M
o
n
a
s
h
I
V
F
G
r
o
u
p
L
i
m
i
t
e
d
|
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
9
Growing
stronger…
Annual Report 2019
with our professional &
dedicated fertility specialists
with our caring &
committed team
40,000
Babies Born
with our help…
and counting
106
Fertility
Specialists and
Sonologists…
partner
with us
550
Scientific, Nursing
and Support
personnel…
and growing
40
IVF Clinics
and Ultrasound
Practices across
Australia and
Malaysia
Monash IVF Group Limited
Monash IVF Group (Monash IVF Group Ltd or The Group)
is a leading provider of Assisted Reproductive Services
(ARS) in Australia and Malaysia. Since the early 1970s the
Group has been a market leader in fertility care and over
the last 40 years has grown into a specialised fertility and
women's imaging group receiving international recognition
for research, science and innovation, helping individuals
and families achieve their goal of having a healthy baby.
Annual General Meeting
KPMG
Collins Square Tower Two
Room 12 and 13
Wominjeka & Bunjil Room
Level 36
727 Collins Street
Melbourne 3008
at 2:00pm
www.colliercreative.com.au #MON0024
…together.
Today we continue to lead the world
in scientific leadership with the world
first, internally developed, non-invasive
pre implementation genetic screening
technology. This is another example
of how we have continued to build
on our pioneering heritage since
achieving the world’s first IVF pregnancy.
We look to the future with a focused
strategic growth plan and the right team
with the experience and capabilities
to take advantage of the exciting
opportunities available to us.
Contents
2
4
Chairman’s Report
Managing Director
and CEO’s Report
Looking to the future…
5
Our Vision 2022
6
Our Pillars
11
Our Achievements
12
Research and Innovation
14
Financial Highlights
15
Chief Financial Officer’s Report
16
Board of Directors
18
Management Team
Directors’ Report
19
Remuneration Report – Audited 35
Corporate Governance
Statement
54
Consolidated Statement
of Profit or Loss and Other
Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Notes to the Consolidated
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
66
67
68
69
70
107
108
112
114
1
MoNASh IVF GRoUP LIMIted
Annual Report 2019
with our highly
specialised researchers
2019
Launch of
Non Invasive
Preimplantation
Genetic Screening
technology
(NIPGS)
1973
World First IVF
Pregnancy
Chairman’s Report
Our patients have always been at
the centre of what we do. This year
we extended our patient centric
approach with the introduction of
a patient satisfaction measurement.
This methodology will ensure
we continue to lift the bar and
optimise the patient experience.
We also continued to invest in world
leading science, giving our patients the
best possibility of having a healthy
baby. This year Monash IVF scientists
developed a non-invasive, pre
implementation genetic screening
technology. A number of other key
innovations are also well progressed
and geared towards our unrelenting
focus on delivering better
patient outcomes.
Our fertility specialists, nurses,
scientists and administrative teams
have been integral to this year’s
performance and achievements.
The passion and commitment from
our team is incredible. I continue to
be humbled by the empathy, care and
support that our people show every
day to our patients and I thank them for
their contribution throughout the year.
I would like to thank our new CEO,
Michael Knaap and our new CFO,
Malik Jainudeen and the rest of the
management team for their leadership
during 2019.
Overseeing one of the world’s best
fertility solutions providers, the Board
and l are extremely excited about
our future. We are looking forward to
continuing to deliver exceptional care
for our patients in partnership with
our doctors and strong financial results
for our shareholders in 2020.
Richard davis
Chairman
Monash IVF Group
During the year, the Board and
management team refined the group’s
business strategy and vision.
Our strategy is clear and focused
to deliver continued, profitable growth
in the coming years. The strategy
optimises our deep knowledge
and experience within the Assisted
Reproductive Services market
and capitalises on the significant
opportunities that exist in Australia
and overseas.
We have already begun to make
inroads into our domestic and
international expansion plans, by
acquiring Fertility Solutions to expand
our footprint and progressing plans
for potential partnerships/acquisitions
within the Asia Pacific region.
Our underlying profit before one off
items was $20.9 million with revenues
of $152 million. Importantly, we
returned to positive earnings growth
in the second half of 2019 as forecast
at the 2018 Annual General Meeting.
Our cash conversion was 107.1% and
total fully franked dividends declared
of 6.0 cents per share.
Both our existing Australian and
Malaysian businesses delivered solid
financial performance. Australian Full
Service Stimulated Cycles (excluding
the impact of a departed specialist)
grew by 3.7% in 2019, while we
achieved 21.8% growth in our
International operation. Ultrasound
scans for the year were flat as a result
of the shift of patients to the public
sector, particularly in our
Sydney business.
Nine new fertility specialists were
recruited during the year to provide
additional growth capacity and
succession planning, however
post year end, five uncontracted
doctors departed in Victoria. Monash
contracted doctors today perform
more than 95% of the Group’s Full
Service Stimulated Cycles.
Engagement with our employees and
fertility specialists continues to be a
significant focus. The implementation
of new programs and initiatives saw
our overall employee engagement
scores increase by 11%.
I am pleased to present
Monash IVF’s annual report.
We have worked hard to
build on our scientific
leadership and improve
the patient experience.
Our people and our doctors
have been integral to our
strong financial performance
and achievements this year.
NPAt
(2.3%)
2nd half
9.5%
Revenue
0.9%
2nd half
1.5%
eBItdA
(0.8%)
2nd half
6.71%
2
3
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Managing Director and CEO’s Report
It is a privilege to be appointed to the
position of Interim CEO in October
2018 and formally appointed as CEO
and Managing Director in April 2019.
This year we demonstrated strong
progress against our strategy with a
return to earnings growth in the second
half of FY19. Total growth of 11.3% was
achieved in the combined markets of
New South Wales, Queensland and
South Australia. Our Malaysian clinic in
Kuala Lumpur also continued to deliver
strong volume and earnings growth,
with stimulated cycles growing by
21.8%. The Group as a whole is building
strong momentum together.
During the year we focused on the
evolution of our organisational strategy
refining our long term strategic
roadmap with the development of
Vision 2022. We have expanded on
our existing strategic pillars of Patient
Experience, Clinical Excellence, Scientific
Leadership and People Engagement, to
emphasise Doctor Partnerships, Brand
and Marketing, Digital and Systems
Transformations and International
Expansion. These complementary pillars
ensure our strategy is comprehensive
and can deliver on our mission.
We have made significant in roads
in many of our strategic pillars.
Scientific Leadership was particularly
showcased in FY19 with our world
first, internally developed, non-
invasive, pre-implantation genetic
screening technology. This innovation
symbolises our heavy focus on scientific
and medical research ensuring we
are giving our patients the best
possibility of having a health baby.
This type of research and successful
commercialisation delivered by our
best in class scientific teams continues
to be at the forefront of Monash IVF
enabling better patient outcomes.
Enhancing our Patient Experience
with a focus on care, empathy,
support and consistency across all
patient engagements has seen a 16%
improvement in our Net Promoter
Score (NPS). People Engagement also
improved by 11% underpinned by our
Principles, leadership, coaching and
engagement improvement initiatives.
Engagement of clinicians continues
to remain a critical focus. We attracted
9 new fertility specialists to the Group
in FY19. We continue to actively
enhance our doctor value proposition
with regular communication and
targeted marketing, building the Monash
IVF Group reputation as the trusted
advisor for fertility. Ongoing research
opportunities and continued expansion
of our clinic and consulting network
across all markets and a commitment
to clinical excellence leads to a best
practice patient experience.
To grow our market share we
welcomed Fertility Solutions into our
Group. This expands our footprint
in Queensland, with fertility clinics
in Sunshine Coast and Bundaberg
performing more than 300 stimulated
cycles per annum. Through this we also
welcomed 6 new fertility specialists to
the group. These clinics and the great
people that work in them provide a
very strong platform for growth in
the domestic market.
In 2019 we’ve continued to break new
ground with improvements in fertility
care, women’s imaging and diagnostics.
With a new Sydney CBD flagship
ultrasound clinic opened in March 2019
we have seen positive growth of 7% in
the 4th quarter of FY19. Non Invasive
Pre-implantation Test (NIPT) volumes
increased by 0.7% and NIPT volume
now represents 4% of Group revenue.
We have also established a reproductive
carrier screening service.
Our business is considerably stronger
than 12 months ago. We will continue to
break new ground with improvements
in fertility care, women’s imaging and
diagnostics. There is a lot to be proud of
but there is still a lot to do. I would like
to finish by thanking our people for their
incredible commitment, passion and
pride. We have industry leading talent
and the highest experience at Monash
IVF Group. The work they do each day
drives better outcomes for our patients
and inspire me to deliver on our growth
strategy for years to come.
Michael Knaap
Chief Executive Officer
and Managing Director
Monash IVF Group
In 2019 we’ve continued
to break new ground with
improvements in fertility
care, women’s imaging
and diagnostics.
dividend
Remained at
6.0
cents
21.8%
Growth in
Stimulated
cycles in KL
11.3%
Growth in QLd,
NSW, SA
4
Looking to the future… Our Vision 2022
The Vision 2022 Strategic Roadmap provides a clear pathway forward and
enables everyone to understand the priorities, actions and decisions required
to achieve success.
5
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Our Pillars
Scientific Leadership
our focus in world class research
and science will deliver market leading
success rates, innovative services and
attract partnership opportunities.
The Monash IVF Group Scientific
Advisory Committee (GSAC) is
committed to leading the way in
scientific innovation and excellence.
The GSAC members include the
Director of Research & Development
and the Group Scientific Directors
who have strengthened the scientific
collaboration across the disciplines
of Embryology, Genetics, Andrology
and Pathology.
The principal focus of GSAC in
2019 was to formalise and launch
the “Monash Way”, an evidence
based best practice in scientific
protocols to align all laboratories
within the Group.
The continuous improvement in
pregnancy rates across all patient
treatment cycles, including fresh
IVF/Intra Cytoplasmic Sperm Injection
(ICSI) and frozen embryo transfers
has been a strong focus across the
science disciplines in 2019.
A new initiative in FY19 was the
introduction of end to end, highly
detailed, site specific laboratory
reviews performed by the Scientific
Directors based in each geographical
region. A bespoke programme of
scientific education has also been
successfully launched with the
support of a dedicated learning
and development role.
This will enhance and develop the
scientific capability of the team.
The shared knowledge across
the scientific group, backed by
implementation of benchmarking has
resulted in higher pregnancy success
for patients and a premium service
offering for the clinician group.
Key initiatives in 2019 included:
• Collaboration and communication
across the scientific community
• Upgrade of endocrine services
• Automated semen analysis
• Embryoscope trial
• Non-invasive preimplementation
genetic screening technology launch
the “Monash Way”
GSAC has been formalising the
“Monash Way” for scientific
excellence, to ensure our
scientists help us achieve our
mission to help bring life to
the world. Further initiatives
currently underway include;
• Lab benchmarking and
setting of KPIs
• Scientist education
programmes through Learning
Management Software
• Renewed competency
framework for scientists
• Standardised and centralised
success rate reporting
• Lab reviews to assess risk
minimisation, disaster recovery
and operating efficiencies
6
doctor
Partnerships
We develop mutually beneficial
long term partnerships with our
doctors that benefit our patients
and enables growth.
Increased engagement and more
personalised support for our doctors
has been a key focus during the year.
More group forums and one-on-one
meetings have occurred during the
year to meet doctor requirements.
Increased doctor support initiatives
included new co-marketing initiatives
and expanded research opportunities
such as the refresh of the Monash IVF
Research and Education Foundation.
We continue to hold regular clinical
governance and education sessions
such as regular state clinical advisory
committee meetings and Monash IVF
Group Clinical Education forums held
in late 2019. Our doctor engagement
survey results increased by 20%
over the year.
We were delighted to welcome
nine new fertility specialists to the
Monash IVF Group. Sixteen new
fertility specialists have joined the
Group in the last eighteen months
providing future growth capacity
and succession planning.
our doctor
engagement
survey results
increased by
20%
over the year.
Jinny Foo: Partnering
with Monash IVF
BMed, MRepMed,
MWomHMed, FRANZCOG
Dr Jinny Foo started working
with Monash IVF in 2017. Initially
qualified as an obstetrician and
gynaecologist, Dr Foo is currently
working towards her Certificate
in Reproductive Endocrinology
and Infertility (CREI) under the
supervision, guidance and
mentorship of Dr Peter Benny.
The combination of her
qualifications and experience
allow Dr Foo to provide an end
to end approach to fertility care.
“ I am passionate about providing
patients with a holistic experience.
From the moment a patient sets
out to have a baby, to assisting
them with their fertility, through
to delivering a healthy baby.
Working with Monash IVF
enables me to do that.”
Dr Foo has a special interest in
fertility preservation not only
for patients experiencing cancer
treatment but also those with
childhood illnesses requiring
assistance with their fertility journey.
Her caring and compassionate
approach towards patients during
what can be an emotionally
challenging experience is evident.
“ I always tell my patients there
are many ways to have a family,
and we will find the best way
for them based on their
individual needs.”
7
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Our Pillars
Clinical
excellence
establish excellence in clinical care
across the fertility and pregnancy
journey through high quality,
fit-for-purpose clinical services
and infrastructure.
Over the last year we commenced a
long term program of refreshing our
clinic infrastructure with the opening
of a new flagship ‘Sydney Ultrasound
for Women’ clinic in Kent Street,
Sydney and the modernisation of
patient consulting areas and laboratory
at Monash IVF Clayton.
Recognising the growth in populations
outside metropolitan Melbourne and
Sydney, we have increased services
in eastern Melbourne, in existing
regional locations and commenced
upgrading our Penrith clinic to expand
our presence in Greater Western
Sydney leveraging our established
Parramatta clinic.
Investments in improving patient
quality and safety have included further
refinement to incident reporting and
the training of front-line teams on
managing and responding to incidents.
Our state Medical Directors and local
Medical Advisory Committees have
led a number of initiatives in improving
clinical practice, responding to external
regulatory and community expectations
with insights being shared across the
Group through the Group Medical
Advisory Committee.
8
Brand and Marketing
Communicate our ‘brand value
proposition’ through new and
targeted go to market strategies,
including early education, digital,
sponsorship and events.
Our focus on building brand equity
and confidence in the Monash IVF
brand is having a positive impact with
brand awareness and preference
increasing across most States.
We continue to invest in and evolve
our brand and marketing strategy.
This includes developing a deep
understanding of our patients needs
and their entire patient journey.
Communication platforms that
enable us to provide more support
and engage with our patients earlier
in their fertility journey have been
implemented through initiatives
such as Ready, Set, Baby, and regular
educational seminars for patients.
These educational seminars enable
our patients to access the expertise
of Monash IVF specialists, nurses
and scientists in a supportive and
empathetic environment.
We also implemented a successful
sperm donor campaign through
Australia Needs Your Sperm
providing more support for
our patients.
digital and systems
transformation
Build a scalable, robust and secure
next generation It service offering,
enhancing interactions with patients,
doctors and people.
At the core of our digital strategy is the
migration to cloud based computing.
One of the projects leveraging this is
our rollout of video conferencing for
all our staff. This is increasing collaboration
internally across our sites and is facilitating
remote consultations with our patients.
We will continue to take advantage of
the scalability available in cloud services
to support our cyber security and
growth initiatives.
International
expansion
export our expertise in fertility
services to Asia and beyond
through effective partnerships.
Our international growth aspirations
are focused on exporting our fertility
services to Asia and beyond through
effective partnerships.
The success of the Kuala Lumpur
clinic has provided us with knowledge
and understanding of the dynamics
of the region and how to optimise
a clinic roll out.
The Monash IVF brand, our scientific
leadership and innovative offering is
a valuable proposition to potential
healthcare partners in the South
East Asian region. Asia-Pacific has an
attractive future growth profile and
we are well-placed and structured to
provide best in class fertility solutions
for all in the region.
Market
opportunity
Asia Pacific
9
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Our Pillars
Patient
experience
We are committed to delivering
a patient experience across the
continuum of care that is empathetic,
empowering and personalised to all
patients consistent with our best in
class offering.
We have continued evolving our
services to be more personalised and
responsive to patients. This has been
led at both a national and local level
with cross-functional teams using the
insights of the Patient Net Promoter
System to make change. Changes have
included more tailored counselling
support, more fertility nurse phone
based support and new patient
information tools on-line and in-clinic.
We also invested in improving our
donor and surrogacy services with
more personnel deployed to this area
and successful campaigns to recruit
sperm donors (Australia Needs Your
Sperm) as well as successfully obtaining
approval from the Victorian regulator
(VARTA) for the use of an overseas
sperm provider.
Collectively patient focused changes
to our service delivery model as well
as new payment options, such as Zip
Money and gap only payments, have
had a significant impact on patient
satisfaction before, during and after
their experience. Our Patient Net
Promotor Score improved 16% over
the year.
10
People engagement
The introduction of our Reward
program, Cudos, recognises our
employees for achieving exceptional
outcomes by living Our Principles
and most importantly delivering
positive outcomes to our patients.
We had a record number of awards
in the 2nd half of FY19 across
the business.
through passion, pride and
capability our people are leading
the way in helping bring life to
the world.
Employee engagement continued
to drive our people strategy in
2019. Embedding Our Principles
Framework into all of our
people processes including
performance development,
leadership development, attraction
and retention, health and
wellbeing, diversity and inclusion,
communication and reward, has led
to an improvement of our overall
employee engagement score by 11%.
Our Achievements
10
Joint studies
with research
partners
71%
Female
representation
in Leadership
positions
20%
Improvement
in Clinician
engagement
16%
Improvement
in Patient Net
Promoter Score
(NPS)
80,860
diagnostic
Scans
13,108
NIPt tests
11%
Improvement
in employee
engagement
11
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Research and Innovation
Our scientific research
is rewarded with
commercialised
technologies and real
world outcomes.
Our in-house research and
development has focussed on methods
to improve the outcomes for our
patients. During the year we successfully
completed clinical trials on a new,
non-invasive method for assessing the
chromosome complement of embryos
leading to the commercialisation of
world-first technology non-invasive
pre-implantation genetic screening.
We have also recently completed
a clinical trial for a new gentler ICSI
(Intracytoplasmic Sperm Injection)
procedure that vastly improves
fertilisation rates, resulting in patients
having more embryos for transfer.
This technology will be available
exclusively to our patients in early FY20.
An extensive internal and external
consultation on the goals and objectives
of the Monash IVF Education and
Research Foundation (MREF) has been
a catalyst for renewed collaborative
partnerships with innovative institutions
and companies in the sector, focusing
on the translation of new knowledge
into clinical practice as a core focus.
In the last 12 months we have been
actively collaborating with several
companies in developing and assessing
new technology in sperm selection and
embryo culture and viability assessment
that will be launched to the market
in the coming year.
In April 2019, Professor Rob McLachlan
with colleagues from the University
of New South Wales were awarded
$3.8 million by the Federal Health
Minister for research into the causes
and prevention of male infertility.
Of particular relevance is a proposed
longitudinal study of infertile men
and their offspring in collaboration
the Murdoch Children’s Research
Institute and Monash University.
Across FY19, the largest ever study
of the health and genetics of the first
generation of men conceived by ICSI
neared completion with over 700
couples approached and 70 young
men presenting for full assessment.
This major study was conducted with
Monash University. In 2020, analysis
of data on their fertility, health and
genetic and epigenetics will have
progressed significantly.
12
13
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Clinical GovernanceProfessor Luk Rombauts says –“ Monash IVF has very strong clinical and scientific governance, structures and policy in place. These are aimed at ensuring a strong focus on safety, outcomes and high quality patient centered care. The depth and breadth of our clinical and scientific expertise ensures we can offer a higher level of care for patients with complex needs. For example, we have doctors in each State who practice a sub specialty such as urology, andrology, reproductive endocrinology, reproductive surgeons, and reproductive immunologists.We also have specialist CREI training units which enables us to foster ongoing education within Monash IVF, and again ensures we have the expertise to manage the most complex cases.The diversity of our clinical and scientific teams is broad in terms of both gender and ethnicity. This enables us to be sensitive to the diverse ethnicity of our population.” Financial Highlights
2h19
Revenue
$74.8m
2h18 $73.7m
1.5%
FY19: $152.0m
(Up 0.9%)
2h19 NPAt(2)
$10.2m
2h18 $9.3m
9.5%
FY19 Underlying: $20.9m
(Down 2.3%)
2h19
eBItdA(1)
$18.5m
2h18 $17.3m
6.7%
FY19 Underlying:
$37.8m (Down 0.8%)
2h19 Cash
Conversion(3)
113.9%
2h18 103.2%
10.7%
FY19: 107.1%
(Up 13.8%)
2h19
eBItdA margin %
24.7%
2h18 23.5%
1.2%
FY19 Underlying: 24.9%
(Down 0.4%)
2h19 Free
Cash Flow(4)
$12.6m
2h18 $9.9m
28.0%
FY19: $26.6m
(Up 37.2%)
$m
Group Revenue
EBITDA(1)(2)
EBITDA(1)(2) before one-off items(5)
EBIT
NPAT attributable to ordinary shareholders
NPAT before one-off items(6)
EPS (cents)
DPS (cents)
Net Debt (m)
Net Debt to Equity ratio(3)
Return on Equity (pa.)(4)
14
FY19
$152.0
$37.2
$37.8
$31.3
$19.9
$20.9
8.4
6.0
FY18
$150.6
$38.1
$38.1
$33.2
$21.4
$21.4
9.1
6.0
% change
0.9%
(2.3%)
(0.8%)
(5.6%)
(7.0%)
(2.3%)
(7.7%)
–
30 June 19
30 June 18
$84.7
48.8%
12.0%
$94.1
56.4%
12.8%
Chief Financial Officer’s Report
Full year underlying EBITDA was down
by $0.3m or 0.8% however, second
half EBITDA was up 6.7% on pcp
growing full year EBITDA margin to
24.9%, compared to 23.5% in 2H18.
Margin improvement was largely
achieved through both volume leverage
and cost reductions. Cost base
initiatives included a need to re-align
our Victorian cost base given lower
activity, whilst the closure of the
Mosman clinic in Sydney and transition
of its activity to Bondi Junction was
a success. A focus on our cost base
was critical in funding our long-term
plans for growth including an increase
of almost $1m in marketing expenditure,
investment into greater capacity
while improving our service delivery
and value proposition to patients,
specialists and staff.
Cash flow was exceptional this year
with net operating cash flow before
tax up by $4.4m or 12.3% and free
cash flow up by $7.3m or 37.2%.
Pre-tax conversion of EBITDA to
operating cash flow increased to
107.1% compared to 93.3% in pcp,
driven by an improvement in patient
receipts due to several collection
initiatives, including introduction
of a website payment portal.
As a result, we were able to improve
Net Debt by $9.4m to $84.7m, fund
dividend payments of $13.2m and capex
of $6.5m for replacement and growth
assets, including a flagship womens
imaging clinic in Sydney CBD. Our capital
management metrics vastly improved
with our leverage ratio reducing from
2.46x to 2.24x, net debt to equity
ratio of 48.8% and interest cover
ratio comfortably at 10.6x.
Our lenders continued to support our
Business by extending the maturity
profile on our total $155m debt facilities
to no earlier than January 2022, with
no change to covenant requirements.
The Board declared a 3.0 cents fully
franked FY19 final dividend, bringing
the total franked dividends declared for
FY19 to 6.0 cents per share, reflecting
an underlying NPAT dividend payout
ratio of 67.8%.
Malik Jainudeen
Chief Financial Officer
and Company Secretary
Monash IVF Group
We returned to earnings
growth in the second half
and achieved full year
revenue growth.
Our full year revenue increased by
$1.4m or 0.9% notwithstanding the
departure of a high volume Victorian
fertility specialist in September 2017
which impacted both the first half and
second half. It was pleasing that our
South Australian, New South Wales
and Queensland fertility businesses
experienced 11.3% growth in Stimulated
Cycles combined, resulting in additional
revenue of $3.3m. Our Kuala Lumpur
clinic continued to grow from strength
to strength, delivering 21.8% Stimulated
Cycle growth, contributing additional
revenues of $2.8m. This Clinic has now
demonstrated year-on-year volume
growth since acquisition in 2013.
(1) EBITDA is earnings before interest, tax, depreciation and amortisation.
(2) EBITDA is a non IFRS measure which is used by the Group as a key indicator of underlying performance. This and any other non IFRS measure is not
subject to audit or review.
(3) Net Debt to Equity is calculated using Net Debt divided by equity as at 30 June 2019.
(4) Return on Equity is calculated using NPAT for the previous 12 month period divided by the average equity in the same period.
(5) EBITDA adjusted for one-off items including Mosman clinic closure make-good provision ($100k pre-tax) and CEO separation costs ($473k pre-tax).
(6) NPAT attributable to ordinary shareholders adjusted for one-off items including Mosman clinic closure accelerated depreciation ($882k pre-tax),
make-good provision ($100k pre-tax) and CEO separation costs ($473k pre-tax).
15
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Board of Directors
Mr Richard davis
Independent Chairman
Mr. Richard Davis joined the Group
in June 2014 and is currently serving
as a non-executive director of ASX
listed companies, InvoCare Limited
and Australian Vintage Limited (and
Chairman of Australian Vintage).
Richard worked for InvoCare for
20 years until 2008. For the majority
of that time he held the position of
CEO and managed the growth of
that business through a number
of ownership changes and over
20 acquisitions, including offshore
in Singapore.
Prior to InvoCare Limited, Richard
worked in venture capital and as an
accounting partner of Bird Cameron.
Richard holds a Bachelor of Economics
from the University of Sydney.
16
Ms Christina (‘Christy’) Boyce
Independent
Non-executive director
Ms Christy Boyce joined the Group
in June 2014. Christy is also a director
of Port Jackson Partners and a
non-executive director of ASX listed
companies, Greencross Limited and
Oneview Healthcare. Christy is a
former director of Cryosite Limited.
Christy has over 20 years of
management consulting experience
in both Australia and the United States
and has worked extensively with major
corporations on corporate strategy.
Prior to joining Port Jackson Partners,
Christy spent 14 years with McKinsey
and Company, where she was a partner.
She holds a Bachelor of Economics
from the University of Sydney, a
Masters of Management from the
Kellogg Graduate School of Business
(Northwestern University) and is a
Graduate Member of the Australian
Institute of Company Directors.
Mr Josef Czyzewski
Independent
Non-executive director
Mr. Josef Czyzewski joined the
Group in June 2014 and has over
30 years of experience in senior
finance positions and significant
experience in the health industry.
Josef has held the positions of CFO
at Healthscope Limited and more
recently CFO/General Manager Strategy
and Development at Spotless Group
Limited following its takeover by
private equity interests in 2012.
Prior to that time, Josef had held
various senior finance positions with
BHP Billiton including VP Finance
and Corporate Treasurer. He holds
a Bachelor of Commerce from the
University of Newcastle and is a
Graduate Member of the Australian
Institute of Company Directors.
Mr Neil Broekhuizen
Independent
Non-executive director
Mr. Neil Broekhuizen is the Joint
Chief Executive Officer of Ironbridge.
Neil has over 30 years experience in
the finance industry, including 27 years
in private equity with Investcorp and
Bridgepoint in Europe and Ironbridge in
Australia. He has sat on the Ironbridge
Investment Committee since inception.
He is the Independent Non-executive
Chairman of Bravura Solutions, having
previously served as a Director.
Neil is qualified as a Chartered
Accountant and holds a BSC (Eng)
Honours degree from Imperial
College, University of London.
dr Richard henshaw
executive director
Dr Richard Henshaw MD FRANZCOG
FRCOG has practiced in the field of
reproductive medicine since 1995.
Richard works as a Fertility Specialist
for the Group.
Richard has served on many national
bodies, including RANZCOG Council,
the IVF Medical Directors Group
of Australia and New Zealand,
and the Reproductive Technology
Accreditation Committee.
Michael Knaap
Chief executive officer
& Managing director
Mr Michael Knaap was appointed
to the role of Chief Executive Officer
and Managing Director for Monash
IVF Group on 15 April 2019.
Following his tenure as MVF Group’s
Chief Financial Officer and Company
Secretary since August 2015, Michael
was appointed to Interim CEO in
Oct 2018.
Mr Knaap has nearly 20 years
experience in executive positions with
a strong operational, strategic and
leadership background. Prior to joining
MVF Group, Michael was with Patties
Foods Limited where he held a number
of executive positions over six years,
including the role of Chief Financial
Officer and Company Secretary.
He holds a Bachelor of Accounting
from Monash University and is a
Certified Practising Accountant.
Ms Zita Peach
Independent
Non-executive director
Ms Zita Peach has more than 25 years
of commercial experience in the
pharmaceutical, biotechnology, medical
devices and health services industries.
She worked for major industry players
such as CSL Limited and Merck Sharp
& Dohme, the Australian subsidiary
of Merck Inc.
Ms Peach's most recent executive
position was as Managing Director
for Australia and New Zealand and
Executive Vice President, South Asia
Pacific for Fresenius Kabi, a leading
provider of pharmaceutical products
and medical devices to hospitals.
Previously, Zita was Vice President,
Business Development for CSL Limited,
a position she held for ten years.
Ms Peach is a Non-executive Director
of the ASX listed AirXpanders, Inc.,
Starpharma Holdings Limited, Pacific
Smiles Group Limited and Visioneering
Technologies, Inc. Zita is also a member
of the Hudson Institute of Medical
Research Board.
Ms Peach is a Fellow of the
Australian Institute of Company
Directors and a Fellow of the
Australian Marketing Institute.
17
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Management Team
top left to bottom right:
Fiona Allen
Chief Marketing Officer
Brett Comer
Chief Operating Officer
Nicolette Curtis
Regional Manager – Eastern Victoria
tedd Fuell
Quality, Regulatory & Risk Manager
Pierre Abou haila
Chief Information Officer
hamish hamilton
Regional Manager - South Australia,
Northern Territory & Ultrasound
Malik Jainudeen
Chief Financial Officer
& Company Secretary
Jan Lagerwij
International Business
Development Manager
Professor Michelle Lane
Director of Research & Development
May Q, Loke
Centre Manager, KL Fertility
& Gynaecology Centre
Peggy North
Chief People & Culture Officer
tom Sexton
General Manager – Queensland
Clementina Singh
General Manager – New South Wales
Jonathan Whitty
Regional Manager – Western Victoria
18
Monash IVF Group Limited
Directors’ Report
Directors’ Report
For The Year Ended 30 June 2019
for the year ended 30 June 2019
The Directors present their report together with the consolidated financial report of Monash IVF Group Limited
('the Group'), being the Company (Monash IVF Group Limited), its subsidiaries, and the Group's interest in
associated entities as at and for the year ended 30 June 2019, and the auditor's report thereon.
Directors
The Directors of the Company at any time during or since the end of the year are:
Directors
Mr Richard Davis
Ms Christina Boyce
Mr Neil Broekhuizen
Mr Josef Czyzewski
Dr Richard Henshaw
Ms Zita Peach
Mr Michael Knaap (appointed CEO & Managing Director on 15 April 2019)
Mr David Morris (resigned effective 9 October 2018)
Mr. Michael Knaap was acting CEO from 9 October 2018 to 15 April 2019. Information on the Directors’ and
Company Secretary’s experience is outlined on page 32 and 33. Information on the Directors’ responsibilities is
outlined in the Corporate Governance Statement.
Principle activity
The Group is a leader in the field of human fertility services and is one of the leading providers of Assisted
Reproductive Services (ARS) which is the most significant component of fertility care in Australia and Malaysia. ARS
encompass a range of techniques used to assist patients experiencing infertility to achieve a clinical pregnancy. In
addition, the Group is a significant provider of specialist women’s imaging services.
Operational and Financial Review
The Group reported a decline of 7.0% in statutory profit after tax (NPAT) and before non-controlling interests to
$19.9m (FY18: $21.4m) whilst Group revenues increased by 0.9% to $152.0M (FY18: $150.6m) for the year
ended 30 June 2019 (FY19). NPAT, before one-off non-recurring items related to the Mosman clinic closure and
CEO separation costs6, declined by 2.3% to $20.9m compared to pcp.
$m
Group Revenue
EBITDA(1)(2)
EBITDA(1)(2) before one-off items(5)
EBIT
NPAT attributable to ordinary shareholders
NPAT before one-off items(6)
EPS (cents)
DPS (cents)
Net Debt (m)
Net Debt to Equity ratio (3)
Return on Equity (pa.) (4)
FY19
$152.0
$37.2
$37.8
$31.3
$19.9
$20.9
8.4
6.0
FY18
$150.6
$38.1
$38.1
$33.2
$21.4
$21.4
9.1
6.0
% Change
0.9%
(2.3%)
(0.8%)
(5.6%)
(7.0%)
(2.3%)
(7.7%)
-
30 Jun 19
30 Jun 18
$84.7
48.8%
12.0%
$94.1
56.4%
12.8%
(1) EBITDA is earnings before interest, tax, depreciation and amortisation.
(2) EBITDA is a non IFRS measure which is used by the Group as a key indicator of underlying performance. This and any other non IFRS measure is not subject to audit or review.
(3) Net Debt to Equity is calculated using Net Debt divided by equity as at 30 June 2019.
(4) Return on Equity is calculated using NPAT for the previous 12 month period divided by the average equity in the same period.
(5) EBITDA adjusted for one-off items including Mosman clinic closure make-good provision ($100k pre-tax) and CEO separation costs ($473k pre-tax)
(6) NPAT attributable to ordinary shareholders adjusted for one-off items including Mosman clinic closure accelerated depreciation ($882k pre-tax), make-good provision
($100k pre-tax) and CEO separation costs ($473k pre-tax)
19
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
FY19 Summary:
Return to earnings growth in 2H19 with NPAT up by 9.5% on pcp with FY19 NPAT down 2.3% on pcp
before one-off non-recurring items1
MVF Australian Full Service Stimulated Cycles grew by 3.7% driven by 11.3% growth achieved in SA,
NSW and QLD (excluding impact from departed specialist)
Overall ARS Stimulated Cycle market grew by 6.4% on pcp, above the long-term expected growth
rate of 2%
MVF ARS International growth continued as Stimulated Cycles grew by 21.8% on pcp
World-first scientific breakthrough achieved in commercialisation of non-invasive genetic screening
technology
Strong pre-tax conversion of EBITDA to operating cash flows of 107.1%, strengthening the Balance
Sheet for future growth
Long-term funding secured as Syndicated Debt Facility is extended to January 2022
Full year fully franked dividends consistent with pcp with declaration of a 3 cents per share final FY19
fully franked dividend
Vision 2022 strategic roadmap developed, re-confirming our best-in-class Full Service positioning
focused on growth
Strategic Pillars
During the year, there has been strong progression in on our strategic pillars, which have delivered earnings
growth during 2H19. An update and execution of several operational improvements detailed below:
NIPGT internally developed, tested, patented and now commercially
available across all MVF owned clinics
Trial commenced on an alternative method and technology for ICSI
which is expected to improve egg fertilisation rates
Progressed collaborative partnership on development of a sperm
selection device
Creation of the Group Scientific Advisory Committee is fast tracking
greater collaboration and standardisation of scientific practices and
protocols which is promoting the “Monash Way”
All scientific innovation, investment, collaboration and standardisation is
geared towards better patient outcomes
Continued emphasis on enhancing the patient journey with a focus on
care, empathy, support and consistency across all patient engagement
Utilisation of Net Promoter System (NPS) has resulted in an improved
patient experience with a NPS improvement of 16% in the twelve
months to 30 June 2019
Expansion of patient funding options including introduction of ZIP Money
and gap only payments
Scientific
Leadership
Patient
Experience
20
4
Directors’ Report (Continued)
21
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited Directors’ Report for the year ended 30 June 2019 Strategic Pillars (continued) Digital & System Transformation Continued development of our in-house patient management system with a focus on improving interaction with patients, scientific equipment and user experience Progress and focus on strengthening our cyber security risk profile across our Network System and network upgrades enabling increased efficiency, reliability, stability and security throughout our vast clinic network Brand & Marketing Building Monash IVF brand awareness and confidence as the trusted advisor Focus on communicating more often and earlier in the fertility journey using low effort, high scale marketing activity. This includes utilisation of brand influencers on social media channels and early funnel activity such as our Ready Set Baby program Regular patient seminars growing awareness and access to Monash IVF specialists, nurses and scientists for potential patients 6 Directors’ Report (Continued)
22
Monash IVF Group Limited Directors’ Report for the year ended 30 June 2019 Strategic Pillars (continued) Clinical Excellence Doctor Partnerships Engagement with fertility specialists continues and remains a critical focus including regular Doctor Forums, co-funded marketing initiatives, increasing consultation locations and research opportunities Nine new fertility specialists recruited providing future growth capacity and succession planning. Recruitment of additional fertility specialists remains a focus across all markets Seven new fertility specialists recruited in FY18 have contributed to strong growth and succession planning achieved in SA and NSW More than 95% of specialists are contracted to Monash IVF Group after five Victorian based fertility specialists, who were not subject to restraint and non-compete provisions, exited the Group (refer to ASX announcement on 22 August 2019) New Penrith clinic is opening in September 2019 expanding presence in NSW in the Greater Western region. We have additional consultation locations including Melbourne CBD, Brisbane CBD and Regional Victoria (Ballarat) New clinic in Sydney CBD planned to open in 4Q20 as a Sydney flagship clinic representing best practice patient experience and clinical excellence Growth and expansion of donor and surrogacy offering including increased supply through international partnerships and locally sourced donors New clinic in Sydney CBD planned to open in 2H20 as an Australian flagship clinic representing best practice patient experience and clinical excellence People Engagement Engagement with employees has improved through our Principles and Beliefs, focus on improving patient experience, leadership training programs and improvement programs from our People feedback Creation of our shared Principles and Beliefs (Care, Collaborate, Communicate, Commitment, Create) that unite all employees and guides us in our actions Development and rollout of scientific learning & development framework which is critical to implementing the “Monash Way” across the Group 5 Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Revenue
Group revenues increased by $1.3m or 0.9% to $152.0 compared to pcp. A summary of the increase in
revenues is detailed in the waterfall chart below:
5.9
2.2
1.5
3.3
2.8
0.5
150.6
152.0
M
$
155
150
145
140
135
130
FY18 Revenue
1H19 VIC ARS
Volume decline
2H19 VIC ARS
Volume decline
Non-VIC ARS
Volume growth
ARS price
International
(ARS)
Ultrasound,
Diagnostics &
Other
FY19 Revenue
The following details key movements in revenue:
VIC ARS Volume decline: Volume decline impact in 2H19 reduced to $1.5m after a $5.9m volume
decline impact in 1H19 from departure of a specialist in September 2017
Non-VIC ARS Volume growth: $3.3m revenue increase from Stimulated Cycle growth in NSW, QLD
and SA, reflecting 11.3% Stimulated Cycle growth in these markets combined
ARS price: $2.2m revenue increase from price increases of between 2% and 3% across all ARS service
offerings
International (ARS): $2.8m revenue increase from our Malaysian clinic as Stimulated Cycles increased
by 21.8% on pcp
Ultrasound, Diagnostics & Other: $0.5m revenue increase derived from increased Day Surgery income
at the Adelaide day surgery unit in line with fertility activity growth experienced in the SA market
7
23
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Patient Treatments
IVF Treatment numbers
Monash IVF Group – Australia
Stimulated cycles
Cancelled cycles
Frozen embryo transfers
Total IVF Patient Treatments
Monash IVF Group – International
Stimulated cycles
Cancelled cycles
Frozen embryo transfers
Total IVF Patient Treatments
Total Monash Group
Stimulated cycles
Cancelled cycles
Frozen embryo transfers
Total IVF Patient Treatments
Stimulated cycles as a % of Total Patient Treatments
Other Treatment numbers
Ultrasound Scans
Pre-implantation Genetic Screening/Diagnosis
Non Invasive Prenatal Testing (NIPT)
(3.0%)
(8.0%)
(5.6%)
(4.3%)
21.8%
-%
35.1%
26.9%
(0.6%)
(7.4%)
(1.0%)
(1.1%)
FY19
FY18
% Change
7,607
732
5,584
7,844
796
5,913
13,923
14,553
849
67
756
1,672
8,693
863
6,669
16,225
53.6%
1,034
67
1,021
2,122
8,641
799
6,605
16,045
53.9%
FY19
80,860
1,395
13,108
FY18 % Change
80,392
1,498
13,017
0.6%
(6.9%)
0.7%
The Group’s Stimulated Cycles declined by 0.6% compared to pcp whilst Frozen Embryo Transfers declined by
1.0%.
Australian Stimulated Cycles declined by 3.0% compared to pcp. SA, QLD and NSW delivered strong growth in
1H19 and continued this momentum into 2H19, however this was offset by the loss of activity from the departure
of a specialist in Victoria during FY18. Excluding the impact from a departed specialist, Full Service Stimulated
Cycles increased by 3.7% compared to pcp. Australian Frozen Embryo Transfers declined by 5.6%, a greater
rate than Stimulated Cycles due to the impact from Stimulated Cycle declines in pcp. Cancelled cycles have
declined at a greater rate than Stimulated Cycles as a result of more effective scientific protocol.
International Stimulated Cycles increased by 21.8% due to increased demand following the introduction of a
new Fertility Specialist and increased capacity from the relocation to Damansara Mall Clinic.
Pre-implantation Genetic Screening/Diagnosis (PGS/D) has declined by 6.9% due primarily to the decline in
Australian Stimulated Cycles.
Ultrasound scan volumes increased by 0.6% to 80,860 driven by ultrasound services commencing during FY18 in
Dulwich, SA and Gold Coast, QLD. Sydney Ultrasound for Women scans declined by 3.9% due to greater
competitive pressure in NSW and lower obstetric private practice referral activity which is in part due to a shift
in volumes to the public sector. The non-invasive prenatal testing (NIPT) volumes continue to grow after replacing
the previously outsourced service.
24
8
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Expenditure before interest and tax
The table below provides a summary of FY19 Expenditure before interest and tax compared to FY18:
Employee expenses
Clinician fees
Raw materials and consumables used
Marketing and advertising expense
IT and communications expense
Property expenses
Professional and other fees
Other costs
Mosman clinic closure and CEO separation costs
Total operating expenditure
% of Group revenues
Depreciation and amortisation
Total expenditure before interest and tax
% of Group revenues
FY19
$m
FY18
$m
%
Change
48.1
25.8
15.5
5.0
2.9
9.7
3.0
4.0
1.5
115.5
76.1
5.0
119.0
78.5%
47.9
26.1
14.5
4.0
2.6
9.3
3.3
4.9
-
112.5
74.7%
5.0
117.5
78.0%
0.4%
(1.3%)
7.1%
23.7%
13.9%
5.0%
(5.2%)
(17.8%)
100%
2.7%
-%
1.5%
Total operating expenditure before one-off non-recurring costs (Mosman clinic closure and CEO separation costs)
increased by $1.5m or 1.5%. The following details key expenditure movements in FY19 against FY18:
Employee expense increased by $0.2m or 0.4%. The increase is due to prescribed increases in
enterprise agreements for nursing and science, partly offset from head count reduction to re-align the
Victorian workforce from volume declines;
Clinician fees are lower than pcp reflecting lower volumes in Australian Stimulated Cycles. Clinician
fees across the majority of the Group are variable to Fertility and Ultrasound activity except for certain
jurisdictions whereby remuneration is fixed via salary arrangements and theatre sessional fees which
have not declined at the same rate as revenue;
Raw material and consumables increased by $1.0m or 7.1%. The increase is primarily due to an
increase in day surgery activity and drug income in South Australia and Malaysia from higher
Stimulated Cycles in these markets. In addition, donor related activity increased resulting in higher donor
sperm expenditure;
IT and communication expense increased by $0.3m or 13.9% due to an increase in maintenance
expenditure to support existing IT infrastructure and networks;
Property expenses increased by $0.6m or 5.0% which is primarily due to annual rental increases across
the clinic network, higher rent expense at the Kuala Lumpur clinic and new Sydney CBD ultrasound clinic,
partly offset by the closure of the Mosman, NSW clinic in November 2018;
Marketing and advertising expense increased by $1.0m or 23.7% as greater investment was made in
targeted marketing activities, including radio, digital and direct inbound enquiry activity;
Other costs decreased by $0.9m or 17.8% due to general cost base reductions including lower
equipment maintenance costs and closure of the Mosman, NSW clinic;
Mosman clinic closure and CEO separation costs include $1.0m of accelerated depreciation on
leasehold assets retired and make-good at the Mosman clinic which closed in November 2018;
Depreciation and amortisation is consistent with pcp.
9
25
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Expenditure before interest and tax (continued)
Net interest expense
Net finance cost is $3.8m or $0.3m higher than pcp due to a moderate increase in debt margin based on the Net
Leverage Ratio and re-finance in December 2018.
Taxation
The effective tax rate for FY19 is 27.9% (FY18: 28.5%). The reduction in the effective tax rate is primarily
due to an increase in Malaysian derived income, of which is taxed at 24% compared to the Australian
tax rate of 30%.
Segment analysis
Australia
$m
Revenue
EBITDA(1)(2) before one-off items(3)
NPAT
(1) EBITDA is earnings before interest, tax, depreciation and amortisation.
(2) EBITDA is a non IFRS measure which is used by the Group as a key indicator of underlying performance. This and any other non IFRS measure is not subject to audit or
review.
(3) NPAT attributable to ordinary shareholders adjusted for one-off items including Mosman clinic closure accelerated depreciation ($882k pre-tax), make-good
provision ($100k pre-tax) and CEO separation costs ($473k pre-tax)
% change
32.3%
40.5%
44.4%
% change
(1.1%)
(5.3%)
(13.7%)
FY18
141.87
34.34
18.54
FY19
140.38
32.52
16.00
11.60
5.29
3.81
8.77
3.77
2.64
FY19
International
FY18
Australia
Australian revenues declined by $1.5m (-1.1%) compared to pcp. SA, QLD and NSW delivered strong growth in
1H19 and continued this momentum into 2H19, however this was offset by the loss of activity from the departure
of a specialist in Victoria during FY18. In addition, revenue increased due to price increases across all services,
and higher day surgery income from the sole day surgery service in SA.
Australian underlying EBITDA (which excludes one-off non-recurring items) declined by $1.8m (-5.2%) to $32.5m
with EBITDA margin declining by 1.2% to 23.1%. As compared to 2H18 (1 January to 30 June 2018), EBITDA
margins have improved from 21.9% to 23.1%, reflecting volume increases outside of Victoria and cost effective
management whilst investing in demand driven marketing and strategic pillars.
International
The International segment continues to demonstrate strong growth supported by the move to the new Kuala
Lumpur premises’ in late 2017 and a new fertility specialist who commenced in 2H18 providing greater capacity
to meet demand. International revenues increased by $2.8m (32.3%) to $11.6m vs pcp driven by Stimulated
Cycle growth of 21.8% to 1,034 whilst frozen embryo transfers increased by 35.1% to 1,021.
International EBITDA increased by 40.5% to $5.3m as a result of volume growth and EBITDA margin improved
by 2.6% to 45.9% as incremental volumes leverage the cost base.
26
10
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Statement of Financial Position and Capital Metrics
Balance Sheet ($m)
Cash and cash equivalents
Other current assets
Current liabilities
Net working capital
Borrowings
Goodwill & Intangibles
Plant & Equipment
Other assets/liabilities
Net assets
Capital Metrics
Net Debt ($m)
Leverage Ratio (Net Debt / EBITDA)
Interest Cover (EBITDA / Interest)
Net Debt to Equity Ratio
Return on Equity
Return on Assets
Jun 19
$m
Jun 18
$m
% change
4.3
11.2
(24.2)
(8.7)
(89.0)
257.1
16.5
(2.5)
173.4
3.9
12.9
(22.0)
(5.2)
(98.0)
256.1
16.9
(2.9)
166.9
11.1%
(12.6%)
10.2%
(65.3%)
(9.2%)
0.4%
(2.4%)
(13.8%)
3.9%
Jun 19
Jun 18
+/-
84.7
2.24x
10.6
48.8%
12.0%
7.2%
94.1
2.46x
11.1
56.4%
12.8%
7.3%
(9.4)
(0.22x)
(0.50x)
(7.6%)
(0.8%)
(0.1%)
The Group’s balance sheet is stronger with net debt to equity improving from 56.4% to 48.8% during FY19. Net
debt decreased by $9.4m to $84.7m due primarily to strong pre-tax operating cash flows of $39.9m, partly
offset by tax, capex and interest payments during the year.
On 21 December 2018, the Group extended the maturity date of its existing $110m Syndicated Debt Facility
and $5m working capital facility to January 2022. In addition the $40m Accordion Facility remains in place for
permitted acquisitions and capital expenditure. As at 30 June 2019, the debt balance is $89m.
The Group has sufficient headroom in banking covenant ratios including leverage ratio of 2.24x (<3.50) and
interest cover ratio of 10.6x (>3.0).
11
27
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Statement of Cash Flows
Net operating cash flow (pre-tax)
Net operating cash flow (post-tax)
Cash flow from investing activities
Free cash flow
1
Cash flow from financing activities
Net cash flow movement
Closing cash balance
FY19
$m
FY18
$m
Change%
39.9
33.1
(6.5)
26.6
(26.1)
0.5
4.3
35.5
25.9
(6.6)
19.3
(19.3)
0.1
3.9
12.3%
27.7%
(0.3%)
37.2%
35.6%
11.8%
(1) Free cash flow is a non-IFRS measure used by the Group as a key indicator of cash generated from operating and investing activities and is not subject to audit or
review. Calculated as Net cash flow generated from operating activities less Net cash flows used in investing activities.
Statement
Key cash flow highlights are as follows:
Net operating cash flows increased by 27.7% to $33.1m;
Pre-tax conversion of EBITDA to operating cash flows improved to 107.1% compared to 93.3% in pcp;
Investing activities remained consistent with pcp with capital expenditure on continued IT infrastructure
improvements including enhancements to patient management systems, new and re-furbished facilities
including the new Sydney CBD ultrasound clinic and regular asset replacements;
Financing activities include $13.1m fully franked dividends and $9.0 net debt repayments paid during
the year;
Free cash flow increased by $7.3m or 37.2% due to higher operating cash generation.
Dividends
On 26 August 2019, the Board declared a fully franked FY19 final dividend of 3.0 cents per share bringing
total dividends for FY19 to 6.0 cents per share which is consistent with prior year. The record date for the
dividend is 6 September 2019 and the payment date for the dividend is 11 October 2019.
Outlook
As a result of momentum gained in 2H19, we are well positioned to optimise future earnings, as we progress our
strategic initiatives. The key initiatives include:
Clear strategy to grow our full service business through enhancing our best-in-class patient
experience and scientific leadership, whilst ensuring our People are engaged and share
common principles and beliefs
Recruitment of new fertility specialists and continuing to engage and grow our existing fertility
specialists
Expansion of our footprint through new clinics and the recent Fertility Solutions acquisition
Asia Pacific expansion strategy through acquisition and partnerships
Continue our cost management initiatives including productivity measures and efficiency
projects
In addition, strong underlying demand fundamentals for assisted reproductive services remains domestically and
abroad.
The exit of five Victorian based fertility specialists may have an impact on FY20 net profit after tax (on a
variable contribution basis) of approximately $1.5m to $2.5m, however we are working on strategies to minimise
the financial impact.
We will provide a further update on FY20 performance at our Annual General Meeting in November 2019.
28
12
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Business Strategies and Prospects for Future Financial Years
Monash IVF Group’s mission is to help bring life to the World by providing Best-in-Class fertility solutions to all,
including diagnostics, genetics and pathology. This is supported by our Vision to be the most admired fertility
solutions provider in the world by patients, doctors, our people and other industry stakeholders. Our Mission and
Vision will be delivered through Our Pillars as illustrated below:
13
29
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Business Strategies and Prospects for Future Financial Years (continued)
Our Pillars are defined as follows below:
Patient experience - We are committed to delivering a patient experience across the continuum of care that is
empathetic, empowering and personalised to all patients consistent with our best in class offering.
Doctor partnership - We will develop mutually beneficial long term partnerships with our doctors that benefits
our patients and enables growth.
Scientific leadership - Our focus in world-class research and science will deliver market leading success rates,
innovative services and attract partnership opportunities.
Clinical excellence - Establish excellence in clinical care across the fertility, donor and surrogacy and pregnancy
journey through high quality, fit-for-purpose clinical services and infrastructure.
People engagement - Through passion, pride and capability our people are leading the way in helping bring
life to the world.
Brand & marketing - Communicate our ‘brand value proposition’ through new and targeted go to market
strategies, including early education, digital, sponsorship and events.
Digital & systems transformation - Build a scalable, robust and secure next generation IT service offering,
enhancing interactions with our patients, doctors and people.
International expansion - Export our expertise in fertility services to Asia and beyond through effective
partnerships.
Our Pillars will drive achievement of Our Outcomes to Engage with our Key Stakeholders, continually improve our
patient outcomes, grow our market share and create value for our Key Stakeholders including patients, doctors,
staff and shareholders.
Business risks
The Monash IVF Group continually considers the benefits of implementing a risk management framework, all of
which contributes to the increased likelihood that the Group will be able to achieve its organisational objectives.
Accordingly, the Group has a risk management framework and has implemented systematic processes for:
Better identification of opportunities and threats;
Prevention of potential risks from being realised;
Reduction of the element of chance;
Increased accountability and transparency for decisions;
More effective allocation and use of resources;
Improved incident management and reduction in loss and the cost of risk;
Improved stakeholder confidence and trust;
Improved compliance with relevant legislation and accreditation processes;
Proactive rather than reactive management; and
Enhanced governance.
The risk management framework together with the risk assessments and mitigation strategies are regularly
reviewed both individually and collectively by the Executive Team, the Audit and Risk Committee and the Board.
A simple prioritisation system has been adopted to scale the relative importance of all the identified risks.
30
14
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Business risks (continued)
From review of the Group’s key business, operational and financial risks, processes are in-place to reduce the
inherent nature of these risks to an acceptable and manageable level. As a result, the Group does not have any
‘high’ priority residual risks. Notwithstanding this, the Group considers the below as important risks that require
continued management to ensure the Group meets its objectives:
Relationships with staff in key roles, including clinicians
The relationships between Monash IVF Group, the staff and clinicians are key to our recruitment and retention
strategies, ability to grow the businesses and replacement of retiring clinicians. The loss or disengagement of any
clinicians or inability to attract new clinicians to the organisation would likely impact the revenue and profitability
of the organisation.
There are similar risks to the organisation relating to the departure or disengagement of the Executive and
Leadership Teams and staff in key roles, defined by regulatory requirements. Comprehensive training and
development programs, competitive remuneration frameworks, commitment to patient centred care and
opportunities to participate in world class research activities all contribute to attracting and retaining the very best
talent in the industry.
Change in Government funding arrangements for Assisted Reproductive Services
There is a risk that the Commonwealth Government will change the funding (including levels, conditions or eligibility
requirements) it provides for Assisted Reproductive Services (ARS). Patients receive partial re-imbursement for ARS
treatment through Commonwealth Government Programs, including the Medicare Benefit Schedule (MBS) and
Extended Medicare Safety Net (EMSN). If the level of re-imbursement were to be reduced or capped, patients
would face higher out-of-pocket expenses for ARS potentially reducing the demand for services provided by the
Group. The Group is not aware of any changes to Commonwealth Government funding for ARS in the short to
medium term.
Risk of increased competition
In each of the markets the Group operates in, there is a risk that:
Existing competitors may undertake aggressive marketing campaigns, product innovation or price
discounting;
New market entrants may participate in the Sector and gain market share;
Further growth in low cost offerings provided by competitors may reduce the Group’s market share;
and
An increase in government provided ARS services may reduce the Group’s market share however it is
expected to primarily impact low cost service providers.
The Group continues to strategically position the ARS service as a specialised premium offering as a point of
differentiation against low cost competitors as outlined in the Business Strategies and Prospects for Future Financial
Years sections in the Director’s Report on pages 29-31. In addition, the Group has previously partnered with State
based governments in the provision of publicly provided ARS services and will look to continue to partner with
governments to provide greater access to ARS services to the community.
31
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Information on directors
Director
Mr Richard Davis
Independent Chairman
Member of Audit & Risk Management
Committee
Member of Remuneration & Nomination
Committee
Mr Josef Czyzewski
Independent
Non-executive Director
Chair of Audit & Risk Management
Committee
Member of Remuneration & Nomination
Committee
Ms Christina (‘Christy’) Boyce
Independent
Non-executive Director
Chair of Remuneration & Nomination
Committee
Member of Audit & Risk Management
Committee
Mr Neil Broekhuizen
Independent
Non-executive Director
Member of Audit & Risk Management
Committee
Experience
Mr. Richard Davis joined the Group in June 2014 and is currently serving as
a non-executive director of ASX listed companies, InvoCare Limited and
Australian Vintage Limited (and Chairman of Australian Vintage).
Richard worked for InvoCare for 20 years until 2008. For the majority of
that time he held the position of CEO and managed the growth of that
business through a number of ownership changes and over 20 acquisitions,
including offshore in Singapore.
Prior to InvoCare Limited, Richard worked in venture capital and as an
accounting partner of Bird Cameron. Richard holds a Bachelor of Economics
from the University of Sydney.
Mr. Josef Czyzewski joined the Group in June 2014 and has over 30 years
of experience in senior finance positions and significant experience in the
health industry.
Josef has held the positions of CFO at Healthscope Limited, and more
recently CFO/General Manager Strategy and Development at Spotless
Group Limited following its takeover by private equity interests in 2012.
Prior to that time, Josef had held various senior finance positions with BHP
Billiton including VP Finance and Corporate Treasurer. He holds a Bachelor
of Commerce from the University of Newcastle and is a Graduate Member
of the Australian Institute of Company Directors.
Ms Christy Boyce joined the Group in June 2014. Christy is also a director
of Port Jackson Partners. Christy is a former director of Greencross Limited
and Oneview Healthcare.
Christy has over 20 years of management consulting experience in both
Australia and the United States and has worked extensively with major
corporations on corporate strategy. Prior to joining Port Jackson Partners,
Christy spent 14 years with McKinsey and Company, where she was a
partner.
She holds a Bachelor of Economics from the University of Sydney, a Masters
the Kellogg Graduate School of Business
of Management from
(Northwestern University) and is a Graduate Member of the Australian
Institute of Company Directors.
Mr. Neil Broekhuizen is the Joint Chief Executive Officer of Ironbridge.
Neil has 25 years of private equity experience with Investcorp and
Bridgepoint in Europe and Ironbridge in Australia. Neil is currently also a
director of Bravura Solutions Limited and PKS Holdings Ltd.
Neil is qualified as a Chartered Accountant and holds a BSC (Eng) Honours
degree from Imperial College, University of London.
32
16
Directors’ Report (Continued)
Monash IVF Group Limited
Directors’ Report
for the year ended 30 June 2019
Director
Mr Michael Knaap
Chief Executive Officer
Managing Director
Dr Richard Henshaw
Executive Director
Experience
Mr Michael Knaap joined Monash IVF Group in August 2015 as the Chief
Financial Officer and Company Secretary.
In October 2018 Mr. Knaap was appointed Interim CEO and in April 2019
he was appointed Chief Executive Officer and Managing Director.
Michael has more than 17 years' experience in senior finance executive
roles in the FMCG sector in both listed and unlisted organisations. Michael's
role prior to joining Monash IVF Group was with Patties Foods Limited
where he held a number of executive positions in 6 years, including the role
of CFO and Company Secretary.
Michael holds a Bachelor of Accounting from Monash University and is a
Certified Practising Accountant.
Dr Richard Henshaw MD FRANZCOG FRCOG has practiced in the field of
reproductive medicine since 1995.
Richard works as a Fertility Specialist for the Group.
Richard has served on many national bodies, including RANZCOG Council,
the IVF Medical Directors group of Australia and New Zealand, and the
Reproductive Technology Accreditation Committee.
33
17
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Directors’ Report (Continued)
Directors’ Report
for the year ended 30 June 2019
Company Secretary
Mr Malik Jainudeen was appointed to the role of Monash IVF Group Chief Financial Officer and Company
Secretary on 15 April 2019.
Malik joined Monash IVF Group in 2014 as a senior finance leader and has continued to progress his career with
Monash IVF Group. Malik has more than 15 years experience in the finance sector including 9 years at KPMG as
a Manager in Audit and Assurance where his client portfolio included ASX listed organisations Origin Energy
Limited, AusNet Services and Dulux Group Limited. Malik was also the External Audit Manager for the Monash
IVF Group for 6 years prior to its listing on the ASX in 2014.
Director Meetings
The number of directors’ meetings and number of meetings attended by each of the directors of the Company
during the financial year are:
Member
Mr Richard Davis (Chair)
Mr Josef Czyzewski
Ms Christy Boyce
Ms Zita Peach
Mr Neil Broekhuizen
Dr Richard Henshaw
Mr. Michael Knaap(1)
Mr David Morris
Attended
Eligible to Attend
12
12
12
12
12
11
3
4
12
12
12
12
12
12
3
4
(1) Mr. Michael Knaap was appointed Managing Director on 15 April 2019
The Board of Directors participated in numerous teleconferences in addition to the above formal Board meetings.
Committee meetings
Member
Mr Richard Davis
Mr Josef Czyzewski (ARC Chair)
Ms Christy Boyce (REM Chair)
Ms Zita Peach
Mr Neil Broekhuizen
ARC
REM
Attended
Held
Attended
Held
4
4
4
n/a
3
4
4
4
n/a
4
5
5
5
5
5
5
5
5
n/a
n/a
34
18
Remuneration Report – Audited
Monash IVF Group Limited
For The Year Ended 30 June 2019
Remuneration Report - Audited
for the year ended 30 June 2019
The Company’s Directors present the 2019 Remuneration Report prepared in accordance with Section 300A of
the Corporations Act 2001, for the Company and the Group for the year ending 30 June 2019 (“FY19”). The
information provided in this Remuneration Report has been audited by KPMG as required by Section 308(3C) of
the Corporations Act 2001. The Remuneration Report forms part of the Directors’ Report.
The Remuneration Report outlines the remuneration strategies and arrangements for the Key Management
Personnel (KMP), who have authority and responsibility for planning, directing and controlling the activities of
Monash IVF Group.
Introduction
Monash IVF Group has continued the alignment of the Remuneration Framework to enable the organisation to
attract and retain the appropriately qualified personnel, including Directors, Executive Management and
specialised personnel. The remuneration framework continues to be focused on driving a performance culture by
linking Executive Remuneration to strategic objectives both financial and non-financial. The structure of
remuneration, particularly at Senior Executive level, is a key component in driving positive performance
improvement in scientific leadership, clinical excellence, patient experience and people engagement as well as
growth both domestically and internationally.
Executive Remuneration in FY19 remains at levels which are competitive with Executives in comparable companies
and roles. Fixed remuneration continues to sit at or below the industry benchmark; a higher proportion of
remuneration is at risk relative to industry peers. The Board varies rewards in accordance with short and long
term financial performance.
The remainder of this report outlines the Company’s remuneration policy and practice in greater detail.
KMP Changes in FY19
Following the resignation of Mr David Morris as Chief Executive Officer and Managing Director in October
2018, Mr Michael Knaap was appointed interim Chief Executive Officer following his tenure as Monash IVF’s
Chief Financial Officer and Company Secretary since August 2015. In April 2019, Mr. Knaap was appointed
Chief Executive Officer and Managing Director.
Following Mr Knaap’s appointment, Mr Malik Jainudeen was appointed interim Chief Financial Officer in
October 2018 and formally appointed Chief Financial Officer and Company Secretary in April 2019.
1.0 Remuneration Snapshot
1.1 Remuneration Governance
The Board is ultimately responsible for remuneration decisions. To assist the Board’s governance and oversight of
remuneration, this is delegated to the Remuneration and Nomination Committee (Committee). Under the
Remuneration and Nomination Committee Charter, it must have at least three members, the majority of whom
(including the Chair) must be independent Directors and all of whom must be non-executive Directors.
The Committee is composed of four independent Directors and is chaired by Ms Christina Boyce. Ms Boyce was
appointed Chair of the Remuneration and Nomination Committee on 4 June 2014. Mr Davis and Mr Czyzewski
were appointed on 4 June 2014 and Ms Peach was appointed on 16 December 2016.
During FY19, the Remuneration and Nomination Committee met five times with full attendance by all members.
In addition to reviewing and refining the remuneration framework, the Remuneration and Nomination Committee
also undertook a review of the executive and non executive skills assessment model and reviewed the succession
plans for both non-executive and executive structures to ensure continued alignment with the Company’s long term
strategic goals.
19
35
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
The Remuneration and Nomination Committee may invite the CEO, CFO/Company Secretary and Chief People &
Culture Officer to attend Committee meetings to assist in deliberations (excluding matters relating to their own
employment).
From time to time, the Remuneration and Nomination Committee seeks independent external advice on the
appropriateness of the remuneration framework and remuneration arrangements. No recommendations as
defined in section 9B of the Corporations Act were received in FY19.
The Committee is responsible for reviewing and making recommendations to the Board in relation to:
Group remuneration strategy and practices
Non-executive director fee frameworks, policy regarding fee allocation, and fee pools sufficient
for appropriate fee levels, board renewal, board roles, market practice, and director workload
Overall remuneration framework for Executives
Terms and conditions underpinning Executive & Doctor Service Agreements (ESA), including restraint
and notice period
Eligibility for, and conditions of, incentive plans, including equity-based incentive plans
Remuneration packages for all Senior Executives including structure and incentives
Metrics and associated targets for STI and LTI
Terms and conditions associated with STI and LTI plans including equity incentive plan rules, escrow
and other restrictions on disposal
Structure and quantum of Senior Executive termination payments
Treatment of outstanding incentives (STI & LTI) in case of cessation of employment
Exercise of malus or clawback if relevant to STI or LTI payments.
The Remuneration and Nomination Committee are also responsible for monitoring and reporting to the
Board;
Remuneration relative to industry benchmarks
Superannuation arrangements for directors, senior executives and other employees
Achievement of performance requirements for the payment of Incentives
Diversity and pay equity.
Alignment of the company’s remuneration and incentive policies, practices and performance
Succession planning for Senior Executives, Executive Directors and Non-Executive Directors
Selection, appointment and induction of Directors and Executives
indicators to the Vision, Principles and overall business objectives
The Remuneration and Nomination Committee Charter
the Company’s website at
http://ir.monashivfgroup.com.au/Investor-Centre/?page=Corporate-Governance. The Charter is reviewed
annually and was last reviewed in May 2019. Further information on the Remuneration and Nomination
Committee is provided in the Corporate Governance Statement in this Annual Report.
is available on
1.2 Principles used to determine the nature and amount of remuneration
The executive remuneration framework is designed to:
Ensure employees including KMP and Executive management are rewarded fairly and competitively
according to role accountability, market positioning, skills, experience and performance.
Alignment with the overall business strategy and ensure all policies and processes are observed to enable
the attraction and retention of key personnel who create value for shareholders
Be simple, flexible, consistent and scalable across the organisation allowing for sustainable business
growth
36
20
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
Encompass long term and short term variable performance elements for senior management,
employees and contractors who have the ability to impact overall organisation performance to best
align incentives.
Support the business strategy
Reinforce Vision, Mission, and Principles and is reviewed regularly to ensure employees act ethically
and responsibly
Comply with all relevant legal and regulatory provisions
2.0 Remuneration Policy
2.1 Executive remuneration policy
For the majority of Senior Executives, total remuneration consists of:
Total Fixed
Remuneration
(TFR)
Is determined as base salary and inclusive of all standard leave provisions and
• Is determined as base salary and inclusive of all standard leave provisions and
superannuation guaranteed contributions.
superannuation guaranteed contributions.
• Reflects the individuals’ accountability, position requirements and experience.
Reflects the individuals’ accountability, position requirements and experience.
• Considering labour market conditions as well as scale of the Company and size
Considering labour market conditions as well as scale of the Company and size
of the role.
of the role.
Short Term Incentive
(STI)
• Ensures a proportion of remuneration is tied to key performance indicators for
the relevant financial year and aligned to the strategic goals of the
organization.
• The STI is available to eligible employees and is based on a balanced
scorecard of financial and non-financial objectives.
Long Term Incentive
(LTI)
• Ensures that a proportion of remuneration is tied to longer term Group
performance measured over 3 years.
• Creates alignment with long term shareholder interests and rewards the creation
of sustainable shareholder wealth.
The Group’s remuneration framework for FY19 for the CEO, CFO and COO has three components, two of which
vary with performance. TFR levels sit at or below median for similar organisations. A higher proportion of
remuneration is at risk relative to peers. The remuneration structure aligns the remuneration opportunity with the
level of position accountability.
21
37
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
The diagram below summarises the framework for FY19. The framework continues to be reviewed each year.
Executive Remuneration Framework
Total Fixed Remuneration (TFR)
At Risk Remuneration
Comprises:
Short Term Incentive (STI)
Long Term Incentive Plan (LTI)
• Base salary
• Salary sacrifice items
• Employer superannuation
contributions in line with statutory
regulations
TFR is determined on the basis of
market rates, the size and
complexity of the role and the
individual’s skill and experience
relative to position requirements.
TFR is at or below median for
companies of similar size.
Total fixed annual remuneration
• EBITDA/Specific Business
• EPS hurdles based on
Unit EBITDA (70%)
• Non-financial measures
linked to key strategic
initiatives built around a
balanced scorecard
(30%) focused on
scientific leadership,
patient engagement,
employee engagement
clinician engagement and
market share.
predefined growth rates
over a 3 year period
• TSR hurdles based on
Group’s relative TSR
performance against
ASX300 Healthcare Index
Comprise share rights which vest
in accordance with 3 year EPS
growth and relative TSR above
threshold performance
requirement.
Total fixed remuneration (TFR) consists of base remuneration (which is calculated on a total cost basis) as well as
non-monetary benefits and superannuation.
TFR levels are reviewed annually by the Remuneration and Nomination Committee through a process that
considers market rates and individual experience in the position. TFR is also reviewed on promotion. There are
no guaranteed increases in base pay or superannuation included in Executive contracts.
KMP TFR sits at or below the median level for ASX listed companies of similar size (based on a market capital of
$375M - $750M).
38
22
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
Short-term incentives
Overview of FY19 Short term incentive plan:
STI Structure
Financial Measure (70%)
- Group EBITDA
•
("EPS Hurdle")
• 70% of allocation subject to the
hurdle
•
le ("EPS Hurdle")
Non-Financial Measure (30%)
• Clinician Engagement
• Patient Engagement
• Employee Engagement
• Market Share
• Scientific Leadership
• 70% of allocation subject to the
•
("EPS Hurdle")
$39.5m
hurdle
$42.5m
Less than
$39.5m
0% Payable
• 70%
of
allo
cati
on
subj
ect
to
the
hur
dle
Minimum
performance
25% Payable
• 70%
of
allo
cati
on
subj
ect
to
the
hur
dle
Stretch
demands
superior
performance
100%
Payable
• 70%
of
allo
cati
on
subj
ect
to
the
hur
dle
No Non-
financial
Objectives
achieved
Some but not all
• 70% of allocation subject to the
Non-financial
Objectives
achieved
All Non-
financial
Objectives
achieved
hurdle
•
0% Payable
100%
Payable
• 70% of allocation subject to the
hurdle
le ("EPS Hurdle")
Proportion
payable depends
on extent, and
weighting
objectives
achieved.
Threshold set with
reference to
industry
benchmarks and
historic
performance
(improvement
required)
• 70
%
of
all
oc
ati
on
su
bje
ct
to
the
hu
rdl
e
• 70
%
of
all
oca
tio
n
sub
jec
t to
the
hur
dle
•
le
("EP
S
Hur
dle"
)
• 70% of
allocati
on
subject
to the
hurdle
le
("EP
S
Hur
dle"
)
The Group’s STI is a variable component of remuneration and is designed to focus on strategic objectives
prioritised by the Board for the financial year.
•
•
•
•
le
("EP
S
Hur
dle"
)
The STI structure was revised in FY19. The proportion for the financial measure was increased from 60% to 70%
le
of the total available. At the same time, the financial gateway was removed from the non-financial component of
the STI opportunity. These changes were made to ensure that the management team had a clear incentive to
("E
pursue investments in critical outcomes for the business that would deliver longer term financial benefits and that
PS
they were rewarded for quantified improvements in these metrics.
Hu
rdl
The financial measure within the STI Plan is Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA).
EBITDA is compared to target EBITDA to assess achievement. EBITDA may be normalised to assess cash earning
e")
operating performance by adjustment for any amounts for individually significant, non-recurring, abnormal or
unusual gains or losses of the Group. The financial measure is set at a threshold of $39.5m. Stretch EBITDA
• 70
%
of
all
23
oca
tio
• 70%
of
allo
cati
on
subj
ect
to
the
hur
• 70% of
allocati
on
subject
to the
hurdle
• 70%
of
allo
cati
on
• 70%
of
allo
cati
on
subj
ect
to
• 70
%
of
all
oc
le ("EPS
Hurdle"
)
le
("E
PS
Hu
rdl
e")
•
39
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
performance was set at $42.5m, at which the entire amount allocated for financial measure is payable.
Achievement between these two levels of performance results in a pro-rata payment of STI.
The non-financial measures defined for KMP (including the CEO) include Market Share, Employee Engagement,
Clinician Engagement, Customer Service Engagement and Scientific Leadership. The quantified threshold for each
metric was set to require an improvement over historic performance and the stretch targets required substantial
improvements in outcomes.
Long-term incentive plan
Executive KMP including CEO, CFO & COO are eligible to receive a LTI grant.
Grants under LTI Plan are subject to the following conditions:
•
The invitations issued to eligible persons will include information such as award conditions and, upon
acceptance of an invitation, the Directors will grant awards in the name of the eligible person. Awards
may not be transferred, assigned or otherwise dealt with except with the approval of the Directors.
• Awards will only vest where the conditions advised to the participant by the Directors have been
satisfied. An unvested award will lapse in a number of circumstances, including where conditions are not
satisfied within the relevant time period, or in the opinion of the Directors, a participant has committed
an act of fraud or misconduct or gross dereliction of duty. If a participant’s engagement with the
Company (or one of its subsidiaries) terminates before an award has vested, the Directors may
determine the extent to which the unvested awards that have not lapsed will become vested awards or,
if the award offer does not so provide and the Board does not decide otherwise, the unvested awards
will automatically lapse.
• Awards are subject to malus and clawback conditions whereby the Board may, in its discretion, and
subject to applicable laws, determine the performance rights or shares already allocated following the
vesting or exercise of a performance right are forfeited, recovered or the conditions modified. The
Board’s decision in regards to unfair benefits obtained by the participant is final and binding.
• Where there is a takeover bid or a scheme of arrangement proposed in relation to the Company, the
Directors may determine that the participant’s unvested awards will become vested awards. In such
circumstances, the Directors shall promptly notify each participant in writing that the awards have
become vested awards, or that he or she may, within the time period specified in the notice and where
applicable in accordance with the class or category of award, exercise such vested awards. A
participant is not entitled to participate, in their capacity as holder of awards, in any new issue of
shares in the Company, nor in any return of capital, buyback or other distribution or payment to
shareholders, unless the Board determines otherwise. In the event of a bonus issue or rights issue, the
rights of the award will be altered in a manner (if any) determined by the Board, consistent with the
ASX Listing Rules.
In the event of any reorganisation of the issued ordinary capital of the Company before the exercise of
an award, the number of shares attached to each award will be reorganised in the manner specified in
the LTI plan and in accordance with the ASX Listing Rules or, if the manner is not specified, the Board will
determine the reorganisation. In any event, the
reorganisation will not result in any additional benefits being conferred on participants which are not
conferred on shareholders of the Company.
Participants who hold an award issued pursuant to the LTI plan have no rights to vote any shares under
the LTI award at meetings of the Company until that award has vested (and is exercised, if applicable)
and the participant is the holder of a valid share in the Company. Shares acquired upon vesting of the
award will, upon issue, rank equally in all respects with other shares.
•
•
• No award or share may be offered under the LTI plan if to do so would contravene the Corporations
Act, the ASX Listing Rules or instruments of relief issued by ASIC from time to time.
40
24
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
Senior Executive LTI
Overview of FY19 Senior Executive LTI:
Performance Rights Granted
EPS Compound Annual Growth Rate
(“EPS Hurdle”)
70% of allocation subject to the hurdle
•
("EPS Hurdle")
• 70% of allocation subject to the
Relative Total Shareholder Return
("TSR Hurdle")
30% of allocation subject to the hurdle
Vesting Framework
hurdle
Vesting Framework
•
le ("EPS Hurdle")
The EPS component of the allocation will be
measured at the end of the 3 year performance
period.
• 70% of allocation subject to the
hurdle
20% will vest at threshold performance.
100% will vest at maximum performance, with
pro-rata vesting between threshold and
maximum.
EPS threshold performance is 10% growth per
annum over the three year period
("EPS Hurdle")
•
• 70% of allocation subject to the
hurdle
Senior Executive LTI – FY19
The TSR component of the allocation will be
measured at the end of the 3 year performance
the ASX300 Healthcare
to
period relative
Accumulation Index (Index) performance.
20% will vest at threshold performance when TSR
equals index returns, 100% vest at maximum
performance if TSR equals index returns + 5
percentage points on an annualised basis, with
pro-rata
threshold and
maximum
vesting between
•
le ("EPS Hurdle")
The LTI plan is a performance rights plan with vesting rights dependent upon the satisfaction of pre-defined
performance hurdles and continuous employment. As indicated in the last remuneration report, LTI grants will be
issued on a rolling annual basis. This ensures executives maintain a continuous focus on sustainable long term
growth and returns, and provides an appropriate balance to the focus on annual results demanded by the STI.
• 70% of allocation subject to the
hurdle
Performance rights were granted in two tranches during FY19, with each tranche subject to separate vesting
conditions. The executives did not pay any money to be granted those performance rights. The expiry date of
the rights will be on the fifth anniversary of their grant. Given the desire to focus on financial outcomes and the
challenges associated with identifying an appropriate proxy for the relative TSR measure, the EPS hurdle was
weighted 70% and the TSR was weighted 30%. The allocation of performance rights to Mr. Knaap reflects his
position as CFO at the commencement of the performance period. The FY19 LTI does not reflect his appointment
to the CEO position as this occurred part way through the year.
25
41
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
Details of performance rights granted to Senior Executives during FY19 are set out in the following table:
Name
Mr. Michael Knaap (CEO)
Mr. Brett Comer (COO)
Hurdle
EPS
TSR
EPS
TSR
Weighting
70%
30%
70%
30%
Performance Rights Granted
57,145
24,491
51,426
22,040
The performance periods and vesting schedules for the performance rights granted in FY19 are as follows:
Performance Measure
Earnings Per Share
Relative TSR
Performance Period
1 July 2018 to 30 June 2021
11 days after FY18 results announcement to 11 days after
FY21 results announcement
Earnings per share
Performance
Less than 10%
10%
Between 10 and 12%
Greater than or equal to 12%
% of rights that will vest
0%
20%
20% to 100% (pro-rata)
100%
Relative TSR
Performance
Less than ASX300 Healthcare Index
Equal to ASX300 Healthcare Index
Between ASX300 Healthcare Index and ASX300 Healthcare Index + 5%
Greater than ASX300 Healthcare Index + 5%
% of rights that will vest
0%
20%
20% to 100% (pro-rata)
100%
The graduated vesting scale in the senior executive LTI plan was designed to minimise the likelihood of excessive
risk taking as a performance threshold is approached.
The Board believes this vesting framework strengthens the performance link over the long-term and accordingly
encourages executives to focus on long-term performance. The Board also acknowledges that the value of certain
strategic initiatives may take several years to deliver.
Senior Executive LTI Grant: FY16 – FY18 Update
The outstanding balance of 35,072 performance rights issued in FY16 lapsed during the period as TSR
performance was less than the ASX300 Healthcare Accumulation Index, measured from the 11th trading
after FY15 results announced on the 11th trading day after FY18 results.
Performance rights granted to Mr. David Morris in FY18 were forfeited upon his resignation as CEO in
October 2018.
There was no vesting of performance rights issued in FY17 or FY18.
Please refer to the table on page 33 for a schedule of unvested performance rights and the movement during
the financial year.
42
26
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
2.2 Non-Executive Director (NED) Remuneration Policy
Under the Constitution, the Directors decide the total amount paid to all Directors as remuneration for their
services as Directors. However, under the ASX Listing Rules, the total amount paid to all Directors for their
services must not exceed in aggregate in any financial year, the amount fixed by the Company in a general
meeting. This amount has been fixed by the Company at $950,000. For the 2019 financial year, the fees
payable to the current NEDs are $567,530 in aggregate.
Role
Base Fees
Chair
Other Non-Executive Directors
Additional Fees
Audit & Risk Committee – Chair
Audit & Risk Committee – Member
Remuneration & Nomination Committee – Chair
Remuneration & Nomination Committee – Member
3.0 Executive and Non-Executive Remuneration
3.1 Remuneration Summary
2019
$
139,050
86,520
16,480
8,240
16,480
8,240
2018
$
139,050
86,520
16,480
8,240
16,480
8,240
The Executive Remuneration outcomes for FY19 for the CEO and KMP Executives reflect the performance
outcomes achieved over the year.
Executive
CEO
Michael Knaap
Component
TFR
Commentary
$500,000 per annum.
CEO for the period 15
April 2019 to 30 June
2019
STI
The CEO had the opportunity to earn an annual incentive of
60% of his total fixed remuneration package based on
meeting certain defined criteria. The FY19 STI criteria were
subject to both financial (70%) and non financial (30%)
outcomes.
LTI (Performance
Rights)
No performance rights were granted during FY19 to Mr
Knaap in his capacity as CEO. See commentary on rights
granted in his capacity as CFO below.
Notice Period
Term of Agreement
TFR
6 Months
No Fixed Term
$388,915 per annum.
Interim CEO
Michael Knaap
Interim CEO for the
period 9 October
2018 - 14 April 2019
Higher Duties
Allowance
STI
A temporary Higher Duties allowance of $96,000 per annum
($35,076 for the relevant period) was paid to Mr Knaap
whilst he acted as Interim CEO over the period October 2018
to April 2019.
The Interim CEO had the opportunity to earn an annual
incentive of 55% of his total fixed remuneration package
based on meeting certain defined criteria. The FY19 STI
criteria were subject to both financial (70%) and non financial
(30%) outcomes.
27
43
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
Executive
CFO
Michael Knaap
Component
TFR
Commentary
$388,915 per annum.
CFO for the period 1
July 2018 - 8 October
2018
STI
LTI (Performance
Rights)
Notice Period
Term of Agreement
TFR
STI
LTI (Performance
Rights)
Notice Period
Term of Agreement
CEO
David Morris
CEO for the period 1
July 2018 to 9
October 2018
Executive Director
Dr Richard
Henshaw
TFR
The CFO had the opportunity to earn an annual incentive of
30% of his total fixed remuneration package based on
meeting certain defined criteria. The FY19 STI criteria were
subject to both financial (70%) and non financial (30%)
outcomes.
81,635 performance rights were granted during FY19. These
rights vest at the end of the 3 year performance period
subject to meeting certain EPS and TSR outcomes.
3 Months
No Fixed Term
$500,000 per annum.
n/a
CEO forfeited performance rights due to his resignation.
n/a
n/a
$317,124 per annum.
Dr Richard Henshaw was the only doctor during FY2019 who
served as a Director. He was paid a salary by Monash IVF
Group.
STI
LTI (Performance
Rights)
Notice Period
n/a
n/a
6 Months
Term of Agreement
No Fixed Term
CFO
Malik Jainudeen
CFO for the period 15
April 2019 to 30 June
2019
TFR
STI
LTI (Performance
Rights)
Notice Period
Term of Agreement
$300,000 per annum.
The CFO had the opportunity to earn an annual incentive of
30% of his total fixed remuneration package based on
meeting certain defined criteria. The FY19 STI criteria were
subject to both financial (70%) and non financial (30%)
outcomes.
No performance rights were granted in FY19
3 Months
No Fixed Term
44
28
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
Executive
Interim CFO
Malik Jainudeen
Interim CFO for the
period 9 October
2018 to 14 April
2019
Component
TFR
Higher Duties
Allowance
STI
COO
Brett Comer
LTI (Performance
Rights)
Notice Period
Term of Agreement
TFR
STI
LTI (Performance
Rights)
Commentary
$198,721 per annum.
A temporary Higher Duties Allowance of $95,097 per annum
($34,747 for the relevant period) was paid to Mr Jainudeen
whilst he acted as Interim CFO over the period October 2018
to April 2019.
The Interim CFO had the opportunity to earn an annual
incentive of 30% of his total fixed remuneration package
based on meeting certain defined criteria. The FY19 STI
criteria were subject to both financial (70%) and non financial
(30%) outcomes.
No performance rights were granted in FY19
3 Months
No Fixed Term
$350,000 per annum.
The COO had the opportunity to earn an annual incentive of
30% of his total fixed remuneration package based on
meeting certain defined criteria. The FY19 STI criteria were
subject to both financial (70%) and non financial (30%)
outcomes.
73,466 performance rights were granted during FY19. These
rights vest at the end of the 3 year performance period
subject to meeting certain EPS and TSR outcomes.
Notice Period
3 Months
Term of Agreement
No Fixed Term
The following table shows the proportional weighting of each element of remuneration for each of the current
senior executives based on achieving maximum opportunity:
Mr. Michael Knaap (1)
Mr. Richard Henshaw
Mr. Brett Comer
Mr. Malik Jainudeen (2)
Fixed
Remuneration
(%)
54.00
100.00
64.52
70.72
Short Term
Incentive
(%)
25.25
-
19.35
21.22
Long Term
Incentive
(%)
20.75
-
16.13
8.06
(1) The proportional weighting of each element of remuneration for Mr. Knaap has been calculated in accordance with the contract terms of
positions held during FY19.
(2) Mr Malik Jainudeen commenced as interim CFO on 9 October 2018 and is considered Key Management Personnel from that date. The
proportional weighting of each element of remuneration has been calculated from 9 October 2018 and in accordance with the contract terms
of positions held since that date.
29
45
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
3.2 Details of Remuneration for Key Management Personnel
Key Management Personnel (“KMP”)
KMP have authority and responsibility for planning, directing and controlling the activities of the Group, directly
or indirectly, including directors of the Company and other executives. KMP comprise the directors of the
Company and the senior executives for the Group named in this report.
Name
Non-Executive Directors
Mr Richard Davis
Ms Christina Boyce
Mr Josef Czyzewski
Mr Neil Broekhuizen
Ms Zita Peach
Executive Directors
Mr Michael Knaap
Mr David Morris
Dr Richard Henshaw
Other KMP
Mr Malik Jainudeen
Mr Brett Comer
Position
Period Covered Under this Report
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Full Financial Year
Full Financial Year
Full Financial Year
Full Financial Year
Full Financial Year
Chief Executive Officer
Chief Financial Officer
Chief Executive Officer
Executive Director
From 9 October 2018 to 30 June 2019
From 1 July 2018 to 8 October 2018
From 1 July 2018 to 9 October 2018
Full Financial Year
Chief Financial Officer
Chief Operations Officer
From 9 October 2018 to 30 June 2019
Full Financial Year
46
30
Remuneration Report – Audited (Continued)
$
l
a
t
o
T
0
3
5
5
5
1
,
0
3
5
5
5
1
,
0
4
2
1
1
1
,
0
4
2
1
1
1
,
0
4
2
1
1
1
,
0
4
2
1
1
1
,
0
6
7
4
9
,
0
6
7
4
9
,
0
6
7
4
9
,
0
6
7
4
9
,
0
3
5
7
6
5
,
0
3
5
7
6
5
,
-
-
-
-
-
-
-
-
-
-
-
-
$
s
t
h
g
R
i
d
e
s
a
b
e
r
a
h
S
s
t
n
e
m
y
a
p
s
t
i
f
e
n
e
b
t
n
e
m
y
o
p
m
e
l
t
s
o
P
s
t
i
f
e
n
e
b
l
e
e
y
o
p
m
e
m
r
e
t
t
r
o
h
S
$
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
$
3
9
4
3
1
,
3
9
4
3
1
,
1
5
6
9
,
1
5
6
9
,
1
5
6
9
,
1
5
6
9
,
1
2
2
8
,
1
2
2
8
,
1
2
2
8
,
1
2
2
8
,
7
3
2
9
4
,
7
3
2
9
4
,
s
t
i
f
e
n
e
b
n
o
i
t
a
n
i
m
r
e
T
g
n
o
l
r
e
h
t
O
s
t
i
f
e
n
e
b
m
r
e
t
n
o
i
t
a
u
n
n
a
r
e
p
u
S
$
l
a
t
o
T
7
3
0
2
4
1
,
7
3
0
2
4
1
,
9
8
5
1
0
1
,
9
8
5
1
0
1
,
9
8
5
1
0
1
,
9
8
5
1
0
1
,
9
3
5
6
8
,
9
3
5
6
8
,
9
3
5
6
8
,
9
3
5
6
8
,
3
9
2
8
1
5
,
3
9
2
8
1
5
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
r
e
h
t
O
s
t
i
f
e
n
e
b
$
h
s
a
C
I
T
S
e
v
i
t
n
e
c
n
i
$
s
e
e
f
&
y
r
a
a
S
l
7
3
0
2
4
1
,
7
3
0
2
4
1
,
9
8
5
1
0
1
,
9
8
5
1
0
1
,
9
8
5
1
0
1
,
9
8
5
1
0
1
,
9
3
5
6
8
,
9
3
5
6
8
,
9
3
5
6
8
,
9
3
5
6
8
,
3
9
2
8
1
5
,
3
9
2
8
1
5
,
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
s
i
v
a
D
d
r
a
h
c
i
R
r
M
i
k
s
w
e
z
y
z
C
f
e
s
o
J
r
M
e
c
y
o
B
a
n
i
t
s
i
r
h
C
s
M
n
e
z
i
u
h
k
e
o
r
B
l
i
e
N
r
M
h
c
a
e
P
a
t
i
Z
s
M
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
l
a
t
o
T
.
s
r
a
e
y
l
a
i
c
n
a
n
i
f
r
o
i
r
p
d
n
a
t
n
e
r
r
u
c
e
h
t
r
o
f
P
M
K
s
’
p
u
o
r
G
e
h
t
y
b
i
d
e
v
e
c
e
r
n
o
i
t
a
r
e
n
u
m
e
r
e
h
t
f
o
s
l
i
a
t
e
d
l
e
b
a
t
g
n
i
w
o
l
l
o
f
9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
e
h
T
1
3
47
MoNASh IVF GRoUP LIMIted
Annual Report 2019
d
e
t
i
d
u
A
-
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
e
t
i
m
i
L
p
u
o
r
G
F
V
I
h
s
a
n
o
M
Remuneration Report – Audited (Continued)
$
l
a
t
o
T
5
6
1
0
2
5
,
8
0
1
4
2
4
,
4
2
1
7
1
3
,
3
0
5
2
8
3
,
6
5
3
4
1
6
,
7
9
1
0
4
3
,
,
5
4
6
1
5
4
1
,
,
8
0
8
6
4
1
1
,
-
7
3
8
6
7
3
,
7
3
6
8
4
,
0
5
6
9
1
2
,
7
3
6
8
4
,
4
3
6
1
6
5
,
,
2
6
6
5
1
6
2
,
,
5
7
9
2
6
7
1
,
-
-
$
s
t
h
g
R
i
7
7
5
3
,
8
6
9
8
1
,
$
-
-
-
-
s
t
i
f
e
n
e
b
n
o
i
t
a
n
i
m
r
e
T
)
4
4
5
7
2
(
,
6
5
1
4
8
4
,
4
4
5
7
2
,
)
6
7
5
8
(
,
1
2
1
1
3
,
5
4
1
2
1
,
-
-
-
-
5
4
1
2
1
,
9
6
5
3
,
1
2
1
1
3
,
-
6
5
1
4
8
4
,
-
-
-
-
-
-
-
-
6
5
1
4
8
4
,
g
n
o
l
r
e
h
t
O
$
$
s
t
i
f
e
n
e
b
m
r
e
t
n
o
i
t
a
u
n
n
a
r
e
p
u
S
$
l
a
t
o
T
$
r
e
h
t
O
s
t
i
f
e
n
e
b
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
3
5
0
2
,
5
8
0
0
2
,
7
7
9
4
2
,
1
5
7
8
1
,
6
6
0
0
1
,
4
2
0
0
1
,
4
7
5
5
5
,
0
6
8
8
4
,
-
0
0
0
5
2
,
0
2
2
4
,
2
5
2
5
1
,
0
2
2
4
,
2
5
2
0
4
,
3
6
0
5
4
1
,
7
1
3
2
0
1
,
6
6
6
0
8
4
,
6
4
4
0
0
4
,
7
4
1
2
9
2
,
2
5
7
3
6
3
,
8
7
6
7
4
1
,
9
2
6
2
0
3
,
1
9
4
0
2
9
,
,
7
2
8
6
6
0
1
,
-
2
9
6
9
3
3
,
7
1
4
4
4
,
8
9
3
4
0
2
,
7
1
4
4
4
,
0
9
0
4
4
5
,
,
4
7
8
2
8
9
1
,
,
7
3
5
9
2
6
1
,
)
(
2
6
7
0
5
3
,
-
-
-
0
0
0
0
5
,
4
0
5
6
1
,
6
7
0
5
3
,
4
0
5
6
6
,
-
-
-
)
(
6
7
4
7
4
3
,
$
h
s
a
C
I
T
S
e
v
i
t
n
e
c
n
i
4
8
8
3
4
,
-
-
-
-
-
-
4
8
8
3
4
,
-
0
3
4
2
2
,
-
3
2
4
2
1
,
7
4
7
4
3
,
3
5
8
4
3
,
-
3
2
8
9
6
,
4
0
5
6
6
,
-
-
7
3
7
8
7
,
$
s
e
e
f
&
y
r
a
a
S
l
6
0
7
1
0
4
,
6
4
4
0
5
3
,
7
4
1
2
9
2
,
2
5
7
3
6
3
,
8
7
6
7
4
1
,
5
2
1
6
8
2
,
1
3
5
1
4
8
,
,
3
2
3
0
0
0
1
,
-
2
6
2
7
1
3
,
7
1
4
4
4
,
8
2
2
7
5
1
,
7
1
4
4
4
,
0
9
4
4
7
4
,
,
4
1
3
4
3
8
1
,
,
3
3
0
3
6
5
1
,
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
9
1
0
2
8
1
0
2
)
1
(
p
a
a
n
K
l
e
a
h
c
i
M
r
M
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
w
a
h
s
n
e
H
d
r
a
h
c
i
R
r
D
)
3
(
s
i
r
r
o
M
d
i
v
a
D
r
M
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
l
a
t
o
T
t
n
e
m
e
g
a
n
a
M
y
e
K
r
e
h
O
t
)
4
(
r
e
m
o
C
t
t
e
r
B
r
M
l
e
n
n
o
s
r
e
P
)
5
(
n
e
e
d
u
n
i
a
J
k
i
l
a
M
.
r
M
t
n
e
m
e
g
a
n
a
M
y
e
K
r
e
h
O
t
l
a
t
o
T
l
e
n
n
o
s
r
e
P
n
o
i
t
a
r
e
n
u
m
e
R
P
M
K
l
a
t
o
T
8
1
Y
F
r
o
f
l
a
t
o
t
e
h
T
2
3
.
r
M
d
o
i
r
e
p
e
h
t
r
o
f
n
o
i
t
a
r
e
n
u
m
e
R
l
a
t
o
T
.
r
o
t
c
e
r
i
D
g
n
i
g
a
n
a
M
&
O
E
C
d
e
t
n
o
p
p
a
s
a
w
e
h
i
9
1
0
2
l
i
r
p
A
5
1
n
O
.
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
d
n
a
O
F
C
s
a
w
e
h
e
t
a
d
s
i
h
t
o
t
r
o
i
r
P
.
8
1
0
2
r
e
b
o
t
c
O
9
n
o
O
E
C
m
i
r
e
t
n
i
d
e
t
n
i
o
p
p
a
s
a
w
p
a
a
n
K
l
e
a
h
c
i
M
r
M
)
1
(
.
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
&
O
F
C
d
e
t
n
o
p
p
a
s
a
w
e
h
9
1
0
2
i
l
i
r
p
A
5
1
n
O
.
e
t
a
d
t
a
h
t
m
o
r
f
l
e
n
n
o
s
r
e
P
t
n
e
m
e
g
a
n
a
M
y
e
K
d
e
r
e
d
i
s
n
o
c
s
i
d
n
a
8
1
0
2
r
e
b
o
t
c
O
9
n
o
O
F
C
m
i
r
e
t
n
i
s
a
d
e
c
n
e
m
m
o
c
n
e
e
d
u
n
i
a
J
k
i
l
a
M
r
M
9
1
0
2
l
i
r
p
A
o
t
8
1
0
2
r
e
b
o
t
c
O
d
o
i
r
e
p
e
h
t
r
e
v
o
O
F
C
m
i
r
e
t
n
I
s
a
g
n
i
t
c
a
t
s
l
i
h
w
e
c
n
a
w
o
l
l
A
s
e
i
t
u
D
r
e
h
g
H
a
d
e
v
i
e
c
e
r
i
n
e
e
d
u
n
i
a
J
k
i
l
a
M
r
M
.
8
1
0
2
l
i
r
p
A
0
3
n
o
t
n
e
m
y
o
p
m
e
l
s
i
h
d
e
c
n
e
m
m
o
c
r
e
m
o
C
t
t
e
r
B
r
M
)
4
(
)
5
(
)
6
(
.
,
3
7
3
6
1
4
$
s
a
w
O
E
C
m
i
r
e
t
n
I
d
n
a
O
F
C
s
a
d
e
t
c
a
p
a
a
n
K
.
r
M
d
o
i
r
e
p
e
h
t
r
o
f
n
o
i
t
a
r
e
n
u
m
e
r
l
a
t
o
T
.
,
2
9
7
3
0
1
$
s
a
w
r
o
t
c
e
r
i
D
g
n
i
g
a
n
a
M
&
O
E
C
s
a
d
e
t
c
a
p
a
a
n
K
.
9
1
0
2
l
i
r
p
A
o
t
8
1
0
2
r
e
b
o
t
c
O
d
o
i
r
e
p
e
h
t
r
e
v
o
O
E
C
m
i
r
e
t
n
I
s
a
g
n
i
t
c
a
t
s
l
i
h
w
e
c
n
a
w
o
l
l
A
s
e
i
t
u
D
r
e
h
g
H
a
i
d
e
v
i
e
c
e
r
p
a
a
n
K
l
e
a
h
c
i
M
r
M
)
2
(
.
8
1
0
2
r
e
b
o
t
c
O
9
n
o
t
n
e
m
y
o
p
m
e
l
s
i
h
d
e
s
a
e
c
s
i
r
r
o
M
d
i
v
a
D
r
M
)
3
(
.
t
r
o
p
e
r
s
’
r
a
e
y
t
s
a
l
n
i
d
e
t
r
o
p
e
r
n
a
m
e
d
e
i
h
T
s
e
m
a
J
O
E
C
r
e
m
r
o
f
e
h
t
r
o
f
,
7
1
3
0
4
2
$
e
h
t
e
d
u
l
c
n
i
t
o
n
s
e
o
d
t
i
s
a
,
2
9
2
3
0
0
2
$
,
f
o
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
8
1
Y
F
e
h
t
n
i
8
1
Y
F
r
o
f
l
a
t
o
t
e
h
t
n
a
h
t
s
s
e
l
s
i
l
e
b
a
t
e
h
t
n
i
,
5
7
9
2
6
7
1
$
f
o
,
d
e
s
a
b
e
r
a
h
S
s
t
n
e
m
y
a
p
s
t
i
f
e
n
e
b
t
n
e
m
y
o
p
m
e
l
t
s
o
P
s
t
i
f
e
n
e
b
l
e
e
y
o
p
m
e
m
r
e
t
t
r
o
h
S
d
e
t
i
d
u
A
-
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
d
e
t
i
m
i
L
p
u
o
r
G
F
V
I
h
s
a
n
o
M
48
Remuneration Report – Audited (Continued)
r
i
a
F
e
u
l
a
V
r
e
p
y
t
i
r
u
c
e
S
$
1
3
1
.
9
6
1
.
3
6
0
.
9
1
1
.
9
4
0
.
0
0
1
.
5
4
0
.
9
1
1
.
9
4
0
.
0
0
1
.
5
4
0
.
3
3
e
r
a
h
S
d
e
s
a
B
t
n
e
m
y
a
P
e
s
n
e
p
x
E
9
1
Y
F
$
-
-
2
2
0
6
,
)
9
8
0
6
,
(
0
4
5
5
,
9
2
4
1
1
,
6
6
0
2
,
8
6
9
8
1
,
)
)
2
4
8
7
,
(
2
0
7
9
1
,
(
)
4
4
5
7
2
(
,
e
c
n
a
a
B
l
f
o
d
e
t
s
e
v
n
U
0
3
y
t
i
u
q
E
9
1
0
2
n
u
J
r
e
b
m
u
N
-
-
7
4
4
9
1
,
0
8
6
9
2
,
0
8
6
9
2
,
5
4
1
7
5
,
0
9
4
4
2
,
-
-
-
5
8
2
0
1
,
6
2
4
1
5
,
0
6
8
1
,
5
4
1
2
1
,
9
6
5
3
,
0
4
0
2
2
,
6
6
4
3
7
,
,
2
4
4
0
6
1
9
0
8
8
7
,
4
4
9
5
4
,
5
6
8
2
3
,
2
7
0
5
3
,
7
4
4
9
1
,
-
-
-
-
-
-
-
-
,
1
7
2
4
1
1
3
5
0
7
4
,
,
4
2
3
1
6
1
-
-
-
-
-
-
-
-
9
1
5
4
5
,
6
2
0
6
9
,
6
2
0
6
9
,
,
2
5
0
2
9
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
d
e
t
i
e
f
r
o
F
r
o
d
e
s
p
a
L
n
i
d
e
t
s
e
V
9
1
Y
F
9
1
Y
F
n
i
d
e
t
n
a
r
G
f
o
e
c
n
a
a
B
l
d
e
t
s
e
v
n
U
1
y
t
i
u
q
E
8
1
l
u
J
$
r
e
b
m
u
N
$
r
e
b
m
u
N
$
r
e
b
m
u
N
$
-
-
-
-
-
-
-
-
5
4
1
7
5
,
1
2
0
1
1
,
6
6
1
8
6
,
-
-
-
-
-
5
4
1
7
5
,
-
-
-
0
9
4
4
2
,
5
3
6
1
8
,
-
-
4
4
9
5
4
,
5
6
8
2
3
,
1
5
2
2
1
,
9
1
3
5
3
,
3
4
5
4
1
,
,
2
2
9
0
4
1
,
1
7
2
4
1
1
3
5
0
7
4
,
,
4
2
3
1
6
1
6
2
4
1
5
,
6
2
4
1
5
,
8
1
9
9
,
4
4
3
1
6
,
0
4
0
2
2
,
6
6
4
3
7
,
-
-
-
e
c
n
a
a
B
l
f
o
d
e
t
s
e
v
n
U
1
y
t
i
u
q
E
8
1
l
u
J
r
e
b
m
u
N
-
-
2
7
0
5
3
,
7
4
4
9
1
,
7
4
4
9
1
,
0
8
6
9
2
,
0
8
6
9
2
,
,
6
2
3
3
3
1
6
2
0
6
9
,
6
2
0
6
9
,
,
2
5
0
2
9
1
-
-
-
c
n
a
m
r
o
f
r
e
P
d
o
i
r
e
P
e
e
t
a
D
d
n
E
e
t
a
D
t
n
a
r
G
l
s
e
d
r
u
H
e
p
y
T
e
m
a
N
8
1
-
p
e
S
-
2
1
6
1
-
n
u
J
-
9
2
9
1
-
n
u
J
-
0
3
7
1
-
r
a
M
-
7
1
9
1
-
p
e
S
-
9
7
1
-
r
a
M
-
7
1
0
2
-
n
u
J
-
0
3
8
1
-
n
a
J
-
9
2
0
2
-
p
e
S
-
4
8
1
-
n
a
J
-
9
2
1
2
-
n
u
J
-
0
3
8
1
-
c
e
D
-
0
2
1
2
-
g
u
A
-
0
3
8
1
-
c
e
D
-
0
2
0
2
-
n
u
J
-
0
3
8
1
-
n
a
J
-
9
2
0
2
-
p
e
S
-
4
8
1
-
n
a
J
-
9
2
0
2
-
n
u
J
-
0
3
8
1
-
c
e
D
-
0
2
1
2
-
g
u
A
-
0
3
8
1
-
c
e
D
-
0
2
R
S
T
S
P
E
R
S
T
S
P
E
R
S
T
S
P
E
R
S
T
S
P
E
R
S
T
S
P
E
R
S
T
)
2
(
s
t
h
g
R
i
)
3
(
s
t
h
g
R
i
p
a
a
n
K
l
e
a
h
c
i
M
.
r
M
s
t
h
g
R
i
s
t
h
g
R
i
s
t
h
g
R
i
s
t
h
g
R
i
s
t
h
g
R
i
s
t
h
g
R
i
s
t
h
g
R
i
s
t
h
g
R
i
s
t
h
g
R
i
)
1
(
s
i
r
r
o
M
d
i
v
a
D
.
r
M
r
e
m
o
C
t
t
e
r
B
.
r
M
l
t
a
o
T
:
w
o
e
b
l
d
e
l
i
a
t
e
d
s
i
r
a
e
y
l
a
i
c
n
a
n
i
f
e
h
t
g
n
i
r
u
d
t
n
e
m
e
v
o
m
e
h
t
d
n
a
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
d
e
t
s
e
v
n
u
f
o
s
l
i
a
t
e
D
d
e
t
i
d
u
A
-
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
d
e
t
i
m
i
L
p
u
o
r
G
F
V
I
h
s
a
n
o
M
,
8
0
9
3
3
2
,
3
3
1
0
4
2
,
1
7
5
6
4
2
,
0
1
5
9
2
1
,
1
0
1
5
5
1
,
6
4
2
2
0
3
,
8
7
3
5
2
3
.
d
e
s
p
a
l
s
t
h
g
i
r
e
s
e
h
t
e
r
o
f
e
r
e
h
t
;
s
t
l
u
s
e
r
8
1
Y
F
r
e
t
f
a
y
a
d
g
n
d
a
r
t
i
h
t
1
1
e
h
t
o
t
d
e
c
n
u
o
n
n
a
s
t
l
u
s
e
r
5
1
Y
F
r
e
t
f
a
g
n
i
d
a
r
t
h
t
1
1
e
h
t
m
o
r
f
d
e
r
u
s
a
e
m
,
x
e
d
n
I
n
o
i
t
a
l
u
m
u
c
c
A
e
r
a
c
h
t
l
a
e
H
0
0
3
X
S
A
e
h
t
n
a
h
t
s
s
e
l
s
a
w
e
c
n
a
m
r
o
f
r
e
p
R
S
T
.
d
e
s
p
a
l
s
t
h
g
i
r
e
s
e
h
t
e
r
o
f
e
r
e
h
t
d
e
i
f
s
i
t
a
s
t
o
n
e
r
e
w
7
1
Y
F
n
i
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
r
o
f
s
n
o
i
t
i
d
n
o
c
g
n
i
t
s
e
v
S
P
E
.
8
1
Y
F
n
i
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
s
t
i
e
f
r
o
f
e
r
o
f
e
r
e
h
t
;
9
1
Y
F
n
i
n
o
i
t
a
n
g
i
s
e
r
s
i
h
d
e
r
e
d
n
e
t
s
i
r
r
o
M
d
i
v
a
D
r
M
)
1
(
)
2
(
)
3
(
49
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Remuneration Report – Audited (Continued)
Remuneration Report - Audited
for the year ended 30 June 2019
Analysis of incentives included in remuneration
Details of the vesting profile of the STI cash incentives awarded as remuneration to each director of the
Company and other KMP are detailed below:
Cash Incentive (2019)
Cash Incentive (2018)
% of Available
Incentive
% of Available
Incentive
Payable
Payable
$
%
Not
Payable
%
43,884
-
-
12,423
22,430
21.4%
-
-
25.0%
21.4%
78.6%
-
-
75.0%
78.6%
Paid
Paid
$
$0
-
$0
-
-
%
0%
-
0%
-
-
Not
Paid
%
100%
-
100%
-
-
Executive Directors
Mr Michael Knaap
Dr Richard Henshaw
Mr David Morris
Other Key Management Personnel
Mr Malik Jainudeen
Mr Brett Comer
3.3 Loans to Key Management Personnel
No loans were issued to KMP during 2019.
3.4 Key Management Personnel Shareholdings
The following details Monash IVF Group ordinary shares held by Directors and KMP during 2019:
Balance at start
of year
Granted as
remuneration
Net
Change
Name
Non-Executive Directors
Mr Richard Davis
Mr Josef Czyzewski
Ms Christina Boyce
Mr Neil Broekhuizen
Ms Zita Peach
Executive Directors
Mr Michael Knaap
Mr David Morris
Dr Richard Henshaw
Other Key Management
Personnel
Mr Malik Jainudeen
Mr Brett Comer
Total
27,026
122,027
56,215
100,000
28,740
46,670
125,000
1,108,602
-
-
1,614,280
-
-
-
-
-
-
-
-
-
-
Balance at
end
of year
52,799
142,027
106,215
100,000
56,000
25,773
20,000
50,000
-
27,260
7,774
-
303,030
54,444
N/A(1)
1,411,632
-
-
433,837
-
-
1,923,117
(1) Mr David Morris ceased his employment on 9 October 2018 and was not considered KMP at year end.
50
34
Monash IVF Group Limited
Remuneration Report - Audited
Remuneration Report – Audited (Continued)
for the year ended 30 June 2019
4.0 Link to Group Performance
4.1 Group Performance
The revenue and earnings of the Group for the five years to 30 June 2019 are summarised below:
Measure
Revenue
Reported EBITDA
Underlying EBITDA(2)
Net Profit After Tax (1)
STI Payable
Relative Total Shareholder Return (1)
Closing Share Price ($)
Dividend Per Share (cents)
Earnings per Share (cents) (1)
2019
$’000
151,980
37,242
37,815
19,807
29.4%
34%
1.40
6.0
8.4
2018
$’000
150,736
38,109
38,109
21,181
0%
-35%
1.08
6.00
9.1
2017
$’000
155,182
48,974
48,974
29,619
17.8%
3%
1.78
8.80
12.6
2016
$’000
156,561
49,584
49,584
28,775
84.6%
48%
1.82
8.50
12.2
2015
$’000
124,955
38,805
38,805
21,373
0.0%
-27%
1.28
6.95
9.2
(1) The Net Profit after Tax, total shareholder return and earnings per share are not comparable for certain years due to the
capital structure and discontinued operations.
(2) EBITDA adjusted for one-off items including Mosman clinic closure make-good provision ($100k pre-tax) and CEO
separation costs ($473k pre-tax) relates to FY19 only.
During the period, Revenue, EBITDA, NPAT, TSR and EPS were key performance measures. In addition, during
FY2019, H2 NPAT performance was a performance measure, with the Group achieving NPAT growth of 10%
compared to 2H18.
EBITDA is a major component of the STI plans for KMP including the CEO, CFO and COO whilst TSR and EPS are
long term metrics used to measure the CEO, CFO and COO’s remuneration via the Executive Long Term Incentive
Plan. CEO, CFO and COO remuneration varies with the outcomes of these measures above a required threshold
performance level.
35
51
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Directors’ Report
Directors’ Report
For The Year Ended 30 June 2019
for the year ended 30 June 2019
Matters subsequent to the end of the financial year
(a) On 10 July 2019, Monash IVF Group Limited announced the acquisition of Fertility Solutions, a Queensland
based provider of fertility services, for initial cash consideration of $2.1 million. The financial effects of this
transaction have not been recognised a 30 June 2019. The operating results and assets and liabilities of the
acquired entity will be consolidated from the completion date expected to be in early September 2019.
(b) On 22 August 2019, Monash IVF Group Limited announced that five Victorian based fertility specialists
(“Doctors”) who currently refer patients for IVF treatment and are not subject to both notice and restraint provisions
(unlike the vast majority of its 106 specialists), will cease using services from Monash IVF Group Limited from
September 2019. These Doctors intend to establish their own independent IVF clinic with operational control.
(c) On 26 August 2019, a fully franked final dividend of 3.0 cents per share was declared. The record date for
the dividend is 6 September 2019 and the payment date for the dividend is 11 October 2019.
Except as disclosed above, there has not arisen in the interval between the end of the financial year and the date
of this report any item, transaction or event of a material or unusual nature likely, in the opinion of the directors of
the Company, to affect significantly the operations of the Group, the results of those operations, or the state of
affairs of the Group, in future financial periods.
Environmental regulations
The Group is not subject to any significant environmental regulations under Commonwealth or State legislation.
Likely developments
The Group remains committed, prudent and focused on profitably growing the Business through leveraging its
scientific capabilities and scale across the clinic network both domestically and internationally.
Indemnification and insurance of officers and auditors
Since the end of the previous financial period, the Group has not indemnified or made a relevant agreement for
indemnifying against a liability any person who is or has been an officer or auditor of the Group.
Lead auditor’s independence declaration
The lead auditor’s independence declaration is set out on page 53 and forms part of the directors’ report for the
year ended 30 June 2019.
This report is made in accordance with a resolution of the directors.
Richard Davis
Chairman
Dated in Melbourne this 26th day of August 2019
52
Auditor’s Independence Declaration
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Monash IVF Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Monash IVF Group
Limited for the financial year ended 30 June 2019 there have been:
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
i.
ii.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
BW Szentirmay
Partner
Melbourne
26 August 2019
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
37
53
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Corporate Governance Statement
Corporate Governance Statement
This statement, approved by the Board, reports on the Group’s key governance framework, principles and
practices as at 30 June 2019. These principles and practices are subject to regular review and when necessary
revised to reflect legislative changes or corporate governance best practice.
The Board of Directors is committed to maintaining the Group’s pre-eminent status as a leader in the fields of
Assisted Reproductive Services (ARS) and specialist women’s imaging. This commitment will lead to sustainable
growth and shareholder returns. The Board is a strong advocate of good corporate governance and its
fulfilment of these practices and obligations will enhance the ability for shareholders to be appropriately
rewarded.
Monash IVF Group Ltd complies in all material respects with the third edition of the ASX Corporate Governance
Council’s Corporate Governance Principles and Recommendations released in 2014. The details of this
compliance and reasons for any non compliance are set out in this statement. A separate Appendix 4G has been
lodged with the Australian Securities Exchange Limited (ASX).
Principle 1 Lay solid foundations for management and oversight
1.1 Roles and responsibilities of the Board and Management and delegation
The role of the Board is to oversee good governance practice in all aspects of the Group’s undertakings. This
includes setting and approving the strategic direction of the Group and to guide and monitor Monash IVF Group
management and its businesses in achieving their strategic objectives. The Board is committed to maximising
performance through continued investment in all aspects of the business including research, education and
innovation in clinical services to improve patient outcomes.
The Board is committed to a high standard of corporate governance practice and fosters a culture of compliance
which values ethical behaviour, integrity, teamwork and respect for others.
The Monash IVF Group Ltd Board Charter outlines the role and responsibilities of the Board along with direction
on Board composition, structure and membership requirements. The Charter clearly outlines matters expressly
reserved for the Board’s determination and those matters delegated to Management.
The Company’s Chief Executive Officer and Managing Director, Michael Knaap, has responsibility for day-to-
day management of Monash IVF Group Ltd in its entirety. Michael was previously the Chief Financial Officer
and held the position of Interim Chief Executive Officer between October 2018 and April 2019. Michael was
appointed to Chief Executive Officer and Managing Director on 15 April 2019 is supported by the Executive
Team which is responsible for implementation of Board directed strategies at an operational level.
The Monash
http://ir.monashivfgroup.com.au/Investor-Centre/?page=Corporate-Governance
IVF Group Ltd Board Charter
is available on
the Monash
IVF Group Ltd website
1.2 and 1.3 Board and Senior Executive Appointments
In the event of a new appointment to a director or senior executive role, appropriate probity and integrity
checks are undertaken to ensure the individual has an appropriate background to hold the role with Monash IVF
Group Ltd. Should the role be for election of a director for the first time a comprehensive check of the candidates
personal and professional history would occur including details of any other material directorships or non
executive roles.
All Board members have a written agreement outlining the terms of their appointment clearly articulating the
expectations, roles and responsibilities and remuneration of their role.
All employment agreements for senior executives clearly set out their terms of appointment, remuneration and
requirements to adhere to company policies and procedures. Industry regulation and Company policy requires
police checks for employees which are undertaken prior to commencement. Employment contracts require
employees to disclose any offences that would result in an adverse police check.
54
38
Monash IVF Group Limited
Corporate Governance Statement
Corporate Governance Statement (Continued)
Principle 1 Lay solid foundations for management and oversight (continued)
1.4 Company Secretary
Mr Malik Jainudeen was appointed in the role of Company Secretary and Chief Financial Officer with Monash
IVF Group Ltd in April 2019. Malik’s role is to work closely with the Board and its committees to advise on
governance matters and to oversee meeting protocols are adhered to including comprehensive minutes.
1.5 Diversity and Inclusion Policy
Monash IVF Group recognises that its business success is a reflection of the quality of its people, and is proud of
its strong diverse and inclusive workforce. The Company’s workforce is made up of individuals with a diverse set
of skills, values, experiences, backgrounds and attributes including those gained on account of their gender, age,
disability, ethnicity, marital or family status, religious or cultural background and sexual orientation. Monash IVF
Group is committed to supporting and further developing this through attracting, engaging and retaining diverse
talent.
Monash IVF Group is a recognised employer under the Workplace Gender Equity Act 2012 and is compliant
with the requirements of the Australian Government Workplace Gender Equity Agency. The breakdown of
gender diversity at Monash IVF Group is listed below:
Organisational Level
Non-Executive Directors
Senior Management
Team Leader
Number of Women
2
6
27
% of Women
40%
40%
87%
Total Staff (inc above)
537
91%
The Board recognises the high proportion of women in the workplace and acknowledges that this gender
diversity is reflective of the nature of the organisation. Senior Management is defined as Executive Directors and
Management personnel in operational leadership positions generally specific to state leadership teams.
Monash IVF Group has in place a Flexible Work Arrangements policy to promote work life balance and to
accommodate family care in line with the operational requirements of the Business. During FY19, 41 employees
have taken parental leave, utilising the Group’s generous parental leave policy. Flexible hour working
arrangements either formally and informally are widely used across Monash IVF Group.
The Diversity and Inclusion Policy is overseen by the Remuneration and Nomination Committee. The Committee has
no executive powers with regard to its findings and recommendations however is responsible for monitoring,
reviewing and reporting to the Board on the Company’s performance in respect to diversity in accordance with
the Company’s Diversity and Inclusion Policy.
The Board is committed to targeting a board composition aligned to its workforce and patient base over time.
The Diversity Policy is available on the Monash IVF Group Ltd website http://ir.monashivfgroup.com.au/Investor-
Centre/?page=Corporate-Governance
39
55
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Corporate Governance Statement (Continued)
Corporate Governance Statement
Principle 1 Lay solid foundations for management and oversight (continued)
Monash IVF Group is committed to providing a diverse and culturally inclusive work environment to ensure that all
employees are valued and safe in their workplace. Monash IVF Group provides an Equal Employment
Opportunity policy framework in relation to harassment, bullying, discrimination and grievance procedures. The
policies are available to all employees via the Company intranet. The Group also offers an employee assistance
program that provides a confidential counselling service to support employee wellbeing in the workplace. To
ensure a full understanding of respectful workplace obligations, the organisation utilises a Learning Management
System, an online learning management portal to manage and track the full compliance of all respectful
workplace topics. In FY19 Monash IVF Group partnered with Pride in Diversity, a national not-for-profit
employer support program for LGBTI workplace and is specifically designed to assist employers and employees
with all aspects of inclusion.
1.6 Director Performance Evaluation
The Remuneration and Nomination Committee under the Chair of Ms Christy Boyce undertakes the process of
performance reviews of the Board, its Committees and the Chairman. Objectives of the review are to ensure the
Board adheres to ASX governance principles and to identify opportunities to improve the functioning of the
Board as a whole. The focus is on the performance of the Board as a whole and, to a lesser extent, the Board
committees. The Chairman performs individual appraisals on each director.
The annual review completed by Monash IVF Group Ltd Board was undertaken in August 2019 with findings and
feedback aggregated and discussed by the Board to inform areas or opportunities for improvement.
1.7 Senior Executive Evaluations
Monash IVF Group Ltd has an annual Performance Review Policy for all senior executives and managers as
stated in the Board Charter. Senior executive and manager performance is reviewed by the CEO against KPIs
which are both financial and non financial in nature. The Remuneration and Nomination Committee has oversight
of this process.
The Chairman of the Board performs the CEO performance review against annual key performance indicators.
Michael Knaap’s performance was formally reviewed in August and recommendations as a result were taken to
the Board. The Board oversees and monitors the key performance indicators and strategic plan for the Group
which also allows the Board to monitor the performance of senior executives outside the annual review process.
Principle 2 Structure of the Board to add value
The Constitution of the Company provides that the number of Directors must at any time be no more than ten and
no less than three members. The Monash IVF Group Ltd Board currently consists of seven directors, five
independent and two non independent members. The Board charter prescribes that the Chair of the Board must
be independent and the Board should consist of individuals who contribute a mix of skills and a diversity of
professional backgrounds. Further information on the Board members is available in the Directors Report.
Monash IVF Group Ltd believes the current Board of seven members adequately allows its members to carry out
its responsibilities without unnecessarily debasing its effectiveness with an excessive number that can hinder
individual engagement and involvement of Board members. To add efficiency to the Board, two committees are
in-place; the Remuneration and Nomination Committee and the Audit and Risk Committee whereby meetings
occurred during FY19. The Board Charter prescribes that all committee members be Independent Directors.
A summary of the Board members, their roles, independence and appointment dates are as follows:
56
40
Corporate Governance Statement (Continued)
Monash IVF Group Limited
Corporate Governance Statement
Director
Position
Independent
Mr Richard Davis
Independent Chairman
Mr Josef Czyzewski
Ms Christina Boyce
Ms Zita Peach
Mr Neil Broekhuizen
Independent non-executive
Director
Independent non-executive
Director
Independent non-executive
Director
Independent non-executive
Director
Mr Michael Knaap
CEO and Managing Director
Dr Richard Henshaw
Executive Director
2.1 Remuneration and Nomination Committee
Yes
Yes
Yes
Yes
Yes
No – CEO and Managing
Director
No – Fertility Specialist with
Monash IVF Group Ltd
Appointment
Date
4/6/2014
4/6/2014
4/6/2014
12/10/2016
4/6/2014
15/4/2019
30/4/2014
The Remuneration and Nomination Committee is governed by the Remuneration and Nomination Committee
Charter as found on the Monash IVF Group Ltd website at http://ir.monashivfgroup.com.au/Investor-
Centre/?page=Corporate-Governance
The Remuneration and Nomination Committee consists of four independent Directors of the Board:
Ms Christina Boyce (Chair)
Mr Richard Davis
Mr Josef Czyzewski
Ms Zita Peach
The Committee assists the Board by reviewing and making recommendations to the Board in relation to:
the Company's remuneration policy;
Board succession issues and planning;
Board member and re-election of members to the Board and its committees;
Director induction and continuing professional development programs for Directors;
remuneration packages of senior executives;
non-executive Directors and executive Directors, equity-based incentive plans and other employee
benefit programs;
Company superannuation arrangements;
the Company's recruitment, retention and termination policies;
succession plans of the CEO, senior executives and executive Directors;
the process for the evaluation of the performance of the Board, its Board Committees and individual
Directors;
the review of the performance of senior executives;
review of the Company's remuneration policies and packages; and
the size and composition of the Board and strategies to address Board diversity and the Company's
performance in respect of the Company's Diversity and Inclusion Policy, including whether there is any
gender or other inappropriate bias in remuneration for Directors, senior executives or other employees.
41
57
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Corporate Governance Statement (Continued)
58
Monash IVF Group Limited Corporate Governance Statement 2.2 Board Skill Matrix On establishing the Board in 2014 the desirable skills, attributes and experience required was considered in searching for potential Board members. The below skill matrix outlines the current Board Director skill set: Monash IVF Group Ltd believe the current Director skill set is adequate to ensure an appropriate and diverse mix of backgrounds, expertise, experience and qualifications exist to assist with being able to understand and effectively advise on Group strategy and growth. 2.3 2.4 and 2.5 Board Independence The Board Charter outlines that at least half of the Board should be independent directors, one of whom is the Chairman. A director is deemed to be “independent” if free of any business or other relationship with the Company that could materially interfere with, or could reasonably be perceived to interfere with, the exercise of unfettered and independent judgement. The Board has assessed, using the criteria set out in the ASX Corporate Governance Principles and Recommendation, the independence of non-executive directors in light of their interests and relationships and considers at least half to be independent. The independence status and length of service of each director is outlined in the table under Principle 2. During FY19 the percentage of Board members considered independent was 71%. Mr Richard Davis was appointed Monash IVF Group Ltd Chairman in June 2014. He is a non-executive Independent Director. Mr Davis in his role as Chair provides leadership to the Board and advice and support to the CEO. The Chair of the Board is responsible for overseeing Board dynamics and ensuring all directors contribute effectively and constructively to Group meetings and strategic agendas. Strategic direction setting New business development Mergers and acquisitions International business development Health services Clinical/ medical experience Accounting/ Finance Regulatory/ government relations Technology Work, health & safety Mr Richard Davis Mr Joe Czyzewski Ms Christy Boyce Mr Neil Broekhuizen Mr Michael Knaap Dr Richard Henshaw Ms Zita Peach 100% 75% 50% 25% 0% 42 Monash IVF Group Limited
Corporate Governance Statement (Continued)
Corporate Governance Statement
2.6 Director Induction and Professional Development
Monash IVF Group Ltd has a comprehensive induction process for Directors and senior executives. This induction
includes meetings with senior management and staff to gain an understanding of the core business as well as
visits to laboratories and clinics to gain a more in depth understanding of the business.
Board members have been continuously informed via research papers and presentations, financial and business
results and discussion involving market strategic initiatives contributing to the continued professional development
of the Board.
Principle 3 Act Ethically and Responsibly
Monash IVF Group Ltd recognises the need to observe the highest standards of corporate practice, business
conduct and responsible decision making. Accordingly, the Board adheres to a formal Code of Conduct which
outlines Monash IVF Group Ltd policies on various matters including ethical conduct, business and personal
conduct, compliance, privacy, security of information, financial integrity and conflicts of interest. This Code
clearly states the standard of responsibility and ethical conduct expected of staff, directors or doctors engaged
by the Company. The Code recognises the numerous legislative and compliance matters that affect the business.
3.1 Code of Conduct
The Code of Conduct promotes ethical and responsible decision making by directors, contractors and employees.
The Code also gives direction in the avoidance of conflicts of interest and mandates high standards of personal
integrity, objectivity and honesty in the dealings of all Monash IVF Group Ltd Board members and staff, detailing
guidelines to ensure the highest standards are maintained. Monash IVF Group holds all staff to act according to
this code to maintain standards in confidentiality and general behaviour.
The code is provided to all staff as part of the Group induction process and compliance is reviewed regularly.
Monash IVF Group Ltd Code of Conduct policy can be found in full on our website under
www.monashivfgroup.com.au/investor-centre/corporate-governance/ and includes a Whistle Blower policy.
43
59
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Corporate Governance Statement (Continued)
Corporate Governance Statement
Principle 4 Safeguard integrity in corporate reporting
4.1 Audit Committee
The Audit and Risk Management Committee for Monash IVF Group Ltd are responsible for supervising the
process of corporate governance, financial reporting and risk management, internal control, continuous disclosure,
non-financial risk monitoring and external audit. The Committee’s role, as outlined in the Audit and Risk
Management Committee Charter, is to monitor the Group’s compliance with laws and regulations and adherence
to the Group Code of Conduct and to promote discussion with regard to risk between Board, management and
the external auditor.
Monash IVF Group Ltd engages the services of an external auditor; who’s independence and performance is
monitored and reviewed by the Audit and Risk Management Committee. The external auditors and Audit & Risk
Committee and Audit Chair met on a number of occasions independently of Management during 2019.
The current Audit and Risk Management Committee consists of four non-executive Independent Directors with
experience and qualifications in financial management as outlined in the Audit and Risk Management Committee
Charter.
Current members of the Committee are:
Mr Josef Czyzewski (Chair)
Mr Richard Davis
Ms Christina Boyce
Mr Neil Broekhuizen
The Audit and Risk Management Committee Charter is available on the Monash IVF Group Ltd website at
http://ir.monashivfgroup.com.au/Investor-Centre/?page=Corporate-Governance
4.2 Financial Statement Approval
Monash IVF Group Ltd CEO and MD, Mr Michael Knaap, and CFO, Mr Malik Jainudeen, reviewed and verified
that the FY19 half year and full year reporting statements as listed in reports to the ASX and shareholders are
true and accurate. A declaration to that effect has been signed by both to declare that the financial records
have been entered and maintained as per the Corporations Act (2001) accounting standards and they give a
fair and true view of the financial position and performance of Monash IVF Group Ltd. Further a detailed
questionnaire is completed by senior operational, administrative and financial management attesting to the
validity and integrity of the processes that they control prior to the approval of the Financial statements. These
questionnaires are reviewed by the Audit and Risk Management Committee.
4.3 Auditor in attendance at Annual General Meeting
Monash IVF Group Ltd has retained the services of KPMG as an external auditor for the annual financial audit of
the Group. KPMG will be in attendance at the Annual General Meeting (AGM) on 28 November 2019 to
respond to Shareholders questions and provide information and feedback if required on the Auditor’s report.
The external auditors attended the AGM held on 22 November 2018. Shareholders were able to supply
questions to the auditor before the AGM via numerous methods as well as being provided with the opportunity to
ask questions at the AGM.
60
44
Monash IVF Group Limited
Corporate Governance Statement (Continued)
Corporate Governance Statement
Principle 5 Make timely and balanced disclosure
5.1 Continuous Disclosure
Monash IVF Group Ltd is committed to effective communication with its investors and the wider community. The
Company strives to ensure that all Stakeholders, market participants, patients and the wider community are
informed in a timely manner of its activities and performance in line with its Continuous Disclosure Policy.
This policy complies with the continuous disclosure obligations under the Corporation Act (2001) and the ASX
Listing Rules and as much as possible seeks to achieve and exceed best practice to promote investor confidence in
Monash IVF Group Ltd.
Continuous disclosure principles and requirements are well understood by the Monash IVF Group Ltd Company
Secretary and the Board of Directors and are in place to ensure all relevant information, especially of a sensitive
nature, is made available in a timely manner. Any matters requiring disclosure are raised for consideration
whenever necessary. The Monash IVF Group Ltd website is structured to provide shareholders and the community
with easy access to information.
The Continuous Disclosure Policy
the Monash
http://ir.monashivfgroup.com.au/Investor-Centre/?page=Corporate-Governance.
found on
can be
IVF Group website at
Principle 6 Respect the rights of security holders
6.1 Communication with Shareholders
Monash IVF Group Ltd ensures shareholders are fully informed of its governance processes and are notified of
any major developments affecting the Group. In line with the Monash IVF Group Ltd Communication Policy the
Company's website is considered to be the primary means to provide information to all stakeholders. It has been
designed to enable information to be accessed in a clear and readily accessible manner including:
Company information including Board members;
A ’Corporate Governance’ landing page with documents including the Company's codes, policies and
charters;
all announcements and releases to the ASX;
copies of presentations to shareholders, institutional investors, brokers and analysts;
any media or other releases;
all notices of meetings and explanatory material;
a copy of the Company's Prospectus and Annual Reports;
previous annual and half yearly reports;
any other relevant information concerning non-confidential activities of the Company including business
developments.
The Company website can be found at www.monashivfgroup.com.au where information can be clearly located
under heading:
Home – homepage with Company history and overview
About – information on Our People, Collaborations and Career Opportunities
Our Business – lists the Monash IVF Group Ltd subsidiary companies
Research and Innovation – lists current and published research and our scientific firsts.
45
61
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Corporate Governance Statement (Continued)
Corporate Governance Statement
6.2 Investor Relations
to
there
the Company website,
In addition
Investor Relations page found at
http://ir.monashivfgroup.com.au/Investor-Centre/ which provides investors and shareholders with information on
Monash IVF Group Ltd Board members, Announcements, Corporate Governance documents, Results presentations
and webcasts. The Investor Centre also acts as a portal for two way communication between the Company and
investors with links to a ‘Contact Us’ page which allows individuals to email enquiries and also provides postal
address and contact number to allow access to the Company. The Communication Policy can be located at:
http://ir.monashivfgroup.com.au/Investor-Centre/?page=Corporate-Governance
is a dedicated
6.3 Attendance at Company meetings
As cited in the Monash IVF Group Ltd Communications Policy, the Company encourages full participation of
Shareholders at the Annual General Meeting which provides an excellent opportunity for the Company to
provide information to its shareholders and to receive Shareholder feedback.
The next Annual General Meeting will be held on 28 November 2019.
In the event Shareholders are not able to attend the meetings, questions can be directed to the Group for
addressing at the Annual General Meeting and the presentations and webcasts are promptly added to the
website. These can be found at http://ir.monashivfgroup.com.au/Investor-Centre/?page=Presentations-
Webcasts
Shareholders are also able to direct any questions via the Group’s share registry provider, Link Market Services.
6.4 Electronic Communication
The Company recognises that electronic communication is often a more efficient and more desired form of
communication. Monash IVF Group Ltd Communications Policy addresses this and accordingly Shareholders are
given the option to communicate with the Company Share Registry electronically.
The Company's email system allows staff and stakeholders to communicate with ease with Management and staff
of the Company. Doctors, employees and other stakeholders have access to this system and are encouraged to
use it to improve the flow of information and communication generally.
The Monash IVF Group Ltd Communications Policy can be located at:
http://ir.monashivfgroup.com.au/Investor-Centre/?page=Corporate-Governance
62
46
Monash IVF Group Limited
Corporate Governance Statement (Continued)
Corporate Governance Statement
Principle 7 Recognise and Manage Risk
The Monash IVF Group Ltd Board, primarily through the Audit and Risk Management Committee, reviews and
manages risk areas for the Group.
7.1 Audit and Risk Committee
The identification and appropriate management of risks is an important priority for the Monash IVF Group Ltd
Board. ‘Risks’ are identified as any possible outcomes that could materially impact the Company's financial
performance, assets, reputation, people or the environment.
Risk recognition and management are viewed by the Company as integral to its objectives of creating and
maintaining shareholder value, and to the successful execution of the Company's strategies. The Audit and Risk
Management Committee oversees and governs risk management strategy and policy, to monitor risk
management and to establish procedures which seek to provide assurance that major business risks are identified,
consistently assessed and appropriately addressed.
The Committee abides by the Audit and Risk Management Committee Charter to assist the Board in fulfilling its
corporate governance and oversight responsibilities in actively identifying risks and developing appropriate
mitigants. The Board Committee adheres to the Risk Management Policy for the business which highlights the risks
relevant to Company operations.
Monash IVF Group Ltd’s Audit & Risk Management Committee Charter can be found on the website at:
http://ir.monashivfgroup.com.au/Investor-Centre/?page=Corporate-Governance
This Charter prescribes that the Audit and Risk Management Committee consist of at least three Board Directors
that are non-executive independent Directors.
7.2 Risk Management
Monash IVF Group provides a framework for risk management which supports the achievement of our strategic
and operational objectives. We are committed to maintaining an organisational philosophy and culture which
ensures that effective risk management is integrated into day to day activities.
The Group maintains a Risk Register that documents all identified risks, lists appropriate preventative actions to
mitigate risks, reviews process of risk reduction and nominates responsible persons who take ownership of the risk
strategy process. The Risk Register is reviewed by the Risk Owners, Leadership teams and Executive Team help
determine whether risks are still current, controls are effective and identify any emerging risks, which are then
flagged to the Audit and Risk Management Committee. An annual review of Risk Management is undertaken
annually and was completed in May 2019.
Specialist software used to record adverse events and feedback ensures that exposures to risk are continually
monitored to ensure they are adequately understood and managed. This system of reporting also allows for
formal monitoring of patient safety, identification training needs and informs clinical policy decision making.
7.3 Internal Audit
Monash IVF Group Ltd does not have a designated Internal Audit Function at present but the Group performs
internal audit activities from a clinical and operational perspective to ensure compliance with various external
accreditation requirements.
The CEO and CFO have key responsibility in ensuring that internal controls are in place, operating effectively
and reviewed for continual improvement. As part of the various accreditation and licencing processes undertaken
by the business, key internal audit functions are undertaken. These audits are then made available to
accreditation and licensing bodies. Certain financial internal controls are tested by KPMG as part of their
financial statement audit procedures. The Group believes internal controls implemented such as segregation of
duties, delegation processes, treasury controls and structured approval processes counter many risks. During
FY19, an external audit provider, PricewaterhouseCoopers, performed certain internal control procedures on IT
cyber security and risk review. The Group will continue to assess whether an independent third party internal
audit function or designated in-house internal audit function is required.
47
63
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Corporate Governance Statement (Continued)
Corporate Governance Statement
7.4 Risk Exposure
Monash IVF Group Ltd provides assisted reproductive services in Australia and Malaysia and specialist women’s
imaging services in Australia. As a Group we are committed to conducting our services in an open and
transparent environment and in a manner that is honest and ethical. The Group embraces responsibility for
corporate actions and encourages a positive impact on the environment and stakeholders including patients,
employees, investors and the community.
Since our early pioneering days in assisted reproductive treatment, resulting in the first IVF pregnancy in 1973,
Monash IVF Group Ltd has played an important role in the local communities we serve and society at large. Our
focus on evidenced based fertility care provides the opportunity to commit resources to scientific research, clinical
teaching and training. Our services are offered to all and do not discriminate, including nature and complexities
of infertility.
From an ethical perspective, Monash IVF Group Ltd and its companies ensure national regulation and state
legislation drives the standards of care to ensure we protect our patients, donors and any children born as a
result of treatment provided by the Group.
All Monash IVF facilities meet the appropriate standards for accreditation including:
Our assisted reproductive treatment sites in Australia are accredited with the Reproductive Technology
Accreditation Committee (RTAC) and we ensure appropriate documentation is held by our sites, doctors,
nurses and scientists. This accreditation incorporates components covering ethics and safety in practice
and management of adverse events.
Our day surgeries are accredited with National Safety and Quality Health Service (NSQHS) standards
which ensure quality standards are consistent with an exceptional standard of care expected by
consumers in health facilities.
Our diagnostic laboratories are accredited to ISO 15189 and relevant NPAAC Guidelines.
Our diagnostic imaging (ultrasound) facilities are accredited with the Department of Health Diagnostic
Imaging Accreditation Scheme (DIAS).
Our Malaysian clinic whilst not legally requiring the same level of regulation, operates to the same
standards having been externally accredited to the international RTAC standards.
The Group recognises that our staff and Doctors are instrumental to the success of the organisation.
Comprehensive recruitment, credentialing, induction, training and development programs are designed to attract
and retain staff equipped to deliver outstanding customer care. Staff actively participate in the continual
improvement of our internal policies and processes and are encouraged to participate in innovation and
research.
The Monash IVF Group Workplace Health and Safety Policy framework covers policies on general safety in the
workplace.
Monash IVF Group Ltd recognises protecting the environment is a critical issue and a key responsibility of the
business and corporate community. With 23 fertility clinics, 18 specialist women’s imaging sites, 9 service centres,
2 specialised diagnostic laboratories, 2 day hospitals and one central administration headquarters, we consider
our environmental impact is minimal. Monash IVF Group is an organisation that is not involved in manufacturing
or resource extraction and hence we consider our environmental footprint to be small and we adopt a philosophy
of clinical excellence in an environment of safe and supportive service provision. No material environmental or
social sustainability risks have been identified.
The Quality Management System in place in each laboratory supports the review and monitoring of quality of
product from suppliers. New consumables undergo a full quality screening process and products are thoroughly
evaluated to review where and how products are manufactured before being used in the laboratories. All
products are reviewed formally on an annual basis to ensure they maintain quality standards and informally on a
day to day basis. Currently all Monash IVF Group clinics use predominantly products from the top two suppliers
in lab products supplying to Australia in order to maintain consistency in quality.
The Group takes cyber security and its potential consequences extremely seriously. The Group has
comprehensive security arrangements in place to isolate attacks on its systems and ensure that attempted
intrusions are identified and viruses are not spread across the Group’s network or systems. The Group’s IT
64
48
Corporate Governance Statement (Continued)
Monash IVF Group Limited
Corporate Governance Statement
systems operate safely and securely. Numerous levels of redundancy and backup are built into the IT systems
providing a high degree of system availability and protection of data. An independent third party review of the
Group’s cyber security risk was performed during FY18 and FY19. Recommendations from this review continue
to be implemented and will further enhance cyber security measures in place.
Economic risk continues to be potentially material to Monash IVF Group Ltd. Our services in Australia are
indirectly funded to a significant extent by the Australian Federal Government through the Medicare Benefit
Schedule and Extended Medicare Safety Net. Any change to the funding arrangements could lead to a reduction
in revenue affecting financial performance and sustainability of the Group. Market contraction and changes to
market dynamics can significantly affect business outcomes and is a risk for the Group. Market competitiveness
has heightened in recent years with the introduction of low cost providers. One area where Monash IVF Group
Ltd has been integral in leading the industry has been in advocating for governing bodies to be more
transparent in reporting outcomes of treatments to allow patients to be better informed before commencing
treatment. Tightening industry standards on consistency of data gathering, outcome reporting and transparency
of results to the community will lead to improved outcomes for patients and the industry generally.
Principle 8 Remunerate fairly and responsibly
8.1 Remuneration and Nomination Committee
As outlined above under ‘Structure the Board to add value’ Monash IVF Group Ltd has a combined Remuneration
and Nomination Committee which assists the Board with discharging its responsibilities to Shareholders with
regard to developing and monitoring remuneration policies and practices for Directors, Senior Executives and
employees.
The Committee works under the guidance of the Remuneration and Nomination Committee Charter and
Remuneration Policy.
8.2 Remuneration of executive and non-executive directors
Under the guidance of the Remuneration and Nomination Committee and the Remuneration Policy the Monash IVF
Group Ltd Board has established a framework for remuneration that is designed to ensure consistent and
reasonable remuneration polices and practices are observed which optimise the attraction and retention of
directors and management and fairly rewards Directors and senior management for positive performance.
Monash IVF Group Ltd remuneration practices for Executive appointments are expanded on in the Remuneration
Report. The Monash IVF Group Ltd Remuneration Policy can be found on the Group website at:
http://ir.monashivfgroup.com.au/Investor-Centre/?page=Corporate-Governance
8.3 Equity Based remuneration
Currently the CEO, COO and International Business Development Manager have long term incentives that are
equity based. The CFO is expected to be issued with equity based remuneration in FY20. The participants have
no mechanisms available to limit the risk associated with that scheme.
49
65
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Consolidated Statement Of Profit Or Loss And Other Comprehensive Income
Consolidated Statement of Profit or Loss
for the year ended 30 June 2019
and Other Comprehensive Income
For The Year Ended 30 June 2019
Consolidated
Revenue from services
Employee benefits expense
Clinician fees
Raw materials and consumables used
IT and communications expense
Depreciation expense
Amortisation expense
Property expense
Marketing and advertising expense
Professional and other fees
Other expenses
Mosman clinic closure and CEO separation costs(1)
Operating profit
Finance income
Finance expenses
Net finance costs
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges
Tax on cash flow hedges
Exchange difference on translation of foreign operations
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year
Profit attributable to:
Owners of the Company
Non-controlling interests
Profit for the year
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income for the year
Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Note
2.2
2.3
4.5
1.4
2019
$’000
151,980
(48,095)
(25,754)
(15,547)
(2,948)
(3,712)
(1,361)
(9,732)
(4,989)
(3,069)
(4,031)
(1,455)
31,287
7
(3,809)
(3,802)
27,485
(7,678)
19,807
(603)
181
(15)
(437)
19,370
19,852
(45)
19,807
19,415
(45)
19,370
2018
$’000
150,638
(47,891)
(26,088)
(14,521)
(2,588)
(3,888)
(1,063)
(9,265)
(4,033)
(3,236)
(4,907)
-
33,158
9
(3,562)
(3,553)
29,605
(8,424)
21,181
121
(36)
240
325
21,506
21,353
(172)
21,181
21,678
(172)
21,506
1.3
1.3
8.4
8.4
9.1
9.1
(1) Includes Mosman clinic closure accelerated depreciation ($882,000), Mosman make good provision ($100,000) and CEO separation costs ($473,000).
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
50
66
Monash IVF Group Limited
Consolidated Statement Of Financial Position
Consolidated Statement of Financial Position
as at 30 June 2019
As at 30 June 2019
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventory
Other assets
Total current assets
Non current assets
Equity accounted investment
Trade and other receivables
Plant and equipment
Intangible assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Employee benefits
Total current liabilities
Non current liabilities
Borrowings
Derivative financial instruments
Employee benefits
Deferred tax liability
Total non current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Profits reserve
Retained earnings
Total equity attributable to Owners of the Company
Non-controlling interests
Total equity
Note
4.6
2.1
2.5
2.6
2.1
2.2
2.3
2.4
4.4
3.1
4.3
4.4
3.1
1.4
4.1
Consolidated
2019
$’000
4,281
3,296
638
3,983
3,335
15,533
763
114
16,523
257,104
274,504
290,037
15,460
171
8,572
24,203
88,349
942
920
2,189
92,400
116,603
173,434
2018
$’000
3,853
4,193
2,040
3,854
2,786
16,726
754
85
16,935
256,111
273,885
290,611
14,045
-
7,926
21,971
97,596
510
798
2,878
101,782
123,753
166,858
428,757
(137,484)
42,834
(160,892)
173,215
219
173,434
428,347
(137,035)
36,174
(160,892)
166,594
264
166,858
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
51
67
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Consolidated Statement of Changes in Equity
For The Year Ended 30 June 2019
l
a
t
o
T
y
t
i
u
q
e
0
0
0
$
’
1
8
1
1
2
,
6
1
5
3
6
1
,
5
2
3
6
0
5
1
2
,
)
3
(
6
3
4
)
7
9
5
8
1
,
(
8
5
8
6
6
1
,
7
0
8
9
1
,
)
7
3
4
(
0
7
3
9
1
,
0
1
4
)
2
1
(
)
2
9
1
3
1
,
(
4
3
4
3
7
1
,
-
)
2
7
1
(
-
)
2
7
1
(
0
0
0
$
’
t
s
e
r
e
t
n
i
-
n
o
N
g
n
i
l
l
o
r
t
n
o
c
-
6
3
4
-
4
6
2
)
5
4
(
-
)
5
4
(
-
-
-
9
1
2
l
a
t
o
T
0
0
0
$
’
3
5
3
1
2
,
6
1
5
3
6
1
,
5
2
3
8
7
6
1
2
,
-
)
3
(
)
7
9
5
8
1
,
(
4
9
5
6
6
1
,
2
5
8
9
1
,
)
7
3
4
(
5
1
4
9
1
,
0
1
4
)
2
1
(
)
2
9
1
3
1
,
(
5
1
2
3
7
1
,
r
e
h
t
O
)
3
(
s
e
v
r
e
s
e
r
d
e
n
i
a
t
e
R
s
g
n
i
n
r
a
e
s
t
i
f
o
r
P
)
2
(
e
v
r
e
s
e
r
0
0
0
$
’
)
6
4
5
(
-
5
2
3
5
2
3
-
-
)
3
(
)
4
2
2
(
-
)
7
3
4
(
)
7
3
4
(
-
-
)
2
1
(
)
3
7
6
(
0
0
0
$
’
)
2
9
8
0
6
1
(
,
-
-
-
-
-
-
)
2
9
8
0
6
1
(
,
-
-
-
-
-
-
)
2
9
8
0
6
1
(
,
0
0
0
$
’
8
1
4
3
3
,
3
5
3
1
2
,
-
3
5
3
1
2
,
-
-
4
7
1
6
3
,
2
5
8
9
1
,
)
7
9
5
8
1
,
(
-
2
5
8
9
1
,
-
-
4
3
8
2
4
,
)
2
9
1
3
1
,
(
-
-
-
-
-
-
-
-
-
-
-
-
r
e
h
t
O
y
t
i
u
q
e
0
0
0
$
’
)
1
(
e
v
r
e
s
e
r
0
0
0
$
’
y
t
i
u
q
e
d
e
t
u
b
i
r
t
n
o
C
)
1
1
8
6
3
1
(
,
7
4
3
8
2
4
,
s
r
e
n
w
o
s
a
y
t
i
c
a
p
a
c
r
i
e
h
t
n
i
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
s
n
o
i
t
c
a
s
n
a
r
t
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
s
n
o
i
t
u
b
i
r
t
n
o
c
l
a
t
i
p
a
C
i
d
a
p
s
d
n
e
d
i
v
i
D
r
a
e
y
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
o
t
l
a
t
o
T
7
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
b
d
e
t
a
d
i
l
o
s
n
o
C
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
l
a
t
o
T
r
a
e
y
e
h
t
r
o
f
t
i
f
o
r
P
)
1
1
8
6
3
1
(
,
7
4
3
8
2
4
,
8
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
b
d
e
t
a
d
i
l
o
s
n
o
C
-
-
-
-
-
-
-
-
-
-
-
0
1
4
s
r
e
n
w
o
s
a
y
t
i
c
a
p
a
c
r
i
e
h
t
n
i
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
s
n
o
i
t
c
a
s
n
a
r
t
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
i
d
a
p
s
d
n
e
d
i
v
i
D
s
e
r
a
h
s
y
r
a
n
i
d
r
o
f
o
e
u
s
s
I
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
r
a
e
y
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
o
t
l
a
t
o
T
)
s
s
o
l
(
/
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
l
a
t
o
T
r
a
e
y
e
h
t
r
o
f
t
i
f
o
r
P
)
1
1
8
6
3
1
(
,
7
5
7
8
2
4
,
9
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
b
d
e
t
a
d
i
l
o
s
n
o
C
68
y
t
i
u
q
E
n
I
s
e
g
n
a
h
C
f
O
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
d
e
t
i
m
i
L
p
u
o
r
G
F
V
I
h
s
a
n
o
M
6
2
n
o
d
t
L
y
t
P
s
e
s
i
r
p
r
e
t
n
E
e
g
d
i
r
b
h
t
l
a
e
H
e
r
i
u
q
c
a
o
t
i
d
a
p
n
o
i
t
a
r
e
d
i
s
n
o
c
e
h
t
d
n
a
d
t
L
y
t
P
s
e
s
i
r
p
r
e
t
n
E
e
g
d
i
r
b
h
t
l
a
e
H
n
i
l
a
t
i
p
a
C
d
e
u
s
s
I
e
h
t
n
e
e
w
t
e
b
e
c
n
e
r
e
f
f
i
d
e
h
t
s
t
n
e
s
e
r
p
e
r
e
v
r
e
s
e
r
y
t
i
u
q
e
r
e
h
t
o
e
h
T
)
1
(
.
4
1
0
2
e
n
u
J
2
5
.
s
d
o
i
r
e
p
e
r
u
t
u
f
n
i
s
d
n
e
d
v
d
i
i
s
a
s
n
o
i
t
u
b
i
r
t
s
i
d
r
o
f
l
e
b
a
l
i
a
v
a
s
t
i
f
o
r
p
s
e
s
i
r
e
t
c
a
r
a
h
c
d
n
a
d
o
i
r
e
p
e
h
t
r
o
f
t
i
f
o
r
p
t
e
n
f
o
r
e
f
s
n
a
r
t
e
h
t
s
e
s
i
r
p
m
o
c
e
v
r
e
s
e
r
s
t
i
f
o
r
p
e
h
T
.
e
v
r
e
s
e
r
g
n
g
d
e
h
d
n
a
i
n
o
i
t
a
l
s
n
a
r
t
y
c
n
e
r
r
u
c
i
n
g
e
r
o
f
,
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
s
s
e
d
u
l
c
n
i
s
e
v
r
e
s
e
r
r
e
h
t
O
)
2
(
)
3
(
i
.
s
e
t
o
n
g
n
y
n
a
p
m
o
c
c
a
e
h
t
h
t
i
w
n
o
i
t
c
n
u
n
o
c
j
n
i
d
a
e
r
e
b
d
l
u
o
h
s
y
t
i
u
q
e
n
i
s
e
g
n
a
h
c
f
o
t
n
e
m
e
t
a
t
s
d
e
t
a
d
i
l
o
s
n
o
c
e
h
T
Monash IVF Group Limited
Consolidated Statement Of Cash Flows
Consolidated Statement of Cash Flows
for the year ended 30 June 2019
For The Year Ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Cash generated from operations
Income taxes paid
Net cash flows generated from operating activities
Cash flows from investing activities
Payment for plant and equipment and intangible assets
Net cash flows used in investing activities
Cash flows from financing activities
Receipt of borrowings
Receipt of loans receivable
Proceeds from non-controlling interest
Repayment of borrowings
Debt facility refinance cost
Interest paid
Dividends paid
Net cash flows used in financing activities
Total cash flows from activities
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on foreign currency cash flows
and cash balances
Cash and cash equivalents at end of the year
Note
4.6
Consolidated
2019
$’000
2018
$’000
152,922
(113,043)
39,879
(6,786)
33,093
150,455
(114,912)
35,543
(9,613)
25,930
(6,536)
(6,536)
(6,559)
(6,559)
12,500
-
-
(21,500)
(330)
(3,592)
(13,192)
(26,114)
443
3,853
(15)
4,281
21,800
22
436
(19,300)
-
(3,621)
(18,597)
(19,260)
111
3,502
240
3,853
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
53
69
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
For The Year Ended 30 June 2019
for the year ended 30 June 2019
Contents
Reporting entity
Basis of preparation
71
71
Section 1:
Section 2:
Our financial performance
Our operating asset base
1.1
1.2
1.3
1.4
Operating segments
Dividends
Earnings per share
Taxation
72 2.1
74 2.2
75 2.3
76 2.4
2.5
2.6 Other assets
Trade and other receivables
Plant and equipment
Intangible assets
Trade and other payables
Inventory
Section 3:
Our people
3.1
3.2
3.3
3.4
Employee benefits
Long-term incentive plan
Share-based payments arrangements
Key management personnel
Section 4:
Our funding structure
86 4.1
87 4.2
88 4.3
89 4.4
4.5
4.6
Contributed equity and reserves
Financial risk management
Borrowings
Derivative financial instruments
Net finance costs
Cash and cash equivalents
Section 5:
Our business portfolio
5.1
Controlled entities
Section 6:
Other disclosures
100 6.1
6.2
6.3
6.4
6.5
6.6
6.7
Changes in accounting policies
New standards and interpretations
Commitments
Parents entity disclosures
Deed of cross guarantee
Auditors’ remuneration
Events occurring after the reporting
period
79
80
82
85
85
85
90
93
96
98
98
99
101
102
103
103
104
106
106
About this report
In order to develop this financial report, management is required to make a number of judgements and apply
estimates of the future as part of the application process of the Group’s accounting policies. Judgements and
estimates, which are material to the report, are highlighted in the following notes:
1.4 Recovery of deferred tax assets and income taxes
2.2 Plant and equipment
2.3 Goodwill & other indefinite assets and goodwill impairment testing assumptions
3.3 Share-based payments
70
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Reporting entity
Monash IVF Group Ltd (the ‘Company’) is a for profit company primarily involved in the area of assisted
reproductive services and the provision of specialist women’s imaging services. The Company is incorporated in
Australia and listed on the Australian Stock Exchange. Its registered office is at Level 1, 21-31 Goodwood
Street, Richmond, Victoria and is limited by shares. The consolidated financial statements comprise the Company
and its controlled entities (collectively ‘the consolidated entity’, ‘Monash Group’ or ‘Group’).
Monash IVF Group Ltd and its wholly owned subsidiary Monash IVF Group Acquisitions Pty Ltd were incorporated
on 30 April 2014.
Basis of preparation
Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the
Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial
statements of the Group comply with the International Financial Reporting Standards (IFRSs) and interpretations
adopted by the international Accounting Standards Board (IASB).
The consolidated financial statements were approved by the Board of Directors on 26 August 2019.
Going concern
As at 30 June 2019, the group has a net current asset deficiency of $8,670,000 (FY18: $5,245,000).
The Directors consider that there are reasonable grounds to believe the Group will be able to pay its debts as
and when they fall due based on forecast operating cashflows which indicate that cash reserves are sufficient to
fund operations, the availability of committed but undrawn external debt facilities, and given certain current
liabilities such as employee entitlements and deferred revenue will not be fully settled in the short term to cause a
liquidity shortfall.
Basis of measurement
The financial report has been prepared on an accrual basis and is based on historical cost (unless otherwise
stated), except for derivative financial instruments and contingent consideration assumed in a business
combination, which have been measured at fair value.
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is the functional and
presentational currency of the Company and the majority of the Group. Each entity in the Group determines its
own functional currency and items included in the financial statements of each entity are measured using that
functional currency.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 issued by the Australian Securities and Investments Commission (ASIC), relating to the rounding off of
amounts in the consolidated financial statements. Amounts in the consolidated financial statements have been
rounded off in accordance with that legislative instrument to the nearest thousand, unless specifically stated to be
otherwise.
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Monash IVF
Group Ltd as at 30 June 2019 and the results of all subsidiaries for the year then ended. Subsidiaries are all
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. The acquisition method of accounting is used to account for business combinations by
the Group.
55
71
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Section 1
Our Financial Performance
This section provides information that is most relevant to understanding the financial performance of the
Group during the financial year and, where relevant, the accounting policies applied and the critical
judgements and estimates made.
1.1 Operating segments
1.3 Earnings per share
1.2 Dividends
1.4 Taxation
1.1 Operating segments
Identification of reportable operating segments
Segment assets and liabilities
The two geographic segments being Australia and
International reflect Monash IVF Group’s reporting
structure to the Chief Executive Officer, its chief
operating decision maker (CODM). Monash IVF Group
considers that the two geographic segments are
appropriate for segment reporting purposes under
AASB 8 “Operating Segments”. These segments
comprise the following operations:
- Monash IVF Group Australia: provider of Assisted
Reproductive Services, Ultrasound and other
related services.
- Monash IVF Group International: provider of
Assisted Reproductive Services in Malaysia.
Segment revenue
The revenue from external parties is measured in the
same way as in the profit or loss. If any sales occur
between segments, they are carried out at arm’s length
and are eliminated on consolidation.
Segment EBITDA
is used
Segment performance is measured based on segment
EBITDA as included in the internal management reports
that are reviewed by the Group’s CODM. Segment
EBITDA
to measure performance as
management believes that such information is the most
relevant in evaluating the results of segments relative
to other entities that operate within the industry. Any
intersegment pricing is determined on an arm’s length
basis.
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,
physical location of the asset and liabilities residing
within each geographic segment.
Information about reportable segments
Information related to each reportable segment is set
out on the next page. Segment profit before tax, as
included in internal management reports reviewed by
the Group’s CODM, is used to measure performance
because management believes that such information is
the most relevant in evaluating the results of the
respective segments relative to other entities that
operate within the same industries.
Given the nature of services provided, no segment is
reliant on any major customers.
Revenue recognition
Revenue is recognised when performance obligations
have been satisfied, recovery of the consideration is
probable and the amount of revenue can be measured
reliably. Revenue is measured at the fair value of the
consideration received or receivable.
Rendering of services
Revenue
Revenue from rendering of services is recognised on
completion of
is
services provided.
recognised when the customer has consumed the
benefits of the service, whether on completion of a
medical procedure, on supply of drugs, or on
completion of analytical tests. If payments received
from patients exceed the revenue recognised, the
difference is recognised as deferred revenue.
72
56
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
1.1 Operating segments (continued)
Deferred revenue
Other revenue
Fees for fertility treatment paid in advance of
performing the service are recognised as deferred
revenue until the time the service is rendered to the
customer when the fees are recognised as revenue.
Other revenue is recognised when the right to receive
revenue has been established.
Segment results
2019
Revenue
External revenue
Total revenue
Segment EBITDA (1) (before one-off non-recurring
items)2
Depreciation and amortisation expense
Mosman clinic closure and CEO separation costs
Interest revenue
Interest expense
Profit before income tax expense
Income tax expense
Profit for the year
Segment assets
Acquisition of plant and equipment and intangibles
Segment liabilities
2018
Revenue
External revenue
Total Revenue
Segment EBITDA (1)
Depreciation and amortisation expense
Interest revenue
Interest expense
Profit before income tax expense
Income tax expense
Profit for the year
Segment assets
Acquisition of plant and equipment and intangibles
Segment liabilities
Monash IVF
Group Australia
$’000
140,378
140,378
32,521
(4,792)
(1,455)
7
(3,809)
22,472
(6,477)
15,995
280,922
6,261
(116,084)
Monash IVF
Group Australia
$’000
141,871
141,871
34,341
(4,686)
9
(3,562)
26,102
(7,560)
18,542
281,997
6,072
(122,988)
Monash IVF
Group
International
$’000
11,602
11,602
5,294
(281)
-
-
-
5,013
(1,201)
3,812
9,115
275
(519)
Monash IVF
Group
International
$’000
8,767
8,767
3,768
(265)
-
-
3,503
(864)
2,639
8,614
487
(765)
Total
$’000
151,980
151,980
37,815
(5,073)
(1,455)
7
(3,809)
27,485
(7,678)
19,807
290,037
6,536
(116,603)
Total
$’000
150,638
150,638
38,109
(4,951)
9
(3,562)
29,605
(8,424)
21,181
290,611
6,559
(123,753)
(1) EBITDA is a non-IFRS measure which is used by the Group as a key indicator of underlying financial performance.
(2) One-off non recurring items include Mosman clinic closure asset accelerated depreciation ($882,000), Mosman clinic make-
good provision ($100,000) and CEO separation costs ($473,000)
57
73
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
1.1 Operating segments (continued)
Segment results (continued)
Foreign currency translation
Transactions in foreign currencies are translated at foreign exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the
functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the
difference between amortised cost in the functional currency at the beginning of the period, adjusted for
effective interest and payments during the period, and the amortised costs in foreign currency translated at the
exchange rate at the end of the reporting period. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the
date that the fair value was determined. Non-monetary items that are measured in terms of historical costs in a
foreign currency are translated using the exchange rate at the date of transaction.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
acquisition, are translated to Australian dollars at exchange rates at the reporting date. The income and
expenses of foreign operations are translated to Australian dollars at exchange rates at the dates of the
transactions. Foreign currency differences are recognised in other comprehensive income (OCI), and presented in
the foreign currency translation reserve (translation reserve) in equity.
1.2 Dividends
On 25 February 2019, the Board declared a fully franked interim dividend of 3.00 cents per share. Payment of
the interim dividend occurred on 5 April 2019. On 27 August 2018, a fully franked 2018 final dividend of 2.60
cents per share was declared and paid on 12 October 2018. Total dividends declared during the 2019
financial year were 5.60 cents per share ($13.2m). Monash IVF Group’s dividend policy is to target a payout
ratio of between 60% and 70% of Statutory NPAT. The level of payout ratio is expected to vary between
periods depending on general operating conditions, operating cashflow and profit, funding, strategic growth
opportunities and availability of franking credits.
Subsequent to 30 June 2019, the Board has declared a fully franked 2019 final dividend of 3.00 cents per
share. Total dividend declared for FY2019 is 6.00 cents per share.
Franking credits surplus as at 30 June 2019 is $13.0m (FY18: $12.4m).
74
58
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
1.3 Earnings per share
Basic earnings per share
Diluted earnings per share
The calculation of basic earnings per share has been
based on profit attributable to ordinary shareholders
and weighted average number of ordinary shares
outstanding.
The calculation of diluted earnings per share has been
based on profit attributable to ordinary shareholders
and weighted average number of ordinary shares
outstanding after adjustment for the effects of all
dilutive potential ordinary shares.
Earnings per share
Basic earnings per share
Diluted earnings per share
Profit attributable to ordinary shareholders
Profit after income tax attributable to the ordinary shareholders used
in calculating basic and diluted earnings per share
Weighted average number of shares (basic)
Issued ordinary shares at 1 July
Effect of shares issued during the period
Weighted average number of ordinary shares at 30 June
Weighted average number of shares (diluted)
Weighted average number of shares (basic)
Adjustments for calculation of diluted earnings per share (1)
Weighted average number of ordinary shares (diluted) at 30 June
Consolidated
2019
Cents per share
8.4
8.4
2018
Cents per share
9.1
9.1
2019
$’000
19,852
2019
Number
235,395,438
202,640
235,598,078
2019
Number
235,598,078
322,654
235,920,732
2018
$’000
21,353
2018
Number
235,395,438
-
235,395,438
2018
Number
235,395,438
361,228
235,756,666
(1) The calculation of the weighted average number of shares has been adjusted for the effect of share based rights granted
from the date of issue. Refer to Section 3.3 for further details.
59
75
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
1.4 Taxation
Recognition and Measurement
Income tax
Current tax
Income tax expense comprises current and deferred
tax. It is recognised in profit or loss except to the
extent that it relates to a business combination, or to
items recognised directly in equity or in OCI.
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to tax payable or receivable in
respect of previous years. It is measured using tax
rates enacted or substantively enacted at the reporting
date.
Income Tax
Consolidated
Current tax
Deferred tax
Total income tax expense
Deferred income tax expense/(benefit) included in income tax expense
comprises:
(Increase)/decrease in deferred tax assets
Total deferred tax expense/(benefit)
Numerical reconciliation of income tax expense to prima facie tax
payable
Profit before income tax expense
Tax at the Australian tax rate of 30% (2018: 30%)
Tax effect of amounts which are not deductible in calculating taxable
income:
Effect of tax rates in foreign jurisdiction
Research and development
Other items
Over/(under) provision of previous year
Income tax expense
2019
$’000
8,186
(508)
7,678
(508)
(508)
27,485
8,245
(301)
(250)
20
(36)
7,678
))
76
2018
$’000
7,270
1,154
8,424
1,154
1,154
29,605
8,881
(210)
(250)
-
3
8,424
60
Notes to the Consolidated Financial Statements (Continued)
-
-
-
)
8
5
1
6
(
,
9
6
9
3
,
)
9
8
1
2
(
,
)
4
1
2
(
)
4
4
9
5
,
(
9
1
0
2
e
n
u
J
x
a
t
d
e
r
r
e
f
e
D
0
3
t
a
y
t
i
l
i
b
a
i
l
)
4
1
2
(
)
4
4
9
5
,
(
8
1
0
2
e
n
u
J
x
a
t
d
e
r
r
e
f
e
D
0
3
t
a
y
t
i
l
i
b
a
i
l
-
-
-
-
)
8
5
1
6
(
,
0
8
2
3
,
)
8
7
8
2
(
,
1
6
-
-
6
3
3
5
8
7
-
8
4
8
2
,
9
6
9
3
,
)
9
6
9
3
,
(
0
3
t
a
t
e
s
s
a
9
1
0
2
e
n
u
J
x
a
t
d
e
r
r
e
f
e
D
0
3
t
a
t
e
s
s
a
8
1
0
2
e
n
u
J
x
a
t
d
e
r
r
e
f
e
D
-
-
-
5
5
1
8
0
5
-
7
1
6
2
,
0
8
2
3
,
)
0
8
2
3
,
(
-
-
1
8
1
-
-
-
-
1
8
1
-
-
-
-
-
7
7
2
1
3
2
8
0
5
y
t
i
u
q
e
n
i
s
s
o
l
r
o
y
l
t
c
e
r
i
d
d
e
s
i
n
g
o
c
e
R
t
i
f
o
r
p
n
i
d
e
s
i
n
g
o
c
e
R
-
-
-
-
-
)
6
3
(
)
6
3
(
-
-
y
t
i
u
q
e
n
i
-
-
s
s
o
l
r
o
)
8
5
1
1
,
(
-
7
4
)
3
4
(
)
4
5
1
1
(
,
-
-
y
l
t
c
e
r
i
d
d
e
s
i
n
g
o
c
e
R
t
i
f
o
r
p
n
i
d
e
s
i
n
g
o
c
e
R
-
-
-
)
8
5
1
6
(
,
0
8
2
3
,
)
8
7
8
2
,
(
8
1
0
2
)
4
1
2
(
)
4
4
9
5
,
(
x
a
t
d
e
r
r
e
f
e
D
y
l
u
J
1
y
t
i
l
i
b
a
i
l
7
1
0
2
)
4
1
2
(
)
4
4
9
5
,
(
x
a
t
d
e
r
r
e
f
e
D
y
l
u
J
1
y
t
i
l
i
b
a
i
l
-
-
-
-
)
8
5
1
6
(
,
0
7
4
4
,
)
8
8
6
1
,
(
-
-
5
5
1
8
0
5
-
7
1
6
2
,
0
8
2
3
,
)
0
8
2
3
,
(
x
a
t
d
e
r
r
e
f
e
D
8
1
0
2
y
l
u
J
1
t
e
s
s
a
x
a
t
d
e
r
r
e
f
e
D
7
1
0
2
y
l
u
J
1
t
e
s
s
a
-
-
-
1
9
1
1
5
5
8
5
1
1
,
0
7
5
2
,
0
7
4
4
,
)
0
7
4
4
,
(
)
d
e
u
n
i
t
n
o
c
(
n
o
i
t
a
x
a
T
4
1
.
x
a
T
d
e
r
r
e
f
e
D
9
1
0
2
e
r
a
w
t
f
o
s
&
t
n
e
m
p
i
u
q
e
,
t
n
a
P
l
s
r
a
l
l
o
d
f
o
s
d
n
a
s
u
o
h
t
n
I
s
t
e
s
s
a
l
i
e
b
g
n
a
t
n
I
f
f
o
t
e
s
e
r
o
f
e
b
s
t
e
s
s
a
/
)
s
e
i
t
i
l
i
b
a
i
l
(
x
a
T
n
o
i
s
i
v
o
r
p
d
n
a
l
s
e
b
a
y
a
p
e
d
a
r
T
s
t
i
f
e
n
e
b
e
e
y
o
p
m
E
l
)
s
e
i
t
i
l
i
b
a
i
l
(
/
s
t
e
s
s
a
x
a
t
t
e
N
x
a
t
f
f
o
t
e
S
s
e
v
i
t
a
v
i
r
e
D
8
1
0
2
e
r
a
w
t
f
o
s
&
t
n
e
m
p
i
u
q
e
,
t
n
a
P
l
s
r
a
l
l
o
d
f
o
s
d
n
a
s
u
o
h
t
n
I
s
t
e
s
s
a
l
i
e
b
g
n
a
t
n
I
f
f
o
t
e
s
e
r
o
f
e
b
s
t
e
s
s
a
/
)
s
e
i
t
i
l
i
b
a
i
l
(
x
a
T
n
o
i
s
i
v
o
r
p
d
n
a
l
s
e
b
a
y
a
p
e
d
a
r
T
s
t
i
f
e
n
e
b
e
e
y
o
p
m
E
l
)
s
e
i
t
i
l
i
b
a
i
l
(
/
s
t
e
s
s
a
x
a
t
t
e
N
x
a
t
f
f
o
t
e
S
s
t
s
o
c
n
o
i
t
c
a
s
n
a
r
t
O
P
I
s
e
v
i
t
a
v
i
r
e
D
77
MoNASh IVF GRoUP LIMIted
Annual Report 2019
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
i
F
d
e
t
a
d
i
l
o
s
n
o
C
e
h
t
o
t
s
e
t
o
N
9
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
d
e
t
i
m
i
L
p
u
o
r
G
F
V
I
h
s
a
n
o
M
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
1.4 Taxation (continued)
Recognition and Measurement
Deferred tax
Offsetting deferred tax
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for taxation purposes.
Deferred tax is not recognised for the following
temporary differences:
Deferred tax assets and liabilities are offset if there is
a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes
levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to
settle current tax liabilities and assets on a net basis or
their assets and
realised
simultaneously.
liabilities will be
that
that affects
the initial recognition of assets or liabilities in
is not a business
transaction
a
combination and
neither
accounting nor taxable profit or loss, and
in
differences
relating
subsidiaries and associates and
jointly
controlled entities to the extent that it is
probable that they will not reverse in the
foreseeable future.
investments
to
In addition, deferred tax is not recognised for
taxable temporary differences arising on the
initial recognition of goodwill.
Deferred tax is measured at the tax rates that are
expected to be applied to temporary differences
when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting
date.
Tax consolidation
Monash IVF Group Limited and its wholly Australian
owned controlled entities are part of a
tax
consolidation group under Australian taxation law.
Monash IVF Group Limited is the head entity in the tax-
consolidated group. Entities within the tax consolidated
group have entered into a tax funding arrangement
and a tax sharing agreement with the head entity.
Under the terms of the tax funding arrangement,
Monash IVF Group Limited and each of the entities in
the tax consolidated group have agreed to pay (or
receive) a tax equivalent payment to (or from) the
head entity, based on the current tax liability or
current tax asset of the entity.
Key estimate and judgement:
Key estimate and judgement:
Recovery of deferred tax assets
Income taxes
that future
A deferred tax asset is recognised to the extent that it
taxable profits will be
is probable
available against which the temporary difference can
be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is
no longer probable that the related tax benefit will be
realised.
it
has
The Group is subject to income taxes in Australia and
foreign operations.
jurisdictions where
Judgement is required in determining the worldwide
provision for income taxes and in assessing whether
the
deferred
statement of
in
financial position.
circumstances will alter expectations, which may impact
the amount of provision for income taxes and deferred
tax balances recognised.
recognised on
Changes
tax balances are
78
62
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Section 2
Our Operating Asset Base
This section provides information relating to the Group’s Operating Base, highlighting the primary
operating assets used and liabilities incurred to support the Group’s operating activities.
2.1 Trade and other receivables
2.4 Trade and other payables
2.2 Plant and equipment
2.3 Intangible assets
2.1 Trade and other receivables
Recognition and Measurement
2.5 Inventory
2.6 Other assets
Trade receivables are recognised initially at fair value and subsequently measured at amortised costs using the
effective interest method less provision for impairment.
A financial asset (including trade receivables) not classified as at fair value through profit or loss is assessed at
each reporting date to determine whether there is any objective evidence that it is impaired. AASB 9 replaced the
‘incurred loss model’ in AASB 139 with an ‘expected credit loss’ (ECL) model. Loss allowances for trade receivables
are measured at an amount equal to 12 month ECLs. When determining whether the credit risk of a financial asset
has increased significant since initial recognition and when estimating ECLs, the Group considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both quantitative
and qualitative information and analysis, based on the Group’s historical experience and informed credit
assessment and including forward-looking information. ECLs are a probability-weighted estimate of credit losses,
measured as the present value of all cash shortfalls and discounted at the effective interest rate of the financial
asset.
Current
Trade receivables
Provision for impairment
Other debtors
Accrued income
Total current trade and other receivables
Non current
Other receivables and debtors
Total trade and other receivables
Consolidated
2019
$’000
3,218
(460)
409
129
3,296
114
3,410
2018
$’000
3,673
(458)
599
379
4,193
85
4,278
Credit Risk
Credit risk is the risk of financial loss to the Group if a patient or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the Group’s trade receivables, being patients.
Credit risk is managed at a business unit level and reviewed regularly by the administrative/accounts receivables
function. Up to 100% of patient fees are received in advance and recognised as deferred revenue if the
procedure is yet to be performed. This reduces the risk of non-collectability. Trade receivables reflect 2.1% of
annual revenue (FY18: 2.4%).
Payment reminder notices are issued to patients with outstanding balances at 30, 60 and 90 days. After which,
collection of this debt is handled by a collection agency. The Group does not have any material credit risk
exposure to any single receivable or group of receivables under financial instruments entered into by the Group.
63
79
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
2.2 Plant and equipment
Recognition and Measurement
Items of plant and equipment are measured at cost less
accumulated depreciation and any accumulated
impairment losses.
Cost includes expenditure that is directly attributable
to the acquisition of the asset. The cost of self
constructed assets includes the cost of materials and
direct labour, any other costs directly attributable to
bringing the assets to a working condition for their
intended use, the costs of dismantling and removing the
items and restoring the site on which they are located
and capitalised borrowing costs.
Purchased software that is integral to the functionality
of the related equipment is capitalised as part of that
equipment.
When parts of an item of plant and equipment have
different useful lives, they are accounted for as
separate items (major components) of plant and
equipment.
Key estimate and judgement:
Plant and equipment
Gains and losses on disposal of an item of plant and
equipment are determined by comparing the proceeds
from disposal with the carrying amount of plant and
equipment and are recognised on a net basis within
“other income” in profit or loss.
Subsequent costs
The cost of replacing part of an item of plant and
equipment is recognised in the carrying amount of the
item if it is probable that the future economic benefits
embodied with the part will flow to the Group and its
cost can be measured reliably.
The carrying amount of
is
derecognised. The costs of the day-to-day servicing of
the plant and equipment are recognised in profit or
loss as incurred.
the replaced part
The Group’s plant and equipment are depreciated over their useful economic lives. Management reviews the
appropriateness of useful economic lives of assets and any impairment indicators annually by evaluating
conditions specific to the consolidated Group and to the particular asset.
Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted
for cost, less its residual value.
Depreciation is recognised in profit or loss on a straight line basis over the estimated useful lives of each part of
an item of plant and equipment, since this most closely reflects the expected pattern of consumption of the future
economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and
their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
Depreciation methods, useful lives and residual values are reviewed at each reporting date. Assets in work-in-
progress are not depreciated until commissioned for use.
80
64
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
2.2 Plant and equipment (continued)
Consolidated
Cost
Opening balance at 1 July
Additions
Closing balance at 30 June
Depreciation and impairment losses
Opening balance at 1 July
Depreciation for the year (1) (2)
Closing balance at 30 June
Carrying amount
At 1 July (Opening balance)
At 30 June (Closing balance)
2019
$’000
49,496
4,182
53,678
(32,561)
(4,594)
(37,155)
16,935
16,523
2018
$’000
45,423
4,073
49,496
(28,673)
(3,888)
(32,561)
16,750
16,935
(1) The estimated useful lives of plant & equipment in 2019 and 2018 are between 2-10 years from the purchase date.
(2) Includes Mosman clinic closure accelerated depreciation of $882,000.
65
81
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
2.3 Intangible assets
Recognition and Measurement
Goodwill
Other intangible assets
Goodwill on consolidation represents the excess of the
cost of an acquisition over the fair value of the Group’s
share of net identifiable assets of the acquired entities
at the date of acquisition. Goodwill on the acquisition
of subsidiaries
intangible assets.
less accumulated
Goodwill
impairment losses. Goodwill is tested for impairment
annually or more frequently if events or changes in
circumstances indicate that it might be impaired.
in
is measured at cost
included
is
Subsequent expenditure
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure,
including expenditure on internally generated goodwill
and brands, is recognised in profit or loss as incurred.
Other intangible assets that are acquired by the
Group are measured at cost
less accumulated
amortisation and accumulated impairment losses.
Amortisation
Amortisation is calculated over the cost of the asset, or
another amount substituted for cost, less its residual
value. Amortisation is recognised in profit or loss on a
straight line basis over the estimated useful lives of
intangible assets, other than goodwill and trademark,
from the date that they are available for use, since this
most closely
the expected pattern of
consumption of the future economic benefits embodied
in the asset.
reflects
The estimated useful lives of software are between 5-
10 years from the acquisition date.
Cost
Balance at 1 July 2017
Additions
Balance at 30 June 2018
Balance at 1 July 2018
Additions
Balance at 30 June 2019
Amortisation and
impairment losses
Balance at 1 July 2017
Amortisation for the year
Impairment loss
Balance at 30 June 2018
Balance at 1 July 2018
Amortisation for the year
Impairment loss
Balance at 30 June 2019
Carrying amounts
at 30 June 2018
at 30 June 2019
Goodwill
$’000
Software
$’000
Trademark
$’000
Others (1)
$’000
230,657
-
230,657
230,657
-
230,657
(1,549)
-
-
(1,549)
(1,549)
-
-
(1,549)
14,185
2,486
16,671
16,671
2,354
19,025
(8,450)
(1,063)
-
(9,513)
(9,513)
(1,361)
-
(10,874)
19,845
-
19,845
19,845
-
19,845
-
-
-
-
-
-
-
-
9,587
-
9,587
9,587
-
9,587
(9,587)
-
-
(9,587)
(9,587)
-
-
(9,587)
Total
$’000
274,274
2,486
276,760
276,760
2,354
279,114
(19,586)
(1,063)
-
(20,649)
(20,649)
(1,361)
-
(22,010)
229,108
229,108
7,158
8,151
19,845
19,845
-
-
256,111
257,104
(1) Public Contracts, Public Relationships and Employment Contracts amortised to nil prior to 1 July 2014.
82
66
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
2.3 Intangible assets (continued)
Impairment testing
Recognition and measurement on impairment on Non-Financial assets
The carrying amounts of the Group’s non financial
assets, other than inventories and deferred tax assets
are reviewed at each reporting date to determine
whether there is any indication of impairment. If any
such indication exists then the asset’s recoverable
amount is estimated.
For the purpose of impairment testing, assets that
cannot be tested individually are grouped together
into the smallest group of assets that generates cash
inflows of other assets or groups of assets (the ‘cash-
generating’ units). The recoverable amount of an asset
or cash-generating unit (CGU) is the greater of its
value in use and its fair value less costs to sell. In
assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the
asset or CGU.
An impairment loss is recognised if the carrying amount
of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of CGUs are
allocated first to reduce the carrying amount of any
goodwill allocated to the CGU and then to reduce the
carrying amount of the other assets in the CGU (group
of CGUs) on a pro rata basis.
An impairment loss is reversed only to the extent that
the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net
of depreciation and amortisation, if no impairment loss
had been recognised.
The following CGUs were tested for impairment during the 2019 financial year:
Goodwill allocated to:
Monash IVF Group (Australia)
Monash IVF Group (Ultrasound)
Monash IVF Group (International)
2019
$’000
195,727
28,232
5,149
229,108
2018
$’000
195,727
28,232
5,149
229,108
67
83
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
2.3 Intangible assets (continued)
Key estimate and judgement:
Goodwill & other indefinite life assets
Goodwill and other indefinite life intangible assets
become impaired when their carrying value exceeds
their recoverable amount. Recoverable amount is the
greater of fair value less costs to sell or value in use.
In determining the recoverable amount, judgments and
assumptions are made in the determination of likely net
sale proceeds or in the determination of future cash
flows which support a value in use. Specifically with
respect to future cash flows, judgments are made in
respect to the quantum of those future cash flows, the
discount rates (cost of capital and debt) applied to
determining the net present value of these future cash
flows.
Goodwill impairment testing assumptions
-
-
From
impairment
The recoverable amount of each CGU was calculated
using a value in use calculation determined by
discounting the future cash flows generated from each
the
CGU.
recoverable amount was determined to be higher than
the carrying amount and any reasonable possible
change to relevant assumptions and inputs would not
result in the recoverable amount being lower than the
carrying amount. The following key assumptions and
inputs were utilised for the impairment testing:
testing performed,
in equities generally and
The respective discount rate was a pre-tax
measure based on the rate of 10 year
Government bonds issued by the Australian
and Malaysian Government respectively in
the relevant market, adjusted for a risk
premium to reflect the increased risk of
investing
the
systemic risk of the specific CGU. A pre-tax
discount rate of 10.47% (FY18: 10.81%) for
the Australian CGU, 11.70% (FY18: 11.52%)
for the Ultrasound CGU and 11.27% (FY18:
11.27%) for the International CGU was
applied
recoverable
amount. The discount rate was estimated
based on past experience, and the industry
average weighted cost of capital.
in determining
the
Five years of cash flows were included in the
discounted cash flow model. A long-term
growth rate
into perpetuity of between
2.00% to 3.00% (FY18: 3.00%) has been
determined based on an assessment of
historical growth rates, expectations of future
growth rates and market specific dynamics.
Budgeted EBIT was based on the expectation
of future outcomes taking into account past
experience, adjusted for
the anticipated
revenue growth.
84
68
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
2.4 Trade and other payables
Recognition and Measurement
Trade and other payables
Provisions
Trade and other payables are recognised when the
Group becomes obligated to make future payments
resulting from the purchase of goods and services.
Trade payables are unsecured and are usually paid
within 30 days of recognition. The carrying amounts of
trade and other payables are assumed to be the same
as their fair values, due to their short-term nature.
Current
Trade payables
Accrued expenses
Deferred revenue
Other liabilities
Total current trade and other liabilities
2.5 Inventory
Recognition and Measurement
Inventory
Inventories are measured at the lower of cost and net
realisable value.
Inventory
Total inventory
2.6 Other assets
Recognition and Measurement
Prepayments
Payments made for the receiving of goods or services
rendered
in future years are recognised as a
prepayment.
Prepayments
GST receivable and other
Total other assets
A provision is recognised if, as a result of a past event,
the Group has a present
legal or constructive
obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are
determined by discounting the expected future cash
flows at a post-tax discount rate that reflects current
market assessments of the time value of money and the
risks specific to the liability. The unwinding of the
discount is recognised as a finance cost.
Consolidated
2019
$’000
4,388
4,753
6,050
269
15,460
2018
$’000
2,803
4,787
6,090
365
14,045
Consolidated
2019
$’000
3,983
3,983
2018
$’000
3,854
3,854
Consolidated
2019
$’000
2,327
1,008
3,335
2018
$’000
2,250
536
2,786
69
85
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Section 3
Our People
This section provides financial insight into employee reward and recognition for creating a high
performance culture and the Group’s ability to attract and retain talent. This section is to be read in
conjunction with the Remuneration Report, as set out in the Directors Report.
3.1 Employee benefits
3.3 Share-based payments arrangements
3.2 Long term incentive plan
3.4 Key management personnel
3.1 Employee benefits
Recognition and Measurement
Short-term obligations
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits are expected to
be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration
rates which are expected to be paid when the liability is settled.
Long-term obligations
All other employee benefits are measured at their present value of the estimated future cash outflow to be made in
respect of services provided by the employees up to the reporting date. The discount rate is the yield at the
reporting date on corporate bonds issued by the relevant markets that have maturity dates approximating the
terms of the Group’s obligations.
The aggregate amount of employee benefits is comprised of:
Current liability
Long service leave
Annual leave
Total current employee benefits
Non current liability
Long service leave
Total non current employee benefits
Consolidated
2019
$’000
5,095
3,477
8,572
920
920
2018
$’000
4,526
3,400
7,926
798
798
The aggregate employee entitlement provision is $9,492,000 (FY18: $8,724,000). Employee benefits incurred
during the year were $48,095,000 (FY18: $47,891,000).
86
70
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
3.2 Long-term incentive plan
Recognition and Measurement – Share-based payments
The Group will provide benefits to certain employees in the form of share-based payment options and/or
performance rights. The fair values of these instruments granted under the plans are recognised as an employee
benefit expense with a corresponding increase in equity. The fair value is measured at grant date and
recognised over the period during which the employee becomes unconditionally entitled to the instruments.
Fair value is measured at grant date using a combination of Binomial tree and Monte-Carlo Simulation models,
for the respective performance hurdles. The valuation was performed by an independent valuer which models
the future security price.
The fair value of the instruments granted excludes the impact of any non-market vesting conditions. Non-market
vesting conditions are included in assumptions about the number of instruments that are expected to become
exercisable. At each reporting date, the entity revises its estimate of the number of instruments 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 original estimates, if any, is recognised in profit and loss with a corresponding adjustment to
equity.
Under the Company’s Long Term Incentive (“LTI”) Plan, awards (constituting share appreciation rights,
performance rights or options, or any different class or category of award on such terms as the Board
determines) may be offered to eligible persons (including executives, contractors, senior management, doctors
and other employees) selected by the Directors. Key management personnel, other senior management and
fertility specialists are eligible to participate under the LTI Programmes.
Senior executive’s long-term incentive plan
The senior executives LTI are performance rights plans with vesting rights dependent upon the satisfaction of pre-
defined performance hurdles and continuous employment. Current performance hurdles are based on
achievement of pre-defined Earning Per Share (“EPS”) Hurdle and a Total Shareholder Return (“TSR”) Hurdle
over a three year performance period. The Board may amend the performance hurdles or specify a different
performance hurdle(s) if it considers it necessary. For further detail on the specific LTI plans, refer to the
Remuneration Report.
Fertility specialist long-term incentive plan
In FY16, the fee-for-service fertility specialists were eligible to participate in the Fertility Specialist LTI Plan. Two
separate tranches were offered:
A Practice Development Award to recognise the consistent development of a fertility specialist’s practice
at above industry growth rates; and
A Key Doctor Award to recognise the significant contribution of key fee-for-service fertility specialists
and their commitment to the development of Monash IVF.
Eligibility criteria also included a number of qualitative criteria focused on optimising the patient experience and
clinical excellence.
The Fertility Specialist long-term incentive plan was only offered in FY16.
71
87
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
3.3 Share-based payments arrangements
Long term incentive program (equity settled)
Key management personnel are entitled to participate in the Group long-term incentive plan. Performance rights
applicable to FY19 were granted in FY16, FY17, FY18 and FY19 under the program. There will be no loan from
the Company for the acquisition of shares upon vesting of the rights.
A description of the equity plans applicable during the year ended 30 June 2019 are described below:
Grant date
Number of
performance
rights
Vesting conditions
Exercise price
Contractual life
of performance
rights
20 December
2018
207,997
EPS - Subject to meeting certain EPS
hurdles and 3 year service period to
30 June 2021
N/A
6 years
29 January 2018
287,262
17 March 2017
143,540
29 June 2016
233,570
TSR - Subject to Total Shareholder
Return hurdles and a 3 year service
period to the 11th trading day after
the FY21 results announcement
EPS - Subject to meeting certain EPS
hurdles and 3 year service period to
30 June 2020
TSR - Subject to Total Shareholder
Return hurdles and a 3 year service
period to the 11th trading day after
the FY20 results announcement
EPS - Subject to meeting certain EPS
hurdles and 3 year service period to
30 June 2019
TSR - Subject to Total Shareholder
Return hurdles and a 3 year service
period to the 11th trading day after
the FY19 results announcement
EPS - Subject to meeting certain EPS
hurdles and 3 year service period to
30 June 2018
TSR - Subject to Total Shareholder
Return hurdles and a 3 year service
period to the 11th trading day after
the FY18 results announcement
N/A
5 years
N/A
5 years
N/A
5 years
88
72
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
3.3 Share-based payments arrangements (continued)
Key estimate and judgement: Share-based payments
As a result of the combination of non-market (EPS) and market (TSR) vesting conditions, the fair value of the share
rights plan has been measured using Binomial tree and Monte Carlo simulation respectively. The inputs used in the
measurement of the fair values at grant date of the equity-settled share based payment plans were as follows:
Fair value at grant date (EPS condition)
Fair value at grant date (TSR condition)
Share price at grant date
Exercise price
Expected volatility – Monash IVF
Expected volatility – ASX 300 Healthcare Index
Expected life (years)
Expected dividends
Risk free interest rate (based on government bonds)
2019
$1.00
$0.45
$1.00
N/A
30%
15%
6
6.00%
1.88%
2018
$1.19
$0.49
$1.36
N/A
37%
14%
5
5.50%
2.13%
2017
$1.69
$0.63
$1.90
N/A
32%
15%
5
4.80%
1.91%
2016
$1.65
$1.31
$1.83
N/A
32%
14%
5
4.80%
1.55%
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price,
particularly over the historical period commensurate with the expected term. The expected term of the instruments
has been based on historical experience and general instrument holder behavior.
Reconciliation of outstanding performance rights
The number of performance rights under the company’s long-term incentive plan were as follows:
Number of performance rights
Outstanding at 1 July 2017
Granted during the year
Lapsed during the year (1)
Outstanding at 30 June 2018
Granted during the year
Lapsed during the year (2)
Forfeited during the year (3)
Outstanding at 30 June 2019
109,038
287,262
(35,072)
361,228
207,997
(54,519)
(192,052)
322,654
(1) EPS vesting conditions for performance rights granted in FY16 were not satisfied therefore these rights lapsed.
(2) TSR vesting conditions for performance rights granted in FY16 and EPS vesting conditions for performance rights granted in
FY17 were not satisfied therefore these rights lapsed.
(3) David Morris (CEO) FY18 performance rights were forfeited due to his resignation and departure.
3.4 Key management personnel
Compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
Total key management personnel compensation
2019
$
1,982,874
629,219
3,569
2,615,662
2018
$
1,629,537
102,317
31,121
1,762,975
For further information on key management personnel refer to the Remuneration Report.
Transactions with key management personnel and related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
73
89
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Section 4
Our Funding Structure
This section provides information relating to the Group’s capital structure and its exposure to financial
risk, how they affect the Group’s financial position and performance, and how the risks are managed.
The capital structure of the Group consists of debt and equity. The Directors determine the
appropriate capital structure of Monash IVF, specifically how much is raised from the shareholders
(equity) and how much is borrowed from financial institutions (debt) in order to finance the current and
future activities of the Group. The Directors review the Group’s capital structure regularly and do so in
the context of the Group’s ability to continue as a going concern, to invest in opportunities that grow
the business and enhance shareholder value.
4.1 Contributed equity and reserves
4.4 Derivative financial instruments
4.2 Financial risk management
4.5 Net finance costs
4.3 Borrowings
4.6 Cash and cash equivalents
4.1 Contributed equity and reserves
Recognition and measurement
Ordinary shares
Share option reserve
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Share option reserve represents the grant-date fair
value of equity-settled share-based payment awards
granted to employees, which is generally recognised
as an expense, with corresponding increase in equity
over the vesting period of the awards.
Other equity reserve
Hedge reserve
The other equity reserve represents the difference
between the issued capital in Healthbridge Enterprises
Pty Ltd and Monash IVF Group Ltd on 26 June 2014,
being the date Monash IVF Group Ltd acquired
Healthbridge Enterprises Pty Ltd.
Profits reserve
instruments
The hedging reserve comprises the effective portion of
the cumulative net change in the fair value of cash flow
hedging
related
to highly probable
forecast transactions. The hedging reserve is used to
record gains or
that are
designated and qualify as cash flow hedges and that
are recognised in OCI.
losses on derivatives
The profit reserve comprises the transfer of net profit
for the period and characterises profits available for
distribution as dividends in future periods.
Amounts are reclassified to profit or loss when the
associated hedged transaction affects profit or loss.
Foreign currency translation reserve
The translation reserve comprises all foreign currency
differences arising from the translation of the financial
statements of foreign operations.
90
74
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
4.1 Contributed equity and reserves (continued)
Opening balance at 1 July 2017
Closing balance at 30 June 2018
Opening balance at 1 July 2018
Shares issued (1)
Closing balance at 30 June 2019
Number of shares issued
235,395,438
235,395,438
235,395,438
390,446
235,785,884
$’000
428,347
428,347
428,347
410
428,757
(1) Issue of shares to a consultant under the terms of their consultancy agreement
All shares are fully paid. No ordinary shares have been issued under the long-term incentive plan.
Ordinary shares
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. Ordinary shares entitle the holder to one vote,
either in person or by proxy, at a meeting of the Company. The fully paid ordinary shares have no par value.
Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor and market confidence and to
sustain future growth of the business. Management monitors the return on capital as well as the level of dividends
to ordinary shareholders. The Board of Directors seeks to maintain a balance between the higher returns that
might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital
structure. In order to maintain an optimal capital structure, the Group may amend the amount of dividends
declared and paid, return capital to shareholders or increase borrowings or equity to fund growth and future
acquisitions.
Escrow arrangements
The following ordinary shareholders have entered into voluntary escrow arrangements in relation to certain
ordinary shares they hold in Monash IVF Group Ltd. An ‘escrow’ is a restriction on sale, disposal, or encumbering
of, or certain other dealings in respect of, the Shares concerned for the period of the escrow, subject to
exceptions set out in the escrow arrangement.
Doctors (1)
Sydney Ultrasound for Women
Total
30 June 2019
30 June 2018
Number of
shares subject
to escrow (m)
15.3
1.5
16.8
Escrowed
shares (as a %
of shares on
issue
6.5%
0.6%
7.1%
Number of
shares subject
to escrow (m)
15.6
1.6
17.2
Escrowed
shares (as a %
of shares on
issue)
6.6%
0.7%
7.3%
Escrowed
shares (as a %
(1) FY19 Includes 1.0m shares subject to escrow held by Richard Henshaw (Executive Director) (FY18:$1.0m shares)
75
91
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
4.1 Contributed equity and reserves (continued)
Escrow arrangements (continued)
Doctors
The escrow applied to a pre-IPO Doctor was calculated by reference to the aggregate value of that person’s pre-
reorganisation equity interests in Healthbridge Enterprises Pty Ltd as follows:
Shares equivalent to 10% of a Doctor’s interest prior to the re-organisation were held in short-term escrow, with
3.33% released each year from escrow on the first trading day in Shares following the Company’s FY15, FY16
and FY17 financial results announcements to the ASX. This concluded the release of the pre-IPO doctor short-term
escrow.
Shares held in long-term escrow are subject to the following conditions:
1. Shares equivalent to 20% of a Doctor’s interest prior to the re-organisation will be released when the
Doctor reaches the age of 63. These shares may be otherwise released from escrow in the following
circumstances:
-
for Doctors who were aged 63 or older at the time of re-organisation or who turned 63 within two
years of Completion, these shares can be released from escrow from June 2016; or
- where a Doctor becomes a ‘relocated leaver’ (as described below), these Shares can be released from
escrow five years after the date that they become a ‘relocated leaver’; or
- where a Doctor dies or leaves the Group as a result of becoming permanently disabled or seriously
disabled, these shares can be released from escrow on the date of the relevant occurrence (as
resolved by the Board acting reasonably); or
If the Board determines to release the shares from escrow earlier.
-
2. Shares equivalent to the final 20% of a Doctor’s interest prior to re-organisation can be released from
escrow:
- on retirement by the Doctor from the ARS industry (provided a Doctor must have used their best
endeavours to transition their practice to another Doctor to the satisfaction of the Board); or
if the Doctor becomes a ‘good leaver’ or a ‘relocated leaver’ (as described below); or
-
- Five years after the Doctor leaves Monash IVF Group in other circumstances.
Doctors will be able to sell any non-escrowed Shares at any time, subject to complying with insider trading
restrictions and the Group’s Securities Trading Policy.
The escrow arrangements describe the circumstances in which a Doctor is a ‘good leaver’ or a ‘relocated leaver’ in
the following manner:
(a) A Doctor is a ‘good leaver’ where:
-
-
they leave the Group as a result of death, serious disability or permanent incapacity through ill health
(as determined by the Group’s Board, acting reasonably); or
they or the Group terminates the Doctor’s contract in specific circumstances; or
The Board determines, in its discretion, that the Doctor is a ‘good leaver’.
(b) A Doctor is a ‘relocated leaver’ if they terminate their contract and the Board is satisfied that:
-
-
-
the Doctor genuinely intends to relocate permanently to a place which is more than 100 km from any
clinic operated by the Group or any of its subsidiaries; and
the Doctor also intends to provide Assisted Reproductive Services in the place the Doctor is relocating
to; and
the Doctor has used their best endeavours to transition their practice to another Doctor at the Group.
92
76
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
4.1 Contributed equity and reserves (continued)
Escrow arrangements (continued)
Escrow for Sydney Ultrasound for Women (SUFW)
All shares issued to the vendors of SUFW are escrowed such that 53.3% of the shares issued were escrowed until
the first trading day after the release of the FY16 results at which time 3.3% of escrowed shares were released.
3.3% were escrowed until the first trading day after the release of the FY17 results and 3.3% are escrowed until
the first trading day after the release of the FY18 results. The remaining 40% is subject to escrow and is consistent
with the Doctors above in points 1 and 2.
Doctors will be able to sell any non-escrowed Shares at any time, subject to complying with insider trading
restrictions and the Group’s Securities Trading Policy.
The escrow arrangements describing the circumstances in which a SUFW Doctor is a ‘good leaver’ or a ‘relocated
leaver’ is the same as described above.
4.2 Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
-
-
-
-
Liquidity risk;
Foreign exchange risk;
Interest risk; and
Price risk.
This note presents information about the Group’s exposure to each of the above risks, objectives, policies and
processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are
included throughout this financial report.
Risk management policies are in place to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its
recruitment, training and management standards and procedures, aims to develop a disciplined and constructive
control environment in which all employees understand their roles and obligations.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The group manages this risk through the following
mechanisms:
-
Preparing forward-looking financial analysis in relation to its operational, investing and financing
activities;
- Monitoring undrawn credit facilities;
- Obtaining funding from a variety of sources;
- Maintaining a reputable credit profile;
- Managing credit risk related to financial assets;
- Only investing surplus cash with major financial institutions; and
-
Comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
The following are the contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting arrangements, subject to the Group meeting future undertakings.
77
93
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
4.2 Financial risk management (continued)
2019
Non-derivative financial liabilities
Secured bank loans
Trade and other payables
Derivative financial liabilities
Interest rate swaps
2018
Non-derivative financial liabilities
Secured bank loans
Trade and other payables
Derivative financial liabilities
Interest rate swaps
Carrying
amount
$’000
89,000
15,460
1,113
105,573
Carrying
amount
$’000
Contractual
cash flows
$’000
Within 1
year
$’000
1-5 years
> 5 years
$’000
$’000
(95,411)
(15,460)
(2,564)
(15,460)
(92,847)
-
(1,113)
(111,984)
(171)
(18,195)
(942)
(93,789)
-
-
-
-
Contractual
cash flows
$’000
Within 1
year
$’000
1-5 years
> 5 years
$’000
$’000
98,000
14,045
(102,867)
(14,045)
(3,361)
(14,045)
(99,506)
-
510
112,555
(510)
(117,422)
-
(17,406)
(510)
(100,016)
-
-
-
-
Foreign exchange risk
The Group is not exposed to material levels of foreign currency risk at the reporting date or during the financial
year.
Interest rate risk
Interest rate risk is managed using a mix of floating rate debt and fixed rate instruments. At 30 June 2019
approximately 56% of the interest rate exposure is fixed (FY18: 51%). This is achieved by entering into interest
rate swaps to mitigate interest rate risk on floating rate debt. Interest rate swaps are not entered into for trading
purposes and are not classified as held for trading.
The interest rate profile of the Group’s interest-bearing financial instruments as reported to management of the
Group is as follows including the impact of hedging instruments:
Fixed rate instruments
Financial assets
Financial liabilities
Variable rate instruments
Financial assets
Financial liabilities
Consolidated
2019
$’000
565
(50,000)
(49,435)
3,716
(39,000)
(35,284)
2018
$’000
565
(50,000)
(49,435)
3,228
(48,000)
(44,772)
Cash flow sensitivity analysis for variable rate instruments
A reasonable possible change of a 100 basis points in interest rates at the reporting date would have
increased/(decreased) equity and profit or loss by $352,840 (FY18: $447,720). This assumes that all other
variables remain constant.
94
78
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
4.2 Financial risk management (continued)
Market risk – Operational risk
The Group is exposed to legislative and/or Government policy changes to funding for IVF and related healthcare
services which may impact patient out-of-pocket costs resulting in potentially higher or lower demand.
Fair values
(a) Accounting classifications and fair values
The following table shows the carrying amounts and fair value of financial assets and financial liabilities, including
their levels in the fair value hierarchy. The Group has not disclosed the fair values for financial assets such as short-
term trade receivables, and financial liabilities such as payables (including variable rate secured bank loans),
because these carrying amounts are a reasonable approximation of fair values.
2019
Financial liabilities measured at fair value
Interest rate swaps for hedging
2018
Financial liabilities measured at fair value
Interest rate swaps for hedging
Carrying
amount
$’000
1,113
1,113
Carrying
amount
$’000
510
510
Fair Value
Level 1
Level 2
Level 3
$’000
$’000
$’000
-
-
1,113
1,113
-
-
Fair Value
Level 1
Level 2
Level 3
$’000
$’000
$’000
-
-
510
510
-
-
Total
$’000
1,113
1,113
Total
$’000
510
510
The table above analyses financial assets and liabilities carried at fair value. The different levels have been
defined as follows:
-
-
-
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
79
95
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
4.2 Financial risk management (continued)
(b) Measurement of fair value
(i) Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as
the significant unobservable inputs used.
Type
Valuation Technique
Significant unobservable
inputs
Inter-relationship
between significant
unobservable inputs and
fair value measurement
Not applicable
Not applicable
Interest rate swaps for
hedging
Market comparison
technique: The fair values
are based on broker
quotes. Similar contracts
are traded in an active
market and the quotes
reflect the actual
transactions in similar
instruments
4.3 Borrowings
Recognition and measurement
Derivative financial instruments, including hedge accounting
The Group holds derivative financial instruments to hedge certain floating interest rate exposures. On initial
designation of the hedge, the Group formally documents the relationship between the hedging instruments and
hedging items, including the risk management objectives and strategy in undertaking the hedge transaction,
together with the methods that will be used to assess the effectiveness of hedging relationship. The Group
makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether
the hedging instruments are expected to be “highly effective” in offsetting the change in the cash flows of the
respective hedged items during the period for which the hedge is designated, and whether the actual results of
each hedge are within a range of 80-125 percent. For a cash flow hedge of a forecast transaction, the
transaction should be highly probable to occur and should present an exposure to variations in cash flows that
could ultimately affect reported profit or loss.
Derivatives are recognised initially at fair value; attributed transaction costs are recognised in profit or loss as
incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes to therein are
accounted for as described below. All derivative financial instruments are valued using unadjusted quoted
prices in active markets for identical assets or liabilities.
Cash flow hedge
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised
in OCI and presented in the hedging reserve in equity. To the extent that the hedge is ineffective, changes in
fair value are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative
gain or loss previously recognised in OCI and presented in the hedge reserve in equity remains there until the
forecast transaction affects profit or loss. If the forecast transaction is no longer expected to occur, then the
balance in OCI is recognised immediately in profit or loss. In other cases the amount recognised in OCI is
transferred to profit or loss in the same period that the hedged item affects profit or loss.
96
80
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
4.3 Borrowings (continued)
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. They are subsequently measured at amortised cost using the effective interest method. Where there is an
unconditional right to defer settlement of the liability for at least twelve months after the reporting date, the
loans and borrowings are classified as non-current.
The current facility comprises of a $110.0m syndicated debt and $5.0m working capital facility. In addition,
the Group has access to an un-committed $40.0m accordion facility for acquisition and capital expenditure
purposes. In December 2018, the Group amended and extended the syndicated debt facility, working capital
facility and accordion facility. The maturity profile of the facilities has been extended to January 2022.
The maturity profile of the syndicated debt facility is as follows for amounts utilised:
Currency
Nominal
interest
rate
Year of
maturity
Face value
Commercial loans
Total interest bearing liabilities
AUD
2.88%
2022
$’000
89,000
89,000
Carrying
amount
$’000
89,000
89,000
30 June 2019
Borrowing carrying values are as follows:
Non current borrowings
Borrowings
Capitalised finance facility fees
Consolidated
2019
$’000
89,000
(651)
88,349
2018
$’000
98,000
(404)
97,596
The banking facilities are secured via a first ranking security over substantially all of the Group’s entities.
The Group is subject to certain financial undertakings under the banking facilities which will be tested at 31
December and 30 June each year. As at 30 June 2019, the Group is compliant with its financial undertakings
and expects to remain in compliance with these financial undertakings. During the prior year, there were no
defaults or breaches of covenants on any loans.
As at 30 June 2019, the Group had $1,369,000 of bank guarantees in place (FY18: $950,000).
81
97
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
4.4 Derivative financial instruments
Current
Derivatives
Non current
Derivatives
Consolidated
2019
$’000
171
171
942
942
2018
$’000
-
-
510
510
In February 2017, the Group entered into 2 interest rate swaps for $45m which are in a hedging relationship
with existing debt. $15m of these swaps will mature each year in February 2020, 2021 and 2022. A further
$5m interest rate swap was entered into in June 2018 for $5m which will mature in February 2020.
4.5 Net Finance Costs
Recognition and measurement
Finance income and finance costs include:
-
-
-
-
-
Interest income;
Interest expense;
The fair value gain or loss on contingent consideration classified as a financial liability;
The net gain or loss on hedging activities that are recognised in profit or loss; and
The reclassification of net gains previously recognised in OCI.
Finance income
Interest income
Finance expense
Interest expense
Amortisation of bank fees
Total finance expense
Net finance costs
Consolidated
2019
$’000
7
7
(3,656)
(153)
(3,809)
(3,802)
2018
$’000
9
9
(3,438)
(124)
(3,562)
(3,553)
98
82
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
4.6 Cash and cash equivalents
Recognition and measurement
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash balances and
term deposits with original maturities of three months or less that are subject to insignificant risk of changes in their
fair value, and are used by the Group in the management of its short-term commitments.
The Group limits its exposure to credit risk on liquid funds because the counterparties engaged are banks with high
credit ratings assigned by international credit agencies. At balance date, the Group had $4,281,000 in short-term
deposits or cash at bank with ‘A’ rated or higher Australian banks.
Cash at bank and in hand
Short-term bank deposits
Total cash and cash equivalents
Cash flow information
Consolidated
2019
$’000
3,716
565
4,281
2018
$’000
3,288
565
3,853
Consolidated
Reconciliation of profit after income tax to net
cash inflow from operating activities
Profit for the period
Adjustments for:
Net finance expense
Depreciation and amortisation
Mosman clinic closure accelerated depreciation
Income tax expense
Share of associate loss
Share rights expense
Doctor LTIP expense
Operating profit before changes in working capital and provisions
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other assets
(Increase)/decrease in inventory
Increase/(decrease) in trade and other payables
Increase in provisions and employee benefits
Income taxes paid
Net cash from operating activities
2019
$’000
19,807
3,802
5,073
882
7,678
37
12
6
37,297
867
(551)
(129)
1,626
769
(6,786)
33,093
2018
$’000
21,181
3,553
4,951
-
8,424
8
3
52
38,172
923
287
(451)
(3,546)
158
(9,613)
25,930
83
99
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (Continued)
for the year ended 30 June 2019
Section 5
Our Business Portfolio
This section provides further insight into the legal structure and group of subsidiary companies.
5.1 Controlled entities
5.1 Controlled entities
Parent entity
Monash IVF Group Limited
The below entities are 100% owned by Monash IVF Group Limited.
Controlled entities
Healthbridge Enterprises Pty Ltd
Monash IVF Group Acquisitions Pty Ltd
Healthbridge IVF Holdings Pty Ltd
Healthbridge Shared Services Pty Ltd
Healthbridge Repromed Pty Ltd
Repromed Finance Pty Ltd
Repromed Holdings Pty Ltd
Repromed NZ Holding Pty Ltd
Repromed Australia Pty Ltd
Adelaide Fertility Centre Pty Ltd
Monash IVF Holdings Pty Ltd
Monash IVF Finance Pty Ltd
Monash IVF Pty Ltd
Monash Reproductive Pathology and Genetics Pty Ltd
Monash Ultrasound Pty Ltd
Monash IVF Auchenflower Pty Ltd (formerly Wesley Monash IVF Pty Ltd)
Yoncat Pty Ltd
My IVF Pty Ltd
ACN 169 060 495 Pty Ltd
Palantrou Pty Ltd
ACN 166 701 819 Pty Ltd
ACN 166 702 487 Pty Ltd
KL Fertility & Gynaecology Centre Sdn. Bhd.
KL Fertility Daycare Sdn. Bhd.
Sydney Ultrasound for Women Partnership
Ultrasonic Diagnostic Services Trust No.2
ACN 604 384 661 Pty Ltd
Ultrasonic Diagnostic Services Pty Ltd
Fertility Australia Pty Ltd
Fertility Australia Trust
MVF Sunshine Coast Pty Ltd (formerly HBIVF Johor Bahru Lab Pty Ltd)
100
Place of business/country
Australia
Place of business/country
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Malaysia
Malaysia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
84
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
Section 6
Other disclosures
6.1 Changes in accounting policies
6.5 Deed of cross guarantee
6.2 New standards and interpretations
6.6 Auditors’ remuneration
6.3 Commitments
6.7 Events occurring after the reporting period
6.4 Parent entity disclosures
6.1 Changes in accounting policies
The Group has initially applied AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments
from 1 July 2018. A number of other new standards are effective from 1 July 2018 but they do not have a
material effect on the Group’s financial statements.
(a) AASB 15 Revenue from Contracts with Customers
AASB 15, Revenue from Contracts with Customers establishes a comprehensive framework for determining
whether, how much and when revenue is recognised. AASB 15 did not have a significant impact on the Group’s
recognition of revenue from services during the period or at transition date, due to the nature of services
provided and time from which they are provided.
(b) AASB 9 Financial Instruments
AASB 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some
contracts to buy or sell non-financial items. It also introduces an “expected loss” model for measuring impairment
of receivables. This standard replaces AASB 139 Financial Instruments: Recognition and Measurement.
Classification and measurement of financial assets and financial liabilities
AASB 9 largely retains the existing requirements in AASB 139 for the classification and measurement of financial
liabilities. However, it eliminates the previous AASB 139 categories for financial assets of held to maturity, loans
and receivables and available for sale.
The adoption of AASB 9 has not had a significant effect on the Group’s classification or measurement of financial
liabilities, financial assets and derivative financial instruments (for derivatives that are used as hedging
instruments during the period or at transition date).
85
101
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
6.2 New standards and interpretations
The following accounting standards, amendments to accounting standards and interpretations have been
identified as those which will impact the Group in the period of initial adoption. They were available for early
adoption for the Group’s annual reporting period beginning 1 July 2018, but have not been applied in
preparing this financial report.
Title of standard
AASB 16 Leases
Nature of change
AASB 16 removes the classification of leases as either operating leases or
finance leases for the lessee, effectively treating all leases as finance leases.
This will effectively move all off-balance sheet operating leases onto the
balance sheet.
Date of adoption by Group
The Group will apply the standard from its mandatory adoption date of 1
January 2019, the financial year beginning 1 July 2019.
Impact
The Group intends to apply the modified retrospective approach and will not
restate comparative amounts for the first year prior to adoption. Right-of-use
assets for property leases will be measured on transition as if the new rules had
always applied. All other right-of-use assets will be measured at the amount of
the lease liability on adoption.
The Group has completed an assessment of the potential impact on the Group’s
financial statements resulting from the application of AASB 16 with respect to
existing lease arrangements that fall within the scope of the standard (primarily
in relation to property).
Based on existing lease arrangements, on 1 July 2019, the Group expects to
recognise right-of-use assets of approximately $21.4m on 1 July 2019, lease
liabilities of approximately $23.2m, and deferred tax assets of approximately
$0.54m.
The following new or amended standards are not expected to have a significant impact on the Group’s consolidated financial
statements:
-
IFRIC 23 Uncertainty over Income Tax Treatments
-
-
-
AASB 1059 Service Concession Arrangements: Grantor
AASB 17 Insurance Contracts
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to AASB 10
and AASB 128)
102
86
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
6.3 Commitments
Capital commitments
The Group has $863,000 capital expenditure contracted for at the end of the reporting period but not
recognised as a liability (FY18: $119,000).
Non-cancellable operating lease
The Group is party to various non-cancellable operating leases expiring within 1 to 5 years which are subject to
varying extension clauses.
Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows:
Within one year
Later than one year but no later than 5 years
Later than five years
2019
$’000
5,391
8,682
-
14,073
2018
$’000
4,793
9,104
-
13,897
During the financial year ended 30 June 2019, $7,122,000 was recognised as an expense in the income
statement in respect of operating leases (FY18: $7,068,000).
6.4 Parent entity disclosures
The individual financial statements for the parent entity show the following aggregate amounts:
Results of parent entity
Profit after tax
Other comprehensive income
Total comprehensive income
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent entity comprising of:
Share capital
Retained earnings
Total equity
2019
$’000
13,535
-
13,535
2019
$’000
499,137
503,003
(64,317)
(64,317)
438,686
2019
$’000
428,757
9,929
438,686
2018
$’000
24,941
-
24,941
2018
$’000
486,340
490,206
(51,863)
(51,863)
438,343
2018
$’000
428,347
9,996
438,343
Contractual commitments for the acquisition of plant & equipment
The parent entity did not have any capital commitments for the acquisition of plant or equipment as at 30 June
2019 (FY18: nil).
Parent entity guarantees in respect of the debts of its subsidiaries
The parent entity has entered into a Deed of cross guarantee with the effect that the Company guarantees debts
in respect of certain subsidiaries.
87
103
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
6.5 Deed of cross guarantee
The below listed entities are parties to a Deed of cross guarantee under which each company guarantees the
debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the
requirement to prepare a financial report and directors’ report under ASIC Corporations (Wholly Owned
Companies) Instrument 2016/785 issued by the Australian Securities and Investments Commission.
The below companies represent the parties to the Deed of cross guarantee (‘closed group’) for the purposes of
the legislative instrument entered into on 26 June 2014;
Healthbridge Repromed Pty Ltd
- Monash IVF Group Ltd
- Monash IVF Group Acquisition Pty Ltd
Healthbridge Enterprises Pty Ltd
-
Healthbridge Shared Services Pty Ltd
-
Healthbridge IVF Holdings Pty Ltd
-
ACN 169060495 Pty Ltd
-
ACN 166701819 Pty Ltd
-
- My IVF Pty Ltd
-
- Monash IVF Holdings Pty Ltd
Palantrou Pty Ltd
-
ACN 166702487 Pty Ltd
-
Repromed Finance Pty Ltd
-
- Monash IVF Finance Pty Ltd
Repromed Holdings Pty Ltd
-
- Monash IVF Pty Ltd
-
-
- Monash Ultrasound Pty Ltd
- Monash Reproductive Pathology & Genetics Pty Ltd
- Monash IVF Auchenflower Pty Ltd
-
-
-
-
-
-
-
-
- MVF Sunshine Coast Pty Ltd (formerly HBIVF Johor Bahru Lab Pty Ltd)
Yoncat Pty Ltd
Adelaide Fertility Centre Pty Ltd
Sydney Ultrasound for Women Partnership
Ultrasonic Diagnostic Services Trust No. 2
ACN 604384661 Pty Ltd
Ultrasonic Diagnostic Services Pty Ltd
Fertility Australia Pty Ltd
Fertility Australia Trust
Repromed Australia Pty Ltd
Repromed NZ Holding Pty Ltd
An extract of the consolidated statement of comprehensive income and consolidated statement of financial
position, comprising the Company and controlled entities which are party to the Deed of cross guarantee, after
eliminating all transactions between parties to the Deed of cross guarantee, for the year ended 30 June 2019 is
set out as follows:
104
88
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
6.5 Deed of cross guarantee (continued)
Extract of the statement of profit or loss and other comprehensive income
Profit before tax
Income tax expense
Net profit after tax
Other comprehensive income
Profit for the period
Items that may be subsequently reclassified to profit or loss
Cash flow hedges
Tax on cash flow hedges
Other comprehensive income for the year, net of tax
Summary of movements in consolidated retained earnings
Retained earnings at the beginning of the financial year
Profit for the period
Dividends paid – ordinary shares
Retained earnings at the end of the financial year
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax asset
Inventory
Other assets
Total current assets
Non current assets
Investment in subsidiaries
Trade and other receivables
Plant and equipment
Intangible assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Employee benefits
Total current liabilities
Non current liabilities
Borrowings
Derivative financial instruments
Deferred tax liability
Employee benefits
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2019
$’000
25,654
(6,516)
19,138
19,138
(603)
181
18,716
(122,265)
19,138
(13,192)
(116,319)
2019
$’000
2,511
3,263
650
3,756
3,152
13,332
13,343
69
14,170
251,954
279,536
292,868
16,888
171
8,559
25,618
88,349
942
2,128
913
92,332
117,950
174,918
428,757
(137,520)
(116,319)
174,918
2018
$’000
29,136
(7,711)
21,425
21,425
121
(36)
21,510
(125,093)
21,425
(18,597)
(122,265)
2018
$’000
2,625
4,125
2,367
3,739
2,614
15,470
13,401
69
14,562
250,962
278,994
294,464
15,742
-
7,897
23,639
97,596
510
2,919
804
101,829
125,468
168,996
428,347
(137,086)
(122,265)
168,996
As at 30 June 2019, the Deed of cross guarantee has a net current asset deficiency of $12,286,000 (FY18: $8,169,000). As per the basis of preparation note, the Group considers the
Deed of cross guarantee to be a going concern.
89
105
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Monash IVF Group Limited
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
6.6 Auditors’ remuneration
During the year the following fees were paid or payable for services provided by the auditor of the parent
entity, its related practices and non-related audit firms
Audit services - KPMG
Audit and review of financial statements
Other services - KPMG
Taxation services
Other auditors (Non-KPMG)
Audit and review of financial statements
Total services
6.7 Events occurring after the reporting period
2019
$
2018
$
284,000
284,000
146,000
144,065
11,949
441,949
10,500
438,565
(a) On 10 July 2019, Monash IVF Group Limited announced the acquisition of Fertility Solutions, a Queensland
based provider of fertility services, for initial cash consideration of $2.1 million. The financial effects of this
transaction have not been recognised at 30 June 2019. The operating results and assets and liabilities of the
acquired entity will be consolidated from the completion date expected to be in early September 2019.
(b) On 22 August 2019, Monash IVF Group Limited announced that five Victorian based fertility specialists
(“Doctors”) who currently refer patients for IVF treatment and are not subject to both notice and restraint
provisions (unlike the vast majority of its 106 specialists), will cease using services from Monash IVF Group Limited
from September 2019. These Doctors intend to establish their own independent IVF clinic with operational control.
(c) On 26 August 2019, a fully franked final dividend of 3.0 cents per share was declared. The record date for
the dividend is 6 September 2019 and the payment date for the dividend is 11 October 2019.
Except as disclosed above, there has not arisen in the interval between the end of the financial year and the
date of this report any item, transaction or event of a material or unusual nature likely, in the opinion of the
directors of the Company, to affect significantly the operations of the Group, the results of those operations, or
the state of affairs of the Group, in future financial periods.
106
90
Monash IVF Group Limited
Directors’ Declaration
Directors’ Declaration
for the year ended 30 June 2019
For The Year Ended 30 June 2019
1.
In the opinion of the directors of Monash IVF Group Ltd (the ‘Company’):
(a) the consolidated financial statements and notes set out on pages 66 to 106 and the Remuneration
report on pages 35 to 51 in the Directors’ report, are 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 2019 and of its
performance for the financial year ended on that date; and
complying with Australian Accounting Standards, the Corporations Regulations 2001; and
(ii)
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
2. There are reasonable grounds to believe that the Company and the Group entities identified in Note 6.5
will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of
the Deed of Cross Guarantee between the Company and those Group entities pursuant to ASIC
Corporations (Wholly Owned Companies) Instrument 2016/785.
3. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 by
the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2019.
4. The Directors draw attention to page 71 to the consolidated financial statements, which include a statement
of compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Dated at Melbourne, 26th day of August 2019
Mr. Richard Davis
Chairman
26 August 2019
Mr. Michael Knaap
Chief Executive Officer
26 August 2019
107
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Independent Auditor’s Report
This is the original version of the Audit Report over the Financial Statements signed by the Directors on 26 August 2019.
Page references should be read as follows to reflect the correct references now that the Financial Statements have been
presented in the context of the Annual Report in its entirety: page references with respect to our Report on the
Remuneration Report as set out in the Director’s Report, should be updated to read pages 35 to 51.
108
Independent Auditor’s Report To the shareholders of Monash IVF Group LimitedReport on the audit of the Financial Report We have audited the Financial Report of Monash IVF Group Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: •giving a true and fair view of the Group’sfinancial position as at 30 June 2019 and of itsfinancial performance for the year ended onthat date; and•complying with Australian AccountingStandards and the Corporations Regulations2001.The Financial Report comprises: •Consolidated statement of financialposition as at 30 June 2019•Consolidated statement of profit or lossand other comprehensive income,consolidated statement of changes inequity and consolidated statement of cashflows for the year then ended•Notes including a summary of significantaccounting policies•Directors’ Declaration.The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code. 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. This matter was 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 this matter. Opinion KPMG, an Australian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Ccoperative ("KPMG International"), a Swiss entity.Liability limited by a scheme approved under Professional Standards Legislation92 Independent Auditor’s Report (Continued)
This is the original version of the Audit Report over the Financial Statements signed by the Directors on 26 August 2019.
Page references should be read as follows to reflect the correct references now that the Financial Statements have been
presented in the context of the Annual Report in its entirety: page references with respect to our Report on the
Remuneration Report as set out in the Director’s Report, should be updated to read pages 35 to 51.
109
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Goodwill ($229.1 million) Refer to Note 2.3 of the Financial Report The key audit matter How the matter was addressed in our audit At 30 June 2019 the Group’s balance sheet includes goodwill, contained within three cash generating units (CGUs) – Australian IVF, International IVF and Ultrasound. A key audit matter for us was the Group’s annual testing of goodwill for impairment. We focused on the significant forward-looking assumptions the Group applied in its value in use models, including: •Forecast operating cash flows, growthrates and terminal growth rates in light ofany changes in market conditions that haveimpacted the performance of relevantCGUs. These conditions impact ourconsideration of forecasting risk; and•Discount rate – these vary according to theconditions and environment the specificCGU is subject to from time to time.The Group uses a range of internal and external sources as inputs to the model assumptions. Forward-looking assumptions can be prone to greater risk for potential bias, error and inconsistent application. Where the Group has not met prior year forecasts in relation to a specific CGU we factor this into our assessment of forecast assumptions. These conditions necessitate additional scrutiny by us, in particular to address the objectivity of sources used for assumptions, and their consistent application. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. Our procedures included: •We assessed the appropriateness of theGroup’s identified CGU’s, and considered theappropriateness of the Group’s value in usemethodology to perform the annual test ofgoodwill for impairment against therequirements of the accounting standards;•We assessed the integrity of the value in usemodels used, including the accuracy of theunderlying formulas;•We compared the forecast cash flowscontained in the value in use models to Boardapproved forecasts;•We assessed the accuracy of previous Groupforecasting to inform our evaluation offorecasts included in the value in use models.We applied increased scepticism to CGUforecasts when there was a shortfall inperformance against previous forecasts;•We considered the sensitivity of the modelsby varying key assumptions, such as forecastgrowth rates and discount rates, to identifythose assumptions at higher risk of bias orinconsistency in application. We alsoassessed the relatedimpairment breakeven points for theseassumptions in order to identify those CGUsat higher risk of impairment and to focus ourfurther procedures;•We challenged the Group’s forecast cash flowand growth assumptions in light of anychanges to market conditions. We comparedkey events to the Board approved plan andstrategy, and applied increased scepticism toforecasts in the areas where previousforecasts were not achieved. We comparedforecast growth rates and terminal growthrates to published information regardingindustry trends and expectations whereappropriate, and considered differences in theGroup’s operations. We used our knowledge93 Independent Auditor’s Report (Continued)
This is the original version of the Audit Report over the Financial Statements signed by the Directors on 26 August 2019.
Page references should be read as follows to reflect the correct references now that the Financial Statements have been
presented in the context of the Annual Report in its entirety: page references with respect to our Report on the
Remuneration Report as set out in the Director’s Report, should be updated to read pages 35 to 51.
110
of the Group, its past performance, business and customers and our industry experience; •Working with our valuation specialists, weindependently developed a comparablediscount rate range using publicly availablemarket data for comparable entities andassessed the appropriateness of entity-specific risk factors; and•We assessed the disclosures in the financialreport against the requirements of theaccounting standards.Other Information Other Information is financial and non-financial information in Monash IVF Group Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. The Other Information we obtained prior to the date of this Auditor’s Report was the Director’s Report, Remuneration Report, Appendix 4E, Corporate Governance Statement and FY19 Results Presentation. The Chairman’s Report, CEO/Managing Director’s Report, CFO Report, Group Medical Director’s Report, Scientific Directors’ Report and Shareholder Information are expected to be made available to us after the date of the Auditor’s report.Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we 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. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: •preparing the Financial Report that gives a true and fair view in accordance with AustralianAccounting Standards and the Corporations Act 2001•implementing necessary internal control to enable the preparation of a Financial Report thatgives a true and fair view and is free from material misstatement, whether due to fraud orerror•assessing the Group’s ability to continue as a going concern and whether the use of the goingconcern basis of accounting is appropriate. This includes disclosing, as applicable, mattersrelated to going concern and using the going concern basis of accounting unless they eitherintend to liquidate the Group or to cease operations, or have no realistic alternative but to doso.94 Independent Auditor’s Report (Continued)
This is the original version of the Audit Report over the Financial Statements signed by the Directors on 26 August 2019.
Page references should be read as follows to reflect the correct references now that the Financial Statements have been
presented in the context of the Annual Report in its entirety: page references with respect to our Report on the
Remuneration Report as set out in the Director’s Report, should be updated to read pages 35 to 51.
111
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Auditor’s responsibilities for the audit of the Financial Report Our objective is: •to obtain reasonable assurance about whether the Financial Report as a whole is free frommaterial 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 Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar2.pdf This description forms part of our Auditor’s Report. Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Monash IVF Group Limited for the year ended 30 June 2019, complies with Section 300A of the Corporations Act 2001. Directors’ 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 responsibilities We have audited the Remuneration Report included in pages 19 to 35 of the Directors’ report for the year ended 30 June 2019. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BW Szentirmay Partner Melbourne 26 August 2019KPMG95 Shareholder Information
Shareholder Information
Additional information required under ASX Listing Rule 4.10 and not shown elsewhere in this Annual Report is
as follows. This information is current as at 30 September, 2019.
Distribution of Shareholders – Ordinary Shareholders
Size of Holding
1 to 1000
1001 to 5000
5001 to 10000
10001 to 100000
100001 and Over
Total
No of
Shareholders
1,465
Ordinary
Shares
924,810
% of issued
Capital
0.39%
2,463
1,012
1,075
6,908,340
7,901,011
28,396,840
114
191,654,883
2.93%
3.35%
12.04%
81.28%
6,129
235,785,884
100.00%
The number of security investors holding less than a marketable parcel of 470 securities ($1.065 on 30/9/2019)
is 425 and they hold 117,827 securities.
112
Shareholder Information (Continued)
Shareholder Information continued
20 Largest Shareholders – Ordinary Shareholders
Rank
1
Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
No. of fully
paid shares
% of issued
Capital
56,980,314
24.17%
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
ARGO INVESTMENTS LIMITED
JANGHO HEALTH CARE AUSTRALIA PTY LTD
BOND STREET CUSTODIANS LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMINEES PTY LTD
XLY HOLDING PTY LTD
PACIFIC CUSTODIANS PTY LIMITED
IPPOLITI PTY LTD
VOLLENHOVEN INVESTMENTS PTY LTD
MR PRASHANT NADKARNI
BNP PARIBAS NOMS PTY LTD
MILKS SFCT PTY LTD
DALYNE PTY LTD
KELTON PAUL TREMELLEN
ECAPITAL NOMINEES PTY LIMITED
Total for Top 20
Total other investors
Grand Total
Substantial Shareholders
19,373,616
17,440,559
13,310,809
11,454,986
10,623,124
4,940,000
4,612,000
3,463,725
3,444,768
3,090,000
2,474,369
2,011,336
1,812,787
1,461,484
1,431,012
1,229,928
1,170,000
1,109,245
1,102,408
8.22%
7.40%
5.65%
4.86%
4.51%
2.10%
1.96%
1.47%
1.46%
1.31%
1.05%
.85%
.77%
.62%
.61%
.52%
.50%
.47%
.47%
162,536,470
73,249,414
68.93%
31.07%
235,785,884
100.00%
As at 30 September 2019, the following details the names of substantial shareholders in Monash IVF Group
Limited and the number of shares held, as disclosed in substantial holding notices given to the Company:
Rank
1
2
Name
AUSTRALIANSUPER PTY LTD
CELESTE FUNDS MANAGEMENT
Voting Rights
No. of fully
paid shares
27,333,696
12,988,660
% of issued
Capital
11.6%
5.5%
In accordance with the Constitution, each member present at a meeting (whether in person, by proxy, by power
of attorney or by a duly authorised representative), upon a poll, shall have one vote for each fully paid ordinary
share.
113
MoNASh IVF GRoUP LIMIted
Annual Report 2019
Corporate Directory
Corporate Directory
Stock Exchange Listing
Auditor
KPMG Australia
Tower Two, Collins Square
727 Collins Street
Docklands VIC 3008
T +61 (0)3 9288 5555
Corporate Office
Pelaco Building 1
Level 1
21‐31 Goodwood Street
Richmond VIC 3121
T +61 (0)3 9420 8235
Website
www.monashivfgroup.com
The shares of Monash IVF Group are listed by ASX
Ltd on the Australian Securities Exchange trading
under “MVF”.
Directors
Mr Richard Davis – Chairman
Ms Christina Boyce
Mr Neil Broekhuizen
Mr Josef Czyzewski
Dr Richard Henshaw
Mr Michael Knaap
Ms Zita Peach
Mr Malik Jainudeen – Company Secretary
Share Registry
Link Market Services
Tower 4, 727 Collins Street
Melbourne VIC 3008
T 1300 554 474
Legal
Clayton Utz
1 Bligh Street
Sydney NSW 2000
T +61 (0)2 9353 4000
114