Capitol Health : 2021 Half Year Report

ABN 84 117 391 812

CONSOLIDATED INTERIM FINANCIAL REPORT

FOR THE HALF-YEAR ENDED

31 DECEMBER 2020

Contents

Page
Directors' Report	2
Auditor's Independence Declaration
4
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income	5
Condensed Consolidated Statement of Financial Position	6
Condensed Consolidated Statement of Cash Flows	7
Condensed Consolidated Statement of Changes in Equity	8
Notes to the Condensed Consolidated Financial Statements	9
Directors' Declaration	20
Independent Auditor's Review Report
21

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this interim report is to be read in conjunction with the annual report for the year ended 30 June 2020 and any public announcements made by Capitol Health Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Capitol Health Limited

Page 1

The Directors present their report together with the financial report of Capitol Health Limited ("Company") and its controlled entities (the "Group") for the half-year ended 31 December 2020, and the auditor's report thereon.

Directors

The Directors of the Company at any time during the half-year and up to the date of this report are:

Mr Andrew Demetriou

Non-Executive Director and Chairman

Mr Justin Walter

Managing Director and Chief Executive Officer

Mr Richard Loveridge

Non-Executive Director

Ms Nicole Sheffield Non-Executive Director

Financial Review

The Group recorded a profit for the half-year ended 31 December 2020 of $6.2 million.

• o Operating revenue increased 5.9% to $85.3 million over the prior corresponding period. This increase was despite a second Covid-19 lockdown in Victoria and was driven by revenue from organic growth initiatives, re-indexation of Medicare rebates, and newly acquired businesses;

• o Profit before Finance Costs, Depreciation and Amortisation and Income tax (EBITDA) increased 41.4% from $16.0 million to $22.6 million, as a result of the increased revenues over the period, cost containment, continuation of the JobKeeper program to the end of September 2020 and reduced transaction and restructure costs.

• o Operating EBITDA (EBITDA prior to non-operating Transaction and restructure costs and the Revaluation/(impairment) of financial assets) increased 50.1% from $17.7 million to $26.6 million with the impairment entirely due to the movement in the AUD:USD exchange rate on the Group's investment in Enlitic (denominated in USD).

• o The Operating EBITDA margin (Operating EBITDA as a percentage of Revenue) improved significantly to 31.1% compared to the previous comparable period of 22.0%. This improvement in margin reflects the implementation of strategic plan initiatives and continual focus on cost control.

• o With the extension of Covid-19 lockdown in Victoria management continued to maintain tight control over the cost base of the business particularly focusing on matching staff levels and clinic operating hours to patient demand

• o The Group was a recipient of the JobKeeper program during the period. The Group received $5.8 million in funding net of payment of wage to-ups in line with government policy to retain highly trained medical professionals and support staff during the lockdown period in Victoria and for the reduced demand in services.

• o Transaction and restructure costs of $1.5 million compared to $1.7 million in prior comparable period.

• o Net finance costs decreased 12.5% over the corresponding prior period to $1.7 million reflecting interest savings on a reduced level of borrowings from the prior period.

• o The business cashflow relief on income taxes that the Group availed itself of were all settled within the period.

• o The effective income tax rate for the period was 42.6% compared to 34.2% in the previous comparable period as a result of the impact of by the unrealised foreign exchange loss on the Enlitic investment.

Capital Management Initiatives

During the half-year to 31 December 2020 the Group did not undertake any new capital management initiatives and the share buy-back facility was not utilised over this period.

Events Occurring after the Reporting Period

Subsequent to the end of the Reporting Period:

Acquisition

On 1 February 2021 the Group completed the acquisition of the business and assets of Direct Radiology, which operates diagnostic imaging clinics in Fairfield, Monbulk and South Melbourne in Victoria.

The consideration for the acquisition amounted to $12.65 million and was funded from cash reserves, existing bank debt facilities and $0.65 million in issued shares in the Company. The shares are to be held in voluntary escrow until 31 August 2023 and are subject to achieving a revenue target in FY23.

Dividend

The Company declared an interim dividend for the half-year ended 31 December 2020 of 0.5 cents per share (31 December 2019: 0.5 cents) with the maximum dividend payable of $5.1 million (31 December 2019: $3.8 million).

Other than the above, there have been no other matters or circumstances occurring subsequent to the end of the half-year that has significantly affected, or may significantly affect, the operations of the Group, the results of these operations, or the state of affairs of the Group in subsequent financial years.

Auditor's Independence Declaration

The auditor's independence declaration is set out on page 4 of the consolidated interim financial report and forms part of the Directors report for the half-year ended 31 December 2020.

Rounding of Amounts

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest thousand dollars, or in certain cases, the nearest dollar.

Signed in accordance with a resolution of the Directors made pursuant to Section 306(3) of the Corporations Act 2001.

On behalf of the Directors

____________________________

Justin Walter

Managing Director and Chief Executive Officer Melbourne, Victoria

23 February 2021

Auditor's Independence Declaration

Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street

Melbourne VIC 3000

GPO Box 78

Melbourne VIC 3001 Australia

Tel: [phone]

Fax: [phone]www.deloitte.com.au

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ("DTTL"), its global network of member firms, and their related entities (collectively, the "Deloitte organisation"). DTTL (also referred to as "Deloitte Global") and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please seewww.deloitte.com/aboutto learn more.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Asia Pacific Limited and the Deloitte Network

Capitol Health Limited

Page 4

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Half-Year Ended 31 December 2020

Notes	$000	$000
Statement of Profit or Loss
Revenue	4	85,305	80,554
Wages, contractor costs and salaries	(45,684)	(49,796)
Occupancy costs	(2,218)	(2,415)
Medical equipment and consumable supplies	(4,687)	(4,422)
Service costs	(6,162)	(6,228)
Transaction and restructure costs	(1,490)	(1,676)
Revaluation/(impairment) of financial assets	6	(2,416)	-
Profit before Finance Costs, Depreciation and Amortisation,
and Income Tax	22,648	16,017
Depreciation and amortisation	(10,070)	(9,970)
Profit before Finance Costs and Income Tax	12,578	6,047
Net finance costs	5	(1,712)	(1,957)
Profit before Income Tax	10,866	4,090
Income tax expense	(4,629)	(1,397)
Profit for the Half-Year	6,237	2,693
Attributable to:
Equity holders of the parent	6,274	2,693
Non-controlling interests	(37)	-
6,237	2,693
Basic Earnings per share (cents)	14	0.61	0.35
Diluted Earnings per share (cents)	14	0.59	0.34
Other Comprehensive Income
Profit for the Half-Year	6,237	2,693
Net gain/(loss) on interest rate derivative, net of income tax	53	(137)
Other Comprehensive Income, net of income tax	53	(137)
Total Comprehensive Income for the Half- Year	6,290	2,556
Attributable to:
Equity holders of the parent	6,327	2,556
Non-controlling interests	(37)	-
6,290	2,556

31 Dec 2020

31 Dec 2019

The Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes.

Condensed Consolidated Statement of Financial Position as at 31 December 2020

31 Dec 2020	30 Jun 2020
Notes	$000	$000
Assets
Cash and cash equivalents	19,048	13,763
Trade and other receivables	4,606	5,493
Other financial assets	6	262	277
Other assets	1,540	767
Total Current Assets	25,456	20,300
Plant and equipment	40,159	40,820
Right-of-use asset	9	57,656	54,729
Intangible assets	7	117,358	117,949
Other financial assets	6	19,722	22,138
Other receivables	362	630
Deferred tax asset	5,510	5,741
Total Non-Current Assets	240,767	242,007
Total Assets	266,223	262,307
Liabilities
Trade and other payables	14,666	16,967
Lease liabilities	9	9,406	9,640
Employee benefit liabilities	11,729	10,828
Income tax liability	3,922	2,751
Total Current Liabilities	39,723	40,186
Borrowings	8	17,000	17,000
Lease liabilities	9	55,796	52,702
Other financial liability	10	4,884	3,698
Provisions	1,340	1,340
Employee benefit liabilities	817	852
Deferred tax liability	2,030	2,490
Total Non-Current Liabilities	81,867	78,082
Total Liabilities	121,590	118,268
Net Assets	144,633	144,039
Equity
Issued capital	11	146,340	145,776
Reserves	12	1,608	2,694
Accumulated losses	(3,501)	(4,654)
Equity Attributable to Owners of the Parent	144,447	143,816
Non-controlling Interests	186	223
Total Equity	144,633	144,039

The Condensed Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.

Condensed Consolidated Statement of Cash Flows for the Half-Year Ended 31 December 2020

Operating Activities

Receipts from customers

Payments to suppliers and employees

Interest received

Interest and other finance charge on borrowings

Interest on lease liabilities

Income tax (paid)/refunded

Net cash flows from operating activities

Investing Activities

Purchase of plant and equipment

Payments for business acquisitions, investments

including transaction costs

Net cash flows (used in) investing activities

Financing Activities

Payments in respect of share buy-back and costs

Proceeds on exercise of options

Proceeds of secured loans

Payment of dividend

Payment of dividends to non-controlling interests

Cash payment of lease liabilities

Net cash flows from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the period

Cash and cash equivalents at end of the period

31 Dec 2020	31 Dec 2019
Notes	$000	$000
85,470	81,575
(56,031)	(65,337)
4	14
(676)	(791)
(1,004)	(1,003)
(3,620)	59
24,143	14,517
(3,782)	(5,330)
(1,579)	(8,008)
(5,361)	(13,338)
-	(10)
197	-
-	5,000
(8,997)	(3,842)
(92)	-
(4,605)	(4,176)
(13,497)	(3,028)
5,285	(1,849)
13,763	7,330
19,048	5,481

The Condensed Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.

Condensed Consolidated Statement of Changes in Equity for the Half-Year Ended 31 December 2020

Accumulated

Non-

Issued CapitalReserves

Profits/ (Losses)

Sub-Total

Controlling Interests

Total Equity

Balance at

1 July 2020

Profit for the half-year

Other Comprehensive Income for the half-year

Total Comprehensive Income

Transactions with Equity Holders Exercise of options

Conversion of issued options/rightsPut option from sale/acquisition of business

Share issue costs Dividend paid

Allocation of share-based employee costs

Total Transactions with Equity Holders

Balance at

31 December 2020

145,776	2,694	(4,654)	143,816	223	144,039
- -	- 53	6,274 -	6,274 53	(37) -	6,237 53
-	53	6,274	6,327	(37)	6,290
198 400	- (400)	- -	198 -	- -	198 - (983) (34) (5,121) 244
- (34) -	(983) - -	- - (5,121)	(983) (34) (5,121)	- - -
-	244	-	244	-
564 146,340	(1,139) 1,608	(5,121) (3,501)	(5,696) 144,447	- 186	(5,696) 144,633

Balance at

1 July 2019

Profit for the half-year Other Comprehensive Income for the half-year

107,632 -1,374 -6,627 2,693

115,633 2,693

--115,633 2,693

• - (137)

-(137)

Total Comprehensive Income Transactions with Equity Holders Share buy-back and costs Dividend paid

-

(137)

2,693

2,556

- -(137) 2,556

(10)

-

-

Allocation of share-based employee costs

- -

• - (3,842)

(10) (3,842)

- - -

(10) (3,842)

348

-

348

348

Total Transactions with Equity Holders

-(10)

Balance at

31 December 2019

107,622

348 1,585

(3,842)

(3,504)

(3,504)

5,478

114,685

-

114,685

The Condensed Consolidated Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

1. Reporting Entity

Capitol Health Limited (the "Company") is a company incorporated and domiciled in Australia. Capitol

Health Limited is a company limited by shares which are publicly traded on the Australian Securities Exchange. The consolidated interim financial report of the Company for the half-year ended 31 December 2020 comprises the Company and its subsidiaries (together referred to as the "Group").

The consolidated annual financial report of the Group for the year ended 30 June 2020 may be viewed on the Company's website:https://www.capitolhealth.com.au/reports-and-presentations

2. Basis of Preparation

This consolidated interim financial report is a general purpose financial report prepared in accordance with the Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

The consolidated interim financial report does not include all of the information required for a full financial report and should be read in conjunction with the consolidated annual financial report of the Group for the year ended 30 June 2020. It is also recommended that the consolidated interim report be considered together with any public announcements made by the Group in accordance with continuous disclosure obligations under the Corporations Act 2001 and ASX listing rules.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the annual financial report for the year ended 30 June 2020, except as noted in 2 iii) below.

The consolidated interim financial report was approved by the Directors on 23 February 2021.

i)Going Concern

The financial statements have been prepared on a going concern basis. For the half-year ended 31 December 2020, the consolidated entity made a profit of $6.2 million (31 December 2019: $2.7 million) and had net current liabilities of $14.3 million (31 December 2019: $19.9 million).

The directors have considered the following factors in determining the appropriateness of the going concern basis of preparation in the financial statements:

• a) the consolidated entity has sufficient working capital to enable it to meet its objectives and financial obligations. Net available funding available through its secured banking facilities totals $154 million.

• b) the consolidated entity generated net operating cash inflow for the half-year ended 31 December 2020 of $24.1 million (31 December 2019: $14.5 million).

Accordingly, the consolidated interim financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

ii)Comparative Figures

Where applicable comparative amounts have been adjusted to conform to changes in presentation in the current half-year.

2. Basis of Preparation (continued)

iii) New accounting standards and interpretations

The Group has adopted all of the new revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The Directors of the Group do not anticipate that the adoption of any of the amendments not yet adopted will have a material impact in future periods on the financial statements of the Group.

3. Significant Accounting Estimates, Assumptions and Judgements

The preparation of the consolidated interim financial report requires management to make judgements, estimates and assumptions that affect the reported amounts in the consolidated 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 results 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 those estimates. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In preparing the consolidated interim financial report, the significant judgements made by management in applying the Groups' accounting policies and the key source of estimation uncertainty were consistent with those made for the consolidated financial report as at and for the year ended 30 June 2020.

4. Revenue

The Group solely operates within Australia and accordingly is only in one geographic market and only has one product and service category:

31 Dec 2020 31 Dec 2019 $000 $000

Major service category

Diagnostic imaging services	85,244	80,419
Other operating revenue	61	135
Total Revenue	85,305	80,554

Revenue is recognised when the imaging service is rendered, and payment is either rebated via Medicare or payable on date of service.

5. Net Finance Costs

31 Dec 2020	31 Dec 2019
$000	$000
Interest income	6	13
Interest on borrowings	(633)	(875)
Establishment fee	(13)	-
Interest rate swap	(68)	(83)
Lease interest	(1,004)	(1,003)
Other interest	-	(9)
(1,712)	(1,957)
Capitol Health Limited

6. Other Financial Assets

31 Dec 2020	30 June 2020
$000	$000
Current
Rental bonds - held to maturity	262	277
Non-current
Investment in unlisted entity	19,722	22,138
Movement
Fair value - opening balance	22,138	20,408
Investment during the period	-	3,006
Revaluation/(impairment) of financial assets
Unrealised foreign exchange gain/(loss)	(2,416)	343
Impairment charge	-	(1,619)
Fair value - closing balance	19,722	22,138

The investment in unlisted entity is a level 3 financial asset as defined in 2.6.4 Fair Value Measurement of the 30 June 2020 Annual Report.

7. Intangible Assets

At 1 July 2020

Adjustment re prior year acquisitions Amortisation charge

At 31 December 2020

Cost value

Goodwill

Accumulated amortisation & impairment Total at 31 December 2020

$000	$000	$000	$000
109,722 34 -	1,258 - -	6,969 - (625)	117,949 34 (625)
109,756	1,258	6,344	117,358
109,756 -	1,258 -	8,318 (1,974)	119,332 (1,974)
109,756	1,258	6,344	117,358

Brands and TrademarksReferrer RelationshipsTotal

Goodwill $000

At 1 July 2019

Acquisition of entities and businesses (net) Adjustment re prior year acquisitions Amortisation charge

97,304 12,399 19 -Brands and Trademarks $000

762 496 - -Referrer Relationships $000

Total $000

3,928 101,994 3,796 16,691 (27) (8) (728) (728)

At 30 June 2020

Cost value

Accumulated amortisation & impairment Total at 30 June 2020

109,722 109,722 - 109,722

1,258 1,258 - 1,258

6,969 117,949

8,318 119,298

(1,349) 6,969

(1,349) 117,949

7. Intangible Assets (continued)

The Group has performed an assessment of impairment indicators at the end of the reporting period, following the full impairment testing that was conducted at 30 June 2020. There were no indicators of impairment identified that required an impairment test to be conducted at the end of the reporting period.

8. Borrowings

31 Dec 2020	30 June 2020
$000	$000
Non-current
Bank borrowings	17,000	17,000
17,000	17,000

The Group complied with all applicable financial covenant requirements for the half-year ended 31

December 2020.

9. Leases

31 Dec 2020	30 June 2020
$000	$000
Current
Lease liabilities	9,406	9,640
9,406	9,640
Non-current
Lease liabilities	55,796	52,702
55,796	52,702

i) Reconciliation of movement of Right-of-use asset for half-year ended

PropertyEquipment

Leases

LeasesTotal

At 1 July 2020

New leases entered into during the period Remeasured and modified leases Terminated leases

Amortisation charge

At 31 December 2020

Cost value

Accumulated amortisation

Total at 31 December 2020

$000	$000	$000
53,211 5,220 409 (86) (4,316)	1,518 1,930 84 (23) (291)	54,729 7,150 492 (109) (4,607)
54,437	3,219	57,656
66,463 (12,026)	3,952 (733)	70,415 (12,759)
54,437	3,219	57,656

9. Leases (continued)

i) Reconciliation of movement of Right-of-use asset for half-year ended (continued)

At 1 July 2020	(54,803)
Interest expense	(851)
New leases entered into during the period	(5,220)
Remeasured and modified leases	(284)
Terminated leases	51
Loss on modification/termination	(12)
Cash payments	4,149
At 31 December 2020	(56,970)
Current	(7,523)
Non-current	(49,447)
Total at 31 December 2020	(56,970)
Capitol Health Limited

ii) Reconciliation of movement of lease liability for half-year ended

Property	Equipment	Total
Leases	Leases
$000	$000	$000
Equipment
Leases	Total
$000	$000
(7,539)	(62,342)
(153)	(1,004)
(1,930)	(7,150)
(85)	(369)
14	65
-	(12)
1,461	5,610
(8,232)	(65,202)
(1,883)	(9,406)
(6,349)	(55,796)
(8,232)	(65,202)

At 1 July 2019

New leases entered into during the period Leases acquired on acquisition Remeasured and modified leases Amortisation charge

At 30 June 2020

Cost value

Accumulated amortisation Total at 30 June 2020

52,939 4,756 2,121 1,400 (8,005)	1,988 - - 75 (545)	54,927 4,756 2,121 1,475 (8,550)
53,211	1,518	54,729
61,216 (8,005)	2,063 (545)	63,279 (8,550)
53,211	1,518	54,729

Property

Leases

$000

9. Leases (continued)

ii) Reconciliation of movement of lease liability (continued)

Property	Equipment	Total
Leases	Leases
$000	$000	$000
At 1 July 2019	(52,939)	(8,899)	(61,838)
Interest expense	(1,605)	(363)	(1,968)
New leases entered into during the period	(5,981)	-	(5,981)
Leases acquired on acquisition	(2,121)	(815)	(2,936)
Remeasured and modified leases	(175)	(75)	(250)
Covid-19 rent relief	380	-	380
Cash payments	7,638	2,613	10,251
At 30 June 2020	(54,803)	(7,539)	(62,342)
Current	(7,212)	(2,428)	(9,640)
Non-current	(47,591)	(5,111)	(52,702)
At 30 June 2020	(54,803)	(7,539)	(62,342)
10. Other Financial Liabilities
31 Dec 2020	30 June 2020
$000	$000
Non- Current
Other financial liabilities	4,884	3,698

Other financial liabilities, in respect of the put and call options in relation to the non-wholly owned entities, have been valued at fair value in accordance with AASB 132 Financial Instruments: Presentation.

A financial liability of $1.2 million has been recognised in the period in respect of a new put option.

11. Issued Capital

Issued Capital
30 June 2020
Number
of shares	$000
Balance at 1 July	768,444,825	107,632
Exercise of options	-	-
Share placement and share purchase plan	248,996,426	40,000
Shares issued on acquisition	6,901,313	-
Share issue costs	-	(1,499)
Share buy-back	(1,745,370)	(357)
Conversion from Share Option Reserve	-	-
Balance at end of period	1,022,597,194	145,776

31 Dec 2020	30 June 2020
$000	$000
146,340	145,776

31 Dec 2020 Number of shares $000
1,022,597,194 1,000,000 - - - 1,502,566	145,776 198 - - (34) 400
1,025,099,760	146,340

The Company does not have authorised capital or par value in respect of its issued shares.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regards to the Company's residual assets.

Options and Performance Rights

The Company operates an incentive plan referred to as the Capitol Health Limited Employee Incentive Option Plan. The table below summarises the number of options and performance rights that were outstanding, their weighted average exercise price as well as the movements during the half-year:

Balance at 1 July	32,839,827	28.96
Granted	2,385,280	-
Exercised	-	-
Forfeited	(1,744,765)	-
Balance at end of period	33,480,342
Represented by:
Options	29,400,000	28.96
Performance rights	4,080,342	-
Balance at end of period	33,601,382	33,480,342
Capitol Health Limited	Page 15

Number 33,480,342 6,966,102 (2,502,566) (4,342,496)

31 Dec 2020	30 June 2020
Weighted	Weighted
average	average
exercise	exercise
price	price
Number (cents)

(cents) 28.96 24.06 (19.70) (30.06)

33,601,382

12. Reserves

Interest

Balance at 1 July 2020 Exchange differences on translation of foreign subsidiaries Interest rate derivative movement	- -	(53) 53	2,107 -	640 -	2,694 53
Option Valuation Transferred on Exercise	-	-	(400)	-	(400)
Put options from sale/purchase	-	-	-	(983)	(983)
Allocation of share-based employee costs	-	-	244	-	244
Movement for the financial year	-	53	156	(983)	1,086
Balance at 31 December 2020	-	-	1,951	(343)	1,608

Balance at 1 July 2020	-	(53)	-	-	(53)
Interest rate derivative movement	-	53	-	-	53
Balance at 31 December 2020	-	-	-	-	-

rate
derivative	Option	Other	Total
$000	$000	$000	$000
-	1,383	-	1,374
-	-	-	9
(53)	-	(53)
2,070	2,070
-	-	(1,430)	(1,430)
-	724	-	724
(53)	724	640	1,320
(53)	2,107	640	2,694
Other Comprehensive Income (OCI) Items, net of tax:
At 31 December 2020	Interest
rate	Retained
derivative	Option	Earnings	Total
$000	$000	$000	$000
Interest
rate	Retained
derivative	Option	Earnings	Total
$000	$000	$000	$000
-	-	-	(9)
(53)	-	-	(53)
-	9
(53)	-	-	(53)

Currency translation $000

Balance at 1 July 2019

Exchange differences on translation of foreign subsidiaries

Interest rate derivative movement

Fair value of shares issued on acquisition Put options from sale/purchase Allocation of share-based employee costs Movement for the financial year Balance at 30 June 2020

At 30 June 2020

Balance at 1 July 2019

Interest rate derivative movement Foreign exchange translation differences Balance at 30 June 2020

(9)

9 - - - 9 -

Currency translation $000

Currency translation $000

(9)

-

9

-

13. Dividends

Fully franked dividends were declared during the financial period as follows:

31 Dec 2020	30 Jun 2020
$000	$000
FY19 Final Dividend paid 0.5 cents per share on 23 October 2019	-	3,842
FY20 Interim Dividend paid 0.5 cents per share on 23 October 2020*	-	3,877
FY20 Final Dividend paid 0.5 cents per share on 23 October 2020	5,121	-
5,121	7,719

*The payment of the FY20 interim dividend declared for the half-year ended 31 December 2019 was deferred from its initial payment date of 23 March 2020 until 23 October 2020.

Since the end of the half-year to 31 December 2020, the Directors have declared an FY21 interim dividend of 0.5 cents per share which is not recognised as a liability at 31 December 2020.

The Dividend Reinvestment Plan (DRP) is currently suspended.

14. Earnings per Share (EPS)

Basic EPS is calculated by dividing the profit for the half-year attributable to ordinary equity holders of Capitol Health Limited by the weighted average number of ordinary shares outstanding during the half-year.

Diluted EPS is calculated by dividing the profit for the half-year attributable to ordinary equity holders of the parent (after adjusting for outstanding options) by the weighted average number of ordinary shares outstanding during the half-year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The following table reflects the profit and share data used in the basic and diluted EPS calculations:

31 Dec 2020 31 Dec 2019

$000 $000

Profit attributable to ordinary equity holders of the parent:	6,274	2,693
Weighted average ordinary shares used as the denominator in	Number	Number
calculating:
Basic earnings	1,024,254,107	768,415,482
Effect of dilution from share options and performance rights	31,931,921	32,022,306
Diluted earnings	1,056,186,029	800,437,788
Earnings per share - Continuing operations:	Cents	Cents
Basic	0.61	0.35
Diluted	0.59	0.34

On 1 February 2021 a total of 2,347,752 fully paid ordinary shares were issued to the vendors of Direct Radiology which are the subject of a voluntary escrow until 31 August 2023.

Other than this, there have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and date of the authorisation of these financial statements.

15. Business combinations - Summary of acquisitions

Combinations for this reporting period

The Group finalised the accounting of the acquisition of Fowler Simmons Radiology during the half-year ended 31 December 2020. At 30 June 2020 the group provisionally accounted for goodwill of $14.5 million. There were no new acquisitions during the period.

Date of acquisitionBusiness Name

StatePurchase consideration $000

Net Assets Acquired $000

GoodwillNote Reference

$000

29 February 2020

Fowler Simmons RadiologySouth Australia

$16,620

2,260

14,360

i)

i) The Group acquired 90% of the issued share capital of Adrad Investments Pty Ltd which in turn holds 100% interest in

Adelaide Radiology Pty Ltd trading as Fowler Simmons Radiology. The fair value of net assets acquired include the plant and equipment and other intangible assets comprising the referrer relationship independently valued at date of acquisition.

The fair value of the consideration transferred at acquisition date for FSR was made up of the following components:

$'000
Payment for 90% of the Issued Shares in the Entity
Cash	13,961
Shares issued	2,070
Deferred and contingent consideration payable	1,382
Completion adjustmentii)	(793)
16,620
Assumed:
Net current assets acquired	(472)
-Employee Entitlements	53
-Make Good Provision	54
Other intangible asset
- Referrer Relationship	(2,476)
- Brand Name	(496)
Recognition of Deferred Tax Asset	(66)
Recognition of Deferred Tax Liability	892
Fair value of net assets acquired	(2,511)
Non-controlling interest	251
Goodwill	14,360

ii) The completion adjustment has been updated since 30 June 2020 to reflect the final acquisition accounting for Fowler

Simmons Radiology.

Since 31 December 2020 the company acquired the business and assets of Direct Radiology, a group comprising three clinics based in Melbourne, Victoria. For more details refer to Note 19 - Events Occurring after the Reporting Period.

Combinations for prior reporting period

The Group finalised the accounting of the acquisition of UniRadiology during the half-year ended 31 December 2019. At 30 June 2019 the group provisionally accounted for goodwill of $8.0 million. There were no new acquisitions during the period.

Date of	Purchase	Net Assets	Goodwill	Note
acquisition	Business Name	State	consideration	Acquired	Reference
$000	$000	$000
22 March 2019	Uniradiology	VIC	8,004	2,010	5,994	ii)

iii) The Group acquired the assets and liabilities of Uniradiology. The net assets include the plant and equipment and other intangible asset comprising the referrer relationship independently valued at date of acquisition.

16.

Contingencies

Rental Guarantees

The Group has an obligation to provide rental property guarantees when requested by the owners of rented premises which may be classed as a contingent liability unless supported by value for value specific deposits.

17.

Segment Information

The Group has one business segment which is the operation of diagnostic imaging facilities in Australia. The segment is defined by national registration available for diagnostic imaging. Senior management and the Board regularly review the Group's operating results to allocate resources and assess/review the

Group's performance as a whole. As the Group operates in a single business and geographic segment no further disclosures are required. Overseas controlled entities did not trade during the period.

18. Fair Value Measurement of Financial Instruments

The carrying amount of financial assets and financial liabilities, which are not measured at fair value in the statement of financial position, approximate their fair values.

19. Events Occurring after the Reporting Period

Subsequent to the end of the Reporting Period:

Acquisition

On 1 February 2021 the Group completed the acquisition of the business and assets of Direct Radiology, which operates diagnostic imaging clinics in Fairfield, Monbulk and South Melbourne in Victoria.

The consideration for the acquisition amounted to $12.65 million and was funded from cash reserves, existing bank debt facilities and $0.65 million in issued shares in the Company. The shares are to be held in voluntary escrow until 31 August 2023 and are subject to achieving a revenue target in FY23.

Dividend

The Company declared an interim dividend for the half-year ended 31 December 2020 of 0.5 cents per share (31 December 2019: 0.5 cents) with the maximum dividend payable of $5.1 million (31 December 2019: $3.8 million).

Other than the above, there have been no other matters or circumstances occurring subsequent to the end of the half-year that has significantly affected, or may significantly affect, the operations of the Group, the results of these operations, or the state of affairs of the Group in subsequent financial years.

Directors' Declaration

In the opinion of the Directors of Capitol Health Limited:

• (a) the financial statements and notes set out on pages 5 to 19, are in accordance with the Corporations Act 2001, including:

  (i) giving a true and fair view of the Group's financial position as at 31 December 2020 and of its performance for the half-year ended on that date; and

  (ii)complying with Australian Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors made pursuant to s.303 (5) of the Corporations Act 2001.

On behalf of the Directors

____________________________ Justin Walter

Managing Director and Chief Executive Officer Melbourne, Victoria

23 February 2021

Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street

Melbourne VIC 3000

GPO Box 78

Melbourne VIC 3001 Australia

Tel: [phone]

Fax: [phone]www.deloitte.com.au

Independent Auditor's Review Report to the members of Capitol Health Limited

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Asia Pacific Limited and the Deloitte Network