EBOS Group Annual Report 2019
Annual Report
2019
The investments we have made in
our people and a strong and diverse
business ensure that we are well
positioned for the future and have
the capabilities that will enable our
continued support of better healthcare
and animal care across Australia and
New Zealand.
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EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
Contents
20
Business
Highlights
26
Community
27
Social
Responsibility
30
Our Board
32
Financial
Summary
36
Financial
Report
38
Independent
Auditor’s Report to
the Shareholders
42
Financial
Statements
94
Corporate
Governance
98
Director’s interests
and disclosures
105
Directory
04
Foreword
06
Summary
of Results
08
CEO &
Chairman’s Report
14
EBOS Group
Overview
16
Supporting
healthcare across
our markets
18
Building leading
animal care and
consumer brands
All figures referred to in this report are in Australian dollars unless otherwise stated.
Foreword
Every day, communities across Australia
and New Zealand benefit from the work
we do at EBOS Group. Through the timely
distribution of medicines to those who
need them most, our support of a broad
network of pharmacies, hospitals, medical
clinics and aged care facilities, and the
provision of some of the most trusted
consumer and animal care brands –
our commitment to improving the health
and wellbeing of people and animals is
embedded in everything we do.
We continue to reinforce our capabilities
across the entire supply chain, through
targeted acquisitions and major investments
in technology and infrastructure designed to
complement and strengthen our business.
We are proud to maintain our position as the
largest Trans-Tasman marketer, wholesaler
and distributor of healthcare and animal
care products.
The investments we have made in our
people and a strong and diverse business
ensure that we are well positioned for the
future and have the capabilities that will
enable our continued support of better
healthcare and animal care across Australia
and New Zealand.
Our approach is reflected in our financial
performance, where we have delivered
further increases in returns to our valued
shareholders. We trust that you will enjoy
reading this year’s Annual Report on the
performance of your company and we thank
you for your continued support.
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EBOS Group 2019 Annual Report
Highlights
Our business
acquisition
investment
revenue
$6.9b
investment in
net capital works
$26.6m$93.6m
Our shareholders
total dividends per share
*NZ cents per share
7, 599
shareholders
*
57
locations in Australia and New Zealand
71.5c
* As at 31 July 2019
staff
members
3,600
28%
NZ
72%
AUS
42
%
58
%
82% healthcare
18% animal care
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EBOS Group 2019 Annual Report
Financials
Corporate
Governance
Directors’ Interests
& Disclosures
Directory
Business Overview
Symbion Brisbane pharmaceutical distribution facility
06
EBOS Group 2019 Annual Report
Summary
of Results
$6.9 bill ion revenue
$250.4 million EBITDA +0.1% increase
NZ 71.5 cents dividend per share +4.4% increase
Financial Highlights
Reported Results
Five year EBITDA trend
For the year to 30 June ($millions)
250.1
221.5
207.7
182.3
250.4
20192018201720162015
Five year EBITDA trend
For the year to 30 June ($millions)
250.1
228.2
207.7
182.3
261.6
20192018201720162015
Five year NPAT trend
For the year to 30 June ($millions)
137.3
125.9
117.0
98.2
137.7
20192018201720162015
Five year NPAT trend
For the year to 30 June ($millions)
137.3
130.9
117.0
98.2
144.4
20192018201720162015
Underlying Results
Excludes one-off items for transaction costs incurred on M&A, warehouse transition and restructuring costs, net of the gain on sale from disposal of a
surplus property.
$ 137.7 million net profit after tax +0.3% increase
89.8 cents earnings per share -0.6% decrease
$6.9
bill ion revenue
$261.6 million EBITDA +4.6% increase
$144.4 million net profit after tax +5.2% increase
94.2 cents earnings per share +4.3% increase
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EBOS Group 2019 Annual Report
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Business Overview
Segment & Divisional Earnings Overview
EBITDARevenue
AustraliaAustraliaNew ZealandNew Zealand
82%77%18%23%
Data based on gross operating revenue, which comprises revenue less cost of sales
(including any adjustments to inventory).
Pharmacy (Wholesale and Retail)
46%
Consumer Products
6%
Contract Logistics
8%
Institutional Healthcare
26%
Animal Care
14%
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EBOS Group 2019 Annual Report
CEO & Chairman’s
Report
CEO John Cullity and Chairman Mark Waller
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EBOS Group 2019 Annual Report
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Business Overview
EBOS delivered another year of
increased momentum in 2019 as
the Company positioned itself for
the next wave of growth in 2020.
The result reflects the Board
and management’s adherence to
the core business strategy that
has consistently delivered for
shareholders over time by growing
the business through carefully
calculated investment decisions
that drive both our Healthcare
and Animal Care businesses in
Australia and New Zealand.
Business Highlights for
the year
EBOS reported solid growth in
underlying earnings in what has been
a strategically important year for the
Group. Operating in highly competitive
and regulated markets, the Group has
withstood a range of challenges and
changing market dynamics and still
delivered a solid result for shareholders.
Our Retail Pharmacy division was
particularly active throughout 2019 as
we moved to 100% ownership of the
Terry White Group (TWG) and retained
our wholesale contract with Blooms
The Chemist, one of Australia’s largest
independent pharmacy groups. We also
signed the Chemist Warehouse Group
(CWG) pharmaceutical contract, which
commenced on 1 July 2019.
The decision by CWG to select EBOS as
its exclusive pharmaceutical distributor
was a great endorsement of EBOS’
Wholesale Pharmacy division and is
a reflection of the Group’s high level
of expertise and excellent service
standards. The partnership with CWG
will see EBOS deliver pharmaceutical
products to more than 450 Chemist
Warehouse and My Chemist stores in
Australia, generating approximately
$1 billion in additional revenue in the
first year.
Importantly, with the commencement of
the CWG partnership, EBOS was focused
on ensuring there would be no adverse
impact on our existing loyal pharmacy
and hospital customers.
It is therefore pleasing to report that we
have successfully commenced servicing
the CWG stores while still maintaining
the high standards we pride ourselves
on for all our existing customers.
This is in no small way a function of the
dedicated teams who work hard each
and every day for our customers and the
communities we serve.
The decision by CWG to select EBOS
as its partner was also an endorsement
of our broader capital investment
strategy and reflects the efficiencies
we have made over a number of years
to our operations.
In the last financial year we
commenced operations in two new
facilities in Brisbane and Sydney,
together with a smaller distribution
centre in Darwin. In New Zealand we
opened a new facility in Christchurch
servicing our Healthcare business,
while in Auckland we opened a new
Healthcare Logistics facility and
neared completion of our new shared
distribution and manufacturing
facility. This new facility, which has a
significant footprint of 10,000m², will
see the consolidation of six separate
New Zealand locations, enabling more
streamlined stock and delivery services
to our customers. Furthermore, the
new site will house our Red Seal
manufacturing operations, as well as
providing significant storage capacity
for our growing Endeavour Consumer
Health business.
The year was also highlighted by
several strategic acquisitions as we
continue to build our Healthcare and
Animal Care businesses. The total value
of investments for the year was
$93.6 million and, in addition to
acquiring the minority shares in TWG,
also included three small-to-medium-
sized bolt-on acquisitions.
The first of these acquisitions was
Warner & Webster, a medical
and surgical supplies wholesaler
servicing Victoria and South Australia,
providing further opportunity to grow
our share of the medical consumable
market for our Healthcare business. In
our Animal Care business we acquired
Therapon, a Victoria-based veterinary
distribution business that will operate
under our Lyppard vet wholesale
business. Finally, our Endeavour
Consumer Health business acquired
Quitnits, a leading natural head lice
product range, which adds to our
consumer health brands portfolio.
The ongoing success of the EBOS
business strategy to ‘invest for
growth’ through disciplined capital
management, and acquire businesses
and brands that can deliver shareholder
value, was part of the reasoning for the
Group’s equity capital raising in May
2019. The Group successfully raised
NZ$175 million in new capital, a clear
indication that our strategy continues
to resonate with a range of investors.
The funds raised will provide us with
enhanced financial capacity for further
strategic acquisitions and organic
growth opportunities so that we can
continue the long-term strategic
growth of the Group.
As we have stated previously,
we operate in highly competitive
and regulated markets and it was
therefore pleasing that the Australian
Government recognised, at the
conclusion of its recent review into
the Community Service Obligation
(CSO), the importance of the wholesale
industry in providing Australians
with equal access to medicines in
accordance with the National Medicines
Policy. However, if the wholesale
industry is to maintain its service
standards then it requires additional
financial support through increased
CSO funding and a sustainable
wholesale margin. The financial stability
of the industry is at a critical juncture,
with wholesalers being significantly
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EBOS Group 2019 Annual Report
impacted by Pharmaceutical
Benefits Sceme (PBS) reforms, and
approximately 80% of distribution
volumes now generating a margin
of less than $1 given there has been
no effective increase in wholesaler
remuneration for the past five years.
EBOS, together with other members
of the National Pharmaceutical
Services Association (NPSA), continues
to actively engage with the federal
government and federal minister for
health with respect to successfully
resolving these matters as part of
negotiations for the 7th Community
Pharmacy Agreement.
The Directors have announced a final
dividend of NZ 37 cents per share,
which takes full-year dividends to
NZ 71.5 cents per share, an increase of
4.4% on the prior year. The full details
relating to the dividend are included in
the Financial Summary section of this
Annual Report.
The Future
Throughout the last financial year
EBOS Group has maintained its upward
momentum, while at the same time
positioning itself for future growth
through investment in our distribution
network, acquiring new businesses and
brands, securing new customers and
importantly, renewing and maintaining
existing customer relationships.
Our shared success reflects the effort
and commitment across EBOS and we
are incredibly grateful to all our staff
in New Zealand and Australia for their
daily contribution to our business and
the communities we serve.
The investments we have made in
our people, and a strong and diverse
business, ensure that we are well
positioned for the future and have the
capabilities that will enable continued
support of better healthcare and
animal care across the markets in
which we operate.
John Cullity
Chief Executive Officer
Mark Waller
Chairman
A message from Mark Waller
After more than 30 years with the
company I have made the decision
to retire as Chairman of EBOS Group
effective 15 October 2019.
I am immensely proud of the time
I have spent with this company having
joined EBOS in March 1984 and then
becoming CEO in 1987 when it was
a small player in the New Zealand
healthcare industry with annual revenue
of approximately NZ$8 million.
It would be fair to say we embarked on
an ambitious growth strategy over the
subsequent years and it is with a great
deal of personal satisfaction that EBOS
Group is now positioned as the largest
trans-Tasman healthcare and animal
care company.
I’ve enjoyed the challenge and
opportunity tremendously and I feel
it is now the right time to retire. Above
anything else my greatest enjoyment has
been gained through the people I have
worked with over the many years and
I wish the future Chairman and Board,
Executive and Staff across New Zealand
and Australia all the very best and I look
forward to seeing the company continue
to grow from strength to strength.
Mark Waller
Chairman
All figures in Australian dollars unless otherwise stated.
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EBOS Group 2019 Annual Report
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Directory
Business Overview
On 15 October 2019, EBOS Group Chairman Mark
Waller will retire after more than 30 years service
with the Company.
Mr Waller joined EBOS in March 1984 as its Chief Financial
Officer before assuming the position of Chief Executive
Officer in 1987 during a challenging period for the Company.
At that time, EBOS was a very small player in the New Zealand
healthcare industry, with annual revenues of approximately
NZ$8 million primarily from marketing and distributing surgical
and dental supplies under license from manufacturers.
Facing significant pressure from larger competitors and
multi-national corporations, Mr Waller sought to create a
business that followed customers over their lifetime and
drove a culture that attracted some of the best and brightest
minds in the industry.
Over the next 27 years, he led the Group on an ambitious
yet disciplined growth strategy, overseeing many successful
mergers and acquisitions, including the purchase of Symbion in
2013 for NZ$1.1 billion, and significantly increasing the Group’s
presence in Australia. Under his leadership, EBOS Group grew
to become the largest Trans-Tasman healthcare and animal
care company with revenues in excess of NZ$6 billion.
After handing over the reins as CEO in 2014, Mr Waller assisted
EBOS in an advisory role focussed on acquisition projects
before assuming the position of Group Chairman in 2015.
During his career Mark has received many business accolades
including receiving the Chief Executive of the Year Award at
the Deloitte 200 Awards in 2011 and was the recipient of the
Leadership Award at the INFINZ Industry Awards in 2014.
Mark received the ultimate recognition for his significant
contribution to New Zealand business with his induction into
the New Zealand Business Hall of Fame in August 2019.
Mr Waller will depart EBOS Group acknowledged as a warm and
personable leader and a pivotal figure who was central to the
Group’s sustained and significant growth in shareholder value.
On behalf of his fellow Directors, staff and shareholders,
we extend our sincere thanks to Mr Waller for his significant
contribution to the Group over more than 30 years. We wish
him all the best for his well earned retirement.
Mr Waller will
depart EBOS Group
acknowledged as a
warm and personable
leader and a pivotal
figure who was
central to the Group’s
sustained and
significant growth in
shareholder value.
EBOS Group thanks
Mark Waller
Our commitment
is to supporting
great community
health outcomes
across Australia
and New Zealand.
Financials
Corporate
Governance
Directors’ Interests
& Disclosures
Directory
Business Overview
TerryWhite Chemmart pharmacy
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EBOS Group 2019 Annual Report
EBOS Group
Overview
Healthcare
Community PharmacyInstitutional HealthcareContract Logistics
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EBOS Group 2019 Annual Report
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Corporate
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Directors’ Interests
& Disclosures
Directory
Business Overview
Animal Care
Consumer ProductsAnimal Care
Symbion Brisbane pharmaceutical distribution facility
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EBOS Group 2019 Annual Report
Supporting healthcare
across our markets
HealthcareManufacturer services
Our business is founded on a simple principle –
an unwavering commitment to supporting better
healthcare outcomes in communities across
Australia and New Zealand.
It is this commitment that is driving us to make
positive impacts in the lives of more Australians and
New Zealanders than ever before – supporting their
wellbeing by increasing accessibility to an expansive
range of medicines, therapeutic goods and other
leading healthcare products.
While we remain firmly focused on the present –
delivering vital medicines and healthcare products
from our 34 warehouses across both countries and
supporting pharmacists to succeed as clinicians and
business owners every day – more than ever we are
looking ahead to the future needs of an ever-changing
healthcare market.
We continue to make significant investments in our
people and the infrastructure and technology of
tomorrow, to ensure that our commitment remains
as strong in the future as it is today.
Brett Barons
CEO Symbion
Clinect
Manufacturers
Healthcare
Logistics
Zest
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EBOS Group 2019 Annual Report
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Business Overview
Financials
Corporate
Governance
Directors’ Interests
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Directory
Business Overview
TerryWhite Chemmart
Cincotta Discount
Chemist
GoodPrice Pharmacy
Warehouse
healthSAVE
Pharmacy Choice
HPS
Vantage
Primary care
Our customersOur distribution networkOur brands
Hospitals
Retail
brands
Minfos
Intellipharm
Data and
technology
Community
pharmacy
Aged care
Onelink
ProPharma
and PWR
Symbion
DoseAid
EBOS Healthcare
and Warner
& Webster
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EBOS Group 2019 Annual Report
Building leading animal
care and consumer brands
Animal Care and Consumer Brands
While we increasingly turn our attention to global consumer
markets – especially South-East Asia – the cornerstone of our
business remains our commitment to delivering trusted brands
to our valued customers in Australia and New Zealand.
Our success has been underpinned by key performers Black Hawk,
Vitapet and Red Seal, and we are committed to strengthening
these brands further through investments in marketing, product
innovation and a focus on high quality products.
In Animal Care, both the Black Hawk and Vitapet brands continue
to enjoy growing support from animal lovers seeking higher quality
products that are aligned to the humanisation of pets and us
viewing them as part of our families. Black Hawk continues to
achieve strong sales in Australia and, since launching into New
Zealand, has built a strong customer base and dedicated following.
Built on a commitment to helping New Zealand families care for
those they love, Red Seal’s recent growth has been underpinned by
uptake from major retailers in Australia and other key international
markets, as we continue to drive innovation in the tea and
toothpaste categories.
The key strength of our business remains our people –
knowledgeable and passionate employees who are engaged in
our journey to build great brands that add value to the lives of
Australians and New Zealanders.
Sean Duggan
CEO Animal Care and Consumer Brands
Masterpet
Endeavour
Consumer Health
Lyppard
Vet Wholesale
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EBOS Group 2019 Annual Report
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Our customersOur brands
Black Hawk
Vitapet
Aristopet
Consumer
brands
Consumer
brands
Grocery and
supermarkets
Veterinarians
Pet specialty
Online retailers
Specialty
retailers
Grocery and
supermarkets
Pharmaceutical
wholesalers
Online retailers
Red Seal
Faulding
Anti-Flamme
Floradix
Gran’s Remedy
Quitnits
Consumer
health
Animal
care
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EBOS Group 2019 Annual Report
Business Highlights
EBOS Group is firmly committed to
delivering the supply chain capabilities of
tomorrow. In recent years, the Group has
undertaken a major strategic investment
program to strengthen the core of our
business and ensure that we can support
the future needs of our customers and
continue to deliver great health outcomes
to the community.
In total, the Group has invested $80 million in four
projects across Australia and New Zealand, which
will underpin the capabilities of our Healthcare
business and add significant scale to our Animal
Care and Consumer Brands operations.
Looking to the future, we have confidence that
the new facilities we have commissioned will
provide us with the capabilities, room for growth,
efficiency and productivity that is demanded by
our customers, while positioning us well to capture
new opportunities and adapt to the ever-changing
needs of local and global healthcare and animal
care markets.
Australia
In the past 12 months, we have completed two
major projects designed to support the future
capabilities of our Healthcare business in Australia.
In October 2018, Symbion unveiled its new highly
automated distribution centre in Acacia Ridge,
Queensland.
Built at a cost of $59 million, the facility represents
a significant investment in the Group’s wholesaling
capabilities and ensures that we can continue
to meet the needs of Australia’s ever-changing
pharmaceutical market.
Earlier in 2018, the Group opened the new
headquarters for its Healthcare Logistics business
in Pemulwuy, New South Wales.
Designed to service the pre-wholesale market, the
$15 million distribution centre will add significant
scale to our operations. At 25,000m
2
– roughly the
size of four soccer pitches – it has been sized for
growth and is the largest facility across the Group.
These combined investments underline EBOS
Group’s commitment to servicing the current and
future needs of Australia’s healthcare market. With
the Group’s contract to supply Chemist Warehouse
Group commencing on 1 July 2019, the additional
scale and capability these facilities provide will be
critical to ensuring we are equipped to handle the
volumes required by this contract.
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EBOS Group 2019 Annual Report
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New Zealand
EBOS Group has significantly strengthened its
New Zealand Healthcare business with the
development of two major distribution centres to
service customers across the country.
In Christchurch, the Group has recently
opened a new shared facility for its wholesaling
business ProPharma and institutional healthcare
supplier EBOS Healthcare.
The new site provides significantly increased
capacity to ensure that both businesses are
equipped to handle the future demands of the
New Zealand healthcare market and it has been
built to best environmental practices, while also
featuring enhanced protection against earthquakes.
In August 2019, the Group unveiled its second major
New Zealand project – a new distribution centre in
Auckland for Endeavour Consumer Health.
The facility represents the consolidation of six
separate locations and will enable more streamlined
stock management and increased delivery
efficiencies for customers. Built at a cost of
$4 million, the 10,000m
2
facility will house Red Seal
toothpaste manufacturing operations, as well as
providing significant storage capacity for healthcare
and consumer products.
Looking to the future,
we have confidence that
the new facilities we have
commissioned will provide
us with the capabilities,
room for growth, efficiency
and productivity that
is demanded by our
customers.
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EBOS Group 2019 Annual Report
TerryWhite Chemmart – that’s real chemistry
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EBOS Group 2019 Annual Report
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Business
Highlights
TerryWhite Chemmart
In late 2018, EBOS Group
announced that it had acquired
all minority shares in the Terry
White Group (TWG) and moved to
100% ownership of TWG, which
is responsible for the TerryWhite
Chemmart retail pharmacy
network.
Founded 60 years ago as a single owner-
operated pharmacy in Queensland,
TerryWhite Chemmart has since grown to
become one of Australia’s leading retail
networks. Today, the company has a
network of approximately 450 community
pharmacies across the country and over
two million Australians visit a TerryWhite
Chemmart pharmacy each month,
highlighting the enormous reach of the
brand. The owner-operated pharmacies
continue to deliver personalised care
direct from pharmacist to customer –
guided by the best selection of health
products and beauty brands.
TerryWhite Chemmart maintains a strong
focus on its integrated education program
for pharmacists, enabling them to build
on their clinical skills and knowledge.
A key element of this program is
TerryWhite Chemmart Masterclass,
a year-round program that brings
together pharmacists across the country
and culminates in an annual three-day
education conference.
This year’s Masterclass was held in
Melbourne at the end of April and was
attended by over 400 pharmacists and
support staff, with a focus on the critical
role pharmacists play in the community,
fostering quality patient experiences and
better health outcomes.
The increase in access to the range
of immunisations administered by
pharmacists has been a key topic of the
Masterclass in recent years and, so far in
2019, TerryWhite Chemmart pharmacists
have administered over 250,000 flu
vaccinations – a 48% increase on the
previous year. Reinforcing this expanded
scope of practice is a major focus for
TerryWhite Chemmart.
In March 2019, the company unveiled
its new brand campaign, that’s
real
chemistry, with the objective of building
upon the trusted relationship between
pharmacists and their customers –
highlighting this as a point of difference
to position TerryWhite Chemmart as a
frontline healthcare leader. The campaign
was rolled out across traditional and
digital media platforms around Australia,
including TV, outdoor, press, digital and
owned assets such as social media,
website, electronic direct marketing,
catalogues and point of sale.
EBOS Group is well positioned to achieve
long-term sustainable growth for
TerryWhite Chemmart and is committed
to ensuring the brand continues to
succeed in a competitive and constantly
evolving retail pharmacy sector.
TerryWhite Chemmart
maintains a strong focus
on its integrated education
program for pharmacists,
enabling them to build on
their clinical skills and
knowledge.
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EBOS Group 2019 Annual Report
Business
Highlights
Red Seal strengthens Asian presence
Red Seal’s growth in global markets continued at
pace in the 2018-19 financial year, highlighted by
an increased presence in China, Korea and Japan,
and expansion into Malaysia.
Since launching into China in 2012, Red Seal has
become a brand of choice for Chinese consumers
seeking high-quality health food, natural toothpaste
and teas. Driven by strong marketing and New
Zealand’s reputation for producing quality natural
health products, Red Seal is now available in more
than 1,600 online stores and 4,000 bricks-and-
mortar retail outlets across China.
A key part of the recent success of Red Seal has
come through its deepening engagement with
major e-commerce platforms including Kaola,
Little Red Book, JD, VIP and Alibaba-owned Tmall.
In August 2018, Red Seal took part in an event in
Auckland to launch Tmall’s
Amazing New Zealand
page, which showcased a range of leading New
Zealand health products and was broadcast to
8.6 million consumers across the world. Tmall is
the world’s second largest ecommerce platform,
with 500 million monthly active users and the event
paid immediate dividends for Red Seal, with sales
increasing by 300% in the first day following the
launch of the Amazing New Zealand page.
Beyond China, Red Seal continues to target
expansion in other key Asian markets and, in June
2018, the brand launched its range of natural
toothpaste products into Malaysia.
Closer to home, Red Seal has enjoyed continued
success in the Australian market, with an expanded
presence in grocery stores. Driving this success
are Red Seal fruit teas, which are now available in
a range of flavours through both Woolworths and
Coles nationally and with feedback from customers
being overwhelmingly positive. In the New Zealand
market, despite some intense competitive activity,
Red Seal maintained its strong leadership in the
natural toothpastes segment, while the popularity of
Red Seal fruit teas continues to grow year on year.
Red Seal continues to be a driver of significant
global and local success for EBOS Group and the
brand has a strong future as consumers increasingly
gravitate towards trusted natural health products.
Red Seal toothpaste and fruit tea products
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EBOS Group 2019 Annual Report
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Black Hawk driving better animal
nutrition across key markets
The 2019 financial year has been another exciting
period for Black Hawk, headlined by strong sales
growth and the expansion of its range of Original
and Grain Free dog and cat food products.
The brand’s continued success is driven by its
philosophy of creating better relationships between
pets and people. This has seen it consolidate its
position as a leading premium animal care brand
in Australia and New Zealand, while underpinning
expansion into new markets across South-East Asia.
The Black Hawk commitment to ensuring pet
owners understand the importance of great food
saw the brand come face-to-face with pet owners
at dog parks, beaches and other high-traffic areas
across Australia as part of its caravan tour.
This tour provided people with samples of Black
Hawk products and drove engagement with the
Black Hawk DogCheck™ tool, which enables pet
owners to check their dog’s weight against an ideal
target range.
Black Hawk continues to forge strong partnerships
with key advocates for the brand across Australia
and New Zealand. Breeders have enjoyed multiple
‘Best in Show’ successes after switching to Black
Hawk products and these relationships, along with
those with vets, retail staff and other advocates,
play an important role in strengthening the
Black Hawk credentials and building consumer
confidence.
The company has also proudly partnered with New
Zealand Land Search and Rescue Inc. (LandSAR)
as the official feeding partner for the organisation’s
search and rescue dogs.
LandSAR is a national volunteer organisation
providing land search and rescue services to the
police and public of New Zealand. Black Hawk
is proud to provide its specialised Working Dog
formula to LandSAR, which will ensure its dogs have
access to quality nutrition that will give them the
energy they need to succeed in often challenging
search and rescue environments.
Black Hawk continues to
forge strong partnerships
with key advocates for the
brand across Australia and
New Zealand.
A member of LandSAR’s search and rescue pack, Rocket
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EBOS Group 2019 Annual Report
Community
Christchurch tragedy
We were shocked and saddened by the act of terrorism that
took place in Christchurch, New Zealand on Friday 15 March
2019. It is always difficult to comprehend events such as this
when they take place anywhere in the world, but when they
occur so close to home, the impact is far more profound.
EBOS Group has a strong connection with Christchurch –
many of our businesses operate there and our origins can be
traced to the Christchurch-based Early Brothers Trading Co.
Ltd of the early 1920s.
The events of 15 March required a rapid, coordinated response
across all of our Christchurch sites to ensure the safety of our
staff and the continued supply of critical medicine deliveries
to our customers. The picking and delivery of orders to
our ProPharma customers in Christchurch and Nelson was
redirected to other distribution centres so that staff could
either remain at home, or head home when it was safe to do
so. In addition, the Group established a support phone line
for staff requiring assistance during and after the terrorist
incident.
In the aftermath, EBOS Group – on behalf of staff
and shareholders – made the decision to support the
Christchurch Foundation’s ‘Our People, Our City’ fund to assist
in meeting the short-and long-term needs of the families
most affected by the tragedy.
The event is a sad reminder that there are those out there
who seek to divide with acts of unspeakable horror. However,
the response and solidarity shown by local and global
communities should give us great hope that Christchurch can
grow stronger as a result. And that’s something we’re proud to
be a part of.
The response and
solidarity shown by local
and global communities
should give us great hope
that Christchurch can
grow stronger as a result.
27
EBOS Group 2019 Annual Report
Financials
Corporate
Governance
Directors’ Interests
& Disclosures
Directory
Business Overview
CommunitySocial
Responsibility
EBOS Group is committed to social responsibility across Australia and New Zealand. We are
committed to being good corporate citizens and our actions reflect in the positive impacts in the
communities where we operate.
We maintain a strong commitment to operating our business in line with best environmental practice and supporting a
variety of charitable initiatives, including our Match-Funding program, which supports staff who take part in charitable
events or fundraisers by matching their donations.
In the 2018-19 financial year, EBOS Group supported 14 charities through the Match-Funding program and 17 charities in total.
Some of the key highlights from our Social Responsibility program are detailed below.
Offsetting our carbon emissions
We are pleased to report that in the 2019 financial year,
EBOS Group offset 100% of the carbon emissions associated
with its fleet of vehicles across Australia and New Zealand.
This was achieved thanks to our continued partnership with
Trans-Tasman not-for-profit organisation Greenfleet, and sees
the Group contribute to planting approximately 41,000 trees
annually to offset almost 11,000 tonnes of carbon emissions.
The Group has taken measures to offset its environmental
impact through the installation of solar panels at its new
distribution centres in New South Wales and Queensland.
In total, 2,344 square metres of panels have been installed,
covering an area approximately the size of six basketball courts.
raised for Ovarian Cancer Australia
through morning tea fundraising
$1.4m
free flu
vaccines
administered
1,000
EBOS Healthcare
immunisation program
EBOS Healthcare is a strong supporter of the annual
influenza vaccination initiative coordinated by the
Immunisation Coalition of Australia.
In 2019, this has seen around 1,000 people receive
free flu vaccines at two public events in Melbourne,
with EBOS Healthcare a key contributor through the
donation of vaccines for the event.
TerryWhite Chemmart and
Ovarian Cancer Australia
Over the past 13 years, TerryWhite Chemmart has raised
more than $1.4 million for Ovarian Cancer Australia
(OCA) through holding morning teas, cake stalls and
other fundraising events across its extensive community
pharmacy network.
trees
planted
41,000
of solar panels
installed
2,344m
2
An unwavering
commitment to
quality ensures our
brands are trusted
by pet owners
across Australia
and New Zealand.
Financials
Corporate
Governance
Directors’ Interests
& Disclosures
Directory
Business Overview
30
EBOS Group 2019 Annual Report
Our Board
31
EBOS Group 2019 Annual Report
Financials
Corporate
Governance
Directors’ Interests
& Disclosures
Directory
Business Overview
1. Mark Waller
Independent Chairman
BCOM, FACA, FNZIM, CMinstD
Mark Waller was appointed as Chairman
of the Board in October 2015 and
was formerly the Chief Executive and
Managing Director of EBOS Group
Limited from 1987 to 30 June 2014.
He is a member of the Audit and Risk
Committee and Chairman of the
Remuneration Committee. He is also
a director of EBOS Group Limited
subsidiaries. Mark was the recipient
of the Leadership Award at the INFINZ
Industry Awards in May 2014 and the
Chief Executive of the Year Award at the
Deloitte 200 Awards in 2011. In August
2019 Mark was inducted into the New
Zealand Business Hall of Fame.
2. Elizabeth Coutts
Independent Director
ONZM, BMS, FCA
Elizabeth Coutts was appointed to
the EBOS Group Limited Board in July
2003. She is Chairman of the Audit and
Risk Committee and a member of the
Remuneration Committee. She is Chair
of Ports of Auckland Ltd, Urwin & Co
Limited, Oceania Healthcare Ltd and
Skellerup Holdings Limited, Director of
Tennis Auckland Region Incorporated
and Member, Marsh New Zealand
Advisory Board.
Elizabeth is a former Chairman of Meritec
Group, Industrial Research, and Life
Pharmacy Limited, former director of Air
New Zealand Limited, the Health Funding
Authority, Sanford Limited and the Yellow
Group of Companies, former Deputy
Chairman of Public Trust, former board
member of Sport NZ, former member
of the Pharmaceutical Management
Agency (Pharmac), former Commissioner
for both the Commerce and Earthquake
Commissions, former external monetary
policy adviser to the Governor of the
Reserve Bank of New Zealand, immediate
past President of the Institute of Directors
Inc. and former Chief Executive of the
Caxton Group of Companies.
3. Peter Williams
Peter Williams was appointed to the
EBOS Group Limited Board in July 2013.
Peter has been an executive of The
Zuellig Group since 2000. Peter is a
director of Pharma Industries Limited,
Green Cross Health Limited and CB
Norwood Pty Ltd. He is also a director of
Cambert, a company marketing health
and personal care products in South-
East Asia.
4. Stuart McGregor
BCOM, LLB, MBA
Stuart McGregor was appointed to the
EBOS Group Limited Board in July 2013.
He is a member of the Audit and Risk
Committee. Stuart was educated at the
University of Melbourne and the London
School of Business Administration,
gaining degrees in Commerce and Law.
He also completed a Master of Business
Administration at the University of
Melbourne. Currently Stuart is Chairman
of Donaco International Limited, an ASX-
listed company. He is also director of
Symbion Pty Ltd and other EBOS Group
subsidiaries.
Over the last 30 years, Stuart has
been Company Secretary of Carlton
United Breweries, Managing Director of
Cascade Brewery Company Limited in
Tasmania and Managing Director of San
Miguel Brewery Hong Kong Limited.
In the public sector, he served as Chief
of Staff to a Minister for Industry and
Commerce in the Federal Government
and as Chief Executive of the Tasmanian
Government’s Economic Development
Agency. He was formerly a director of
Primelife Limited from 2001 to 2004.
5. Sarah Ottrey
Independent Director
BCOM
Sarah Ottrey was appointed to
the EBOS Group Limited Board in
September 2006. She is a member of
the Remuneration Committee. Sarah
is a director of Whitestone Cheese
Limited, Skyline Enterprises Limited and
subsidiaries, Mount Cook Alpine Salmon
Limited, Christchurch International
Airport Ltd and Sarah Ottrey Marketing
Limited. She is a past board member
of the Public Trust and the Smiths City
Group. Sarah has held senior marketing
management positions with Unilever
and Heineken.
6. Stuart McLauchlan
Independent Director
Stuart McLauchlan was appointed to
the EBOS Group Limited Board in July
2019. Stuart is a Chartered Fellow of
the Institute of Directors and a Past
President. He is a chartered accountant,
partner of GS McLauchlan & Co, and a
Fellow of the New Zealand Institute of
Chartered Accountants. He is currently
Chairman of Scott Technology Limited
and ADInstruments Ltd. He is a director
of Ngai Tahu Tourism Ltd, UDC Finance
Ltd and Argosy Properties Ltd as well
as a number of private companies. He
is also a governor of the New Zealand
Sports Hall of Fame.
32
EBOS Group 2019 Annual Report
Financial
Summary
EBOS has delivered a solid year in
underlying earnings and a strong
cash flow result.
Group revenue was broadly in line
with last year at $6.9 billion, negatively
impacted by a $425 million combined
impact of the further reduction in
hepatitis C medicine sales and the
impact of Government PBS reforms.
Revenue growth excluding these
impacts was 5.7%, driven by growth in
our core businesses.
During the year the business completed
several strategic acquisitions,
transitioned into two new distribution
facilities in Brisbane and Sydney and
announced it was successful in signing
an agreement with the CWG to be
the exclusive wholesale distributor of
pharmaceuticals from FY20.
In FY19, the Group’s statutory results
were negatively impacted by net
non-recurring charges of $11.2 million
($6.7 million after tax) relating to M&A
costs, costs incurred in rationalising
warehousing facilities and employee
redundancy costs. For clarity, the
comparative results below are shown
on both an underlying and reported
(statutory) basis.
Underlying Earnings Before Net
Finance Costs, Tax, Depreciation and
Amortisation (EBITDA) of $261.6 million
grew by $11.6 million, representing an
increase of 4.6%. Reported EBITDA of
$250.4 million was slightly ahead of
last year.
Underlying Net Profit After Tax (NPAT)
attributable to shareholders increased
by 5.2% to $144.4 million. Reported
NPAT increased by $0.4 million on the
prior year to $137.7 million.
Healthcare
The Healthcare segment generated a
4.6% increase in Underlying EBITDA on
sales revenue that was 0.9% lower to
last year.
The Australian business recorded a
decline of 3.5% in revenue, although
Underlying EBITDA grew 5.7%.
The revenue decline was driven by a
$257 million reduction in hepatitis C
medicine sales and the impact of PBS
price reforms of $168 million. EBITDA
growth was assisted from strong
growth in our Institutional Healthcare
and Contract Logistics business units.
The New Zealand Healthcare operations
again delivered solid revenue growth
of 8.7% with EBITDA marginally ahead
of last year. FY19 EBITDA growth was
impacted by cost increases in labour
and freight in our wholesale businesses.
Animal Care
The Animal Care segment recorded
EBITDA growth of 5.7% for the year
as the business continues to benefit
from the excellent performance of
our branded products. Full year Black
Hawk sales increased 11.4% with strong
growth achieved across both Australia
and New Zealand. Black Hawk remains
one of Australia and New Zealand’s
fastest growing premium pet food
brands with leading market positions
in the pet specialty retail channel.
Total Animal Care revenue growth of
1.0% was impacted by a decline in
our Lyppard wholesale business as
a result of the decision of an animal
health manufacturer to bypass the
wholesale channel, which affected
revenue by approximately $21 million.
Notwithstanding this, Lyppard
strengthened its market presence
with the acquisition of Therapon in
November 2018, a Victoria-based
veterinary wholesale business.
Acquisitions completed
During the year EBOS invested $93.6
million in strategic acquisitions, which
included the following transactions:
• The acquisition of all minority shares
in TWG.
• The acquisition of Warner & Webster,
a medical and surgical supplies
wholesaler servicing Victoria and
South Australia.
• The acquisition of Therapon,
a Victoria-based Veterinary
distribution business.
• The acquisition of Quitnits, a leading,
trusted head lice products business
in Australia.
Operating Cash Flow, Net Debt
and Return on Capital Employed
Operating cash flow before capital
expenditure was solid at $118.5 million.
The investment in working capital of
$51 million for the year primarily reflects
the further reduction in the cash benefit
of the Group’s hepatitis C business and
the investment in inventory required
ahead of commencement of trading
with CWG on 1 July 2019.
Net Capital expenditure for the year
was $26.6 million and primarily
comprised final payments on the
new distribution facility in Brisbane
and other improvements across
the Symbion warehouse network in
preparation for the increased volumes
from CWG stores.
In May 2019, the Group successfully
raised NZ$175 million in new capital.
Funds received from the equity raising
have initially been used to repay bank
debt, and are expected to be deployed
from FY20 on strategic acquisitions and
organic growth opportunities.
33
EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
As a result of the debt repayment, the
Group’s Net Debt/EBITDA ratio at
30 June 2019 decreased to 1.41x.
Return on Capital Employed (ROCE)
of 15.9% declined marginally from
June 2018 (-0.4%), reflecting the higher
investment in net working capital.
Dividends
The Directors are pleased to announce
a final dividend of NZ 37 cents per
share, which takes full year dividends
to NZ 71.5 cents per share, an increase
of 4.4% on the prior year.
The record date for the final dividend
is 27 September 2019 and the
dividend will be paid on 11 October
2019. The final dividend will again be
imputed to 25% for New Zealand tax
resident shareholders and will be fully
franked for Australian tax resident
shareholders. The Board confirms
that the Dividend Reinvestment Plan
(DRP) will be operational for the final
dividend, and shareholders can elect
to take shares in lieu of a dividend
at a discount of 2.5% to the volume
weighted average price (VWAP).
Outlook
EBOS recorded a strong underlying
financial performance in FY19 and
the Group is confident of a significant
increase in earnings in FY20.
A performance update will be provided
to shareholders at the Annual Meeting
on 15 October 2019.
57 locations
in Australia and
New Zealand
EBOS Group is
trusted to deliver
when care is
needed most.
35
Financials
Corporate
Governance
Directors’ Interests
& Disclosures
Directory
Business Overview
Corporate
Governance
Directors’ Interests
& Disclosures
Directory
36
EBOS Group 2019 Annual Report
Financial
Report
Introducing this report 48
Section A: EBOS performance
A1. Revenue and expenses 52
A2. Segment information 55
A3. Taxation 58
A4. Earnings per share 60
Section B: Key judgements made
B1. Goodwill and intangibles 61
B2. Acquisition information 66
Section C: Operating assets and liabilities used by EBOS
C1. Trade and other receivables 70
C2. Inventories 71
C3. Trade and other payables 72
Section D: Capital assets used by EBOS to
operate our business
D1. Property, plant and equipment 73
D2. Capital work in progress 74
Section E: How we fund the business
E1. Share capital 75
E2. Dividends 76
E3. Borrowings 77
E4. Borrowing facilities maturity profile 78
E5. Operating cash flows 79
Section F: EBOS group structure
F1. Subsidiaries 81
F2. Investment in associates 83
Section G: How we manage risk
G1. Financial risk management 85
G2. Financial instruments 87
Section H: Other disclosures
H1. Contingent liabilities 89
H2. Commitments for expenditure 89
H3. Subsequent events 89
H4. Related party disclosures 90
H5. Remuneration of auditors 90
H6. Changes in financial reporting standards 91
Contents
Directors’ Responsibility Statement 37
Independent Auditor’s Report 38
Financial Statements 42
Consolidated Income Statement 42
Consolidated Statement of Comprehensive Income 43
Consolidated Balance Sheet 44
Consolidated Statement of Changes in Equity 46
Consolidated Cash Flow Statement 47
Notes to the Financial Statements 48
Additional stock exchange information 92
Key
Key judgements and other judgements madeAccounting policy
Subsequent eventExplanatory note
Risks
37
EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
Directors’ Responsibility
Statement
The Directors of EBOS Group Limited
are pleased to present to shareholders
the financial statements for EBOS
Group Limited and its controlled
entities (together the ‘Group’) for
the year to 30 June 2019.
The Directors are responsible for
presenting financial statements in
accordance with New Zealand law
and generally accepted accounting
practice, which give a true and fair
view of the financial position of the
Group as at 30 June 2019 and the
results of their operations and cash
flows for the year ended on that date.
The Directors consider the financial
statements of the Group have been
prepared using accounting policies
which have been consistently
applied and supported by reasonable
judgements and estimates and
that all relevant financial reporting
and accounting standards have
been followed.
The Directors believe that proper
accounting records have been kept
which enable, with reasonable
accuracy, the determination of the
financial position of the Group and
facilitate compliance of the financial
statements with the Financial Markets
Conduct Act 2013.
The Directors consider that they
have taken adequate steps to
safeguard the assets of the Group,
and to prevent and detect fraud and
other irregularities. Internal control
procedures are also considered to
be sufficient to provide reasonable
assurance as to the integrity and
reliability of the financial statements.
The financial statements are signed
on behalf of the Board by:
Mark Waller
Chairman
Elizabeth Coutts
Director
21 August 2019
38
EBOS Group 2019 Annual Report
Independent Auditor’s
Report to the Shareholders
Report on the Audit of the Consolidated Financial Statements
Opinion We have audited the consolidated financial statements of EBOS Group Limited and its subsidiaries
(the ‘Group’), which comprise the consolidated balance sheet as at 30 June 2019, and the
consolidated income statement, statement of comprehensive income, statement of changes in
equity and cash flow statement for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements, on pages 42 to 91, present
fairly, in all material respects, the consolidated financial position of the Group as at 30 June 2019,
and its consolidated financial performance and cash flows for the year then ended in accordance
with New Zealand Equivalents to International Financial Reporting Standards (‘NZ IFRS’) and
International Financial Reporting Standards (‘IFRS’).
Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (‘ISAs’) and
International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics
for Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
Other than in our capacity as auditor and the provision of advisory services and taxation services,
we have no relationship with or interests in the Company or any of its subsidiaries. These services
have not impacted our independence as auditor of the Company and Group.
Audit MaterialityWe consider materiality primarily in terms of the magnitude of misstatement in the financial
statements of the Group which, in our judgement would make it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced (the ‘quantitative’
materiality). In addition, we also assess whether other matters that come to our attention
during the audit would in our judgement change or influence the decisions of such a person (the
‘qualitative’ materiality). We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
We determined materiality for the Group financial statements as a whole to be AUD9.6m.
Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
39
EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
Key audit matterHow our audit addressed the key audit matter
Goodwill and Indefinite Life Intangible Asset Impairment Assessment
The Group has $947m of goodwill and $124m of indefinite life
intangible assets, including brands of $96m, on the balance
sheet at 30 June 2019 as detailed in note B1 to the financial
statements.
The carrying values of goodwill and brands are dependent
on the future cash flows expected to be generated by the
underlying businesses, and there is a risk if these cash flows
do not meet the Group’s expectations that the assets may be
impaired.
The Group tests goodwill and brands at least annually by
determining the recoverable amount (the higher of value-in-
use or fair value less costs to sell) of the individual assets
where possible, or otherwise the cash-generating units (CGUs)
to which the assets belong and comparing the recoverable
amounts of the assets to their carrying values.
The impairment assessment models prepared by the Group
contain a number of significant assumptions. Changes in these
assumptions might lead to a change in the carrying value of
indefinite life intangible assets and goodwill.
The Group has assessed the recoverable amount of brands
based on fair value using the relief from royalty method.
The key assumptions applied in the above models are:
• annual revenue and expense growth rates for the five-year
forecast period;
• pre-tax discount rates;
• royalty rates; and
• terminal growth rates.
The Group has assessed the recoverable amount of each cash-
generating unit (‘CGU’) or group of CGUs to which goodwill
has been allocated based on value-in-use models. The key
assumptions applied in the value-in-use models are:
• annual revenue and expense growth rates for the five-year
forecast period;
• pre-tax discount rates; and
• terminal growth rates.
We have included the impairment assessments of goodwill
and brands as a key audit matter due to the significance of the
balances to the financial statements and the level of judgement
applied by the Group in determining the key assumptions used
to determine the recoverable amounts.
We considered whether the Group’s methodology
for assessing impairment is compliant with NZ IAS
36:
Impairment of Assets. We focused on testing
and challenging the suitability of the models and
reasonableness of the assumptions used by the Group
in conducting their impairment reviews.
Our procedures included:
• agreeing a sample of future cash flows to Board-
approved forecasts;
• challenging the reliability of the Group’s revenue and
expense growth rates by comparing the forecasts
underlying the growth rates to historical forecasts and
actual results of the underlying businesses (where
applicable); and
• assessing the reasonableness of key assumptions and
changes to them from previous years.
We used our internal valuation specialists to assist with
evaluating the models and challenging the Group’s key
assumptions. The procedures of the specialist included:
• evaluating the appropriateness of the valuation
methodology;
• testing the mathematical integrity of the models;
• evaluating the Group’s determination of the pre-tax
discount rates and royalty rates used in the models
through consideration of the relevant risk factors for each
CGU, the cost of capital for the Group, and market data on
comparable businesses; and
• comparing the terminal growth rates to market data for
the industry sectors.
We evaluated the sensitivity analysis performed by
management to consider the extent to which a change in one
or more of the key assumptions could give rise to impairment
in the goodwill and indefinite life intangible assets.
40
EBOS Group 2019 Annual Report
Other InformationThe Directors are responsible on behalf of the Group for the other information. The other
information comprises the information in the Annual Report that accompanies the consolidated
financial statements and the audit report.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and consider whether it is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If so, we are required to report that fact. We have nothing to
report in this regard.
Board of Directors’
Responsibilities for the
Consolidated Financial
Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible on behalf of the
Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Auditor’s
Responsibilities
for the Audit of the
Consolidated Financial
Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs and ISAs (NZ)
will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is
located on the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/
audit-report-1
This description forms part of our auditor’s report.
Restriction on UseThis report is made solely to the Company’s shareholders, as a body. Our audit has been
undertaken so that we might state to the Company’s shareholders those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Company’s shareholders
as a body, for our audit work, for this report, or for the opinions we have formed.
Paul Bryden, Partner
For Deloitte Limited
Christchurch, New Zealand
21 August 2019
41
EBOS Group 2019 Annual Report
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Corporate
Governance
Directors’ Interests
& Disclosures
Directory
Business Overview
Symbion Brisbane pharmaceutical distribution facility
42
EBOS Group 2019 Annual Report
Financial
Statements
Consolidated Income Statement
The Consolidated Income Statement presents income earned and expenditure incurred by EBOS Group during the financial year in determining profit.
For the financial year ended 30 June 2019Notes
2019
A$’000
2018
A$’000
RevenueA 1 ( a )6,930,3606,986,731
Income from associatesF24,2034,140
Profit before depreciation, amortisation,
net finance costs and tax expense (EBITDA)
250,410
250,052
DepreciationA1 (b)(16,438)(16,210)
AmortisationA1 (b)(15,623)(15,689)
Profit before net finance costs and tax expense218,349218,153
Finance income1,9271,631
Finance costs(27,261)(22,502)
Profit before tax expense193,015197,282
Tax expenseA3(56,288)(58,013)
Profit for the year136,727139,269
Profit for the year attributable to:
Owners of the Company137,700137,274
Non-controlling interests(973)1,995
136,727139,269
Earnings per share:
Basic (cents per share)A489.890.4
Diluted (cents per share)A489.890.4
Notes to the financial statements are included on pages 48 to 91.
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EBOS Group 2019 Annual Report
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Directors’ Interests & Disclosures
Directory
Business Overview
Consolidated Statement of Comprehensive Income
The Consolidated Statement of Comprehensive Income presents profit for the year, plus gains and losses that are not recognised in the
Consolidated Income Statement and instead are required to be taken directly to reserves within equity.
For the financial year ended 30 June 2019
2019
A$’000
2018
A$’000
Profit for the year136,727139,269
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Cash flow hedge (losses)/gains(9,432)2,060
Related income tax2,784(588)
Movement in foreign currency translation reserve12,013(9,297)
5,365(7,825)
Items that will not be reclassified subsequently to profit or loss:
Movement on equity instruments fair valued through other comprehensive income370(1,424)
Total comprehensive income net of tax142,462130,020
Total comprehensive income for the year is attributable to:
Owners of the Company143,435128,025
Non-controlling interests(973)1,995
142,462130,020
Notes to the financial statements are included on pages 48 to 91.
44
EBOS Group 2019 Annual Report
Notes to the financial statements are included on pages 48 to 91.
Consolidated Balance Sheet
The Consolidated Balance Sheet presents a summary of the EBOS Group assets, liabilities and equity at the end of the financial year.
As at 30 June 2019Notes
2019
A$’000
2018
A$’000
Current assets
Cash and cash equivalents166,620149,869
Trade and other receivablesC1897,796916,861
Prepayments9,6039,041
InventoriesC2723,517535,082
Current tax refundable8359
Other financial assets – derivativesG26111,306
Total current assets1,798,2301,612,218
Non-current assets
Property, plant and equipmentD1174,463112,166
Capital work in progressD26,50858,329
Prepayments650-
Deferred tax assetsA3 (b)54,34848,682
GoodwillB 1 ( a )947,055893,796
Indefinite life intangiblesB1 (b)123,582121,717
Finite life intangiblesB1 (d)46,56958,877
Investment in associatesF241,07437,009
Other financial assets9,7339,269
Total non-current assets1,403,9821,339,845
Total assets3,202,2122,952,063
Current liabilities
Trade and other payablesC31,288,3191,170,128
Bank loansE3168,307147,149
Current tax payable12,88311,431
Employee benefits40,80540,724
Other financial liabilities – derivativesG210,7171,980
Total current liabilities1,521,0311,371,412
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EBOS Group 2019 Annual Report
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Notes to the financial statements are included on pages 48 to 91.
Non-current liabilities
Bank loansE3364,038435,121
Trade and other payablesC313,94113,484
Deferred tax liabilitiesA3 (b)57,33053,258
Employee benefits6,6125,944
Total non-current liabilities441,921507,807
Total liabilities1,962,9521,879,219
Net assets1,239,2601,072,844
Equity
Share capitalE1931,811763,636
Share-based payments reserve3,9372,144
Foreign currency translation reserve(10,792)(22,805)
Retained earnings323,635308,499
Equity instrument fair valued through other comprehensive income(1,054)(1,424)
Cash flow hedge reserve(5,206)1,442
Equity attributable to owners of the Company1,242,3311,051,492
Non-controlling interests(3,071)21,352
Total equity1,239,2601,072,844
As at 30 June 2019Notes
2019
A$’000
2018
A$’000
Consolidated Balance Sheet continued
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EBOS Group 2019 Annual Report
Consolidated Statement of Changes in Equity
The Consolidated Statement of Changes in Equity presents the components of capital and reserves of EBOS Group and explains the movements in
each component during the financial year.
For the financial year ended
June 2019Notes
Share
capital
A$’000
Share-
based
payments
A$’000
Foreign
currency
translation
reserve
A$’000
Retained
earnings
A$’000
Equity
instruments
fair valued
through
other com-
prehensive
income
reserve
A$’000
Cash flow
hedge
reserve
A$’000
Non-
controlling
interests
A$’000
Total
A$’000
Balance at 1 July 2017763,636466(13,508)264,239-(30)19,3571,034,160
Profit for the year---137,274--1,995139,269
Other comprehensive income
for the year, net of tax
--(9,297)-(1,424)1,472-(9,249)
Payment of dividendsE2---(93,014)---(93,014)
Share-based payments-1,678-----1,678
Balance at 30 June 2018763,6362,144(22,805)308,499(1,424)1,44221,3521,072,844
Balance at 1 July 2018763,6362,144(22,805)308,499(1,424)1,44221,3521,072,844
Profit for the year---137,700--(973)136,727
Other comprehensive income for
the year, net of tax
--12,013-370(6,648)-5,735
Payment of dividendsE2---(99,336)---(99,336)
Share-based payments-1,793-----1,793
Dividends reinvestedE15,719------5,719
Institutional placementE1165,493------165,493
Share issue costsE1(3,037)------(3,037)
Arising on acquisition of remaining
non-controlling interest
B2
-
-
-
-
-
-
(46,678)
(46,678)
Transfer of non-controlling interest---(23,228)--23,228-
Balance at 30 June 2019931,8113,937(10,792)323,635(1,054)(5,206)(3,071)1,239,260
Notes to the financial statements are included on pages 48 to 91.
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Consolidated Cash Flow Statement
The Consolidated Cash Flow Statement presents the cash generated and used by EBOS Group during the financial year.
For the financial year ended 30 June 2019Notes
2019
A$’000
2018
A$’000
Cash flows from operating activities
Receipts from customers7,032,5077,055,426
Interest received1,9271,631
Dividends received from associatesF21,394859
Payments to suppliers and employees(6,834,753)(6,813,234)
Taxes paid(55,271)(60,044)
Interest paid(27,261)(22,502)
Net cash inflow from operating activitiesE5118,543162,136
Cash flows from investing activities
Sale of property, plant and equipment7,703155
Purchase of property, plant and equipment(27,239)(15,838)
Payments for capital work in progress(5,735)(39,750)
Payments for intangible assets(1,227)(2,492)
Acquisition of subsidiariesB2(93,445)(21,207)
Investment in other financial assets(110)(9,717)
Net cash (outflow) from investing activities(120,053)(88,849)
Cash flows from financing activities
Proceeds from issue of sharesE1168,175-
Proceeds from borrowingsE523,07727,077
Repayment of borrowingsE5(74,955)(9,003)
Dividends paid to equity holders of parentE2(99,932)(91,993)
Net cash inflow/(outflow) from financing activities16,365(73,919)
Net increase/(decrease) in cash held14,855(632)
Effect of exchange rate fluctuations on cash held1,896(3,701)
Net cash and cash equivalents at the beginning of the year149,869154,202
Net cash and cash equivalents at the end of the year166,620149,869
Notes to the financial statements are included on pages 48 to 91.
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EBOS Group 2019 Annual Report
Notes to the consolidated financial statements
For the financial year ended 30 June 2019.
Introducing this report
The notes to the financial statements include information that is considered relevant and material to assist the reader in the
understanding of the financial performance and financial position of EBOS Group.
Information is considered relevant and material if:
• The amount is significant because of its size and nature.
• It is important to assist the readers understanding of the results of EBOS.
• It helps to explain to the reader the changes in the business and/or operations of EBOS.
• It relates to an aspect of operations that is important to the future performance of EBOS.
EBOS Group Limited (‘the Company’) is a profit-oriented company incorporated in New Zealand, registered under the Companies
Act 1993 and dual listed on both the New Zealand Stock Exchange and the Australian Securities Exchange.
Basis of preparation
The financial statements have been prepared in
accordance with Generally Accepted Accounting
Practice (‘GAAP’). They comply with New Zealand
Equivalents to NZ IFRS and other applicable reporting
standards as appropriate for profit-oriented entities.
The financial statements comply with International
Financial Reporting Standards (‘IFRS’).
EBOS is a Tier 1 for-profit entity in terms of the
New Zealand External Reporting Board Standard A1.
The Company is an FMC reporting entity for the
purposes of the Financial Markets Conduct Act 2013,
and its financial statements comply with this Act.
The financial statements have been prepared on the
basis of historical cost, except for the revaluation of
certain financial instruments. Cost is based on the fair
value of the consideration given in exchange for assets.
The information is presented in thousands of Australian
dollars, unless otherwise stated.
Critical accounting estimates and judgements
In the process of applying the Group’s accounting
policies and the application of accounting standards,
EBOS has made a number of judgements and
estimates. The estimates and underlying assumptions
are based on historic experience and various other
factors that are considered to be appropriate under
the circumstances. Therefore, there is an inherent risk
that actual results may subsequently differ from the
estimates made.
These estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the
estimate is revised if the revision affects only that
period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Judgements and estimates that are considered
material to understanding the performance of EBOS
are found in the relevant notes to the financial
statements. Key judgements have been made in
regard to assumptions that support the impairment
assessment for goodwill and indefinite life intangibles
(note B1) and the identification and valuation of
intangibles recognised on acquisitions (note B2).
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Introducing this report continued
Basis of consolidation
The EBOS Group financial statements comprise the
financial statements of EBOS Group Limited, the
parent company, combined with all the entities that
comprise the Group, being its subsidiaries (listed in
note F1) and its share of associate investments
(listed in note F2). The financial statements of the
members of the Group, including associates, are
prepared for the same reporting period as the parent
company, using consistent accounting policies.
Subsidiaries are consolidated on the date on which
control is obtained to the date on which control is
lost. The results of subsidiaries acquired or disposed
of during the year are included in the Consolidated
Income Statement from the effective date of
acquisition or up to the effective date of disposal,
as appropriate.
All significant inter-company transactions and
balances are eliminated on consolidation.
Presentation currency – change in accounting policy
The Group’s revenues, profits and cash flows are
primarily generated in Australian dollars (AUD) and are
expected to remain principally denominated in AUD
in the future. Effective from 1 July 2017, the Group
changed the currency in which it presents its financial
statements from New Zealand dollars (NZD) to AUD
in order to better reflect the underlying performance
of the Group. A change in presentation currency is a
change in accounting policy which, is accounted for
retrospectively.
Statutory financial information included in the Group’s
financial statements for the year ended 30 June 2018,
previously reported in NZD, has been restated into
AUD using the procedures outlined below:
• Assets and liabilities denominated in currencies
other than AUD were translated into AUD at the
closing rates of exchange on the last day of the
relevant accounting period.
• Revenues and expenses in currencies other than
AUD were translated into AUD at the transaction
date rate.
• Share capital and reserves were translated at the
historic rates prevailing at the transaction dates.
• In each case, the rates of exchange were consistent
with those used by the Group in the relevant
accounting period.
In undertaking the translation of financial statements
into an Australian dollar presentation currency,
it was determined that goodwill associated with the
Symbion acquisition in Australia in 2013, previously
denominated in New Zealand dollars, should be
denominated in Australian dollars as it aligns with the
functional currency of the underlying operations of the
acquired entity. Comparative periods have been also
adjusted to allow comparability between periods.
This adjustment, (1 July 2017: $61.6m and
30 June 2018: $43.6m), impacted the balance sheet
only, with decreases to goodwill and equity balances,
with no impact on the income statement or cash flow
statement in the comparative period.
The Directors have not included the original amounts
and the adjustment as we consider this would not
be meaningful to users of the financial statements
as these financial statements are now presented in
Australian dollars.
Adopting of new and revised standards and interpretations
In the current year, the Group adopted all mandatory
new and amended standards and interpretations.
During the current year, NZ IFRS 9 Financial
Instruments (NZ IFRS 9) and NZ IFRS 15 Revenue from
Contracts with Customers (NZ IFRS 15) were adopted.
A summary of the effect of the change in accounting
policy and disclosures resulting from the application
of these new standards is described below.
NZ IFRS 9 (2014) Financial Instruments:
In the current year, the Group has applied NZ IFRS 9
Financial Instruments (as revised in 2014), effective
1 July 2018.
NZ IFRS 9 introduced new requirements for:
1) classification and measurement of financial assets
and financial liabilities;
2) impairment of financial assets; and
3) general hedge accounting.
Details of these new requirements as well as
their impact on the Group’s consolidated financial
statements are described below.
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EBOS Group 2019 Annual Report
Adopting of new and revised standards and
interpretations continued
(i) Classification and measurement of financial assets
and liabilities:
NZ IFRS 9 includes revised guidance on the
classification and measurement of financial
instruments. The standard divides all financial assets
that are currently in the scope of NZ IAS 39 into two
classifications – those measured at amortised cost and
those measured at fair value.
Where assets are measured at fair value, gains and losses
are either recognised entirely in profit or loss (‘FVTPL’),
or recognised in other comprehensive income (‘FVTOCI’).
For debt instruments the FVTOCI classification is
mandatory for certain assets unless the fair value
option is elected. While for equity instruments, the
FVTOCI classification is optional. The classification
of a financial asset is made at the time it is initially
recognised.
All financial assets and financial liabilities are initially
measured at fair value. All recognised financial assets
that are within the scope of NZ IFRS 9 are required to
be measured subsequently at amortised cost, or at fair
value on the basis of the entity’s business model for
managing the financial assets and the contractual cash
flow characteristics of those financial assets.
As a result of the adoption of this standard, financial
assets previously classified as loans and receivables
are now classified as amortised cost.
The Group’s investment in MedAdvisor Pty Limited,
previously classified as an available-for-sale financial
instrument, has been reclassified as being measured at fair
value through other comprehensive income. Any changes
in the fair value of this investment are accumulated
within the fair value reserve within equity. The investment
is fair valued using its listed share price as it is traded
in an active market (Australian Securities Exchange,
the ASX). The Group would transfer the accumulative
amount from this reserve to retained earnings if the
investment is derecognised. No reclassification to
profit or loss would occur upon derecognition.
The Directors believe this designation is appropriate
as the investment is considered to be a long-term
strategic investment by the Group. At 30 June 2019, the
value of this investment was $9.6m. The investment in
MedAdvisor is presented as ‘Other financial assets’
in the balance sheet as a non-current asset.
There is no impact on the Group’s accounting for
financial liabilities, as the new requirements only
affect the accounting for financial liabilities that are
designated at fair value through profit or loss and the
Group does not have such liabilities.
(ii) Impairment of financial assets:
NZ IFRS 9 requires an expected credit loss (ECL) model
as opposed to an incurred credit loss model under
NZ IAS 39. The expected credit loss model requires
the Group to account for expected credit losses and
changes in those expected credit losses at each
reporting date to reflect changes in credit risk since
initial recognition of the financial assets. In other words,
it is no longer necessary for a credit event to have
occurred before credit losses are recognised.
NZ IFRS 9 allows a simplified approach for measuring
the loss allowance at an amount equal to lifetime
ECL for trade receivables (refer note C1). As a result of
adopting this new standard no adjustment to the loss
allowance was required.
(iii) General hedge accounting:
The new general hedge accounting requirements
retain the three types of hedge accounting, however,
the effectiveness test has been replaced with the
principle of an ‘economic relationship’. Retrospective
assessment of hedge effectiveness is also no longer
required. An assessment of the Group’s current hedging
relationships indicated that they qualified as continuing
hedging relationships upon application of NZ IFRS 9.
No other changes on these financial statements has
been recognised as a result of adopting this standard.
NZ IFRS 15 Revenue from Contracts with Customers:
NZ IFRS 15 Revenue from Contracts with Customers
also became effective for the Group on 1 July 2018.
Revenue is measured based on the consideration
specified in a contract with a customer and excludes
amounts collected on behalf of third parties.
The Group recognises revenue when it transfers
control of a product or service to a customer.
The Group has applied the modified approach on
transitioning to NZ IFRS 15 and has applied the
standard on initial application being 1 July 2018.
No material impact on these financial statements has
been recognised as a result of adopting this standard.
Introducing this report continued
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EBOS Group 2019 Annual Report
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Foreign currency
Functional currency
The financial statements of each of the Group’s
entities are measured using the currency of the
primary economic environment in which that entity
operates (‘the functional currency’).
Transactions and balances
Foreign currency transactions are translated into
the functional currency using the exchange rate on
the date of the transaction. At each balance sheet
date, monetary assets and liabilities that are
denominated in foreign currencies are translated at
the rates prevailing on the balance sheet date.
Non-monetary assets and liabilities that are measured
in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of
monetary items, and on the translation of monetary
items, are included in the Consolidated Income
Statement for the period.
Foreign operations
On consolidation, the assets and liabilities of EBOS’
overseas operations are translated at the exchange
rate at the reporting date. Income and expense items
are translated at the average rates for the period.
Exchange differences arising are recognised in the
foreign currency translation reserve (in equity), and
recognised in profit or loss on disposal of the foreign
operation.
Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets
and liabilities of the foreign entity and translated at
the exchange rate at the reporting date.
Other accounting policies
Other accounting policies that are relevant to the
readers understanding of the financial statements
are included throughout the following notes to the
financial statements.
Introducing this report continued
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EBOS Group 2019 Annual Report
A1. Revenue and expenses
(a) Revenue
Revenue consisted of the following items:
2019
A$’000
2018
A$’000
Community Pharmacy3,704,1233,871,426
Institutional Healthcare2,292,6972,239,592
Contract Logistics Services63,01258,480
Contract Logistics Sales454,987395,730
Consumer Products113,931108,616
Interdivisional eliminations(80,434)(65,272)
Healthcare6,548,3166,608,572
Animal Care382,044378,159
6,930,3606,986,731
Recognition and measurement
Community Pharmacy and Institutional Healthcare
Revenue is derived from the supply of human healthcare products to pharmacies in Australia and New Zealand,
in accordance with agreed terms with the customer. Following delivery, the customer obtains control as it has full
discretion over the manner of distribution and price to sell the goods, has the primary responsibility when onselling the
goods and bears the risks of loss in relation to the goods.
A receivable is recognised by the Group when it loses control which is when the goods are delivered to the customer as
this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time
is required before payment is made.
The transaction price may be adjusted for customers who pay their account in full, earlier than what standard credit
terms would require, or for incremental costs incurred in obtaining a sales contract, which are recognised over the
contractual period. Under our standard terms with customers product returns, refunds and provision for warranties
provided are in accordance with local requirements. Accumulated experience has been used to determine that such
returns are not significant.
Section Overview
This section explains the financial performance of EBOS by:
a) displaying additional information about individual items in the Consolidated Income Statement;
b) presenting further analysis of EBOS’ operating segments by revenue and expenses; and
c) providing an analysis of the components of EBOS’ tax balances for the year and the current imputation credit
account balance.
Section A: EBOS performance
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A1. Revenue and expenses continued
(a) Revenue continued
Recognition and measurement
Contract Logistics
Sales: Sales consist of the sale of human healthcare
products to a wide range of healthcare customers
(wholesalers, pharmacies and medical centres)
in accordance with agreed terms with the customer.
A receivable is recognised by the Group when it loses
control, which is when the goods are confirmed to
be onsold by the customer, as this represents the
point in time at which the right to consideration
becomes unconditional, as only the passage of time
is required before payment is made.
Under our standard terms with customers product
returns, refunds and provision for warranties
provided are in accordance with local requirements.
Accumulated experience has been used to
determine that such returns are not significant.
Service fees: Revenue is derived from the provision
of logistics services for a fee to overseas-based
healthcare manufacturers for their operating
activities in Australia and New Zealand. Service fees
are typically charged for storage of manufacturer’s
inventory holdings and pick, pack and delivery
services provided over a period of time, typically
on a monthly basis, as specified within contractual
rates agreed with the manufacturer.
The performance obligation is satisfied either
at a point in time or over time, as applicable,
at which point the right to consideration becomes
unconditional, as only the passage of time is
required before payment is made.
Consumer Products
Revenue is derived from the supply of EBOS’ own
branded human healthcare products, such as Red
Seal, Faulding, Nature’s Kiss, Quitnits and Floradix,
to pharmacies and supermarkets in Australia and
New Zealand and overseas distributors for export
markets. Following delivery, the customer assumes
control as it has full discretion over the manner of
distribution and pricing of goods, has the primary
responsibility when onselling the goods and bears
the risks of loss in relation to the goods.
A receivable is recognised by the Group when it
loses control which is when the goods are delivered
to the customer as this represents the point in
time at which the right to consideration becomes
unconditional, as only the passage of time is
required before payment is made.
The transaction price may be adjusted for customers
who pay their account in full, earlier than what
standard credit terms would require. Under our
standard terms with customers product returns,
refunds and provision for warranties provided are in
accordance with local requirements. Accumulated
experience has been used to determine that such
returns are not significant.
Animal Care
Revenue is derived from the supply of animal care
products to pet retail and vet clinics across Australia
and New Zealand. Upon delivery, the customer
assumes full control as it has complete discretion
over the manner of distribution and pricing of goods,
has the primary responsibility when onselling the
goods and bears the risks of loss in relation to the
goods.
A receivable is recognised by the Group when it
loses control, which is when the goods are delivered
to the customer as this represents the point in
time at which the right to consideration becomes
unconditional, as only the passage of time is
required before payment is made.
Under our standard terms with customers product
returns, refunds and provision for warranties
provided are in accordance with local requirements.
Accumulated experience has been used to
determine that such returns are not significant.
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EBOS Group 2019 Annual Report
A1. Revenue and expenses continued
(b) Expenses
Profit before tax expense has been arrived at after charging the following expenses by nature:
2019
A$’000
2018
A$’000
One-off items
(1)
(11,212)-
Cost of sales(6,121,500)(6,196,382)
Writedown of inventory(2,570)(3,711)
Impairment gain/(loss) on trade and other receivables341(1,753)
Depreciation of property, plant and equipment(16,438)(16,210)
Amortisation of finite life intangibles(15,623)(15,689)
Operating lease and rental expenses(42,796)(39,685)
Donations(210)(243)
Employee benefit expense(283,024)(272,771)
Defined contribution plan expense(15,985)(14,967)
Other expenses(207,197)(211,307)
Total expenses(6,716,214)(6,772,718)
(1)
One-off items comprise merger and acquisition, warehouse transition and restructuring costs incurred, $14.1m,
net of a gain on the sale of excess land held, $2.9m, during the period.
Recognition and measurement
Impairment
EBOS reviews the recoverable amount of its tangible and intangible assets, including goodwill, at each balance
date. If the carrying value of an asset exceeds the recoverable amount, an impairment expense is recognised in the
income statement.
Tangible assets are grouped at the lowest levels for which there are separately identifiable cash flows
(CGUs). The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of
future cash flows expected to be generated by the asset (value in use).
Depreciation and amortisation
Depreciation is provided for on a straight-line basis on all property, plant and equipment other than freehold land,
at depreciation rates calculated to allocate the assets’ cost less estimated residual value, over their estimated
useful lives. Refer to note D1 for the useful lives used in the calculation of depreciation.
Amortisation is charged on a straight-line basis over the estimated useful life of finite life intangibles. Refer to note
B1 for the useful lives used in the calculation of amortisation.
Operating lease expenses
EBOS leases certain land, buildings, plant and equipment. Operating leases are where the lessor rather than EBOS
have effectively retained the substantial risk and benefit of ownership of a leased item. Operating lease payments
are included in the determination of profit or loss in equal instalments over the period of the lease. Lease
incentives received are recognised on a straight-line basis over the lease period.
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A1. Revenue and expenses continued
Employee expenses
Provision is made for benefits owing to employees in respect of wages and salaries, annual leave, long service
leave and employee incentives for services rendered. Provisions are recognised when it is probable they will be
settled and can be measured reliably. They are carried at the remuneration rate expected to apply at the time of
settlement and discounted to the present value of the expected payment to the employee at balance date.
Net finance costs
Finance costs include bank interest and amortisation of costs incurred in connection with borrowing facilities.
Finance costs are expensed immediately as incurred, using the effective interest method, unless they relate to
acquisition and development of qualifying assets, in which case they are capitalised.
Interest income is recognised on a time-proportionate basis using the effective interest method.
A2. Segment information
(a) Reportable segments
EBOS’ major products and services are the same as the reportable segments, i.e. Healthcare and Animal Care, with no major
products and services allocated to corporate.
(b) Segment revenues and results
The following is an analysis of EBOS’ revenue and results by reportable segment:
Revenue from external customers ($’000)
Corporate Segment
Includes net funding costs and
central administration expenses
that have not been allocated to the
healthcare or animal care segments.
Animal Care Segment
Sale of animal care products in a
range of sectors, own brands,
retail and wholesale activities.
EBOS GROUP LIMITED
Healthcare Segment
Sale of healthcare products in a
range of sectors, own brands,
retail healthcare, pharmacy
services and wholesale activities.
20182019
Healthcare
94%
$6,548,316
Healthcare
95%
$6,608,572
Animal Care
6%
$382,044
Animal Care
5%
$378,159
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EBOS Group 2019 Annual Report
A2. Segment information continued
EBITDA ($’000)
Net profit/(loss) after tax for the year attributable to owners of the Company ($’000)
Associate information:
2019
A$’000
2018
A$’000
Included in the segment results above is income from associates:
Animal Care3,5733,271
Healthcare630869
Total income from associates4,2034,140
Healthcare
$215,949$216,579
$48,271
($13,810)
$45,655
($12,182)
Animal CareCorporate
Healthcare
$133,132
$33,045
($28,477)
$130,822
$30,485
($24,033)
Animal CareCorporate
20182019
2018
2019
(b) Segment revenues and results continued
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EBOS Group 2019 Annual Report
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Business Overview
The following is an analysis of other financial information by reportable segment:
(c) Geographical information
EBOS operates in two principal geographical areas: New Zealand and Australia.
EBOS’ revenue from external customers by geographical location and information about its segment assets
(non-current assets), excluding financial instruments and deferred tax assets, are detailed below:
HealthcareAnimal CareCorporate
2019
A$’000
2018
A$’000
2019
A$’000
2018
A$’000
2019
A$’000
2018
A$’000
Depreciation(15,698)(15,326)(740)(884)--
Amortisation of finite life intangibles(13,464)(13,273)(2,159)(2,416)--
Net finance costs----(25,334)(20,871)
Tax (expense)/benefit(54,628)(55,163)(12,327)(11,870)10,6679,020
AustraliaNew ZealandGroup
2019
A$’000
2018
A$’000
2019
A$’000
2018
A$’000
2019
A$’000
2018
A$’000
Continuing operations
Revenue from external customers5,345,1335,528,5901,585,2271,458,1416,930,3606,986,731
Non-current assets1,014,531973,408294,029280,7461,308,5601,254,154
(d) Information about major customers
No revenues from transactions that are with a single customer amount to 10% or more of EBOS’ revenues (2018: Nil).
Recognition and measurement
The reportable segments of EBOS have been identified in accordance with NZ IFRS 8 ‘Operating Segments’.
The Group’s operating segments are identified on the basis of internal reports about components of the Group that
are regularly reviewed by the chief operating decision-maker in order to allocate resources to the segment and to
assess its performance.
The accounting policies of EBOS have been consistently applied to the operating segments. Profit before depreciation,
amortisation, net finance costs and tax expense (EBITDA), is the measure reported to the chief operating decision-
maker for the purposes of resource allocation and assessment of segment performance.
Assets are not allocated to operating segments as they are not reported to the chief operating decision-maker at a
segment level.
A2. Segment information continued
(b) Segment revenues and results continued
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EBOS Group 2019 Annual Report
A3. Taxation
(a) Tax expense recognised in Consolidated Income Statement
The tax rates used are principally the corporate tax rates of 28% (2018: 28%) payable by New Zealand and 30% (2018: 30%)
payable by Australian corporate entities on taxable profits under tax law in each jurisdiction.
2019
A$’000
2018
A$’000
Tax expense comprises:
Current tax expense/(credit):
Current year55,60258,858
Adjustments for prior years(2,375)(1,753)
53,22757,105
Deferred tax expense/(credit):
Current year1,086(593)
Adjustments for prior years1,9751,501
3,061908
Total tax expense56,28858,013
The prima facie income tax expense on pre-tax accounting profit from operations
reconciles to the income tax expense in the financial statements as follows:
Profit before tax expense193,015197,282
Tax expense calculated at 28% (2018: 28%)54,04455,239
Non-deductible expenses8721,327
Effect of different tax rates of subsidiaries operating in
overseas jurisdictions3,0013,263
(Over) provision of tax expense in prior years(400)(253)
Other adjustments(1,229)(1,563)
Total tax expense56,28858,013
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A3. Taxation continued
(b) Deferred tax assets and liabilities
Taxable and deductible temporary differences arise from the following:
(c) Imputation credit account balances
2019
A$’000
2018
A$’000
Gross deferred tax liabilities:
Property, plant and equipment(7,425)(3,218)
Other payables(911)(185)
Other financial assets – derivatives(142)(152)
Intangible assets(48,852)(49,703)
(57,330)(53,258)
Gross deferred tax assets:
Property, plant and equipment12,5538,684
Other payables31,99834,680
Other financial assets – derivatives2,84317
Intangible assets6,5834,965
Tax losses carried forward371336
54,34848,682
2019
A$’000
2018
A$’000
Imputation credit account balances
Imputation credits available directly and indirectly to shareholders
of the parent company
7,573
6,986
Imputation credits allow EBOS to pass on to its shareholders the benefit of the New Zealand income tax it has paid by attaching
imputation credits to the dividends it distributes, reducing shareholders’ net tax obligations.
Recognition and measurement
Income tax expense is the income tax assessed on taxable profit for the year.
Taxable profit differs from profit before tax reported in the Consolidated Income Statement as it excludes items of
income and expense that are taxable or deductible in other years (temporary differences), and also excludes items
that will never be taxable or deductible (permanent differences).
Income tax expense components are current income tax and deferred tax.
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EBOS Group 2019 Annual Report
A3. Taxation continued
Deferred tax is income tax that is expected to be payable or recoverable in the future as a result of the unwinding of
temporary differences. These arise from differences in the recognition of assets and liabilities for financial reporting
and for the filing of income tax returns.
Deferred tax is recognised on all temporary differences, other than those arising:
• from goodwill;
• from the initial recognition of assets and liabilities in a transaction (other than in a business combination) that affects
neither the accounting nor taxable profit or loss; and
• investments in associates and subsidiaries where EBOS is able to control the reversal of the temporary differences
and such differences are not expected to reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the year when a liability is settled or an asset
realised, based on tax rates and tax laws that have been enacted or substantively enacted at balance date.
A deferred tax asset is recognised to the extent it is probable that future taxable profits will be available to use the
asset. This is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available in the future to utilise the deferred tax asset.
A4. Earnings per share
Basic earnings
per share
Diluted earnings
per share
2019
A$’000
2018
A$’000
2019
A$’000
2018
A$’000
Earnings used in the calculation of
total earnings per share (A$’000)137,700137,274137,700137,274
Weighted average number of ordinary shares for
the purposes of calculating earnings per share No. (000’s)153,320151,914153,320151,914
Earnings per share Cents89.890.489.890.4
Basic earnings per share is calculated by dividing the profit attributable to the shareholders of the Company
by the weighted average number of ordinary shares on issue during the year, excluding shares held as treasury
stock. Diluted earnings per share assumes conversion of all dilutive potential ordinary shares in determining the
denominator.
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Business Overview
B1. Goodwill and intangibles
(a) Goodwill
2019
A$’000
2018
A$’000
Gross carrying amount
Balance at beginning of financial year893,796889,259
Recognised from business acquisition during the year43,74914,745
Adjustment due to finalisation of acquisition in the prior year650(2,976)
Effects of foreign currency exchange differences8,860(7,232)
Net book value947,055893,796
Recognition and measurement
Goodwill arising on the acquisition of a subsidiary is recognised as an asset at the date that control is acquired
(the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount
of any non-controlling interest in the acquiree, and the fair value of the acquirer’s previously held equity interest
(if any) in the acquiree over the fair value of the identifiable net assets recognised.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing,
goodwill is allocated to each of EBOS’ CGUs or groups of CGUs expected to benefit from the synergies of the
combination.
CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there
is an indication that the unit may be impaired. The recoverable amount is the higher of fair value less cost to sell
and value in use. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is
first allocated to reduce the carrying amount of any goodwill and then to the other assets of the unit on a pro-
rata basis. Any impairment loss on goodwill is recognised immediately in profit or loss and is not subsequently
reversed.
Section Overview
This section identifies the balances and transactions to which key judgements have been made by EBOS in the
preparation of these financial statements. Key judgements have been made in regard to the estimates for future
cash flows for goodwill and indefinite life intangibles impairment assessment purposes, and the identification of
intangible assets and recognition of goodwill for business acquisitions.
Section B: Key judgements made
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EBOS Group 2019 Annual Report
B1. Goodwill and intangibles continued
(b) Indefinite life intangibles
Terry White
Chemmart
Brands
A$’000
Other
Healthcare
Brands
A$’000
Franchise
Network
A$’000
Animal
Care
Brands
A$’000
Healthcare
Trademarks
A$’000
Total
A$’000
Gross carrying amount
Balance at 1 July 201736,55021,16010,95425,18016,392110,236
Acquisitions through business
combinations-12,649---12,649
Effects of foreign currency exchange
differences-(390)-(213)(565)(1,168)
Balance at 30 June 201836,55033,41910,95424,96715,827121,717
Effects of foreign currency exchange
differences-961-2486561,865
Balance at 30 June 201936,55034,38010,95425,21516,483123,582
Recognition and measurement
Indefinite life intangible assets represent purchased brands, trademarks and franchise network asset that are initially
recognised at fair value. These intangible assets are tested annually for impairment on the same basis as for goodwill.
Judgement: useful lives of indefinite life intangible assets
The Directors have assessed these brands, trademarks and a franchise network asset as having an indefinite useful
life. In coming to this conclusion, the expected expansion of these assets across other products and markets,
the typical product life cycle of these assets, the stability of the industry in which the assets are operating, the level
of maintenance expenditure required and the period of legal control over these assets has been considered.
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B1. Goodwill and intangibles continued
(c) Cash-generating units
The carrying amount of goodwill and indefinite life intangibles allocated to CGUs or groups of CGUs is as follows:
GoodwillIndefinite life intangibles
2019
A$’000
2018
A$’000
2019
A$’000
2018
A$’000
Healthcare Australia
1
624,914583,54912,74612,649
Healthcare New Zealand
2
69,91167,19521,64620,784
Healthcare: Pharmacy/Logistics NZ
3
90,87087,24816,48315,826
Healthcare: Terry White Group
4
10,99910,63747,49247,492
Animal Care
5
150,361145,16725,21524,966
947,055893,796123,582121,717
For the year ended 30 June 2019, the Directors have determined that there is no impairment of any of the CGUs containing
goodwill, brands, trademarks or the franchise network asset (2018: Nil).
1
Australian Consumer, Hospital, Pharmacy, Primary Healthcare sectors.
2
New Zealand Consumer, Hospital, Primary Healthcare, Aged Care and International Product Supplies.
3
New Zealand Pharmacy Wholesaler and Logistic Services.
4
Australia – Terry White Group.
5
New Zealand and Australia Animal Care.
Key judgement: impairment assessment assumption
The recoverable amounts of CGUs is determined on the basis of value-in-use calculations.
The recoverable amount calculations are most sensitive to changes in the following assumptions:
RevenueEstimated by management based on revenue achieved in the period immediately before the
start of the assessment period and adjusted each year for any anticipated growth.
Operating costsEstimated by management based on current trends at the start of the assessment period and
adjusted for expected changes in the business or sector in which the business operates.
Discount ratesEstimated by management based on a current market assessment of the time value of money,
cost of capital and risks specific to the asset to which the cash flows generated by that asset
are being assessed.
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EBOS Group 2019 Annual Report
B1. Goodwill and intangibles continued
(c) Cash-generating units continued
2019 2018
Goodwill
Annual revenue growth rates2.5% - 7.0%3.5% - 7.1%
Allowance for increases in expenses1.8% - 5.8%3.0% - 6.7%
Pre-tax discount rates12.3% - 13.8%12.3% - 14.1%
Terminal growth rate 2.5%2.5%
Key estimate: value-in-use calculation
The value-in-use calculation uses cash flow projections based on financial forecasts approved by the Board and
management covering a five-year period, including terminal value, and management’s past experience. The following
estimates were used in the value-in-use calculation:
Key estimate: value-in-use calculation
The fair value of indefinite life intangibles has been calculated using the relief from royalty method. The following
estimates were used:
Management has carried out a sensitivity analysis and believe that any reasonably possible change in the key
assumptions would not cause the book value of any of the CGUs, or groups of CGUs to exceed their recoverable
amount.
Indefinite life intangibles
Annual revenue growth rates2.5% - 7.0%3.8% - 7.0%
Allowance for increases in expenses1.8% - 5.6%3.0% - 7.0%
Royalty rate3.0% - 11.8%3.0% - 8.3%
Pre-tax discount rates13.3% - 20.8%13.2% - 17.9%
Terminal growth rate 2.5%2.5%
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B1. Goodwill and intangibles continued
(d) Finite life intangibles
Other
A$’000
Customer
relationships/
contracts
A$’000
Total
A$’000
Gross carrying amount15,553107,099122,652
Accumulated amortisation and impairment(10,388)(53,387)(63,775)
Balance at 30 June 20185,16553,71258,877
Gross carrying amount19,063106,874125,937
Accumulated amortisation and impairment(13,949)(65,419)(79,368)
Balance at 30 June 20195,11441,45546,569
Aggregate amortisation recognised as an expense during the year:
2019
A$’000
2018
A$’000
Customer relationships and contracts12,23813,535
Other3,3852,154
15,62315,689
Recognition and measurement
Finite life intangible assets are recorded at cost less accumulated amortisation. Amortisation is charged on a
straight-line basis over their estimated useful life.
Judgement: useful lives of finite life intangible assets
In determining the estimated useful life of finite life intangible assets (of a period of between one and 12 years)
the following characteristics have been assessed: (i) expected expansion of the usage of the assets, (ii) the typical
product life cycle of these assets, (iii) the stability of the industry in which the assets are operating, and (iv) the
level of maintenance expenditure required. The estimated useful life and amortisation period is reviewed at the
end of each annual reporting period.
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EBOS Group 2019 Annual Report
B1. Goodwill and intangibles continued
(e) Goodwill and intangibles accounting policies
Accounting policies
At each balance sheet date, EBOS reviews the carrying amounts of its non-current assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, EBOS estimates the
recoverable amount of the CGU to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset (CGU) is estimated to be less than its carrying amount,
the carrying amount of the asset (CGU) is reduced to its recoverable amount. An impairment loss is recognised as an
expense immediately.
Where an impairment loss subsequently reverses, other than for goodwill, the carrying amount of the asset (CGU)
is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (CGU) in prior years. A reversal of an impairment loss is recognised as income immediately.
Impairment losses cannot be reversed for goodwill.
B2. Acquisition information
The following material acquisitions of subsidiaries took place during the year.
Name of business acquired
Principal
activities
Date of
acquisition
Cost of
acquisition
A$’000
2019:
100% of the business assets of Warner and Webster Pty LtdHealthcareAugust 201834,353
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B2. Acquisition information continued
Carrying value
A$’000
Fair value
adjustment
A$’000
Fair value on
acquisition
A$’000
Current assets
Cash and cash equivalents1,588-1,588
Trade and other receivables5,807(280)
1
5,527
Prepayments144(50)
2
94
Inventories2,992(716)
3
2,276
Non-current assets
Property, plant and equipment347-347
Deferred tax assets-744
4
744
Current liabilities
Trade and other payables(5,685)(675)
5
(6,360)
Current tax payable(43)(5)
6
(48)
Employee benefits(537)(51)
7
(588)
Non-current liabilities
Employee benefits(235)(167)
7
(402)
Net assets acquired4,378(1,200)3,178
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EBOS Group 2019 Annual Report
Judgements made:
1.
To recognise the fair value of trade and other receivables on acquisition.
2.
To recognise the fair value of prepayments on acquisition.
3.
To recognise the fair value of inventories on acquisition.
4.
To recognise deferred tax asset balance on acquisition.
5.
To recognise the fair value of trade and other payables on acquisition.
6.
To recognise additional tax liability on acquisition.
7.
To recognise the fair value of employee benefits on acquisition.
Recognition and measurement
Acquisition of subsidiaries and businesses are accounted for using the acquisition method.
The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by EBOS in exchange for control of the acquiree. Acquisition-
related costs are recognised in profit or loss as incurred.
Where applicable, the cost of acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted against
the cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the
fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant
NZ IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.
Goodwill arising on acquisition
Goodwill arose on the acquisition of Warner and Webster Pty Ltd (‘WW’) because the cost of acquisition included a control
premium paid. In addition, goodwill resulted from the consideration paid for the benefit of future expected cash flows above
the current fair value of the assets acquired and the expected synergies and future market benefits expected to be obtained.
These benefits are not recognised separately from goodwill as the expected future economic benefits arising cannot be reliably
measured and they do not meet the definition of identifiable intangible assets.
WW was acquired as it is a profitable Australian healthcare distribution business, which the Group believes fits strategically with
its Australian healthcare business assets.
Impact of the acquisition on the results of the Group for the period ended 30 June 2019
WW contributed $1,252,000 to the Group profit for the period. Group revenue for the period includes $36,684,000 in respect
of WW. Had the WW acquisition been effective at 1 July 2018, the revenue of the Group from continuing operations would have
been $6,938,436,000 and the profit for the period would have been $136,951,000.
Carrying value
A$’000
Fair value
adjustment
A$’000
Fair value on
acquisition
A$’000
Goodwill on acquisition31,175
Total consideration34,353
Less cash and cash equivalents acquired(1,588)
Deferred purchase consideration(750)
Net cash outflow from acquisition32,015
B2. Acquisition information continued
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B2. Acquisition information continued
Impact on the Consolidated Cash Flow Statement of all acquisitions during the year:
2019
A$’000
2018
A$’000
Subsidiaries acquired
Consideration
Cash and cash equivalents48,36422,030
Deferred purchase consideration4,347(1,549)
Total consideration52,71120,481
Represented by
Net assets acquired8,3128,712
Goodwill on acquisition44,39911,769
Total consideration52,71120,481
Net cash outflow on acquisition of subsidiaries and non-controlling interests
Cash and cash equivalents consideration48,36422,030
Non-controlling interest46,678-
Less cash and cash equivalents acquired(1,597)(823)
Net cash consideration paid93,44521,207
During the period the Group also acquired the remaining equity interest in Terry White Chemmart Pty Ltd (TWC) for $46.7m.
This payment represented an excess over the non-controlling interest’s share of net assets of $23.2m, which has been taken
directly to reserves. As the Group held a greater than 50% equity share in TWC, it was already considered to be a subsidiary of
the Group.
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EBOS Group 2019 Annual Report
C1. Trade and other receivables
2019
A$’000
2018
A$’000
Trade receivables (i)879,551909,905
Other receivables32,05024,707
Allowance for expected credit losses (ii)(13,805)(17,751)
897,796916,861
Recognition and measurement
Trade receivables are measured on initial recognition at fair value and are subsequently carried at amortised cost.
They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.
The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty
and there is no realistic prospect of recovery.
The Directors believe that the carrying amount of trade and other receivables approximates their fair value.
(i) Trade receivables are non-interest bearing. Interest may be charged on outstanding overdue balances in accordance with the
terms and conditions under which goods are supplied. Trade debtors generally have terms of 30 days.
(ii) Provision for expected credit losses
Section Overview
This section provides further analysis on the significant operating assets and liabilities of EBOS. These balances
comprise the material net working capital balances used by EBOS to run its day to day operating activities.
Section C: Operating assets and liabilities used by EBOS
Current
A$’000
30–60
days
A$’000
60–90
days
A$’000
90+
days
A$’000
Total
A$’000
Trade receivables – total807,68853,3728,9339,558879,551
Provision for expected credit losses – total(533)(864)(3,463)(8,945)(13,805)
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C1. Trade and other receivables continued
Recognition and measurement
The Group recognises a loss allowance for expected credit losses (‘ECL’) on trade receivables. The amount of ECLs
is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial
instrument.
The Group measures the provision for ECL using the simplified approach to measuring ECL, which uses a lifetime
expected loss allowance for all trade receivables. The Group determines lifetime ECLs for groups of trade receivables
with shared credit risk characteristics. Groupings are based on customer, trading terms and ageing.
An ECL rate is determined based on the historic credit loss rates for the Group, adjusted for other current observable
data that may materially impact the Group’s future credit risk. This other observable data includes specific factors in
relation to each debtor or general economic conditions of the industry in which the debtors operate.
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than
90 days past due unless the Group has reasonable basis that a more lagging default criterion is more appropriate.
C2. Inventories
2019
A$’000
2018
A$’000
Raw materials – at cost1,746718
Finished goods – at cost721,771534,364
723,517535,082
Recognition and measurement
Inventories consist of raw materials (for the manufacturing operations of EBOS) and finished goods. Inventories are
recognised at the lower of cost, determined on a weighted average basis and net realisable value. Cost comprises
direct materials and where applicable, direct labour costs and those overheads that have been incurred in bringing
the inventories to their present location and condition. Net realisable value represents the estimated selling price in
the ordinary course of business, less all estimated costs of completion and costs to be incurred in marketing, selling
and distribution.
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EBOS Group 2019 Annual Report
C3. Trade and other payables
2019
A$’000
2018
A$’000
Current
Trade payables1,190,5991,078,171
Other payables91,06989,653
Deferred purchase consideration6,6512,304
1,288,3191,170,128
Non-current
Other payables13,94113,484
13,94113,484
Recognition and measurement
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
Trade and other payables are initially measured at fair value and subsequently measured at amortised cost,
using the effective interest method.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
Trade payables are unsecured and are generally settled within the month following the invoice date.
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Business Overview
Reconciliation of the carrying amount from the beginning to the end of the year ($’000)
Opening NBV
250,000
200,000
150,000
100,000
50,000
-
Additions/
transfers from
WIP
AcquisitionsDisposalsDepreciationForexClosing NBV
$81,714
($4,814)
($16,438)
$866
$969
$112,166
$174,463
D1. Property, plant and equipment
Freehold
land
A$’000
Buildings
A$’000
Leasehold
improvements
A$’000
Plant and
equipment
A$’000
Office equipment,
furniture and fittings
A$’000
Total
A$’000
Cost33,05716,99621,16462,48221,965155,664
Accumulated depreciation-(5,531)(7,336)(23,257)(7,374)(43,498)
Balance at 30 June 201833,05711,46513,82839,22514,591112,166
Cost28,69040,38534,900100,06328,025232,063
Accumulated depreciation-(6,660)(9,867)(29,263)(11,810)(57,600)
Balance at 30 June 201928,69033,72525,03370,80016,215174,463
Section Overview
This section explains what capital assets, such as property, plant and equipment, EBOS uses to operate its business
activities. This section also describes the material movements in capital assets during the year.
Section D: Capital assets used by EBOS to operate our business
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EBOS Group 2019 Annual Report
Recognition and measurement
Property, plant and equipment is initially recorded at cost. Cost includes the original purchase consideration and
those costs directly attributable to bringing the item of property, plant and equipment to the location and condition
for its intended use. After recognition as an asset, property, plant and equipment is carried at cost less accumulated
depreciation and impairment losses.
Depreciation of property, plant and equipment assets, other than freehold land, is calculated on a straight-line basis.
This allocates the cost or fair value amount of an asset, less any residual value, over its estimated useful life.
Judgements and estimates – useful lives
EBOS estimates the remaining useful life of assets as follows:
• Buildings: 20 to 50 years
• Leasehold improvements: two to 15 years
• Plant and equipment: two to 20 years
• Office equipment, furniture and fittings: two to 10 years
The residual value and useful lives are reviewed and if appropriate, adjusted at each reporting date.
D2. Capital work in progress
2019
A$’000
2018
A$’000
Capital work in progress6,50858,329
6,50858,329
Capital work in progress relates to buildings under construction. The additional cost to complete the project is estimated at
$6,317,000 (2018: $11,984,000).
D1. Property, plant and equipment continued
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Capital management
EBOS manages its capital, meaning total shareholders’ funds, to provide appropriate returns to shareholders while maintaining a
capital structure that safeguards its ability to remain a going concern and optimises the cost of capital.
Recognition and measurement
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its
liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.
E1. Share capital
Notes
2019
No.
000’s
2019
Total
A$’000
2018
No.
000’s
2018
Total
A$’000
Fully paid ordinary shares
Balance at beginning of financial year152,539763,636151,914763,636
Dividend reinvested – April 20192865,719--
Institutional placement – May 20198,883165,493--
Institutional placement costs-(3,037)--
Shares issued under the long-term
executive incentive scheme
– September 2017--625-
H4161,708931,811152,539763,636
2019
No.
000’s
2018
No.
000’s
Treasury stock
Opening stock1,225600
Shares scheme – shares issued-625
1,2251,225
Section Overview
This section explains how EBOS funds its operations and shows the sources of other available facilities that it may
call upon if required to fund its operational or future investing activities.
Section E: How we fund the business
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EBOS Group 2019 Annual Report
20192018
A$ Cents
per share
Total
A$’000
A$ Cents
per share
Total
A$’000
Recognised amounts
Fully paid ordinary shares:
Final – prior year32.449,05730.346,185
Interim – current year33.250,27930.746,829
Dividends per share 65.699,33661.093,014
Unrecognised amounts
Final dividend35.457,20532.649,711
2019
NZ$ Cents
per share
2018
NZ$ Cents
per share
Recognised amounts
Fully paid ordinary shares:
Final – prior year35.533.0
Interim – current year34.533.0
Dividends per share 70.066.0
Unrecognised amounts
Final dividend37.035.5
Subsequent event
A dividend of NZ 37.0 cents per share was declared on 21 August 2019 with the dividend being payable on 11 October
2019. The anticipated cash impact of the dividend is approximately $50.6m (2018: $49.7m).
E2. Dividends
Recognition and measurement
Dividends are approved by the Board in New Zealand dollars. Dividends recognised in the Statement of Changes in
Equity are converted from New Zealand dollars to Australian dollars at the exchange rate applicable on the date the
dividend was approved.
Unrecognised dividends are converted at the exchange rate applicable on the reporting date.
The following table shows dividends approved in New Zealand dollars:
New Zealand dollar dividends paid to equity holders of the parent are translated into Australian dollars and disclosed in the cash
flow statement at the foreign currency exchange rate applicable on the date they are paid.
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E3. Borrowings
2019
A$’000
2018
A$’000
Current
Bank loans – securitisation facility (i)168,307147,149
Non-current
Bank loans (ii)364,038435,121
(i) EBOS, through a subsidiary company, has a trade debtor securitisation facility of $400.0m (2018: $400.0m) of which $231.7m
was unutilised at 30 June 2019 (2018: $252.9m). The securitisation facility involves providing security over the future cash
flows of specific trade receivables, which meet certain criteria, in return for cash finance on a contracted percentage of the
security provided. As recourse, in the event of default by a trade debtor, remains with EBOS, the trade receivables provided
as security and the funding provided are recognised on the EBOS Consolidated Balance Sheet.
At 30 June 2019, the value of trade receivables provided as security under this securitisation facility was $212.5m
(2018: $190.4m). The net cash flows associated with the securitisation program are disclosed in the Consolidated Cash Flow
Statement as cash flows from financing activities.
(ii) EBOS has bank term loans and working capital facilities of $635m (2018: $556.8m), of which $270.9m was unutilised at
30 June 2019 (2018: $121.6m).
EBOS is in full compliance with its debt facility financial covenants. All bank loans, excluding the securitisation facility,
are secured by a charge over the assets of EBOS.
Recognition and measurement
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received plus issue
costs associated with the borrowing. After initial recognition, these loans and borrowings are subsequently measured
at amortised cost using the effective interest method, which allocates the cost through the expected life of the loan or
borrowing. The fair value of non-current borrowings is approximately equal to their carrying amount.
Bank loans are classified as current liabilities unless EBOS has an unconditional right to defer settlement of the liability
for at least 12 months after the balance sheet date.
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2019
A$’000
2018
A$’000
Bank overdraft facility, reviewed annually and payable at call:
Amount unused1,3951,348
1,3951,348
Bank loan facilities with various maturity dates through to May 2023
(2018: May 2023)
Amount used532,345582,270
Amount unused510,293374,511
1,042,638956,781
E4. Borrowings facilities maturity profile
As at 30 June 2019, EBOS had unrestricted access to the following lines of available credit:
Facility
Amount (AUD)
$ millionsMaturity
Term debt facilities ($AUD)$58.01–2 years
Term debt facilities ($NZD)$66.71–2 years
Term debt facilities ($AUD/$NZD)$50.02–3 years
Term debt facilities ($AUD)$292.93–4 years
Working capital facilities ($AUD/$NZD)$167.3< 1 year
Securitisation facility ($AUD)$400.01–2 years
Less than
1 year
A$’000
1–2 years
A$’000
2–3 years
A$’000
3–4 years
A$’000
4–5 years
A$’000
5+ years
A$’000
Total
A$’000
Bank loans
201916,445213,82184,687261,833--576,786
201820,90720,648255,07959,150294,363-650,147
The following table shows the remaining contractual maturity for EBOS’ borrowings at balance date. The table includes both
interest and principal (undiscounted) cash flows, with total bank loans of $532.3m (2018: $582.3m).
Financing activities
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E5. Operating cash flows
Reconciliation of profit for the year with cash from operating activities:
For the financial year ended 30 June 2019
2019
A$’000
2018
A$’000
Profit for the year136,727139,269
Add/(less) non-cash items:
Depreciation16,43816,210
(Gain)/loss on sale of property, plant and equipment(2,267)15
Amortisation of finite life intangible assets15,62315,689
Share of profit from associates, net of dividends received(4,203)(4,140)
Expense recognised in respect of share-based payments1,793772
Deferred tax3,061908
30,44529,454
Movement in working capital:
Trade and other receivables19,06573,728
Prepayments(1,212)(1,590)
Inventories(188,435)8,777
Current tax refundable/payable1,428(1,979)
Trade and other payables118,648(92,073)
Employee benefits7492,251
Foreign currency translation of working capital balances(1,201)1,663
(50,958)(9,223)
Balances classified as investing activities(2,951)1,652
Working capital items acquired5,280984
Net cash inflow from operating activities118,543162,136
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Accounting policies
Cash and cash equivalents comprise cash on hand and deposits readily convertible to cash and which are not
subject to a significant risk of change in value.
The Consolidated Cash Flow Statement is prepared exclusive of Goods and Services Tax (GST), which is consistent
with the method used in the Consolidated Income Statement.
• Operating activities include all transactions and other events that are not investing or financing activities.
• Investing activities are those activities relating to the acquisition and disposal of current and non-current
investments and any other non-current assets.
• Financing activities are those activities relating to changes in the equity and debt capital structure of the Group
and those activities relating to the cost of servicing EBOS’ equity capital.
Reconciliation of debt:
1 July 2018
A$’000
Net (repayments)
A$’000
Foreign currency
movement
A$’000
30 June 2019
A$’000
Bank loans582,270(51,878)1,953532,345
1 July 2017
A$’000
Net drawings
A$’000
Foreign currency
movement
A$’000
30 June 2018
A$’000
Bank loans567,34618,074(3,150)582,270
E5. Operating cash flows continued
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F1. Subsidiaries
The following entities comprise the significant trading and holding companies of the Group:
Parent and head entity: EBOS Group Limited
Ownership Interests
and Voting Rights
Subsidiaries (all balance dates 30 June unless otherwise noted)
Country of
Incorporation20192018
Pet Care Holdings Australia Pty Limited
(formerly EBOS Healthcare (Australia) Pty Limited)
Australia100%100%
EBOS Group Australia Pty Limited Australia100%100%
EBOS Health & Science Pty LimitedAustralia100%100%
PRNZ LimitedNew Zealand100%100%
Pharmacy Retailing NZ LimitedNew Zealand100%100%
Pet Care Distributors Pty Limited
(formerly Healthcare Distributors Pty Limited)Australia100%100%
Masterpet Corporation LimitedNew Zealand100%100%
Masterpet Australia Pty LimitedAustralia100%100%
Botany Bay Imports and Exports Pty LimitedAustralia100%100%
Aristopet Pty Ltd Australia100%100%
EAHPL Pty Limited
(formerly EBOS Australia Holdings Pty Limited)Australia100%100%
ZHHA Pty LtdAustralia100%100%
ZAP Services Pty LtdAustralia100%100%
Symbion Pty LtdAustralia100%100%
Intellipharm Pty LtdAustralia100%100%
Clinect Pty LtdAustralia100%100%
Lyppard Australia Pty LtdAustralia100%100%
DoseAid Pty Limited
(formerly APHS Packaging Pty Ltd)
Australia100%100%
Symbion Trade Receivables Trust
(formerly Symbion Pharmacy Services Trade Receivables Trust)
1
Australia100%100%
Blackhawk Premium Pet Care Pty LimitedAustralia100%100%
Endeavour Consumer Health Limited (
formerly Healthcare Distributors Limited)New Zealand100%100%
Section Overview
This section provides information to assist in understanding the EBOS Group legal structure and how it affects the
financial position and performance of the Group. Details of businesses acquired are presented in Section B.
Section F: EBOS Group structure
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Ownership Interests
and Voting Rights
Subsidiaries (all balance dates 30 June unless otherwise noted)
Country of
Incorporation20192018
Nexus Australasia Pty LimitedAustralia100%100%
EBOS PH Pty LimitedAustralia100%100%
Terry White Group LimitedAustralia100%50%
Chemmart Holdings Pty LtdAustralia100%50%
TW&CM Pty LtdAustralia100%50%
TWC IP Pty LtdAustralia100%50%
PBA Wholesale Pty LtdAustralia100%50%
VIM Health Pty LtdAustralia100%50%
PBA Finance Pty LtdAustralia100%50%
Chem Plus Pty LtdAustralia100%50%
Pharmacy Brands Australia Pty LtdAustralia100%50%
VIM Health IP Pty LtdAustralia100%50%
Tony Ferguson Weight Management Pty LtdAustralia100%50%
Lite Living Pty LtdAustralia100%50%
Alchemy Holdings Pty LimitedAustralia100%100%
Alchemy Sub-Holdings Pty LtdAustralia100%100%
HPS Holdings Group (Aust) Pty LtdAustralia100%100%
HPS Hospitals Pty LtdAustralia100%100%
HPS Corrections Pty LtdAustralia100%100%
HPS Services Pty LtdAustralia100%100%
Hospharm Pty LtdAustralia100%100%
HPS IVF Pty LtdAustralia100%100%
HPS Finance Pty LtdAustralia100%100%
HPS Brands Pty LtdAustralia100%100%
Endeavour CH Pty Ltd
(formerly Natures Synergy Pty Ltd)Australia100%100%
Ventura Health Pty LimitedAustralia100%100%
You Save Management Pty LimitedAustralia100%100%
Mega Save Management Pty LimitedAustralia100%100%
Cincotta Holding Company Pty LimitedAustralia100%100%
CC Pharmacy Investments Pty LimitedAustralia100%100%
F1. Subsidiaries continued
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F2. Investment in associates
Name of associate companyPrincipal activities
Date of
acquisition
Proportion
of shares
and voting
rights
acquired
Cost of
acquisition
A$’000
Animates NZ Holdings LimitedAnimal Care suppliesDecember 201150%17,353
Good Price Pharmacy Franchising Pty LimitedHealthcare suppliesOctober 201425.77%3,592
Good Price Pharmacy Management Pty LimitedHealthcare suppliesOctober 201425.77%3,592
The reporting date for Animates NZ Holdings Limited is 30 June. Animates NZ Holdings Limited is incorporated in New Zealand.
The reporting date for Good Price Pharmacy Franchising Pty Limited and Good Price Pharmacy Management Pty Limited is
30 June. They are incorporated in Australia.
Although the Company holds 50% of the shares and voting power in Animates NZ Holdings Limited this entity is not deemed to
be a subsidiary as the other 50% is held by a single shareholder, therefore EBOS is unable to exercise control over this entity.
Ownership Interests
and Voting Rights
Subsidiaries (all balance dates 30 June unless otherwise noted)
Country of
Incorporation20192018
CC Pharmacy Promotions Pty LimitedAustralia100%100%
CC Pharmacy Management Pty LimitedAustralia100%100%
Shanghai EBOS Business Co. LtdChina100%-
ACN 618 208 969 Pty LtdAustralia100%100%
Warner and Webster Pty LtdAustralia100%-
W & W Management Services PLAustralia100%-
1.
The balance date of all subsidiaries is 30 June, aside from the Symbion Trade Receivables Trust, which has a balance date of 31 December. The results of the Symbion
Trade Receivables Trust have been included in the Group results for the year to 30 June 2019. The Trust is consolidated as EBOS has the exposure, or rights, to variable
returns from its involvement with the Trust and the Group considers that it has existing rights that give it the current ability to direct the relevant activities of the Trust.
F1. Subsidiaries continued
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F2. Investment in associates continued
The summary financial information in respect of EBOS Group’s associates is set out below:
2019
A$’000
2018
A$’000
Statement of Financial Position
Total assets71,98368,061
Total liabilities(31,643)(34,862)
Net assets40,34033,199
Group’s share of net assets19,59915,755
Income Statement
Total revenue129,464120,147
Total profit for the year9,5639,900
Group’s share of profits of associates4,2034,140
Movement in the carrying amount of the Group’s investment in associates:
Balance at the beginning of the financial year37,00934,661
Share of profits of associates4,2034,140
Share of dividends (1,394)(859)
Net foreign currency exchange differences1,256(933)
Balance at the end of the financial year41,07437,009
Goodwill included in the carrying amount of the Group’s investment
in associates
20,43019,823
The Group’s share of the contingent liabilities of associates--
The Group’s share of capital commitments of associates--
Recognition and measurement
An associate is an entity over which EBOS has significant influence and that is neither a subsidiary nor an interest in a
joint venture or joint operation. EBOS has significant influence when it has the power to participate in the financial and
operating policy decisions of the investee, but is not in control or joint control over those policies.
Investments in associates are incorporated in the EBOS Group financial statements using the equity method of
accounting. Under the equity method, investments in associates are carried in the Consolidated Balance Sheet at cost
and adjusted for post-acquisition changes in EBOS’ share of the net assets of the associate, less any impairment in
the value of individual investments and less any dividends. Losses of an associate in excess of EBOS’ interest in that
associate are recognised only to the extent that EBOS has incurred legal or constructive obligations or made payments
on behalf of the associate.
Any excess of the cost of acquisition over EBOS’ share of the net fair value of the identifiable assets, liabilities and
contingent liabilities of the associate recognised at the date of acquisition, is recognised as goodwill. The goodwill is
included within the carrying amount of the investment and is assessed for impairment as part of that investment.
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Foreign currency risk
EBOS is exposed to foreign currency risk arising primarily from the procurement of goods denominated in foreign
currencies (US dollar, Australian dollars, Thai baht, euro and British pound).
Section Overview
This section describes the financial risks that EBOS has identified and how it manages these risks to protect its
financial position and financial performance. Management of these risks includes the use of financial instruments
to hedge against unfavourable interest rate and foreign currency movements.
Section G: How we manage risk
G1. Financial risk management
The EBOS corporate treasury function provides services to the Group’s entities, coordinates access to financial markets,
and manages the financial risks relating to the operation of the Group.
EBOS does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
The use of financial derivatives is governed by Group policies approved by the Board of Directors, which provide written
principles on the use of financial derivatives. Compliance with policies and exposure limits is reviewed by the Board of Directors
on a regular basis.
Foreign exchange rate exposures are managed utilising forward foreign exchange contracts.
It is the policy of the Group to enter into foreign exchange forward contracts to manage the foreign currency risk associated
with anticipated sales and purchase transactions typically out to 12 months of the exposure generated. It is the policy of the
Group to enter into foreign exchange forward contracts for up to 100% of forecasted foreign currency transactions for the next
six months and up to 80% of six to 12 months of forecasted foreign currency transactions.
All forward foreign currency contracts entered into fixed the exchange rate of highly probable forecast transactions,
denominated in foreign currencies, and are designated as cash flow hedges to reduce the Group’s cash flow exposure resulting
from variable movements in exchange rates.
The Group performs a qualitative assessment of effectiveness of hedges using the critical terms of the underlying transaction
and hedging instrument. It is expected that the value of the forward contracts and the value of the corresponding hedged items
will systematically change in opposite direction in response to movements in the underlying exchange rates.
EBOS enters into forward foreign exchange contracts only in accordance with the Board approved treasury policy.
No sources of ineffectiveness emerged from these hedging relationships.
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Interest rate risk
EBOS is exposed to interest rate risk as it borrows funds in both New Zealand dollars and Australian dollars at floating
interest rates.
The risk is assessed and managed by the use of interest rate swap contracts. EBOS agrees to exchange the difference between
fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable EBOS to
mitigate the risk of changing interest rates on debt held.
It is the policy of the Group to enter into interest rate swap contracts to manage interest rate risk associated with floating rate
Group borrowings of up to 100% of the exposure generated.
All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts, are designated as cash
flow hedges to reduce the Group’s cash flow exposure resulting from variable interest rates on borrowings. The interest rate
swaps and the interest payments on the loan occur simultaneously, and the amount accumulated in equity is reclassified to
profit or loss over the period that the floating rate interest payments on debt affect profit or loss.
The Group performs a qualitative assessment of the effectiveness of hedges using the critical terms of the underlying
transaction and hedging instrument. It is expected that the value of the interest rate swaps and the value of the corresponding
hedged items, (floating rate borrowings), will systematically change in opposite direction in response to movements in the
underlying exchange rates.
No sources of ineffectiveness emerged from these hedging relationships.
Interest rate swap contracts are only entered into in accordance with the Group’s Board approved treasury policy.
EBOS manages liquidity risk by maintaining adequate reserves, banking facilities and reserve banking facilities, by continuously
monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities. Refer to note E4 for
information on EBOS’ borrowings facility maturity profile.
EBOS has adopted a policy of only dealing with credit worthy counter parties as a means of mitigating the risk of financial loss
from defaults. All bank balances are assessed to have low credit risk at each reporting date as they are held with reputable
international banking institutions.
Trade receivables consist of a large number of customers spread across diverse sectors and geographical areas. Ongoing credit
evaluation is performed on the financial condition of the trade receivables. Credit assessments are undertaken to determine the
credit quality of the customer, taking into account their financial position, past experience and other relevant factors. Individual
risk limits are granted in accordance with the internal credit policy and authorised via appropriate personnel as defined by the
Group’s delegation of authority manual.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the
maximum exposure to EBOS of any credit risk.
EBOS does not have any significant credit risk exposure to any single counter party. The credit risk on liquid funds and derivative
financial instruments is limited because the counter parties are banks with high credit ratings assigned by international credit
rating agencies.
EBOS has not changed its overall strategy regarding the management of risk from 2018.
G1. Financial risk management continued
Liquidity risk
EBOS is exposed to liquidity risk as it must invest in significant levels of working capital such as inventory and accounts
receivable, which can impact liquidity unless they are converted to cash.
Credit risk
EBOS is exposed to the risk of default in relation to receivables owing from its healthcare and animal care customers,
hedging instruments and guarantees and deposits held with banks and other financial institutions.
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Recognition and measurement
EBOS has categorised these derivatives, both financial assets and financial liabilities, as Level 2 under the fair value hierarchy
contained within NZ IFRS 13. There were no transfers between fair value hierarchy levels during the current or prior periods.
The fair value of forward foreign exchange contracts is determined using a discounted cash flow valuation. Key inputs are based
upon observable forward exchange rates, at the measurement date, with the resulting value discounted back to present values.
Interest rate swaps are valued using a discounted cash flow valuation. Key inputs for the valuation of interest rate
swaps are the estimated future cash flows based on observable yield curves at the end of the reporting period,
discounted at a rate that reflects the credit risk of the various counter parties.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value.
The fair values of financial assets and financial liabilities are determined as follows:
• The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid
markets are determined with reference to quoted market prices.
• The fair value of other financial assets and financial liabilities are determined in accordance with generally accepted
pricing models based on discounted cash flow analysis.
• The fair value of derivative instruments are calculated using quoted prices. Where such prices are not available use is
made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments.
The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their
fair values.
As hedge accounting has been applied for all derivatives, and no hedge ineffectiveness has occurred during the period,
the movement in these instruments has been recognised on the other comprehensive income. The recognition in
profit or loss depends on the nature of the hedge relationship. EBOS designates these derivatives as cash flow hedges
of highly probable forecast transactions. Hedging gains or losses are recognised in the profit or loss when the hedged
items affect the profit or loss, except where they are hedging non-financial items, in which case they are recognised
as an adjustment to the initial carrying value of the non-financial items (basis adjustment). When a forward contract is
used in a cash flow hedge relationship the Group has designated the change in fair value of the entire forward contract,
i.e. including the forward element, as the hedging instrument.
G2. Financial instruments
Derivatives
2019
A$’000
2018
A$’000
Other financial assets – derivatives (at fair value)
Forward foreign exchange contracts (i)6111,289
Interest rate swaps (i)-17
6111,306
Other financial liabilities – derivatives (at fair value)
Forward foreign exchange contracts (i)40-
Interest rate swaps (i)10,6771,980
10,7171,980
(i) Designated and effective as a cash flow hedging instrument carried at fair value.
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EBOS Group 2019 Annual Report
G2. Financial instruments continued
Cash flow hedges
At the inception of a hedge relationship, the Group documents the relationship between the hedging instrument and
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging
instrument that is used in a hedging relationship is highly effective in offsetting changes in the cash flows of the hedged
item attributable to the hedged risk.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges,
is recognised in other comprehensive income and accumulated as a separate component of equity in the hedging
reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
2019
A$’000
2018
A$’000
Buy Australian dollars9,9837,918
Buy euro3,3788,172
Buy British pounds3,2033,029
Buy Thai bhat7,9444,807
Buy US dollars21,35426,292
45,86250,218
2019
A$’000
2018
A$’000
Less than 1 year26,47375,098
1 to 3 years145,81576,212
3 to 5 years195,000159,590
Greater than 5 years--
367,288310,900
Outstanding forward foreign currency contracts: nominal value
Outstanding interest rate swap contracts: nominal value
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Section Overview
This section includes the remaining information relating to EBOS that is required to be presented so as to comply
with its financial reporting requirements.
Section H: Other disclosures
H1. Contingent liabilities
2019
A$’000
2018
A$’000
Contingent liabilities
Guarantees given to third parties3,0022,509
3,0022,509
H2. Commitments for expenditure
2019
A$’000
2018
A$’000
Capital expenditure commitments:
Plant1,1279,251
Software development1,3521,346
2,47910,597
Operating expenditure commitments:
Non-cancellable operating lease payments:
Less than one year37,99632,893
More than one year and less than five years108,39497,550
More than five years47,01258,713
193,402189,156
Lease arrangements
Operating leases relate to certain land, buildings, plant and equipment, with lease terms of between one and 12 years with
options to extend for a further one to 19 years. Operating lease contracts contain market review clauses in the event that EBOS
exercises its option to renew. EBOS does not have an option to purchase the leased asset at the expiry of the lease period.
H3. Subsequent events
Subsequent event
Subsequent to year end, the Board has approved a final dividend to shareholders. For further details please refer
to note E2.
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EBOS Group 2019 Annual Report
H4. Related party disclosures
Key management personnel compensation
2019
A$’000
2018
A$’000
Short-term employee benefits11,69211,284
11,69211,284
EBOS operates a long-term incentive share scheme whereby eligible staff receive cash and performance rights entitling each
holder of the performance right to one new share per right issue. Performance rights do not vest until performance conditions
are met over a three-year period. In the current year 180,300 performance rights were issued with a three-year performance
period of 1 July 2018 to 30 June 2021 (2018: Nil).
EBOS also operates a long-term incentive share plan whereby EBOS provides an interest free, non-recourse loan to
participating senior executives in order for those executives to purchase shares in the Company. While the shares are issued
and held in the executive’s name, the shares will not vest unless and until performance conditions are met. The executive
cannot deal in the shares unless and until those shares vest. All net dividends received in respect of the shares must be
applied to the repayment of the interest free loan. In 2018, 625,000 shares were issued with an issue price of NZ$17.35.
The performance period in relation to these shares is 1 July 2017 to 30 June 2020.
H5. Remuneration of auditors
All non-audit services provided by EBOS Group’s auditor require pre-approval by the Audit and Risk Committee. Before any
non-audit services are approved, the Audit and Risk Committee must be satisfied that the provision of such services will not
have any influence on the independence of the auditors.
2019
A$’000
2018
A$’000
Auditor of the Group (Deloitte)
Audit of the financial statements679556
Audit related services for review of interim financial statements197162
Advisory services572
Taxation compliance5-
886790
Other auditors (Ernst & Young)
Audit of subsidiary financial statements-186
Audit related services for review of interim financial statements-50
-236
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H6. Changes in financial reporting standards
No new accounting standards or interpretations have been adopted during the year which have had a material impact on these
financial statements (refer to pages 50–52). The following new standards have been approved but are not yet effective, which
may have a future impact on the Group financial statements:
NZ IFRS 16 Leases
– effective for the Group for the period beginning 1 July 2019
NZ IFRS 16 Leases introduces a comprehensive model for the identification of lease arrangements and accounting treatments
for both lessors and lessees. NZ IFRS 16 will supersede the current lease guidance including NZ IAS 17 Leases and the related
interpretations when it becomes effective on 1 July 2019.
NZ IFRS 16 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by a customer.
The distinction between operating leases (off balance sheet) and finance leases (on balance sheet) is removed for lessee
accounting, and is replaced by a model where a right-of-use asset and a corresponding liability have to be recognised for all
leases by lessees (i.e. all on balance sheet), except for short-term leases and leases of low-value assets.
The right-of-use asset is initially measured at cost, and subsequently measured at cost (subject to certain exceptions) less
accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is
initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the lease liability is
adjusted for interest and lease payments, as well as the impact of lease modifications, among others.
Furthermore, the classification of cash flows will also be affected as operating lease payments under NZ IAS 17 are presented
as operating cash flows; whereas under the NZ IFRS 16 model, the lease payments will be split into a principal and an interest
portion, which will be presented as financing and operating cash flows respectively.
The Group will apply NZ IFRS 16 on 1 July 2019 using the modified retrospective (full simplified) transition method and the
practical expedient that the right to use asset will match the lease liability. Comparative periods presented will not be restated.
Based on our assessment we expect that almost all of the Group’s leases that contribute to non-cancellable operating lease
commitments of $193.4m (2018: $189.2m), as disclosed in Note H2, will meet the definition of a lease under NZ IFRS 16.
The following impacts are expected on implementation of the new requirements:
• A material right-of-use asset and a lease liability will be recognised on the balance sheet, with the difference posted to
retained earnings.
• Finance costs will increase due to the impact of the interest component of the lease liability.
• Depreciation expense will increase due to depreciation of the right-of-use asset over the lease term.
• Lease rental operating expenses will reduce to close to nil.
• In the cash flow statement, operating cash outflows will decrease, and financing cash outflows will increase as repayment of
the principal balance in the lease liability will be classified as a financing activity.
The expense previously recorded in relation to operating leases will move from being included in operating expenses (and within
EBITDA), to depreciation and finance expense. The impact on net earnings before income tax of an individual lease over its term
remains the same; however, the new standard will result in a higher interest expense in the early years, and lower in the later
years of a lease, compared with the current straight-line expense profile of an operating lease.
There will be no impact on actual cash payments.
To finalise the implementation of the new standard, management will make a final determination of the discount rates and
options periods for each of its leases. The Group will apply NZ IFRS 16 on 1 July 2019 using the modified retrospective
(full simplified) transition method. Comparative periods presented will not be restated. The Group will recognise a right-of-use
asset and a corresponding liability in respect of all these leases unless they qualify for low value or short-term leases upon the
application of NZ IFRS 16.
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EBOS Group 2019 Annual Report
Fully paid
ordinary shares
Percentage of
paid capital
Sybos Holdings Pte Limited60,525,72137.43
FMR LLC15,457,11510.13
75,982,83647.56
Substantial product holders
The following information is provided in compliance with section 293 of the Financial Markets Conduct Act and is stated as at
30 June 2019.
The total number of ordinary shares in the Company as at 30 June 2019 was 161,708,121. The total number of unquoted
performance rights as at 30 June 2019 was 180,300.
As at 31 July 2019
Twenty largest shareholdersFully paid shares
Percentage of
paid capital
Sybos Holdings Pte Limited60,525,72137.43
HSBC Nominees (New Zealand) Limited – NZCSD HKBN9010,135,8786.27
JP Morgan Chase Bank NA NZ Branch-Segregated Clients Acct – NZCSD CHAM248,495,9305.25
Citibank Nominees (New Zealand) Limited – NZCSD CNOM906,612,4204.09
Forsyth Barr Custodians Limited 1-CUSTODY4,330,2442.68
Accident Compensation Corporation – NZCSD ACCI403,588,3442.22
FNZ Custodians Limited3,477,1962.15
Custodial Services Limited A/C 42,574,4561.59
Custodial Services Limited A/C 32,531,8151.57
HSBC Nominees (New Zealand) Limited A/C State Street – NZCSD HKBN452,491,9651.54
National Nominees New Zealand Limited – NZCSD NNLZ902,447,1251.51
JP Morgan Nominees Australia Limited2,391,9951.48
HSBC Nominees A/C New Zealand Superannuation Fund Nominees Limited –
NZCSD SUPR40
1,896,6961.17
BNP Paribas Nominees (NZ) Limited – NZCSD COGN401,883,3121.16
Whyte Adder No 3 Limited1,796,4251.11
Citicorp Nominees Pty Limited 1,633,0861.01
Custodial Services Limited A/C 21,406,4790.8
Tea Custodians Limited Client Property Trust Account – NZCSD TEAC401,224,6960.76
HSBC Custody Nominees (Australia) Limited1,201,5340.74
BNP Paribas Nominees (NZ) Limited – NZCSD BPSS401,154,2400.71
121,799,55775.31
Additional stock exchange information
93
EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
Distribution of shareholders and shareholdingsHolders
Fully paid
ordinary shares
Percentage of
paid capital
Size of Holding
1 to 1,0003,2861,492,9940.92
1,001 to 5,0002,9837,219,1934.46
5,001 to 10,0007255,151,9623.19
10,001 to 100,00055012,210,7297.55
100,001 and over55135,633,24383.88
Total7,599161,708,121100.00
Unmarketable parcels as at 31 July 2019
As at 31 July 2019, there were 104 shareholders (with a total of 997 shares) holding less than a marketable parcel of shares,
based on the closing price of the Company’s shares on the ASX of A$23.78. The ASX Listing Rules define a marketable parcel of
shares as a parcel of shares of not less than A$500.
Waivers from the NZX and ASX Listing Rules
Waivers granted from the application of NZX and ASX Listing Rules are published on the Company’s website.
The terms of the Company’s admission to the ASX and ongoing listing requires the following disclosures:
1. The Company is not subject to Chapters 6, 6A, 6B and 6C of the Australian Corporations Act dealing with the acquisition of
shares (including substantial holdings and takeovers).
2. Limitations on the acquisition of securities imposed under New Zealand law are as follows:
(a) In general, securities in the Company are freely transferable and the only significant restrictions or limitations in relation
to the acquisition of securities are those imposed by New Zealand laws relating to takeovers, overseas investment and
competition.
(b) The New Zealand Takeovers Code creates a general rule under which the acquisition of 20% or more of the voting rights
in the Company or the increase of an existing holding of 20% or more of the voting rights of the Company can only occur
in certain permitted ways. These include a full takeover offer in accordance with the Takeovers Code, a partial takeover
in accordance with the Takeovers Code, an acquisition approved by an ordinary resolution, an allotment approved by an
ordinary resolution, a creeping acquisition (in certain circumstances), or compulsory acquisition of a shareholder holding
90% or more of the shares.
(c) The New Zealand Overseas Investment Act 2005 and Overseas Investment Regulations 2005 (New Zealand) regulate
certain investments in New Zealand by overseas interests. In general terms, the consent of the New Zealand Overseas
Investment Office is likely to be required where an ‘overseas person’ acquires shares in the Company that amount to
25% or more of the shares issued by the Company, or if the overseas person already holds 25% or more, the acquisition
increases that holding.
(d) The New Zealand Commerce Act 1986 is likely to prevent a person from acquiring shares in the Company if the acquisition
would have, or would be likely to have, the effect of substantially lessening competition in the market.
Voting rights
Shareholders may vote at a meeting of shareholders either in person or by proxy, attorney, or representative. Where voting is by
show of hands or by voice, every shareholder present in person or representative has one vote.
In a poll, every shareholder present in person or by proxy, attorney or representative has one vote for each share.
Additional stock exchange information continued
94
EBOS Group 2019 Annual Report
ObjectiveProgress during 2018/19
Aim to increase the proportion of women on the Board
as vacancies arise, having regard to the circumstances
(including skill requirements) relating to the vacancies.
During the year ended 30 June 2019 the Board appointed
Stuart McLauchlan as a new director whose appointment
took effect from 1 July 2019. As part of the process to
appoint a new director, a number of female candidates were
considered. Having regard to the Board’s structure and the
Board’s assessment of skill requirements for the Board and
Mr McLauchlan’s extensive experience, it was determined to
appoint Mr McLauchlan.
Aim to increase the proportion of women in executive and
senior management roles as vacancies arise, having regard
to the circumstances (including skill requirements) relating
to the vacancies.
As at 30 June 2019 the proportion of females that were
Officers (as defined in the NZX Listing Rules) was 29%,
a slight increase compared to 30 June 2018 (25%).
More broadly, in relation to recruitment for any senior roles
within the Group, it is the practice of the Group to ensure
that suitably qualified female candidates are identified as
part of the recruitment process.
Continue to ensure that the remuneration of females
in salaried roles is objectively reviewed against the
remuneration of males in comparable roles in order to
eliminate inequity based on gender (with such reviews
taking into account relevant experience, qualifications and
performance).
A detailed gender pay equity analysis was undertaken in 2018.
The conclusion from that analysis was that any variances
were based on tenure in the role or experience at the time of
appointment.
EBOS will conduct further gender pay equity analysis from
time to time.
Continue to promote family friendly and flexible workplace
practices including, but not limited to, parental leave, flexible
return to work arrangements, flexible work arrangements
and employee assistance programs.
EBOS continued to promote these policies throughout the
year (including by introducing relevant policies to businesses
acquired during the year). It is recognised that such policies
contribute to retaining talent and reducing staff turnover.
The Board and management of EBOS Group Limited are
committed to ensuring that the Company adheres to best
practice and governance principles and maintains high
ethical standards.
The 2019 Corporate Governance Statement relating to the
Company and its subsidiaries (the Group) can be found at:
https://ebosgroup.gcs-web.com/corporate-governance.
The Corporate Governance Statement refers to a number of
codes, policies and charters of the Group. These documents
(or a summary of them) can be found in the Group’s
Corporate Governance Code at https://ebosgroup.gcs-web.
com/corporate-governance.
For the purposes of compliance with the NZ Companies
Act, NZX Listing Rules and NZX Corporate Governance Code
dated 1 January 2019 (2019 Code), the following disclosures
are included in the Annual Report.
Diversity
The Group has a Diversity Policy, which is set out as
Appendix F of the Corporate Governance Code. Under the
policy, the Board is responsible for setting measurable
objectives for achieving diversity. Set out below is the
Board’s assessment of the objectives for the 2018/19 year:
Corporate
Governance
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EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
Director independence
The Board’s assessment of the independence of each
person that was a director as at 30 June 2019 is set out
below.
Name
#
Status*Appointment date
Mark WallerIndependent1987
Elizabeth CouttsIndependentJuly 2003
Stuart McGregorNon-independentJuly 2013
Sarah OttreyIndependentSeptember 2006
Peter WilliamsNon-independentJuly 2013
#Mr Stuart McLauchlan became a director on 1 July 2019 (i.e. after the
Company’s balance date)
*Independent means that the director is considered to be an Independent
Director as defined under the NZX Listing Rules.
Mark Waller, Elizabeth Coutts and Sarah Ottrey have been
determined as Independent Directors as that term is defined
in the NZX Listing Rules. In respect of Mark Waller, the Board
members unanimously believe that he acts independently
as a director and as Chairman, notwithstanding his previous
appointment as Managing Director/CEO, which ceased in
2014. This assessment is based on the experiences of those
of them who have worked with him, and in particular, having
regard to the high degree of professionalism he has at all
times displayed as an EBOS director and as Chairman.
In addition, the Board notes that Mark Waller has no
affiliation with any major shareholder of the Company
and did not have any such affiliation during his tenure as
the EBOS Managing Director/Chief Executive Officer.
In relation to Elizabeth Coutts and Sarah Ottrey, the Board
is unanimously of the view that each director brings, among
other things, an independent view to decisions in relation to
EBOS and that their tenure is not, of itself, an indication that
they are no longer independent.
CEO remuneration
In the year ended 30 June 2019, Mr John Cullity received
fixed remuneration, a short-term incentive and a grant of
performance rights as part of a long-term incentive plan.
1
The Group’s policy in relation to the remuneration of the
CEO (and other executives) is set out in its Remuneration
Policy. A copy of this policy can be found in the Group’s
Corporate Governance Code which is published on its
website: www.ebosgroup.com.
The remuneration described in this section relates to fixed
remuneration and short-term incentives paid during the year
and long-term incentive grants made during the year.
These amounts may differ from the amounts included in
Note H4 to the Financial Report and the table of employee
remuneration included on pages 103 and 104 which are
reported according to accounting standards.
Corporate
Governance
Gender representation
The Group’s gender representation as at 30 June 2019 was as follows:
BoardFemale %Female (no.)Male %Male (no.)
2017/18402603
2018/19402603
OfficerFemale %Female (no.)Male %Male (no.)
2017/18252756
2018/19292715
GroupFemale %Male %
2017/185545
2018/195842
Officer has the meaning given in the NZX Listing Rules.
1
Mr Cullity’s fixed remuneration and short-term incentive payments are
expressed in Australian dollars.
96
EBOS Group 2019 Annual Report
The accounting values of remuneration reported in
accordance with the accounting standards may not always
reflect what a person was actually paid during the financial
year, particularly due to the valuation of share-based
payments and accrual of short-term incentives.
Fixed remuneration
In the financial year ended 30 June 2019 Mr Cullity received
fixed remuneration of $1,150,531. This includes compulsory
superannuation contributions.
Short-Term Incentive (STI) payment
An STI payment is a performance based payment and the
targets in relation to the STI payment are set by the Board.
The maximum amount that the Chief Executive Officer may
be entitled to as an STI payment is a fixed dollar amount.
In the financial year ended 30 June 2019, Mr Cullity received
an STI payment of $487,500. This payment was based on the
financial performance of the Group for the prior year
(that is, the year ended 30 June 2018) (2018 STI). Mr Cullity
was appointed as CEO during the year ended 30 June 2018
and as such the 2018 STI payment is related to his role as
CEO and previous role as Chief Financial Officer.
With regard to the 2018 STI, a target was set by reference
to the Group’s 2018 Profit Before Tax results (Target).
The calculation of Mr Cullity’s 2018 STI was based on the
following criteria:
- If the Group’s Profit Before Tax (PBT) results were less than
80% of the Target, no STI was payable.
- If the Group’s PBT results were between 80% of the Target
and the Target, an STI between 35% and 75% of Mr Cullity’s
maximum STI entitlement was payable.
- If the Group’s PBT results met certain stretch targets above
the Target, an STI between 75% to 100% of Mr Cullity’s
maximum STI entitlement was payable.
Mr Cullity received his maximum STI entitlement under the
2018 STI.
2019 STI
In relation to the STI for the year ended 30 June 2019,
a similar structure for the STI was adopted and it is
anticipated that the payment of an STI amount to Mr Cullity
will be made during the 2020 financial year.
Long-Term Incentive (LTI) plan
In the year ended 30 June 2019, EBOS introduced a
performance rights plan whereby eligible employees receive
performance rights entitling each holder on exercise of the
performance right to one ordinary share per performance
right granted or a cash payment in lieu. Performance rights
do not vest and cannot be exercised unless and until
performance conditions are met.
In the financial year ended 30 June 2019, Mr Cullity was
issued 47,500 performance rights as part of an LTI plan
with a performance period from 1 July 2018 to 30 June 2021
(LTI 2018/21).
The performance conditions for the LTI 2018/21 are:
- continuous employment with the Group during the
performance period (although noting that the Board has
retained discretion relating to this condition); and
- growth in the Company’s earnings per share in each year
of the performance period or over the performance period
must equal or exceed a specific percentage target.
The performance conditions in relation to these shares will be
tested after the end of the performance period, being
1 July 2018 to 30 June 2021.
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EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
RecommendationComment
3.4 – Nomination CommitteeThe Board does not have a nomination committee.
The Board has determined, having regard to the current
composition of the Board, that a nomination committee is
not currently required. The Board undertakes the functions
that were previously delegated to a nominations committee.
5.2 – Remuneration PolicyEBOS has a Remuneration Policy. The policy does not
include the relative weightings of remuneration and
performance criteria. This information is included in the
annual Corporate Governance Statement (available on the
Company’s website) to ensure it accurately reflects the
remuneration structures.
8.4 – additional equityDuring the financial year, the Company conducted a
successful placement of shares to raise NZ$175 million.
The Board determined that a placement, rather than pro-
rata equity raise, was the most practical, timely and effective
method of raising capital. A pro-rata rights issue was
considered to be challenging given the size of the capital
raise and that it would have extended the duration of the
process.
2019 Code
Under NZX Listing Rule 3.8.1(b), EBOS is required to state in the Annual Report those recommendations in the 2019 Code
that were not followed in the financial year ended 30 June 2019.
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EBOS Group 2019 Annual Report
Disclosure of interests
In accordance with section 140(2) of the Companies Act
1993, the Directors named below have made general
disclosure of interest, by a general notice disclosed to the
Board and entered in the Company’s interests register
during the year ended 30 June 2019, as follows:
EM Coutts: Chair of Urwin & Co Ltd, Oceania Healthcare
Ltd, Ports of Auckland Ltd and Skellerup Holdings Ltd,
Director of the Yellow Pages group of companies, and
Tennis Auckland Region Incorporated, Member, Marsh
New Zealand Advisory Board and President, Institute of
Directors Inc.
SJ McGregor: Chairman of Donaco International Ltd
and director of Symbion Pty Ltd and other EBOS Group
subsidiaries.
SC Ottrey: Director of Whitestone Cheese Ltd, Sarah
Ottrey Marketing Ltd, Skyline Enterprises Limited and
subsidiaries, Mount Cook Alpine Salmon Limited and
Christchurch International Airport Ltd. Member of
the Institute of Directors – Otago Southland Branch
committee.
MB Waller: Director of EBOS Group Ltd and subsidiaries.
PJ Williams: Executive of The Zuellig Group and director
of associated companies, a director of Pharma Industries
Ltd, CB Norwood Pty Ltd, Cambert and Green Cross Health
Limited.
Indemnity and insurance
In accordance with section 162 of the Companies Act 1993
and the constitution of the Company, the Company has
given indemnities to, and has effected insurance for, the
Directors and executives of the Company and its related
companies which, except for some specific matters that
are expressly excluded, indemnify and insure directors
and executives against monetary losses as a result of
actions undertaken by them in the course of their duties.
Specifically excluded are certain matters, such as the
incurring of penalties and fines, which may be imposed for
breaches of law.
Use of information
There were no notices from directors of the Company
requesting to use Company information received in their
capacity as directors, which would not otherwise have
been available to them.
Directors’ interests
and disclosures
Share dealings by directors
The directors have disclosed to the Board under section 148(2) of the Companies Act 1993 particulars of acquisitions or
disposals of a relevant interest in the Company’s shares.
Director
Ordinary Shares
Purchased/(Sold)
Consideration
Paid/(Received)
Date of
Transaction
EM Coutts2,500NZ$54,7477 May 2019
SC Ottrey97NZ$2,0495 April 2019
MB Waller6,427NZ$135,7385 April 2019
(35,000)(NZ$756,472)20, 21 and 22 March 2019
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EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
Directors’ shareholdings
Number of fully paid shares held as at30 June 201930 June 2018
EM Coutts – Indirect beneficial interest32,50030,000
SC Ottrey – Directly held together with another8,1768,079
– Indirect beneficial interest3,0503,050
MB Waller – Directly held together with others506,692535,265
– Direct non-beneficial interest/trustee of EBOS Staff Share Plan71,59271,592
BoardAudit & RiskRemuneration
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
EM Coutts663322
SC Ottrey6622
SJ McGregor6533
MB Waller663322
PJ Williams66
Attendance at board and committee meetings
Directors’ remuneration and other benefits
Directors’ remuneration and other benefits required to be disclosed pursuant to section 211(1) of the Companies Act 1993 for the
year ended 30 June 2019 were as follows (expressed in New Zealand dollars):
30 June 201930 June 2018
EM Coutts$193,000*$161,750
SJ McGregor $162,500$151,875
SC Ottrey$153,000$143,000
MB Waller$317,500$296,875
PJ Williams$150,000$140,000
*This includes fees paid for additional services provided.
EBOS Group 2019 Annual Report
Disclosures relating to subsidiaries
SubsidiaryCurrent Directors
ACN 618 208 969 Pty LtdJ Cullity
S McGregor#
Alchemy Holdings Pty LtdJ Cullity
S McGregor#
Alchemy Sub-Holdings Pty LtdJ Cullity
S McGregor#
Aristopet Pty LtdJ Cullity
S Duggan
M Waller*
Beaphar Pty LtdJ Cullity
S Duggan
M Waller*
BFCMC Pty LtdJ Cullity
S McGregor#
A White*
Blackhawk Premium Pet Care
Pty Ltd
J Cullity
S McGregor#
Botany Bay Imports Exports Pty LtdJ Cullity
S Duggan
M Waller*
CC Pharmacy Investments Pty LtdJ Cullity
S McGregor#
CC Pharmacy Management Pty LtdJ Cullity
S McGregor#
CC Pharmacy Promotions Pty LtdJ Cullity
S McGregor#
Chem Plus Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
Chemmart Holdings Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
SubsidiaryCurrent Directors
Cincotta Holding Company Pty LtdJ Cullity
S McGregor#
Clinect Pty LtdJ Cullity
S McGregor
M Waller*
Clinect NZ Pty LimitedJ Cullity
M Waller
Collaboration Medical Clinics Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
Developing People Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
DoseAid Pty LtdJ Cullity
S McGregor
M Waller*
EAHPL Pty LtdJ Cullity
S McGregor#
EBOS Group Australia Pty LtdJ Cullity
S McGregor#
EBOS Health & Science Pty LtdJ Cullity
S McGregor#
EBOS PH Pty LtdJ Cullity
S McGregor#
Endeavour CH Pty LtdJ Cullity
S McGregor#
Endeavour Consumer Health LimitedJ Cullity
M Waller
Healthcare Supply Partners Pty LtdJ Cullity
100
101
EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
SubsidiaryCurrent Directors
Masterpet Logistics Pty LtdJ Cullity
S Duggan
M Waller*
Mega Save Management Pty LtdJ Cullity
S McGregor#
Nexus Australasia Pty Limited#J Cullity
S McGregor#
PBA Finance No. 1 Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
PBA Finance No. 2 Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
PBA Wholesale Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
Pet Care Distributors Pty LtdJ Cullity
S McGregor#
M Waller*
Pet Care Holdings Australia Pty LtdJ Cullity
S McGregor#
M Waller*
Pets International Pty LtdJ Cullity
S Duggan
M Waller*
Pharmacy Brands Australia Pty LtdJ Cullity
S McGregor#
A White*
SubsidiaryCurrent Directors
Hospharm Pty LtdJ Cullity
S McGregor#
HPS Brands Pty LtdJ Cullity
S McGregor#
HPS Corrections Pty LtdJ Cullity
S McGregor#
HPS Finance Pty LtdJ Cullity
S McGregor#
HPS Holdings Group (Aust) Pty LtdJ Cullity
S McGregor#
HPS Hospitals Pty LtdJ Cullity
S McGregor#
HPS IVF Pty LtdJ Cullity
S McGregor#
HPS Services Pty LtdJ Cullity
S McGregor#
Intellipharm Pty LtdJ Cullity
S McGregor
M Waller *
Lite Living Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
Lyppard Australia Pty LtdJ Cullity
S McGregor
M Waller*
Masterpet Australia Pty LimitedJ Cullity
S Duggan
M Waller*
Masterpet Corporation LimitedJ Cullity
S Duggan
M Waller
102
EBOS Group 2019 Annual Report
#S McGregor is an alternate director for J Cullity.
*Ceased to be a director during the year ended 30 June 2019.
No employee of the Group appointed as a director of the
Company or its subsidiaries receives remuneration or other
benefits in their role as a director. The remuneration and other
benefits of such employees, received as employees, are included
in the relevant bandings for remuneration disclosed under
employee remuneration range below.
Disclosures relating to subsidiaries continued
SubsidiaryCurrent Directors
Pharmacy Retailing (NZ) LimitedJ Cullity
M Waller
PRNZ LimitedJ Cullity
M Waller
Richard Thomson Pty LimitedJ Cullity
S McGregor#
M Waller*
Symbion Pty LtdJ Cullity
S McGregor
D Lewis*
Terry White Group LimitedJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis
S Hughes
Tony Ferguson Weight Management
Pty Ltd
J Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
TW&CM Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
TWC IP Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
Ventura Health Pty LtdJ Cullity
S McGregor#
SubsidiaryCurrent Directors
VIM Health Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
VIM Health IP Pty LtdJ Cullity
S McGregor#
R Higham*
J McKellar*
K Sclavos*
T White*
D Lewis*
Vitapet Corporation Pty LimitedJ Cullity
S Duggan
M Waller*
Warner & Webster Pty LtdJ Cullity
S McGregor#
W & W Management Services Pty LtdJ Cullity
S McGregor#
You Save Management Pty LtdJ Cullity
S McGregor#
ZAP Services Pty Ltd
J Cullity
S McGregor
M Waller*
ZHHA Pty LtdJ Cullity
S McGregor
M Waller*
103
EBOS Group 2019 Annual Report
Financials
Corporate Governance
Directors’ Interests & Disclosures
Directory
Business Overview
Employee remuneration
Grouped below, in accordance with Section 211 of the Companies Act 1993, are the number of employees or former employees
of the Company and its subsidiaries, including those based in Australia, who received remuneration and other benefits in their
capacity as employees totalling NZ$100,000 or more during the year.
Employee
remuneration (NZ)
30 June 2019
Number of Employees
100,000–110,000109
110,000–120,00072
120,000–130,00069
130,000–140,00077
140,000–150,00045
150,000–160,00039
160,000–170,00036
170,000–180,00020
180,000–190,00025
190,000–200,00025
200,000–210,00020
210,000–220,00012
220,000–230,00014
230,000–240,00011
240,000–250,00010
250,000–260,00010
260,000–270,0005
270,000–280,0003
280,000–290,0006
290,000–300,0002
300,000–310,0004
310,000–320,0002
320,000–330,0003
330,000–340,0003
340,000–350,0001
360,000–370,0001
370,000–380,0003
400,000–410,0003
410,000–420,0001
420,000–430,0001
440,000–450,0001
450,000–460,0001
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EBOS Group 2019 Annual Report
Employee
remuneration (NZ$)
30 June 2019
Number of Employees
470,000–480,0001
490,000–500,0001
510,000–520,0002
560,000–570,0001
570,000–580,0002
610,000–620,0001
650,000–660,0001
660,000–670,0001
680,000–690,0001
720,000–730,0001
760,000–770,0001
900,000–910,0002
910,000–920,0001
920,000–930,0001
1,160,000–1,170,0001
1,230,000–1,240,0001
1,830,000–1,840,0001
1,920,000–1,930,0001
3,910,000–3,920,0001
M B Waller
Chairman of Directors
E M Coutts
Director
Auditor
The Company’s Auditor, Deloitte Limited, will continue in office in accordance with the Companies Act 1993.
The directors are satisfied that the provision of non-audit services, during the year by the auditor is compatible with the general
standard of independence for auditors imposed by the Companies Act 1993. Details of amounts paid or payable to the auditor
for non-audit services provided during the year by the auditor are outlined in note H5 of the financial statements.
105
EBOS Group 2019 Annual Report
Financials
Corporate
Governance
Directors’ Interests
& Disclosures
Directory
Business Overview
Registered offices
108 Wrights Road
PO Box 411
Christchurch 8024
New Zealand
Telephone: +64 3 338 0999
Email: ebos@ebos.co.nz
Level 7, 737 Bourke Street
Docklands 3008
PO Box 7300
Melbourne 8004
Australia
Telephone: +61 3 9918 5555
Email: ebos@ebosgroup.com
Website address
www.ebosgroup.com
Directors
Mark Waller
Chairman
Elizabeth Coutts
Independent Director
Stuart McGregor
Stuart McLauchlan
Independent Director
Sarah Ottrey
Independent Director
Peter Williams
Senior executives
John Cullity
Chief Executive Officer
Brett Barons
CEO Symbion
Andrea Bell
Chief Information Officer
Janelle Cain
General Counsel
Sean Duggan
CEO Animal Care and
Consumer Brands
Shaun Hughes
Chief Financial Officer
David Lewis
EGM Strategy
Auditor
Deloitte Limited
Christchurch
Securities exchange
EBOS Group Limited shares are quoted
on the New Zealand Securities Exchange
and the Australian Securities Exchange
(NZX/ASX code: EBO).
Share register
Computershare Investor Services Ltd
Private Bag 92119
Auckland 1142
New Zealand
Telephone: +64 9 488 8777
Computershare Investor Services
Pty Ltd
GPO Box 3329
Melbourne, Victoria 3001
Australia
Telephone: 1800 501 366
Managing your
shareholding online
To change your address, update your
payment instructions and to view
your Investment portfolio, including
transactions, please visit:
www.computershare.com/
investorcentre
General enquiries can be directed to:
• enquiry@computershare.co.nz
• Private Bag 92119, Auckland 1142,
New Zealand or GPO Box 3329,
Melbourne, Victoria 3001, Australia
• Telephone (NZ) +64 9 488 8777 or
(Aust) 1800 501 366
• Facsimile (NZ) +64 9 488 8787 or
(Aust) +61 3 9473 2500
Please assist our registrar by quoting
your CSN or shareholder number.
Notice of Annual Meeting
The Annual Meeting of EBOS Group
Limited will be held on Tuesday,
15 October 2019 at 2.00 pm, at
Addington Raceway & Events Centre,
75 Jack Hinton Drive, Addington,
Christchurch, New Zealand.
Directory
98
EBOS Group 2019 Annual Report
Symbion Brisbane pharmaceutical distribution facility
Our commitment remains as strong as
ever to supporting better healthcare and
animal care across Australia and
New Zealand, and it’s this singular focus
that enables our continued strength as
a business.
Through substantial investments in
our people and our capabilities across
the entire supply chain, the Group is
well positioned to achieve sustained
success and capture new opportunities
in constantly evolving markets,
while ensuring we continue to deliver for
our customers, each and every day.
www.ebosgroup.com
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.