Half Year Results
1
All amounts included are denoted in Australian dollars unless otherwise stated.
² Excludes the impacts of IFRS 16 Leases and net one-off costs.
20 February 2020
MARKET RELEASE
NZX/ASX Code: EBO
EBOS reports significant increase in first half earnings
First Half Highlights
Revenue $4.4 billion (up 25.2%).
Statutory EBITDA $167.2 million (up 36.4%).
Statutory NPAT $81.7 million (up 21.8%).
Underlying EBITDA $149.0 million (up 13.4%).
Underlying NPAT $84.2 million (up 15.8%).
Very strong performance from our Community Pharmacy business demonstrating its
leading position with revenues increasing by 35.4%.
The launch of EBOS Medical Devices with the acquisition of LMT and National Surgical for
$34 million.
The opening of our new Consumer Products distribution and manufacturing facility in
Auckland.
Strong growth in the TerryWhite Chemmart network including 16 new stores and
network sales growth of 5.7%.
Continued market share gains in our Healthcare Logistics business across both Australia
and New Zealand.
Strong balance sheet with Net Debt : EBITDA @1.41x.
Group Financial Summary
Australian Dollars¹ Statutory Results Underlying Results²
Total Revenue $4.4b up 25.2% $4.4b up 25.2%
EBITDA $167.2m up 36.4% $149.0m up 13.4%
EBIT $131.4m up 22.4% $131.3m up 13.1%
Net Profit after Tax (NPAT) $81.7m up 21.8% $84.2m up 15.8%
Earnings per Share (EPS) 50.6 cents up 14.8% 52.2 cents up 9.1%
ROCE 15.9%
consistent with June 2019
Net Debt : EBITDA 1.41x
consistent with June 2019
2
EBOS today announced strong growth in revenue and earnings for the first half of FY 2020.
In today’s results announcement EBOS Chief Executive Officer, John Cullity said:
“Our strong results are reflective of the commencement of the Chemist Warehouse Group
(CWG) pharmaceutical wholesale contract, together with strong performances from our
Institutional Healthcare, Contract Logistics and TerryWhite Chemmart (TWC) Group
businesses reflecting the strength of the EBOS business model. Our extensive and diverse
portfolio has again delivered a significant increase in both revenue and earnings as shown in
today’s results.
“The growth in our pharmacy wholesale and contract logistics businesses is testament to the
Group’s capital investment strategy over recent years which has enabled us to productively
manage the significant uplift in volumes and revenues”, Mr Cullity said.
“Our Community Pharmacy business grew revenues by 35.4% following the successful
commencement of both the CWG contract and growth within our existing customer base,
including the TWC Group”, Mr Cullity said.
TWC welcomed 16 new pharmacies during the period and remains one of Australia’s largest
community pharmacy networks. TWC network sales grew by 5.7% and prescription sales, on
a like-for-like basis, increased by 5.3%, driven by increased brand awareness, customer
satisfaction and new programmes with Qantas Frequent Flyer, Bupa and Afterpay.
The half was also highlighted by EBOS entering the A$8 billion Australian and New Zealand
medical device sector with the acquisition of established distribution business LMT and
National Surgical (“LMT/NS”). LMT/NS over many years have built a strong presence in
providing product and services to the Orthopaedic, Spine, Neuro, Ear Nose and Throat, and
most recently, the sports medicine markets.
“We are pleased with the progress we are making in developing this strategic new platform
for the Group and the performance is in line with our internal expectations”, Mr Cullity said.
Reinforcing its capital investment strategy the Group opened its new Consumer Products
manufacturing and distribution facility in Auckland which saw the consolidation of six
separate New Zealand locations into one new purpose built site. “Our new Auckland facility
will streamline stock handling, deliver cost efficiencies and improve both quality and service
delivery to our customers”, Mr Cullity said.
3
Segment Overview
Healthcare
Healthcare
A$
31 December
2019
31 December
2018
Growth
Total Revenue $4.2b $3.3b +26.1%
Statutory EBITDA $145.8m $104.3m +39.9%
Underlying EBITDA¹ $131.1m $112.7m +16.3%
¹ Refer to Appendix 1 for details of Underlying EBITDA adjustments.
The Healthcare segment generated a 26.1% increase in revenue for the period, underpinned
by significantly higher sales volumes through the addition of CWG stores, and continued
growth in the Institutional Healthcare, Contract Logistics and TWC businesses.
In Australia, Healthcare revenue increased by $786 million (30.9%). Underlying EBITDA
increased 22.3% driven by the performance of our Pharmacy Wholesale, TWC, Institutional
Healthcare and Contract Logistics businesses. New Zealand Healthcare revenue grew by
9.9%, however, Underlying EBITDA was affected by softer overseas demand for our
consumer products, reflective of the changes which have impacted the daigou export
channel.
Pharmacy revenue across Australia and New Zealand increased by $670 million (35.4%) due
to significantly increased volumes in both countries. The pharmacy business also benefitted
from productivity improvements across our automated sites which provides our customers
with industry leading service levels and solutions.
The Group’s Institutional Healthcare business also performed strongly with first half revenue
growth of 9.1% due to increased market growth within our hospitals business as well as the
contribution from our recently acquired LMT/NS medical devices business.
The Contract Logistics division grew Gross Operating Revenue (GOR) by 21.5% as we
attracted new customers to our recently opened facilities in Sydney and Auckland.
In relation to the Australian pharmacy regulatory environment, Mr Cullity said Symbion and
its industry representative body (NPSA) were working diligently with all stakeholders on
negotiating a favourable outcome to the 7
th
Community Pharmacy Agreement (7
th
CPA). It is
critically important that the 7
th
CPA provides the industry with a framework for continued
investment in the industry which represents a critical piece of infrastructure to Australia’s
health system.
“In support of the traditional wholesale distribution model it was pleasing to see major
pharmaceutical supplier Upjohn, part of the Pfizer Group, announce in December 2019 that
it would move away from exclusive direct distribution. This will see Upjohn products being
4
available via the Australian wholesale network which is a great outcome for patients
ensuring they will receive medicines in a timely and efficient manner”, Mr Cullity said.
Animal Care
Animal Care
A$
31 December
2019
31 December
2018
Growth
Total Revenue $210.6m $192.3m +9.5%
Statutory EBITDA $28.5m $24.3m +17.2%
Underlying EBITDA¹ $25.7m $24.3m +5.7%
¹ Refer to Appendix 1 for details of Underlying EBITDA adjustments.
The Group’s Animal Care segment generated revenue of $211 million, an increase of 9.5%
for the period, primarily due to a combination of the continued excellent performance from
our branded products portfolio and higher veterinary wholesale volumes.
Our key brands Black Hawk and Vitapet both recorded strong uplifts in revenue growing
their market share. Pleasingly, our Vitapet brand made significant headway in the Australian
grocery channel and recorded revenue growth above market.
Lyppard strengthened its market position during the period with revenue increasing by 9.4%
due to both customer growth and the full six month contribution from Therapon that was
acquired in December 2018.
Community
EBOS Group is committed to meeting community expectations with our behaviour and
actions reflecting positively in the communities where we operate.
In late 2019 and early 2020, we supported several communities locally and abroad as they
dealt with major crises.
In New Zealand, we worked to distribute more than 114,000 doses of the measles vaccine as
the country dealt with a major outbreak of the disease in 2019, with more than 2,000
confirmed cases. Internationally, we supported Samoa as it dealt with a measles crisis of its
own by donating a specialised air purifying system to local hospitals to minimise the
potential spread of the highly infectious virus.
New Zealand and Australia were both impacted by the tragic incident on Whakaari/White
Island in December. Onelink NZ operated as a key partner in the NZ health supply chain
working with health agencies to supply products required to treat the injured.
5
In Australia, as the country dealt with an unprecedented bushfire emergency through the
latter part of 2019 and early 2020, our teams went above and beyond to meet the
heightened demand for medicines and emergency supplies created by the ongoing crisis.
Working around road closures, and challenging and dynamic conditions, our teams
collaborated with federal, state and local authorities and support agencies to keep
medicines and consumables moving into bushfire impacted communities to support our
customers in these areas to assist their patients.
EBOS Group donated products from both its Healthcare and Animal Care businesses to
affected communities and financially supported initiatives to assist members of the
community as they recover from the impact of these fires.
Our business has also been assisting the Australian Government in its preparations to assess
returning citizens for coronavirus. This involved quickly mobilising resources to provide
infrared thermometers to officials for use at airports in Brisbane and Sydney. In New
Zealand, Onelink has been engaging with the Ministry of Health and District Health Boards to
support efforts to combat coronavirus by providing Personal Protective Equipment (PPE) to
front-line responders.
We are very proud of our staff, who have worked tirelessly during this period, further
highlighting the critical role we play as part of the healthcare systems in both New Zealand
and Australia.
Operating Cash Flow, Net Debt and Return on Capital Employed
First half operating cash flow before capital expenditure was strong at $74.2 million. The first
half cash performance reflects the seasonality of the Group’s investment in net working
capital at 31 December, the investment in working capital for servicing significantly higher
pharmacy wholesale volumes from 1 July 2019 and the adoption of IFRS 16 Leases.
Capital expenditure for the period was $13.7 million and primarily comprised spend on the
new Consumer Products facility in Auckland and other smaller projects.
During the period, the Group purchased LMT/NS for $34 million.
Return on Capital Employed (ROCE) of 15.9% was consistent with June 2019 with the strong
earnings growth partially offset by the seasonality of the Group’s working capital cycle.
The Group’s Net Debt/EBITDA ratio at 31 December 2019 was consistent with 30 June 2019
at 1.41 times.
6
Impact of IFRS 16 Leases
EBOS Group adopted IFRS 16 Leases from 1 July 2019. Refer to Appendix 1 for a
reconciliation of statutory to underlying earnings.
Interim Dividend
The Directors declared an interim dividend of NZ 37.5 cents per share, an increase of 8.7%
on the prior corresponding period.
The Group’s Dividend Reinvestment Plan (DRP) will be operational for the dividend payment
in April 2020. Shareholders can elect to take shares in lieu of a cash dividend at a discount of
2.5% to the volume weighted average share price (VWAP).
The record date for the dividend is 13 March 2020 and the dividend will be paid on 3 April
2020. The interim dividend will again be imputed to 25% for New Zealand tax resident
shareholders and will be fully franked for Australian tax resident shareholders.
Board Composition
As communicated at the Annual Meeting last year, the Board intends to increase the number
of Directors on the Board. As part of this process Mr Nick Dowling, who resides in Sydney,
has been appointed to the EBOS Group Board effective 1 February 2020.
Mr Dowling is Chief Operating Officer at Balmoral Australia and prior to Balmoral was
Managing Director and CEO, Australia and New Zealand at New Hope Group Co. Ltd, a
private Beijing based corporation engaged in agribusiness and food, real estate and
infrastructure, chemicals, finance and investment.
EBOS Chair Liz Coutts said that Mr Dowling brings a wealth of experience in growing
businesses across a broad range of industries. “Nick’s experience as well as his deep M&A
experience will be of great benefit to the Group’s broad business portfolio and strategic
growth objectives”, Ms Coutts said. “Nick will become the Groups second Australian based
Director which is particularly important with the Australian operations representing the
majority of the Group’s earnings”, Ms Coutts added.
7
Outlook
Trading for the first half of FY20 was in line with our internal expectations and we reconfirm
the Group is confident of a significant increase in earnings in the current financial year.
We have not seen any significant impact to the Group as a result of the coronavirus (COVID-
19). We continue to closely monitor this issue and will take all necessary actions to ensure
we are well placed to respond to any challenges that arise as the situation unfolds.
This media release, the half-year results and related materials were authorised for lodgement with
NZX and ASX by the Board of EBOS Group Limited.
For further information, please contact:
Media: Investor Relations:
New Zealand Shaun Hughes
Geoff Senescall, Senescall Akers CFO, EBOS Group Ltd
+64 21 481 234 +61 428 833 981
Australia:
James Aanensen
PRX
+61 410 518 590
Financial Results Presentation webcast link:
https://edge.media-server.com/mmc/p/jmih5kk6
About EBOS Group
EBOS Group Limited NZBN 9429031998840 (NZX/ASX Code: EBO) is the largest and most
diversified Australasian marketer, wholesaler and distributor of healthcare, medical and
pharmaceutical products. It is also a leading Australasian animal care brand owner, product
marketer and distributor.
8
Appendix 1 – Reconciliation of Statutory and Underlying Earnings
A$m
EBITDAEBITPBTNPATEBITDAEBITPBTNPAT
Statutory result
167.2131.4115.981.7122.6107.395.067.0
Adjusted for
IFRS 16 Lease Accounting(19.4)(1.3)2.61.5- - - -
Profit on sale of surplus property- - - - (2.9)(2.9)(2.9)(2.4)
- - - - 6.96.96.94.7
Transaction costs incurred on M&A1.21.21.21.04.94.94.93.3
Net of One-off items(18.2)(0.1)3.92.58.88.88.85.6
Underlying result
149.0131.3119.884.2131.4116.1103.872.7
H1 FY19H1 FY20
Transition costs for major new warehouses
and Restructuring costs
---
INVESTOR
PRESENTATION
INTERIM FINANCIAL RESULTS
Half year ended 31 December 2019
20 February 2020
2
DISCLAIMER
The information in this presentation was prepared by EBOS Group Ltd (EBOS) with due care and attention. However, the information is
supplied in summary form and is therefore not necessarily complete, and no representation is made as to the accuracy, completeness or
reliability of the information. In addition, neither EBOS nor any of its subsidiaries, directors, employees, shareholders nor any other
person shall have liability whatsoever to any person for any loss (including, without limitation, arising from any fault or negligence)
arising from this presentation or any information supplied in connection with it.
This presentation may contain forward-looking statements and projections. These reflect EBOS’ current expectations, based on what it
thinks are reasonable assumptions. EBOS gives no warranty or representation as to its future financial performance or any future matter.
Except as required by law or NZX or ASX listing rules, EBOS is not obliged to update this presentation after its release, even if things
change materially. This presentation does not constitute financial advice. Further, this presentation is not and should not be construed as
an offer to sell or a solicitation of an offer to buy EBOS securities and may not be relied upon in connection with any purchase of EBOS
securities.
This presentation contains a number of non-GAAP financial measures, including Gross Profit, Gross Operating Revenue, EBIT, EBITA,
EBITDA, Underlying EBITDA, NPAT, Underlying NPAT, Underlying Earnings per Share, Free Cash Flow, Interest cover, Net Debt and Return
on Capital Employed. Because they are not defined by GAAP or IFRS, EBOS’ calculation of these measures may differ from similarly titled
measures presented by other companies and they should not be considered in isolation from, or construed as an alternative to, other
financial measures determined in accordance with GAAP. Although EBOS believes they provide useful information in measuring the
financial performance and condition of EBOS' business, readers are cautioned not to place undue reliance on these non-GAAP financial
measures.
The information contained in this presentation should be considered in conjunction with the consolidated financial statements for the
period ended 31 December 2019.
All currency amounts are in Australian dollars unless stated otherwise.
Group Financial Results
4
H1 FY20 SUMMARY RESULTS
1
$4.4b
Revenue
Underlying EBITDA
2
Underlying NPAT
2
Note 1: All currency amounts are in Australian dollars except for Dividends per share.
Note 2: Underlying results exclude the impact of IFRS 16 Leases and net one-off costs.
Refer to page 24 for the reconciliation of Underlying to Statutory earnings.
up 25.2%
$149.0m
up 13.4%
$84.2m
up 15.8%
Statutory EBITDA
Statutory NPAT
$167.2m
up 36.4%
$81.7m
up 21.8%
Underlying EPS
2
Statutory EPS
52.2c
up 9.1%
50.6c
up 14.8%
37.5c
(NZ$)
Dividends per share
up 8.7%
ROCE
15.9%
consistent with June 2019
5
STRATEGIC HIGHLIGHTS
The Australian wholesale business has
demonstrated its leading competitive
position with a significant increase in
revenues and profit, again evidencing the
strength of the Group’s long term strategy of
driving productivity and consistently building
capacity to create Australia’s leading
network of pharmacy distribution
infrastructure.
We have reignited the growth of TerryWhite
Chemmart (TWC), one of Australia's leading
community pharmacy networks, with our
That’s Real Chemistry campaign. The TWC
network delivered 5.7% sales growth on the
prior period and we welcomed 16 new
stores to the network.
The acquisition of LMT/NS for $34m signals
EBOS’ entry into the A$8b Australian and
New Zealand medical device sector creating
a new platform of growth for the Group.
Another strong performance from our
Institutional Healthcare business with
growth in specialty medicines and medical
consumables.
Our new 25,000m² Contract Logistics
facility in Sydney has enabled strong
growth in our Australian Contract Logistics
business.
The Animal Care segment delivered
another strong performance across our
portfolio of businesses, with our Vitapet,
Blackhawk and Lyppard wholesale business
all gaining market share.
Group revenue increased by 25.2% evidencing the strength of our portfolio of businesses with a
substantial uplift in Pharmacy Wholesale and strong performances from TerryWhite Chemmart,
Institutional Healthcare and Healthcare Logistics
6
A$m
H1 FY20H1 FY19Var$Var%
Underlying Results ¹
Revenue4,376.1 3,496.5 879.6 25.2%
Gross Operating Revenue449.4 404.8 44.6 11.0%
EBITDA149.0 131.4 17.6 13.4%
Depreciation & Amortisation17.7 15.2 (2.5) (16.2%)
EBIT131.3 116.1 15.2 13.1%
Net Finance Costs11.5 12.4 0.8 6.7%
Profit Before Tax119.8 103.8 16.0 15.4%
Net Profit after Tax84.2 72.7 11.5 15.8%
Earnings per share - cps52.2c47.8c4.4c9.1%
Net Debt392.2 552.1
Net Debt : EBITDA1.41x2.16x
Statutory Results
Revenue4,376.1 3,496.5 879.6 25.2%
EBITDA167.2 122.6 44.6 36.4%
EBIT131.4 107.3 24.0 22.4%
Profit Before Tax115.9 95.0 21.0 22.1%
Net Profit After Tax81.7 67.0 14.6 21.8%
Earnings per share - cps50.6c44.1c6.5c14.8%
H1 FY20 FINANCIAL PERFORMANCE
Note 1: Underlying results exclude the impact of IFRS 16 Leases and net one-off costs.
Refer to page 24 for the reconciliation of Underlying to Statutory earnings.
Significant revenue increase of 25.2%
primarily due to growth in Pharmacy
Wholesale, TerryWhite Chemmart,
Institutional Healthcare and Contract
Logistics.
Statutory EBITDA of $167.2m, an increase
of $44.6m or 36.4%. This includes a
$19.4m benefit from the adoption of IFRS
16 Leases.
Underlying EBITDA increase of $17.6m or
13.4%:
Healthcare up 16.3%.
Animal Care up 5.7%.
Underlying NPAT and Underlying EPS
increases of 15.8% and 9.1%,
respectively.
Healthcare Results
8
HEALTHCARE SEGMENT
Significant growth in Australia from a strong underlying trading performance
Australia’s growth in revenue of 30.9% and
Underlying EBITDA of 22.3% was driven by the
performances of our Pharmacy Wholesale, TWC,
Institutional Healthcare and Contract Logistics
businesses.
New Zealand revenue growth was 9.9%, however,
Underlying EBITDA was affected by softer overseas
demand for our consumer products, reflective of
the changes which have impacted the daigou
export channel.
Underlying EBITDA and Underlying EBITDA %
A$mH1 FY20H1 FY19Var$Var%
Revenue4,165.53,304.2861.326.1%
Underlying EBITDA
1
131.1112.718.416.3%
Underlying EBITDA%3.15%3.41%
Australia
Revenue3,331.42,545.3786.130.9%
Underlying EBITDA
1
111.391.020.322.3%
Underlying EBITDA%3.34%3.58%
New Zealand
Revenue834.1758.975.29.9%
Underlying EBITDA
1
19.821.7(1.9)(8.7%)
Underlying EBITDA%2.37%2.85%
Note 1: Underlying results exclude the impact of IFRS 16 Leases and net one-off costs.
Refer to page 24 for the reconciliation of Underlying to Statutory earnings.
9
COMMUNITY
PHARMACY
Pharmacy revenue increased by $670m and
GOR by $31m due to increased wholesale
volumes in both Australia and New Zealand.
The pharmacy business benefitted from:
Successful commencement of the Chemist
Warehouse Group (CWG) contract from 1
July 2019;
Productivity improvements in wholesale
operations due to higher volumes across
our sites and the new Brisbane facility;
and
The performance of our retail brands,
particularly TerryWhite Chemmart.
The movement in GOR % margin is due to
sales mix of ethical/OTC products in the
wholesale business and the loss of rental
income from the sale of a surplus property in
FY19.
Revenue and GOR
H1 FY16 to H1 FY20 CAGR
Revenue: 9.3%
GOR: 9.1%
A$mH1 FY20H1 FY19Var$Var%
Revenue2,561.91,892.2669.735.4%
GOR221.4190.630.816.2%
GOR%8.64%10.07%
10
TERRYWHITE CHEMMART
Continued growth in one of Australia’s leading community pharmacy networks
16 new pharmacies
joined the network
250,000 flu
vaccinations
Leading pharmacy brand for
pharmacist administered vaccines
in 2019
#1 Customer
Satisfaction
Roy Morgan research puts TWC in
the number one position for
pharmacy customer satisfaction
In the last six months, we
welcomed 16 new pharmacies to
our national network
5.7% network
sales growth
With prescription sales growth of
5.3%, on a like-for-like basis
Exclusive brands
Growing national and
private label brands in
destination categories
Partnerships to access new
customers and drive sales growth
Repositioning the brand under
‘that’s real chemistry’
Exclusive Masterclass
program
Over 600 pharmacists attend
our industry leading education
and health program
Supplier relationships
strengthened
New partnership approach with
suppliers driving improved
outcomes
11
INSTITUTIONAL
HEALTHCARE
Revenue growth of 9.1% was driven largely
from increases in new specialty medicines,
combined with strong growth in the medical
consumables sector and the acquisition of
LMT/NS.
Symbion Hospitals had strong growth and our
excellent service levels and relationships with
both private and public customers saw us
maintain our market leading position.
Our entry into the devices sector via the
acquisition of LMT/NS represents an
important development in the Group’s growth
trajectory as a foundation step in building
another significant platform to our Healthcare
portfolio.
Revenue and GOR
H1 FY16 to H1 FY20 CAGR
Revenue: 9.7%
GOR: 17.2%
A$mH1 FY20H1 FY19Var$Var%
Revenue1,252.31,147.8104.59.1%
GOR109.4101.87.67.4%
GOR%8.73%8.87%
12
CONTRACT LOGISTICS
Photo of the new Sydney Contract Logistics facility.
An active business development focus led to
GOR growth of 21.5% as the business
continues to drive growth and profitability
as customers join our new facilities.
The new 25,000m² facility in Sydney and
further expansion in Auckland has created
further growth in both countries.
Note: GOR % not relevant as sales are predominantly on consignment.
Revenue and GOR
H1 FY16 to H1 FY20 CAGR
Revenue: 10.6%
GOR: 8.5%
A$mH1 FY20H1 FY19Var$Var%
Revenue346.4241.9104.543.2%
GOR39.332.37.021.5%
13
CONSUMER PRODUCTS
Consumer Products performance was affected
by softer overseas demand for our products,
reflective of the changes which have impacted
the daigou export channel.
We have increased our investment in this
business segment through the opening of our
new purpose built manufacturing and
distribution facility in Auckland.
Revenue and GOR
H1 FY16 to H1 FY20 CAGR
Revenue: 15.6%
GOR: 9.4%
A$mH1 FY20H1 FY19Var$Var%
Revenue57.959.6(1.7)(2.9%)
GOR19.723.2(3.5)(15.0%)
GOR%34.03%38.90%
Animal Care Results
15
ANIMAL CARE SEGMENT
Strong Revenue and Underlying EBITDA performance reflecting continued growth in our key brands
Revenue growth of $18.3m, or 9.5%, due to
the continued excellent performance of our
branded products portfolio and higher
wholesale volumes.
Our key brands Black Hawk and Vitapet
recorded strong uplifts in revenue both
growing their market share.
Our Vitapet brand made significant headway
in the Australian grocery channel with
revenue growth above market.
Lyppard strengthened its market position
during the period with revenue increasing by
9.4% due to customer growth and the new
Therapon business acquired in December
2018.
Wholesale (Lyppard)
EBOS brands
(Black Hawk and Vitapet)
Other products
Underlying EBITDA and Underlying EBITDA %
Revenue mix by category
A$m
H1 FY20H1 FY19
Var$Var%
Revenue210.6192.318.39.5%
Underlying EBITDA25.724.31.45.7%
Underlying EBITDA%12.20%12.65%
16
CONTINUED GROWTH FROM OUR BRANDS
Black Hawk sales grew 9.7% due to:
Strong consumer support for our products.
Continued investment in marketing to drive
increased brand awareness and retail support.
Maintaining the price value proposition against
other premium foods.
Vitapet’s strong sales growth of 14.7% due to:
Strong new product pipeline.
Marketing support to grow brand awareness.
Improved packaging and branding enhancing shelf
presence.
Both our Black Hawk and Vitapet brands continue strong growth rates
Group Financial Information &
Outlook
18
CASH FLOW
Statutory Operating Cash Flow of $74.2m is above last year by $34.0m due to the significant
increase in earnings and continued working capital management. Cash from Operating activities
also reflects a $15.5m uplift arising from the adoption of IFRS 16 Leases.
Capex of $13.7m primarily comprised spend on the new Consumer Products facility in Auckland
and other smaller projects.
A$mH1 FY20H1 FY19Var$Var%
Statutory Cash Flow including IFRS 16 Leases
EBITDA167.2 122.6 44.6 36.4%
Net interest paid(15.4) (12.4) (3.1)
Tax paid(32.6) (25.7) (6.9)
Net working capital and other movements(45.0) (44.3) (0.7)
Cash from Operating activities74.2 40.3 34.0 84.4%
Capital expenditure (net)(13.7) (16.9) 3.2
Free Cash Flow60.5 23.3 37.2 159.5%
19
WORKING CAPITAL AND ROCE
Working Capital
1
Return on Capital Employed
1
Working capital management discipline is
a key focus of the Group and maintaining
the industry leading cash conversion cycle
of 16 days is reflective of this.
Return on Capital Employed of 15.9% at
December 2019 is consistent with June 2019
and reflects the strong earnings growth,
partially offset by the seasonality of the
Group’s working capital cycle.
Note 1: Working Capital and ROCE excludes the impacts of IFRS 16 Leases.
Note 2: Cash conversion days are adjusted for the Group’s 3PL debtors and creditors arising from its hepatitis C business.
A$mDec 2019June 2019
Net Working Capital
Trade receivables1,069.6865.7
Inventory728.7723.5
Trade payables/other(1,462.1)(1,307.3)
Total336.2281.9
Cash conversion days
2
Debtor days43 43
Inventory days34 43
Creditor days61 68
Cash conversion days16 18
20
NET DEBT AND MATURITY PROFILE
Net Debt and Net Debt : EBITDA ratio
1
Net Debt
1
of $392m at December 2019,
with a Net Debt : EBITDA
1
ratio of 1.41x
(1.41x at June 2019).
Current gearing continues to provide
approximately $300m – $350m headroom
for future acquisitions.
Bank covenants have been amended to
adopt a frozen gap approach with respect
to IFRS 16 Leases.
At 31 December 2019, gross drawn debt
1
was
$666m or 64% of total facility limits.
At 31 December 2019, the weighted average
maturity of our combined term debt and
securitisation facilities is 1.9 years with actions
underway to extend the term of our debt
facilities by 30 June 2020.
Debt Maturity Profile – facility limits
1
Note 1: Debt and the Net Debt : EBITDA ratio excludes the impacts of IFRS 16 Leases.
21
EARNINGS AND DIVIDENDS PER SHARE
Underlying Earnings Per Share (A$ cents)
Dividends Per Share (NZ$ cents)
Underlying EPS of 52.2 cents representing growth of 9.1% in H1 FY20.
Interim dividend of 37.5 cents (imputed to 25% and franked to 100% for Australian resident
shareholders).
Dividend payout ratio of 70.2%, excluding the impact of the Dividend Reinvestment Plan (DRP).
The Group’s DRP will again be operational for the interim dividend with a discount of 2.5%
applicable to VWAP.
22
FY20 OUTLOOK
Trading for the first half of FY20 was in line with our internal expectations and we reconfirm the
Group is confident of a significant increase in earnings in the current financial year.
We have not seen any significant impact to the Group as a result of the coronavirus (COVID-19).
We continue to closely monitor this issue and will take all necessary actions to ensure we are
well placed to respond to any challenges that arise as the situation unfolds.
Supporting Information
24
H1 FY19
IFRS16M&AOne-off
A$m
H1 FY20H1 FY19Var$Var%ImpactcostscostsH1 FY20H1 FY19Var$Var%
Group Income Statement
Revenue4,376.1 3,496.5 879.6 25.2%- - - 4,376.1 3,496.5 879.6 25.2%
Gross Operating Revenue449.4 404.8 44.6 11.0%- - - 449.4 404.8 44.6 11.0%
EBITDA149.0 131.4 17.6 13.4%19.4 (1.2) (8.8) 167.2 122.6 44.6 36.4%
Depreciation & Amortisation17.7 15.2 (2.5) (16.2%)18.1 - - 35.9 15.2 (20.6) (135.1%)
EBIT131.3 116.1 15.2 13.1%1.3 (1.2) (8.8) 131.4 107.3 24.0 22.4%
Net Finance Costs11.5 12.4 0.8 6.7%3.9 - - 15.4 12.4 (3.1) (24.8%)
Profit Before Tax119.8 103.8 16.0 15.4%(2.6) (1.2) (8.8) 115.9 95.0 21.0 22.1%
Net Profit after Tax84.2 72.7 11.5 15.8%(1.5) (1.0) (5.6) 81.7 67.0 14.6 21.8%
Earnings per share - cps52.2c47.8c4.4c9.1%50.6c44.1c6.5c14.8%
EBITDA by Segment
Healthcare131.1 112.7 18.4 16.3%16.0 (1.2) (8.4) 145.8 104.3 41.6 39.9%
Animal Care25.7 24.3 1.4 5.7%2.8 - - 28.5 24.3 4.2 17.2%
Corporate(7.7) (5.6) (2.1) (38.1%)0.6 - (0.4) (7.1) (6.0) (1.1) (18.2%)
Group149.0 131.4 17.6 13.4%19.4 (1.2) (8.8) 167.2 122.6 44.6 36.4%
H1 FY20
Underlying¹Statutory
H1 FY20 RECONCILIATION OF
UNDERLYING AND STATUTORY EARNINGS
Note 1: Underlying earnings is a Non-GAAP measure which adjusts for the impact of IFRS 16 Leases and net one-off costs.
25
RECONCILIATION OF UNDERLYING AND
STATUTORY NET ASSETS FOR IFRS 16 LEASES
Net Assets as at 31 December 2019
Pre IFRS 16 lease
adjustmentStatutory
A$m31-Dec-1931-Dec-19
Current assets2,136.92,136.9
Non-current assets1,424.0298.11,722.1
Current liabilities(1,726.3)(34.6)(1,760.9)
Non-current liabilities(551.2)(265.0)(816.2)
Net Assets1,283.4(1.5)1,281.9
IFRS 16
impact
26
Health Care
Animal Care
Pharmacy
(Wholesale and retail)
Institutional Healthcare
Contract Logistics
Consumer Products
SEGMENT EARNINGS AND GOR MIX
EBITDA by segment
Gross Operating Revenue (GOR) H1 FY20
5%
13%
13%
24%
9%
H1 FY20
GOR Mix
49%
87%
A$m
H1 FY20H1 FY19
Var$Var%
Statutory EBITDA
Healthcare145.8104.341.639.9%
Animal Care28.524.34.217.2%
Corporate(7.1)(6.0)(1.1)(18.2%)
Group167.2122.644.636.4%
Underlying EBITDA
Healthcare131.1112.718.416.3%
Animal Care25.724.31.45.7%
Corporate(7.7)(5.6)(2.1)(38.1%)
Group149.0131.417.613.4%
One-off items
Healthcare(1.2)(8.4)7.2
Animal Care- - -
Corporate- (0.4)0.4
Group(1.2)(8.8)7.6
IFRS 16 Impact
Healthcare16.0- 16.0
Animal Care2.8- 2.8
Corporate0.6- 0.6
Group19.4- 19.4
27
GLOSSARY OF TERMS AND MEASURES
Term Definition
Debtor days Trade debtors at the end of period divided by Revenue for the period, multiplied by number of days in the period.
Inventory days Inventory at the end of period divided by Cost of Sales for the period, multiplied by number of days in the period.
Creditor days Trade creditors at the end of period divided by Cost of Sales for the period, multiplied by number of days in the period.
Revenue Revenue from the sale of goods and the rendering of services.
Gross Operating
Revenue (GOR)
Revenue less cost of sales and the write-down of inventory.
EBITDA Earnings before interest, tax, depreciation and amortisation.
Underlying EBITDA Earnings before interest, tax, depreciation, amortisation and adjusted for IFRS16 Leases and one-off items.
EBIT Earnings before interest and tax.
Underlying EBIT Earnings before interest and tax and adjusted for IFRS16 Leases and one-off items.
PBT Profit before tax.
Underlying PBT Profit before tax and adjusted for IFRS16 Leases and one-off items.
NPAT Net Profit After Tax attributable to the owners of the company.
Underlying NPAT Net Profit After Tax attributable to the owners of the company and adjusted for IFRS16 Leases and one-off items.
One-off items The net transaction costs incurred on M&A, transition costs for major new warehouses, restructuring costs and gains on sale of surplus property.
Free Cash Flow Cash from operations less capital expenditure net of proceeds from disposals.
Earnings per share
(EPS)
Net Profit after tax divided by the weighted average number of shares on issue during the period in accordance with IAS 33 ‘Earnings per share’.
Underlying EPS Underlying NPAT divided by the weighted average number of shares on issue during the period.
Underlying Net Debt Net debt excluding the impacts of IFRS16 Leases.
Net Debt : EBITDA Ratio of Underlying net debt at period end to the last 12 months Underlying EBITDA, adjusting for pre acquisition earnings of acquisitions for the period.
Return on Capital
Employed (ROCE)
Measured as underlying earnings before interest, tax and amortisation of finite life intangibles for 12 months (EBITA) divided by closing capital
employed (including a pro-rata adjustment for entities acquired and excluding amounts for significant capital projects yet to complete and strategic
investments).
Except where noted, common terms and measures used in this document are based upon the following definitions:
www.ebosgroup.com
---
EBOS GROUP LIMITED
INTERIM REPORT
FOR THE SIX MONTHS
ENDED 31 DECEMBER 2019
EBOS GROUP LIMITED
INTERIM REPORT 2020
CONTENTS Page
Summary of Consolidated Financial Highlights 1
Shareholder Calendar 1
Auditor’s Independent Review Report 2
Condensed Consolidated Income Statement 3
Condensed Consolidated Statement of Comprehensive Income 4
Condensed Consolidated Statement of Changes in Equity 5
Condensed Consolidated Balance Sheet 8
Condensed Consolidated Cash Flow Statement 9
Notes to the Condensed Consolidated Interim Financial Statements 10
Directory 22
1
EBOS GROUP LIMITED
INTERIM REPORT 2020
SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Revenue 4,376,127 3,496,498 6,930,360
Profit before net finance costs, tax expense, depreciation and
amortisation (EBITDA)
167,205
122,566
250,410
Earnings before interest and income tax expense (EBIT) 131,355 107,318 218,349
Profit before income tax expense 115,928 94,962 193,015
Profit for the period 81,922 67,238 136,727
Profit for the period attributable to owners of the Company 81,680 67,045 137,700
Equity attributable to owners of the Company 1,284,757 1,053,285 1,242,331
Earnings per share 50.6c 44.1c 89.8c
Interim dividend per share (New Zealand dollars) 37.5c 34.5c 34.5c
SHAREHOLDER CALENDAR
Interim dividend record date 13 March 2020
Interim dividend payable 3 April 2020
Release of 2020 full year results 20 August 2020
Annual General Meeting 13 October 2020
2
INDEPENDENT REVIEW REPORT TO THE SHAREHOLDERS OF EBOS GROUP LIMITED
We have reviewed the condensed consolidated interim financial statements of EBOS Group Limited and its subsidiaries (‘the Group’) which
comprise the condensed consolidated balance sheet as at 31 December 2019, and the condensed consolidated income statement,
condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed
consolidated statement of cash flows for the six months ended on that date, and a summary of significant accounting policies and other
explanatory information on pages 3 to 21.
This report is made solely to the Group’s shareholders, as a body. Our review has been undertaken so that we might state to the Group’s
shareholders those matters we are required to state to them in a review 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 Group’s shareholders as a body, for our engagement, for this
report, or for the opinions we have formed.
Board of Directors’ Responsibilities
The Board of Directors are responsible for the preparation and fair presentation of the condensed consolidated interim financial
statements, in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting and for such internal control
as the Board of Directors determine is necessary to enable the preparation and fair presentation of the condensed consolidated interim
financial statements that are free from material misstatement, whether due to fraud or error.
Our Responsibilities
Our responsibility is to express a conclusion on the condensed consolidated interim financial statements based on our review. We
conducted our review in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity
(‘NZ SRE 2410’). NZ SRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the
condensed consolidated interim financial statements, taken as a whole, are not prepared, in all material respects, in accordance with NZ
IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting. As the auditor of EBOS Group Limited, NZ SRE 2410 requires that
we comply with the ethical requirements relevant to the audit of the annual financial statements.
A review of the condensed consolidated interim financial statements in accordance with NZ SRE 2410 is a limited assurance engagement.
The auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International
Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on those financial statements.
Our firm carries out other assignments for the Group in the area of taxation advice. These services have not impaired our independence as
auditor of the Group. In addition to this, partners and employees of our firm deal with the Group on normal terms within the ordinary
course of trading activities of the business of the Group. The firm has no other relationship with, or interest in, the Group.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial
statements of the Group do not present fairly, in all material respects, the financial position of the Group as at 31 December 2019 and its
financial performance and cash flows for the six months ended on that date in accordance with NZ IAS 34 Interim Financial Reporting and
IAS 34 Interim Financial Reporting.
19 February 2020
Christchurch, New Zealand
3
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2019
Notes
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Revenue
2(a) 4,376,127 3,496,498 6,930,360
Income from associates
1,632 1,814 4,203
Profit before depreciation, amortisation, net finance
costs and income tax expense
167,205
122,566
250,410
Depreciation
2(b) (27,619) (7,490) (16,438)
Amortisation of finite life intangibles
2(b) (8,231) (7,758) (15,623)
Profit before net finance costs and income tax expense
131,355 107,318 218,349
Finance income
761 942 1,927
Finance costs – borrowings
(12,291) (13,298) (27,261)
Finance costs – leases
9 (3,897) - -
Profit before income tax expense
115,928 94,962 193,015
Income tax expense
(34,006) (27,724) (56,288)
Profit for the period
81,922 67,238 136,727
Profit for the period attributable to:
Owners of the Company
81,680 67,045 137,700
Non-controlling interests
242 193 (973)
81,922 67,238 136,727
Earnings per share
Basic (cents per share)
50.6 44.1 89.8
Diluted (cents per share)
50.6 44.1 89.8
4
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2019
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Profit for the period
81,922 67,238 136,727
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Cash flow hedge (losses)
(218) (2,158) (9,432)
Related income tax
64 714 2,784
Movement in foreign currency translation reserve
3,031 10,517 12,013
2,877 9,073 5,365
Items that will not be reclassified subsequently to profit or loss:
Movement on equity instruments fair valued through other
comprehensive income
(2,778) (2,593) 370
Total comprehensive income net of tax
82,021 73,718 142,462
Total comprehensive income for the period is attributable to:
Owners of the Company
81,779 73,525 143,435
Non-controlling interests
242 193 (973)
82,021 73,718 142,462
5
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2019
Notes
Share
capital
A$’000
Share
based
payments
reserve
A$’000
Foreign
currency
translation
reserve
A$’000
Retained
earnings
A$’000
Cash flow
hedge
reserve
A$’000
Equity
instruments fair
valued through
other
comprehensive
income reserve
A$’000
Non-
controlling
interests
A$’000
Total
A$’000
Six months ended
31 December 2018 (unaudited):
Opening balance 763,636 2,144 (22,805) 308,499 1,442 (1,424) 21,352 1,072,844
Profit for the period - - - 67,045 - - 193 67,238
Other comprehensive income for
the period, net of tax
-
- 10,517 - (1,444)
(2,593) - 6,480
Payment of dividends 4 - - - (49,386) - - - (49,386)
Share based payments - 882 - - - - - 882
Arising on acquisition of
remaining non-controlling
interest -
-
- - -
-
(46,678) (46,678)
Transfer of non-controlling
interest
-
-
- (23,228) -
-
23,228 -
Balance at 31 December 2018 763,636 3,026 (12,288) 302,930 (2) (4,017) (1,905) 1,051,380
6
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
For the six months ended 31 December 2019
Notes
Share
capital
A$’000
Share
based
payments
reserve
A$’000
Foreign
currency
translation
reserve
A$’000
Retained
earnings
A$’000
Cash flow
hedge
reserve
A$’000
Equity
instruments fair
valued through
other
comprehensive
income reserve
A$’000
Non-
controlling
interests
A$’000
Total
A$’000
Year ended
30 June 2019 (audited):
Opening balance 763,636 2,144 (22,805) 308,499 1,442 (1,424) 21,352 1,072,844
Profit for the period - - - 137,700 - - (973) 136,727
Other comprehensive income for
the period, net of tax
-
- 12,013 - (6,648)
370 - 5,735
Payment of dividends 4 - - - (99,336) - - - (99,336)
Share based payments - 1,793 - - - - - 1,793
Dividends reinvested 3 5,719 - - - - - - 5,719
Institutional placement 3 165,493 - - - - - - 165,493
Share issue costs 3 (3,037) - - - - - - (3,037)
Arising on acquisition of
remaining non-controlling
interest
-
-
- - -
-
(46,678)
(46,678)
Transfer of non-controlling
interest -
-
- (23,228) -
-
23,228 -
Balance at 30 June 2019 931,811 3,937 (10,792) 323,635 (5,206) (1,054) (3,071) 1,239,260
7
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
For the six months ended 31 December 2019
Notes
Share
capital
A$’000
Share
based
payments
reserve
A$’000
Foreign
currency
translation
reserve
A$’000
Retained
earnings
A$’000
Cash flow
hedge
reserve
A$’000
Equity
instruments fair
valued through
other
comprehensive
income reserve
A$’000
Non-
controlling
interests
A$’000
Total
A$’000
Six months ended
31 December 2019 (unaudited):
Opening balance 931,811 3,937 (10,792) 323,635 (5,206) (1,054) (3,071) 1,239,260
Profit for the period - - - 81,680 - - 242 81,922
Other comprehensive income for
the period, net of tax
-
- 3,031 - (154)
(2,778) - 99
Payment of dividends 4 - - - (56,378) - - - (56,378)
Share based payments - 1,371 - - - - - 1,371
Dividends reinvested 3 9,301 - - - - - - 9,301
Employee shares exercised 3 6,353 - - - - - - 6,353
Balance at 31 December 2019 947,465 5,308 (7,761) 348,937 (5,360) (3,832) (2,829) 1,281,928
8
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 December 2019
Notes
31 Dec 19
A$’000
(unaudited)
31 Dec 18
A$’000
(unaudited)
30 Jun 19
A$’000
(audited)
Current assets
Cash and cash equivalents 274,420 152,144 166,620
Trade and other receivables 1,107,458 910,318 897,796
Prepayments 12,496 9,532 9,603
Inventories
728,726
564,602
723,517
Current tax refundable 13,774 1,229 83
Other financial assets – derivatives 8 - 807 611
Total current assets 2,136,874 1,638,632 1,798,230
Non-current assets
Property, plant and equipment 172,992 120,934 174,463
Capital work in progress 12,343 54,452 6,508
Prepayments 517 68 650
Deferred tax assets
125,712
46,398
54,348
Goodwill 966,763 945,698 947,055
Indefinite life intangibles 123,856 123,382 123,582
Finite life intangibles 41,870 51,923 46,569
Right of use assets
9
228,408
-
-
Investment in associates 42,607 38,979 41,074
Other financial assets 7,008 6,747 9,733
Total non-current assets 1,722,076 1,388,581 1,403,982
Total assets
3,858,950
3,027,213
3,202,212
Current liabilities
Trade and other payables
1,458,159 1,145,003 1,288,319
Bank loans 7 202,189 213,762 168,307
Lease liabilities 9 34,737 - -
Current tax payable 20,375 14,995 12,883
Employee benefits 35,071 35,890 40,805
Other financial liabilities – derivatives
8
10,324 3,639 10,717
Total current liabilities 1,760,855 1,413,289 1,521,031
Non-current liabilities
Bank loans
7
464,209 490,370 364,038
Lease liabilities 9 205,999 - -
Trade and other payables 3,355 14,406 13,941
Deferred tax liabilities 135,715 51,276 57,330
Employee benefits 6,889 6,492 6,612
Total non-current liabilities 816,167 562,544 441,921
Total liabilities 2,577,022 1,975,833 1,962,952
Net assets
1,281,928 1,051,380 1,239,260
Equity
Share capital 3 947,465 763,636 931,811
Share based payments reserve
5,308 3,026 3,937
Foreign currency translation reserve (7,761) (12,288) (10,792)
Retained earnings 348,937 302,930 323,635
Cash flow hedge reserve (5,360) (2) (5,206)
Equity instruments fair valued through OCI
(3,832) (4,017) (1,054)
Equity attributable to owners of the company 1,284,757 1,053,285 1,242,331
Non-controlling interests (2,829) (1,905) (3,071)
Total equity 1,281,928 1,051,380 1,239,260
9
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 December 2019
Notes
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Cash flows from operating activities
Receipts from customers
4,204,450 3,556,358 7,032,507
Interest received
761 942 1,927
Dividends received from associates
315 959 1,394
Payments to suppliers and employees
(4,082,531) (3,479,059) (6,834,753)
Taxes paid
(32,579) (25,647) (55,271)
Interest paid
(16,188) (13,298) (27,261)
Net cash inflow from operating activities
5 74,228 40,255 118,543
Cash flows from investing activities
Sale of property, plant & equipment
346 98 7,703
Purchase of property, plant & equipment
(5,429) (11,189) (27,239)
Payments for capital work in progress
(6,018) (5,013) (5,735)
Payments for intangible assets
(2,583) (795) (1,227)
Acquisition of subsidiaries
(30,261) (92,389) (93,445)
Investment in other financial assets
- (110) (110)
Net cash (outflow) from investing activities
(43,945) (109,398) (120,053)
Cash flows from financing activities
Proceeds from issue of shares
15,654 - 168,175
Proceeds from borrowings
132,972 128,361 23,077
Repayment of borrowings
- (9,169) (74,955)
Repayment of lease liabilities
9 (15,451) - -
Dividends paid to equity holders of parent
4 (55,508) (50,138) (99,932)
Net cash inflow from financing activities
77,667 69,054 16,365
Net increase/(decrease) in cash held
107,950 (89) 14,855
Effect of exchange rate fluctuations on cash held during
the period
(150)
2,364
1,896
Net cash and cash equivalents at beginning of period
166,620 149,869 149,869
Net cash and cash equivalents at end of period
274,420 152,144 166,620
10
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 31 December 2019
1. FINANCIAL STATEMENTS
These unaudited condensed consolidated interim financial statements have been prepared in accordance with Generally Accepted
Accounting Practice (“GAAP”). They comply with the New Zealand Equivalent to International Accounting Standard 34 (NZ IAS 34)
“Interim Financial Reporting” and International Accounting Standard IAS 34, as applicable for profit orientated entities. These
financial statements should be read in conjunction with the financial statements and related notes included in the Group’s Annual
Report for the year ended 30 June 2019.
Apart from the changes noted below in relation to the adoption of NZ IFRS 16 ‘Leases’ the accounting policies and methods of
computation adopted are consistent with those of the previous year.
During the current period, effective from 1 July 2019, the Group has adopted NZ IFRS 16 which has had a material impact on these
financial statements (refer to Note 9).
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 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 ‘Leases’ 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 has applied NZ IFRS 16 from 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 have not been restated
in accordance with the transition method adopted.
Leases of less than 12 months duration and low value asset leases will continue to be recognised on a straight line basis.
The information is presented in thousands of Australian dollars unless otherwise stated.
11
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
2. PROFIT FROM OPERATIONS
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
(a)
Revenue
Community Pharmacy
2,561,903
1,892,192
3,704,123
Institutional Healthcare
1,252,258 1,147,762 2,292,697
Contract Logistics Services
36,225 30,156 63,012
Contract Logistics Sales
310,148 211,711 454,987
Consumer Products
57,905
59,618
113,931
Interdivisional eliminations
(52,935) (37,247) (80,434)
Healthcare
4,165,504 3,304,192 6,548,316
Animal Care
210,623 192,306 382,044
4,376,127 3,496,498 6,930,360
12
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
2. PROFIT FROM OPERATIONS (Continued)
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
(b)
Profit before income tax expense
Profit before income tax has been arrived at
after charging the following expenses by
nature:
One-off items (1)
(1,240) (8,820) (11,212)
Cost of sales
(3,924,743) (3,090,157) (6,121,500)
Write-down of inventory
(1,976) (1,512) (2,570)
Impairment (loss)/gain on trade & other
receivables
(617) 671 341
Depreciation of property, plant & equipment
(9,480) (7,490) (16,438)
Depreciation on right of use assets
(18,139)
-
-
Amortisation of finite life intangibles
(8,231) (7,758) (15,623)
Lease rental expenses
(2,515) (21,513) (42,796)
Donations
(45) (15) (210)
Employee benefit expense
(145,443) (139,397) (283,024)
Defined contribution plan expense
(8,578)
(8,026)
(15,985)
Other expenses
(125,397) (106,977) (207,197)
Total expenses
(4,246,404) (3,390,994) (6,716,214)
(1) One-off items comprise merger and acquisition costs (31 December 2019). One-off items comprise merger and acquisition
costs, warehouse transition and restructuring costs incurred net of a $2.9m gain on the sale of excess land held
(31 December 2018 and 30 June 2019).
3. SHARE CAPITAL
Six months
31 Dec 19
Six months
31 Dec 18
Year ended
30 Jun 19
No.
’000
A$’000
(unaudited)
No.
’000
A$’000
(unaudited)
No.
’000
A$’000
(audited)
Fully paid ordinary
shares
Balance at beginning
of period
161,708
931,811
152,539
763,636
152,539
763,636
Dividend reinvested –
April 2019
- - - - 286 5,719
October 2019
415
9,301
-
-
-
-
Institutional
placement –
May 2019
- - - - 8,883 165,493
Placement costs
- - - - - (3,037)
Shares vested under
the long-term
executive incentive
scheme
- 6,353 - - - -
162,123
947,465
152,539
763,636
161,708
931,811
13
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
4. DIVIDENDS
AUD
Six months
31 Dec 19
AUD
Six months
31 Dec 18
AUD
Year ended
30 Jun 19
Cents per
share
A$’000
(unaudited)
Cents per
share
A$’000
(unaudited)
Cents per
share
A$’000
(audited)
Recognised amounts
Fully paid ordinary shares
Final – prior year
35.0 56,378 32.4 49,057 32.4 49,057
Interim dividend
- - - - 33.2 50,279
35.0 56,378 32.4 49,057 65.6 99,336
Unrecognised amounts
Final dividend
- - - - 35.4 57,205
Interim dividend
36.1 58,468 32.8 50,100 - -
36.1 58,468 32.8 50,100 35.4 57,205
Dividends are approved by the Board in New Zealand dollars. Dividends recognised in the Statement of Changes in Equity are
converted from New Zealand dollars to Australian Dollars at the exchange rate applicable on the date the dividend was approved.
Unrecognised dividends are converted at the exchange rate applicable on the reporting date. The Board approved an interim
dividend of 37.5 New Zealand cents per share on 19 February 2020. The record date for the dividend is 13 March 2020 and the
dividend will be paid on 3 April 2020.
The following table shows dividends approved in New Zealand dollars:
NZD
NZD
NZD
Cents per
share
Cents per
share
Cents per
share
Recognised amounts
Fully paid ordinary shares
Final – prior year
37.0 35.5 35.5
Interim dividend
- - 34.5
37.0 35.5 70.0
Unrecognised amounts
Final dividend
- - 37.0
Interim dividend
37.5 34.5 -
37.5 34.5 37.0
New Zealand dollar dividends paid to equity holders of the parent are translated into Australian dollars and disclosed in the cash
flow statement at the foreign currency exchange rate applicable on the date they are paid.
14
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
5. NOTES TO THE CASH FLOW STATEMENT
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Reconciliation of profit for the period with cash
flows from operating activities
Profit for the period
81,922
67,238
136,727
Add/(less) non-cash items:
Depreciation of property, plant & equipment
9,480 7,490 16,438
Depreciation on right of use assets
18,139 - -
Amortisation of finite life intangibles
8,231
7,758
15,623
Loss/(gain) on sale of property, plant & equipment
51 (2,856) (2,267)
Income from associates
(1,632) (1,814) (4,203)
Expense recognised in respect of share based
payments
1,371 585 1,793
Deferred tax
8,227 955 3,061
43,867
12,118
30,445
Movements in working capital:
Trade and other receivables
(209,662) 6,543 19,065
Prepayments
(2,760) (559) (1,212)
Inventories
(5,209) (29,520) (188,435)
Current tax refundable/(payable)
(6,199) 2,394 1,428
Trade and other payables
159,254 (24,192) 118,648
Provision for employee benefits
(5,457) (4,286) 749
Foreign currency translation of opening working
capital balances
158 555 (1,201)
(69,875) (49,065) (50,958)
Balances classified as investing activities
9,610 4,152 (2,951)
Working capital items acquired on acquisition
8,704 5,812 5,280
Net cash inflow from operating activities
74,228 40,255 118,543
15
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
6. SEGMENT INFORMATION
(a) Products and services from which reportable segments derive their revenues
The Group’s reportable segments under NZ IFRS 8 ‘Operating Segments’ are as follows:
Healthcare: Incorporates the sale of human healthcare products to Community Pharmacy, Institutional Healthcare, Contract
Logistics and Consumer Products customers.
Animal care: Incorporates the sale of animal care products in a range of sectors, own brands, retail and wholesale activities.
Corporate: Includes net financing costs and central administration expenses that have not been allocated to either the
healthcare or animal care segments.
(b) Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Revenue from external customers
Healthcare
4,165,504 3,304,192 6,548,316
Animal care
210,623 192,306 382,044
4,376,127 3,496,498 6,930,360
Segment result (EBITDA)
Healthcare
145,833 104,270 215,949
Animal care
28,490 24,319 48,271
Corporate
(7,118) (6,023) (13,810)
167,205 122,566 250,410
Segment expenses
Healthcare:
Depreciation
(24,037) (7,111) (15,698)
Amortisation of finite life intangibles
(7,224) (6,679) (13,464)
Income tax expense
(33,710) (26,541) (54,628)
(64,971) (40,331) (83,790)
Animal care:
Depreciation
(3,010) (379) (740)
Amortisation of finite life intangibles
(1,007) (1,079) (2,159)
Income tax expense
(6,789) (6,408) (12,327)
(10,806) (7,866) (15,226)
Corporate:
Depreciation
(572) - -
Net finance costs
(15,427) (12,356) (25,334)
Income tax credit
6,493 5,225 10,667
(9,506) (7,131) (14,667)
Profit for the period
Healthcare
80,862 63,939 132,159
Animal care
17,684 16,453 33,045
Corporate
(16,624) (13,154) (28,477)
81,922 67,238 136,727
‘
16
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
6. SEGMENT INFORMATION (Continued)
The accounting policies of the reportable segments are consistent with the Group’s accounting policies. Segment result
represents profit before depreciation, amortisation, net finance costs and tax. This is the measure reported to the chief
operating decision maker for the purposes of resource allocation and assessment of segment performance.
(c) Segment assets
The following balance sheet and cash flow items are not allocated to operating segments as they are not reported to the
chief operating decision maker at a segment level:
- Assets
- Liabilities
- Capital expenditure
(d) Revenues from major products and services
The Group’s major products and services are transacted the same as its reportable segments i.e. healthcare, animal care and
corporate.
(e) Geographical information
The Group operates in two principal geographical areas; New Zealand (country of domicile) and Australia.
The Group’s revenue from external customers by geographical location (of the reportable segment) and information about its
segment assets (non-current assets excluding investments in associates and deferred tax assets) are detailed below:
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Revenue from external customers
New Zealand
861,857 784,418 1,585,227
Australia
3,514,270 2,712,080 5,345,133
4,376,127 3,496,498 6,930,360
Non-current assets
New Zealand
362,616 290,966 294,029
Australia
1,191,141 1,012,238 1,014,531
1,553,757 1,303,204 1,308,560
7. BANK FACILITY AND BORROWINGS
The Group fully complies with and operates within the financial covenants under the arrangements with its bankers.
At 31 December 2019 the Group had unutilised term and working capital facilities of $171.9m (December 2018: $143.6m, June
2019: $270.9m).
The Group also has a trade debtor securitisation facility of which $198.0m was unutilised at 31 December 2019 (December 2018:
$186.2m, June 2019: $231.7m).
17
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
7. BANK FACILITY AND BORROWINGS (Continued)
As at 31 December 2019, the maturity profile of the Group’s term debt and securitisation facilities was:
Facility Amount Maturity
Term debt and working capital facilities $192.3m Less than 1 year
Term debt facilities $151.0m 1-2 years
Term debt facilities $293.0m 3-4 years
Securitisation facility $400.0m 1-2 years
8. FINANCIAL INSTRUMENTS
The Group enters into foreign currency forward exchange contracts to hedge trading transactions, including anticipated
transactions, denominated in foreign currencies and uses interest rate swaps to manage cash flow interest rate risk.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is
designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the
nature of the hedge relationship. The Group designates certain derivatives as cashflow hedges of highly probable forecast
transactions.
Fair value of derivative financial instruments
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Other financial assets – derivatives:
Foreign currency forward exchange contracts
- 807 611
- 807 611
Other financial liabilities – derivatives:
Foreign currency forward exchange contracts
(454) (182) (40)
Interest rate swaps
(9,870) (3,457) (10,677)
(10,324) (3,639) (10,717)
The Group has categorised these derivatives, both financial assets and financial liabilities, as Level 2 under the fair value
hierarchy contained within NZ IFRS 13 ‘Fair Value Measurement’.
The fair value of foreign currency forward exchange contracts is determined using a discounted cashflow valuation. Key inputs
include 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 counterparties.
There have been no changes in valuation techniques used for either foreign currency forward exchange contracts or interest rate
swaps during the current reporting period.
18
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
9. IMPACT OF NEW ACCOUNTING STANDARDS
NZ IFRS 16 ‘Leases’
The Group has adopted NZ IFRS 16 with a date of initial application of 1 July 2019. NZ IFRS 16 (replaces NZ IAS 17) sets out the
principal for the recognition, measurement, presentation and disclosure of leases. It requires lessees to account for all leases
under a single on balance sheet model, similar to accounting for finance leases under NZ IAS 17.
The adoption of NZ IFRS 16 results in the Group recognising a right-of-use (ROU) asset and corresponding liability for all leases
with a term of more than 12 months, excluding low value assets. Operating lease expense is replaced by depreciation expense on
the ROU assets and interest expense on the lease liability as they amortise.
The Group has applied the modified retrospective full simplified transition method. At 1 July 2019, lease liabilities were
measured at present value of the remaining lease payments, discounted at the incremental borrowing rate (IBR) as at 1 July
2019. ROU assets are measured equal to lease liabilities, adjusted for initial direct costs incurred when entering into the leases,
less any incentives received on commencement date. Comparative periods were not restated.
Lease payments included in the measurement of the lease liability comprise:
- fixed lease payment, less incentives receivable,
- variable lease payments that depend on an index or a rate, initially measured using the index or rate at the
commencement date,
- the amount expected to be payable by the lessee under residual value guarantees,
- the exercise price of purchase options, if the lessee is reasonably certain to exercise the options, and
- payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability and by
reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related ROU asset) whenever:
- the lease term has changed or if there is a change in the assessment of exercise of a purchase option, in which case the
lease liability is remeasured by discounting the revised lease payments using the relevant revised discount rate,
- the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial
discount rate, and
- a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease payments using a revised discount rate.
The Group did not make any such adjustments during the periods presented.
The ROU assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement date less any lease incentives receivable and any initial direct costs. They are subsequently measured at cost
less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located
and restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and
measured under NZ IAS 37 Provisions, Contingent Liabilities and Contingent Assets and a corresponding amount added to the
ROU asset.
ROU assets are depreciated over the shorter period of either the lease term or the useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the ROU asset reflects that the Group expects to exercise a purchase
option, the related ROU asset is depreciated over the useful life of the underlying asset. The depreciation starts at the
commencement of the date of lease.
The ROU assets are presented as a separate line in the consolidated statement of financial position.
19
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
9. IMPACT OF NEW ACCOUNTING STANDARDS (Continued)
NZ IFRS 16 ‘Leases’
The Group applies NZ IAS 36 Impairment of Assets to determine whether a ROU asset is impaired and accounts for any identified
impairment loss under this standard.
Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the ROU
asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those
payments occurs and are included in the line “other expenses” in the statement of comprehensive income.
As a practical expedient, NZ IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease
associated non-lease components as a single arrangement.
The lease expense that would previously be recorded as an operating expense moved from being included in operating expenses,
to depreciation and finance expense from 1 July 2019.
The impact on net earnings before income tax of an individual lease over its term remains the same, however, the new standard
results in a higher expense in early years, and lower in later years of a lease, as compared to the straight line expense profile of
an operating lease under NZ IAS 17.
The aggregate lease liability and ROU asset recognised in the statement of financial position as at 1 July 2019 and the Group’s
operating lease commitment at 30 June 2019 can be reconciled as follows:
Lease liability recognised on transition
A$’000
(unaudited)
Future minimum lease payments under non-cancellable operating leases as at 30 June 2019 193,402
Future lease payments on renewal options that are reasonably certain 93,756
Effect of discounting (41,537)
Lease liability as at 1 July 2019
245,621
Right of Use Asset recognised on transition
A$’000
(unaudited)
Land and buildings 225,624
Office, Plant and equipment 8,576
Motor Vehicles 2,746
Right of Use Assets as at 1 July 2019
236,946
In applying the modified retrospective approach, the Group has taken advantage of the following practical expedients:
- a single discount rate has been applied to portfolios of leases with reasonably similar characteristics,
- leases with a term of less than 12 months have been considered short-term leases,
- leases with a remaining term of twelve months or less from the date of application have been accounted for as short term
leases even though the initial term of the leases from lease commencement date may have been more than twelve months,
and
- a lessee may use hindsight, such as in determining the lease term if the contract contains options to extend or terminate the
lease.
20
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
10. ACQUISITION INFORMATION
The following material acquisition of subsidiaries took place during the period.
On 30 September 2019 EBOS Group Limited, through its subsidiary EBOS Medical Devices Australia Pty Ltd, acquired the 100%
equity interest in LMT Surgical Pty Ltd and National Surgical Pty Ltd (LMT Group).
Details of the acquisition are as follows:
Assets and liabilities acquired:
Carrying Value
A$’000
(unaudited)
Fair value
adjustment
A$’000
(unaudited)
Fair value on
acquisition
A$’000
(audited)
Current assets
Trade and other receivables
4,265 (255)
1
4,010
Prepayments
746 - 746
Inventories
14,070 (1,371)
2
12,699
Current tax refundable
138 - 138
Non-current assets
Property, plant and equipment
2,684 (703)
3
1,981
Deferred tax assets
263 795
4
1,058
Right of use assets
4,077 - 4,077
Current liabilities
Bank overdraft
(1,352) - (1,352)
Trade and other payables
(6,960) (323)
5
(7,283)
Lease liabilities
(4,219) - (4,219)
Current tax payable
(82) - (82)
Employee benefits
(1,390) - (1,390)
Non-current liabilities
Bank loans
(996) - (996)
Deferred tax liabilities
(17) - (17)
Net assets acquired
11,227 (1,857) 9,370
Goodwill on acquisition
19,710
Total consideration 29,080
Less deferred consideration (3,500)
Plus bank overdraft acquired 1,352
Net cash outflow from acquisition 26,932
1. To recognise the fair value of trade and other receivables on acquisition.
2. To recognise the fair value of inventory on acquisition.
3. To recognise the fair value of property, plant and equipment on acquisition.
4. To recognise deferred tax assets on acquisition.
5. To recognise the fair value of trade and other payables on acquisition.
Due to the timing of the acquisition the above figures have not yet been finalised and are currently considered provisional.
21
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
10. ACQUISITION OF SUBSIDIARIES (Continued)
Goodwill arising on acquisition
Goodwill arose on the acquisition of LMT Group 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.
LMT Group was acquired as it is a profitable Australasian medical device business which the Group believes fits strategically with
its Australasian healthcare business assets.
Due to the timing of the acquisition, LMT Group’s revenue and profit for the period are considered immaterial to the Group.
The acquisition of subsidiaries balance ($30.3m) included in the Condensed Consolidated Cash Flow Statement includes deferred
consideration payments of $3.4m in relation to prior period acquisitions.
11. EVENTS AFTER BALANCE DATE
Subsequent to 31 December 2019, the Board approved an interim dividend to shareholders. For further details please refer to
Note 4.
22
EBOS GROUP LIMITED
DIRECTORY
CORPORATE HEAD OFFICE AUSTRALIA HEAD OFFICE
108 Wrights Road Level 7, 737 Bourke Street
PO Box 411 Docklands
Christchurch 8024 Melbourne 3008
New Zealand Australia
Telephone +64 3 338 0999 Telephone +61 3 9918 5555
E-mail: ebos@ebosgroup.com
Internet: www.ebosgroup.com
DIRECTORS
Elizabeth Coutts Independent Chair
Nick Dowling Independent Director
Stuart McGregor
Stuart McLauchlan Independent Director
Sarah Ottrey Independent Director
Peter Williams
SHARE REGISTER
Computershare Investor Services Ltd Computershare Investor Services Pty Ltd
Private Bag 92119 GPO Box 3329
Auckland 1142 Melbourne, Victoria 3001
New Zealand Australia
Telephone: +64 9 488 8777 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.investorcentre.com/nz
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.
---
EBOS GROUP LIMITED
APPENDIX 4D
1
Interim Report for the Six Months Ended 31 December 2019
RESULTS FOR ANNOUNCEMENT TO THE MARKET
The following information is presented in accordance with ASX listing rule 4.2A.3 and should be read
in conjunction with the attached unaudited EBOS Group Limited interim report for the six months
ended 31 December 2019.
1. DETAILS OF THE REPORTING PERIOD AND THE PREVIOUS CORRESPONDING PERIOD
Current period Six months ended 31 December 2019
Previous corresponding period Six months ended 31 December 2018
This report and the attached condensed consolidated interim unaudited financial statements are
presented in Australian dollars, being the Group’s presentation currency.
2. GROUP FINANCIAL RESULTS - HALF YEAR SUMMARY
Group results
(AUD$000’s)
31 December
2019
AUD$000
(Unaudited)
31 December
2018
AUD$000
(Unaudited)
Change
%
Revenue
4,376,127
3,496,498
25.2%
EBITDA 167,205 122,566 36.4%
Depreciation and amortisation 35,850 15,248 235.1%
Earnings before interest and tax (EBIT) 131,355 107,318 22.4%
Net profit after tax (NPAT) 81,922 67,238 21.8%
Net Profit after tax (NPAT) attributable to the
owners of the Company
81,680
67,045
21.8%
Basic EPS - (cps) 50.6 44.1 14.8%
Net tangible asset backing per ordinary share - ($) $0.15 ($0.76)
Underlying EBITDA
(refer reconciliation below)
149,020 131,386 13.4%
Underlying Net profit after tax (NPAT)
attributable to the owners of the Company
(refer reconciliation below)
84,152
72,664
15.8%
Underlying EPS – (cps) 52.2 47.8 9.1%
EBOS GROUP LIMITED
APPENDIX 4D
2
Dividends
Amount per security
NZ Cents Per
Share
Franked amount per
security to 30% tax
rate
Interim dividend
37.5c
100%
Interim dividend – previous corresponding period 34.5c 100%
Key dates for the 2020 Interim Dividend
Ex-dividend date
12 March 2020
Record date 13 March 2020
(5.00pm NZDT)
Dividend payment date 3 April 2020
Other comments
The interim dividend will be imputed to 25% for New Zealand resident shareholders, and a
supplementary dividend paid to eligible non-resident shareholders.
3. RECONCILIATION OF REPORTED TO UNDERLYING EARNINGS
Reconciliation of Reported vs Underlying
Earnings
31 December
2019
AUD$000
(Unaudited)
31 December
2018
AUD$000
(Unaudited)
Change
%
Reported EBITDA
167,205
122,566
36.4%
Add back one-off costs incurred during the
period
1
Impact of NZ IFRS 16 Leases before tax
1,240
(19,425)
8,820
-
Underlying EBITDA 149,020 131,386 13.4%
Reported Net Profit after tax (NPAT) attributable
to the owners of the Company
81,680
67,045
21.8%
Add back one-off costs incurred during the
period
1
(net of tax and after non-controlling
interests)
Impact of NZ IFRS 16 Leases after tax
969
1,503
5,619
-
Underlying Net Profit after tax (NPAT)
attributable to the owners of the Company
84,152
72,664
15.8%
Underlying EBITDA and Underlying Net Profit after tax attributable to the owners of the Company
are both non-GAAP measures which adjust for the effects of one-off items.
(1) One-off items comprise: M&A costs of $1.2 million incurred during the period.
For supplementary comments on the Group’s financial results refer to the Results Presentation and
Media Release issued 20 February 2020.
EBOS GROUP LIMITED
APPENDIX 4D
3
4. ENTITIES ACQUIRED
On 30 September 2019, the Group acquired a 100% equity interest in LMT Surgical Pty Ltd and
National Surgical Pty Ltd. For further details refer to note 10 of the attached interim report.
There were no other material acquisitions during the six months ended 31 December 2019.
There were no disposals or loss of control over any entities during the six months ended 31
December 2019.
5. DIVIDENDS PAID AND DECLARED
Amount
Per Share
(NZ cents)
Amount Per
Share
(AU cents)
Total
Amount
($)
Date Paid/
(Payable)
Dividends declared in respect of
the year ending 30 June 2020
2020 interim dividend 37.5 cents 36.1 cents $58,468,000 3 April 2020
Dividends paid attributable to the
year ended 30 June 2019
2019 interim dividend 34.5 cents 33.2 cents $50,279,000 5 April 2019
2019 final dividend 37.0 cents 35.0 cents $56,378,000 11 October 2019
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.
6. DIVIDEND REINVESTMENT PLAN
The Company's dividend reinvestment plan ('DRP') will be operable for this dividend. The EBOS
Board has approved a discount of 2.5% to the Volume Weighted Average Price ('VWAP') for the
shares to be issued under the DRP for the 2020 interim dividend.
Other key dates for the 2020 interim dividend
DRP participation election date
16 March 2020
DRP pricing period (calculation of VWAP) 16 March 2020 to 20 March 2020
(both inclusive)
A copy of the DRP plan document is available on the Company's website www.ebosgroup.com.
EBOS GROUP LIMITED
APPENDIX 4D
4
7.ASSOCIATES AND JOINT VENTURES
T
he Group equity accounted the following associate entities at 31 December 2019:
Name of business Proportion of shares and voting rights
Animates NZ Holdings Limited 50%
Good Price Pharmacy Management Pty Limited 25.8%
Good Price Pharmacy Franchise Pty Limited 25.8%
I
ncome from the individual Associates has not been separately disclosed as it is considered
immaterial. Total Income from Investments in Associates for the half year ended 31 December 2019
was $1,632,000 ( 2018: $1,814,000).
8.F
OREIGN ENTITIES
The condensed consolidated i nterim unaudited financial statements are presented in Australian
dollars and comply with International Financial Reporting Standards (“IFRS”).
9.I
NDEPENDENT AUDIT REVIEW
Th
e condensed consolidated interim financial statements have been reviewed by an independent
Auditor, and the Auditor has given an unmodified review opinion.
EBOS GROUP LIMITED
INTERIM REPORT
FOR THE SIX MONTHS
ENDED 31 DECEMBER 2019
EBOS GROUP LIMITED
INTERIM REPORT 2020
CONTENTS Page
Summary of Consolidated Financial Highlights 1
Shareholder Calendar 1
Auditor’s Independent Review Report 2
Condensed Consolidated Income Statement 3
Condensed Consolidated Statement of Comprehensive Income 4
Condensed Consolidated Statement of Changes in Equity 5
Condensed Consolidated Balance Sheet 8
Condensed Consolidated Cash Flow Statement 9
Notes to the Condensed Consolidated Interim Financial Statements 10
Directory 22
1
EBOS GROUP LIMITED
INTERIM REPORT 2020
SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Revenue 4,376,127 3,496,498 6,930,360
Profit before net finance costs, tax expense, depreciation and
amortisation (EBITDA)
167,205
122,566
250,410
Earnings before interest and income tax expense (EBIT) 131,355 107,318 218,349
Profit before income tax expense 115,928 94,962 193,015
Profit for the period 81,922 67,238 136,727
Profit for the period attributable to owners of the Company 81,680 67,045 137,700
Equity attributable to owners of the Company 1,284,757 1,053,285 1,242,331
Earnings per share 50.6c 44.1c 89.8c
Interim dividend per share (New Zealand dollars) 37.5c 34.5c 34.5c
SHAREHOLDER CALENDAR
Interim dividend record date 13 March 2020
Interim dividend payable 3 April 2020
Release of 2020 full year results 20 August 2020
Annual General Meeting 13 October 2020
2
INDEPENDENT REVIEW REPORT TO THE SHAREHOLDERS OF EBOS GROUP LIMITED
We have reviewed the condensed consolidated interim financial statements of EBOS Group Limited and its subsidiaries (‘the Group’) which
comprise the condensed consolidated balance sheet as at 31 December 2019, and the condensed consolidated income statement,
condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed
consolidated statement of cash flows for the six months ended on that date, and a summary of significant accounting policies and other
explanatory information on pages 3 to 21.
This report is made solely to the Group’s shareholders, as a body. Our review has been undertaken so that we might state to the Group’s
shareholders those matters we are required to state to them in a review 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 Group’s shareholders as a body, for our engagement, for this
report, or for the opinions we have formed.
Board of Directors’ Responsibilities
The Board of Directors are responsible for the preparation and fair presentation of the condensed consolidated interim financial
statements, in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting and for such internal control
as the Board of Directors determine is necessary to enable the preparation and fair presentation of the condensed consolidated interim
financial statements that are free from material misstatement, whether due to fraud or error.
Our Responsibilities
Our responsibility is to express a conclusion on the condensed consolidated interim financial statements based on our review. We
conducted our review in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity
(‘NZ SRE 2410’). NZ SRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the
condensed consolidated interim financial statements, taken as a whole, are not prepared, in all material respects, in accordance with NZ
IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting. As the auditor of EBOS Group Limited, NZ SRE 2410 requires that
we comply with the ethical requirements relevant to the audit of the annual financial statements.
A review of the condensed consolidated interim financial statements in accordance with NZ SRE 2410 is a limited assurance engagement.
The auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International
Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on those financial statements.
Our firm carries out other assignments for the Group in the area of taxation advice. These services have not impaired our independence as
auditor of the Group. In addition to this, partners and employees of our firm deal with the Group on normal terms within the ordinary
course of trading activities of the business of the Group. The firm has no other relationship with, or interest in, the Group.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial
statements of the Group do not present fairly, in all material respects, the financial position of the Group as at 31 December 2019 and its
financial performance and cash flows for the six months ended on that date in accordance with NZ IAS 34 Interim Financial Reporting and
IAS 34 Interim Financial Reporting.
19 February 2020
Christchurch, New Zealand
3
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2019
Notes
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Revenue
2(a) 4,376,127 3,496,498 6,930,360
Income from associates
1,632 1,814 4,203
Profit before depreciation, amortisation, net finance
costs and income tax expense
167,205
122,566
250,410
Depreciation
2(b) (27,619) (7,490) (16,438)
Amortisation of finite life intangibles
2(b) (8,231) (7,758) (15,623)
Profit before net finance costs and income tax expense
131,355 107,318 218,349
Finance income
761 942 1,927
Finance costs – borrowings
(12,291) (13,298) (27,261)
Finance costs – leases
9 (3,897) - -
Profit before income tax expense
115,928 94,962 193,015
Income tax expense
(34,006) (27,724) (56,288)
Profit for the period
81,922 67,238 136,727
Profit for the period attributable to:
Owners of the Company
81,680 67,045 137,700
Non-controlling interests
242 193 (973)
81,922 67,238 136,727
Earnings per share
Basic (cents per share)
50.6 44.1 89.8
Diluted (cents per share)
50.6 44.1 89.8
4
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2019
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Profit for the period
81,922 67,238 136,727
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Cash flow hedge (losses)
(218) (2,158) (9,432)
Related income tax
64 714 2,784
Movement in foreign currency translation reserve
3,031 10,517 12,013
2,877 9,073 5,365
Items that will not be reclassified subsequently to profit or loss:
Movement on equity instruments fair valued through other
comprehensive income
(2,778) (2,593) 370
Total comprehensive income net of tax
82,021 73,718 142,462
Total comprehensive income for the period is attributable to:
Owners of the Company
81,779 73,525 143,435
Non-controlling interests
242 193 (973)
82,021 73,718 142,462
5
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2019
Notes
Share
capital
A$’000
Share
based
payments
reserve
A$’000
Foreign
currency
translation
reserve
A$’000
Retained
earnings
A$’000
Cash flow
hedge
reserve
A$’000
Equity
instruments fair
valued through
other
comprehensive
income reserve
A$’000
Non-
controlling
interests
A$’000
Total
A$’000
Six months ended
31 December 2018 (unaudited):
Opening balance 763,636 2,144 (22,805) 308,499 1,442 (1,424) 21,352 1,072,844
Profit for the period - - - 67,045 - - 193 67,238
Other comprehensive income for
the period, net of tax
-
- 10,517 - (1,444)
(2,593) - 6,480
Payment of dividends 4 - - - (49,386) - - - (49,386)
Share based payments - 882 - - - - - 882
Arising on acquisition of
remaining non-controlling
interest -
-
- - -
-
(46,678) (46,678)
Transfer of non-controlling
interest
-
-
- (23,228) -
-
23,228 -
Balance at 31 December 2018 763,636 3,026 (12,288) 302,930 (2) (4,017) (1,905) 1,051,380
6
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Continued)
For the six months ended 31 December 2019
Notes
Share
capital
A$’000
Share
based
payments
reserve
A$’000
Foreign
currency
translation
reserve
A$’000
Retained
earnings
A$’000
Cash flow
hedge
reserve
A$’000
Equity
instruments fair
valued through
other
comprehensive
income reserve
A$’000
Non-
controlling
interests
A$’000
Total
A$’000
Year ended
30 June 2019 (audited):
Opening balance 763,636 2,144 (22,805) 308,499 1,442 (1,424) 21,352 1,072,844
Profit for the period - - - 137,700 - - (973) 136,727
Other comprehensive income for
the period, net of tax
-
- 12,013 - (6,648)
370 - 5,735
Payment of dividends 4 - - - (99,336) - - - (99,336)
Share based payments - 1,793 - - - - - 1,793
Dividends reinvested 3 5,719 - - - - - - 5,719
Institutional placement 3 165,493 - - - - - - 165,493
Share issue costs 3 (3,037) - - - - - - (3,037)
Arising on acquisition of
remaining non-controlling
interest
-
-
- - -
-
(46,678)
(46,678)
Transfer of non-controlling
interest -
-
- (23,228) -
-
23,228 -
Balance at 30 June 2019 931,811 3,937 (10,792) 323,635 (5,206) (1,054) (3,071) 1,239,260
7
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Continued)
For the six months ended 31 December 2019
Notes
Share
capital
A$’000
Share
based
payments
reserve
A$’000
Foreign
currency
translation
reserve
A$’000
Retained
earnings
A$’000
Cash flow
hedge
reserve
A$’000
Equity
instruments fair
valued through
other
comprehensive
income reserve
A$’000
Non-
controlling
interests
A$’000
Total
A$’000
Six months ended
31 December 2019 (unaudited):
Opening balance 931,811 3,937 (10,792) 323,635 (5,206) (1,054) (3,071) 1,239,260
Profit for the period - - - 81,680 - - 242 81,922
Other comprehensive income for
the period, net of tax
-
- 3,031 - (154)
(2,778) - 99
Payment of dividends 4 - - - (56,378) - - - (56,378)
Share based payments - 1,371 - - - - - 1,371
Dividends reinvested 3 9,301 - - - - - - 9,301
Employee shares exercised 3 6,353 - - - - - - 6,353
Balance at 31 December 2019 947,465 5,308 (7,761) 348,937 (5,360) (3,832) (2,829) 1,281,928
8
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 December 2019
Notes
31 Dec 19
A$’000
(unaudited)
31 Dec 18
A$’000
(unaudited)
30 Jun 19
A$’000
(audited)
Current assets
Cash and cash equivalents 274,420 152,144 166,620
Trade and other receivables 1,107,458 910,318 897,796
Prepayments 12,496 9,532 9,603
Inventories
728,726
564,602
723,517
Current tax refundable 13,774 1,229 83
Other financial assets – derivatives 8 - 807 611
Total current assets 2,136,874 1,638,632 1,798,230
Non-current assets
Property, plant and equipment 172,992 120,934 174,463
Capital work in progress 12,343 54,452 6,508
Prepayments 517 68 650
Deferred tax assets
125,712
46,398
54,348
Goodwill 966,763 945,698 947,055
Indefinite life intangibles 123,856 123,382 123,582
Finite life intangibles 41,870 51,923 46,569
Right of use assets
9
228,408
-
-
Investment in associates 42,607 38,979 41,074
Other financial assets 7,008 6,747 9,733
Total non-current assets 1,722,076 1,388,581 1,403,982
Total assets
3,858,950
3,027,213
3,202,212
Current liabilities
Trade and other payables
1,458,159 1,145,003 1,288,319
Bank loans 7 202,189 213,762 168,307
Lease liabilities 9 34,737 - -
Current tax payable 20,375 14,995 12,883
Employee benefits 35,071 35,890 40,805
Other financial liabilities – derivatives
8
10,324 3,639 10,717
Total current liabilities 1,760,855 1,413,289 1,521,031
Non-current liabilities
Bank loans
7
464,209 490,370 364,038
Lease liabilities 9 205,999 - -
Trade and other payables 3,355 14,406 13,941
Deferred tax liabilities 135,715 51,276 57,330
Employee benefits 6,889 6,492 6,612
Total non-current liabilities 816,167 562,544 441,921
Total liabilities 2,577,022 1,975,833 1,962,952
Net assets
1,281,928 1,051,380 1,239,260
Equity
Share capital 3 947,465 763,636 931,811
Share based payments reserve
5,308 3,026 3,937
Foreign currency translation reserve (7,761) (12,288) (10,792)
Retained earnings 348,937 302,930 323,635
Cash flow hedge reserve (5,360) (2) (5,206)
Equity instruments fair valued through OCI
(3,832) (4,017) (1,054)
Equity attributable to owners of the company 1,284,757 1,053,285 1,242,331
Non-controlling interests (2,829) (1,905) (3,071)
Total equity 1,281,928 1,051,380 1,239,260
9
EBOS GROUP LIMITED
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 December 2019
Notes
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Cash flows from operating activities
Receipts from customers
4,204,450 3,556,358 7,032,507
Interest received
761 942 1,927
Dividends received from associates
315 959 1,394
Payments to suppliers and employees
(4,082,531) (3,479,059) (6,834,753)
Taxes paid
(32,579) (25,647) (55,271)
Interest paid
(16,188) (13,298) (27,261)
Net cash inflow from operating activities
5 74,228 40,255 118,543
Cash flows from investing activities
Sale of property, plant & equipment
346 98 7,703
Purchase of property, plant & equipment
(5,429) (11,189) (27,239)
Payments for capital work in progress
(6,018) (5,013) (5,735)
Payments for intangible assets
(2,583) (795) (1,227)
Acquisition of subsidiaries
(30,261) (92,389) (93,445)
Investment in other financial assets
- (110) (110)
Net cash (outflow) from investing activities
(43,945) (109,398) (120,053)
Cash flows from financing activities
Proceeds from issue of shares
15,654 - 168,175
Proceeds from borrowings
132,972 128,361 23,077
Repayment of borrowings
- (9,169) (74,955)
Repayment of lease liabilities
9 (15,451) - -
Dividends paid to equity holders of parent
4 (55,508) (50,138) (99,932)
Net cash inflow from financing activities
77,667 69,054 16,365
Net increase/(decrease) in cash held
107,950 (89) 14,855
Effect of exchange rate fluctuations on cash held during
the period
(150)
2,364
1,896
Net cash and cash equivalents at beginning of period
166,620 149,869 149,869
Net cash and cash equivalents at end of period
274,420 152,144 166,620
10
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 31 December 2019
1. FINANCIAL STATEMENTS
These unaudited condensed consolidated interim financial statements have been prepared in accordance with Generally Accepted
Accounting Practice (“GAAP”). They comply with the New Zealand Equivalent to International Accounting Standard 34 (NZ IAS 34)
“Interim Financial Reporting” and International Accounting Standard IAS 34, as applicable for profit orientated entities. These
financial statements should be read in conjunction with the financial statements and related notes included in the Group’s Annual
Report for the year ended 30 June 2019.
Apart from the changes noted below in relation to the adoption of NZ IFRS 16 ‘Leases’ the accounting policies and methods of
computation adopted are consistent with those of the previous year.
During the current period, effective from 1 July 2019, the Group has adopted NZ IFRS 16 which has had a material impact on these
financial statements (refer to Note 9).
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 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 ‘Leases’ 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 has applied NZ IFRS 16 from 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 have not been restated
in accordance with the transition method adopted.
Leases of less than 12 months duration and low value asset leases will continue to be recognised on a straight line basis.
The information is presented in thousands of Australian dollars unless otherwise stated.
11
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Continued)
For the six months ended 31 December 2019
2. PROFIT FROM OPERATIONS
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
(a)
Revenue
Community Pharmacy
2,561,903
1,892,192
3,704,123
Institutional Healthcare
1,252,258 1,147,762 2,292,697
Contract Logistics Services
36,225 30,156 63,012
Contract Logistics Sales
310,148 211,711 454,987
Consumer Products
57,905
59,618
113,931
Interdivisional eliminations
(52,935) (37,247) (80,434)
Healthcare
4,165,504 3,304,192 6,548,316
Animal Care
210,623 192,306 382,044
4,376,127 3,496,498 6,930,360
12
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Continued)
For the six months ended 31 December 2019
2. PROFIT FROM OPERATIONS (Continued)
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
(b)
Profit before income tax expense
Profit before income tax has been arrived at
after charging the following expenses by
nature:
One-off items (1)
(1,240) (8,820) (11,212)
Cost of sales
(3,924,743) (3,090,157) (6,121,500)
Write-down of inventory
(1,976) (1,512) (2,570)
Impairment (loss)/gain on trade & other
receivables
(617) 671 341
Depreciation of property, plant & equipment
(9,480) (7,490) (16,438)
Depreciation on right of use assets
(18,139)
-
-
Amortisation of finite life intangibles
(8,231) (7,758) (15,623)
Lease rental expenses
(2,515) (21,513) (42,796)
Donations
(45) (15) (210)
Employee benefit expense
(145,443) (139,397) (283,024)
Defined contribution plan expense
(8,578)
(8,026)
(15,985)
Other expenses
(125,397) (106,977) (207,197)
Total expenses
(4,246,404) (3,390,994) (6,716,214)
(1) One-off items comprise merger and acquisition costs (31 December 2019). One-off items comprise merger and acquisition
costs, warehouse transition and restructuring costs incurred net of a $2.9m gain on the sale of excess land held
(31 December 2018 and 30 June 2019).
3. SHARE CAPITAL
Six months
31 Dec 19
Six months
31 Dec 18
Year ended
30 Jun 19
No.
’000
A$’000
(unaudited)
No.
’000
A$’000
(unaudited)
No.
’000
A$’000
(audited)
Fully paid ordinary
shares
Balance at beginning
of period
161,708
931,811
152,539
763,636
152,539
763,636
Dividend reinvested –
April 2019
- - - - 286 5,719
October 2019
415
9,301
-
-
-
-
Institutional
placement –
May 2019
- - - - 8,883 165,493
Placement costs
- - - - - (3,037)
Shares vested under
the long-term
executive incentive
scheme
- 6,353 - - - -
162,123
947,465
152,539
763,636
161,708
931,811
13
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Continued)
For the six months ended 31 December 2019
4. DIVIDENDS
AUD
Six months
31 Dec 19
AUD
Six months
31 Dec 18
AUD
Year ended
30 Jun 19
Cents per
share
A$’000
(unaudited)
Cents per
share
A$’000
(unaudited)
Cents per
share
A$’000
(audited)
Recognised amounts
Fully paid ordinary shares
Final – prior year
35.0 56,378 32.4 49,057 32.4 49,057
Interim dividend
- - - - 33.2 50,279
35.0 56,378 32.4 49,057 65.6 99,336
Unrecognised amounts
Final dividend
- - - - 35.4 57,205
Interim dividend
36.1 58,468 32.8 50,100 - -
36.1 58,468 32.8 50,100 35.4 57,205
Dividends are approved by the Board in New Zealand dollars. Dividends recognised in the Statement of Changes in Equity are
converted from New Zealand dollars to Australian Dollars at the exchange rate applicable on the date the dividend was approved.
Unrecognised dividends are converted at the exchange rate applicable on the reporting date. The Board approved an interim
dividend of 37.5 New Zealand cents per share on 19 February 2020. The record date for the dividend is 13 March 2020 and the
dividend will be paid on 3 April 2020.
The following table shows dividends approved in New Zealand dollars:
NZD
NZD
NZD
Cents per
share
Cents per
share
Cents per
share
Recognised amounts
Fully paid ordinary shares
Final – prior year
37.0 35.5 35.5
Interim dividend
- - 34.5
37.0 35.5 70.0
Unrecognised amounts
Final dividend
- - 37.0
Interim dividend
37.5 34.5 -
37.5 34.5 37.0
New Zealand dollar dividends paid to equity holders of the parent are translated into Australian dollars and disclosed in the cash
flow statement at the foreign currency exchange rate applicable on the date they are paid.
14
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Continued)
For the six months ended 31 December 2019
5. NOTES TO THE CASH FLOW STATEMENT
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Reconciliation of profit for the period with cash
flows from operating activities
Profit for the period
81,922
67,238
136,727
Add/(less) non-cash items:
Depreciation of property, plant & equipment
9,480 7,490 16,438
Depreciation on right of use assets
18,139 - -
Amortisation of finite life intangibles
8,231
7,758
15,623
Loss/(gain) on sale of property, plant & equipment
51 (2,856) (2,267)
Income from associates
(1,632) (1,814) (4,203)
Expense recognised in respect of share based
payments
1,371 585 1,793
Deferred tax
8,227 955 3,061
43,867
12,118
30,445
Movements in working capital:
Trade and other receivables
(209,662) 6,543 19,065
Prepayments
(2,760) (559) (1,212)
Inventories
(5,209) (29,520) (188,435)
Current tax refundable/(payable)
(6,199) 2,394 1,428
Trade and other payables
159,254 (24,192) 118,648
Provision for employee benefits
(5,457) (4,286) 749
Foreign currency translation of opening working
capital balances
158 555 (1,201)
(69,875) (49,065) (50,958)
Balances classified as investing activities
9,610 4,152 (2,951)
Working capital items acquired on acquisition
8,704 5,812 5,280
Net cash inflow from operating activities
74,228 40,255 118,543
15
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Continued)
For the six months ended 31 December 2019
6. SEGMENT INFORMATION
(a) Products and services from which reportable segments derive their revenues
The Group’s reportable segments under NZ IFRS 8 ‘Operating Segments’ are as follows:
Healthcare: Incorporates the sale of human healthcare products to Community Pharmacy, Institutional Healthcare, Contract
Logistics and Consumer Products customers.
Animal care: Incorporates the sale of animal care products in a range of sectors, own brands, retail and wholesale activities.
Corporate: Includes net financing costs and central administration expenses that have not been allocated to either the
healthcare or animal care segments.
(b) Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Revenue from external customers
Healthcare
4,165,504 3,304,192 6,548,316
Animal care
210,623 192,306 382,044
4,376,127 3,496,498 6,930,360
Segment result (EBITDA)
Healthcare
145,833 104,270 215,949
Animal care
28,490 24,319 48,271
Corporate
(7,118) (6,023) (13,810)
167,205 122,566 250,410
Segment expenses
Healthcare:
Depreciation
(24,037) (7,111) (15,698)
Amortisation of finite life intangibles
(7,224) (6,679) (13,464)
Income tax expense
(33,710) (26,541) (54,628)
(64,971) (40,331) (83,790)
Animal care:
Depreciation
(3,010) (379) (740)
Amortisation of finite life intangibles
(1,007) (1,079) (2,159)
Income tax expense
(6,789) (6,408) (12,327)
(10,806) (7,866) (15,226)
Corporate:
Depreciation
(572) - -
Net finance costs
(15,427) (12,356) (25,334)
Income tax credit
6,493 5,225 10,667
(9,506) (7,131) (14,667)
Profit for the period
Healthcare
80,862 63,939 132,159
Animal care
17,684 16,453 33,045
Corporate
(16,624) (13,154) (28,477)
81,922 67,238 136,727
‘
16
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Continued)
For the six months ended 31 December 2019
6. SEGMENT INFORMATION
(Continued)
The accounting policies of the reportable segments are consistent with the Group’s accounting policies. Segment result
represents profit before depreciation, amortisation, net finance costs and tax. This is the measure reported to the chief
operating decision maker for the purposes of resource allocation and assessment of segment performance.
(c) Segment assets
The following balance sheet and cash flow items are not allocated to operating segments as they are not reported to the
chief operating decision maker at a segment level:
- Assets
- Liabilities
- Capital expenditure
(d) Revenues from major products and services
The Group’s major products and services are transacted the same as its reportable segments i.e. healthcare, animal care and
corporate.
(e) Geographical information
The Group operates in two principal geographical areas; New Zealand (country of domicile) and Australia.
The Group’s revenue from external customers by geographical location (of the reportable segment) and information about its
segment assets (non-current assets excluding investments in associates and deferred tax assets) are detailed below:
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Revenue from external customers
New Zealand
861,857 784,418 1,585,227
Australia
3,514,270 2,712,080 5,345,133
4,376,127 3,496,498 6,930,360
Non-current assets
New Zealand
362,616 290,966 294,029
Australia
1,191,141 1,012,238 1,014,531
1,553,757 1,303,204 1,308,560
7. BANK FACILITY AND BORROWINGS
The Group fully complies with and operates within the financial covenants under the arrangements with its bankers.
At 31 December 2019 the Group had unutilised term and working capital facilities of $171.9m (December 2018: $143.6m, June
2019: $270.9m).
The Group also has a trade debtor securitisation facility of which $198.0m was unutilised at 31 December 2019 (December 2018:
$186.2m, June 2019: $231.7m).
17
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Continued)
For the six months ended 31 December 2019
7. BANK FACILITY AND BORROWINGS (Continued)
As at 31 December 2019, the maturity profile of the Group’s term debt and securitisation facilities was:
Facility Amount Maturity
Term debt and working capital facilities $192.3m Less than 1 year
Term debt facilities $151.0m 1-2 years
Term debt facilities $293.0m 3-4 years
Securitisation facility $400.0m 1-2 years
8. FINANCIAL INSTRUMENTS
The Group enters into foreign currency forward exchange contracts to hedge trading transactions, including anticipated
transactions, denominated in foreign currencies and uses interest rate swaps to manage cash flow interest rate risk.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is
designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the
nature of the hedge relationship. The Group designates certain derivatives as cashflow hedges of highly probable forecast
transactions.
Fair value of derivative financial instruments
Six months
31 Dec 19
A$’000
(unaudited)
Six months
31 Dec 18
A$’000
(unaudited)
Year ended
30 Jun 19
A$’000
(audited)
Other financial assets – derivatives:
Foreign currency forward exchange contracts
- 807 611
- 807 611
Other financial liabilities – derivatives:
Foreign currency forward exchange contracts
(454) (182) (40)
Interest rate swaps
(9,870) (3,457) (10,677)
(10,324) (3,639) (10,717)
The Group has categorised these derivatives, both financial assets and financial liabilities, as Level 2 under the fair value
hierarchy contained within NZ IFRS 13 ‘Fair Value Measurement’.
The fair value of foreign currency forward exchange contracts is determined using a discounted cashflow valuation. Key inputs
include 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 counterparties.
There have been no changes in valuation techniques used for either foreign currency forward exchange contracts or interest rate
swaps during the current reporting period.
18
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
9. IMPACT OF NEW ACCOUNTING STANDARDS
NZ IFRS 16 ‘Leases’
The Group has adopted NZ IFRS 16 with a date of initial application of 1 July 2019. NZ IFRS 16 (replaces NZ IAS 17) sets out the
principal for the recognition, measurement, presentation and disclosure of leases. It requires lessees to account for all leases
under a single on balance sheet model, similar to accounting for finance leases under NZ IAS 17.
The adoption of NZ IFRS 16 results in the Group recognising a right-of-use (ROU) asset and corresponding liability for all leases
with a term of more than 12 months, excluding low value assets. Operating lease expense is replaced by depreciation expense on
the ROU assets and interest expense on the lease liability as they amortise.
The Group has applied the modified retrospective full simplified transition method. At 1 July 2019, lease liabilities were
measured at present value of the remaining lease payments, discounted at the incremental borrowing rate (IBR) as at 1 July
2019. ROU assets are measured equal to lease liabilities, adjusted for initial direct costs incurred when entering into the leases,
less any incentives received on commencement date. Comparative periods were not restated.
Lease payments included in the measurement of the lease liability comprise:
- fixed lease payment, less incentives receivable,
- variable lease payments that depend on an index or a rate, initially measured using the index or rate at the
commencement date,
- the amount expected to be payable by the lessee under residual value guarantees,
- the exercise price of purchase options, if the lessee is reasonably certain to exercise the options, and
- payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability and by
reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related ROU asset) whenever:
- the lease term has changed or if there is a change in the assessment of exercise of a purchase option, in which case the
lease liability is remeasured by discounting the revised lease payments using the relevant revised discount rate,
- the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial
discount rate, and
- a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease payments using a revised discount rate.
The Group did not make any such adjustments during the periods presented.
The ROU assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement date less any lease incentives receivable and any initial direct costs. They are subsequently measured at cost
less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located
and restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and
measured under NZ IAS 37 Provisions, Contingent Liabilities and Contingent Assets and a corresponding amount added to the
ROU asset.
ROU assets are depreciated over the shorter period of either the lease term or the useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the ROU asset reflects that the Group expects to exercise a purchase
option, the related ROU asset is depreciated over the useful life of the underlying asset. The depreciation starts at the
commencement of the date of lease.
The ROU assets are presented as a separate line in the consolidated statement of financial position.
19
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
9. IMPACT OF NEW ACCOUNTING STANDARDS (Continued)
NZ IFRS 16 ‘Leases’
The Group applies NZ IAS 36 Impairment of Assets to determine whether a ROU asset is impaired and accounts for any identified
impairment loss under this standard.
Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the ROU
asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those
payments occurs and are included in the line “other expenses” in the statement of comprehensive income.
As a practical expedient, NZ IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease
associated non-lease components as a single arrangement.
The lease expense that would previously be recorded as an operating expense moved from being included in operating expenses,
to depreciation and finance expense from 1 July 2019.
The impact on net earnings before income tax of an individual lease over its term remains the same, however, the new standard
results in a higher expense in early years, and lower in later years of a lease, as compared to the straight line expense profile of
an operating lease under NZ IAS 17.
The aggregate lease liability and ROU asset recognised in the statement of financial position as at 1 July 2019 and the Group’s
operating lease commitment at 30 June 2019 can be reconciled as follows:
Lease liability recognised on transition
A$’000
(unaudited)
Future minimum lease payments under non-cancellable operating leases as at 30 June 2019 193,402
Future lease payments on renewal options that are reasonably certain 93,756
Effect of discounting (41,537)
Lease liability as at 1 July 2019
245,621
Right of Use Asset recognised on transition
A$’000
(unaudited)
Land and buildings 225,624
Office, Plant and equipment 8,576
Motor Vehicles 2,746
Right of Use Assets as at 1 July 2019
236,946
In applying the modified retrospective approach, the Group has taken advantage of the following practical expedients:
- a single discount rate has been applied to portfolios of leases with reasonably similar characteristics,
- leases with a term of less than 12 months have been considered short-term leases,
- leases with a remaining term of twelve months or less from the date of application have been accounted for as short term
leases even though the initial term of the leases from lease commencement date may have been more than twelve months,
and
- a lessee may use hindsight, such as in determining the lease term if the contract contains options to extend or terminate the
lease.
20
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2019
10. ACQUISITION INFORMATION
The following material acquisition of subsidiaries took place during the period.
On 30 September 2019 EBOS Group Limited, through its subsidiary EBOS Medical Devices Australia Pty Ltd, acquired the 100%
equity interest in LMT Surgical Pty Ltd and National Surgical Pty Ltd (LMT Group).
Details of the acquisition are as follows:
Assets and liabilities acquired:
Carrying Value
A$’000
(unaudited)
Fair value
adjustment
A$’000
(unaudited)
Fair value on
acquisition
A$’000
(audited)
Current assets
Trade and other receivables
4,265 (255)
1
4,010
Prepayments
746 - 746
Inventories
14,070 (1,371)
2
12,699
Current tax refundable
138 - 138
Non-current assets
Property, plant and equipment
2,684 (703)
3
1,981
Deferred tax assets
263 795
4
1,058
Right of use assets
4,077 - 4,077
Current liabilities
Bank overdraft
(1,352) - (1,352)
Trade and other payables
(6,960) (323)
5
(7,283)
Lease liabilities
(4,219) - (4,219)
Current tax payable
(82) - (82)
Employee benefits
(1,390) - (1,390)
Non-current liabilities
Bank loans
(996) - (996)
Deferred tax liabilities
(17) - (17)
Net assets acquired
11,227 (1,857) 9,370
Goodwill on acquisition
19,710
Total consideration 29,080
Less deferred consideration (3,500)
Plus bank overdraft acquired 1,352
Net cash outflow from acquisition 26,932
1. To recognise the fair value of trade and other receivables on acquisition.
2. To recognise the fair value of inventory on acquisition.
3. To recognise the fair value of property, plant and equipment on acquisition.
4. To recognise deferred tax assets on acquisition.
5. To recognise the fair value of trade and other payables on acquisition.
Due to the timing of the acquisition the above figures have not yet been finalised and are currently considered provisional.
21
EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Continued)
For the six months ended 31 December 2019
10. ACQUISITION OF SUBSIDIARIES (Continued)
Goodwill arising on acquisition
Goodwill arose on the acquisition of LMT Group 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.
LMT Group was acquired as it is a profitable Australasian medical device business which the Group believes fits strategically with
its Australasian healthcare business assets.
Due to the timing of the acquisition, LMT Group’s revenue and profit for the period are considered immaterial to the Group.
The acquisition of subsidiaries balance ($30.3m) included in the Condensed Consolidated Cash Flow Statement includes deferred
consideration payments of $3.4m in relation to prior period acquisitions.
11. EVENTS AFTER BALANCE DATE
Subsequent to 31 December 2019, the Board approved an interim dividend to shareholders. For further details please refer to
Note 4.
22
EBOS GROUP LIMITED
DIRECTORY
CORPORATE HEAD OFFICE AUSTRALIA HEAD OFFICE
108 Wrights Road Level 7, 737 Bourke Street
PO Box 411 Docklands
Christchurch 8024 Melbourne 3008
New Zealand Australia
Telephone +64 3 338 0999 Telephone +61 3 9918 5555
E-mail: ebos@ebosgroup.com
Internet: www.ebosgroup.com
DIRECTORS
Elizabeth Coutts Independent Chair
Nick Dowling Independent Director
Stuart McGregor
Stuart McLauchlan Independent Director
Sarah Ottrey Independent Director
Peter Williams
SHARE REGISTER
Computershare Investor Services Ltd Computershare Investor Services Pty Ltd
Private Bag 92119 GPO Box 3329
Auckland 1142 Melbourne, Victoria 3001
New Zealand Australia
Telephone: +64 9 488 8777 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.investorcentre.com/nz
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.
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Results for announcement to the market
Name of issuer EBOS Group Limited
Reporting Period 6 months to 31 December 2019
Previous Reporting Period 6 months to 31 December 2018
Currency AUD
Amount (000s) Percentage change
Revenue from continuing operations $4,376,127 25.2%
Total Revenue $4,376,127 25.2%
Underlying net profit from continuing
operations attributable to security holders
1
$84,152 15.8%
Net profit/(loss) from continuing operations $81,680 21.8%
Total net profit/(loss) $81,680 21.8%
Interim Dividend
Amount per Quoted Equity Security $ 0.375
Imputed amount per Quoted Equity Security $ 0.03645833
Record Date 13 March 2020
Dividend Payment Date 3 April 2020
Current period Prior comparable
period
Net tangible assets per Quoted Equity Security
2
$0.15 ($0.76)
A brief explanation of any of the figures above
necessary to enable the figures to be
understood
Refer to attached Results Presentation,
Media Release and Shareholders Report.
Authority for this announcement
Name of person
authorised to make this
announcement
Janelle Cain
Contact person for this announcement Janelle Cain
Contact phone number +61 3 9918 5370
Contact email address Janelle.Cain@ebosgroup.com
Date of release through MAP
20 February 2020
Unaudited condensed consolidated interim financial statements accompany this announcement.
1
Underlying net profit represents reported profit for the period adjusted for one-off items in relation to merger and
acquisition costs incurred ($1.2m) and the impact of the new lease standard (NZ IFRS 16 ‘Leases’). Refer to
Appendix 1 for reconciliation between reported and underlying earnings.
2
Tangible assets include the Right of Use assets recognised in relation to the adoption of NZ IFRS 16 ‘Leases’.
Appendix 1:
---
Distribution Notice
Section 1: Issuer information
Name of issuer EBOS Group Limited
Financial product name/description Ordinary Shares
NZX ticker code EBO
ISIN (If unknown, check on NZX
website)
NZEBOE0001S6
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies X
Record date 13 March 2020
Ex-Date (one business day before
the Record Date)
12 March 2020
Payment date (and allotment date for
DRP)
3 April 2020
Total monies associated with the
distribution
1
NZD$60,796,000
(AUD$58,468,000)
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.41145833
Gross taxable amount
3
$0.41145833
Total cash distribution
4
$0.37500000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount $0.01654412
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Partial imputation
If fully or partially imputed, please
state imputation rate as % applied
6
25%
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form.
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not
constitute advice as to whether or not RWT needs to be withheld.
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
Imputation tax credits per financial
product
$0.03645833
Resident Withholding Tax per
financial product
$0.09932292
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
2.5%
Start date and end date for
determining market price for DRP
16 March 2020 20 March 2020
Date strike price to be announced (if
not available at this time)
24 March 2020
Specify source of financial products
to be issued under DRP programme
(new issue or to be bought on
market)
New issue
DRP strike price per financial product
The EBOS Board has approved a discount of 2.5% to
the Volume Weighted Average Price ('VWAP') for the
shares to be issued under the DRP for the 2020 interim
dividend. The VWAP shall be determined over the
period of 16 March 2020 to 20 March 2020 (both
inclusive).
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
16 March 2020
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Janelle Cain
Contact person for this
announcement
Janelle Cain
Contact phone number +61 3 9918 5370
Contact email address Janelle.Cain@ebosgroup.com
Date of release through MAP
20 February 2020
---
2020 Half Year Results
Dear Shareholder
The first half of the 2020 Financial Year saw EBOS
continue its disciplined approach to executing our
strategy of:
1. Investing for growth through external acquisitions and
capital investment to lift productivity, manage costs
and deliver better customer outcomes;
2. Protecting, building or acquiring leading positions in a
range of healthcare and animal care sectors so as to
maximise our growth; and
3. Focusing on generating strong operating cash flow to
allow for further investment and improved returns to
shareholders.
In reviewing the half year it is pleasing to report that our
activity and results reflect the Board and management’s
adherence to this core business strategy that has
consistently delivered for shareholders over time through
disciplined investment decisions that have driven growth
in both our Healthcare and Animal Care businesses.
Shareholders
Report 2020
31 December 2019
Key Highlights
acquisition
investment
revenue
$4.4b
investment in
net capital works
$13.7m$30.3m
Financial Highlights
$4.4 billion revenue
$167.2 million EBITDA +36.4% increase
$81.7 million NPAT +21.8% increase
Reported Results
Reported net profit after tax
Six months to 31 December ($millions)
67.0
2018
81.7
2019
65.4
2016
58.9
2015
2017
69.9
Underlying Results
1
$4.4 billion revenue
$149.0 million EBITDA +13.4% increase
$84.2 million NPAT +15.8% increase
Underlying net profit after tax
Six months to 31 December ($millions)
1
Excludes the impacts of IFRS 16 Leases and net one-off costs.
72.7
2018
84.2
2019
66.6
20162017
69.9
58.9
2015
02
EBOS Group 2020 Shareholders Report
Key highlights of the first half included:
• Revenue $4.4 billion (up 25.2%);
• Statutory Net Profit after Tax (NPAT) $81.7 million
(up 21.8%);
• Underlying Net Profit after Tax (NPAT) $84.2 million
(up 15.8%);
• Very strong performance from our Community
Pharmacy business demonstrating its leading position
with revenues increasing by 35.4%;
• Strong growth in the TerryWhite Chemmart (TWC)
network including 16 new stores and network sales
growth of 5.7%;
• The launch of EBOS Medical Devices with the acquisition
of LMT and National Surgical (LMT/NS) for $34 million;
• The opening of our new Consumer Products distribution
and manufacturing facility in Auckland;
• Continued market share gains in our Healthcare
Logistics business across both Australia and New
Zealand; and
• The appointment of new Chair Elizabeth Coutts
following the retirement of Mark Waller.
In looking at our first half financial performance, the
Group generated revenue of $4.4 billion, up $880 million
or 25.2% on last year. This was primarily due to strong
sales growth in our Healthcare business which was up
26.1% on last year, and Animal Care growth of 9.5% on the
previous year’s first half.
Healthcare
The Healthcare segment generated revenue of
$4.2 billion, a 26.1% increase for the period, underpinned
by significantly higher Pharmacy sales volumes and
continued growth in the Institutional Healthcare,
Contract Logistics and TWC businesses.
In Australia, Healthcare revenue increased by $786
million (30.9%). Underlying EBITDA increased 22.3%
driven by the performance of our Pharmacy, Institutional
Healthcare and Contract Logistics businesses and the
commencement of the Chemist Warehouse Group
(CWG) pharmaceutical wholesale contract. New Zealand
Healthcare revenue grew by 9.9%, however, underlying
EBITDA was affected by softer overseas demand for our
consumer products, reflective of the changes which have
impacted the daigou export channel.
Pharmacy revenue increased by $670 million (35.4%) due
to significantly increased volumes in both Australia and
New Zealand. The pharmacy business also benefitted
from productivity improvements across our automated
sites which provides our customers with industry leading
service levels and solutions.
TWC welcomed 16 new pharmacies during the period
and remains one of Australia’s largest community
pharmacy networks. TWC network sales grew by 5.7%
and prescription sales, on a like-for-like basis increased
by 5.3%, driven by increased brand awareness, customer
satisfaction and new programmes with Qantas Frequent
Flyer, Bupa and Afterpay.
Our Institutional Healthcare business also performed well
with first half revenue growth of 9.1% due to increased
market growth within our hospitals business as well
as the contribution from our recently acquired LMT/NS
medical devices business.
The purchase of LMT/NS for $34 million signalled
the Group’s entry into the A$8 billion Australian and
New Zealand medical devices sector. This acquisition
represents an important development in the Group’s
growth trajectory as it is the first step in building
another significant platform to our Healthcare portfolio.
Consistent with our strategy, we will continue to pursue
growth in this sector through further bolt-on acquisitions.
We look forward to updating shareholders in future years
as this business unit develops and makes an important
profit contribution to the Group.
Our Contract Logistics division grew Gross Operating
Revenue (GOR) by 21.5% as we attracted new customers
to our recently completed industry leading facility in
Sydney.
In Auckland, we opened our new Consumer Products
distribution and manufacturing facility which involved
a significant amount of complex planning and logistics
management and saw the consolidation of six separate
New Zealand locations into one new site. Again, in line
with our strategy, this facility will ultimately enable more
streamlined and cost efficient stock handling and delivery
services to our customers, as well as the benefit of having
the Red Seal toothpaste manufacturing facility located in
a modern purpose built facility.
In Australia, it was very pleasing to be able to host
Australia’s Federal Minister for HeaIth, the Honourable
Mr. Greg Hunt to officially open Symbion’s new highly
automated Distribution Centre in Brisbane in late
August 2019. This world class healthcare distribution
facility is already generating significant improvements in
productivity and efficiencies.
Animal Care
Our Animal Care segment generated revenue of $211
million, an increase of 9.5% for the period, primarily due
to a combination of the continued excellent performance
from our branded products portfolio and higher
wholesale volumes.
Our key brands Black Hawk and Vitapet both recorded
strong uplifts in revenue both growing their market share.
Pleasingly, our Vitapet treats brand made significant
headway in the Australian grocery channel and recorded
revenue growth above market.
Lyppard strengthened its market position during the
period with revenue increasing by 9.4% due to customer
growth and the benefits of its recently acquired Therapon
business.
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EBOS Group 2020 Shareholders Report
Regulatory Environment
Our Symbion business, together with its industry
representative body (NPSA), is looking forward to a
favourable outcome from the current negotiations of
the 7th Community Pharmacy Agreement (7th CPA).
It is critically important that the 7th CPA provides the
industry with a framework for continued investment as it
represents a critical piece of infrastructure to Australia’s
health system.
As further evidence of the benefits to the community of
Australia’s wholesale distribution model, pharmaceutical
supplier Upjohn, part of the Pfizer Group, announced in
December 2019 that it would move away from exclusive
direct distribution. The decision by Upjohn will see Upjohn
products now being available via the Australian wholesale
channel ensuring patients receive medicines in a timely
and efficient manner.
Community
EBOS Group is committed to meeting community
expectations with our behaviour and actions reflecting
positively in the communities where we operate.
In late 2019 and early 2020, we supported several
communities locally and abroad as they dealt with major
crises.
In New Zealand, we worked to distribute more than
114,000 doses of the measles vaccine as the country
dealt with a major outbreak of the disease in 2019,
with more than 2,000 confirmed cases. Internationally,
we supported Samoa as it dealt with a measles crisis of
its own by donating a specialised air purifying system to
local hospitals to minimise the potential spread of the
highly infectious virus.
New Zealand and Australia were both impacted by the
tragic incident on Whakaari/White Island in December.
Onelink NZ operated as a key partner in the NZ health
supply chain working with health agencies to supply
products required to treat the injured.
In Australia, as the country dealt with an unprecedented
bushfire emergency through the latter part of 2019 and
early 2020, our teams went above and beyond to meet
the heightened demand for medicines and emergency
supplies created by the ongoing crisis.
Working around road closures, and challenging and
dynamic conditions, our teams collaborated with federal,
state and local authorities and support agencies to
keep medicines and consumables moving into bushfire
impacted communities to support our customers in these
areas to assist their patients.
EBOS Group donated products from both its Healthcare
and Animal Care businesses to affected communities
and financially supported initiatives to assist members of
the community as they recover from the impact of these
fires.
Our business has also been assisting the Australian
Government in its preparations to assess returning
citizens for coronavirus. This involved quickly mobilising
resources to provide infrared thermometers to officials
for use at airports in Brisbane and Sydney. In New
Zealand, Onelink has been engaging with the Ministry
of Health and District Health Boards to support efforts
to combat coronavirus by providing Personal Protective
Equipment (PPE) to front-line responders.
We are very proud of our staff, who have worked tirelessly
during this period, further highlighting the critical role
we play as part of the healthcare systems in both New
Zealand and Australia.
Operating Cash Flow, Net Debt and Return on
Capital Employed
First half operating cash flow before capital expenditure
was strong at $74.2 million. The first half cash
performance reflects the seasonality of the Group’s
investment in net working capital at 31 December, the
investment in working capital for servicing significantly
higher wholesale volumes from 1 July 2019 and the
adoption of IFRS 16 Leases.
Segment Overview
Underlying EBITDA
1
Six months to 31 December ($millions)
131.1
2019
112.7
2018
101.5
2016
91.5
20152017
109.4
HealthcareAnimal Care
Underlying EBITDA
1
Six months to 31 December ($millions)
25.7
2019
24.3
2018
20.1
2016
18.0
20152017
22.2
1
Excludes the impacts of IFRS 16 Leases and net one-off costs.
1
Excludes the impacts of IFRS 16 Leases and net one-off costs.
04
EBOS Group 2020 Shareholders Report
www.ebosgroup.com
Capital expenditure for the period was $13.7 million and
primarily comprised spend on the new Consumer Products
facility in Auckland and other smaller projects.
During the period, the Group purchased LMT/NS for
$34 million.
Return on Capital Employed (ROCE) of 15.9% was
consistent with June 2019 with the strong earnings growth
partially offset by the seasonality of the Group’s working
capital cycle.
The Group’s Net Debt/EBITDA ratio at 31 December 2019
was consistent with 30 June 2019 at 1.41 times.
Board Composition
As communicated at the Annual Meeting last year,
the Board intends to increase the number of Directors on
the Board. As part of this process Mr Nick Dowling, who
resides in Sydney, has been appointed to the EBOS Group
Board effective 1 February 2020.
Mr Dowling is Chief Operating Officer at Balmoral Australia
and prior to Balmoral was Managing Director and CEO,
Australia and New Zealand at New Hope Group Co. Ltd,
a private Beijing based corporation engaged in agribusiness
and food, real estate and infrastructure, chemicals,
finance and investment.
Mr Dowling brings a wealth of experience in growing
businesses across a broad range of industries including
deep M&A experience which will be of great benefit to the
Group’s broad business portfolio and strategic growth
objectives. He will become the Group’s second Australian
based Director which is particularly important given the
Australian operations represent the majority of the Group’s
earnings.
Interim Dividend Increase
Your Directors declared an interim dividend of NZ
37.5 cents per share, an increase of 8.7% on the prior
corresponding period.
The Group’s Dividend Reinvestment Plan (DRP) will again
be operational for the dividend payment in April 2020.
Shareholders can elect to take shares in lieu of a cash
dividend at a discount of 2.5% to the volume weighted
average share price (VWAP).
The record date for the dividend is 13 March 2020 and the
dividend will be paid on 3 April 2020. The interim dividend
will be imputed to 25% for New Zealand tax resident
shareholders and will be fully franked for Australian tax
resident shareholders.
Outlook
Trading for the first half of FY20 was in line with our
internal expectations and we reconfirm the Group is
confident of a significant increase in earnings in the
current financial year.
We have not seen any significant impact to the Group
as a result of the coronavirus (COVID-19). We continue
to closely monitor this issue and will take all necessary
actions to ensure we are well placed to respond to any
challenges that arise as the situation unfolds.
Thank you again for your ongoing support.
Liz Coutts
Chair of the Board
John Cullity
Chief Executive Officer
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.