2024
Annual Report
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A N N U A L R E P O R T
REPORT
KEY INFORMATION
Annual Report
(including Directors report)
Our Annual Report is a succinct report prepared with reference to the principles
of integrated reporting, setting out how Pro Medicus creates sustainable value.
It sets out our governance and business model, strategy, operating context, and
operational performance and prospects. While the Report is targeted primarily at
current and prospective investors, and other providers of financial capital, it will
be of interest to other stakeholders. It includes a detailed analysis of our financial
results and our audited financial statements, prepared in accordance with AAS and
the Corporations Act 2001.
Corporate Governance
Statement
Our Corporate Governance Statement provides information about Pro Medicus’
governance framework and application of the 4th Edition of the ASX Corporate
Governance Principles & Recommendations.
https://www.promed.com.au/wp-content/uploads/2024/08/PME-Corporate-
Governance-Statement-2024-Final.pdf
Investor Presentation
Our Investor Presentation summarises our operational performance and prospects,
targeted primarily at institutional investors. It includes a summary of our financial
results and outlook.
https://www.promed.com.au/wp-content/uploads/2024/08/PME-Investor-
Presentation-FY2024-Final.pdf
These are all available at Promed.com.au
OUR REPORTING SUITE
CONTENTS
About this report
Our Reporting Suite
1
Contents
1
Why we exist
3
Highlights for the year
5
CEO and Chairman’s Letter
7
Global Leadership Team
9
About Pro Medicus
11
Organisational Overview
and External Environment
13
How We Create Value
15
Risk management
17
The Value We Created
19
Other
27
Into the Future / Outlook
28
Remuneration Report(Audited)
30
Corporate Governance
40
Contents to financial report
41
COMMITMENT TO INTEGRATED REPORTING
In this year's Annual Report, we reaffirm our commitment to integrated reporting, reflecting our dedication
to transparency, accountability, and long-term value creation for all stakeholders. By adhering to the
International Integrated Reporting Framework (IIRF), we strive to provide a comprehensive and cohesive
account of our financial and non-financial performance, demonstrating how our strategy, governance, and
prospects contribute to sustainable value creation. This approach underscores our commitment to continuous
improvement and our determination to communicate our business's true impact and potential effectively
SCOPE AND CONTENT
This report covers Pro Medicus’ operations with
information referring to the year ended 30 June
2024 unless otherwise stated. It includes the key
disclosures required under Australian legislation and
provides a holistic overview of our business.
The boundary for reporting captures Pro Medicus’
international operations in Berlin, San Diego and its
headquarters in Melbourne.
Our Directors’ Report has been prepared in
accordance with the Corporations Act 2001 and is
integrated throughout the annual report consisting of:
•
Corporate Structure (Page 11).
•
Nature of Operations and Principal Activities;
Pro Medicus at a glance (Page 11).
•
Our strategic goals (Page 15).
•
How we create value (Page 15).
•
Review and results of operations
(Page 13 and 18).
•
Review of financial condition (Page 19).
•
Risk management (Page 16-17).
•
Remuneration Report (Page 30-38).
•
Corporate Governance (Page 40).
•
Outlook (Page 28) and
•
Other (Page 27).
Our Financial Statements from page 42 have been
prepared in accordance with the Corporations Act
2001 and Australian Accounting Standards (AAS).
Compliance with AAS ensures compliance with the
International Financial Reporting Standards (IFRS).
Detailed information on the basis of preparation of
our Financial Statements is available on page 46.
THE INTEGRITY OF
OUR REPORTING
Pro Medicus has an Audit and Risk
Management Committee in place tasked
with the responsibility of managing the
process of verifying the integrity of any
periodic corporate report released to
the market that has not been audited
or reviewed by the Company’s external
auditor, EY.
The process involves receiving confirmation
from either the respective business units
or management as to the completeness
and accuracy of the information contained
within the report and subsequent approval
by Senior Executives, the CEO and the
Pro Medicus Board as deemed necessary
before external release.
EY has conducted an independent audit of
the Financial Statements and Remuneration
Report. A copy of EY’s audit report is contained
in this annual report on pages 75-78.
MATERIALITY
This report provides information on matters
that we believe could substantively affect
value creation at Pro Medicus. The Board
has collectively identified and prioritised the
material issues for inclusion in this report.
In this report, we present the identified
material information through a structured
narrative. We review who we are and how
we create value through our governance
practices and business model (pages 11-
38). We report those matters significantly
impacting value (page 15) and outline our
strategy, performance, and outlook to
ensure long-term value creation (page 28).
The Board will continue to engage with
key stakeholders and consult with them on
matters that interest and impact them and
add to our Annual Report when necessary.
We will also continue to capture their views
during our regular business engagements
with them.
ABOUT THIS REPORT
1
PRO MEDICUS ANNUAL REPORT 2024
OUR VISION
To be the leading provider of best-in-class enterprise medical imaging software.
OUR MISSION
To provide the best value enterprise Healthcare Imaging Software solutions “moving the needle” on clinical
outcomes and return on investment.
OUR VALUES
SERVICE AND PRODUCT EXCELLENCE
•
We are committed to providing well-supported, stable products and services to our customers
enabling them to improve workflow and diagnoses, ultimately providing more efficient patient care.
•
We are committed to continuous improvement of our systems, product and services.
INTEGRITY AND TRUST
•
We do the right thing for our people, customers and patients
•
We do what we say we will do
•
We maintain confidentiality
•
We commit to a culture that is inclusive, respectful, honest and transparent in all that we do
WHY WE EXIST
To be the leading provider
of best-in-class enterprise
medical imaging
software.
Why
We Exist
PRO MEDICUS ANNUAL REPORT 2024
3
HIGHLIGHTS FOR THE YEAR
Our Finances
Our Customers and
key Relationships
Our Team
Our Software
Implementation Process
and R&D Capabilities
• Reported profit after
tax for the period was
$82.8m an increase
of 36.5% from the
previous year.
• Underlying profit before
tax (PBT) was $112.2m
– up 33.8% (refer to
financial outcomes
Page 18 for explanation
of Underlying PBT and
reason for inclusion).
• Cash, bank term
deposits and other
current financial assets
of $155.4m – up 27.9%
• Full-year revenue of the
Group increased from
$124.9m to $161.5m, an
increase of 29.3%.
• Transaction revenue
increased year on year
(YoY)
• Full contracted revenue
increase to $624m over
the next 5 years
• Net cash inflows from
operating activities for
the current period were
$82.0m.
• Declared dividends of
40c per share fully-
franked – up 33.3%
• Company remains
debt-free
• Pipeline remains strong
in terms of quantity and
quality of opportunities
• Won nine key contracts
in North America.
• Continued growth of
clients opting for “full-
stack” – all three Visage
7 products: Viewer, Open
Archive and Workflow.
• Eleven of the best “top-
20” Hospitals in the
US are our customers.
(http://health.usnews.
com/best-hospitals)
standardised on
Visage-7.
• Successful Go Live at
the #2 ranked hospital
for cancer in the
U.S, Memorial Sloan
Kettering.
• Received notable
recognition for excelling
in helping healthcare
professionals improve
patient care.
• Diverse customer base
across all healthcare
market segments
(leading Academics
large Integrated Delivery
Network (IDN’s),
regional hospitals and
imaging centres.
• The ability for
Visage-7 technology
to work seamlessly
and efficiently over
the public internet
enables radiologists
to seamlessly read
remotely.
• By implementing
Visage 7 CloudPACS™,
customers eliminate the
complexity and cost of
maintaining on-premise
hardware; bolster
security and deliver
ultrafast performance
and unlimited scale.
• Employee turnover
percentage has
decreased from
2.9% to 2.7%.
• Stable management
structure.
• The percentage of
women across the
entire organisation
increased to 26.7%,
while the company
saw an increase in the
percentage of women
in managerial roles from
17.7% to 30.0%.
• Maintained a strong
health and safety record
and had zero workplace
injuries.
• Continued to support a
hybrid workplace.
• Strong sense of loyalty,
engagement and
ownership with many
staff holding shares in
the Company.
• Introduced Visage 7
Cardiology Imaging,
Expanding Visage 7’s
ultrafast capabilities into
Cardiology, including
Ejection Fraction,
Doppler Curve and
Doppler Velocity
tools. At RSNA 2023,
participated in our
fourth consecutive
Imaging Artificial
Intelligence in Practice
demonstration (https://
www.rsna.org/rsnai/
radiology-reimagined-ai)
• Released Visage Ease VP
for Apple Vision Pro, with
innovative Immersive 3D
for Apple’s highly touted
spatial computing device.
• Further enhancements
to Visage 7 CloudPACS™,
bolstering Visage’s
leadership position in cloud.
• Made USD$5M minority
investment in Elucid
Bioimaging Inc, a
company developing in
AI for cardiac CT.
• Expanded the Visage
7 ecosystem, releasing
Visage 7 RadPath Hub,
closing the loop for
radiology/pathology
results correlation.
• Released enhancements
to Visage AI Accelerator,
reinforcing AI-Ready for
the Visage 7 platform.
• Released new
capabilities in Visage RIS,
the company’s leading
Radiology Information
System software.
• Highlighted progress
with customer
Research Collaboration
Agreements via
demonstration of work-
in-progress algorithms
at RSNA 2023.
Full-year revenue of
the Group increased
from $124.9m to
$161.5m, an increase
of 29.3%.
Highlights
For The Year
5
PRO MEDICUS ANNUAL REPORT 2024
Dear Shareholders,
We are delighted to report that the 2024 financial year has been
our most successful year to date with the company continuing
to deliver strong, profitable growth. Revenue rose by 29.3%
to $161.5 million and profit after tax increased by 36.5% to
$82.8 million. FY24 was also a record year for sales with the
company. The winning of nine contracts in North America, with
a combined minimum total contract value of $245 million, has
laid the foundation for continued growth in FY25 and beyond.
The company continued to extend its position as the leader in
Cloud PACS and made significant inroads in the areas of “other
ologies” and AI.
Our North American business experienced robust growth
throughout the period with (transaction) revenue increasing by
34.4% year on year. We continued to expand our footprint in
the region winning nine new contracts across a diverse mix of
market segments and size of opportunities, including the AUD
$140 million 10-year contract with Baylor Scott and White, the
company’s largest contract to date.
We now proudly service eleven of the top and best 20 US
hospitals (as voted by U.S. News & World Report Best Hospitals
24/25) as well as a rapidly growing number of large and mid-
sized IDNs and health systems across North America.
We pride ourselves on our reputation of successfully completing
complex, large-scale implementations in less than a third of the
time compared to competing solutions. Over the past year, the
company completed nine implementations all of which were
cloud based. At RSNA 2024, we highlighted customer
go-live feedback through our inventive “In their words.
Not ours” market campaign, which continues to this day.
More than ever, the ultrafast streaming capabilities of our
Visage 7 Enterprise Imaging Platform are enabling our clients to
respond and thrive in a rapidly changing and dynamic landscape
by improving radiologists work life balance via significantly
improved productivity, by seamlessly enabling remote/home
reading and orchestrating complex workflows; the net result
being reduced burnout, improved radiologist retention and the
ability to attract radiologists in an ever-tightening market.
Our research and development efforts continued unabated
throughout the year (including collaborations with several of our
major clients), and we are realising the benefits from these.
The company continues to benefit from the huge momentum
shift towards Cloud, with all contracts won throughout the
period being for our Visage 7 | CloudPACS™ solution.
This combined with our highly modular solution, enables us to
provide the most flexible and scalable options to our clients as
evidenced by the continuing trend of clients who have opted for
the “full stack” of all three of our core products, a trend we see
continuing. Additionally, we are seeing several of our earlier PACS
customers implementing additional offerings, including Visage 7
Workflow and Visage 7 Open Archive, thereby eliminating the need
for third-party solutions.
Our Australian division was also a solid contributor with our RIS
product continuing to be the undisputed market leader with
revenue increasing due to the ongoing rollout of our key contracts
as well as winning several smaller contracts from independent
radiology practices.
Europe continued to fuel the company’s success as the R&D centre
for the Visage 7 suite of products. Market opportunities in Europe
have been limited this financial year; however, we anticipate this will
change over the next few years.
The company has continued its ongoing investments in our products,
namely the Visage 7 Enterprise Imaging Platform (Visage 7 Viewer,
Visage 7 Open Archive and Visage 7 Workflow), Visage RIS, and the
Visage AI Accelerator program. During the period, we also made a
USD $5M/ AUD $7.3M strategic investment in Boston-based Elucid
Bioimaging Inc, a company specialising in Cardiac CT AI, with the aim of
further bolstering our Visage 7 - Cardiology Imaging product offering.
The trends we have previously identified as driving the industry are
continuing unabated. Exponentially larger data sets, and transition
to Cloud create demands that are uniquely satisfied by Visage 7 with
its fast, clinically rich, highly modular and scalable technology. We
continue to see increasing interest in the emerging field of artificial
intelligence (AI) for medical imaging analysis, technology that shows
promise to improve clinical outcomes. We believe we are uniquely
positioned to take advantage of this trend via our Visage-7 AI
Accelerator which provides a unique end-to end, AI ready platform
and path to market.
In October 2022 the Board met with the global management team
to map out the company’s strategic plan for the next three financial
years. The company is on-track to achieving the agreed goals, which
if ultimately successful, will see the company continue its strong,
profitable growth trajectory.
We finish the year financially stronger than ever before with cash reserves,
bank term deposits and other current financial assets totalling $155.4
million, up 27.9%, supporting a final dividend of 22c fully franked (year
total of 40c per share). The company remains debt-free and has sufficient
reserves to fund organic growth and invest strongly in its future.
Key to this successful year are the management team and our
staff, who have worked tirelessly and continue to innovate and
differentiate, keeping our customer needs in the forefront of their
minds. We thank the global management team, the staff at all levels
and our fellow directors for their efforts throughout the year and look
forward to the company’s continuing growth
Yours faithfully
Peter T Kempen AM
Dr Sam Hupert
Chairman
Chief Executive Officer
CEO AND CHAIRMAN’S LETTER
DR SAM HUPERT
PETER KEMPEN
Our North American business
experienced robust growth
throughout the period
with (transaction)
revenue increasing
by 34.4% year
on year.
CEO
and
Chairmans letter
PRO MEDICUS ANNUAL REPORT 2024
7
The 2024 financial year has been the most successful in the company’s history
confirming the board’s belief that the global management structure has served the
company well and continues to position us to cater for anticipated future growth.
GLOBAL LEADERSHIP TEAM
Malte Westerhoff is the General Manager for
Visage Imaging GmbH, the European branch
of Visage Imaging. He is also the Group’s Chief
Technical Officer (CTO) and is responsible for
product management and R&D globally. He
has more than fifteen 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.
MALTE WESTERHOFF
General Manager –
Europe and Global Chief
Technology Officer
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 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.
BRAD LEVIN
General Manager –
North America and Global Head
of Marketing
DANNY TAUBER
General Manager – Australia
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 18 years,
having served in senior sales roles with AGFA
Healthcare, AMICAS and Emageon.
Sean holds a Bachelor of Science degree from
Arizona State University.
Clayton Hatch is the Chief Financial Officer for
Pro Medicus Limited, where he is responsible
for the financial and strategic analysis of
the company. Prior to this role, Clayton was
Finance Manager and Company Secretary of
the Company. Clayton has strong experience in
financial and management accounting having
worked in a Finance role for several years
prior to joining Pro Medicus. 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.
Clayton holds a Bachelor of Commerce degree
from Curtin University, is a Certified Practising
Accountant (CPA) and a graduate from Monash
University’s Global Executive Master of
Business Administration (GEMBA).
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
Massachusetts, 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.
SEAN LAMBRIGHT
Global Head of Sales
CLAYTON HATCH
Chief Financial Officer
TERESA GSCHWIND
Global Head of Customer Service
Sharni Redenbach joined Pro Medicus in July
2022 in the newly created role of People and
Culture Director, where she has responsibility
for all strategic and operational aspects of
the People and Culture function. With over
20 years’ experience, Sharni has led People
and Culture functions and teams in global
ASX and NASDAQ listed companies across
financial services and technology, including
the Link Group, Fiserv and, most recently,
Equity Trustees.
Sharni holds a Bachelor of Applied Science, co-
majoring in Psychology and Psychophysiology,
from Swinburne University of Technology and
postgraduate qualifications in both psychology
and human resources management.
SHARNI REDENBACH
People and Culture Director
The global management
structure has served the
company well
and continues to
position us to cater
for anticipated
future growth.
Global
Leadership
Team
PRO MEDICUS ANNUAL REPORT 2024
9
Pro Medicus is a leading
healthcare informatics
company, providing a full
range of medical imaging
software and services
to hospitals, imaging
centres and health
care groups in
Australia, Europe
and North
America.
About
Pro Medicus
ABOUT PRO MEDICUS
WHO WE ARE
Pro Medicus is a leading healthcare informatics company,
providing a full range of medical imaging software and
services to hospitals, imaging centres and health care
groups in Australia, Europe and North America.
Corporate structure
Pro Medicus is an Australian incorporated and domiciled
company, listed on the ASX with subsidiaries in Europe
and North America (collectively the Group).
Nature of Operations and Principal Activities
The principal activities of Pro Medicus during the year
were the development and supply of healthcare imaging
software, Radiology Information System (RIS) software
and services to hospitals, diagnostic imaging groups and
other related health entities in Australia, North America
and Europe.
Pro Medicus at a Glance
Our key business activities consist of the following:
• Research & Development - Software enhancements,
updates, innovation, program extensions, AI, research.
• Sales and customer engagement - Sales/marketing/
customer relationship development and nurturing.
• Product implementation - System implementation and
continual updates (as available).
• Product support and training - Customer support and
ongoing training.
• Support services – Billing, risk management,
governance, HR, management.
Our key products and services include:
• Visage RIS Visage 7 Enterprise Imaging Platform
(“Visage 7”) – Healthcare Imaging software that
provides radiologists, physicians and clinicians with the
modern foundation of a fast, clinically rich, and highly
scalable platform, providing immediate access and
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 support products.
• Visage RIS – Proprietary medical software for practice
management, training, installation and professional
services, after-sale support and service products,
Promedicus.net secure email and Integration products.
Pro Medicus has continued development of both the
Visage 7 and Visage RIS product lines throughout
the period. Pro Medicus undertakes research and
development (R&D) in Australia for its Practice
Management (RIS) and promedicus.net products
including R&D for Visage RIS.
The R&D for Visage 7 is performed in Europe, with an
R&D centre in New York to support and collaborate on
customer research initiatives. Further information on our
products can be found at at http://www.promed.com.
au/visage-ris/ and https://visageimaging.com/platform/
OUR COMPETITIVE ADVANTAGE
To understand how we create value for stakeholders,
we have reviewed our market position and competitive
advantages and listed them below.
• Our software is renowned for being the market leader
when it comes to speed, functionality and scalability.
• Visage-7’s ability to stream images (rather than compress
and send) makes accessing images significantly faster for
clinicians than competitor software.
• The company’s Visage-7 viewer offers a single
integrated desktop system that performs the functions
previously achieved by multiple independent systems
including 3D, 4D and advanced visualisation functions.
• The Visage 7 software suite offers unparalleled
scalability having a much smaller hardware footprint
as compared to our competitors and is therefore very
energy efficient.
• The company possesses “best in breed”, highly
modular components that allow it to address
opportunities in mixed vendor environments as well as
offer a single vendor, Visage based solution.
• Visage-Ease the Visage 7 Mobile App provides
clinicians with the ability to review images on demand
anywhere on any device, leading to better outcomes
for patients.
• Visage-7 streaming architecture is based on the same
GPU processors used for running AI algorithms ensuring
the Visage 7 architecture is intrinsically AI-capable.
• We have a proven rapid implementation capability that
minimises the cost and disruption of changing systems
delivering the benefits of the system in the shortest
possible time frame.
• The Visage 7 platform and the services provided
around implementation and ongoing support provide
customers with the best financial and clinical Return on
Investment (Roi), enabling them to do on the Visage
platform what they can’t easily do with others.
• The company’s cloud native solution, Visage
CloudPACS™ enables customers to avail themselves
of the scalability and security of public cloud
infrastructure – a trend that is gaining significant
momentum in the healthcare industry.
• Visage RIS is a comprehensive, enterprise-class and
state-of-the-art radiology information system (RIS)
which leverages modern, open-source, standard-
based technology.
PRO MEDICUS ANNUAL REPORT 2024
11
DYNAMICS OF THE BUSINESS / GLOBAL OPERATIONS
We outline the result of our global operations below and how it impacts our finance outcomes.
Australia
North America
Europe
Australian employees undertake the
research and development of Pro
Medicus products Visage RIS as well
as sales and service/support function.
Our Australian revenue increased by
5.9% compared to the previous year,
with the main contributors being
transaction volumes from the
Healius contract and additional
licence revenue from private
radiology groups
Promedicus.net, the Company’s
e-health offering, held its market
position.
The North American team fulfil sales,
marketing and professional services
roles relating to the Visage-7 series of
Enterprise Imaging products.
The company has an established
R&D centre in New York to support
and collaborate with customer
research initiatives.
Revenue from North America
increased by 34.4% compared
to the previous year. This was
largely attributable to increases in
transaction-based revenue from
existing customers and sales of
Visage technology as more contracts
came on stream.
The Group’s employees in the 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 decreased by
6.7% compared to the previous year.
The previous year had an extension
of the Charite hospital contract which
was not replicated in this year.
EXTERNAL ENVIRONMENT
The following external factors positively affect our ability to create value.
SIGNIFICANT INCREASE OF IMAGE DATA AND SIZE.
Image files sizes have increased from 2-3 GB to 6-10 GB per file. Visage-7 technology, which efficiently
streams data to the customer, provides a significant advantage over competitors relying on traditional
“compress and send” technology.
ADOPTION OF ELECTRONIC MEDICAL RECORDS (EMR)
The Electronic Medical Records (EMR) Mandate in the US requires healthcare providers to convert all
medical records to a digital format. Images are a significant component of the medical record and
adoption of EMR systems triggers the need to acquire technology to store and display them, creating a
market demand for Visage technology.
TRANSACTION BASED LICENSING
The industry is moving to a "pay per view” model. Converting an up-front capital cost into an operational usage
fee makes it less expensive for the customer to commence use and provides a stream of income for the lifetime
of the relationship. Visage technology is predominantly sold on a “pay per view” operational model.
REMOTE/HOME REPORTING
The COVID 19 pandemic accelerated the need for remote/home reporting. Visage 7 with its unique
streaming capability allows radiologists to seamlessly report from home without degradation of speed or
functionality over a consumer grade internet connection. This provides healthcare institutions maximum
flexibility in terms of managing increasing work from home requirements.
PUBLIC CLOUD
There is a growing trend for health enterprises to move away from on-premise solutions in favour of
public Cloud offerings. Visage 7 with its cloud native design is ideally suited to support this transition via
the company’s Visage CloudPACS™ offering. This reduces not only the upfront cost and complexity of
provisioning and managing server hardware, but it also provides customers with the added security and
scalability offered by public Cloud providers.
ARTIFICIAL INTELLIGENCE
Machine learning in the field of medical imaging and patient diagnosis is an ongoing trend. Visage-7
AI accelerator provides an end-to-end platform for customers to support their AI research efforts and
incorporate them into diagnostic imaging workflow.
ORGANISATIONAL OVERVIEW
AND EXTERNAL ENVIRONMENT
Organisational
Overview and
External Environment
Artificial Intelligence in the field
of medical imaging and patient
diagnosis is an ongoing trend.
Visage-7 AI accelerator
provides an end-to-end
platform for customers
to support their AI
research efforts and
incorporate them
into diagnostic
imaging
workflow.
PRO MEDICUS ANNUAL REPORT 2024
13
We employ our key inputs (our capitals) to our business model and transform them by our business
activities to provide a suite of products and services to our customers. We deliver outcomes creating
sustainable enterprise value whilst enhancing the capitals available to the business for use in future
years. As part of the integrated reporting journey the Board will determine metrics in addition to
existing financial measures (such as Net Profit after Tax (NPAT) and revenue growth) to quantify our
performance in delivering outcomes in the coming years.
Some of the key ‘outcomes’ for stakeholders on value creation are:
•
Customers – Our products and services reduce the cost of business for our customers, which flows
through to their pricing models and profitability.
•
Customers - Our products and services are highly scalable allowing accessibility to a broad range of
customers.
•
Customers - Our products are developed to minimise the computer hardware and storage
requirements of our customers by being cloud deployable.
•
Customers - Our products support high-availability, fast access to diagnostic imaging wherever
required, with no requirement for downtime.
•
Community – Our customers and their patients - Improved accessibility and fast, high quality image
interpretation creates better financial and health outcomes.
•
Employees – Our staff are loyal and engaged, with low turnover with many senior staff invested in
the company.
•
Employees – Competitively remunerated and incentivised through fixed remuneration, short-term
incentives and long-term incentives.
•
Investors – Our products and services are in demand and attract strong margins, securing good
growth in revenue, profit and shareholder returns, thus rewarding our investment in R&D and people.
HOW WE CREATE VALUE
We have three overarching strategic business goals which drive our business model and the way we create value.
Goal 1:
Goal 2:
Goal 3:
Best in class Healthcare Imaging &
RIS software through continuous
innovation
Make a meaningful impact on
customer financial and clinical
outcomes
Sustained revenue and NPAT margin
growth
First and foremost, the Company strives to develop and market software and services for the medical
imaging profession that are best in class. The fact that the company’s success in many open tenders has
been won on the basis of feature, function and performance rather than price supports that we are on
track to achieve this goal.
Secondly, to maintain the pricing premium for our software, it is necessary to provide meaningful value to
our customers. Financially, this is seen through the efficiencies gained by adopting Visage-7 technology
which provides greater throughput of patient images interpreted within an organisation and significantly
reduces IT costs. Clinically, the software enhances the diagnostic process acuity due to its ability to display
the full spectrum of medical imaging including 2D, 3D, 4D and advanced imaging in the one desktop
enabling clinicians to do in seconds what would otherwise take minutes with multiple other systems.
This value to the interpreting radiologist is further augmented through insights derived through the use of
image analysis using Artificial Intelligence algorithms.
Finally, we are rewarded for our quality and service by regular and increased custom from a growing and
loyal customer base.
OUR BUSINESS STRATEGY
We deliver outcomes creating
sustainable enterprise
value whilst enhancing
the capitals available
to the business for
use in future
years.
How
We Create
Value
PRO MEDICUS ANNUAL REPORT 2024
15
KEY RISKS
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 identified risk and
opportunities.
The Company has an Audit and
Risk Committee (ARC) which has a
guiding role in the development and
evolution of the risk management
framework. The ARC’s primary risk
management responsibility is to
monitor and review the Company's
risk management framework at
least annually to assess whether
it is sound and is operating in
accordance with the nature and
extent of the acceptable levels of risk
determined by the Board and report
to the Board the results of those
assessment. We have appointed a
specific employee of the company
to take responsibility for identifying
risk across the organisation in
conjunction with the management
team and reporting to the CFO.
During the reporting period the
Company continued to identify,
manage and mitigate key risks by
establishing a key risk indicators
dashboard to monitor and measure
risks on an on-going basis and by
updating several key risk policies
through the period.
The material strategic, operational
and financial risks being managed by
the company are outlined below.
FINANCIAL RISKS
Changes in market competition
The threat of new entrants to the
market and the impact on revenue
base is managed and mitigated
through long term contracts,
continuous product development,
proactive customer engagement to
determine needs and requirements
and offering additional products to
customers to add value.
Alignment of customers,
products and services to
strategic objectives
The threat of losing key customers
due to non-performance, non-
compliance with Service Level
Agreements (SLAs) or competition
is managed and mitigated through
regular reporting on key client
satisfaction and assisted by
automation of performance analysis
of customer software.
Quality management
The risk of poor-quality management
or lack of policies and procedures
are managed and mitigated through
internal control measures.
Fraud / inappropriate conduct
The risk of fraud / inappropriate
conduct leading to significant loss
or reputational damage is managed
and mitigated through periodic
financial reconciliations. Delegation
of Authority policy and periodic
cyber security reviews. An external
audit is conducted on the Company’s
financials annually.
STRATEGIC AND
OPERATIONAL RISKS
Cyber security
During the reporting period,
Pro Medicus appointed a Chief
Information and Security Officer to
manage and further mitigate the risk
of a direct external cyber-attack on
PME IT systems or third party (client)
systems using PME relationships. The
Cyber Risk is managed and mitigated
through thorough internal control
measures. In the event of a breach
to key systems, the Company can
either shut down, reinstall or revert
to system and source code backups.
As at the date of this report, there
have been no material cyber security
breaches or penetration.
Security of private data
The risk of non-compliance or breach
of the regulations of private data
has been managed and mitigated
through risk assessments and audits.
As at the date of this report, there
were no known non-compliance
or breaches of the regulations of
private data noted for the financial
year ended 2024.
Succession planning
The potential risk of lack of
succession planning for key
executives has been identified by
the People and Culture Committee
as a priority, following a strategic HR
review to ensure that we have the
right people in the right roles in the
Company to continue the growth
and success of the company. Our
succession planning framework helps
us identify and develop talent who
can transition into leadership roles
when they become vacant to ensure
that as leadership changes, the
company maintains its productivity
and continues to thrive.
Clinical risk
Clinical misdiagnosis risks are
managed and mitigated through
the FDA (510k) process undertaken
in the United States. This process
requires demonstration that
the software produces clinically
equivalent results to other known
legally marketed devices.
Technology obsolescence
The risk of Pro Medicus technology
becoming obsolete and threat of
emerging technologies has been
managed and mitigated through
frequent interaction with customers
and leaders across the industry to
help identify emerging innovations
and disruptions to the market and
through our continuous research and
development efforts.
IP issues
The risk of transgressing others’ IP
and the risk of IP being lost due to
theft, copying by third parties or a
rogue employee has been managed
and mitigated through insurance,
agreements, the ownership of key
patents and active surveillance.
Should the likelihood of an
inadvertent IP transgression arise,
the Company is able to change and
update product software to avoid
any continuing patent breaches.
Climate change
The Board and management have
identified climate change as a
key risk to the global community.
The Board and management have
considered from a governance and
risk perspective however, whilst a
risk, it would have a lower impact
on enterprise value than the top 10
risks outlined above. The Group has
no significant identified risks with
regard to environmental regulations
currently in force. There have been
no known breaches by the Group of
any regulations.
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
identified
risk and
opportunities.
Risk
Management
PRO MEDICUS ANNUAL REPORT 2024
17
THE VALUE WE CREATED
FINANCIAL OUTCOMES
FINANCIAL PERFORMANCE
Reported profit after tax for the period was $82.8m, an increase of 36.5% from the previous year.
Full year revenue of the Group increased from $124.9m to $161.50m, an increase of 29.3%. The key drivers
of the revenue increase were increases in transaction revenue in North America, as well as increased
revenue from RIS sales in Australia.
The underlying pre-tax profit for the year of $112.2m compared to an underlying pre-tax profit of $83.9m
from the previous corresponding period, an increase of 33.8%. The underlying profit comprises reported
profit before tax of $116.5m, plus the net currency loss of $1.1m and adding back the fair value gain on the
movement of other financial assets (net of interest and distributions) of $5.4m. The underlying profit from
2023, comprises reported profit before tax of $86.1m, plus the net currency loss of $0.4m and fair value
loss on the movement of other financial assets of $2.64 (net of interest and distributions). Underlying
profit is a non-IFRS measure and has been included in the analysis of financial performance as the
Directors consider it provides a meaningful comparison of results from period to period.
The currencies of the countries in which the Company has its activities have changed relative to the Australian
Dollar during the year. On a constant currency basis , the revenue would have been $157.8m (up 26.4%) and the
underlying profit before tax would have been $109.8m (up 31.2%) for the year ended 30 June 2024.
The Company had another successful year in terms of new sales winning nine key contracts in North America:
Memorial Sloan Kettering Cancer Centre (July 2023) - (A$24.0m – 7-year deal), a not-for-profit National
Cancer Institute (NCI) in Manhattan, New York.
Baylor, Scott and White (September 2023) - (A$140.0m – 10-year deal), the largest not-for-profit health
care system in Texas, and one of the largest in the United States.
South Shore Health (October 2023) - (A$16.0m – 8-year deal), a not-for-profit health system in
Weymouth, Massachusetts.
Oregon Health & Science University (November 2023) - (A$20.0m – 8-year deal), an Academic and not-
for-profit health system based in southwest Portland and in the South Waterfront Central District.
Consulting Radiology Limited (January 2024) - (A$9.5m – 5-year deal), a large privately owned radiology
group based in Minneapolis.
Nationwide Children’s Hospital (April 2024) - (A$11.5m – 7-year deal), a leading paediatric hospital in
Columbus, Ohio.
Nicklaus Children’s Hospital (April 2024) - (A$6.5m – 5-year deal), a leading paediatric hospital in Miami,
Florida.
Moffitt Cancer Centre (May 2024) - (A$9.0m – 8-year deal), a not-for-profit cancer treatment and
research centre located in Tampa, Florida.
US Radiology Specialists (May 2024) - (A$8.5m – 5-year deal), a partnership of physician owned
radiology practice located in Raleigh, North Carolina.
During the reporting period the Company continued investing in the research and development hub in New
York to support collaboration for the development and commercialisation of AI, leveraging the Visage AI
Accelerator platform, breast density algorithm (FDA approved) and to further enhance our Visage 7 platform.
The Company also continued to make significant progress with all key implementations being on, or ahead
of schedule. This was achieved by a mix of remote and onsite presence.
1Constant currency removes the impact of exchange rate movements to facilitate comparability of operational performance for the Company. This is done in
two parts: a) by converting the current year net profit / (loss) of entities in the group that have reporting currencies other than AU Dollars, at the rates that
were applicable to the prior comparable period (Translation Currency Effect); b) by restating material transactions booked by the group that are impacted by
exchange rate movements at the rate that would have applied to the transaction if it had occurred in the prior comparable period (Transaction Currency Effect).
2Contract values represent the minimum total expected fees to be earned over the life of the relevant agreement.
The Company also continued
to make significant
progress with all key
implementations being
on, or ahead of
schedule. This was
achieved by a
mix of remote
and onsite
presence.
The
Value We
Created
PRO MEDICUS ANNUAL REPORT 2024
19
ESG OUTCOMES
The Board has identified three main areas of ESG that we can focus on that will deliver our key
stakeholders ESG metrics that interest and impact them.
1.
People – our people are our sustainable advantage
2.
Climate – goal to become carbon neutral
3.
Responsible Artificial Intelligence (AI) – become a thought leader for responsible AI
HUMAN CAPITAL (OUR PEOPLE)
Our people are key to achieving our vision of being “the leading provider of best-in-class enterprise
medical imaging software”.
We have a highly engaged, enabled and loyal team whose specialised knowledge in healthcare imaging,
software development and system implementation, and network of relationships with hospital radiology
groups, helps us create value.
We continue to invest in our employees to create a positive work environment, which has numerous
benefits for both our staff and the overall success of our business, including high commitment and
low turnover, as well as increased productivity and customer satisfaction. Staff are crucial to building a
sustainable future and benefits include:
Talent and expertise: Our employees possess unique skills, knowledge, and experience that contribute
to the success of our organisation. By nurturing their talents and providing opportunities for growth, we
enhance their capabilities and ensure the long-term sustainability of our business.
Innovation and creativity: Engaged and motivated employees are more likely to think creatively and
come up with innovative solutions. Encouraging a culture of collaboration and open communication can
stimulate fresh ideas and drive sustainable practices.
Employee loyalty and retention: When employees feel valued and supported, they are more likely to
remain loyal to the Company. Reducing turnover not only saves recruitment and training costs but also
fosters continuity, stability, and institutional knowledge, all of which contribute to sustainability.
Productivity and efficiency: A satisfied workforce tends to be more productive and efficient. By
prioritising the well-being of our staff, providing the necessary resources, and fostering a healthy work-life
balance, we enhance productivity while reducing stress and burnout, ultimately contributing to the long-
term sustainability of the business.
Corporate culture and reputation: Employees are brand ambassadors, and their actions and attitudes
reflect on our Company's culture and reputation. A positive work environment that emphasises
sustainability and values employee well-being can attract top talent, enhance our brand image, and
position our Company as an employer of choice.
To leverage the potential of our staff for sustainable development, we have implemented (or are in the
process of implementing) the following strategies:
•
Employment Engagement Survey: Our people are our most important asset, and the engagement
survey lets us hear from them and identify areas to improve in future.
•
Workforce Future Proofing: Our succession planning framework helps us identify and develop talent
who can move into leadership roles when they become vacant. This will ensure that as leadership
changes, the Company maintains its productivity and continues to thrive.
•
Career Development Framework: Provide training opportunities and skill-building initiatives to
empower our staff to grow, both personally and professionally.
•
Work-life balance and well-being: Promote a healthy work-life balance by offering flexible work
arrangements, wellness programs, and other initiatives that support physical and mental well-being.
During the year we also updated our Diversity, Equity and Inclusion Policy (DEI), which was approved and
endorsed by our board. It forms the basis for our global DEI strategy and provides a framework to achieve
the Company’s diversity goals. You can find the policy on our website.
The Company is committed to creating and ensuring a work environment in which everyone is treated
fairly and with respect and where everyone feels responsible for the reputation and performance of the
Company. The board of directors of the Company and management believe that Pro Medicus’ commitment
to this policy embeds the importance and value of diversity within the culture of the Company and
contributes to the achievement of corporate objectives.
Diversity can broaden the pool for recruitment of high-quality employees, enhance employee retention,
improve the Company’s corporate image and reputation, and foster a closer connection with, and better
understanding of customers. It is important that Pro Medicus is able to attract, retain and motivate
employees from the widest possible pool of talent.
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 return on surplus
funds, subject to conservative investment risk exposure, 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 inflows from operating activities for the current period were $82.0m, with receipts from
customers totalling $158.5m compared with payments of $37.5m to suppliers and employees. During the
year the Company paid out a total of $36.6m in dividends and invested $7.5m in fixed income securities
and USD $5m in Series C Preferred shares of Elucid Bioimaging, Inc., the net result being total cash assets
of $60.1m and short-term deposits of $63.9m; an increase of 35.8% from last year. During the reporting
period the Group continued to make investments in fixed income securities to enhance the return of its
available funds.
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.
20
PRO MEDICUS ANNUAL REPORT 2024
21
We have included the following environmental metrics that we currently monitor.
Greenhouse Gas Emissions
The major source of emissions from Pro Medicus’ operations comes from Scope 2 greenhouse gas (GHG)
emissions. Due to the nature of our business, our emissions footprint is minimal.
Tonnes CO2 equivalent
FY24
FY23
Scope 1
1.9
1.9
Scope 2
118.9
96.7
Total Emissions
120.9
98.6
Scope 1 emissions are direct emissions from owned or controlled sources and relate to refrigerants from refrigerators and air conditioning.
Scope 2 emissions are indirect emissions from the generation of purchased energy and relate to electricity consumption.The increase in Scope 2 emissions in
FY24 compared to FY23 is a reflection of the company’s growth.
The GHG emissions have been prepared in accordance with Pro Medicus’s GHG Inventory Basis of
Preparation which references the World Business Council for Sustainable Development Greenhouse Gas
Protocol. The methodology for energy and emission factors related to the international offices is sourced
from Australia’s National Greenhouse Accounts (NGA), German Environmental Federal Office and US
Environmental Protection Agency (EPA).
Water Consumption
Pro Medicus recognises the importance of promoting sustainable water management practices. Water scarcity
is increasingly affecting more populations worldwide. Pro Medicus monitors and reports water consumption
with the aim to reduce our environmental impact and increase efficient water management practices.
Kilolitres (KL)
FY24
FY23
Water Consumption
832.9
730.4
Water consumption from the three Pro Medicus international offices
RESPONSIBLE ARTIFICIAL INTELLIGENCE (AI)
Pro Medicus is a thought leader in the development of software for the healthcare industry. To maintain our position as a
thought leader, we are advocating for responsible AI and how machine learning is being used in our industry to develop
innovative solutions.
Responsible artificial intelligence (AI) in medical software refers to the ethical and responsible use of AI technology in
healthcare applications. It involves ensuring that AI algorithms and systems used in medical software are developed
and deployed in a manner that prioritises patient safety, data privacy, fairness, and accountability. Some of the key
considerations for responsible AI that are always front of mind are as follows
•
Patient Safety: AI algorithms should undergo rigorous testing and validation to ensure their accuracy and
reliability in medical diagnosis, treatment planning, and decision-making. They should be designed to minimize
the risk of errors or adverse outcomes.
•
Data Privacy and Security: Medical software should adhere to strict data protection standards, ensuring that
patient data is collected, stored, and processed securely. Compliance with privacy regulations, such as HIPAA
(Health Insurance Portability and Accountability Act), and GDPR is crucial.
•
Subjectivity Mitigation: Developers should strive to minimise biases in AI algorithms, ensuring that they do not
disproportionately favour or discriminate against any specific group of patients. Regular monitoring and auditing
of AI systems can help identify and address potential biases.
•
Regulatory Compliance: Medical software incorporating AI should adhere to relevant regulatory guidelines
and standards. Compliance with regulatory frameworks, such as FDA (U.S. Food and Drug Administration)
regulations, is essential to ensure the safety and effectiveness of AI-powered medical software.
•
Ongoing Monitoring and Evaluation: Continuous monitoring and evaluation of AI algorithms and their real-
world performance are crucial to identify any issues, biases, or unintended consequences. Regular updates and
improvements should be made based on feedback and new insights.
Promoting responsible AI in medical software requires collaboration among software developers, healthcare providers,
regulatory bodies, and other stakeholders. It is essential that Pro Medicus strikes a balance between harnessing the
potential of AI in improving healthcare outcomes while upholding ethical standards and patient safety.
Pro Medicus’s AI policy emphasises transparency, accountability, and safety. Under the extent of the European AI Act, Pro
Medicus is in the process of implementing an AI policy in conjunction with robust risk management systems, using high-
quality data, and maintaining human oversight to ensure AI decisions are understandable and contestable. Compliance
with existing regulations is essential to protect patient safety, ensure data privacy, and foster trust in AI technologies.
Furthermore, our company AI policy will be in line with the European AI Act, and incorporates ethical considerations
such as fairness and non-discrimination, preventing AI applications from exacerbating existing biases or inequalities in
our healthcare delivery.
By adopting these principles, Pro Medicus believes that we can improve healthcare outcomes while maintaining trust
and safeguarding client and patient needs and rights.
We have included the following social metrics that we currently monitor.
Employee Turnover
Pro Medicus prides itself on creating a positive workplace environment that generates strong commitment
and loyalty. Employee turnover has historically been low across our company due to a concerted effort to
create a positive culture.
Employee Turnover %
FY24
FY23
Total Employee turnover for the period
2.7
2.9
|Based on average turnover of full-time and part-time employees
Female Representation
Pro Medicus respects and recognises the importance of having a diverse workplace, particularly pertaining
to gender representation. Pro Medicus’ Diversity, Equity and Inclusion Policy outlines our commitment to
gender diversity and recognition that gender is not a barrier to participation in our workforce.
Female Representation %
FY24
FY23
Board
28.6
28.6
Senior Executive
22.2
11.1
Management
36.4
25.0
Total % of women in management roles
30.0
17.7
Operational
26.0
24.7
Total % of women across the entire organisation
26.7
23.6
Management roles are defined as either a management or senior executive position
Safety
Pro Medicus recognises that our ability to achieve our objectives successfully depends on the wellbeing
of our workers. We acknowledge that the key elements of work health, safety and wellbeing include the
culture and physical environment as well as the policies, practices and procedures that guide our work.
Pro Medicus maintains a strong health and safety record and had zero workplace injuries.
Safety Reporting
FY24
FY23
Safety Reporting %
0
0
Lost time injury frequency rate (per total employees)
0
0
Lost time injury frequency rate (LTIFR) measures the number of lost-time injuries per million hours worked during the accounted period.
CLIMATE
We are committed to reducing our carbon emissions. Becoming carbon neutral involves reducing our
carbon footprint and offsetting the remaining emissions to achieve a net-zero carbon balance. To transition
to carbon neutral, the company will undertake the following steps:
•
Measure our current greenhouse gas emissions by conducting a comprehensive carbon footprint
assessment, including consideration of emissions from energy consumption, transportation, waste
generation, and those within the Group’s supply chain.
•
Establish achievable reduction targets for our company's emissions. With the aim of reducing
emissions with our operations by adopting energy efficiency measures, renewable energy adoption,
and process optimisation.
•
Develop strategies to minimize waste generation and maximise recycling within the company.
•
Foster a culture of sustainability within your company by educating and engaging employees.
•
Offset the remaining emissions that we are unable to eliminate through the above measures by
investing in verified carbon offset projects.
•
Regularly track and report the Group's progress towards carbon neutrality.
•
Engage with other organisations, industry groups, and sustainability networks to share experiences,
learn from best practices, and collaborate on collective initiatives.
Being carbon neutral is an ongoing process, that we will continually evaluate and adjust our emissions
choices to minimise our impact on the environment.
22
PRO MEDICUS ANNUAL REPORT 2024
23
Leigh joined Pro Medicus Limited as a Director on 8 September 2017. He is the Managing
Director of AdNED Pty Ltd, non-executive director of both Ena Respiratory Pty Ltd and Axelia
Oncology Pty Ltd, a member of the Walter and Eliza Hall Institute of Medical Research Board
Commercialisation Committee, a member of the Independent Advisory Council of Medicines
Australia, a member of the Scientific and Industry Advisory Committee of the Australian
Research Council Centre for Cryo-electron Microscopy of Membrane Proteins and,
Chair of the Scientific Advisory Board of Island Pharmaceuticals Ltd.
Leigh was previously Head of Health Security Systems Australia, a Division of DMTC Ltd, Senior
Vice President, Commercial of Certara USA, Inc. where he was responsible for Asia Pacific
Commercial. Prior to this, he was Chairman and COO of d3 Medicine LLC, which was acquired
by Certara USA, Inc. Prior to these appointments, Leigh was Vice President of Business
Development at Biota Pharmaceuticals, Associate Director GBS Venture Partners, Research
Manager Johnson & Johnson Research and CEO of Gene Shears Pty Ltd.
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 People & Culture committee and Audit and Risk committee.
Alice joined Pro Medicus Limited as a Director on 1 September 2021. Alice is also a non-executive
director of Vocus Group, Djerriwarrh Investments, Australian Submarine Corporation (ASC
Pty Ltd) and Mercer Investments Australia Ltd. She is chair of the Audit & Risk Committee of
Djerriwarrh Investments, ASC and Vocus Group and is a member of the Audit & Risk Committee
and Due Diligence Committee of Mercer Investments (Australia) Ltd. Alice holds other board
positions with Tobacco Free Portfolios and is on the Advisory Council of the Florey Institute of
Neuroscience Novell Project.
Previous board roles include Director and Chair of the Audit Committee of Cooper Energy,
Chair of Nomination, Remuneration and Human Resources Committee and Non-Executive Director
of Equity Trustees Ltd, and Non-Executive member of the Foreign Investment Review Board.
Alice holds a Commerce degree from Melbourne University, is a Fellow of the Australia Society
of Certified Practicing Accountants, a Fellow of the Australian Institute of Company Directors,
and graduate from the Institute of Chartered Financial Analysts.
Alice is Chair of Audit & Risk committee and also serves on the People & Culture committee.
Danny is the Head of Finance for Pro Medicus and has extensive global financial management
experience, with a deep understanding of financial reporting, governance and risk
management. Danny has worked in both private and publicly listed companies and is well
versed in the complexities of dealing with both multinational and local requirements. Having
worked in senior-level Finance roles for several years across Europe and North America.
Danny holds a Bachelor of Commerce degree and is a Chartered Accountant (CA & ACCA).
Deena joined Pro Medicus Limited as a Director on 1 August 2020. Deena was also Chair of the
Supervisory Board of Marley Spoon SE (ASX:MMM) to August 2024. Deena is an Independent
Member of the board of the Global Alliance for Vaccines and Immunisation, the multi-lateral
global health fund based in Geneva. Deena is also on the board of Opera Australia and is the
Chairman of AROSE (Australian Remote Operations in Space and Earth), and the Chairman
of the International Advisory Board of the A.R.C Centre of Excellence, on Automated Decision
Making and Society
Previous board roles include Chairman of the global board of BAI Communications,
Non-Executive Director of Appen (ASX :APX); EOS Holdings (ASX: EOS) and Director of
the Citadel Group (ASX:CGL), board member of infrastructure Australia, Chairman of the
Government’s Export Credit Agency EFIC, as well as board roles in 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 is Chair of the People & Culture committee and serves on the Audit and Risk committee.
DR LEIGH BERNARD FARRELL
PhD, B.Sc. (Hons), FAICD
(Non-Executive Director)
DEENA ROBYN SHIFF
B.Sc (Hons), B.A. Law (Hons),
(Non-Executive Director)
ALICE WILLIAMS
B.Com, FCPA, FAICD, CFA, AIF ASFA,
(Non-Executive Director)
DANNY ENGLISH
CA, ACCA
Company Secretary
DIRECTORS’ REPORT
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 Kempen joined Pro Medicus Limited as a Director on 12 March 2008. He is Chairman
of Australasian Leukemia and Lymphoma Group. 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 Honors.
Peter became Chairman in August 2010 before which he served as a Non-Executive
Director of the Company.
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.
Co-founder of Pro Medicus Limited in 1983, Anthony Hall has been principal architect and
developer of the core software systems. Anthony holds a Bachelor and Master’s degree
in Science from La Trobe University.
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 Austco Healthcare Limited (ASX:AZV)
since September 2018, an international provider of healthcare communication and clinical
workflow management solutions.
Anthony is also a Director of Iress (ASX:IRE) since October 2022, a technology company
providing software to the financial services industry.
Anthony has previously been an Investment Director at Starfish Ventures and was the founder
and CEO of Tonic Systems and a founding Non-Executive Director of Cameron Systems.
He has also held senior software engineering positions at Google and Sun Microsystems Inc.
Anthony holds bachelor’s degree 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 People & Culture committee and Audit and Risk committee.
ANTHONY JAMES GLENNING
B.Sc. B.EE (Hons), M.EE
(Non-Executive Director)
ANTHONY BARRY HALL
B.Sc. (Hons), M.Sc.
(Executive Director and Technology
Director)
DR SAM AARON HUPERT
M.B.B.S.
(Managing Director and Chief Executive
Officer)
PETER TERENCE KEMPEN AM
F.C.A, F.A.I.C.D
(Chairman)
24
PRO MEDICUS ANNUAL REPORT 2024
25
OTHER
DIVIDENDS
Dividend declared subsequent to the end of the year
Cents
$’000
FY24 final dividend (declared 14 August 2024)
22.0
22,974
Dividends declared and paid during the year:
FY24 interim dividend
18.0
18,797
FY23 final dividend
17.0
17,757
Refer to Note 9 for further details about Dividends paid during the year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Refer to the Operating and Financial Review section above for information on the significant changes in
the state of affairs of the Group. Information on likely developments and future prospects of the Group
is discussed below.
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.
ROUNDING
Unless otherwise stated, 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
A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act
2001 (Ctn) is included on page 39.
The Group may decide to employ the auditor on assignments additional to statutory audit duties where
the auditor's expertise and experience with the Group is essential and will not compromise auditor
independence.
Details of the amounts paid or payable to Ernst & Young for audit and assurance and non-audit services
provided during the year are set out in Note 21 to the financial statements. The Board has considered the
non-audit services provided during the year and is satisfied these services are compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001 (Cth) for the following reasons;
•
All non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not
impact the impartiality and objectivity of the auditor; and
•
None of the services undermine the general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants.
BOARD COMMITTEES
The Board and management team maintain high standards of corporate governance as part of our
commitment to create value for our stakeholders through effective strategic planning, risk management,
transparency, and corporate responsibility.
As at 30 June 2024, the company had an Audit and Risk Committee comprising the 5 Non-Executive
Directors and a People and Culture Committee comprising 4 Non-Executive Directors
A description of the role of each committee and its composition is set out in the following table.
Committee
Members
Composition
Role
Audit and Risk Committee
Ms Alice Williams
(Chair)
Mr Anthony Glenning
Dr Leigh Farrell
Ms Deena Shiff
Mr Peter Kempen
– At least three members,
all of whom must be non-
executive directors and
a majority of whom are
independent directors.
– The chair must be
an independent non-
executive director, who is
not the chairman of the
Board.
– Comprise members who
are financially literate
and include at least
one member who has
accounting and/or related
financial management
expertise and some
members who have an
understanding of the
industries in which the
Company operates.
Our Audit and Risk
Committee assists the
Board in carrying out its
oversight of the quality
and integrity of the
accounting, auditing and
financial reporting of the
Company. The Committee
also reviews the adequacy
of Pro Medicus’ internal
control structure, corporate
reporting processes,
and risk management
framework, monitors the
effectiveness, objectivity
and independence of the
external auditor and reviews
reports from the external
auditor.
People and Culture
Committee
Ms Deena Shiff (Chair)
Mr Anthony Glenning
Dr Leigh Farrell
Ms Alice Williams
– At least three members,
all of whom are non-
executive and the
majority of whom are
independent directors.
– The chair should be an
independent director.
– All members should
have sufficient technical
expertise to discharge its
mandate effectively.
– Our People and Culture
Committee assists and
advises the Board on
remuneration policies
for directors and senior
executives, induction and
continuing professional
development programs
for directors, succession
planning, composition
and size of the board,
process for evaluating the
performance of the board,
and overseeing employee
engagement and talent
programs.
DIRECTOR’S 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:
Board Meetings
Audit & Risk Committee
People & Culture Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Peter Kempen
12
12
3
3
5
5
Anthony Glenning
12
12
3
3
5
5
Leigh Farrell
12
11
3
3
5
5
Deena Shiff
12
12
3
3
5
5
Alice Williams
12
12
3
3
5
5
Anthony Hall
12
12
3
2
5
4
Dr Sam Hupert
12
12
3
2
5
5
26
PRO MEDICUS ANNUAL REPORT 2024
27
SHARE OPTIONS
Un-issued Shares
As at the date of this report, there were 256,012 un-issued ordinary shares in the form of performance
rights. Refer to Note 18 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, 17,066 performance rights were exercised by current employees and zero
performance rights expired. A further 5,960 performance rights were exercised by key management
personnel in the current year to acquire fully paid ordinary shares in Pro Medicus Limited.
Significant events after Balance Sheet date
FY24 final divided
A Final Dividend for FY24 of 22.0 cents per share was declared on 14 August 2024.
Other than the matters described above, no matters have arisen since the Balance Sheet date which have
significantly affected or may affect, the operations of the Group, the results of those operations or the
state of affairs of the Group in future financial periods.
The Directors express their gratitude for the efforts of the management team and all employees in
achieving this year’s result.
INTO THE FUTURE / OUTLOOK
The Directors anticipate that the 2025 financial year will see more opportunities crystallise for the
Company due to improved prospects in North America for Visage 7 (PACS) and the continued
commercialisation and roll out of Visage RIS.
Key factors 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 2025 financial year.
•
Continued strong interest in the Visage 7 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 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 technology, including the use of artificial
intelligence (AI) in the industry, the ease of deployment of Visage 7 in public cloud and the rise
in image data size which increases the time to display images by non-streaming technologies.
•
Increased revenue from Visage RIS, the company’s new technology RIS platform as the rollout
of this new platform continues.
•
Extension of the Visage 7 product to Enterprise Imaging and use beyond the realm of radiology
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 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.
28
29
WHO IS COVERED BY THIS REPORT?
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
of the Group.
For the purposes of this report, the term ‘Executive’ includes the Chief Executive Officer (CEO), Executive
Directors and other Senior Executives who are considered KMP of the Group. KMP were in appointment
for the entire period unless otherwise stated.
(i) Non- Executive KMP
Peter Kempen
Anthony Glenning
Leigh Farrell
Deena Shiff
Alice Williams
Non-Executive Chairman
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
(ii) Executive KMP
Dr Sam Hupert
Anthony Hall
Clayton Hatch
Malte Westerhoff
Managing Director and CEO
Technology Director
Chief Financial Officer
General Manager Europe and
Global Chief Technology Officer
REMUNERATION GOVERNANCE
The People and Culture Committee of the board provides advice, assistance and recommendations to
the board in relation to remuneration arrangements for Directors and Executives, as well as to advise
and support the board’s oversight of key people practices, such as succession planning and talent
management, to help achieve the Company’s long-term business objectives.
The members of the People and Culture Committee during the reporting period were:
Deena Shiff - Committee Chair
Anthony Glenning
Leigh Farrell
Alice Williams
OUR PEOPLE
Our people are integral to the future success of the Company. The continuing growth in our customer base
and the number of products in use per customer is a testament to our ability to innovate and develop our
product range. In this respect our people are key to the defence of our market leadership and to future
value creation.
The continuing scaling up of the business has prompted a multi-year review of our human capital
including:
•
The phased expansion of the roles and responsibilities of our next generation of leaders;
•
The recruitment of new staff, especially to revenue generating functions in sales and service;
•
The development of existing staff;
•
Remuneration as Pro Medicus and our staff’s responsibilities grow; and
•
Succession planning for key personnel, including in FY24 the appointment of a Chief Information
Security Officer who reports to the General Manager Europe and Global Chief Technology Officer.
In addition, we conducted our second Employee Engagement Survey to measure our workforce’s
connection and commitment to the Company and its goals. Engagement can impact the attraction of
talent, performance, innovation and retention. Almost all of our employees participated in the anonymous
survey. Once again, our results were strong and favourable compared to our peers. Importantly, we
improved in the areas of focus in our Employee Engagement Action Plan.
REMUNERATION REPORT (AUDITED)
This remuneration report for the year ended 30 June 2024 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.
2024 OUTCOMES AT A GLANCE
Pro Medicus has once again experienced significant growth in shareholder value in the past year and has
generated substantial new business in particular in the United States, with agreements being put in place
with leading hospitals. The table below provides a summary of the strong increase in shareholder value
over the last five years:
Short-term incentive metrics
Long-term incentive metrics
Other financial metrics
Underlying
EBIT1
($’000)
Annual
Contract
Value2
($’000)
Underlying
Revenue
Growth3
($’000)
Underlying
EPS4
(cents per
share)
Share price
at 30 Jun
($)TSR5
Revenue
($’000)
Dividends
declared
(cents per
share)
Short-term incentive payments
are linked to underlying EBIT and
underlying Revenue Growth for Key
Management Personnel (KMP).
Long-term incentives are linked to
underlying EPS and TSR growth.
Value has been created for
shareholders through increased
revenue targets and dividends.
These financial outcomes are reflected in part in the FY24 remuneration outcomes for Executives.
Consistent with the growth trajectory of the Company to date, and its expected continuation, the Group is
adopting a multi-year approach to human capital and remuneration driven by a number of factors, including:
•
Our ability to attract and retain staff who are fundamental to the competitive outcomes of the
Group.
•
Recognition of the significant increase in the capability and capacity of Executives in line with the
significant growth of the Company; and
•
Taking a measured but focussed approach to developing the next generation of talent for
succession planning purposes.
The main change to remuneration in FY24 related to our short-term incentive metrics, with Annual
Contract Value (ACV) being replaced by Revenue Growth at a slightly higher percentage. This change will
further focus Executives on top-line growth and maintain strong shareholder alignment.
1 Underlying EBIT – Earnings before interest and tax and excluding currency gains/(losses) and capitalised development cost adjustments.
Underlying EBIT is a non-IFRS measure.
2 Annual Contract Value – represents the total minimum contractual revenues to be earned over the life of new contracts executed during the period.
Annual Contract Value is a non-IFRS measure.
3 Underlying Revenue Growth – represents the set compound rate of revenue growth expected to continue on a year-on-year basis.
Annual Underlying Revenue Growth is a non-IFRS measure.
4 Underlying EPS – Earnings Per Share adjusted for the impact of currency gains/(losses). Underlying EPS is a non-IFRS measure.
5 TSR – Total Shareholder Returns.
6 CAGR – Compound Annual Growth Rate.
$32,022
$44,797
$60,477
$80,703
$105,010
2020
2021
2022
2023
2024
35% CAGR
$8,205
$23,105
$17,094
$14,460
2020
2021
2022
2023
$124,900
$152,537
2023
2024
22%
CAGR
23.67
31.08
41.85
58.95
80.03
2020
2021
2022
2023
2024
36% CAGR
$26.46
$58.72
$42.25
$65.64
$143.26
2020
2021
2022
2023
2024
53% CAGR
$56,821
$67,884
$93,461
$124,900
$161,501
2020
2021
2022
2023
2024
30% CAGR
12.0
15.0
22.0
30.0
40.0
2020
2021
2022
2023
2024
35% CAGR
30
PRO MEDICUS ANNUAL REPORT 2024
31
EXECUTIVES KMP REMUNERATION MIX
The diagram below illustrates the remuneration mix at maximum potential for each executive.
TOTAL FIXED REMUNERATION
The Company has recently improved the frequency and quality of its performance and salary review
process. However, ‘lag’ adjustments were required as part of the FY24 salary review for some Executives
to ensure that their remuneration is competitively positioned.
The remuneration of Dr. Malte Westerhoff – General Manager Europe and Global Chief Technology Officer
– had remained unchanged for two years. Following the external market review, and in line with our pay-
for-performance philosophy, a base pay adjustment was made to the remuneration of Dr Westerhoff, from
an annual base pay (inclusive of social security) of €434,700 to €600,000, effective 1 July 2023. There
was also an adjustment to his Short-Term Incentive, increasing from 30% to 40% of base pay. Together,
these changes ensure that Dr Westerhoff’s remuneration is more competitively positioned.
The base pay of Clayton Hatch – Chief Financial Officer – was also increased effective 1 July 2023 from
$305,000 (inclusive of superannuation) per annum to $325,000.
VARIABLE REMUNERATION OUTCOMES
Short Term Incentive (STI)
Short term incentives in the form of cash bonuses were paid to Executives based on a mix of Company
and personal performance targets as set out in the below table.
At the start of FY24 Pro Medicus changed one of its short-term incentive metrics from Annual Contract
Value (ACV) to Revenue Growth
As background, the ACV measurement criteria was introduced to drive focus and investment in the
Company’s strategic plan to expand into the US marketplace. This has been a successful approach that
has positioned the Company for the next phase of growth and focus on accelerating the expansion plans
of the business. As such, the People and Culture Committee has now aligned Executives with group
revenue targets, encompassing both new contract wins, as well as organic growth from existing clients.
Revenue Growth provides a more accurate measure of the Company’s financial success and reflects the
actual financial performance and cash flow of the Company and its operational efficiency, ensuring that
incentives are tied to tangible and realised financial improvements.
Ultimately, Revenue Growth as an incentive metric fosters a more balanced and forward-looking strategy,
promoting not just the acquisition of new business but also the maintenance and expansion of existing
customer relationships contributing to the company’s long-term stability, sustainable growth and success,
over merely acquiring new contracts.
REMUNERATION PRINCIPLES
Our objectives for the level and composition of executive remuneration are: -
•
Setting rates of pay that are market competitive, having regard to the markets in which our people
work;
•
Paying for performance, in both fixed and variable at-risk remuneration components; and
•
Achieving alignment of the interests of Executive with the interests of shareholders
In addition, the objectives seek pay structures that
•
Are simple and clear: meaningful to executives and transparent to shareholders; and
•
Reflect responsible business conduct, with board discretion on malus and which are subject to
continuing employment conditions.
In FY24 the People and Culture Committee conducted its annual external remuneration benchmarking
for the Executives through an independent provider. To date, remuneration benchmarking has been largely
based on a peer group consisting of other technology/software companies, with size largely based on a blend
of revenue and number of FTE, and comparators in the geography where the relevant Executive is based.
As the Company grows in market capitalisation, and as part of our multi-year-review, the peer group for
remuneration benchmarking of Executives will continue to be refined.
External benchmarking will continue to be used as a guide only and not as a substitute for the People and
Culture Committee’s assessment of the appropriate remuneration to attract and retain top performers
given the unique nature of the Company and expanding responsibilities of Executives.
In line with our pay-for-performance philosophy, and as a general guideline, Pro Medicus aims to pay at
the midpoint for performance that meets expectations, between the midpoint and the 75th percentile for
performance that exceeds expectations, and above the 75th percentile for performance that sets a new
standard.
REMUNERATION FRAMEWORK
In FY24, executive remuneration comprised a mix of fixed and variable at-risk remuneration components
through the STI and LTI plans. Dr Sam Hupert and Mr. Hall do not participate in the variable at-risk
remuneration components, given their substantial personal shareholdings.
Component
Description
Link to strategy & performance
Total fixed remuneration
Base salary and retirement benefits
(superannuation or country
equivalent).
May include fringe benefits or other
payment methods provided that it
is appropriate and not unreasonably
costly for the Group.
Reviewed annually having regard to
individual accountabilities, skills and
performance as well as comparative
remuneration in the market,
including as appropriate, external
benchmarking.
Short term incentive (STI)
An at-risk component set as a
percentage of base salary for Senior
Executives.
Performance is measured over the
12-month period and awards are
currently made on an annual basis
in cash.
Based on specific performance
related key financial and non-financial
measures.
In the FY24 reporting period these
were 40% Underlying EBIT targets
met, 35% Underlying Revenue Growth
targets met, and 25% individual
targets met.
Further details of the STI program are
discussed in the ‘variable remuneration
outcomes’ section below.
Long term incentive (LTI)
Performance rights with a nil
exercise price are issued on an
annual basis based on a three-year
performance period and a further
12 months vesting period, subject to
continued service.
Performance hurdles relate to
profitability – Earnings per Share (EPS)
(60%), and Total Shareholder Returns
(TSR) (40%).
Both hurdles are set annually by the
board.
The TSR growth hurdle was measured
against the ASX 200.
Further details of the LTI program are
discussed in the ‘variable remuneration
outcomes’ section below.
Clayton Hatch - CFO
Anthony Hall - Technical
Director
Sam Hupert - CEO
FIXED
STI
Equity based LTI
100%
100%
43%
26%
31%
0%
38%
31%
31%
0%
32
PRO MEDICUS ANNUAL REPORT 2024
33
•
Investor Clarity: Enhancing transparency for investors and stakeholders by providing a true
reflection of the LTIs' market value through a fair value measurement approach.
•
Comparability: Ensuring consistency and comparability with other companies in the industry,
facilitating better benchmarking and analysis.
•
Risk Management: Allowing for effective assessment of the risks and rewards associated with LTIs.
•
Performance Alignment: Ensuring that the incentives provided are closely aligned with actual
performance and economic benefits.
•
When assessing the cost to Pro Medicus for issuing shares as part of employee compensation, the
distinction between face value and fair value is less relevant due to the accounting principles and
the economic realities involved.
•
The market perceives the fair value as the true cost because it reflects the current value of the
shares in the market, considering future potential earnings and risks.
•
The fair value of the rights are determined by using pricing models (e.g., Black-Scholes model and
Mote Carlo) and reflects the current market conditions and expected future performance of the
rights. This is the amount that will be expensed in the financial statements over the vesting period.
By adopting fair value accounting for LTIs, Pro Medicus aims to maintain high standards of financial reporting
and provide stakeholders with the most accurate and useful information possible. For further details of
valuation of options, models and assumptions used please refer to Note 18 of the financial statements.
Outcomes
Performance under the FY22 grant was tested at 30 June 2024 resulting in the following vesting outcomes
which remain conditional on continued employment through to 30 June 2025:
Hurdle
Target (for 50% vesting)
Outcome
EPS
30% CAGR for reporting period (FY22-FY24)
Achieved 37% CAGR and therefore
outperformance – 100% retained.
TSR
60% growth over the ASX 200 Accumulation
index for performance period (FY22-FY24)
Achieved 144% and therefore outperformance –
100% retained.
The FY21 grant, for which performance hurdles were tested at 30 June 2023, vested on 30 June 2024.
As previously disclosed the vesting outcomes under the FY20 plan were as follows:
Hurdle
Target (for 50% vesting)
Outcome
EPS
35% CAGR for reporting period
(FY21-FY23)
Achieved 36% CAGR and therefore
between target and stretch – 54%
retained.
TSR
60% growth over the ASX 200
Accumulation index for performance
period (FY21-FY23)
Achieved 148% and therefore
outperformance – 100% retained.
FY24 Grants
EPS hurdles for FY24 LTI have been set at threshold, target and outperformance with target set at 25%
CAGR for three consecutive performance periods FY24-FY26, with payout at target of 50%. TSR targets
were also set within a range of threshold, target and overperformance to encourage growth over and
above ASX200 index returns, with target set at 40% growth over the ASX 200 index over the three-year
performance period (FY24-FY26) to align to shareholders interests. TSR target performance is set at 50%
payout, with outperformance (100% payout) achieved at 70% growth over the ASX 200 index.
The table below outlines the number and value of performance rights granted to each KMP during the year
as part of remuneration. These rights were granted on 16 August 2023 and will vest in four years’ time on
30 June 2027 subject to the achievement of the performance hurdles outlined above (tested at 30 June
2026) and the KMP remaining employed by the Company:
Name
Number of EPS
performance rights (1)
(at outperformance)
Number of TSR
performance rights (at
outperformance)
Total number of
performance rights (at
outperformance)
Fair value of rights on
grant date (1)
$
Clayton Hatch
1,948
1,299
3,247
167,303
Malte Westerhoff
6,929
4,620
11,549
595,081
Total
8,877
5,919
14,796
762,384
STI Metrics
Performance
category and
weighting
Reason chosen
FY24 Target
FY24 Performance
STI outcome
Underlying EBIT
(40%)
Underlying EBIT is a key
measure of performance
and income returns
generated for shareholders.
Underlying EBIT of
$111.4m
EBIT below
target due to
implementation
rollout later than
budgeted and
increase in costs
during the period
Achieved Underlying
EBIT of $105.01m.
5.39% below target.
Payout 24.6%
Underlying
Revenue Growth
(35%)
Underlying Revenue
growth is a key measure
of an increase in existing
sales and new contract
wins through the period
and their minimum annual
revenue contribution in
future reporting periods to
ensure steady consistent
growth.
Underlying
Revenue Growth of
21.7%, - $152.0m
Revenue growth
achieved due to
steady growth in
customer exam
volumes and archive
sales
Achieved Underlying
Revenue Growth of
23.1% - 6.3% above
target. $152.5m. Payout
106.3%
Individual targets
(25%)
Individual targets chosen
to measure KMP against
metrics that they can
control, including their
leadership and an
increasing focus on a “one
Pro Medicus” approach as
the Company grows.
At target – 100%
Individually
determined
Individual
performance
measured as a bell
curve against each
KMP
At target – 100%.
Accrued in the financial
statements at 100%
based on best estimates
of the board prior to
finalisation
The table below outlines the FY24 STI outcomes for each participating KMP:
Executive KMP
Target STI as %
of TFR
Maximum STI as
% of TFR
Actual STI
awarded ($)
% of target STI
opportunity
awarded
% of maximum
STI opportunity
awarded
% of maximum
STI forfeited
Clayton Hatch
30%
60%
$70,244
72%
36%
64%
Malte Westerhoff
40%
80%
$285,233
72%
36%
64%
Key Performance Indicators
Underlying EBIT hurdles for FY24 STI have been set at threshold, target and outperformance with target
set at 36% increase on the prior year Underlying EBIT, with payout at target of 100%. Underlying Revenue
Growth targets were also set within a range of threshold, target and outperformance to encourage
budget overachievement, with target limits stretched to align to shareholders interests. Outperformance
achievement maximum payout is 200% of target. For individual targets, as a general guideline up to 200%
of target can be awarded based on personal performance.
Long Term Incentive (LTI) Performance Rights
Under the LTI plan Senior Executives of the Group are 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% weighting) which is set on an annualised basis by the board and Total Shareholder
Returns (TSR) growth (40% weighting). The Company’s TSR growth performance hurdle is measured
relative to the ASX200 Index 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.
Use Of Fair Value For Long-Term Incentives
Pro Medicus solely discloses fair value measurements for its long-term incentives (LTIs) as this aligns with
our commitment to providing a transparent and accurate representation of our financial position as per
the outline below:
•
Regulatory Compliance: Adhering to accounting standards such as IFRS 2 and ASC 718, which
require the use of fair value for share-based payments.
•
Economic Accuracy: Fair value offers a realistic estimate of the LTIs' worth at the grant date,
considering market conditions and volatility.
34
PRO MEDICUS ANNUAL REPORT 2024
35
Table 2: Shareholdings of Executive Key Management Personnel
Ordinary shares held in
Pro Medicus Limited
(Number)
Balance at
1 July 2023
On exercise of
performance rights
Net change other
Balance at
30 June 2024
30 June 2024
Ordinary
Ordinary
Ordinary
Ordinary
S A Hupert
26,137,660
-
(1,000,000)1
25,137,660
A B Hall
26,109,000
-
(930,000)2
25,179,000
C Hatch
43,000
1,481
(8,954)3
35,527
M Westerhoff
103,322
4,479
(4,479)4
103,322
Total
52,392,982
5,960
(1,943,433)
50,455,509
1 Dr Sam Hupert sold 1,000,000 shares throughout the year at the prevailing market share price.
2 Anthony Hall sold 1,000,000 shares at the prevailing market share price and holds a relevant interest in 70,000 shares through an off market transfer
(non-cash) as a Trustee for Estate of the Late Ronda Hall.
3 Clayton Hatch sold 8,954 shares throughout the year at the prevailing market share price.
4 Malte Westerhoff sold 4,479 shares throughout the year at the prevailing market share price.
Table 3: Performance rights of Executive Key Management Personnel
Performance
rights held in Pro
Medicus Limited
(Number)
Balance at
1 July 2023
Granted as
remuneration
Performance
rights exercised1
Performance
rights forfeited*
Balance at
30 June 2024
Not yet
vested
Vested and
exercisable
at 30 June
2024
30 June 2024
S A Hupert
-
-
-
-
-
-
-
A B Hall
-
-
-
-
-
-
-
C Hatch
14,346
3,247
(1,481)
(1,621)
14,491
(14,491)
-
M Westerhoff
40,716
11,549
(4,479)
(4,942)
42,844
(42,844)
-
Total
55,062
14,796
(5,960)
(6,563)
57,335
(57,335)
-
*Performance rights forfeited due to performance hurdles not being met in relation to the FY21 LTI grant upon testing on 30 June 2024.
Refer to LTI outcomes section above for further information.
1 FY20 performance rights exercised on 28 August 2023 at a value of $71.91 per right.
Non-Executive Director Remuneration
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 25 November 2020 when shareholders
approved an aggregate remuneration pool for all non-executive directors of $1,000,000 per year.
The amount of the aggregate remuneration sought to be approved by shareholders and the way it is
apportioned amongst Non-Executive Directors is reviewed bi-annually. The Board considers fees paid to
Non-Executive Directors of comparable companies when undertaking the review process.
Each Non-Executive Director receives a fee for being a Director of the Company. No additional fee was
paid to the Chairs of the People and Culture, and Audit and Risk Committees during the reporting period
and no additional fees were paid for time spent on Committees.
Non-Executive Directors have long been encouraged by the board to hold shares in the Company
(purchased by the Non-Executive 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 2024 is detailed in
Table 4 of this report.
(1) Calculated based on a fair value per performance right of:
Grant date
EPS hurdle $
TSR hurdle $
16 August 2023
68.88
25.50
The fair value per performance right was calculated as at the grant date identified above. The valuation
of the TSR performance rights incorporates the probability of achieving market conditions whereas
the valuation of EPS performance rights does not. This results in a lower fair value of TSR performance
rights than for EPS performance rights. Further details on assumptions used to determine fair value of
the performance rights and the accounting expense in relation to the performance rights are included
in Note 18. The minimum total value of the grant to Executive KMP is nil should none of the applicable
performance conditions be met.
Change of Control
Under the LTI Plan Rules, on the occurrence of a Change of Control Event, all awards will be subject to
accelerated vesting based on a pro-rata basis for time elapsed, unless the board in its sole and absolute
discretion determines otherwise.
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 Director 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 Director 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 Executive Directors 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 written notice in accordance with the agreement or by providing payment in lieu of the notice
period (based on the fixed component of the Executive’s remuneration). In accordance with German
employment law, Mr Westerhoff has a seven month notice period, Mr Hatch has a three month notice
period. The Group may terminate an Executive’s 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.
The company has maintained a stable and high-performing leadership team; however the People and
Culture Committee of the board will continue to focus on ‘futureproofing’ the workforce to ensure we
continue to thrive if changes do occur.
Table 1: Statutory remuneration for Executive KMP
Short-Term
Post-
Employment
Long Term
Share Based
Payment
Current KMP
Salary and
Wages
$
Cash Bonus
$
Non-Monetary
benefits
$
Super
annuation
$
Long Service
Leave
$
Performance
rights7
$
Total
$
Dr. Sam Hupert
2024
2023
921,468
722,5002
-
-
-
-
27,500
27,500
16,253
339,811
-
-
965,221
1,089,811
Anthony Hall
2024
2023
339,953
347,500
-
-
-
-
27,500
27,500
5,808
4,166
-
-
373,261
379,166
Clayton Hatch
2024
2023
281,4616
277,500
70,244
110,502
-
-
27,500
27,500
8,726
4,625
112,842
76,747
500,773
496,874
Malte Westerhoff
2024
2023
941,5113
640,386
285,2334
576,531
19,6455
18,564
2,890
2,731
-
-
337,283
215,403
1,586,562
1,453,615
1 Salary and wages include the net change in accrued annual leave within the period.
2Dr Sam Hupert’s pay was adjusted in the FY23 period, to reflect market conditions and was paid a fixed remuneration of $1,000,000 from 1 January 2023.
3Malte Westerhoff’s pay was adjusted in the period, to reflect market conditions and our pay-for-performance philosophy. Dr Westerhoff was paid a fixed
remuneration of €600,000 from 1 July 2023, with a conversion to AUD of 0.606 as compared to FY23 €434,700 with the conversion to AUD at 0.642 (using
the average FX rates for the period).
4The cash bonus for Malte Westerhoff includes a STI bonus ($285,000, FY23: $254,000) and bonus for additional responsibilities in setting up the NY research
hub (FY24: $nil, FY23: $322,000). The FY23 additional bonus was a one-off discretionary bonus.
5 Non-Monetary benefits for Malte Westerhoff reflects an annual car allowance of $19,645.
6Clayton Hatch’s pay was adjusted in the period, to reflect market conditions and our pay-for-performance philosophy. Mr. Hatch was paid a fixed remuneration
of $325,000 from 1 July 2023.
36
PRO MEDICUS ANNUAL REPORT 2024
37
AUDITOR’S INDEPENDENCE DECLARATION
To the Directors of Pro Medicus Limited
Table 4: Amounts paid to Non-Executive Directors
Fees
$
Non-Monetary
benefits
$
Superannuation
$
Total
$
Peter Kempen
2024
2023
225,225
174,326
-
-
24,775
27,500
250,000
201,826
Anthony Glenning
2024
2023
121,903
89,041
-
-
3,097
9,589
125,000
98,630
Leigh Farrell
2024
2023
112,613
91,324
-
-
12,387
9,589
125,000
100,913
Deena Shiff
2024
2023
112,613
91,324
-
-
12,387
9,589
125,000
100,913
Alice Williams*
2024
2023
112,613
90,909
-
-
12,387
9,545
125,000
100,454
*Alice Williams commenced as a Non-Executive Director on 1 September 2021.
Table 5: Shareholdings Non-Executive Directors
Ordinary shares held in
Pro Medicus Limited
(Number)
Balance at
1 July 2023
Purchased during
the year
Sold during the year
Balance at
30 June 2024
30 June 2024
Ordinary
Ordinary
Ordinary
Ordinary
Peter Kempen
629,082
-
-
629,082
Anthony Glenning
9,525
-
-
9,525
Leigh Farrell
4,240
-
-
4,240
Deena Shiff
1,923
-
-
1,923
Alice Williams
650
1,910
-
2,560
Total
645,420
1,910
-
647,330
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 2024, lease payments of $215,120 (2023: $215,120) in respect of the Group’s
operating premises at 450 Swan Street Richmond were paid to Champagne Properties Pty. Ltd., an entity
controlled by Dr Sam Hupert and Mr. Hall. These lease arrangements are on an ‘arm’s length basis’ as
determined by an independent assessment of the rental lease and lease terms.
END OF REMUNERATION REPORT
The Directors’ Report has been prepared in accordance with the Corporations Act 2001 and is integrated
throughout the annual report as identified on page 2 of the Annual Report.
Signed in accordance with a resolution of the Directors.
P T Kempen
Director
Melbourne, 14 August 2024
A member firm of Ernst & Young Global Limited
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s independence declaration to the directors of Pro Medicus Limited
As lead auditor for the audit of the financial report of Pro Medicus Limited for the financial year ended 30 June 2024, 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;
b.
No contraventions of any applicable code of professional conduct in relation to the audit; and
c.
No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit.
This declaration is in respect Pro Medicus Limited and the entities it controlled during the financial year.
Ernst & Young
Andrea Steacy
Partner
14 August 2024
38
PRO MEDICUS ANNUAL REPORT 2024
39
CONTENTS TO FINANCIAL REPORT
Consolidated Statement of Comprehensive Income
42
Consolidated Statement of Financial Position
43
Consolidated Statement of Changes in Equity
44
Consolidated Statement of Cash Flows
45
Notes to the Financial Statements
46
Note
1
Corporate Information
46
Note
2
Summary of Significant Accounting Policies
46
Note
3
Significant Accounting Judgements, Estimates and Assumptions
47
Note
4
Operating Segments
48
Note
5
Revenue from contracts with customers
50
Note
6
Income and Expenses
52
Note
7
Income Tax
53
Note
8
Earnings per Share
55
Note
9
Dividends Paid and Proposed
56
Note
10
Cash Flow Information
56
Note
11
Trade and Other Receivables
58
Note
12
Other Financial Assets
58
Note
13
Intangible Assets
59
Note
14
Trade and Other Payables
61
Note
15
Deferred Revenue
61
Note
16
Provisions
61
Note
17
Contributed Equity and Reserves
62
Note
18
Share based Payments
64
Note
19
Leases
66
Note
20
Events after the Balance Sheet Date
66
Note
21
Auditors’ Remuneration
67
Note
22
Key Management Personnel
67
Note
23
Related Party Disclosure
67
Note
24
Financial Risk Management Objectives and Policies
68
Note
25
Parent Entity Information
71
Note
26
Other Accounting Policies
72
Consolidated Entity Disclosure Statement
73
Directors’ Declaration
74
Independent Auditor’s Report
75
ASX Additional Information
79
Corporate Information
80/84
CORPORATE GOVERNANCE
Pro Medicus’ Corporate Governance Statement for 2024 (Statement) outlines our principal corporate
governance practices in place during the financial year ended 30 June 2024. Copies of all governance
documents referred to in this Statement can be found at http://www.promed.com.au/investors/
corporategovernance/
Our governance policies and practices have been measured against the 4th edition of the ASX Corporate
Governance Council’s Corporate Governance Principles and Recommendations (ASX Governance
Principles). These policies and practices, together with reasons for any non-compliance with the ASX
Governance Principles, are reflected in this Statement as well as our Appendix 4G. The Statement is
current as at 14 August 2024 and has been approved by the Board on that date.
The Board and management team maintain high standards of corporate governance as part of our
commitment to create value for our stakeholders through effective strategic planning, risk management,
transparency, and corporate responsibility.
We regularly review our governance practices considering the growth in the Company and relevant
emerging corporate governance developments.
2023-24 Areas Of Governance Focus
Key areas of governance focus and activities undertaken by the Board, its committees and management
during 2023-24 included:
Our People
• Ensuring compliance with Group policies in all subsidiaries via an attestation.
• Continuing our efforts to “future-proof” the workforce, through succession planning and career
development.
• Conducting our second Employee Engagement Survey to measure our workforce’s ongoing connection
and commitment to the Company and its goals as we grow.
Governance
• risk reporting, risk appetite statement and governance frameworks adopted under the oversight of the
Audit and Risk Management Committee
• meeting with shareholders and proxy advisors as part of Pro Medicus’ ongoing engagement to discuss
matters relating to our business performance, governance and remuneration.
• Completing all actions in our first Modern Slavery Statement.
Board
• Undertook a review of the Risk Management Plan, a Board endorsed Risk Appetite Statement and Risk
Register
• Undertook a Board performance review with assistance from an external consultant.
PRO MEDICUS ANNUAL REPORT 2024
41
40
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
Consolidated
FOR THE YEAR ENDED 30 JUNE 2024
Notes
2024
$’000
2023
$’000
Revenue from contracts with customers
5
161,501
124,900
Interest and distribution income
4,832
2,431
Total revenue and income
166,333
127,331
Cost of sales
(301)
(544)
Gross profit
166,032
126,787
Net foreign currency gains/(losses)
6(a)
(1,122)
(386)
Fair value movements on financial instruments
536
207
Accounting and secretarial expenses
(1,295)
(1,138)
Advertising and public relations expenses
(2,891)
(2,521)
Depreciation and amortisation
6(b)
(8,510)
(7,926)
Insurance costs
(1,166)
(1,069)
Legal costs
(1,468)
(1,028)
Other expenses
(1,743)
(1,492)
Employee benefits expenses
6(b)
(30,382)
(24,065)
Travel and accommodation expenses
(1,493)
(1,244)
Profit before income tax
116,498
86,126
Income tax expense
7
(33,704)
(25,478)
Profit for the year
17
82,794
60,648
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Foreign currency translation
(229)
156
Other comprehensive income for the year
(229)
156
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX
82,565
60,804
Earnings per share (cents per share)
8
- Basic earnings per share
79.3¢
58.1¢
- Diluted earnings per share
79.1¢
58.0¢
This Consolidated Statement of Comprehensive Income should be read in conjunction with the notes to
the financial statements.
Consolidated
AS AT 30 JUNE 2024
Notes
2024
$’000
2023
$’000
ASSETS
Current Assets
Cash and cash equivalents
10a
60,062
91,248
Bank term deposits
10b
63,857
-
Trade and other receivables
11
48,055
39,882
Accrued revenue
228
193
Contract costs
915
590
Other financial assets
12
31,506
30,247
Inventories
49
55
Prepayments
1,890
1,575
Total Current Assets
206,562
163,790
Non-Current Assets
Deferred tax assets
7
17,182
12,206
Plant and equipment
512
472
Contract costs
3,856
2,361
Right-of-use assets
19
1,867
1,715
Intangible assets
13
20,071
21,349
Other financial assets
12
7,336
-
Prepayments
40
242
Total Non-Current Assets
50,864
38,345
TOTAL ASSETS
257,426
202,135
LIABILITIES
Current Liabilities
Trade and other payables
14
10,199
6,801
Income tax payable
2,403
6,539
Deferred revenue
5,15
17,051
12,602
Other current financial liabilities
26(b)
-
504
Lease liabilities
19
553
654
Provisions
16
4,351
3,751
Total Current Liabilities
34,557
30,851
Non-Current Liabilities
Deferred tax liabilities
7
7,662
7,813
Deferred revenue
15
25,850
23,421
Lease liabilities
19
1,516
1,197
Provisions
16
113
77
Total Non-Current Liabilities
35,141
32,508
TOTAL LIABILITIES
69,698
63,359
NET ASSETS
187,728
138,776
EQUITY
Contributed equity
17
23,649
1,959
Share buyback reserve
17
(8,543)
(5,774)
Share reserve
17
176
16,156
Foreign currency translation reserve
17
(910)
(681)
Retained earnings
17
173,356
127,116
TOTAL EQUITY
187,728
138,776
This Consolidated Statement of Financial Position should be read in conjunction with the notes to the
financial statements.
42
PRO MEDICUS ANNUAL REPORT 2024
43
CONSOLIDATED STATEMENT OF
CASH FLOWS
Consolidated
FOR THE YEAR ENDED 30 JUNE 2024
Notes
2024
$’000
2023
$’000
Cash flows from operating activities
Receipts from customers
158,449
117,923
Payments to suppliers and employees
(37,541)
(31,854)
Interest paid
(76)
(76)
Income tax paid
(38,853)
(23,458)
Net cash flows from operating activities
10c
81,979
62,535
Cash flows from investing activities
Acquisition of bank term deposits
10b
(63,857)
-
Payments for capitalised development costs
13
(6,385)
(6,147)
Interest received
4,797
2,238
Investments in other financial assets
(46,069)
(21,252)
Sale of other financial assets
38,545
17,903
Payments for plant and equipment
(308)
(299)
Net cash flows used in investing activities
(73,277)
(7,557)
Cash flows from financing activities
Payments of dividends on ordinary shares
9
(36,554)
(26,108)
Payments for lease liabilities
(518)
(574)
Payments for share buyback
(2,769)
(845)
Net cash flows used in financing activities
(39,841)
(27,527)
Net increase/(decrease) in cash and cash equivalents
(31,139)
27,451
Net foreign exchange differences
(47)
141
Cash and cash equivalents at beginning of period
91,248
63,656
Cash and cash equivalents at end of period
10a
60,062
91,248
This Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial
statements
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Consolidated
FOR THE YEAR ENDED 30 JUNE 2024
Contributed
Equity
$'000
Treasury
Shares
$’000
Share
Buyback
Reserve
$'000
Share
Reserve
$'000
Foreign
Currency
Translation
Reserve
$'000
Retained
Earnings
$'000
Total
Equity
$'000
At 1 July 2022
1,959
-
(5,224)
13,258
(837)
92,576
101,732
Profit for the year
-
-
-
-
-
60,648
60,648
Other comprehensive income
-
-
-
-
156
-
156
Total comprehensive income for the period
-
-
-
-
156
60,648
60,804
Transaction with owners in their capacity
as owners
Share based payment
-
-
-
1,233
-
-
1,233
Share buyback
-
-
(550)
-
-
-
(550)
Tax effect of share based payments
-
-
1,665
-
-
1,665
Dividends
-
-
-
-
-
(26,108)
(26,108)
At 30 June 2023
1,959
(5,774)
16,156
(681)
127,116
138,776
At 1 July 2023
1,959
-
(5,774)
16,156
(681)
127,116
138,776
Profit for the year
-
-
-
-
-
82,794
82,794
Other comprehensive income
-
-
-
-
(229)
-
(229)
Total comprehensive income for the period
-
-
-
-
(229)
82,794
82,565
Transaction with owners in their capacity
as owners
Share based payment
-
-
-
1,926
-
-
1,926
Share buyback
-
-
(2,769)
-
-
-
(2,769)
Tax effect of share based payments
-
-
-
3,784
-
-
3,784
Issue of shares to Trust
21,690 (21,690)
-
-
-
-
-
Shares issued to satisfy employee
performance rights (note 17)
- (21,690)
- (21,690)
-
-
-
Dividends
-
-
-
-
- (36,554) (36,554)
At 30 June 2024
23,649
-
(8,543)
176
(910)
173,356
187,728
This Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the
financial statements.
44
PRO MEDICUS ANNUAL REPORT 2024
45
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:
Distinguishing between the research and development phases and determining whether the recognition
requirements for the capitalisation of development costs as discussed in Note 13 are met requires
judgement. After capitalisation, management monitors whether the recognition requirements continue to
be met and whether there are any indicators that capitalised costs may be impaired.
Development costs include employee labour costs and other directly attributable costs including amounts
of overhead and administrative expenditure to the extent these amounts are incurred in connection with
the related employee labour.
Impairment of non-financial assets:
The Group assesses impairment of all non-financial 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. Additionally, goodwill, indefinite life intangible
assets and intangible assets not yet ready for use are tested annually. Management has tested certain
assets for impairment in this financial period. Refer to Note 13 of the financial statements for significant
assumptions applied in assessing for impairment on non-financial assets.
Deferred tax:
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 in subsidiaries, 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1. CORPORATE INFORMATION
The financial report of Pro Medicus Limited (the Company) for the year ended 30 June 2024 was
authorised for issue in accordance with a resolution of Directors on 14 August 2024. The Directors have the
power to amend and reissue the financial report.
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 except for certain financial instruments which have been recognised
at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand
dollars ($000) unless otherwise stated in accordance with ASIC Legislative Instrument 2016/191.
(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 (the Group). Control is achieved when the Group is exposed, or has rights, to variable returns
from its involvement with the investee and could 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 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.
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.
(d) New accounting standards and interpretations
New and/or amended standards that were effective for the Group as of 1 July 2023 did not have a material
impact on the financial statements of the Group as they are either not relevant to the Group’s activities or
require accounting which is consistent with the Group's current accounting policies.
46
PRO MEDICUS ANNUAL REPORT 2024
47
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.
OPERATING SEGMENTS
Australia
Europe1
North America1
Total Operations
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Revenue
Sales to external customers – RIS
15,440
14,818
-
-
-
-
15,440
14,818
Sales to external customers – PACS
1,436
1,118
3,998
4,287
140,555
104,564
145,989
109,969
Inter-segment sales
114,422
82,381
10,242
7,803
-
-
124,664
90,184
Total segment revenue
131,298
98,317
14,240
12,090
140,555
104,564
286,093
214,971
Inter-segment elimination
(124,664)
(90,184)
Other income
72
113
Total consolidated revenue
161,501
124,900
Results
Segment result
108,678
80,126
178
2,033
2,995
2,177
111,851
84,336
Interest and distribution income
4,832
2,431
Other amounts unallocated to
segments
(185)
(642)
Non-segment expenses
Income tax expense
(33,704)
(25,478)
Statutory net profit after tax
82,794
60,647
Assets
Non-current assets
32,978
27,111
825
79
462
612
34,265
27,802
Deferred tax asset
8,009
4,793
-
-
9,173
7,413
17,182
12,206
Current assets
178,540
144,295
24,690
23,724
60,502
46,930
263,732
214,949
Segment assets
219,527
176,199
25,515
23,803
70,137
54,955
315,179
254,957
Inter-segment elimination
(57,753)
(52,822)
Total assets
257,426
202,135
Liabilities
Segment liabilities
48,112
46,224
3,811
3,354
74,526
62,188
126,449
111,766
Inter-segment elimination
(56,751) (48,407)
Total liabilities
69,698
63,359
Other segment information
Capital expenditure
6,433
6,258
108
45
156
131
6,697
6,433
Depreciation and amortisation
7,902
7,345
307
291
301
289
8,510
7,926
1European results relate solely to the company’s operations in Germany. North American results relate solely to the operations in the United States of America.
Revenue from major customers
No customer contributed to the total consolidated Group’s revenue by more than 10%
(2023: no customer in the Group contributed 10%).
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (cont'd)
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.
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 18.
Revenue recognition:
The Group has applied judgement in determining that certain performance obligations within its contracts
with customers are one single performance obligation for the purposes of measuring and recognising
revenue. Further discussion on the factors the Group has considered in making this judgement are
contained in Note 5.
Classification of bank term deposits
The Group assesses at period end whether its bank term deposits are held for the purpose of meeting
short-term cash commitments, or for investment or other purposes. When assessing the purpose of
its bank term deposits, the Group considers its available cash reserves as compared to its forecasted
operating cash requirements, declared dividends and strategic investments the Group may enter into,
in order to determine whether the bank term deposit will be required to meet its short-term cash
commitments. If the bank term deposit is not required to meet short-term cash commitments, it is
classified as an asset separate from cash and cash equivalents.
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 maker) 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. Segment
performance in the relevant jurisdiction is assessed based on the ‘Segment result’ which comprises
revenue earned (including intercompany sales) less expenses. Interest and tax related amounts are
excluded from the segment result.
Types of products and services
The Group produces integrated software applications for the healthcare imaging 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.
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.
48
PRO MEDICUS ANNUAL REPORT 2024
49
Set out below is the disaggregation of the Group's revenue from contracts with customers:
Year ended 30 June 2024 ($’000)
Consolidated
Australia
Europe
North
America
Total
Types of goods and services
Radiology Information System (RIS)
15,440
-
-
15,440
Picture Archiving Communications System
(Visage 7/Open Archive)
1,436
3,998
140,555
145,989
Other
-
72
-
72
Total revenue per statement of comprehensive income
16,876
4,070
140,555
161,501
Timing of revenue recognition
Over time
16,876
4,070
140,555
161,501
Total revenue per statement of comprehensive income
16,876
4,070
140,555
161,501
Year ended 30 June 2023 ($’000)
Consolidated
Australia
Europe
North
America
Total
Types of goods and services
Radiology Information System (RIS)
14,818
-
-
14,818
Picture Archiving Communications System
(Visage 7/Open Archive)
1,118
4,287
104,564
109,969
Other
-
113
-
113
Total revenue per statement of comprehensive income
15,936
4,400
104,564
124,900
Timing of revenue recognition
Over time
15,936
4,400
104,564
124,900
Total revenue per statement of comprehensive income
15,936
4,400
104,564
124,900
Payments received in advance of the commencement of the term of the contract are initially deferred as
contract liabilities (deferred revenue, refer to Note 15).
Set out below is the amount of revenue from contracts with customers recognised from:
Consolidated
2024
$’000
2023
$’000
Amounts included in deferred revenue
19,865
12,647
Set out below is the amount of salaries and employee benefits expense recognised from:
Consolidated
2024
$’000
2023
$’000
Amounts capitalised as contract costs
696
573
5. REVENUE FROM CONTRACTS WITH CUSTOMERS
The Group’s contracts with customers for its Radiology Information System (RIS) and Picture Archiving
Communications System (Visage 7/Open Archive) 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.
•
Support services, including updates and upgrades to the product licence; and
•
Archive data migration services
The Group’s contracts with customers also comprise of multiple activities 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 installation, product licence,
transaction services and support services comprise one performance obligation 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 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:
•
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.
•
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 over time 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 exceeding set minimum activity levels. Such variable 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 cost and amortised within salaries and employee benefits expense over the life
of the relevant contract as revenue is recognised. The carrying value of contract costs are assessed for
impairment at each reporting date.
The Group also provides archive migration services to its customers. These services are considered to
be a separate performance obligation and are not highly interrelated with the other goods and services
providing by the Group as they could be provided by other third parties. Accordingly, revenue from archive
migration services is recognised over time based on an input method based on the percentage completion
of data that is migrated.
50
PRO MEDICUS ANNUAL REPORT 2024
51
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 for temporary differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
•
where the deferred income tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
•
when the taxable temporary difference is associated with investments in subsidiaries, associates
or interests in joint ventures, and the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry-forward of unused tax assets
and unused tax losses can be utilised, except:
•
where the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
•
when the deductible temporary difference is associated with investments in subsidiaries, associates
or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that
it is probable that the temporary difference will reverse in the foreseeable future and taxable profit
will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to
the extent that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the
year when the asset is realised or the liability is settled, based on the tax rates (and tax laws) that have
been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the
statement of comprehensive income.
Unrecognised temporary differences
At 30 June 2024, the Group has not recognised deferred tax liabilities associated with the Group's
investments in subsidiaries 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
(30 June 2023: nil)
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.
6. INCOME AND EXPENSES
Consolidated
Notes
2024
$’000
2023
$’000
(a) Net foreign currency gains/(losses)
Currency gains
8,719
11,233
Currency loss
(10,376)
(11,115)
Fair value (loss)/gain on financial instruments – forward exchange
contracts
535
(504)
Total net foreign currency gains
(1,122)
(386)
(b) Expenses
Depreciation and amortisation
Property, plant and equipment assets
268
286
Right-of-use lease assets
19
579
549
Capitalised development costs
13
7,663
7,091
Total depreciation and amortisation expense
8,510
7,926
Salaries and employee benefits expense
Gross wages and salaries
31,742
25,474
Capitalised wages and salaries*
(5,319)
(4,744)
Long service leave provision
109
482
Share-based payments expense**
1,926
1,233
Defined contribution plan expense
1,924
1,620
Total salaries and employee benefits expense
30,382
24,065
*The Group’s total wages and salaries incurred was ($’000) $31,742 (2023: $25,474) of which $5,319 (2023: $4,744) of these costs have been capitalised as
development costs within intangible assets.
**The Groups share-based payments includes a portion of expense relating to the FY21, FY22, FY23 and FY24 grant of performance rights. Please refer to Note
18 for further details into the valuation of these performance rights during this period.
52
PRO MEDICUS ANNUAL REPORT 2024
53
Deferred income tax
Consolidated Statement
of Financial Position
Consolidated Statement
of Comprehensive Income
Recognised
within Equity
Deferred income tax at 30 June relates to the
following:
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Deferred tax liabilities
Foreign currency exchange gain
(106)
230
336
114
-
-
Intangible assets
6,021
6,405
384
283
-
-
Depreciation expenses
25
17
(8)
(5)
-
-
Right-of-use asset
539
459
(80)
123
-
-
Contract costs
1,183
702
(481)
(238)
-
-
Deferred tax liabilities
7,662
7,813
151
277
-
-
Deferred tax assets
Employee entitlements
1,960
1,432
528
450
-
-
Intellectual property expenses
178
196
(18)
(19)
-
-
Accruals
5
27
(22)
1
-
-
Allowance for expected credit losses
-
-
-
(158)
-
-
Deferred revenue
8,568
7,918
650
1,381
-
-
Lease liabilities
598
497
101
(123)
-
-
Unrealised fair value loss on other financial assets
99
260
(161)
260
(546)
(3,356)
Employee Share Trust – unvested share-based
payments
5,727
1,870
476
94
3,381
(546)
Patent cost
36
-
36
-
-
-
Other
11
6
5
-
-
-
Deferred tax assets
17,182
12,206
1,595
1,886
3,381
(546)
Deferred tax movement (charged) or credited to profit or loss
1,746
2,163
-
-
Deferred tax movement (charged) or credited directly to equity
-
-
3,381
(546)
8. EARNINGS PER SHARE
Basic earnings per share is calculated as net profit after tax 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 after tax 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.
The following reflects the income and share data used in the basic and diluted earnings per share
computations:
Consolidated
2024
$
2023
$
Net profit after tax attributable to ordinary equity holders
82,793,715
60,647,665
Number
Number
Weighted average number of ordinary shares for basic earnings per share
104,440,687
104,406,547
Effect of dilution:
Performance rights
211,683
181,095
Weighted average number of ordinary shares adjusted for the effect of dilution
104,652,370
104,587,642
7. INCOME TAX (cont'd)
Consolidated
2024
$’000
2023
$’000
The major components of income tax expense are:
Statement of comprehensive income
Current income tax
Current income tax charge
36,284
27,668
Prior year adjustment
(834)
(27)
Deferred income tax
Relating to origination and reversal of temporary differences
(1,746)
(2,163)
Income tax expense reported in profit or loss
33,704
25,478
Statement of changes in equity
Current income tax
Impact of the Employee Share Trust – vested share-based payments
(403)
(2,211)
Deferred income tax
Relating to origination and reversal of temporary differences due to the
Employee Share Trust – unvested share-based payments
(3,381)
546
Income tax (benefit) / expense reported directly in the statement of changes in equity
(3,784)
(1,665)
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
116,498
86,126
At the applicable statutory income tax rate in each country
- Australia (30%)
33,084
24,266
- United States of America (USA) (21-25%)
907
646
- Germany (30.15%)
772
761
Prior year adjustment
(834)
(27)
Expenditure not allowable for income tax purposes
333
190
Benefit from vested share-based payments
(63)
(203)
Other
(495)
(155)
Income tax expense reported in profit or loss
33,704
25,478
54
PRO MEDICUS ANNUAL REPORT 2024
55
Bank term deposits represent funds invested by the Group that are not required to meet short-term
cash commitments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes of value.
Bank term deposits are made for varying periods, typically less than three months, and earn interest
at the respective bank term deposit rates.
Consolidated
(c) Reconciliation of net profit after tax to net cash flows from operations
2024
$’000
2023
$’000
Net profit
82,794
60,648
Adjustments for:
Depreciation of property, plant and equipment and right of use lease assets
847
834
Amortisation of intangible assets
7,663
7,091
Interest received classified in investing activities
(4,832)
(2,431)
Current income tax impact of vested share-based payments recognised directly in
equity
330
1,732
Net unrealised foreign currency differences and other non-cash items
1,166
(981)
Fair value loss on other financial assets
536
207
Share-based payment expense
1,926
1,233
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(8,173)
(12,442)
(Increase)/decrease in inventory
6
22
(Increase)/decrease in deferred tax asset
(4,976)
(1,340)
(Increase)/decrease in prepayments
(113)
(513)
(Increase)/decrease in contract costs
(1,820)
(1,036)
(Decrease)/increase in trade and other payables
3,398
1,495
(Decrease)/increase in income tax payable
(4,136)
240
(Decrease)/increase in deferred income
6,878
7,267
(Decrease)/increase in deferred tax liability
(151)
(277)
(Decrease)/increase in employee entitlements
636
786
Net cash flow from operations
81,979
62,535
11. TRADE AND OTHER RECEIVABLES
Trade and other receivables do not contain a significant financing component and are recognised initially at
the transaction price and subsequently measured at amortised cost less an allowance for any impairment.
Consolidated
Current
2024
$’000
2023
$’000
Trade receivables
47,907
39,650
Less: Allowance for expected credit losses
-
-
47,907
39,650
Other receivables
148
232
48,055
39,882
The carrying value of trade receivables approximates their fair value due to the short-term nature of
receivables.
The provision matrix for expected credit losses is initially based on the Group’s historical observed default
rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-
looking information. For instance, if forecast economic conditions are expected to deteriorate over the
next year which can lead to an increased number of defaults in the manufacturing sector, the historical
default rates are adjusted. At every reporting date, the historical observed default rates are updated and
changes in the forward-looking estimates are analysed.
9. DIVIDENDS PAID AND PROPOSED
Consolidated
2024
$’000
2023
$’000
Declared and paid during the year:
Final franked dividend for 2023: 17.0 cents (2022: 12.0 cents franked)
17,757
12,532
Interim franked dividend for 2024: 18.0 cents (2023: 13.0 cents franked)
18,797
13,576
36,554
26,108
Declared subsequent to the end of the year (not recognised as a liability as at
30 June):
Dividends on ordinary shares:
Final franked dividend for 2024: 22.0 cents (2023: 17.0 cents franked)
22,974
17,753
Total dividends proposed
22,974
17,753
Consolidated
Franking credit balance
2024
$’000
2023
$’000
– franking account balance as at the end of the financial year at 30% (2023: 30%)
21,022
5,835
– franking credits that will arise from the payment of income tax payable as at the
end of the financial year
2,773
7,210
– franking debits that will arise from the payment of dividends as at the end of the
financial year
-
-
– franking credits that the entity may be prevented from distributing in the
subsequent financial year
-
-
23,795
13,045
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
(9,769)
(7,608)
14,026
5,437
The tax rate at which paid dividends have been franked is 30% (2023: 30%).
Dividends proposed will be fully franked.
10. CASH FLOW INFORMATION
Consolidated
(a) Cash and cash equivalents
2024
$’000
2023
$’000
Cash at bank and in hand*
60,062
30,394
Short-term deposits
-
60,854
60,062
91,248
*$1,462,000 (2023: $907,000) 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 held for the purpose of meeting short-term cash
commitments.
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 carrying value of cash and cash equivalents approximates their fair value.
Consolidated
(b) Bank term deposits
2024
$’000
2023
$’000
Short-term deposits
63,857
-
63,857
-
56
PRO MEDICUS ANNUAL REPORT 2024
57
Fair value measurement
Listed debt instruments are classified as Level 1 in the fair value hierarchy as their prices are quoted in
an active market. Unlisted debt instruments and managed fund investments are classified as Level 2.
Investments in unlisted managed funds are recorded at the redemption value per unit as reported by the
investment managers of the fund. Unlisted debt instruments fair values are determined with reference to
recent market transactions for instruments with similar terms and conditions.
Equity instruments
On 3 January 2024, the Group purchased 2,577,718 Series C Preferred shares of Elucid Bioimaging, Inc.
(“Elucid”) for a total consideration of USD $4,999,999.61 / AUD $7,336,034.43. The acquisition represents
a circa 3.5% minority shareholding in Elucid.
Through the investment, the Group is looking to partner with Elucid to integrate its cardiac CT solutions
into Visage Imaging, Inc., a subsidiary of Pro Medicus.
The investment was initially measured at fair value and is subsequently measured at fair value with any
change recognised in profit or loss in the period in which it arises.
The shares in Elucid are not traded in an active market and have been categorised within Level 3
in the fair value hierarchy. Due to the proximity of time between the acquisition date and reporting
date, and Elucid’s continual achievement of project milestones as reported in the quarterly investor
updates, the Group considers these factors to form a reliable basis for utilising the acquisition
price as the fair value and have determined the fair value of the investment as at 30 June 2024
to be USD $4,999,999.61 / AUD $7,336,034.43.
13. 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, at the cash generating
unit level. In addition, intangible assets which are not yet ready for use are not amortised but are tested for
impairment at least annually. 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 reviewed 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 which the Group has assessed as 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. Development costs are
separately identified for the following products:
•
Visage 7 PACS
•
Visage RIS
11. TRADE AND OTHER RECEIVABLES (cont'd)
During the year ended 30 June 2024, $nil of trade and other receivables were written off as unrecoverable
and allowances for expected credit losses of $nil were recognised (30 June 2023: $654,000 written off
and $nil allowances recognised).
At June 30, the ageing analysis of trade receivables is as follows:
Consolidated
2024
$’000
2023
$’000
0 – 30 days
41,793
31,867
31 – 60 days
844
100
61 – 90 days
2,808
6,476
91+ days
2,462
1,207
Total trade receivables
47,907
39,650
The majority of customers are on terms of between 30 to 60 days, however certain customers have terms
of up to 90 days.
12. OTHER FINANCIAL ASSETS
Consolidated
Investments
2024
$’000
2023
$’000
Hybrid/convertible debt instruments, listed
6,339
3,872
Other debt instruments, listed
1,457
1,097
Hybrid/convertible debt instruments, unlisted
14,944
-
Other debt instruments, unlisted
6,968
15,305
Managed fund units, unlisted
1,263
9,973
30,971
30,247
Foreign exchange forward contract
535
-
Equity instruments, unlisted
7,336
-
Total other financial assets
38,842
30,247
Total current
31,506
30,247
Total non-current
7,336
-
Except for trade receivables that do not contain a significant financing component or for which the Group
has applied the practical expedient (see Note 11), the Group initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
The subsequent measurement of the Groups financial assets depends on the financial asset’s contractual
cash flow characteristics (whether the cash flows represent solely payments of principal and interest
“SPPI”) and the Group’s business model for managing them (the “Business Model” test). The subsequent
measurement of the Group’s investments and derivatives is discussed below.
Investments in debt instruments and managed fund
The portfolio of investments is managed, and performance is evaluated on a fair value basis. The Group
is primarily focused on fair value information and uses that information to assess the assets’ performance
and to make decisions.
Consequently, all investments are measured at fair value through profit or loss.
Derivatives
Derivatives are mandatorily measured at fair value through profit and loss.
58
PRO MEDICUS ANNUAL REPORT 2024
59
14. TRADE AND OTHER PAYABLES
Trade payables and other payables are initially recognised at fair value and subsequently carried at
amortised cost. They 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.
Consolidated
CURRENT
2024
$’000
2023
$’000
Trade payables
1,739
1,033
Other payables and accruals
8,460
5,768
10,199
6,801
(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.
15. DEFERRED REVENUE
Consolidated
2024
$’000
2023
$’000
Current
Deferred revenue from contracts with customers
17,051
12,602
17,051
12,602
Non-current
Deferred revenue from contracts with customers
25,850
23,421
25,850
23,421
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are
unsatisfied as at 30 June 2024 was ($’000) $42,901 (2023: $36,023) and is expected to be recognised as
revenue in future reporting periods as follows:
Consolidated
2024
$’000
2023
$’000
Less than one year
16,412
12,602
Between one year and five years
21,407
19,610
More than five years
5,082
3,811
Revenue to be recognised from unsatisfied performance obligations
42,901
36,023
16. 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.
Development Costs
- Visage RIS
$’000
Development Costs
- Visage PACS
$’000
Total
$’000
Year ended 30 June 2024
At 1 July 2023 net of accumulated amortisation and
impairment
6,396
14,953
21,349
Additions - internal development
2,048
4,337
6,385
Amortisation charge for the year
(2,601)
(5,062)
(7,663)
At 30 June 2024 net of accumulated amortisation and
impairment
5,843
14,228
20,071
At 30 June 2024
Cost
22,618
58,919
81,537
Accumulated amortisation and impairment
(16,775)
(44,691)
(61,466)
Net carrying amount
5,843
14,228
20,071
Development Costs
- Visage RIS
$'000
Development Costs
- Visage PACS
$'000
Total
$'000
Year ended 30 June 2023
At 1 July 2022 net of accumulated amortisation and
impairment
5,820
16,473
22,293
Additions - internal development
2,141
4,006
6,147
Amortisation charge for the year
(1,565)
(5,526)
(7,091)
At 30 June 2023 net of accumulated amortisation and
impairment
6,396
14,953
21,349
At 30 June 2023
Cost
20,570
56,318
76,888
Accumulated amortisation and impairment
(14,174)
(41,365)
(55,539)
Net carrying amount
6,396
14,953
21,349
Impairment
On an annual basis the Group performs an impairment assessment on intangible assets which are not yet
available for use. Given these intangible assets relate to new versions of the Visage PACS and RIS software
products the carrying amounts of the intangible assets not yet available for use are allocated to the Cash
Generating Units (CGU) which have been identified separately for each of these software products. These
CGUs are considered the smallest identifiable group of assets that generate largely independent cash inflows.
The Group estimates the recoverable amount using a value-in-use (VIU) discounted cash flow
methodology. Key inputs and assumptions to the VIU calculation include the discount rate, budgeted cash
flows and terminal growth rates.
No impairment loss was recognised during the year ended 30 June 2024 (2023: nil impairment loss) as the
results of the impairment test indicated that the recoverable amount of each CGU exceeded the carrying
amount. There were also no reasonably possible changes in assumptions identified that would result in
recoverable amount being lower than carrying amount.
As part of the annual assessment the Group also performed an assessment of impairment indicators for
the in-use definite life intangible assets, resulting in no indicators of impairment.
60
PRO MEDICUS ANNUAL REPORT 2024
61
Consolidated
Reserves
2024
$’000
2023
$’000
Share reserve (i)
Balance at 1 July
16,156
13,258
Share based payment expense
1,926
1,233
Income tax effect of the Employee Share Trust
3,784
1,665
Shares issued to satisfy employee performance rights
(21,690)
-
Balance at 30 June
176
16,156
Foreign currency translation reserve (ii)
Balance at 1 July
(681)
(837)
Foreign currency movement
(229)
156
Balance at 30 June
(910)
(681)
Share buyback reserve (iii)
Balance at 1 July
(5,774)
(5,224)
Share buyback
(2,769)
(550)
Balance at 30 June
(8,543)
(5,774)
Retained earnings
Number of
Shares
2024
$’000
Balance at 1 July
127,116
92,576
Net profit for the year
82,794
60,648
Dividends
(36,554)
(26,108)
Balance at 30 June
173,356
127,116
(i) Share reserve
The share reserve is used to record the fair value of share-based payments provided to employees,
including KMP, as part of their remuneration, and deferred tax on the share-based payments required to
be recognised in equity. When shares are assigned from the Employee Share Trust via Treasury shares to
employees to satisfy the equity incentive plan, the Share reserve is reduced by the market value of the
shares. Refer to Note 18 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.
(iii) Share buyback reserve
The share buyback reserve is used to record the market value of shares that have been bought back
during the reporting period.
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 reviews 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 or buyback existing shares.
During the year, the company paid dividends of $36,553,876 (2023: $26,108,063).
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 at the value of expected future payments to
be made in respect of services provided by employees up to the reporting date. 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 current rates paid to employees.
(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
2024
$’000
2023
$’000
Current
Long service leave
1,590
1,517
Annual leave
2,761
2,234
4,351
3,751
Non-current
Long service leave
113
77
113
77
17. 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.
Consolidated
Contributed Equity
2024
$’000
2023
$’000
(i) Ordinary shares
23,649
1,959
Issued and fully paid
23,649
1,959
Fully paid ordinary shares carry one vote per share and carry the right to dividends
(ii) Movements in shares on issue
Number of
Shares
2024
$’000
At 1 July 2023
104,432,253
1,959
Share buyback
(30,397)
-
Issue of shares to Trust to satisfy employee performance rights
23,026
1,656
Issue of shares to Trust
-
20,034
At 30 June 2024
104,424,882
23,649
Number of
Shares
2023
$’000
At 1 July 2022
104,281,957
1,959
Share buyback
(12,583)
-
Exercise of performance rights
162,879
-
At 30 June 2023
104,432,253
1,959
62
PRO MEDICUS ANNUAL REPORT 2024
63
The table below details movements in the number of performance rights on issue:
30 June 2024
Number of Performance Rights
30 June 2023
Number of Performance Rights
Outstanding at the beginning of the year
248,741
404,611
- granted
69,258
71,867
- forfeited
(38,961)
(64,858)
- exercised1
(23,026)
(162,879)
Outstanding at the end of the year
256,012
248,741
Exercisable at end of year
-
-
Weighted average remaining contractual life
2.5
2.7
1Performance rights issued under the FY20 LTI plan were exercised on 28 August 2023 at a value of $71.91 per right (prior period: FY19 LTI plan performance
rights exercised on 29 August 2022 at a value of $52.55 per right).
Performance hurdles applicable to the performance rights on issue during the year were:
• Earnings per share (EPS) (60% of performance rights granted): calculated as the compound
annual growth rate (CAGR) of EPS for the 3-year period from the grant date.
• Relative total shareholder return (TSR) (40% of performance rights granted): Relative TSR
combines the security price movement and distributions (which are assumed to be reinvested) to
show the total return to securityholders, relative to that of other companies in the TSR comparator
group. For the FY24, FY23, FY22 and FY21 plans the TSR comparator group was the ASX 200 index.
Performance rights valuation
The fair value of the equity-settled performance rights granted for the current LTI scheme is estimated as
at the date of the grant using Black Sholes and Monte Carlo Simulation Models considering the terms and
conditions upon which the performance rights were granted.
The following table lists the inputs to the models used:
2024
2023
2022
2021
Dividend yield
0.43%
0.43%
0.26%
0.48%
Expected volatility
32.1%
45.8%
16.3%
19.5%
Risk-free interest rate
1.50%
1.50%
0.90%
0.90%
Expected life of performance rights
4 years
4 years
4 years
4 years
Performance rights exercise price
$0.00
$0.00
$0.00
$0.00
Fair value per right - TSR
$25.50
$24.07
$8.03
$3.28
Fair value per right – EPS
$68.88
$50.80
$57.75
$24.45
18. 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).
Details of the current share-based payment plan, which provides performance rights to employees are
outlined below.
The cost of these equity-settled transactions with employees 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.
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, considering 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 lapsed 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 the Share reserve in 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 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).
Performance Rights - Long Term Incentive (LTI) Scheme
Senior Executives of the Group are offered performance rights over the ordinary shares of Pro Medicus
Limited. The performance rights, which are accounted for as options, are issued with nil exercise price and
vest 4 years after grant date subject to an employee remaining in service and certain performance hurdles
(which are tested at the end of the third year) being met. The performance rights cannot be transferred
and will not be quoted on the ASX.
During the current year performance rights granted during the FY24, FY23, FY22 and FY21 years remained
on issue.
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PRO MEDICUS ANNUAL REPORT 2024
65
21. AUDITOR’S REMUNERATION
Consolidated
2024
2023
Amounts received or due and receivable by Ernst & Young (Australia) for:
– Statutory audit and review of the financial report of the Group
300,906
287,526
– Tax compliance services in relation to the Group (non-audit services)
73,950
68,241
374,856
355,767
Amounts received or due and receivable by related practices of Ernst & Young (Australia):
– Statutory audit of the financial report of Visage Imaging GmbH
73,324
118,437
– Tax compliance services in relation to Visage Imaging GmbH (non-audit services)
11,090
11,376
459,270
485,580
22. KEY MANAGEMENT PERSONNEL
(a) Compensation for key management personnel
Consolidated
2024
2023
Short-term employee benefits
3,544,582
3,230,409
Post-employment benefits
150,423
151,044
Long-term benefits
30,787
348,601
Share-based payments
450,125
292,150
Total compensation
4,175,917
4,022,204
Detailed remuneration disclosure are contained in the Remuneration Report section of the Director’s Report.
(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
During the year lease payments of $215,120 (2023: $215,120) 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. These lease arrangements are on an ‘arm’s length basis’ as determined by an
independent assessment of rental and lease terms. The lease expires 01 April 2026, with the option
for a three year renewal.
23. 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.
% Equity interest
Name
Country of incorporation
2024
Promed (USA) Pty Ltd
Australia
100
PME IP Australia Pty Ltd
Australia
100
PME IP Pty Ltd
Australia
100
Visage Imaging (Aust) Pty Ltd
Australia
100
Visage Ventures Pty Ltd
Australia
100
PME Nominees Pty Ltd (ATF Employee Share Trust)
Australia
100
Pro Medicus (USA) LLC
United States
100
Visage Ventures Inc
United States
100
Visage Imaging Inc
United States
100
Visage Imaging GmbH
Germany
100
(b) Ultimate parent
Pro Medicus Limited is the ultimate Australian parent entity and the ultimate parent of the Group.
19. LEASES
The table below details movements in the Group’s right-of-use assets and lease liabilities during the year
ended 30 June 2024:
Consolidated
Right-of-use assets
Lease liabilities
Property
$’000
Motor vehicles
$’000
Total
$’000
Total
$’000
As at 1 July 2023
1,670
45
1,715
(1,851)
Additions
755
46
801
(882)
Depreciation expense
(532)
(47)
(579)
-
Interest expense
-
-
-
(76)
Payments
-
-
-
668
Foreign exchange translation
(67)
(3)
(70)
72
As at 30 June 2024
1,826
41
1,867
(2,069)
Consolidated
Right-of-use assets
Lease liabilities
Property
$’000
Motor vehicles
$’000
Total
$’000
Total
$’000
As at 1 July 2022
2,064
79
2,143
(2,279)
Additions
94
-
94
(82)
Depreciation expense
(507)
(42)
(549)
-
Interest expense
-
-
-
(76)
Payments
-
-
-
624
Foreign exchange translation
19
8
27
(38)
As at 30 June 2023
1,670
45
1,715
(1,851)
Set out below are the amounts recognised in profit and loss during the year ended 30 June 2024:
Consolidated
30 Jun 2024
$’000
30 Jun 2023
$’000
Depreciation expense
579
549
Interest expense
76
76
Total amount recognised in profit and loss
655
625
The Group had total cash outflows for leases during the year ended 30 June 2024 of ($’000) $668 (2023: $624).
At 30 June 2024 there were no leases that were committed to but not yet commenced (30 June 2023: None).
20. EVENTS AFTER THE BALANCE SHEET DATE
On 14 August 2024, the directors of Pro Medicus Limited declared a fully franked final dividend on ordinary
shares in respect of the 2024 financial year of 22.0 cents per share totalling $22,973,474. The dividend has
not been provided for in the 30 June 2024 financial statements.
No other matters have arisen since the Balance Sheet date which have significantly affected or may affect,
the operations of the Group, the results of those operations or the state of affairs of the Group in future
financial periods.
66
PRO MEDICUS ANNUAL REPORT 2024
67
24. 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:
Post tax profit
higher/(lower)
Other comprehensive income
higher/(lower)
Judgements of reasonably possible movements:
2024
$’000
2023
$’000
2024
$’000
2023
$’000
AUD/USD +10%
2,106
595
(111)
(114)
AUD/USD – 5%
(1,053)
(297)
56
57
AUD/CAD +10%
(6)
(96)
-
-
AUD/CAD – 5%
3
48
-
-
AUD/GBP +10%
(13)
(13)
-
-
AUD/GBP – 5%
7
7
-
-
AUD/EUR +10%
(118)
(120)
(235)
(263)
AUD/EUR – 5%
59
60
118
132
Management believes the reporting date risk exposures are representative of the risk exposure inherent in
the financial instruments.
Credit risk
Credit risk arises from the financial instruments of the Group, which comprise cash and cash equivalents
and trade and other receivables and certain of its other financial assets being debt instruments and
derivatives. The Group’s exposure to credit risk arises from potential defaults of the counterparty,
with a maximum exposure equal to the carrying amount of the financial assets.
(i) Trade and other receivables
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 expected credit losses 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.
(ii)Cash and cash equivalents
Cash and cash equivalents and bank term deposits 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.
(iii) Other financial assets (debt instruments)
The Group’s investment management have been provided with clear credit policies for investing in debt
instruments, a summary is listed below:
•
Investment is limited to specific asset classes, namely fixed income and private credit.
•
No more than 10% of capital is initially invested in any one underlying asset or with any one issuer
(held directly or indirectly) and no more than 15% before rebalancing must take place.
•
Within fixed income, holding bonds dated 2 years or less.
•
Within private debt, no less than 80% of capital invested with a minimum credit rating of
BBB - or better (“Investment Grade”)
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments are cash and cash equivalents, bank term deposits and other
financial assets.
The main purpose of these financial instruments is to provide finance for the Group’s operations. The
Group also 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 90% (2023: 87%) of the Group’s sales are denominated in currencies other than the
presentational currency. 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.
At 30 June the Group had the following exposure to foreign currency that is not designated in cash flow
hedges or recorded in the functional currency of the subsidiary
Consolidated
USD$
CAD$
GBP
EUR€
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Financial assets
Cash and cash equivalents
8,710
11,678
57
963
133
133
1,177
1,199
8,710
11,678
57
963
133
133
1,177
1,199
Financial liabilities
Foreign exchange forward contracts
(29,768) (17,626)
-
-
-
-
-
-
Net exposure
(21,058)
(5,948)
57
963
133
133
1,177
1,199
68
PRO MEDICUS ANNUAL REPORT 2024
69
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont'd)
Liquidity risk
The Group has minimal liquidity risk as it has cash and cash equivalent and bank term deposit reserves
of $123,919, with no external 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 summarises the maturity profile of the Groups financial liabilities based on contractual
undisclosed payments:
LESS THAN 1 YEAR
$’000
1 TO 5 YEARS
$’000
> 5 YEARS
$’000
TOTAL
$’000
Year ended 30 June 2024
Trade and other payables
10,199
-
-
10,199
Lease liabilities
636
1,697
-
2,333
TOTAL
10,835
1,697
-
12,532
LESS THAN 1 YEAR
$’000
1 TO 5 YEARS
$’000
> 5 YEARS
$’000
TOTAL
$’000
Year ended 30 June 2023
Trade and other payables
6,801
-
-
6,801
Lease liabilities
655
1,179
215
2,049
TOTAL
7,456
1,179
215
8,850
In addition to the amounts disclosed in the tables above, at 30 June 2024 the group held forward
contracts for the purchase of Australian Dollars with US Dollars (disclosed as other financial liabilities
within the financial statements). These contracts involved gross US Dollar payments of ($000) $19,500 in
exchange for Australian Dollars of $29,768 (30 June 2023: gross US Dollar payments of ($000) $12,000 in
exchange for Australian Dollars of $17,626). Refer to Note 26(b) for further information.
25. PARENT ENTITY INFORMATION
Information relating to Pro Medicus Limited
2024
$’000
2023
$’000
Current assets
32,890
31,898
Total assets
47,167
46,473
Current liabilities
33,816
38,329
Total liabilities
36,507
41,738
Issued capital
23,649
1,959
Retained earnings
8,507
2,894
Foreign currency translation reserve
(3,344)
(3,646)
Share reserve
(9,609)
9,302
Share Buyback Reserve
(8,543)
(5,774)
Total shareholders’ equity
10,660
4,735
Profit/(loss) of the parent entity
5,473
10,131
Total comprehensive income of parent entity
5,473
10,131
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.
The table below summarises the credit quality by instrument.
AA
%
AA-
%
A+
%
A
%
A-
%
BBB+
%
BBB
%
BBB-
%
BB+
% TOTAL
Year ended 30 June 2024
Hybrid/convertible debt instruments, listed
-
-
-
-
-
-
92
8
-
100
Other debt instruments, listed
-
-
-
-
-
100
-
-
-
100
Hybrid/convertible debt instruments, unlisted
-
-
-
-
58
21
17
4
-
100
Other debt instruments, unlisted
-
-
6
-
40
27
24
3
-
100
Managed fund units, unlisted
-
1
-
-
2
-
-
-
97
100
TOTAL
-
-
5
-
28
24
36
3
4
100
AA
%
AA-
%
A+
%
A
%
A-
%
BBB+
%
BBB
%
BBB-
%
BB+
% TOTAL
Year ended 30 June 2023
Hybrid/convertible debt instruments, listed
-
-
-
-
26
-
48
26
-
100
Other debt instruments, listed
-
-
-
-
-
100
-
-
-
100
Other debt instruments, unlisted
-
7
-
3
-
45
24
21
-
100
Managed fund units, unlisted
20
9
-
24
17
-
5
14
11
100
TOTAL
7
6
-
10
9
26
20
19
4
100
(iv) Other financial liabilities (derivatives)
Derivative other financial liabilities are held with Macquarie Bank Limited, an A-1 rated bank.
Interest rate risk (cash flow and fair value)
The Group exposure to market interest rates relates primarily to the company’s cash and cash equivalents,
bank term deposits and other financial assets, being debt instruments.
(i) Cash flow interest rate risk
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 and are subject to cash flow interest rate risk:
Cash and Cash equivalents of $60,062 (2023: $91,248) and bank term deposits of $63,857 (2023: nil)
in the Group.
At 30 June 2024, 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 by cash flow
interest rate risk as follows:
Consolidated
Post tax profit
higher/(lower)
Other comprehensive income
higher/(lower)
Judgements of reasonably possible
movements:
2024
$’000
2023
$’000
2024
$’000
2023
$’000
+1% (100 basis points)
1,239
912
-
-
– 0.5% (50 basis points)
(620)
(456)
-
-
(ii) Fair value interest rate risk
At reporting date, the Group had the following debt instruments exposed to fair value interest rate risk:
Consolidated
2024
$’000
2023
$’000
Hybrid/convertible debt instruments, listed
6,339
3,872
Other debt instruments, listed
1,457
1,097
Hybrid/convertible debt instruments, unlisted
14,944
-
Other debt instruments, unlisted
6,968
15,305
The Group considers that these exposures do not give rise to significant fair value interest rate risk given
the short maturities of the debt instruments held and credit quality of the portfolio.
70
PRO MEDICUS ANNUAL REPORT 2024
71
26. OTHER ACCOUNTING POLICIES
(a) Accounting Standards and Interpretation issued but not yet effective
In June 2024, the Australian Accounting Standards Board issued AASB 18 Presentation and Disclosure
in Financial Statements [for for-profit entities] (“AASB 18”). Upon adoption, AASB 18 replaces AASB 101
Presentation of Financial Statements and is applied retrospectively to comparative periods presented.
The key presentation and disclosure requirements established by AASB 18 are:
•
The presentation of newly defined subtotals in the statement of comprehensive income –
Operating profit and Profit before financing and income taxes;
•
The disclosure of management-defined performance measures; and
•
Enhanced requirements for grouping (aggregation or disaggregation) of financial information.
The standard is effective for the Group for the full year ending 30 June 2028, with earlier adoption
permitted. ASAB 18 is not expected to impact the recognition or measurement of items in the financial
statements.
(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 derivatives.
These mature in July 2024, January 2025 and March 2025 (2023: August 2023).
2024
2023
Carrying
Amount
$’000
Fair
Value
$’000
Carrying
Amount
$’000
Fair
Value
$’000
Financial assets/(liabilities)
535
535
(504)
(504)
Foreign exchange forward contracts
535
535
(504)
(504)
(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. There has been no reclassification or repositioning of comparatives in the current year
disclosures.
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
Entity name
Entity type
Body corporate
country of
incorporation
Body
corporate
% of share
capital held
Country of tax
residence
Promed (USA) Pty Ltd
Body corporate
Australia
100
Australia
PME IP Australia Pty Ltd
Body corporate
Australia
100
Australia
PME IP Pty Ltd
Body corporate
Australia
100
Australia
Visage Imaging (Aust) Pty Ltd
Body corporate
Australia
100
Australia
Visage Ventures Pty Ltd
Body corporate
Australia
100
Australia
PME Nominees Pty Ltd
Trustee
Australia
100
Australia
ATF Employee Share Trust
Trust
N/A
N/A
Australia
Pro Medicus (USA) LLC
Body corporate
United States
100
United States
Visage Ventures Inc
Body corporate
United States
100
United States
Visage Imaging Inc
Body corporate
United States
100
United States
Visage Imaging GmbH
Body corporate
Germany
100
Germany
72
PRO MEDICUS ANNUAL REPORT 2024
73
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 2024 and
of the performance for the year ended on that date; and
(ii) complying with Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001; and
(b) the Consolidated entity disclosure statement as at 30 June 2024 set out on page 77 is true and
correct.
(c) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as
and when they become due and payable.
(d) 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 2024.
On behalf of the Board
P T Kempen
Chairman
Melbourne, 14 August 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent auditor’s report to the members of Pro Medicus Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Pro Medicus Limited (the Company) and its subsidiaries (collectively the Group), which
comprises the consolidated statement of financial position as at 30 June 2024, the consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes
to the financial statements, including material accounting policy information, the consolidated entity disclosure statement, 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 true and fair view of the consolidated financial position of the Group as at 30 June 2024 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) (the Code) that are relevant to our audit of the financial report in Australia.
We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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.
Capitalisation of development costs
Why significant
How our audit addressed the key audit matter
The Group develops medical software related to radiology systems. Costs
directly attributable to the development of this software (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 2024 was $20.1
million.
Our audit procedures included the following:
►
Assessed key cost inputs, including directly attributable labour and
overhead costs, used in the Group’s capitalisation model which
determines the amount of capitalised development costs.
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2024
74
PRO MEDICUS ANNUAL REPORT 2024
75
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2024
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 3
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of:
a.
The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001, and;
b.
The consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i.
The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view and is free
from material misstatement, whether due to fraud or error; and
ii.
The consolidated entity disclosure statement that is true and correct and is free of misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Company’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 Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.
As part of an audit in accordance with 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 the 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.
►
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.
A member firm of Ernst & Young Global Limited
Page 2
Why significant
How our audit addressed the key audit matter
Capitalisation of development costs was considered a key audit matter
given the judgement required in accounting for internal capitalised
development costs, the value of capitalised development cost assets
relative to total assets, and the specific Australian Accounting Standards
criteria that have to be met to enable costs incurred to be capitalised.
In addition, determining whether there is any indication of impairment of
the carrying value of assets requires judgement in making assumptions
which are affected by future market or economic developments.
Note 13 of the financial report contains disclosure relating to capitalised
development costs.
►
Selected a sample of capitalised development costs by
project and assessing whether the nature of projects
and costs incurred were supported by underlying
evidence such as payroll records, employment contracts,
time allocations approved by the development team
leads and supplier invoices.
►
Interviewed a sample of employees with labour costs capitalised to
understand whether these employees were directly involved in
developing software and not maintenance, administration or other
activities that are not eligible for capitalisation.
►
Tested a sample of projects on the feasibility and benefits expected
from each based on the current status, forecast performance and
related assumptions.
►
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 13.
Revenue recognition
Why significant
How our audit addressed the key audit matter
The Group generated $161.5 million in revenue from contracts with
customers across its global operations for the year ended 30 June 2024.
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 matter.
Note 5 of the financial report contains disclosure relating to revenue
recognition.
Our audit procedures included the following:
►
Assessed 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.
►
Examined a sample of customer contracts to assess whether
revenue recognised was in accordance with Australian Accounting
Standard and the terms and conditions in the underlying contract.
►
Used data analytic tools to test the full population of revenue
transactions for all significant revenue streams, including
performing:
§
Correlation analysis between revenue, receivables and cash
§
Targeted audit procedures over material items that did not
correlate as expected
§
Testing to verify that the cash recorded represents real cash
from third party customers
►
Assessed the adequacy of the disclosures included in Note 5.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information included in the
Company’s 2024 annual report, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of
assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information 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.
76
PRO MEDICUS ANNUAL REPORT 2024
77
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2024
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 4
►
Evaluate the overall presentation, structure 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 with 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 the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2024.
In our opinion, the Remuneration Report of Pro Medicus Limited for the year ended 30 June 2024, complies with section 300A
of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.
Ernst & Young
Andrea Steacy
Partner
Melbourne
14 August 2024
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:
Performance rights
Ordinary shares
Number of holders
Number of rights
Number of holders
Number of shares
1 – 1,000
14
6,639
12,964
3,018,747
1,001 – 5,000
45
118,031
1,732
3,807,180
5,001 – 10,000
2
13,498
243
1,750,603
10,001 – 100,000
6
117,844
184
4,810,967
100,001 and Over
-
-
31
91,037,385
67
256,012
15,154
104,424,882
The number of shareholders holding less than a marketable parcel are:
115
135
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
Listed ordinary shares
Number of
shares
Percentage of
ordinary shares
1 Mr A Hall (multiple shareholdings)
25,179,000
24.11%
2 Dr S Hupert (multiple shareholdings)
25,137,660
24.07%
3 HSBC Custody Nominees (Australia) Limited
20,907,861
20.02%
4 Citicorp Nominees Pty Ltd
8,363,268
8.01%
5 J P Morgan Nominees Australia Limited
8,125,600
7.78%
6 BNP Paribas Noms Pty Ltd
1,335,766
1.28%
7 National Nominees Limited
816,927
0.78%
8 Mr Peter Terence Kempen & Mrs Elaine Margaret Kempen (multiple shareholdings)
629,082
0.60%
9 Grain Exporters (Australia) Pty Ltd
465,000
0.45%
10 Mr Michael Wu
425,242
0.41%
11 Netwealth Investments Limited
370,143
0.35%
12 Mr Stephen Geoffrey Wilson & Ms Denise Adele Prandi
285,037
0.27%
13 Mr Colin Gregory Organ
271,000
0.26%
14 Palm Beach Nominees Pty Ltd
259,654
0.25%
15 Mr John Charles Plummer
250,000
0.24%
16 Mr Danny Tauber
241,546
0.21%
17 Neweconomy Com Au Nominees Pty Limited
179,886
0.17%
18 Mr Sean Michael Lambright
177,981
0.17%
19 Mr Bram Vander Jagt & Mrs Maaike Vander Jagt
165,000
0.16%
20 Mr Roderick Lyle
154,000
0.15%
93,739,653
89.74%
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of
the Corporations Law are:
Number of shares
S. Hupert
25,137,660
A Hall
25,179,000
(d) Voting rights
All ordinary shares carry one vote per share without restriction.
78
PRO MEDICUS ANNUAL REPORT 2024
79
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.
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
•
Choose your preferred annual report delivery
option
•
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.
CORPORATE INFORMATION
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
80
81
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82
The global management
structure has served the
company well
and continues to
position us to cater
for anticipated
future growth.
Global
Presence
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
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/
Chair - People & Culture Committee
Alice Williams
Non-Executive Director/
Chair - Audit & Risk Committee
Company Secretary
Danny English
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
Mailing address:
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Australia
Telephone
+612 8280 7111
Toll free
1300 554 474
Facsimile
+612 9287 0303
Facsimile (proxy forms only)
+612 9287 0309
E-mail
registrars@linkmarketservices.com.au
Website:
www.linkmarketservices.com.au
CORPORATE INFORMATION (cont'd)
84
450 Swan Street Richmond
Victoria 3121 Australia
promedicus.com.au • promedicus.com • visageimaging.com