T
R
O
P
E
R
L
A
U
N
N
A
P
R
O
M
E
D
I
C
U
S
L
I
M
I
T
E
D
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
450 Swan Street
Richmond, VIC, 3121
(03) 9429 8800
www.promedicus.com.au
www.promedicus.com
www.visageimaging.com
ProMed 2013 Annual Report Cover Artwork.indd 1
4/10/13 10:47 AM
1 Highlights 2012/2013
3 CEO and Chairman’s Letter
5 Financial Summary
7 Business Background
9 Global Leadership Team
11
The Year in Review
13
Into the Future
15
Financial Statements
16
Director’s Report
60 Director’s Declaration
62 Independent Audit Report
64 ASX Additional Information
65 Corporate Governance
71 Corporate Information
S
T
N
E
T
N
O
C
2012–2013
HIGHLIGHTS
FINANCIAL SUMMARY
X Profit after tax of $5.13 million – up 186.5%
X Revenue from continuing operations $11.37 million – in line with previous year
X Cash reserves of $18.02 million – increase of 247.2%
X Company remains debt free
X Dividend of 2.0c per share – fully franked
BUSINESS HIGHLIGHTS
X Ongoing deployment of Coral, the company’s new technology platform
X North America revenue increased by 26.9%
X Pivotal sale to vRad – one of the world’s largest radiology groups
X Increased interest in Visage technology
ProMed 2013 Annual Report Cover Artwork.indd 2
ProMed AR13 Final.indd 1
1
10/10/13 4:15 PM
4/10/13 10:47 AM
Dr Sam Hupert
Peter Kempen
Dear Shareholders,
The 2013 financial year saw a mix
of results for the company. Whilst
North American revenue increased by
26.9% this was offset by decreases in
the company’s European operations
as well as increased costs associated
with the ongoing commercialisation
of Coral, the company’s new
technology platform.
In July 2012, the company sold the
Amira software platform business
to a European IT company for
€12.1 million (approximately
A$14 million), having bought the
business in February 2009 as part
of its acquisition of Visage Imaging
from Mercury Computer Systems.
The sale generated a one-off, after-
tax profit of $8.45 million. This was
partially offset by an assessment of
the carrying value of the company’s
intangible assets which yielded an
after-tax impairment loss of $3.22
million resulting in a full year profit of
$5.13 million.
During the year significant
progress was made on the ongoing
deployment and implementation
of Coral, the company’s new RIS
technology platform in Australia. The
company is pleased to announce
that the new RIS technology platform
has been successfully implemented
at a number of new client sites and
is scheduled to be rolled out to
our existing customer base in the
near future. To date, feedback for
the product has been very positive
reconfirming our belief that this
new system represents a quantum
improvement over anything currently
in the market.
The company has also continued
investing in ongoing R & D of the
Visage 7 suite of products which,
based on the company’s unique
thin client technology, combines
conventional 2D x-ray imaging with the
new 3D volume rendering of images.
The company continues to see the
benefits resulting from management
changes made late in 2010 and we
anticipate these will continue to
be instrumental in maintaining the
company on a long term course of
profitable growth.
The company announced in
May 2013 that its wholly-owned
subsidiary, Visage Imaging Inc, has
signed a pivotal five-year agreement
with US group vRad (Virtual
Radiologic), one the world’s largest
radiology groups. vRad, whose more
than 400 radiologists read more than
7 million radiology studies annually,
will implement Visage 7 as a central
component of its new technology
platform focused on delivering a real-
time, ‘read anywhere, read anytime’
environment.
This agreement represented a
key milestone for Pro Medicus in
North America. Revenue from this
contract is expected to commence
in the October/November timeframe
and build as the Visage software
is progressively rolled out to vRad
sites thereby providing significant
upside potential. The company is
also experiencing increased interest
in Visage from others in the North
American market which your directors
feel is encouraging.
The vRad deal continues the trend
towards the increased adoption of
a pay per use pricing model. Whilst
this does not have the same degree
of upfront payment as an outright
purchase (capital) model, it provides
a growing recurring revenue stream
which longer term will provide greater
predictability of future earnings.
Pro Medicus now has the strongest
balance sheet in its history with a
cash position of $18.02 million as at
the end of June 2013, up from $5.19
million in June 2012 an increase of
247.2%. This provides sufficient
reserves to fund the anticipated
growth of the business from internal
sources. The company continues to
be debt free.
As a result, your directors were
pleased to announce an increased
dividend of 2c per share fully franked
and believe that our strong balance
sheet leaves us well placed to
maintain our dividend policy in the
coming years.
We would also like to express our
sincere thanks to our fellow directors
and to the energetic team we have at
both Pro Medicus and Visage Imaging,
each of whom has contributed to a
year that continues to put us on a
solid path for the future.
Yours faithfully,
Peter Kempen
CHAIRMAN
Dr Sam Hupert
CHIEF EXECUTIVE OFFICE
I
N
A
M
R
A
H
C
D
N
A
O
E
C
R
E
T
T
E
L
2 Annual Report 2013
3
YEAR
ENDED
30 JUNE 2013
All figures in $A thousands unless
otherwise stated
2013
$’000
11,374
-0.04%
327
-89.1%
11,701
-18.7%
7,327
+190.2%
5,131
+186.5%
2012
$’000
11,379
+1.8%
3,013
+4.3%
14,392
+2.3%
2,525
+321.5%
1,791
+256.1%
29,418
23,144
Revenues from Continuing Operations
Revenues from Discontinued Operations (Amira)
Total Revenues
Operating Profit Before Interest and Income Tax
Net Profit After Tax
Total Assets 30 June
Shareholders’ Funds 30 June
20,959
16,002
Net Tangible Assets per Share at 30 June (cents)
Earnings per Share (cents)
15.0
5.1
+183.3%
5.0
1.8
+260.0%
I
L
A
C
N
A
N
F
I
Y
R
A
M
M
U
S
4 Annual Report 2013
5
PRO MEDICUS IS A LEADING PROVIDER OF IT
PRODUCTS AND SERVICES TO THE HEALTHCARE
INDUSTRY. WORKING TOGETHER WITH OUR CLIENTS
WORLDWIDE, PRO MEDICUS IS HELPING TO SOLVE
OUR CLIENT’S DAILY CHALLENGE OF DELIVERING
IMPROVED LEVELS OF HEALTH CARE BY MAKING
SURE OUR USERS HAVE THE RIGHT INFORMATION AT
THE RIGHT TIME, AND ARE ABLE TO PUT IT TO USE
IN THE MOST EFFICIENT MANNER. BUILDING ON OUR
CLINICAL AND PRACTICE MANAGEMENT EXPERTISE,
WE HAVE FOUND INCREASINGLY INNOVATIVE WAYS
TO DELIVER VALUE TO OUR CLIENTS.
In February of 2009, the company
acquired Visage Imaging in the
US which has expanded the Pro
Medicus product portfolio into the
clinical imaging space as well as
providing the company with its own
presence in both Europe and the US.
The suite of Pro Medicus solutions
which previously comprised of
Practice Management, e-health and
digital imaging integration products
now includes the Visage suite of
2-D and 3-D digital radiology (PACS)
and Advanced Visualisation clinical
products plus a comprehensive range
of services centred on the company’s
numerous offerings. These include
training and installation, hardware
configuration and ongoing technical
and end user support.
In addition to the 2-D PACS
and 3-D/advanced visualisation
products, the Visage Imaging
acquisition brought with it
a number of other revenue
streams including OEM (original
equipment manufacturer) and
dealer relationships.
The activities of Pro
Medicus in the financial
year ending June 30, 2013
can be characterised by the
following revenue streams:
Radiology Information
Systems (RIS)/Practice
Management
The business consists of a range of
integrated software applications and
services that are designed to aid the
management of medical practices.
The primary products in this area
include medical accounting, clinical
reporting, appointments/scheduling
and marketing/management
information applications. Services
include network design and
implementation, hardware sourcing
and configuration, staff and
management training and ongoing
technical and end user support.
E-health
Pro Medicus’ Internet-based
e-health offering, promedicus.net,
enables referring doctors to receive
encrypted clinical reports via the
Internet to a centralised “In-Tray”
run on a doctor’s computer. These
reports are then electronically
incorporated into the patients’
medical record, doing away with
the need for double handling or
manual filing. Over 26,000 Australian
doctors are registered users of
promedicus.net.
Integration products
Pro Medicus has developed a
range of highly modular integration
products which provide a seamless
interface between the Pro Medicus
Practice Management System
and a number of 3rd party PACS/
digital imaging products allowing
large diagnostic imaging providers
to incrementally implement this
technology across their enterprise.
Revenue is generated from the
sale of software licenses for the
integration modules, implementation
services and ongoing support.
Visage 3-D Advanced
Visualisation
Advanced visualisation allows CT
and MRI images to be reconstructed
in 3D and 4D (3D with motion). A
growing number of specialist areas
are being revolutionised by this
technology including cardiology,
where it provides 3-D reconstruction
of coronary arteries from high
definition CT images, oncology
via the introduction of PET CT and
advanced areas of stroke treatment
and neuro-radiology. This product
can be interfaced to a broad range
of third-party PACS Systems and is
sold as a 3-D “plug in “. Revenue
is derived by sale of licences and
ongoing support.
The Visage 7
Enterprise Viewer
The Visage 7 Enterprise Viewer
combines the 3-D/4-D and
advanced visualisation capabilities
with the full gamut of 2-D reading
functionality creating a truly unique
thin client streaming Universal
viewing platform that enables
radiologist to read anything from a
2-D chest x-ray to a complicated
3-D cardiac study all within the one
viewer. The Enterprise viewer can
be interfaced with a broad range
of third party image archiving and
distribution products. These include
other 3rd party PACS systems
upon which Visage technology can
be overlaid as well as the growing
industry trend for vendor neutral
archives (VNA). Traditionally revenue
for this product has been generated
from sale of licences and ongoing
support however we are seeing the
increased adoption of a pay per use
licensing model which is helping
to build growing annuity revenue
streams for the company particularly
in the US.
Visage 3D PACS
As a result of the extensive R & D
undertaken post the Visage Imaging
acquisition, the company now has
its own comprehensive 2D-3D /
PACS offering which combines the
Visage 7 Enterprise Viewer with
the ability to store and archive
radiological images creating one of
the world’s first “3-D PACS”. The
company is now selling this solution
in North America, Australia, and
select countries within Europe.
Due to the highly modular nature
of our product offering, Visage
technology can be successfully
deployed in the vast majority of
radiology environments including
private imaging centres, remote
reading/teleradiology groups as well
as large teaching hospitals opening
up markets previously not available
or only partially accessible to us.
Life Sciences — Research
The Amira business was sold to
Visualization Sciences Group
(VSG) in July 2012 for a sum of €
€12.1 million.
D
N
U
O
R
G
K
C
A
B
S
S
E
N
S
U
B
I
6 Annual Report 2013
7
Key Personnel
Danny Tauber
General Manager
Australia
After graduating in 1986 Danny
Tauber started his career with
chartered accountants Warnocks
gaining experience in taxation and
general accounting. He then started
his own property development
company and spent a number of
years gaining project management
and general finance skills. An
interest in IT led Danny into the
computer industry where he worked
for a company producing hotel
management systems. Danny joined
Pro Medicus in 1993 and has been
with the company for over 20 years.
Danny has progressed through the
company to his current position of
General Manager – Australia which he
assumed on the 1st of January 2011.
Malte Westerhoff
General Manager
Europe
Malte Westerhoff is the General
Manager for Visage Imaging GmbH,
the European branch of Visage
Imaging. He is also the Chief
Technical Officer and is responsible
for product management and the
R&D groups of Visage Imaging
globally. He has more than eleven
years of experience in medical
imaging and software development,
holding positions in research and
industry. Dr. Westerhoff holds a
master’s degree in physics from
Technical University, Berlin, and
a PhD in computer science
and mathematics from Free
University, Berlin.
Mr. Westerhoff is one of the
founders of Indeed - Visual
Concepts GmbH and author and
co-author of many scientific papers
in scientific visualization and high-
performance computing and was
instrumental in developing many of
the patented and patent pending
technologies that form the basis of
Visage Imaging’s product portfolio.
Prior to joining the Pro Medicus
group, he has served at Mercury
Computer Systems and Indeed -
Visual Concepts in senior positions.
Before that, he has worked at Zuse
Institute Berlin (ZIB) as scientist in
brain research.
Brad Levin
General Manager
North America
& Global Vice President of Marketing
Brad Levin’s broad experience has
spanned a variety of leadership
roles, including government,
consulting, and marketing. While
in government, Brad worked as
a PACS subject matter expert for
the renowned US Department
of Defence’s Digital Imaging
Network–Picture Archiving
and Communications System
(DIN-PACS) initiative, as well as
consulting for top healthcare
institutions across the US.
After leaving his consulting role,
Brad went on to spearhead
marketing for two web-based
PACS start-ups, first AMICAS, and
then Dynamic Imaging. Both firms
experienced rapid commercial
growth leading to acquisition, by
Vitalworks and GE Healthcare,
respectively. In his most recent
role, Brad was GE Healthcare’s
commercial Marketing Director,
where he had radiology and
cardiology marketing responsibility
for their RIS, PACS and CVIT
product portfolios. Brad joined
Visage Imaging in August 2011.
I
P
H
S
R
E
D
A
E
L
L
A
B
O
L
G
M
A
E
T
8 Annual Report 2013
9
United States
The Group employs 8 people in North
America to fulfill the sales marketing
and professional services roles.
Revenue from North America increased
by 26.9% compared to the previous
year. This was largely attributable to an
increase in transaction based revenue
from sales of Visage technology as
more contracts come on stream as well
as an increase in Original Equipment
Manufacturer (OEM) sales in this region.
Europe
Pro Medicus established a presence
in Europe with the acquisition of Visage
Imaging GmbH in late January 2009.
The group has 38 employees in its Berlin
office who undertake research and
development of Visage Imaging products
worldwide as well as sales, marketing
and service/support functions for the
group’s European operations. Revenue
from our European operations decreased
by 22.6% compared to the previous
year due to deteriorating European
market conditions.
COMPANY OFFICES
Pro Medicus Limited — Melbourne
This is the company’s Global and Australian headquarters and is
the base for all Australian sales, marketing, service and support as
well as R&D for Coral the company’s new technology platform.
Visage Imaging GmbH — Berlin
This is the company’s European headquarters and houses 38 staff,
the majority which are involved in product research and development
and ongoing product support. This office also forms the base of the
company’s European operations including order administration and
both direct and OEM sales activities.
Visage Imaging Inc — San Diego
This is the company’s US headquarters and is the base for 8 staff
who are involved in sales, marketing, training/implementation and
applications support for both the Visage Imaging offerings and the
existing Pro Medicus products.
Australia
The Group employs 28 people in Australia who
undertake research and development of Pro
Medicus products (RIS) as well as sales and
service/support functions.
The Group’s Australian revenue was marginally
above last year’s result despite an increasingly
competitive local market with overall profit being
affected by increased costs associated with the
ongoing commercialisation and roll-out of the
Company’s new Coral RIS technology platform.
The company now has a growing number of
installations of its new technology platform (Coral)
and is commencing the roll-out of this exciting
technology to its existing customer base.
Promedicus.net, the company’s e-health offering,
continued to hold its strong market position
despite increasing competition.
3
1
0
2
–
2
1
0
2
I
W
E
V
E
R
10 Annual Report 2013
11
EXPANDED PRODUCT
PORTFOLIO
GROUND BREAKING
VISAGE 7 TECHNOLOGY
CONTINUED
US EXPANSION
ADDRESSING
HOSPITAL MARKETS
NEW RIS TECHNOLOGY
PLATFORM
PAY PER USE
LICENSING MODEL
E
H
T
O
T
N
I
E
R
U
T
U
F
THE BOARD AND
MANAGEMENT BELIEVE
THE COMPANY IS
WELL POSITIONED TO
BUILD ON THE SOLID
PROGRESS IT HAS MADE
THROUGHOUT THE 2013
FINANCIAL YEAR.
In North America it is anticipated that
the company will continue to build
on its base of pay per use revenue
as a result of the vRad rollout which
is scheduled to commence in the
October/November timeframe.
This will be supplemented by growth
in transaction numbers from existing
contracts and any future sales
the company may make throughout
the period.
In Australia, the ongoing roll-out of
the company’s new RIS technology
platform will continue to cement Pro
Medicus position as the premium
provider of Practice Management
(RIS) systems which the company
anticipates will lead to further sales of
this technology.
Key factors predicted to drive growth include:
Expanded geographical
footprint
The company is looking to further
build on its presence in North
America as well as consolidate
its position in Australia. In North
America, our strategy of developing
direct sales has been very successful
with an increasing percentage of the
company’s revenue coming from this
region, a trend we feel will continue in
the coming year.
Multiple licencing models
Over the past year, the company
has seen an increase in the pay per
use licensing model in both Australia
and North America. We believe this
will continue to gain momentum
as more and more clients opt for
an operational model. This has the
potential to build growing annuity
revenue streams to supplement the
upfront, capital licence model that
has traditionally been used.
Fully integrated product
offering
With the ongoing commercialisation
of Coral our new RIS technology
platform, we are fulfilling our aim
of fully integrating our new RIS
technology platform with our leading
edge Visage 7.0 suite of products
thereby creating the first fourth-
generation, end-to-end single-vendor
‘thin client’ PACS/RIS solution in
the market. Over the past year,
we have seen a clear trend in
Australia where all new sales have
been for the combined solution
of Coral and Visage technologies
providing early confirmation of
our multi product strategy.
New Technology
The company will continue the rollout
of its New Technology RIS Platform.
This platform, the culmination of
many years of intense R & D effort
will see Pro Medicus cement its
position at the forefront of radiology
information system (RIS) and
practice management technology.
A key feature of this technology is
the ability for clients to configure
business-specific workflow and rules
to suit their needs without the need
to customize the program, a new
concept for the radiology industry.
The company will also continue
to make significant investments in
R&D for its flagship Visage 7 suite
of products which it believes will
continue to differentiate our offering in
both the 2-D PACS and 3-D advanced
visualisation space opening up more
opportunities in a broad range of
radiology market segments.
12 Annual Report 2013
13
CONTENTS
Directors’ Report ...............................................................................................................16
Auditor’s Independence Declaration .................................................................................24
Statement of Comprehensive Income ...............................................................................25
Statement of Financial Position .........................................................................................26
Statement of Changes in Equity ........................................................................................27
Statement of Cash Flows ..................................................................................................28
Notes to the Financial Statements ....................................................................................29
Note 1 Corporate Information ......................................................................................29
Summary of Significant Accounting Policies ...................................................29
Note 2
Significant Accounting Judgements, Estimates and Assumptions .................38
Note 3
Financial Risk Management Objectives and Policies ......................................39
Note 4
Operating Segments ........................................................................................41
Note 5
Income and Expenses .....................................................................................43
Note 6
Income Tax .......................................................................................................44
Note 7
Discontinued Operations .................................................................................45
Note 8
Note 9
Earnings per Share ...........................................................................................46
Note 10 Dividends Paid and Proposed .........................................................................46
Note 11 Cash and Cash Equivalents .............................................................................47
Note 12 Trade and Other Receivables (Current) ............................................................48
Inventory ..........................................................................................................48
Note 13
Note 14 Plant and Equipment .......................................................................................49
Note 15
Intangible Assets ..............................................................................................50
Note 16 Trade and Other Payables (Current) .................................................................52
Note 17 Provisions .........................................................................................................52
Note 18 Contributed Equity and Reserves ....................................................................52
Note 19 Share based Payment Plan ..............................................................................53
Note 20 Commitments ..................................................................................................55
Note 21 Events after the Balance Sheet Date ...............................................................55
Note 22 Auditors’ Remuneration ...................................................................................56
Note 23 Key Management Personnel ............................................................................56
Note 24 Related Party Disclosure ..................................................................................58
Note 25 Contingencies ..................................................................................................58
Note 26 Parent Entity Information .................................................................................59
Directors’ Declaration ........................................................................................................60
Independent Auditor’s Report ...........................................................................................62
ASX Additional Information ...............................................................................................64
Corporate Governance Statement ....................................................................................65
Corporate Information .......................................................................................................71
15
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
F
I
DIRECTORS’
REPORT
THE NAMES AND DETAILS
OF THE COMPANY’S
DIRECTORS IN OFFICE
DURING THE FINANCIAL
YEAR AND UNTIL THE
DATE OF THIS REPORT
ARE AS FOLLOWS:
Peter Terence Kempen
F.C.A, F.A.I.C.D
Chairman
Peter Kempen joined Pro Medicus
as a Director on 12 March 2008. He
is Chairman of Ivanhoe Grammar
School and Chairman of Australasian
Leukaemia and Lymphoma Group. He
is also a Director of the Yara Pilbara
group of companies.
Peter has previously been Chairman
of Patties Food Limited, Chairman
of Danks Holdings Limited and
Managing Partner of Ernst & Young
Corporate Finance Australia.
Peter is a Fellow of the Institute of
Chartered Accountants in Australia
and a Fellow of the Australian
Institute of Company Directors.
Peter became Chairman in August
2010 before which he served
as a Non Executive Director of
the company.
Peter is also Chairman of the
audit committee.
Roderick Lyle
LL.B., B.Com, LL.M (Lond),
MBA (Melb)
Non Executive Director
Roderick joined Pro Medicus Limited
as a Director on 23 November 2010.
He is a Senior Partner of Clayton Utz
and is former Managing Partner of the
Melbourne office.
Roderick is a member of the Law
Institute of Victoria, a member of the
Law Society of New South Wales and
a member of the Law Society London.
Roderick is recognised as one of
Australia’s leading commercial
lawyers. He has been a key advisor in
a large number of significant mergers
and acquisitions and equity capital
markets transactions. Roderick also
serves on the audit committee.
Dr Sam Aaron Hupert
M.B.B.S.
Managing Director and
Chief Executive Officer
Co-founder of Pro Medicus Limited
in 1983, Sam Hupert is a Monash
University Medical School graduate
who commenced General Practice
in 1980. Realising the significant
potential for computers in medicine
he left general practice in late 1984 to
devote himself full time to managing
the Group.
Sam served as CEO from the time he
co-founded the company until October
2007 at which time he stepped down
to become an executive director. Sam
resumed full time CEO activities in
October of 2010.
Clayton James Hatch
CPA
Chief Financial Officer and
Company Secetary
Clayton was appointed Company
Secretary on 1 July 2009.
Clayton has strong experience
in financial and management
accounting having worked in a
Finance role for several years.
Clayton joined Pro Medicus in June
2008 and has progressed through
the company to his current position
of Chief Financial Officer which he
assumed on the 1st July 2012.
Anthony Barry Hall
B.Sc. (Hons), M.Sc.
Executive Director and
Technology Director
Co-founder of Pro Medicus Limited in
1983, Anthony Hall has been principal
architect and developer of the core
software systems. His current role is
to oversee product development and
plan the future technical direction of
the Group.
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
As at the date of this report, the interests of the directors in the shares and options of the Company were:
Ordinary Shares
Options over Ordinary Shares
30,068,500
30,072,660
378,082
140,000
CENTS
1.0
1.0
1.0
NIL
NIL
200,000
200,000
Cents
5.12
5.12
$’000
1,002
1,002
1,002
A. B. Hall
S. A. Hupert
P. T. Kempen
R. Lyle
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
DIVIDENDS
ORDINARY SHARES
Final dividends recommended:
Normal dividend plan
Dividends paid in the year:
Interim for the year
Final dividend for 2012 shown as recommended in the 2012 report:
Normal dividend plan
OPERATING AND FINANCIAL REVIEW
Corporate Structure
Pro Medicus Limited is a company
limited by shares that is incorporated
and domiciled in Australia.
Nature of operations and
principal activities
The principal activities of the Group
during the year were the supply of
product and services to diagnostic
imaging groups and a range of
other entities predominately within
the private medical market. These
products and services include:
Radiology Information Systems (RIS)
▶ Innovative proprietary medical
software for practice management
(RIS);
▶ Training, installation and professional
services;
▶ After sale support and service
products;
▶ Promedicus.net secure email; and
▶ Digital radiology integration products
Visage PACS
▶ Innovative clinical software that
provides radiologist with advanced
visualisation capability for viewing
3-D and 4-D images;
▶ PACS/Digital imaging software that
is sold both direct and to original
equipment manufacturers (OEM).
▶ Training, installation and
professional services;
▶ Support and service products;
The Company undertakes R&D in
Australia for it Practice Management
(RIS) and promedicus.net products
including R&D for Coral, its new
technology platform.
Its R&D base in Europe is where
the bulk of the R&D for the Visage
Imaging product set is carried
out. The Company has continued
development of the Visage 7 product
line throughout the period.
16 Annual Report 2013
17
DIRECTORS’ REPORT cont.
REVIEW AND
RESULTS OF
OPERATIONS
Investment Activities
Surplus funds which are held in
several currencies are invested by
the Group in a cash management
account and terms deposits to
maximise the interest return.
Performance Indicators
Management and the Board
monitor overall performance,
from the strategic plan through
to the performance of the Group
against operating plans and
financial budgets.
The Board, together with
management, have identified key
performance indicators (KPIs) that
are used to monitor performance.
Key management monitor these
KPIs on a regular basis and Directors
receive appropriately structured
board reports for review prior to each
monthly Board meeting allowing
them to actively monitor the Group’s
performance.
Dynamics of the Business
Australia
The Group employs 28 people in
Australia who undertake research
and development of Pro Medicus
products (RIS) as well as sales and
service/support functions.
The Group’s Australian revenue was
marginally above last year’s result
despite an increasingly competitive
local market with overall profit being
affected by increased costs associated
with the ongoing commercialisation
and rollout of the Company’s new Coral
RIS technology platform.
Promedicus.net, the company’s
e-health offering, continued to hold
its strong market position despite
increasing competition.
North America
The Group employs 8 people in
North America to fulfil the sales
marketing and professional services
roles. Revenue from North America
increased by 26.9% compared
to the previous year. This was
largely attributable to an increase
in transaction based revenue from
sales of Visage technology as more
contracts come on stream as well
as an increase in Original Equipment
Manufacturer (OEM) sales.
18 Annual Report 2013
Europe
Pro Medicus established a presence
in Europe with the acquisition of
Visage Imaging GmbH in late January
2009. The group has 38 employees
in its Berlin office who undertake
research and development of Visage
Imaging products worldwide as well as
sales, marketing and service/support
functions for the group’s European
operations. Revenue from our
European operations decreased
by 22.6% compared to the previous
year due to deteriorating European
market conditions.
Financials
Full year revenue of the Group from
continuing operations, decreased
marginally from $11.38m to $11.37m,
a decrease of 0.4%.
The result from the underlying
operations for the year was a loss
of $0.65m. The underlying loss is
made up of reported profit after-tax
of $5.13m, less the after-tax profit
of $8.61m of Amira and after-tax net
currency gain of $0.39m, and adding
back the after-tax impairment expense
of $3.22m. This result was impacted
by additional costs, mainly associated
with the ongoing commercialisation
and roll out of Coral RIS to the market.
Profit after tax for the period was
$5.13m an increase of 186.5% from
the previous year.
The key driver of the profit increase
was the sale of Amira business in
July 2012 which generated a one-off
after-tax profit of $8.45m. This was
partially offset by a decrease in the
carrying value of some the company’s
intangible assets which resulted in an
after-tax impairment loss of $3.22m.
Investments for Future
Performance
The Company will continue to direct
resources into the development of
new products and is committed to the
continued development of Coral, its
new RIS technology platform as well
as the ongoing development of the
Visage Imaging PACS product.
It is anticipated that this strategy of
ongoing development will continue
to position Pro Medicus as a market
leader and enable the group to
leverage its expanded product
portfolio and geographical spread.
The Group remains committed
to providing staff with access to
appropriate training and development
programs, together with the resources
to complete their duties.
The directors express their gratitude
for the efforts of the management
team and all employees in achieving
this year’s result.
REVIEW OF FINANCIAL
CONDITION
Capital Structure
The Company has a sound capital
structure with a strong financial
position, with no debt.
Treasury Policy
With the increase in overseas
operations there is an increased
currency risk as a consequence of
contracts written in and cash being
held in foreign currencies. Whilst
this is offset to a degree by having
operations in North America and
Europe, this change in risk profile has
been noted by the board and action
is being taken to manage this risk.
The treasury function, co-ordinated
within Pro Medicus Limited, is
limited to maximising interest return
on surplus funds and managing
currency risk. The treasury operates
within policies set by the Board,
which is responsible for ensuring that
management’s actions are in line with
Board policy.
Cash from Operations
Net cash flows from operating
activities for the current period was
a positive $3.81m, with receipts
from customers totalling $11.68m
compared with payments of $8.26m
to suppliers and employees. The
group continued to hold total cash
assets of $18.02 million and increase
of 247.21% from last year.
Liquidity and Funding
The Group is cash flow positive, has
adequate cash reserves and has no
overdraft facility. Sufficient funds are
held to finance operations.
Risk Management
The Company takes a proactive
approach to risk management. The
Board is responsible for ensuring
that risks, and also opportunities,
are identified on a timely basis and
that the Group’s objectives and
activities are aligned with the risks and
opportunities identified by the Board.
The Company believes that it is crucial
for all Board members to participate
in this process, as such the Board has
not established separate committees
for areas such as risk management,
environmental issues, occupational
health and safety or treasury.
SIGNIFICANT EVENTS
AFTER THE BALANCE
DATE
A Final Dividend of 1.0 cents per share
has been declared post 1 July. Please
refer Note 10.
The Board has a number of
mechanisms in place to ensure
that management’s objectives and
activities are aligned with the risks
identified by the Board. These include
the following:
▶ Board approval of strategic plans,
which encompass the Company’s
vision, mission and strategy
statements, designed to meet
stakeholder needs and manage
business risk;
▶ Implementation of Board approved
operating plans and budgets and
Board monitoring of progress
against these budgets, including
the establishment and monitoring
of KPIs;
▶ Overseeing of appropriate backup
procedures for important company
data; and
▶ Routine review by key executives
of its established Quality Assurance
program and corrective action
recommendations stemming from it.
Corporate Governance
In recognising the need for the highest
standards of corporate behaviour and
accountability, the directors of Pro
Medicus Limited support and have
adhered to the principles of good
corporate governance. Please refer
to the separate “Corporate
Governance” section for more details
of specific policies.
SIGNIFICANT
CHANGES IN THE
STATE OF AFFAIRS
Shareholders’ equity increased by
31.0% from $16.00m to $20.96m.
This movement was largely the result
of the sale of the Amira business,
offset by the impairment loss during
the year.
LIKELY
DEVELOPMENTS AND
EXPECTED RESULTS
The Directors anticipate that the 2014
financial year will see more opportunity
crystallise for the company due to
improved prospects in North America
and the continued commercialisation
and roll out of Coral, the company’s
new technology RIS platform.
Key components that are likely
to affect the performance of the
company are:
▶ Growing interest in the Visage suite
of products in the North American
market has resulted in a number
of sales opportunities that the
Company is actively pursuing.
▶ The ability of the expanded Visage
product set to address key market
segments such as large public/
teaching hospitals in addition to
the private radiology and
teleradiology markets.
▶ The continued adoption of advanced
visualisation and 3-D capability
throughout the radiology profession.
▶ Increased revenue being generated
from transaction based contracts
including the Vrad contract that
was announced in May which is
anticipated to come on stream in the
first half of the 2014 financial year.
▶ Improved sales prospects for Coral,
the company’s New Technology RIS
platform as the rollout of this new
platform continues.
As a result, it is anticipated that
the 2014 financial year will show
continued improvement in profits.
However, this is dependant on
many market factors over which the
directors have limited or no control.
ENVIRONMENTAL
REGULATION AND
PERFORMANCE
The Group has no identified risk with
regard to environmental regulations
currently in force. There have been
no known breaches by the Group of
any regulations.
SHARE OPTIONS
Un-issued Shares
As at the date of this report, there
were 1,675,000 un-issued ordinary
shares under options refer to Note 19
of the financial statements for further
details of the options outstanding.
Option holders do not have any right,
by virtue of the option, to participate in
any share issue of the Company.
Shares Issued as a Result
of the Exercise of Options
During the financial year, no share
options were exercised by ex-
employees. During the financial year
no share options expired. No directors
or key management personnel in the
current year have exercised any option
to acquire fully paid ordinary shares in
Pro Medicus Limited.
INDEMNIFICATION
AND INSURANCE
OF DIRECTORS
AND OFFICERS
During the year, Pro Medicus Limited
indemnified Clayton Utz and each
one or more of the past, present or
future partners of Clayton Utz (other
than Mr. Lyle) against any liability
(including a liability incurred by
Clayton Utz to pay legal costs) arising
out of Mr. Lyle’s activities as
a Director of Pro Medicus Limited.
During or since the financial year,
the Company has paid premiums in
respect of a contract for Directors’ &
Officers’/Company Re-Imbursement
Liability insurance for directors,
officers and Pro Medicus Limited
for costs incurred in defending
proceedings against them.
Disclosure of the amount of insurance
and the terms of this cover is
prohibited by the insurance policy.
19
DIRECTORS’ REPORT cont.
REMUNERATION
REPORT (audited)
This remuneration report for the
year ended 30 June 2013 outlines
the remuneration arrangements of
the Group in accordance with the
requirements of the Corporations
Act 2001 and its Regulations.
This information has been audited
as required by section 308(3C) of
the Act.
The remuneration report details
the remuneration arrangements for
key management personnel (KMP)
who are defined as those persons
having authority and responsibility
for planning, directing and controlling
the major activities of the Company
and the Group, directly or indirectly,
including any director (whether
executive or otherwise) of the Group.
For the purposes of this report, the
term ‘executive’ includes the Chief
Executive Officer (CEO), executive
directors and other senior executives
of the Group.
Remuneration committee
Remuneration and nomination
issues are handled at the full Board
level. The Board due to the small
number of directors decided this.
No Committees for these functions
have been established at this time.
Board members, as per groupings
detailed below, are responsible
for determining and reviewing
compensation arrangements.
In order to maintain good corporate
governance the Non-Executive
Directors assume responsibility
for determining and reviewing
compensation arrangements for the
Executive Directors of the Group.
The Executive Directors in turn
are responsible for determining
and reviewing the compensation
arrangements for the Non-Executive
Directors. The CEO, in conjunction
with the full Board reviews the terms
of employment for all executives.
The assessment considers the
appropriateness of the nature and
amount of remuneration of such
executives on a periodic basis by
reference to relevant employment
market conditions with the overall
objective of ensuring maximum
stakeholder benefit from the
retention of a high quality Board
and executive team.
(i) Non – Executive Directors
Peter Terence Kempen
Chairman
Roderick Lyle
Director (non-executive)
(ii) Executive Directors
Dr Sam Aaron Hupert
Managing Director and CEO
Anthony Barry Hall
Technology Director
(ii) Other Executives
Danny Tauber
Malte Westerhoff
General Manager – Pro Medicus
Limited
Managing Director – Visage Imaging
GmbH
Brad Levin
General Manager – Visage Imaging Inc
Remuneration philosophy
The performance of the group
depends upon the quality of its
Directors and Executives. To prosper,
the Company must attract, motivate
and retain highly skilled directors and
executives.
To this end, the Company provides
competitive rewards to attract high
calibre Executives.
Remuneration structure
In accordance with best practice
corporate governance, the structure
of Non-Executive Director and
Executive’s remuneration is separate
and distinct.
Non-Executive Director
remuneration
Objective
The Board seeks to set aggregate
remuneration at a level which
provides the Company with the
ability to attract and retain Directors
of the highest calibre, whilst
incurring a cost which is acceptable
to shareholders.
Structure
The Constitution and the ASX
Listing Rules specify that the
aggregate remuneration of Non-
Executive Directors shall be
determined from time to time by
a general meeting. An amount not
exceeding the amount determined is
then divided between the Directors
as agreed. The latest determination
was at the Annual General Meeting
held on 4 November 2005 when
shareholders approved an aggregate
remuneration of $500,000 per year.
The amount of the aggregate
remuneration sought to be approved
by shareholders and the manner
in which it is apportioned amongst
Directors is reviewed annually. The
Board considers fees paid to Non-
Executive Directors of comparable
companies when undertaking the
annual review process.
Each Director receives a fee for
being a Director of the Company. No
additional fee is paid for time spent
on Audit Committee business.
Non-Executive Directors have long
been encouraged by the Board
to hold shares in the Company
(purchased by the Director on
market). It is considered good
governance for the Directors to
have a stake in the Company on
whose board they sit. The Non-
Executive Directors of the Company
participate in the Employee Share
Incentive Scheme [Option based]
which was established in 2000 to
provide incentive for participants.
The remuneration of Non-Executive
Directors for the period ending
30 June 2013 is detailed in Table 1
of this report.
Executives
(including Executive
Directors remuneration)
Objective
The Group aims to reward
Executives with a level and mix of
remuneration commensurate with
their position and responsibilities
within the Group and so as to:
▶ align the interests of Executives
with those of shareholders;
▶ ensure total remuneration is
competitive by market standards.
Structure
Employment Contracts have been
entered into with all Executives of
the Group. Details of these contracts
are provided on page 22.
Remuneration consists predominately
of fixed remuneration. Variable
remuneration is provided occasionally
at the Board’s discretion including
both short term incentives (STI) and
long term incentives (LTI).
The Company does not have a policy
regarding Executives entering into
contracts to hedge their exposure to
share options granted as part of their
remuneration package.
Fixed Remuneration
Objective
The level of fixed remuneration is
set so as to provide a base level
of remuneration which is both
appropriate to the position and is
competitive in the market.
Fixed remuneration is reviewed
annually and the process consisting
of a review of group wide, business
and individual performance, relevant
comparative remuneration in the
market and internal and, where
appropriate, external advice on
policies and practices. As noted
above, the company conducting the
review has access to external advice
independent of management.
Executives, including Executive
Directors are given the opportunity
to receive their fixed (primary)
remuneration in a variety of forms
including cash and fringe benefits
such as motor vehicles and expense
payment plans. It is intended that
the manner of payment chosen will
be optimal for the recipient without
creating undue cost for the group.
The fixed remuneration is detailed in
Table 1 of this report.
Variable Remuneration
– Long Term Incentive (LTI)
Roderick Lyle was granted options
in 2011-12 under the Employee
Share Option Scheme with a 5 year
vesting period.
A long term incentive plan was
established during 2011-12 whereby
Senior Executives of Group were
offered performance rights over
the ordinary shares of Pro Medicus
Limited. The performance rights,
issued for nil consideration, are
offered for a 5 year period and
vest 3 years after granting date
on completion of service. This
long term incentive plan includes
performance hurdles related to
profitability which is set on an
annualised basis by the Board.
Variable Pay
– Short Term Incentive (STI)
Short term incentives in the form of
cash bonuses were paid to key staff
based on a mix of company based
and personal performance targets.
STI bonus for 2013
For the 2013 financial year, the total
amount of STI cash bonus either
paid or accrued at year end was
$202,898. The maximum amount
payable under STI was $247,598.
Key Performance Indicators
Actual STI payments granted to
key staff depended on the extent
to which specific targets set at
the time of employment were met.
The targets consist of a number
of Key Performance Indicators
(KPIs) covering both financial (Sales
Targets) and non-financial measures
of performance.
Shareholder Returns
The directors are confident that the
holdings of reserve cash is sufficient
to underpin the development and
expansion needs of the company
as the business looks to increase its
penetration of existing markets.
The company has maintained
cash holdings and the increased
return on net assets and equity as
shown in the table below reflects
the increased level of profit in the
current period.
Basic earnings per share — reported (cents)
Return on assets (%)
Return on equity (%)
Dividend payout ratio (%) — normal dividend plan
Dividend payout ratio (%) — total dividend
2013
2012
2011
2010
2009
5.1
25.6
24.2
39.7
39.7
1.8
11.3
11.2
84.0
84.0
0.5
3.0
3.3
0.0
0.0
3.9
23.8
23.5
51.2
51.2
5.1
33.4
38.5
59.0
59.0
Available franking credits ($’000)
1,641
2,638
2,921
4,821
4,042
20 Annual Report 2013
21
DIRECTORS’ REPORT cont.
Employment Contracts
Executive Directors
Executive Service Contracts, on
similar terms and conditions, have
been prepared for all Executive
Directors of the Company.
These agreements provide the
following major terms:
▶ Each executive will receive a
remuneration package per annum
which is to be reviewed annually;
▶ The agreements protect the
Company and Group’s confidential
information and provide that any
inventions or discoveries of an
executive become the property of
the Group;
▶ Non-competition during
employment and for a period of 12
months thereafter; and
▶ Termination by the Company on
six months notice or payment of
six months remuneration in lieu of
notice or a combination of both
(or without notice or payment in
lieu in the event of misconduct or
other specified circumstances). The
agreements may be terminated by
the executives on the giving of six
months notice.
Executives (excluding
Executive Directors)
All Executives have rolling contracts.
The Group may terminate the
Executive’s employment agreement
by providing six months written
notice or providing payment in lieu
of the notice period (based on the
fixed component of the Executive’s
remuneration). The Group may
terminate the contract at any time
without notice if serious misconduct
has occurred. Where termination
with cause occurs the Executive
is only entitled to that portion of
remuneration that is fixed, and only
up to the date of termination. On
termination with cause any unvested
options will immediately be forfeited.
Remuneration of key management personnel of the company and the Group
Table 1: Remuneration of key management personnel for the year ended 30 June 2013.
SHORT-TERM
NON–
MONETARY
BENEFITS
POST
EMPLOYMENT
SUPER-
ANNUATION
LONG
TERM
LONG
SERVICE
LEAVE
SALARY &
FEES
CASH
BONUS
SHARE-BASED
PAYMENT
TOTAL
TOTAL
PERFORMANCE
RELATED %
PERFORMANCE
RIGHTS
OPTIONS
30 JUNE 2013
Directors
P T Kempen
47,720
S A Hupert
255,000
A B Hall
R. Lyle
255,000
45,872
–
–
–
–
Executives
D Tauber
301,871
35,000
M Westerhoff
295,323 138,666
B Levin
185,136
29,232
8,280
–
–
–
–
–
–
24,000
25,000
25,000
4,128
–
–
–
–
–
–
–
–
–
–
–
80,000
280,000
280,000
11,270
61,270
–
–
–
–
13,129
4,817
9,000
4,606
368,423
2,209
–
–
–
10,500
1,415
448,113
–
–
214,368
9.5%
30.9%
13.6%
1,385,922 202,898
8,280
93,466
4,817
19,500
17,291 1,732,174
Compensation options granted, vested and exercised during the year as part of
remuneration
126,000 shares with a fair value of $31,500 ($0.25 per performance right) were granted as performance rights to
Malte Westerhoff with a grant date of 24 September 2012. The performance rights have a 3 year vesting period and
are automatically exercised upon completion of the vesting period.
108,000 shares with a fair value of $27,000 ($0.25 per performance right) were granted as performance rights to
Danny Tauber with a grant date of 24 September 2012. The performance rights have a 3 year vesting period and are
automatically exercised upon completion of the vesting period.
22 Annual Report 2013
Table 2: Remuneration of key management personnel for the year ended 30 June 2012
SHORT-TERM
NON–
MONETARY
BENEFITS
POST
EMPLOYMENT
SUPER-
ANNUATION
LONG
TERM
LONG
SERVICE
LEAVE
SALARY &
FEES
CASH
BONUS
SHARE-BASED
PAYMENT
TOTAL
TOTAL
PERFORMANCE
RELATED %
SHARES
OPTIONS
30 JUNE 2012
Directors
P T Kempen
47,924
115,000
115,000
45,872
S A Hupert
A B Hall
R. Lyle
Executives
D Tauber
301,871
M Westerhoff
232,412
B Levin
162,917
1,020,996
–
–
–
–
–
–
–
-
8,076
–
–
–
–
–
–
24,000
25,000
25,000
4,128
–
–
–
–
13,129
4,830
2,274
–
–
–
8,076
93,531
4,830
–
–
–
–
–
–
–
-
1,040
81,040
–
–
140,000
140,000
23,498
73,498
11,554
331,384
3,060
237,746
–
162,917
39,152
1,166,585
–
–
–
–
–
–
–
Compensation options granted, vested and exercised during the year as part of remuneration
200,000 shares with a fair value of $45,116 ($0.23 per option) were granted as options to Roderick Lyle with a grant
date of 18 November 2011. The share options have an exercise price of $0.55. The options have a first exercise date
of 18 November 2012 and can be exercised at anytime through to expiry date of 18 November 2021. The options
vest 20% each year over a 5 year period on completion of service.
For details of the valuation of options, including models and assumptions used please refer to Note 19.
DIRECTORS’ MEETINGS
The numbers of meetings of directors (including meetings of committees of directors) held during the year and the
number of meetings attended by each director were as follows:
DIRECTORS’ MEETINGS
ELIGIBLE TO ATTEND
AUDIT COMMITTEE
ELIGIBLE TO ATTEND
Number of meetings held:
Number of meetings attended:
P. T. Kempen
R. Lyle
A. B. Hall
S. A. Hupert
12
12
12
12
12
2
2
2
2
2
12
12
12
12
2
2
2
2
Committee membership
As at the 30 June 2013, the company had an Audit Committee comprising the 2 Non-Executive Directors and
2 Executive Directors.
ROUNDING
The amounts contained in this report
and in the financial report have been
rounded to the nearest $1,000 (where
rounding is applicable) under the
option available to the Company
under ASIC Class Order 98/0100.
The Company is an entity to which
the Class Order applies.
AUDITOR
INDEPENDENCE
AND NON–AUDIT
SERVICES
The directors received a declaration
from the auditor of Pro Medicus
Limited (refer page 24).
NON–AUDIT SERVICES
The following non–audit services were provided by the company’s auditor,
Ernst & Young. The directors are satisfied that the provision of non–audit
services is compatible with the general standard of independence for the
auditors imposed by the Corporations Act. The nature and scope of the non–
audit service provided means that auditor independence is not compromised.
Ernst & Young received the following amount for the provision of non–audit services:
Professional services rendered in respect to taxation matters
$64,080
Signed in accordance with a resolution of the Directors.
P T Kempen
Director
Melbourne, 23 August 2013
23
DIRECTORS’ REPORT cont.
AUDITOR’S INDEPENDENCE
DECLARATION
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor's Independence Declaration to the Directors of Pro Medicus
Limited
In relation to our audit of the financial report of Pro Medicus Limited for the financial year ended
30 June 2013, to the best of my knowledge and belief, there have been no contraventions of the
auditor independence requirements of the Corporations Act 2001 or any applicable code of
professional conduct.
Ernst & Young
David Petersen
Partner
Melbourne
23 August 2013
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
CONSOLIDATED
FOR THE YEAR ENDED 30 JUNE 2013
Continuing Operations
Revenue
Finance Revenue
Revenue
Cost of Sales
Gross Profit
Other Income/(Expenses)
Accounting and Secretarial Fees
Advertising and Public Relations
Depreciation and Amortisation
Insurance
Legal Costs
Operating Lease Expense — minimum lease payments
Impairment Expense
Other Expenses
Salaries and Employee Benefits Expense
Travel and Accommodation
Profit/(loss) for the year from continuing operations before tax
Income tax benefit/(expense)
Profit/(loss) for the year from continuing operations
Discontinued operations
Profit/(loss) after tax for the year from discontinued operations
Profit for the year
Other Comprehensive Income
Items that may be reclassified subsequently to profit and loss
Foreign Currency translation
Other comprehensive income for the period
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX
Earnings per share (cents per share)
Basic for net profit for the year
Diluted for net profit for the year
Earnings per share for continued operations (cents per share)
Basic for net profit for the year from continued operations
Diluted for net profit for the year from continued operations
NOTES
5
6(a)
6(b)
15 (iii)
6(b)
7
8
18
9
9
2013
$’000
11,154
220
11,374
(473)
10,901
686
(440)
(670)
(2,948)
(362)
(108)
(338)
(4,600)
(604)
(5,915)
(504)
(4,902)
1,425
(3,477)
8,608
5,131
1,777
1,777
6,908
5.12¢
5.12¢
(3.5¢)
(3.5¢)
2012
$’000
11,313
66
11,379
(546)
10,833
812
(419)
(601)
(2,936)
(332)
(127)
(360)
–
(55)
(5,379)
(417)
1,019
(263)
756
1,035
1,791
(533)
(533)
1,258
1.8¢
1.8¢
0.8¢
0.8¢
24 Annual Report 2013
25
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legis lation
12
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
AS AT 30 JUNE 2013
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Income tax receivable
Inventories
Prepayments
Assets classified held for sale
Total Current Assets
Non-current Assets
Deferred tax asset
Plant and equipment
Intangible assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Income tax payable
Provisions
Liabilities directly associated with the assets classified as held for sale
Total Current Liabilities
Non-current Liabilities
Deferred tax liabilities
Provisions
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Share Reserve
Foreign Currency Translation Reserve
Retained earnings
TOTAL EQUITY
NOTES
11
12
13
7
14
15
16
17
7
17
18
18
18
18
CONSOLIDATED
2012
$’000
5,193
1,692
135
101
157
7,278
2,647
9,925
1,596
356
11,267
13,219
23,144
1,708
-
1,224
2,932
945
3,877
3,234
31
3,265
7,142
16,002
327
172
(1,681)
17,184
16,002
2013
$’000
18,023
2,648
–
113
101
20,885
–
20,885
1,089
334
7,110
8,533
29,418
1,046
4,176
1,310
6,532
–
6,532
1,903
24
1,927
8,459
20,959
327
226
96
20,310
20,959
FOR THE YEAR ENDED 30 JUNE 2013
At 1 July 2011
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transaction with owners in their capacity as owners
Share Based Payment
Share Bay-Back
Dividends
At 30 June 2012
ISSUED
CAPITAL
$’000
330
SHARE
RESERVE
$’000
122
CONSOLIDATED
FOREIGN CURRENCY
TRANSLATION
RESERVE
RETAINED
EARNINGS
TOTAL
EQUITY
$’000
$’000
$’000
(1,148)
15,894
15,198
–
–
–
–
(3)
–
–
–
–
50
–
–
–
(533)
(533)
–
–
–
1,791
1,791
–
(533)
1,791
1,258
–
–
50
(3)
(501)
(501)
327
172
(1,681)
17,184
16,002
At 1 July 2012
327
172
(1,681)
17,184
16,002
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transaction with owners in their capacity as owners
Share Based Payment
Dividends
At 30 June 2013
–
–
–
–
–
327
–
–
–
54
–
226
–
5,131
5,131
1,777
1,777
–
1,777
5,131
6,908
–
–
96
–
54
(2,005)
(2,005)
20,310
20,959
26 Annual Report 2013
27
CONSOLIDATED STATEMENT
OF CASH FLOWS
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
NOTES
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Income tax (paid)/refunded
Net cash flows from operating activities
Cash flows from investing activities
Capitalised Development Costs
Interest received
Net inflow from sale of Amira, net of cash disposed
Purchase of plant and equipment
Proceeds from disposal of plant & equipment
Net cash flows used in investing activities
Cash flows from financing activities
Payment of dividends on ordinary shares
Net cash flows used in financing activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of period
11
15
8
14
14
10
Cash and cash equivalents at end of period
11
CONSOLIDATED
2013
$’000
11,681
(8,260)
392
3,813
(3,239)
220
13,883
(137)
7
10,734
(2,005)
(2,005)
12,542
288
5,193
18,023
2012
$’000
16,416
(8,716)
(1,824)
5,876
(3,354)
66
–
(129)
11
(3,406)
(501)
(501)
1,969
(31)
3,255
5,193
1. CORPORATE
INFORMATION
The financial report of Pro
Medicus Limited (the Company)
for the year ended 30 June
2013 was authorised for issue in
accordance with a resolution of
directors on 23 August 2013.
Pro Medicus Limited is a for
profit company limited by shares
incorporated in Australia whose
shares are publicly traded on the
Australian Securities Exchange.
The nature of the operations and
principal activities of the Group are
described in the Directors’ Report.
2. SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
(a) Basis of Preparation
The financial report is a
general-purpose financial
report, which has been
prepared in accordance
with the requirements of
the Corporations Act 2001,
Australian Accounting
Standards and other
authoritative pronouncements
of the Australian Accounting
Standards board. The financial
report has also been prepared
on a historical cost basis.
The financial report is presented
in Australian dollars and all
values are rounded to the
nearest thousand dollars ($000)
unless otherwise stated.
(b) Statement of compliance
with IFRS
The financial report complies with
Australian Accounting Standards
and International Financial
Reporting Standards (IFRS)
as issued by the International
Accounting Standards Board.
(c) New accounting standards
and interpretations
(i) Changes in Accounting policy
and disclosures
The accounting polices adopted are
consistent with those of the previous
financial year except as follows:
The Group has adopted the following
new and amended Australian
Accounting Standards and AASB
Interpretations as of 1 July 2012.
Adoption of these standards did
not have any effect on the financial
position or performance of the Group.
AASB 2011–9 — Amendments to
Australian Accounting Standards
— Presentation of Other
Comprehensive Income (AASB 1,
5, 7, 101, 112, 120, 121, 132, 133,
134, 1039 & 1049)
This standard requires entities to
group items presented in other
comprehensive income on the
basis of whether they might be
reclassified subsequently to profit or
loss and those that will not:
(ii) Accounting Standards and
Interpretation issued but not
yet effective
Australian Accounting Standards and
Interpretations that have recently been
issued or amended but are not yet
effective have not been adopted by
the Group for the annual reporting
period ending 30 June 2013. These
are outlined in the table below.
REFERENCE
TITLE
SUMMARY
AASB 10
Consolidated
Financial
Statements
AASB 12
Disclosure of
Interests in
Other Entities
AASB 10 establishes a new control model that
applies to all entities. It replaces parts of AASB 127
Consolidated and Separate Financial Statements
dealing with the accounting for consolidated
financial statements and UIG-112
Consolidation — Special Purpose Entities.
The new control model broadens the situations
when an entity is considered to be controlled by
another entity and includes new guidance for
applying the model to specific situations, including
when acting as a manager may give control, the
impact of potential voting rights and when holding
less than a majority voting rights may give control.
Consequential amendments were also made to
this and other standards via AASB 2011–7 and
AASB 2012–10.
AASB 12 includes all disclosures relating to an
entity’s interests in subsidiaries, joint arrangements,
associates and structured entities. New disclosures
have been introduced about the judgments made
by management to determine whether control
exists, and to require summarised information about
joint arrangements, associates, structured entities
and subsidiaries with non- controlling interests.
IMPACT
ON GROUP
FINANCIAL
REPORT
APPLICATION
DATE FOR
GROUP
No impact
1 July 2013
APPLICATION
DATE OF
STANDARD
1 January
2013
1 January
2013
No impact
1 July 2013
28 Annual Report 2013
29
NOTES TO THE FINANCIAL STATEMENTS cont.
REFERENCE
TITLE
SUMMARY
AASB 13
Fair Value
Measurement
AASB
119
Employee
Benefits
AASB
2012-2
AASB
2012-5
AASB
2012-9
Amendments
to Australian
Accounting
Standards –
Disclosures
– Offsetting
Financial Assets
and Financial
Liabilities
Amendments
to Australian
Accounting
Standards
arising from
Annual
Improvements
2009–2011
Cycle
Amendments
to AASB 1048
arising from
the withdrawal
of Australian
Interpretation
1039
AASB 13 establishes a single source of guidance
for determining the fair value of assets and
liabilities. AASB 13 does not change when an entity
is required to use fair value, but rather, provides
guidance on how to determine fair value when fair
value is required or permitted. Application of this
definition may result in different fair values being
determined for the relevant assets.
AASB 13 also expands the disclosure requirements
for all assets or liabilities carried at fair value. This
includes information about the assumptions made
and the qualitative impact of those assumptions on
the fair value determined.
Consequential amendments were also made to
other standards via AASB 2011-8.
The main change introduced by this standard is to
revise the accounting for defined benefit plans. The
amendment removes the options for accounting
for the liability, and requires that the liabilities
arising from such plans is recognized in full with
actuarial gains and losses being recognized in other
comprehensive income. It also revised the method
of calculating the return on plan assets.
The revised standard changes the definition of
short-term employee benefits. The distinction
between short-term and other long-term employee
benefits is now based on whether the benefits are
expected to be settled wholly within 12 months after
the reporting date.
Consequential amendments were also made
to other standards via AASB 2011-10.
AASB 2012-2 principally amends AASB 7 Financial
Instruments: Disclosures to require disclosure of the
effect or potential effect of netting arrangements,
including rights of set- off associated with the
entity’s recognised financial assets and recognised
financial liabilities, on the entity’s financial position,
when all the offsetting criteria of AASB 132 are
not met.
AASB 2012-5 makes amendments resulting
from the 2009-2011 Annual Improvements Cycle.
The Standard addresses a range of improvements,
including the following:
▶ repeat application of AASB 1 is permitted
(AASB 1); and
▶ clarification of the comparative information
requirements when an entity provides a third
balance sheet (AASB 101 Presentation of
Financial Statements).
AASB 2012-9 amends AASB 1048
Interpretation of Standards to evidence
the withdrawal of Australian Interpretation
1039 Substantive Enactment of Major Tax Bills
in Australia.
APPLICATION
DATE FOR
GROUP
1 July 2013
APPLICATION
DATE OF
STANDARD
1 January
2013
IMPACT
ON GROUP
FINANCIAL
REPORT
The Group
will amend
the future
financial
reports to
comply with
AASB 13
1 July 2013
1 January
2013
The Group
will amend
the future
financial
reports to
comply with
AASB 119
1 January
2013
No impact
1 July 2013
1 January
2013
No impact
1 July 2013
1 January
2013
No impact
1 July 2013
IMPACT
ON GROUP
FINANCIAL
REPORT
APPLICATION
DATE FOR
GROUP
No impact
1 July 2014
APPLICATION
DATE OF
STANDARD
1 January
2014
REFERENCE
TITLE
SUMMARY
Amendments
to Australian
Accounting
Standards
– Offsetting
Financial Assets
and Financial
Liabilities
AASB 2012-3 adds application guidance to
AASB 132 Financial Instruments: Presentation
to address inconsistencies identified in applying
some of the offsetting criteria of AASB 132,
including clarifying the meaning of “currently
has a legally enforceable right of set-off” and
that some gross settlement systems may be
considered equivalent to net settlement.
AASB
2012-3
AASB
2011-4
Amendments
to Australian
Accounting
Standards
to Remove
Individual Key
Management
Personnel
Disclosure
Requirements
[AASB 124]
This amendment deletes from AASB 124
individual key management personnel disclosure
requirements for disclosing entities that are not
companies. It also removes the individual KMP
disclosure requirements for all disclosing entities
in relation to equity holdings, loans and other
related party transactions.
1 January
2013
1 July 2013
The Group
will amend
the future
financial
reports to
comply
with AASB
2011-4
1 January
2015
No impact
1 July 2015
AASB 9
Financial
Instruments
AASB 9 includes requirements for the classification
and measurement of financial assets. It was further
amended by AASB 2010-7 to reflect amendments
to the accounting for financial liabilities.
These requirements improve and simplify the
approach for classification and measurement of
financial assets compared with the requirements of
AASB 139. The main changes are described below.
(a) Financial assets that are debt instruments
will be classified based on (1) the objective of
the entity’s business model for managing the
financial assets; (2) the characteristics of the
contractual cash flows.
(b) Allows an irrevocable election on initial
recognition to present gains and losses on
investments in equity instruments that are not
held for trading in other comprehensive income.
Dividends in respect of these investments that
are a return on investment can be recognised
in profit or loss and there is no impairment or
recycling on disposal of the instrument.
(c) Financial assets can be designated and
measured at fair value through profit or loss
at initial recognition if doing so eliminates
or significantly reduces a measurement or
recognition inconsistency that would arise from
measuring assets or liabilities, or recognising the
gains and losses on them, on different bases.
(d) Where the fair value option is used for financial
liabilities the change in fair value is to be
accounted for as follows:
▶ The change attributable to changes in
credit risk are presented in other
comprehensive income (OCI)
▶ The remaining change is presented in
profit or loss
Further amendments were made by AASB
2012–6 which amends the mandatory effective date
to annual reporting periods beginning on or after
1 January 2015. AASB 2012-6 also modifies the
relief from restating prior periods by amending AASB
7 to require additional disclosures on transition to
AASB 9 in some circumstances.
Consequential amendments were also made
to other standards as a result of AASB 9,
introduced by AASB 2009-11 and superseded
by AASB 2010-7 and 2010-10.
30 Annual Report 2013
31
NOTES TO THE FINANCIAL STATEMENTS cont.
(d) Basis of consolidation
The consolidated financial
statements comprise the
financial statements of Pro
Medicus Limited and its
subsidiaries as at 30 June each
year (the Group).
Subsidiaries are all those entities
over which the Group has the
power to govern the financial
and operating policies so as
to obtain benefits from their
activities. The existence and
effect of potential voting rights
that are currently exercisable or
convertible are considered when
assessing whether a Group
controls another entity.
The financial statements of
the subsidiaries are prepared
for the same reporting period
as the parent company, using
consistent accounting policies.
In preparing the consolidated
financial statements, all
intercompany balances and
transactions, income and
expenses and profit and losses
resulting from intragroup
transactions have been
eliminated in full.
Subsidiaries are fully
consolidated from the date
on which control is obtained
by the Group and cease to be
consolidated from the date on
which control is transferred out
of the Group.
The acquisition of subsidiaries
is accounted for using
the acquisition method of
accounting. The acquisition
method of accounting involves
recognising at acquisition date,
separately from goodwill, the
identifiable assets acquired,
the liabilities assumed and any
non-controlling interest in the
acquiree. The identifiable assets
acquired and the liabilities
assumed are measured at their
acquisition date fair values.
The difference between the
above items and the fair value
of the consideration (including
the fair value of any pre- existing
investment in the acquiree)
is goodwill or a discount on
acquisition.
A change in the ownership
interest of a subsidiary that does
not result in a loss of control,
is accounted for as an equity
transaction.
Non-controlling interests are
allocated their share of net
profit after tax in the statement
of comprehensive income and
are presented within equity in
the consolidated statement of
financial position, separately
from the equity of the owners of
the parent.
Losses are attributed to the non-
controlling interest even if that
results in a deficit balance.
If the Group loses control over a
subsidiary, it
– Derecognises the assets
(including goodwill) and
liabilities of the subsidiary.
– Derecognises the carrying
amount of any non–controlling
interest.
– Derecognises the cumulative
translation differences,
recorded in equity.
– Recognises the fair value of
the consideration received.
– Recognises the fair value of
any investment retained.
– Recognises any surplus or
deficit in profit or loss.
– Reclassifies the parent’s
share of components
previously recognised in other
comprehensive income to
profit or loss.
(e) Business combinations
Business combinations are
accounted for using the
acquisition method. The
consideration transferred in a
business combination shall be
measured at fair value, which
shall be calculated as the sum of
the acquisition date fair values
of the assets transferred by the
acquirer, the liabilities incurred by
the acquirer to former owners of
the acquiree and the equity issued
by the acquirer, and the amount
of any non–controlling interest in
the acquiree. For each business
combination, the acquirer
measures the non–controlling
interest in the acquiree either at
fair value or at the proportionate
share of the acquiree’s identifiable
net assets. Acquisition–related
costs are expensed as incurred.
When the Group acquires a
business, it assesses the financial
assets 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 as at the
acquisition date.
If the business combination is
achieved in stages, the acquisition
date fair value of the acquirer’s
previously held equity interest in
the acquiree is remeasured at fair
value as at the acquisition date
through profit or loss.
Any contingent consideration to
be transferred by the acquirer
will be recognised at fair value at
the acquisition date. Subsequent
changes to the fair value of the
contingent consideration which is
deemed to be an asset or liability
will be recognised in accordance
with AASB 139 either in profit or
loss or in other comprehensive
income. If the contingent
consideration is classified as
equity, it shall not be remeasured.
(f) Operating segments
An operating segment is a
component of an entity that
engages in business activities
from which it may earn revenues
and incur expenses (including
revenues and expenses relating
to transactions with other
components of the same entity),
whose operating results are
regularly reviewed by the entity’s
chief operating decision maker to
make decisions about resources
to be allocated to the segment
and assess its performance
and for which discrete financial
information is available. This
includes start up operations
which are yet to earn revenues.
Management will also consider
other factors in determining
operating segments such as the
existence of a line manager and
the level of segment information
presented to the board of directors.
Operating segments have been
identified based on the information
provided to the chief operating
decision makers – being the
executive management team.
The group aggregates two or more
operating segments when they have
similar economic characteristics and
the segments are similar in each of
the following respects:
▶ Nature of the products and services
▶ Type or class of customer for the
products and services
▶ Nature of the regulatory environment
Operating segments that meet the
quantitative criteria as prescribed
by AASB 8 are reported separately.
However, an operating segment
that does not meet the quantitative
criteria is still reported separately
where information about the
segment would be useful to users
of the financial statements.
Information about other business
activities and operating segments
that are below the quantitative
criteria are combined and disclosed
in a separate category for “all
other segments”.
(g) Revenue recognition
Revenue is recognised to the extent
that it is probable that the economic
benefits will flow to the Group
and the revenue can be reliably
measured. The following specific
recognition criteria must also be met
before revenue is recognised:
Rendering of services
Revenue from the installation
and ongoing support of software
applications and services is
recognised by reference to the
stage of completion of a contract
or contracts in progress. Stage
of completion is measured by
completion of identifiable service
segments as a percentage of the
total services to be provided for each
contract, which is determined by a
quotation with the customer.
Service Revenue is recognised over
the term of the contract. Where
revenue is received in advance,
revenue is recognised in the period
during which the service is provided.
Where the contract outcome cannot
be reliably measured, revenue is
recognised only to the extent that
costs have been incurred.
Licences
License revenue is recognised
when control of the right to be
compensated for the license can be
reliably measured. License revenue
is recognised when ownership of
the goods have passed to the buyer,
which is usually after the software
application has been installed and is
ready for use by the buyer.
Interest
Revenue is recognised as the
interest accrues (using the effective
interest method, which is the rate
that exactly discounts estimated
future cash receipts through
the expected life of the financial
instrument) to the net carrying
amount of the financial asset.
(h) Leases
The determination of whether
an arrangement is or contains a
lease is based on the substance of
the arrangement and requires an
assessment of whether the fulfilment
of the arrangement is dependant on
the use of a specific asset or assets
and the arrangement conveys a right
to use the asset.
Group as a lessee
Leases where the lessor retains
substantially all the risks and
benefits of ownership of the asset
are classified as operating leases.
Operating lease payments are
recognised as an expense in the
statement of comprehensive income
on a straight–line basis over the
lease term.
(i) Cash and cash equivalents
Cash and cash equivalents in the
statement of financial position
comprise cash at bank and in hand
and short term deposits with an
original maturity of three months or
less that are readily convertible to
known amounts of cash and which
are subject to an insignificant risk of
changes of value.
For the purposes of the Cash Flow
Statement, cash and cash equivalents
consist of cash and cash equivalents
as defined above.
(j) Trade and other receivables
Trade and intercompany receivables
are recognised initially at fair value
and subsequently measured at
amortised cost less an allowance for
any uncollectible amounts.
A provision for impairment is made
when there is objective evidence
that Pro Medicus will not be able to
collect the debts. Financial difficulty
of the debtors is considered objective
evidence by the Group. Bad debts
are written off when identified.
(k) Inventories
Inventories are valued at the lower
of cost and net realisable value. The
cost of finished goods represents the
purchase cost.
Net realisable value is the estimated
selling price in the ordinary course
of business, less estimated costs of
completion and the estimated costs
necessary to make the sale.
(l) Derivative financial
instruments and hedging
The Group has not transacted any
derivative financial instruments
to hedge its risk associated
foreign currency and interest rate
fluctuations.
(m) Investments and other
financial assets
Investments and financial assets in
the scope of AASB 139 Financial
Instruments: Recognition and
Measurement are categorised
as either financial assets at fair
value through profit or loss, loans
and receivables, held–to–maturity
investments, or available–for–sale
financial assets. The classification
depends on the purpose for which
the investments were acquired
or originated. Designation is re–
evaluated at each reporting date, but
there are restrictions on reclassifying
to other categories. When financial
assets are recognised initially, they
are measured at fair value, plus,
in the case of assets not at fair
value through profit or loss, directly
attributable transaction costs.
32 Annual Report 2013
33
NOTES TO THE FINANCIAL STATEMENTS cont.
Recognition and
derecognition
All regular way purchases and sales
of financial assets are recognised
on the trade date i.e., the date that
the Group commits to purchase
the asset. Regular way purchases
or sales are purchases or sales of
financial assets under contracts that
require delivery of the assets within
the period established generally
by regulation or convention in the
market place. Financial assets are
derecognised when the right to
receive cash flows from the financial
assets has expired or when the entity
transfers substantially all the risks
and rewards of the financial assets. If
the entity neither retains nor transfers
substantially all of the risks and
rewards, it derecognises the asset if it
has transferred control of the assets.
Subsequent
measurement
(i) Financial assets at fair value
through profit or loss
Financial assets classified as
held for trading are included in
the category “financial assets at
fair value through profit or loss”.
Financial assets are classified
as held for trading if they are
acquired for the purpose of
selling in the near term with
the intention of making a profit.
Derivatives are also classified as
held for trading unless they are
designated as effective hedging
instruments. Gains or losses on
financial assets held for trading
are recognised in profit or loss
and the related assets are
classified as current assets in the
statement of financial position.
(ii) Loans and receivables
Loans and receivables including
loan notes and loans to key
management personnel are
non–derivative financial assets
with fixed or determinable
payments that are not quoted in
an active market. Such assets
are carried at amortised cost
using the effective interest rate
method. Gains and losses are
recognised in profit or loss when
the loans and receivables are
derecognised or impaired. These
are included in current assets,
except for those with maturities
greater than 12 months after
reporting date, which are
classified as non–current.
(n) Foreign currency translation
(i) Functional and presentation
currency
Both the functional and
presentation currency of
Pro Medicus Limited and its
Australian subsidiaries are
Australian dollars ($). The United
States subsidiaries’ functional
currency is United States Dollars.
The subsidiary in Germany
has a functional currency of
Euro. Foreign subsidiaries
are translated to presentation
currency (see below for
consolidated reporting).
(ii) Transactions and balances
Transactions in foreign currencies
are initially recorded in the
functional currency by applying the
exchange rates ruling at the date
of the transaction. Monetary assets
and liabilities denominated in
foreign currencies are retranslated
at the rate of exchange ruling at the
reporting date.
Non–monetary items that are
measured in terms of historical
cost in a foreign currency are
translated using the exchange
rate as at the date of the initial
transaction. Non–monetary items
measured at fair value in a foreign
currency are translated using the
exchange rates at the date when
the fair value was determined.
(iii) Translation of Group
Companies’ functional
currency to presentation
currency
The results of the United States
and German subsidiaries are
translated into Australian dollars
(presentation currency) using
an average exchange rate
for the trading period. Assets
and liabilities are translated at
exchange rates prevailing at
reporting date.
Exchange variations resulting
from the translation are
recognised in the foreign currency
translation reserve in equity.
On consolidation, exchange
differences arising from the
translation of the net investments
in foreign subsidiaries are taken
to the foreign currency translation
reserve. If a foreign subsidiary
were sold, the proportionate
share of exchange differences
would be transferred out of equity
and recognised in the statement
of comprehensive income.
(o) Income tax
Current tax assets and liabilities
for the current and prior periods
are measured at the amount
expected to be recovered from or
paid to the taxation authorities.
The tax rates and tax laws used
to compute the amount are those
that are enacted or substantively
enacted by the reporting date.
Deferred income tax is provided
on all temporary differences at the
reporting date between the tax
bases of assets and liabilities and
their carrying amounts for financial
reporting purposes.
Deferred income tax liabilities
are recognised for all taxable
temporary differences, except:
▶ where the deferred income tax
liability arises from the initial
recognition of an asset or liability
in a transaction that is not a
business combination and, at the
time of the transaction, affects
neither the accounting profit nor
taxable profit or loss.
▶ when the taxable temporary
difference is associated with
investments in subsidiaries,
associates or interests in joint
ventures, and the timing of
the reversal of the temporary
difference can be controlled and
it is probable that the temporary
difference will not reverse in the
foreseeable future.
Deferred income tax assets are
recognised for all deductible
temporary differences, carry
forward of unused tax assets
and unused tax losses, to the
extent that it is probable that
taxable profit will be available
against which the deductible
temporary differences, and the
carry–forward of unused tax
assets and unused tax losses
can be utilised, except:
▶ where the deferred income tax
asset relating to the deductible
temporary difference arises from
the initial recognition of an asset
or liability in a transaction that is
not a business combination and,
at the time of the transaction,
affects neither the accounting
profit nor taxable profit or loss.
▶ when the deductible temporary
difference is associated with
investments in subsidiaries,
associates or interests in joint
ventures, in which case a deferred
tax asset is only recognised to
the extent that it is probable that
the temporary difference will
reverse in the foreseeable future
and taxable profit will be available
against which the temporary
difference can be utilised.
The carrying amount of deferred
income tax assets is reviewed at each
reporting date and reduced to the
extent that it is no longer probable that
sufficient taxable profit will be available
to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income
tax assets are reassessed at each
reporting date and are recognised to
the extent that it has become probable
that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred income tax assets and
liabilities are measured at the tax
rates that are expected to apply to
the year when the asset is realised
or the liability is settled, based on
the tax rates (and tax laws) that
have been enacted or substantively
enacted at the reporting date.
Deferred tax assets and deferred tax
liabilities are offset only if a legally
enforceable right exists to set off
current tax assets against current tax
liabilities and the deferred tax assets
and liabilities relate to the same taxable
entity and the same taxation authority.
Income taxes relating to items
recognised directly in equity are
recognised in equity and not in the
statement of comprehensive income.
Tax consolidation
legislation
Pro Medicus Limited and its wholly–
owned Australian controlled entities
implemented the tax consolidation
legislation as of 1 July 2009.
The head entity, Pro Medicus Limited
and the controlled entities in the
tax consolidated group continue to
account for their own current and
deferred tax amounts. The Group has
applied the Group allocation approach
to determining the appropriate
amount of current taxes and deferred
taxes to allocate to members of the
tax consolidated group.
In addition to its own current and deferred tax amounts, Pro Medicus also
recognises the current tax liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
Pro Medicus Limited and its 100% owned Australian resident subsidiaries
formed a tax consolidated group with effect from 1 January 2009. Pro
Medicus Limited is the head entity of the tax consolidated group. An allocation
of income tax liabilities between the entities of the tax consolidated group will
be made should the head entity default on its tax payment obligations. No
such amounts have been recognised in the financial statements on the basis
that the possibility of default is remote.
(p) Other taxes
Revenues, expenses and assets are recognised net of the amount of
GST except:
▶ when the GST incurred on a purchase of goods and services is not
recoverable from the taxation authority, in which case the GST is recognised
as part of the cost of acquisition of the asset or of the expense item as
applicable; and
▶ receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the statement of
financial position.
Cash flows are included in the Cash Flow Statement on a gross basis and
the GST component of cash flows arising from investing and financing
activities, which is recoverable from, or payable to, the taxation authority are
classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
(q) Non-current assets held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for
sale if their carrying amounts will be recovered principally through a sale
transaction rather than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at the lower
of their carrying amount and fair value less costs to sell. The criteria for
held for sale classification is regarded as met only when the sale is highly
probable and the asset or disposal group is available for immediate sale in
its present condition. Management must be committed to the sale, which
should be expected to qualify for recognition as a completed sale within
one year from the date of classification.
Discontinued operations are excluded from the results of continuing
operations and are presented as a single amount as profit or loss after tax
from discontinued operations in the income statement.
Property, plant and equipment and intangible assets are not depreciated
or amortised once classified as held for sale.
(r) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and
any impairment in value.
Depreciation is calculated on a straight–line basis over the estimated
useful life of the asset as follows:
2013
2012
Property Improvements
2 to 7 years
2 to 7 years
Motor Vehicles
Office Equipment
4 to 5 years
4 to 5 years
2 to 7 years
2 to 7 years
Furniture and Fittings
5 years
5 years
Research and Development Equipment
3 to 4 years
3 to 4 years
34 Annual Report 2013
35
NOTES TO THE FINANCIAL STATEMENTS cont.
An item of plant and equipment is
derecognised upon disposal or when
no future economic benefits are
expected to arise from the continued
use of the asset.
Any gain or loss arising on de–
recognition of the asset (calculated
as the difference between the net
disposal proceeds and the carrying
amount of the item) is included in
the statement of comprehensive
income in the period the item is
derecognised.
Impairment
The carrying values of plant
and equipment are reviewed for
impairment at each reporting date,
with recoverable amount being
estimated when events or changes
in circumstances indicate that the
carrying value may be impaired.
For an asset that does not generate
largely independent cash inflows, the
recoverable amount is determined for
the cash generating unit to which the
asset belongs.
If any such indication exists and
where the carrying values exceed
the estimated recoverable amount,
the assets or cash–generating
units are written down to their
recoverable amount.
The recoverable amount of plant
and equipment is the greater of fair
value less costs to sell and value
in use. 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.
(s) Intangible assets
Intangible assets acquired
separately or in a business
combination are initially
measured at cost. The cost of
an intangible asset acquired in
a business combination is its fair
value as at date of acquisition.
Following initial recognition,
intangible assets with a finite
life are carried at cost less any
accumulated amortisation
and any accumulated
impairment losses.
Amortisation is calculated on
a straight–line basis over the
estimated useful life of the asset.
Intangible assets, excluding
development costs, created
within the business are not
capitalised and expenditure is
charged against profits in the
period in which the expenditure
is incurred.
Intangible assets are tested
for impairment where an
indicator of impairment exists,
either individually or at the
cash generating unit level. The
recoverable amount is estimated
and an impairment loss is
recognised to the extent that the
recoverable amount is lower than
the carrying value.
The amortisation period
and method is renewed at
each financial year end and
adjustments, where applicable,
are made on a prospective basis.
Research and
development costs
Research costs are expensed
as incurred.
An intangible asset arising from
development expenditure on an
internal project is recognised only
when the group can demonstrate the
technical feasibility of completing
the intangible asset so that it will
be available for sale or use, its
intention to complete and its ability
to use or sell the asset, how the
asset will generate future economic
benefits, the availability of resources
to complete the development
and the ability to measure reliably
the expenditure attributable to
the intangible asset during its
development. Following initial
recognition of the development
expenditure, the cost model is
applied requiring the asset be
carried at cost less any accumulated
amortisation and accumulated
impairment losses. Any expenditure
so capitalised is amortised on a
straight line basis over the period of
expected benefit from the related
project (5 years).
Development expenditure includes
costs of materials and services
and salaries and wages and other
employee related costs arising from
the generation of the intangible asset.
The carrying value of an intangible
asset arising from development
expenditure is tested for impairment
annually when the asset is not yet
available for use or more frequently
when an indication of impairment
arises during the reporting period.
Intellectual Property –
Software
Three separately identifiable
intangible assets, in the form of
software intellectual property, have
previously been identified in the
business acquisition of Visage
Imaging;
▶ Visage CS
▶ Visage PACS and
▶ Amira
Following initial recognition,
Intellectual property is measured
at cost less any accumulated
amortisation. A useful life of 5 years
has been determined.
Software Licenses
The Group identified a separate
intangible asset in the form of
software licenses, in the business
acquisition of Visage Imaging.
Following initial recognition,
software licenses are measured
at cost less any accumulated
amortisation. A useful life of
4 years has been determined.
Customer List
The Group identified a separate
intangible asset in the form of
a customer list, in the business
acquisition of Visage Imaging.
Following initial recognition,
the customer list is measured
at cost less any accumulated
amortisation. A useful life of 4 years
has been determined.
(t) Trade and other payables
Trade payables and other
payables are carried at
amortised cost and represent
liabilities for goods and services
provided to the Group prior to
the end of the financial year that
are unpaid and arise when the
Group becomes obliged to make
future payments in respect of
the purchase of these goods
and services.
(u) Provisions
Provisions are recognised
when the Group has a present
obligation (legal or constructive)
as a result of a past event, it
is probable that an outflow of
resources embodying economic
benefits will be required to settle
the obligation and a reliable
estimate can be made of the
amount of the obligation.
When the Group expects
some or all of a provision to be
reimbursed, for example under
an insurance contract, the
reimbursement is recognised
as a separate asset but only
when the reimbursement is
virtually certain. The expense
relating to any provision is
presented in the statement of
comprehensive income net of
any reimbursement.
Provisions are measured at the
present value of management’s
best estimate of the expenditure
required to settle the present
obligation at the reporting date.
Dividends payable are recognised
when a legal or constructive
obligation to pay the dividend
arises, typically following
approval of the dividend at a
meeting of directors.
(v) Employee leave benefits
Provision is made for employee
entitlement benefits accumulated
as a result of employees
rendering services up to the
reporting date.
(i) Wages salaries, annual leave
and sick leave
Liabilities for wages and salaries
and annual leave, expected to be
settled within twelve months of
the reporting date are recognised
in respect of employees’ services
up to the reporting date. They
are measured at the amounts
expected to be paid when the
liabilities are settled. Expenses
for non–accumulating sick leave
are recognised when the leave is
taken and are measured at the
rates paid.
(ii) Long Service Leave
The liability for long service leave
is recognised and measured as
the present value of expected
future payments to be made in
respect of services provided by
employees up to the reporting
date, using the projected unit
credit method. Consideration is
given to expected future wage
and salary levels, experience
of employee departures, and
periods of service. Expected
future payments are discounted
using market yields at the
reporting date on national
government bonds with terms
to maturity and currencies that
match, as closely as possible the
estimated future cash outflows.
(w) Share based payment
transactions
(i) Equity settled transactions:
The Group provides benefits to its
employees (including KMP) in the
form of share-based payments,
whereby employees render services
in exchange for shares or rights over
shares (equity-settled transactions).
There are currently two plans in place
to provide these benefits:
▶ The Employee Share Option Plan
(ESOP), which provides benefits to
directors and senior executives.
▶ The Long Term Incentive Plan
(LTIP), which provides benefits to
directors and senior executives.
The cost of these equity-settled
transactions with employees (for
awards granted after 7 November
2002 that were unvested at 1
January 2005) is measured by
reference to the fair value of the
equity instruments at the date at
which they are granted. The fair value
is determined using a Black Scholes
model, further details of which are
given in note 19.
In valuing equity-settled transactions,
no account is taken of any vesting
conditions, other than conditions
linked to the price of the shares
of Pro Medicus Limited (market
conditions) if applicable.
The cost of equity-settled transactions
is recognised, together with a
corresponding increase in equity, over
the period in which the performance
and/or service conditions are fulfilled
(the vesting period), ending on the
date on which the relevant employees
become fully entitled to the award (the
vesting date).
At each subsequent reporting date
until vesting, the cumulative charge
to the statement of comprehensive
income is the product of:
(i) The grant date fair value of the award;
(ii) For options with non–market
vesting conditions, the current
best estimate of the number of
awards that will vest, taking
into account such factors as the
likelihood of employee turnover
during the vesting period and
the likelihood of non–market
performance conditions being
met; and
(iii) The expired portion of the
vesting period.
The charge to the statement of
comprehensive income for the period
is the cumulative amount as calculated
above less the amounts already
charged in previous periods. There is a
corresponding entry to equity.
Until an award has vested, any
amounts recorded are contingent
and will be adjusted if more or fewer
awards vest than were originally
anticipated to do so. Any award
subject to a market condition is
considered to vest irrespective of
whether or not that market condition
is fulfilled, provided that all other
conditions are satisfied.
If the terms of an equity–settled
award are modified, as a minimum
an expense is recognised as if the
terms had not been modified. An
additional expense is recognised
for any modification that increases
the total fair value of the share–
based payment arrangement,
or is otherwise beneficial to the
employee, as measured at the date
of modification.
If an equity–settled award is
cancelled, it is treated as if it had
vested on the date of cancellation,
and any expense not yet recognised
for the award is recognised
immediately. However, if a new award
is substituted for the cancelled award
and designated as a replacement
award on the date that it is granted,
the cancelled and new award are
treated as if they were a modification
of the original award, as described in
the previous paragraph.
The dilutive effect, if any, of
outstanding options is reflected
as additional share dilution in the
computation of diluted earnings per
share (see note 9).
(x) Contributed equity
Ordinary shares are classified as
equity. Incremental costs directly
attributable to the issue of new
shares or options are shown in
equity as a deduction, net of tax,
from the proceeds.
(y) Earnings per share
Basic earnings per share
is calculated as net profit
attributable to members of the
Group, adjusted to exclude any
costs of servicing equity (other
than dividends) divided by the
weighted average number of
ordinary shares, adjusted for any
bonus element.
36 Annual Report 2013
37
NOTES TO THE FINANCIAL STATEMENTS cont.
Diluted earnings per share
is calculated as net profit
attributable to members of
the Group adjusted for
– Costs of servicing equity
(other than dividends)
– The after tax effect of
dividends and interest
associated with dilutive
potential ordinary shares that
have been recognised as
expenses; and
– Other non–discretionary
changes in revenue or
expenses during the period
that would result from the
dilution of potential ordinary
shares and
– Dilutive potential ordinary
shares adjusted for any
bonus element.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to
make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. Management continually evaluates
its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements and
estimates on historical experience and on other various factors it believes to
be reasonable under the circumstances, the result of which form the basis of
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions and conditions.
Management has identified the following critical accounting policies for which
significant judgements, estimates and assumptions are made. Actual results
may differ from these estimates under different assumptions and conditions
and may materially affect financial results or the financial position reported in
future periods.
Further details of the nature of these assumptions and conditions may be
found in the relevant notes to the financial statements.
(i) Significant accounting judgements
and then divided by the weighted
average number of ordinary shares.
(z) Comparatives
Where necessary, comparatives
have been reclassified and
repositioned for consistency
with current year disclosures.
(aa) Government Grants
Recovery of deferred tax assets:
Deferred tax assets are recognised for deductible temporary differences as
management considers that it is probable that future taxable profits will be
available to utilise those temporary differences.
Capitalisation of Development costs:
Development costs are only capitalised by the Group when it can be
demonstrated that the technical feasibility of completing the intangible asset
is valid so that the asset will be available for use or sale.
Research and Development
tax credits are recognized in
accordance with AASB 120:
Accounting for Government
Grants and Government
Assistance. The Research
and development tax credit
is recognised when there is
reasonable assurance that the
grant will be received and all
conditions have been complied
with. The Grant is recognised as a
reduction to the cost base of the
intangible and released to income
as a reduction in amortization
expense over the expected useful
life of the related asset. The
amount recognised for the period
to 30 June 2013 is $654,439.
(2012:$463,242).
Impairment of non–financial assets
The Group assesses impairment of all assets at each reporting date by
evaluating conditions specific to the Group and to the particular asset that
may lead to impairment. If an impairment trigger exists the recoverable
amount of the asset is determined. Given the current uncertain economic
environment management considered that the indicators of impairment were
significant enough and as such these assets have been tested for impairment
in this financial period.
Taxation
The Group’s accounting policy for taxation requires management’s judgement
as to the types of arrangements considered to be a tax on income in contrast
to an operating cost. Judgement is also required in assessing whether
deferred tax assets and certain deferred tax liabilities are recognised on the
statement of financial position. Deferred tax assets, including those arising
from un-recouped tax losses, capital losses and temporary differences,
are recognised only where it is considered more likely than not that they
will be recovered, which is dependent on the generation of sufficient future
taxable profits. Deferred tax liabilities arising from temporary differences
in investments, caused principally by retained earnings held in foreign tax
jurisdictions, are recognised unless repatriation of retained earnings can
be controlled and are not expected to occur in the foreseeable future.
38 Annual Report 2013
Assumptions about the generation
of future taxable profits and
repatriation of retained earnings
depend on management’s estimates
of future cash flows. These depend
on estimates of future sales
volumes, operating costs, capital
expenditure, dividends and other
capital management transactions.
Judgements are also required
about the application of income
tax legislation. These judgements
and assumptions are subject to
risk and uncertainty, hence there
is a possibility that changes in
circumstances will alter expectations,
which may impact the amount of
deferred tax assets and deferred tax
liabilities recognised on the statement
of financial position and the amount
of other tax losses and temporary
differences not yet recognised. In
such circumstances, some or all of
the carrying amounts of recognised
deferred tax assets and liabilities
may require adjustment, resulting in a
corresponding credit or charge to the
statement of comprehensive income.
Net investment in Foreign
Operations
The Group maintains inter-company
loans it assesses to represent a part
of its net investment in its foreign
operations. The judgements made in
assessing these loans to represent
net investments are on the basis the
loans are neither planned nor likely
to be settled within the foreseeable
future, the loans do not include
trade receivables or trade payable
and the loans represent a return of
funds from their investment in the
respective subsidiaries.
(ii) Significant accounting
estimates and assumptions
Capitalisation of
development costs
The capitalisation of development
costs includes an overhead rate
which has been estimated from total
costs. The estimated development
overheads rate has been calculated
by dividing the development labour
costs over total labour costs to give
a percentage of development labour
rate. The development labour rate
is then applied against the total
overheads of the company, to give an
estimate of the amount of overheads
that relates to development.
4. FINANCIAL RISK MANAGEMENT OBJECTIVES
AND POLICIES
The group’s principal financial instruments are cash and short–term deposits.
The main purpose of these financial instruments is to provide finance for the
Group’s operations. The Group has various other financial assets and liabilities
such as trade receivables and trade payables, which arise directly from its
operations. The main risks arising from the Group’s financial instruments are
foreign currency risk, interest risk and credit risk. The Board manages each
of these risks as detailed below.
Foreign currency risk
The Group has transactional currency exposure, which arise from sales made
in currencies other than the Group’s functional currency.
Approximately 51% (2012: 62%) of the Group’s sales are denominated in
currencies other than the functional currency, and these sales would be
predominately offset by currency exposure on costs. Foreign bank accounts
have also been established, to create a natural hedge and reduce the need for
regular transfers from the functional currency (AUD) cash holdings.
At 30 June the Group had the following exposure to US$ foreign currency that
is not designated in cash flow hedges
CONSOLIDATED
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Net exposure
2013
$000
25
25
–
25
2012
$000
56
56
–
56
At 30 June the Group had the following exposure to CAD$ foreign currency
that is not designated in cash flow hedges
CONSOLIDATED
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Net exposure
2013
$000
1,145
1,145
–
1,145
2012
$000
1,185
1,185
–
1,185
At 30 June the Group had the following exposure to GBP₤ foreign currency
that is not designated in cash flow hedges
CONSOLIDATED
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Net exposure
2013
$000
566
566
–
566
2012
$000
420
420
–
420
39
NOTES TO THE FINANCIAL STATEMENTS cont.
At 30 June the Group had the following exposure to EUR€ foreign currency that is not designated in cash flow hedges
At 30 June 2013, if interest rates had moved, as illustrated in the table below, with all other variables held constant,
post tax profit and equity (excluding retained profits) would have been affected as follows:
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Net exposure
CONSOLIDATED
2013
$000
9,295
9,295
–
9,295
2012
$000
57
57
–
57
At 30 June, had the Australian Dollar moved, as illustrated in the table below, with all other variables held constant,
post tax profit and equity (excluding retained profits) would have been affected as follows:
JUDGEMENTS OF REASONABLY POSSIBLE
MOVEMENTS:
AUD/USD +10%
AUD/USD – 5%
AUD/CAD +10%
AUD/CAD – 5%
AUD/GBP +10%
AUD/GBP – 5%
AUD/EUR +10%
AUD/EUR – 5%
POST TAX PROFIT
HIGHER/(LOWER)
OTHER COMPREHENSIVE INCOME HIGHER/
(LOWER)
2013
$’000
(2)
1
(114)
57
(57)
28
(930)
465
2012
$’000
(6)
3
(118)
59
(42)
21
(6)
3
2013
$’000
(24)
12
–
–
–
–
(107)
54
2012
$’000
–
–
–
–
–
–
–
–
Management believe the reporting date risk exposures are representative of the risk exposure inherent in the financial
instruments.
Credit risk
Credit risk arises from the financial instruments of the Group, which comprise
cash and cash equivalents and trade and other receivables. The Group’s
exposure to credit risk arises from potential defaults of the counter–party, with
a maximum exposure equal to the carrying amount of the financial assets.
Interest risk
The Group exposure to market
interest rates relates primarily to
the company’s cash and cash
equivalents.
The Group trades only with recognised, credit worthy third parties.
It is the Group’s policy that all customers who wish to trade on credit terms are
subject to credit assessment.
In addition, receivable balances are monitored on an ongoing basis with the
result that the Group’s exposure to bad debts is not significant.
As the Group trades predominantly within the Diagnostic Imaging market there is
a concentration of credit risk. Given the underlying Government funding support
for Radiology in Hospital settings and the Imaging Centre and Diagnostic Imaging
market, and the commercial successes achieved by the Group to date, credit risk
is considered to be minimal.
Cash and cash equivalents are held with several financial institutions, with the
majority held with the Westpac Banking Corporation, a AA rated bank.
At reporting date, the Group had the
following financial assets exposed to
Australian Variable interest rate risk
that are not designated in cash flow
hedges:
Cash and Cash equivalents in the
Group ($’000’s) $18,023 (2012:
$5,193).
The Group’s policy is to place cash
balances in either 30 day term
deposits or commercial bills that
earn higher interest rates.
CONSOLIDATED
JUDGEMENTS OF REASONABLY POSSIBLE MOVEMENTS:
+1% (100 basis points)
– 1% (100 basis points)
POST TAX PROFIT
HIGHER/(LOWER)
OTHER COMPREHENSIVE INCOME
HIGHER/(LOWER)
2013
$’000
180
(180)
2012
$’000
–
–
2013
$’000
52
(52)
2012
$’000
–
–
Liquidity risk
The Group has minimal liquidity risk as it has cash reserves of $18.0m, with no borrowings.
These cash reserves are deemed to be adequate and the Board believes they will underpin the ongoing growth of
the business.
The table below reflects all contractually fixed pay-offs for settlement and repayments resulting from recognised financial
liabilities. Cash flows for financial liabilities without fixed amount of timing are based on the conditions existing at 30
June 2013.
The remaining contractual maturities of the Group’s financial liabilities are:
CONSOLIDATED
2013
$000
407
18
33
588
1,046
2012
$000
889
–
–
819
1,708
<30 days
31–60 days
61–90 days
Over 90 days
TOTAL
5. OPERATING SEGMENTS
The Group has identified its operating segments based on the internal reports
that are reviewed and used by the executive management team (the chief
operating decision makers) in assessing performance and in determining the
allocation of resources.
The operating segments are identified by management based on country of
origin. Discrete financial information is reported to the executive management
team on at least a monthly basis.
Types of products and services
The Group produces integrated software applications for the health care
industry. In addition, the Group provides services in the form of installation
and support.
Accounting policies and inter–segment transactions
The accounting policies used by the Group in reporting segments internally is
the same as those contained in note 2 to the financial statements and in the
prior periods except as detailed below:
Inter–entity sales
Inter–entity sales are recognised based on an internally set transfer price. The
price aims to reflect what the business operation could achieve if they sold
their output and services to external parties at arm’s length.
40 Annual Report 2013
41
NOTES TO THE FINANCIAL STATEMENTS cont.
AUSTRALIA
EUROPE
NORTH AMERICA
TOTAL OPERATIONS
2013
$’000
2012
$’000
2013
$’000
2012
$’000
2013
$’000
2012
$’000
2013
$’000
2012
$’000
5,479
1,750
7,229
5,428
1,755
7,183
2,807
3,519
6,326
3,625
3,263
6,888
2,868
2,260
11,154
11,313
–
–
5,269
5,018
2,868
2,260
16,423
16,331
(5,269)
(5,018)
11,154
11,313
(744)
509
342
624
(120)
(180)
(522)
220
(4,600)
1,425
(3,477)
953
66
–
(263)
756
OPERATING SEGMENTS
Revenue
Sales to external customers
Inter–segment Sales
Total segment revenue
Inter–segment elimination
Total consolidation revenue
Results
Segment Result
Interest Revenue
Non segment expense
Impairment Expense
Income Tax Expense
Net Profit
Assets
Non–Current Assets
11,052
11,344
185
225
822
663
–
26,386
17,084
22,688
38,260
29,091
22,873
–
6,619
6,844
42
267
2,503
2,812
55
11,279
11,624
933
1,089
1,596
1,959
51,577
25,662
2,947
63,945
38,882
(34,527)
(18,385)
29,418
20,497
Deferred Tax Asset
Current Assets
Segment Assets
Inter-segment elimination
Total Assets
Liabilities
Segment Liabilities
Inter-segment elimination
Total Liabilities
Other segment information
Capital expenditure
Depreciation and amortisation
Cash flow information
Net cash flow from
operating activities
Net cash flow from
investing activities
Net cash flow from
financing activities
31,545
17,250
5,045
1,171
2,379
4,044
38,969
22,465
(30,510)
(16,268)
8,459
6,197
2,999
2,498
2,445
2,521
346
413
988
952
23
37
39
28
3,368
2,948
3,472
3,501
3,458
5,759
(1,567)
(1,267)
1,922
1,384
3,813
5,876
(2,885)
(2,398)
11,713
(969)
1,906
(39)
10,734
(3,406)
(2,005)
(501)
–
–
–
–
(2,005)
(501)
Product information
Revenue from external customers
Radiology Information Systems (RIS)
Picture Archiving Communications Systems (PACS)
Other income
NOTES
CONSOLIDATED
2013
$’000
5,817
5,272
65
2012
$’000
5,778
5,471
64
Total revenue per statement of comprehensive income
11,154
11,313
6. INCOME AND EXPENSES
(a) Other Income
Net Currency Gains
Net Currency (Loss)
Other Income
(b) Expenses
Depreciation and Amortisation
Motor Vehicles
Office Equipment
Furniture and Fittings and Property Improvements
Research & Development Equipment
Amortisation on capitalised development costs
Intangible assets
Total Depreciation and Amortisation Expense
Salaries and Employee Benefits Expense
Wages & Salaries
Long service leave provision
Share–based payment
Defined contribution plan expense
Total Salaries and Employee Benefits Expense
14
14
14
14
14
14
1,590
(1,034)
130
686
2,356
(1,544)
–
812
3
135
13
1
2,419
377
2,948
4
133
6
7
2,354
432
2,936
5,054
4,526
27
54
780
5,915
18
50
785
5,379
42 Annual Report 2013
43
NOTES TO THE FINANCIAL STATEMENTS cont.
NOTES
CONSOLIDATED
2013
$’000
2012
$’000
7. INCOME TAX
The major components of income tax expense are:
Statement of Comprehensive Income
Current income tax
Current income tax charge/(benefit)
Prior year adjustment
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax expense/(benefit) reported in the statement of
comprehensive income
A reconciliation between tax expense and the product of accounting
profit before income tax multiplied by the Group’s applicable income
tax rate is as follows:
Accounting profit before tax
At the applicable statutory income tax rate in each country
Prior year adjustment
Discontinued operations
Expenditure not allowable for income tax purposes
Other
Income tax expense/(benefit) reported in the statement of
comprehensive income
(324)
(276)
(825)
(1,425)
7,547
2,365
(276)
(3,841)
139
188
(1,425)
68
–
195
263
2,591
875
–
(537)
81
(156)
263
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CONSOLIDATED STATEMENT
OF COMPREHENSIVE
INCOME
Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Foreign Currency Exchange Gain
Intellectual Property expenses
Capitalised development expenses
Liabilities directly associated with the assets classified as held
for sale
Other
2013
$’000
561
(318)
1,657
–
2
2012
$’000
435
(115)
3,593
(681)
2013
$’000
126
(203)
(1,936)
681
2
–
Deferred income tax liabilities
1,902
3,234
(1,332)
Deferred tax assets
Employee Entitlements
Tax Losses in Subsidiaries
Audit Fee Accrual
Other
Deferred income tax assets
283
786
16
4
300
1,274
18
4
17
488
2
–
1,089
1,596
507
2012
$’000
233
(201)
28
–
–
60
(4)
138
5
(4)
135
Tax Consolidation
Pro Medicus Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated group with effect
from 1 January 2009. Pro Medicus Limited is the head entity of the tax consolidated group.
8. DISCONTINUED OPERATIONS
On 2 July 2012, the Group publicly announced the decision of its Board of Directors to sell its life sciences division of
Visage Imaging, Amira. The business division of Amira is considered non-core to the operations of the Group and an
offer to purchase the business was made from a French IT company, Visualization Sciences Group (VSG). The disposal
of Amira was completed on 31 July 2012 for $14,144,000 in cash resulting in a pre-tax gain of $12,216,800.
The results of Amira for the period are presented below:
Revenue
Cost of Goods Sold
Gross Profit
Operating Expenses
Profit/(loss) before tax from a discontinued operation
Income tax expense
Profit/(loss) for the year from a discontinued operation
Gain on disposal of the discontinued operations
Attributable tax expense
Profit/(loss) after tax on disposal of the discontinued operation
NOTES
CONSOLIDATED
2013
$’000
327
(4)
323
(91)
232
(71)
161
12,217
(3,770)
8,447
2012
$’000
3,013
(252)
2,761
(1,189)
1,572
(537)
1,035
–
–
–
Total profit after tax for the period from a discontinued operation
8,608
1,035
Cash inflow on sale:
Consideration received
Net cash disposed of with the discontinued operations
Net cash inflow
The net cash flows incurred by Amira are as follows:
Operating
Investing
Financing
Net cash (outflow)/inflow
Earning per share
Basic from discontinued operations
Diluted from discontinued operations
14,144
(261)
13,883
276
–
–
276
1,069
(651)
–
418
CENTS
CENTS
8.6
8.6
1.1
1.1
As Amira was sold prior to 30 June 2013, the net assets of $1,927,000 which were classified as held for sale are no
longer included in the Consolidated statement of financial position.
Unrecognised temporary differences
At 30 June 2013, there are no temporary differences associated with the Group’s investments in subsidiaries being
recognised as the parent is able to control the timing of the reversal of any temporary differences and it is not probable
any temporary difference will reverse in the foreseeable future.
44 Annual Report 2013
45
NOTES TO THE FINANCIAL STATEMENTS cont.
9. EARNINGS PER SHARE
The following reflects the income and share data used in the basic and diluted earnings per share
computations:
Net Profit attributable to ordinary equity holders of the parent from
continuing operations
Profit/(loss) attributable to ordinary equity holders of the parent
from discontinuing operations
NOTES
CONSOLIDATED
2013
$’000
2012
$’000
(3,477,399)
756,035
8,608,352
1,034,523
11. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
NOTES
CONSOLIDATED
2013
$’000
16,002
2,021
18,023
2012
$’000
5,140
53
5,193
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Net Profit attributable to ordinary equity holders
5,130,953
1,790,558
Short term deposits are made for varying periods of between 20 days and 35 days, depending on the immediate
cash requirements of the Group, and earn interest at the respective short-term deposit rates.
Weighted average number of ordinary shares for basic earnings per share
100,263,406
100,263,406
NUMBER
NUMBER
The fair value of cash and cash equivalents is their carrying value.
Reconciliation of net profit after tax to net cash flows from operations
Effect of dilution:
Share options
–
Weighted average number of ordinary shares adjusted for the effect of dilution
100,263,406
There have been no other transactions involving ordinary shares or potential ordinary shares
between the reporting date and the date of completion of these financial statements
–
100,280,000
10. DIVIDENDS PAID AND PROPOSED
Declared and paid during the year:
Dividends on ordinary shares
Final franked dividend for 2012: 1.0 cent (2011: nil)
Interim franked dividend for 2013: 1.0 cent (2012: 0.5 cents)
Proposed for approval by directors (not recognised as a liability as at 30 June):
Dividends on ordinary shares:
Final franked dividend for 2013: 1.0 cents (2012: 1.0 cents)
Total dividends proposed
Franking credit balance
1,003
1,002
2,005
1,002
1,002
–
501
501
1,002
1,002
– franking account balance as at the end of the financial year at
1,641
2,638
30% (2012: 30%)
– franking credits that will arise from the payment of income tax
payable as at the end of the financial year
– franking debits that will arise from the payment of dividends as
at the end of the financial year
– franking credits that the entity may be prevented from
distributing in the subsequent financial year
The amount of franking credits available for future reporting periods:
– impact on the franking account of dividends proposed or declared
before the financial report was authorised for issue but not recognised
as a distribution to equity holders during the period
The tax rate at which paid dividends have been franked is 30% (2012: 30%).
Dividends proposed will be fully franked.
–
–
–
–
–
–
1,641
2,638
(430)
(430)
1,211
1,779
Net profit
Adjustments for:
Depreciation of Property Plant and Equipment
Amortisation of Intangible Assets
Interest Received classified in Investing Activities
Foreign currency (gain)/loss
Share buy back
Share option expense
Net inflow from sale of Amira, net of cash disposed
Impairment expense
Write back of discontinued intangible asset
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventory
(Increase)/decrease in deferred tax asset
(Increase)/decrease in prepayments
(Decrease)/increase in deferred income
(Decrease)/increase in trade and other payables
(Decrease)/increase in tax provision
(Decrease)/increase in deferred income tax liability
(Decrease)/increase in employee entitlements
Net cash flow from operations
5,131
1,791
152
2,796
(220)
(566)
–
54
(13,883)
4,600
2,269
1,479
(13)
507
56
(570)
(357)
4,312
(2,013)
79
3,813
150
3,351
(66)
(812)
(4)
50
–
_
_
2,089
52
135
42
118
169
(1,219)
60
(30)
5,876
46 Annual Report 2013
47
NOTES TO THE FINANCIAL STATEMENTS cont.
NOTES
12. TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables
Provision for impairment
Research & development tax receivable
Asset held for sale
Other receivables
Fair value approximates carrying value due to the short term nature of receivables.
a) Allowance for impairment loss
Movements in the provision for impairment loss were as follows:
At 1 July
Charge to/(write back of) provision for the year
Foreign exchange translation
At 30 June
2013
$’000
1,830
(65)
1,765
654
–
229
2,648
86
(29)
8
65
2012
$’000
1,538
(86)
1,452
463
(378)
155
1,692
118
(22)
(10)
86
At June 30, the ageing analysis of trade receivables is as follows:
TOTAL
0-30 DAYS
31-60 DAYS
61-90 DAYS
+91 DAYS
+91 DAYS
2013 Consolidated
2012 Consolidated
1,830
1,538
* Past due not impaired (‘PDNI’)
** Considered Impaired (‘CI’)
811
1,054
PDNI*
158
277
PDNI*
194
63
PDNI*
667
58***
CI*
65
86
*** Payment terms nil (2012: $17,377) on these debtors have been renegotiated. The company has been in direct
contact with these debtors and is satisfied that payment will be received in full.
13. INVENTORIES (CURRENT)
Finished goods (at net realisable value)
NOTES
CONSOLIDATED
2013
$’000
113
2012
$’000
101
Inventory write downs recognised as an expense total nil (2012: $46,095)
CONSOLIDATED
14. PLANT &
EQUIPMENT
CONSOLIDATED
PROPERTY
IMPROVEMENTS
MOTOR
VEHICLES
OFFICE
EQUIPMENT
FURNITURE
& FITTINGS
RESEARCH &
DEVELOPMENT
EQUIPMENT
$’000
$’000
$’000
$’000
$’000
22
9
–
2
(4)
29
326
(297)
29
16
8
–
–
(2)
22
14
–
–
–
(3)
11
560
(549)
11
19
–
–
(1)
(4)
14
274
85
(3)
38
(135)
259
1,739
(1,480)
259
293
140
(11)
(15)
(133)
274
TOTAL
$’000
356
99
(7)
38
1
–
–
–
(1)
(152)
–
334
45
5
(4)
(2)
(9)
35
342
(307)
209
3,176
(209)
(2,842)
35
52
–
–
(3)
(4)
45
–
8
–
–
–
334
388
148
(11)
(19)
(7)
1
(150)
356
Year ended 30 June 2013
At 1 July 2012 net of
accumulated depreciation
Additions
Disposals
Exchange differences
Depreciation charge for the
year
At 30 June 2013 net of
accumulated depreciation
At 30 June 2013
Cost
Accumulated depreciation and
impairment
Net carrying amount
Year ended 30 June 2012
At 1 July 2011 net of
accumulated depreciation
Additions
Disposals
Exchange differences
Depreciation charge for the year
At 30 June 2012 net of
accumulated depreciation
At 30 June 2012
Cost
Accumulated depreciation and
impairment
309
(287)
550
(536)
1,489
(1,215)
325
(280)
209
2,882
(208)
(2,526)
Net carrying amount
22
14
274
45
1
356
48 Annual Report 2013
49
NOTES TO THE FINANCIAL STATEMENTS cont.
15. INTANGIBLE ASSETS
CONSOLIDATED
Year ended 30 June 2013
At 1 July 2012 net of accumulated
amortisation and impairment
Additions - internal development
Disposals
Exchange differences
Impairment
Amortisation charge for the year
At 30 June 2013 net of accumulated
amortisation and impairment
At 30 June 2013
Cost
Accumulated amortisation and impairment
Net carrying amount
Year ended 30 June 2012
At 1 July 2011 net of accumulated
amortisation and impairment
Additions - internal development
Additions
Disposals
Asset held for sale
Exchange differences
Amortisation charge for the year from
a discontinued operation
Amortisation charge for the year
At 30 June 2011 net of accumulated
amortisation and impairment
At 30 June 2012
Cost
Asset held for sale
Accumulated amortisation and impairment
INTELLECTUAL
PROPERTY I)
CUSTOMER
LIST II)
DEVELOPMENT
COSTS III)
TOTAL
SOFTWARE
LICENSES
IV)
$’000
$’000
$’000
$’000
$’000
585
21
10,642
19
11,267
–
–
–
–
(369)
216
1,848
(1,632)
216
(21)
–
–
–
213
(213)
–
3,259
–
–
(4,600)
(2,419)
6,882
–
–
1
–
(8)
12
3,259
(21)
1
(4,600)
(2,796)
7,110
16,522
(9,640)
6,882
282
18,865
(270)
(11,755)
12
7,110
1,554
77
11,884
18
13,533
–
–
–
(367)
–
(232)
(370)
585
3,006
(367)
(2,054)
–
–
–
(3)
–
(53)
21
213
–
(192)
3,347
–
–
(1,902)
–
(333)
–
11
–
–
(1)
–
3,347
11
–
(2,269)
(4)
(565)
(2,354)
(9)
(2,786)
10,642
19
11,267
20,294
(1,902)
(7,750)
448
23,961
–
(2,269)
(429)
(10,425)
Net carrying amount
585
21
10,642
19
11,267
i) Intellectual Property was acquired
in 2009 through the Visage
Imaging business combination
and is carried at cost less
accumulated amortisation. Three
separately identifiable intangible
assets, in the form of software
intellectual property, have
been identified in the business
acquisition of Visage Imaging;
Visage CS, Visage PACS and
Amira. The carrying amounts are
Visage CS ($180,579) and Visage
PACS ($34,986), while Amira has
been sold and is a discontinued
operation (refer Note 8). These
intangible assets have been
assessed as having a finite life
and are amortised using the
straight line method over a
period of 5 years, commencing
February 2009.
ii) A Customer List was acquired in
2009 through the Visage Imaging
business combination and has
since been sold with the Amira
discontinued operation (refer
Note 8).
iii) Development costs have been
capitalised at cost. This intangible
asset has been assessed
as having a finite life and is
amortised using the straight line
method over a period of 5 years.
As at 30 June 2013 the carrying
values of capitalised development
costs are Visage CS ($3,843,521)
RIS ($2,428,846) and Visage
PACS ($609,504), all sit within
the Australian operating segment.
The Group undertook an impairment
assessment of the capitalised
development costs as at 31
December 2012. The recoverable
amount of development costs
have been determined based on
a value in use calculation using
cash flow projections from financial
budgets approved by the Board
of Directors covering a five-year
period. The projected cash flows
were updated to reflect the change in
forecast revenues to a pay per view
(operational) model, thereby reducing
the forecasted revenue from previous
periods and a post tax discount
rate of 20% (30 June 2012:18%)
was applied. Cash flows beyond a 5
year period have been extrapolated
using a 2.5% growth rate (30 June
2012:2.5%). All other assumptions
remained consistent with those
disclosed in Note 2s. As a result
of the updated analysis, the Group
recognised an impairment charge at
31 December 2012 of $4,600,000
against the Capitalised Development
costs (RIS - $870,000, Visage PACS
- $3,300,000, MagicWeb - $430,000).
The Group undertook an impairment
assessment at 30 June 2013 and
no further impairment charges were
recorded at this date.
Key assumptions used in
value in use calculations
The calculation of value in use for
development costs is most sensitive
to the following assumptions:
- Revenue forecasts
- Discount rates
- Growth rates used to extrapolate
cash flows beyond the forecast
period
Revenue forecasts – Revenue
forecasts are based on current
year consolidated budgets for each
geographical segment. Estimated
growth rates are then used to
forecast the following four years
revenue for each product used in
each geographical segment. Total
forecast segment growth rates range
from (22%) to 186% across the 4
year period.
Discount rates – Discount rates
represent the current market
assessment of risks specific to
each cash generating unit (CGU),
taking into consideration the time
value of money and individual risks
of the underlying assets that have
not been incorporated in the cash
flow estimates. The discount rate
calculation is based on the specific
circumstances of the Group and its
operating segments and is derived
from its weighted average return on
assets (WARA). The WARA takes
into account the cost of equity from
expected return on investments by
the Groups investors, whilst there
is no debt for the group to take into
account.
Specific risk is associated with
the intangible asset nature and is
incorporated by applying individual
beta factors, which are evaluated
annually.
Growth rate estimates – rates are
based on industry based customer
price index (CPI) forecasts. The long
term rate of 2.5% was used in the
current assessment.
Sensitivity to changes in
assumptions
With regard to the assessment of
value in use of development costs,
the estimated recoverable amount
is equal to its carrying value and
consequently, any adverse change
in key assumptions could result in
a further impairment loss. The key
assumptions for the recoverable
amounts are discussed below:
Growth rate assumption – Rates are
based on management’s estimated
revenue forecast for the next 5
year period for each geographical
segment. The revised growth rates
reflect a move towards operational
revenue forecast thereby reducing
the forecasted revenue from
previous periods, however given
the economic uncertainty, further
reductions to growth estimates may
be necessary in the future, resulting
in further impairment.
Discount rates – The discount
rate has been adjusted to reflect
the current market assessment of
the risks specific to the intangible
assets and was estimated based on
weighted average return on assets
of the company. Further changes to
the discount rate may be necessary
in the future to reflect changing risks
for the industry and changes to the
weighted average return on assets.
An increase in the discount rate may
result in further impairment.
iv) Software Licences have been
assessed as having a finite life and
are amortised using the straight line
method over a period of 4 years.
50 Annual Report 2013
51
NOTES TO THE FINANCIAL STATEMENTS cont.
16. TRADE AND OTHER PAYABLES (CURRENT)
NOTES
Trade payables
Other payables and accruals
Liabilities directly associated with the assets classified as held for sale
Deferred Income
CONSOLIDATED
2013
$’000
199
629
828
–
218
1,046
2012
$’000
454
730
1,184
(264)
788
1,708
(i) Trade payables are non-interest bearing and are normally settled on 30-day terms.
(ii) Other payables, other than inter-company payables are non-interest bearing and have an average term of 30 days.
Fair value approximates carrying value due to the short term nature of trade and other payables.
17. PROVISIONS
Current
Long service leave
Annual leave
Non Current
Long service leave
487
823
453
771
1,310
1,224
24
24
31
31
i) Long Service Leave
Refer to note 2 (u)(ii) for the relevant accounting policy and a discussion of the significant estimations and
assumptions applied in the measurement of this provision.
18. CONTRIBUTED EQUITY AND RESERVES
NOTES
(i) Ordinary shares
Cancellation for share buy-back
Issued and fully paid
Fully paid ordinary shares carry one vote per share and carry the right to dividends
CONSOLIDATED
2013
$’000
327
–
327
(ii) Movements in shares on issue
At 1 July 2012
Cancellation for share buy-back
Issued for cash on exercise of options
At 30 June 2013
At 1 July 2011
Cancellation for share buy-back
Issued for cash on exercise of options
At 30 June 2012
52 Annual Report 2013
NUMBER OF SHARES
100,263,406
–
–
100,263,406
NUMBER OF SHARES
100,280,000
(16,594)
–
100,263,406
2012
$’000
330
(3)
327
$’000
327
–
–
327
$’000
330
(3)
–
327
Share Reserve (i)
Balance at 1 July
Share options expensed
Balance at 30 June
Foreign Currency Translation Reserve (ii)
Balance at 1 July
Foreign Currency Movement
Balance at 30 June
Retained Earnings
Balance at 1 July
Net profit for the year
Dividends
Balance at 30 June
NOTES
CONSOLIDATED
2013
$’000
172
54
226
(1,681)
1,777
96
17,184
5,131
(2,005)
20,310
2012
$’000
122
50
172
(1,148)
(533)
(1,681)
15,894
1,791
(501)
17,184
(i) Share Reserve
19. SHARE BASED PAYMENT PLAN
The share reserve is used to record
the value of share based payments
provided to employees, including
KMP, as part of their remuneration.
Refer to note 19 for further details of
these plans.
(ii) Foreign Currency translation
reserve
The foreign currency translation
reserve is used to record exchange
differences arising from the
translation of the financial statements
of foreign subsidiaries and for
exchange differences arising from
long term loan accounts resulting
from net investment in subsidiaries.
Capital Management
When managing capital,
management’s objective is to ensure
the entity continues as a going
concern as well as to maintain
optimal returns to shareholders
and benefits for other stakeholders.
Management also aims to maintain
a capital structure that ensures the
lowest cost of capital available to
the entity.
Management review the capital
structure to take advantage of
favourable costs of capital or
high returns on assets. As the
market is constantly changing,
management may change the
amount of dividends to be paid
to shareholders, return capital to
shareholders, or issue new shares.
During the year, the company paid
dividends of $2,005,268 (2012:
$501,400).
Employee Share Option Scheme
An employee share incentive scheme was established on 25th August
2000 whereby directors and staff of the Company were issued with options
over the ordinary shares of Pro Medicus Limited. The options, issued for nil
consideration, had an exercise price of $1.15 and 2,100,000 share options
expired under the scheme on 25 August 2010. Options vested at 20% per
annum commencing on the first anniversary of issue. The options cannot be
transferred and will not be quoted on the ASX.
200,000 shares were granted as options to Peter Kempen on becoming a
Director of the company in 2008 under a separate agreement. The options had
a grant date of 12 March 2008 and an exercise price of $1.25. The fair value of
the options at grant date was $40,852 ($0.13–$0.29 per option). The options
have a first exercise date of 12 March 2009 and can be exercised at anytime
through to expiry date of 12 March 2018. The options vest over a 5 year period
on completion of service. At reporting date all options had vested. No options
were exercised during the year.
900,000 shares were granted as options to key Visage Imaging employees
under a separate agreement. The options had a grant date of 1 April 2010
and an exercise price of $1.00. The fair value of the options at grant date was
$67,278 ($0.07 per option). The options have a first exercise date of 1 April 2011
and can be exercised at anytime through to expiry date of 1 April 2020. The
options vest over a 5 year period on completion of service. At reporting date
435,000 (48%) options had vested and 175,000 (19%) options had expired. No
options were exercised during the year.
550,000 shares were granted as options to Key Executives under a separate
agreement. The options had a grant date of 25 August 2010 and an exercise
price of $1.00. The fair value of the options at grant date was $54,109 ($0.10
per option). The options have a first exercise date of 25 August 2011 and can
be exercised at anytime through to expiry date of 25 August 2020. The options
vest over a 5 year period on completion of service. At reporting date 220,000
(40%) options had vested. No options were exercised during the year.
200,000 shares were granted as options to Roderick Lyle on becoming a
Director of the company in 2011 under a separate agreement. The options had
a grant date of 18 November 2011 and an exercise price of $0.55. The fair value
of the options at grant date was $45,116 ($0.23 per option). The options have
a first exercise date of 18 November 2012 and can be exercised at anytime
through to expiry date of 18 November 2021. The options vest over a 5 year
period on completion of service. At reporting date 40,000 (20%) options had
vested. No options were exercised during the year.
53
NOTES TO THE FINANCIAL STATEMENTS cont.
Information with respect to the number of options granted under the employee share option scheme is as follows:
NUMBER OF
OPTIONS
2013
WEIGHTED
AVERAGE
EXERCISE PRICE
Outstanding at the beginning of the year
1,675,000
– granted
– forfeited
– exercised
– expired
–
–
–
–
–
–
–
–
–
Outstanding at the end of the year
Exercisable at end of year
1,675,000
895,000
$0.98
$0.98
NUMBER OF
OPTIONS
1,850,000
200,000
–
–
375,000
1,675,000
570,000
2012
WEIGHTED
AVERAGE
EXERCISE PRICE
$0.55
–
–
$1.16
$0.98
$1.07
All options above have been recognised in accordance with AASB 2 as the options were granted after 7 November 2002.
The outstanding balance as at 30 June 2013 is represented by:
▶ 200,000 options over ordinary shares with an exercise price of $1.25 each, exercisable until 12 March 2018
▶ 725,000 options over ordinary share with an exercise price of $1.00 each, exercisable until 1 April 2020
▶ 550,000 options over ordinary share with an exercise price of $1.00 each, exercisable until 25 August 2020
▶ 200,000 options over ordinary shares with an exercise price of $0.55 each, exercisable until 18 November 2021
Weighted average remaining contractual life
The weighted average remaining contractual life for share options outstanding at 30 June 2013 is 6.94 years
(2012: 7.94 Years).
Range of exercise price
The range of exercise prices for options outstanding at the end of the year was $0.55 – $1.25 (2012: $0.55 – $1.25).
Weighted average fair value
The weighted average fair value of options granted during the year was nil (2012: $0.23).
Option pricing model
The fair value of the equity-settled share options granted is estimated as at the date of the grant using a Black
Scholes Model taking into account the terms and conditions upon which the options were granted.
The following table lists the inputs to the models used for the year ended 30 June 2013:
2013
Dividend yield
Expected volatility*
Risk–free interest rate
Expected life of options
Option exercise price
Weighted average share price at measurement date
nil
nil
nil
nil
nil
nil
2012
3.91%
40.0%
6.0%
10 years
$1.00
$0.57
*The expected volatility rate was calculated measuring the standard deviation between the historical share price
movements for the past 12 months.
Performance Rights
A long term incentive plan was established on 18th November 2011 whereby Senior Executives of Group were offered
performance rights over the ordinary shares of Pro Medicus Limited. The performance rights, issued for nil consideration,
are offered for a 5 year period and vest 3 years after granting date on completion of service. The performance rights cannot
be transferred and will not be quoted on the ASX. This long term incentive plan includes performance hurdles related to the
company and vesting conditions relating to the employee’s period of service.
At reporting date 387,000 performance rights had been granted during the year. The performance rights had a grant date of
1 July 2012 and vest over 3 years on completion of service. The fair value of the performance rights at grant date was $96,750
($0.25 per performance right).
Performance rights pricing model
The fair value of the equity-settled performance rights granted is estimated as at the date of the grant using a Black Scholes
Model taking into account the terms and conditions upon which the performance rights were granted.
The following table lists the inputs to the models used for the year ended 30 June 2013:
Dividend yield
Expected volatility*
Risk–free interest rate
Expected life of options
Option exercise price
Weighted average share price at measurement date
2013
5.66%
70%
5%
3 years
$0.00
$0.25
2012
nil
nil
nil
nil
nil
nil
*The expected volatility rate was calculated measuring the standard deviation between the historical share price movements for
the past 12 months.
20 COMMITMENTS
a) Operating lease commitments – Group as lessee
The Parent has entered into a commercial property lease for office premises. This lease has a life of 5 years with an
option for a further 5 year period. There is no restriction placed upon the lessee by entering into this lease. The US
operations have entered into a commercial property lease for office premises from 1 May 2010 for a 5 year period.
The German operations have entered into a commercial property lease for office premises and can give notice to
vacate 3 months prior to 30 April each year, whereby they sign into another 12 months. The German operations also
have several motor vehicles leases which expire at various stages between August 2012 and February 2015.
Future minimum rentals payable under non–cancellable operating lease
as at 30 June are as follows:
– Within one year
– After one year and not more than five years
– After more than five years
NOTES
CONSOLIDATED
2013
$’000
372
777
–
2012
$’000
367
805
–
1,149
1,172
21 EVENTS AFTER THE BALANCE SHEET DATE
On 23 August 2013, the directors of Pro Medicus Limited declared a final dividend on ordinary shares in respect of the
2013 financial year. This dividend comprises a normal dividend of 1.0 cents per share. The total amount of the dividend
is $1,002,634 which represents a fully franked dividend of a total of 1.0 cents per share. The dividend has not been
provided for in the 30 June 2013 financial statements.
54 Annual Report 2013
55
NOTES TO THE FINANCIAL STATEMENTS cont.
22. AUDITOR’S REMUNERATION
NOTES
Amounts received or due and receivable by Ernst & Young (Australia) for:
– an audit or review of the financial report of the Company and any
other entity in the Consolidated Group
– other services in relation to the Company or Group
Amounts received or due and receivable by related practices of Ernst
& Young (Australia):
– audit of the financial report of Visage Imaging GmbH
23. KEY MANAGEMENT PERSONNEL
(a) Compensation for key management personnel
Short–term employee benefits
Post–employment benefits
Other long–term benefits
Share–based payment
Total compensation
(b) Option holdings of Key Management Personnel
CONSOLIDATED
2013
$’000
2012
$’000
135,300
132,500
64,080
21,130
199,380
153,630
63,410
63,500
262,790
217,130
1,597,100
1,029,072
93,466
4,817
36,791
93,531
4,830
39,152
1,732,174
1,166,585
OPTIONS
EXERCISED
NET CHANGE
OTHER
BALANCE AT
BEGINNING OF
YEAR
1 JULY 2012
GRANTED AS
REMU–
NERATION
30 JUNE 2013
Directors
P T Kempen
200,000
S A Hupert
A B Hall
R Lyle
Executives
D Tauber
M Westerhoff
B Levin
Total
–
–
200,000
350,000
350,000
–
1,100,000
# Includes forfeitures
–
–
–
-
–
–
–
–
–
–
–
-
–
–
–
–
BALANCE
AT END OF
YEAR
30 JUNE
2013
200,000
–
–
NOT VESTED
VESTED
TOTAL
–
–
–
200,000
200,000
–
–
–
–
200,000
160,000
40,000
200,000
350,000
350,000
–
–
– 1,100,000
210,000
140,000
–
510,000
140,000
210,000
–
590,000
350,000
350,000
-
1,100,000
BALANCE AT
BEGINNING OF
YEAR
1 JULY 2011
GRANTED AS
REMU–
NERATION
30 JUNE 2012
Directors
P T Kempen
200,000
S A Hupert
A B Hall
R Lyle
Executives
D Tauber
M Westerhoff
B Levin
Total
–
–
–
350,000
350,000
–
900,000
–
–
–
200,000
–
–
–
200,000
# Includes forfeitures
56 Annual Report 2013
OPTIONS
EXERCISED
NET CHANGE
OTHER
BALANCE
AT END OF
YEAR
30 JUNE
2012
NOT VESTED
VESTED
TOTAL
–
–
–
–
–
–
–
–
–
–
–
–
200,000
200,000
–
–
–
–
–
200,000
350,000
350,000
–
–
– 1,100,000
280,000
210,000
–
720,000
70,000
140,000
–
380,000
350,000
350,000
–
1,100,000
#
–
–
–
-
–
–
#
–
–
–
–
–
–
(c) Shareholdings of Key Management Personnel
SHARES HELD IN PRO
MEDICUS LIMITED
(NUMBER)
30 JUNE 2013
Directors
P T Kempen
S A Hupert
A B Hall
R Lyle
Executives
D Tauber
M Westerhoff
B Levin
Total
BALANCE
1 JULY 2012
ORDINARY
GRANTED AS
REMUNERATION
ON EXERCISE OF
OPTIONS
ORDINARY
ORDINARY
NET CHANGE
OTHER
ORDINARY
BALANCE
30 JUNE 2013
ORDINARY
328,082
30,072,660
30,068,500
100,000
150,000
–
–
60,719,242
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50,000*
–
–
378,082
30,072,660
30,068,500
40,000*
140,000
–
–
–
90,000
150,000
–
–
60,809,242
*Peter Kempen purchased 50,000 shares throughout the year on the prevailing market share price and
Roderick Lyle purchased 40,000 shares throughout the year on the prevailing market share price.
SHARES HELD IN PRO
MEDICUS LIMITED
(NUMBER)
30 JUNE 2012
Directors
P T Kempen
S A Hupert
A B Hall
R Lyle
Executives
D Tauber
M Westerhoff
B Levin
Total
BALANCE
1 JULY 2011
ORDINARY
GRANTED AS
REMUNERATION
ON EXERCISE OF
OPTIONS
ORDINARY
ORDINARY
NET CHANGE
OTHER
ORDINARY
BALANCE
30 JUNE 2012
ORDINARY
169,647
30,072,660
30,068,500
47,987
150,000
–
–
60,508,794
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
158,435*
328,082
–
–
30,072,660
30,068,500
52,013*
100,000
–
–
–
150,000
–
–
210,448
60,719,24
*Peter Kempen purchased 158,435 shares throughout the year on the prevailing market share price and
Roderick Lyle purchased 52,013 shares throughout the year on the prevailing market share price.
(d) Performance Rights
A long term incentive plan was established during 2011–12 whereby Senior Executives of Group were offered
performance rights over the ordinary shares of Pro Medicus Limited. The performance rights, issued for nil
consideration, are offered for a 5 year period and vest 3 years after granting date on completion of service. This
long term incentive plan includes performance hurdles related to the company and vesting conditions relating to the
employee’s period of service. Refer to Note 19.
(e) Loans to Key Management Personnel
No loans are made to Key Management Personnel or staff.
Purchases
During the year lease payments of $169,476 (2012: $169,476) in respect of the Group’s operating premises at 450
Swan Street Richmond were paid to Champagne Properties Pty. Ltd., an entity controlled by S. Hupert and A. Hall.
Commercial arrangements on an ‘arms length basis’ have been determined by an independent assessment of rental
and lease terms.
57
200,000
30,000
170,000
200,000
(f) Other transactions and balances with Key Management Personnel
26. PARENT ENTITY INFORMATION
INFORMATION RELATING TO PRO MEDICUS LIMITED
Current assets
Total assets
Current Liabilities
Total Liabilities
Issued capital
Retained Earnings
Foreign Currency Translation Reserve
Share Reserve
Total shareholders equity
Profit/(loss) of the parent entity
Total comprehensive income of parent entity
2013
$000
26,386
34,236
20,207
21,145
327
13,855
(1,317)
226
13,091
(1,689)
(1,689)
2012
$000
15,841
24,487
6,492
7,757
327
16,231
–
172
16,730
980
980
The parent entity has not entered into any guarantees in relation to the debts of its subsidiaries. There are no
contingent liabilities held against the parent entity. The parent entity does not have any contractual commitments for
the acquisition of property, plant and equipment.
NOTES TO THE FINANCIAL STATEMENTS cont.
24. RELATED PARTY DISCLOSURE
(a) Subsidiaries
The consolidated financial statements include the financial statements of Pro Medicus Limited and the subsidiaries
listed in the following table.
NAME
Promed (USA) Pty Ltd
PME IP Australia Pty Ltd
Visage Imaging (Aust) Pty Ltd
Pro Medicus (USA) LLC
Visage Imaging Inc
Visage Imaging GmbH
COUNTRY OF
INCORPORATION
Australia
Australia
Australia
United States
United States
Germany
% EQUITY INTEREST
INVESTMENT $000
2013
100
100
100
100
100
100
2012
100
100
100
100
100
100
2013
2012
–
–
–
–
2,389
3,638
6,027
–
–
–
–
2,389
3,638
6,027
(b) Ultimate parent
Pro Medicus Limited is the ultimate Australian parent entity and the ultimate parent of the Group.
(c) Key management personnel
Details relating to KMPs, including remuneration paid, are included in note 23.
(d) Transactions with related parties
The following table provides the total amount of transactions that were entered into with related parties for the
relevant financial year (for information regarding outstanding balances on related party trade receivables and
payables at year–end.
SALES TO
RELATED
$000
Related party
Consolidated
Champagne Properties Pty Ltd – Rental lease 2013
Champagne Properties Pty Ltd – Rental lease 2012
–
–
PURCHASES FROM
RELATED PARTIES
OTHER TRANSACTIONS
WITH RELATED PARTIES
$000
169
169
$000
–
–
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made in arm’s length transactions both at normal market prices and
on normal commercial terms.
Outstanding balances at year end are unsecured, interest free and payable on demand.
Entities within the group that own the Intellectual Property earn a 50% royalty from the sales made by other entities
within the group.
Development costs undertaken by the German operations are reimbursed by the parent on commercial terms.
25. CONTINGENCIES
Tax related contingencies
Amended assessments from the Australian Taxation Office (ATO)
As a result of the ATO’s program of routine and regular tax audit, the Group anticipates that ATO audits may occur in
the future. The Group is similarly subject to routine tax audits in certain overseas jurisdictions. The ultimate outcome
of any future tax audits cannot be determined with an acceptable degree of reliability at this time. Newvertheless,
the Group believes that it is making adequate provision for its taxation liabilities (including amounts shown as
deferred and current tax liabilities) and is taking reasonable steps to address potentially contentious issues with
the ATO. However, there may be an impact to the Group of any of the revenue authority investigations results in an
adjustment that increases the Group’s taxation liabilities.
Ongoing transactions – transfer pricing
The Group has offshore operations in the United States and Germany (note 24). As disclosed in note 24, there are
extra Group transactions, which include the Company and its US and German based subsidiaries Visage Imaging
Inc and Visage Imaging GmbH and Pro Medicus Limited. These transactions are on an arm’s length basis and are
conducted at normal market prices and on normal commercial terms.
Whilst there are no investigations currently in progress, such transactions are not subject to any statutory limit
in Australia.
58 Annual Report 2013
59
DIRECTORS’
DECLARATION
In accordance with a resolution of the directors of Pro Medicus Limited, I state that:
(1) In the opinion of the directors:
(a)
the financial statements, notes and the additional disclosures included in the directors’ report designated
as audited, of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and
of the performance for the year ended on that date; and
complying with Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001; and
(b)
(c)
there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and
when they become due and payable.
the financial statements and notes comply with International Financial Reporting Standards (IFRS) as
disclosed in Note 2(b).
(2) This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2013.
On behalf of the Board
P T Kempen
Chairman
Melbourne, 23 August 2013
I
T
D
U
A
T
N
E
D
N
E
P
E
D
N
I
T
R
O
P
E
R
60 Annual Report 2013
61
INDEPENDENT AUDIT
REPORT
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent auditor's report to the members of Pro Medicus Limited
Report on the financial report
We have audited the accompanying financial report of Pro Medicus Limited which comprises the
consolidated statement of financial position as at 30 June 2013, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors' declaration of the
consolidated entity comprising the company and the entities it controlled at the year's end or from
time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal controls as the directors determine are necessary to enable the
preparation of the financial report that is free from material misstatement, whether due to fraud or
error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial report, whether due
to fraud or error. In making those risk assessments, the auditor considers internal controls relevant
to the entity's preparation and fair presentation of the financial report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations
Act 2001. We have given to the directors of the company a written Auditor’s Independence
Declaration, a copy of which follows in the directors’ report.
Opinion
In our opinion:
a.
the financial report of Pro Medicus Limited is in accordance with the Corporations Act
2001, including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June
2013 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
b.
the financial report also complies with International Financial Reporting Standards as
disclosed in Note 2.
Report on the remuneration report
We have audited the Remuneration Report included in pages 7-10 of the directors' report for the
year ended 30 June 2013. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Pro Medicus Limited for the year ended 30 June 2013,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
David Petersen
Partner
Melbourne
23 August 2013
62 Annual Report 2013
63
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legis lation
53
54
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legis lation
ASX ADDITITIONAL
INFORMATION
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is
as follows.
(a) Distribution of equity securities
The number of shareholders, by size of holding, in each class of share are:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001
and Over
ORDINARY SHARES
NUMBER OF
HOLDERS
NUMBER OF
SHARES
137
334
219
289
48
90,434
1,008,984
1,761,430
8,317,942
89,084,616
1,027
100,263,406
The number of shareholders holding less than a marketable parcel are:
153
108,522
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
1 Dr S Hupert (multiple shareholdings)
2 Mr A Hall (multiple shareholdings)
3 RBC Dexia Investor Services Australia Nominees P/L
4 Citicorp Nominees Pty Ltd
5 Aust Executor Nominees Pty Ltd
6 BNP Parabis Nominees Pty Ltd
7 Equitas Nominees Pty Ltd
8 Brazil Farming Pty Ltd
9 Dr Russell Kay Hancock
10 Mr Bram Vander Jagt
11 Mr Timothy John Hannigan & Mrs Kerrie Helen Hannigan
12 Mr Alan Graham Rochford
13 Mr Ralph Ronald Stadus & Ms Denise Leslie Stadus
14 Mr Peter Terence Kempen & Mrs Elaine Margaret Kempen
15 Mr Evan Philip Clucas & Ms Leanne Jane Weston
16 Mr John Charles Plummer
17 Mr Stephen Geoffrey Wilson & Ms Denise Adele Prandi
18 Mr Colin Gregory Organ
19 Indicorp Consulting Group Pty Ltd
20 Mr Peter Propert Birrell & Mrs Dinny Mary Birrell
LISTED ORDINARY
SHARES
PERCENTAGE OF
ORDINARY SHARES
29.99%
29.99%
8.25%
6.17%
1.99%
1.57%
0.78%
0.66%
0.65%
0.60%
0.53%
0.46%
0.45%
0.38%
0.37%
0.36%
0.34%
0.27%
0.25%
0.23%
84.30%
NUMBER
OF
SHARES
30,072,660
30,068,500
8,275,528
6,187,247
2,000,000
1,577,605
783,250
660,000
650,000
600,000
530,000
464,052
455,556
378,082
368,217
365,000
337,537
271,000
250,000
232,000
84,526,234
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B
of the Corporations Law are:
S. Hupert
A Hall
Perpetual Limited RBC Dexia Investor Services Australia Nominees P/L
Commonwealth Bank of Australia
(d) Voting rights
All ordinary shares carry one vote per share without restriction.
NUMBER OF SHARES
30,072,660
30,068,500
8,275,528
6,187,247
CORPORATE GOVERNANCE
STATEMENT
FOR THE YEAR ENDED 30 JUNE 2013
The Board of Directors of Pro Medicus Limited is responsible for the corporate governance of the entity having
regard to the ASX Corporate Governance Council (CGC) published guidelines as well as its corporate governance
principles and recommendations. The Board guides and monitors the business and affairs of Pro Medicus Limited
on behalf of the shareholders by whom they are elected and to whom they are accountable.
The table below summaries the Group’s compliance with the CGC’s recommendations.
RECOMMENDATION
COMPLY
YES/NO
REFERENCE/
EXPLANATION
ASX LISTING
RULE/CGC
RECOMMENDATIONS
Principle 1
Lay solid foundations for management and
oversight
Companies should establish the functions reserved to
the board and those delegated to senior executives
and disclose those functions
Companies should disclose the process for evaluating
the performance of senior executives.
Yes
Page 70
ASX CGC 1.1
Yes
Page 68
ASX CGC 1.2
Companies should provide the information indicated in
the guide to reporting on Principle 1.
Yes
ASX CGC 1.3
Principle 2
Structure the board to add value
A majority of the board should be independent
directors.
The chair should be an independent director.
The roles of chair and chief executive officer (CEO)
should not be exercised by the same individual.
The board should establish a nomination committee.
Companies should disclose the process for evaluating
the performance of the board, its committees and
individual directors.
Companies should provide the information indicated in
the guide to reporting on Principle 2.
Yes
Page 68
ASX CGC 2.1
Page 68
Page 68
Page 69
Page 68
Yes
Yes
No
Yes
Yes
ASX CGC 2.2
ASX CGC 2.3
ASX CGC 2.4
ASX CGC 2.5
ASX CGC 2.6
1.1
1.2
1.3
2.1
2.2
2.3
2.4
2.5
2.6
64 Annual Report 2013
65
CORPORATE GOVERNANCE STATEMENT cont.
RECOMMENDATION
COMPLY
YES/NO
REFERENCE/
EXPLANATION
ASX LISTING
RULE/CGC
RECOMMENDATIONS
Principle 3
Promote ethical and responsible decision–making
3.1
Companies should establish a code of conduct and
disclose the code or a summary of the code as to:
Yes
Page 69
ASX CGC 3.1
▶ The practices necessary to maintain confidence
in the company’s integrity.
▶ The practices necessary to take into account
their legal obligations and the reasonable
expectations of their stakeholders.
▶ The responsibility and accountability of
individuals for reporting and investigating
reports of unethical practices.
Companies should establish a policy concerning
diversity and disclose the policy or a summary of
that policy. The policy should include requirements
for the board to establish measureable objectives for
achieving gender diversity for the board to assess
annually both the objectives and progress in achieving
them.
Companies should disclose in each annual report the
measureable objectives for achieving gender diversity
set by the board in accordance with the diversity
policy and progress towards achieving them.
Companies should disclose in each annual report
the proportion of women employees in the whole
organization, women in senior executive positions and
women on the board.
Yes
Page 68
ASX CGC 3.2
Yes
Page 69
ASX CGC 3.3
Yes
Page 69
ASX CGC 3.4
Companies should provide the information indicated in
the guide to reporting on Principle 3.
Yes
ASX CGC 3.5
Principle 4
Safeguard integrity in financial reporting
The board should establish an audit committee.
Yes
Page 69
ASX CGC 4.1
The audit committee should be structured so that it:
▶ Consists only of non-executive directors.
▶ Consists of a majority of independent directors.
▶ Is chaired by an independent chair, who is not
chair of the board.
▶ Has at least three members.
The audit committee should have a formal charter.
Companies should provide the information indicated in
the guide to reporting on Principle 4.
Principle 5
Make timely and balanced disclosure
Companies should establish written policies designed
to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior
executive level for that compliance and disclose those
policies or a summary of those policies.
ASX CGC 4.2
No
Yes
Yes
Page 69
ASX LR 12.7
Page 69
ASX CGC 4.3
ASX CGC 4.4
Yes
Page 70
ASX CGC 5.1
3.2
3.3
3.4
3.5
4.1
4.2
4.3
4.4
5.1
RECOMMENDATION
COMPLY
YES/NO
REFERENCE/
EXPLANATION
5.2
Companies should provide the information indicated in
the guide to reporting on Principle 5.
Yes
ASX LISTING
RULE/CGC
RECOMMENDATIONS
ASX CGC 5.2
Principle 6
Respect the rights of shareholders
6.1
Companies should design a communications policy for
promoting effective communication with shareholders
and encouraging their participation at general
meetings and disclose their policy or a summary of
that policy.
Yes
Page 70
ASX CGC 6.1
6.2
Companies should provide the information indicated in
the guide to reporting on Principle 6.
Yes
ASX CGC 6.2
7.1
7.2
7.3
Principle 7
Recognise and manage risk
Companies should establish policies for the oversight
and management of material business risks and
disclose a summary of those policies.
The board should require management to design and
implement the risk management and internal control
system to manage the company's material business
risks and report to it on whether those risks are being
managed effectively. The board should disclose that
management has reported to it as to the effectiveness
of the company's management of its material business
risks.
The board should disclose whether it has received
assurance from the CEO [or equivalent] and the
Chief Financial Officer (CFO) [or equivalent] that the
declaration provided in accordance with section 295A
of the Corporations Act is founded on a sound system
of risk management and internal control and that the
system is operating effectively in all material respects
in relation to financial reporting risks.
Yes
Page 70
ASX CGC 7.1
Yes
Page 70
ASX CGC 7.2
Yes
Page 70
ASX CGC 7.3
7.4
Companies should provide the information indicated in
the guide to reporting on Principle 7.
Yes
ASX CGC 7.4
Principle 8
Remunerate fairly and responsibly
8.1
8.2
8.3
The board should establish a remuneration committee.
Companies should clearly distinguish the structure
of non-executive directors' remuneration from that of
executive directors and senior executives.
Companies should provide the information indicated in
the guide to reporting on Principle 8.
Yes
Yes
Yes
Page 69
ASX CGC 8.1
Refer to
Remuneration
Report
ASX CGC 8.2
ASX CGC 8.3
Pro Medicus Limited’s corporate governance practices were in place throughout the year ended 30 June 2013.
66 Annual Report 2013
67
CORPORATE GOVERNANCE STATEMENT cont.
Structure of the Board
The skills, experience and expertise
relevant to the position of director
held by each director in office at the
date of the annual report is included
in the Directors’ Report.
The composition of the Board was
determined in accordance with the
following principles and guidelines:
▶ The Board should comprise at least
four directors and should maintain a
majority of non–executive directors,
or at least a 50/50 ratio of non–
executives and executive directors;
▶ The Chairperson must be a non–
executive director and not occupy
the role of CEO;
▶ The Board should comprise
directors with an appropriate range
of qualifications and expertise; and
▶ The Board shall meet monthly
and follow meeting guidelines
set down to ensure all directors
are made aware of, and have
available all necessary information,
to participate in an informed
discussion of all agenda items.
Directors of Pro Medicus Limited are
considered to be independent when
they are independent of management
and free from any business or other
relationship that could materially
interfere with – or could reasonably
be perceived to materially interfere
with the exercise of their unfettered
and independent judgement.
In the context of director
independence, “materiality”
is considered from both the
company and individual director
perspective. The determination of
materiality requires consideration
of both quantitative and qualitative
elements. An item is presumed to be
quantitatively immaterial if it is equal
or less than 5% of the appropriate
base amount. It is presumed to be
material (unless there is qualitative
evidence to the contrary) if it is
equal to or greater than 10% of the
appropriate base amount.
Qualitative factors considered
include whether a relationship
is strategically important, the
competitive landscape, the nature of
the relationship and the contractual
or other arrangements governing
it and other factors which point to
the actual ability of the director in
question to shape the direction of the
company’s loyalty.
In accordance with the definition of independence above, and the materiality
thresholds set, the following directors of Pro Medicus Limited are considered
to be independent:
NAME
POSITION
P T Kempen
Chairman, Non–Executive Director,
Chairman Audit Committee
R Lyle
Non–Executive Director
The Board wishes to advise that it continues to maintain responsibility for
the actions of the chief executive officer and any tasks delegated to the
management by the Board.
Directors’ Appointment Letters have not been revised in the prescribed
format as the board considered this unnecessary given the small number
of fairly recently appointed current directors who understand their roles and
responsibilities. The board has undertaken that the recommended format
should be used for any future director appointments.
Mr. Sam Hupert and Mr. Anthony Hall were directors in Pro Medicus Pty Ltd
since incorporation in 1983. Mr. Peter Kempen was appointed in March 2008
and Mr Roderick Lyle was appointed in November 2010.
Performance
The performance of the board and key executives is reviewed regularly
against both measurable and qualitative indicators. During the reporting
period the board conducted performance evaluations that involved
an assessment of each board member’s and key executive’s
performance against specific and measurable qualitative and
quantitative performance criteria.
The performance criteria against which directors and executives are
assessed are aligned with the financial and non–financial objectives of
Pro Medicus Limited.
In order to ensure that the Board continues to discharge its responsibilities
in an appropriate manner, the Chairman annually reviews the performance of
all Directors who will be asked to retire from the board if not performing in a
satisfactory manner.
Trading policy
Under the group’s security trading policy, an executive, director, or any
employee of the group, must not trade in any securities of the parent
company at any time when they are in possession of unpublished, price–
sensitive information in relation to those securities.
Before commencing to trade, an executive must first obtain the approval
of the Company Secretary to do so and a director must obtain approval of
the Chairman.
Only in exceptional circumstances will approval be forthcoming inside of the
period which is 30 days after:
▶ One day following the announcement of the half–yearly and full year results as
the case may be.
▶ One day following the holding of the annual general meeting.
▶ One day after any other form of earnings forecast update is given to the market.
As required by the ASX listing rules, the Group notifies the ASX of any
transaction conducted by directors in the securities of the parent company.
Code of Conduct
The board has developed a “Code of Conduct” consistent with the
recommendations and details are disclosed on the company website.
Diversity
The Group recognises the value contributed to the organisation by
employing people with varying skills, cultural backgrounds, ethnicity and
experience. Pro Medicus believes its diverse workforce is the key to its
continued growth, improved productivity and performance.
We actively value and embrace the diversity of our employees and are
committed to creating an inclusive workplace where everyone is treated
equally and fairly, and where discrimination, harassment and inequity are not
tolerated. While Pro Medicus is committed to fostering diversity at all levels,
gender diversity has been and continues to be a priority for the Group.
To this end, the Group supports and complies with the recommendations
contained in the ASX Corporate Governance Principles and
Recommendations. The Group has established a diversity policy outlining
the board’s measurable objectives for achieving diversity. This is assessed
annually to measure the progress towards achieving those objectives.
The table below outlines the diversity objectives established by the board, the
steps taken during the year to achieve these objectives and the outcomes.
OBJECTIVES
STEPS TAKEN/OUTCOME
Increase the number of
women in the workforce,
including senior
management positions
and at board level.
▶ There were no key senior female appointments
made during the year as there were no key
senior appointments made during the year.
▶ Pro Medicus appointed 2 females in managerial
roles
▶ As at 30 June 2013, women represented 20% in
the Group’s workforce (2012:20%), 20% in key
executive positions (2012:20%) and 0%
at board level (2012:0%)
▶ Women represented 20% of new hires during
the year (2012:23%)
For the upcoming financial year, the Group
targets to increase female representation in
the Group’s workforce to 25-30%
▶ Pro Medicus has set a zero tolerance policy
against discrimination of employees at all
levels. The company also provides avenues for
employees to voice their concerns or report any
discrimination.
▶ No cases of discrimination were reported
during the year (2012: nil).
Promote an inclusive
culture that treats the
workforce with fairness
and respect.
Provide career
development
opportunities for every
employee, irrespective
of any cultural, gender or
other differences.
▶ Whilst Pro Medicus place focus on gender
diversity, career development opportunities are
equal for all employees.
▶ During the year, representation at training
and development programs was based on
performance of the employees.
The achievement of the measurable objectives in the current financial year
was taken into consideration in assessing bonuses for employees. The Group
will continue to review and update the measurable objectives to promote
diversity for the upcoming year.
Committees
Due to the small number of Directors, the Board decided it was more
appropriate to handle nomination and remuneration issues at full Board level.
No Committees for these functions have been established at this time.
In addition the full Board handles any matters as and when they arise concerning
environmental issues, occupational health and safety, finance and treasury.
In order to maintain good corporate governance the Non–Executive
Directors assume responsibility for determining and reviewing compensation
arrangements for the Executive Directors of the Group. The Executive Directors
in turn are responsible for determining and reviewing the compensation
arrangements for the Non–Executive Directors. The CEO, in conjunction with
the full Board reviews the terms of employment for all executives.
The Board has delegated the
responsibility of executive
remuneration to the management
who will assess the appropriateness
of the nature and amount of
remuneration of such executives
on a periodic basis by reference
to relevant employment market
conditions with the overall objective
of ensuring maximum stakeholder
benefit from the retention of a high
quality board and executive team.
The appointment of appropriately
skilled Non–Executive Directors,
together with a broadly unchanged
business base has meant no new
director nominations have been
required to date.
Strategic planning has been an
important objective of the Board.
Meetings are scheduled so that all
Board members can attend and are
conducted in an informal fashion
to allow non–executive directors to
gain enhanced industry, customer,
product and research knowledge.
Audit Committee
The board has established an audit
committee, which operates under a
charter approved by the Board.
It is the Board’s responsibility to
ensure that an effective internal
control framework exists within
the entity. This includes internal
controls to deal with both the
effectiveness and efficiency of
significant business processes.
This also includes the safeguarding
of assets, the maintenance of proper
accounting records, and reliability
of financial information as well as
non–financial considerations such as
the benchmarking of operational key
performance indicators.
The members of the audit
committee are:
P T Kempen Chairman
S A Hupert
A B Hall
R Lyle
The audit committee is also
responsible for nomination of the
external auditor and reviewing the
adequacy of the scope and quality
of the annual statutory audit and half
yearly audit review.
Due to the small number of Directors,
all members of the Board serve on
the Audit Committee, whilst the Board
Chairman is also the Audit Committee
Chairman as his area of expertise is in
Accounting and Finance.
68 Annual Report 2013
69
In accordance with ASX Principle
7, the Board has received from the
Management an assurance that internal
risk management and internal control
systems are effective. The Board has
also received a declaration from the
Chief Executive Officer and Chief
Financial Officer in accordance with
section 295A of the Corporations Act
founded on the sound system of risk
management an internal compliance
and control which is operating
effectively in respect to financial
reporting risks.
The Company up until late in the financial
period was not exposed to any interest
rate or significant currency sensitive loans
or debts. Given the increase in overseas
operations there is now an increased
currency risk as a consequence of
contracts written in and cash being held
in foreign currencies. This change in risk
profile has been noted by the board and
action is being taken to manage this
risk. The Board oversees appropriate
backup procedures for important
company data. Detailed annual review
of insurance policies in force to ensure
cover is at appropriate levels to safeguard
key executives, Company assets and
operations. The Board regularly considers
succession planning to ensure staff of
appropriate skill and experience are
available to the Company.
CORPORATE
INFORMATION
ABN 25 006 194 752
Directors
The names of the Directors of the
Company in office during the year
and until the date of this report are:
Peter Terence Kempen
Chairman/Non–Executive Director/
Chairman Audit Committee
Solicitors
Sci–Law Strategies
Bankers
Westpac Banking Corporation
Auditors
Ernst & Young
Dr Sam Aaron Hupert
Chief Executive Officer/
Managing Director
Anthony Barry Hall
Technology Director
Roderick Lyle
Non–Executive Director
Company Secretary
Clayton James Hatch
Registered Office
450 Swan Street
Richmond, VIC, 3121
(03) 9429 8800
www.promedicus.com.au
www.promedicus.com
www.visageimaging.com
Share Registry
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000,Australia
Mailing address:
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235, Australia
Telephone +612 8280 7111
Toll free 1300 554 474
Facsimile +612 9287 0303
Facsimile (proxy forms only)
+612 9287 0309
registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
CORPORATE GOVERNANCE STATEMENT cont.
Board Functions
As the Board acts on behalf of and
is accountable to the shareholders,
it seeks to identify the expectations
of the shareholders, as well as other
regulatory and ethical expectations
and obligations. In addition, the
Board is responsible for identifying
areas of significant business risk and
ensuring arrangements are in place
to adequately manage those risks.
The Board seeks to discharge these
responsibilities in a number of ways.
The Board has delegated
responsibility for the operation
and administration of the group
to the Chief Executive Officer and
the executive team (as detailed in
Note 23). The Board ensures that
this team is appropriately qualified
and experienced to discharge
their responsibilities and has in
place procedures to assess the
performance of the Chief Executive
and the executive team.
The Board is responsible for ensuring
that management’s objectives
and activities are aligned with the
expectations and risks identified by
the Board. The Board has a number
of mechanisms in place to ensure
this is achieved. In addition to the
establishment of the committee
referred to above, these mechanisms
include the following:
▶ approval of strategic plans, which
encompass the entity’s vision,
mission and strategy statements,
designed to meet stakeholders’
needs and manage business risk;
▶ involvement in developing
the strategic plan (a dynamic
document) and approving initiatives
and strategies designed to ensure
the continued growth and success
of the entity;
▶ overseeing implementation of
operating plans and budgets by
management and monitoring of
progress against budget – this
includes the establishment and
monitoring of key performance
indicators (both financial and non–
financial) for all significant business
processes; and
▶ utilising appropriately skilled
professionals to provide advice
on relevant discussion topics and
procedures to allow Directors, in the
furtherance of their duties, to seek
independent professional advice at
the Company’s expense.
Monitoring of the Board’s Performance and
Communication to Shareholders — Continuous
Disclosure Policy
The board has developed a written policy to ensure compliance with the ASX
Listing Rules on continuous disclosure and has adopted measures to ensure
the market and shareholders are fully informed. The measures in place require
all potential market sensitive matters are discussed with the Chief Executive
Officer who in conjunction with the Chairman and other relevant directors
decide whether to make an appropriate announcement to the market.
Only nominated authorised persons have the authority to release these
communications to the ASX. This policy is displayed on the company website.
Shareholder Communication
The Board of Directors aims to ensure that the shareholders, on behalf of whom
they act, are informed of all information necessary to assess the performance of
the Directors. Information is communicated to the shareholders through:
▶ the annual report which is distributed to all shareholders registered to receive
copies;
▶ through the release of information to the market via the ASX
▶ the annual general meeting and other meetings so called to obtain
approval for Board action as appropriate;
▶ an up to date website:
www.promedicus.com.au;
▶ email contact with registered users; and
▶ special written communications to shareholders distributed with the
dividend notifications.
The company is adopting procedures to ensure that any material
given to a particular group is available to all interested parties via the
company website. This includes any material presented at the Annual
General Meeting.
A representative of the external auditors Ernst & Young will continue to
attend the Annual General Meeting.
Risk Management Policies
The Company takes a proactive approach to risk management. The Board is
responsible for ensuring that risks are identified on a timely basis and that the
Group’s objectives and activities are aligned with the risks identified by the Board.
The Company believes that it is crucial for all Board members to participate in
this process; as such the Board has not established separate committees for
areas such as risk management, environmental issues, occupational health
and safety or treasury.
The Company is committed to the identification; monitoring and management of
risks associated with its business activities and has included in its management
and reporting systems a number of risk management controls, such as:
▶ Annual budgeting and monthly reporting systems for all operations which
enable the monitoring of progress against performance targets and to
evaluate trends
▶ Guidelines and limits on capital expenditure and purchasing authority matrix
▶ Executive approvals for staffing requirements
▶ Detailed monthly management reports including cash flow reports, and to
identify any foreign currency risks associated with contracts written in and
cash being held in foreign currencies
70 Annual Report 2013
71
Did you know that you can
access — and even update
— information about your
holdings in Pro Medicus
Limited via the Internet.
Visit Link Market Services’ website
linkmarketservices.com.au and access a
wide variety of holding information, make
some changes online or download forms.
You can
X Check your current and previous
holding balances
X Choose your preferred annual report
1 Highlights 2012/2013
delivery option
3 CEO and Chairman’s Letter
X Update your address details
5 Financial Summary
X Update your bank details
7 Business Background
X Lodge, or confirm lodgement of, your
Tax File Number (TFN), Australian
Business Number (ABN) or exemption
The Year in Review
9 Global Leadership Team
X Check transaction and dividend history
11
X Enter your email address
13
Into the Future
X Check the share prices and graphs
Financial Statements
15
X Download a variety of instruction forms
Director’s Report
16
X Subscribe to email announcements
60 Director’s Declaration
62 Independent Audit Report
You can access this information via a
security login using your Security holder
Reference Number (SRN) or Holder
Identification Number (HIN) as well as your
surname (or company name) and postcode
(must be the postcode recorded on your
holding record).
65 Corporate Governance
64 ASX Additional Information
71 Corporate Information
Don’t miss out
on your dividends
Dividend cheques that are not banked are
required to be handed over to the State
Trustee under the Unclaimed Monies
Act. You are reminded to bank cheques
immediately.
S
Better still, why not have us
T
do your banking for you
N
Wouldn’t you prefer to have immediate
access to your dividend payment? Your
E
dividend payments can be credited directly
T
into any nominated bank, building society
N
or credit union account in Australia as
cleared funds on dividend payment date
O
— and we will still mail [(or email if you
prefer)] you a dividend advice confirming
C
your payment details. Not only can we do
your banking for you, but payment by direct
credit eliminates the risk of cheque fraud.
Designed & produced by Kajetan Design Group Pty.Ltd. Melbourne
ProMed AR13 Final.indd 72
ProMed 2013 Annual Report Cover Artwork.indd 2
10/10/13 4:06 PM
4/10/13 10:47 AM
T
R
O
P
E
R
L
A
U
N
N
A
P
R
O
M
E
D
I
C
U
S
L
I
M
I
T
E
D
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
450 Swan Street
Richmond, VIC, 3121
(03) 9429 8800
www.promedicus.com.au
www.promedicus.com
www.visageimaging.com
ProMed 2013 Annual Report Cover Artwork.indd 1
4/10/13 10:47 AM