ProMed AR'10 WEB 18/10/10 12:06pm Page 1 · eport 2010 1 financial million 24.6% half e franked...

ANNUAL REPORT 2010

ProMed AR'10 WEB 18/10/10 12:06pm Page 1

annual report 2010 ▲ 1

financial▲ Profit after tax of $3.92 million▲ Revenue of $19.46 million – up 24.6%▲ Second-half profit higher than first half▲ Visage Imaging now profitable▲ Full-year dividend of 2.0 cents per share fully franked▲ Strong balance sheet with cash reserves of $3.79 million▲ Company remains debt free

business▲ Pro Medicus completes integration of Visage Imaging.

▲ Launches Visage 7.0 to create world’s first thin client 3D PACS.

▲ Three key sales in Australia in 2nd half validate new Visage Imaging technology.

▲ Increased presence in Europe and North America - 48.3% of company revenues generated from overseas activities.

▲ Continued investment in R&D with ‘next generation’ technology platform due for release in late 2010.

highlights2009-2010

contents

1Highlights 2009-2010

2Financial Sum

mary 4

CEO & Chairman’s Letter

5Business Background 8

2009-2010 Review 10Into the Future

12Financial Statem

ents 14Directors’ Report 60

Directors’ Declaration

61Independent Audit Report 63

ASX Additional Information

64Corporate Governance 70

Corporate Information



2010 2009$’000 $’000

Revenues from Continuing Operations 19,464 15,615+24.6%

Revenues 19,464 15,615+24.6%

Operating Profit Before Interest and Income Tax 5,300 6,515-18.6%

Net Profit After Tax 3,920 5,018-21.9%

Total Assets 30 June 24,136 21,775

Shareholders’ Funds 30 June 16,825 15,442

Net Tangible Assets per Share at 30 June (cents) 7.0 7.0

Earnings per Share (cents) 3.9 5.0-21.9%

Franked Dividends per Share (cents per share) 2.0 3.5-42.9%

Year ended 30 June 2010All figures in $A thousands unless otherwise stated

financialsummary



Dear Shareholders,

The past financial year saw the company deliver a sound financialperformance, consolidate its acquisition of Visage Imaging, and launch new and exciting technologies. In the process, Pro Medicus secured several significant new sales and gainedimportant new overseas partners.

Despite the general improvement in the economic climate inAustralia, the aftermath of the Global Financial Crisis has seenhealthcare spending around the world remain patchy, withspending in the U.S. in particular improving only marginally.Notwithstanding this, we were able to grow consolidated revenueby 24.6%, and improve earnings in the second half resulting ina net profit of $3.92m for the year.

While lower than 2008-09, the decrease in profit was anticipatedand was due to a number of factors primarily related to continuedinvestment in US operations and ongoing R&D funding. Duringthis period the company released its new Universal VisageViewer – Visage 7.0 and made major inroads in the developmentof it new radiology information system (RIS) technology platform(codenamed “Coral”) due for release in late 2010.

Increased spending on R&D paid off with three large orders beingwon in the second half of the year for the recently releasedVisage 7 product line. Visage 7, the first of a new generation ofproduct termed “3D PACS”, is a single application combining2D and 3D image review technology for primary interpretationof any examination type, from plain film to cardiac CT, as wellas for state-of-the-art 3D and 4D post-processing. The productis based on the company’s new generation of the Visage® thinclient platform which has been optimized using patented technology to provide unparalleled speed and versatility whenaccessing large image data sets even over relatively low band-width connections.

The past year has also seen significant progress being made inintegrating the Visage clinical solutions with our RadiologyInformation Systems (RIS) and e-health offerings, effectivelycreating a new fourth-generation technology platform. We willsoon release our new-generation RIS platform which has beenclose to three years in the making. We believe this new technologywill represent a quantum improvement over anything currentlyin the market, either locally or overseas.

Pro Medicus is beginning to see evidence of our enhancedsolution attracting increasing interest in the larger North Americanand European markets, mirroring the increased take up inAustralia. However the level of take up of our new offering willlargely depend upon economic conditions in those markets.

We expect revenue from our European and North Americanoperations will continue to grow as we develop our presence inthese markets. Already more that 48.3% of the company’sincome is derived from overseas activities (28.5% from Europeand 19.8% from North America), which sets a strong foundationfor future overseas growth.

We have also made significant organisational changes in NorthAmerica with the appointment of a new General Manager withstrong experience at a leading US-based PACS/RIS company.In addition, we have adopted a more efficient sales model andhave initiated additional cost-saving measures all of which isexpected to improve results and put us on track to be profitablein North America in 2010-2011.

In Australia the company has continued with its successful directsales model whilst in both the US and Europe we are nowadopting a hybrid of direct and indirect sales channels. This is a function of the size and complexity of these markets, andalso of the appeal of our technology to both end-users andtechnology and channel partners alike.

Our European operations were bolstered with the addition of ahighly experienced Director of Sales and Business Developmentwho is responsible for developing both direct sales and channelsales opportunities.

Pro Medicus has cash of $3.79 million as at the end of June 2010,down from $5.5 million in June 2009. The drop in cash reserveswere largely as a result of the ongoing investment in Visage,and spending on local R&D. The company remains debt free.Importantly, this still leaves sufficient reserves to fund the antici-pated growth of the business from internal sources. The Boardreviewed the company’s financial position and its immediateprospects and decided that it was appropriate to declare a finaldividend of 2 cents per share for FY 2010.

Looking to the future, we believe that the company is well posi-tioned to move into a new growth phase by maximising the manyopportunities created over the past 12 months from the acqui-sition and successful integration of the Visage Imaging businesstogether with the release of our new generation products.

It was with great reluctance that Mr Melvyn Ward AO stooddown as the Chairman of the Board due to ill health in August2010, remaining on as a non executive director until beingovercome by his illness. Mel was an inspirational leader whochaired the company with great distinction since its ASX listingin 2000. His integrity and principles will remain as an exampleto those who follow and his warmth and generous personalitywill be sadly missed.

We would also like to express our sincere thanks to our fellowdirectors and to the energetic teams at both Pro Medicus andVisage Imaging, each of whom has contributed to a year thathas provided a solid foundation for the future.

Yours faithfully,

David Chambers Peter KempenCHIEF EXECUTIVE OFFICER CHAIRMAN

ceo &chairman’sletter



Pro Medicus is a leading provider of IT products and servicesto the healthcare industry.

These include training and installation, hardware configurationand ongoing technical and end user support.

In February of 2009, the company acquired Visage Imaging inthe US which has expanded the Pro Medicus product portfoliointo the clinical imaging space as well as providing the companywith its own presence in both Europe and the US.

In addition to the 2-D PACS and 3-D/advanced visualisationproducts, the Visage Imaging acquisition brought with it a numberof other revenue streams including OEM (original equipmentmanufacturer) and dealer relationships as well as the Amirabusiness which provides a 3-D imaging toolkit to educationaland research institutions in the life sciences field throughout the world.

The activities of Pro Medicus in the financial year endingJune 30, 2010 can be characterised by the following revenue streams:

PRACTICE MANAGEMENTThe Company’s traditional business consists of a range of integrated software applications and services that are designedto aid the management of medical practices. The primary products in this area include medical accounting, clinical reporting,appointments/scheduling and marketing/management informa-tion applications. Services include network design and imple-mentation, hardware sourcing and configuration, staff and man-agement training and ongoing technical and end user support.

E-HEALTHPro Medicus’ Internet-based e-health offering, promedicus.net,enables referring doctors to receive encrypted clinical reportsvia the Internet to a centralised "In-Tray" run on a doctor’s computer. These reports are then electronically incorporatedinto the patients’ medical record, doing away with the need fordouble handling or manual filing. Over 26,000 Australian doctorsare registered users of promedicus.net.

INTEGRATION PRODUCTSDigital Radiology or PACS (Picture Archive and CommunicationSystems) radiology images (X-rays) are acquired digitally andviewed on high-resolution monitors without the need to convertthe images to x-ray film. Images and the subsequent diagnosticreport are stored and linked electronically.

Pro Medicus has developed a range of highly modular integrationproducts which provide a seamless interface between the ProMedicus system and a number of 3rd party PACS/digital imagingproducts allowing large diagnostic imaging providers to incre-mentally implement this technology across their enterprise.

Revenue is generated from the sale of software licenses for the integration modules, implementation services and ongoing support.

DIGITAL IMAGING PACSWith the acquisition of Visage Imaging the company now hasits own digital imaging/PACS offering which had previouslybeen sold primarily via OEM and third-party dealer channels.Since acquiring Visage Imaging in early 2009, the company hassuccessfully expanded the Visage product set to create one ofthe world's first thin client, 3-D PACS offerings capable of displaying both 2-D and 3-D images in the one unified viewer. Revenue in Australia is generated from licence sales and ongoing support. The technology is also sold through OEM anddealer channels in both the US and Europe as well as beinglicenced on a pay per use model.

3-D/ADVANCED VISUALISATIONAdvanced visualisation allows CT and MRI images to be recon-structed in 3D and 4D (3D with motion). A number of specialistareas have been revolutionised by this technology includingcardiology, where it provides 3-D reconstruction of coronaryarteries from high definition CT images, PET CT and advancedareas of neuro-radiology and oncology.

The Visage 7 product (combining 2D, 3D and 4D) is a one ofthe world's leading thin client, 3-D advanced visualisation prod-ucts. This product can be sold as a 3-D "plug in appliance" oras a “universal viewing platform” interfaced to a broad range ofthird-party PACS Systems. Revenue is generated from licencesales and ongoing support as well as through OEM and dealerchannels in both the US and Europe.

LIFE SCIENCES - RESEARCHAmira, acquired as part of Visage Imaging, is a division thatsells software toolkits via a Web store to universities and researchinstitutions working in the life sciences area. The product enablesthese institutions to produce complex 3-D models via the toolkit.Revenue is derived from the sale of the licences and ongoingsupport contracts.

businessbackground



AUSTRALIAThe Australian business finished the financial year strongly with three sales of the new Visage V7.0 technology coming inthe second half. These sales, made in a highly competitive environment to both existing as well as new clients more thanoffset the slight decrease in core practice management and e-health revenues throughout the period. The companybelieves that these sales will form the base for further sales in the local market within the coming year.

UNITED STATESOver the past year the company has made significant inroads in integrating the Pro Medicus and Visage Imaging US sales,marketing and technical teams creating a small but dynamic organization. We have appointed a new North AmericanGeneral Manager with significant industry experience and have initiated additional cost-saving measures all of which areexpected to improve results and put our US operations on track to be profitable in North America in 2011.Our Visage 3D technology has now been successfully installed at a number of prestigious hospitals, including Brigham andWomen’s Hospital, University of Chicago and University of Texas. These hospitals are regarded as being among the top 20hospitals in the country forming a good reference base for future sales opportunities. The company has also expanded its product range in the US to include the new Visage Universal viewer and 3D PACSproducts and has added a number of channel partners to supplement our own direct sales capability.

EUROPEThe European segment booked almost 30% of total company income with a pre-tax profit $2.4 million for 2010, making it a solid contributor to our overall result. This is primarily due to OEM, Amira and some direct sales. In order to boost salesfurther, we have appointed a new director of sales and marketing for Europe and have established some new dealerarrangements which we are looking to use as a model for future strategic partnerships in the region.

COMPANY OFFICESIn addition to the Melbourne-based head office which houses 25 staff who are involved in sales, marketing, training/imple-mentation and applications support for both the Pro Medicus and Visage imaging offerings, the company now has two offshore offices:

Malte Westerhoff GENERAL MANAGER - EUROPE Ph.D., M.Sc.

Malte Westerhoff is the General Manager for Visage Imaging GmbH, the European branch of Visage Imaging.He is also the Chief Technical Officer and is responsible for product management and the R&D groups ofVisage Imaging globally. He has more than ten years of experience in medical imaging and software development,holding positions in research and industry. Dr. Westerhoff holds a master's degree in physics from TechnicalUniversity, Berlin, and a PhD in computer science and mathematics from Free University, Berlin.

Mr. Westerhoff is one of the founders of Indeed - Visual Concepts GmbH and author and co-author of manyscientific papers in scientific visualization and high-performance computing aand was instrumental in developingmany of the patented and patent pending technologies that form the basis of Visage Imaging's product portfolio.

John Danahy GENERAL MANAGER - NORTH AMERICA

John Danahy is a healthcare information technology executive with over 17 years of sales and managementexperience. Prior to joining Visage Imaging Inc. Mr. Danahy served as Vice President of Sales and Marketingwith Medsphere Systems Corporation, a leading provider of open source electronic medical records andadvanced clinical solutions. His experience also includes success as Vice-President of Customer Operationsfor McKesson Corporation, as well as executive roles at Picker (later acquired by Philips), and Cemax-Icon(later acquired by Kodak).

Visage Imaging Key Personnel

2009-2010review

PRODUCTS AND REVENUE STREAMSThe acquisition of Visage Imaging has greatly increased the company's product portfolio to include 2-D/3-D digital imaging/ PACSand 3-D advanced visualisation products. Via the Amira business unit, the company also sells 3-D toolkits to universities andresearch institutions in the life sciences field. These products are currently sold by a mixture of direct and indirect sales channelsand in the case of Amira via the Internet.

> Visage GmbH - BerlinThis is the company's European headquarters and houses 33 staff, the majority which are involved in product research and development and ongoing product support. This office alsoforms the base of the company's European operations includingorder administration and both direct and indirect sales activities.

> Visage Imaging Inc – San DiegoThis is the company’s new US headquarters and is the base for 13 staff who are involved in sales, marketing, training/imple-mentation and applications support for both the Visage Imagingofferings and the existing Pro Medicus products.



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into the future

The company believes it is well placed to move into a new growth phase as it continues to maximise the benefits arising from the integration of the Pro Medicus and Visage Imaging businesses. Key factors predicted to drive growth include:

3-D PACS

EXPANDED GEOGRAPHICAL FOOTPRINTThe company has a growing presence in North America andEurope as well as an established presence in Australia. It isenvisaged that we will continue to develop parallel businessstreams in each of these market segments decreasing ourdependence on any one geography. Over time it is anticipatedthat a relatively higher proportion of the company’s revenueswill be generated in geographies with higher populations suchas North America and Europe.

NEW, EXPANDED PRODUCT PORTFOLIOWith the acquisition of Visage Imaging , Pro Medicus now hasarguably one off the most extensive, end to end solutions froma single vendor combining practice management/billing with 2-D/3-D PACS, 3-D advanced visualisation and e-health/elec-tronic results delivery. This product suite will be furtherenhanced with the release of our new technology RIS platformdue for release in late 2010. We believe this extensive productportfolio will provide the company with a number of significantbenefits including the ability to address new markets such aslarge teaching hospitals as well as create higher value, highermargin sales as the industry continues to gravitate to singlevendor solutions due the increased functionality this approachcan provide.

MULTIPLE CHANNELS TO MARKETIn both the European and North American markets we haveadopted a hybrid of direct and indirect channels to market. To date this has resulted in alliances with strong, well connectedpartners such as Accelarad in the US and Telegentis in Europe.

The company looks to expand these channels and has enteredinto discussions with a number of OEMs and third parties thatcan provide cost-effective means of product distribution inareas not addressable by a direct sales force. The companyhas also upgraded its sales force in the US and Europe to caterfor sales of the expanded product range in both existing andnew markets.

RELEASE OF NEW TECHNOLOGYThe company is planning the release of its New TechnologyPlatform in late 2010. This platform, the culmination of threeyears of intense R & D effort, will see Pro Medicus cement itsposition at the forefront of radiology information system andpractice management technology. The product, built utilisingthe latest in software development tools will not only providegreatly increased functionality and scalability, it will deliver significant efficiencies in programming and ongoing productdevelopment reducing overall R&D costs.

The company is also looking to release new versions of its flagship Visage 7 product throughout the coming year expandingits clinical product portfolio which the company believes will further differentiate its offerings in the rapidly evolving 3-DPACS and 3-D advanced visualisation space.



contents

Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 14 Auditor’s Independence Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Note 1 Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Note 2 Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Note 3 Significant Accounting Judgements, Estimates and Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Note 4 Financial Risk Management Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39Note 5 Operating Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41Note 6 Income and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43Note 7 Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44Note 8 Earnings per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45Note 9 Dividends Paid and Proposed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45Note 10 Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46Note 11 Trade and Other Receivables (Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46Note 12 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47Note 13 Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48Note 14 Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49Note 15 Trade and Other Payables (Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50Note 16 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50Note 17 Contributed Equity and Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50Note 18 Share based Payment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52Note 19 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52Note 20 Events after the Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54Note 21 Auditors’ Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54Note 22 Key Management Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54Note 23 Related Party Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57Note 24 Business Combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58Note 25 Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59Note 26 Parent Entity Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61ASX Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63Corporate Governance Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70

financialstatements


annual report 2010 ▲ 1514 ▲ annual report 2010

directors’ report Your Directors submit their report for the year ended 30 June 2010.

DIRECTORSThe names and details of the company’s directors in office during the financial year and until the date of this report are as follows:

Melvyn Keith Ward AO CHAIRMAN/NON EXECUTIVE DIRECTOR B.E.(Hons), M.Eng.Sc., F.I.E(Aust), F.T.S., F.A.I.M., I.V.A.

Mel Ward joined Pro Medicus Limited as a Director on 4 April, 2000. He was also a director of Transfield Services Limited.After a long career in the communications sector, Mel retired as Managing Director of TelecomAustralia (Telstra) in 1992.Since that time, he has been a professional Director for such significant companies as AXA AsiaPacific Holdings, Insurance Manufacturers of Australia, Coca-Cola Amatil Limited, WesternAustralian Newspapers Limited and Macquarie Communications Group.Mel served as chairman and as a member of the audit committee until August 2010 after whichtime he served as a non executive director until October 2010.

Dr Peter David Jonson NON-EXECUTIVE DIRECTOR B.Comm(Hons), M.A.(Hons), PhD, F.A.I.C.D., F.A.A.S.S.

Peter Jonson joined Pro Medicus as a Director on 4th April 2000. He is lead independent directorof Village Roadshow Ltd and Chair Emeritus of the Melbourne Institute, having served as the Chairof its Advisory Board from 1992 to 2002. Peter has previously been Chairman of Bionomics Ltd and Federal Government’s CRC Committeeand previously been a board member of the Metal Storm Limited.In his previous career, Peter was an economist at the Reserve Bank of Australia for 17 years,including 7 years in its most senior economics post, then called Head of Research. He subsequently worked in the private finance industry for 12 years including CEO of NorwichFinancial Services Ltd and Managing Director and then Chairman of ANZ Funds Management.Peter is a fellow of the Australian Institute of Company Directors and of the Academy of the SocialSciences in Australia.

Dr Sam Aaron Hupert DEPUTY CHAIRMAN & EXECUTIVE DIRECTOR M.B.B.S.

Co-founder of Pro Medicus Limited in 1983, Sam Hupert is a Monash University Medical Schoolgraduate 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.

Anthony Barry Hall EXECUTIVE DIRECTOR & TECHNOLOGY DIRECTOR B.Sc.(Hons), M.Sc.

Co-founder of Pro Medicus Limited in 1983, Anthony Hall has been principal architect and developer of the core software systems. His current role is to oversee product development and plan the future technical direction of the Group.

David Chambers CHIEF EXECUTIVE OFFICER & MANAGING DIRECTOR B.Sc. Grad Dip. Bus.

David Chambers joined Pro Medicus as CEO on the 1st of October 2007 and was appointed a Director on the 10th December 2007.David graduated from La Trobe University with a BSc, Chemistry and Mathematics in 1978 andwent on to do a Grad Dip Bus Mgt, Marketing at the Australian Graduate School of Management.He has extensive experience in the healthcare industry and was previously the General Managerof Agfa Healthcare Asia Pacific prior to taking on the role of Vice President Sales & Services,North America at Agfa Healthcare.

Peter Terence Kempen NON-EXECUTIVE DIRECTOR/CHAIRMAN F.C.A, F.A.I.C.D

Peter Kempen joined Pro Medicus as a Director on 12 March 2008. He is Chairman of IvanhoeGrammar School and Chairman of Australasian Leukaemia and Lymphoma Group.Peter has previously been Chairman of Patties Food Limited, Chairman of Danks Holdings Limitedand Managing Partner of Ernst & Young Corporate Finance Australia and was also heavily involvedin the first corporatisation of a radiology practice and ultimate public listing of Medical ImagingAustralasia Limited.Peter is a Fellow of the Institute of Chartered Accountants in Australia and a Fellow of the Australian Institute of Company Directors.Peter became Chairman in August 2010 before which he served as a non executive director of the company. Peter is also Chairman of the audit committee.

Clayton James Hatch COMPANY SECRETARY B.Comm, ASA

Clayton was appointed Company Secretary on 1 July 2009. Clayton has strong experience in financial and management accounting having worked as Financial Manager for several years. Clayton joined Pro Medicus as Finance Manager in June 2008.



directors’ report cont.

The period post acquisition and throughout the 2010 financialyear has seen the ongoing integration of the group’s globalR&D efforts culminating in the release of several new and innovative technologies including:

Visage 7 Picture Archive and Communication Systems (PACS)Visage 7 thin client universal viewerVisage ‘teleradiology’ RIS

REVIEW AND RESULTS OF OPERATIONSInvestment ActivitiesSurplus funds are invested by the Group in commercial bills to maximise the interest return.

Performance IndicatorsManagement and the Board monitor overall performance, fromthe strategic plan through to the performance of the Groupagainst operating plans and financial budgets.

The Board, together with management, have identified key performance indicators (KPIs) that are used to monitor performance. Key management monitor these KPIs on a regular basis and Directors receive appropriately structuredboard reports for review prior to each monthly Board meetingallowing them to actively monitor the Group’s performance.

Dynamics of the BusinessAustraliaThe group’s Australian revenue grew over the period by 12.7%with some decline in our service revenues due to market shareerosion being offset through the release of the Visage range ofproducts which created a total imaging centre solution and culminated in several strategically important new sales beingsecured. Other areas of the Australian operation remainedsteady despite the challenging environment over the past year.The group employs 25 people in Australia who undertakeresearch and development of Pro Medicus products as well assales and service/support functions.

Promedicus.net, the company’s e-health offering, continued tohold its strong market position recording revenue of $2.05 milliondespite increasing competition.

Service revenues from the new sales secured in the 4th quarterwill be additive to our run rates for service revenues from bothRIS and digital imaging sales from previous periods.

North AmericaThe past year saw a number of significant changes in thegroup’s US operations since the acquisition in January 2009.The group employs 13 people in the US to fulfil the sales marketing and professional services roles. The resultant salessaw a growth of 72.8% over the previous year, with some significant strategic sales that included placements at Brighamand Women’s Hospital in Boston and University of Chicago.Visage 3D technology was featured as a technology break-through in several prominent journals. As such there is anexpectation of further significant increases in revenues in thiscoming financial year.

EuropePro Medicus established a presence in Europe with the acquisitionof Visage Imaging GmbH in late January 2009. The group has 33employees in its Berlin office who undertake research anddevelopment of Visage Imaging products worldwide as well assales, marketing and service/support functions for the group'sEuropean operations. Sales of the group's products in Europeboth through direct sales and via OEM channels have met and insome areas exceeded budget expectations since the acquisition.

FinancialsFull year revenue, which included a full twelve months of theVisage Imaging business rose from $15.62 million to $19.46million, an increase of 24.6%.

Net margin as defined by profit before tax to revenue fromoperating activities decreased from 48.5% to 32.3% in line withexpectations as a result of the Visage Imaging acquisition.

Profit after tax for the period was $3.92 million a decrease of21.9% from the previous year in what was a difficult year forthe industry and the economy as a whole. However, the groupcontinued to invest in research and development of its productand had high transactional operation costs, meant that full-yearprofit was lower than last year’s.

Shareholder ReturnsThe Company is pleased to report a dividend return to share-holders of a total of 2.0 cents per share. This is made up of afinal dividend of 2.0 cents.

This level of dividend preserves balance sheet strength duringthe transition period of integration of the overseas acquisitions. The directors are confident that the holdings of reserve cashafter paying out the second half dividend is sufficient to underpinthe development and expansion needs of the company as thebusiness looks to increase its penetration of existing markets.

The company has maintained cash holdings and althoughreturn on net assets and equity have decreased this reflects the acquisition of the Visage Imaging business.

OPERATING AND FINANCIAL REVIEWCorporate StructurePro Medicus Limited is a company limited by shares that is incorporated and domiciled in Australia.

Nature of operations and principal activitiesThe principal activities of the Group during the year were thesupply of product and services to diagnostic imaging groupsand a broad range of entities predominately within the privatemedical market. These products and services include:• Innovative proprietary medical software for practice

management (RIS);• Digital Imaging – Picture Archive and Communication

Systems (PACS) • 3-D Advanced Visualisation products• Life Science - Research products • Training, installation and professional services;• After sale support and service products; • Promedicus.net secure email; and• Digital radiology integration products

In January 2009, Pro Medicus Limited acquired Visage ImagingInc (US operations) and Visage Imaging GmbH (GermanyOperations) from Mercury Computer Systems in the US. The acquisition was funded from cash reserves.

This acquisition of Visage Imaging has enabled the group tosignificantly broaden its product offering to now include:

• Innovative clinical software that provides radiologist withadvanced visualisation capability for viewing 3-D and 4-Dimages;

• PACS/Digital imaging software that is sold both direct and to original equipment manufacturers (OEM).

• Training, installation and professional services;• Support and service products; • The sale of advanced visualisation toolkits to academic

and research institutions (Amira).

During the past year, the group has been engaged in ongoingnew product development:

Significant progress was made on the development of a newtechnology platform designed to underpin the group’s futuregrowth in both local and overseas markets. The group alsoreleased a number of updates and enhancements to its existingproduct lines throughout the period.

The acquisition of Visage Imaging in January 2009 saw thegroup extend its R&D base to Europe where the bulk of theR&D for the Visage Imaging product set is carried out.

INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY As at the date of this report, the interests of the directors in the shares and options of the Company were:

Options overOrdinary Shares Ordinary Shares

A. B. Hall 30,068,500 425,000S. A. Hupert 30,072,660 425,000M. K. Ward 50,000 400,000P. D. Jonson 50,000 200,000D. Chambers 65,000 NILP. T. Kempen 129,647 200,000

EARNINGS PER SHARE

CentsBasic earnings per share 3.9Diluted earnings per share 3.9

DIVIDENDS

Ordinary Shares Cents $’000

Final dividends recommended:Normal dividend plan 2.0 2,006

Dividends paid in the year:Interim for the year - -

Final dividend for 2009 shown as recommended in the 2008 report:Normal dividend plan 2.0 2,006



SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Shareholders’ equity increased by 9.0% from $15.44m to$16.83m. This movement was largely the result of high profitand retaining cash in the business.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

A Final Dividend of 2.0 cents per share has been declared post1 July. Please refer Note 9.

LIKELY DEVELOPMENTS AND EXPECTEDRESULTS

The Directors foresee that the 2011 financial year will be a yearof growth in both the local and overseas markets. It is anticipatedthis will result from:

• The group’s expanded product portfolio that now includesadvanced visualisation, PACS (Digital Imaging) 3-D and 4-Dcapability.

• The anticipated increased adoption of advanced visualisationand 3-D capability throughout the radiology profession.

• The integration of the group's existing product set with thecomplimentary clinical products of Visage Imaging enablingPro Medicus to provide a complete end-to-end solution.

• The ability of the new expanded product set to address the needs of large public hospitals in the US Europe and Australia in addition to the private radiology market.

• The increased geographical presence of Pro Medicus whichnow has bases in Australia, North America and Europe as a result of the Visage acquisition.

As a result, it is anticipated that the 2011 financial year will showimprovement in profits. However, this is dependant on manymarket factors over which the directors have limited or no control.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group has no identified risk with regard to environmentalregulations currently in force. There have been no knownbreaches by the Group of any regulations.

SHARE OPTIONSUn-issued SharesAs at the date of this report, there were 3,400,000 un-issuedordinary shares under options Refer to Note 18 of the financialstatements for further details of the options outstanding.

Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company.

Shares Issued as a Result of the Exercise of OptionsDuring the financial year, no share options were exercised by exemployees and no shares expired during the year. No directorsor key management personnel in the current year have exercisedany option to acquire fully paid ordinary shares in Pro MedicusLimited.

Regarding Share Options that were granted prior to 7 November2002, 20% of the options vested on each anniversary of thedate of commencement and can be converted into fully paidshares. All of these options are now fully vested.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

During the financial year, the Company did not indemnify anyperson for any reason.

During or since the financial year, the Company has paid premiumsin respect of a contract for Directors’ & Officers’/Company Re-Imbursement Liability insurance for directors, officers andPro Medicus Limited for costs incurred in defending proceedingsagainst them.

Disclosure of the amount of insurance and the terms of thiscover is prohibited by the insurance policy.

REMUNERATION REPORT (AUDITED)

This report outlines the remuneration arrangements in place fordirectors and executives of Pro Medicus Limited in accordancewith the requirements of the Corporations Act 2001 and itsRegulations. For the purposes of this report, key managementpersonnel (KMP) of the Group are defined as those personshaving authority and responsibility for planning, directing andcontrolling the major activities of the Company and the Group,directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the fiveexecutives in the Parent and the Group receiving the highestremuneration.

For the purposes of this report, the term ‘executive’ encom-passes Directors and Executives of the Parent and Group.

18 ▲ annual report 2010


Investments for Future PerformanceThe Company will continue to direct resources into the development of new products and in particular is committed tothe completion of its new RIS technology platform as well as theongoing development of the Visage Imaging range of products.

It is anticipated that this will continue to position Pro Medicusas a market leader and enable the group to leverage both itsexpanded product portfolio and geographical spread as a resultwhich is heavily attributable to the acquisition of Visage Imaging.

The directors express their gratitude for the efforts of allemployees in achieving this year’s result.

The Group remains committed to providing staff with access toappropriate training and development programs, together withthe resources to complete their duties.

REVIEW OF FINANCIAL CONDITIONCapital StructureThe company has a sound capital structure with a strong balance sheet, with no debt.

Treasury PolicyThe Company up until late in the financial period was notexposed to any interest rate or significant currency sensitiveloans or debts. Given the increase in overseas operations thereis now an increased currency risk as a consequence of contractswritten in and cash being held in foreign currencies. This changein risk profile has been noted by the board and action is beingtaken to manage this risk.

For larger overseas transactions the Company uses derivativefinancial instruments in the form of forward currency contracts,to hedge its risk associated with foreign currency fluctuations. The treasury function, co-ordinated within Pro Medicus Limited,is limited to maximising interest return on surplus funds and nowmanaging currency risk. The treasury operates within policiesset by the Board, which is responsible for ensuring that management’s actions are in line with board policy.

Cash from OperationsNet cash flows from operating activities was a positive $6.84mfor the current period, attributed by a $19.93m collection ofreceipts from customers compared with payments of $11.87mto suppliers and employees. The group continued to hold totalcash assets of $3.79 million.

Liquidity and FundingThe Group is cash flow positive, has substantial cash reservesand has no overdraft facility. Sufficient funds are held to financeoperations.

Risk ManagementThe Company takes a proactive approach to risk management.The Board is responsible for ensuring that risks, and alsoopportunities, are identified on a timely basis and that theGroup’s objectives and activities are aligned with the risks andopportunities identified by the Board.

The Company believes that it is crucial for all Board membersto participate in this process, as such the Board has not established separate committees for areas such as risk management, environmental issues, occupational health and safety or treasury.

The Board has a number of mechanisms in place to ensurethat management’s objectives and activities are aligned with the risks identified by the Board. These include the following:

• Board approval of strategic plans, which encompass thecompany’s vision, mission and strategy statements, designedto meet stakeholder needs and manage business risk;

• Implementation of Board approved operating plans andbudgets and Board monitoring of progress against thesebudgets, including the establishment and monitoring ofKPIs; and

• Overseeing of appropriate backup procedures for importantcompany data

• Routine review by key executives of its established QualityAssurance program and corrective action recommendationsstemming from it

Corporate GovernanceIn recognising the need for the highest standards of corporatebehaviour and accountability, the directors of Pro MedicusLimited support and have adhered to the principles of goodcorporate governance. Please refer to the separate “CorporateGovernance” section for more details of specific policies.

Statement of ComplianceThe above report is based on the guidelines in The Group of 100 Incorporated publication Guide to the Review ofOperations and Financial Condition.

The company has maintained cash holdings and although return on net assets and equity have decreased this reflects the acquisition of the Visage Imaging business.

2010 2009 2008 2007 2006

Basic earnings per share – reported (cents) 3.9 5.1 7.9 7.1 6.1Return on assets (%) 23.6 33.4 57.9 55.5 55.5Return on equity (%) 23.3 38.5 50.4 49.5 46.3Dividend payout ratio (%) – normal dividend plan 51.2 59.0 75.8 77.5 65.4Dividend payout ratio (%) – total dividend 51.2 59.0 75.8 98.5 89.9Available franking credits ($’000) 4,821 4,042 5,516 5,582 5,268



StructureEmployment Contracts have been entered into with all executivesof the Parent and Group. Details of these contracts are providedon page 21.

Remuneration consists predominately of fixed remuneration.Variable remuneration is provided occasionally at the board’sdiscretion including both short term incentives (STI) and longterm incentives (LTI).

The Company does not have a policy regarding executivesentering into contracts to hedge their exposure to shareoptions granted as part of their remuneration package.

Fixed RemunerationObjectiveThe level of fixed remuneration is set so as to provide a baselevel of remuneration which is both appropriate to the positionand is competitive in the market.

Fixed remuneration is reviewed annually and the process consisting of a review of group wide, business and individualperformance, relevant comparative remuneration in the marketand internal and, where appropriate, external advice on policiesand practices. As noted above, the company conducting thereview has access to external advice independent of management.

Executives, including Executive Directors are given the opportunityto receive their fixed (primary) remuneration in a variety of formsincluding cash and fringe benefits such as motor vehicles andexpense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the group.

The fixed remuneration is detailed in Table 1 of this report.

Variable Remuneration – Long Term Incentive (LTI)Upon commencement with the Group, Mike Tefft was grantedoptions and in the prior year David Chambers, upon commencement with the Group was issued with shares.

The options granted tor Mike Tefft have a 2 year vesting period.

Variable Pay – Short Term Incentive (STI)Short term incentives in the form of cash bonuses were paid to key staff based on a mix of company based and personal performance targets.

STI bonus for 2010For the 2010 financial year, the total amount of STI cash bonuseither paid or accrued at year end was $212,868. The maximumamount payable under STI was $250,895.

Key Performance IndicatorsActual STI payments granted to Malte Westerhoff depended onthe extent to which specific targets set at the time of employmentwere met. The targets consist of a number of Key PerformanceIndicators (KPIs) covering both financial (Sales Targets) andnon-financial measures of performance.

Group performanceFor details of the group’s performance (as measured byEarnings Per Share and other relevant measures) for the currentfinancial year and previous four financial years, refer to page 18of the Directors’ Report.

Employment ContractsExecutive DirectorsExecutive Service Contracts, on similar terms and conditions,have been prepared for all Executive Directors of the Company. These agreements provide the following major terms:

• Each executive will receive a remuneration package perannum which is to be reviewed annually;

• The agreements protect the Company and Group’s confidential information and provide that any inventions ordiscoveries of an executive become the property of the Group;

• Non-competition during employment and for a period of 12months thereafter; and

• Termination by the Company on six months notice or payment of six months remuneration in lieu of notice or acombination of both (or without notice or payment in lieu inthe event of misconduct or other specified circumstances).The agreements may be terminated by the executives onthe giving of six months notice.

The CEO's agreement includes an additional incentive toincrease earnings per share by a multiple of 4 over a 4 yearperiod commencing 1 December 2007. As the earnings pershare target has not been achieved, no amounts have beenpaid or accrued during the current financial year.

Executives (excluding Executive Directors)All executives have rolling contracts. The Group may terminatethe executive’s employment agreement by providing six monthswritten notice or providing payment in lieu of the notice period(based on the fixed component of the executive’s remuneration).The Group may terminate the contract at any time withoutnotice if serious misconduct has occurred. Where terminationwith cause occurs the executive is only entitled to that portionof remuneration that is fixed, and only up to the date of termination. On termination with cause any unvested optionswill immediately be forfeited.



Remuneration committeeRemuneration and nomination issues are handled at the fullBoard level. The Board due to the small number of directorsdecided this. No Committees for these functions have beenestablished at this time.

Board members, as per groupings detailed below, are responsiblefor determining and reviewing compensation arrangements.

In order to maintain good corporate governance the Non-Executive Directors assume responsibility for determining and reviewing compensation arrangements for the ExecutiveDirectors of the Parent. The Executive Directors in turn areresponsible for determining and reviewing the compensationarrangements for the Non-Executive Directors. The CEO, inconjunction with the full Board reviews the terms of employmentfor all executives.

The assessment considers the appropriateness of the natureand amount of remuneration of such executives on a periodicbasis by reference to relevant employment market conditionswith the overall objective of ensuring maximum stakeholder benefitfrom the retention of a high quality board and executive team.

Remuneration philosophyThe performance of the group depends upon the quality of itsdirectors and executives. To prosper, the company must attract,motivate and retain highly skilled directors and executives.

To this end, the company provides competitive rewards toattract high calibre executives.

Remuneration structureIn accordance with best practice corporate governance, thestructure of non-executive director and executive’s remunerationis separate and distinct.

Non-executive director remunerationObjectiveThe Board seeks to set aggregate remuneration at a levelwhich provides the company with the ability to attract andretain directors of the highest calibre, whilst incurring a costwhich is acceptable to shareholders.

StructureThe Constitution and the ASX Listing Rules specify that theaggregate remuneration of non-executive directors shall bedetermined from time to time by a general meeting. An amountnot exceeding the amount determined is then divided betweenthe directors as agreed. The latest determination was at theAnnual General Meeting held on 4 November 2005 whenshareholders approved an aggregate remuneration of $500,000per year.

The amount of the aggregate remuneration sought to beapproved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The Boardconsiders advice from external consultants as well as the feespaid to non-executive directors of comparable companieswhen undertaking the annual review process.

Each director receives a fee for being a director of the company.No additional fee is paid for time spent on Audit Committeebusiness.

Non-executive directors have long been encouraged by theboard to hold shares in the company (purchased by the directoron market). It is considered good governance for the directorsto have a stake in the company on whose board he sits. The non-executive directors of the company participate in theEmployee Share Incentive Scheme [Option based] which wasestablished in 2000 to provide incentive for participants.

The remuneration of non-executive directors for the period ending 30 June 2009 is detailed in Table 1 of this report.

Executives (including Executive Directors remuneration)ObjectiveThe group aims to reward executives with a level and mix ofremuneration commensurate with their position and responsibilitieswithin the group and so as to:

• align the interests of executives with those of shareholders;• ensure total remuneration is competitive by market

standards.

REMUNERATION REPORT (AUDITED) (CONT)

Details of Key Management Personnel (including the five highest paid executives of the Company & Group)(i) Directors

Melvyn Keith Ward Chairman (non-executive)Dr Peter David Jonson Non Executive Director Dr Sam Aaron Hupert Executive Director and Deputy ChairmanAnthony Barry Hall Executive Director and Technology DirectorDavid Chambers Managing Director and CEO Peter Terence Kempen Non Executive Director and Chairman Audit Committee

(ii) ExecutivesDanny Tauber Group Chief Operating OfficerMalte Westerhoff Managing Director – Visage Imaging GmbH John Danahy General Manager – Sales & Services – Visage Imaging Inc (appointed 1 February 2010) Mike Tefft National Business Manager – Visage Imaging Inc




REMUNERATION REPORT (AUDITED) (CONT)

Remuneration of key management personnel and the five highest paid executives of the company and the Group

TABLE 1: REMUNERATION OF KEY MANAGEMENT PERSONNEL FOR THE YEAR ENDED 30 JUNE 2010TOTAL

POST SHARE-BASED PERFORMANCESHORT-TERM EMPLOYMENT LONG TERM PAYMENT TOTAL RELATED%

Non- LongSalary & Cash Monetary Service

30 June 2010 Fees Bonus benefits Superannuation Leave Shares OptionsDirectorsM K Ward 80,000 - - 7,200 - - - 87,200 -P D Jonson 20,100 - - 25,433 - - - 45,533 -S A Hupert 169,947 - - 50,000 4,448 - - 224,395 -A B Hall 168,550 - - 50,000 4,448 - - 222,998 -D Chambers 417,591 - - 91,208 7,681 - - 516,480 -P T Kempen 55,046 - - 4,954 - - 5,315 65,315 -

ExecutivesD Tauber 281,871 - - 13,129 4,699 - - 299,699 -M Westerhoff 234,101 21,367 - 2,771 - - 14,846 273,085 7.82%J Danahy 132,593 - - 6,819 - - - 139,412 -M J Tefft 181,843 - - 10,940 - - 342 193,125 -

1,741,642 21,367 - 262,454 21,276 - 20,503 2,067,242

Compensation options granted, vested and exercised during the year as part of remuneration900,000 shares with a fair value of $67,278 ($0.075 per option) were granted as options to key Visage Imaging with a grant dateof 1 April 2010. The share options have an exercise price of $1.00. The options have a first exercise date of 1 April 2011 and canbe exercised at anytime through to expiry date of 1 April 2020. The options vest over a 5 year period on completion of service.

TABLE 1: REMUNERATION OF KEY MANAGEMENT PERSONNEL FOR THE YEAR ENDED 30 JUNE 2009TOTAL

POST SHARE-BASED PERFORMANCESHORT-TERM EMPLOYMENT LONG TERM PAYMENT TOTAL RELATED%

Non-Salary & Cash Monetary Incentive

30 June 2009 Fees Bonus benefits Superannuation Plans Shares OptionsDirectorsM K Ward 80,000 - - 7,200 - - - 87,200 -P D Jonson - - - 43,600 - - - 43,600 -S A Hupert 181,589 - - 98,411 4,448 - - 284,448 -A B Hall 181,589 - - 98,411 4,448 - - 284,448 -D Chambers 347,993 - - 91,208 7,681 - - 446,882 -P T Kempen 55,046 - - 4,954 - - 10,135 70,135 -

ExecutivesD Tauber 281,871 - - 13,129 4,698 - - 299,698 -M Westerhoff 109,685 15,303 - 3,264 - - - 128,252 11.93%C Murphy 107,196 - - - - - - 107,196 -M J Tefft 180,665 - - - - - 3,283 183,948 -

1,525,634 15,303 - 360,177 21,275 - 13,418 1,935,807

Compensation options granted, vested and exercised during the year as part of remuneration200,000 shares with a fair value of $3,623 ($0.02 per option) were granted as options to Mike Tefft, with a grant date of 29September 2008. The options vest on 29 September 2010 and expire on termination of employment and can be exercised at anytime subsequent to vesting and prior to expiry. The shares are split into 2 categories, being 100,000 shares for service and100,000 shares for performance based on set KPI’s (Profitability of business unit & Sales Targets). The 100,000 shares for servicehave an exercise price of $1.25 and they have a 2 year vesting period, while the 100,000 shares for performance have an exerciseprice of $1.35 and also have a 2 year vesting period.

For details of the valuation of options, including models and assumptions used please refer to Note 18.

DIRECTORS’ MEETINGS

The numbers of meetings of directors (including meetings of committees of directors) held during the year and the number ofmeetings attended by each director were as follows:

Directors’ Meetings Eligible to attend Audit Committee Eligible to attend

Number of meetings held: 12 2Number of meetings attended:A. B. Hall 11 12 2 2S. A. Hupert 12 12 2 2M. K. Ward 11 12 2 2P. D. Jonson 11 12 2 2P. T. Kempen 11 12 2 2D Chambers 12 12 2 2

Committee membershipAs at the 30 June 2010, the company had an Audit Committee comprising the 3 non-executive directors and 3 executive directors.

ROUNDING

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies.

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

The directors received a declaration from the auditor of Pro Medicus Limited (refer page 24).

NON-AUDIT SERVICES

The following non-audit services were provided by the company’s auditor, Ernst & Young. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for the auditors imposed by theCorporations Act. The nature and scope of the non-audit service provided means that auditor independence is not compromised.

Ernst & Young received the following amount for the provision of non-audit services:

Professional services rendered in respect to taxation matters $45,000

Signed in accordance with a resolution of the Directors.

M K Ward DIRECTORMelbourne, 26 August 2010.



auditor’s independencedeclaration

statement of comprehensive income

FOR THE YEAR ENDED 30 JUNE 2010 ConsolidatedNotes 2010 2009

$’000 $’000

Continuing OperationsRevenue 19,197 14,913Finance Revenue 267 702

Revenue 19,464 15,615Cost of Sales (1,784) (616)

Gross Profit 17,680 14,999One-off gain on acquisition of subsidiaries 24 - 17Other Income 6(a) 402 760Accounting and Secretarial Fees (442) (426)Advertising and Public Relations (1,008) (312)Depreciation and Amortisation 6(b) (2,681) (1,267)Insurance (333) (276)Legal Costs (146) (121)Operating Lease Expense - minimum lease payments (591) (496)Other Expenses (348) (852)Salaries and Employee Benefits Expense 6(b) (5,970) (4,179)Travel and Accommodation (861) (572)

Profit before income tax 5,702 7,275Income tax expense 7 (1,782) (2,257)

Net profit for the period 17 3,920 5,018

Other Comprehensive IncomeForeign Currency translation (575) (569)

Other Comprehensive Income for the period (575) (569)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 3,345 (4,449)

Earnings per share (cents per share) 8- Basic for net profit for the year 3.9¢ 5.1¢- Diluted – for net profit for the year 3.9¢ 5.1¢



statement offinancial position

statement of changes in equity

FOR THE YEAR ENDED 30 JUNE 2010 ConsolidatedNotes 2010 2009

$’000 $’000

ASSETSCurrent AssetsCash and cash equivalents 10 3,785 5,561Trade and other receivables 11 5,702 5,446Income tax receivable 153 -Inventories 12 324 495Prepayments 158 247Total Current Assets 10,122 11,749

Non-current AssetsDeferred tax assets 7 1,267 590Plant and equipment 13 368 477Intangible assets 14 12,379 8,959Total Non-current Assets 14,014 10,026

TOTAL ASSETS 24,136 21,775

LIABILITIES Current LiabilitiesTrade and other payables 15 2,289 2,721Income tax payable - 659Provisions 16 1,303 1,261Total Current Liabilities 3,592 4,641

Non-current LiabilitiesDeferred tax liabilities 7 3,675 1,627Provisions 16 44 65Total Non-current Liabilities 3,719 1,692

TOTAL LIABILITIES 7,311 6,333

NET ASSETS 16,825 15,442

EQUITYContributed equity 17 330 330Share Reserve 17 79 35Foreign Currency Translation Reserve 17 (1,144) (569)Retained earnings 17 17,560 15,646TOTAL EQUITY 16,825 15,442

FOR THE YEAR ENDED 30 JUNE 2010 CONSOLIDATEDIssued Share Foreign Retained TotalCapital Reserve Currency Earnings Equity

TranslationReserve

$’000 $’000 $’000 $’000 $’000

At 1 July 2008 330 22 - 15,392 15,744

Profit for the year - - - 5,018 5,018Other comprehensive income - - (569) - (569)Total comprehensive income for the period - - (569) 5,018 4,449

Transaction with owners in their capacity as ownersShare Based Payment - 13 - - 13Dividends - - - (4,764) (4,764)At 30 June 2009 330 35 (569) 15,646 15,442

At 1 July 2009 330 35 (569) 15,646 15,442

Profit for the year - - - 3,920 3,920Other comprehensive income - - (575) - (575)Total comprehensive income for the period - - (575) 3,920 3,345

Transaction with owners in their capacity as ownersShare Based Payment - 44 - - 44Dividends - - - (2,006) (2,006)At 30 June 2010 330 79 (1,144) 17,560 16,825



statement of cash flow

FOR THE YEAR ENDED 30 JUNE 2010 Consolidated Notes 2010 2009

$’000 $’000

Cash flows from operating activities

Receipts from customers 19,934 16,591Payments to suppliers and employees (11,870) (8,340)Income tax paid (1,225) (2,774)

Net cash flows from operating activities 10 6,839 5,477

Cash flows from investing activities

Capitalised Development Costs 14 (5,942) (4,296)Interest received 267 702Purchase of plant and equipment 13 (167) (47)Proceeds from disposal of plant & equipment 13 11 -Acquisition of subsidiaries 24 (711) (2,822)Costs incurred on acquisition of subsidiaries 24 - (1,160)

Net cash flows used in investing activities (6,542) (7,623)

Cash flows from financing activities

Payment of dividends on ordinary shares 9 (2,006) (4,764)

Net cash flows used in financing activities (2,006) (4,764)

Net increase/(decrease) in cash and cash equivalents (1,709) (6,910)Net foreign exchange differences (67) (414)Cash and cash equivalents at beginning of period 5,561 12,885

Cash and cash equivalents at end of period 10 3,785 5,561

1. CORPORATE INFORMATION

The financial report of Pro Medicus Limited (the Company) forthe year ended 30 June 2010 was authorised for issue inaccordance with a resolution of directors on 25 August 2010.

Pro Medicus Limited is a company limited by shares incorporatedin Australia whose shares are publicly traded on the Australianstock exchange.

The nature of the operations and principal activities of theGroup are described in the Directors’ Report.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of PreparationThe financial report is a general-purpose financial report, whichhas been prepared in accordance with the requirements of theCorporations Act 2001, Australian Accounting Standards andother authoritative pronouncements of the AustralianAccounting Standards board. The financial report has alsobeen prepared on a historical cost basis.

The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000)unless otherwise stated.

(b) Statement of compliance with IFRSThe financial report complies with Australian AccountingStandards and International Financial Reporting Standards(IFRS) as issued by the International Accounting StandardsBoard.

(c) New accounting standards and interpretations(i) Changes in Accounting policy and disclosures

The accounting polices adopted are consistent withthose of the previous financial year except as follows:

The Group has adopted the following new and amendedAustralian Accounting Standards and AASBInterpretations as of 1 July 2009. Adoption of thesestandards did not have any effect on the financial positionor performance of the Group.

AASB 101 Presentation of Financial Statements -The revised Standard separates owner and non-ownerchanges in equity. The statement of changes in equityincludes only details of transactions with owners, withnon-owner changes in equity presented in a reconciliationof each component of equity and included in the newstatement of comprehensive income. The statement ofcomprehensive income presents all items of recognisedincome and expense, either in one single statement, orin two linked statements. The Group has elected topresent one statement.

AASB 8 Operating Segments - AASB 8 replacedAASB 114 Segment Reporting upon its effective date.The Group concluded that the operating segmentsdetermined in accordance with AASB 8 are the same as

the business segments previously identified under AASB114. AASB 8 disclosures are shown in note 5, includingthe related revised comparative information.

AASB 3 Business Combinations (revised 2008) and AASB 127 Consolidated and SeparateFinancial Statements (revised 2008) - AASB 3(revised 2008) introduces significant changes in theaccounting for business combinations occurring afterthis date. Changes affect the valuation of non-controllinginterests (previously “minority interests”), the accountingfor transaction costs, the initial recognition and subsequentmeasurement of contingent consideration and businesscombinations achieved in stages. These changes willimpact the amount of goodwill recognised, the reportedresults in the period when an acquisition occurs andfuture reported results.

AASB 127 (revised 2008) requires that a change in theownership interest of a subsidiary (without a change incontrol) is to be accounted for as a transaction with ownersin their capacity as owners. Therefore such transactionswill no longer give rise to goodwill, nor will they give riseto a gain or loss in the statement of comprehensiveincome. Furthermore the revised Standard changes theaccounting for losses incurred by a partially owned subsidiary as well as the loss of control of a subsidiary.The changes in AASB 3 (revised 2008) and AASB 127(revised 2008) will affect future acquisitions, changes in,and loss of control of, subsidiaries and transactions withnon-controlling interests. The change in accounting policywas applied prospectively and had no material impacton earnings per share.

AASB 2008-7 Amendments to AustralianAccounting Standards - Cost of an Investment in aSubsidiary, Jointly Controlled Entity or Associate - Theamendments delete the reference to the “cost method”making the distinction between pre and post acquisitionprofits no longer relevant. All dividends received are nowrecognised in profit or loss rather than having to be splitbetween a reduction in the investment and profit andloss. However the receipt of such dividends requires anentity to consider whether there is an indicator of impairment of the investment in that subsidiary. The adoption of these amendments did not have anyimpact on the financial position or the performance ofthe Group.

AASB Interpretation 16 Hedges of a NetInvestment in a Foreign Operation - The Interpretationis to be applied prospectively. AASB Interpretation 16provides guidance on the accounting for a hedge of anet investment in a foreign operation. As such it providesguidance on identifying the foreign currency risks thatqualify for hedge accounting in the hedge of a netinvestment, where within the group the hedging instru-ments can be held in the hedge of a net investment andhow an entity should determine the amount of foreigncurrency gain or loss, relating to both the net investmentand the hedging instrument, to be recycled on disposalof the net investment.

notes to the financial statements



notes to the financial statements cont.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)(ii) Accounting Standards and Interpretation issued

but not yet effectiveAustralian Accounting Standards and Interpretationsthat have recently been issued or amended but are notyet effective have not been adopted by the Group forthe annual reporting period ending 30 June 2010. These are outlined in the table below.

Application Impact Applicationdate of on Group date for

Reference Title Summary standard* financial report Group*

AASB 2009-5 Further Amendments toAustralian AccountingStandards arising from theAnnual Improvements Project[AASB 5, 8, 101, 107, 117,118, 136 & 139]

The amendments to someStandards result in account-ing changes for presentation,recognition or measurementpurposes, while someamendments that relate toterminology and editorialchanges are expected tohave no or minimal effect onaccounting except for thefollowing:

The amendment to AASB117 removes the specificguidance on classifying landas a lease so that only thegeneral guidance remains.Assessing land leases basedon the general criteria mayresult in more land leasesbeing classified as financeleases and if so, the type ofasset which is to be recorded(intangible vs. property, plantand equipment) needs to bedetermined.

The amendment to AASB101 stipulates that the termsof a liability that could result,at anytime, in its settlementby the issuance of equityinstruments at the option ofthe counterparty do not affectits classification.

The amendment to AASB107 explicitly states that onlyexpenditure that results in arecognised asset can beclassified as a cash flow frominvesting activities.

The amendment to AASB118 provides additionalguidance to determinewhether an entity is actingas a principal or as an agent.

1 January2010

The Group will amendthe future financialreports to comply withAASB 2009-5

1 July2010

Application Impact Applicationdate of on Group date for

Reference Title Summary standard* financial report Group*

The features indicating anentity is acting as a principalare whether the entity:> has primary responsibility

for providing the goods or service;

> has inventory risk;> has discretion in

establishing prices;> bears the credit risk.

AASB 2009-8 Amendments to AustralianAccounting Standards – GroupCash-settled Share-basedPayment Transactions[AASB 2]

This Standard makesamendments to AustralianAccounting Standard AASB2 Share-based Payment andsupersedes Interpretation 8Scope of AASB 2 andInterpretation 11 AASB 2 –Group and Treasury ShareTransactions.

The amendments clarify theaccounting for group cash-settled share-based paymenttransactions in the separateor individual financial state-ments of the entity receivingthe goods or services whenthe entity has no obligationto settle the share-basedpayment transaction.

The amendments clarify thescope of AASB 2 by requiringan entity that receives goodsor services in a share-basedpayment arrangement toaccount for those goods or services no matter whichentity in the group settles thetransaction, and no matterwhether the transaction issettled in shares or cash.

1 January2010

The Group has share-based payment arrange-ments that may beaffected by theseamendments. The Groupis in the process ofdetermining the extent ofthe impact, if any.

1 July2010

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)




(f) Operating segmentsAn operating segment is a component of an entity thatengages in business activities from which it may earn revenuesand incur expenses (including revenues and expenses relatingto transactions with other components of the same entity),whose operating results are regularly reviewed by the entity'schief operating decision maker to make decisions aboutresources to be allocated to the segment and assess itsperformance and for which discrete financial information isavailable. This includes start up operations which are yet toearn revenues.

Management will also consider other factors in determiningoperating segments such as the existence of a line managerand the level of segment information presented to the boardof directors.

Operating segments have been identified based on theinformation provided to the chief operating decision makers– being the executive management team.

The group aggregates two or more operating segmentswhen they have similar economic characteristics and thesegments 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 asprescribed by AASB 8 are reported separately. However, anoperating segment that does not meet the quantitative criteria is still reported separately where information aboutthe segment would be useful to users of the financial state-ments.

Information about other business activities and operatingsegments that are below the quantitative criteria are combinedand disclosed in a separate category for “all other segments”.

(g) Revenue recognitionRevenue is recognised to the extent that it is probable thatthe economic benefits will flow to the Group and the revenuecan be reliably measured. The following specific recognitioncriteria must also be met before revenue is recognised:

Rendering of servicesRevenue from the installation and ongoing support of soft-ware applications and services is recognised by referenceto the stage of completion of a contract or contracts inprogress. Stage of completion is measured by completionof identifiable service segments as a percentage of the totalservices to be provided for each contract, which is determinedby a quotation with the customer.

Service Revenue is recognised over the term of the contract.Where revenue is received in advance, revenue is recognisedin the period during which the service is provided.

Where the contract outcome cannot be reliably measured,revenue is recognised only to the extent that costs havebeen incurred.

LicencesLicense revenue is recognised when control of the right tobe compensated for the license can be reliably measured.License revenue is recognised when ownership of thegoods have passed to the buyer, which is usually after thesoftware application has been installed and is ready for useby the buyer.

InterestRevenue is recognised as the interest accrues (using theeffective interest method, which is the rate that exactly discounts estimated future cash receipts through theexpected life of the financial instrument) to the net carryingamount of the financial asset.

(h) LeasesThe determination of whether an arrangement is or containsa lease is based on the substance of the arrangement andrequires an assessment of whether the fulfilment of thearrangement is dependant on the use of a specific asset orassets and the arrangement conveys a right to use theasset.

Group as a lesseeLeases where the lessor retains substantially all the risksand benefits of ownership of the asset are classified asoperating leases.

Operating lease payments are recognised as an expense inthe statement of comprehensive income on a straight-linebasis over the lease term.

(i) Cash and cash equivalentsCash and cash equivalents in the balance sheet comprisecash at bank and in hand and short term deposits with anoriginal maturity of three months or less that are readilyconvertible to know amounts of cash and which are subjectto an insignificant risk of changes of value.

For the purposes of the Cash Flow Statement, cash andcash equivalents consist of cash and cash equivalents asdefined above.

(j) Trade and other receivablesTrade and intercompany receivables are recognised initiallyat fair value and subsequently measured at amortised costless an allowance for any uncollectible amounts.

A provision for impairment is made when there is objectiveevidence that Pro Medicus will not be able to collect thedebts. Financial difficulty of the debtors is considered objective evidence by the Group. Bad debts are written offwhen identified.




(d) Basis of consolidationThe consolidated financial statements comprise the financialstatements of Pro Medicus Limited and its subsidiaries asat 30 June each year (the group).

Subsidiaries are all those entities over which the Group hasthe power to govern the financial and operating policies soas to obtain benefits from their activities. The existence andeffect of potential voting rights that are currently exercisableor convertible are considered when assessing whether agroup controls another entity.

The financial statements of the subsidiaries are prepared forthe same reporting period as the parent company, usingconsistent accounting policies. In preparing the consolidatedfinancial statements, all intercompany balances and trans-actions, income and expenses and profit and losses resultingfrom intragroup transactions have been eliminated in full.

Subsidiaries are fully consolidated from the date on whichcontrol is obtained by the Group and cease to be consoli-dated from the date on which control is transferred out ofthe Group.

The acquisition of subsidiaries is accounted for using theacquisition method of accounting. The acquisition methodof accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired,the liabilities assumed and any non-controlling interest in theacquiree. The identifiable assets acquired and the liabilitiesassumed are measured at their acquisition date fair values.

The difference between the above items and the fair valueof the consideration (including the fair value of any pre-existinginvestment in the acquiree) is goodwill or a discount onacquisition.

A change in the ownership interest of a subsidiary that doesnot result in a loss of control, is accounted for as an equitytransaction.

Non-controlling interests are allocated their share of netprofit after tax in the statement of comprehensive incomeand are presented within equity in the consolidated statementof financial position, separately from the equity of the ownersof the parent.

Losses are attributed to the non-controlling interest even if that results in a deficit balance.

If the Group loses control over a subsidiary, it- Derecognises the assets (including goodwill) and liabilities

of the subsidiary.- Derecognises the carrying amount of any non-controlling

interest.- Derecognises the cumulative translation differences,

recorded in equity.- Recognises the fair value of the consideration received.- Recognises the fair value of any investment retained.

- Recognises any surplus or deficit in profit or loss.- Reclassifies the parent's share of components previously

recognised in other comprehensive income to profit or loss.

(e) Business combinationsSubsequent to 1 January 2009Business combinations are accounted for using the acquisitionmethod. The consideration transferred in a business combi-nation shall be measured at fair value, which shall be calcu-lated as the sum of the acquisition date fair values of theassets transferred by the acquirer, the liabilities incurred bythe acquirer to former owners of the acquiree and the equityissued by the acquirer, and the amount of any non-controllinginterest in the acquiree. For each business combination, theacquirer measures the non-controlling interest in theacquiree either at fair value or at the proportionate share ofthe acquiree's identifiable net assets. Acquisition-relatedcosts are expensed as incurred.

When the Group acquires a business, it assesses the financialassets and liabilities assumed for appropriate classificationand designation in accordance with the contractual terms,economic conditions, the Group’s operating or accountingpolicies and other pertinent conditions as at the acquisitiondate.

If the business combination is achieved in stages, theacquisition date fair value of the acquirer's previously heldequity interest in the acquiree is remeasured at fair value asat the acquisition date through profit or loss.

Any contingent consideration to be transferred by theacquirer will be recognised at fair value at the acquisitiondate. Subsequent changes to the fair value of the contingentconsideration which is deemed to be an asset or liability willbe recognised in accordance with AASB 139 either in profitor loss or in other comprehensive income. If the contingentconsideration is classified as equity, it shall not be remea-sured.

Prior to 1 January 2009Business combinations were accounted for using the purchase method. Transaction costs directly attributable tothe acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minorityinterest) was measured at the proportionate share of theacquiree's identifiable net assets.

Business combinations achieved in stages were accountedfor in separate steps. Any additional interest in the acquireeacquired did not affect previously recognised goodwill. Thegoodwill amounts calculated at each step acquisition wereaccumulated.

Contingent consideration was recognised if, and only if, theGroup had a present obligation, the economic outflow wasmore likely than not and a reliable estimate was determinable.Subsequent adjustments to the contingent considerationwere adjusted against goodwill.




(o) Income tax (cont)Deferred income tax is provided on all temporary differencesat the balance sheet date between the tax bases of assetsand liabilities and their carrying amounts for financial reportingpurposes.

Deferred income tax liabilities are recognised for all taxabletemporary differences, except:

• where the deferred income tax liability arises from theinitial recognition of an asset or liability in a transactionthat is not a business combination and, at the time ofthe transaction, affects neither the accounting profit nortaxable profit or loss.

• when the taxable temporary difference is associatedwith investments in subsidiaries, associates or interestsin joint ventures, and the timing of the reversal of thetemporary difference can be controlled and it is probablethat the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductibletemporary differences, carry forward of unused tax assetsand unused tax losses, to the extent that it is probable thattaxable profit will be available against which the deductibletemporary differences, and the carry-forward of unused taxassets and unused tax losses can be utilised, except:

• where the deferred income tax asset relating to thedeductible temporary difference arises from the initialrecognition of an asset or liability in a transaction that isnot a business combination and, at the time of thetransaction, affects neither the accounting profit nor taxable profit or loss.

• when the deductible temporary difference is associatedwith investments in subsidiaries, associates or interestsin joint ventures, in which case a deferred tax asset isonly recognised to the extent that it is probable that thetemporary difference will reverse in the foreseeable futureand taxable profit will be available against which thetemporary difference can be utilised.

The carrying amount of deferred income tax assets isreviewed at each balance sheet date and reduced to theextent that it is no longer probable that sufficient taxableprofit will be available to allow all or part of the deferredincome tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to theextent that it has become probable that future taxable profitwill allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured atthe tax rates that are expected to apply to the year whenthe asset is realised or the liability is settled, based on thetax rates (and tax laws) that have been enacted or substan-tively enacted at the balance sheet date.

Deferred tax assets and deferred tax liabilities are offset onlyif a legally enforceable right exists to set off current taxassets against current tax liabilities and the deferred taxassets and liabilities relate to the same taxable entity andthe same taxation authority.

Income taxes relating to items recognised directly in equityare recognised in equity and not in the income statement.

(p) Other taxesRevenues, expenses and assets are recognised net of theamount 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 costof acquisition of the asset or of the expense item asapplicable; 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 orpayables in the balance sheet.

Cash flows are included in the Cash Flow Statement on agross basis and the GST component of cash flows arisingfrom investing and financing activities, which is recoverablefrom, or payable to, the taxation authority are classified asoperating cash flows.

Commitments and contingencies are disclosed net of theamount of GST recoverable from, or payable to, the taxation authority.




(k) InventoriesInventories are valued at the lower of cost and net realisablevalue. The cost of finished goods represents the purchasecost.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(l) Derivative financial instruments and hedgingThe Group has not transacted any derivative financial instruments to hedge its risk associated foreign currencyand interest rate fluctuations.

(m) Investments and other financial assets Investments and financial assets in the scope of AASB 139Financial Instruments: Recognition and Measurement arecategorised as either financial assets at fair value throughprofit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired or originated. Designation is re-evaluated at each reporting date, but there are restrictionson reclassifying to other categories. When financial assetsare recognised initially, they are measured at fair value, plus,in the case of assets not at fair value through profit or loss,directly attributable transaction costs.

Recognition and derecognitionAll regular way purchases and sales of financial assets arerecognised on the trade date i.e., the date that the Groupcommits to purchase the asset. Regular way purchases orsales are purchases or sales of financial assets under con-tracts that require delivery of the assets within the periodestablished generally by regulation or convention in themarket place. Financial assets are derecognised when theright to receive cash flows from the financial assets hasexpired or when the entity transfers substantially all the risksand rewards of the financial assets. If the entity neither retainsnor transfers substantially all of the risks and rewards, itderecognises the asset if it has transferred control of theassets.

Subsequent measurement(i) Financial assets at fair value through profit or loss

Financial assets classified as held for trading are includedin the category “financial assets at fair value throughprofit or loss”. Financial assets are classified as held fortrading if they are acquired for the purpose of selling inthe near term with the intention of making a profit.Derivatives are also classified as held for trading unlessthey are designated as effective hedging instruments.Gains or losses on financial assets held for trading arerecognised in profit or loss and the related assets areclassified as current assets in the statement of financialposition.

(ii) Loans and receivablesLoans and receivables including loan notes and loans tokey management personnel are non-derivative financialassets with fixed or determinable payments that are notquoted in an active market. Such assets are carried atamortised cost using the effective interest rate method.Gains and losses are recognised in profit or loss whenthe loans and receivables are derecognised or impaired.These are included in current assets, except for thosewith maturities greater than 12 months after balancedate, which are classified as non-current.

(n) Foreign currency translation(i) Functional and presentation currency

Both the functional and presentation currency of Pro Medicus Limited and its Australian subsidiaries areAustralian dollars ($). The United States subsidiaries’functional currency is United States Dollars. The sub-sidiary in Germany has a functional currency of Euro.Foreign subsidiaries are translated to presentation currency (see below for consolidated reporting).

(ii) Transactions and balancesTransactions in foreign currencies are initially recorded inthe functional currency by applying the exchange ratesruling at the date of the transaction. Monetary assetsand liabilities denominated in foreign currencies areretranslated at the rate of exchange ruling at the balancesheet date.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated usingthe exchange rate as at the date of the initial transaction.Non-monetary items measured at fair value in a foreigncurrency are translated using the exchange rates at thedate when the fair value was determined.

(iii) Translation of Group Companies’ functional currency to presentation currencyThe results of the United States and German subsidiariesare translated into Australian dollars (presentation currency)using an average exchange rate for the trading period.Assets and liabilities are translated at exchange ratesprevailing at balance date.

Exchange variations resulting from the translation arerecognised in the foreign currency translation reserve inequity.

On consolidation, exchange differences arising from thetranslation of the net investments in foreign subsidiariesare taken to the foreign currency translation reserve. If aforeign subsidiary were sold, the proportionate share ofexchange differences would be transferred out of equityand recognised in the income statement.

(o) Income taxCurrent tax assets and liabilities for the current and priorperiods are measured at the amount expected to be recoveredfrom or paid to the taxation authorities. The tax rates and taxlaws used to compute the amount are those that are enactedor substantively enacted by the balance sheet date.




(r) Intangible assets (cont)• Visage CS• Visage PACS and • Amira

Following initial recognition, Intellectual property is measuredat cost less any accumulated amortisation. A useful life of 5years has been determined.

Software LicensesThe Group identified a separate intangible asset in the formof software licenses, in the business acquisition of VisageImaging.

Following initial recognition, software licenses are measuredat cost less any accumulated amortisation. A useful life of 4years has been determined.

Customer ListThe Group identified a separate intangible asset in the formof a customer list, in the business acquisition of VisageImaging.

Following initial recognition, the customer list is measured atcost less any accumulated amortisation. A useful life of 4years has been determined.

(s) Trade and other payablesTrade payables and other payables are carried at amortisedcost and represent liabilities for goods and services providedto the Group prior to the end of the financial year that areunpaid and arise when the Group becomes obliged tomake future payments in respect of the purchase of thesegoods and services.

(t) ProvisionsProvisions are recognised when the Group has a presentobligation (legal or constructive) as a result of a past event,it is probable that an outflow of resources embodying eco-nomic benefits will be required to settle the obligation and areliable estimate can be made of the amount of the obligation.

When the Group expects some or all of a provision to bereimbursed, for example under an insurance contract, thereimbursement is recognised as a separate asset but onlywhen the reimbursement is virtually certain. The expenserelating to any provision is presented in the income state-ment net of any reimbursement.

Provisions are measured at the present value of management’sbest estimate of the expenditure required to settle the presentobligation at the balance sheet date.

Dividends payable are recognised when a legal or constructiveobligation to pay the dividend arises, typically followingapproval of the dividend at a meeting of directors.

(u) Employee leave benefitsProvision is made for employee entitlement benefits accu-mulated as a result of employees rendering services up tothe reporting date.

(i) Wages salaries, annual leave and sick leaveLiabilities for wages and salaries and annual leave,expected to be settled within twelve months of thereporting date are recognised in respect of employees’services up to the reporting date. They are measured atthe amounts expected to be paid when the liabilities aresettled. Expenses for non-accumulating sick leave arerecognised when the leave is taken and are measuredat the rates paid.

(ii) Long Service LeaveThe liability for long service leave is recognised andmeasured as the present value of expected future payments to be made in respect of services provided byemployees up to the reporting date, using the projectedunit credit method. Consideration is given to expectedfuture wage and salary levels, experience of employeedepartures, and periods of service. Expected future payments are discounted using market yields at thereporting date on national government bonds with termsto maturity and currencies that match, as closely aspossible the estimated future cash outflows.

(v) Share based payment transactions(i) Equity settled transactions:

The Group provides benefits to its employees (includingKMP) in the form of share-based payments, wherebyemployees render services in exchange for shares orrights over shares (equity-settled transactions).

There are currently two plans in place to provide thesebenefits:• The Employee Share Option Plan (ESOP), which

provides benefits to directors and senior executives;and

• The Employee Share Incentive Scheme, which provides benefits to directors and staff by way ofoptions to shares in the Company***

***As these options were granted prior to 7 November 2002 they areexempted from the requirements of AASB 2 “Share-based Payment.” As such no expense has been recorded in the income statement.

The cost of these equity-settled transactions with employees(for awards granted after 7 November 2002 that wereunvested at 1 January 2005) is measured by reference tothe fair value of the equity instruments at the date at whichthey are granted. The fair value is determined by an externalvaluer using a binomial model, further details of which aregiven in note 18.

In valuing equity-settled transactions, no account is taken ofany vesting conditions, other than conditions linked to theprice of the shares of Pro Medicus Limited (market conditions)if applicable.




(q) Plant and equipmentPlant and equipment is stated at cost less accumulateddepreciation and any impairment in value.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

An item of plant and equipment is derecognised upon disposalor when no future economic benefits are expected to arisefrom the continued use of the asset.

Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is includedin the income statement in the period the item is derecognised.

ImpairmentThe carrying values of plant and equipment are reviewed forimpairment at each reporting date, with recoverable amountbeing estimated when events or changes in circumstancesindicate that the carrying value may be impaired.

For an asset that does not generate largely independentcash inflows, the recoverable amount is determined for thecash generating unit to which the asset belongs.

If any such indication exists and where the carrying valuesexceed the estimated recoverable amount, the assets orcash-generating units are written down to their recoverableamount.

The recoverable amount of plant and equipment is thegreater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flowsare discounted to their present value using a pre-tax discountrate that reflects current market assessments of the timevalue of money and the risks specific to the asset.

(r) Intangible assetsIntangible assets acquired separately or in a business combination are initially measured at cost. The cost of anintangible asset acquired in a business combination is itsfair value as at date of acquisition. Following initial recognition,intangible assets with a finite life are carried at cost less anyaccumulated amortisation and any accumulated impairmentlosses.

Amortisation is calculated on a straight-line basis over the estimated useful life of the asset.

Intangible assets, excluding development costs, createdwithin the business are not capitalised and expenditure is

charged against profits in the period in which the expenditureis incurred.

Intangible assets are tested for impairment where an indicatorof impairment exists, either individually or at the cash generating unit level. The recoverable amount is estimatedand an impairment loss is recognised to the extent that therecoverable amount is lower than the carrying value.

The amortisation period and method is renewed at eachfinancial year end and adjustments, where applicable, aremade on a prospective basis.

Research and development costsResearch costs are expensed as incurred.

An intangible asset arising from development expenditureon an internal project is recognised only when the groupcan demonstrate the technical feasibility of completing theintangible asset so that it will be available for sale or use, itsintention to complete and its ability to use or sell the asset,how the asset will generate future economic benefits, theavailability of resources to complete the development andthe ability to measure reliably the expenditure attributable tothe intangible asset during its development. Following initialrecognition of the development expenditure, the cost modelis applied requiring the asset be carried at cost less anyaccumulated amortisation and accumulated impairmentlosses. Any expenditure so capitalised is amortised on astraight line basis over the period of expected benefit fromthe related project (5 years).

Development expenditure includes costs of materials andservices and salaries and wages and other employee relatedcosts arising from the generation of the intangible asset.

The carrying value of an intangible asset arising from devel-opment expenditure is tested for impairment annually whenthe asset is not yet available for use or more frequently whenan indication of impairment arises during the reporting period.

Intellectual Property – SoftwareThree separately identifiable intangible assets, in the form ofsoftware intellectual property, have previously been identifiedin the business acquisition of Visage Imaging;

2010 2009Property Improvements 2 to 7 years 2 to 7 yearsMotor Vehicles 4 to 5 years 4 to 5 yearsOffice Equipment 2 to 7 years 2 to 7 yearsFurniture and Fittings 5 years 5 yearsResearch and Development Equipment 3 to 4 years 3 to 4 years



3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONT)

completing the intangible asset is valid so that the asset will be available for use or sale.

Impairment of non-financial assetsThe Group assesses impairment of all assets at each reportingdate by evaluating conditions specific to the Group and tothe particular asset that may lead to impairment. If animpairment trigger exists the recoverable amount of theasset is determined. Given the current uncertain economicenvironment management considered that the indicators ofimpairment were significant enough and as such these assetshave been tested for impairment in this financial period.

TaxationThe Group's accounting policy for taxation requires management's judgement as to the types of arrangementsconsidered to be a tax on income in contrast to an operatingcost. Judgement is also required in assessing whetherdeferred tax assets and certain deferred tax liabilities arerecognised on the balance sheet. Deferred tax assets,including those arising from un-recouped tax losses, capitallosses and temporary differences, are recognised onlywhere it is considered more likely than not that they will berecovered, which is dependent on the generation of sufficientfuture taxable profits.

Deferred tax liabilities arising from temporary differences ininvestments, caused principally by retained earnings held inforeign tax jurisdictions, are recognised unless repatriationof retained earnings can be controlled and are not expectedto occur in the foreseeable future.

Assumptions about the generation of future taxable profitsand repatriation of retained earnings depend on management'sestimates of future cash flows. These depend on estimatesof future sales volumes, operating costs, capital expenditure,dividends and other capital management transactions.Judgements are also required about the application ofincome tax legislation. These judgements and assumptionsare subject to risk and uncertainty, hence there is a possibilitythat changes in circumstances will alter expectations, which

may impact the amount of deferred tax assets and deferredtax liabilities recognised on the balance sheet and the amountof other tax losses and temporary differences not yet recog-nised. In such circumstances, some or all of the carryingamounts of recognised deferred tax assets and liabilitiesmay require adjustment, resulting in a corresponding creditor charge to the income statement.

(ii) Significant accounting estimates and assumptionsCapitalisation of development costsThe capitalisation of development costs includes an over-head rate which has been estimated from total costs. Theestimated development overheads rate has been calculatedby dividing the development labour costs over total labourcosts to give a percentage of development labour rate. Thedevelopment labour rate is then applied against the totaloverheads of the company, to give an estimate of theamount of overheads that relates to development.

4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The parent entity’s and group’s principal financial instrumentsare cash and short-term deposits.

The main purpose of these financial instruments is to providefinance for the parent entity’s and Group’s operations. TheGroup has various other financial assets and liabilities such astrade receivables and trade payables, which arise directly fromits operations. The main risks arising from the Group’s financialinstruments are foreign currency risk, interest risk and creditrisk. The Board manages each of these risks as detailed below.

Foreign currency riskThe Group has transactional currency exposure, which arisefrom sales made in currencies other than the Group’s functionalcurrency.

Approximately 47% (2009: 49%) of the Group’s sales aredenominated in currencies other than the functional currency,and these sales would be predominately offset by currencyexposure on costs. Foreign bank accounts have also beenestablished, to create a natural hedge and reduce the need forregular transfers from the functional currency (AUD) cash holdings.




(v) Share based payment transactions (cont)The cost of equity-settled transactions is recognised, togetherwith a corresponding increase in equity, over the period inwhich the performance and/or service conditions are fulfilled(the vesting period), ending on the date on which the relevantemployees become fully entitled to the award (the vesting date).

At each subsequent reporting date until vesting, the cumulativecharge to the income statement 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 thatwill vest, taking into account such factors as the likelihoodof employee turnover during the vesting period and thelikelihood of non-market performance conditions beingmet; and

(iii) The expired portion of the vesting period.

The charge to the income statement for the period is thecumulative amount as calculated above less the amountsalready charged in previous periods. There is a correspondingentry to equity.

Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awardsvest than were originally anticipated to do so. Any awardsubject to a market condition is considered to vest irrespectiveof whether or not that market condition is fulfilled, providedthat all other conditions are satisfied.

If the terms of an equity-settled award are modified, as aminimum an expense is recognised as if the terms had notbeen modified. An additional expense is recognised for anymodification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial tothe employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if ithad vested on the date of cancellation, and any expensenot yet recognised for the award is recognised immediately.However, if a new award is substituted for the cancelledaward and designated as a replacement award on the datethat it is granted, the cancelled and new award are treatedas if they were a modification of the original award, asdescribed in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflectedas additional share dilution in the computation of dilutedearnings per share (see note 8).

(w) Contributed equityOrdinary shares are classified as equity. Incremental costsdirectly attributable to the issue of new shares or optionsare shown in equity as a deduction, net of tax, from theproceeds.

(x) Earnings per shareBasic earnings per share is calculated as net profit attributableto members of the Parent, adjusted to exclude any costs of

servicing equity (other than dividends) divided by theweighted average number of ordinary shares, adjusted forany bonus element.

Diluted earnings per share is calculated as net profit attributableto members of the Parent adjusted for - Costs of servicing equity (other than dividends)- The after tax effect of dividends and interest associated

with dilutive potential ordinary shares that have beenrecognised as expenses; and

- Other non-discretionary changes in revenue or expensesduring the period that would result from the dilution ofpotential ordinary shares and

- Dilutive potential ordinary shares adjusted for any bonuselement.

and then divided by the weighted average number of ordinaryshares.

(y) ComparativesWhere necessary, comparatives have been reclassified andrepositioned for consistency with current year disclosures.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the financial statements requires managementto make judgements, estimates and assumptions that affectthe reported amounts in the financial statements. Managementcontinually evaluates its judgements and estimates in relation toassets, liabilities, contingent liabilities, revenue and expenses.Management bases its judgements and estimates on historicalexperience and on other various factors it believes to be reasonable under the circumstances, the result of which formthe basis of the carrying values of assets and liabilities that arenot readily apparent from other sources. Actual results may differ from these estimates under different assumptions andconditions.

Management has identified the following critical accountingpolicies for which significant judgements, estimates andassumptions are made. Actual results may differ from theseestimates under different assumptions and conditions and maymaterially affect financial results or the financial position reportedin future periods.

Further details of the nature of these assumptions and conditionsmay be found in the relevant notes to the financial statements.

(i) Significant accounting judgementsRecovery of deferred tax assets:Deferred tax assets are recognised for deductible temporarydifferences as management considers that it is probablethat future taxable profits will be available to utilise thosetemporary differences.

Capitalisation of Development costs:Development costs are only capitalised by the Group whenit can be demonstrated that the technical feasibility of

At 30 June the parent entity had the following exposure to US$ foreign currency that is not designated in cash flow hedges

Parent2010 2009$’000 $’000

Financial assetsCash and cash equivalents 48 11

48 11Financial liabilitiesTrade and other payables - 27Net exposure 48 (16)



4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT)

Liquidity riskThe Group has minimal liquidity risk as it has cash reserves of $3.8m, with no borrowings.

These cash reserves are deemed to be adequate and theBoard believes they will underpin the ongoing growth of thebusiness.

The table below reflects all contractually fixed pay-offs for settlement and repayments resulting from recognised financialliabilities. Cash flows for financial liabilities without fixed amountof timing are based on the conditions existing at 30 June 2010.



4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT)

Credit riskCredit risk arises from the financial instruments of the Groupand Parent entity, which comprise cash and cash equivalentsand trade and other receivables. The Group’s exposure to creditrisk arises from potential defaults of the counter-party, with amaximum exposure equal to the carrying amount of the financialassets.

The Group trades only with recognised, credit worthy third parties.

It is the Group’s policy that all customers who wish to trade oncredit terms are subject to credit assessment.

In addition, receivable balances are monitored on an ongoingbasis with the result that the Group’s exposure to bad debts isnot significant.

As the Group trades predominantly within the Diagnostic Imagingmarket there is a concentration of credit risk. Given the underlyingGovernment funding support for Radiology in Hospital settings

and the Imaging Centre and Diagnostic Imaging market, andthe commercial successes achieved by the Group to date,credit risk is considered to be minimal.

Cash and cash equivalents are held with several financial institutions, with the majority held with the Westpac BankingCorporation, a AA rated bank.

Interest riskThe Group exposure to market interest rates relates primarily to the company’s cash and cash equivalents.

At balance date, the Group and the parent entity had the followingfinancial assets exposed to Australian Variable interest rate riskthat are not designated in cash flow hedges:

Cash and Cash equivalents in the Group ($’000’s) $3,785,(2009: $5,561).

The Group’s policy is to place cash balances in either 30 dayterm deposits or commercial bills that earn higher interest rates.

At 30 June, had the Australian Dollar moved, as illustrated in the table below, with all other variables held constant, post tax profitand equity (excluding retained profits) would have been affected as follows:

Judgements of reasonably possible movements: Post Tax Profit Other comprehensive incomeHigher/(Lower) Higher/(Lower)

2010 2009 2010 2009$’000 $’000 $’000 $’000

AUD/USD +10% (5) 2 - -AUD/USD – 5% 2 (1) - -

Management believe the balance date risk exposures are representative of the risk exposure inherent in the financial instruments.

At 30 June 2010, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profitand equity (excluding retained profits) would have been affected as follows:

CONSOLIDATEDJudgements of reasonably possible movements: Post Tax Profit Other comprehensive income

Higher/(Lower) Higher/(Lower)2010 2009 2010 2009$’000 $’000 $’000 $’000

+1% (100 basis points) 38 56 - -– 2% (200 basis points) (76) (112) - -

The remaining contractual maturities of the Group’s financial liabilities are:

Consolidated2010 2009$’000 $’000

<30 days 580 53831-60 days 575 82261-90 days - -Over 90 days 1,134 1,361TOTAL 2,289 2,721

5. OPERATING SEGMENTS

The Group has identified its operating segments based on the internal reports that are reviewed and used by the executivemanagement team (the chief operating decision makers) inassessing performance and in determining the allocation ofresources.

The operating segments are identified by management basedon country of origin. Discrete financial information is reported tothe executive management team on at least a monthly basis.

The reportable segments are based on aggregated operatingsegments determined by the similarity of the products producedand sold and the services provided, as these are the sources ofthe Group’s major risk and have the most effect on the rates ofreturn.

Types of products and servicesThe Group produces integrated software applications for thehealth care industry. In addition, the Group provides services in the form of installation and support.

Accounting policies and inter-segment transactionsThe accounting policies used by the Group in reporting segmentsinternally is the same as those contained in note 2 to theaccounts and in the prior periods except as detailed below:

Inter-entity salesInter-entity sales are recognised based on an internally settransfer price. The price aims to reflect what the business operationcould achieve if they sold their output and services to externalparties at arm’s length.




5. OPERATING SEGMENTS (CONT)

Operating Segments:AUSTRALIA EUROPE NORTH AMERICA TOTAL OPERATIONS

2010 2009 2010 2009 2010 2009 2010 2009$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

RevenueSales to external customers 9,923 8,804 5,479 3,022 3,795 3,086 19,197 14,912Inter-segment Sales 861 458 4,569 2,552 - - 5,430 3,010Total segment revenue 10,784 9,262 10,048 5,574 3,795 3,086 24,627 17,922Inter-segment elimination (5,430) (3,010)Total consolidation revenue 19,197 14,912

ResultsSegment Result 5,145 6,340 2,389 968 (2,099) (752) 5,435 6,556Interest Revenue 267 702Gain on Acquisition of subsidiaries - 17Non segment expensesIncome Tax Expense (1,782) (2,257)Net Profit 3,920 5,018

AssetsSegment Assets 17,160 15,488 4,579 4,233 2,397 2,054 24,136 21,775Total Assets 24,136 21,775

LiabilitiesSegment Liabilities 4,642 3,345 2,149 2,304 520 186 7,311 6,272Total Liabilities 7,311 6,272

Other segment informationRestructuring - - - 563 - - - 563Capital expenditure 4,497 1,516 1,432 2,827 - - 5,929 4,343Depreciation and amortisation 2,342 790 305 457 34 20 2,681 1,267

Cash flow informationNet cash flow from operating activities 6,898 2,173 772 4,465 (831) (1,161) 6,839 5,477

Net cash flow from investing activities (5,294) (5,051) (1,221) (2,572) (27) - (6,542) (7,623)

Net cash flow from financing activities (2,006) (4,764) - - - - (2,006) (4,764)

ConsolidatedNotes 2010 2009

$’000 $’000

6. INCOME AND EXPENSES

(a) Other IncomeNet Currency Gains 402 760

402 760

(b) ExpensesDepreciation and Amortisation

Motor Vehicles 13 24 34Office Equipment 13 157 119Furniture and Fittings and Property Improvements 13 25 21Research & Development Equipment 13 18 21Amortisation on capitalised development costs 14 1,675 705Intangible Assets 14 782 367

Total Depreciation and Amortisation Expense 2,681 1,267

Salaries and Employee Benefits ExpenseWages & Salaries 4,967 3,067Long service leave provision 16 32Share-based payment 44 13Redundancy payment - 563Defined contribution plan expense 943 504

Total Salaries and Employee Benefits Expense 5,970 4,179




Consolidated2010 2009$’000 $’000

7. INCOME TAX

The major components of income tax expense are:Income StatementCurrent income taxCurrent income tax charge 411 2,106

Deferred income taxRelating to origination and reversal of temporary differences 1,371 151Income tax expense reported in the income statement 1,782 2,257

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 5,702 7,336At the applicable statutory income tax rate in each country 1,756 2,434Expenditure not allowable for income tax purposes 65 41R& D Allowance (103) (165)Gain on acquisition of subsidiaries - (23)Other 64 (30)Income tax expense reported in the income statement 1,782 2,257

Deferred income taxDeferred income tax at 30 June relates to the following:Deferred tax liabilitiesForeign Currency Exchange Gain 346 236Intelectual Property expenses 328 498Capitalised development expenses 3,001 893Deferred income tax liabilities 3,675 1,627

Deferred tax assetsEmployee Entitlements 318 289Tax Losses in Subsidiaries 926 225Audit Fee Accrual 23 22Other - 54Deferred income tax assets 1,267 590

Unrecognised temporary differencesAt 30 June 2010, there are no unrecognised temporary differences associated with the Group’s investments in subsidiaries, as the Group has no liability for additional taxation should unremitted earnings be remitted.

Tax ConsolidationPro Medicus Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated group with effect from 1 January 2009. Pro Medicus Limited is the head entity of the tax consolidated group. An allocation of income tax liabilitiesbetween 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.

Consolidated2010 2009

$ $

8. EARNINGS PER SHARE

The following reflects the income and share data used in the basic and diluted earnings per share computations:

Net Profit attributable to ordinary equity holders 3,919,795 5,078,871

Number Number

Weighted average number of ordinary shares for basic earnings per share 100,280,000 100,280,000Effect of dilution:

Share options - -Weighted average number of ordinary shares adjusted for the effect of dilution 100,280,000 100,280,000

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements

Consolidated2010 2009$’000 $’000

9. DIVIDENDS PAID AND PROPOSED

Declared and paid during the year:Dividends on ordinary sharesFinal franked dividend for 2009: 2.0 cents (2008: 3.25 cents) 2,006 3,259Interim franked dividend for 2010: nil (2009: 1.50 cents) - 1,505

2,006 4,764

Proposed for approval by directors (not recognised as a liability as at 30 June):Dividends on ordinary shares:Final franked dividend for 2010: 2.0 cents (2009: 2.0 cents) 2,006 2,006Total dividends proposed 2,006 2,006

Parent2010 2009$’000 $’000

Franking credit balanceThe amount of franking credits available for the subsequent financial year are:– franking account balance as at the end of the financial year at 30% (2009: 30%) 4,821 4,042– franking credits that will arise from the payment of income tax payable as at the end of the financial year - -– franking debits that will arise from the payment of dividends as at the end of the financial year - -– franking credits that the entity may be prevented from distributing in the subsequent financial year - -

4,821 4,042

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 (602) (602)4,219 3,440

The tax rate at which paid dividends have been franked is 30% (2009: 30%). Dividends proposed will be fully franked.




Consolidated2010 2009$’000 $’000

10. CASH AND CASH EQUIVALENTS

Cash at bank and in hand 3,736 5,514Short-term deposits 49 47

3,785 5,561

Cash at bank earn interest at floating rates based on daily bank deposit rates.

Short term deposits are made for varying periods of between 20 days and 35 days, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.

The fair value of cash and cash equivalents is their carrying value.

Reconciliation of net profit after tax to net cash flows from operationsNet profit 3,920 5,018

Adjustments for:Depreciation of Property Plant and Equipment 224 195Amortisation of Intangible Assets 2,457 1,069Interest Received classified in Investing Activities (267) (702)Foreign currency gain (402) -Share option expense 44 13Gain on acquisition of subsidiaries - (17)

Changes in assets and liabilities(Increase)/decrease in trade and other receivables (256) 1,073(Increase)/decrease in inventory 171 274(Increase)/decrease in deferred tax asset (677) (28)(Increase)/decrease in prepayments 89 (171)(Decrease)/increase in deferred income (190) 13(Decrease)/increase in trade and other payables 469 (464)(Decrease)/increase in tax provision (812) (972)(Decrease)/increase in deferred income tax liability 2,048 219(Decrease)/increase in employee entitlements 21 (43)Net cash flow from operations 6,839 5,477

11. TRADE AND OTHER RECEIVABLES (CURRENT)

Trade receivables 5,299 4,591Provision for impairment (102) (407)

5,197 4,184Work in progress 91 924Other receivables 414 338

5,702 5,446

Fair value approximates carrying value due to the short term nature of receivables.

Consolidated2010 2009$’000 $’000

11. TRADE AND OTHER RECEIVABLES (CURRENT) (CONT)a) Allowance for impairment loss

Movements in the provision for impairment loss were as follows:At 1 July 407 -Opening balance on Acquisition of subsidiary - 272Charge to/(write back of) provision for the year (230) 174Foreign exchange translation (75) (39)At 30 June 102 407

Consolidated2010 2009$’000 $’000

12. INVENTORIES (CURRENT)

Finished goods (at net realisable value) 324 495

Inventory write downs recognised as an expense total $34,941 (2009: $103,183)

At June 30, the ageing analysis of trade receivables is as follows:

Total 0-30 days 31-60 days 61-90 days +90 days +91 daysPDNI* PDNI* PDNI* CI*

2010 Consolidated 5,299 4,316 287 146 448** 1022009 Consolidated 4,591 2,217 427 398 1,142** 407

* Past due not impaired (‘PDNI’)* Considered Impaired (“CI”)** Payment terms on $153,612 (2009: $398,000) on these debtors have been renegotiated. The company has been in direct contact with these debtors and is satisfied

that payment will be received in full.




ConsolidatedResearch &

Property Motor Office Furniture DevelopmentNotes Improvements Vehicles Equipment & Fittings Equipment Total

$’000 $’000 $’000 $’000 $’000 $’000

13. PLANT & EQUIPMENT

Year ended 30 June 2010At 1 July 2009 net of accumulated depreciation 49 67 251 76 34 477Additions - - 161 4 2 167Acquisition of subsidiary 24 - - - - - -Disposals - (11) - - - (11)Exchange differences (1) (3) (24) (13) - (41)Depreciation charge for the year (17) (24) (157) (8) (18) (224)At 30 June 2009 net of accumulated depreciation 31 29 231 59 18 (368)

At 30 June 2010Cost 308 594 1,782 341 209 3,234Accumulated depreciation and impairment (277) (565) (1,551) (282) (191) (2,866)Net carrying amount 31 29 231 59 18 368

Year ended 30 June 2009At 1 July 2008 net of accumulated depreciation 37 51 64 3 44 199Additions 15 - 21 - 11 47Acquisition of subsidiary 24 13 56 318 91 - 478Disposals - - - - - -Exchange differences (2) (6) (33) (11) - (52)Depreciation charge for the year (14) (34) (119) (7) (21) (195)At 30 June 2009 net of accumulated depreciation 49 67 251 76 34 477

At 30 June 2009Cost 319 642 1,909 362 207 3,439Accumulated depreciation and impairment (270) (575) (1,658) (286) (173) (2,962)Net carrying amount 49 67 251 76 34 477

At 1 July 2008Cost 242 480 258 219 196 1,395Accumulated depreciation and impairment (205) (429) (194) (216) (152) (1,196)Net carrying amount 37 51 64 3 44 199

ConsolidatedIntellectual Customer Development Software

Property List Costs LicencesNotes i) ii) iii) iv) Total

$’000 $’000 $’000 $’000 $’000

14. INTANGIBLE ASSETS

Year ended 30 June 2010At 1 July 2009 net of accumulated amortisation and impairment 2,756 266 5,750 187 8,959Additions - internal development - - 5,929 - 5,929Additions - - - 13 13Acquisition of subsidiary 24 - - - - -Disposals - - - - -Exchange differences - (41) - (24) (65)Amortisation charge for the year (601) (76) (1,675) (105) (2,457)At 30 June 2010 net of accumulated amortisation and impairment 2,155 149 10,004 71 12,379

At 30 June 2010Cost 3,006 245 12,945 585 16,781Accumulated amortisation and impairment (851) (96) (2,941) (514) (4,402)Net carrying amount 2,155 149 10,004 71 12,379

Year ended 30 June 2009At 1 July 2008 net of accumulated amortisation and impairment - - 2,294 15 2,309Additions - internal development - - 4,161 - 4,161Additions - - - 135 135Acquisition of subsidiary 24 3,006 343 - 128 3,477Disposals - - - - -Exchange differences - (37) - (14) (51)Amortisation charge for the year (250) (40) (705) (77) (1,072)At 30 June 2009 net of accumulated amortisation and impairment 2,756 266 5,750 187 8,959

At 30 June 2009Cost 3,006 343 7,333 278 10,960Accumulated amortisation and impairment (250) (77) (1,583) (91) (2,001)Net carrying amount 2,756 266 5,750 187 8,959

At 1 July 2008Cost - - 3,172 75 3,247Accumulated amortisation and impairment - - (878) (60) (938)Net carrying amount - - 2,294 15 2,309

i) Intellectual Property has been acquired in the prior year through the Visage Imaging business combination and is carried at cost less accumulated amortisation.Three separately identifiable intangible assets, in the form of software intellectual property, have been identified in the business acquisition of Visage Imaging; Visage CS, Visage PACS and Amira. The carrying amounts are Visage CS ($1,418,851), Visage PACS ($274,903) and Amira ($1,062,130). These intangible assetshave been assessed as having a finite life and is amortised using the straight line method over a period of 5 years, commencing February 2009.

ii) A Customer List has been acquired in the prior year through the Visage Imaging business combination and is carried at cost less accumulated amortisation. This intangible asset has been assessed as having a finite life and is amortised using the straight line method over a period of 4 years, commencing February 2009.

iii) Development costs have been capitalised at cost. This intangible asset has been assessed as having a finite life and is amortised using the straight line methodover a period of 5 years.

iv) Software Licences have been assessed as having a finite life and are amortised using the straight line method over a period of 4 years.




ConsolidatedNotes 2010 2009

$’000 $’000

15. TRADE AND OTHER PAYABLES (CURRENT)

Trade payables 384 244Acquisition related payables - 711Other payables and accruals 1,528 1,199

1,912 2,154Deferred Income 377 567

2,289 2,721

(i) Trade payables are non-interest bearing and are normally settled on 30-day terms.(ii) Other payables, other than inter-company payables are non-interest bearing and have an average term of 30 days.

Fair value approximates carrying value due to the short term nature of trade and other payables.

Consolidated2010 2009$’000 $’000

16. PROVISIONS

CurrentLong service leave 389 353Annual leave 914 908

1,303 1,261

Non CurrentLong service leave 44 65

44 65

Movements in Provisions(i) Long Service Leave

Refer to note 2 (v) for the relevant accounting policy and a discussion of the significant estimations and assumptions applied in the measurement of this provision.

Numberof Shares $’000

17. CONTRIBUTED EQUITY AND RESERVES (CONT)

At 1 July 2009 100,280,000 330Issued for cash on exercise of options - -At 30 June 2010 100,280,000 330

Number 2009of Shares $’000

At 1 July 2008 100,280,000 330Issued for cash on exercise of options - -At 30 June 2009 100,280,000 330

Consolidated2010 2009$’000 $’000

Share Reserve (i)Balance at 1 July 35 22Share options expensed 44 13Balance at 30 June 79 35

Foreign Currency Translation Reserve (ii)Balance at 1 July (569) -Foreign Currency Movement (575) (569)Balance at 30 June (1,144) (569)

Retained EarningsBalance at 1 July 15,646 15,392Net profit for the year 3,920 5,018Dividends (2,006) (4,764)Balance at 30 June 17,560 15,646

(i) Share ReserveThe share reserve is used to record the value of share based payments provided to employees, including KMP, as part of their remuneration. Refer to note 19 for further details of these plans.

(ii) Foreign Currency translation reserveThe foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Capital ManagementWhen 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 thatensures the lowest cost of capital available to the entity.

Management review the capital structure to take advantage of favourable costs of capital or high returns on assets. As the marketis constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders,or issue new shares.

During the year, the company paid dividends of $2,005,600 (2009: $4,764,000).

Consolidated2010 2009$’000 $’000

17. CONTRIBUTED EQUITY AND RESERVES

(i) Ordinary shares 330 330Issued and fully paid 330 330

Fully paid ordinary shares carry one vote per share and carry the right to dividends

(ii) Movements in shares on issue



18. SHARE BASED PAYMENT PLAN (CONT)

Weighted average remaining contractual lifeThe weighted average remaining contractual life for share options outstanding at 30 June 2010 is 3.2 years (2009: 1.7 Years)

Range of exercise priceThe range of exercise prices for options outstanding at the end of the year was $1.00 - $1.35 (2009: $1.25 - $1.35).

Weighted average fair valueThe weighted average fair value of options granted during the year was $1.00 (2009: $1.30).

Option pricing modelThe fair value of the equity-settled share options granted is estimated as at the date of the grant using a Black Scholes Model taking into account the terms and conditions upon which the options were granted.

The following table lists the inputs to the models used for the year ended 30 June 2010

2010 2009

Dividend yield 2.86% 5.13%Expected volatility* 49.0% 40.0%Risk-free interest rate 6.0% 7.0%Expected life of options 10 years 2 yearsOption exercise price $1.00 $1.25 & $1.35Weighted average share price at measurement date $0.46 $0.69

*The expected volatility rate was calculated measuring the standard deviation between the historical share price movements for the past 12 months.

19. COMMITMENTS a) Operating lease commitments – Group as lessee

The Parent has entered into a commercial property lease for office premises. This lease has a life of 5 years with an option for a further 5 year period. There is norestriction placed upon the lessee by entering into this lease. The US operations have entered into a commercial property lease for office premises from 1 May 2010for a 5 year period. The German operations have entered into a commercial property lease for office premises and can give notice to vacate 3 months prior to 30April each year, whereby they sign into another 12 months.The German operations also have several motor vehicles leases which expire at various stages between June 2011 and March 2013.


Future minimum rentals payable under non-cancellable operating lease as at 30 June are as follows:– Within one year 424 441– After one year and not more than five years 940 753– After more than five years - -

1,364 1,194



18. SHARE BASED PAYMENT PLAN

Employee Share Option SchemeAn employee share incentive scheme was established on 25thAugust 2000 whereby directors and staff of the Company wereissued with options over the ordinary shares of Pro MedicusLimited. The options, issued for nil consideration, have an exerciseprice of $1.15 and expire in August 2010. Options vest at 20%per annum commencing on the first anniversary of issue. The options cannot be transferred and will not be quoted onthe ASX. There are currently 14 staff members, 3 executivedirectors and 3 non-executive directors eligible for this scheme.

A further 200,000 shares were granted as options to Peter Kempenon becoming a Director of the company in 2008 under a separateagreement. The options had a grant date of 12 March 2008and an exercise price of $1.25. The fair value of the options atgrant date was $40,852 ($0.13 - $0.29 per option). The optionshave a first exercise date of 12 March 2009 and can be exercisedat anytime through to expiry date of 12 March 2018. The optionsvest over a 5 year period on completion of service. At balancedate 90,000 (45%) options had vested. No options were exercised during the year.

A further 200,000 shares were granted as options to Mike Teffton commencement with Pro Medicus under a separate agreement.The shares have a fair value of $3,623 ($0.02 per option) andhave a grant date of 29 September 2008. The options vest on29 September 2010 and expire on termination of employmentand can be exercised at anytime subsequent to vesting andprior to expiry. The shares are split into 2 categories, being100,000 shares for service and 100,000 shares for performancebased on set KPI’s (Profitability of business unit & Sales Targets).The 100,000 shares for service have an exercise price of $1.25and they have a 2 year vesting period, while the 100,000 sharesfor performance have an exercise price of $1.35 and also havea 2 year vesting period.

A further 900,000 shares were granted as options to keyVisage Imaging employees during the year under a separateagreement. The options had a grant date of 1 April 2010 andan exercise price of $1.00. The fair value of the options at grantdate was $67,278 ($0.07 per option). The options have a firstexercise date of 1 April 2011 and can be exercised at anytimethrough to expiry date of 1 April 2020. The options vest over a 5 year period on completion of service.

2010 2009Weighted Weighted

average averageNumber exercise Number exercise

of Options price of Options price

Information with respect to the number of options granted under the employee share option scheme is as follows:

Outstanding at the beginning of the year 2,500,000 2,300,000- granted 900,000 $1.00 200,000 $1.30- forfeited - $1.15 - $1.15- exercised - $1.15 - $1.15- expired - - - -Outstanding at the end of the year 3,400,000 $1.13 2,500,000 $1.16Exercisable at end of year 3,400,000 $1.13 2,500,000 $1.16

All options above, except 200,000 granted during 2007-08 to Peter Kempen, 200,000 options granted to Mike Tefft during 2008-09and 900,000 options granted to Visage Imaging employees during the year, have not been recognised in accordance with AASB 2as the options were granted before 7 November 2002. These options have not subsequently been modified and therefore do notneed to be accounted for in accordance with AASB 2.

The outstanding balance as at 30 June 2010 is represented by:

• 2,100,000 options over ordinary shares with an exercise price of $1.15 each (options expire 25 August 2010 – Please refer to Note 20)

• 200,000 options over ordinary shares with an exercise price of $1.25 each, exercisable until 12 March 2018• 100,000 options over ordinary shares with an exercise price of $1.25 each, exercisable until 29 September 2010• 100,000 options over ordinary shares with an exercise price of $1.35 each, exercisable until 29 September 2010• 900,000 options over ordinary share with an exercise price of $1.00 each, exercisable until 1 April 2020




20. EVENTS AFTER THE BALANCE SHEET DATE

On 25 August 2010, the directors of Pro Medicus Limiteddeclared a final dividend on ordinary shares in respect of the2010 financial year. This dividend comprises a normal dividendof 2.0 cents per share. The total amount of the dividend is$2,005,600 which represents a fully franked dividend of a totalof 2.0 cents per share. The dividend has not been provided forin the 30 June 2010 financial statements.

On 25 August 2010, options granted under the EmployeeShare Incentive Scheme expire. 2,100,000 options grantedunder this scheme will be forfeited. The options have been fullyvested in prior periods and therefore no expense has beenrecorded in the current Statement of comprehensive income.

The Board will consider new options granted under theEmployee Share Incentive Scheme during the Directors meetingon 25 August 2010. The terms and conditions of the newgranted options are as follows:

550,000 shares options will be granted to Key executives.The exercise price of $1.00 will be adopted and the options havea first exercise date of 25 August 2011 and can be exercised atanytime through to expiry date of 25 August 2020. The optionsvest over a 5 year period on completion of service.


$ $21. AUDITORS’ REMUNERATION

Amounts received or due and receivable by Ernst & Young (Australia) for:- an audit or review of the financial report of the Company and any other

entity in the Consolidated Group 157,935 120,000- other services in relation to the Company or Group 45,000 7,200

Amounts received or due and receivable by related practices of Ernst & Young (Australia): 202,935 127,210- audit of the financial report of Visage Imaging GmbH 42,000 42,000

244,935 169,210


22. KEY MANAGEMENT PERSONNEL(a) Compensation for key management personnel

Short-term employee benefits 1,763,009 1,540,937Post-employment benefits 262,454 360,177Other long-term benefits 21,276 21,175Share-based payment 20,503 13,418Total compensation 2,067,242 1,935,807

Balance at Granted as Options Net Change Balance at Vested at 30 June 2010beginning of year Remuneration Exercised Other end of year

30 June 2010 1 July 2009 # 30 June 2010 Not exercisable Exercisable Total

DirectorsM K Ward 400,000 - - - 400,000 - 400,000 400,000P D Jonson 200,000 - - - 200,000 - 200,000 200,000S A Hupert 425,000 - - - 425,000 - 425,000 425,000A B Hall 425,000 - - - 425,000 - 425,000 425,000D Chambers - - - - - - - -P T Kempen 200,000 - - - 200,000 110,000 90,000 200,000

ExecutivesD Tauber 350,000 - - - 350,000 - 350,000 350,000M Westerhoff - 350,000 - - 350,000 350,000 - 350,000J Danahy - - - - - - - -M J Tefft 200,000 - - - 200,000 200,000 - 200,000Total 2,200,000 350,000 - - 2,550,000 660,000 1,890,000 2,550,000# Includes forfeitures

Balance at Granted as Options Net Change Balance at Vested at 30 June 2009beginning of year Remuneration Exercised Other end of year

30 June 2009 1 July 2008 # 30 June 2009 Not exercisable Exercisable Total

DirectorsM K Ward 400,000 - - - 400,000 - 400,000 400,000P D Jonson 200,000 - - - 200,000 - 200,000 200,000S A Hupert 425,000 - - - 425,000 - 425,000 425,000A B Hall 425,000 - - - 425,000 - 425,000 425,000D Chambers - - - - - - - -P T Kempen 200,000 - - - 200,000 150,000 50,000 200,000

ExecutivesD Tauber 350,000 - - - 350,000 - 350,000 350,000M Westerhoff - - - - - - - -M J Tefft - 200,000 - - 200,000 200,000 - 200,000Total 2,000,000 200,000 - - 2,200,000 350,000 1,850,000 2,200,000# Includes forfeitures

22. KEY MANAGEMENT PERSONNEL (CONT)(b) Option holdings of Key Management Personnel




Shares held in Balance 1 July 09 Granted as On Exercise Net Change BalancePro Medicus Limited Remuneration of Options Other 30 June 2010(number)

30 June 2010 Ordinary Ordinary Ordinary Ordinary Ordinary

Directors M K Ward 50,000 - - - 50,000P D Jonson 50,000 - - - 50,000S A Hupert 30,072,660 - - - 30,072,660A B Hall 30,068,500 - - - 30,068,500D Chambers 50,000 - - 15,000* 65,000P T Kempen 70,000 - - 59,647* 129,647

ExecutivesD Tauber 150,000 - - - 150,000M Westerhoff - - - - -M J Tefft - - - - -Total 60,511,160 - - 74,647 60,585,807

* Peter Kempen purchased 59,647 shares and David Chambers purchased 15,000 shares throughout the year on the prevailing market share price.

Shares held in Balance 1 July 08 Granted as On Exercise Net Change BalancePro Medicus Limited Remuneration of Options Other 30 June 2009(number)

30 June 2009 Ordinary Ordinary Ordinary Ordinary Ordinary

Directors M K Ward 50,000 - - - 50,000P D Jonson 50,000 - - - 50,000S A Hupert 30,072,660 - - - 30,072,660A B Hall 30,068,500 - - - 30,068,500D Chambers 50,000 - - - 50,000P T Kempen 30,000 - - 40,000 70,000

ExecutivesD Tauber 150,000 - - - 150,000M Westerhoff - - - - -C Murphy - - - - -M J Tefft - - - - -Total 60,471,160 - - 40,000 60,511,160

(d) Loans to Key Management PersonnelNo loans are made to Key Management Personnel or staff.

(e) Other transactions and balances with Key Management PersonnelPurchasesDuring the year lease payments of $169,476 (2009: $169,476) in respect of the Group’s operating premises at 450 SwanStreet Richmond were paid to Champagne Properties Pty. Ltd., an entity controlled by S. Hupert and A. Hall. Commercialarrangements on an ‘arms length basis’ have been determined by an independent assessment of rental and lease terms.

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 Investment $000Name Country of incorporation 2010 2009 2010 2009

Promed (USA) Pty Ltd Australia 100 100 - -PME IP Australia Pty Ltd Australia 100 100 - -Visage Imaging (Aust) Pty Ltd Australia 100 100 - -Pro Medicus (USA) LLC United States 100 100 - -Visage Imaging Inc United States 100 100 2,389 2,389Visage Imaging GmbH Germany 100 100 3,638 3,638

6,027 6,027

(b) Ultimate parentPro Medicus Limited is the ultimate Australian parent entity and the ultimate parent of the Group.

(c) Key management personnelDetails relating to KMPs, including remuneration paid, are included in note 22.

(d) Transactions with related partiesThe following table provides the total amount of transactions that were entered into with related parties for the relevant financialyear (for information regarding outstanding balances on related party trade receivables and payables at year-end.

Sales to related Purchases from Other transactionsparties related parties with related parties

$000 $000 $000

Related partyConsolidatedChampagne Properties Pty Ltd – Rental lease 2010 - 169 -Champagne Properties Pty Ltd – Rental lease 2009 - 169 -

Terms and conditions of transactions with related partiesSales to and purchases from related parties are made in arm’s length transactions both at normal market prices and on normalcommercial terms.

Outstanding balances at year end are unsecured, interest free and payable on demand.

Entities within the group that own the Intellectual Property earn a 30% royalty from the sales made by other entities within the group.

Development costs undertaken by the German operations are reimbursed by the parent on commercial terms.

22. KEY MANAGEMENT PERSONNEL (CONT)(c) Shareholdings of Key Management Personnel



25. CONTINGENCIES

Tax related contingenciesAmended assessments from the Australian Taxation Office (ATO)As a result of the ATO’s program of routine and regular tax audit, the Group anticipates that ATO audits may occur in the future.The Group is similarly subject to routine tax audits in certain overseas jurisdictions. The ultimate outcome of any future tax auditscannot be determined with an acceptable degree of reliability at this time. Nevertheless, the Group believes that it is making adequate provision for its taxation liabilities (including amounts shown as deferred and current tax liabilities) and is taking reasonablesteps to address potentially contentious issues with the ATO. However, there may be an impact to the Group of any of the revenueauthority investigations results in an adjustment that increases the Group’s taxation liabilities.

Ongoing transactions – transfer pricingThe Group has offshore operations in the United States and Germany (note 23). As disclosed in note 23, there are extra Grouptransactions, which include the Company and its US and German based subsidiaries Visage Imaging Inc and Visage ImagingGmbH and Pro Medicus Limited. These transactions are on an arm’s length basis and are conducted at normal market prices andon normal commercial terms.

Whilst there are no investigations currently in progress, such transactions are not subject to any statutory limit in Australia.



24. BUSINESS COMBINATION

Acquisition of Visage Imaging Inc and Visage Imaging GmbH (Visage Imaging Group)On 28 January 2009, Pro Medicus Limited acquired 100% of the voting shares of Visage Imaging Inc and Visage Imaging GmbH,both unlisted private company’s based in United States and Germany respectively and specialising in information technology withinthe health care industry.

The total cost of the combination was $6,027,087 and comprised the payment of cash and costs directly attributable to the combination.

The fair value of the identifiable assets and liabilities of the Visage Imaging Group as at the date of acquisition were:

ConsolidatedRecognised on Carrying

acquisition value$000 $000

Plant and equipment 478 478Customer List 343 343Software Licences 128 128Cash and cash equivalents 1,182 1,182Trade receivables* 2,674 2,674Intellectual Property – Software 3,006 -Inventories 769 769

8,580 5,574

Trade payables (17) (17)Employee Entitlements (471) (471)Deferred tax liabilities* (498) (437)Deferred Revenue (482) (482)Other payables (1,068) (1,068)

(2,536) (2,475)

Fair value of identifiable net assets 6,044Gain on acquisition of subsidiaries* (17)

6,027

Cost of the combination:Cash paid 4,004Direct costs relating to the acquisition 1,160Acquisition costs remaining to be paid at 30 June 863Total cost of the combination 6,027

The cash outflow on acquisition is as follows:Net cash acquired with the subsidiary 1,182Cash paid (5,164)Net consolidated cash outflow (3,982)

* The only adjustments made to the 30 June 2009 provisional accounting were to increase deferred tax liabilities by $498,000 to $498,000 and decrease trade receivables by ($167,000) to $2,674,000. The result of these adjustments reduces the gain on acquisition of subsidiaries by $604,000 to $17,000. These adjustments have been reflected in the 30 June 2009 comparative numbers.

26. PARENT ENTITY INFORMATION

Information relating to Pro Medicus Limited

2010 2009$000 $000

Current assets 16,753 9,450Total assets 25,338 21,436Current Liabilities 6,028 4,303Total Liabilities 7,496 5,497Issued capital 330 330Retained Earnings 17,433 15,574Share Reserve 79 35Total shareholders equity 17,842 15,939

Profit of the parent entity 3,865 4,946Total comprehensive income of parent entity 3,865 4,946

The parent entity has not entered into any guarantees in relation to the debts of its subsidiaries. There are no contingent liabilitiesheld against the parent entity. The parent entity does not have any contractual commitments for the acquisition of property, plantand equipment.



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 2010 and of the performance for the year ended on that date; and

(ii) complying with Accounting Standards and Corporations Regulations 2001; and

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

(c) the financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

(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 2010.

On behalf of the Board

M K WardCHAIRMAN

Melbourne, 26 August 2010

independent audit report



independent audit reportcont.

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 securitiesThe number of shareholders, by size of holding, in each class of share are:

Ordinary sharesNumber of holders Number of shares

1 – 1,000 172 117,4071,001 – 5,000 463 1,422,6845,001 – 10,000 310 2,508,272

10,001 – 100,000 376 10,116,886100,001 and Over 32 86,114,751

1,353 100,280,000

The number of shareholders holding less than a marketable parcel are: 176 121,552

(b) Twenty largest shareholdersThe names of the twenty largest holders of quoted shares are:

Listed ordinary sharesNumber of shares Percentage of ordinary

shares1 Dr S Hupert (multiple shareholdings) 30,072,660 29.99%2 Mr A Hall (multiple shareholdings) 30,068,500 29.98%3 RBC Dexia Investor Services Australia Nominees P/L <PIIC a/c> 12,060,380 12.03%4 Citicorp Nominees Pty Ltd 6,226,201 6.21%5 Cogent Nominees Pty Ltd 1,924,808 1.92%6 RBC Dexia Investor Services Australia Nominees P/L <BKCUST a/c> 1,075,000 1.07%7 Dr Russell Kay Hancock 500,000 0.50%8 Mr Timothy John Hannigan & Mrs Kerrie Helen Hannigan<Clubnet Super Fund A/C 350,000 0.35%9 Brazil Farming Pty Ltd 303,793 0.30%10 Mr Peter Propert Birrell & Mrs Dinny Mary Birrell 227,000 0.23%11 Narlack Pty Ltd 226,699 0.23%12 Mrs Nelly Michelle Cunningham 224,742 0.22%13 Mr E P Clucas & Mr L J Weston <Kuranga Nursery Super A/C> 208,500 0.21%14 Randell Management Services Pty Ltd 200,000 0.20%15 Mr John Charles Plummer 200,000 0.20%16 Mr Simon Gautier Hannes <Sgh Super Fund A/C> 186,250 0.19%17 Mr Charles Chau-Yuan Lin & Mrs Lee-Yuen Lin 173,500 0.17%18 Mr S G Wilson & Ms D A Prandi <Prandi-Wilson Super a/c> 172,937 0.17%19 Mr Alan Graham Rochford 165,900 0.17%20 RBC Dexia Investor Services Australia Nominees P/L <MLCI> 159,717 0.16%

84,726,587 84.49%

(c) Substantial shareholdersThe names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Law are:

Number of sharesS. Hupert 30,072,660A Hall 30,068,500Perpetual Limited RBC Dexia Investor Services Australia Nominees P/L 13,299,937Commonwealth Bank of Australia 6,226,201

(d) Voting rightsAll ordinary shares carry one vote per share without restriction.



The Board of Directors of Pro Medicus Limited is responsible for the corporate governance of the entity having regard to the ASXCorporate Governance Council (CGC) published guidelines as well as its corporate governance principles and recommendations.The Board guides and monitors the business and affairs of Pro Medicus Limited on behalf of the shareholders by whom they areelected and to whom they are accountable.

The table below summaries the Group’s compliance with the CGC’s recommendations.

corporategovernancestatement

RECOMMENDATIONCOMPLY

yes/noREFERENCE/EXPLANATION

ASX LISTINGRULE/CGC

Recommendations

Yes Page 68 ASX CGC 1.1


Yes ASX CGC 1.3

Yes Page 67 ASX CGC 2.1Yes Page 67 ASX CGC 2.2Yes Page 67 ASX CGC 2.3

No Page 68 ASX CGC 2.4

Yes ASX CGC 2.6



Yes ASX CGC 3.3

Principle 1Lay solid foundations for management and oversight

1.1 Companies should establish the functions reserved to the boardand those delegated to senior executives and disclose those functions

1.2 Companies should disclose the process for evaluating the performance of senior executives.

1.3 Companies should provide the information indicated in the guideto reporting on Principle 1.

Principle 2Structure the board to add value

2.1 A majority of the board should be independent directors.2.2 The chair should be an independent director.2.3 The roles of chair and chief executive officer (CEO) should not be

exercised by the same individual.2.4 The board should establish a nomination committee.2.5 Companies should disclose the process for evaluating the

performance of the board, its committees and individual directors.2.6 Companies should provide the information indicated in the guide

to reporting on Principle 2.

Principle 3Promote ethical and responsible decision-making

3.1 Companies should establish a code of conduct and disclose thecode or a summary of the code as to:• The practices necessary to maintain confidence in the

company's integrity.• The practices necessary to take into account their legal

obligations and the reasonable expectations of their stakeholders.

• The responsibility and accountability of individuals for reportingand investigating reports of unethical practices.

3.2 Companies should establish a policy concerning trading in companysecurities by directors, senior executives and employees, and disclose the policy or a summary of that policy.





corporate governancestatement cont.



ASX LISTINGRULE/CGC

Recommendations

Yes Page 68 ASX CGC 4.1Yes Page 68 ASX CGC 4.2

ASX LR 12.7

Yes Page 68 ASX CGC 4.3Yes ASX CGC 4.4



Yes ASX CGC 6.2




Yes ASX CGC 7.4

Principle 4Safeguard integrity in financial reporting

4.1 The board should establish an audit committee.4.2 The audit committee should be structured so that it:

• Consists only of non-executive directors.• Consists of a majority of independent directors.• Is chaired by an independent chair, who is not chair of the board.• Has at least three members.

4.3 The audit committee should have a formal charter.4.4 Companies should provide the information indicated in the guide

to reporting on Principle 4.

Principle 5Make timely and balanced disclosure

5.1 Companies should establish written policies designed to ensurecompliance with ASX Listing Rule disclosure requirements and toensure accountability at a senior executive level for that complianceand disclose those policies or a summary of those policies.


Principle 6Respect the rights of shareholders

6.1 Companies should design a communications policy for promotingeffective communication with shareholders and encouraging theirparticipation at general meetings and disclose their policy or asummary of that policy.


Principle 7Recognise and manage risk

7.1 Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.

7.2 The board should require management to design and implementthe risk management and internal control system to manage thecompany's material business risks and report to it on whetherthose risks are being managed effectively. The board should disclosethat management has reported to it as to the effectiveness of thecompany's management of its material business risks.

7.3 The board should disclose whether it has received assurance fromthe CEO [or equivalent] and the Chief Financial Officer (CFO) [orequivalent] that the declaration provided in accordance with sec-tion 295A of the Corporations Act is founded on a sound systemof risk management and internal control and that the system isoperating effectively in all material respects in relation to financialreporting risks.


Yes ASX CGC 5.2



ASX LISTINGRULE/CGC

Recommendations

Yes Page 68 ASX CGC 8.1Yes Refer to

RemunerationReport

ASX CGC 8.2

Yes ASX CGC 8.3

Principle 8Remunerate fairly and responsibly

8.1 The board should establish a remuneration committee.8.2 Companies should clearly distinguish the structure of non-execu-

tive directors' remuneration from that of executive directors andsenior executives.


Pro Medicus Limited’s corporate governance practices were in place throughout the year ended 30 June 2010.

STRUCTURE OF THE BOARDThe skills, experience and expertise relevant to the position ofdirector held by each director in office at the date of the annualreport is included in the Directors’ Report.

The composition of the Board was determined in accordancewith the following principles and guidelines:

• The Board should comprise at least five directors and shouldmaintain a majority of non-executive directors, or at least a50/50 ratio of non-executives and executive directors;

• The Chairperson must be a non-executive director and notoccupy the role of CEO;

• The Board should comprise directors with an appropriaterange of qualifications and expertise; and

• The Board shall meet monthly and follow meeting guidelinesset down to ensure all directors are made aware of, andhave available all necessary information, to participate in aninformed discussion of all agenda items.

Directors of Pro Medicus Limited are considered to be independent when they are independent of management andfree from any business or other relationship that could materiallyinterfere with – or could reasonably be perceived to materiallyinterfere with the exercise of their unfettered and independentjudgement.

In the context of director independence, “materiality” is consideredfrom both the company and individual director perspective. The determination of materiality requires consideration of bothquantitative and qualitative elements. An item is presumed tobe quantitatively immaterial if it is equal or less than 5% of theappropriate base amount. It is presumed to be material (unlessthere is qualitative evidence to the contrary) if it is equal to orgreater than 10% of the appropriate base amount.

Qualitative factors considered include whether a relationship isstrategically important, the competitive landscape, the nature ofthe relationship and the contractual or other arrangements governing it and other factors which point to the actual ability of

the director in question to shape the direction of the company’sloyalty.

In accordance with the definition of independence above, and the materiality thresholds set, the following directors of Pro Medicus Limited are considered to be independent:

Name PositionM K Ward Chairman, Non-Executive DirectorP D Jonson Deputy Chairman, Non-Executive DirectorP T Kempen Non-Executive Director, Chairman Audit

Committee

The Board wishes to advise that it continues to maintainresponsibility for the actions of the chief executive officer and any tasks delegated to the management by the Board.

Directors’ Appointment Letters have not been revised in theprescribed format as the board considered this unnecessarygiven the small number of fairly recently appointed currentdirectors who understand their roles and responsibilities. The board has undertaken that the recommended formatshould be used for any future director appointments.

Mr. Mel Ward and Mr. Peter Jonson have been directors of ProMedicus Limited since its ASX listing in 2000 however Mr. SamHupert and Mr. Anthony Hall were directors in Pro Medicus PtyLtd since incorporation in 1983. Mr D Chambers was appointedin December 2007 and Mr. Peter Kempen was appointed inMarch 2008.

PERFORMANCEThe performance of the board and key executives is reviewedregularly against both measurable and qualitative indicators.During the reporting period the board conducted performanceevaluations that involved an assessment of each board member’sand key executive’s performance against specific and measurablequalitative and quantitative performance criteria.

The performance criteria against which directors and executivesare assessed are aligned with the financial and non-financialobjectives of Pro Medicus Limited.

In order to ensure that the Board continues to discharge itsresponsibilities in an appropriate manner, the Chairman annuallyreviews the performance of all Directors who will be asked toretire from the board if not performing in a satisfactory manner.



• overseeing implementation of operating plans and budgetsby management and monitoring of progress against budget- this includes the establishment and monitoring of key performance indicators (both financial and non-financial) for all significant business processes; and

• utilising appropriately skilled professionals to provide adviceon relevant discussion topics and procedures to allowDirectors, in the furtherance of their duties, to seek independent professional advice at the Company’s expense.

MONITORING OF THE BOARD’S PERFORMANCE AND COMMUNICATION TO SHAREHOLDERS - CONTINUOUS DISCLOSURE POLICYThe board has developed a written policy to ensure compliancewith the ASX Listing Rules on continuous disclosure and hasadopted measures to ensure the market and shareholders arefully informed. The measures in place require all potential marketsensitive matters are discussed with the Chief Executive Officerwho in conjunction with the Chairman and other relevant directorsdecide whether to make an appropriate announcement to themarket.

Only nominated authorised persons have the authority to releasethese communications to the ASX. This policy is displayed onthe company website.

SHAREHOLDER COMMUNICATIONThe Board of Directors aims to ensure that the shareholders,on behalf of whom they act, are informed of all information necessary to assess the performance of the Directors.

Information is communicated to the shareholders through:

• the annual report which is distributed to all shareholdersregistered to receive copies;

• through the release of information to the market via the ASX

• the annual general meeting and other meetings so called to obtain approval for Board action as appropriate;

• an up to date website - www.promedicus.com.au;

• email contact with registered users; and

• special written communications to shareholders distributedwith the dividend notifications.

The company is adopting procedures to ensure that any materialgiven to a particular group is available to all interested partiesvia the company website. This includes any material presentedat the Annual General Meeting.

A representative of the external auditors Ernst & Young will continue to attend the Annual General Meeting.

RISK MANAGEMENT POLICIES

The Company takes a proactive approach to risk management.The Board is responsible for ensuring that risks are identified ona timely basis and that the Group’s objectives and activities arealigned with the risks identified by the Board.

The Company believes that it is crucial for all Board membersto participate in this process; as such the Board has not established separate committees for areas such as risk management, environmental issues, occupational health and safety or treasury.

The Company is committed to the identification; monitoring andmanagement of risks associated with its business activities andhas included in its management and reporting systems a numberof risk management controls, such as:

• Annual budgeting and monthly reporting systems for alloperations which enable the monitoring of progress againstperformance targets and to evaluate trends

• Guidelines and limits on capital expenditure and purchasingauthority matrix

• Executive approvals for staffing requirements

• Detailed monthly management reports including cash flowreports, and to identify any foreign currency risks associatedwith contracts written in and cash being held in foreign currencies

In accordance with ASX Principle 7, the Board has receivedfrom the Management an assurance that internal risk managementand internal control systems are effective. The Board has alsoreceived a declaration from the Managing Director and FinanceManger in accordance with section 295A of the CorporationsAct founded on the sound system of risk management an internal compliance and control which is operating effectively inrespect to financial reporting risks.

The Company up until late in the financial period was notexposed to any interest rate or significant currency sensitiveloans or debts. Given the increase in overseas operations thereis now an increased currency risk as a consequence of contracts written in and cash being held in foreign currencies.This change in risk profile has been noted by the board andaction is being taken to manage this risk. The Board overseesappropriate backup procedures for important company data.Detailed annual review of insurance policies in force to ensurecover is at appropriate levels to safeguard key executives,Company assets and operations. The Board regularly considerssuccession planning to ensure staff of appropriate skill andexperience are available to the Company.


corporate governancestatement cont.

TRADING POLICYUnder the group’s security trading policy, an executive, director,or any employee of the group, must not trade in any securitiesof the parent company at any time when they are in possessionof unpublished, price-sensitive information in relation to thosesecurities.

Before commencing to trade, an executive must first obtain the approval of the Company Secretary to do so and a directormust obtain approval of the Chairman.

Only in exceptional circumstances will approval be forthcominginside of the period which is 30 days after:

• One day following the announcement of the half-yearly and full year results as the case may be.

• One day following the holding of the annual general meeting.

• One day after any other form of earnings forecast update is given to the market.

As required by the ASX listing rules, the Group notifies the ASXof any transaction conducted by directors in the securities ofthe parent company.

CODE OF CONDUCT The board has developed a “Code of Conduct”” consistentwith the recommendations and details are disclosed on thecompany website.

COMMITTEESDue to the small number of Directors, the Board decided it wasmore appropriate to handle nomination and remunerationissues at full Board level. No Committees for these functionshave been established at this time.

In addition the full Board handles any matters as and whenthey arise concerning environmental issues, occupational healthand safety, finance and treasury.

In order to maintain good corporate governance the Non-Executive Directors assume responsibility for determining and reviewing compensation arrangements for the ExecutiveDirectors of the Parent. The Executive Directors in turn areresponsible for determining and reviewing the compensationarrangements for the Non-Executive Directors. The CEO, inconjunction with the full Board reviews the terms of employmentfor all executives.

The Board has delegated the responsibility of executive remuneration to the management who will assess the appropriateness of the nature and amount of remuneration ofsuch executives on a periodic basis by reference to relevantemployment market conditions with the overall objective ofensuring maximum stakeholder benefit from the retention of a high quality board and executive team.

The appointment of appropriately skilled Non-Executive Directors,together with a broadly unchanged business base has meantno new director nominations have been required to date. Strategic planning has been an important objective of the Board.

Meetings are scheduled so that all Board members can attendand are conducted in an informal fashion to allow non-execu-tive directors to gain enhanced industry, customer, product andresearch knowledge.

AUDIT COMMITTEEThe board has established an audit committee, which operatesunder a charter approved by the Board.

It is the Board’s responsibility to ensure that an effective internalcontrol framework exists within the entity. This includes internalcontrols to deal with both the effectiveness and efficiency ofsignificant business processes. This also includes the safe-guarding of assets, the maintenance of proper accountingrecords, and reliability of financial information as well as non-financial considerations such as the benchmarking of operational key performance indicators.

The members of the audit committee are:

P T Kempen CHAIRMANM K WardP D JonsonS A HupertA B HallD Chambers

The audit committee is also responsible for nomination of theexternal auditor and reviewing the adequacy of the scope andquality of the annual statutory audit and half yearly audit review.

BOARD FUNCTIONSAs the Board acts on behalf of and is accountable to the share-holders, it seeks to identify the expectations of the shareholders,as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifyingareas of significant business risk and ensuring arrangementsare in place to adequately manage those risks. The Boardseeks to discharge these responsibilities in a number of ways.

The Board has delegated responsibility for the operation andadministration of the group to the Chief Executive Officer andthe executive team (as detailed in Note 22). The Board ensuresthat this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures toassess the performance of the Chief Executive and the executiveteam.

The Board is responsible for ensuring that management’sobjectives and activities are aligned with the expectations andrisks identified by the Board. The Board has a number ofmechanisms in place to ensure this is achieved. In addition tothe establishment of the committee referred to above, thesemechanisms include the following:

• approval of strategic plans, which encompass the entity’svision, mission and strategy statements, designed to meetstakeholders’ needs and manage business risk;

• involvement in developing the strategic plan (a dynamicdocument) and approving initiatives and strategies designedto ensure the continued growth and success of the entity;


Did you know that you can access – and even update– information about your holdings in Pro MedicusLimited via the Internet.

Visit Link Market Services’ website: www.linkmarketservices.com.auand 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 loginusing your Security holder Reference Number (SRN)or Holder Identification Number (HIN) as well asyour surname (or company name) and postcode (must be the postcode recorded on your holding record).

Don’t miss out on your dividendsDividend cheques that are not banked are requiredto be handed over to the State Trustee under theUnclaimed Monies Act. You are reminded to bankcheques immediately.

Better still, why not have us do your bankingfor youWouldn’t you prefer to have immediate access to your dividend payment? Your dividend paymentscan be credited directly into any nominated bank,building society or credit union account in Australiaas cleared funds on dividend payment date – andwe 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 ofcheque fraud.

Top 5 tipsfor Pro Medicus Limited investors visiting Link’s (our registry) website:

1. Bookmark www.linkmarketservices.com.auto bookmark, click on ‘Favourites’ on the menubar at the top of your browser then select ‘Add to Favourites’

2. Create a portfolio for your holding or holdingsand you don’t have to remember your SRN or HIN every time you visit

3. Lodge your email via the ‘CommunicationsOptions’ and benefit from the online communications options Pro Medicus Limitedoffers its investors

4. Check out the ‘FAQs’ page (accessible via theorange menu bar) for answers to frequentlyasked questions

5. Use the ‘Client List’ page (accessible via theorange menu bar) to link to Pro Medicus Limited website and the website of the other Link clientsin which you invest.

Contact InformationYou can also contact the Pro Medicus Limitedshare registry by calling:+61 2 8280 7111 or Toll Free 1300 554 474


corporate information you can do so much online

ABN 25 006 194 752

DirectorsThe names of the Directors of the Company in office during the year and until the date of this report are:

Melvyn Keith Ward CHAIRMAN/NON EXECUTIVE DIRECTORDr Peter David Jonson NON EXECUTIVE DIRECTORDr Sam Aaron Hupert EXECUTIVE DIRECTOR/DEPUTY CHAIRMANAnthony Barry Hall TECHNOLOGY DIRECTORDavid Chambers CHIEF EXECUTIVE OFFICER/MANAGING DIRECTORPeter Kempen NON-EXECUTIVE DIRECTOR/CHAIRMAN/CHAIRMAN AUDIT COMMITTEE

Company SecretaryClayton James Hatch

Registered Office450 Swan Street Richmond VIC 3121(03) 9429 8800

Internet Addresswww.promedicus.com.auwww.promedicus.comwww.visageimaging.com

SolicitorsInnovation Law

BankersWestpac Banking Corporation

AuditorsErnst & Young

Share RegistryLink Market Services LimitedLevel 12, 680 George StreetSydney NSW 2000 Australia

Mailing address:Link Market Services LimitedLocked Bag A14Sydney South NSW 1235 Australia

Telephone +612 8280 7111Toll free 1300 554 474Facsimile +612 9287 0303Facsimile (proxy forms only) +612 9287 0309E-mail: [email protected]: www.linkmarketservices.com.au



your notesProMed AR'10 WEB 18/10/10 12:06pm Page 72

PROMEDICUS LIMITED450 Swan Street, RichmondVictoria 3121 AustraliaT: 03 9429 8800F: 03 9429 9455E: [email protected]


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