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Brave together.
Annual Report
2020
Monash IVF Group Annual Report 2020
Brave together
1
We are moving forward into another exciting era for
Monash IVF Group.
As the world becomes richer with diversity and society’s needs change, it is important that
Monash IVF Group continues to progress. This includes evolving the way we lead and the way we look.
Leading the future of reproductive care
There is still a lack of information about reproductive health, and taboos about infertility, miscarriage
and the role of the male factor infertility.
We want to help change the way society thinks about and takes care of their fertility. We will use the
knowledge and experience we have gained over the last 40+ years, and the expertise of our people
and doctors to drive early awareness, promote conversation about fertility, lead the advancement
of reproductive science and offer early, proactive fertility health services.
We have so much more to offer than just IVF. We can educate and empower patients so they can
proactively manage their reproductive health and increase their chances of achieving a family.
Our new brand identity reflects the empathetic, warm and nurturing patient experience we provide
to patients each and every day.
Let’s be #bravetogether
Contents
Chairman’s Report
Managing Director & CEO’s Report
Financial Overview
Chief Financial Officer’s Report
Board of Directors
Management Team
Directors’ Report
Remuneration Report – Audited
4
6
8
9
22
24
25
41
Auditor’s Independence Declaration 57
Corporate Governance Statement
58
Consolidated Statement
of Profit or Loss and Other
Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
72
73
74
Consolidated Statement
of Cash Flows
Notes to the Consolidated
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
75
76
117
118
123
125
Monash IVF Group Annual Report 2020
A year in review
Kuala Lumpur
109 Locations
25 Fertility centres
65 Consulting locations
2 Day hospitals
17 Diagnostic sites
Australia
Full Service Clinics
Consulting Locations
Day Hospitals
Diagnostic Sites
Our
Reproductive
Care Team
Doctors
121
Scientists
136
Nurses
151
Sonographers
Counsellors
Support staff
59
28
222
Brave together
3
8,010
Total stimulated
cycles
82,311
Ultrasound
scans
13,478
Non Invasive Pre Natal
Testing increased
by 2.9%
14,894
Total Group IVF
patient treatments
94%
Increase in reproductive
carrier screening counselling
8 Fertility
Specialists
joined Monash IVF Group
in FY20
Dr Vanessa King
Dr Fiona Cowell
Monash IVF Group Annual Report 2020
Chairman’s
Report
Our commitment to being one of the world’s best fertility providers has never been
more strongly demonstrated than over the last 12 months. I would like to highlight
five key themes which have been evident at Monash IVF Group during this time.
Leading through resilience
Monash IVF Group has managed an unprecedented number
of operational and financial challenges resulting from
COVID-19. Agility and resilience were critical as we adapted
our operating model in response to the temporary elective
surgery suspension, the introduction of safety and protective
measures, border restrictions and the significant changes
to state based health policies across Australia and Malaysia.
During this time, the Board and management team worked
closely to ensure our people, doctors and patients were at
the centre of our decisions and operational changes.
I am proud of the
commitment of our
people and the high level
of care, empathy and
support they provided in
what was an unsettling
time for patients.
Patient and community focus
As a leader in the community, we were aware that our
contribution needed to extend beyond the operations
of Monash IVF Group. We were considered in how we
balanced the needs of our patients with the needs of
the greater healthcare system in our decision making.
I am proud of the commitment of our people and the
high level of care, empathy and support they provided
in what was an unsettling time for patients.
As day-to-day business processes were adapted for
the new normal, we also collaborated with our patients
to co-design and improve the patient experience.
This included addressing key pain points for our patients,
digitising parts of the patient journey and improving
patient communications.
Innovation despite adversity
We progressed a number of significant growth initiatives
during the year. These included construction of our new
flagship Sydney CBD fertility clinic which is due to open
later this year, and our second international investment
with the acquisition of KPJ Johor Specialist Hospital
Fertility Business in Malaysia.
We demonstrated our agility and willingness to respond
to new ways of working and living through the shift to
telehealth, remote working in some parts of our business,
digital engagement with our patients and people, and the
myriad of operational changes which were implemented
to ensure the ongoing safety of our people, patients
and doctors.
Our future growth and succession plans were significantly
strengthened during the year with 12 specialists participating
in our fertility traineeship program, and eight new contracted
fertility specialists joining Monash IVF Group.
Brave together Through close
collaboration with our
fertility specialists and
people, we have seen our
business emerge from
COVID-19 financially
stronger, more resilient
and with strong growth
momentum.
Strength in recovery
Our management team has done an impressive job in
navigating the myriad of challenges and leading us through
to a strong recovery. Through close collaboration with
our fertility specialists and people, we have seen our
business emerge financially stronger, more resilient
and with strong growth momentum.
Our Adjusted Profit After Tax for certain non-regular items
was $14.4m with revenues of $145.4m. There was a
$3.9m adverse NPAT impact during March to June 2020
compared to the prior comparison period due predominately
to the COVID-19 temporary shutdown, which includes
$4.9m (pre-tax) JobKeeper subsidies to maintain our
workforce during hibernation and recovery periods.
The dividend for the first half of FY20 has been deferred
to 2 October 2020.
Importantly, following the recommencement of IVF services
in Australia, our full service stimulated cycles increased by
33.6% from June to July 2020 compared to last year.
Our Malaysian business has recovered well following easing
of the Movement Control Orders on 9 June, which resulted
in 23.5% stimulated cycle growth in June to July 2020 with
July up 72% compared to the prior comparison period.
This minimised the adverse impact on our volumes and
is reassuring as we head into FY21.
A number of initiatives were implemented to assist in
mitigating the financial impact of COVID-19 during the
period from March to June 2020, including an $80m
equity raising to reduce debt, strengthening our balance
sheet, pursuing further growth opportunities in South East
Asia and investment in our domestic infrastructure.
5
Evolution and growth
The next 12 months are now focused on continued
investment, evolution and growth.
We will continue to evolve and deliver new services and
technologies that meet society’s changing needs including
earlier and preventative reproductive health, and continued
enhancement of the patient experience through digitisation.
We have also updated our brand identity to reflect our
best in class positioning and the empathetic, warm and
nurturing patient experience we provide to our patients
each and every day.
In conclusion, we are excited about the year ahead and look
forward to continuing to deliver the best possible reproductive
care for our patients and strong results for our shareholders.
Thanks and appreciation
On behalf of the Board and Management I wish to extend
thanks to Christy Boyce for her contribution to the Monash IVF
Group Board. Christy tended her resignation from the Board
on 29th June 2020. Christy was a foundation director and
held the position of Chair of the Remuneration and Nomination
Committee for the past six years. We thank Christy for her
service to Monash IVF Group and wish her well for the future.
Following the resignation of Christy, we are delighted
to welcome Catherine West to the Board of Directors.
Catherine was appointed on 8 September 2020 as an
Independent Non-executive Director. We are thrilled to have
the skill and expertise of Catherine on the Board and look
forward to working with her.
In closing, the Board wishes to thank our investor shareholders
for their commitment to Monash IVF Group. Thanks must
also be extended to Michael Knaap our CEO and his
experienced management team, together with our doctors,
nurses, scientists and support staff for their commitment
and leadership during what has been a challenging 2020.
Mr Richard Davis
Independent Chairman
Monash IVF Group Annual Report 2020
Managing Director &
CEO’s Report
FY20 has been a year that we will all remember for its challenges and the way
we have overcome them. I am proud of Monash IVF Group for our commitment
during this time. We have demonstrated strength by continuing to live by our
principles and deliver a safe environment for our people, doctors and patients.
FY20 performance
Our experienced and capable team of 121 doctors and
over 550 scientific, nursing and support team members
showed exceptional resilience, agility and courage in FY20.
This aided in reconfirming our best in class position as a
leader in reproductive health care.
Although our FY20 results were adversely impacted by
a temporary suspension of elective surgery, our recovery
was strong and swift. Our stimulated cycles were up by
33.6% in the June to July 2020 period versus the
previous corresponding period.
In our key markets, stimulated cycle market share was
relatively stable at 20.4%. Our market share improved by
0.8% compared to the six-month period to December 2019,
reflecting positive operational momentum and a successful
recovery after the COVID-19 suspension.
Our Kuala Lumpur clinic is on the path to recovery after a
sustained period of Movement-Control Orders in Malaysia,
having demonstrated 72% stimulated-cycle growth in the
month of July versus the previous corresponding period.
Our Ultrasound business operated throughout COVID-19
with a significant focus on effective infection control and
social-distancing measures, providing a safe environment.
We demonstrated scan growth during the June-July period of
9.5%, with total scans for FY21 across the Group increasing
by 1.8%. In light of a moderate decline in the March to June
period, this was a good result.
Collaborating through COVID-19
Thank you to our clinician group for their exceptional
contributions during COVID-19. They supported the
safe clinical protocols, minimal disruption in services
and the recovery phase.
Our future foundations continue to be strong as we
welcome and support our new clinicians to the
Monash IVF Group network.
We’re looking forward to collaborating with our doctors –
new and existing – to develop and grow their business.
This is particularly exciting with our increased focus on
patient and doctor engagement through digital pathways,
such as webinars, Facebook and telehealth services.
People engagement remains a key priority. Our people
continue to be celebrated for their exceptional work,
passion and pride in Monash IVF Group and our principles.
Throughout the COVID-19 crisis, our team remained
supportive and responsive to provide our community with a
safe environment. Safety protocols – including hygiene and
infection control measures, social distancing and remote
and virtual working – ensured we could continue supporting
our patients.
We also continue to build specialised capabilities and
knowledge through our dedicated learning and development
framework and platforms.
Progress of our strategic roadmap
Despite the challenges of COVID-19, we were able to continue
the momentum of our strategic plan and break new ground,
with improvements in science, patient care and services.
Increased marketing activities are driving growth in the
patient pipeline. Our patient engagement activities during
the shutdown period have driven a strong recovery of
pent-up demand.
We were excited to launch a new ‘Brave Together’
advertising campaign to illustrate our progressive,
empathetic and empowering approach to patient care.
Brave together We are investing in expanding our clinic and consulting
network, while enhancing our value proposition to patients
and specialists.
Our new Sydney CBD flagship clinic is on track to open during
the second quarter of this financial year and will represent
best-practice patient experience. This clinic is a key initiative
to attract new fertility specialists into the Monash IVF family.
The strategic priority of clinic infrastructure has continued
to be a focus in FY20 with a particular focus on transformation
of our Melbourne footprint, a new full-service clinic in Penrith,
which commenced in October and a refurbishment completed
in our Dulwich, South Australia clinic.
In a positive milestone for our international expansion,
we acquired a majority stake of a boutique IVF operation
in Johor Bahru, Malaysia, increasing our footprint in the
South East Asian region.
Domestically, we celebrated the acquisition of Fertility
Solutions and taking a majority share in the Tasmania clinic.
Both our international and local acquisitions and growth
are supported by our unrelenting focus on building scientific
capability to give our patients the best possible outcomes.
We have demonstrated improvement in our success rates
in FY20. In addition, we continue to partner with innovative
organisations to advance new technologies, such as a safer
and softer method of ICSI that is demonstrating improved
fertility rates and therefore creating more embryos for
our patients.
7
Our future
foundations continue
to be strong as we
welcome and support
our new clinicians
to the Monash IVF
Group Network.
Looking ahead
Our strategic roadmap, Vision 2022, will continue to guide
our priorities, actions and decisions to achieve success
and deliver profitable growth in the oncoming years.
Our capital metrics following the equity raise allowed us
to navigate the uncertainty of COVID-19 and will allow us
to maintain momentum on strategic growth initiatives to
achieve our Vision 2022.
As a business, we will continue to be agile to provide
a safe environment for our people, doctors and patients.
Thank you to our people for supporting our community
in this uniquely challenging and uncertain environment.
Together we will continue to embrace new ways of working
to be the leaders in reproductive care.
Michael Knaap
Chief Executive Officer
& Managing Director
Our strategic roadmap,
Vision 2022, will continue
to guide our priorities,
actions and decisions to
achieve success and deliver
profitable growth in the
oncoming years.
Monash IVF Group Annual Report 2020
Financial Overview
Operating performance impacted by COVID-19 disruption and departure of specialists in Victoria
Revenue
$145.4m
FY19 $152.0m ( 4.3%)
Adjusted EBIT 1,3,5
$24.4m
FY19 $32.7m (25.3%)
Adjusted EBITDA1,2,3,4,5
$34.8m
Adjusted NPAT 1,3,4,5
$14.4m
FY19 $37.8m (8.0%)
FY19 $20.9m( 31.2%)
Reported EBITDA2,3
$32.8m
Reported NPAT 1,3,4
$11.7m
FY19 $37.2m (11.8%)
FY19 $19.9m ( 40.9%)
Note: Financial metrics include impact from COVID-19 and AASB16 Leases.
1. Reported EBITDA adjusted by $2.0m, Reported EBIT adjusted by $2.6m and Reported NPAT by $2.7m. Refer to page 10 for reconciliation.
2. EBITDA is a non-IFRS measure. EBITDA is defined as Earnings before interest, tax, depreciation and amortisation.
3. FY20 includes impact from changes to AASB16 Lease accounting standard (EBITDA +7.2m, EBIT +$1.6m and NPAT +$0.3m).
4. Attributable to ordinary members.
5. Adjusted EBITDA, Adjusted EBIT and Adjusted NPAT are non-IFRS measures.
$m
Group Revenue
EBITDA (1)
Adjusted EBITDA (1)(2)(6)
EBIT
Adjusted EBIT (1)(6)
NPAT attributable to ordinary shareholders
Adjusted NPAT (1)(6)
EPS (cents)
DPS (cents)
Net Debt (m) (3)
Net Debt to Equity ratio (4)
Return on Equity (pa.) (5)
FY20
$145.4
$32.8
$34.8
$21.8
$24.4
$11.7
$14.4
4.6
2.1
FY19
$152.0
$37.2
$37.8
$31.3
$32.7
$19.9
$20.9
8.4
6.0
% change
(4.3%)
(11.8%)
(8.0%)
(30.2%)
(25.3%)
(40.9%)
(31.2%)
(45.2%)
(65.0%)
30 June 20
30 June 19
$4.2
1.7%
5.7%
$84.7
48.8%
12.1%
(1) Adjusted reflects non-regular items relating to transaction costs on acquisition activity, restructuring costs, certain pre-IPO patient claim, closure of interest
rate swaps and work-in-progress Sydney CBD clinic premise operating costs. Refer to page 29.
(2) EBITDA is earnings before interest, tax, depreciation and amortisation. EBITDA is a non-IFRS measure which is used by the Group as a key indicator of underlying
performance. This non-IFRS measure is not subject to audit or review.
(3) Debt less cash balances.
(4) Net debt to equity is debt divided by equity.
(5) Return on equity is Adjusted NPAT divided by closing equity.
(6) Adjusted EBITDA, Adjusted EBIT and Adjusted NPAT are non-IFRS measures.
Brave together 9
Chief Financial Officer’s
Report
The pandemic has created a challenging operating environment
but Monash IVF Group is well positioned to grow in FY21 and beyond.
The ongoing COVID-19 pandemic has had an overwhelming
impact on our global community and has created challenges
and presented unchartered waters that will continue into the
short and medium term. The $80m equity raising completed
in May 2020 and the sharp recovery following the re-opening
of elective surgery in Australia, has placed the Group in a
strong position to pursue its strategic growth plan and any
implications the next chapter of the Pandemic may present.
The impact from the shutdown of elective surgery during parts
of Q4 and the departure of five Victorian fertility specialists in
Q1 had an impact on profitability resulting in an Adjusted Net
Profit After Tax decline of 31.2% to $14.4m.
Our full year revenue declined by $6.6m or 4.3% to $145.4m.
The domestic IVF businesses experienced a $5.7m revenue
decline in the period March to June 2020 which included an
approximate 530 stimulated cycle decline (compared to
previous corresponding period (pcp)) during the COVID-19
shutdown period from early April to mid-May, followed by a
strong recovery whereby stimulated cycles increased by 34%
in the period from mid-May to 30 June. The strong recovery
has continued into FY21 with stimulated cycles increasing by
32% in July compared to previous corresponding period (pcp).
The Kuala Lumpur clinic was also impacted due to
Movement Control Orders (MCO) in Malaysia resulting in a
$1.7m or 14.5% revenue decline as stimulated cycles reduced
by 58% in the period from March to June compared to pcp.
Following the easing of the MCO, stimulated cycles have
increased by 72% in July 2020 compared to pcp.
Full year adjusted EBITDA (excluding the impact from
AASB16) declined by $10.1m to $27.7m. The revenue
decline in the period from March to June had a substantial
impact on earnings. Prior to March, earnings growth was
experienced in South Australia, New South Wales and
Queensland, whilst Victoria declined due to the departure
of five fertility specialists. There has been a $1.1m increase
in Marketing investment particularly during Q4FY20, which
has created a strong patient pipeline going into FY21.
Net debt has reduced to $4.2m following the equity
raising resulting in a stronger balance sheet to navigate
through the pandemic and pursue organic and non-organic
growth opportunities.
Given lower debt, the Syndicated Debt Facility size has been
reduced from $110m to $40m. Whilst the size of the facility
has been reduced, the Group continues to have access to
the $40m Accordion Facility for acquisitions and growth
capital expenditure. Bank covenants have been waived to
30 June 2021 but importantly, the Net Leverage Ratio
is 0.15x and well below the 3.5x covenant requirement.
Operating cash flow generation was strong in FY20 with
conversion of EBITDA to pre-tax operating cash flows solid
at 108%. The second half was particularly strong following
a 78% conversion rate in the first half reflecting several cash
management initiatives implemented during the uncertain
operating environment since March.
Cash management initiatives included deferring the 1H20
interim dividend which was paid on 2 October 2020 and
no final FY20 dividend was declared.
In closing, I would like to thank all our staff including the
Board and the Executive Team for the response to the
Pandemic which has placed Monash IVF Group in a
strong position to grow in FY21 and beyond.
Malik Jainudeen
Chief Financial Officer
and Company Secretary
Monash IVF Group
Monash IVF Group Annual Report 2020
Patient
Experience
Creating a better patient experience
We are proud of the passion and commitment our people continue to demonstrate to
our patients. Despite the operational challenges presented by COVID-19, we ensured
that the patient experience continued to be caring and empathetic.
Net Promoter Score (NPS) remains the key measure of patient
satisfaction across the Group. Our Group NPS ended the year
strongly at 58.5%.This increase on last year, despite the
operational impact of COVID-19, is a success for our Group.
We are pleased to see that the number of patients who have
had a positive experience and would recommend our services
is continuing to grow. We continue to use the insights gained
through our Net Promoter Score measurement program to
identify service improvements.
We made significant inroads during the year to progress
our patient focus and experience.
• An online booking system was introduced for our
Sydney Ultrasound business increasing convenience
for our patients.
• Digitisation of the pre-treatment and day surgery
admission processes was undertaken through the
trial of a mobile platform in our South Australian clinic.
• A patient experience vision was developed to support
delivery of a consistent, best in class patient experience
across our States and clinics.
• The financial elements of the patient experience
were reviewed to improve patient convenience,
empathy and care.
Our Group NPS
ended the year
strongly at 58.5%
Brave together 11
Monash IVF Group Annual Report 2020
Scientific
Leadership
Monash IVF Group is dedicated to providing world-class science and research,
which facilitates the delivery of market leading success rates for our patients.
This commitment is led by the Group Scientific
Advisory Committee (GSAC) comprising of the
Group Scientific Directors.
In FY20 pregnancy rates continued to improve across
the country due to the end-to-end laboratory reviews.
This was coupled with further alignment of laboratory
protocols across Monash IVF Group in conjunction with
scientific learning modules and knowledge assessments
for the entire scientific workforce.
Innovation and state of the art diagnostics continued to be a
strong focus of FY20 with the following achievements attained:
• Construction and accreditation of an IVF pathology
laboratory for Monash IVF Victoria (endocrine and
andrology) with a state of the art sperm vapour
storage capability.
• A major upgrade of the pathology laboratory in NSW
including a state of the art blood analysis platform.
• Further roll-out of automated semen analysis across
the country.
• Launch of NIPT version 2.0 (NEST+) for use in
early pregnancy.
With the impending launch of government facilitated success
rates, the GSAC in conjunction with the Monash IVF Group
Board has formalised a new way of success rate reporting
to facilitate comparative benchmarking. The compiled data
demonstrates steady improvements in success rates ensuring
the delivery of the best possible outcomes for our patients.
Brave together 13
Our foundation for the future is strong, with 12 doctors
currently in our fertility specialist traineeship programs
across Australia, providing us with a strong pipeline for
growth and succession planning. This includes two new
Victorian fertility specialists who will be ready for patient
management in quarter one, FY21.
Our doctors continue to play an important role in our business,
particularly as we look ahead to the delivery of major projects
and new technologies, such as a new fertilisation technique
utilising Piezo ICSI. As we look ahead, our priority is to continue
to attract like-minded experienced fertility specialists to
partner with us in all our geographies, and continue to grow
our doctor network in the full service IVF market domestically
and abroad in South East Asia.
Doctor
Partnerships
We have continued to develop
mutually beneficial and long term
partnerships with our doctors.
Through these strong partnerships,
we together strive to achieve the
best outcomes for our patients.
The strength of these partnerships was proven as we
worked closely with our state Medical Directors and their
clinical teams to respond to the COVID-19 pandemic.
Together with our Medical Directors, we implemented
safe clinical protocols to protect our staff and patients
whilst causing minimal disruption in services.
In collaboration with Monash Research Education Fund
(MREF), we celebrated working together at the annual
clinic education weekend, held in November 2019.
The event was a great success and will continue in 2021.
Our doctor group continues to grow in size, reflecting that
Monash IVF Group is a destination of choice for developing
and experienced fertility specialists. In FY20 we welcomed
8 new doctors to the Monash IVF Group network, bringing
our total number of doctors to 121.
Importantly, most of our doctors are now contracted to
Monash IVF Group. This includes all of our Victorian fertility
specialists, bringing our total proportion of contracted
doctors across the group to over 97 per cent.
121Monash IVF
Group doctors
Monash IVF Group Annual Report 2020
Clinical
Infrastructure
Monash IVF Group has invested in our clinical infrastructure as part of
our commitment to deliver the best services and experience for our patients.
Plans for further clinical infrastructure works are
underway to ensure our facilities continue to reflect
the best in class treatment and patient journey
that we provide. Future areas of focus include the
Gold Coast, Brisbane and Victoria.
Key works were undertaken at Monash IVF Gold Coast
and Repromed (Dulwich) to redesign and re-purpose
clinic treatment areas to improve the patient experience.
We opened Monash IVF Penrith to give patients in
Greater Western Sydney access to IVF services.
The region is one of the fastest growing areas in
Australia and Monash IVF are proud to be the first
full service clinic in Penrith.
The opening of our flagship site at 207 Kent Street,
Sydney CBD remains a considerable focus into the
next financial year. With an onsite day surgery,
the location offers a fully integrated facility
experience for patients.
Brave together
15
People
Engagement
Our principles have anchored the way we work at Monash IVF Group in FY20.
Our response to COVID-19 illustrated that we have a strong internal community
and demonstrated the resilience of our culture.
COVID-19 response
Guided by our principles, we were able to adjust our
workforce to meet the needs of our community and provide
a safe environment ensuring the wellbeing of our people.
Care
Our employee health and wellbeing focus in FY20 centred
on supporting our teams as they helped our patients through
COVID-19. We implemented safe work practices for the safety
of our people, our clinicians and our patients. At the same
time, we brought the spotlight onto employee mental wellbeing
with a program designed to cover self-care, staying connected
and enhancing our knowledge of mental wellbeing.
Communicate
We prioritised ‘staying connected’ and opened up
communication channels to support our employees,
regardless of where they were working.
Collaborate
Our internal working groups are empowered to
drive change and challenge traditional thinking
to collectively implement new ways of working.
Create
We saw strength in our ability to be innovative and adaptive
as we adjusted to new patterns of working.
Our teams identified and implemented improvements
that enabled an adjusted operating model focused on
delivering best in class services to our patients.
Commitment
We celebrated the commitment of our people through
specialised events such as World Embryology Day and
International Nurse Day with collaboration and support
of our patients who also shared their gratitude for the
work our team do.
We have continued to rollout our reward and recognition
program, Cudos, with many of our employees and teams
recognised through the year.
We continue to prioritise the engagement of our people
through developing our specialised learning and development
framework. This framework is designed to continue to improve
our employee value proposition and empower our workforce.
We continue to prioritise
the engagement of our
people through developing
our specialised learning
and development
framework.
Monash IVF Group Annual Report 2020
Brand and
Marketing
Building on our pioneering heritage, we are using our knowledge, expertise
and our capabilities to define the future of reproductive health.
In FY20, our marketing strategy was updated to enable
us to unlock additional value and drive incremental growth.
We identified four key drivers that will increase brand
equity, market share and growth in our patient pipeline.
These are brand differentiation, patient lifecycle engagement,
patient value proposition and marketing effectiveness.
Strengthening our brand differentiation
This year we launched a new brand strategy and identity
for Monash IVF Group.
This new strategy acknowledges that reproductive health
is not well understood within society and that our role
extends beyond just treating patients for infertility.
Our new brand identity reflects the authentic, caring
and empathetic patient experience we provide to our
patients every day.
Patient lifecycle engagement
The new channel marketing strategy implemented in FY20
is driving positive momentum across our patient pipeline.
This is reflected in a significant lift in new patient enquiries
post COVID-19 compared to the previous comparison period,
and an increase in market share in all markets in the last
quarter of FY20.
Our new advertising campaign, Brave Together, was launched
in the last quarter to acknowledge the bravery our patients
show in pursuing their dream of starting a family. It is the start
of a much needed conversation in society about fertility.
The number of patients engaging with our fertility specialists
has significantly increased as a result of new digital events
including weekend fertility retreats, webinars, and live chats
through social media.
Brave together
17
Enhancing our Patient Value Proposition
In FY20 we continued to focus on key priorities that will enhance the value proposition to our patients.
Empower patients with the right
information at the right time.
Improve patient outcomes by advancing
fertility science, research, and technology.
Improve patient care experiences
in clinic, online and over the phone.
Evolve our service offering to meet
changing needs.
Monash IVF Group Annual Report 2020
Digital
Transformation
Our digital cloud-first solutions strategy allowed us to provide
our patients with a robust telehealth solution and support our
team with a new digital workplace. This strategy allowed us to
successfully navigate the difficulties caused by COVID-19
while still providing our patients with the best care available.
Looking ahead, we will build on these successes by extending
the capabilities of our digital workplaces through more
collaboration tools and video conferencing.
Virtual healthcare will be a critical part of society’s recovery
from COVID-19. With this in mind, we are positioning Monash
IVF Group to support our patients by deploying a new mobile
patient management system. This platform has already
successfully supported patients in South Australia and is
now being rolled out in New South Wales and Victoria.
We’re moving with the evolution of technology in healthcare.
We continue to invest in our technology to deliver:
•
•
•
improved cyber security
operational efficiencies
an improved patient experience.
Brave together 19
International
Expansion
In FY20, Monash IVF Group laid further
foundations for international expansion
across the South East Asian (SEA) region.
The Asian expansion model focuses on key strategic
elements Monash IVF Group brings to its clinics and partners
within the region, including scientific and clinical capability,
training and development programs, brand strength and
recognition, and industry leadership.
During FY20, the Group acquired a clinic in Johor Bahru,
Malaysia to address both the domestic Malaysian and
Singapore markets. This added a bench of highly experienced
clinicians and scientists in both Singapore and Malaysia.
Monash IVF Group Annual Report 2020
Research and
Innovation
Monash IVF Group is dedicated to ensuring its research and innovation
has the ability to transform patient care and improve patient outcomes.
embryos cryopreserved which will provide improved
outcomes for our patients. In addition, Monash IVF Group has
also continued its partnership with Memphasys on developing
technology for sperm preparation and selection and is further
partnering on other technologies in the male infertility arena.
FY20 saw the initiation of the first Monash IVF Group PhD
Scholarship in conjunction with the Monash University.
This will enable us to further drive our commitment to ensuring
the development of excellence in scientific leadership, as well
as advancement in clinical practice.
In FY20 Monash IVF Group (MVF) was a successful partner
in several multi-million dollar NHMRC grants. Partnerships
included the University of Melbourne and Newcastle University
in investigating environmental effects on male fertility; and
University of South Australia investigating novel methods
for isolating circulating trophoblast cells for next generation
Non-Invasive Prenatal Testing (NIPT). Further industry
partnerships have been established and funded through
the Monash Research and Education foundation (MREF) to
drive the company’s research commitment.
The Group Scientific Advisory Committee (GSAC) has
developed an arm dedicated to driving research and innovation
within our scientific teams, in partnership with commercial
and academic entities. As part of our commitment to scientific
excellence, scientists from within our laboratory networks
across all disciplines (embryology, genetics, andrology and
endocrine) have initiated over 20 projects in FY20 that span
multiple states to ensure collaboration is powered by the
scale of the Monash IVF Group laboratory network.
As part of our commitment to market leading success rates
and being a world leader in championing new technologies,
the phase one clinical trial investigating a novel and more gentle
microinjection technology was completed and a multi-center
phase two clinical trial initiated. This technology results in
increased fertilisation rates and an increased number of
Industry partnerships have
been established and funded
through the Monash Research
and Education Foundation
(MREF) to drive the company’s
research commitment.
Brave together 21
Clinical
Governance
Our patients, their needs and the care that we provide are the focus
of Monash IVF’s Clinical Governance framework. We understand
that working with our patients, informing them and involving them
in decisions about their care will help us to meet their needs
and deliver the care that they expect and desire.
We have developed a Clinical Governance framework,
which sets out the key systems, structures and processes
that guides the quality of the care that we provide. Within this
framework, clinicians and clinical teams are supported
by management. Through strong clinical leadership and
clinical engagement, clinicians are actively involved in risk
management and continue to foster a culture that seeks
to monitor our activities, learn from our experiences and
implement relevant and effective, evidence based
improvement activities.
Recently, the COVID-19 pandemic led to a cross functional
review of how our services are delivered; with telehealth
services being more widely introduced and a range of infection
control, social distancing and Personal Protective Equipment
(PPE) measures being implemented across the organisation
designed for the safety of both our patients and teams, while
continuing to deliver care.
Over the past year, the Monash IVF Group clinician training
program has seen a further 12 doctors participate in furthering
their skills and capabilities to ensure that Monash IVF is best
placed to manage complex cases across our sites.
Monash IVF Group Annual Report 2020
Board of Directors
Ms Catherine West
Independent
Non-executive Director
Appointed 8 Sept 2020
Michael Knaap
Chief Executive Officer
& Managing Director
Mr Richard Davis
Independent Chairman
Mr Josef Czyzewski
Independent
Non-executive Director
Ms Christina
(‘Christy’) Boyce
Independent
Non-executive Director
Resigned 29 June 2020
Dr Richard Henshaw
Executive Director
Ms Zita Peach
Independent
Non-executive Director
Mr Neil Broekhuizen
Independent
Non-executive Director
Brave together 23
Mr Richard Davis
Independent Chairman
Mr Josef Czyzewski
Independent Non-executive Director
Ms Catherine West
Independent Non-executive Director
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 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.
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 over 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 Catherine West joined the Group in
September 2020 and is currently serving as
a non-executive director of ASX listed Nine
Entertainment where she is Chair of the
People and Remuneration Committee and
a member of the Audit & Risk Committee.
Catherine is an experienced ASX listed
non-executive director and has over 25 years
of legal, business affairs and strategy experience
in customer focussed businesses in the media,
entertainment, telecommunications and medical
sectors in Australia, the UK and Europe.
Catherine was previously on the board of Southern
Phone, a regional telecommunications company
and she currently holds position of Vice-President
of the Sydney Breast Cancer Foundation at Chris
O’Brien Lifehouse, director of the NIDA Foundation
and a Governor of Wenona School.
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.
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.
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.
Monash IVF Group Annual Report 2020
Management Team
Fiona Allen
Chief Marketing Officer
Nicolette Curtis
Regional Manager VIC
Denise Donati
CEO/Clinic Manager
Fertility Solutions
Tedd Fuell
Quality, Regulatory
& Risk Manager
Anthony Gurney
General Manager
of SUFW
Pierre Abou Haila
Chief Information
& Project Officer
Hamish Hamilton
Chief Operating Officer
Malik Jainudeen
Chief Financial Officer
& Company Secretary
Jan Lagerwij
International Business
Development Manager
May Q, Loke
Centre Manager
KLFGC
Shannon Neilsen
Regional Manager NSW
Peggy North
Chief People &
Culture Officer
Rebecca Redden
Regional Manager
SA, NT & TAS
Prof Luk Rombauts
Group Medical Director
Gillian Smith
Regional Clinic
Manager QLD
Jonathan Whitty
General Manager of
MUFW & Pathology
Brave together 25
Directors’ Report
Directors’ Report
for the year ended 30 June 2020
for the year ended 30 June 2020
The Directors present their report together with the consolidated financial report of Monash IVF Group Ltd ('the
Group'), being the Company (Monash IVF Group Ltd), its subsidiaries, and the Group's interest in associated
entities as at and for the year ended 30 June 2020, and the auditor's report thereon.
Directors
The Directors of the Company at any time during or since the end of the year are:
Mr Richard Davis
Ms Christina Boyce (resigned effective 29 June 2020)
Mr Neil Broekhuizen
Mr Josef Czyzewski
Dr Richard Henshaw
Ms Zita Peach
Mr Michael Knaap
Information on the Directors’ and Company Secretary’s experience is outlined on page 38 and 39. 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 an Adjusted net profit after tax (NPAT)(1) of $14.4m before $2.6m non-regular items. Refer
to page 29 for non-regular items adjusted. It should be noted that FY20 includes impact from AASB16 Lease
accounting which increases EBITDA by $7.2m, EBIT by $1.6m and NPAT by $0.3m.
$m
FY20
FY19
% Change
Group Revenue
EBITDA(1)
Adjusted EBITDA(1)(2)(6)
EBIT
Adjusted EBIT(1)(6)
NPAT attributable to ordinary shareholders
Adjusted NPAT(1)(6)
EPS (cents)
DPS (cents)
$145.4
$32.8
$34.8
$21.8
$24.4
$11.7
$14.4
4.6
2.1
30 Jun 20
$152.0
$37.2
$37.8
$31.3
$32.7
$19.9
$20.9
8.4
6.0
30 Jun 19
(4.3%)
(11.8%)
(8.0%)
(30.2%)
(25.3%)
(40.9%)
(31.2%)
(45.2%)
(65.0%)
Net Debt (m)(3)
Net Debt to Equity ratio (4)
Return on Equity (pa.) (5)
(1) Adjusted reflects non-regular items relating to transaction costs on acquisition activity, restructuring costs, certain pre-IPO patient claim, closure of interest rate
$84.7
48.8%
12.1%
$4.2
1.7%
5.7%
swaps and work-in-progress Sydney CBD clinic premise operating costs. Refer to page 29.
Operational and Financial Review - continued
EBITDA is earnings before interest, tax, depreciation and amortisation. EBITDA is a non IFRS measure which is used by the Group as a key indicator of underlying
performance. This non IFRS measure is not subject to audit or review.
(2)
(3) Debt less cash balances
(4) Net debt to equity is debt divided by equity
(5)
(6) Adjusted EBITDA, Adjusted EBIT and Adjusted NPAT are non-IFRS measures
(7)
Return on equity is Adjusted NPAT divided by closing equity
Monash IVF Group Annual Report 2020
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
$14.4m Adjusted NPAT(1) is above $14m guidance provided on 29 June 2020 (reported NPAT of
$11.7m);
$3.9m adverse NPAT impact during March to June 2020 compared to pcp due predominately to COVID-
19 temporary shutdown;
Recovery from temporary suspension of IVF procedures in Australia was strong with stimulated cycles up
by 33.6% from June to July 2020 vs pcp;
Kuala Lumpur clinic has recovered from Movement Control Orders in Malaysia demonstrating 72%
stimulated cycle growth in July vs pcp;
Ultrasound clinics continued to operate throughout Q4 although impeded by heavy but effective infection
control and social distancing measures;
Market share gains across SA, QLD and NSW although Victoria lost market share following departure of
five specialists in September 2019;
Balance Sheet strong following $80m equity raising which has reduced debt while navigating COVID-19
and allows for investment into future growth opportunities including new Sydney CBD clinic and
partnerships in SE Asia;
Deferred 1H20 dividend to be paid on 2 October 2020;
AASB16 Lease accounting has on impact on FY20 by increasing EBITDA by $7.2m, EBIT by $1.6m and
NPAT by $0.3.
COVID-19 trading recovery summary
Key Events
On 25 March 2020, National Cabinet acting on the advice of Australian Health Protection Principal
Committee temporarily suspended all non-urgent elective surgery, including IVF procedures;
On 21 April 2020, National Cabinet announced that certain elective surgery procedures, including IVF
could recommence from 27 April;
On 27 March 2020, Movement Control Orders (MCO) were implemented in Malaysia which were
subsequently eased on 9 June 2020.
Impact
The temporary suspension of IVF procedures resulted in a 71% decline in Australian stimulated cycles in
April to mid May 2020;
The MCO in Malaysia resulted in a 76% decline in International stimulated cycles in April and May 2020;
$3.9m adverse NPAT impact during March to June 2020 as compared to pcp predominately due to
COVID-19 which includes $4.9m (pre-tax) Job Keeper Subsidy to maintain engagement with workforce
during hibernation and recovery periods;
Ultrasound clinics remained open and scan volumes were moderately impacted (3.4% decline in March to
June 2020) by movement restrictions in-place; however, cost of service delivery increased due to
heightened infection control measures;
Key Actions
As a key priority, the Group implemented measures designed to protect the health and safety of its
patients, employees and doctors;
Implementation of a number of initiatives to assist in mitigating financial impact of COVID-19;
(1) Adjusted NPAT is a non-IFRS measure
Brave together
27
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
COVID-19 trading recovery summary - continued
$80m equity raising in response to potential extended shutdown due to COVID-19, reduce debt and
pursue growth opportunities including build of a new Sydney CBD fertility clinic, Joint venture/partnership
and acquisition opportunities across South East Asia and transformation of Melbourne footprint;
Patient engagement activities during shut-down period has driven the strong recovery of pent up demand
and increased marketing activities post equity raising is driving growth in the patient pipeline leading into
FY21.
Recovery
Following recommencement of IVF services in Australia, stimulated cycles increased by 34.3% between
18 May and 30 June 2020 compared to pcp, with 32.1% growth continuing into July 2020;
Kuala Lumpur is in recovery following easing of the Movement Control Orders on 9 June resulting in a
23.5% stimulated cycle growth in June to July 2020 with July up by 72% compared to pcp;
The Victorian IVF business has continued to operate notwithstanding Stage 4 restrictions (effective 2 August
2020) as IVF has been exempt from the current suspension of non-urgent elective surgery in Victoria.
Revenue
Group revenues declined by $6.6m or 4.3% to $145.4m compared to pcp. A summary of the decrease in revenues
is detailed in the waterfall chart below:
151
147
M
$
143
139
3.5
152.0
5.7
3.3
2.1
0.2
1.7
145.4
FY19
MVF February YTD MVF Domestic ARS Price Fertility Solutions
volume decline March-June
volume decline
& Tasmania
MVF Malaysia Ultrasound, FY20
March-June Diagnostics
volume decline & Other
MVF February YTD volume decline reduced revenue by $3.5m reflecting Full-Service stimulated cycle
growth in QLD, SA and NSW offset by declines in VIC due to departure of five fertility specialists
MVF Domestic March to June volume decline reduced revenue by $5.7m as organic stimulated cycles
declined by 472 during March to June as compared to pcp following the temporary shutdown partly
offset by 34.8% stimulated cycle growth from mid May to 30 June 2020 compared to pcp
Fertility Solutions and Tasmania contribution of $3.3m is due to Fertility Solutions acquisition in September
and contribution from Fertility Tasmania (from August) subsequent to taking a controlling interest
International revenue declined by $2.1m as stimulated cycles reduced by 189 (March to June 2020) which
was largely driven during the Movement Restriction Orders in place in Malaysia
Ultrasound, Diagnostics and Other income is largely in line with pcp as Ultrasound revenue increased by
$0.2m, offset by ancillary services related to ARS related activity including genetic screening.
Monash IVF Group Annual Report 2020
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Adjusted Earnings before interest, depreciation, interest and tax (EBITDA)
Adjusted EBITDA(1)(2) is $34.8m as compared to $37.8m. For comparative purposes, Adjusted EBITDA excluding the
impact from AASB16 Leases (+$7.2m) declined by $10.2m or 26.7% due primarily to:
Negative impact from COVID-19 temporary suspension which reduced stimulated cycles by 71% in the
period from 1 April to mid May. The Group was eligible for the Job Keeper Subsidy for Q4FY20 ($4.9m
pre-tax) utilised to maintain and engage workforce;
$3.4m negative impact from decline in ARS activity prior to COVID-19 suspension due to departure of
Victorian specialists partly offset by growth in SA, NSW, QLD and cost out program impact as at February
YTD;
$1.1m marketing expenditure increase is driving pipeline growth leading into FY21 through radio, TV,
digital channels and patient enquiry/registration conversion. Increase in media investment between May
to July 2020 was $0.7m.
Finance costs
Net finance cost is $5.7m, an increase of $1.9m compared pcp. The increase is due to the closure of interest rate
swaps as a result of hedge accounting in-effectiveness following repayment of debt ($1.1m), the application of
the new leasing standard ($1.1m) partly offset by $0.2m lower underlying debt costs.
Taxation
The effective tax rate is 27.1% as compared to 27.9% in pcp. The effective tax rate reflects the 30% Australian
and 24% Malaysian corporate tax rates as well as capturing the research and development tax incentives
available from continued scientific innovation.
Segment analysis
$m
Revenue
Adjusted EBITDA(1)(2)
Adjusted EBIT(1)(2)
NPAT
Australia
FY20
Australia
FY19
135.5
140.4
30.3
20.6
9.0
32.5
27.7
16.0
% change
(3.5%)
(6.8%)
(25.6%)
(43.8%)
FY20
International
FY19
9.9
4.5
3.8
2.8
11.6
5.3
5.0
3.8
% change
(14.7%)
(15.1%)
(24.0%)
(26.3%)
Australia revenue declined by 3.5% to $135.5m due to the following:
FY20 stimulated cycles declined by 5.6% to 7,181 reflecting:
10.1% increase in South Australian cycles February 2020 YTD resulting in market share gains;
1.9% increase in New South Wales cycles February 2020 YTD whilst maintaining total market share;
15.9% increase in Queensland cycles February 2020 YTD. The Fertility Solutions acquisition added 133
stimulated cycles between mid September 2019 to February 2020 resulting in market share gains;
14.6% decline in Victorian cycles February 2020 YTD due to departure of specialists;
366 cycle decline in March to June compared to pcp due primarily to COVID-19 disruption;
Fertility Tasmania contributed 99 cycles following consolidation into the Group from August 2019;
(1) Adjusted EBITDA and Adjusted EBIT are non-IFRS measures
(2) Adjusted reflects non-regular items relating to transaction costs on acquisition activity, restructuring costs, certain pre-IPO patient claim, closure of interest
rate swaps and AASB16 depreciation/interest on Work-in-progress Sydney CBD clinic premise costs Refer to next page
Brave together
29
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Segment analysis - continued
MyIVF, provider of low cost services, which ceased operations in March 2020, reducing stimulated cycles
by 45 during the year;
FY20 Frozen Embryos declined by 5.2% driven by the decline in stimulated cycles;
Ultrasound scans increased by 1.8% to 82,311 and Non-invasive prenatal testing increased by 2.8% to
13,478.
Adjusted EBIT declined by $7.1m or 25.6% to $20.6m due to impact from COVID-19 temporary shutdown of
services, impact from departure of specialists in Victoria, which was partly offset by volume growth in South
Australia and Queensland, $1.1m increase in marketing driving COVID-19 recovery and future pipeline. Adjusted
EBIT is also increased by $1.6m due to AASB 16 Leases and $0.5m benefit from cost out program during Q3FY20.
International
International revenue declined by $1.7m or 14.7% to $9.9m. The International segment comprises the Kuala
Lumpur clinic which was heavily impacted by movement control orders (MCO) effective 27 March. The Clinic
experienced a 76% decline in April and May stimulated cycles compared to pcp. The MCO was eased on 9 June
which resulted in improved volumes in June although below pcp by 14%. Strong growth has been experienced in
July following conversion of some pent up demand created due to the MCO. Stimulated Cycles during FY20
declined by 205 or 19.8% and frozen embryos declined by 156 or 15.3%.
International Adjusted EBIT declined by $1.2m or 24.0% due to volume declines which was heavily impacted by
the MCO in place during Q4.
AASB16 Leases impact
Implementation of AASB16 Leases on 1 July 2019 had the following impact on FY20 profitability as compared to
FY19:
Increased EBITDA by $7.2m;
Increased EBIT by $1.6m;
Increased NPAT by $0.3m.
Earnings reconciliation
The table below provides a summary of FY20 non-regular items as compared to FY19:
Statutory NPAT(1)
1H20 non-regular items
2H20 Restructuring costs
2H20 Acquisition costs
2H20 Interest rate swap closure
2H20 New Sydney CBD premise costs
FY19 Mosman clinic closure and CEO separation costs
Adjusted NPAT(1)
FY20
$m
11.7
FY19
$m
19.9
1.2
0.2
0.1
0.8
0.4
-
14.4
-
-
-
-
1.0
20.9
Monash IVF Group Annual Report 2020
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Earnings reconciliation - continued
The table below provides a reconciliation of FY20 Adjusted EBITDA, EBIT and NPAT to the reported statutory
metrics:
$m
Reported Statutory
1H20 non-regular items
2H20 Restructuring costs
2H20 Acquisition costs
2H20 Interest rate swap closure
2H20 New Sydney CBD premise costs
Adjusted
(1) Attributable to members
EBITDA
32.8
1.7
0.2
0.1
-
-
34.8
EBIT
21.8
NPAT(1)
11.7
1.7
0.3
0.1
-
0.5
24.4
1.2
0.2
0.1
0.8
0.4
14.4
$1.2m 1H20 non-regular items includes post-tax impact from Fertility Solutions acquisition transaction costs
($0.3m), pre-IPO patient claim ($0.5m) and restructuring costs associated with the cost reduction program
($0.4m);
$0.2m 2H20 restructuring costs primarily relates to the closure of the MyIVF low-cost clinic;
$0.1m 2H20 acquisition costs relates to the Johor Bahru, Malaysia acquisition which completed in June
2020;
$0.8m closure of interest rate swaps are for the termination of $30m swaps following part repayment of
Syndicated Banking Facility. This resulted in transfer of balances in the hedge reserve to profit & loss for
accounting purposes;
$0.4m New Sydney CBD IVF premise (lease depreciation and interest expense) from execution of the
lease in February 2020. Construction works commenced in late June and is on-track to be ready for
patient treatments during Q2FY21.
Statement of Financial Position and Capital Metrics
Balance Sheet ($m)
Cash and cash equivalents
Other current assets
Current lease liabilities
Current liabilities
Net working capital
Borrowings
Goodwill & Intangibles
Right of use assets
Lease liabilities
Property Plant & Equipment
Other assets/liabilities
Net assets
FY20
15.1
15.6
(2.3)
(35.6)
(7.2)
(19.3)
262.1
36.5
(36.3)
19.1
(2.8)
252.1
FY19
4.3
11.2
-
(24.2)
(8.7)
(89.0)
257.1
-
-
16.5
(2.5)
173.4
% change
251.2%
39.3%
-
(47.1%)
17.2%
(78.3%)
1.9%
-
-
15.8%
(12.0%)
45.4%
Brave together
31
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Statement of Financial Position and Capital Metrics - continued
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
4.2
0.15x
8.4x
1.7%
5.8%
4.1%
84.7
2.24x
10.6x
48.8%
12.1%
7.2%
+/-
(80.5)
2.09x
(2.2x)
47.1%
(6.3%)
(3.1%)
The $80m equity raising has resulted in a stronger balance sheet and reduction of debt to navigate any future
developments in COVID-19. In addition, it has created flexibility to pursue identified organic and non-organic
growth opportunities in Australia and South East Asia including the Sydney CBD fertility clinic construction,
JV/partnership opportunities in SE Asia and transformation of Melbourne footprint.
Net debt has decreased by $80.5m to $4.2m noting financial banking covenant requirements are waived until 30
June 2021 (which was executed prior to the equity raising). A decision was made to right size the $110m
Syndicated Debt Facility to $40m effective 24 August 2020. The $40m accordion facility remains available for
acquisitions and capex.
The key Net Leverage Ratio has reduced to 0.15x which is well within the 3.5x covenant requirement when re-
introduced. The Interest Cover Ratio worsened by 2.2x to 8.4x but well above the 3.0x covenant requirement.
Goodwill and Intangibles increased by $5.0m due to goodwill associated with the Fertility Solutions and Johor
Bahru acquisitions and software enhancements (patient management systems).
Current Liabilities increased by $11.4m which includes $5.0m liability for the 1H20 deferred interim dividend due
to be paid on 2 October 2020. In addition, timing of working capital increased trade payables and deferred
revenue due to strong recovery experienced in June and July.
Right of use assets of $36.5m and Lease Liabilities of $36.3m recognised in accordance with AASB16 Leases
implemented on 1 July 2019.
Cash Flows ($m)
EBITDA
Movement in working capital
Income taxes paid
Net operating cash flows (post-tax)
Capital expenditure
Payments for businesses
Cash flows used in investing activities
(1)
Free cash flow
Proceeds from issue of shares
Dividends paid
Interest on borrowings
Payments of lease liabilities
Proceeds/(Repayment) of borrowings
Other
Cash flows used in financing activities
Net cash flow movement
Closing cash balance
FY20
32.8
2.6
(4.3)
31.1
(7.5)
(3.1)
(10.6)
20.5
77.5
(7.1)
(3.5)
(7.2)
(69.7)
0.3
(9.7)
10.8
15.1
FY19
36.4
3.5
(6.8)
33.1
(6.5)
-
(6.5)
26.6
-
(13.2)
(3.6)
-
(9.0)
(0.4)
(26.2)
0.4
4.3
Change%
(9.9%)
(25.7%)
36.8%
(6.0%)
(15.4%)
(100%)
(63.1%)
(22.9%)
100%
46.2%
2.8%
(100%)
(674%)
175.0%
63.0%
2600%
251.2%
(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.
Monash IVF Group Annual Report 2020
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Statement of Financial Position and Capital Metrics - continued
Key cash flow highlights are as follows:
Pre-tax conversion of EBITDA to operating cash flow was strong at 107.9% following 78.0% conversion
at 31 December 2019;
Investment activities continued to drive future growth including:
$2.5m Fertility Solutions and $0.6m Johor Bahru acquisitions (including transaction costs);
Capital expenditure including commencement of new Sydney CBD clinic build, new Penrith clinic,
refurbishment of Dulwich clinic, medical equipment and IT infrastructure including cyber security
enhancements;
Financing activities includes the $80m equity raising (net of transaction costs) partly offset by $69.7m net
repayment of debt. In addition, $7.1m FY19 final dividend paid and $1.1m for termination of interest
rate swaps;
$7.2m Payment for Leases including premises are now classified in Financial activities due to changes in
AASB16 Leases.
Dividends
No final FY20 dividend has been declared by the Board. The FY20 interim dividend will be paid on 2 October
2020.
Outlook
Industry fundamentals remain strong as the community seeks assistance when trying to conceive which has not
changed due to the on-going Pandemic. The Group’s strong balance sheet, positions it well to navigate through
the COVID-19 Pandemic and optimise future earnings through strategic and operational momentum gained during
FY20 as illustrated in the Business Strategies and Prospects for Future Financial Years section below.
Notwithstanding strong long-term industry fundamentals, current positive treatment volume recovery and patient
pipelines, the Group is not providing FY21 guidance due to the continued uncertainty created by the on-going
COVID-19 Pandemic. An update will be provided at the FY20 AGM.
Brave together
33
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
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:
Monash IVF Group Annual Report 2020
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Business Strategies and Prospects for Future Financial Years - continued
Our Pillars are defined as follows below:
Patient experience - We are committed to providing best in class clinical care across the fertility and pregnancy
journey; delivering through a patient experience that is empathetic, empowering and personalised.
Doctor partnership - We will develop mutually beneficial long term partnerships with our doctors that benefits our
patients through excellence in clinical care and to drive growth in our doctors’ businesses.
Scientific leadership - Our focus in world-class research and science will deliver market leading success rates,
innovative services and attract partnership opportunities.
Clinical infrastructure – Provide high quality, fit-for-purpose infrastructure to support our best in class offering
through investing in new and existing facilities and businesses.
People engagement - Through passion, pride and capability our people are leading the way in helping bring life
to the world.
Brand & marketing – Our brand and marketing conveys our leadership in reproductive health and develops strong
brand salience through progressive, empathetic and empowering engagement with the community, patients and
our People.
Digital transformation – Investing in next generation technology, platforms and systems to enhance interactions
with our patients, doctors and People. Grow and diversify revenue streams through enhanced digital capabilities
and partnerships.
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.
Key development in Our Pillars during the year are noted below:
Scientific Leadership
Scientific advancements continue to differentiate our value proposition to patients;
Improved success rates and preparation for national reporting guidelines and framework;
Implementation of multi-centre clinical trial to investigate new microinjection technology with progress
made to commercialise during FY21;
Sperm selection device development in partnership with Memphasys (ASX: MEM) is progressing with final
stages of testing in a Monash IVF clinical trial;
Group scientific collaboration on the “Monash Way” is continuing to unify scientific practices through the
Group Scientific Advisory Committee (GSAC) optimising patient outcomes and creating a more scalable
operation.
Doctor partnerships
All 24 Victorian fertility specialists are now contracted with more than 97% of specialists contracted across
the Group;
Future growth and succession planning strengthened with 12 specialists currently in our fertility specialist
traineeship program including two new Victorian fertility specialists ready for patient management in
Q1FY21;
Brave together
35
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Business Strategies and Prospects for Future Financial Years - continued
Clear strategy to attract new experienced clinicians across the country;
Priority to attract new experienced Sydney based fertility specialists to support new NSW flagship clinic
in Sydney due to open in Q2;
Exceptional contribution from our clinician group during COVID-19, supporting the safe clinical protocols
and recovery;
Creating opportunity for doctor growth and patient engagement through digital pathways (eg.
Webinars/Facebook) and telehealth.
Clinic infrastructure
New Sydney CBD flagship clinic commenced construction in June and due to open during Q2FY20;
New Sydney CBD flagship clinic will represent best practice patient experience and is a key initiative to
attract new specialists in Sydney;
Transformation of Melbourne footprint and patient experience is progressing to ensure our infrastructure
is best-in-class in our largest state based business;
New Penrith, NSW clinic opened in October 2019 servicing the western region of NSW;
Refurbishment of Dulwich, SA clinic – continuation of modernising clinic atmospherics to reflect best-in-class
patient experience.
Patient experience
Patient experience principle remains focussed on care, empathy, support, empowerment and a consistent
patient journey throughout our network of clinics;
Successfully maintained patient engagement during temporary suspension of services which ensured pent
up patient demand converted to treatment following re-commencement of services.
Digital transformation
Cyber security defences protected data and systems against a targeted and sophisticated cyber attack
in 1H20. Upgrades and replacement of legacy systems are further enhancing patient data security;
Technology enhancements to patient management systems are enabling improvements to interactions with
patients, clinicians and employees.
People engagement
Our pro-active approach when responding to COVID-19 included strong engagement and communication
strategies to ensure our People and Patients are safe and protected in Monash IVF environments. This is
a critical pillar ensuring we have a safe and secure workforce to safeguard continuity of service where
possible;
People engagement remains a key priority as we focus on recognising our People’s passion and pride in
working at Monash IVF. Our People continue to be rewarded for demonstrating our principles in action;
Building and growing capability in our People is enabling us to continue to lead the way now and in the
future with a focus on a specialised learning and development framework.
Brand and marketing
New “Brave Together” advertising campaign illustrates innovative marketing investment following the
recommencement of services during Q4FY20. The advertising campaign reflects our progressive,
empathetic and empowering approach to patient care;
$1.1m increase in marketing investment is supporting new patient pipeline exceeding pcp and pre COVID-
19 levels during May to July;
Monash IVF Group Annual Report 2020
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Business Strategies and Prospects for Future Financial Years - continued
Enhancements to the patient engagement strategy is building knowledge, support, and empowering
patients to make decisions earlier in the journey and proactively safeguard their fertility;
Our marketing investment, innovation and strategy are key activities to engage with our Clinician group
to ensure their private practices are supported by Monash IVF.
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.
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:
COVID-19 Pandemic
COVID-19 and the risk of transmission of infection may impact Monash IVF’s operations in Australia and Malaysia
through the imposition of government and regulatory requirements (which can change over time), including
suspension of elective surgery, recommendations to postpone treatment where possible and the need for social
distancing impacting staff movement within the partner healthcare system and patient willingness to access services.
Monash IVF is continually working with industry bodies, regulator and governments to understand and shape
regulatory positions but these positions and related actions can impact Monash IVF operations in the future. The
short to medium term impact from COVID-19, particularly on levels of unemployment and movement restrictions
may cause Monash IVF to experience reduction in demand for services, and may adversely impact financial
performance and market position. In addition, Monash IVF employees may come into close proximity with patients
and other members of the public during the course of business, increasing risk of transmission and impact on
workforce. While protocols have been established and are effective in responding to the risk of transmission, the
workforce may be infected with COVID-19 resulting in disruption of operations and services whilst they are isolating
and/or recovering.
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.
Brave together
37
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Business Strategies and Prospects for Future Financial Years - continued
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;
An increase in publicly provided ARS services may reduce the Group’s market share.
Further growth in low cost offerings provided by competitors may reduce the Group’s market share; and
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 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.
Occupational Health and Safety
Monash IVF employees are at risk of workplace accidents and incidents. In the event that a Monash IVF employee
is injured in the course of their employment, Monash IVF may be liable for penalties or damages. This has the
potential to harm both the reputation and financial performance of Monash IVF.
Monash IVF Group Annual Report 2020
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Information on directors
Director
Mr Richard Davis
Independent Chairman
Member of Audit & Risk Management
Committee
Member of Remuneration & Nomination
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 (Chairman).
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 as an accounting partner of Bird
Cameron. Richard holds a Bachelor of Economics from the University of
Sydney.
Mr Josef Czyzewski
Independent
Non-executive Director
Chair of Audit & Risk Management
Committee
Member of Remuneration & Nomination
Committee
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 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 Christina (‘Christy’) Boyce
Independent
Non-executive Director
Chair of Remuneration & Nomination
Committee
Member of Audit & Risk Management
Committee
Resigned effective 29 June 2020
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.
Mr Neil Broekhuizen
Independent
Non-executive Director
Member of Audit & Risk Management
Committee
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. 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.
Neil is currently 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.
Brave together
39
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
Information on directors - continued
Director
Dr Richard Henshaw
Executive Director
Ms Zita Peach
Independent
Non-executive Director
Chair of Remuneration & Nomination
Committee effective 1 July 2020
Mr Michael Knaap
Chief Executive Officer
Managing Director
Experience
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.
Ms Zita Peach has more than 25 years of commercial experience in the
pharmaceutical, biotechnology, medical devices and health services
industries, and has worked for major industry players such as CSL Limited
and Merck Sharp & Dohme, the Australian subsidiary of Merck Inc.
Zita’s most recent executive position is 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, Ms Peach was Vice President, Business Development,
for CSL Limited, a position she held for ten years.
Zita is Chair of Pacific Smiles Group Limited and Non-executive Director of
ASX-listed, Starpharma Holdings Limited and Visioneering Technologies, inc.
She 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.
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.
Monash IVF Group Annual Report 2020
Directors’ Report
Directors’ Report (cont)
for the year ended 30 June 2020
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 10 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
Attended
Eligible to Attend
18
17
18
18
18
17
18
18
18
18
18
18
18
18
For the purposes of the equity raising, a Due Diligence Working Group (DDWG) was created which included
participation from Richard Davis, Josef Czyzewski, Neil Broekhuizen, Michael Knaap and Malik Jainudeen (CFO).
There were six DDWG meetings held and were attended by all participants.
In addition, the Board of Directors participated in numerous teleconferences to the above formal Board meetings,
in particular in response to the emerging COVID-19 Pandemic in March, April and May 2020.
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
4
4
4
4
n/a
4
5
4
5
5
5
5
5
5
n/a
n/a
Brave together
41
Remuneration Report - Audited
Remuneration Report – Audited
for the year ended 30 June 2020
for the year ended 30 June 2020
The Company’s Directors present the 2020 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 2020 (“FY20”). 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.
Executive Summary
The 2020 financial year has seen unprecedented challenges across Australia with the global COVID-19 pandemic.
Throughout the year the employees of Monash IVF Group have worked tirelessly to adjust to these challenges,
enabling the Monash IVF Group to deliver quality patient care in a safe manner that protects our patients, our
people and our doctors.
In response to the challenges being faced during this time, and considering the circumstances and performance in
FY20, the following remuneration outcomes relate to FY20 and FY21;
Short-term incentive (STI) payments for KMP in FY20 reflect the achievement of non-financial metrics
ranging from 15-20%. No STI was payable for financial achievements in FY20.
Long Term Incentive (LTI) FY18 plans relating to EPS and TSR are not expected to vest due to performance.
Increases to the 2021 financial year fixed pay for KMP including Executives have been placed on hold for
review in January 2021.
No increase to the 2021 financial year fees for Directors.
In taking these decisions, the Board has been mindful that returns to shareholders for the 2020 financial year did
not meet our expectations. At the same time, the Board wants to acknowledge the considerable efforts of
employees across the Group, and to thank them as they have continued to provide high quality service to our
patients through difficult times and events and supporting our strong recovery.
The Monash IVF Executive team are commended for their commitment and have worked closely with the Board to
navigate the COVID-19 situation with increased consultation meetings to ensure alignment with the regulatory
requirements, government recommendations, workforce planning including Stand down periods, Job Keeper,
restructuring and undertaking a Capital Equity Raise.
The Monash IV Group Executive had also been focused on preparing plans for strong and fast market share growth.
The Board will consider in FY21 a special bonus of 5% of TFR available should market share targets be met over
the first 3 month period post shutdown.
Our remuneration framework continues to be focused on driving a performance culture by linking Executive
Remuneration to strategic objectives both financial and non-financial.
Executive Remuneration in FY20 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 performance based and at risk relative to industry peers. The Board varies rewards to
Management in accordance with short and long term financial performance.
COVID-19 continues to have an impact on many of our patients, employees, doctors and on the community more
widely. We will continue to be guided by our principles as we support our patients, our people and our doctors
in these challenging times.
Director and KMP Changes in FY20
There have been two changes to Directors and KMP in 2020. These include;
Director, Christy Boyce tendered her resignation on 29 June 2020. In the ASX announcement made on
29 June 2020 it was stated that, during Ms Boyce’s tenure as a non-executive director, she retained her
partnership at Port Jackson Partners, a boutique strategy consulting firm. Port Jackson Partners has
recently been acquired by Ernst & Young (EY) and Ms Boyce was appointed a partner of EY. As EY’s
policy stipulates that ‘Partners and Employees should not serve as directors, officers or trustees of entities
Monash IVF Group Annual Report 2020
Remuneration Report - Audited
Remuneration Report – Audited (cont)
for the year ended 30 June 2020
Director and KMP Changes in FY20 - continued
with publicly traded shares, or debt and for-profit private entities’, Ms Boyce must resign as a Director of
the Company. The Board will undertake a search to appoint a new non-executive director.
On the 27th March 2020, Brett Comer the Chief Operations Officer tendered his resignation. Following
this Monash IVF Group made an internal succession appointment of Hamish Hamilton to the position of
Chief Operations Officer on 30th March 2020. Hamish Hamilton has been with Monash IVF Group since
2009 and has extensive experience in science and scientific leadership and operational leadership. He
has held positions including Scientific Director in Darwin, General Manager Repromed & Regional
Manager SA/NT and Ultrasound and has provided interim leadership for both QLD and NSW.
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. Ms Christina Boyce chaired the Remuneration and
Nomination Committee until her resignation on 29th June 2020. 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. Ms Zita Peach was appointed to the Remuneration Chair on 23 June
2020.
During FY20, the Remuneration and Nomination Committee met five times with full attendance by all members.
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 FY20.
The Committee is responsible for reviewing and making recommendations to the Board in relation to:
Group remuneration principles, 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 Incentive plans
Terms and conditions associated with incentive plans including equity plan rules, escrow and other
restrictions on disposal
Structure and quantum of Senior Executive termination payments
Treatment of outstanding incentives in case of cessation of employment
Exercise of malus or clawback if relevant to incentive plan payments.
The Remuneration and Nomination Committee are also responsible for monitoring and reporting to the Board;
Remuneration relative to industry benchmarks
Achievement of performance requirements for the payment of incentives
Diversity and pay equity.
Brave together
43
Remuneration Report - Audited
Remuneration Report – Audited (cont)
for the year ended 30 June 2020
1.0 Remuneration Snapshot - continued
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 2020. 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
Encompass long term and short term variable performance elements for Executives, employees and
contractors who have the ability to impact overall organisation performance to best align
incentives
Support the business strategy
Reinforce the organisations mission, principles and culture 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 superannuation guaranteed contributions.
• Reflects the individuals’ accountability, position requirements and experience.
• Benchmarked by the scale and size of the company.
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 reward the
creation of sustainable shareholder wealth.
The Group’s remuneration framework for FY20 for the CEO, CFO and COO had three components, two of which
vary with performance. TFR levels sit at or below median for similar organisations. A higher proportion
performance based remuneration is at risk relative to peers. The remuneration structure aligns the remuneration
opportunity with the level of position accountability.
Monash IVF Group Annual Report 2020
Remuneration Report - Audited
Remuneration Report – Audited (cont)
for the year ended 30 June 2020
2.0 Remuneration Policy - continued
The diagram below summarises the framework for FY20. 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)
• Cash salary
• Salary sacrifice items
• Employer superannuation
contributions in line with
statutory regulations
TFR is determined on the basis of
market rates (where applicable,
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.
• The STI includes a Non-
Financial Gateway (ANZARD
Success Rate Average)
• Financial Measure (70%) being
EBITDA for Group and/or
Specific Business Units
• Non-financial Measures (30%)
are linked to key strategic
initiatives built around a
balanced scorecard including
but not limited to;
•
Engagement (People,
Patient, Doctor)
• Market Share
•
Scientific Success Rates
• EPS growth hurdles based on
predefined growth rates over
a 3 year period (50%)
• TSR hurdles based on Group’s
relative TSR performance
against ASX300 Healthcare
Index (50%)
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
$175M - $375M).
Brave together
45
Remuneration Report - Audited
Remuneration Report – Audited (cont)
for the year ended 30 June 2020
2.0 Remuneration Policy - continued
Short-term Incentive Plan
Overview of FY20 Short term incentive plan:
STI Structure
Non-Financial Measure Gateway
(ANZARD above average Success Rates)
Financial Measure (70%)
Group EBITDA
•
•
•
("EPS Hurdle")
Non-Financial Measure (30%)
70% of allocation subject to the hurdle
•
le ("EPS Hurdle")
70% of allocation subject to the hurdle
• Patient engagement
• Clinician engagement
• Employee engagement
• Market Share
• Scientific Success Rates
•
("EPS Hurdle")
Less than
$40.08m
0% Payable
hurdle
•
$40.08m
$42.75m
• 70% of allocation subject to the
hurdle
Some but not all
Qualitative
Objectives
achieved
le ("EPS Hurdle")
All
Qualitative
Objectives
achieved
No
Qualitative
Objectives
achieved
•
0% Payable
• 70% of
Minimum
performance
for payment
Stretch is built
into budget
•
•
•
•
hurdle
le
("E
PS
Hu
rdl
e")
le
("
EP
S
Hu
rdl
e"
)
le
("EP
S
Hur
dle"
)
allocation
subject
to the
hurdle
100% Payable
to
subject
the hurdle
70% of
allocation
subject
to the
hurdle
30% Payable
• allocatio
n subject
to the
hurdle
Proportion payable
relative to number and
weighting of
qualitative objectives
achieved
•
100%
• 70% of allocation subject to the
Payable
• 70% of
allocatio
n
subject
The Group’s STI is a variable component of remuneration and is designed to focus on strategic objectives prioritised
to the
by the Board for the financial year.
hurdle
The introduction of a Non-Financial Gateway was introduced in FY20 for the Short Term Incentive Plan (STI). This
le
target required the Group to achieve above the average ANZARD (Australia and New Zealand Assisted
le
("EP
Reproduction Database) clinical pregnancy rates (success rates). In FY20 Clinical Pregnancy rates achieved were
("
above the ANZARD average.
S
EP
Hur
The financial measure within the STI Plan is Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA).
S
EBITDA is compared to budget EBITDA to assess achievement. EBITDA may be normalised to assess cash earning
dle"
operating performance by adjustment for any amounts for individually significant, non-recurring, abnormal or
H
)
unusual gains or losses of the Group. For the majority of the senior management team, threshold performance was
ur
set at $40.08m for FY20. At this level, 30% of the amount allocated for EBITDA achievement is payable. Stretch
dl
EBITDA performance was set at $42.75m, at which the entire amount allocated for EBITDA is payable. Achievement
between these two levels of performance results in a pro-rata payment of STI.
e"
)
The qualitative non-financial measures defined for KMP (including the CEO) include Patient Engagement which is
measured using Patient NPS, Clinician Engagement assessed using an annual Doctor Engagement survey, Employee
Engagement also measured annually using an employee engagement survey, Scientific Success Rates based on
• 70
clinical pregnancy rates and Market Share based on MBS data. The CEO and CFO both were measured on
%
of
all
oc
ati
on
• 70
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of
all
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ati
on
su
bj
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t
to
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hu
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on
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ect
to
the
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dle
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allo
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on
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ect
to
the
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dle
• 70
%
of
all
oc
ati
on
su
bje
ct
to
the
allocation
subject
to the
hurdle
le ("EPS
Hurdle")
• 70% of
•
•
Monash IVF Group Annual Report 2020
Remuneration Report - Audited
Remuneration Report – Audited (cont)
for the year ended 30 June 2020
2.0 Remuneration Policy - continued
International Expansion targets and the CFO included a Domestic Acquisition target. In FY20 the maximum STI
payout for KMP’s was 20% of the Non-Financial metrics.
STI in FY21
In FY20 Monash IVF Group performed a review of the STI framework and will introduce the following change to
the Financial Metric in FY21. The Financial Metric change will replace Group EBITDA for an Earnings Per Share
(EPS) target to further align variable incentives to shareholder value.
Long-term Incentive plan
KMP including CEO, CFO & COO are eligible to receive an 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 Board 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 Board.
• Awards will only vest where the conditions advised to the participant by the Board 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 Board, 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 Board 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
Board may determine that the participant’s unvested awards will become vested awards. In such
circumstances, the Board 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 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.
Brave together
47
Remuneration Report - Audited
Remuneration Report – Audited (cont)
for the year ended 30 June 2020
2.0 Remuneration Policy - continued
Overview of the FY20 LTI Plan:
Performance Rights Granted
EPS Compound Annual Growth Rate
(“EPS Hurdle”)
50% of allocation subject to the hurdle
Relative Total Shareholder Return
("TSR Hurdle")
50% of allocation subject to the hurdle
Vesting Framework
Vesting Framework
The EPS component of the allocation will be
measured at the end of the 3-year performance
period.
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% per annum
over the three-year period
The TSR component of the allocation will be
measured at the end of the 3-year performance
period relative to the ASX300 Healthcare
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 vesting between threshold and
maximum
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.
Performance rights were granted in two tranches during FY20, 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.
Details of current performance rights granted to Executives during FY20 are set out in the following table:
Mr. Michael Knaap (CEO)
Mr. Malik Jainudeen (CFO)
EPS
TSR
EPS
TSR
50%
50%
50%
50%
147,205
147,205
36,801
36,801
The performance periods and vesting schedules for the performance rights granted in FY20 are as follows:
Performance Measure
Earnings Per Share
Relative TSR
Performance Period
1 July 2019 to 30 June 2022
11 days after FY19 results announcement to 11 days after
FY22 results announcement
Monash IVF Group Annual Report 2020
Remuneration Report - Audited
Remuneration Report – Audited (cont)
for the year ended 30 June 2020
2.0 Remuneration Policy - continued
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.
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 2020 financial year, the fees payable to the current NEDs
are $569,943 in aggregate.
Role
Fees
Chair
Other Non-Executive Directors
Additional Fees
Audit & Risk Committee – Chair
Audit & Risk Committee – Member
Remuneration & Nomination Committee – Chair
Remuneration & Nomination Committee – Member
2020
$
143,222
89,116
16,974
8,487
16,974
8,487
2019
$
139,050
86,520
16,480
8,240
16,480
8,240
Brave together
49
Remuneration Report - Audited
Remuneration Report – Audited (cont)
for the year ended 30 June 2020
3.0 Executive and Non-Executive Remuneration
Remuneration Summary
The Executive Remuneration outcomes for FY20 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.
STI
The CEO has the opportunity to earn an annual incentive of
60% of his total fixed remuneration package based on
meeting certain defined criteria. The FY20 STI criteria were
subject to both financial (70%) and non-financial (30%)
outcomes.
LTI (Performance
Rights)
294,410 performance rights were granted in FY20. These
rights vest at the end of the 3 year performance period
subject to meeting certain EPS and TSR outcomes.
Notice Period
Term of Agreement
6 Months
No Fixed Term
Executive Director
Dr Richard Henshaw
TFR
$346,951 per annum.
Dr Richard Henshaw was the only doctor during FY20 who
served as a Director. He was paid a salary by Monash IVF
Group.
STI
LTI (Performance
Rights)
Notice Period
Term of Agreement
TFR
STI
LTI (Performance
Rights)
Notice Period
Term of Agreement
TFR
STI
LTI (Performance
Rights)
n/a
n/a
6 Months
No Fixed Term
$300,000 per annum.
The CFO has the opportunity to earn an annual incentive of
30% of his total fixed remuneration package based on
meeting certain defined criteria. The FY20 STI criteria were
subject to both financial (70%) and non-financial (30%)
outcomes.
73,602 performance rights were granted in FY20. 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
$350,000 per annum
n/a
COO forfeited performance rights due to his resignation.
Notice Period
Term of Agreement
n/a
n/a
CFO
Malik Jainudeen
COO
Brett Comer
COO for the period of
1 July 2019 to 27
March 2020
Monash IVF Group Annual Report 2020
Remuneration Report - Audited
Remuneration Report – Audited (cont)
for the year ended 30 June 2020
3.0 Executive and Non-Executive Remuneration - continued
Executive
COO
Hamish Hamilton
Component
TFR
COO for the period
from 30 March 2020
STI
Commentary
$300,000 per annum
The COO has the opportunity to earn an annual incentive of
30% of his total fixed remuneration package based on
meeting certain defined criteria. The FY20 STI criteria were
subject to both financial (70%) and non-financial (30%)
outcomes.
LTI (Performance
Rights)
No performance rights were granted in FY20
Notice Period
Term of Agreement
3 Months
No Fixed Term
The following table shows the proportional weighting of each element of remuneration for each of the senior
executives based on achieving maximum opportunity:
Mr. Michael Knaap
Mr. Richard Henshaw
Mr. Malik Jainudeen
Mr Hamish Hamilton(1)
Fixed
Remuneration
(%)
45.4
100
64.5
76.9
Short Term
Incentive
(%)
27.3
-
19.4
23.1
Long Term
Incentive
(%)
27.3
-
16.1
-
(1) Mr Hamish Hamilton commenced as COO on 30 March 2020 and is considered KMP from that date. The proportional weighting of each
element of remuneration has been calculated from 30 March 2020 and in accordance with the contract terms of the position held from this
time.
3.1 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
Dr Richard Henshaw
Other KMP
Mr Malik Jainudeen
Mr Brett Comer
Mr Hamish Hamilton
Position
Period Covered Under this Report
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Full Financial Year
From 1 July 2020 to 29 June 2020
Full Financial Year
Full Financial Year
Full Financial Year
Chief Executive Officer
Executive Director
Full Financial Year
Full Financial Year
Chief Financial Officer
Chief Operations Officer
Chief Operations Officer
Full Financial Year
From 1 July 2020 – 27 March 2020
From 30 March 2020
Brave together
Remuneration Report – Audited (cont)
51
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Monash IVF Group Annual Report 2020
Remuneration Report - Audited
for the year ended 30 June 2020
Remuneration Report – Audited (cont)
3.1 Details of Remuneration for Key Management Personnel - continued
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 (2020)
Cash Incentive (2019)
% of Available
Incentive
% of Available
Incentive
Payable
Payable
$
Executive Directors
Mr Michael Knaap
Dr Richard Henshaw
Other Key Management Personnel
Mr Malik Jainudeen
Mr Brett Comer
Mr Hamish Hamilton
49,500
-
14,850
-
12,841
%
16.5
-
16.5
-
20
Not
Payable
%
83.5
-
83.5
-
80
Paid
$
43,884
-
12,423
22,430
-
Paid
%
21.4
-
25.0%
21.4%
-
Not
Paid
%
78.6
-
75.0
78.6
-
STI Non – Financial
The qualitative non-financial measures defined for KMP in Fy20 included the following:
Strategic Objective
Measure
Patient Engagement
Deliver an ongoing improvement in Patient
Engagement. A patient NPS Survey is
undertaken.
FY20 Outcome
Partial Achievement
Due to COVID-19 IVF was
significantly impacted whilst
Ultrasound maintained a
strong NPS.
People Engagement
Doctor Engagement
Scientific Success Rates
To foster a culture of Engagement with all
Monash IVF Group employees, assessed via an
annual employee survey on improvement targets
Achieved
Foster a culture of engagement with all Monash
IVF Group Clinicians, assessed via a clinician
engagement survey on improvement targets
Achieved
Deliver a focused improvement in clinical
pregnancy success rates above ANZARD and
improvement above previous year
Achieved
Domestic Market Growth
Increase market share growth in all IVF Key
markets
Not Achieved
Note: CEO and CFO Non-Financial Metrics included a focus on the International Expansion. In addition, the CFO
included a metric focused on Domestic Acquisitive Growth. In FY20 these measures were not achieved due to the
impact of COVID-19 and resources realigned to the hibernation and recovery requirements associated to
COVID-19.
3.2 Loans to Key Management Personnel
No loans were issued to KMP during 2020.
Brave together
55
Remuneration Report - Audited
for the year ended 30 June 2020
Remuneration Report – Audited (cont)
3.3 Key Management Personnel Shareholdings
The following details Monash IVF Group ordinary shares held by Directors and KMP during 2020:
Name
Non-Executive Directors
Mr Richard Davis
Mr Josef Czyzewski
Ms Christina Boyce
Mr Neil Broekhuizen
Ms Zita Peach
Executive Directors
Mr Michael Knaap
Dr Richard Henshaw
Other Key Management Personnel
Mr Malik Jainudeen
Mr Hamish Hamilton
Mr Brett Comer
Total
Balance at start
of year
Granted as
remuneration
52,799
142,027
106,215
100,000
56,000
54,444
1,411,632
-
N/A
-
1,923,117
-
-
-
-
-
-
-
-
-
-
-
Net
Change
129,268
99,355
48,104
32,787
36,803
96,211
(52,790)
19,231
71,535
-
480,504
Balance at
end
of year
182,067
241,382
154,319
132,787
92,803
150,655
1,358,842
19,231
71,535
N/A
2,403,621
(1) Net Change primarily comprises pro rata allocations from the $80M Equity Raising completed in May 2020.
4.0 Link to Group Performance
4.1 Group Performance
The revenue and earnings of the Group for the five years to 30 June 2020 are summarised below:
Measure
Revenue
Reported EBITDA
Adjusted EBITDA (2)
Net Profit After Tax (1)
STI Payable
Total Shareholder Return (1)
Closing Share Price ($)
Dividend Per Share (cents)
Earnings per Share (cents) (1)
2020
$’000
145,417
32,833
34,797
11,726
24.1%
-61%
0.53
2.1
4.6
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
6.0
9.1
2017
$’000
155,182
48,974
48,974
29,619
17.8%
3%
1.78
8.8
12.6
2016
$’000
156,561
49,584
49,584
28,775
84.6%
48%
1.82
8.5
12.2
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) Adjusted reflects non-regular items relating to transaction costs on acquisition activity ($539,000 pre-tax), restructuring costs
($848,000) pre-tax), certain pre-IPO patient claim ($728,000 pre-tax).
During the period, Revenue, EBITDA, NPAT, TSR and EPS were key performance measures. EBITDA is a major
component of the STI plans for KMP including the CEO, CFO and COO whilst TSR and EPS growth 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.
Monash IVF Group Annual Report 2020
Directors’ Report
for the year ended 30 June 2020
Directors’ Report for the year ended 30 June 2020 Matters subsequent to the end of the financial year Subsequent to 30 June 2020 and related to the COVID-19 Pandemic, the Group’s largest operating market, Victoria in Australia has experienced a surge in COVID-19 cases resulting in its capital city, Melbourne moving to Stage 4 restrictions. Whilst this is disrupting operational efficiency and patient movement, provision of IVF and Ultrasound services are continuing notwithstanding Stage 4 restrictions. IVF services are exempt from the non-urgent elective surgery ban in-place in Victoria due to the service being “time critical and has minimal impact on hospital bed capacity”. Effective 24 August 2020, the Group has right sized the $110m Syndicated Debt Facility to $40m. The $40m accordion facility remains available for acquisitions and capital expenditure. 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 57 and forms part of the directors’ report for the year ended 30 June 2020. This report is made in accordance with a resolution of the directors. Richard Davis Michael Knaap Chairman Chief Executive Officer and Managing Director Dated in Melbourne this 24th day of August 2020 Brave together Auditor’s Independence Declaration
57
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. 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 2020 there have been: i.no contraventions of the auditor independence requirements as set out in theCorporations Act 2001 in relation to the audit; andii.no contraventions of any applicable code of professional conduct in relation to the audit.KPM_INI_01 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG BW Szentirmay Partner Melbourne 24 August 2020 35 Monash IVF Group Annual Report 2020
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 2020. 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 and 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,
such as experience, education, criminal record and bankruptcy history, 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.
With the exception of the Managing Director & CEO, one third of all eligible Directors, and any other Director who
has held office for over three years since their last election, must retire in rotation at the Annual General Meeting
(AGM). This is in accordance with the Company’s Constitution. A retiring Director holds office until the conclusion of
the meeting at which he or she retires. They may stand for re-election by security holders at that meeting. The
Board may appoint a new Director to fill a casual vacancy and that Director will hold office until the close of the
next AGM, unless elected at that meeting.
Brave together
59
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 1 Lay solid foundations for management and oversight - continued
The Board makes recommendations in respect of the election or re-election of each Director based on tenure, skills
and experience of the Director in relation to Board composition. The Nomination and Remuneration Committee
ensures that appropriate background checks take place for the appointment of a new Director. The details of
those Directors who stand for re-election will be provided in the Notice of Meeting which is sent to security holders
prior to the AGM. The Board provides security holders with all material information in its possession relevant to a
decision on whether or not to elect or re-elect a director, in addition a statement by the Board as to whether it
supports the election or re-election of the candidate and a summary of the reasons as to why the Board has taken
this view. Additionally, each Director standing for re-election makes a short presentation to security holders at the
meeting itself.
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.
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
8
35
% of Women
40%
57%
92%
Total Staff (inc above)
590
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 confirms compliance with the Workplace Gender Equality Agency (Agency) for the 2019-20 reporting
period and confirms compliance with the Workplace Gender Equality Act 2012 (Act). Monash IVF Group achieves
diversity above industry standard with 50% female representation of Executives reporting to the CEO. Board
representation continues to be targeted at a minimum of 30% female representation.
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 FY20, 51 employees
have taken primary and secondary parental leave, utilizing the Group’s generous parental leave policy. Flexible
hour working arrangements either formally and informally are widely used across Monash IVF Group.
Monash IVF Group Annual Report 2020
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 1 Lay solid foundations for management and oversight - continued
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
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
FY20 Monash IVF Group continued their partnership 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 including awareness and education.
1.6 Director Performance Evaluation
The Remuneration and Nomination Committee Chair 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 July 2019. It involved directors
completing a confidential online questionnaire covering aspects outlined in the Board Charter. The results were
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 performance evaluation process has been undertaken in accordance
with this policy for the current financial year. 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
Brave together
61
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 2 Structure of the Board to add value - continued
in-place; the Remuneration and Nomination Committee and the Audit and Risk Committee. 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:
Director
Position
Independent
Mr Richard Davis
Independent Chairman
Mr Josef Czyzewski
Ms Christina Boyce
Independent non-executive
Director
Independent non-executive
Director
Ms Zita Peach
Mr Neil Broekhuizen
Independent non-executive
Director
Independent non-executive
Director
Mr Michael Knaap
CEO and Managing Director
Dr Richard Henshaw
Executive Director
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
(resigned
29/6/20)
12/10/2016
4/6/2014
15/4/2019
30/4/2014
2.1 Remuneration and Nomination Committee
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
Following the resignation of the Chair of the Remuneration and Nomination Committee, Christina Boyce on 29 June
2020, Ms Zita Peach has been appointed the Chair of the Remuneration and Nomination Committee. It is
anticipated that a new member of the Remuneration and Nomination Committee will be appointed.
The Remuneration and Nomination Committee consist of four independent Directors of the Board:
Ms Zita Peach (Chair)
Mr Richard Davis
Mr Josef Czyzewski
To be appointed
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;
Monash IVF Group Annual Report 2020
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 2 Structure of the Board to add value - continued
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.
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 Board of Director skill set during FY20:
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 advice 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.
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63
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 2 Structure of the Board to add value - continued
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. 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.
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, strategy,
financial, operational and risk management matters and factors relevant to the sectors and environments in which
the Company operates as well as visits to laboratories and clinics to gain a more in depth understanding of the
business.
The Chairman periodically reviews whether there is a need for Directors to undertake professional development
to maintain the skills and knowledge needed to perform their role as Directors effectively. Directors are active in
undertaking professional development opportunities for the purpose of development and maintenance of their
skills. The Board and its Committees are provided with updates and information from both management and
external experts on various topics relevant to the Company’s circumstances, including emerging business and
governance issues relevant to the Company and material developments in laws and regulations. The Board and
individual Directors attend at operational sites, meet staff in operations and receive presentations from
management across the Group’s operations. 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 Instill a culture of acting lawfully, ethically and responsibly
The Board and senior executives are firmly committed to ensuring that all employees observe high standards of
lawful, ethical behaviour and conduct. Setting the cultural tone for the organisation, Monash IVF Group’s core values
are as follows:
Monash IVF Group Annual Report 2020
Corporate Governance Statement (cont)
Corporate Governance Statement Principle 3 Instill a culture of acting lawfully, ethically and responsibly - continued Our Principles Monash IVF Group’s performance review process requires assessment of the extent to which personnel have demonstrated behaviour consistent with these values. The values also form the foundation for the monthly and annual employee CUDOS Awards, recognising and celebrating outstanding employee behaviour in line with these values. The principles are provided with sufficient guidance to enable personnel to make decisions consistent with the Board’s risk appetite and core values. 3.2 Code of Conduct and whistleblower program 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. 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 Brave together 65
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 3 Instil a culture of acting lawfully, ethically and responsibly - continued
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. The Board or Audit and Risk Management
Committee are informed of any material breaches of the entity’s code of conduct.
The Company has a Whistleblower policy which has been communicated to all Company personnel and published
on the Company’s website.
The Whistleblower Policy promotes and supports the reporting of matters of concern and suspected wrongdoing,
such as dishonest or fraudulent conduct, breaches of legislation and other conduct that may cause financial loss or
be otherwise detrimental to its reputation or interests. The Policy sets out the approach to disclosure, investigation
and reporting and outlines the protection to be afforded to those who report such conduct against reprisals,
discrimination, harassment or other disadvantage resulting from their reports. All disclosures received under the
Whistleblower Policy are reported to the Audit and Risk Management Committee with details of investigations
completed.
3.3 Anti-Bribery and Corruption policy
The Group has a number of policies intended to foster a culture of lawful, ethical and responsible decision-making.
In addition to specific behaviours set out in the Code of Conduct where Monash IVF Group confirms it has no
tolerance for corrupt practices and as part of improvements planned to align practices with the Fourth Edition of
the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, Monash IVF
Group has committed to the adoption and disclosure of a formal Anti Bribery and Corruption Policy in the next
reporting period.
Monash IVF Group Ltd Code of Conduct policy and Whistle Blower policy can be found in full on our website under
www.monashivfgroup.com.au/investor-centre/corporate-governance/
Principle 4 Safeguard integrity in corporate reporting
4.1 Audit and Risk Management 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.
The 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 (resigned 29 June 2020)
Mr Neil Broekhuizen
Details of the Committee members’ experience and technical expertise are set out in the directors’ biographies
which can be viewed on the Board of Directors pages in the latest Annual Report. Details of the number of times
the Committee met throughout the period and individual attendances of the members can be viewed in the Directors
Report in the latest Annual Report. 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
Monash IVF Group Annual Report 2020
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 4 Safeguard integrity in corporate reporting - continued
4.2 Financial Statement Approval
Monash IVF Group Ltd CEO and Managing Director, Mr Michael Knaap, and CFO, Mr Malik Jainudeen, reviewed
and verified that the 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 Process for verifying Periodic Corporate Reports
Monash IVF Group Ltd is committed to providing security holders and other external stakeholders with timely,
consistent and transparent corporate reporting. The process which is followed to verify the integrity of periodic
corporate reports is tailored based on the nature of the relevant report, its subject matter and where it will be
published. Monash IVF Group Ltd seeks to adhere to the following general principles with respect to the preparation
and verification of its corporate reporting:
periodic corporate reports prepared by, or under the oversight of, the relevant subject matter expert
for the area being reported on;
the relevant report is in compliance with any applicable legislation or regulations;
the relevant report reviewed (including any underlying data), with regard to ensuring it is not
inaccurate, false, misleading or deceptive; and
where required by law or by Monash IVF Group policy, relevant reports authorised for release by the
appropriate approver required under that law or policy.
Consistent with these principles, the non-audited sections of the Annual Report and Corporate Governance
Statement for the Reporting Period were prepared by the relevant subject matter experts and reviewed and
verified by relevant senior executives and senior managers prior to Board approval. ASX announcements (other
than administrative announcements) during the Reporting Period were also reviewed and approved in accordance
with the Continuous Disclosure policy, which includes review by the Board, CEO and CFO prior to publication.
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.
5.2 and 5.3 Material market announcements and presentations
The Company Secretary ensures that the Board receives copies of all material market announcements promptly
after they have been made and ensures that any new investor or analyst presentation is released on the ASX
before the presentation is given. The Continuous Disclosure Policy can be found on the Monash IVF Group website
at http://ir.monashivfgroup.com.au/Investor-Centre/?page=Corporate-Governance.
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67
Corporate Governance Statement
Corporate Governance Statement (cont)
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;
copies of presentations to shareholders, institutional investors, brokers and analysts;
all announcements and releases to the ASX;
any media or other releases;
all notices of meetings and explanatory material;
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
Research and Innovation – lists current and published research and our scientific firsts.
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 and 6.4 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 26 November 2020.
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
All resolutions put to the Annual General Meeting will be decided by way of a poll. Shareholders are also able to
direct any questions via the Group’s share registry provider, Link Market Services.
Monash IVF Group Annual Report 2020
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 6 Respect the rights of security holders - continued
6.5 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
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
mitigating actions. The Committee adheres to the Risk Management Policy for the business which highlights the risks
relevant to Company operations and oversees that the entity is operating with due regard to the risk appetite set
by the Board.
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. A review of Risk Management is undertaken annually.
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.
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69
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 7 Recognise and Manage Risk - continued
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. The Group will continue to
assess whether an independent third party internal audit function or designated in-house internal audit function is
required.
7.4 Risk Exposure
Monash IVF Group Ltd provides assisted reproductive services in Australia and Malaysia and specialist women’s
imaging services in Australia. The Group is committed to performing 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 its 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 it serves and society at large. Its
focus on evidenced based fertility care provides the opportunity to commit resources to scientific research, clinical
teaching and training. The Group’s 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 subsidiary companies ensure national regulation and
state legislation drives the standards of care to ensure its protects its patients, donors and any children born as a
result of treatment provided by the Group.
All Monash IVF Group facilities meet the appropriate standards for accreditation including:
Assisted reproductive treatment sites in Australia are accredited with the Reproductive Technology
Accreditation Committee (RTAC) and the Group ensures appropriate documentation is held by sites,
doctors, nurses and scientists. This accreditation incorporates components covering ethics and safety in
practice and management of adverse events.
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.
Diagnostic laboratories are accredited to ISO 15189 and relevant NPAAC Guidelines.
Diagnostic imaging (ultrasound) facilities are accredited with the Department of Health Diagnostic Imaging
Accreditation Scheme (DIAS).
The Group’s 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 its 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 the
Group’s 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. Monash IVF Group is an organisation that is not involved in manufacturing
or resource extraction and hence it considers its environmental footprint to be small.
Monash IVF Group Annual Report 2020
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 7 Recognise and Manage Risk - continued
The Group adopts 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 Group adopts the approach of
a responsible corporate citizen with regard to the management of waste and hazardous materials. The Group is
not a significant consumer of electricity, water or gas and accordingly, the opportunities for material reductions in
utility consumption are limited.
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 of
laboratory products in 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 systems operate safely and
securely as demonstrated by a recent cyber-attack that failed to propagate through our systems. Our preventative
controls isolated the attack to a comparatively small subset of system resources, while we hardened our firewall
and email filtering to stop this and future attacks from coming through. Numerous levels of redundancy and backup
are built into the IT systems providing a high degree of system availability and protection of data. The Group
periodically engages an independent third party to review the Group’s cyber security risk. Recommendations from
these reviews continue to be implemented and the Group continues to invest to 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. All members of the Committee are non-executive independent Directors.
Details of the Committee members’ experience and technical expertise are set out in the directors’ biographies
which can be viewed on the Board of Directors pages in the latest Annual Report. Details of the number of times
the Committee met throughout the period and individual attendances of the members can be viewed in the Directors
Report in the latest Annual Report.
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.
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71
Corporate Governance Statement
Corporate Governance Statement (cont)
Principle 8 Remunerate fairly and responsibly - continued
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
The Board may award incentive payments to the CEO, CFO and Senior Executives in the form of equity. The
Corporations Act prohibits key management personnel (or closely-related parties) of an ASX-listed Australian
company from entering into an arrangement that would limit their exposure to an element of their remuneration
subject to a holding lock. Equity-based awards are made on the condition that Corporations Act requirements are
complied with.
Directors and officers cannot buy and sell securities when in possession of price sensitive information and during the
following periods, referred to as Prohibited Periods:
the period from the end of the Company’s financial year (30 June) until the announcement of the
Company’s full year results to the ASX;
the period from the end of the Company’s half year (31 December) until the announcement of the
Company’s half year results to the ASX.
Approval from the Chair is required prior to any transacting in shares contemplated by directors and Managing
Director, and approval from the Managing Director for any transacting contemplated by the CFO and Company
Secretary.
A copy of the Securities Trading Policy is available on the Company’s website. Directors and senior executives are
not permitted to hedge their exposure to Company securities. Employees, directors and senior executives are not
permitted to use Company securities as collateral in any financial transaction, including margin loan arrangements.
Monash IVF Group Annual Report 2020
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2020
for the year ended 30 June 2020
Revenue from services
Employee benefits expense(1)
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(2)
Operating profit
Net finance costs
Profit before tax
Income tax expense
Net profit after tax 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
2.4,2.5
2.6
4.5
1.5
Consolidated
2020
$’000
145,417
(48,996)
(25,743)
(16,408)
(3,059)
(9,106)
(1,894)
(3,345)
(5,718)
(4,052)
(5,263)
21,833
(5,707)
16,126
(4,366)
11,760
1,115
(336)
(77)
702
12,462
11,726
34
11,760
12,428
34
12,462
2019
$’000
151,980
(48,095)
(25,754)
(15,547)
(2,948)
(3,712)
(1,361)
(9,732)
(4,989)
(3,069)
(5,486)
31,287
(3,802)
27,485
(7,678)
19,807
(603)
181
(15)
(437)
19,370
19,852
(45)
19,807
19,415
(45)
19,370
1.4
1.4
4.6
4.5
8.4
8.4
*The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach,
comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognized in retained
earnings at the date of initial application.
(1) Includes JobKeeper income of $4.9m (refer note 1.1).
(2) Prior year 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.
Brave together
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
as at 30 June 2020
as at 30 June 2020
73
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventory
Total current assets
Non current assets
Equity accounted investment
Trade and other receivables
Plant and equipment
Right of use assets
Intangible assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Derivative financial instruments
Contingent consideration
Employee benefits
Total current liabilities
Non current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Contingent consideration
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
2.2
2.1
2.4
2.5
2.6
2.3
4.4
5.2
3.1
4.3
4.4
5.2
3.1
1.5
4.1
Consolidated
2020
$’000
15,072
10,442
1,202
3,949
30,665
393
181
19,111
36,514
262,165
318,364
349,029
25,504
2,316
-
600
9,442
37,862
18,943
36,314
-
1,200
1,037
1,551
59,045
96,907
252,122
2019
$’000
4,281
6,631
638
3,983
15,533
763
114
16,523
-
257,104
274,504
290,037
15,460
-
171
-
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24,203
88,349
-
942
-
920
2,189
92,400
116,603
173,434
506,786
(136,778)
42,535
(162,735)
249,808
2,314
252,122
428,757
(137,484)
42,834
(160,892)
173,215
219
173,434
*The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative
information is not restated and the cumulative effect of initially applying AASB 16 is recognized in retained earnings at the date of initial
application.
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
Monash IVF Group Annual Report 2020
Consolidated Statement of Changes in Equity
for the year ended 30 June 2020
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Consolidated Statement of Cash Flows
for the year ended 30 June 2020
Consolidated Statement of Cash Flows
for the year ended 30 June 2020
75
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other income received
Cash generated from operations
Income taxes paid
Net cash flows generated from operating activities
Cash flows from investing activities
Payments for plant and equipment and intangible assets
Payments for business acquisitions (including transactions costs)
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds/(Repayment) of borrowings
Interest paid on borrowings
Interest paid on closure of interest rate swaps
Payments of lease liabilities
Dividends paid
Proceeds from sale of non-controlling interest
Debt facility refinance cost
Net proceeds from issue of ordinary shares
Net cash flows used in financing activities
Total cash flows from activities
Note
4.6
Consolidated
2020
$’000
2019
$’000
146,351
(114,304)
3,313
35,360
(4,281)
31,079
152,922
(113,043)
-
39,879
(6,786)
33,093
(7,507)
(3,056)
(10,563)
(69,721)
(3,450)
(1,087)
(7,202)
(7,074)
1,300
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77,532
(9,702)
(6,536)
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(9,000)
(3,592)
-
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(13,192)
-
(330)
-
(26,114)
10,814
443
4,281
(23)
15,072
3,853
(15)
4,281
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
4.6
*The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative
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application.
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
for the year ended 30 June 2020
Notes to the Consolidated Financial Statements for the year ended 30 June 2020 Contents Section 1: Section 2: Our financial performance Our operating asset base 1.1 Revenue and expenses 77 2.1 Trade and other receivables 85 1.2 Operating segments 78 2.2 Inventory 86 1.3 Dividends 80 2.3 Trade and other payables 86 1.4 Earnings per share 81 2.4 Plant and equipment 87 1.5 Taxation 82 2.5 Right of use assets 88 2.6 Intangible assets 89 Section 3: Section 4: Our people Our funding structure 3.1 Employee benefits 92 4.1 Share capital and reserves 96 3.2 Share-based payments 92 4.2 Financial risk management 98 3.3 Key management personnel 95 4.3 Borrowings 101 4.4 Derivative financial instruments 103 4.5 Net finance costs 103 4.6 Cash and cash equivalents 104 Section 5: Section 6: Our business portfolio Other disclosures 5.1 Controlled entities 105 6.1 Auditors’ remuneration 111 5.2 5.3 Acquisitions and disposals Investments using the equity method 106 107 6.2 Events occurring after the reporting period 111 5.4 Parent entity 108 6.3 Reporting entity 111 5.5 Deed of cross guarantee 109 6.4 Basis of preparation 112 6.5 Changes in accounting policies 114 6.6 New standards and interpretations 115 Brave together 77
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
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 Revenue and Expenses
1.4 Earnings per Share
1.2 Operating Segments
1.5 Taxation
1.3 Dividends
1.1 Revenue and Expenses
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 from rendering of services is recognised on completion of services provided. Revenue is 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.
Deferred 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.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the
grant will be received and the Group will comply with all attached conditions. Government grants relating to costs
are recognised in comprehensive income over the period necessary to match them with the costs that they are
intended to compensate.
In March 2020, the Australian Government announced the introduction of JobKeeper, an economic response
package to the Coronavirus pandemic. Under the JobKeeper grant, businesses impacted by the Coronavirus were
able to access a subsidy from the Government to continue paying their employees. Employers who have turnover
under $1 billion are eligible for the subsidy if their turnover reduces by more than 30 per cent relative to the
comparable prior year period of at least a month between April and September 2020. The COVID-19 impact
on the group turnover in April 2020 resulted in a greater than 30% reduction compared to April 2019 due to the
temporary suspension of IVF procedures requiring hospitalisation between 25 March and 27 April 2020 in
Australia as well as movement control orders in Malaysia. Accordingly, the Group is eligible to claim a fortnightly
payment of $1,500 per eligible employee from 30 March 2020 for a maximum period of 6 months.
JobKeeper payments receivable from the ATO are recognised by a ‘for profit’ entity as a government grant as
the payment is a wage subsidy provided by the Government with the objective of keeping the organisation
connected with the economy and their workers during the COVID-19 pandemic period between April and
September 2020. The related amounts paid to employees are recognised as employee benefit expenses. The
JobKeeper payment is recognised only when there is reasonable assurance that the organisation will comply with
the conditions and that the grant will be received. The income is recognised in profit and loss matching the
employee salary expense which is what the grant is intended to compensate.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
1.1 Revenue and Expenses - continued
As a government grant, there is an accounting policy choice whereby the organisation presents the grant income
gross from the expense or net of the related expense. The grant income has been disclosed net of the related
employee expense as the subsidy support is used to fund existing employee wages during the period.
The grant amount recognised in employee benefits expense is $4.9m (FY19: nil). The amount recognised as a
sundry debtor as at 30 June 2020 is $1.6m, and was received in July 2020.
1.2 Operating segments
The Group determines and presents operating segments based on information that internally is provided to and
used by the Chief Executive Officer, who is the Group’s Chief Operating Decision Maker (CODM). An operating
segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components.
The financial results of each operating segment are regularly reviewed by the Group’s Chief Executive Officer in
order to make decisions about resources to be allocated to the segment and assess its performance, and for which
discrete financial information is available.
Segment results that are reported to the Chief Executive Officer include items directly attributable to a segment,
as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets,
head office expenses and income tax assets and liabilities. Segment capital expenditure is the total cost incurred
during the period to acquire property, plant and equipment and intangible assets other than goodwill.
The basis of inter-segmental transfers is market pricing. Results are calculated before consideration of net
borrowing costs and tax expense. Segment assets exclude deferred tax balances and cash, which have been
included as unallocated assets.
Identification of reportable operating segments
The two geographic segments being Australia and International reflect Monash IVF Group’s reporting structure to
the 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.
Brave together
79
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
Segment results
2020
Total revenue – external
Adjusted EBIT (before non-recurring items)(1) (2)
Acquisition costs(1)
Restructuring costs(1)
Provision for patient claim(1)
Sydney CBD clinic premise costs(2)
Reported EBIT
Net finance costs
Finance cost - Interest rate swaps closure cost
Profit before income tax expense
Income tax expense
Profit for the year
Depreciation and amortisation expense
Segment assets
Acquisition of plant and equipment and intangibles
Segment liabilities
2019
Total revenue – external
Adjusted EBIT (before non-recurring items)(3)
Mosman clinic closure and CEO separation costs
Reported EBIT
Net finance costs
Profit before income tax expense
Income tax expense
Profit for the year
Depreciation and amortisation expense
Segment assets
Acquisition of plant and equipment and intangibles
Segment liabilities
Monash IVF
Group Australia
$’000
135,503
20,631
(539)
(848)
(728)
(480)
18,036
(4,510)
(1,087)
12,439
(3,481)
8,958
(10,345)
338,204
7,759
92,373
Monash IVF
Group
Australia
$’000
140,378
27,729
(1,455)
26,274
(3,802)
22,472
(6,477)
15,995
(4,792)
280,922
6,261
116,084
Monash IVF
Group
International
$’000
9,914
3,797
-
-
-
-
3,797
(110)
-
3,687
(885)
2,802
(655)
10,825
40
4,534
Monash IVF
Group
International
$’000
11,602
5,013
-
5,013
-
5,013
(1,201)
3,812
(281)
9,115
275
519
Total
$’000
145,417
24,428
(539)
(848)
(728)
(480)
21,833
(4,620)
(1,087)
16,126
(4,366)
11,760
(11,000)
349,029
7,799
96,907
Total
$’000
151,980
32,742
(1,455)
31,287
(3,802)
27,485
(7,678)
19,807
(5,073)
290,037
6,536
116,603
(1) Non-recurring items include transaction costs on acquisition activity including Fertility Solutions and Johor Bahru ($539,000 pre-tax),
restructuring costs ($848,000 pre-tax) and provision for patient claim ($728,000 pre-tax).
(2) Relates to period from lease commencement for new Sydney CBD fertility clinic in work in progress stage ($480,000 pre-tax).
(3) 2019 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).
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
1.3 Dividends
Dividends during the year
Franking
Payment
Date
Per share
(cents)
2020
$’000
2019
$’000
Interim dividend in respect
of the current financial year
Fully franked
2 October 2020
(2019: 5 April 2019)
2.1
(2019: 3.0)
4,951
7,067
Final dividend in respect of
the prior financial year
Fully franked
11 October 2019
(2019: 12 October 2018)
3.0
(2019: 2.6)
7,074
6,125
Total
Current liability – Dividend payable(1)
Paid in cash during the year
5.1
(2019: 5.6)
12,025
13,192
4,951
7,074
-
13,192
(1) On 1 April 2020, The Company announced the deferral of the payment of the interim dividend until 2 October 2020. This deferral was
considered a prudent measure due to the economic environment caused by the COVID-19 pandemic.
Dividend franking account
Amount of franking credits available at 30 June
to shareholders for subsequent financial years
8,724
13,031
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.
The Board has not declared a 2020 final dividend.
Brave together
81
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
1.4 Earnings per share
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
Weighted average number of ordinary shares used in calculating
basic earnings per share
2020
Cents per share
4.6
4.5
2019
Cents per share
8.4
8.4
2020
$’000
11,726
2020
Number
2019
$’000
19,852
2019
Number
257,550,107
235,598,078
Adjustments for calculation of diluted earnings per share (1)
Weighted average number of ordinary shares used in calculating
diluted earnings per share
550,148
322,654
258,100,255
235,920,732
(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.
Basic 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.
Diluted earnings per share
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.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
1.5 Taxation
Income Tax expense
Current tax
Deferred tax
Over/(under) provided in prior year
Total income tax expense
2020
$’000
3,867
661
(162)
4,366
2019
$’000
8,222
(508)
(36)
7,678
Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
Tax at the Australian tax rate of 30% (2019: 30%)
16,126
4,838
27,485
8,245
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
(231)
(250)
171
(162)
4,366
(301)
(250)
20
(36)
7,678
))
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.
Brave together
Notes to the Consolidated Financial Statements (cont)
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Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
1.5 Taxation - continued
Recognition and Measurement
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:
The initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries
and associates and jointly controlled entities to the extent that it is probable that they will not reverse in
the foreseeable future.
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.
Offsetting deferred tax
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
liabilities will be realised simultaneously.
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
A deferred tax asset is recognised to the extent that it
is probable that future taxable profits will be
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.
The Group is subject to income taxes in Australia and
jurisdictions where
foreign operations.
it has
Judgement is required in determining the worldwide
provision for income taxes and in assessing whether
deferred tax balances are recognised on the statement
of financial position. Changes in circumstances will
alter expectations, which may impact the amount of
provision for income taxes and deferred tax balances
recognised.
Brave together
85
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
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 Plant and equipment
2.2 Inventory
2.5 Right of use of assets
2.3 Trade and other payables
2.6 Intangible assets
2.1 Trade and other receivables
Current
Trade receivables
Provision for expected credit losses
Other debtors
Accrued income
Prepayments
GST receivable
Total current trade and other receivables
Non current
Other debtors
Provision for expected credit losses
2020
$’000
4,183
(747)
3,436
2,431
1,060
2,761
754
10,442
181
2019
$’000
3,218
(460)
2,758
409
129
2,327
1,008
6,631
114
The consolidated entity has recognised an expense of $287,000 (2019: $2,000) in profit or loss in respect of
impairment of receivables for the year ended 30 June 2020. The increase in provision for expected credit losses
during the year was predominately driven to reflect counterparties that have been impacted by COVID-19 in
combination with a general increased loss expectation as a result of a deterioration in the economic environment.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised costs using the
effective interest method less provision for expected credit losses. 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 significantly 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, debtor ageing and credit assessment including forward-looking
information.
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.
Patient fees for most treatments are received in advance and recognised as deferred revenue if the procedure is
yet to be performed. This reduces the risk of non-collectability. Outstanding receivables predominantly relate to
amounts owing from Medicare and storage fee patient accounts. Payment reminder notices are issued to patients
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
2.1 Trade and other receivables - continued
with outstanding balances at 30, 60 and 90 days. After which, collection of this debt may be 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.
Prepayments
Payments made for the receiving of goods or services rendered in future years are recognised as a prepayment.
2.2 Inventory
Consumables – at cost
Total inventory
2020
$’000
3,949
3,949
2019
$’000
3,983
3,983
Inventories are recorded using the FIFO method and are valued at the lower of cost and net realisable value.
Inventories include medical supplies to be consumed in providing future patient services.
2.3 Trade and other payables
Current
Trade payables
Accrued expenses
Deferred revenue
Dividend payable
Other liabilities
Total trade and other payables
2020
$’000
3,024
10,804
6,725
4,951
-
25,504
2019
$’000
4,388
4,753
6,050
-
269
15,460
Trade and other payables are carried at amortised cost and are not discounted. These amounts represent liabilities
for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts
are unsecured and are paid in accordance with vendor terms.
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
87
2.4 Plant and equipment
Cost
Opening balance at 1 July
Additions
Acquisitions through business combinations
Disposals
Closing balance at 30 June
Opening balance at 1 July
Depreciation for the year
Acquisitions through business combinations
Disposals
Closing balance at 30 June
Carrying amount
At 1 July (Opening balance)
At 30 June (Closing balance)
2020
$’000
53,678
4,613
2,030
(2,152)
58,169
(37,155)
(3,466)
(589)
2,152
(39,058)
16,523
19,111
2019
$’000
49,496
4,182
-
-
53,678
(32,561)
(4,594)(1)
-
-
(37,155)
16,935
16,523
(1)
Includes Mosman clinic closure accelerated depreciation of $882,000.
Capital commitments
Expenditure contracted for but not recognised as liabilities:
Capital plant and equipment
(1) Capital plant and equipment includes the new Sydney CBD Fertility Clinic in development.
2020
$’000
3,345(1)
2019
$’000
863
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. 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.
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. 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 the replaced part is derecognised. The costs of the day-
to-day servicing of the plant and equipment are recognised in profit or loss as incurred.
Key estimate and judgement:
Depreciation
The Group’s plan and equipment are depreciated over their useful economic lives between 2-10 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date. Depreciation is
recognized 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.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
2.5 Right of Use Assets
Leases as lessee
$’000
Cost
Opening balance at 1 July
Recognition of right-of-use asset on initial application of
AASB16
Adjusted Opening balance at 1 July
Additions
Acquisitions through business combinations
Disposals
Closing balance at 30 June
Accumulated depreciation
Opening balance at 1 July
Recognition of right-of-use asset on initial application of
AASB16
Adjusted Opening balance at 1 July
Depreciation for the year
Disposals
Closing balance at 30 June
Carrying amount
At 1 July (Opening balance)
Adjusted balance at 1 July
At 30 June (Closing balance)
2020
Buildings
Equipment
Total
2019
Total
-
46,143
46,143
9,469
2,132
(39)
57,705
-
(17,360)
(17,360)
(5,245)
39
(22,566)
-
-
-
46,143
-
1,770
-
-
1,770
46,143
11,239
2,132
(39)
59,475
-
-
-
(17,360)
-
(395)
-
(395)
(17,360)
(5,640)
39
(22,961)
-
28,783
35,139
-
-
1,375
-
-
36,514
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Group leases property and equipment. The leases typically run for a period of between one to ten years,
with an option to renew the lease after this date. Lease payments are renegotiated at periods to reflect market
rentals. The Group has elected not to recognise right of use assets and lease liabilities for short term and/or low
value assets such as IT and office equipment.
Amounts recognised in profit and loss
Interest on lease liabilities
Expenses relating to leases of low value assets
Lease expense – operating leases under AASB117
Amounts recognised in statement of cash flows
Payments of lease liabilities
Extension options
2020
$’000
1,046
77
-
7,202
2019
$’000
-
-
7,122
-
Some leases contain extension options exercisable by the Group up to one year before the end of the non-
cancellable contract period. Where practicable, the Group seeks to include extension options in new leases to
provide operational flexibility. The extension options held are exercisable by the Group and not by the lessors.
The Group assesses at lease commencement date whether it is reasonably certain to exercise the extension options.
The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or
significant changes in circumstances within its control. The Group has estimated that the potential future lease
payments, should it exercise the extension option, would result in an increase in lease liability of $8.2 million.
Brave together
89
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
2.6 Intangible assets
$’000
2020
Net book value
Balance at 1 July 2019
Additions
Acquisitions through business combinations
Amortisation expense
Balance at 30 June 2020
At 30 June 2020
Cost
Amortisation and impairment losses
Balance at 30 June 2020
2019
Net book value
Balance at 1 July 2018
Additions
Amortisation expense
Balance at 30 June 2019
At 30 June 2019
Cost
Amortisation and impairment losses
Balance at 30 June 2019
Software
Goodwill
Software
Trademark
Total
229,108
-
4,061
-
233,169
233,169
-
233,169
229,108
-
-
229,108
229,108
-
229,108
8,151
2,894
-
(1,894)
9,151
13,721
(4,570)
9,151
7,158
2,354
(1,361)
8,151
19,025
(10,874)
8,151
19,845
-
-
-
19,845
19,845
-
19,845
19,845
-
-
19,845
19,845
-
19,845
257,104
2,894
4,061
(1,894)
262,165
267,060
(4,570)
262,165
276,760
2,354
(1,361)
257,104
269,527
(12,423)
257,104
Software has a finite useful life and is carried at cost less accumulated amortisation and impairment losses. The
cost of system development, including purchased software, is capitalised and amortised over the estimated useful
life, being three to eight years. Amortisation methods, useful lives and residual values are reviewed at each
financial year end and adjusted if appropriate.
Trademark
Trademarks are reported at historical cost less impairment. Trademarks have an indefinite useful life where there
is no expiry and no foreseeable limit on the period of time over which these assets are expected to contribute to
the cash flows of the Group. Similar to goodwill, these are tested for impairment annually.
Goodwill
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 is included in intangible assets. Goodwill is measured at cost less accumulated impairment losses.
Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it
might be impaired.
Impairment testing
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 and the discount rates (cost of
capital and debt) applied to determining the net present value of these future cash flows.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
2.6 Intangible assets - continued
The carrying amounts of the Group’s non financial 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 year:
Goodwill and trademark allocated to:
Australia
Ultrasound
International
Impairment testing assumptions
2020
$’000
219,030
28,232
5,752
253,014
2019
$’000
215,572
28,232
5,149
248,953
The recoverable amount of a CGU is based on value-in-use calculations. The following key assumptions were
utilised for the impairment testing:
- 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 in equities generally and the systemic risk of the specific CGU. A pre-
tax discount rate of 10.5% (FY19: 10.47%) for the Australian CGU, 11.0% (FY19: 11.70%) for the
Ultrasound CGU and 10.5% (FY19: 11.27%) for the International CGU was applied in determining the
recoverable amount. The discount rate and related risk factors also had regard to the current COVID-19
environment.
- Cash flow forecasts are based on the Board-approved FY21 budget, projected for four years plus a terminal
value. The FY21 budget reflects management’s best estimate of forecast operating performance having
regard to the market and economic uncertainties posed by the COVID-19 pandemic. The underpinning
assumptions include a return to pre-COVID-19 volumes in FY21 driven by pent up demand for IVF and
Ultrasound services and a general stabilization in economic activity, the continuation of cost containment
initiatives, no inclusion of expected JobKeeper payments, and no further extended Government restrictions or
lockdowns that impact the Group’s ability to provide its services to customers.
- A long-term growth rate into perpetuity of 2.5%-3.0% (FY19: 3.0%) has been determined based on an
assessment of historical growth rates, expectations of future growth rates and market specific dynamics.
Impact of possible changes in key assumptions
All CGU’s in the Group have been tested for impairment and have met their required hurdle rates to support the
current carrying values. Any reasonable possible change to relevant assumptions and inputs would not result in
the recoverable amount being lower than the carrying amount.
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91
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
2.6 Intangible assets - continued
Result of Impairment testing
The recoverable amount of all CGU’s are deemed recoverable.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
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 Key management personnel
3.2 Share-based payments
3.1 Employee benefits
Current liability
Long service leave
Annual leave
Total current employee benefits
Non current liability
Long service leave
Total non current employee benefits
Total employee benefits provision
Provisions
2020
$’000
4,021
5,421
9,442
1,037
1,037
10,479
2019
$’000
5,095
3,477
8,572
920
920
9,492
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.
Provision for employee benefits
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. 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.
3.2 Share-based payments
Senior executives’ long-term incentive plan
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 recognized as an employee
benefit expense with a corresponding increase in equity. The fair value is measured at grand date and recognized
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.
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93
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
3.2 Share-based payments - continued
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 selected by the Directors. Key management personnel and other senior management
are eligible to participate under the LTI Program.
The senior executive 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.
Long term incentive program (equity settled)
A description of the equity plans applicable during the year are described below:
Grant date
Vesting conditions
(2020)
16 October 2019
(2019)
20 December 2018
(2018)
29 January 2018
(2017)
17 March 2017
EPS - Subject to meeting certain EPS hurdles and 3 year service period to 30 June 2022
TSR - Subject to Total Shareholder Return hurdles and a 3 year service period to the
11th trading day after the FY22 results announcement
EPS - Subject to meeting certain EPS hurdles and 3 year service period to 30 June 2021
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
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
3.2 Share-based payments - 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
Expected volatility – Monash IVF
Expected volatility – ASX 300 Healthcare Index
Expected life (years)
Expected dividends
Risk free interest rate (based on government bonds)
2020
$0.94
$0.46
$0.94
35%
15%
6
6.0%
0.83%
2019
$1.00
$0.45
$1.00
30%
15%
6
6.0%
1.88%
2018
$1.19
$0.49
$1.36
37%
14%
5
5.5%
2.13%
2017
$1.69
$0.63
$1.90
32%
15%
5
4.8%
1.91%
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:
2020
Grant Date
17 Mar 2017
29 Jan 2018
20 Dec 2018
16 Oct 2019
Balance
at 1July
2019
Expiry Date
30 June 2019
19,447
30 June 2020
95,210
30 June 2021 207,997
-
30 June 2022
322,654
Granted
during the
year
-
-
-
471,055
471,055
Lapsed
during the
year
(19,447)1
(47,605)2
-
-
(67,052)
Forfeited
during the
year
-
-
(73,466)3
(103,043)3
(176,509)
Balance at
Vested
30 June
during the
2020
year
-
-
-
47,605
- 134,531
- 368,012
- 550,148
(1) TSR vesting conditions for performance rights granted in FY17 were not satisfied therefore these rights lapsed.
(2) EPS vesting conditions for performance rights granted in FY18 were not satisfied therefore these rights lapsed
(3) The performance rights for Brett Comer (Chief Operating Officer) were forfeited due to resignation and departure on 27 March 2020.
2019
Grant Date
29 June 2016
17 Mar 2017
29 Jan 2018
20 Dec 2018
Expiry Date
30 June 2018
30 June 2019
30 June 2020
30 June 2021
Balance
at 1July
2018
35,072
38,894
287,262
-
361,228
Granted
during the
year
-
-
-
207,997
207,997
Lapsed
during the
year
(35,072)1
(19,447)1
-
-
(54,519)
Forfeited
during the
year
-
-
(192,052)2
-
(192,052)
Balance at
Vested
30 June
during the
2019
year
-
-
19,447
-
-
95,210
- 207,997
- 322,654
(1) 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.
(2) David Morris (CEO) FY18 performance rights were forfeited due to his resignation and departure.
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95
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
3.3 Key management personnel
Compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
Termination benefits
Total key management personnel compensation
2020
$
2,194,168
199,074
5,971
-
2,399,213
2019
$
1,982,874
145,063
3,569
484,156
2,615,662
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.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
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 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 Share capital 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 Share capital and reserves
Opening balance at 1 July 2018
Shares issued (1)
Closing balance at 30 June 2019
Opening balance at 1 July 2019
Shares issued (2)
Capital raising fees (2)
Closing balance at 30 June 2020
Number of shares
issued
235,395,438
390,446
235,785,884
235,785,884
153,848,956
-
389,634,840
$’000
428,347
410
428,757
428,757
80,001
(1,972)
506,786
(1) Issue of shares to a consultant under the terms of their consultancy agreement.
(2) In May 2020, the Company issued 153,848,956 shares under its non-renounceable entitlement offer at a price of $0.52 per share,
resulting in an increase in share capital of $80.0 million less transaction costs of $2.8 million pre tax ($2.0m post tax).
Ordinary shares
Ordinary shares are classified as share capital. 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.
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.
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.
Other equity 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.
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
4.1 Share capital and reserves - continued
Profits reserve
The profits reserve comprises the transfer of net profit for the period and characterises profits available for
distribution as dividends in future periods.
Share option reserve
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.
Hedge reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to highly probable forecast transactions. The hedging reserve is used to record gains
or losses on derivatives that are designated and qualify as cash flow hedges and that are recognised in OCI.
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.
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) (2)
Sydney Ultrasound for Women(3)
Total
30 June 2020
Number of
shares subject
to escrow (m)
15.0
1.5
16.5
Escrowed
shares (as a %
of shares on
issue
3.8%
0.4%
4.2%
Number of
shares subject
to escrow (m)
15.3
1.5
16.8
30 June 2019
Escrowed shares
(as a % of
shares on issue)
Escrowed shares
(as a %
6.5%
0.6%
7.1%
(1) FY20 Includes 1.0m shares subject to escrow held by Richard Henshaw (Executive Director) (FY19:1.0m shares)
(2) 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
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
4.1 Share capital and reserves - continued
- 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.
(3) 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.
Brave together
99
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
4.2 Financial risk management - continued
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.
Carrying
amount
$’000
Total
Contractual
cash flows
$’000
Within 1
year
1-5 years
Over
5 years
$’000
$’000
$’000
-
-
(17,646)
-
(17,646)
Over 5
years
19,279
25,503
38,631
1,800
85,213
(19,964)
(457)
(19,507)
(25,503)
(25,503)
(38,631)
(1,800)
(85,898)
(2,316)
(600)
(28,876)
-
(18,669)
(1,200)
(39,376)
Carrying
amount
$’000
Total
Contractual
cash flows
$’000
Within 1 year
1-5 years
$’000
$’000
$’000
89,000
15,460
(95,411)
(15,460)
(2,564)
(15,460)
(92,847)
-
1,113
105,573
(1,113)
(111,984)
(171)
(18,195)
(942)
(93,789)
-
-
-
-
2020
Non-derivative financial
liabilities
Secured bank loans
Trade and other
payables
Lease liabilities
Contingent consideration
2019
Non-derivative financial
liabilities
Secured bank loans
Trade and other payables
Derivative financial
liabilities
Interest rate swaps
Foreign exchange risk
The Group is not exposed to material levels of foreign currency risk at the reporting date or during the financial
year.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
4.2 Financial risk management - continued
Interest rate risk
The consolidated entity’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable
rates expose the consolidated entity to interest rate risk. Interest rate risk may be managed using a mix of floating
rate debt and fixed rate instruments. Interest rate swaps may be used 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.
At 30 June 2020, there was no fixed interest rate exposure (FY19: 56%) following the closure or maturity of the
$50 million of interest rate swaps during the year. There were no fixed interest rate swaps in place at 30 June
2020 (FY19: $1.1m).
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
2020
$’000
2,004
(38,631)
36,627
13,068
(19,279)
(6,211)
2019
$’000
565
(50,000)
(49,435)
3,716
(39,000)
(35,284)
Cash flow sensitivity analysis for variable rate instruments
A reasonable possible change of a 100 basis points in interest rates are the reporting date would have increased
/(decreased) equity and profit or loss by $62,110 (FY19: $352,840). This assumes that all other variables remain
constant.
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.
2020
Financial liabilities measured at fair value
Interest rate swaps for hedging
Fair Value
Carrying
amount
$’000
Level 1
Level 2
Level 3
$’000
$’000
$’000
Total
$’000
-
-
-
-
-
Brave together
101
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
4.2 Financial risk management - continued
2019
Financial liabilities measured at fair value
Interest rate swaps for hedging
Fair Value
Carrying
amount
$’000
Level 1
Level 2
Level 3
$’000
$’000
$’000
Total
$’000
1,113
-
1,113
-
1,113
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).
(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
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
Significant
unobservable inputs
Inter-relationship
between significant
unobservable inputs and
fair value measurement
Not applicable
Not applicable
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.
Total loan facilities available to the Group in Australian dollars
$’000
Syndicated Debt facility
Working capital facility
Accordion facility(1)
Total loan facilities
Non current borrowings
Borrowings
Capitalised finance facility fees
Total non current borrowings
2020
2019
Limit
Utilised
Limit
Utilised
110,000
5,000
40,000
155,000
110,000
5,000
40,000
155,000
16,000
3,279(2)
-
19,279
19,279
(336)
18,943
89,000
-
-
89,000
89,000
(651)
88,349
(1) An un-committed $40m accordion facility for acquisition and capital expenditure purposes.
(2) The working capital facility limit is fully utilised after the allocation of bank guarantees of $1,721,000.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
4.3 Borrowings - continued
In December 2018, the Group amended and extended the syndicated debt facility, working capital facility and
accordion facility with a maturity date of January 2022. 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. In conjunction with the Equity raise and the impact of the global economic environment caused
by COVID-19, in April 2020, the Facility was amended to suspend covenant testing until 30 June 2021. As at 30
June 2020, the Group is compliant with its financial undertakings.
As at 30 June 2020, the Group had $2,969,000 of bank guarantees in place (FY19: $1,369,000).
$’000
Loans
Lease liabilities
Interest rate swap
Balance
at 1 July
2019
88,349
19,226(1)
1,113
Additions
Principal
repayments
-
26,607
-
(69,721)
(7,202)
(1,087)
Total interest bearing loans and borrowings 108,688
26,607
(78,010)
Other
315
-
(26)
289
Balance at
30 June
2020
18,943
38,631
-
57,574
(1)
Includes lease liabilities recognised on 1 July 2019 on adoption of AASB16.
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.
Brave together
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
103
4.4 Derivative financial instruments
Current
Derivatives
Non current
Derivatives
Total derivative financial instruments
All interest rate swaps matured or were terminated during the financial year.
4.5 Net Finance Costs
Finance income
Interest income
Finance costs
Interest expense
Interest expense on closure of swaps
Amortisation of borrowing costs(1)
Interest on lease liabilities
Total finance costs
Net finance costs
2020
$’000
-
-
-
2020
$’000
11
3,272
1,087
313
1,046
5,718
5,707
2019
$’000
171
942
1,113
2019
$’000
7
3,656
-
153
-
3,809
3,802
(1)
Includes interest and amortisation of ancillary costs incurred in connection with the arrangement of borrowings.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
4.6 Cash and cash equivalents
Cash at bank
Short-term bank deposits
Total cash and cash equivalents
Reconciliation of profit after income tax to net
cash inflow from operating activities
Profit for the period
Adjustments:
Depreciation and amortisation
Net finance cost included in financing activities
Provision for expected credit losses
Mosman clinic closure accelerated depreciation
Other
Operating profit before changes in working capital and provisions
Change in net operating assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventory
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions and employee benefits
Increase/(decrease) in income and deferred taxes
Net cash from operating activities
2020
$’000
13,068
2,004
15,072
2020
$’000
11,760
11,000
5,707
287
-
1,224
29,978
(3,811)
34
5,092
987
(1,201)
31,079
2019
$’000
3,716
565
4,281
2019
$’000
19,807
5,073
3,802
2
882
232
29,798
316
(129)
1,626
769
713
33,093
Brave together
105
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
Section 5
Our Business Portfolio
This section provides further insight into the legal structure and group of subsidiary companies.
5.1 Controlled entities
5.4 Parent equity
5.2 Acquisitions and Disposals
5.5 Deed of cross guarantee
5.3 Investments accounted for using the equity
method
5.1 Controlled entities
Parent entity
Monash IVF Group Limited
Controlled entities
Place of business/country
Australia
Place of business
/country
Ownership interest
2020
2019
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)
Hobart IVF Pty Ltd
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
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
57.4%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
47.3%
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
5.1 Controlled entities - continued
Controlled entities
Gold Coast Ultrasound for Women Pty Ltd
Monash IVF Asia Pte Ltd(1)
Monash IVF South Malaysia Pte Ltd(1)
Place of business
/country
Australia
Singapore
Malaysia
2019
Ownership interest
2020
51%
90%
62%
51%
-
-
(1)
In June 2020, the Group established Monash IVF Asia Pte Ltd and Monash IVF South Malaysia Pte Ltd, and acquired majority share
(62%) of the assets and liabilities of IVF Consultancy SDN. BHD in Johor Bahru, Malaysia for $0.6m.
5.2 Acquisitions and disposals
Acquisition of Fertility Solutions
On 16 September 2019, the Group acquired Fertility Solutions which operates two clinics located in Buderim (on
the Sunshine Coast) and Bundaberg. The business brings six fertility specialists who have worked together for
several years into the Monash IVF clinician network. The transaction includes the acquisition of certain assets,
liabilities and contracts of Fertility Solutions for an initial cash consideration of $2.1million on a debt free basis,
with the potential of additional earn out payments over a four year period to 30 June 2023.
In this financial report, Fertility Solutions contributed $2.2m of revenue and net profit before tax of $0.4m to the
consolidated results. If the acquisition had occurred on 1 July 2019, Management estimate that consolidated
revenue would have been $2.8m and consolidated profit before tax for the period would have been $0.5m. In
determining these amounts, management assumed that the fair value adjustments, determined provisionally would
have been the same if the acquisition had occurred on 1 July 2019.
The identifiable assets acquired and liabilities assumed have been determined at fair value:
Consideration
Cash
Contingent consideration
Current
Non Current
Total contingent consideration
Total consideration
Identifiable assets acquired and liabilities assumed
Prepayments
Plant and equipment
Inventory
Trade and other payables
Employee entitlements
Total identifiable net assets
Total consideration
less Fair value of identifiable assets
Goodwill
$'000
2,100
600
1,200
1,800
3,900
28
943
88
(325)
(199)
535
3,900
(535)
3,365
The Group incurred acquisition related costs of $0.5m relating to external legal fees, due diligence and stamp
duty costs. These costs are included in ‘professional and other fees’ in the Group’s statement of profit or loss and
other comprehensive income.
Accounting estimates and judgements – Contingent consideration
Deferred or contingent consideration relates to businesses acquired and is initially measured at fair value as at the
acquisition date. Subsequent to initial recognition, deferred consideration continues to be measured at fair value
with any changes in fair value recognised in the profit or loss.
Brave together
107
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
5.2 Acquisitions and disposals - continued
The measurement of contingent consideration requires management to estimate the amount likely to be paid in the
future. This requires the exercise of judgement, in particular where the amounts is payable is dependent to the
future financial performance of the business that has been acquired.
Accounting policy for business combinations
The acquisition method of accounting is used to account for business combinations. The consideration transferred is
the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred
by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree.
For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the
Group’s operating or accounting policies and other pertinent conditions in existence at the acquisition date. Where
the business combination is achieved in stages, the Group measures its previously held equity interest in the acquiree
at the acquisition date fair value and the difference between fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition date fair value.
Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised
in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is
accounted for within equity. The difference between the acquisition date fair value of assets acquired, liabilities
assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and
the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration
transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being
a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer
on the acquisition date, but only after a reassessment of the identification and measurement of the net assets
acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets and liabilities during the measurement period,
based on new information obtained about the facts and circumstances that existed at the acquisition date. The
measurement period ends on either the earlier of (i) twelve months from the date of the acquisition or (ii) when the
acquirer received all the information possible to determine fair value.
Sale of 10% of KL Fertility & Gynaecology Centre Sdn Bhd (KLFGC)
On 31 December 2019, a share sale agreement was executed for the sale of 10% of KLFGC to two Malaysian
fertility specialists. The strategic disposal of part of the Kuala Lumpur clinic is to align and facilitate further growth
in Kuala Lumpur and other Asian regions. Total consideration under the share sale agreement was $1.7m payable
in cash.
Hobart IVF Pty Ltd Ownership Interest % change (Refer to 5.3)
On 6 August 2019, a buy back agreement was signed between Hobart IVF Pty Ltd and a minority interest
shareholder. The purchase price paid for the 17.6% shareholding was $195k. As a result, the Group’s shareholding
increased from 47.3% to a 57.4% majority shareholding. Accordingly, this resulted in a change of control with full
consolidation of this entity in the Group financial statements.
5.3 Investments accounted for using the equity method
Name of company
Compass Fertility
Hobart IVF Pty Ltd
(Trading as Fertility Tasmania)*
*Refer to Note 5.2
Principal
Activity
Ownership Interest
%
Share of Net Profit/Loss
$’000
Fertility Services
Fertility Services
2020
25%
2019
25%
-
47.3%
2020
205
(8)
2019
111
8
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
5.4 Parent entity
As at 30 June 2020 and throughout the financial year ending on that date, the parent company of the Group
was Monash IVF Group Limited.
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
2020
$’000
11,189
-
11,189
2,472
541,171*
4,952
25,447
515,724
506,786
8,938
515,724
2019
$’000
13,535
-
13,535
499,137*
503,003*
64,317
64,317
438,686
428,757
9,929
438,686
*Includes Intercompany balances with its subsidiaries, as at 30 June 2020, these balances are not expected to be settled within twelve
months.
Expenditure contracted for but not recognised as liabilities:
Parent Entity
Capital plant and equipment
(1) Capital plant and equipment includes the new Sydney CBD Fertility Clinic in development.
Parent entity guarantees in respect of the debts of its subsidiaries
2020
$’000
3,345(1)
2019
$’000
-
The parent entity has entered into a Deed of cross guarantee with the effect that the Company guarantees debts
in respect of certain subsidiaries
Brave together
109
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
5.5 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 is set out as follows:
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
5.5 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, Items that will not be reclassified to profit or loss:
Cash flow hedges
Tax on cash flow hedges
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Summary of movements in retained earnings
Opening balance at 1 July
Profit for the period
Dividends paid/declared
Closing balance at 30 June
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax asset
Inventory
Total current assets
Non current assets
Investment in subsidiaries
Trade and other receivables
Plant and equipment
Right of use assets
Intangible assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Derivative financial instruments
Contingent consideration
Employee benefits
Total current liabilities
Non current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Deferred tax liability
Contingent consideration
Employee benefits
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2020
$’000
13,890
(3,463)
10,427
779
(62)
717
11,144
(116,319)
10,427
(12,025)
(117,917)
12,421
9,477
1,098
3,806
26,802
12,943
-
17,085
36,514
256,412
322,954
349,756
27,014
2,316
-
600
9,435
39,365
18,942
36,314
-
819
1,200
1,026
58,301
97,666
252,090
506,786
(136,779)
(117,917)
252,090
2019
$’000
25,654
(6,516)
19,138
(603)
181
(422)
18,716
(122,265)
19,138
(13,192)
(116,319)
2,511
6,415
650
3,756
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
As at 30 June 2020, the Deed of cross guarantee Group has a net current asset deficiency of $13,331,000 (FY19: $12,286,000). Refer to the basis of preparation
note in relation to going concern considerations.
Brave together
111
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
Section 6
Other disclosures
6.1 Auditors’ remuneration
6.4 Basis of preparation
6.2 Events occurring after the reporting period
6.5 Taxation
6.3 Reporting entity
6.1 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
2020
$
2019
$
270,000
284,000
177,000
146,000
11,122
458,122
11,949
441,949
6.2 Events occurring after the reporting period
Subsequent to 30 June 2020 and related to the COVID-19 Pandemic, the Group’s largest operating market,
Victoria in Australia has experienced a surge in COVID-19 cases resulting in its capital city, Melbourne moving to
Stage 4 restrictions. Whilst this is disrupting operational efficiency and patient movement, provision of IVF and
Ultrasound services are continuing notwithstanding Stage 4 restrictions. IVF services are exempt from the non-urgent
elective surgery ban in-place in Victoria due to the service being “time critical and has minimal impact on hospital
bed capacity”.
Effective 24 August 2020, the Group has right sized the $110m Syndicated Debt Facility to $40m. The $40m
accordion facility remains available for acquisitions and capital expenditure.
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.
6.3 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. Monash IVF Group Ltd was
incorporated on 30 April 2014. 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 Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
6.4 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 24 August 2020.
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 2020 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.
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.
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.
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113
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
6.4 Basis of preparation - continued
Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with AASBs requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimates are revised and in any future periods affected. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below:
(i) Estimated recoverable amount of goodwill and other non-current assets
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy
for intangible assets. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows, which are largely independent of the cash inflows from other assets
or groups of assets (cash generating units, or CGUs). Refer to Note 12 for further details on impairment testing.
(ii) Provision for ECL on receivables
The Group calculates the doubtful debts provision under the expected credit loss (ECL) model. The Group assesses
credit losses based on the Group’s historical credit loss experience, adjusted for forward-looking factors specific to
the debtors and the economic environment. Measurement of ECL allowance for trade receivables is disclosed in
Note 8.
(iii) Deferred consideration
The measurement of deferred consideration requires management to estimate the amount likely to be paid in the
future. This requires the exercise of judgement, in particular where the amounts is payable is dependent to the
future financial performance of the business that has been acquired.
(iv) Leases
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that
include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts
the lease term, which significantly affects the lease liabilities and right-of-use assets recognised. The lease liability
is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease, or if the rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
Going concern
As at 30 June 2020, the group has a net current asset deficiency of $7,196,000 (FY19: $8,670,000). 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 cash flows which indicate that cash reserves are sufficient to fund operation,
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.
The spread of novel coronavirus (COVID-19) was declared a public health emergency by the World Health
Organisation on 31 January 2020 and upgraded to a global pandemic on 11 March 2020. The rapid rise of the
virus has seen an unprecedented global response by Governments, regulators and industry sectors. The Australian
Federal Government enacted its emergency plan on 29 February 2020 which has seen the closure of Australian
borders from 20 March, an increasing level of restrictions on corporate Australia’s ability to operate, significant
volatility and instability in financial markets and the release of a number of government stimulus packages to
support individuals and businesses as the Australian and global economies face significant slowdowns and
uncertainties. Community disruption has continued beyond 30 June 2020 with further restrictions in-place in Victoria
and localised outbreaks emerging across Australia. In response to declaration of a global pandemic in March 2020,
the Group implemented a range of measures designed to protect the health and safety of its patients, employee
and clinicians. On 25 March 2020, for public safety reasons, the Fertility Society of Australia recommended the
postponing of patients planning to start fertility treatment following Federal Cabinet’s decision to temporarily
suspend non-urgent elective surgery, which was lifted on 27 April 2020.
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
6.4 Basis of preparation - continued
This significantly impacted the Group’s operating performance during Q4FY20 including a 73% decline in
Australian stimulated cycles in April 2020 compared to pcp and a 76% decline in International stimulated cycles in
April and May. As a result, the Group initiated the following actions and activities:
Cash preservation activities across operating and capital expenditure to reduce the Group’s monthly net
operating cash flow burn during the period of restriction and uncertainty. This included stand-down of
employees, a reduction in science, consumables and other clinical variable costs and a reduction in fixed
non-essential expenditure including temporary reduction in premise costs. In addition, non-essential capital
projects were paused;
1H20 interim dividend due for payment in April 2020 was deferred to 2 October 2020;
Execution of an $80m equity raise comprising an institutional placement and pro-rata accelerated non-
renounceable entitlement offer, which was completed on 28 May 2020. The purpose of the equity raising
was to improve liquidity, strengthen the balance sheet by reducing debt to navigate through COVID-19
uncertainty in FY20 and beyond, and provide flexibility to pursue identified organic and non-organic
growth opportunities in Australia and South East Asia;
Agreement was reached with the Group’s financiers to waive financial covenant obligations until 30 June
2021 under the Syndicated Debt Facility.
Following the actions implemented above and COVID-19 developments, the Directors have considered plausible
forecast cash flow scenarios (including adverse downside scenarios) for at least the twelve month period from the
date of approval of these financial statements. As a result, the Directors consider that the Group is able to pay its
debts as and when they are due and these financial statements can be prepared on a going concern basis.
6.5 Changes in significant accounting policies
The Group has applied AASB 16 Leases from 1 July 2019. A number of other new standards are effective from
1 July 2019 but they do not have a material effect on the Group’s financial statements. This is the first set of the
Group’s financial statements where AASB 16 Leases has applied, the changes are described below.
AASB 16 Leases
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. In applying AASB 16 for the first time, the Group has used the following practical expedients
permitted by the standard:
the use of a single discount rate across a portfolio of leases with reasonably similar characteristics in
relation to lease term;
the accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019
as short term leases which are recognised on a straight line basis as an expense; and
the use of hindsight in determining the lease term where the contract contains options to extend or
terminate the lease.
On transition to AASB 16, the Group recognized right-of-use assets and lease liabilities, recognizing the difference
in retained earnings. The impact of the adoption of AASB 16 is set out below:
On 1 July 2019
Right of use assets
Lease liabilities
Deferred tax asset
Retained earnings
$’000
29,547
(31,180)
790
1,843
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115
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
6.5 Changes in significant accounting policies - continued
When measuring lease liabilities for leases that were classified as operating leases, The Group discounted lease
payments using its incremental borrowing rate at 1 July 2019. The weighted average rate applied is 3%.
Operating lease commitment as disclosed at 30 June 2019
Discounted using the incremental borrowing rate at 1 July 2019
Lease liabilities recognised as at 30 June 2019
Recognition exemption for leases of low-value assets
Recognition for leases with less than 12 months of lease term at transition
Extension options reasonably certain to be exercised
Lease liabilities recognised at 1 July 2019
14,073
(2,159)
11,914
-
-
20,266
32,180
* In November 2019, the International Financial Reporting Standards Interpretations Committee (IFRIC) issued a final agenda decision, Lease
Term and Useful Life of Leasehold Improvements, on how lease term of a cancellable or renewable lease should be determined for both the
lessor and lessee when applying AASB 16 Leases. IFRIC clarifies that the broader economics and not only the contractual termination payments
should be considered in determining lease terms. The adoption of this clarification increased right of use assets by $8,154 and lease liabilities
by $8,926 in the Statement of Financial Position.
In relation to the leases under AASB 16, the Group has recognized depreciation and interest costs, instead of
operating lease expense. During the year ended 30 June 2020, the Group recognised:
Depreciation expense
Interest expense
Accounting policy
5,640
1,046
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost less any accumulated depreciation and impairment losses, and adjusted for certain
remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease, or if
the rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its
incremental borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by the lease
payment made. It is remeasured when there is a change in future lease payments arising from a change in an index
or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as
appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be
exercised or a termination option is reasonably certain not to be exercised. The Group has applied judgement to
determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment
of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly
affects the lease liabilities and right-of-use assets recognised.
At transition, for leases classified as operating leases under AASB 117 Leases, lease liabilities were measured at
the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at 1
July 2019. Right-of-use assets are measured at their carrying value as if AASB 16 has been applied since the
commencement date, discounted using the lessee’s incremental borrowing rate at the date of initial application –
the Group applied this approach to its largest property lease.
6.6 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 2019, but have not been applied in preparing this financial
report. These standards are not expected to have a material impact to the Group:
Monash IVF Group Annual Report 2020
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements (cont)
for the year ended 30 June 2020
6.6 New standards and interpretations - continued
-
-
-
Amendments to References to Conceptual Framework in IFRS standards
Definition of a business (Amendments to AASB 3)
Definition of material (Amendments to AASB 101 and AASB 108)
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Directors’ Declaration
for the year ended 30 June 2020
117
Directors’ Declaration for the year ended 30 June 2020 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 72 to 116 and the Remuneration Report on pages 41 to 55 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 2020 and of its performance for the financial year ended on that date; and (ii) complying with Australian Accounting Standards, the Corporations Regulations 2001; and (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 5.1 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 2020. 4. The Directors draw attention to page 112 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, 24th day of August 2020 Mr. Richard Davis Mr. Michael Knaap Chairman Chief Executive Officer and Managing Director 24 August 2020 24 August 2020 Monash IVF Group Annual Report 2020
Independent Auditor’s Report
This is the original version of the Audit Report over the Financial Statements signed by the Directors on 24 August 2020.
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 to our Report on the Remuneration Report
as set out in the Director’s Report, should be updated to read pages 41 to 55.
96 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. Independent Auditor’s Report To the shareholders of Monash IVF Group Limited Report on the audit of the Financial Report Opinion 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 theGroup’s financial position as at 30June 2020 and of its financialperformance for the year ended onthat date; and•complying with AustralianAccounting Standards and the Corporations Regulations 2001.The Financial Report comprises: •Consolidated statement of financial position as at 30June 2020•Consolidated statement of profit or loss and othercomprehensive income, consolidated statement ofchanges in equity and consolidated statement ofcash flows for the year then ended•Notes including a summary of significant accountingpolicies•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 (including Independence Standards) (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. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the Directors of Monash IVF Group Limited, would be in the same terms if given to the Directors as at the time of this Auditor’s Report. Brave together 119
Independent Auditor’s Report (cont)
This is the original version of the Audit Report over the Financial Statements signed by the Directors on 24 August 2020.
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 to our Report on the Remuneration Report
as set out in the Director’s Report, should be updated to read pages 41 to 55.
97 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. Goodwill ($233.2 million) Refer to Note 2.6 of the Financial Report The key audit matter How the matter was addressed in our audit At 30 June 2020 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, and the estimation uncertainty continuing from the business disruption impact of the COVID-19 global pandemic. We focused on the significant forward-looking assumptions the Group applied in its value in use models, including: •Forecast cash flows, growth ratesand terminal growth rates in light ofthe changes in market conditions,including the impact from COVID-19,that have impacted the actual andexpected performance of the relevantCGUs. These conditions impact ourconsideration of forecasting risk; and•Discount rate – these vary accordingto the conditions and environmentthe specific CGU is subject to fromtime to time.The Group uses a range of internal and external sources as inputs to the model assumptions. Modelling, including those containing judgemental allocations of corporate costs to CGUs, that use forward-looking assumptions can be prone to greater risk for potential bias, error and inconsistent application especially in this current environment. Where the Group has not met prior year forecasts in relation to a specific CGU we factor this into our assessment of Our procedures included: •We considered the appropriateness of the Group’svalue in use methodology to perform the annual testof goodwill for impairment against the requirementsof the accounting standards;•We assessed the Group’s underlying methodologyand documentation for the allocation of corporatecosts to the respective CGUs. We examined theforecast cash flows contained in the value in usemodel for consistency with our understanding of thebusiness and the criteria in the accounting standards;•We met with management and those charged withgovernance to understand the impact of COVID-19to the Group and impact of government responseprograms to the actual and forecast results;•We assessed the integrity of the value in use modelsused, including the accuracy of the underlyingcalculations formulas;•We compared the forecast cash flows contained inthe value in use models to revised forecastsreflecting the COVID-19 expected recovery rateapproved by the Board;•We assessed the accuracy of previous Groupforecasting to inform our evaluation of forecastsincluded in the value in use models.We applied increased scepticism to current periodCGU forecasts when there was a shortfall inperformance against previous forecasts;•We considered the sensitivity of the models byvarying key assumptions, such as forecast growthrates, terminal growth rates and discount rates,within a reasonably possible range. We did this toidentify those assumptions at higher risk of bias or Monash IVF Group Annual Report 2020
Independent Auditor’s Report (cont)
This is the original version of the Audit Report over the Financial Statements signed by the Directors on 24 August 2020.
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 to our Report on the Remuneration Report
as set out in the Director’s Report, should be updated to read pages 41 to 55.
98 forecast assumptions. These conditions necessitate additional scrutiny by us, in particular to address the objectivity of sources used for assumptions, and their consistent application. In addition to the above, the carrying amount of the net assets of the Group exceeded the Group’s market capitalisation at year end, increasing the possibility of goodwill being impaired. This further increased our audit effort in this key audit area. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. inconsistency in application and to identify those CGUs at higher risk of impairment and to focus our further procedures; •We challenged the Group’s forecast cash flow andgrowth assumptions in light of the expectedcontinuation of significant uncertainties arising fromthe COVID-19 global pandemic. We compared keyevents to the Board approved plan and strategy. Wecompared forecast growth rates and terminal growthrates to authoritative published informationregarding industry trends and expectations, andconsidered differences for the Group’s operations.We used our knowledge of the Group, business andcustomers and our industry experience;•We checked the consistency of growth rates to theGroup’s revised plans and our experience regardingthe feasibility of these plans in the industry in whichit operates and current economic environment;•We assessed the Group’s explanation of differencesbetween the year-end market capitalisation and thecarrying amount of the net assets based on ourunderstanding of the business and the industry itoperates in;•Working with our valuation specialists, weindependently developed a comparable discount raterange from publicly available market data forcomparable entities and adjusted by specific riskfactors to the Group and the industry it operates in;and•We assessed the disclosures in the financial reportusing our understanding obtained from our testingand against the requirements of the accountingstandards.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, Appendix 4E, Corporate Governance Statement and FY20 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 and will not express an audit opinion or any form of assurance conclusion thereon, with the exception Brave together 121
Independent Auditor’s Report (cont)
This is the original version of the Audit Report over the Financial Statements signed by the Directors on 24 August 2020.
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 to our Report on the Remuneration Report
as set out in the Director’s Report, should be updated to read pages 41 to 55.
99 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 thegoing concern basis of accounting is appropriate. This includes disclosing, as applicable,matters related to going concern and using the going concern basis of accounting unlessthey either intend to liquidate the Group or to cease operations, or have no realisticalternative but to do so.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_responsibilities/ar2_2020.pdf. This description forms part of our Auditor’s Report. Monash IVF Group Annual Report 2020
Independent Auditor’s Report (cont)
This is the original version of the Audit Report over the Financial Statements signed by the Directors on 24 August 2020.
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 to our Report on the Remuneration Report
as set out in the Director’s Report, should be updated to read pages 41 to 55.
100 Report on the Remuneration ReportOpinion In our opinion, the Remuneration Report of Monash IVF Group Limited for the year ended 30 June 2020, 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 33 of the Directors’ report for the year ended 30 June 2020. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPM_INI_01 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG BW Szentirmay Partner Melbourne 24 August 2020 Brave together 123
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, 2020.
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
1,472
2,689
1,139
1,395
148
6,843
Ordinary
Shares
959,046
7,373,598
8,881,137
39,428,274
332,992,785
389,634,840
% of issued
Capital
0.25%
1.89%
2.28%
10.12%
85.46%
100.00%
The number of security investors holding less than a marketable parcel of 766 securities ($0.645 on 30/9/2020)
is 822 and they hold 344,526 securities.
Monash IVF Group Annual Report 2020
Shareholder Information - Continued
Shareholder Information (cont)
20 Largest Shareholders – Ordinary Shareholders
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Argo Investment Limited
BNP Paribas Nominees Pty Ltd
Jangho Health Care Australia Pty Ltd
XLY Holding Pty Ltd
Citicorp Nominees Pty Limited
BNP Paribas NOMS Pty Ltd
Neweconomy COM AU Nominees
Pacific Custodians Pty Limited
Ippoliti Pty Ltd
Vollenhoven Investments Pty Ltd
Mr Prashant Nadkarni
Dr Robert Ian McLachlan & Mrs Edwina Margaret McLachlan
Payne Media Pty Ltd
Ong Administration Pty Ltd
Merrill Lynch
Dalyne Pty Ltd
Total for Top 20
Total other investors
Grand Total
Substantial Shareholders
No. of fully
paid shares
96,545,066
55,976,455
36,242,265
32,957,311
19,982,646
12,793,956
12,022,159
4,901,414
3,686,700
2,744,622
2,606,362
2,474,369
2,011,336
1,739,787
1,461,484
1,385,944
1,300,850
1,201,906
1,192,203
1,170,000
294,386,846
95,247,994
389,634,840
% of issued
Capital
24.78%
14.37%
9.30%
8.46%
5.13%
3.28%
3.08%
1.26%
.95%
.70%
.67%
.64%
.52%
.45%
.38%
.36%
.33%
.31%
.31%
.30%
75.55%
24.45%
100.00%
As at 30 September 2020, 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
3
4
Name
BlackRock Group
Allan Gray Australia Pty Ltd
Lennox Capital Partners Pty Limited
Argo Investments Limited
No. of fully
paid shares
56,745,317
51,858,105
28,634,592
19,982,646
% of issued
Capital
14.56%
13.31%
7.35%
5.13%
Voting Rights
In accordance with the Constitution, each member present at a meeting (whether in person, by proxy, by power of
attorney or by a duly authorized representative), upon a poll, shall have one vote for each fully paid ordinary
share.
Brave together
125
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
E groupenquiries@monashivf.com
Website
www.monashivfgroup.com.au
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 (Resigned 29 June 2020)
Mr Neil Broekhuizen
Mr Josef Czyzewski
Dr Richard Henshaw
Mr Michael Knaap
Ms Zita Peach
Ms Catherine West (Appointed 8 September 2020)
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
126
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Inside back cover
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
Thursday 26 November 2020
at 2pm
Virtual Meeting
The online platform for the AGM can
be accessed at
https://agmlive.link/MVF20
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