Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
CONTENTS
1. Highlights 2019/2020
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. Environmental Social Governance
17. Financial Report
18. Director’s Report
68. Director’s Declaration
69. Independent Audit Report
75. ASX Additional Information
76. Corporate Governance
85. Corporate Information
HIGHLIGHTS
FINANCIAL
SUMMARY
X NPAT $23.08 million – up 20.7 %
X Underlying before-tax profit –
$30.23 million - up 33.4%
X Revenue of $56.82 million –
increase of 13.4%
X EBIT Margins increase to 52.5%
X Cash reserves of $43.41 million –
up 34.3%
X Strong balance sheet – debt free
X Dividends of 12.0c per share fully-
franked – up 14.3%
BUSINESS
HIGHLIGHTS
X Transaction revenue increased by
30.7%
X Three major contract wins –
Ohio State University, Nines and
Northwestern Memorial
X 7 out of the top 20 hospitals in the
U.S. have standardised on Visage 7
technology
X Implementations on or ahead of
schedule
X Future contracted revenue
increased to $210 million over next
5 years
X Australian and European
businesses continue to perform
well
X Strong pipeline in terms
of quantity and quality of
opportunities
A
PRO MEDICUS ANNUAL REPORT 2020
11
1
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Dr Sam Hupert
Peter Kempen
Dear Shareholders,
This year marks the 20th anniversary of Pro Medicus
as an ASX listed company and we are delighted to
advise it has been another record year with revenue
rising by 13.4% to $56.82 million and underlying
profit before tax increasing by 33.4% to $30.23
million.
This result was largely driven by the North American
business which experienced strong growth
in transaction revenue from new and existing
customers, despite the impact of COVID-19 in the
second half of the year. The company continued
to expand its footprint in the North American
market winning three new contracts. The first, a $9
million 5-year contract with Ohio State University
(OSU) in November 2019. This was followed by a
$6 million 5-year contract with Nines in December
2019 with the largest sale of the year, and one of
the company’s largest to date, a $22 million 5-year
deal with Chicago-based Northwestern Memorial
in June 2020. Seven of the top twenty hospitals
in the U.S. (as voted by U.S. News Best Hospitals
20/21) now use the company’s leading-edge Visage
7 technology. Our Australian and European divisions
were also solid contributors with continued rollout
of Visage RIS in Australia and incremental sales of
Visage 7 in Europe.
The past year has also seen the company enhance
its reputation for successful implementations by
completing the go-live at Mass General Brigham
(previously Partners) in six weeks, a record for the
industry. Our clients continue to realise significant
benefits in key areas such as IT infrastructure
consolidation, radiologist productivity, increased
clinical accuracy and scalability.
Our ongoing efforts and increasing investments in
Research and Development for both our Visage 7
and Visage RIS products continue to be rewarded.
During the past year the company released its AI
accelerator platform that has been adopted by some
of the most prestigious healthcare institutions in the
U.S., as well as its Workflow manager product that
rounds out the company’s offering.
The trend towards purchasing our technology on a
transaction or “pay per view” basis continues with
the majority of North American revenue now coming
from this model. Based on committed minimum
transaction numbers over a 5-7 year contract
period, this model has built a high-quality scalable
annuity stream which grew 30.7% year on year as
existing client’s transaction volumes increased and
we continued to implement the contracts we have
won. We see this trend continuing in FY21 with OSU,
Northwestern and the recently won NYU Langone
contract coming on stream.
The trends we have previously identified as driving
the industry are continuing unabated. Exponentially
growing data sets and the increasing importance of
images as part of a patient’s electronic health record
(EHR) are fueling industry adoption of new systems.
Visage 7 with its fast, highly modular and scalable
technology is uniquely suited to dealing with these
challenges. We continue to see increasing interest
in the new and exciting field of Artificial Intelligence
(AI) whose technology shows real promise to
improve radiological interpretation and workflow.
We believe we are extremely well-positioned to take
advantage of this trend as it develops.
We finished the year financially stronger than ever,
with cash reserves of $43.41 million, up 34.3%
from $32.32 million. As a result, we increased our
dividends from 10.5 cents per share, fully franked,
to 12.0 cents per share fully franked an increase of
14.3%. The company remains debt-free and believes
it has sufficient reserves to internally fund both the
organic growth of the business and additionally
invest strongly in its future.
Key to this success are our staff who have ensured
that is was “business as usual” despite the difficult
conditions created by the COVID-19 pandemic. We
thank them and our fellow directors for all their
efforts throughout the year. We are very proud of
what the company has achieved over the past 20
years and look forward to building on our success in
2021.
Yours faithfully
Peter Kempen
CHAIRMAN
Sam Hupert
CHIEF EXECUTIVE OFFICER
3
PRO MEDICUS ANNUAL REPORT 202020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
YEAR
YEAR
ENDED
ENDED
30 JUNE 2020
30 JUNE 2020
ALL FIGURES IN $A
THOUSANDS UNLESS
OTHERWISE STATED
2020
$’000
56,821
+13.4%
56,993
+13.2%
29,848
+15.3%
23,076
+20.7%
2019
$’000
50,105
50,349
25,879
19,125
95,645
84,278
Revenues from Continuing Operations
Total Revenues
Operating Profit Before Interest and Income Tax
Net Profit After Tax
Total Assets 30 June
Shareholders’ Funds 30 June
60,183
49,288
Net Tangible Assets per Share at 30 June (cents)
Earnings per Share (cents)
32.0
22.2
+20.0%
23.0
18.5
5
PRO MEDICUS ANNUAL REPORT 202020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Pro Medicus Limited [ASX: PME] is
a leading health imaging IT provider.
Founded in 1983, the company
provides a comprehensive range of
software and services to hospitals,
imaging centres, and health care
groups.
VISAGE PRODUCTS
The company’s software solutions
are branded as “Visage” and provide
one of the most comprehensive,
enterprise-level, end-to-end
offerings¬ available in the radiology
market today.
The Visage product line comprises
solutions for RIS (Radiology
Information Systems) / Practice
Management, Healthcare Imaging and
e-health. These systems can be used
either individually or in combination
by radiologists and other medical
imaging professionals to interpret
the images created by medical
imaging equipment such as X-Ray
and Ultrasound machines and CT and
MRI Scanners and communicate the
results to their referring clinicians.
Visage software solutions are
provided to customers as either
on-premise where Visage software
runs on computer infrastructure
and networks provided by the
customer or cloud based where the
infrastructure is managed by a 3rd
party cloud provider such as Google
Cloud. Importantly, the company
does not store client data with either
solution.
RADIOLOGY INFORMATION
SYSTEMS (RIS)
Visage RIS handles the entire patient
encounter from the moment the
appointment is scheduled through
to the financial accounting for the
visit. This includes interfacing with
onsite medical imaging equipment
and PACS/digital imaging systems as
well as the production and electronic
transmission of the clinical report.
Visage RIS provides radiology
practices with a highly scalable,
enterprise-level solution that
incorporates powerful search
capability and configurable workflow
and rules engines to meet a broad
range of customer’s needs. Services
include project management,
implementation, training, and
ongoing technical and end-user
support.
E-HEALTH
The result of a radiological
examination is a written report
containing the radiologist’s
interpretation. The Company’s
Internet-based e-health offering,
promedicus.net, enables referring
doctors to receive such clinical
reports securely via the Internet to
a centralised “in-tray” run on the
doctor’s computer. These reports
are then electronically incorporated
into the patients’ medical records,
doing away with the need for
double handling or manual filing.
Over 26,000 Australian doctors are
registered users of promedicus.net.
HEALTHCARE IMAGING
In January 2009, the company
acquired Visage Imaging, which
has been transformed into a global
provider of leading-edge Healthcare
imaging and 3D PACS (Picture
Archiving and Communication
System) solutions. The company’s
Visage 7 product line incorporates
highly optimised proprietary
advanced visualization capability
that delivers extremely fast, multi-
dimensional images streamed via the
Visage 7 intelligent thin-client viewer.
Visage 7 components can either be
sold as a complete single vendor
solution or individual components
can be sold in a modular fashion as
part of a best in breed offering.
THE VISAGE 7 ENTERPRISE
VIEWER
This is the cornerstone of the Visage
product set. It combines 3D/4D and
advanced visualisation capabilities
with the full gamut of 2D reading
functionality creating a truly unique
thin client streaming universal
viewing platform. This enables
radiologists to read any type of
examination from a 2D chest x-ray to
a complicated 3D cardiac study as
well as high-resolution photographic
images and videos, all within the
one enterprise viewer. The Visage 7
Enterprise viewer can be interfaced
with the Visage Open archive and
Visage Workflow manager products
as well as a broad range of third-
party vendor-neutral image archiving
(VNA) databases and worklist
products as part of a modular,
interoperable solution.
VISAGE EASE PRO
(MOBILE)
Visage Ease Pro provides mobile
app technology for diagnostic
interpretation of medical images
using iOS-based mobile devices. It is
U.S. Food and Drug Administration
(FDA) 510 (k) certified for all imaging
modalities apart from mammography
which requires higher screen
resolution than current iOS devices
can support. This enables clinicians
to interpret images, no matter
how large, anywhere using Visage
technology. Visage Ease Pro includes
numerous image manipulation
features, display of non-DICOM (and
non-diagnostic) images such as
photos, support for recording voice
memos, and the ability to upload
photo attachments to studies on
Visage 7.
VISAGE 7 OPEN ARCHIVE
The company introduced Visage 7
Open Archive to the North American
market in May 2017 with the offering
built on the same ultrafast, highly
scalable enterprise imaging platform
used in Visage 7. Coupled with a
modular design based on open
standards, Visage 7 Open Archive
ensures maximum interoperability
even in the most complex
environments. The introduction
of Visage 7 Open Archive enables
the company to offer the choice of
modular or single-vendor solutions.
VISAGE 7 WORKFLOW
Visage 7 Workflow is now available
offering native worklist management
that enables customers to unify
workflow with the simplicity of an
additional tab in the Visage 7 viewer.
Customers have the choice of driving
reading workflow from independent
workflow platforms, EHR-driven
workflow, or natively with Visage 7.
The release of Visage 7 workflow
allows customers to construct a
single vendor Enterprise PACS
solution based on Visage technology.
VISAGE IN THE CLOUD
Visage in the Cloud is the industry’s
first cloud-engineered, server-
side platform for complete PACS
operations. Leveraging the speed
and functionality of the Visage 7
viewer, Open archive and Workflow
modules, it delivers the same ultrafast
performance as on-premise Visage
implementations, but with the added
security and scale of the cloud.
Visage in the Cloud is suitable for
organisations of any size and can
be adopted as a primary or backup
imaging solution.
VISAGE 7 AI ACCELERATOR
Recent advances in machine learning,
known as Artificial Intelligence (AI),
have made possible the development
and use of algorithms that can
recognise complex patterns in
medical images. These algorithms
are improved by a training process
which compares their results against
a pool of certified interpretations
by expert radiologists. Once
validated, these algorithms need to
be accessible to radiologists to assist
their interpretation.
In December 2019 the company
announced its AI Accelerator
program designed to harness
the enormous potential of AI in
radiology. AI Accelerator is an end-
to-end platform that spans the entire
process from AI Research all the
way through to commercialisation
and the use of AI as an aide to
diagnostic interpretation. Using the
AI accelerator platform, the company,
in conjunction with clinicians from
Yale, was able to take its breast
density AI project from research
through to submission for FDA
approval in approximately 10 months,
substantially less time than it would
otherwise have taken using traditional
tools.
7
PRO MEDICUS ANNUAL REPORT 2020
GLOBAL LEADERSHIP
team
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
KEY PERSONNEL
In 2015 the company transitioned from
a Regional to a Global management
structure appointing four regional
managers to global roles in the areas of
Technology/R&D, Sales, Marketing, and
Customer Services. The 2020 financial
year has been the most successful in the
company’s history confirming the board’s
belief that this structure has served the
company well and positions us to cater
for anticipated future growth.
MALTE WESTERHOFF
General Manager –
Europe and Global Chief
Technology Officer
Malte Westerhoff is the General Manager
for Visage Imaging GmbH, the European
branch of Visage Imaging. He is also
the company Chief Technical Officer
(CTO) and is responsible for product
management and R&D globally. He has
more than twenty years of experience
in medical imaging and software
development, holding positions in both
research and industry. Malte holds a
master’s degree in physics from Technical
University, Berlin, and a Ph.D. in computer
science and mathematics from Free
University, Berlin.
Malte was one of the founders of Indeed
- Visual Concepts GmbH the precursor
to Visage Imaging and is an author/
co-author of several papers in scientific
visualization and high-performance
computing. In the role as CTO, he is
involved in developing and overseeing
the company’s growing intellectual
property patent portfolio. Before joining
Pro Medicus, he served in senior technical
leadership positions at Mercury Computer
Systems and Indeed - Visual Concepts.
SEAN LAMBRIGHT
Global Head of Sales
Sean Lambright is the Global Head of
Sales for Visage Imaging as well as VP
Sales, North America. He is responsible
for the company’s global sales strategy,
including all third-party and channel
relationships. Sean joined Visage in 2010
and has been instrumental in positioning
Visage as a complete enterprise imaging
solution capable of dealing with some of
the largest and most prestigious health
systems in North America. Prior to Visage,
his career in imaging IT has spanned 17
years, having served in senior sales roles
with AGFA Healthcare, AMICAS and
Emageon.
Sean holds a Bachelor of Science degree
from Arizona State University.
BRAD LEVIN
General Manager –
North America and Global
Head 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 U.S. 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
U.S.
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.
DANNY TAUBER
General Manager –
Australia
Danny Tauber joined Pro Medicus in 1993
after a diverse career in accounting,
property development and IT. Assuming
the role of General Manager – Australia
in 2011 he is recognised as an industry
expert and leads our Australian operation,
which includes software development,
application support and professional
services.
TERESA GSCHWIND
Global Head of Customer Service
Teresa Gschwind is the Global Head of
Customer Service for Visage Imaging, where
she is responsible for pre- and post-sales
customer service activities worldwide. Prior
to this role, Teresa managed the Company’s
U.S. Customer Service team based in MA, and
then the European Customer Service team
based in Berlin, Germany. Teresa has extensive
experience working with Visage’s global
customer base, having joined the Company
in 2002 when Visage was part of Mercury
Computer Systems. Prior to Visage, Teresa
held numerous management positions at
Datacube, Inc, where she specialized in image
processing.
Teresa holds a Bachelor of Science degree in
Electrical Engineering from the University of
New Hampshire.
9
PRO MEDICUS ANNUAL REPORT 202020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
THE YEAR IN
review
The company was pleased to mark the start of the
financial year with its admission into the benchmark
S&P/ASX 200 index.
Major rollouts of Visage RIS continued for key
customers in Australia and in North America the
company won three contracts and completed
a number of large-scale implementations. The
company also released two new products during
the year; the Visage AI Accelerator platform and
the Visage Workflow manager.
The company further cemented its position as the
leading supplier of healthcare imaging solutions
with 7 of the top 20 hospitals in North America
(as voted by U.S. News Best Hospitals 20/21)
standardising on the Visage 7 platform, significantly
more than any other vendor.
AUSTRALIA
The company’s Australian operation undertakes
research and development of the Visage RIS and
e-health products as well as sales and service/
support functions of both Visage RIS and Visage 7
products.
Visage 7 RIS continues to build on its position as
the market leader for Enterprise RIS. Australian
revenue increased by 19.2% from the previous year
driven by the ongoing rollout of Visage RIS as part
of long term (5-year) contracts with I-MED Network
Radiology and Healius (previously known as
Primary Health Care) as well as to new customers.
Promedicus.net, the company’s e-health offering
experienced modest growth throughout the year
despite increasing competition.
NORTH AMERICA
The company’s North American team comprising
sales, marketing, implementation and service/
support staff was a strong contributor to the
group’s overall performance with revenue growing
by 23.7% compared to the previous year. This was
attributable to continued growth in transaction-
based revenue as existing client’s transaction
volumes increased, and previously won contracts
came on stream.
Particularly pleasing was the rollout of the
Mass General Brigham (Partners Healthcare)
implementation in July 2019 which was completed
in record time. In November 2019 the company
won a A$9M, 5-year contract with the Ohio State
University Wexner Medical Center (OSUWMC), a
large multi-disciplinary academic medical centre
located in Columbus, Ohio. Later that month, the
company showcased two new products at RSNA-
2019 the premier industry conference - Visage
Workflow Manager the Visage AI Accelerator
platform.
In December 2019 the company signed a 5-year,
A$6M cloud-based contract with Nines, a Palo Alto
based startup looking to utilise AI in the advanced
teleradiology space.
The company finished the year with one of its
biggest sales to date, a 5 year A$22M deal with
Chicago based Northwestern Memorial Healthcare
(Northwestern) - a large, tier-one academic
institution voted as one of the top 10 hospitals in
North America.
EUROPE
The Group’s employees in its Berlin office
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 for software
from our European operations was in line with
expectations despite a decrease of 37.7% period-
on-period due to a one-off $3.049m capital sale to
the German government in FY19.
COVID-19
2020 will be remembered for the COVID-19
pandemic and for the company it was the year
we went “virtual”. We were able to seamlessly
transition 100% of our global workforce to work
from home by mid-March. Work has continued
uninterrupted - implementations, customer
support, sales demonstrations, sales pilots, training
and product development all being done remotely
ensuring business continuity.
Lockdowns and distancing measures have created
a need for our customers to ensure radiologists
and other clinical users can access images when
and where needed, especially from home. Visage
7 is particularly suited to working remotely
enabling even the largest studies to be viewed on-
demand without degradation in speed, fidelity or
functionality even over consumer-grade Internet.
11
PRO MEDICUS ANNUAL REPORT 202020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
INTO THE
future
RAPIDLY GROWING NORTH AMERICAN
FOOTPRINT
NEW EXPANDED PRODUCT SET - BEST IN BREED
OR SINGLE VENDOR SOLUTIONS
ENTERPRISE IMAGING
VISAGE IN THE CLOUD
ARTIFICIAL INTELLIGENCE – VISAGE AI
ACCELERATOR
The Board and Management
believe the company is extremely
well-positioned for growth after
making strong progress in the
2020 financial year. Key factors
predicted to drive growth include:
EXPANDED GEOGRAPHICAL
FOOTPRINT
Over the past year, the company
continued to build on its presence
in North America and Australia as
well as consolidate its position in
Europe.
Our growing North American
customer base comprises some of
the largest and most prestigious
health systems in the U.S., including
7 of the top 20 ranked hospitals in
the U.S. for 2020/2021 (U.S. News
& World Report Honour Roll). The
company believes it can continue
to leverage its expanded footprint
and increased market presence to
drive further sales opportunities
across all segments of the market
including large Enterprise hospitals,
private imaging centres and remote
reading/teleradiology.
HIGHLY DIFFERENTIATED
TECHNOLOGY
The company continues to
maintain its significant ongoing
investment in R&D for its flagship
Visage 7 suite of products, which
includes the Visage 7 One Viewer™,
Visage 7 Open Archive and Visage
Workflow manager, which we
believe will continue to differentiate
our offerings in the modular PACS,
Enterprise viewer, and advanced
visualisation space.
The Visage RIS platform is the
culmination of many years of
intense R&D effort and positions
Pro Medicus at the forefront of RIS/
Practice Management technology.
It is differentiated by its scalability,
powerful search capability and
ability to allow clients to configure
their business-specific workflow
and rules to meet their needs.
INDUSTRY TRENDS
The company believes the North
American market has reached
a tipping point as a result of a
number of significant industry
trends that when combined,
continue to drive demand for
Visage 7 products.
Explosion in image data size
continues
With developments in imaging
technology it is now common for a
single examination image file to be
in the order of 2 to 3 Gigabytes or
larger. The introduction of Digital
Breast Tomosynthesis (DBT), a
new form of 3D breast imaging,
has added to the data explosion
problem producing image files
as large as 6 to 10 Gigabytes
per examination. Traditional
PACS/Digital Imaging based on
“compress and send” technology
requires these files to be
transferred across the network to
the radiologist desktop in order to
be visualised. This has created very
significant network bottlenecks
which have limited the widespread
adoption and use of these new
imaging technologies.
Visage 7, with its unique server-side
thin-client streaming technology,
enables the radiologist or referring
clinician to instantly visualize
these very large datasets without
having to move the images to their
desktop thereby overcoming the
bandwidth/ network bottleneck
issue.
Adoption of Electronic Health
Records (EHR)
The U.S. Government as part of
its Meaningful Use program has
mandated U.S. health institutions
to implement an enterprise-wide
Electronic Health Record (EHR).
Under this new model, all patient
clinical data including images
is entered into, and is accessed
via, the EHR. This has resulted in
a heightened focus on imaging
as medical images both DICOM
(radiology and cardiology) as well
as non DICOM (photos and videos)
now comprise a large and rapidly
growing part of the medical record.
Visage 7, with its ability to display
all of these image types within the
one product, is well positioned to
benefit from this rapidly evolving
trend.
Flexibility of single vendor or
best in breed or solutions
Visage 7, with its highly modular
design can sold as part of “best in
breed” solution or in conjunction
with Visage 7 Open archive and
Workflow manager as a highly
scalable single vendor offering. This
degree of flexibility enables the
company to address the broadest
range of market opportunities.
TRANSACTION BASED
LICENCING
The vast majority of the company’s
contracts are now transaction or
“pay per view” based. This not
only enables customers to more
accurately align their investment
in Visage to the size of their
business but has the added benefit
of creating significant ongoing
revenue streams for the company.
ENTERPRISE IMAGING
The company continues to make
significant investments in ongoing
R&D to develop products including
Visage 7 One Viewer. This extends
the capability of Visage 7 beyond
the realm of radiology enabling the
viewing of DICOM (radiology) and
non-DICOM images such as photos
and HD videos (also described as
medical multimedia objects) all in
the one viewer.
CLOUD
To date, most healthcare
institutions have preferred on-
premise solutions, hosting their
applications in their own or leased
data centres however there is a
rapidly growing trend towards
the convenience, scalability
and security of cloud-based
infrastructure offered by tier 1
cloud providers.
Visage in the Cloud is the industry’s
first cloud-engineered, server-
side platform for complete PACS
operations. Leveraging the speed
and functionality of the Visage 7
viewer, Open archive and Workflow
modules, it delivers the same
ultrafast performance as on-
premise Visage implementations,
but with the added benefits
of cloud. Visage in the Cloud
is suitable for organisations of
any size and can be adopted as
a primary or backup imaging
solution.
ARTIFICIAL INTELLIGENCE
(AI)
No trend looms larger on the
horizon than the potential of
machine learning or Artificial
Intelligence (AI) to the field of
Healthcare Imaging.
Visage is uniquely positioned
to be the platform of choice for
development of AI algorithms
as well as providing the best
environment in which the
algorithms can run. During the
year the company released its
AI accelerator platform in order
to harness the potential of AI in
radiology. AI Accelerator is now
being used by a number of top
academic hospitals in the U.S. with
others still to follow. The company
believes this will open up a number
of commercial opportunities in the
AI space.
The first such opportunity is the
Breast density algorithm the
company developed with input
from breast imaging specialists
at Yale. The algorithm is currently
pending FDA approval which, if
granted, will be the company’s first
fully commercialised AI project.
The company anticipates that it
will have further opportunities
for AI collaboration and/or
commercialisation.
The company also believes that
it’s Visage 7 platform is ideally
suited to displaying the output
of AI companies allowing the
seamless embedding of these new
algorithms in the interpretation
workflow of Visage 7, significantly
enhancing their usability.
13
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
ENVIRONMENTAL
social governance
The Pro Medicus Board and
management recognises
the importance of sound
Environment, Social and
Governance practices to
provide the social licence for the
company’s operations.
The company is a provider of
software that facilitates better
healthcare. Using the company’s
Visage 7 suite of products,
healthcare professionals can
view diagnostic quality images
on demand regardless of their
size even over consumer grade
internet. This coupled with the
sophistication and functionality
of Visage 7 provides unparalleled
clinical capability thereby aiding
the diagnostic process. Over the
past year, millions of patients
have had their healthcare
imaging reviewed and diagnosed
by radiologists using Visage 7
software.
Victorian Stroke Telemedicine
Project
For the past two years,
Pro Medicus has gifted the
company’s Visage 7 software to
the Victorian Stroke Telemedicine
(VST) Program. The VST service,
operating under the umbrella
of Ambulance Victoria (AV),
facilitates rapid clinical decision-
making and treatment of stroke
by connecting rural and regional
hospitals in Victoria and North
West Tasmania to a 24/7, year-
round roster of Melbourne-based
Neurologists.
For a patient with acute stroke,
every minute counts. Visage
7 with its thin client streaming
technology, on-the-fly advanced
3D functionality and ability
to provide access anytime,
anywhere, is ideally suited to
the ongoing efforts in delivering
the best care possible to stroke
patients; irrespective of their
location and the subsequent
resource and accessibility
challenges this may present.
Professor Christopher Bladin,
Director of the Victorian Stroke
Telemedicine (VST) Service
explains:
“The Visage 7 viewer from Pro
Medicus has had a significant
impact on the Victorian Stroke
Telemedicine service (VST).
VST services 19 regional
hospitals across Victoria and
Northwest Tasmania. Patients
with suspected acute stroke
presenting to the Emergency
Department receive multimodal
CT imaging including CT
angiography and CT perfusion.
These generate large image files
that must be transferred and
evaluated very quickly. Visage
has been a major advance for
VST - it allows fast manipulation
of images through its “Netflix-
like” process of streaming images
from a central server to the VST
consultant. Decisions can then
be made quickly about stroke
treatments such as thrombolysis
(clot busting therapy) and
endovascular clot retrieval (clot
removal from a brain artery).”
Due to the positive response
from the VST’s neurologists, Pro
Medicus is continuing to support
the VST in the next “phase” of
this Project, with the installation
of the Visage Enterprise Imaging
Software within Ambulance
Victoria’s own datacentre
infrastructure.
Community Contributions -
Australian Bushfire Appeal
The tragedy of the Australian
bushfire season motivated our
staff in the U.S. to undertake
fundraising in that country.
On behalf of the company a
$25,000 donation was also
shared amongst the following
Australian organisations directly
involved in bushfire recovery and
repair.
NSW Rural Fire Service
This donation is aimed at
assisting prevention of future
fires through support of the NSW
volunteer fire brigade.
Mallacoota District Health &
Support Service
This donation aligns with our
healthcare background and will
assist the physical and emotional
recovery of locals in the area.
Kangaroo Island Mayoral Relief
and Recovery Bushfire Fund
Donations will be donated on
merit by the fund with careful
and fee-free oversight.
BlazeAid
A volunteer organisation that
is rebuilding thousands of
kilometres of fencing to allow
farmers to manage and rebuild
stock.
Wisdom in Diagnostic Imaging
program
Visage has been supporting
the University of Florida
Wisdom in Diagnostic Imaging
program since 2016. This is an
emergency medicine/critical care
competency-based assessment
program for radiology residents,
powered by Visage 7, that
has included hundreds of
academic radiology programs
and impacted the education of
thousands of radiology residents.
The Visage 7 Enterprise Imaging
Platform software and Visage
professional services are
provided philanthropically, at no
cost, in support of this worthy
program.
COVID-19
Visage has also been actively
supporting early research and
philanthropic efforts spawned
as a result of the COVID-19
pandemic.
Radunited
Radunited.org is a philanthropic
collaborative effort by academic
radiologists, informaticists, and
computer scientists, supported
by Visage Imaging and Nuance
to provide a platform to allow
hospitals and communities in
COVID affected areas to receive
pro-bono radiological services.
The goal is to provide a cloud-
based platform to allow hospitals
and communities in hard hit areas
that need help, to be matched up
with radiology departments with
the capacity and desire to donate
their services. Initially inspired
to help support in the global
COVID crisis, RadUnited can also
be used for other emergencies
and natural disasters, with
lower middle-income countries
(LMIC) the initial beneficiaries of
RadUnited services.
COVISAR – COVISAR (an
acronym of COVID Visage
and Archive) is a multisite
collaboration led by Yale and
Visage, intended to expand the
technical template and approach
to multiple institutional research
for COVID and other disease
domains. The immediate intent
is to create a highly curated
multi-center data repository
of COVID-19 positive cases,
including pertinent clinical
information and annotated
images to serve as the basis
for multi-center, multi-organ,
research projects. The program
now has participation from a
number of clinical partners.
15
PRO MEDICUS ANNUAL REPORT 202020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
FINANCIAL
report
ANNUAL
FINANCIAL REPORT
30 JUNE 2020
Directors’ Report
Auditor’s Independence Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
1 Corporate Information
2 Summary of Significant Accounting Policies
3 Significant Accounting Judgements, Estimates and Assumptions
4 Operating Segments
5 Revenue from contracts with customers
6 Income and Expenses
7 Income Tax
8 Earnings per Share
9 Dividends Paid and Proposed
10 Cash and Cash Equivalents
11 Trade and Other Receivables
12 Inventory
13 Plant and Equipment
14 Intangible Assets
15 Trade and Other Payables
16 Deferred Revenue
17 Provisions
18 Contributed Equity and Reserves
19 Share based Payments
20 Leases
21 Events after the Balance Sheet Date
22 Auditors’ Remuneration
23 Key Management Personnel
24 Related Party Disclosure
25 Financial Risk Management Objectives and Policies
26 Contingencies
27 Parent Entity Information
28 Other Accounting Policies
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Governance Statement
Corporate Information
18
30
31
32
33
34
35
35
35
39
40
42
44
45
47
48
49
50
51
51
53
55
55
56
56
57
60
60
61
61
61
62
65
65
66
68
69
75
76
85
17
PRO MEDICUS ANNUAL REPORT 202020
Your Directors submit their report for the year ended 30 June
2020 in relation to Pro Medicus Limited (the “Company”) and its
subsidiaries (the “Group”).
DIRECTORS
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
AM, F.C.A, F.A.I.C.D
(Chairman)
Peter Kempen joined Pro Medicus Limited as a Director on 12 March 2008. He is
Chairman of Australasian Leukaemia and Lymphoma Group and Chairman of Logie-
Smith Lanyon. He is also a Trustee of the Barr Family Foundation and a member of the
Board of St Hilda’s College Ltd, University of Melbourne.
Peter has previously been Chairman of Patties Food Limited, Chairman of Danks
Holdings Limited, Chairman of Ivanhoe Grammar School 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 was appointed a Member in the
General Division of the Order of Australia (AM) in the 2018 Queen’s Birthday Honours.
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.
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.
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 focus is the transition to and
development of the Company’s next generation RIS systems.
Anthony holds a Bachelor and Master’s degree in Science from La Trobe University.
CLAYTON JAMES HATCH
CPA
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 1 July 2012.
ANTHONY JAMES GLENNING
B.CS, B.EE, M.EE
Non-Executive Director
Anthony joined Pro Medicus Limited as a Director on 1 May 2016. He is the fund manager
of Skalata Ventures, investing in early stage companies to help them scale and grow
into significant and sustainable businesses.
He is a Director of Azure Healthcare Limited (ASX:AZV), an international provider of
healthcare communication and clinical workflow management solutions. He is also
Chairman of Cyrise Pty Ltd, an accelerator for early stage cyber security start-ups.
Anthony has previously been Investment Director of Starfish Ventures and was the
founder and previously the CEO of Tonic Systems and a founding Non-Executive
Director of Cameron Systems.
Anthony holds bachelor degrees in Computer Science and Electrical Engineering from
University of Melbourne and holds a Master’s degree in Electrical Engineering from
Stanford University California.
Anthony also serves on the audit committee.
DR LEIGH BERNARD FARRELL
PhD, B.Sc. (Hons), FAICD
Non-Executive Director
Leigh joined Pro Medicus Limited as a Director on 8 September 2017. He is Executive
Director of AdNED Pty Ltd and was previously Senior Vice President, Commercial of
Certara USA, Inc. Prior to this, he was Chairman and COO of d3 Medicine LLC, which
was acquired by Certara USA, Inc.
Leigh holds a PhD in Biochemistry and a Bachelor of Science (Honours) from Monash
University and is a Fellow of the Australian Institute of Company Directors.
Leigh also serves on the audit committee.
DEENA ROBYN SHIFF
B.Sc (Hons), B.A. Law (Hons),
Non-Executive Director
(Appointed 1 August 2020)
Deena joined Pro Medicus Limited as a Director on 1 August 2020. Deena is Chair of
the Supervisory Board of Marley Spoon AG (ASX:MMM) and Non-Executive Director
of Appen Ltd (ASX:APX). Deena also holds other board positions with Infrastructure
Australia and Opera Australia and is Chair of the Government’s Australia Broadband
Advisory Council.
Previous board roles include Chairman of the global board of BAI Communications,
Non-Executive Director of the Citadel Group (ASX:CGL), Vice Chairman of the
Government’s Export Credit Agency EFIC, and a number of venture capital backed
growth stage ICT companies.
Deena has served as a Group Managing Director at Telstra, where she led the Wholesale
Division Group, established and led Telstra Business and founded Telstra’s corporate
venture capital arm, Telstra Ventures. Deena has also held various in house regulatory
and legal positions and has been a Partner of the law firm Mallesons Stephen Jacques.
Deena holds a degree from the London School of Economics and a Law degree from
the University of Cambridge.
Deena also serves on the audit committee.
DIRECTORS’
DIRECTORS’
report
report
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
18
19
PRO MEDICUS ANNUAL REPORT 2020
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:
Final dividend for 2019 shown as recommended in the 2019 report:
OPERATING AND FINANCIAL REVIEW
A. B. Hall
S. A. Hupert
P. T. Kempen
A. J. Glenning
L. B. Farrell
D. R. Shiff
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
Normal dividend plan
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 healthcare imaging
software and services to
hospitals, diagnostic imaging
groups and other health related
entities in Australia, North
America and Europe. These
products and services include:
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
20
Ordinary Shares
Options over
Ordinary Shares
28,109,000
28,137,660
678,082
9,525
4,240
NIL
CENTS
6.0
6.0
4.5
NIL
NIL
NIL
NIL
NIL
NIL
Cents
22.21
22.09
$’000
6,239
6,237
4,663
Radiology Information Systems
(RIS)
▶ Proprietary medical software
for practice management (RIS);
▶ Training, installation and
professional services;
▶ After sale support and
service products;
▶ Promedicus.net secure email;
and
▶ Integration products.
Visage 7.0
▶ Healthcare imaging software
that provides radiologist
and clinicians with advanced
visualisation capability for
rapidly viewing 2-D, 3-D and
4-D medical images;
▶ Picture Archive and
Communication System
(PACS)/Digital imaging
software that is sold directly
and to original equipment
manufacturers (OEM);
▶ Training, installation and
professional services; and
▶ Service and support products.
The Group has continued
development of both the RIS
products and the Visage 7.0
product line throughout
the period.
The Group undertakes
research and development
(R&D) in Australia for its
Practice Management (RIS)
and promedicus.net products
including R&D for Visage RIS,
its new technology platform.
The R&D for the Visage Imaging
product set is carried out
in Europe.
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,
at-call accounts and term 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’s Australian employees undertake
research and development of Pro Medicus products
(RIS) as well as sales and service/support functions.
The Group’s Australian revenue increased by 19.2%
compared to the previous year, with the rollout
of the Healius (ex-Primary Health) contract and
extension of its contract with I-MED being the main
contributors to the increased revenue.
Promedicus.net, the company’s e-health offering,
continued to hold its market position.
North America
The North American team fulfil sales, marketing
and professional services roles. Revenue from
North America increased by 23.7% compared to
the previous year. This was attributable to increase
in transaction-based revenue from sales of Visage
technology as more contracts came on stream.
Europe
The Group’s employees in its Berlin office 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 for software from our
European operations was in line with expectations
despite a decrease of 37.7% period on period, as
a result of a one-off $3.049m capital sale to the
German government in FY19.
Financials
Reported profit after tax for the period was
$23.08m an increase of 20.7% from the previous
year.
Full year revenue of the Group increased from
$50.11m to $56.82m, an increase of 13.4%. As the
Group’s costs are relatively fixed, an increase in
sales has a significant impact on profitability.
The key drivers of the profit increase were increases
in transaction revenue in North American and as
well as increased RIS sales in Australia.
The result from the underlying operations for the
year was a pre-tax profit of $30.24m compared
to an underlying pre-tax profit of $22.66m from
the previous corresponding period, an increase of
33.4%. The underlying profit comprises reported
profit before tax of $30.02m and adding the net
currency loss of $0.22m. The underlying profit
from 2019, comprises of reported profit before tax
of $26.12m less the currency gain of $0.41m and
subtracting the one-off capital sale to the German
government of $3.05m.
During the period the Company continued to make
strong inroads into the North American market
winning key contracts with Ohio State University
(A$9.0m – 5 year deal), a large multi-disciplinary
academic medical center in Columbus, Ohio;
Nines (A$6.0m – 5 year deal), a Palo Alto based
teleradiology business; and Northwestern Memorial
(A$22.0m – 5 year deal), a large, highly respected
tier 1 academic hospital system in Chicago, Illinois.
The Company also continued to make significant
progress with all key implementations being on or
ahead of schedule.
COVID-19
The company successfully transitioned its entire
global operations to “work from home” in mid-
March 2020 ensuring full continuity of all R&D and
client support services. In addition, customer-facing
activities including meetings with prospective
clients, product demonstrations and training and
implementation were performed remotely using
a combination of the company’s own Visage 7
technology and third party video conferencing
tools, thereby enabling these activities to continue
unabated throughout the period.
Exam volumes, particularly in Australia and the
US, declined during the last week in March 2020
and into the first two weeks of April 2020 as
clients deferred all elective, non-urgent radiology
examinations. Since that period to the end of the
financial year, volumes steadily increased to a
level just below that of the months prior to COVID.
The impact on the full year results is estimated
to be that profit after tax would have been
higher by approximately $1.2m, which equates to
approximately 5% of underlying NPAT.
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 its Visage RIS and
Visage 7.0 product sets.
It is anticipated that this strategy of ongoing
development will continue to position Pro Medicus
as a market leader and enable the Group to further
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.
21
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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 and is debt free.
Treasury Policy
The treasury function, co-ordinated within Pro
Medicus Limited, is limited to maximising interest
return on surplus funds and managing currency
risk. The treasury function operates within policies
set by the Board, which is responsible for ensuring
that management’s actions are in line with Board
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 steps have been taken to manage
this risk, including taking out forward currency
exchange contracts and currency options.
Cash from Operations
Net cash flows from operating activities for the
current period was a positive $31.42m, with receipts
from customers totalling $60.63m compared with
payments of $19.92m to suppliers and employees.
During the year the Company paid out a total of
$10.92m in dividends, the net result being total cash
assets of $43.41m; an increase of 34.3% 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.
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
22
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 22.1% from
$49.29m to $60.18m. This movement was largely
the result of profit during the year, offset by
dividends paid out during the year.
SIGNIFICANT EVENTS AFTER
THE BALANCE DATE
A Final Dividend of 6.0 cents per share has been
declared post 30 June 2020. Please refer to Note 9
of the financial statements.
LIKELY DEVELOPMENTS
AND EXPECTED RESULTS
The Directors anticipate that the 2021 financial
year will see more opportunities crystallise for
the company due to improved prospects in North
America and the continued commercialisation
and roll out of Visage RIS, the company’s new
technology RIS platform.
Key components that are likely to affect the
performance of the company are:
• Increased revenue being generated from
previously won transaction-based contracts
which are scheduled to come on stream in the
2021 financial year.
• Continued strong interest in the Visage 7.0
expanded 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 7.0 product
set to address key market segments such as
large Health Systems and Hospitals in addition to
the private radiology and teleradiology markets.
• Market dynamics that favour the adoption of
Visage 7.0 technology.
• Increased revenue from Visage RIS, the
company’s new technology RIS platform as the
rollout of this new platform continues.
DIRECTORS’ REPORT CONT.
COVID-19
Examination volumes in Australia and North
American have returned to near normal levels and it
is anticipated, subject to a no further major COVID
outbreaks that this trend back to normal volumes
will continue.
As a result, it is anticipated that the 2021 financial
year will show a continuing improvement in
operational results, however this is dependent upon
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 zero un-
issued ordinary shares under options. Refer to Note
19 of the financial statements for further details of
movement of options throughout the year.
Shares Issued as a Result of the Exercise
of Options
During the financial year, zero share options were
exercised by current employees to acquire fully
paid ordinary shares in Pro Medicus Limited and no
share options expired.
PERFORMANCE RIGHTS
Un-issued Shares
As at the date of this report, there were 927,306
un-issued ordinary shares under performance
rights. Refer to Note 19 of the financial statements
for further details of the performance rights
outstanding.
Rights holders do not have any right, by virtue of
the right, to participate in any share issue of the
Company.
Shares Issued as a Result of the Exercise of
Performance Rights
During the financial year, 172,344 performance
rights were exercised by current employees
and no performance rights expired. A further
192,032 performance rights were exercised by
key management personnel in the current year to
acquire fully paid ordinary shares in Pro Medicus
Limited.
INDEMNIFICATION AND INSURANCE
OF DIRECTORS AND OFFICERS
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.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has
agreed to indemnify its auditors, Ernst & Young,
as part of the terms of its audit engagement
agreement against claims by third parties arising
from the audit (for an unspecified amount). No
payment has been made to indemnify Ernst &
Young during or since the financial year.
REMUNERATION REPORT (AUDITED)
This remuneration report for the year ended 30
June 2020 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
whom are considered KMP of the Group.
(i) Non- Executive Directors
Peter Terence Kempen Chairman
Anthony James
Glenning
Director (non-executive)
Leigh Bernard Farrell Director (non-executive)
(ii) Executive Directors
Dr Sam Aaron Hupert
Managing Director
and CEO
Anthony Barry Hall
Technology Director
(iii) Other Senior Executives
Danny Tauber
Malte Westerhoff
Brad Levin
Sean Lambright
General Manager
– Pro Medicus Limited
Managing Director
– Visage Imaging GmbH
General Manager
– Visage Imaging Inc.
Global Head of Sales
– Visage Imaging Inc.
Remuneration and nomination issues are handled
at the full Board level. Due to the small number of
Directors no committee has been established for
this purpose.
Board members, as per groupings detailed below,
are responsible for determining and reviewing
compensation arrangements.
23
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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 remuneration 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.
Remuneration Philosophy
The performance of the Group depends upon the
quality of its Directors and Executives. To prosper,
the Group must attract, motivate and retain highly
skilled Directors and Executives.
To this end, the Group 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 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 Non-Executive 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 Non-Executive
Directors is reviewed annually. The Board considers
fees paid to Non-Executive Directors of comparable
companies when undertaking the annual review
process.
Each Non-Executive 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 Non-Executive
24
Director on market). It is considered good
governance for the Non-Executive Directors to have
a stake in the Company on whose Board they sit.
The remuneration of Non-Executive Directors for
the period ended 30 June 2020 is detailed in Table
1 of this report.
Executives 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; and
• 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 26.
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 consists 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.
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.
DIRECTORS’ REPORT CONT.
Variable Remuneration – Long Term Incentive (LTI)
Performance Rights
Former LTI Plan – Granted until FY2017
A long term incentive plan was established during 2011-12 whereby Senior Executives of the Group were
offered performance rights over the ordinary shares of Pro Medicus Limited. The performance rights,
issued for nil consideration, were offered over a 5 year period and vest 4 years after grant date on
completion of service. This long term incentive plan includes performance hurdles related to profitability
(EBIT – 75%) which was set on an annualised basis by the Board and individual performance (25%).
These measures have been selected and set to align to Company performance and to reflect individual
contribution to the Company.
The fair value of the equity-settled performance rights is estimated using a Black-Scholes model at grant
date taking into account the terms and conditions upon which the performance rights were granted. For
further details of valuation of options, models and assumptions used, refer to Note 19 of the financial
statements.
The table below outlines the proportion to target of performance rights that were granted based on
performance measures since the plan was established. No new grants were awarded during the year
ended 30 June 2020, 2019 and 2018 under this long term incentive plan.
75% EBIT targets met
25% Individual targets met
2020
N/A
N/A
2019
N/A
N/A
2018
N/A
N/A
2017
125%
83%
2016
85%
88%
A share-based payment expense continues to be provided to certain Executives during the year ended 30
June 2020 related to unvested tranches of this long term incentive plan.
Current LTI Plan – Granted from FY2017
A new long term incentive plan was established during 2016-17 whereby Senior Executives of the Group
were offered performance rights over the ordinary shares of Pro Medicus Limited. The performance
rights, issued for nil consideration, are offered on a year to year basis and vest 4 years after grant date
on completion of service, with a 3 year performance period. This long term incentive plan includes
performance hurdles related to profitability - Earnings per Share (EPS) growth (60%) which is set on an
annualised basis by the Board and Total Shareholder Returns (TSR) growth (40%). The Company’s TSR
growth performance hurdle is measured relative to the ASX300 Index (FY2017, FY2018 and FY2019)
and measured relative to the ASX200 Index in FY2020 and assessed by the Board at the end of the
performance period in accordance with the terms of the plan. These measures have been selected and set
to align to Company performance and shareholder value.
The fair value of the equity-settled performance rights is estimated using Black Sholes and Monte Carlo
Simulation Models at grant date taking into account the terms and conditions upon which the performance
rights were granted. For further details of valuation of options, models and assumptions used please refer
to Note 19 of the financial statements.
The table below outlines the proportion to target of performance rights that were granted based on
performance measures during the year and since the plan was established.
60% EPS targets met
40% TSR targets met
2020
100%
100%
Variable Remuneration – Short Term Incentive (STI)
Short term incentives in the form of cash bonuses were paid to Executives based on a mix of Company
based and personal performance targets.
STI bonus for 2019
The table below outlines the proportion to target of STI cash bonuses provided since the new STI plan was
established
75% EBIT targets met
25% Individual targets met
2020
0%
100%*
2019
200%
93%
2018
35%
143%
2017
125%
91%
* Accrued in the financial statements at 100% based on best estimates of the Board prior to formalisation.
2016
N/A
N/A
25
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Key Performance Indicators
Actual STI payments granted to Executives under the individual target portion, 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, including client satisfaction, patent filings and employee satisfaction.
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 return on net assets and equity are shown in the table below.
Basic earnings per share – reported (cents)
Return on assets (%)
Return on equity (%)
Dividend payout ratio (%) – normal dividend plan
Dividend payout ratio (%) – total dividend
Available franking credits ($’000)
2020
2019
2018(restated)
22.2
31.4
38.3
54.1
54.1
18.5
31.0
38.8
57.1
57.1
4,314
2,417
9.7
25.1
28.4
62.1
62.1
820
2017
9.1
28.6
26.8
44.0
44.0
531
2016
6.3
24.3
23.3
47.9
47.9
0
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.
Table 1: Remuneration of key management personnel for the year ended 30 June 2020
Short-Term
Post-
Employment
Salary
and Fees
Cash Bonus
Non-
Monetary
benefits
Super
annuation
Long-
Term
Long
Service
Leave
Share-
Based
Payment
Total
Performance
Related (%)
Total
Performance
Rights
30 June 2020
($)
Directors
P T Kempen
S A Hupert
A B Hall
A Glenning
L Farrell
Executives
D Tauber
152,894
475,000
350,000
95,662
82,192
325,000
554,265
-
-
-
-
-
13,125
1,273
25,000
-
25,000
7,938
25,000 (60,036)
4,338
7,808
-
-
-
-
-
-
-
-
-
-
-
-
179,167
507,938
314,964
100,000
90,000
M Westerhoff
81,812
20,500
2,889
B Levin
328,185
19,178
S Lambright
253,598
774,047
-
-
-
-
-
-
-
59,544
719,010
40,869
388,232
(6,131)
1,021,514
25,000
5,506
17,592
386,223
-
-
-
-
-
8.0%
19.7%
15.5%
75.2%
Compensation options granted, vested and exercised during the year as part of remuneration
During the reporting period, 5,078 rights with a fair value of $47,149 (TSR hurdle - $2.85, EPS hurdle -
$13.58 per performance right) were granted as performance rights to Danny Tauber with a grant date of
16 September 2019 under the Current LTI Plan. The performance rights have a 4 year vesting period from
grant date and are automatically exercised upon achievement of the vesting conditions.
During the reporting period, 16,890 rights with a fair value of $156,824 (TSR hurdle - $2.85, EPS hurdle -
$13.58 per performance right) were granted as performance rights to Malte Westerhoff with a grant date
of 16 September 2019 under the Current LTI Plan. The performance rights have a 4 year vesting period
from grant date and are automatically exercised upon achievement of the vesting conditions.
During the reporting period, 4,647 rights with a fair value of $43,147 (TSR hurdle - $2.85, EPS hurdle -
$13.58 per performance right) were granted as performance rights to Brad Levin with a grant date of 16
September 2019 under the Current LTI Plan. The performance rights have a 4 year vesting period from
grant date and are automatically exercised upon achievement of the vesting conditions.
During the reporting period, 3,591 rights with a fair value of $33,342 (TSR hurdle - $2.85, EPS hurdle -
$13.58 per performance right) were granted as performance rights to Sean Lambright with a grant date of
16 September 2019 under the Current LTI Plan. The performance rights have a 4 year vesting period from
grant date and are automatically exercised upon achievement of the vesting conditions.
Table 2: Remuneration of key management personnel for the year ended 30 June 2019
Short-Term
Post-
Employment
Long-
Term
Share-
Based
Payment
Total
Performance
Related (%)
Total
30 June 2019
($)
Salary and
Fees
Cash Bonus
Non-
Monetary
benefits
Super
annuation
Long
Service
Leave
Performance
Rights
-
-
-
-
-
35.5%
56.1%
48.0%
65.9%
Directors
P T Kempen
73,943
S A Hupert
475,000
A B Hall
349,440
A Glenning
L Farrell
91,324
82,192
-
-
-
-
-
Executives
D Tauber
329,469
91,875
-
-
-
-
-
1,057
25,000
-
25,000
7,916
25,000
5,833
8,676
7,808
-
-
-
-
-
-
-
100,000
507,916
380,273
100,000
90,000
M Westerhoff
460,642
331,559
19,415
2,794
B Levin
307,626
195,631
S Lambright
237,711
431,893
-
-
-
-
-
-
-
285,186
1,099,596
88,826
592,083
26,695
696,299
2,407,347
1,050,958
20,472
114,769
25,392
507,643
4,126,581
20,491
11,643
106,936
560,414
Compensation options granted, vested and exercised during the prior year as part of remuneration
During the reporting period, 15,384 rights with a fair value of $45,844 (TSR hurdle - $1.10, EPS hurdle -
$4.24 per performance right) were granted as performance rights to Danny Tauber with a grant date of 16
August 2018 under the Current LTI Plan. The performance rights have a 4 year vesting period from grant
date and are automatically exercised upon achievement of the vesting conditions.
During the reporting period, 45,306 rights with a fair value of $135,012 (TSR hurdle - $1.10, EPS hurdle -
$4.24 per performance right) were granted as performance rights to Malte Westerhoff with a grant date of
16 August 2018 under the Current LTI Plan. The performance rights have a 4 year vesting period from grant
date and are automatically exercised upon achievement of the vesting conditions.
During the reporting period, 13,910 rights with a fair value of $41,452 (TSR hurdle - $1.10, EPS hurdle - $4.24
per performance right) were granted as performance rights to Brad Levin with a grant date of 16 August
2018 under the Current LTI Plan. The performance rights have a 4 year vesting period from grant date and
are automatically exercised upon achievement of the vesting conditions.
During the reporting period, 10,748 rights with a fair value of $32,029 (TSR hurdle - $1.10, EPS hurdle -
$4.24 per performance right) were granted as performance rights to Sean Lambright with a grant date of
16 August 2018 under the Current LTI Plan. The performance rights have a 4 year vesting period from grant
date and are automatically exercised upon achievement of the vesting conditions.
26
2,616,796
888,162
21,773
115,035
(46,592)
111,874 3,707,048
27
PRO MEDICUS ANNUAL REPORT 2020
Table 3: Shareholdings of Key Management Personnel
Ordinary shares held in
Pro Medicus Limited
(Number)
30 June 2020
Directors
P T Kempen
S A Hupert
A B Hall
A Glenning
L Farrell
Executives
D Tauber
M Westerhoff
B Levin
S Lambright
Total
Balance at
1 July 2019
On exercise of perfor-
mance rights
Net change other
Balance at
30 June 2020
Ordinary
Ordinary
Ordinary
Ordinary
678,082
29,107,660
29,067,500
4,000
2,501
381,573
57,368
45,783
180,000
-
-
-
-
-
45,750
84,313
39,781
22,188
-
(970,000) 1
(958,500) 2
5,5253
1,7394
(46,408) 5
(44,000) 6
(26,450) 7
(22,278) 8
678,082
28,137,660
28,109,000
9,525
4,240
380,915
97,681
59,114
179,910
59,524,467
192,032
(2,060,372)
57,656,127
1Sam Hupert sold 1,000,000 shares and bought 30,000 shares throughout the year at the prevailing market share price.
2Anthony Hall sold 1,000,000 shares and bought 41,500 shares throughout the year at the prevailing market share price.
3Anthony Glenning bought 5,525 shares throughout the year at the prevailing market share price.
4Leigh Farrell bought 1,739 shares throughout the year at the prevailing market share price.
5Danny Tauber sold 46,408 shares throughout the year at the prevailing market share price.
6Malte Westerhoff sold 44,000 shares throughout the year at the prevailing market share price.
7Brad Levin sold 26,450 shares throughout the year at the prevailing market share price.
8Sean Lambright sold 22,278 shares throughout the year at the prevailing market share price.
Table 4: Performance rights of Key Management Personnel
Performance rights held
in Pro Medicus Limited
(Number)
30 June 2020
Directors
P T Kempen
S A Hupert
A B Hall
A Glenning
L Farrell
Executives
D Tauber
M Westerhoff
B Levin
S Lambright
Total
Balance at
1 July 2019
Granted as
remuneration
Performance
rights
exercised
Balance at
30 June 2020 Not yet vested
Vested and
exercisable at
30 June 2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
115,281
283,916
114,515
50,959
5,078
16,890
4,647
3,591
(45,750)
(84,313)
(39,781)
(22,188)
74,609
(74,609)
216,493
(216,493)
79,381
32,362
(79,381)
(32,362)
564,671
30,206
(192,032)
402,845
(402,845)
-
-
-
-
-
-
-
-
-
-
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Loans to Key Management Personnel
No loans are made to Key Management Personnel or other staff.
Other transactions and balances with Key Management Personnel
Purchases
During the year ended 30 June 2020, lease payments of $200,000 (2019: $200,000) 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 ‘arm’s length basis’ have
been determined by an independent assessment of rental and lease terms.
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
A. Glenning
L. Farrell
A. B. Hall
S. A. Hupert
12
12
12
12
12
12
12
12
12
12
12
2
2
2
2
2
2
2
2
2
2
2
Committee membership
As at 30 June 2020, the company had an Audit Committee comprising the 3 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 Corporations
(Rounding in Financial/Directors Reports) instrument 2016/191. 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 30).
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 $83,621
Signed in accordance with a resolution of the Directors.
P T Kempen
Director
Melbourne, 20 August 2020
28
29
PRO MEDICUS ANNUAL REPORT 2020
AUDITOR’S INDEPENDENCE DECLARATION
To the Directors of Pro Medicus Limited
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
Ernst & Young
8 Exhibit ion Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
FOR THE YEAR ENDED 30 JUNE 2020
Revenue from contracts with customers
Notes
5
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Audit or’s Independence Declarat ion t o t he Direct ors of Pro Medicus
Limit ed
As lead auditor for the audit of the financial report of Pro Medicus Limited for the financial year ended
30 June 2020, I declare to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Pro Medicus Limited and the entities it controlled during the financial
year.
Ernst & Young
Tony Morse
Partner
20 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislat ion
30
Interest revenue
Revenue
Cost of Sales
Gross Profit
Net foreign currency (losses)/gains
Accounting and secretarial fees
Advertising and public relations
Depreciation and amortisation
Insurance
Legal costs
Other expense
Salaries and employee benefits expense
Travel and accommodation
Profit before income tax
Income tax expense
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 year
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
6(a)
6(b)
6(b)
7
18
8
This Consolidated Statement of Comprehensive Income should be read in conjunction with the notes to the
financial statements.
Consolidated
2020
$’000
56,821
172
56,993
(355)
56,638
(218)
(1,069)
(1,494)
(7,683)
(772)
(702)
(857)
(12,853)
(970)
30,020
(6,944)
23,076
(308)
(308)
22,768
22.2¢
22.1¢
2019
$’000
50,105
244
50,349
(1,409)
48,940
411
(791)
(1,570)
(6,084)
(635)
(368)
(1,369)
(11,536)
(875)
26,123
(6,998)
19,125
(433)
(433)
18,692
18.5¢
18.3¢
31
PRO MEDICUS ANNUAL REPORT 2020
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
Consolidated
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
AS AT 30 JUNE 2020
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Accrued revenue
Contract assets
Other current financial assets
Income tax receivable
Inventories
Prepayments
Total Current Assets
Non-current Assets
Deferred tax assets
Plant and equipment
Trade and other receivables
Contract assets
Right-of-use lease assets
Intangible assets
Prepayments
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Income tax payable
Deferred revenue
Other current financial liabilities
Lease liabilities
Provisions
Total Current Liabilities
Non-current Liabilities
Deferred tax liabilities
Deferred revenue
Lease liabilities
Provisions
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Share buyback reserve
Share reserve
Retained earnings
TOTAL EQUITY
Foreign currency translation reserve
Notes
2020
$’000
2019
$’000
10
11
5
28
12
7
13
11
20
14
15
16
28
20
17
7
16
20
17
18
18
18
18
43,413
13,844
781
245
45
2,139
35
981
61,483
11,482
622
-
756
2,226
18,839
237
34,162
95,645
2,637
-
7,225
-
522
2,332
12,716
6,518
14,422
1,754
52
22,746
35,462
60,183
1,962
(915)
10,175
(659)
49,620
60,183
32,315
17,419
1,776
210
-
-
31
705
52,456
12,131
503
504
516
-
18,168
-
31,822
84,278
3,421
766
7,626
159
-
1,950
13,922
5,731
15,287
-
50
21,068
34,990
49,288
1,962
(73)
10,290
(351)
37,460
49,288
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated
Issued
Capital
$’000
Share
Buyback
Reserve
$’000
Share
Reserve
$’000
Foreign
Currency
Translation
Reserve
$’000
Retained
Earnings
$’000
Total
Equity
$’000
At 1 July 2018
1,962
(73)
4,920
82
28,178
35,069
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transaction with owners in their capacity
as owners
Share based payment
Tax effect of share based payments
Dividends
At 30 June 2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
781
4,589
-
-
19,125
19,125
(433)
-
19,125
18,692
(433)
(433)
-
-
-
-
-
781
4,589
(9,843)
(9,843)
1,962
(73)
10,290
(351)
37,460
49,288
At 1 July 2019
1,962
(73)
10,290
(351)
37,460
49,288
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transaction with owners in their capacity
as owners
Share based payment
Tax effect of share based payments
Share buyback
Dividends
At 30 June 2020
-
-
-
-
-
-
-
-
-
-
-
-
(842)
-
-
-
-
-
23,076
23,076
(308)
(308)
-
(308)
23,076
22,768
647
(762)
-
-
-
-
-
-
-
-
-
647
(762)
(842)
(10,916)
(10,916)
1,962
(915)
10,175
(659)
49,620
60,183
This Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial
statements.
This Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial
statements.
32
33
PRO MEDICUS ANNUAL REPORT 2020
CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Income tax paid
Net cash flows from operating activities
Cash flows from investing activities
Payments for capitalised development costs
Interest received
Purchase of plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Payments of dividends on ordinary shares
Payments for lease liabilities
Payments for share buyback
Net cash flows used in financing activities
Net increase in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Consolidated
2020
$’000
2019
$’000
Notes
60,629
(19,917)
(118)
(9,174)
31,420
47,763
(15,807)
-
(7,298)
24,658
(7,508)
(7,207)
172
(363)
244
(342)
(7,699)
(7,305)
10
14
13
9
(10,916)
(9,843)
(557)
(842)
-
-
(12,315)
(9,843)
11,406
(308)
32,315
43,413
7,510
(433)
25,238
32,315
10
This Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
34
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1. CORPORATE INFORMATION
The financial report of Pro Medicus Limited (the
Company) for the year ended 30 June 2020 was
authorised for issue in accordance with a resolution
of Directors on 20 August 2020.
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) 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).
Control is achieved when the Group is exposed, or
has rights, to variable returns from its involvement
with the investee and has the ability to affect
those returns through its power over the investee.
Specifically, the Group controls an investee if and
only if the Group has:
• Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee)
• Exposure, or rights, to variable returns from its
involvement with the investee, and
• The ability to use its power over the investee to
affect its returns.
When the Group has less than a majority of the
voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in
assessing whether it has power over an investee,
including:
• The contractual arrangement with the other vote
holders of the investee
• Rights arising from other contractual
arrangements
• The Group’s voting rights and potential voting
rights
The Group re-assesses whether or not it controls
an investee if facts and circumstances indicate
that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary
begins when the Group obtains a control over the
subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and
expenses of a subsidiary acquired or disposed of
during the year are included in the statement of
comprehensive income from the date the Group
gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of other
comprehensive income (OCI) are attributed to the
equity holders of the parent of the Group and to
the non-controlling interests, even if this results
in the non-controlling interests having a deficit
balance. When necessary, adjustments are made
to the financial statements of subsidiaries to bring
their accounting policies into line with the Group’s
accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows
relating to transactions between members of the
Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an
equity transaction. 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 OCI to profit or loss
or retained earnings, as would be required if
the Group had directly disposed of the related
assets or liabilities.
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 9 Financial Instruments
either in profit or loss or in other comprehensive
35
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
income. If the contingent consideration is classified
as equity, it shall not be remeasured.
(d) New accounting standards and
interpretations
The accounting policies adopted are consistent
with those of the previous financial year except the
adoption of new standards effective as of 1 July
2019. The group has not early adopted any other
standard, interpretation or amendment that has
been issued but is not yet effective.
New and revised standards and amendments
thereof and interpretations effective for the Group
from 1 July 2019 include:
• AASB 16 Leases
The details and impact of the adoption of AASB
16 Leases is disclosed below in Note 2(d)(i).
• AASB Interpretation 23 Uncertainty over
Income Tax Treatments
Details of AASB Interpretation 23 Uncertainty
over Income Tax Treatments is disclosed in Note
2(d)(ii). The adoption of this interpretation did
not have any impact on the disclosures or the
amounts recognised in the Group’s consolidated
financial statements.
• AASB 2018-1 Amendments to Australian
Accounting Standards - Annual Improvements
2015- 2017 Cycle
The adoption of this amending standard did
not have any impact on the disclosures or the
amounts recognised in the Group’s consolidated
financial statements.
• AASB 2018-2 Amendments to Australian
Accounting Standards - Plan Amendment,
Curtailment or Settlement
The adoption of this amending standard did
not have any impact on the disclosures or the
amounts recognised in the Group’s consolidated
financial statements.
(i) AASB 16 Leases
The Group has adopted AASB 16 Leases (“AASB
16”) supersedes AASB 117 Leases (“AASB 117”),
AASB Interpretation 4 Determining whether an
Arrangement contains a Lease, AASB Interpretation
115 Operating Leases-Incentives and AASB
Interpretation 127 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease.
AASB 16 sets out the principles for the recognition,
measurement, presentation and disclosure of leases
and requires lessees to account for most leases
under a single on-balance sheet model.
The Group has adopted AASB 16 using the
modified retrospective method of adoption with
the date of initial application being 1 July 2019. The
reclassifications and adjustments arising from the
transition to AASB 16 are therefore recognised in
the opening statement of financial position at 1
July 2019. As the Group has adopted the modified
retrospective method, there was no restatement of
comparative information
36
Nature of the effect of adoption of AASB 16
The Group is, or has been in the relevant period,
lessee under lease contracts for office premises and
motor vehicles.
Before the adoption of AASB 16, the Group
classified each of its leases at the inception date
as either a finance lease or an operating lease. All
of the Group’s leases were classified as operating
leases under AASB 117.
Upon adoption of AASB 16, the Group applied a
single recognition and measurement approach for
all leases that it is lessee. AASB 16 provides specific
transition requirements and practical expedients,
which has been applied by the Group.
• Leases previously classified as operating leases
The Group recognised right-of-use assets and
lease liabilities for those leases previously classified
as operating leases, except for short-term leases
and leases of low-value assets. Lease liabilities
were recognised based on the present value of
the remaining lease payments, discounted using
the incremental borrowing rate at the initial date
of application being 1 July 2019. The right-of-use
assets for leases were recognised at an amount
equal to the lease liability at the initial date of
application, adjusted for previously recognised
prepaid or accrued lease payments.
Application of practical expedients
In applying AASB 16 at the initial date of application
being at 1 July 2019, the Group has applied the
available practical expedients:
• Excluded initial direct costs for the measurement
of the right-of-use asset at the date of initial
application; and
• Relied on its assessment of whether leases are
onerous immediately before the date of initial
application.
Effect of adopting AASB 16 at 1 July 2019
The effect of adopting AASB 16 is as follows:
Impact on the statement of financial position (increase/(decrease)) at 1 July 2019:
Consolidated
1 Jul 2019
$’000
Non-current assets
Lease assets
Deferred tax asset
Total non-current assets
TOTAL ASSETS
Current liabilities
Lease liabilities
Total current liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
TOTAL EQUITY
2,822
827
3,649
3,649
661
661
2,161
827
2,988
3,649
-
-
-
There is no impact on the statement of profit or loss and other comprehensive income, statement of cash
flows, and basic and diluted earnings per share for the comparative period as the Group elected to adopt
the modified retrospective approach to transitioning to AASB 16.
The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as at 30 June
2019 as follows:
Operating lease commitments as at 30 June 2019
Weighted average incremental borrowing rate as at 1 July 2019
Discounted operating lease commitments at 1 July 2019
Add:
Payments in optional extension periods not recognised as at 30 June 2019
Lease liabilities as at 1 July 2019
Consolidated
1 Jul 2019
$’000
497
4.76%
469
2,353
2,822
37
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Summary of new accounting policies
Set out below are the new accounting policies of
the Group upon adoption of AASB 16, which have
been applied from the date of initial application at 1
July 2019.
• Right of use assets
The Group recognises right-of-use assets at the
commencement date of the lease (i.e. the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred,
and lease payments made at or before the relevant
commencement date less any lease incentives
received. Unless the Company is reasonably certain
to obtain ownership of the leased asset at the end
of the relevant lease term, the recognised right-of-
use assets are depreciated on a straight-line basis
over the shorter of its estimated useful life and the
relevant lease term. Right-of-use assets are subject
to impairment.
• Lease liabilities
At the commencement date of the relevant lease,
the Group recognises lease liabilities measured at
the present value of lease payments to be made
over the lease term. The lease payments include
fixed payments (including in-substance fixed
payments) less any lease incentives receivable,
variable lease payments that depend on an index
or a rate (initially measured using the index or
rate as at the relevant commencement date), and
amounts expected to be paid under residual value
guarantees. The lease payments also include the
exercise price of a purchase option reasonably
certain to be exercised by the Group and payments
of penalties for terminating a lease, if the lease
term reflects the Group exercising the option
to terminate. The Group applies the practical
expedient to not separate non-lease components
from lease components, and instead accounts for
each lease component and any associated lease
components as a single lease component.
The variable lease payments that do not depend on
an index or a rate are recognised as expense in the
period on which the event or condition that triggers
the payment occurs.
In calculating the present value of lease payments,
the Group uses the incremental borrowing rate
at the relevant lease commencement date if the
interest rate implicit in the lease is not readily
determinable. After the relevant commencement
date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for
the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there
is a modification, a change in the lease term, a
change in the in-substance fixed lease payments
or a change in the assessment to purchase the
underlying asset.
38
• Significant judgements
The Group has made the following significant
judgements with respect to its leases as lessee:
• Determining the lease term of contracts with
renewal options
The Group determines the lease term as the
non-cancellable term of the lease, together with
any periods covered by an option to extend the
lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate
the lease, if it is reasonably certain not to be
exercised.
Under some of its property leases, the Group
is able to continually exercise the option to
extend the term of the lease. The Group applies
judgement in evaluating whether it is reasonably
certain to exercise the option to renew. That
is, it considers all relevant factors that create
an economic incentive for it to exercise the
renewal. After the commencement date, the
Group reassesses the lease term if there is a
significant event or change in circumstances
that is within its control and affects its ability to
exercise (or not to exercise) the option to renew
(i.e. a change in business strategy). The Group
has included reasonably certain renewal options
as part of the lease term for its property leases
ranging from 5 to 10 years.
• Determining the incremental borrowing rate
The Group has applied judgement to determine
the incremental borrowing rate, which affects the
amount of lease liabilities or right-of-use assets
recognised. The Group reassesses and applies
the incremental borrowing rate on a lease by
lease basis at the relevant lease commencement
date based on the term of the lease (or the
remaining term of the lease at the initial date of
application).
(ii) (ii) AASB Interpretation 23 Uncertainty over
Income Tax Treatments
AASB Interpretation 23 Uncertainty over Income
Tax Treatments (“AASB Interpretation 23”)
addresses the accounting for income taxes when
tax treatments involve uncertainty that affects
the application of AASB 12 Income Taxes (“AASB
12”). It does not apply to taxes or levies outside
the scope of AASB 12, nor does it specifically
include requirements relating to interest and
penalties associated with uncertain tax treatments.
AASB Interpretation 23 specifically addresses the
following:
• Whether an entity considers uncertain tax
treatments separately
• The assumptions an entity makes about the
examination of tax treatments by taxation
authorities
• How an entity determines taxable profit (tax
loss), tax bases, unused tax losses, unused tax
credits and tax rates
• How an entity considers changes in facts and
circumstances
The Group determines whether to consider each
uncertain tax treatment separately or together
with one or more other uncertain tax treatments
and uses the approach that better predicts the
resolution of the uncertainty.
Upon adoption of AASB Interpretation 23, the
Group considered whether it has any uncertain
tax positions. The Group determined, based on
its tax compliance that it is probable that its
tax treatments will be accepted by the taxation
authorities.
AASB Interpretation 23 did not have an impact on
the consolidated financial statements of the Group.
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, estimates
and assumptions
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.
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.
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. Management has tested certain assets
for impairment in this financial period. Refer to
Note 14 of the financial statements for significant
assumptions applied in assessing for impairment on
non-financial assets.
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.
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.
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.
Income taxes:
The group is subject to income taxes in Australia
and jurisdictions where it has foreign operations.
Significant judgement is required in determining
the worldwide provision for income taxes. There
are many transactions and calculations during
the ordinary course of business for which the
ultimate tax determination is uncertain. The Group
recognises liabilities for anticipated tax audit issues
based on estimates of whether additional taxes
will be due. Where the final tax outcome of these
matters is different from the amounts that were
initially recorded, such differences will impact the
current and deferred tax provisions in the period in
which such determination is made.
39
PRO MEDICUS ANNUAL REPORT 2020
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.
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.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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..
Share-based payments:
The Group measures the cost of equity-settled
transactions with employees by reference to the
fair value of equity instruments at the date at which
they are granted. Estimating fair value for share-
based payment transactions requires determination
of the most appropriate valuation model, which
is dependent on the terms and conditions of the
grant. This estimate also requires determination
of the most appropriate inputs to the valuation
model including the expected life of the share
option/performance rights, volatility and dividend
yield and making assumptions about them. The
assumptions and models used for estimating fair
value of share-based payment transactions are
disclosed in Note 19.
Revenue recognition
Refer to Note 5 for significant judgements with
respect to revenue recognition.
4. 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.
Impairment of intangible assets is not monitored at
a segment level.
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
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.
Operating Segments
Australia
Europe
North America
Total Operations
2020
$’000
2019
$’000
2020
$’000
2019
$’000
2020
$’000
2019
$’000
2020
$’000
2019
$’000
10,945
9,182
3,306
5,306
42,570
34,412
56,821
48,900
Revenue
Sales to external customers –
software
Sales to external customers -
hardware
-
-
-
1,205
-
-
-
-
1,205
47,622
39,112
Inter-segment sales
36,619
31,923
11,003
7,189
Total segment revenue
47,564
41,105
14,309
13,700
42,570
34,412 104,443
89,217
Inter-segment elimination
Total consolidated revenue
Results
Segment result
Interest revenue
Non-segment expenses
Income tax expense
Net profit
Assets
Non-current assets
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
(47,622)
(39,112)
56,821
50,105
28,321
22,027
423
2,959
1,104
893
29,848
25,879
172
244
(6,944)
(6,998)
23,076
19,125
24,845
22,543
7,219
7,211
210
-
119
146
266
614
25,321
23,276
4,263
4,774
11,482
12,131
56,008
16,664
16,338
16,697
17,325
22,864
89,671
56,225
88,072
46,418
16,548
16,962
21,854
28,252 126,474
91,632
(30,829)
(7,354)
95,645
84,278
30,107
2,141
2,218
3,360
31,914
38,578
64,239
44,079
(28,777)
(9,089)
35,462
34,990
7,545
7,080
7,420
5,962
169
295
61
62
157
308
69
60
7,871
7,683
7,550
6,084
1,110
668
(5,274)
(1,111)
35,461
25,101
31,297
24,658
(7,374)
(7,175)
(169)
(61)
(156)
(69)
(7,699)
(7,305)
(11,811)
(9,843)
(167)
-
(214)
-
(12,192)
(9,843)
40
41
PRO MEDICUS ANNUAL REPORT 2020
5. REVENUE FROM CONTRACTS WITH CUSTOMERS
The Group’s contracts with customers comprise multiple goods and services, typically with specific fixed
or variable consideration receivable, including:
• Installation and professional services;
• Product licences;
• Transactional services, including image viewing and image archiving; and
• Support services, including updates and upgrades to the product licence.
The Group’s contracts with customers also comprise of multiple activities in order to provide customers
with the specified product. The nature of the Group’s products requires significant integration of various
goods and services promised in contracts that represent a combined output – being the offered product.
The multiple goods or services in the contract are highly interrelated and are integral in combination to the
performance of the product.
The Group has determined that within its contracts with customers there is one performance obligation of
delivering a specified product given:
• The Group provides a significant service of integrating the goods or services with other goods or
services promised in the contract. The combined output – being the offered product – represents a
bundle of the Group’s various goods or services;
• Goods or services (i.e. installation, product licence, transaction services and support services) are highly
interrelated and integral to the performance of the product. The Group could not fulfil its performance
obligation of delivering a specified product by transferring each of the goods or services independently;
and
• Only the Group can provide product installation, transactional services and support (including
significant updates/upgrades) services to customers of product licences, given the associated
intellectual property of the product owned by the Group.
Revenue from multi-element contracts is recognised over the term of the contract, commencing when the
product is ready for use following the installation and establishment of the product licence on the basis
that:
• Customers have no alternate use for the Group’s products outside of the contract period; and
• The Group has an enforceable right to payment for performance completed to date during the period of
the contract.
Revenue is recognised by reference to the satisfaction of the one performance obligation using the input
method. The input method is applied based on the elapsed term of the contract in comparison to the
length of the total contract term from when the product is ready for use by the customer until the licence
and support periods end.
The Group receives consideration for certain elements of product contracts that is based on transaction
volumes and dependent upon customer activity. Such consideration is recognised as revenue as the
customer activity occurs over the term of the contract and the Group becomes entitled to payment.
Directly attributable commissions paid to employees of the Group for obtaining contracts are initially
capitalised as a contract asset and recognised within salaries and employee benefits expense over time
as revenue from the related contract is recognised. The carrying value of contract assets are assessed for
impairment at each reporting date.
• Product updates/upgrades received by the customer over the contract period are frequent and
significant to the performance and compliance of the products with relevant regulatory authorities;
Other
5. REVENUE FROM CONTRACTS WITH CUSTOMERS (cont’d)
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
Year ended 30 June 2020 ($’000)
Australia
Europe
North
America
Total
Consolidated
Types of goods and services
Radiology Information System (RIS)
9,749
-
-
9,749
Picture Archiving Communications System
(Visage 7/Open Archive)
1,196
3,265
42,570
47,031
Other
-
41
-
41
Total revenue per statement of comprehensive income
10,945
3,306
42,570
56,821
Timing of revenue recognition
Point in time
Over time
Total revenue per statement of comprehensive income
-
10,945
10,945
-
3,306
3,306
-
42,570
42,570
-
56,821
56,821
Year ended 30 June 2019 ($’000)
Australia
Europe
North
America
Total
Consolidated
Types of goods and services
Radiology Information System (RIS)
8,080
-
-
8,080
Picture Archiving Communications System
(Visage 7/Open Archive)
1,102
6,482
34,412
41,996
-
29
-
29
Total revenue per statement of comprehensive income
9,182
6,511
34,412
50,105
Timing of revenue recognition
Point in time
Over time
Total revenue per statement of comprehensive income
-
9,182
9,182
4,255
2,256
6,511
-
4,255
34,412
45,850
34,412
50,105
Payments received in advance of the commencement of the term of the contract is initially deferred
as contract liabilities (refer to Note 16). Some contracts contain minimum annual volume amounts for
transactional services that are recognised as revenue in advance of billing and disclosed as accrued
revenue.
During the year ended 30 June 2019, the Group entered into a bespoke contract to provide a certain
customer with a perpetual licence to use a product, irrespective of the customer’s transactional activity.
Support services are sold to the customer, at the customer’s discretion, in separate short-term contracts.
The pricing for these support services contracts are at normal commercial terms.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
42
43
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Set out below is the amount of revenue from contracts with customers recognised from:
Amounts included in deferred revenue at the beginning of the year
Set out below is the amount of salaries and employee benefits expense recognised from:
Consolidated
2020
$’000
7,626
2019
$’000
5,032
Consolidated
2020
$’000
210
2019
$’000
184
Amounts included in contract assets at the beginning of the year
Revenue from major customers
Included in the North American segment is a customer that contributed to the total consolidated Group
revenue by 14.0% (2019: 13.8%). No other customer contributed 10% or more to the Group’s revenue for the
year ended 30 June 2020.
Fair value loss on financial instruments – forward exchange contracts
6. INCOME AND EXPENSES
(a) Net foreign currency gains/(losses)
Currency gains
Currency (loss)
Total net foreign currency gains
(b) Expenses
Depreciation and amortisation
Property improvements
Motor vehicles
Office equipment
Furniture and fittings
Right-of-use lease assets
Amortisation on capitalised development costs
Amortisation on software licences
Total depreciation and amortisation expense
Salaries and employee benefits expense
Gross wages and salaries
Capitalised wages and salaries**
Long service leave provision
Share-based payment ***
Defined contribution plan
Total salaries and employee benefits expense
Notes
13
13
13
13
20
14
14
Consolidated
2020
$’000
7,774
2019
$’000
3,387
(8,037)
(2,817)
45
(218)
(159)
411
2
7
231
4
601
3
7
169
12
-
6,837
5,893
1
-
7,683
6,084
16,823
15,197
(5,893)
(5,624)
(8)
647
1,284
12,853
80
781
1,102
11,536
**The Group’s total wages and salaries incurred was $16,823,000 (2019: $15,197,000) of which $5,893,000 (2019:
$5,624,000) of these costs have been capitalised as development costs within intangible assets.
***91,292 performance rights were granted on 16 September 2019 under the Group’s long-term incentive plan. The
performance rights vest in accordance with performance conditions related to earnings per share (“EPS”) and total
shareholder returns (“TSR”) after completion of a service condition being 4 years from the grant date. The fair value of
the performance rights at grant date were TSR hurdle - $2.85 and EPS hurdle - $13.58 per performance. The amount
of share-based payment expense for the year ended 30 June 2020 takes into consideration the probability of certain
performance conditions vesting.
7. 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:
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.
Income taxes relating to items recognised directly
in equity are recognised in equity and not in the
statement of comprehensive income.
• 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 temporary differences
At 30 June 2020, the Group has not recognised
deferred tax liabilities 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.
Tax consolidation legislation
Pro Medicus Limited and its wholly-owned
Australian controlled entities implemented the tax
consolidation legislation as of 1 July 2009. Members
of the tax consolidated group have entered into a
tax funding agreement.
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 under the tax funding
agreement. The Group applies the Group allocation
approach to determining the appropriate amount
of current taxes and deferred taxes to allocate
to members 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.
In addition to its own current and deferred tax
amounts, Pro Medicus Limited 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.
44
45
PRO MEDICUS ANNUAL REPORT 2020
7. INCOME TAX (cont’d)
The major components of income tax expense are:
Statement of Comprehensive Income
Current income tax
Current income tax charge
Prior year adjustment
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax expense reported in profit or loss
Statement of Changes of Equity
Current income tax
Deferred income tax
Impact of the Employee Share Trust – vested share based payments
Relating to origination and reversal of temporary differences due to the
Employee Share Trust – unvested share-based payments
Income tax benefit reported directly in the statement of changes in
equity
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
– Australia
– United States of America
– Germany
Prior year adjustment
Expenditure not allowable for income tax purposes
Benefit from vested share based payments
Other
Income tax expense reported in profit or loss
Notes
Consolidated
2020
$’000
2019
$’000
Deferred income tax
Consolidated Statement
of Financial Position
Consolidated Statement
of Comprehensive Income
Direct to Equity
Deferred income tax at 30 June relates
to the following:
2020
$’000
2019
$’000
2020
$’000
2019
$’000
2020
$’000
2019
$’000
7. INCOME TAX (cont’d)
6,245
(22)
721
6,944
8,576
(659)
(919)
6,998
(215)
(691)
715
(3,898)
500
(4,589)
30,020
26,123
8,548
267
128
(22)
199
(2,103)
(73)
6,944
6,681
226
892
(659)
(267)
(61)
186
6,998
Deferred Tax liabilities
Foreign currency exchange gain
Capitalised development expenses
Depreciation expenses
Right-of-use lease asset
Contract assets
Deferred tax liabilities
Deferred tax assets
Employee entitlements
Intellectual property expenses
Accruals
Deferred revenue
Lease liabilities
Employee Share Trust – unvested share-
based payments
Other
Deferred tax assets
Deferred tax movement (charged)
or credited to profit or loss
Deferred tax movement (charged)
or credited directly to equity
8. EARNINGS PER SHARE
(65)
5,652
23
666
242
51
5,439
57
-
184
6,518
5,731
577
252
22
4,914
681
5,032
619
271
37
5,451
-
5,749
116
(213)
34
(666)
(58)
(787)
(42)
(19)
(15)
(537)
681
(717)
4
4
-
69
(914)
(13)
-
10
(848)
153
(19)
17
1,479
-
136
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(715)
3,898
-
-
11,482
12,131
(649)
1,767
(715)
3,898
(1,436)
919
-
-
-
-
(715)
3,898
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.
Diluted earnings per share is calculated as net profit attributable to members of the Group adjusted for:
•
•
The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have
been recognised as expenses
Other non-discretionary changes in revenue or expenses during the period that would result from the
dilution of potential ordinary shares
• Dilutive potential ordinary shares adjusted for any bonus element
and then divided by the weighted average number of ordinary shares.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
46
47
PRO MEDICUS ANNUAL REPORT 2020
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Consolidated
2020
$
2019$
23,075,654
19,125,398
Number
Number
103,896,117
103,574,482
560,916
853,010
104,457,033
104,427,492
Net profit attributable to ordinary equity holders
Weighted average number of ordinary shares for basic earnings per share
Effect of dilution:
Performance rights
Weighted average number of ordinary shares adjusted for the effect of dilution
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
9. DIVIDENDS PAID AND PROPOSED
Declared and paid during the year:
Dividends on ordinary shares
Final franked dividend for 2019: 4.5 cents (2018: 3.5 cents franked)
Interim franked dividend for 2020: 6.0 cents (2019: 3.5 cents franked)
Special franked dividend for 2020: nil (2019: 2.5 cents franked)
Proposed for approval by directors (not recognised as a liability as at 30 June):
Final franked dividend for 2020: 6.0 cents (2019: 4.5 cents franked)
Dividends on ordinary shares:
Total dividends proposed
Franking credit balance
of the financial year
end of the financial year
the subsequent financial year
− prior period adjustment
− franking account balance as at the end of the financial year at 30% (2019: 30%)
− franking credits that will arise from the payment of income tax payable as at the end
− franking debits that will arise from the payment of dividends as at the
− franking credits that the entity may be prevented from distributing in
Consolidated
2020
$’000
2019
$’000
4,679
6,237
-
10,916
6,239
6,239
4,314
642
-
-
-
3,626
3,627
2,590
9,843
4,663
4,663
2,417
434
-
-
-
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
(2,828)
(1,998)
2,128
853
The tax rate at which paid dividends have been franked is 30% (2019: 30%).
Dividends proposed will be fully franked.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
10. CASH AND CASH EQUIVALENTS
Cash at bank and in hand *
Short-term deposits
Consolidated
2020
$’000
29,392
14,021
43,413
2019
$’000
24,315
8,000
32,315
*$2,200,000 (2019: $450,000) of the cash at bank balance is held as a deposit for foreign exchange forward contracts.
The deposit matures and becomes available following the settlement of the foreign exchange forward contracts within
three months of the reporting date.
Cash and cash equivalents in the Statement of Financial Position and Statement of Cash Flow comprise cash at
bank and in hand and short term deposits that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes of value.
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short term deposits are made for varying periods, depending on the immediate cash requirements of the Group,
and earn interest at the respective short-term deposit rates.
The fair value of cash and cash equivalents is their carrying value.
Reconciliation of net profit after tax to net cash flows from operations
Net profit
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Interest received classified in investing activities
Current income tax impact of vested share-based payments recognised
directly in equity
Fair value loss on financial instruments
Share-based payment expense
Changes in assets and liabilities
Consolidated
2020
$’000
23,076
846
6,837
(172)
3,357
(204)
647
2019
$’000
19,125
191
5,893
(244)
691
(34)
781
(Increase)/decrease in trade and other receivables
4,079
(10,580)
(Increase)/decrease in inventory
(Increase)/decrease in deferred tax asset
(Increase)/decrease in prepayments
(Increase)/decrease in accrued revenue
(Increase)/decrease in contract assets
(Decrease)/increase in trade and other payables
(Decrease)/increase in income tax payable
(Decrease)/increase in deferred income
(Decrease)/increase in deferred tax liability
(Decrease)/increase in employee entitlements
Net cash flow from operations
(4)
(65)
(513)
995
(275)
(5,543)
(780)
(766)
(1,266)
787
384
23
(1,768)
38
1,453
38
-
1,423
(72)
6,785
848
67
31,420
24,658
4,956
2,851
(Increase)/decrease in income tax receivable
48
49
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
11. TRADE AND OTHER RECEIVABLES
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised
cost less an allowance for any impairment.
Less: Allowance for expected credit losses
Current
Trade receivables
Other receivables
Non-current
Trade receivables
Consolidated
2020
$’000
2019
$’000
13,324
-
13,324
520
13,844
-
-
17,861
(647)
17,214
205
17,419
504
504
Consolidated
2020
$’000
2019
$’000
647
(647)
-
-
-
-
647
-
-
647
Fair value approximates carrying value due to the short term nature of receivables.
A provision for impairment is made based on applying a simplified approach in calculating the expected
credit losses (“ECL”) for debtors and other receivables (including accrued revenue). Therefore, the
Group does not track changes in credit risk, but instead recognises an ECL allowance based on lifetime
ECL at each reporting date. The Group’s provisioning methodology is based on its historical credit
loss experience, adjusted for forward-looking factors specific to individual debtors and the economic
environment. Debtors and other receivables (including accrued revenue) are written off when there is no
reasonable expectation of recovering the contractual cash flows.
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
Utilised during the year
Foreign exchange translation
At 30 June
The charge to the allowance for expected credit losses during the year ended 30 June 2020 reflects a
change in expected losses for a specific debtor arising during the year that did not exist in the prior year
or at date of transition to AASB 9 Financial Instruments.
At June 30, the ageing analysis of trade receivables is as follows:
0 – 30 days
31 – 60 days
61 – 90 days
91+ days
Total trade receivables
Consolidated
Trade receivables
Allowance for expected credit losses
2020
$’000
2019
$’000
2020
$’000
2019
$’000
7,629
1,187
1,262
3,246
9,993
1,582
1,367
5,423
13,324
18,365
-
-
-
-
-
-
-
-
(647)
(647)
No allowance for expected credit losses at 30 June 2020 was made as all outstanding debts were
expected to be received.
The majority of customers are on terms of between 30 to 60 days, however certain customers have
terms of up to 90 days. Payment terms for $2,455,658 (2019: $4,434,798) of trade receivables have pre-
contracted extended trading terms and are due within the next 12 months.
12. INVENTORY
Finished goods (at lower of cost and net realisable value)
Consolidated
2020
$’000
35
2019
$’000
31
Inventory write downs recognised as an expense during the year ended 30 June 2020 total nil (2019: nil)
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.
13. PLANT & 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:
Property Improvements
Motor Vehicles
Office Equipment
Furniture and Fittings
2020
2019
2 to 7 years
4 to 5 years
2 to 7 years
5 years
2 to 7 years
4 to 5 years
2 to 7 years
5 years
Research and Development Equipment
3 to 4 years
3 to 4 years
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.
50
51
PRO MEDICUS ANNUAL REPORT 2020
Consolidated
Property
Improvements
Motor
Vehicles
Office
Equipment
Furniture &
Fittings
Research &
Development
Equipment
Total
$’000
$’000
$’000
$’000
$’000
$’000
11
-
-
-
(2)
9
20
-
-
-
(7)
13
461
359
-
-
(231)
589
11
4
-
-
(4)
11
-
-
-
-
-
-
503
363
-
-
(244)
622
335
488
3,216
427
209
4,675
(326)
(475)
(2,627)
(416)
(209)
(4,053)
9
13
589
11
-
622
Consolidated
Property
Improvements
Motor
Vehicles
Office
Equipment
Furniture &
Fittings
Research &
Development
Equipment
Total
$’000
$’000
$’000
$’000
$’000
$’000
14
27
-
-
-
(3)
11
-
-
-
(7)
20
292
330
-
8
(169)
461
19
5
-
(1)
(12)
11
-
-
-
-
-
-
352
335
-
7
(191)
503
334
488
2,872
420
209
4,323
(323)
(468)
(2,411)
(409)
(209)
(3,820)
11
20
461
11
-
503
14. INTANGIBLE ASSETS
Intangible assets acquired separately 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 PACS
• Visage MagicWeb 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.
13. PLANT & EQUIPMENT (cont’d)
Year ended 30 June 2020
At 1 July 2019 net of accumulated
depreciation
Additions
Disposals
Exchange differences
Depreciation charge for the year
At 30 June 2020 net
of accumulated depreciation
At 30 June 2020
Cost
Accumulated depreciation
and impairment
Net carrying amount
Year ended 30 June 2019
At 1 July 2018 net of accumulated
depreciation
Additions
Disposals
Exchange differences
Depreciation charge for the year
At 30 June 2019 net of accumulated
depreciation
At 30 June 2019
Cost
Accumulated depreciation and impairment
Net carrying amount
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
52
53
PRO MEDICUS ANNUAL REPORT 2020
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.
Year ended 30 June 2020
At 1 July 2019 net of accumulated amortisation
and impairment
Additions - internal development
Disposals
Exchange differences
Amortisation charge for the year
At 30 June 2020 net of accumulated amortisation
and impairment
At 30 June 2020
Cost
Accumulated amortisation and impairment
Net carrying amount
Year ended 30 June 2019
At 1 July 2018 net of accumulated amortisation
and impairment
Additions - internal development
Disposals
Exchange differences
Amortisation charge for the year
At 30 June 2019 net of accumulated amortisation
and impairment
At 30 June 2019
Cost
Accumulated amortisation and impairment
Net carrying amount
Consolidated
Intellectual
Property
i)
Development
Costs
ii)
Software
Licenses
$’000
$’000
$’000
-
-
-
-
-
-
18,167
7,508
-
1
(6,837)
18,839
1
-
-
-
(1)
-
1,848
54,388
(1,848)
(35,549)
324
(324)
-
-
-
-
-
-
-
18,839
16,853
7,207
-
-
(5,893)
18,167
-
1
-
-
-
-
1
Total
$’000
18,168
7,508
-
1
(6,838)
18,839
56,560
(37,721)
18,839
16,854
7,207
-
-
(5,893)
18,168
1,848
46,879
321
49,048
(1,848)
(28,712)
(320)
(30,880)
-
18,167
1
18,168
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
54
i) Intellectual property was acquired through previous business combinations and is carried at cost less
accumulated amortisation. These intangible assets have been assessed as having a finite life and have
been fully amortised using the straight-line method over a period of 5 years.
ii) Development costs have been capitalised. 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 2020 the carrying
values of capitalised development costs are Visage PACS ($13,214,598) RIS ($5,483,667) and Visage
MagicWeb ($140,783), all sit within the Australian operating segment.
Impairment
The carrying values of intangible assets 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.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the
intangible assets or cash-generating units are written down to their recoverable amount.
The recoverable amount of intangible assets 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.
No impairment loss was recognised during the year ended 30 June 2020 (2019: nil impairment loss).
15. 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.
Current
Trade payables
Other payables and accruals
Consolidated
2020
$’000
835
1,802
2,637
(i) Trade payables are non-interest bearing and are normally settled on 30-day terms.
(ii) Other 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.
16. DEFERRED REVENUE
Current
Deferred revenue from contracts with customers
Non-current
Deferred revenue from contracts with customers
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are
unsatisfied as at 30 June 2020 was $21,647,000 (2019: $22,913,000) and is expected to be recognised as
revenue in future reporting periods as follows:
Less than one year
Between one year and seven years
Revenue to be recognised from unsatisfied performance obligations
Consolidated
2020
$’000
2019
$’000
7,225
14,422
21,647
7,626
15,287
22,913
55
2019
$’000
705
2,716
3,421
2019
$’000
7,626
7,626
Consolidated
2020
$’000
7,225
7,225
14,422
14,422
15,287
15,287
PRO MEDICUS ANNUAL REPORT 2020
17. 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. 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.
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.
Employee leave benefits
Provision is made for employee entitlement
benefits accumulated as a result of employees
rendering services up to the reporting date.
(i) Annual leave and sick leave
The liability for annual 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 high quality corporate bonds with terms
to maturity and currencies that match, as closely
as possible the estimated future cash outflows.
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 high quality corporate bonds with terms to
maturity and currencies that match, as closely as
possible the estimated future cash outflows.
Consolidated
2020
$’000
980
1,352
2,332
52
52
2019
$’000
989
961
1,950
50
50
Consolidated
2020
$’000
1,962
1,962
2019
$’000
1,962
1,962
Current
Long service leave
Annual leave
Non Current
Long service leave
Contributed Equity
(i) Ordinary shares
Issued and fully paid
18. CONTRIBUTED EQUITY AND RESERVES
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.
Fully paid ordinary shares carry one vote per share and carry the right to dividends
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
(ii) Movements in shares on issue
At 1 July 2019
Issued for cash on exercise of options
Cancellation of share buyback
Vesting of performance rights
At 30 June 2020
At 1 July 2018
Issued for cash on exercise of options
Vesting of performance rights
At 30 June 2019
Share Reserve (i)
Balance at 1 July
Performance rights expensed
Income tax effect of the Employee Share Trust
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
(i) Share reserve
Number of Shares
103,616,518
-
(34,062)
364,376
2020
$’000
1,962
-
-
-
103,946,832
1,962
Number of Shares
103,369,049
-
247,469
2019
$’000
1,962
-
-
103,616,518
1,962
Consolidated
2020
$’000
2019
$’000
10,290
647
(762)
10,175
(351)
(308)
(659)
37,460
23,076
(10,916)
49,620
4,920
781
4,589
10,290
82
(433)
(351)
28,178
19,125
(9,843)
37,460
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
$10,915,959 (2019: $9,843,585).
19. SHARE BASED PAYMENTS
(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).
56
57
PRO MEDICUS ANNUAL REPORT 2020
Performance Rights
Former Long Term Incentive (LTI) Scheme
A long term incentive plan was established on
18 November 2011 whereby Senior Executives of
the 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 4 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.
Current Long Term Incentive (LTI) Scheme
A new long term incentive plan was established
during 2016-17 whereby Senior Executives of
the Group were offered performance rights over
the ordinary shares of Pro Medicus Limited. The
performance rights, issued for nil consideration,
are offered for a 12 month period and vest 4 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.
During the reporting period, 91,292 performance
rights have been granted with a grant date of 16
September 2019. The performance rights vest over
4 years from grant date on completion of service.
The fair value of these 91,293 performance rights at
grant date was $847,691 (TSR hurdle - $2.85, EPS
hurdle - $13.58 per performance right).
241,250 performance rights were granted in
prior periods in relation to the 2018-19 financial
performance. The performance rights vest over 4
years from grant date on completion of service.
The fair value of these 241,250 performance rights
at grant date was $719,551 (TSR hurdle - $1.10, EPS
hurdle - $4.24 per performance right).
330,021 performance rights were granted in prior periods in relation to the 2017-18 financial performance.
The performance rights vest over 4 years from grant date on completion of service. The fair value of
these 330,021 performance rights at grant date was $564,707 (TSR hurdle - $0.72, EPS hurdle - $2.37 per
performance right).
320,492 performance rights were granted in prior periods in relation to the 2016-17 financial performance.
90,000 performance rights from Tranche 1 vest over 4 years from grant date on completion of service. The
fair value of these 90,000 performance rights at grant date was $439,326 ($4.88 per performance right).
A further 180,492 performance rights from Tranche 2 vest over 4 years from grant date on completion
of service. The fair value of these 180,492 performance rights at grant date was $326,003 (TSR hurdle
- $0.85, EPS hurdle - $2.45 per performance right). The remaining 50,000 performance rights vest in
September 2017 and the fair value of these rights was $44,500 ($0.89 per performance right).
414,375 performance rights were granted in prior periods in relation to the 2015-16 financial performance.
364,376 performance rights vest over 4 years from grant date on completion of service. The fair value of
the 364,376 performance rights at grant date was $721,463 ($1.98 per performance right). The remaining
50,000 performance rights vest in September 2016 and the fair value of these rights was $44,500 ($0.89
per performance right).
397,469 performance rights were granted in prior periods in relation to the 2014-15 financial performance.
247,469 performance rights vest over 4 years from grant date on completion of service. The fair value of
the 247,469 performance rights at grant date was $205,166 ($0.83 per performance right). The remaining
150,000 performance rights vest in September 2015 and the fair value of these rights was $133,737 ($0.89
per performance right).
Information with respect to the number of performance rights granted under the long term incentive
scheme is as follows:
Outstanding at the beginning of the year
− granted
− forfeited
− exercised
− expired
Outstanding at the end of the year
Exercisable at end of year
2020
2019
Number of
Performance Rights
Number of
Performance Rights
1,200,390
91,292
-
1,206,609
241,250
-
(364,376)
(247,469)
-
-
927,306
1,200,390
—
—
Weighted average remaining contractual life
The weighted average remaining contractual life for performance rights at 30 June 2020 is 2.2 years (2019:
2.4 years)
Performance rights pricing model (Former Long Term Incentive Scheme)
The fair value of the equity-settled performance rights granted under the former long term incentive
scheme 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.
There were no rights granted under the former long term incentive scheme during the period.
Performance rights pricing model (Current Long Term Incentive Scheme)
The fair value of the equity-settled performance rights granted for the current long term incentive scheme
is estimated as at the date of the grant using Black Sholes and Monte Carlo Simulation Models taking into
account the terms and conditions upon which the performance rights were granted.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
The current plan in place to provide these benefits
is:
• The Long-Term Incentive Plan (LTIP), which
provides benefits to senior executives and other
employees.
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 either
a Black Scholes model or Monte Carlo simulation
model.
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 profit or loss 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.
The dilutive effect, if any, of outstanding options
is reflected as additional share dilution in the
computation of diluted earnings per share (see
Note 8).
58
59
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
The following table lists the inputs to the models used:
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of performance rights
Performance rights exercise price
Fair value of performance rights at measurement date
(per performance right)
2020
0.38%
17.06%
0.90%
4 years
$0.00
2019
0.69%
14.96%
3.30%
4 years
$0.00
2018
0.82%
15.56%
3.30%
4 years
$0.00
$2.85-13.58
$1.10-4.24
$0.72-2.37
20. LEASES
As disclosed in Note 2(d)(i), the Group has adopted AASB 16 using the modified retrospective method of
adoption with the date of initial application being 1 July 2019.
Set out below are the carrying amounts of the Group’s right-of-use assets and lease liabilities during the
year ended 30 June 2020:
As at 1 July 2019
Depreciation expense
Interest expense
Payments
Foreign exchange translation
As at 30 June 2020
Right-of-use assets
Lease liabilities
Consolidated
Property
$’000
Motor vehicles
$’000
2,724
(552)
-
-
4
2,176
98
(49)
-
-
1
50
Total
$’000
2,822
(601)
-
-
5
Total
$’000
(2,822)
-
(118)
675
(11)
2,226
(2,276)
Set out below are the amounts recognised in profit and loss during the year ended 30 June 2020:
Depreciation expense
Interest expense
Total amount recognised in profit and loss
The Group had total cash outflows for leases during the year ended 30 June 2020 of $675,000.
Set out below is a maturity analysis of lease liabilities:
Less than one year
One to five years
More than five years
Total undiscounted amount
At 30 June 2020 there were no leases that were committed to but not yet commenced.
21. EVENTS AFTER THE BALANCE SHEET DATE
On 20 August 2020, the directors of Pro Medicus Limited declared a fully franked final dividend on
ordinary shares in respect of the 2020 financial year of 6.0 cents per share totalling $6,238,854. The
dividend has not been provided for in the 30 June 2020 financial statements.
Consolidated
30 Jun 2020
$’000
601
118
719
Consolidated
Leases commenced at
30 Jun 2020
522
1,365
800
2,687
22. AUDITOR’S REMUNERATION
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 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
– other services in relation to 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
Consolidated
2020
2019
217,920
82,865
300,785
104,691
756
406,232
187,200
64,450
251,650
73,632
14,820
340,102
Consolidated
2020
2019
3,526,731
3,478,777
115,035
(46,592)
111,874
3,707,048
114,769
25,392
507,643
4,126,581
(b) Loans to Key Management Personnel
No loans are made to Key Management Personnel or staff.
(c) Other transactions and balances with Key Management Personnel
Purchases
DDuring the year lease payments of $200,000 (2019: $200,000) 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 ‘arm’s length basis’ have been determined by an
independent assessment of rental and lease terms. The current arrangement is on a month to month basis.
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
Country of incorporation
2020
2019
2020
2019
% Equity interest
Investment $000
Promed (USA) Pty Ltd
PME IP Australia Pty Ltd
Australia
Australia
Visage Imaging (Aust) Pty Ltd Australia
Visage Ventures Pty Ltd
Australia
PME Nominees Pty Ltd (ATF
Employee Share Trust)
Australia
Pro Medicus (USA) LLC
United States
Visage Ventures Inc
Visage Imaging Inc
United States
United States
Visage Imaging GmbH
Germany
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
—
—
—
—
—
—
—
—
—
—
—
—
—
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.
60
61
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
(c) 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.
Consolidated
Related party
Champagne Properties Pty Ltd – Rental lease
Champagne Properties Pty Ltd – Rental lease
Sales to related
parties
$000
Purchases from
related parties
$000
Other transactions
with related parties
$000
2020
2019
—
—
200
200
—
—
* Champagne Properties Pty Ltd is an entity controlled by Directors of the Company, S. Hupert and A. Hall.
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made in arm’s length transactions both at normal market
prices and on normal commercial terms.
Outstanding balances at year end are unsecured, interest free and payable on demand.
25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments are cash and short-term deposits.
The main purpose of these financial instruments is to provide finance for the Group’s operations. The
Group has various other financial assets and liabilities such as trade receivables and trade payables, which
arise directly from its operations. The main risks arising from the Group’s financial instruments are foreign
currency risk, interest risk and credit risk. The Board manages each of these risks as detailed below.
Foreign currency risk
(i) Functional and presentation currency
Both the functional and presentation currency of Pro Medicus Limited and its Australian subsidiaries are
Australian dollars ($). 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 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 profit or
loss.
The Group has transactional currency exposure, which arise from sales made in currencies other than the
Group’s presentational currency.
Approximately 81% (2019: 83%) of the Group’s sales are denominated in currencies other than the
presentational 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 presentational currency (AUD) cash holdings.
62
At 30 June the Group had the following exposure to US$ foreign currency that is not designated in cash
flow hedges or recorded in the functional currency of the subsidiary
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Net exposure
Consolidated
2020
$’000
16,459
16,459
-
16,459
2019
$’000
12,886
12,886
-
12,886
At 30 June the Group had the following exposure to CAD$ foreign currency that is not designated in cash
flow hedges or recorded in the functional currency of the subsidiary
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Net exposure
Consolidated
2020
$’000
2019
$’000
667
667
-
667
619
619
-
619
At 30 June the Group had the following exposure to GBP£ foreign currency that is not designated in cash
flow hedges or recorded in the functional currency of the subsidiary
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Net exposure
Consolidated
2020
$’000
2019
$’000
125
125
-
125
126
126
-
126
At 30 June the Group had the following exposure to EUR€ foreign currency that is not designated in cash
flow hedges or recorded in the functional currency of the subsidiary
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Net exposure
Consolidated
2020
$’000
2019
$’000
747
747
-
747
3
3
-
3
63
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
AUD/USD +10%
AUD/USD –5%
AUD/CAD +10%
AUD/CAD –5%
AUD/GBP +10%
AUD/GBP –5%
AUD/EUR +10%
AUD/EUR –5%
Credit risk
25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)
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:
Post tax profit
higher/(lower)
Other comprehensive income
higher/(lower)
2020
$’000
(816)
408
(67)
33
(12)
6
(75)
37
2019
$’000
(10)
5
(62)
31
(13)
6
-
-
2020
$’000
(102)
51
-
-
-
-
2019
$’000
(95)
48
-
-
-
-
(254)
127
(244)
122
Management believe the reporting date risk exposures are representative of the risk exposure inherent in
the financial instruments.
Credit risk arises from the financial instruments of the Group, which comprise cash and cash equivalents
and trade and other receivables. The Group’s exposure to credit risk arises from potential defaults of the
counter-party, with a maximum exposure equal to the carrying amount of the financial assets.
The Group trades only with recognised, credit worthy third parties.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit
assessment.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s
exposure to bad debts is not significant.
As the Group trades predominantly within the Diagnostic Imaging market there is a concentration of credit
risk. Given the underlying Government funding support for Radiology in Hospital settings and the Imaging
Centre and
Diagnostic Imaging market, and the commercial successes achieved by the Group to date, credit risk is
considered to be minimal.
Cash and cash equivalents are held with several financial institutions, with the majority held with the
Westpac Banking Corporation and Wells Fargo Bank N.A., both AA rated banks.
Interest risk
The Group exposure to market interest rates relates primarily to the company’s cash and cash equivalents.
At reporting date, the Group had the following financial assets exposed to Australian Variable interest rate
risk that are not designated in cash flow hedges:
Cash and Cash equivalents in the Group ($’000) $43,413 (2019: $32,315).
The Group’s policy is to place cash balances in either 30-180 day term deposits or commercial bills that
earn higher interest rates.
At 30 June 2020, 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:
Judgements of reasonably possible movements:
Consolidated
+1% (100 basis points)
–0.5% (50 basis points)
Liquidity risk
Post tax profit
higher/(lower)
Other comprehensive income
higher/(lower)
2020
$’000
433
(217)
2019
$’000
322
(161)
2020
$’000
2019
$’000
-
-
-
-
The Group has minimal liquidity risk as it has cash reserves of $43.4m, 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 2020.
The remaining contractual maturities of the Group’s financial liabilities are:
<30 days
31 – 60 days
61 – 90 days
Over 90 days
TOTAL
Consolidated
2020
$’000
1,049
254
299
1,035
2,637
2019
$’000
1,385
344
29
1,663
3,421
26. 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. Nevertheless, 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). There are additional
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.
27. 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
Share Buyback Reserve
Total shareholders’ equity
Profit/(loss) of the parent entity
Total comprehensive income of parent entity
2020
$000
19,986
34,614
18,631
26,143
1,962
4,610
(3,434)
6,248
(915)
8,471
9,991
9,991
2019
$000
20,873
33,921
21,289
24,859
1,962
5,665
(3,395)
4,903
(73)
9,062
2,781
2,781
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.
64
65
PRO MEDICUS ANNUAL REPORT 2020
(c) 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 Statement of Cash Flows 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.
(d) Comparatives
Where necessary, comparatives have been reclassified and repositioned for consistency with current year
disclosures.
28. OTHER ACCOUNTING POLICIES
(a) 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
2020. These are as follows:-
i. Conceptual Framework AASB 2019-1 Conceptual Framework for Financial Reporting Amendments to
Australian Accounting Standards – Reference to the Conceptual Framework — Effective date: 1 January
2020 (Application date: 1 July 2020)
The revised Conceptual Framework includes some new concepts, provides updated definitions and
recognition criteria for assets and liabilities and clarifies some important concepts. It is arranged in eight
chapters, as follows.
• Chapter 1 — The objective of financial reporting
• Chapter 2 — Qualitative characteristics of useful financial information
• Chapter 3 — Financial statements and the reporting entity
• Chapter 4 — The elements of financial statements
• Chapter 5 — Recognition and derecognition
• Chapter 6 — Measurement
• Chapter 7 — Presentation and disclosure
• Chapter 8 — Concepts of capital and capital maintenance
AASB 2019-1 sets out the amendments to Australian Accounting Standards, Interpretations and other
pronouncements in order to update references to the revised Conceptual Framework. The changes to the
Conceptual Framework may affect the application of accounting standards in situations where no standard
applies to a particular transaction or event. In addition, relief has been provided in applying AASB 3 and
developing accounting policies for regulatory account balances using AASB 108, such that entities must
continue to apply the definitions of an asset and a liability (and supporting concepts) in the Framework
for the Preparation and Presentation of Financial Statements (July 2004), and not the definitions in the
revised Conceptual Framework.
The Group is currently assessing the impact of the application of the new Conceptual Framework.
(b) Derivative financial instruments and hedging
The Group uses derivative financial instruments (forward currency contracts) to manage its risks
associated with foreign currency. Such derivative financial instruments are initially recognised at fair value
at the date on which a derivative contract is entered into and are subsequently remeasured to fair value
at the reporting date. The fair value of the derivative financial instruments are level 2, being derived from
directly or indirectly observable inputs.
Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is
negative. Any gains or losses arising from changes in the fair value of derivative are recorded directly in
profit or loss for the year within net foreign currency gains/(losses). The Group does not apply hedge
accounting. The foreign exchange forward contracts are entered into for periods consistent with foreign
currency exposure of the underlying transactions, generally from three to six months.
Set out below is a comparison of the carrying amounts and fair value of the Group’s financial instruments.
Financial liabilities
Foreign exchange forward contracts
2020
Carying
Amount
$’000
45
45
Fair
Value
$’000
45
45
2019
Carying
Amount
$’000
(159)
(159)
Fair
Value
$’000
(159)
(159)
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
66
67
PRO MEDICUS ANNUAL REPORT 2020
(ii) complying with Accounting Standards (including the Australian Accounting Interpretations)
Independent Audit or's Report t o t he Members of Pro Medicus Limit ed
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) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020
and of the performance for the year ended on that date; and
and the Corporations Regulations 2001; and
(b) 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.
(c) 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 2020.
On behalf of the Board
P T Kempen
Chairman
Melbourne, 20 August 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2020
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
Report on t he Audit of t he Financial Report
Opinion
We have audited the financial report of Pro Medicus Limited (t he Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2020, the consolidated statement of comprehensive income, consolidated statement of
changes in equit y and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a) giving a t rue and fair view of the consolidated financial position of the Group as at 30 June 2020
and of its consolidated financial performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (t he Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other et hical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Mat t ers
Key audit matters are those matters that , in our professional judgement, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
68
69
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2020
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2020
Capit alisat ion of development cost s
Revenue recognit ion
Why significant
How our audit addressed t he key audit mat t er
Why significant
How our audit addressed t he key audit mat t er
The Group develops medical software related to
radiology systems. Development costs are
capitalised and presented as intangible assets
on the consolidated statement of financial
position.
The carrying value of intangible assets as at
30 June 2020 was $18.8 million (20% of total
assets).
Capitalised development costs was a key audit
matter as product development is core to the
Group’s operations and it is the key asset on the
Group’s consolidated statement of financial
position. This involves judgement to determine
whether the costs meet the capitalisation
criteria in accordance with Australian
Accounting Standards.
The measurement of capitalised development
costs is based on the time and overhead costs
associated wit h individuals employed by the
Group for the specific purpose of developing
software. Capitalised development costs are
amortised once the product is available for use.
Capitalised development costs are amortised
over a useful life of five years.
Refer to Note 14 of the financial report for
disclosure relating to capitalised program
development costs.
Our audit procedures included the following:
► Assessed key measurement inputs,
including labour and overhead costs, used
in the Group’s capitalisation model which
determines the amount of capitalised
development costs.
► Selected a sample of overhead costs
capitalised to assess whether these costs
were appropriately capitalised in
accordance with the criteria set out in
Australian Accounting Standards.
► Agreed a sample of labour costs recorded
within the capitalisation model to employee
timesheets and payroll records. We
enquired with the Group regarding the
development activities that were
undertaken relating to these costs and
determined whether the sample of
employees were directly involved in
developing software and not maintenance
or other activities that are not eligible for
capitalisation.
► Assessed the useful life and amortisation
rate allocated to capitalised development
costs.
► Assessed the consistency of the
capitalisation methodology applied by the
Group in comparison to prior reporting
periods.
► Assessed the adequacy of the disclosures
included in Note 14.
The Group generated $56.8 million in revenue
from customers across its global operations for
the year ended 30 June 2020.
The Group exercises judgement to determine, in
particular:
► Performance obligations within customer
contracts; and
► Recognition of revenue associated with
multi-element contracts over the term of
the contracts.
Accordingly, revenue recognition was
considered a key audit.
Refer to Note 5 of the financial report for
disclosure relating to revenue recognition.
Our audit procedures included the following:
► Considered the appropriateness of the
Group’s revenue recognition accounting
policies against the requirements of
Australian Accounting Standards, as well as
the judgements applied in determining the
timing of revenue recognition.
► Reviewed a sample of customer contracts
to assess the application of revenue
recognition policies to customer
arrangements.
► Selected a sample of revenue transactions
and assessed revenue recognised with
respect to customer contracts.
► Selected a sample of revenue transactions
recognised prior to and after year end, to
assess whether revenue was recognised in
the appropriate period.
Informat ion Ot her t han t he Financial Report and Audit or’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2020 Annual Report other than the financial report and our
auditor’s report thereon. We obtained the Directors’ Report and the Corporate Governance Statement
that are to be included in the Annual Report, prior to the date of this auditor’s report, and we expect
to obtain the remaining sections of the Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection wit h our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
70
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
71
PRO MEDICUS ANNUAL REPORT 2020
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2020
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilit ies of t he Direct ors for t he 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 cont rol as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Audit or's Responsibilit ies for t he Audit of t he Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance wit h the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
·
·
·
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to t he audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2020
·
·
·
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
Evaluate the overall presentation, st ructure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit . We remain solely
responsible for our audit opinion.
We communicate wit h the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on t he Audit of t he Remunerat ion Report
Opinion on t he Remunerat ion Report
We have audited the Remuneration Report included in pages 8 to 15 of the directors' report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Pro Medicus Limited for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
72
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
73
PRO MEDICUS ANNUAL REPORT 2020
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2020
Responsibilit ies
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance wit h section 300A of the Corporations Act 2001. Our
responsibilit y is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Tony Morse
Partner
Melbourne
20 August 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
74
ASX ADDITIONAL 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
Performance rights
Ordinary shares
Number of holders
Number of rights Number of holders
Number of shares
8
9
7
16
2
42
5,777
30,173
45,333
515,659
330,365
927,307
7,095
2,142
306
249
38
2,539,075
4,849,812
2,265,949
6,793,856
87,498,140
9,830
103,946,832
The number of shareholders holding less than a marketable parcel are:
164
1,359
(b) Twenty largest shareholders
Listed ordinary shares
The names of the twenty largest holders of quoted shares are:
Number of shares
1 Dr S Hupert (multiple shareholdings)
2 Mr A Hall (multiple shareholdings)
3 HSBC Custody Nominees (Australia) Limited
4 J P Morgan Nominees Australia Limited
5 Citicorp Nominees Pty Ltd
6 National Nominees Limited
7 HSBC Custody Nominees (Australia) Limited -GSCO ECA
8 BNP Paribas Noms Pty Ltd
9 BNP Parabis Nominees Pty Ltd
10 Mr Bram Vander Jagt & Mrs Maaike Vander Jagt
11 Mr Peter Terence Kempen & Mrs Elaine Margaret Kempen (multiple
shareholdings)
12 Grain Exporters (Australia) Pty Ltd
13 Mr Danny Tauber
14 Mr Kenneth John Vander Jagt & Mrs Tanya Vander Jagt
15 Mr Roderick Lyle (multiple shareholdings)
16 Mr Stephen Geoffrey Wilson & Ms Denise Adele Prandi
17 Mr Evan Philip Clucas and Ms Leanne Jane Weston
18 Mr Colin Gregory Organ
19 Mr John Charles Plummer
20 Mr Michael Wu
28,137,660
28,109,000
11,618,835
5,458,034
3,268,267
1,423,797
1,258,057
1,009,441
857,364
700,000
678,082
585,668
380,915
364,020
340,000
300,037
287,980
271,000
250,000
239,942
Percentage
of ordinary shares
27.07%
27.04%
11.18%
5.25%
3.14%
1.37%
1.21%
0.97%
0.82%
0.67%
0.65%
0.56%
0.37%
0.35%
0.33%
0.29%
0.28%
0.26%
0.24%
0.23%
Substantial shareholders
(c)
The names of substantial shareholders who have notified the Company in accordance with section 671B of
the Corporations Law are:
85,538,099
82.29%
S. Hupert
A Hall
(d)
All ordinary shares carry one vote per share without restriction.
Voting rights
Number of shares
28,137,660
28,109,000
75
PRO MEDICUS ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2020
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
Principle 1 – Lay solid foundations for management and oversight
Comply
Yes/No
Reference/
explanation
1.1
A listed entity should disclose:
Yes
Page 80
a) roles and responsibilities of its board and management; and
b) those matters expressively reserved to the board and those delegated to
Yes
Page 80
No
Yes
Page 80
Page 80
Yes
Page 81
management.
1.2 A listed entity should:
a) undertake appropriate checks before appointing a person, or putting
forward to security holders a candidate for election, as a director; and
b) provide security holders with all material information in its possession
relevant to a decision on whether or not to elect or re-elect a director.
1.3 A listed entity should have written agreement with each director and senior
executive setting out the terms of their agreement.
1.4
The company secretary of a listed entity should be accountable directly to
the board, through the chair, on all matters to do with the proper functioning
of the board.
1.5 A listed entity should:
a) have and disclose a diversity policy
b) through the board or committee of the board set measurable objectives
for achieving gender diversity in the composition of its board, senior
executives and workforce generally and;
c) disclose in relation to each reporting period:
1) the measurable objectives set for that period to achieve gender
diversity;
2) the entity’s progress towards achieving those objectives; and
3) either:
a} the respective proportions of men and women on the board, in senior
executive positions and across the whole workforce (including how
the entity has defined “senior executive” for these purposes); or
b} if the entity is a “relevant employer” under the Workplace Gender
Equality Act, the entity’s most recent “Gender Equality Indicators”, as
defined in and published under that Act.
1.6 A listed entity should:
Yes
Page 81
a) have and disclose a process for periodically evaluation the performance
of the board, its committees and individual directors; and
b) disclose, in relation to each reporting period, whether a performance
evaluation was undertaken in the reporting period in accordance with
that process.
1.7 A listed entity should:
Yes
Page 81
a) have and disclose a process for periodically evaluating the performance
of its senior executives; and
b) disclose, in relation to each reporting period, whether a performance
evaluation was undertaken in the reporting period in accordance with
that process.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Comply
Yes/No
Reference/
explanation
No
Page 82
Recommendation
Principle 2 – Structure the board to add value
2.1
The board of a listed entity should:
a) have a nomination committee which:
1) has at least three members, a majority of whom are independent
directors; and
2) is chaired by an independent directors, and disclose
3) the charter of the committee;
4) the members of the committee; and
5) as at the end of each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at this meetings; or
b) if it does not have a nomination committee, disclose the fact and the
process it employs to address board succession issues and to ensure
that the board has the appropriate skills, knowledge, experience,
independence and diversity to enable it to discharge its duties and
responsibilities effectively.
2.2 A listed entity should have and disclose a board skills matrix setting out the
Yes
Directors Report
mix of skills and diversity that the board currently has or is looking to achieve
in its membership.
2.3 A listed entity should disclose:
Yes
Page 80
a) the names of the directors considered by the board to be independent
directors;
b) if a director has an interest, position, association or relationship of the
type described in Box 2.3 but the board is of the opinion that it does not
compromise the independence of the director, the nature of the interest,
position, association or relationship in question and an explanation of why
the board is of that opinion; and
c) the length of service of each director.
2.4 A majority of the board of a listed entity should be independent directors
2.5
The chair of the board of a listed entity should be an independent directors
and, in particular, should not be the same person as the CEO of the entity.
2.6 A listed entity should have a program for inducting new directors and
provide appropriate professional development opportunities for directors to
develop and maintain the skills and knowledge needed to perform their role
as a directors effectively.
Principle 3 – Install a culture of acting lawfully, ethically and responsibly
3.1 A listed entity should articulate and disclose its values
3.2 A listed entity should:
Yes
Yes
Yes
Yes
Yes
Page 80
Page 80
Page 80
Page 80
Page 83
a) have a code of conduct for its directors, senior executives and employees;
and
b) ensure that the board or a committee of the board is informed of any
material breaches of that code.
3.3 A listed entity should:
Yes
Page 83
a) have and disclose a whistleblower policy; and
b) ensure that the board or a committee of the board is informed of any
material incidents reported under that policy.
3.4 A listed entity should:
Yes
Page 83
a) have and disclose an anti-bribery and corruption policy; and
b) ensure that the board or a committee of the board is informed of any
material incidents reported under that policy.
76
77
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
Recommendation
Principle 4 – Safeguard integrity in corporate reporting
4.1
The board of a listed entity should:
a) have an audit committee which:
1) has at least three members, all of whom are non-executive directors
and a majority of whom are independent directors; and
2) is chaired by an independent director, who is not the chair of the board;
and disclose
3) the charter of the committee
4) the relevant qualifications and experience of the members of the
committee; and
5) in relation to each reporting period, the number of times the committee
met throughout the period and the individual attendances of the
members at those meetings; or
b) if it does not have an audit committee, disclose that fact and the
processes it employs that independently verify and safeguard the
integrity of its corporate reporting, including the processes for the
appointment and removal of external auditor and the rotation of the audit
engagement partner.
4.2
The board of a listed entity should, before it approves the entity’s financial
statements for a financial period, receive from its CEO and CFO a declaration
that, in their opinion, the financial records of the entity have been properly
maintained and that the financial statements comply with the appropriate
accounting standards and give a true and fair view of the financial position
and performance of the entity and that the opinion has been formed on the
basis of a sound system of risk management and internal control which is
operating effectively.
Comply
Yes/No
Reference/
explanation
No
Page 82
Yes
Page 82
4.3 A listed entity that has an AGM should ensure that its external auditor
Yes
Page 82
attends its AGM and is available to answer questions from security holders
relevant to the audit.
Principle 5 – Make timely and balanced disclosure
5.1 A listed entity should:
Yes
Page 82
a) have a written policy for complying with its continuous disclosure
obligations under the Listing Rules; and
b) disclose that policy or a summary of it.
5.2 A listed entity should ensure that its board receives copies of all material
Yes
Page 83
market announcements promptly after they have been made.
Principle 6 – Respect the rights of security holders
6.1 A listed entity should provide information about itself and its governance to
investors via its website.
6.2 A listed entity should design and implement an investor relations program to
facilitate effective two-way communication with investors.
6.3 A listed entity should disclose policies and progress it has in place to
facilitate and encourage participation at meetings of security holders.
6.4 A listed entity should disclose how it facilitates and encourages participation
at meetings of security holders
6.5 A listed entity should give security holders the option to receive
communications from, and send communications to, the entity and its
security registry electronically.
Yes
Yes
Yes
Yes
Yes
Page 83
Page 83
Page 83
Page 83
Page 83
Principle 7 – Recognise and manage risk
7.1
The board of a listed entity should:
No
Page 83
a) have a committee or committees to oversee risk, each of which:
1) has at least three members, a majority of whom are independent
directors; and
2) is chaired by an independent director; and disclose
3) the charter of the committee
4) the members of the committee; and
5) as at the end of each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
b) if it does not have a risk committee or committees that satisfy (a) above,
disclose that fact and the processes it employs for overseeing the entity’s
risk management framework.
7.2
The board or a committee of the board should:
Yes
Page 83
a) review the entity’s risk management framework at least annually to satisfy
itself that it continues to be sound; and
b) disclose, in relation to each reporting period, whether such a review has
taken place.
7.3 A listed entity should disclose:
No
Page 83
a) if it has an internal audit function, how the function is structured and what
role it performs; or
b) if it does not have an internal audit function, that fact and the processes it
employs for evaluation and continually improving effectiveness of its risk
management and internal control processes
7.4 A listed entity should disclose whether it has any material exposure to
Yes
Page 84
economic, environmental and social sustainability risks and, if it does, how it
manages or intends to manage those risks.
Recommendation
Principle 8 – Remunerate fairly and responsibly
8.1
The board of a listed entity should:
a) have a remuneration committee which:
1) has at least three members, a majority of whom are independent
directors; and
2) is chaired by an independent director; and disclose
3) the charter of the committee
4) the members of the committee; and
5) as at the end of each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
if it does not have a remuneration committee, disclose that fact and the
processes it employs for setting the level and composition of remuneration
for directors and senior executives and ensuring that such remuneration is
appropriate and not excessive.
8.2 A listed entity should separately disclose its policies and practices regarding
the remuneration of non-executive directors and the remuneration of
executive directors and other senior executives.
8.3 A listed entity which has an equity-based remuneration scheme should:
a) have a policy on whether participants are permitted to enter into
transactions (whether through the use of derivatives or otherwise) which
limit the economic risk of participating in the scheme; and
b) disclose that policy or a summary of it.
Comply
Yes/No
Reference/
explanation
Yes
Page 82
Yes
No
Page 82
Page 82
Pro Medicus Limited’s corporate governance practices were in place throughout the year ended 30 June
2020.
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.
78
79
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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
P T Kempen
A Glenning
L Farrell
Position
Chairman,
Non-Executive Director,
Chairman Audit Committee
Non-Executive Director
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.
The appointment of appropriately skilled Non-
Executive Directors, together with a broadly
unchanged business base has meant one new
director nomination has occurred this year.
Executive 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.
Non-Executive Directors and senior executives
have a written employment agreement with
the Company setting out the terms of their
appointment.
Dr 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, Mr
Anthony Glenning was appointed in May 2016 and
Dr Leigh Farrell was appointed in September 2017.
Company Secretary
The Company Secretary is accountable to the
Board on all matters to do with the proper
functioning of the Board. The Company Secretary,
who is also the Chief Financial Officer, attends all
Board meetings and ensures that the business
at Board meetings is accurately captured in the
minutes of these meetings.
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. 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.
Values
The Group sets out its values that defines what
type of organisation it aspires to be and what
it expects from its directors, executives and
employees to achieve that aspiration. The Groups
values are:
• Service and Product Excellence
o Commit to provide well-supported, stable
products and services to our customers enabling
them to improve workflow and diagnoses,
ultimately providing more efficient patient care.
o Commit to continuous improvement of our
systems, products and services.
•
Integrity and Trust
o Doing the right thing by our people, customers and patients.
o Doing what we say we will do.
o Maintaining confidentiality.
• Commit to a culture that is inclusive, respectful, honest and transparent in all that we do.
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.
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.
The Group has established a diversity policy outlining the board’s measureable 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 did not appoint any females in managerial roles as
there were no managerial appointments made during the year
• As at 30 June 2020, women represented 21% in the Group’s
workforce (2019:21%), 20% in key executive positions (2019:20%)
and 0% at board level (2019:0%). Subsequent to 30 June 2020,
Pro Medicus has appointed a female Non-Executive Director to its
Board.
• Women represented 18% of new hires during the year (2019:18%)
For the upcoming financial year, the Group targets to increase female
representation in the Group’s workforce to 25-30%
Promote an inclusive culture
that treats the workforce with
fairness and respect.
• 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 (2019: nil).
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.
80
81
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
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 Company does not have a policy in regards
to whether participants are permitted to enter
into transactions (whether through derivatives
or otherwise) which limit the economic risk of
participating in the scheme, however the Board are
in the process of evaluating a policy for such issues.
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.
Remuneration Committee
The Board has established a remuneration
committee, which operates under a charter
approved by the Board.
The members of the remuneration committee are:
D R Shiff - Chair
A Glenning
L Farrell
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
82
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
A Glenning
L Farrell
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, the
Committee does not meet the requirements of
Recommendation 4.1 as 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.
The number of meetings held and individual
attendance of Committee members at those
meetings are disclosed in the Directors Report.
The company rarely releases periodic corporate
reports to the market that are not audited or review
by an external auditor but if it does, the process to
verify its integrity is for the Chief Executive Officer
to present the report to the board to review and
once all directors are satisfied with the content and
approved in the board minutes, then it is released
to the market.
Prior to approval of the Company’s annual financial
statements, the Board obtains a declaration from
the Chief Executive Officer and Chief Financial
Officer that, in their opinion, the financial records
of the entity have been properly maintained and
that the financial statements comply with the
appropriate accounting standards and give a
true and fair view of the financial position and
performance of the entity and that the opinion
has been formed on the basis of a sound system
of risk management and internal control which is
operating effectively.
A representative of the external auditors Ernst &
Young will continue to attend the Annual General
Meeting and is available to answer questions
from security holders relevant to the audit. A
representative of Ernst & Young also attends all
Audit Committee meetings.
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 to be
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. The board receives all copies of material
market announcements from the Company
Secretary promptly by email after they have been
made.
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 ensures 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. Shareholders are encouraged to receive
communications electronically as requested and
can elect to do so through the company’s share
registry. The company ensures that all participating
shareholders have an opportunity to ask questions
through shareholder meetings and encourages
participation at all annual meetings.
A copy of the Corporate Governance Statement
is also available of the Company’s website – www.
promedicus.com.au.
The Company effectively facilitates two-way
communication with shareholders, through six
monthly investor relations roadshows and through
constant investor meetings and conference calls
with shareholders on request.
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.
Executives, directors and employees of the group
may only trade in the securities of the parent
company during an open period.
Only in exceptional circumstances will approval be
forthcoming outside of an open 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
Whistleblower Policy
The board has developed a whistleblower policy
consistent with the recommendations and details
are disclosed on the company website. There were
no major incidents reported under the entities
whistleblower policy during the year.
Anti-bribery and Corruption Policy
The board has developed an anti-bribery
and corruption policy consistent with the
recommendations and details are disclosed on the
company website. There were no major incidents
reported under the entities anti-bribery and
corruption policy during the year.
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.
Whilst the Company has not established an internal
audit function, it 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
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.
83
PRO MEDICUS ANNUAL REPORT 2020
CORPORATE INFORMATION
Mailing address:
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Australia
T: +612 8280 7111
Toll free: 1300 554 474
F: +612 9287 0303
F: (proxy forms only)
+612 9287 0309
E: registrars@linkmarketservices.
com.au
www.linkmarketservices.com.au
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
Dr Sam Aaron Hupert
Chief Executive Officer/
Managing Director
Anthony Barry Hall
Technology Director
Anthony James Glenning
Non-Executive Director
Dr Leigh Bernard Farrell
Non-Executive Director
Deena Robyn Shiff
Non-Executive Director
Company Secretary
Clayton James Hatch
Registered Office
450 Swan Street
Richmond, VIC, 3121
(03) 9429 8800
Internet Address
www.promedicus.com.au
www.promedicus.com
www.visageimaging.com
Solicitors
Clayton Utz
Sci-Law Strategies
Morrison Foerster
Bankers
Westpac Banking Corporation
Auditors
Ernst & Young
Share Registry
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Australia
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. A review of the Company
risk management policy was not undertaken during the year.
The Board does not believe the Company has any material exposure to economic, environmental and
social sustainability risks at the present time.
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
84
85
PRO MEDICUS ANNUAL REPORT 2020
YOU CAN DO SO MUCH MORE ONLINE
DID YOU KNOW THAT YOU CAN ACCESS – AND EVEN UPDATE – INFORMATION ABOUT
YOUR HOLDINGS IN PRO MEDICUS LIMITED VIA THE INTERNET.
NOTES
Visit Link Market Services’ website
www.linkmarketservices.com.au and access a wide
variety of holding information, make some changes
online or download forms.
YOU CAN:
• Check your current and previous holding
balances
option
• Choose your preferred annual report delivery
• Update your address details
• Update your bank details
• Lodge, or confirm lodgement of, your Tax File
Number (TFN), Australian Business Number
(ABN) or exemption
• Check transaction and dividend history
• Enter your email address
• Check the share prices and graphs
• Download a variety of instruction forms
• Subscribe to email announcements.
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).
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.
BETTER STILL, WHY NOT HAVE US DO YOUR
BANKING FOR YOU
Wouldn’t you prefer to have immediate access
to your dividend payment? Your dividend
payments can be credited directly into any
nominated bank, building society or credit union
account in Australia as cleared funds on dividend
payment date – and we will still mail [(or email
if you prefer)] you a dividend advice confirming
your payment details.
Not only can we do your banking for you, but
payment by direct credit eliminates the risk
of cheque fraud.
TOP 5 TIPS FOR PRO MEDICUS LIMITED
INVESTORS VISITING LINK’S (OUR REGISTRY)
WEBSITE
1) Bookmark
www.linkmarketservices. com.au
– to bookmark, click on ‘Favourites’ on the menu
bar at the top of your browser then select ‘Add
to Favourites’
2) Create a portfolio for your holding or holdings
and you don’t have to remember your SRN or
HIN every time you visit
3) Lodge your email via the ‘Communications
Options’ and benefit from the online
communications options Pro Medicus Limited
offers its investors
4) Check out the ‘FAQs’ page (accessible via the
orange menu bar) for answers to frequently
asked questions
5) Use the ‘Client List’ page (accessible via the
orange menu bar) to link to Pro Medicus Limited
website and the website of the other Link clients
in which you invest.
CONTACT INFORMATION
You can also contact the Pro Medicus Limited
share registry by calling +61 2 8280 7111 or
Toll Free 1300 554 474
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
86
87
PRO MEDICUS ANNUAL REPORT 2020
NOTES
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
VISIT US AT:
promedicus.com.au promedicus.com visageimaging.com
88
89
PRO MEDICUS ANNUAL REPORT 2020
Y
L
N
O
E
S
U
L
A
N
O
S
R
E
P
R
O
F
90