Green Cross Health Limited 2020 Annual Report
20202020
Annual Report
347
doctors
nurses
321
medical centres42
enrolled patients
267,000
62
299
361
pharmacies
1. 7
million
loyalty members
clients
42,500
support workers
3,000
home visits
each year
million
3.6
t
clinical staff including nurses,
occupational therapists & physiotherapists
185
Green Cross Health’s promise is to provide the best health support, care and advice to New Zealand
communities. We are passionate about supporting healthier communities through our network of
pharmacies, medical centres and community health services.
Who we are
Annual Report 2020 |
03
Contents
04 Financial summary
08 Company report
10 Company report – Pharmacy division
14 Company report – Medical division
16 Company report – Community Health division
20 Directors’ declaration
21 Independent auditor’s report
27 Group financial statements
32 Notes to the financial statements
61 Group entities
66 Board of directors
69 Corporate governance
77 Other annual report disclosures
81 Shareholder information
83 Company directory
04
| GREEN CROSS HEALTH
Financial summary
So let’s start with the plain English version of our accounts. If you are interested, more details can be found in the
financial statements and notes further on in this report.
2020
$’000
2019
$’000
We generate revenue from four sources:
Pharmacy retail and dispensary sales 298,261 304,627
Community Health fees 155,573 156,501
Medical fees 76,509 70,539
Other pharmacy and group provided services 38,188 35,569
Our costs to operate are primarily:
Wages and salaries 261,110 263,250
Costs of products sold 195,386 198,929
Other costs (marketing, governance, communications etc) 49,867 46,817
Lease expense, depreciation and amortisation 27,719 29,741
Impairment4,672-
Revenue and operating costs are consistent year on year. Impairment relates
to the write-down of intangibles assets of $3.3m after a strategic review of
internal projects’ performance and goodwill disposals of $1.4m.
After all income and expenses we earned:
Profit before tax 23,641 27,428
Tax expense(6,689) (7,339)
Profit after tax 16,952 20,089
Non-controlling interest(3,462) (3,984)
Profit after tax attributable to the Parent shareholders13,49016,105
Annual Report 2020 |
05
2020
$’000
2019
$’000
What happened to the profit and where did the cash go?
We started the year with a bank balance of 16,652 10,754
Our profit after tax (and after adjusting for non-cash items) was 31,330* 23,908
We bought and sold various businesses (3,572) (2,684)
We bought fixed assets(7,264) (8,947)
We drew down/(repaid) bank borrowings7,355 (105)
We paid dividends to our shareholders(10,039) (10,045)
We paid dividends to our minority partners(2,333) (1,986)
We acquired cash with the businesses we bought 40 214
Our working capital increased by 1,730 5,543
We ended the year with a bank balance of 33,899 16,652
*$31.3m includes repayment of lease principle and interest expenses under IFRS 16.
$0m
$5m
$10m
$15m
$20m
2020201920182017
Pro t after tax
(attributable to shareholders)
-$50m
-$40m
-$30m
-$20m
-$10m
$0m
2020201920182017
Net debt
represents borrowings less bank balances
IFRS 16 Adjustment (-$0.6m)
Financial summary
06
| GREEN CROSS HEALTH
As at
March
2020
$’000
As at
March
2019
$’000
So what is the equity book value?
We have total assets of 376,610* 264,797
We have total liabilities of(241,892)*(130,854)
So our equity book value is 134,719 133,943
Which represents a net asset value for each share of (cents) 94.11 93.57
*Includes right-of-use assets and lease liabilities of $86.1m and $93.6m respectively.
Financial summary
(continued)
$0m
$30m
$60m
$90m
$120m
$150m
2020201920182017
Net assets
0
1
2
3
4
5
6
7
8
2020201920182017
Dividends per share
(cents)
Financial summary
Annual Report 2020 |
07
08
| GREEN CROSS HEALTH
Company report
We posted a revenue result of $569m for the 12 months to 31 March
2020, a result consistent with the prior year. Net Profit after Tax Attributable
to Shareholders of the Parent was $13.5m, down -16.2% from the prior
period. Included in the result was the adverse impact from the application of
the IFRS 16 accounting standard of -$0.6m, goodwill disposals of -$1.1m
and intangible asset write-offs of -$2.4m. Net Profit after Tax Attributable to
Shareholders of the Parent before one-off non-cash items and application of
IFRS 16 was $17.6m, an increase of +9.3% on the prior period.
During the year, the Management team saw the arrival of Ben Doshi as
Group Chief Financial Officer, Jo Tait as General Manager - Marketing and
eCommerce and Rick Goebel as General Manager - Merchandise. These
changes bring the skills and experience to support the Company’s strategic
direction, focusing on streamlining and automation of processes, protecting
margin via pricing and a differentiated product range and bolstering our digital
capability by leveraging our 1.7 million Living Rewards loyalty database.
Our Balance Sheet continues to have strong liquidity, which will enable
the Company to traverse the next period, with challenges stemming from
COVID-19 and the related impact on customer spending. It also positions
the company well to selectively consider acquisitions over the medium term.
Green Cross Health is pleased to report a solid result for the 12
months to 31 March 2020, with revenue constant year on year. At
an operating level, a turnaround in the Community Health division,
combined with the continued growth of the Medical division, more
than offset the ongoing competitive pressure in the Pharmacy division.
Annual Report 2020 |
09
Results summary
• Revenue of $569m (+0.2%)
• Operating Profit of $31.0m (+5.4%)
• Net Profit after Tax Attributable to Shareholders of the Parent of
$13.5m (-16.2%)
• Pharmacy Revenue down -1.1%. Operating Profit down -$4.8m to
$22.5m, with part of this decline attributable to goodwill disposals
-$1.4m (before non-controlling interest portion) and write-down of
intangibles of -$3.3m (before tax), partly offset by a positive impact from
the application of IFRS 16 at the operating profit level of +$2.5m
• Medical Revenue up strongly at +8.5% to $76.5m. Operating Profit
up +81.1% to $8.0m reflecting organic revenue growth, operational
efficiency and an IFRS 16 impact of +$1.2m
• Community Health Revenue down -0.5% to $155.6m. Operating
profit increase of +$2.4m to $2.5m, resulting from a focus
on cost management, utilisation of technology and the exit from
unprofitable contracts
• Net Debt of -$22.6m (reduction of $9.9m).
$0m
$5m
$10m
$15m
$20m
$25m
$30m
$35m
2020201920182017
Group operating pro t
before interest and tax
$0m
$100m
$200m
$300m
$400m
$500m
$600m
2020201920182017
Group operating revenue
IFRS 16 Adjustment (+$3.8m)
Company report
10
| GREEN CROSS HEALTH
Pharmacy division
Unichem and Life Pharmacy division
Of the network of 361 pharmacies, 87 are pharmacies in which we hold
an equity investment. During the year, we opened our new concept,
flagship Life Pharmacy Newmarket store in the Westfield Newmarket
development (Auckland), as well as opening a greenfield co-located
medical centre pharmacy, Unichem Parklands Medical Pharmacy
(Christchurch) and re-opening Unichem Highland Park Pharmacy
(Auckland), a new co-located medical centre build replacing our previously
closed store.
Pharmacy Revenue declined marginally (-1.1%) in the year, reflecting some
store closures in the prior year and early in FY20 (as part of our ongoing
portfolio review), offset by two new pharmacies in Karori, Wellington,
which were acquired in February 2020. Same store revenue was up 1.5%
year on year, driven by dispensary volumes, which saw an increase in
repeat prescriptions of 4.7%, highlighting the value of our automated
script reminder service, which now has over 200,000 patients.
Operating Profit was down -$4.8m to $22.5m, with part of this decline
attributable to goodwill on disposals of -$1.4m, write-down of intangibles
of -$3.3m (before tax) and a higher depreciation charge as investments
in prior periods were operationalised. Offsetting these one-off non-cash
items, was a +$2.5m impact from IFRS 16 at the Operating Profit line.
The write-down of intangible assets was after a strategic review of historic
internal projects’ performance and with impairment required for those not
aligned to the division’s strategic direction.
Focus continues on optimising retail margin via a differentiated pricing
strategy, as well as implementing a revised product offering which meets
changing customer needs and includes greater emphasis on exclusive
distribution arrangements and reducing product costs. Our online offer
continues to evolve, with our fulfilment capabilities and processes now
well established, particularly given customer demand during the COVID-19
lockdown period.
1. 7
million
loyalty members
361
stores
During the year, the Pharmacy division continued to leverage our trusted
brands, both through our network of 361 stores and through increasing
our digital capability to support engagement with our customers in
multiple channels. We continued to evolve our product range and
offering as well as instilling a focus on margin management across all
product categories. Our Living Rewards membership again grew year
on year, and we continued to invest in gaining insights and personalising
our offerings to these valuable customers.
Annual Report 2020 |
11
Company report – Pharmacy division
12
| GREEN CROSS HEALTH
Pharmacy division
(continued)
Furthermore, we continue to strengthen our digital capability to leverage the
1.7 million Living Rewards loyalty membership database, obtaining insights
to ensure we can personalise our offering to customers, engage with a
customer segment that spends on average 40% more than non-Living
Rewards members and positively influence customer purchasing behaviour.
During the year, we continued to prioritise advocacy for the removal of
the Government’s current pharmaceutical $5 co-payment tax, to support
improved equity of access and health outcomes for New Zealanders as
well as supporting the financial sustainability of the Community Pharmacy
sector. This remains a strategic priority. In addition to this advocacy, we
continue to actively represent our pharmacies in our role as a lead Sector
Representative in the annual negotiation of the Integrated Community
Pharmacy Services Agreement (ICPSA) with District Health Boards (DHBs).
This representation continues, where we have tabled concerns about
ongoing workforce sustainability and wage cost pressures, along with
relativity and adequacy of Government funding for vital patient services.
Some of these issues have been noted in the recently released Health and
Disability System Review which includes a recommendation for Government
to ‘ring-fence’ Tier 1 (primary care) health funding, to avoid it being shifted
to secondary care and hospital deficits, and that this future ring-fenced
funding should grow at a faster rate than overall health funding.
In the next period, retail performance will face challenges from modified
consumer spending as a result of COVID-19, coupled with ongoing
competitive pressures. Priority is being placed on retail disciplines and
recalibrating labour and occupancy costs, to ensure the cost structures
of our pharmacies are right-sized in light of these pressures. We will
continue our focus on the optimisation of our pharmacy investment
portfolio, both through potential closures in addition to continuing to assess
acquisition opportunities. Our national footprint and trusted Unichem and
Life Pharmacy brands provide a solid foundation upon which we can
successfully adapt our business to the changing market conditions.
Highlights
• Same store sales growth of +1.5%, same store script numbers
up +1.3%
• Year on year growth with Living Rewards loyalty programme now at 1.7
million members
• Automated script reminder service now with over 200,000 patients,
increasing opportunities for customer engagement and supporting
patients with medicines adherence
• Two stores acquired February 2020 in Karori, Wellington
• Rebuild of Life Pharmacy Newmarket and Unichem Highland Park
Pharmacy, along with greenfield investment in Unichem Parklands
Medical Pharmacy.
Company report – Pharmacy division
Annual Report 2020 |
13
Future focus
• Evolve retail offering to changing consumer behaviour post COVID-19
• Focus on margin management and core retail disciplines to further
improve the customer experience
• Strong focus on reducing labour and occupancy costs
• Optimise equity store network, along with leveraging our national
footprint and trusted Unichem and Life Pharmacy brands
• Further invest in our Living Rewards loyalty database to obtain insights
and continue to provide expert care and advice to our customers
• Strengthen our digital and eCommerce offerings
• Advocate for removal of $5 prescription co-payment to increase
accessibility and equity for all New Zealanders.
$0m
$5m
$10m
$15m
$20m
$25m
$30m
2020201920182017
Pharmacy operating pro t*
before interest and tax
$0m
$50m
$100m
$150m
$200m
$250m
$300m
$350m
2020201920182017
Pharmacy operating revenue
IFRS 16 Adjustment (+$2.5m)
*Includes goodwill on disposals of -$1.4m and write-down of
intangibles of -$3.3m.
Company report – Pharmacy division
14
| GREEN CROSS HEALTH
The Medical division delivered continued growth year on year in revenue
and profitability. The company continues to invest to drive patient growth
both organically and through selected acquisitions. We continue to focus
on developing our people, processes and systems to improve capacity, and
patient outcomes and experience.
Medical Revenue grew +8.5% to $76.5m, with Operating Profit up 81.1%
to $8.0m. This performance was the result of improved operational
efficiency, organic revenue growth and an IFRS 16 impact of +$1.2m.
Acquisitions in recent years have now fully integrated into the division, and
nearer the end of the financial year, Drury Surgery was added, increasing
the portfolio to 42 centres.
Enrolled patients at 31 March 2020 totalled 267,000, an increase of
12,000 (+4.7%) since March 2019 which includes increases from the
Drury acquisition as well as the purchase of a doctor’s book which was
amalgamated into The Doctors Fred Thomas.
The Medical division continues to work closely with the Ministry of Health
and Primary Health Organisations to ensure equitable access to primary
healthcare throughout New Zealand. The initiative to increase access to
health care for Community Services Card holders has improved affordable
access to lower socio-economic groups.
Operationally, the Medical division improved its focus on systematic triaging
of patients to improve utilisation and provide superior patient outcomes.
The division commenced trialling the provision of digital health services in a
number of centres prior to year-end.
Clinically, a key focus remains on delivery quality care across the network.
Our Clinical Advisory Team supports our practices and actively promotes
shared leadership to provide a means for all staff to continue to improve
and be held accountable for the quality and safety of care. All GP sites have
obtained or are working towards Cornerstone accreditation, and all Urgent
Care centres maintain accreditation through their Urgent Care audits.
Going forward, the strategy remains to grow revenue organically, while
further reducing the operating cost per patient and targeting compelling
acquisition opportunities, whilst delivering high quality medical services.
Medical division
The Doctors
42
medical centres
4.7
%
increase in enrolled patients
to 267,000
Annual Report 2020 |
15
Highlights
• Medical division revenue up +8.5% to $76.5m
• Operating Profit margin increased from 6.3% to 8.9% (excluding
application of IFRS 16)
• Enrolled patients grew from 255,000 to 267,000
• Ownership of 42 Medical Centre following acquisition of Drury Surgery.
Future focus
• Continue to build The Doctors brand
• Network and patient number growth through targeted acquisitions and
organic revenue growth
• Deploy digital technology to increase efficiency and enhance delivery of
high quality patient care
• Improve utilisation via systematic triaging of patients
• Work closely with funders to ensure equitable access for all
New Zealanders.
$0m
$1m
$2m
$3m
$4m
$5m
$6m
$7m
$8m
2020201920182017
Medical operating pro t
before interest and tax
$0m
$10m
$20m
$30m
$40m
$50m
$60m
$70m
$80m
2020201920182017
Medical operating revenue
IFRS 16 Adjustment (+$1.2m)
Company report – Medical division
16
| GREEN CROSS HEALTH
The Community Health division substantially improved performance
this year. Our strategy to focus on underlying profit drivers, rather
than revenue growth has delivered. A focus on cost reduction,
supported by investment in technology, has improved underlying
earnings. We continue to pursue growth in the higher clinical needs
segment. Further, we continue to advocate for Government to address
sustainability of community health funding.
The Community Health division had a healthy increase in Operating Profit to
$2.5m, an increase of +$2.4m over the comparative period. The key driver
of the improvement in performance was operational efficiency with costs
decreasing -3.0% on reduced revenue of -0.6%, highlighting the success of
cost management and investment in technology.
Notwithstanding the improved performance, the slim operating profit
margin of 1.6% exposes the division to adverse changes in the Home and
Community Support sector.
With the majority of revenues from Government contracts, the funding is
still insufficient to provide a sustainable return. Funding received primarily
supports direct wage costs but does not adequately consider staff on-costs
or infrastructure requirements to support communication and coordination
of care 365 days a year. Furthermore, funding does not support recognition
of pay parity in line with other Government-funded health personnel wage
increase awards.
We are encouraged by the release of the Government’s Health & Disability
System Review that confirms the health system is significantly underfunded
and recognises changes are required to both the level and method of
system funding. We continue to advocate for sustainable sector funding to
allow the division to deliver the care which allows patients to continue to live
independently in their own homes.
Community Health has continued to focus on innovative approaches to
providing care and support to our most vulnerable within the community,
particularly those with complex clinical needs. During the year we have
undertaken further development work, with the extension of our Access
Virtual Assistant (AVA), an app designed to improve our approach to service
delivery and systems efficiency, together with the launch of My Access, a
portal available for our clients and client approved next of kin. Technology
is being used to support “real time” information and provides enhanced
communication with our community.
Community Health division
Access Community Health and Total Care Health
42,500
clients
3.6
million
home visits
Annual Report 2020 |
17
18
| GREEN CROSS HEALTH
Community Health division
(continued)
Highlights
• Cost improvements of 3%
• Operating Profit increased $2.4m to $2.5m
• Bedding in the ACC Integrated Home and Community Support business
that was awarded following a successful tender at the end of last
financial year
• Expansion of Total Care Health into new regions.
Future focus
• Focus on higher clinical needs segments
• Further expand geographic coverage of Total Care Health business
• Harness technology to enhance workforce efficiency and
client outcomes
• Focus on profitability of all contracts, targeting growth in higher
margin areas
• Advocate for additional sector funding to ensure sustainability.
Company report – Community Health division
The ACC Integrated Home and Community Support (IHCS) business contract the division won last year is delivering
results with the segment showing continued growth, particularly in supporting clients with complex care needs,
providing 24/7 care where required.
Total Care Health, our specialised mobile nursing service, continues to expand both service offering and regional
coverage throughout New Zealand, primarily focused on supporting complex wound management within the home,
work or school.
$0.0m
$0.5m
$1.0m
$1.5m
$2.0m
$2.5m
$3.0m
2020201920182017
Community Health operating pro t
before interest and tax
$0m
$50m
$100m
$150m
$200m
2020201920182017
Community Health operating revenue
IFRS 16 Adjustment (+$0.1m)
Annual Report 2020 |
19
COVID-19, dividend and future focus
The Board recognises there is continuing uncertainty as a result of COVID-19, and whilst it has confidence in the
resilience of the company to navigate this period of volatility, it is committed to maintaining a strong balance sheet
in order to absorb the impact of COVID-19 and the associated economic downturn. The company has an absolute
focus on preserving cash including drawing down a portion of unutilised bank facilities to shore up liquidity.
In addition to weathering the storm of lockdown this approach helps protect the company from the need for a dilutive
capital raise and positions the Company to be able to capitalise on future opportunities. With this in mind, the Board
has made the precautionary decision not to declare a full year dividend. Subject to liquidity, the Board expects to
return to declaring dividends from November 2020.
Going forward the company remains committed to delivering to patient and customer expectations. The company
is focused on right-sizing its cost base, targeting labour and occupancy cost reductions, as well reviewing the
Pharmacy and Medical portfolios to determine any sites which will not be sustainable going forward.
Green Cross Health is committed to providing all New Zealanders accessible, quality primary healthcare. As part of
this commitment, the company continues to advocate for the removal of the prescription co-payment Government
tax and for increased funding in the Home and Community Support sector.
Thank you to our team
It has been an exceptionally busy year for us, and we are very thankful for the contribution of every member of the
Green Cross Health team. The dedication and passion of our team helps ensure New Zealanders have access to
quality care and advice, and we are proud of the key role we continue to play in supporting the health of
New Zealand communities.
Company report – Community Health division
20
| GREEN CROSS HEALTH
Directors’
declaration
For the year ended 31 March 2020
In the opinion of the Directors of Green Cross Health Limited, the financial
statements and notes, on pages 27 to 60:
• Comply with New Zealand generally accepted accounting practice
and give a true and fair view of the financial position of the Green
Cross Health Limited Group as at 31 March 2020 and the results of its
operations and cash flows for the year ended on that date.
• Have been prepared using appropriate accounting policies, which have
been consistently applied and supported by reasonable judgements
and estimates.
The Directors believe that proper accounting records have been kept which
enable, with reasonable accuracy, the determination of the financial position
of the Group and facilitate compliance of the financial statements with the
Financial Reporting Act 2013.
The Directors consider that they have taken adequate steps to safeguard
the assets of the Group, and to prevent and detect fraud and other
irregularities. Internal control procedures are also considered to be sufficient
to provide a reasonable assurance as to the integrity and reliability of the
financial statements.
The Directors are pleased to present the financial statements of Green Cross
Health Limited for the year ended 31 March 2020.
For and on behalf of the Board of Directors:
Kim Ellis
Chair
24 June 2020
Carolyn Steele
Director
24 June 2020
Annual Report 2020 |
21
Independent
auditor’s report
To the shareholders of Green Cross Health Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial statements of Green Cross
Health Limited (the company) and its subsidiaries (the Group) on pages 27 to 60:
i. Present fairly in all material respects the Group’s financial position as at 31 March
2020 and its financial performance and cash flows for the year ended on that
date; and
ii. Comply with New Zealand Equivalents to International Financial Reporting
Standards and International Financial Reporting Standards.
We have audited the accompanying consolidated financial statements which
comprise:
• The consolidated statement of financial position as at 31 March 2020;
• The consolidated statements of comprehensive income, changes in equity and
cash flows for the year then ended; and
• Notes, including a summary of significant accounting policies and other
explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(New Zealand) (‘ISAs (NZ)’). We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical
Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New
Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants
(IESBA Code), and we have fulfilled our other ethical responsibilities in accordance
with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s
responsibilities for the audit of the consolidated financial statements section of
our report.
Our firm has also provided other services to the Group in relation to tax compliance
services. Subject to certain restrictions, partners and employees of our firm may also
deal with the Group on normal terms within the ordinary course of trading activities
of the business of the Group. These matters have not impaired our independence as
auditor of the Group. The firm has no other relationship with, or interest in, the Group.
22
| GREEN CROSS HEALTH
Materiality
The scope of our audit was influenced by our application of materiality. Materiality
helped us to determine the nature, timing and extent of our audit procedures and
to evaluate the effect of misstatements, both individually and on the consolidated
financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $1.3 million determined with reference to a
benchmark of Group profit before tax. We chose the benchmark because, in our
view, this is a key measure of the Group’s performance.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the consolidated financial statements in
the current period. We summarise below those matters and our key audit
procedures to address those matters in order that the shareholders as a body
may better understand the process by which we arrived at our audit opinion. Our
procedures were undertaken in the context of and solely for the purpose of our
statutory audit opinion on the consolidated financial statements as a whole and
we do not express discrete opinions on separate elements of the consolidated
financial statements.
The key audit matter: Impairment of goodwill ($127.2 million)
Refer to note 13 of the consolidated financial statements.
The Group has grown significantly through acquisitions in its Pharmacy, Medical
and Community Health business units which has resulted in the recognition of
goodwill in the amount of $74.5 million, $33.7 million and $19.0 million, respectively.
In the event the business units under-perform compared to their business cases,
there is a risk that the goodwill arising on acquisition may no longer be supported.
As disclosed in note 13, the Group performs an annual impairment test of goodwill
and uses a discounted cash flow model to determine the recoverable amount of
its business units to which goodwill has been allocated.
In performing this assessment, assumptions are made in respect of future economic
and market conditions, including the impact of COVID-19. Cash flow forecasts
include consideration of the Group’s strategic business plan for each business unit
and their impact on forecast sales and operating costs. Additionally, management
determined terminal growth rates and discount rates which reflect an assessment of
the time value of money and the risks specific to each business unit.
The annual impairment test performed by the Group was significant to our audit
due to the magnitude of the goodwill balance and because the assessment
process involved judgment about the future performance of the business units.
Independent
auditor’s report
(continued)
Annual Report 2020 |
23
How the matter was addressed in our audit
Our audit procedures included:
• Ensuring the allocation of goodwill to the Group’s business units is appropriate;
• Evaluating the methodology, mathematical accuracy and assumptions applied
in the discounted cash flow models. We used our own valuation specialists to
assist us with the consideration of terminal growth and discount rates;
• Challenging management’s cash flow assumptions over projected cash
flows taking into consideration COVID-19, and the expected impact of the
Group’s business plans for each business unit by reference to their historical
performance and the internal and external factors that influence their operations;
• Performing sensitivity analysis around the key assumptions used in the models;
• Reviewing the appropriateness of related disclosures in the consolidated
financial statements.
We found the judgements and assumptions used in the assessment of goodwill
impairment to be balanced.
The key audit matter: Adoption of NZ IFRS 16 Leases
Refer to note 2(c) of the consolidated financial statements.
The Group has adopted NZ IFRS 16 Leases effective from 1 April 2019, using
the modified retrospective approach. The new standard requires the Group to
recognise its lease commitments as a liability in the consolidated statement of
financial position, along with an associated right-of-use asset. Previously operating
leases were not recognised in the statement of financial position. The adoption of
the standard has resulted in the recognition of a right-of-use asset of $92.9 million
and a lease liability of $98.5 million.
As disclosed in note 2(f), a number of judgements and estimates have been made
by management in establishing the opening balances. These include:
• Incremental borrowing rates at the time of adoption;
• Lease terms, including any rights of renewal expected to be exercised, and
• Application of practical expedients adopted on transition.
The group’s adoption of NZ IFRS 16 was significant to our audit due to the
complexity of the judgements and assumptions involved in the calculation of the
right-of-use assets and associated lease liabilities.
24
| GREEN CROSS HEALTH
How the matter was addressed in our audit
Our audit procedures included:
• Assessing the Group’s process relating to the recording, recognition, and
measurement of leases;
• Assessing the Group’s judgements made in applying practical expedients
against the requirements of NZ IFRS 16;
• Engaging our valuation specialist to assess the appropriateness of the
incremental borrowing rates used;
• Testing completeness of the identified lease contracts by checking leased
stores, medical centres and offices, to a breakdown of rental expense and
property listings;
• Selecting a sample of leases and examining the calculation of the associated
lease liability and right-of-use asset. For each lease selected we performed
the following:
– Agreed key inputs such as commencement date, expiry date, rent
amount, and rent payment frequency to the underlying lease agreement;
– Reviewed assumptions used to determine the lease term including rights
of renewal and assessed whether they were supported by current
business plans;
– Recalculated the lease liability and right-of-use asset based on key inputs;
– Checked the appropriateness of the classification of the lease liability
between current and non-current based on the remaining term of the lease.
• Assessing the disclosures in the consolidated financial statements against
the requirements of NZ IFRS 16.
We found the methodology used by the Group in transitioning to NZ IFRS 16 to be
appropriate. We consider the judgements and assumptions used to be balanced.
Independent
auditor’s report
(continued)
Annual Report 2020 |
25
Other information
The Directors, on behalf of the Group, are responsible for the other information
included in the entity’s Annual Report. Other information includes the Directors
Declaration and the other information included in the Annual Report. Our opinion
on the consolidated financial statements does not cover any other information and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our
responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears materially
misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have received the Directors Declaration and have nothing to report in regards
to it. The Annual Report is expected to be made available to us after the date of
this Independent Auditor’s Report and we will report the matters identified, if any,
to the Directors.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our
audit work has been undertaken so that we might state to the shareholders those
matters we are required to state to them in the independent auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the shareholders as a body for our audit
work, this independent auditor’s report, or any of the opinions we have formed.
Responsibilities of Directors for the consolidated financial statements
The Directors, on behalf of the company, are responsible for:
• The preparation and fair presentation of the consolidated financial statements
in accordance with generally accepted accounting practice in New Zealand
(being New Zealand Equivalents to International Financial Reporting Standards)
and International Financial Reporting Standards;
• Implementing necessary internal control to enable the preparation of a
consolidated set of financial statements that is fairly presented and free from
material misstatement, whether due to fraud or error; and
• Assessing the ability to continue as a going concern. This includes disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless they either intend to liquidate or to cease
operations or have no realistic alternative but to do so.
26
| GREEN CROSS HEALTH
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objective is:
• To obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error; and
• To issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is
located at the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor’s report is Aaron Woolsey.
For and on behalf of
KPMG
Auckland
24 June 2020
Independent
auditor’s report
(continued)
Annual Report 2020 |
27
Group financial
statements
28 Consolidated statement of comprehensive income
29 Consolidated statement of changes in equity
30 Consolidated statement of financial position
31 Consolidated statement of cash flows
32 Notes to the financial statements
28
| GREEN CROSS HEALTH
Consolidated statement
of comprehensive income
For the year ended 31 March 2020
Note2020
$’000
2019
$’000
Operating revenue4568,531567,236
Operating expenditure6.2(509,888)(530,306)
Depreciation and amortisation11,13(8,565)(8,431)
Depreciation - leases12(15,629) -
Impairment13(4,672) -
Share of equity accounted net earnings151,216874
Operating profit before interest and tax30,992 29,373
Interest income114 44
Interest expense(1,787)(1,989)
Interest expense - leases12(5,678)-
Net interest expense(7,351)(1,945)
Profit before tax23,641 27,428
Income tax expense7(6,689)(7,339)
Profit after tax for the year16,952 20,089
Other comprehensive income for the year, net of tax - -
Total comprehensive income for the year16,952 20,089
Attributable to:
Shareholders of the Parent 13,490 16,105
Non-controlling interest3,462 3,984
Attribution of profit and comprehensive income to shareholders and non
controlling interest
16,952 20,089
Earnings per share:
Basic earnings per share (cents)89.42 11.25
Diluted earnings per share (cents)89.41 11.22
The accompanying Statement of Accounting Policies and notes to the Financial Statements on pages 32 to 60 form part of the Financial Statements.
Group financial statements
Annual Report 2020 |
29
Consolidated statement
of changes in equity
For the year ended 31 March 2020
NoteShare
capital
$’000
Retained
earnings
$’000
Non-
controlling
interest
$’000
Total
equity
$’000
Balance at 1 April 201890,609 27,886 7,108125,603
Profit for the year16,105 3,984 20,089
Total comprehensive income for the year16,105 3,984 20,089
Transactions with owners, recorded directly in equity
Dividends to shareholders9(10,021)-(10,021)
Distribution to non-controlling interests-(2,026)(2,026
Impact of other transactions with non-controlling interest(128)422 294
Balance at 31 March 201990,609 33,843 9,489 133,940
Balance at 1 April 201990,609 33,843 9,489 133,940
Impact on application of IFRS 16 - net of tax (2,167) (419) (2,586)
Restated as at 1 April 201990,609 31,676 9,070 131,354
Profit for the year13,490 3,462 16,952
Total comprehensive income for the year13,490 3,462 16,952
Dividends to shareholders9(10,039)-(10,039)
Distribution to non-controlling interests-(2,333)(2,333)
Impact of other transactions with non-controlling interest(1,324)108 (1,216)
Balance at 31 March 202090,609 33,803 10,308 134,719
The accompanying Statement of Accounting Policies and notes to the Financial Statements on pages 32 to 60 form part of the Financial Statements.
Group financial statements
30
| GREEN CROSS HEALTH
Consolidated statement
of financial position
As at 31 March 2020
Note2020
$’000
2019
restated
$’000
Equity
Share capital90,610 90,610
Retained earnings33,802 33,843
Total equity attributable to shareholders of the Parent124,412 124,453
Non-controlling interest10,308 9,490
Total equity134,719 133,943
Current assets
Cash and cash equivalents33,899 16,652
Trade and other receivables1043,107 36,076
Inventories34,720 32,804
Total current assets111,726 85,532
Non-current assets
Property, plant and equipment1122,227 22,291
Right-of-use assets1286,090 -
Intangible assets13133,524 137,664
Deferred tax asset1416,055 12,912
Equity accounted group investments156,988 6,398
Total non-current assets264,884 179,265
Total assets376,610 264,797
Current liabilities
Payables and accruals1690,652 79,975
Income taxes payable161,186 1,760
Borrowings173,359 5,556
Lease liability - current1213,705 -
Total current liabilities108,902 87,291
Non-current liabilities
Borrowings1753,114 43,563
Lease liability - non current1279,875 -
Total non-current liabilities132,989 43,563
Total liabilities241,892 130,854
Net assets134,719 133,943
The accompanying Statement of Accounting Policies and notes to the Financial Statements on pages 32 to 60 form part of the Financial Statements.
Group financial statements
Annual Report 2020 |
31
Consolidated statement
of cash flows
For the year ended 31 March 2020
Note2020
$’000
2019
restated
$’000
Cash flows from operating activities
Dividend received15653 706
Receipts from customers561,500 568,525
Interest received114 44
Payments to suppliers and employees(498,510)(525,636)
Income taxes paid(9,456)(12,199)
Net cash inflow from operating activities1854,301 31,440
Cash flows from investing activities
Purchase of property, plant, equipment and software intangibles(7,264)(8,947)
Acquisition of interests in equity accounted investments(26) -
Acquisition of interests in subsidiaries and non-controlling interests5(3,546)(3,372)
Proceeds from sale of shares in subsidiary- 688
Net cash outflow from investing activities(10,835)(11,631)
Cash flows from financing activities
Proceeds from borrowings19,299 19,575
Repayment of borrowings(11,944)(19,680)
Payment of lease liabilities12(13,778)-
Interest expense12(1,787)(1,989)
Interest expense - leases12(5,678)-
Distribution to non-controlling interest(2,333)(1,986)
Dividends paid(10,039)(10,045)
Net cash outflow from financing activities(26,259)(14,125)
Net increase in cash and cash equivalents17,207 5,684
Add opening cash and cash equivalents16,652 10,754
Cash acquired: business combinations540 214
Closing cash and cash equivalents33,899 16,652
Reconciliation of closing cash and cash equivalents
to the consolidated statement of financial position:
Cash and cash equivalents33,899 16,652
Closing cash and cash equivalents33,899 16,652
The accompanying Statement of Accounting Policies and notes to the Financial Statements on pages 32 to 60 form part of the Financial Statements.
Group financial statements
32
| GREEN CROSS HEALTH
Notes to the
financial statements
For the year ended 31 March 2020
1. Reporting entity
Green Cross Health Limited (the “Parent” or
the “Company”) is a New Zealand company
registered under the Companies Act 1993
and is an FMC entity for the purposes of the
Financial Reporting Act 2013 and the Financial
Markets Conduct Act 2013. The Financial
Statements have been prepared in accordance
with these Acts. The Company is listed on the
NZX Main Board (“NZX”).
The consolidated financial statements of Green
Cross Health Limited comprise the Parent, its
subsidiaries, and its interest in associates and joint
ventures (together referred to as the “Group”).
2. Basis of preparation of
financial statements
(a) Statement of compliance
The financial statements have been prepared
in accordance with New Zealand Generally
Accepted Accounting Practice (“NZ GAAP”).
They comply with New Zealand equivalents
to International Financial Reporting Standards
(“NZ IFRS”), and other applicable Financial
Reporting Standards, and authoritative notices
as appropriate for a Tier one for profit entity.
They also comply with International Financial
Reporting Standards.
The financial statements were approved by the
Board of Directors on 24 June 2020.
(b) Basis of measurement
The financial statements of the Group are
prepared under the historical cost basis unless
otherwise noted within the specific accounting
policies below.
(c) Changes in accounting policies
The Group has consistently applied the following
accounting policies to all periods presented
in these consolidation financials statements,
except as mentioned below.
NZ IAS 1 Amendment
The Group has early adopted Amendments
to IAS 1 Classification of liabilities as current
or non-current in the current year. The impact
of adoption on these consolidated financial
statements has been outlined in the table below.
31 March 2020NZ IAS 1
(Old)
$’000
Impact
$’000
NZ IAS 1
(New)
$’000
Statement of financial position
Current borrowings38,254(34,895) 3,359
Non-current borrowings18,22034,895 53,114
31 March 2019
Statement of financial position
Current borrowings25,556(20,000)5,556
Non-current borrowings23,56320,000 43,563
31 March 2018
Statement of financial position
Current borrowings16,310 (9,000)7,310
Non-current borrowings32,9149,00041,914
Annual Report 2020 |
33
NZ IAS 7 Statement of cash flows
The Group has also voluntarily changed its accounting policy under NZ IAS 7 Statement of cash flows, where interest
expense is now classified as a financing cash flow instead of an operating cash flow.
The Group has applied this change in accounting policy retrospectively by adjusting the comparative amounts disclosed
for the comparative period as if the new classification has always been applied. The impact on the current period and
the comparative period is summarised below.
31 March 2020Original
$’000
Adjustment
$’000
Restated
$’000
Statement of cash flows
Cash flows from operating activities
Interest expense(1,787)1,787 -
Net cash inflow from operating activities52,5141,787 54,301
Cash flows from financing activities
Interest expense-(1,787)(1,787)
Net cash outflow from financing activities(24,472)(1,787) (26,259)
Net increase/(decrease) in cash and cash equivalents-
31 March 2019
Statement of cash flows
Cash flows from operating activities
Interest expense(1,989)1,989 -
Net cash inflow from operating activities29,4511,989 31,440
Cash flows from financing activities
Interest expense-(1,989)(1,989)
Net cash outflow from financing activities(12,136)(1,989) (14,125)
Net increase/(decrease) in cash and cash equivalents-
NZ IFRS 16 Leases
The Group has initially adopted NZ IFRS 16 Leases from 1 April 2019. NZ IFRS 16 introduced a single, on-balance
sheet accounting model for lessees. As a result, the Group, as a lessee, has recognised right-of-use assets representing
its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments.
The Group has applied NZ IFRS 16 using the modified retrospective approach, under which the cumulative effect
of initial application is recognised in retained earnings at 1 April 2019. Accordingly, the comparative information
presented for 2019 has not been restated for the affects of adoption of NZ IFRS 16, i.e. it is presented, as previously
reported, under NZ IAS 17 and related interpretations. See note 12.
Notes to the financial statements
34
| GREEN CROSS HEALTH
2. Basis of preparation of
financial statements
(continued)
(d) Comparatives
Where appropriate, comparative information
has been reclassified to conform to the current
period’s presentation.
(e) Functional and presentation currency
These financial statements are presented in
New Zealand dollars ($), which is the functional
currency of the entities of the Group. All financial
information presented in New Zealand dollars
has been rounded to the nearest thousand.
(f) Significant estimates and judgments
The preparation of financial statements
in conformity with NZ IFRS requires the
Directors to make judgments, estimates and
assumptions that affect the application of
policies and reported amounts of assets,
liabilities, income and expenses. The estimates
and associated assumptions are based on
historical experience and various other factors
that are believed to be reasonable under the
circumstances, the results of which form the
basis for making judgments about carrying
values of some assets and liabilities. Actual
results may differ from these estimates.
In authorising the financial statements for the
year ended 31 March 2020, the Directors have
ensured that the specific accounting policies
necessary for the proper understanding of
the financial statements have been disclosed,
and that all accounting policies adopted are
appropriate for the Group’s circumstances and
have been consistently applied throughout the
year for all Group entities for the purposes of
preparing the consolidated financial statements.
The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in
the period in which the estimate is revised if
the revision affects only that period, or in the
period of revision and future periods if the
revision affects both current and future periods.
Information about the significant areas of
judgment exercised or estimation in applying
accounting policies that have had a significant
impact on the amounts recognised in the
financial statements are described as follows:
(i) Classification of investments
Classifying investments as either subsidiaries,
associates or joint ventures requires the
Directors to assess the degree of influence
which the Group holds over the investee. In
arriving at a conclusion the Directors take into
account the constitutional structure of the
investee, governance arrangements, current
and future representation on the Board of
Directors, and all other arrangements which
might allow influence over the operating and
financial policies of the investee.
(ii) Impairment of goodwill and indefinite life
intangible assets
The carrying values of goodwill and intangible
assets with an indefinite useful life, are
assessed at least annually to ensure that they
are not impaired. This assessment requires
the Directors to estimate future cash flows
to be generated by cash generating units to
which goodwill and intangible assets with
indefinite useful lives have been allocated.
Estimating future cash flows entails making
judgments including the expected rate of
growth of revenues and expenses, margins
and market shares to be achieved, and the
appropriate rate to apply when discounting
future cash flows. Note 13 of these financial
statements provides more information on the
assumptions the Directors have made in this
area and the carrying values of goodwill and
indefinite life intangible assets. As the outcomes
in the next financial period may be different to
the assumptions made, it is impracticable to
predict the impact that could result in a material
adjustment to the carrying amount.
(iii) Accounting for leases under NZ IFRS 16
A number of judgements and estimates have
been made by management in establishing
the opening balances of the right-of-use asset
and lease liability. These include determining
the applicable incremental borrowing rates at
the time of adoption, assessment of the lease
terms, including any rights of renewal and
whether it is reasonably certain they will be
exercised, and application of certain practical
expedients adopted on transition. See note 12.
(iv) COVID-19 pandemic
On 11 March 2020 the World Health
Organisation declared a global pandemic as a
result of the outbreak and spread of COVID-19.
Notes to the financial statements
Annual Report 2020 |
35
Following this, on Wednesday 25 March 2020
the New Zealand Government raised its Alert
Level to 4 (full lockdown of non-essential
services) for an initial 4 week period. A number
of the Group’s pharmacies, medical centres
and its homecare operations continued to
operate in a reduced capacity during Level 4
due to the essential nature of their activities
and the service they provide to the community.
The Group’s activities have progressively
returned to full operation as the country
reduced its Alert Levels. A recovery in the sales
to normal levels is expected throughout Level
1, however, the impact of COVID-19 on the
economy remains uncertain.
The Group reforecast its cash flows and
considered the impact of COVID-19 on the
valuation of intangibles and the Group’s ability
to comply with the terms of its debt facilities.
Management do not consider that COVID-19
will have a material effect on the valuation of
the Group’s assets or its ability to comply with
debt covenants.
(g) Subsidiaries
Subsidiaries are entities that are controlled by
the Group. Control exists when the Group is
exposed to, or has rights to, variable returns
from its involvement in the investee and has the
ability to affect those returns through its power
over the investee. Power arises when the Group
has existing rights to direct the relevant activities
of the investee, i.e. those that significantly affect
the investee’s returns. Control is assessed on a
continuous basis.
The Group consolidates the results of its
subsidiaries from the date that control
commences until the date on which control
ceases. At such point as control ceases, it
derecognises the assets, liabilities and any
related non-controlling interests and other
components of equity. Any interest retained in
the former subsidiary is measured at fair value
when control is lost.
The Group’s ownership interests in subsidiaries
ranges from 25% to 100% (2019: 25% to
100%). The Group consolidates 29 out of 40
entities where it holds less than half of the
voting rights. This is on the basis that the
Group’s contractual arrangements with these
entities result in them meeting the definition of
being subsidiaries as set out above.
(h) Non-controlling interests
Non-controlling interests are present ownership
interests and are initially measured at either
fair value or the non-controlling interests’
proportionate share of the acquiree’s identifiable
net assets. The choice of measurement basis
is determined on a transaction-by-transaction
basis. Under the proportionate interest method,
goodwill is not attributed to the non-controlling
interest and the Group recognises only its share
of goodwill whereas under fair value, the non-
controlling interest includes its proportionate
share of goodwill.
Changes in the Group’s interest in a subsidiary
that do not result in a change in the control
conclusion are accounted for as transactions
with equity-holders in their capacity as
equity holders.
While the group has 44 (2019: 43) subsidiaries
with non-controlling interests, there are no
subsidiaries with individually material non-
controlling interest.
(i) Transactions eliminated on consolidation
Intra-group balances, and any unrealised
income and expenses arising from intra-group
transactions, are eliminated in preparing the
consolidated financial statements. Unrealised
gains arising from transactions with equity
accounted investees are eliminated against the
investment to the extent of the Group’s interest in
the investee. Unrealised losses are eliminated in
the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
(j) Goods and services tax (GST)
The statement of comprehensive income
has been stated so that all components are
exclusive of GST. All items in the statement of
financial position are stated net of GST with the
exception of receivables and payables, which
include GST invoiced.
(k) Statement of cash flows
The statement of cash flows has been prepared
using the direct method subject to the netting of
certain cash flows.
Cash flows in respect of investments and
borrowings that have been rolled-over under
arranged banking facilities have been netted in
order to provide meaningful disclosures.
Notes to the financial statements
36
| GREEN CROSS HEALTH
2. Basis of preparation of
financial statements
(continued)
(k) Statement of cash flows (continued)
Cash and cash equivalents comprise cash
balances and call deposits. Bank overdrafts
that are repayable on demand and form an
integral part of the Group’s cash management
are included as a component of cash and cash
equivalents for the purpose of the statement of
cash flows.
Operating activities include all cash received
from all revenue sources and all cash
disbursed for all expenditure sources including
taxation refunds or payments and other
transactions that are not classified as investing
or financing activities.
Investing activities reflect the acquisition and
disposal of property, plant and equipment
and intangibles, loans to associates, and
investments in associates, subsidiaries and
joint ventures.
Financing activities reflect changes in
borrowings and equity.
(l) Inventory
Inventories are measured at the lower of cost
and net realisable value. The cost of inventories
is based on a weighted average principle, and
includes expenditure incurred in acquiring the
inventories, production or conversion costs and
other costs incurred in bringing them to their
existing location and condition.
3. New standards and
interpretations issued and
not yet effective
A number of new standards, amendments
to standards and interpretations are not yet
effective for the year ended 31 March 2020.
These have been assessed for applicability to
the Group and the Directors have concluded
that they will not have a significant impact
on future financial statements, except for
amendments to NZ IAS 1 which the Group has
elected to adopt early.
4. Segment reporting
The Group has three reportable segments:
pharmacy services, medical services and
community health.
The Group’s main operations are in the
pharmacy industry providing pharmacy
services through consolidated stores, equity
accounted investments and franchise stores.
The medical services segment includes fully
owned and equity accounted medical centres,
and support services provided to these medical
centres, as well as medical centres outside
the Group. The community health segment
provides services direct to the community to
support independent living.
The Board monitors the various revenue streams
within each reportable segment separately
however, they do not meet the criteria for
separate disclosure due to the following:
• Aggregation of the operating segments
within each reportable segment is
consistent with the core principal of NZ
IFRS 8, i.e. aggregating will not distort the
interpretation of the financial statements for
the users;
• The operating segments within each
reportable segment share the same
economic characteristics; and
• The nature of the products and services,
and the nature of the regulatory environment
are the same for the operating segments.
Notes to the financial statements
Annual Report 2020 |
37
March 2020NotePharmacy
Services
$’000
Medical
Services
$’000
Community
Health
$’000
Corporate
$’000
Total
$’000
External revenues6.1336,449 76,509 155,573 - 568,531
Total revenue336,449 76,509 155,573 - 568,531
Cost of products sold(195,386)- - - (195,386)
Employee benefit expense(61,256)(54,494)(145,361)-(261,110)
Lease expenses(2,897)(392)(237)- (3,525)
Other expenses(32,637)(10,197)(5,040)(1,992)(49,867)
Depreciation and amortisation(6,323)(1,330)(913)- (8,565)
Depreciation - leases(11,097)(2,957)(1,575)- (15,629)
Impairment(4,672)--- (4,672)
Share of equity accounted net
earnings
314 902 - - 1,216
Segment Profit22,495 8,042 2,447 (1,992)30,992
Interest income114
Interest expense(1,787)
Interest expense - leases(5,678)
Profit before tax23,641
Tax expense(6,689)
Profit after tax16,952
Non-controlling interest(3,462)
Net profit attributable to the
shareholders of the Parent
13,490
Reportable segment assets294,818 59,843 30,236 (8,287)376,610
Equity accounted investments2,439 4,549 - - 6,988
Capital expenditure5,823 935 686 - 7,444
Reportable segment liabilities169,235 54,176 26,768 (8,287)*241,892
*Intersegmental elimination.
Operating segments
Information about reportable segments
Notes to the financial statements
38
| GREEN CROSS HEALTH
4. Segment reporting (continued)
Operating segments (continued)
March 2019NotePharmacy
Services
$’000
Medical
Services
$’000
Community
Health
$’000
Corporate
$’000
Total
$’000
External revenues6.1340,196 70,539 156,501 - 567,236
Total revenue340,196 70,539 156,501 - 567,236
Cost of products sold(198,929)- - - (198,929)
Employee benefit expense(61,459)(51,768)(149,273)(750)(263,250)
Lease expenses(16,025)(4,108)(1,177)- (21,310)
Other expenses(30,633)(9,674)(4,843)(1,667)(46,817)
Depreciation and amortisation(6,106)(1,168)(1,157)- (8,431)
Depreciation - leases---- -
Impairment---- -
Share of equity accounted net
earnings
256 618 - - 874
Segment profit27,301 4,439 51 (2,417)29,373
Interest income44
Interest expense(1,989)
Profit before tax27,428
Tax expense(7,339)
Profit after tax20,089
Non-controlling interest(3,984)
Net profit attributable to the
shareholders of the Parent
16,105
Reportable segment assets211,121 36,529 29,814 (12,668)264,797
Equity accounted investments2,287 4,111 - - 6,398
Capital expenditure5,119 3,706 945 - 9,770
Reportable segment liabilities92,638 22,963 27,921 (12,668)*130,854
*Intersegmental elimination.
Notes to the financial statements
Annual Report 2020 |
39
5. Business combinations
Business combinations acquired during the year include; Centre City Pharmacy (2004) Limited, Waiuku Medical
Pharmacy (2010) Limited, Karori Pharmacies (2020) Limited, Drury Surgery Limited. None of these acquisitions are
individually material to the Group’s result.
Identifiable assets acquired and liabilities assumedCarrying
value
$’000
Fair value
$’000
Total assets1,828 1,828
Total liabilities(208)(208)
Identifiable net assets1,620 1,620
Consideration transferred
Satisfied by:
Cash consideration 3,546
Deferred consideration -
Total consideration3,546
Less cash acquired (included in assets above) (40)
Net cash consideration 3,505
Goodwill
Goodwill recognised as a result of the acquisitions are as follows:
Total consideration3,546
Identifiable net assets(1,620)
Goodwill1,926
The amount of revenue included in the consolidated statement of comprehensive income is $8.1 million with a net
profit after tax of $0.6 million in respect of the entities acquired during the year.
Notes to the financial statements
40
| GREEN CROSS HEALTH
6. Operating performance
6.1 Revenue 2020
$’000
2019
$’000
Revenue from contracts with customers:
Pharmacy retail and dispensary298,261 304,627
Other pharmacy revenue38,188 35,569
Medical fee income76,509 70,539
Home care 155,573 156,501
568,531 567,236
Disaggregation of Contract RevenueReportable segments
Pharmacy
Services
$’000
Medical
Services
$’000
Community
Health
$’000
Total
$’000
Year ended 31 March 2020
Timing of revenue recognition
Transferred at a point in time324,159 35,315 108,393 467,867
Transferred over time12,290 41,194 47,180 100,664
336,449 76,509 155,573 568,531
Year ended 31 March 2019
Timing of revenue recognition
Transferred at a point in time331,120 35,726 105,899 472,745
Transferred over time9,076 34,813 50,602 94,491
340,196 70,539 156,501 567,236
Pharmacy retail and dispensing services
Pharmacy retail and dispensary services include retail sales, dispensing, professional advisory and care services. For
all these services control is considered to pass to the customer at the point when the customer can use or otherwise
benefit from the goods and services. For retail sales, control passes at point of sale. Retail sales are predominantly by
credit card, debit card or in cash.
The Group operates its own Living Rewards loyalty programme. When a retail sale is made and points are earned,
the resulting revenue is allocated between the loyalty programme and the other components of the sale. The amount
allocated to the loyalty programme is deferred, and is recognised as revenue when the points are redeemed under
the terms of the programme or when it is no longer probable that the points under the programme will be redeemed.
Other pharmacy revenue
These mainly include franchise fees and supplier income. Control for franchise services pass over time as the services
are delivered over the term of the franchise agreement. Payment terms for franchise fees is generally 20 to 30 days.
Supplier income is earned, as promotional services are rendered over a specified time period by the Group. Payment
terms are generally 20 to 30 days.
Medical services
Medical services include capitation and health services and patient fees. Control for capitation and health services
passes over time as the healthcare services are delivered to the patient over a certain time period. Payment terms are
generally 20 to 30 days. Patient fees are earned at a point in time. Control passes to the customer when service has
been delivered to a customer. Patient fees are predominantly by credit card, debit card or in cash.
Notes to the financial statements
Annual Report 2020 |
41
Homecare services
Homecare services consist primarily of community health and support services. Control passes to the customer as the
services are delivered and simultaneously consumed by the customer. Payment terms are generally 30 to 60 days.
Contract assets and contract liabilities
Current contract assets represent revenue where the service has been provided but not yet invoiced to the customer.
When the customer has been invoiced, any outstanding balances are included in receivables. Contract liabilities
reflect payments received for services that have not yet been provided and the payments will be recognised as
revenue over time.
Costs directly related to the acquisition of a contract or renewal of an existing contract are capitalised and amortised
over the life of the contract. Cost relating to fulfilling a contract are only capitalised if they meet the recognition criteria
under NZ IFRS 15. Costs incurred in obtaining a contract are only capitalised to the extent they are incremental.
Contract balances
The following table provides information, about receivables, contract assets and contract liabilities from contracts
with customers:
Significant changes in the contract assets and the contract liabilities during the period are as follows:
As at 31 March 2020, the amount of revenue deferred and recognised as a contract liability for the loyalty programme
is $6.0m. This will be recognised as revenue as the loyalty points are redeemed or expire, which is expected to occur
over the next fifteen months.
31 Mar 2020
$’000
31 Mar 2019
$’000
Trade receivables which are included in trade and other receivables25,257 21,466
Contract assets14,273 11,561
Contract liabilities(6,019)(5,072)
20202019
Contract
assets
Contract
liabilities
Contract
assets
Contract
liabilities
Revenue recognised that was included in the contract liability balance
at the beginning of the period- 5,072- 5,831
Transfer from contract assets recognised at the beginning of the
period to receivables
11,561 - 11,816 -
Notes to the financial statements
42
| GREEN CROSS HEALTH
6. Operating performance (continued)
6.2 Operating expenditure2020
$’000
2019
$’000
Cost of products sold 195,386 198,929
Employee benefit expense 261,110 263,250
Lease expenses3,525 21,310
Other expenses48,224 46,351
Audit fees233 185
Other services provided by auditors140 123
Directors’ fees in respect of the Parent company 431 453
Directors’ fees in respect of the subsidiary companies244 235
Bad debts written off and movement in doubtful debt provision594(530)
509,888 530,306
Auditor’s remuneration to KPMG comprises:
Annual audit of financial statements233185
Annual audit of financial statements – prior year--
233185
Other services provided by auditors:
Taxation services140 113
Other services- 10
140123
Tax services relate to compliance and related services.
Notes to the financial statements
Annual Report 2020 |
43
7. Income tax expense
2020
$’000
2019
$’000
Current tax expense(8,829)(9,078)
Deferred tax expense (see note 14)2,140 1,739
Total income tax expense(6,689)(7,339)
Imputation credit account:
Available for use in subsequent periods $10.1m (2019: $1.2m).
Numerical reconciliation between tax expense and pre-tax accounting profit
Profit before tax23,641 27,428
Income tax expense at 28%(6,620)(7,680)
(Add)/Deduct the tax effect of adjustments
Non deductible write-offs(385)-
Other316 341
(6,689)(7,339)
Taxation accounting policy
Income tax expense is charged to profit and loss and comprises current tax and deferred tax, unless it relates to
an item recognised in other comprehensive income or equity in which case it is recognised in other comprehensive
income or equity.
Current tax is the estimated tax payable on the current period’s taxable income using current tax rates, adjusted for
any under or over accrual in respect of prior periods.
Deferred tax is recognised using the balance sheet liability method, allowing for temporary differences between the
carrying amounts of assets and liabilities for accounting purposes and the carrying amounts for tax purposes. A
deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related benefit will be realised.
Notes to the financial statements
44
| GREEN CROSS HEALTH
8. Earnings and assets per share
The earnings per share, and dividend per share is calculated using the Group’s result divided by the weighted average
number of shares for the listed entity, Green Cross Health Limited.
2020
cents per
share
2019
cents per
share
Basic earnings per share9.4211.25
The calculation of basic earnings per share is based on the profit attributable to
equity holders of the parent and a weighted average number of ordinary shares
issued during the year of 143,152,759 (2019: 143,152,759).
Diluted earnings per share9.4111.22
The calculation of diluted earnings per share is based on the profit attributable to
equity holders of the parent and a weighted average number of ordinary shares
issued during the year after adjustment for the effects of all dilutive ordinary shares
of 143,394,426 (2019: 143,485,759).
Net tangible (liabilities)/assets per share(10.38)(11.62)
The calculation of net tangible assets per share is based on net assets less deferred
tax and intangible assets (refer note 13 and note 14) and the closing number of
ordinary shares at the end of the year.
Net assets per share94.1193.57
The calculation of net assets per share is based on net assets and the closing
number of ordinary shares at the end of the year.
9. Dividends to shareholders of the Parent company
2020
cents per
share
2019
cents per
share
Dividends per share7.00 7.00
In December 2019 Green Cross Health Limited paid an interim dividend of 3.5 cents per qualifying ordinary shares
to shareholders, which was fully imputed to 28%.
In June 2019 Green Cross Health Limited paid a final dividend for the March 2019 year of 3.5 cents per qualifying
ordinary shares to shareholders, which was fully imputed to 28%.
Notes to the financial statements
Annual Report 2020 |
45
10. Trade and other receivables
2020
$’000
2019
$’000
Trade receivables25,257 21,466
Contract assets14,273 11,561
Accrued income2,534 1,176
Other receivables and prepayments2,113 2,743
Provision for doubtful debts(1,070)(870)
43,107 36,076
11. Property, plant and equipment
2020
$’000
2019
$’000
Opening cost75,112 68,044
Acquisitions through business combinations146 1,698
Additions5,010 8,195
Disposals(949)(2,825)
Closing cost79,319 75,112
Opening accumulated depreciation53,143 47,128
Acquisitions through business combinations-
1,133
Depreciation for the period6,029 6,036
Disposals(505)(1,154)
Closing accumulated depreciation58,667 53,143
Closing book value20,652 21,969
Work in progress1,575 322
Total property, plant and equipment22,226 22,291
Property, plant and equipment accounting policy
Property, plant & equipment owned by the Group consists primarily of leasehold improvements and is stated at cost
less accumulated depreciation and any impairment losses. Property, plant & equipment acquired in stages is not
depreciated until the asset is ready for its intended use.
Depreciation is provided on a straight-line basis on all property, plant & equipment components to allocate the cost of
the asset (less any residual value) over its useful life or if it relates to assets in a leased premises, the life of the lease if
shorter. The residual values and remaining useful lives of asset components are reviewed at least annually.
Current estimated useful lives of property, plant and equipment are between two and twelve years.
Subsequent expenditure that extends or expands the useful life of property, plant & equipment or its service potential
is capitalised. All other costs are recognised in the profit and loss as expenditure when incurred.
Any resulting gain or loss on disposal of an asset is recognised in the profit and loss in the period in which the asset
is disposed of.
Notes to the financial statements
46
| GREEN CROSS HEALTH
12. Leases
As a lessee
The Group’s leased assets include property leases for pharmacies, medical centres and offices. The lease terms of
these leases typically range from 6 to 30 years (inclusive of any renewal options). Some leases provide for additional
rent payments that are based on changes in CPI or market rental rates. The Group also leases motor vehicles and
equipment, which typically run for a period of 3 to 5 years. Previously, the Group classified all its leases as operating
leases under NZ IAS 17.
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether
the lease transferred substantially all of the risks and rewards of ownership. Under NZ IFRS 16, the Group recognises
right-of-use assets and lease liabilities for the majority of its leases – i.e. these leases are on-balance sheet.
The carrying amounts of right-of-use assets and lease liabilities are as below:
Property
$’000
Motor Vehicles
$’000
Equipment
$’000
Total
$’000
Right-of-use assets
Balance at 1 April 201988,9332,0151,95992,907
Balance at 31 March 202083,7051,3451,040 86,090
Depreciation14,202734694 15,630
Additions to property of $11.4m have been made to right-of-use assets during the current year.
Property
$’000
Motor Vehicles
$’000
Equipment
$’000
Total
$’000
Lease liabilities
Balance at 1 April 201994,5742,0151,95998,548
Balance at 31 March 202091,0931,4071,080 93,580
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment
losses and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as
the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease
payment made. It is re-measured when there is:
• A change in future lease payments arising from a change in an index or rate; or
• A change in the estimate of the amount expected to be payable under a residual value guarantee; or
• Changes in assessment of whether a purchase or extension option is reasonably certain to be exercised or a
termination option is reasonably certain not to be exercised; or
• Any other change in the future lease payments or the lease term due to a lease modification that’s not
accounted for as a separate lease.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that
include renewal options. The assessment of whether the Group is reasonably certain to exercise such options
impact the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.
Notes to the financial statements
Annual Report 2020 |
47
(i) Transition
On transition to NZ IFRS 16, the Group elected to perform a reassessment of its contracts to determine which of its
contracts are now identified as leases under NZ IFRS 16. Therefore, the definition of a lease under NZ IFRS 16 has
been applied to both contracts as at 1 April 2019 and contracts entered into or changed on or after 1 April 2019.
At transition, for leases classified as operating leases under NZ IAS 17, lease liabilities were measured at the present
value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at 1 April 2019.
Right-of-use assets are measured at either:
• Their carrying amount as if NZ IFRS 16 had been applied since the commencement date, discounted using
the Group’s incremental borrowing rate at the date of initial application – the Group applied this approach to
its largest property leases; or
• An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the
Group applied this approach to all other leases.
The Group used the following practical expedients when applying NZ IFRS 16 to leases previously classified as
operating leases under NZ IAS 17.
• Applied a single discount rate to a portfolio of leases with reasonably similar characteristics (motor vehicles
leases and equipment leases).
• Relied on previous assessments of whether leases are onerous applying NZ IAS 37 Provisions, Contingent
Liabilities and Contingent Assets immediately before the date of initial application as an alternative to
performing an impairment review.
• Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months
of remaining lease term at the date of initial application.
• Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
• Used hindsight, such as in determining the lease term for contracts that contain options to extend or
terminate a lease.
On transition to NZ IFRS 16, the Group recognised additional right-of-use assets and additional lease liabilities,
recognising the difference in retained earnings. The impact on transition is summarised below.
1 April 2019
$’000
Right-of-use assets92,907
Deferred tax asset1,003
Lease liabilities (98,545)
Lease incentives in advance (presented as part of “payables and accruals”)2,055
Non-controlling interest419
Retained earnings2,167
When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease
payments using its incremental borrowing rate at 1 April 2019. The weighted-average rate applied is 6.27%.
Notes to the financial statements
48
| GREEN CROSS HEALTH
12. Leases (continued)
1 April 2019
$’000
Operating lease commitments at 31 March 2019 as disclosed in the Group’s consolidated financial
statements75,995
Contracts reassessed as leases as defined under NZ IFRS 165,543
Effect of discounting using incremental borrowing rates at 1 April 2019 (13,026)
- Recognition exemption for leases with less than 12 months of remaining lease term at transition(1,923)
- Extension options reasonably certain to be exercised31,956
Lease liabilities recognised at 1 April 2019 98,545
(ii) Impacts for the period
The impact for the period is summarised below, by comparing the affected financial statement line items accounted
for under the old leases accounting standard NZ IAS 17 against the amounts accounted for under the new leases
accounting standard NZ IFRS 16.
31 March 2020NZ IAS 17
(Old)
$’000
Impact
$’000
NZ IFRS 16
(New)
$’000
Statement of financial position
Right-of-use assets-86,09086,090
Deferred tax asset13,9582,097 16,055
Lease liabilities - current-(13,705)(13,705)
Lease liabilities - non current-(79,875)(79,875)
Payables and accruals*(92,538)1,886(90,652)
Effect on net assets/(liabilities)-(3,507) -
* Movement is due to derecognition of lease incentives previously accounted for as income in advance under NZ IAS 17.
31 March 2020NZ IAS 17
(Old)
$’000
Impact
$’000
NZ IFRS 16
(New)
$’000
Statement of comprehensive income
Operating expenditure(529,343)19,456(509,888)
Depreciation and amortisation (8,565)(15,629) (24,195)
Interest expense - leases-(5,678)(5,678)
Tax effect-1,0941,094
Effect on profit/(loss)-(758) -
Notes to the financial statements
Annual Report 2020 |
49
31 March 2020NZ IAS 17
(Old)
$’000
Impact
$’000
NZ IFRS 16
(New)
$’000
Maturity analysis of contractual undiscounted cash flows
Less than one year-17,474-
Two to five years -46,536 -
More than five years -60,124-
Total-124,134 -
31 March 2020NZ IAS 17
(Old)
$’000
Impact
$’000
NZ IFRS 16
(New)
$’000
Statement of cash flows
Payments to suppliers and employees(517,966)19,456(498,510)
Interest expense (1,787)- (1,787)
Interest expense - leases-(5,678)(5,678)
Payments of lease liabilities-(13,778)(13,778)
Effect on cash inflow/(outflow)---
For the impact of NZ IFRS 16 on segment information, see note 4.
As a lessor
The Group sub-leases some of its properties. Under NZ IAS 17, the head lease and sub-lease contracts were
classified as operating leases. On transition to NZ IFRS 16, the right-of-use assets recognised from the head leases
are measured at cost on transition to NZ IFRS 16. The sub-lease contracts are classified as operating leases under
NZ IFRS 16.
Notes to the financial statements
50
| GREEN CROSS HEALTH
13. Intangible assets
Note2020
$’000
2019
$’000
Software and other intangible assets
Opening cost20,276 19,564
Acquisitions through business combinations5 - 16
Additions1,261 1,574
Disposals(321)(878)
Assets written-off(3,529)-
Closing cost17,68720,276
Opening accumulated amortisation9,105 7,385
Amortisation for the period2,536 2,395
Disposals(3)(675)
Assets written-off/impairment(233)-
Closing accumulated amortisation11,405 9,105
Closing book value6,282 11,171
Goodwill
Opening cost126,492 123,017
Other acquired goodwill200234
Additions5 1,926 3,241
Disposals (1,376) -
Closing cost127,242 126,492
Total intangible assets133,524 137,664
Intangible assets accounting policy
Intangible assets recognised by the Group are stated at cost less accumulated amortisation and any impairment
losses with the exception of goodwill (see below).
Intangible assets acquired in stages are not amortised until the asset is ready for its intended use.
Amortisation is provided on a straight-line basis for software to allocate the cost of the asset (less any residual value)
over its useful life. The residual values and remaining useful lives of software are reviewed at least annually. Other
intangible assets represent franchisee store rebranding costs and have an indefinite life.
Estimated useful lives of the asset classes are:
Software 3 - 5 years
Subsequent expenditure that extends or expands the useful life of an intangible asset or its service potential is
capitalised. All other costs are recognised in the profit and loss as expenditure when incurred.
Any resulting gain or loss on disposal of an intangible asset is recognised in the profit and loss in the period in which
the intangible asset is disposed of.
Intangible assets disclosed in the financial statements relate to computer software, trademarks and other indefinite life
intangible assets. Indefinite life intangible assets are tested annually for impairment.
Internally developed software in the amount of $3.3m was impaired in the current year as a result of a strategic review
of existing projects.
Notes to the financial statements
Annual Report 2020 |
51
Goodwill accounting policy
Goodwill arises on the acquisition of subsidiaries. Goodwill represents the excess of the purchase consideration over
the fair value of the net identifiable tangible and intangible assets at the time of acquisition.
Goodwill is allocated to the relevant cash generating units expected to benefit from the acquisition and tested for
impairment annually, or earlier at any interim reporting dates if there are indicators of impairment.
If the recoverable amount is less than the carrying amount of the cash generating unit then an impairment loss is
recognised in profit and loss and the carrying amount of the asset is written down. Recoverable amount is calculated
as the greater of the fair value less cost to sell and value in use.
The relative value of the goodwill allocated to the relevant cash generating unit is included in the determination of any
gain or loss on disposal.
Impairment testing
Discounted cash flow (DCF) models have been based on three-year forecast cash flow projections. The budget for
the year-ending 31 March 2021 is the basis for the first year’s projections and projections for subsequent periods
have been based on the Group’s three-year outlook. Terminal cash flows are projected to grow in-line with the New
Zealand long-term inflation rate.
Impairment test assumptions 2020
Pharmacy ServicesMedical ServicesCommunity Health
Discount rate – post tax9.43%7.93%9.50%
Terminal growth rate1.50%1.50%1.50%
Carrying amount of goodwill allocated to the unit ($000)74,513 33,667 19,061
Carrying value of other intangible assets with indefinite
useful lives ($000)
2,048 - -
Impairment test assumptions 2019
Pharmacy ServicesMedical ServicesCommunity Health
Discount rate - post tax9.85%8.35%9.90%
Terminal growth rate1.8%1.8%1.8%
Carrying amount of goodwill allocated to the unit ($000)75,068 32,363 19,061
Carrying value of other intangible assets with indefinite
useful lives ($000)
2,048 16 -
For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the
lowest level within the Group at which the goodwill is monitored for internal management purposes. Within pharmacy
and medical, whilst a cash generating unit (CGU) may be an individual store or medical centre, goodwill is allocated
across all operations within a division that have similar economic characteristics and collectively benefit from
acquisitions that increase the Group’s portfolio.
Notes to the financial statements
52
| GREEN CROSS HEALTH
13. Intangible assets (continued)
Sensitivities
No impairment was identified for Pharmacy or Medical services as a result of this review, nor under any reasonable
possible change, in any of the key assumptions described above.
The estimated recoverable amount of the Community Health CGU exceeds its carrying value by $6.7m. The
projected EBIT for the Community Health CGU is forecast to remain at current levels over the forecast period. The
projected EBIT would need to decrease by 32% for the recoverable amount to be equal to the carrying value of the
Community Health CGU.
14. Deferred tax asset
The movement in deferred tax asset during the year is made up of the following:
Opening
restated
$’000
Recognised in
profit or loss
$’000
Closing
$’000
Group – 2020
Property, plant and equipment2,257 31 2,288
Provisions and accruals7,004 (219)6,785
Tax losses3,650 1,235 4,885
Right-of-use assets*(26,589)2,484 (24,105)
Lease liabilities27,593 (1,391)26,202
13,9152,14016,055
*Opening balance includes the deferred tax impact of
IFRS 16 adoption.
Group – 2019
Property, plant and equipment2,061 196 2,257
Provisions and accruals7,145 (141)7,004
Tax losses1,967 1,683 3,650
11,173 1,738 12,912
Notes to the financial statements
Annual Report 2020 |
53
15. Equity accounted group investments
Note2020
$’000
2019
$’000
The movement in equity accounted investments comprises:
Opening carrying amount6,398 6,264
Investment in associates and joint ventures26 50
Disposal of associates and joint ventures-(84)
Share of net earnings1,216874
Dividend21(653)(706)
6,988 6,398
There are no individually material associates or joint ventures.
Amount of goodwill within the carrying amount of
equity accounted group investments:
Opening carrying amount4,024 4,058
(Disposal)/investment in associates and joint ventures-(34)
4,024 4,024
Summary associate and joint venture financial information
The aggregate results of the associates and joint venture financial position and current year’s profit are as follows:
Assets
$’000
Liabilities
$’000
Revenue
$’000
Net profit
after tax
$’000
As at and for the year ended 31 March 202015,7908,61452,4983,269
As at and for the year ended 31 March 201911,3575,72741,0632,405
Reporting dates
The controlled entities and all associates have a 31 March reporting date.
Notes to the financial statements
54
| GREEN CROSS HEALTH
15. Equity accounted group investments (continued)
Investments in associates and joint ventures accounting policy
An associate is an investee over which the Group has significant influence, which is the power to participate in the
financial and operating policy decisions of the investee but not to control or jointly control those policies.
A joint venture is a joint arrangement in which the parties that have joint control of the arrangement have rights to the
net assets of the arrangement. Joint control is the contractually agreed sharing of control of the arrangement which
only exists when decision about the relevant activities require the unanimous consent of the parties sharing control.
The results and assets and liabilities of associates and joint ventures are incorporated into the financial statements
of the Group using the equity method of accounting. Under the equity method, the initial investment in the Group
financial statements is measured at cost and adjusted thereafter for the Group’s share of profit and loss and other
comprehensive income of the associate and joint venture. Any goodwill arising on the acquisition of an associate
or joint venture investment is included in the carrying amount of the investment net of dividends received. Where
the Group’s share of losses of the associate of joint venture exceeds the Group’s interest in that associate or joint
venture, the Group discontinues recognising its share of losses unless it has a legal or constructive obligation to
continue doing so. The equity method is discontinued where the Group ceases to exert significant influence over the
investee.
Accounting policies adopted by associates and joint ventures are generally consistent with those of the Group. Where
a material difference does exist, appropriate adjustments are applied to ensure congruence with the policies of the
Group, the most significant of these being the recognition of deferred tax.
16. Trade and other payables and income taxes payable
2020
$’000
2019
$’000
Trade payables39,478 33,599
Payable to non-controlling interest2,941 3,024
Contract liabilities6,019 5,072
Accruals18,409 13,938
Employee entitlements23,805 24,342
90,652 79,975
Income tax payable1,186 1,760
91,838 81,735
Employee entitlements accounting policy
Employee entitlements for salaries, bonuses, long service, alternate and annual leave are provided for and recognised
as a liability when benefits are earned by employees but not paid at the reporting date.
Notes to the financial statements
Annual Report 2020 |
55
17. Borrowings
2020
$’000
2019
restated
$’000
Current3,359 5,556
Non-current53,114 43,563
56,474 49,119
The Group’s interest rate on outstanding loans is calculated based on BKBM or cost of funds plus a margin. The
current interest rate is between 2.50% and 4.66% (2019: 4.14% - 5.54%). A 0.5% increase/decrease in the effective
interest rate would result in a decrease/increase in after tax profit of $203,000.
Green Cross Health Limited and all its subsidiaries provided guarantees and indemnities in favour of BNZ covering
all loans held by the parent and subsidiary companies. Loans within partnership subsidiaries are covered by a GSA
agreement over the individual business assets.
Security has also been provided by Green Cross Health Limited in favour of ANZ in relation to one Pharmacy subsidiary.
The Group’s primary lender is the BNZ. As at balance date, the Group has undrawn banking facilities of $10m (2019:
$18m). The maturity of the debt facility with BNZ is 22 August 2022.
As at balance date, two subsidiaries are in breach of covenanted ratios in respect of their bank borrowings. All debt in
breach amounting to $0.7m has been classified as current in these financial statements.
Borrowings and advances accounting policy
Borrowings and advances are initially recognised at fair value, including directly attributable transaction costs.
Subsequent to initial recognition, borrowings and advances are measured at amortised cost using the effective
interest method, less any impairment losses on advances.
18. Operating cash flows reconciliation
2020
$’000
2019
restated
$’000
Profit after tax for the year16,952 20,089
Add/(deduct) non-cash items:
Depreciation, amortisation and impairment28,867 8,431
Other non-cash items6,752(2,623)
Add/(deduct) changes in working capital items:
Receivables and accruals movement(7,031) 655
Inventory (1,916) 1,395
Payables and accruals movement10,677 3,493
Net cash inflow from operating activities54,301 31,440
Notes to the financial statements
56
| GREEN CROSS HEALTH
19. Shares on issue
2020
’000
2019
’000
Shares authorised and on issue
Opening number of shares143,486 143,486
Shares issued – fully paid- -
Shares issued – partly paid- -
Shares cancelled – partly paid(183) -
143,303 143,486
Shares held as treasury stock(150)(333)
143,153143,153
All ordinary shares carry equal rights in terms of voting, dividend payments and distribution upon winding up.
Treasury stock
The redeemable ordinary shares held by Life Pharmacy Trustee Company Limited to satisfy the Senior Management
incentive schemes have not been included in the calculation of the total number of shares issued by the Group as
these shares have not been issued externally by the Group.
Share capital
Incremental costs directly attributable to the issue of ordinary shares, share options and share capital are recognised
as a deduction from equity.
Notes to the financial statements
Annual Report 2020 |
57
20. Financial instruments
The Group is party to financial instruments as part of its normal operations. Financial instruments include cash and
cash equivalents, borrowings, trade and other receivables and trade and other payables.
Financial instruments are initially recognised at their fair value less transaction costs, and subsequently measured at
their amortised cost. A financial instrument is recognised if the Group becomes a party to the contractual provisions
of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the
financial assets expire or if the Group transfers the financial asset to another party without retaining control or
substantially all risks and rewards of the asset. Financial liabilities are derecognised if the Group’s obligations specified
in the contract expire or are discharged or cancelled.
Financial assets and financial liabilities are recognised at amortised cost.
Risk management policies are used to mitigate the Group’s exposures to credit risk, liquidity risk and market risk that
arise in the normal course of operations.
Credit risk
The Group’s maximum credit risk resulting from a third party defaulting on its obligations to the Group is represented
by the carrying amount of each financial asset on the statement of financial position. The Group is not exposed to
any material concentrations of credit risk other than its exposure within the retail pharmacy and government sectors.
The Group monitors credit limits on a monthly basis. All credit facilities to external parties are provided on normal
trade terms (unsecured, to a maximum of 45 days). At any one time, the Group generally has amounts owed to and
amounts owed by the same counterparty, although no legal right of set-off exists. The Parent company holds direct
debit authorities for amounts payable under the contractual terms of its franchise agreements. The Parent regularly
monitors the credit ratings issued, and any qualifications to those ratings, to the financial institutions (and those of the
ultimate parent financial institution) used by the Group.
The status of trade receivables at reporting date is as follows:
Gross receivable
2020
$’000
Impairment
2020
$’000
Gross receivable
2019
$’000
Impairment
2019
$’000
Trade and other receivables
Not past due39,851 - 29,559 -
Past due 0-30 days1,437 - 4,869 -
Past due 31-120 days1,819 - 1,646 -
Past due more than 120 days1,070(1,070)873 (870)
Total 44,177 (1,070)36,947 (870)
Notes to the financial statements
58
| GREEN CROSS HEALTH
20. Financial instruments (continued)
Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity
requirements on an ongoing basis. In general, the Group generates sufficient cash flows from its operating activities
to meet its obligations arising from its financial liabilities and has credit lines in place to cover potential shortfalls. The
following table sets out the contractual cash flows for financial liabilities that are settled on a gross cash flow basis:
2020
Carrying
value
$’000
Contractual
cash flows
$’000
Less than
one year
$’000
Between one
year and
two years
$’000
Between two
years and
five years
$’000
Borrowings56,474 60,909 3,460 1,376 56,073
Trade and other payables60,828 60,828 60,828 - -
Total non-derivative liabilities117,302 121,737 64,288 1,376 56,073
2019
Borrowings restated49,119 52,130 7,234 28,807 16,089
Trade and other payables49,017 49,017 49,017 - -
Total non-derivative liabilities98,137 101,148 56,251 28,807 16,089
Market risk
As interest rates change, the fair value of financial instruments may change. Refer to note 17 for details of the interest
rates for the Group loans and borrowings, which are the most significant financial instruments.
Capital management
The Group’s capital includes share capital and retained earnings. The Group is not subject to any externally imposed
capital requirements.
The allocation of capital between its specific business segments’ operations and activities is, to a large extent,
driven by the optimisation of the return achieved on the capital allocated. The process of allocating capital to specific
business segment operations and activities is undertaken independently of those responsible for the operation.
The Group’s policies in respect of capital management and allocation are reviewed regularly by the Board of Directors.
The carrying amount of the Group’s on-balance sheet financial instruments including trade and other receivables,
cash and cash equivalents, borrowings and trade payables, closely approximate their fair values as at 31 March 2020
and 31 March 2019. The assessment of fair value relating to borrowings was determined by reference to observable
market data (level 2).
Notes to the financial statements
Annual Report 2020 |
59
21. Related parties
During the period, there was one group director who had a shareholding in a subsidiary and also had a shareholding
in the Parent company.
The Group has commercial franchise agreements with stores relating to marketing levies and franchise fees. The
Group also enters into transactions on behalf of the stores which are on-charged. These transactions comprise items
such as training courses, supplier agreements, central advertising campaigns, loyalty card costs, and IT related costs.
The Parent has leased some equipment which is on-leased to associate companies. The Parent performs accounting
services, based on commercial terms, for some of the stores.
The Parent has shareholder agreements with the other shareholders of the associates. The agreements set out the
return on investment/profit sharing arrangements relating to these investments. Payable to non-controlling interests
represents loans advanced to the Group.
Related party transactions for the Group:
NoteTransaction valueBalance outstanding
2020
$’000
2019
$’000
2020
$’000
2019
$’000
Equity earnings from associates1,216 874 - -
Franchise fees and on-charged costs with equity
accounted investments
102 39 9 7
Management service charges and on-charged costs to equity
accounted investments
703 748 41 100
Dividend income653 706 --
Receivable from other related parties--458818
Payable to non-controlling interests16--2,9413,024
Key management personnel remuneration
The Group provides compensation to key management personnel which comprises the directors and executive
officers. Some senior executives also participate in the share option scheme. Key management personnel (includes
the Group CEO, the Group CFO, some senior executives and company directors) compensation comprised:
2020
$’000
2019
$’000
Short-term and other employee benefits 2,415 2,642
Share vesting costs- 2
2,415 2,644
Notes to the financial statements
60
| GREEN CROSS HEALTH
22. Share based payments
(a) Description of share-based payment arrangements
At 31 March 2020, the Group had the following share-based payment arrangements:
Redeemable ordinary shares granted to senior managers:
150,000 Redeemable Ordinary Shares (ROS) have been issued by the Parent to Life Pharmacy Trustee Company
Limited as trustee of a trust that holds the shares on behalf of the employees. Each ROS is partly-paid to $0.01 and
carries an entitlement to dividends and voting rights in proportion to the extent paid. On exercise, the ROS are fully paid
and converted into ordinary shares. The total charged to the profit and loss in the period was $0 (2019: $0).
There were no ROS issued to key or senior managers during the 2020 or 2019 financial years.
(b) Reconciliation of outstanding ROS
in thousandsNumber of
instruments
2020
Weighted average
exercise price
2020
Number of
instruments
2019
Weighted average
exercise price
2019
Outstanding at 1 April333 $1.90 333 $1.90
Cancelled during the year(183) $1.26- -
Exercised during the year- - - -
Granted during the year- - - -
Outstanding at 31 March150 2.37333 $1.90
Exercisable at 31 March150 2.37183 2.17
Instruments outstanding at 31 March 2020 had an exercise price of $2.37(2019: $1.25 - $2.37) and a weighted
average contractual life of 1 year (2019: 1.1 years). The weighted average share price at the date of exercise for ROS
during the year was nil (2019: nil).
Share based payments accounting policy
Equity-settled share based payments awarded to employees are measured at fair value at the date of grant and are
recognised as an employee expense, with a corresponding increase in equity, over the period from the date of grant
to the date on which the employees become unconditionally entitled to the option. The fair value at grant date is
determined using an appropriate valuation model.
At each reporting date, the Group revises the estimate of the number of options expected to vest. The cumulative
expense is revised to reflect the revised estimate, with a corresponding adjustment to equity.
23. Subsequent events
There have been no subsequent events which require disclosure in these financial statements.
Notes to the financial statements
Annual Report 2020 |
61
Group entities
For the year ended 31 March 2020
The current Green Cross Health Limited group structure comprises 138 companies.
The group entities are as follows:
Legal ParentHoldingActivity
Green Cross Health LimitedFranchisor and investment
Controlled entities
280 Queen Street (2005) Limited43.9% Pharmacy
Access Community Health Limited100.0% Community Care
Access Health Services Limited100.0% Non-trading
Albany Pharmacy Limited49.0% Pharmacy
Alexandra Pharmacy (2013) Limited48.5% Pharmacy
Amcal Chemists (N.Z.) Limited100.0% Non-trading
Apollo Pharmacy (2014) Limited49.0% Pharmacy
Bay of Plenty Pharmacies Limited100.0% Non-trading
Bayfair Pharmacy (2010) Limited48.8% Pharmacy
Bayfair Pharmacy Limited100.0% Non-trading
Baymed Group (2013) Limited100.0% Medical Centre
Birkenhead Pharmacy (2011) Limited48.5% Pharmacy
Botany Downs Pharmacy Limited25.0% Pharmacy
Botany Pharmacy (2016) Limited49.0% Pharmacy
Browns Bay Pharmacy (2018) Limited48.5% Pharmacy
Care Chemist Limited100.0% Non-trading
Care Chemist Pakuranga (2008) Limited49.0% Pharmacy
Centre City Pharmacy (2004) Limited46.4% Pharmacy
Chemist Express Limited49.0% Pharmacy
Christchurch Pharmacy (2015) Limited49.0% Pharmacy
Coastlands Pharmacy (2018) Limited49.0% Non-trading
Davies Corner Pharmacy Limited25.0% Pharmacy
Discovery Pharmacy (2016) Limited49.0% Pharmacy
Dispensaryfirst Limited100.0% Non-trading
Drury Surgery Limited60.0% Medical Centre
Endeavour Pharmacy (2016) Limited49.0% Pharmacy
Fred Thomas Pharmacy (2015) Limited49.0% Pharmacy
Gascoigne Medical Services Limited71.2% Medical Centre
Glenfield Mall Pharmacy Limited48.5% Pharmacy
Green Cross Health Direct Limited100.0% Non-trading
Green Cross Health Distribution Limited100.0% Pharmacy
Green Cross Health Investment Limited100.0% Non-trading
Green Cross Health Medical Limited100.0% Investment
Green Cross Health Medical Solutions Limited100.0% Services to medical centres
Green Cross Health Primary Limited100.0% Medical Centre
Green Cross Health Workplace Limited100.0% Health services
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| GREEN CROSS HEALTH
Controlled entitiesHoldingActivity
Guthries Pharmacy Limited49.0% Pharmacy
Harbour City Pharmacy (2011) Limited48.7% Pharmacy
Hastings Pharmacy (2013) Limited49.0% Pharmacy
Hawkes Bay Pharmacies Limited49.0% Pharmacy
Health Services Limited100.0% Investment
Helensville Pharmacy (2008) Limited48.5% Pharmacy
Highland Park Pharmacy (2009) Limited48.5% Pharmacy
Hurstmere Pharmacy (2008) Limited49.0% Pharmacy
Hutt Valley Pharmacies 2014 Limited48.5% Pharmacy
J-Mall Pharmacy Limited49.0% Pharmacy
Karori Pharmacies (2020) Limited49.6% Pharmacy
Knox Pharmacy 2010 Limited48.5% Pharmacy
Lake Taupo Pharmacy (2008) Limited48.5% Pharmacy
Levin Pharmacy (2005) Limited100.0% Non-trading
Life Pharmacy Albany Limited49.0% Pharmacy
Life Pharmacy Centre Place (2009) Limited49.0% Pharmacy
Life Pharmacy Limited100.0% Non-trading
Life Pharmacy Sylvia Park Limited49.0% Pharmacy
Life Pharmacy Trustee Company Limited100.0% Non-trading
Life Pharmacy Wall Street Dunedin Limited49.1% Pharmacy
Manawatu Pharmacies Limited49.0% Pharmacy
Manners Pharmacy (2016) Limited49.0% Pharmacy
Manukau Pharmacy (2011) Limited49.1% Pharmacy
Moorhouse Pharmacy 2003 Limited25.0% Pharmacy
Motueka Medical (2013) Limited54.8% Medical Centre
Neptune Pharmacy (2017) Limited49.0% Pharmacy
New Lynn Pharmacy (2015) Limited48.8% Pharmacy
New Plymouth Pharmacy (2015) Limited48.5% Pharmacy
Northlands Pharmacy (2003) Limited49.6% Pharmacy
Onehunga Medical 2012 Limited100.0% Medical Centre
Palms Pharmacy (2013) Limited48.5% Pharmacy
Parklands Pharmacy (2015) Limited49.0% Pharmacy
Peak Primary Limited100.0% Non-trading
Plimmer Steps Pharmacy (2018) Limited49.0% Pharmacy
Pharmacy 277 Limited49.1% Pharmacy
Pharmacy B102 Limited48.5% Pharmacy
Pharmacy G101 Limited49.0% Pharmacy
Pharmacy J104 Limited49.0% Non-trading
Pharmacy K103 Limited49.0% Pharmacy
Group entities
(continued)
Group entities
Annual Report 2020 |
63
Controlled entitiesHoldingActivity
Pharmacy L105 Limited49.0% Pharmacy
Pharmacy N106 Limited49.0% Pharmacy
Pharmacy Management Limited100.0% Investment
Pharmacy Store Holdings Limited100.0% Investment
Pharmacybrands Limited100.0% Non-trading
Pharmacybrands On-line Limited100.0% Non-trading
Queen Street Pharmacy (2015) Limited49.0% Non-trading
Radius Medical Limited100.0% Non-trading
Radius Medical Solutions Limited100.0% Non-trading
Radius Pharmacy Greenmeadows Limited49.0% Pharmacy
Radius Pharmacy Limited100.0% Franchisor and Investment
Radius Pharmacy Napier Limited48.8% Pharmacy
Radius Pharmacy Riccarton Limited49.0% Pharmacy
Radius Pharmacy Te Rapa Limited48.8% Pharmacy
Radius Pharmacy Upper Hutt Limited49.5% Pharmacy
Radius Pharmacy Waikanae Limited48.5% Pharmacy
Radius Pharmacy Wanganui Limited49.0% Pharmacy
Radius Ti Rakau Limited100.0% Medical Centre
Radius Medical Whakatane Properties Limited100.0% Medical Centre Property
Riccarton Mall Pharmacy 2000 Limited49.0% Pharmacy
RPG Medicine Management Limited25.0% Pharmacy
Russell Street Pharmacy Hastings (2015) Limited48.5% Pharmacy
Shirley Pharmacy Limited100.0% Non-trading
Shore City Pharmacy (2010) Limited48.5% Pharmacy
Shore City Pharmacy Limited100.0% Non-trading
Smart Pharmacy Limited100.0% Non-trading
St Heliers Health Centre Limited100.0% Medical Centre
St James Pharmacy (2015) Limited100.0% Non-trading
St Lukes Pharmacy Holdings Limited49.0% Pharmacy
Stokes Valley Pharmacy (2009) Limited48.5% Pharmacy
Timaru Pharmacy (2013) Limited48.5% Non-trading
Trident Pharmacy (2017) Limited49.0% Pharmacy
The Doctors (Coastcare) Limited100.0% Medical Centre
The Doctors (DFM) Limited100.0% Non-trading
The Doctors (Hastings) Limited71.2% Medical Centre
The Doctors (Huapai) Limited100.0% Medical Centre
The Doctors (New Lynn) Limited53.7% Medical Centre
The Doctors (Whangaparaoa) Limited100.0% Medical Centre
Group entities
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| GREEN CROSS HEALTH
Controlled entitiesHoldingActivity
Total Care Health Services Limited100.0% Health services
Total Health Doctors Limited100.0% Medical Centre
Tower Junction Pharmacy Limited48.5% Pharmacy
Unichem Chemists (N.Z.) Limited100.0% Non-trading
Upper Hutt Health Centre Pharmacy Limited25.0% Pharmacy
Upper Riccarton Pharmacy Limited25.0% Non-trading
Waimauku Doctors Limited100.0% Medical Centre
Waiuku Medical Pharmacy (2010) Limited48.7% Pharmacy
Waiuku Pharmacy (2005) Limited100.0% Non-trading
Waiuku Pharmacy (2016) Limited48.7% Pharmacy
West City Pharmacy (2010) Limited48.5% Pharmacy
Wellington Pharmacy (2016) Limited49.0% Pharmacy
Willis Street Pharmacy Limited25.0% Pharmacy
Joint venture entities
Pharmacies Instore Limited50.0% Retail
Associate entities
Accident & Medical Centre Quaymed Limited25.0% Medical Centre
Albany Family Medical Centre Limited50.0% Medical Centre
Huapai Pharmacy (2017) Limited25.1% Pharmacy
Silverstream Health Centre Limited49.0% Medical Centre
Team Medical at Kapiti Limited48.8% Medical Centre
The Doctors (Mangere) Limited27.6% Medical Centre
The Doctors (Massey Medical) Limited25.1% Medical Centre
The Doctors (Napier) Limited25.1% Medical Centre
Walls & Roche Royal Oak Pharmacy Limited25.1% Pharmacy
Investments
Unichem Export Limited1.0% Wholesale
Group entities
(continued)
Group entities
66
| GREEN CROSS HEALTH
Board of Directors
As at 31 March 2020
Kim Ellis, Independent Chair
Kim Ellis is a widely experienced Chief Executive best known for his 13 years at the helm of Waste Management
NZ Ltd, culminating in the company’s sale in 2006. During his tenure he led 40 acquisitions and built a successful
business in Australia.
Kim’s earlier career encompassed a number of market sectors including health, manufacturing, distribution, transport,
property, agriculture and fashion.
Since 2006 Kim has been active in governance. Kim is currently Chair of Metlifecare and the NZ Social Infrastructure
Fund; a Director of Freightways, Port of Tauranga, FSF Management Company and Ballance Agri-Nutrients; and
consultant to Envirowaste Services.
Kim holds first class honours degrees in Chemical Engineering and Economics. Kim was appointed as Independent
Chair of the Company in December 2019.
John (Andrew) Bagnall, Non-Executive Director
Andrew Bagnall holds a Commerce Degree from Otago University and an MBA from Michigan State University.
Andrew was a significant investor in Life Pharmacy Limited and following the merger with Pharmacybrands Limited
(later renamed Green Cross Health Limited) has continued to hold a significant shareholding in the merged entity.
In Andrew’s earlier career, he was a leading figure in the New Zealand travel industry establishing and managing Gullivers
Travel Group which became the major distributor of wholesale and retail travel services in New Zealand. Gullivers Travel
Group was eventually listed on the NZX and Australian stock exchanges (“ASX”), and subsequently sold to ASX listed
S8. Andrew was also involved in co-developing one of New Zealand’s first commercial retirement villages.
Andrew now runs his own private investment company Segoura, which manages investments in various businesses
and he maintains a keen interest in sports car racing.
Andrew was appointed as a Non-Executive Director of the Company in August 2009.
John Bolland, Non-Executive Director
John Bolland has more than 25 years business experience in private equity, senior management and corporate
finance. This includes 14 years with Ernst & Young, where he had Partner level responsibility in Corporate Finance,
Audit and Business Advisory. John holds a Bachelor of Commerce from the University of Auckland and is a member
of the New Zealand Institute of Chartered Accountants.
John was appointed as a Non-Executive Director of the Company in August 2009.
Annual Report 2020 |
67
Peter Merton, Non-Executive Director
Peter Merton, an Otago University Pharmacy graduate, has been involved in the pharmaceutical industry in New
Zealand and overseas since the early 1980s. His involvement with the Group goes back to the late 1990s, and
he played an active part in the initial industry consolidation when Amcal and Unichem brands merged to form
Pharmacybrands Limited (later renamed Green Cross Health Limited).
Following the merger of Life Pharmacy Limited with Pharmacybrands Limited in 2009, Peter assumed the role of
Chair of the Group, which he relinquished in December 2019. He is also a significant shareholder in the Company
through his interest in Cape Healthcare Limited.
Peter has previously held the roles of Chief Executive of the Propharma/Healthcare Logistics businesses and Director
of EBOS Group Limited.
Peter Williams, Non-Executive Director
Peter Williams is an executive of the Zuellig Group which has significant health care interests in Asia Pacific. In this
capacity he is a Director for a number of companies including, in New Zealand, EBOS Group Limited and C.B.
Norwood Distributors Limited. Peter is also a Director of Cape Healthcare Limited.
Peter was appointed as a Non-Executive Director of the Company in May 2017.
Ken Orr, Independent Director
Ken Orr has had over 30 years as a community pharmacist and is currently a partner in a group of pharmacies
in Northland. Ken was a former President of the NZ Pharmacy Guild, which represents the business interests of
community pharmacies. Ken was a forming director of Manaia PHO and now serves on the Audit, Risk & Finance
committee of Mahitahi Hauora that leads primary health care in Northland.
Ken joined the Board in September 2009 as an alternate Director and was appointed as an Independent Director of
the Company in March 2012.
Carolyn Steele, Independent Director
Carolyn Steele is a Director of Metlifecare Limited, WEL Networks Limited, Ultrafast Fibre Limited, the chair of Halberg
Foundation and a Trustee of the New Zealand Football Foundation. Until 2016, Carolyn was a Portfolio Manager at
Guardians of New Zealand Superannuation, the Crown entity managing the New Zealand Superannuation Fund. Prior
to joining the Guardians in 2010, Carolyn spent ten years in investment banking at Forsyth Barr and Credit Suisse/
First NZ Capital.
Carolyn was appointed as an Independent Director of the Company in June 2017.
Board of Directors
68
| GREEN CROSS HEALTH
Annual Report 2020 |
69
Corporate
governance
For the year ended 31 March 2020
Corporate governance and the role of the Board of Directors
The Board understands the importance of good corporate governance in maximising the value of the Company.
Accordingly, the Board is working to ensure compliance with applicable regulatory requirements and best practice,
including the NZX Corporate Governance Code.
The Board is responsible for the strategic direction and objectives of the Company and sets the policy framework
within which Green Cross Health must operate. The Group CEO is appointed by the Board and has delegated
authority for the day-to-day operations of Green Cross Health.
NZX corporate governance code
The Company has reviewed the 2019 NZX corporate governance code and is in compliance with the majority of its
recommendations. The Company is working to ensure that it complies with the code where practicable.
Compliance with the principles of the code is as follows:
Principle 1: Code of ethical behaviour
Directors should set high standards of ethical behaviour, model this behaviour and hold management
accountable for these standards being followed throughout the organisation.
The Company has adopted formal code of ethics, protected disclosure and securities trading policies, which are
available on the Company’s intranet for employees to access and are included in employee induction.
Further detail on the code of ethics and securities trading policy is provided later in this Annual Report.
The Company also has procedures in place to ensure that gifts received by employees and Directors do not result in
inappropriate influence on decision making, and that conflicts of interest are disclosed and managed.
Principle 2: Board composition and performance
To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience
and perspectives.
Board charters and management responsibility
The Board operates under a written charter and delegates authority to senior management, including the Group CEO
to run the day-to-day operations of the Company.
Director terms of appointment
The Company does not have written terms of appointment for Directors appointed prior to December 2019, which
reflects the long-standing tenure of many of the Directors. However, since December 2019, the Company has
introduced a requirement that all new Directors are provided terms of appointment as they are appointed. This
requirement was met for the appointment of the new Chair in December 2019.
70
| GREEN CROSS HEALTH
NZX corporate governance code (continued)
Principle 2: Board composition and performance (continued)
Diversity policy
The Company and the Board confirm the commitment and core responsibilities to building diversity and inclusion of
thought within the Company.
The Company is committed to attracting, developing and retaining a diverse, talented group of individuals whose
collective thoughts and contributions will help the Company to be the best healthcare company in New Zealand.
The Board is proud of the wide-ranging ethnic, cultural and gender diversity across the Group that reflects the
evolving makeup of New Zealand society. The Company believes that this diversity better enables the Group to
meet the needs of its stakeholders, including customers, patients, clients, suppliers, funding agencies, employees
and shareholders.
The Company’s diversity policy is published on its website (www.greencrosshealth.co.nz/governance). At this point,
the Company considers the objectives and measurement processes described within the policy are appropriate.
Disclosure of Board and key management gender diversity is provided later in this Annual Report.
Director, Board and Committee performance
Directors are expected to understand the Company’s operations and determine the professional development that
they require to undertake their duties. Senior management present to the Board on a regular basis on key matters
affecting the Company, enabling Directors to ask for further information and explanation as required.
The Board, led by the Chair, reviews Board and Director performance biennially against the Board charter in light of
the Company’s changing operating conditions and make improvements to Board processes and meetings when
required changes in Board focus are identified. The last review was conducted in 2019.
The Board reviews the performance of Committees annually against the Committee charters.
Chair and CEO
The Company complies with the recommendation that the Chair is not the CEO.
Principle 3: Board Committees
The Board should use Committees where this will enhance its effectiveness in key areas, while still retaining
Board responsibility.
Board Committees
For the year ended 31 March 2020, the Board had the following Committees:
• Audit Committee
• Finance and Risk Committee
• Nomination and Remuneration Committee.
These Committees operated under written charters. Additional information on the role and makeup of these
Committees is provided elsewhere in this Annual Report.
The NZX Governance Code recommends that the composition of the Nomination and Remuneration Committee
should include a majority of independent Directors. The Company complied with this requirement.
Directors who are not members of Committees are welcome to attend meetings if they wish. The Company complies
with the recommendation that Management only attends Committee meetings at invitation of the Committee.
Corporate governance
Annual Report 2020 |
71
In March 2020 the Board conducted a review of Committee structures and determined the following Committees
would be effective 1 April 2020:
• Audit and Risk Committee
• Nominations Committee
• Remuneration Committee
• Investment Committee.
Charters for all Committees were reviewed as a result and are available on the Company’s website (www.
greencrosshealth.co.nz/governance).
Takeover protocols
The Board has a takeover protocol to be followed if a takeover offer is made for the Company. In the event of a
takeover proposal, the Board will immediately establish an appropriately constituted Committee to deal with matters
arising from the proposal, including:
• Preparing the Company’s response to the proposal
• Engaging an independent advisor to advise on the merits of the proposal
• Making a recommendation to shareholders.
Principle 4: Reporting and disclosure
The Board should demand integrity in financial and non-financial reporting, and in the timeliness and balance of
corporate disclosures.
The Board has a written continuous disclosure policy.
The Company complies with the recommendation that Board and Committee charters, code of ethics and other key
governance documents are available on the Company’s website. The interim and audited Annual Reports are also
available on the website (www.greencrosshealth.co.nz/investors).
The Board has members with financial reporting knowledge and experience that enable the Board to be satisfied that
financial matters are adequately disclosed in the Company’s reporting. Some non-financial disclosures, such as the
Company’s approach to risk management including health and safety, are included within this Annual Report. The
Board considers this level of disclosure appropriate at this time.
Principle 5: Remuneration
The remuneration of Directors and Executives should be transparent, fair and reasonable.
The Director Fee pool was last approved in 2015 and is currently capped at $500,000. Directors’ fees are informally
benchmarked against market precedents. Further disclosure of the details of Directors’ fees is included in the other
Annual Report disclosures published in this Annual Report.
The Company has a remuneration policy for Directors, Officers and all employees of the Company, which outlines
its remuneration practices. The remuneration policy is available on the Company’s website (www.greencrosshealth.
co.nz/governance).
The Company has disclosed details of the remuneration arrangements for the Group CEO. Please refer Group CEO
remuneration under other Annual Report disclosures for the year.
The Company operates a share-based incentive scheme for certain senior managers, which is disclosed further in
note 22 to the Financial Statements.
Corporate governance
72
| GREEN CROSS HEALTH
NZX corporate governance code (continued)
Principle 6: Risk management
Directors have a sound understanding of the material risks faced by the issuer and how to manage them. The Board
regularly verifies that the issuer has appropriate processes that identify and manage potential and material risks.
The Board is responsible for risk management and internal control and has a framework for identifying, assessing,
controlling, monitoring and reporting on the key risks to the Company’s people, assets, reputation and
business objectives.
The Audit and Finance and Risk Committees have responsibility for ensuring that the Company’s risk management
framework, policies and procedures are effective and appropriate. The Company maintains a comprehensive risk
register and management reports to the Board regularly on health and safety issues and progress on objectives.
Risk reporting software is used to facilitate reporting by employees, capture risks, and escalate them within the
Company as required. The nature of many of the Company’s activities, including dispensing of drugs, operating retail
stores, providing medical treatment, and caring for clients in their homes, makes managing health and safety risks a
significant area of focus within the Group.
The Company is exposed to substantially the same economic, environmental, and social risks as similar businesses
operating in the same sectors in New Zealand. These risks include:
• Competitive pressure from traditional and disruptive competitor business models
• Demographic changes impacting on employee availability and customer, client and patient demand
• Regulatory changes
• Changes to Government and wider health sector funding models.
Principle 7: Auditors
The Board ensures the quality and independence of the external audit process with the Audit Committee charter
providing a framework for management of the relationship with the external auditor.
The Audit Committee is tasked with ensuring that the external audit process is independent and of high quality,
including approving any non-audit services provided by the audit firm.
The Committee is also responsible for ensuring that the audit firm or lead audit partner is rotated at least every five
years. The lead audit partner was rotated prior to the 2017 external audit.
The Company does not have an internal audit function but via the Audit and Finance and Risk Committees and the
Company’s external audit process, looks to maintain and improve risk management and internal controls.
The external auditor attends the Annual Meeting and is available to answer any questions from shareholders.
Principle 8: Shareholder rights and relations
The Board should respect the rights of shareholders and foster constructive relationships with shareholders that
encourage them to engage with the issuer.
The Company has a website to enable stakeholder access to financial and governance information. Announcements
and reports are currently available at www.greencrosshealth.co.nz/investors.
Communications from the Company are available electronically through the Company’s share registrar, Computershare.
The Company fully complies with the following recommendations:
• Shareholders have the right to vote on major decisions
• One vote per share
• Annual Meeting notice advised at least 20 business days prior to meeting.
Corporate governance
Annual Report 2020 |
73
Directors and Officers of the Company attend the Annual Meeting and are available to answer questions
from shareholders.
Board composition and structure
The Company’s current Board structure consists of 4 directors representing the 2 major shareholders (who
collectively hold 64% of the Company) together with 3 independent directors.
The Independent Directors are selected to ensure that the appropriate skills and experience required are available to
the Company.
In response to recommendation 2.8 of the NZX corporate governance code recommending boards have a majority
of independent Directors, and Green Cross Health not being compliant with this recommendation, the Board is
of the view that the existing Board structure appropriately reflects the shareholding structure of the Company and
represents the best interests of all shareholders.
In accordance with NZX listing rules, directors must not hold office (without re-election) past the third annual meeting
following the Director’s appointment or 3 years, whichever is longer. In addition a Director appointed by the Board
must not hold office (without re-election) past the next annual meeting following the Director’s appointment.
The Board holds regular scheduled meetings and follows procedures that ensure that all Directors have the necessary
information to participate in an informed discussion on all agenda items and effectively carry out their duties. The
Group CEO, Group CFO and key senior managers attend appropriate sections of Board meetings.
Board meetings
The following table outlines the number of Board meetings attended by Directors during the course of the 2020
financial year.
DirectorMeetings heldMeetings attended
Kim Ellis82
1
John (Andrew) Bagnall85
John Bolland 88
Peter Merton 87
Peter Williams88
Anthony (Tony) Edwards85
2
Margaret Millard 85
3
Kenneth Orr88
Carolyn Steele88
1
Kim Ellis was appointed on 2 December 2019 and was eligible to attend two Board meetings
2
Anthony (Tony) Edwards resigned on 2 December 2019 and was eligible to attend five Board meetings
3
Margaret Millard resigned on 28 February 2020 and was eligible to attend five Board meetings
Corporate governance
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| GREEN CROSS HEALTH
Code of ethics
The Company has established a code of ethics to govern its conduct. The code addresses ethical issues, establishes
compliance standards and procedures, provides mechanisms to report unethical behaviour and provides for disciplinary
actions. The code of ethics policy is available on the Company’s website (www.greencrosshealth.co.nz/governance).
Shareholder relations
The Company maintains a website (www.greencrosshealth.co.nz) where investors and interested stakeholders can
access financial and operational information and key corporate governance information about the Company.
The Board will ensure that shareholders are informed of major developments affecting the Company.
Information is available through the Annual Reports and shareholders are able to participate at each Annual Meeting.
Any material information affecting the Company during the intervening period is announced to the financial markets via
the New Zealand Stock Exchange (NZX) and the Company website under the Board’s policy for continuous disclosure.
Insider trading guidelines
The Board has issued guidelines to prevent insider trading to all Directors, deemed Directors, Officers and other
restricted persons of Green Cross Health. All Directors, deemed Directors, Officers and other restricted persons of
Green Cross Health must formally apply for consent to trade the Company’s securities from the Group CFO before
undertaking any sales or purchases.
The Board reviews all consents granted at each Board meeting. The Directors, deemed Directors, Officers and other
restricted persons of Green Cross Health are obliged to complete and submit disclosure notices to the NZX within
five days of any trades being settled.
Board committees
For the year ended 31 March 2020, the Board operated three standing committees described as follows. The Board
annually reviews the performance of the standing committees against written charters.
Nomination and Remuneration Committee
This Committee comprised two independent Directors and one non-executive Director, who met as required to:
• Review the remuneration of the Group CEO and approve remuneration of the Group CEO’s direct reports
• Make recommendations to shareholders for non-executive and independent Director remuneration
• Recommend Director appointments.
Remuneration packages are reviewed annually. Market data is used as a basis for establishing competitive remuneration.
The composition of the Nomination and Remuneration Committee was John Bolland (Chair), Carolyn Steele and Ken
Orr. The committee met as required.
Corporate governance
Annual Report 2020 |
75
Audit Committee
The Committee comprised two independent Directors and one non-independent Director. The Audit Committee Chair
was not the Chair of the Board. All other Directors were entitled to attend the meetings.
The Group CEO and the Group CFO attended as ex-officio members and external auditors by invitation of the Chair.
The Audit Committee also met privately with the external auditors, that is, without management in attendance. All
Audit Committee members are financially literate, with at least one member having a financial background.
The Committee met six times during the year. Its responsibilities included:
• Reviewing the scope and outcome of the external audit
• Reviewing the annual and half yearly financial statements prior to approval by the Board
• Approving the public releases of financial information
• Assessing the performance of financial management and monitoring of material corporate risk assessments
and internal controls
• Reporting the proceedings of each meeting to the Board
• Making recommendations to the Board on the appointment of the external auditors, their independence and
their fees.
The composition of the Committee was Carolyn Steele (Chair), Ken Orr and John Bolland.
DirectorMeetings heldMeetings attended
John Bolland 66
Ken Orr65
Carolyn Steele6 6
Finance and Risk Committee
The Committee comprised two independent Directors and two non-executive Directors. The Finance and Risk
Committee Chair was not the Chair of the Board. All other Directors were entitled to attend the meetings.
The Group CEO and the Group CFO attended as ex-officio members. All Finance and Risk Committee members
were financially literate.
The Committee met 11 times during the year. Its responsibilities included:
• Reviewing potential acquisition proposals, approving small acquisitions and making recommendations to the
Board for larger acquisitions
• Reviewing the Group’s annual budgets and endorsing for Board approval
• Reviewing capex proposals and making recommendations to the Board
• Reviewing risks and risk management.
The composition of the Committee was Carolyn Steele (Chair), Peter Merton, Ken Orr and John Bolland.
Corporate governance
76
| GREEN CROSS HEALTH
Finance and Risk Committee (continued)
DirectorMeetings heldMeetings attended
John Bolland1111
Peter Merton1110
Ken Orr1111
Carolyn Steele1111
Organisation structure and financial control
The Board has delegated to the Group CEO the management responsibilities of the Company.
The Board satisfies itself that adequate external insurance cover is in place appropriate to the Company’s size and
risk profile.
Gender and diversity
The following table set out a quantitative breakdown of the gender balance of the Directors and key personnel of the
Group as at 31 March 2020:
As at 31 March 2020DirectorsKey management personnel
Female1 14%2 50%
Male6 86%2 50%
Total7 -4 -
As at 31 March 2019
Female2 25%2 50%
Male6 75%2 50%
Total8 -4 -
Corporate governance
Annual Report 2020 |
77
Other annual report
disclosures
For the year ended 31 March 2020
The total annual Directors’ remuneration approved for each financial year is capped at $500,000 (last approved in 2015).
The Directors holding office during the year ended 31 March 2020 and the remuneration paid or payable to the Directors
is as follows:
DirectorTotal Fees
$
Kim Ellis (appointed 2 December 2019)40,000
John (Andrew) Bagnall35,000
John Bolland *
+#
35,000
Peter Merton
#
77,916
Peter Williams35,000
Anthony (Tony) Edwards (resigned 2 December 2019)39,000
Margaret Millard (resigned 28 February 2020)54,000
Kenneth Orr *
+#
70,000
Carolyn Steele *
+#
70,000
Total455,916
Payment allocations
Independent Chair120,000
Non-Executive Directors35,000
Independent Directors60,000
Chair of Audit Committee5,000
Chair of Finance and Risk Committee5,000
Independent Directors on Audit Committee and Finance and Risk Committee2,500
* = Audit Committee member
+ = Nomination and Remuneration Committee member
# = Finance and Risk Committee member
Group CEO remuneration
The Group CEO’s package consists of a base salary, a Short Term Incentive (STI) and a Long Term Incentive (LTI). The
STI is a maximum of 25% of current base salary and is based on quantitative criteria set annually for each financial year.
The LTI is a maximum of 23% of current base salary and is structured as a performance share rights scheme. Rights
vest based on achievement of an earnings per share target over a three year period, provided the Group CEO remains
employed on the vesting date.
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| GREEN CROSS HEALTH
Employee remuneration
The number of employees or former employees of the Group, not being Directors of Green Cross Health Limited,
who received remuneration and other benefits in their capacity as employees, the value of which exceeded $100,000
for the year ended 31 March 2020 is set out below:
Employee annual remuneration bands:20202019
$100,000 - $109,99947 40
$110,000 - $119,99924 19
$120,000 - $129,99925 18
$130,000 - $139,99918 26
$140,000 - $149,99915 19
$150,000 - $159,99916 11
$160,000 - $169,99919 18
$170,000 - $179,99913 8
$180,000 - $189,99911 13
$190,000 - $199,99912 18
$200,000 - $209,99911 10
$210,000 - $219,99914 13
$220,000 - $229,9998 9
$230,000 - $239,9993 9
$240,000 - $249,9998 2
$250,000 - $259,9995 9
$260,000 - $269,9992 3
$270,000 - $279,9993 5
$280,000 - $289,9990 1
$290,000 - $299,9992 0
$300,000 - $309,9992 1
$310,000 - $319,9992 2
$330,000 - $339,9992 0
$340,000 - $349,9990 2
$350,000 - $359,9990 1
$360,000 - $369,9990 1
$370,000 - $379,9991 1
$390,000 - $399,9991 1
$410,000 - $419,9991 1
$580,000 - $589,9990 1
$600,000 - $609,9991 0
$650,000 - $659,99910
$900,000 - $909,9990 1
Former employees included in the above bands:2016
Other annual report disclosures
Annual Report 2020 |
79
Donations
The Group made donations to the value of $13,900.
Directors’ shareholding and trades
The following table summarises:
(a) the number of shares in the Company held by Directors at 31 March 2020; and
(b) disclosures made by Directors, in accordance with section 148(2) of the Companies Act 1993, of acquisitions and
dispositions of relevant interests in shares in the Company during the year.
DirectorHolding
1 April 2019
CancelledIssuedNet trades in
the period
Interest
ceased
Holding
31 March 2020
J A Bagnall (i)45,935,821 - - - -45,935,821
J B Bolland (ii)45,935,821 - - - 45,935,821-
P M Merton (iii)45,840,983 - - - -45,840,983
P J Williams (iv)45,840,983 - - - -45,840,983
K A Orr (v)600,083 - - - -600,083
C M Steele (vi)50,000 - - - -50,000
(i) J A Bagnall is a Director of LPL Trustee Limited and therefore holds a relevant interest of 45,935,821 fully
paid ordinary shares in the company (shares are legally owned by LPL Trustee Limited).
(ii) J B Bolland was appointed Director of LPL Trustee Limited on 10 June 2013 and therefore he held a
relevant interest in 45,935,821 fully paid ordinary shares in the company. This interest was ceased during
the year.
(iii) P M Merton is a Director of Cape Healthcare Limited and a trustee of the Pentz Trust which is a 49%
shareholder of Cape Healthcare Limited. P M Merton has a relevant interest in the 45,840,983 fully paid
ordinary shares in the Company owned by Cape Healthcare Limited.
(iv) P J Williams is a Director of Cape Healthcare Limited. He has a relevant interest in the 45,840,983 fully
paid ordinary shares in the Company owned by Cape Healthcare Limited.
(v) K A Orr holds a beneficial interest of 600,083 fully paid ordinary shares in the Company (shares are legally
owned by Orrs Kaipara Pharmacies Limited and Orrs Pharmacies Limited).
(vi) C M Steele has a relevant interest in 50,000 fully paid ordinary shares in the Company.
Directors’ insurance
Green Cross Health Limited has insured all its directors against liabilities to other parties that may arise from their
positions as directors. The insurance does not cover liabilities arising from criminal actions.
Waivers
Green Cross Health relied on the class waivers from Rule 3.5.1 and 3.6.1 granted by the NZX on 19 March 2020 due
to COVID-19 - which provided listed issuers an additional 30 days to prepare and release results announcements,
and provided listed issuers an additional two months to prepare and release their Annual Report.
Other annual report disclosures
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| GREEN CROSS HEALTH
General disclosure of interest by directors
(section 140(2) of the Companies Act 1993)
The Directors of the Company named below have made a general disclosure of interest by a general notice disclosed
to the Board and entered in the Company’s interest register. General notices of interest were given by these directors
during the financial year ended 31 March 2020:
Kim Ellis – Chair of Metlifecare and the NZ Social Infrastructure Fund; a Director of Freightways, Port of Tauranga,
FSF Management Company and Ballance Agri-Nutrients; and consultant to Envirowaste Services.
John (Andrew) Bagnall – LPL Trustee Limited (Director and Shareholder), Segoura Limited (shareholder and
Director), Plan B Limited (Shareholder), Waiaro Investments Limited (Director and Shareholder), major Shareholder or
Director of various unlisted or privately controlled companies.
John Bolland – Segoura Limited (Consultant), Stellar Electronic Board Reporting System (Director), Shareholder or
Director of various unlisted or privately controlled companies.
Peter Merton – Cape Healthcare Limited (Director and Shareholder).
Peter Williams – Director of Cape Healthcare Limited, EBOS Group Limited and C.B. Norwood Distributors Limited.
Kenneth Orr – Orrs Pharmacies Limited (Director and Shareholder), Orrs Kaipara Pharmacies Limited (Director and
Shareholder), Orrs Maungaturoto Pharmacy Limited (Director and Shareholder), Orrs Rust Ave Pharmacy Limited
(Director and Shareholder), Orrs Cameron Pharmacy Limited (Director and Shareholder), Orrs Ruakaka Pharmacy
Limited (Director and Shareholder), Orrs Tui Pharmacy Limited (Director and Shareholder), Orrs Kaikohe Pharmacies
Limited (Director and Shareholder), Trustee of Mahitahi Hauora, Member of Northland Collaboration Kaupapa
(Northland DHB, Te Tai Tokerau PHO and Iwi Leaders Group), Shareholder or Director of various unlisted or privately
controlled companies.
Carolyn Steele – Chair of Halberg Foundation, Director of Metlifecare Limited, WEL Networks Limited, Ultrafast
Fibre Limited, Trustee of New Zealand Football Foundation.
Other annual report disclosures
Annual Report 2020 |
81
Shareholder
information
Shares and shareholding
The Company’s ordinary shares are listed on the NZX using the ticker code, GXH. As at 31 March 2020 the
Company had on issue 143,302,759 equity securities (as defined by the Financial Markets Conduct Act 2013) being
143,152,759 fully paid ordinary shares, and 150,000 redeemable ordinary shares payable to $0.01 and held on
trust by Life Pharmacy Trustee Company Limited on behalf of senior executive employees.
The 20 largest registered holders of quoted equity securities as at 30 June 2020 were as follows:
NameHolding%
LPL TRUSTEE LIMITED45,935,82132.09
CAPE HEALTHCARE LIMITED45,840,98332.02
JBWERE (NZ) NOMINEES LIMITED <NZ RESIDENT A/C>7,881,2605.51
FNZ CUSTODIANS LIMITED3,168,4722.21
GANET INVESTMENTS LIMITED1,627,9791.14
CUSTODIAL SERVICES LIMITED <A/C 4>1,603,3161.12
PENINSULA INVESTMENT TRUST LIMITED <PENINSULA INVESTMENT A/C>1,510,0001.05
GRANT CLAYTON BAI & CHRISTINA BAI & BARRIE MCCORMICK CAMPBELL
<GRATTON WILSON A/C>
1,066,2240.74
THOMAS LAI & CAROLYN PAMELA LAI & KATHLEEN YEE
<THOMAS & CAROLYN LAI FAMILY A/C>
994,9850.70
FRANCES ANN VUKSICH & WALTER MICK GEORGE YOVICH
<MARK & FRANCES FAMILY A/C>
975,0000.68
HSBC NOMINEES (NEW ZEALAND) LIMITED - NZCSD <HKBN90>923,1540.64
KIM CHRISTOPHER WILKINSON & MARIE ELEANOR WILKINSON795,1200.56
ELIZABETH ANN MCAULAY687,0220.48
JAMES STEVE BEGOVIC & KERRY ELLWYN BEGOVIC & KATHERINE MARINA PALIN
<BEGOVIC FAMILY A/C>
560,0000.39
MICHAEL WALTER DANIEL & NIGEL GEOFFREY LEDGARD BURTON & MICHAEL
MURRAY BENJAMIN <WAIRAHI A/C>
550,0000.38
PIERRE GORDON PIERCE COTTER537,0500.38
JANE STEWART DUNN500,0000.35
FORSYTH BARR CUSTODIANS LIMITED <1-CUSTODY>479,5420.33
JPMORGAN CHASE BANK NA NZ BRANCH-SEGREGATED CLIENTS ACCT - NZCSD
<CHAM24>
474,8040.33
NEW ZEALAND DEPOSITORY NOMINEE LIMITED <A/C 1 CASH ACCOUNT>453,5870.32
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| GREEN CROSS HEALTH
Shares and shareholding (continued)
Substantial security holders
The following persons are deemed to be substantial product holders in accordance with section 274 (1) of the
Financial Markets Authority Act 2013:
NameHolding%
LPL Trustee Limited45,935,821 32.09
Cape Healthcare Limited45,840,983 32.02
Shareholding spread
Green Cross Health Limited’s shareholding spread as at 30 June 2020 is as follows:
Size of holdingHolders%Securities%
1-999367 19.1 172,405 0.12
1,000 - 9,999985 51.2 3,309,850 2.31
10,000 - 99,999503 26.1 14,184,355 9.91
100,000 - 499,99953 2.8 10,329,7637.22
500,000 - 999,9999 0.5 6,522,331 4.56
1,000,000 and over8 0.4 108,634,055 75.89
Total1,925 100.0 143,152,759 100.00
Shareholder information
Annual Report 2020 |
83
Registered office
Green Cross Health Limited
Ground Floor, Building B
602 Great South Road
Ellerslie, Auckland 1051
Telephone: +64 9 571 9080
Board
K Ellis
Independent Chair
J A Bagnall
Non-Executive Director
J B Bolland
Non-Executive Director
P M Merton
Non-Executive Director
P J Williams
Non-Executive Director
K A Orr
Independent Director
C M Steele
Independent Director
Officers
Rachael Newfield Group CEO
Ben Doshi Group CFO/Company Secretary
Auditor
KPMG
KPMG Centre
18 Viaduct Harbour Avenue
Auckland
Bankers
Bank of New Zealand
80 Queen Street
Auckland 1010
Websites
www.greencrosshealth.co.nz
www.access.org.nz
www.lifepharmacy.co.nz
www.livingrewards.co.nz
www.thedoctors.co.nz
www.unichem.co.nz
Share registrar
Computershare Investor
Services Limited
Private Bag 92119
Auckland 1142
Level 2, 159 Hurstmere Road
Takapuna, Auckland 0622
Managing your
shareholding online:
To change your address, update
your payment instructions and
to view your registered details
including transactions, please visit:
www.investorcentre.com/nz
General enquiries can be
directed to:
enquiry@computershare.co.nz
Telephone: + 64 9 488 8777
Facsimile: + 64 9 488 8787
Please assist our registrar by
quoting your CSN
or shareholder number.
Investor relations
For investor relations enquiries:
Phone: 09 571 9088
Email: investorrelations@gxh.co.nz
Company directory
Green Cross Health Ltd
Ground Floor, Building B
602 Great South Road
Ellerslie, Auckland 1051
03843
Private Bag 11906
Ellerslie, Auckland 1542
www.greencrosshealth.co.nz
Working together
to support healthier
communities
---
NOTICE OF ANNUAL MEETING
Notice is hereby given that the 2020 Annual Meeting of Shareholders of Green Cross Health
Limited (“the Company”) will be held at the Ellerslie Event Centre 80 Ascot Avenue
Greenlane Auckland on Monday, 24
th
of August 2020 at 2.30 pm.
BUSINESS:
A. Chair’s Address
B. Group Chief Executive Officer’s Address
C. Financial Statements and Reports
D. Resolutions
To consider and, if thought fit, to pass the following ordinary resolutions:
1. That Kim Ellis be elected as a Director of the Company.
2. That Peter Williams be re-elected as a Director of the Company.
3. That Andrew Bagnall be re-elected as a Director of the Company.
4. That John Bolland be re-elected as Director of the Company.
5. That Carolyn Steele be re-elected as Director of the Company.
6. To authorise the Directors to fix the remuneration of the Auditor for the ensuing
year.
E. To consider any other matter that may be properly brought before the Annual
Meeting.
Proxies and voting
Any shareholder who is entitled to attend and vote at the meeting may instead appoint a
proxy to attend and vote on their behalf. The Chairman of the Company is willing to act as
proxy for any shareholder who may wish to appoint him for that purpose. The Chairman
intends to vote any undirected proxies in favour of the resolutions.
If you wish to appoint a proxy please complete the enclosed proxy form and mail to:
Computershare Investor Services limited
Private Bag 92119
Auckland 1142
Alternatively you can complete a proxy form online at www.investorvote.co.nz
you will
need your CSN/security holder number and FIN to vote on line.
In either case, for your vote to be effective, it must be received not less than 48 hours
before the time of holding the meeting.
2
Note
Biographical information relating to the directors standing for election and re-election at
the meeting can be found below.
Afternoon Tea will be served at the conclusion of the meeting.
For and on behalf of the Board
Benjamin Doshi
Chief Financial Officer/Company Secretary
Dated: 24 July 2020
3
Biographical information relating to the Directors standing for
election and re-election:
Kim Ellis
Independent Director
Kim Ellis is a widely experienced Chief Executive best known for his 13 years at the
helm of Waste Management NZ Ltd, culminating in the company’s sale in 2006.
During his tenure he led 40 acquisitions and built a successful business in Australia.
Kim’s earlier career encompassed a number of market sectors including health,
manufacturing, distribution, transport, property, agriculture and fashion.
Since 2006 Kim has been active in governance. Kim is currently Chair of
Metlifecare and the NZ Social Infrastructure Fund; a Director of Freightways, Port
of Tauranga, FSF Management Company and Ballance Agri-Nutrients; and
consultant to Envirowaste Services.
Kim holds first class honours degrees in Chemical Engineering and Economics. Kim
was appointed as Chair of the Company in December 2019.
Peter Williams
Non-Executive Director
Peter Williams is an executive of the Zuellig Group which has significant health
care interests in Asia Pacific. In this capacity he is a Director for a number of
companies including, in New Zealand, EBOS Group Limited and C.B. Norwood
Distributors Limited. Peter is also a Director of Cape Healthcare Limited.
Peter was appointed as a Non-Executive Director of the Company in May 2017.
Andrew Bagnall
Non-Executive Director
Andrew Bagnall holds a Commerce Degree from Otago University and an MBA from
Michigan State University. Andrew was a significant investor in Life Pharmacy
Limited and following the merger with Pharmacybrands Limited (later renamed
Green Cross Health Limited) has continued to hold a significant shareholding in the
merged entity.
In Andrew's earlier career, he was a leading figure in the New Zealand travel
industry establishing and managing Gullivers Travel Group which became the major
distributor of wholesale and retail travel services in New Zealand. Gullivers Travel
Group eventually listed on the NZX and Australian stock exchanges.
Andrew was also involved in co-developing one of New Zealand’s first commercial
retirement villages. Andrew now runs his own private investment company
4
Segoura, which manages investments in various businesses, and he maintains a
keen interest in sports car racing.
Andrew was appointed as a Non-Executive Director of the Company in August 2009.
John Bolland
Non-Executive Director
John Bolland has more than 25 years business experience in private equity, senior
management and corporate finance. This includes 14 years with Ernst & Young,
where he had Partner level responsibility in Corporate Finance, Audit and Business
Advisory. John holds a Bachelor of Commerce from the University of Auckland and
is a member of the New Zealand Institute of Chartered Accountants.
John was appointed as a Non-Executive Director of the Company in August 2009.
Carolyn Steele
Independent Director
Carolyn Steele is a Director of Metlifecare Limited, WEL Networks Limited,
Ultrafast Fibre Limited, the chair of Halberg Foundation and a Trustee of the New
Zealand Football Foundation. Until 2016, Carolyn was a Portfolio Manager at
Guardians of New Zealand Superannuation, the Crown entity managing the New
Zealand Superannuation Fund. Prior to joining Guardians in 2010, Carolyn spent
ten years in investment banking at Forsyth Barr and Credit Suisse/First NZ Capital.
Carolyn was appointed as an Independent Director of the Company in June 2017.
---
Your secure access information
Control Number:
PLEASE NOTE:
www.investorvote.co.nz
Green Cross Health Limited
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Scan the QR code to vote now.
Online
www.investorvote.co.nz
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By Fax
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For all enquiries contact
+64 9 488 8777
Lodge your proxy
Proxy/Voting Form
Lodge your proxy online, 24 hours a day, 7 days a week:
CSN/Securityholder Number:
You will need your CSN/Securityholder Number and postcode or country of residence (if outside New Zealand) to
securely access InvestorVote and then follow the prompts to appoint your proxy and exercise your vote online.
For your proxy to be effective it must be received by 2:30pm on Saturday 22 August 2020
Go online to vote, or turn over to complete the form
How to Vote on Items of Business
All your securities will be voted in accordance with your directions.
Appointing of Proxy
As a shareholder you may attend the meeting and vote, or you may appoint a
proxy to attend the meeting and vote on your behalf. A proxy can be any person
of the shareholder’s choice and does not have to be a shareholder. The Chair,
or any other Director, is willing to act as a proxy for any shareholder who
wishes to appoint him or her for that purpose. Any undirected votes in respect
of a resolution, where the Chair or any other Director is appointed proxy, will be
voted in favour of the relevant resolution, other than when he or she is
prohibited from voting on that resolution. To appoint a proxy, please enter the
name of your proxy in the space allocated in ‘Step 1' overleaf of this form. If you
do not name a person as your proxy or your named proxy does not attend the
meeting, the Chair will be appointed your proxy and will vote in accordance with
your express direction (subject to any voting prohibitions), and any undirected
votes will be voted in accordance with the Chair's discretion.
Voting of your holding
Direct your proxy how to vote or give the proxy discretion as to how to vote on
the resolutions by completing FOR, AGAINST, ABSTAIN or PROXY DISCRETION
box on ‘Step 2’ overleaf. If the form is returned without a direction as to how the
proxy shall act on a resolution the proxy will exercise the proxy’s discretion as
to whether to vote and, if so, how.
If you propose to ATTEND the Annual Meeting:
Bring this admission card, proxy form and voting instructions/ballot paper to the
share registry at the entrance to the meeting.
If you do NOT propose to attend the Annual Meeting:
Please complete and sign the proxy and voting instruction sections in ‘Step 1’
and ‘Step 2’ overleaf of this form, sign the form and return it to the share
registrar.
Signing Instructions
Individual
Where the holding is in one name, the securityholder must sign.
Joint Holding
Where the holding is in more than one name, all of the shareholders should
sign (on behalf of all shareholders). In the case of joint shareholders, if the
shareholders appoint different proxies, the vote of the proxy appointed by the
first shareholder will be counted.
Power of Attorney
If the form is signed under a power of attorney, a certificate of non-revocation
must be completed and a certified copy of the power of attorney must be
produced to the company unless it has already been noted by the company.
Companies
This form must be signed by a duly authorised Director or duly authorised
officer or attorney. Please sign in the appropriate place and indicate the office
held.
STEP 1
ATTENDANCE SLIP
SIGN
Contact Name Contact Daytime Telephone Date
STEP 2
hereby appointof
or failing him/herof
Proxy/Corporate Representative Form
Appoint a Proxy to Vote on Your Behalf
I/We being a shareholder/s of Green Cross Health Limited
as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions at the Annual Meeting of Shareholders of Green
Cross Health Limited to be held at 2:30pm, Monday 24 August 2020, at the Ellerslie Event Centre, 80 Ascot Avenue, Greenlane, Auckland and at any adjournment
of that meeting and as my proxy thinks fit on any additional resolution or amendment to resolutions so as to give effect to my/our intention as set out below where possible.
Please note: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf and your votes will not be counted.
Unless otherwise instructed, the proxy will vote as he/she thinks fit.
Voting Instructions/Voting Form
Signature of Securityholder(s) This section must be completed.
Securityholder 1
or Sole Director/Director
Securityholder 2
or Director (if more than one)
Securityholder 3
Annual Meeting of Shareholders of Green Cross Health Limited
to be held at 2:30pm, Monday 24 August 2020, at the Ellerslie
Event Centre, 80 Ascot Avenue, Greenlane, Auckland.
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ForAgainstAbstain
Proxy
Discretion
Ordinary Resolutions
1.That Kim Ellis be elected as a Director of the Company.
2.That Peter Williams be re-elected as a Director of the Company.
3.That Andrew Bagnall be re-elected as a Director of the Company.
4.That John Bolland be re-elected as Director of the Company.
5.That Carolyn Steele be re-elected as Director of the Company.
6.To authorise the Directors to fix the remuneration of the Auditor for the ensuing
year.
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