non-executive Director
Agreement commenced:
24 January 2019
Term of agreement:
Not fixed
Details:
For the period ended 30 June 2020, Mr Renard received a salary of $41,667. Pursuant
to Mr Renard’s appointment letter, Mr Renard is offered a total of $80,000 as
remuneration as non-executive director, of which $50,000 is in the form of cash and
$30,000 in the form of shares, to be issued if exercised at each anniversary date within
the three years from date of commencement.
Leo Cui
Non-executive Director
Agreement commenced:
28 November 2019
Term of agreement:
Not fixed
Details:
For the period ended 30 June 2020, Mr Cui received a salary of $10,000. Pursuant to
Mr Cui’s appointment letter, Mr Cui is offered a total of $30,000 in the form of cash as
remuneration as non-executive director.
Jessie Tao
Chief Financial Officer
Agreement commenced:
15 October 2018
Term of agreement:
Not fixed
Details:
For the period ended 30 June 2020, Ms Tao received a salary of $70,000. Pursuant
to Ms Tao’s executive agreement, Ms Tao may resign from her position by giving
6 months’ notice in writing.
Indira Naidu
Company Secretary
Agreement commenced:
6 November 2018
Term of agreement:
Not fixed
Details:
For the period ended 30 June 2020, Ms Naidu received a salary of $35,296. Pursuant
to Ms Indira’s executive agreement, Ms Indira may resign from her position by giving
6 months’ notice in writing.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Rights to deferred shares
Rights to deferred shares under the executive STI scheme are granted on 28 February each year. The shares vest after
two years from the grant date. On vesting, each right automatically converts into one ordinary share. The executives do
not receive any dividends and are not entitled to vote in relation to the rights during the vesting period. If an executive
ceases employment before the rights vest, the rights will be forfeited, except in limited circumstances that are approved
by the board on a case-by-case basis.
The fair value of the rights is determined based on the market price of the company’s shares at the grant date, with an
adjustment made to take into account the two year vesting period and expected dividends during that period that will
not be received by the employees.
Mediland Pharm Limited 2020 Annual Report The Performance Rights will be vested based on the following table provided that the Participants remain employees of
any member entity in the Group as at the relevant Vesting Date. The Vesting Dates are set out as below:
12
Vesting Date
9 January 2020
9 January 2021
9 January 2022
Percentage of the
total offered
Performance Rights
to be vested
33.33%
33.33%
33.33%
While the vesting condition applies to the Performance Rights, they are Unvested Performance Rights. If the vesting
condition is not met, the relevant Unvested Performance Rights will be forfeited. Vesting conditions include both service
and performance conditions.
Details of options over ordinary shares granted, vested and lapsed for directors and other key management personnel
as part of compensation during the year ended 30 June 2020 are set out below:
Balance at start of the year
Vested
Forfeited
Rights to deferred shares
Name
Year
Granted
Number
Granted
during the
year
Yeshween Mudaliar
09.01.2019 2,500,000
Jessie Tao
09.01.2019
500,000
–
–
Number
833,333
166,667
%
Number
33.33
33.33
–
–
Rights to deferred shares
Balance at start of the year
Vested
Forfeited
Year
Granted
Number
02.11.2018
30,000
02.11.2018
30,000
24.01.2019
30,000
Granted
during the
year
–
–
–
Number
10,000
10,000
10,000
%
Number
33.33
33.33
33.33
–
–
–
Name
Peter French
Tracey Cray
Theo Renard
Shareholding
Balance at
end of year
(unvested)
%
– 1,666,667
–
333,333
Balance at
end of year
(unvested)
20,000
20,000
20,000
%
–
–
–
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Name
Ordinary shares
Jhon Shen
Balance at the
start of the year
Additions Disposals/other
Balance at the
end of the year
250,000,000
250,000,000
–
–
–
–
250,000,000
250,000,000
Directors’ Report (continued)for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Other transactions with key management personnel:
The wife of Mr Jhon Shen, is a director of Auckland Harbour Limited and Aust & NZ Group Pty Ltd. The Group has the
following transactions during the year with those two entities:
Sale of goods and services:
2020
$
2019
$
13
Promotion fee charged by Darling Harbour Pty Ltd to Auckland Harbour Limited
–
723,391
Payment for goods and services:
Management fee paid to Aust & NZ Group Pty Ltd
433,234
1,201,614
This concludes the remuneration report, which has been audited.
Shares issued on the exercise of options
There were no ordinary shares of Mediland Pharm Limited issued on the exercise of options during the year ended
30 June 2020 and up to the date of this report.
Indemnity and insurance of officers
The Group has indemnified the directors and executives of the Group 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 Group paid a premium in respect of a contract to insure the directors and executives of
the Group against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Group has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Group or any related entity against a liability incurred by the auditor.
During the financial year, the Group has not paid a premium in respect of a contract to insure the auditor of the Group or
any related entity.
Proceedings on behalf of the consolidated entity
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Group, or to 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 part of those proceedings.
No proceedings have been brought or intervened in or on behalf of the Company with leave of the Court under section
237 of the Corporations Act 2001.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 27 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 27 to the financial statements do not compromise
the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
● all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
● none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the
consolidated entity, acting as advocate for the consolidated entity or jointly sharing economic risks and rewards.
Mediland Pharm Limited 2020 Annual Report Rounding of amounts
The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in
the financial statements. Amounts in the financial statements have been rounded off in accordance with the instrument
to the nearest thousand dollars, or in certain cases, the nearest dollar.
14
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
BDO continues in office in accordance with section 327 of the Corporations Act 2001. The BDO entity performing the
audit of the Group transitioned from BDO East Coast Partnership to BDO Audit Pty Limited on 8 July 2020.
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
Dr. Peter French
Chairman
Sydney, NSW
31 August 2020
Directors’ Report (continued)for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Auditor’s Independence Declaration
for the year ended 30 June 2020
15
Level 11, 1 Margaret St Sydney NSW 2000 Australia Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. DECLARATION OF INDEPENDENCE BY NAME OF GILLIAN SHEA TO THE DIRECTORS OF MEDILAND PHARM LIMITED As lead auditor of Mediland Pharm Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: 1.No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2.No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Mediland Pharm Limited and the entities it controlled during the period. Gillian Shea Director BDO Audit Pty Ltd Sydney, 31 August 2020 Mediland Pharm Limited 2020 Annual Report Financial Statements
for the year ended 30 June 2020
16
Contents
17
Consolidated Statement of Profit or Loss and other
Comprehensive Income
18
19
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
20 Consolidated Statement of Cash Flows
21
Notes to the Financial Statements
42 Directors’ Declaration
43
Independent Auditor’s Report to the members of
Mediland Pharm Limited
General information
The financial statements cover Mediland Pharm Limited
as a consolidated entity consisting of Mediland Pharm
Limited and the entities it controlled at the end of, or
during, the year. The financial statements are presented
in Australian dollars, which is Mediland Pharm Limited’s
functional and presentation currency.
Mediland Pharm Limited is a listed public company limited
by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Suite 4, Level 19,
227 Elizabeth Street
SYDNEY
NSW 2000
A description of the nature of the Group’s operations and
its principal activities are included in the directors’ report,
which is not part of the financial statements.
The financial statements were authorised for issue by
the directors, on 31 August 2020. The directors have the
power to amend and reissue the financial statements.
Mediland Pharm Limited 2020 Annual Report
Consolidated Statement of Profit or Loss and other
Comprehensive Income
for the year ended 30 June 2020
Revenue
Cost of sales
Gross profit
Other income
Government grant
Marketing expenses
Occupancy expenses
Administrative expenses
Employee benefit expenses
Share-based payment expenses
Listing expenses
Finance costs
Profit/(Loss) before income tax expense
Income tax expense
(Loss) after income tax expense for the year attributable to the owners of
Mediland Pharm Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
Mediland Pharm Limited
Earnings
Basic earnings per share
Diluted earnings per share
Consolidated
2020
$
2019
$
Note
4
23,298,447
30,661,259
(5,506,738)
(3,277,209)
17,791,709
27,384,050
17
4
109,722
770,867
288,984
–
(15,366,550)
(19,890,782)
(437,675)
(736,682)
(3,439,141)
(3,339,420)
(2,697,129)
(2,000,721)
(990,560)
(710,909)
–
(589,711)
5
6
(180,527)
–
(4,921,167)
886,692
187,874
897,936
(5,109,041)
(11,244)
(72,723)
(72,723)
(5,181,764)
Cents
19
19
(1.63)
(1.63)
18,164
18,164
6,920
Cents
(0.01)
(0.01)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
Mediland Pharm Limited 2020 Annual Report Consolidated Statement of Financial Position
as at 30 June 2020
18
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangibles
Goodwill
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Customer deposit
Lease – Short term liabilities
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Lease – Long term liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits / (Accumulated losses)
Total equity
Consolidated
2020
$
2019
$
Note
7
8
9
10
26
11
25
6
7,304,139
12,047,350
925,029
1,853,696
1,411,204
866,949
373,842
–
10,014,214
14,767,995
3,031,398
2,143,074
3,953,146
204,647
321,882
–
5,395
–
1,014,350
153,057
8,525,423
2,301,526
18,539,637
17,069,521
12
3,704,391
3,477,155
13
14
26
6
26
15
16
–
50,854
399,987
820,451
198,087
36,460
–
–
4,975,683
3,711,702
1,398,224
3,391,058
317,228
–
4,789,282
317,228
9,764,965
4,028,930
8,774,672
13,040,591
11,898,945
11,898,945
1,643,838
800,219
(4,768,111)
341,427
8,774,672
13,040,591
The above statement of financial position should be read in conjunction with the accompanying notes.
Mediland Pharm Limited 2020 Annual Report Consolidated Statement of Changes in Equity
for the year ended 30 June 2020
Transactions with owners in their capacity as owners:
Consolidated
Balance at 1 July 2018
Loss after income tax expense for
the year
Other comprehensive income for the
year, net of tax
Total comprehensive income for
the year
Share-based payments (note 18)
Group restructure
Shares issued during restructuring
Shares issued during IPO
Less: Share issue cost (note 15)
Dividends paid (note 17)
Balance at 30 June 2019
Consolidated
Issued
capital
$
Group
restructure
reserve
$
Foreign
currency
reserve
$
Share-
based
payments
reserve
$
Retained
Profits/
(Accu-
mulated
losses)
$
Total equity
$
1
–
–
–
–
(1)
100
12,552,722
(653,877)
–
–
–
–
–
–
71,146
–
–
–
–
–
–
18,164
18,164
–
–
–
–
–
–
– 5,654,904 5,654,905
19
–
–
–
(11,244)
(11,244)
–
18,164
(11,244)
6,920
710,909
–
–
–
–
–
–
–
710,909
71,145
100
– 12,552,722
–
(653,877)
– (5,302,233)
(5,302,233)
11,898,945
71,146
18,164
710,909
341,427 13,040,591
Issued
capital
$
Group
restructure
reserve
$
Foreign
currency
reserve
$
Share-
based
payments
reserve
$
Retained
Profits/
(Accu-
mulated
losses)
$
Total equity
$
Balance at 1 July 2019
11,898,945
71,146
18,164
710,909
341,427 13,040,591
Reversal of share-based payment
(note 18)
Impact of change in accounting policy –
AASB16 (Note 26)
–
–
–
–
–
–
(74,218)
74,218
–
–
(74,715)
(74,715)
Restated balance at 1 July 2019
11,898,945
71,146
18,164
636,691
340,930 12,965,876
Loss after income tax expense for the year
Other comprehensive income for the
year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments (note 18)
–
–
–
–
–
–
–
–
–
(72,723)
(72,723)
–
–
–
(5,109,041)
(5,109,041)
–
(72,723)
(5,109,041)
(5,181,764)
–
990,560
–
990,560
Balance at 30 June 2020
11,898,945
71,146
(54,559)
1,627,251
(4,768,111) 8,774,672
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Mediland Pharm Limited 2020 Annual Report Consolidated Statement of Cash Flows
for the year ended 30 June 2020
20
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Lease interests
Net income taxes paid
Government grants and tax incentives
Net cash from/(used in) operating activities
Cash flows from investing activities
Proceeds from disposal of plant and equipment
Payments to acquire plant and equipment
Purchase of intangibles
Payments to acquire investments
Lease payment (Principal)
Proceeds from disposal of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Dividends paid
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Consolidated
2020
$
2019
$
Note
24,271,223
32,566,547
(25,773,774)
(33,678,800)
109,722
(180,526)
62,110
–
(547,635)
(751,475)
288,984
–
29
(1,832,006)
(1,801,618)
10
11
25
17
1,818
(757,450)
(1,319,481)
(112,325)
(800,000)
(622,346)
–
–
–
–
–
7,031
(2,852,334)
(750,419)
–
–
–
–
12,552,822
(653,877)
(5,302,233)
6,596,712
(4,684,340)
4,044,675
12,047,350
8,002,675
(58,871)
–
Cash and cash equivalents at the end of the financial year
7
7,304,139 12,047,350
The above statement of cash flows should be read in conjunction with the accompanying notes.
Mediland Pharm Limited 2020 Annual Report 21
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1. CORPORATION
INFORMATION
Mediland Pharm Limited is a company limited by shares
incorporated in New South Wales on 27 August 2018.
Note 2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies adopted in the
preparation of the financial report are set out below. The
financial report covers the consolidated group of Mediland
Pharm Limited (“the Company”) and its controlled entities
(“the Group”).
The following is a summary of the material accounting
policies adopted by the consolidated Group in the
preparation of the financial report. The accounting policies
have been consistently applied to all years presented,
unless otherwise stated.
(a) Basis of preparation
The financial report is a general purpose financial report
that has been prepared in accordance with Australian
Accounting Standards (including Australian Accounting
Interpretations) of the Australian Accounting Standards
Board (AASB) and Corporations Act 2001 as appropriate
for profit oriented entities.
(i) Historical cost convention
The financial report has been prepared on an accrual
basis and is based on historical costs, modified, where
applicable by the measurement at fair value of selected
non-current assets, financial assets and financial liabilities.
(ii) Critical accounting estimates
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to
the financial statements are disclosed in Note 2(g).
New Standards and interpretations note yet adopted
Certain new accounting standards and interpretations
have been published that are not mandatory for 30 June
2020 reporting periods and have not been early adopted
by the Group. The Group’s assessment of the impact of
these new standards and interpretations is set out below.
AASB 101 Presentation of Fianncial Statements
The AASB issued a naroow-scope amendment to AASB
101 of Financial Statements to clarify that liabilities are
classified as either current or non-current, depending on
the rights that exist at the end of the reporting period.
Classification is unaffected by the expectations of the
entity or events after the reporting date (e.g. the receipt
of a waiver or a breach of covenant). The amendment
also clarifies what AASB 101 means when it refers to the
settlement of a liability.
Entities should consider their existing classification in
light of the amendment and determine whether any
changes are required. The Amendment should be applied
for annual reporting periods on or after 1 January 2022.
Management are still assessing the impact on adopting
the amendment to AASB 101.
There are no other standards that are not yet effective
that would be expected to have a material impact on the
Group in the current or future years abd on foreseeable
future transactions.
(b) Going concern
The financial report has been prepared on a going
concern basis. Notwithstanding the Group generated a
loss after-tax of $5,109,041, those non-recurring expenses
includes share-based payment amounting to $990,560.
Furthermore, the Group had a net assets position at
30 June 2020 of $8,774,672 and cash on hand amount of
$7,304,139. The directors believe the going concern basis
of preparation of the financial statements is appropriate
based on trading forecasts prepared and the future
growth of the Group.
However the impact of COVID-19 did result in some
reduction in financial performance for the year. The
directors has been addressing the ongoing COVID-19
environment by activily engaging in conserving cash
reserves by closing 4 retail stores and diversifying
the business into e-commerce and selling Mediland
branded products through a a leading hotel chain and
a Sydney-based pharmacy. This strategy of diversifying
revenues to offset the challenges from the COVID-19
continue to be successful. Meantime, the management
has instituted a range of measures to significantly
reduce costs.
(c) Significant Accounting Policies
Accounting policies are selected and applied in a manner
that ensures that the resulting financial information
satisfies the concepts of relevance and reliability, thereby
ensuring that the substance of the underlying transactions
or other events is reported. Other significant accounting
policies are contained in the notes to the consolidated
financial statements to which they relate.
(d) Goods and services tax
Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office. In these
circumstances the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of the
expense. Receivables and payables in the statement of
financial position are shown inclusive of GST. Cash flows
are presented in the cash flow statement on a gross basis,
except for the GST component of investing and financing
activities which are disclosed as operating cash flows.
(e) Employee benefits
Employees of the Group receive defined contribution
superannuation entitlements for which the Group
pays the fixed superannuation guarantee contribution
Mediland Pharm Limited 2020 Annual Report Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
foreign currency translation reserve in the statement of
financial position. These differences are also recognised
in the statement of comprehensive income as other
comprehensive income. The foreign currency reserve is
recognised in profit or loss when the foreign operation is
disposed of.
(g) Critical accounting estimates and judgments
The directors evaluate estimates and judgements
incorporated into the financial report based on historical
knowledge and best available current information.
Estimates assume a reasonable expectation of future
events and are based on current trends and economic
data, obtained both externally and within the Group.
Information on material estimates and judgements used
in applying the accounting policies can be found in the
following notes:
Judgement Area
Allowance for expected credit losses
Provision for impairment of inventories
Estimation of useful lives of assets
Recovery of deferred tax assets
Share based payments
Impairment of goodwill
Lease term and incremental borrowing rate
Note
8
9
10
6
18
25
26
22
(currently 9.5% of the employee’s average ordinary
salary) to the employee’s superannuation fund of choice.
All contributions in respect of employees’ defined
contribution entitlements are recognized as an expense
when they become payable. The Group’s obligation with
respect to employees’ defined contribution entitlements
is limited to its obligation for any unpaid superannuation
guarantee contributions at the end of the reporting period.
All obligations for unpaid superannuation guarantee
contributions are measured at the (undiscounted) amounts
expected to be paid when the obligation is settled and are
presented as current liabilities in the Group’s statement of
financial position.
(f) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group’s
entities is measured using the currency of the primary
economic environment in which that entity operates.
The consolidated financial statements are presented in
Australian Dollars which is the Group’s functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into
functional currency using the exchange rates prevailing
at the date of transaction. Foreign currency monetary
items are translated at the year-end exchange rate.
Non-monetary items measured at historical cost continue
to be carried at the exchange rate at the date of the
transaction. Non-monetary items measured at fair value
are reported at the exchange rate at the date when fair
values were determined.
Exchange differences arising on the translation of
monetary items are recognised in the profit or loss, except
where deferred in equity as a qualifying cash flow or net
investment hedge.
Exchange difference arising on translation of non-
monetary items are recognised directly in equity to the
extent that the gain or loss is directly recognised in equity,
otherwise the exchange difference is recognised in the
profit or loss.
Group companies
The financial results and position of foreign operations
whose functional currency is different from the Group’s
presentation currency are translated as follows:
● assets and liabilities are translated at year-end
exchange rates prevailing at that reporting date;
●
income and expense are translated at average
exchange rates for the year; and
● retained earnings are translated at the exchange rates
prevailing at the date of the transaction.
Exchange differences arising on translation of foreign
operations are transferred directly to the Group’s
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Note 3. SEGMENT INFORMATION
The Group identifies its operating segments based on the internal reports that are reviewed and used by the Group’s
chief operating decision makers (CODM). The CODM consists of the Executive Key Management Personnel as
disclosed in the Remuneration Report on pages 7 to 9. For the year ended 30 June 2020, the Group examines the
group’s performance both from a product and geographic perspective and has identified two reportable segments of
its business:
● Retailer servicing the Chinese inbound tourism sector in Australia and New Zealand.
23
● Online sales through E-commerce Platform.
Profit and loss disclosure
Sale of goods
Australia
New Zealand
Commission received
Australia
New Zealand
Other revenue
Australia
New Zealand
Government grants
Australia
New Zealand
Less: COGS
Australia
New Zealand
Operating expense
Australia
New Zealand
Retail 2020
$
Online 2020
$
Total 2020
$
Retail 2019
$
Online 2019
$
Total 2019
$
(15,543,827)
(1,231,898)
(16,775,725) (22,776,869)
(2,890,347)
–
(2,890,347)
(2,639,808)
(18,434,174)
(1,231,898)
(19,666,072)
(25,416,677)
– (22,776,869)
– (2,639,808)
– (25,416,677)
(1,587,677)
(2,044,698)
(3,632,375)
(96,764)
(12,958)
(109,722)
(276,026)
(12,958)
(288,984)
–
–
–
–
–
–
–
–
–
(1,587,677)
(5,244,582)
(2,044,698)
–
(3,632,375)
(5,244,582)
(96,764)
(769,565)
(12,958)
(1,302)
(109,722)
(770,867)
(276,026)
(12,958)
(288,984)
–
–
–
4,124,976
933,011
5,057,987
3,194,658
448,751
–
448,751
82,551
4,573,727
933,011
5,506,738
3,277,209
–
–
–
–
–
–
–
–
–
–
–
–
(5,244,582)
–
(5,244,582)
(769,565)
(1,302)
(770,867)
–
–
–
3,194,658
82,551
3,277,209
16,929,601
639,516
17,569,117
24,580,767
4,551,905
–
4,551,905
1,386,838
21,481,506
639,516
22,121,022
25,967,605
– 24,580,767
–
1,386,838
– 25,967,605
Segment (profit) or loss
3,589,978
340,629
3,930,607
(2,187,312)
–
(2,187,312)
Add:
Listing expenses
Share-based payment
Income tax expense
Net loss
–
990,560
187,874
5,109,041
589,711
710,909
897,936
11,244
Mediland Pharm Limited 2020 Annual Report
24
Segment assets
Australia
New Zealand
Unallocated assets
Total assets as per the
balance sheet
Segment liabilites
Australia
New Zealand
Note 3. SEGMENT INFORMATION (continued)
Segment assets and liabilities
Segment assets and liabilities are measured in the same way as in the financial statements. These assets are allocated
based on the operations of the segment.
Retail 2020
$
Online 2020
$
Total 2020
$
Retail 2019
$
Online 2019
$
Total 2019
$
Total segment assets
16,104,779
1,420,508
17,525,287
16,916,464
14,388,196
1,420,508
15,808,704
14,618,101
1,716,583
–
1,716,583
2,298,363
1,014,350
18,539,637
–
–
–
14,618,101
2,298,363
16,916,464
153,057
17,069,521
(6,871,749)
(1,021,260)
(7,893,009)
(2,850,309)
– (2,850,309)
(790,960)
–
(790,960)
(861,393)
Total segment liabilities
(7,662,709)
(1,021,260)
(8,683,969)
(3,711,702)
Unallocated liabilities
Total liabilities as per the
balance sheet
(1,080,996)
(9,764,965)
Note 4. REVENUE AND OTHER INCOME
Revenue
Sale of goods
Commission received
Total revenue
Other income
Interest income
Other income
Total other income
–
–
(861,393)
(3,711,702)
(317,228)
(4,028,930)
June 2020
$
June 2019
$
19,666,072
25,416,677
3,632,375
5,244,582
23,298,447 30,661,259
92,057
17,665
62,110
708,757
109,722
770,867
Recognition and Measurement
Sales of goods
The Group has earned the sales revenue from the sale
of products through its four retail stores. Revenue for
these activities are recognised when the customers
obtain control of these assets at the point in time when
the customer has obtained control of the goods which is
considered to be fulfilment of the performance obligation.
Revenue is measured with consideration to any trade
discounts and volume rebates.
Commission income
The Group also derives revenue from commission through
agreements with third party retailers who pay the Group
a commission from the sales generated on Chinese tour
groups that the Group arranges to visit these third party
retailers. Revenue for these activities are recognised
when the tour groups purchased the products with these
third party retailers and obtain control of these assets at
the time of delivery of the goods.
App online sales
App online sales include shipping revenue and are
recorded upon delivery to the customer. The Group
recognised revenue when persuasive evidence of an
arrangement exist, delivery has occurred, the sales
price is fixed or determinable and collection is propable.
Product is considered delivered to the customer once
it has been shipped and title, risk or loss and reward of
ownership have been transferred.
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report
Discount, promotional and other rebates
The amount of revenue recognised for a transaction is net of any discounts, promotional and other rebates, which
includes member rebates, and/or contributions to members towards promotional activities.
Interest revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
25
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Note 5. EXPENSES
Finance costs
June 2020
$
June 2019
$
Interest charges paid/payable for lease liabilities
180,527
–
Superannuation expenses
Defined contribution superannuation expenses
(including non-executive Director)
Items included in administrative expenses include
Enti Financial acquisition expenses
Depreciation and amortisation expenses
Depreciation of right of use asset
163,556
133,169
10,000
408,720
869,882
–
170,492
–
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average
interest rate applicable to the entity’s general borrowings during the year, in this case 5.0%.
Note 6. INCOME TAX EXPENSES
Income tax expense / (benefit)
Current tax
Deferred tax
June 2020
$
June 2019
$
(31,829)
613,191
219,703
284,745
187,874
897,936
Numerical reconciliation of income tax to prima facie tax payable:
Prima facie income tax expense on loss from ordinary activities (28%-30%)
(1,476,350)
266,008
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Tax consolidation adjustments
Non-deductible share-based payment expenses
Non-deductible amortisation and depreciation
Difference in overseas tax rates
Adjustment for deferred tax of prior periods
Less: Tax loss not recognised
Income tax expense
** Tax consolidation legislation
–
418,793
297,168
163,449
143,771
236,042
823,794
213,135
–
–
–
–
187,874
897,936
Mediland has formed a tax consolidated group with its subsidiaries under the tax consolidation regime. The Australian
Taxation Office has been notified of this decision. As a result of consolidation, adjustments were required for the reset
tax bases of assets of the subsidiaries. Estimated tax effects of amounts attributable to consolidation adjustments:
Mediland Pharm Limited 2020 Annual Report Note 6. INCOME TAX EXPENSES (continued)
26
Trading stock tax base reductions
Fixed asset tax base reductions
Reconciliation of DTA and DTL
Balance at 1 July 2019
Adjustment for prior periods
Lease liabilities/assets
Other temporary differences
Balance at 30 June 2020
June 2020
$
June 2019
$
–
–
–
164,380
254,413
418,793
DTA
DTL
153,057
(92,876)
317,228
143,166
1,263,453
1,185,944
(309,284)
(248,114)
1,014,350
1,398,224
Potential deferred tax assets attributable to tax losses
carried forward for the company, have not been brought
to account as the directors believe it is not appropriate to
regard realisation of the deferred tax asset as probable.
The benefit will only be obtained if:
● When the deferred income tax asset or liability arises
from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business
combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
● The group derives future assessable income of a
nature and amount sufficient to enable the benefits
from the deductions for the losses to be realised;
● The group continues to comply with the conditions for
deductibility imposed by the law:
● The losses are available under the continuity of
ownership or same business tests;
● No changes in tax legislation adversely affect the
company in realising the benefit from the deductions
for the losses.
The total amount of unused tax losses for which no
deferred tax asset has been recognised is $2,745,979, tax
effected at 30% $823,794. (2019: Nil).
Recognition and Measurement
Current tax
The income tax expense/(benefit) for the year comprises
current income tax expense/(benefit), and deferred tax
expense/(benefit). 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 together with the research and development
claim submitted for 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 tax
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to be
applied when the assets are recovered or liabilities are
settled, based on those tax rates that are enacted or
substantively enacted, except for:
● When the taxable temporary difference is associated
with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be
controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised
deferred tax assets are reviewed at each reporting date.
Deferred tax assets recognised are reduced to the extent
that it is no longer probable that future taxable profits
will be available for the carrying amount to be recovered.
Previously unrecognised deferred tax assets are
recognised to the extent that it is probable that there are
future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where
there is a legally enforceable right to offset current tax
assets against current tax liabilities and deferred tax
assets against deferred tax liabilities; and they relate to
the same taxable authority on either the same taxable
entity or different taxable entities which intend to
settle simultaneously.
Mediland Pharm Limited (the ‘head entity’) and its
wholly-owned Australian subsidiaries have formed
an income tax consolidated group under the tax
consolidation regime. The head entity and each subsidiary
in the tax consolidated group continue to account for
their own current and deferred tax amounts. The tax
consolidated group has applied the ‘separate taxpayer
within group’ approach in determining the appropriate
amount of taxes to allocate to members of the tax
consolidated group.
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Note 7. CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
June 2020
$
June 2019
$
63,621
123,226
7,240,518
11,924,124
7,304,139 12,047,350
27
Recognition and Measurement
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
Cash at bank bears floating interest rates. The interest rate relating to cash and cash equivalents for the year across all
bank accounts was between 0.00% and 2.40% (2018-19: between 0.00% and 2.40%).
Note 8. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Deposits
GST receivables
June 2020
$
June 2019
$
78,098
647,347
78,098
647,347
681,088
495,787
90,161
113,916
75,682
596,646
846,931
1,206,349
925,029
1,853,696
Recognition and Measurement
Trade receivables are initially recognized 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.
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables and contract assets. Trade receivables and contract assets have shared credit
risk characteristics and, as such, the expected loss rates for trade receivables are a reasonable approximation of loss
rates for contract assets. Losses incurred in the last 3 years represent less than 0.1% of receivables and are immaterial.
Therefore, no impairment has been recorded.
Other receivables mainly include prepayments of $500,000 to Careline Australia Pty Ltd to develop two beauty
products for Mediland Pharm to exclusively market and sell globally, including in its retail outlet.
Note 9. INVENTORIES
Finished goods – at cost
June 2020
$
June 2019
$
1,411,204
866,949
1,411,204
866,949
Recognition and Measurement
Finished goods are stated at the lower of cost and net realisable value on a ‘first in first out’ basis. Cost comprises
of costs of purchase, delivery costs, import duties and other taxes. Costs of purchased inventory are determined
after deducting rebates and discounts received or receivable. Net realiable value is the estimated selling price in the
oridinary course of business less the estimated costs necessary to make the sale.
Key estimates and judgement
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the
provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that
affect inventory obsolescence.
Mediland Pharm Limited 2020 Annual Report Note 10. PROPERTY, PLANT AND EQUIPMENT
Fixtures and fittings – at cost
Less: Accumulated depreciation
28
Motor vehicles – at cost
Less: Accumulated depreciation
Office equipment – at cost
Less: Accumulated depreciation
Lease improvement – at cost
Less: Accumulated depreciation
Total property, plant and equipment
Reconciliations
June 2020
$
June 2019
$
1,503,861
1,471,470
(176,933)
(118,842)
1,326,928
1,352,628
327,626
295,597
(140,290)
(89,791)
187,336
205,806
228,298
112,443
(91,502)
(36,061)
136,796
76,382
1,682,845
570,024
(302,507)
(61,766)
1,380,338
508,258
3,031,398
2,143,074
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated
Balance at 30 June 2018
Additions
Disposals
Exchange differences
Less: net assets from PMG
Depreciation expense
Balance at 30 June 2019
Motor
Vehicles
$
Fixtures and
Fittings
$
Office
Equipment
$
Lease
Improvement
$
Total
$
265,930
1,232,675
–
173,844
(14,304)
–
–
–
(284)
–
71,499
13,582
–
275
(197)
–
1,570,104
570,024
757,450
–
–
–
(14,304)
(9)
(197)
(45,820)
(53,607)
(8,777)
(61,766)
(169,970)
205,806
1,352,628
76,382
508,258
2,143,074
Reclassification to intangible
–
–
Adjusted balance as at 1 July 2019
205,806
1,352,628
26,049
102,431
(26,049)
–
482,209
2,143,074
Additions
Disposals
Reclassification
Write-off
Exchange differences
Depreciation expense
52,267
(6,464)
–
(13,009)
32,414
94,068
1,140,732
1,319,481
–
–
–
–
(6,000)
–
(68)
–
–
–
–
(6,464)
(6,000)
(13,009)
(91)
–
(23)
(51,264)
(58,091)
(53,635)
(242,603)
(405,593)
Balance at 30 June 2020
187,336
1,326,928
136,796
1,380,338
3,031,398
Recognition and Measurement
Plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items.
Depreciation is calculated on a straight-line basis to
write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful
lives as follows:
Furniture and fittings
3-40 years
Leasehold improvements
3-10 years
Office equipment
Motor vehicle
1-5 years
5-10 years
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease
or the estimated useful life of the assets, whichever is shorter.
Key estimates and judgements:
Estimation of useful lives of assets
29
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property,
plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical
innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less
than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be
written off or written down.
Note 11. INTANGIBLES
Patent and trademark – at cost
Less: Accumulated amortisation
Customer relationship – at cost
Less: Accumulated amortisation
Website – at cost
Less: Accumulated amortisation
June 2020
$
June 2019
$
122,243
2,996
119,247
80,000
–
80,000
6,000
600
5,400
5,917
522
5,395
–
–
–
–
–
–
Total
204,647
5,395
Recognition and Measurement
Significant costs associated with intellectual property are deferred and amortised on a straight-line basis over the period
of their expected benefit, being their finite life of 10 years.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated
Balance at 1 July 2018
Additions
Amortisation expense
Balance at 30 June 2019
Balance at 1 July 2019
Additions through business acquisition:
– Customer relationship
– Patent
Other additions
Amortisation expense
Exchange difference
Balance at 30 June 2020
Patent and
Trademark
$
Customer
Relationship
$
Website
$
–
5,917
(522)
5,395
5,395
–
–
–
–
–
–
80,000
10,000
106,325
121,720
(2,527)
54
–
–
80,000
–
–
–
–
–
–
–
–
–
6,000
6,000
(600)
–
Total
$
–
5,917
(522)
5,395
5,395
80,000
10,000
112,325
207,720
(3,127)
54
119,247
80,000
5,400
204,647
Mediland Pharm Limited 2020 Annual Report Note 11. INTANGIBLES (continued)
Intangible assets are measured at cost less any accumulated amortisation and any impairment losses. Amortisation is
systematically allocated over the useful life of each identifiable asset with a finite life.
30
Customer Relationship
Customer relationship were acquired as part of a business combination (see Note 25 for details). They are recognised
at their fair value at the date of acquisition and are subsequently amortised on a straight-line basis over their estimated
useful lives. Customer relationship have a finite life and are carried at cost less any accumulated amortisation and any
impairment losses. In calculating amortisation costs, patents are taken to have a useful life of 20 years, trademarks are
taken to have a useful life of 5 years.
Patent and trademarks
Patents and trademarks are recognised at cost of acquisition. Patents and trademarks have a finite life and are carried
at cost less any accumulated amortisation and any impairment losses. Amortisation is systematically allocated over
the useful life of each patent and trademark. In calculating amortisation costs, patents are taken to have a useful life of
20 years, trademarks are taken to have a useful life of 10 years.
Note 12. TRADE AND OTHER PAYABLES
Trade payables
Other payables – related parties
Other payables
June 2020
$
June 2019
$
3,251,611
2,972,504
197,961
197,961
254,819
306,690
3,704,391
3,477,155
Recognition and Measurement
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services
received by the Group during the reporting period which remains unpaid. The balance is recognised as a current liability
with the amount being normally paid with 30 days of recognition of the liability.
The carrying amounts of the Group’s trade and other payables are denominated in Australian dollars. For an analysis of
the financial risks associated with trade and other payables refer to Note 20.
Note 13. PROVISIONS
Employee benefits
Recognition and Measurement
Employee benefits
June 2020
$
June 2019
$
50,854
50,854
36,460
36,460
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance
date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected
to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been
measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the
liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting
requirements. Those cash flows are discounted using market yields on national government bonds with terms to
maturity that match the expected timing of cash flows.
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to
the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report
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 recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The
liability is measured as the present value of expected future payments to be made in respect of services provided by
employees up to the reporting date using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on national government bonds with terms to maturity and currency
that match, as closely as possible, the estimated future cash outflows.
31
Note 14. CUSTOMERS DEPOSIT
Customers deposit
June 2020
$
June 2019
$
399,987
399,987
–
–
Recognition and Measurement
Customer deposits are received in cash, and they are refundable to customers upon the same amount purchase orders
are placed and fulfilled. The estimated fair value of deposits with no stated maturity is the amount repayable on demand.
Note 15. ISSUED CAPITAL
Fully paid ordinary shares
Less: share issue cost
(a) Fully paid ordinary shares
At the beginning of the year
Shares split during the year
IPO shares issued during the year
At the beginning of the year
Shares split during the year
IPO shares issued during the year
June 2020
$
June 2019
$
12,552,822
12,552,822
(653,877)
(653,877)
11,898,945 11,898,945
June 2020
Number of
shares
June 2019
Number of
shares
312,763,610
1
– 249,999,999
–
62,763,610
312,763,610
312,763,610
June 2020
$
June 2019
$
12,552,822
–
–
1
99
12,552,722
12,552,822 12,552,822
Recognition and Measurement
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands, every holder of ordinary shares
present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Ordinary shares are classified as equity. Any transaction costs arising on the issue of ordinary shares are recognised
directly in equity as a reduction of the share proceeds received.
Mediland Pharm Limited 2020 Annual Report
Note 16. RESERVE
32
Foreign currency reserve
Share-based payments reserve
Group restructure reserve
Recognition and Measurement
Foreign currency translation reserve
June 2020
$
June 2019
$
(54,559)
18,164
1,627,251
710,909
71,146
71,146
1,643,838
800,219
Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive
income and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when
the net investment is disposed of.
Share-based payment reserve
The share-based payment reserve is used to recognise the grant date fair value of shares issued and vested to
employees and directors. Refer to Note 18.
Note 17. DIVIDEND
Dividend paid to PMG before admitted to ASX
There were no dividends paid, recommended or declared during the current financial year.
June 2020
$
June 2019
$
–
5,302,233
Note 18. SHARE BASED PAYMENT
An employee incentive plan (“EIP”) has been established by the Group at the initial public offering, whereby the Group
may, at the discretion of the Remuneration & Nominations Committee, grant performance rights, options, deferred share
awards or exempt share awards which may be subject to vesting conditions set by the Board. During the year, the Group
has granted the EIP rights to be issued Shares for nil consideration in lieu of part of the Non-Executive Directors’ (NED)
fees. On the each anniversary after the grant date, the directors will receive $10,000 worth of shares in the company in
2020, 2021 and 2022.
Based on the EIP, the Company has also established a Long Term Incentive Plan (LTIP) to encourage the high
performance of its key management personnel and senior management personnel in order to promote the long-term
success of the Company. The LTIP is an equity-based plan which is delivered in the form of Performance Rights. These
Performance Rights have a three year vesting period and will vest at the end of its period.
Performance rights were issued during the year, pursuant to the Employee Incentive Plan. Fair values at grant date are
determined using a Binomial Option Pricing Model that takes into account the exercise price, the term of the option,
the share price at the grant date, the expected volatility of the underlying share, expected dividend yield, and risk free
interest rate for the term of the option. There were no rights granted during the year ended 30 June 2020.
Set out below are summaries of performance rights granted under the long term incentive plan:
2020
Grant date
Expiry date
Exercise price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
09/01/2019
09/01/2022
$0.00 13,300,000
13,300,000
–
–
–
–
1,250,000
10,750,000
1,250,000
10,750,000
Set out below are summaries of non-executive directors’ rights granted under the EIP:
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report 2020
Grant date
Expiry date
Exercise price
24/01/2019
24/01/2022
02/11/2018
02/11/2021
$0.00
$0.00
Balance at
the start of
the year
$30,000
$60,000
$90,000
Granted
Exercised
–
–
–
–
–
–
Expired/
forfeited/
other
–
–
–
Balance at
the end of
the year
$30,000
$60,000
$90,000
33
Recognition and Measurement
Equity-settled share-based payments with employees and others providing similar services are measured at fair value of
the equity instrument at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Company’s estimate of equity instruments that will eventually vest.
Key estimates and judgements
At each reporting date, the entity revises its estimate of the number of rights that are expected to become exercisable. The
employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision
to the original estimates, is recognised in profit or loss with a corresponding adjustment to equity. The fair value is measured
at grant date and recognised over the period during which the employee becomes unconditionally entitled to the rights.
Note 19. LOSS/EARNINGS PER SHARE
a. Earnings used to calculate basic EPS from continuing operations
b. Weighted average number of ordinary shares during the year used in calculating
basic EPS*
c. Basic and Diluted earnings per share (cents per share)
June 2020
$
June 2019
$
(5,109,041)
(11,244)
Number
Number
312,763,610 183,485,022
(1.63)
(0.01)
* Basic EPS is calculated as the profit (loss) attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary
shares, divided by the weighted average number of ordinary shares outstanding during the financial year, adjusted for any bonus elements in
ordinary shares issued during the year.
Note 20. FINANCIAL INSTRUMENTS
The director’s overall risk management strategy seeks to assist the Group in meeting its financial targets, while
minimising potential adverse effect on financial performance. Risk management policies are approved and reviewed by
Director on a regular basis. These include the credit risk policies and future cash flow requirements.
Market risk
Foreign currency risk
the Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and
recognised financial assets and financial liabilities denominated in a currency that is not the entity’s functional currency.
The risk is measured using sensitivity analysis and cash flow forecasting.
The carrying amount of the Group ‘s foreign currency denominated financial assets and financial liabilities at the
reporting date were as follows:
Consolidated
New Zealand dollars
Chinese Yuan
Assets
2020
$
Liabilities
2019
$
2020
$
2019
$
1,832,054
2,298,363
1,020,385
1,102,614
1,151,276
–
1,599,507
–
2,983,330 2,298,363
2,619,892
1,102,614
Mediland Pharm Limited 2020 Annual Report 34
Note 20. FINANCIAL INSTRUMENTS (continued)
The Group had net assets denominated in foreign
currencies of $363,438 (assets of $2,983,330 less
liabilities of $2,619,892) as at 30 June 2020 (2019: net
assets of $1,195,749). Based on this exposure, had the
Australian dollars weakened by 3% or strengthened
by 3% against these New Zealand dollar with all other
variables held constant, the Group’s profit before tax
for the year would have been $19,397 lower/$19,397
higher. The percentage change is the expected overall
volatility of the significant currencies, which is based
on management’s assessment of reasonable possible
fluctuations taking into consideration movements over
the last 12 months each year and the spot rate at each
reporting date. The actual foreign exchange gain for the
year ended 30 June 2020 was $Nil (2019: Nil).
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group is not exposed to any significant interest
rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will
default on its contractual obligations resulting in financial
loss to the Group. Credit risk arises from cash and cash
equivalents, and deposits with banks. As sales to retail
customers are settled in cash or using major credit
cards within 24 hours, the Group is mitigated from any
material credit risk exposure to any single debtor or group
of debtors.
The Group has a credit risk exposure with a major
Australian retailer from which the commission revenue
has generated, which as at 30 June 2020 owed the
Group $36,717. (2019: $527,907). This balance was
within its terms of trade and no impairment was made
as at 30 June 2020. There are no guarantees against
this receivable but management closely monitors the
receivable balance on a monthly basis and is in regular
contact with this customer to mitigate risk. The Group has
a strict code of credit, including obtaining agency credit
information, confirming references and setting appropriate
credit limits. The Group obtains guarantees where
appropriate to mitigate credit risk. The maximum exposure
to credit risk at the reporting date to recognised financial
assets is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement
of financial position and notes to the financial statements.
The Group does not hold any collateral.
The Group has adopted a lifetime expected loss
allowance in estimating expected credit losses to trade
receivables through the use of a provisions matrix using
fixed rates of credit loss provisioning. These provisions
are considered representative across all customers of
the Group based on recent sales experience, historical
collection rates and forward-looking information that
is available.
Generally, trade receivables are written off when there is
no reasonable expectation of recovery. Indicators of this
include the failure of a debtor to engage in a repayment
plan, no active enforcement activity and a failure to make
contractual payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the Group to
maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able
to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate
cash reserves by continuously monitoring actual and
forecast cash flows and matching the maturity profiles of
financial assets and liabilities.
Remaining contractual maturities
The following tables detail the Group remaining contractual maturity for its financial instrument liabilities.
Consolidated – 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Lease liabilities – Current
Lease liabilities – Non-Current
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 5 years
$
Over 5 years
$
Total
contractual
cash flows
$
Total Carrying
amount
–
–
5%
5%
3,251,611
452,780
1,013,817
–
–
–
–
3,757,413
4,718,208
3,757,413
–
–
–
–
–
3,251,611
3,251,611
452,780
452,780
1,013,817
820,451
3,757,413
3,391,058
8,475,621
7,915,900
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Consolidated – 2019
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 5 years
$
Over 5 years
$
Total
contractual
cash flows
$
Total Carrying
amount
5%
5%
2,972,504
504,651
3,477,155
–
–
–
–
–
–
2,972,504
2,972,504
504,651
504,651
3,477,155
3,477,155
35
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
Fair value of financial instruments
The fair values of financial assets and financial liabilities can be compared to their carrying values as presented in
the statement of financial position. Fair values are those amounts at which an asset could be exchanged, or a liability
settled, between knowledgeable, willing parties at arm’s length transaction.
Fair values derived may be based on information that is estimated or subject to judgment, where changes in
assumptions may have material impact on the amounts estimated. Cash and cash equivalents, trade and other
receivables and trade and other payables are short-term instruments in nature whose carrying value is approximate to
fair value.
Note 21. CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
Note 22. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Name
Darling Harbour Pty Ltd
St Wells Pty Ltd
Surfers Paradise Pty Ltd
Mediland Pharm NZ Ltd
Enti Financial Pty Ltd
Share We Do Platform Technology Services Co., Ltd
Principal place of
business/Country of
incorporation
Ownership interest
2020
%
2019
%
Australia
100.00%
100.00%
Australia
100.00%
100.00%
Australia
100.00%
100.00%
New Zealand
100.00%
100.00%
Australia
100.00%
China
100.00%
–
–
Consolidation accounting policies
Subsidiaries are all those entities over which the Group has control. The group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Mediland Pharm Limited 2020 Annual Report Note 23. PARENT ENTITY INFORMATION
The individual financial statements for the parent entity show the following aggregate amounts:
36
Current assets
Total assets
Current liabilities
Total liabilities
Total equity
Issued capital
Reserves
Retained earnings
Total Equity
(Loss) / profit for the year
Total comprehensive (loss) / income for the year
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 (2019: $0).
June 2020
$
June 2019
$
6,526,192
10,222,992
9,460,667
11,845,991
685,995
71,839
685,995
309,387
11,898,945
11,898,945
1,701,469
710,909
(4,825,742)
(1,073,250)
8,774,672
11,536,604
(3,752,492)
676,748
(3,752,492)
676,748
Capital commitments
The parent entity had no capital commitments for property, plant and equipment at as 30 June 2020 (2019: $0).
Note 24: RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and conditions no more favourable to those
available to other parties unless otherwise stated.
Parent entity
Mediland Pharm Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 22.
Key management personnel
Disclosures relating to key management personnel are set out in note 28 and the remuneration report included in the
directors’ report.
Transactions with related parties
The following transactions occurred with related parties:
2020
$
2019
$
Sale of goods and services:
Promotion fee charged by Darling Harbour Pty Ltd to Auckland Harbour Limited
–
723,391
Payment for goods and services:
Management fee paid to Aust & Nz Group Pty Ltd
433,234
1,201,614
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Current borrowings:
Loan from Pacific Merchant Group Limited
2020
$
2019
$
197,961
197,961
The loan from Pacific Merchant Group Limited (“PMG”) arise from listing costs paid by PMG during IPO.
37
Note 25. BUSINESS COMBINATION
On 22 July 2019, the Mediland Pharm Limited acquired 100% shares of Enti Financial Pty Ltd, a Sydney based
Company. With this acquisition, the Group expects to expand its business to e-Commerce market. From 22 July 2019 to
30 June 2020, Enti Financial Pty Ltd’s revenue amount of $3.88 million and loss before tax amount of $347,763 has been
consolidated into Group result.
Consideration transferred
Amount settled in cash
Detail of the acquisition are as follows:
Property plant and equipment
Inventories
Trade and other receivables
Right-of-use-assets
Lease liabilities
Net identifiable net assets at fair value
Intangible assets acquired during the transction
Customer relationship
Patents
Net intangible at fair value
Goodwill
Acquisition date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Acquisition costs expensed to profit or loss
$
800,000
8,501
298,750
16,976
1,197,431
(1,133,540)
388,118
80,000
10,000
90,000
321,882
800,000
800,000
21,000
Business Combination
Business combination occur where an acquirer obtains
control over one or more businesses. A business
combination is accounted for by applying the acquisition
method, unless it is a combination involving entities
or businesses under common control. The business
combination will be accounted for from the date that
control is obtained, whereby the fair value of the
identifiable assets acquired and liabilities (including
contingent liabilities) assumed is recognised (subject to
certain limited exemptions).
When measuring the consideration transferred in the
business combination, any asset or liability resulting
from a contingent consideration arrangement is also
included. Subsequent to initial recognition, contingent
consideration classified as equity is not remeasured and
its subsequent settlement is accounted for within equity.
Contingent consideration classified as an asset or liability
is remeasured in each reporting period to fair value,
recognising any change to fair value in profit or loss,
unless the change in value can be identified as existing at
acquisition date.
All transaction costs incurred in relation to business
combinations, other than those associated with the issue
of a financial instrument, are recognised as expenses in
profit or loss when incurred. The acquisition of a business
may result in the recognition of goodwill or a gain from a
bargain purchase.
Goodwill on acquisitions of Enti Financial Pty Ltd is
included in intangible assets. Goodwill is not amortised
but it is tested for impairment annually, or more frequently
if events or changes in circumstances indicate that it
might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an
entity include the carrying amount of goodwill relating to
the entity sold.
The Group tests whether goodwill has suffered any
impairment on an annual basis. For the 2020 reporting
Mediland Pharm Limited 2020 Annual Report Note 25. BUSINESS COMBINATION (continued)
period, the recoverable amount of the cash-generating units (CGUs) was determined based on value-in-use calculations
which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved
by management covering a five-year period.
38
Cash flows beyond the five-year period are extrapolated using the estimated growth rate stated below. These growth
rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates.
CGU
Enti Financial Pty Ltd
Revenue growth
(% annual growth rate)
Budgeted gross margin
(%)
Discount Rate (%)
0%
25%
17%
Management has determined the values assigned to each of the above key assumptions as follows:
Assumptions
Approach used to determining values
Revenue growth (%)
Due to the impact of COVID-19, nil growth is expected by management.
Budgeted gross margin (%)
Based on past performance and management’s expectations for the future.
Long-term growth rate
This is the weighted average growth rate used to extrapolate cash flows
beyond the budget period. The rates are consistent with forecasts included in
industry reports.
The directors and management have considered and assessed reasonably possible changes for other key
assumptions and have not identified any instances that could cause the carrying amount of the CGU to exceed its
recoverable amount.
Note 26. ADOPTION OF AASB 16 – LEASE
Transition approach
The Group has adopted AASB 16 using the simplified transition approach and has not restated comparative amounts.
The Group has measured its lease liabilities at the present value of the remaining lease payments, discounted using
the appropriate incremental borrowing rates as of 1 July 2019. The associated right-of-use-assets were measured on
transition as if the new Standard had been applied since the commencement date of the lease. The adjustments arising
from the new leasing rules are recongnised in the opening balance of retained earnings on 1 July 2019.
Adjustments recognised on adoption of AASB 16
Adjustments to the Statement of Financial Position at 1 July 2019
Right-of-use-assets
Lease liabilities
Retained earnings adjustment
Assets
Right of use assets (AASB 16)
Liabilities
Lease Liabilities – current (AASB 16)
Lease Liabilities – non-current (AASB 16)
Interest expense charged for the period
30 June 2019
Adjustments
1 July 2019
–
–
1,536,751
1,536,751
1,611,471
1,611,471
341,427
(74,715)
266,712
Consolidated
30 June 2020
$
3,953,146
820,451
3,391,058
4,211,509
180,521
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Reconciliation of right-of-use-assets
Right-of-use-assets recognised upon transition
Balance at 1 July 2019
Right-of-use-assets through business combination
Lease arrangements entered into during the period
Amortisation expense
Balance at 30 June 2020
Reconciliation of lease liability
Lease liability recognised upon transition
Balance at 1 July 2019
Lease liability recognised through business combination
Lease arrangements entered into during the period
Interest expense and cash payments
Balance at 30 June 2020
Reconciliation of operating lease commitment at 30 June 2019 to lease liability at 1 July 2019
Lease commitment at 30 June 2019
Discounted using the Group's incremental borrowing rate at the date of initial application
Less: termination of leases as at 1 July 2019
Add: adjustments as a result of different treatment on extension and termination options
Lease liability at 1 July 2019
Of which are:
Lease Liabilities – current (AASB 16)
Lease Liabilities – non-current (AASB 16)
39
Consolidated
30 June 2020
$
1,536,751
1,197,431
2,088,846
(869,882)
3,953,146
1,611,471
1,133,540
2,088,846
(622,348)
4,211,509
1,626,815
(168,147)
(256,003)
408,806
1,611,471
389,921
1,221,550
1,611,471
Lease
Head office
Shop
Shop
Shop
Shop
Shop
Shop
Warehouse
Assessment of Impact
Location
Sydney CBD
Melbourne
Gold Coast
Term
Interest rate
From 14 November 2018 to 30 June 2022
From 15 March 2016 to 14 March 2022
From 7 August 2019 to 6 August 2025
Sydney, George St.
From 1 September 2018 to 31 August 2021
Sydney, George St.
From 15 November 2018 to 14 November 2023
Sydney, Castlereagh St.
From 1 July 2019 to 30 June 2024
New Zealand
Sydney, Clyde
From 1 November 2018 to 31 October 2024
From 13 August 2014 to 12 August 2020
5%
5%
5%
5%
5%
5%
5%
5%
As at 30 June 2019, the Group had non-cancellable operating lease commitments of $1,626,815. The Group has
completed an assessment of the impact of adoption of AASB 16 on these commitments.
The full financial impact of adopting AASB 16 on implementation date are as follows:
● A material right-of-use asset amount of $1,536,751 and a lease liability amount of $1,611,471 had been recognised on
the Balance Sheet.
● Finance costs increased by $180,521 due to the impact of the interest component of the lease liability.
Mediland Pharm Limited 2020 Annual Report Note 26. ADOPTION OF AASB 16 – LEASE (continued)
● Depreciation expense increased by $869,882 due to depreciation of the right-of-use asset over the lease term.
● Lease rental operating expenses reduced by $802,864 to nil.
40
In the Cash Flow Statement, operating cash outflows decreased by $802,864 and financing cash outflows increased by
the same amount as repayment of the principal balance in the lease liability has classified as a financing activity.
Key estimates and judgements
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability.
Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease
or purchase the underlying asset will be exercised, or option to terminate the lase will bot be exercised, when
ascertanining the periods to be included in the lease term. In determining the lease term, all facts and circumstances
that create an economical inventive to exercise an extension option, or not to exercise a termination option, are
considered at the lease commencewment date. Factors considered may include the importance of the asset to
the consolidated entity’s operations; comparision of terms and conditions to prevailing market rates; incurrence of
significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset.
The consolidated entity reassesses whether it is reasonably certain to exercise an extension option, or not exercise a
termination option, if there is a significant event or significant change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated
to discount future lease payments to measure the present value of the lease liability at the lease commencement
date. Such a rate is based on what the consolidated entity estimates it would have to pay a third party to borrow
the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and
economic environment.
Note 27. AUDITORS REMUNERATION
During the financial year, the following fees were paid or payable for services provided by, the auditor of the Group:
BDO1
Audit and review of the financial statements
Other non-audit services – tax return and other tax related matter
Total fee
2020
$
2019
$
72,474
258,031
74,500
771,422
330,505
845,922
1 The BDO entity performing the audit of the Group transitioned from BDO East Coast Partnership to BDO Audit Pty Ltd in June 2020. The disclosure
includes amounts received or due and receivable by BDO East Cost Partnership, BDO Audit Pty Ltd and their respective related entities.
Note 28. KEY MANAGEMENT PERSONNEL (KMP) COMPENSATION
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set
out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
2020
$
2019
$
386,802
390,541
36,727
36,219
302,529
199,998
726,058
626,758
Notes to the Financial Statements (continued) for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report Note 29. CASH FLOW INFORMATION
(Loss) after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Foreign exchange differences
Change in operating assets and liabilities (net of acquired business):
Decrease / increase in trade and other receivables
Increase in inventories
Increase in deferred tax assets
Increase / decrease in trade and other payables
Decrease in provision for income tax
Increase in deferred tax liabilities
Increase in other provisions
Net cash from/(used in) operating activities
41
2020
$
2019
$
(5,109,041)
(11,244)
1,278,602
170,492
990,560
710,909
32,325
14,635
751,429
(530,882)
(237,084)
(398,044)
(861,293)
(32,483)
806,570
(1,923,210)
(579,464)
(138,284)
1,080,996
317,228
14,394
19,265
(1,832,006)
(1,801,618)
Note 30. CONTINGENT LIABILITIES
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
Note 31. AFTER BALANCE DATE EVENTS
On 7 July 2020, Performance Rights totalling 4,433,333 granted under the FY 2019 Long Term Incentive Plan (LTIP) have
lapsed or been forfeited.
No other matter or circumstance has arisen since 30 June 2020, that has significantly affected the Group’s operations,
results or the state of affairs or may do so in future years.
Mediland Pharm Limited 2020 Annual Report Directors’ Declaration
for the year ended 30 June 2020
In the directors’ opinion:
●
●
●
42
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as
at 30 June 2020 and of its performance for the financial year ended on that date; and
● there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they
become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Dr. Peter French
Chairman
Sydney, NSW
31 August 2020
Yeshween Mudaliar
Managing Director
Sydney, NSW
31 August 2020
Mediland Pharm Limited 2020 Annual Report
43
Independent Auditor’s Report
for the year ended 30 June 2020
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Mediland Pharm Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Mediland Pharm Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2020, 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 report, 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 2020 and of its
financial performance for the year ended on that date; 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 Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We 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.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
Mediland Pharm Limited 2020 Annual Report
44
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.
Accounting for the business combination
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 25 of the
financial report, on 22 July 2019,
Mediland Pharm Limited acquired
100% of the shares of Enti Financial
Pty Ltd, a Sydney based Company.
The acquisition resulted in the
recognition of intangible assets and
goodwill.
This is a key audit matter due to the
complexity of accounting for
business combinations, the estimates
and judgements required by
management determining the fair
value of the assets and liabilities
acquired in the business
combination, and as such required
significant auditor attention.
Our audit procedures included, among others:
Reviewing the share purchase agreement to ensure
all assets, liabilities and potential contingent
liabilities had been identified at the date of
acquisition;
Performing detailed testing on the assets and
liabilities acquired as at the date of acquisition;
Assessing the work performed by the management in
relation to the purchase price allocation, including
the identification and valuation of separately
identifiable intangibles, and the resulting goodwill
calculation;
Reviewing management’s assessment of the
recoverability of intangible assets at year end,
including testing the mechanics of and challenging
the assumptions used in the value-in-use model;
Assessing the reasonableness of the useful economic
lives of the separately identifiable intangible assets
recognised;
Considering the tax effect accounting implications on
Enti Financial Pty Ltd joining the Mediland Pharm
Limited tax consolidated group; and
Ensuring that the resulting business combination has
been accounted for and appropriately disclosed in
accordance with AASB 3 Business Combinations.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Directors’ Report (excluding the audited Remuneration Report section) for the year
ended 30 June 2020, but does not include the financial report and the auditor’s report thereon, which
we obtained prior to the date of this auditor’s report, and the Annual Report to Shareholders, which is
expected to be made available to us after that date.
Independent Auditor’s Report (continued)for the year ended 30 June 2020Mediland Pharm Limited 2020 Annual Report
45
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
When we read the Annual Report to Shareholders, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and will request that it is
corrected. If it is not corrected, we will seek to have the matter appropriately brought to the
attention of users for whom our report is prepared.
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 has 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 (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Mediland Pharm Limited 2020 Annual Report
46
Independent Auditor’s Report (continued)for the year ended 30 June 2020 Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report under the heading ‘Remuneration Report’ for the year ended 30 June 2020. In our opinion, the Remuneration Report of Mediland Pharm Limited, for the year ended 30 June 2020, 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. BDO Audit Pty Ltd Gillian Shea Director Sydney, 31 August 2020 Mediland Pharm Limited 2020 Annual Report ASX Additional Information
for the year ended 30 June 2020
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as
follows. The information is current as at 28 August 2020.
(a) Substantial Holders
Substantial holders in the Company are set out below:
Ordinary Shares
Pacific Merchants Group Limited
(b) Distribution of equity securities
Fully Paid
Shares
Percentage
250,000,000
79.93
47
(i) Ordinary share capital
312,763,610 fully paid ordinary shares are held by 325 individual shareholders. All issued ordinary shares carry one vote
per share and carry the rights to dividends.
The number of shareholders, by size of holding are:
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Holders
Fully Paid
Ordinary Shares
10
49
89
140
37
1,647
135,216
858,552
4,957,849
306,810,346
325
312,763,610
% Units
0.00
0.04
0.27
1.59
98.10
100.00
(c) Consistency with business objectives (ASX Listing Rule 4.10.19)
The Company states that it has not used cash and assets in a form readily convertible to cash at the time of admission in
a way inconsistent with its business objectives.
Mediland Pharm Limited 2020 Annual Report (d) Twenty largest holders of quoted equity securities
48
Ordinary Shareholder
PACIFIC MERCHANTS GROUP LIMITED
MR QIMING DU
MR YONGQIANG LU
MS XIYAO SUN
AUSSIA PHARMACEUTICALS PTY LTD
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