Our final customer must
come first: our goal is to
provide a professional and
efficient interface between
the brands or services we
supply and end-users; we
concentrate on service and
quality, interacting across
multiple market sectors –
by delivering this we will
be successful Annual Report 2007
1
Contents
Highlights
Financial Highlights
Financial Performance
Customer First
Chairman’s Report
Managing Director’s Review
Healthcare
Heath Support Ltd
Scientific
PRNZ
Board of Directors
Corporate Governance Statement
Directors’ Report
EBOS Group Limited Financial Report
Directors’ Responsibility Statement
Audit Report
Income Statement
Balance Sheet
Statement of Recognised Income & Expense
Cash Flow Statement
Notes to the Financial Statements
Additional Stock Exchange Information
EBOS Group Limited Directory
1
2
3
4
6
8
10
14
15
16
19
20
22
26
26
27
28
29
30
31
32
67
68
2
Highlights of the year
Excellent market
penetration for our
suppliers through the
EBOS business model
offering one route to
multiple sales and
marketing channels.
Strong performance
by group businesses in
New Zealand and Australia.
A successful rights issue
in late 2006 that was well
supported by shareholders.
A quantum step forward
with the post-balance date
acquisition of PRNZ Ltd.
1
Financial highlights
Solid 2007 results,
despite demanding
market conditions and
rising costs, with revenue
at another record mark
of $307 million.
Earnings per share at a
weighted 31.7 cents per
share on higher capital.
Strong Total Shareholder
Return, with annual
declared dividend
maintained at 22.5
cents per share on the
increased capital.
Substantial reduction in
debt as at 30 June 2007,
as a precursor for the
strategic purchase of
PRNZ Ltd subsequently
achieved within
conservative debt/equity
ratios.
2
Financial Performance
307.3
300.5
224.0 227.7
281.0
11.5
10.3
9.0
8.4
6.4
5.5
5.1
4.1
7.1
6.1
2003
2004
2005
2006
2007
2003
2004
2005
2006
2007
2003
2004
2005
2006
2007
Revenue ($ millions)
Profit after tax ($ millions)
Total dividends paid ($ millions)
Financial Performance Trends
Revenue ($’000)
Profit before tax expense ($’000)
Profit attributable to members of the
parent entity ($’000)
Shareholders’ interest ($’000)
Dividends paid ($’000)
Dividends paid cents per share
Earnings per share
Interest cover
Net interest bearing debt to net interest
bearing debt plus equity
Equity to total assets
Current ratio
Asset backing per share
NZ IFRS
2007
2006
2005
NZ GAAP
2004
2003
307,276
14,942
300,486
17,111
280,983
14,666
227,657
12,366
224,017
9,625
10,319
94,150
7,092
22.5c
31.7c
7.8
9.5%
68.6%
2.6 to 1
256c
11,548
55,763
6,074
22c
41.8c
6.9
42.3%
41.4%
1.4 to 1
202c
8,960
49,512
5,516
20c
32.5c
7.7
40.2%
45.2%
1.6 to 1
179c
8,403
46,901
5,069
18.4c
30.5c
10.1
28.2%
52.2%
1.8 to 1
170c
6,416
43,286
4,125
15c
23c
7.0
31.0%
48.1%
1.6 to 1
158c
3
Customer First
The success of EBOS Group is founded on our passion for excellence of customer service.
Our commitment to customers is to provide the right product in the right place at the right time.
Based on this steadfast obligation we seek to build lasting business partnerships across:
• Procurement of Healthcare and Scientific products from our suppliers.
• Sales and marketing into multiple sales channels on behalf of brand agencies and
product partners.
• Supply chain logistics on a national basis in New Zealand, Australia and the Pacific Islands.
We again achieved excellent performance by our in-house
customer service team based at Albany, Auckland, where the
answer rate by our customer services team exceeded baseline
benchmarks. EBOS believes that customers welcome the ability
to be answered by a real person with a real understanding of the
business.
Dedicated and specialised customer service teams focused on
specific EBOS New Zealand markets provide a critical interface
between sales and operations, with teams devoted to channels
in Hospital, Primary Care, Dental, Consumer, Aged Care and
Rehabilitation. Health Support Ltd and EBOS Australia operate a
similar personalised service for its business activities.
EBOS New Zealand is pursuing ongoing improvement by
developing a wider perspective on service delivery. Initiatives
include the proactive provision of information to customers
on estimated-time-of-arrivals for overseas shipments, which
will enable our customers to more effectively plan restocking
schedules, along with alignment between internal operational
processes and EBOS’ external service offering.
Ongoing reassessment and improvement to our internal systems
and processes is continuing as we offer enhancements to our
existing services.
4
Our pivotal position: connecting brands with buyers in multiple market channels
DhB’s/
private surgical
Gp’s/pho’s/a&e’s/
occupational (NZ)
hospital
pharmacy/Grocery/
Baby/Variety
primary Care
Consumer
Gp’s/
Rest home/
hospital (aus)
primary Care
equipment
University/
scientific
Dental
aged Care & Rehab
Dentists/
oral specialists/
Government/Labs
International
Rest homes/
Community Care/
specialist Rehab Centres
papua
New Guinea/
pacific Islands
As at 31 March 2007
5
Chairman’s report
2007 will be a historically significant year for the EBOS Group. Not just because the revenues and underlying
profitability for the last financial year continued to set a new record, but rather more so because of the
$86.25m acquisition of PRNZ Ltd.
PRNZ is a group comprising Propharma and Healthcare Logistics and is a successful New Zealand private
organisation with proven excellence in pharmaceutical distribution and logistics that are complementary to
existing activities by EBOS.
Despite a demanding business environment, EBOS Group’ revenue for the 2006/2007 year was $307.27m,
a 2.25% increase on last year’s record $300m mark. This growth was driven by the strong performance of our
transtasman healthcare and scientific operations and the benefits of operating on a common business model
for both Australia and New Zealand.
The post-balance date acquisition of PRNZ will catapult group annual revenues to approximately $1.1billion and
the activities of operating companies Propharma and Healthcare Logistics across both the retail pharmacy and
healthcare will take the enlarged EBOS Group to the forefront of the New Zealand healthcare supplies market.
The EBOS board is confident that the combined company’s strength will deliver substantial benefits for
shareholders and customers alike, delivering significant revenue and earnings momentum and improving the
risk profile of the group.
Results
In the year under review, our results have shown up the volatility
expected as a result of our adoption last year of the New Zealand
Equivalents to International Financial Reporting Standards (IFRS).
This potential for earnings volatility arises largely from the
treatment of adjustments for derivatives and the translation to
New Zealand dollars of the results of our Australian operations.
In the year ended 30 June 2007, profit before interest and tax
was $17.13m, which compares with $20.03m in 2006. Net profit
for the period was $10.32m compared with $11.55m, a decline
of 10.6% and influenced by the significantly higher NZD/AUD
exchange rate, which was approximately AUD$0.91 at balance
date 2007 versus approximately AUD$0.82 a year earlier.
However, after adjusting for the aforementioned variables, the
2007 result adjusts to $11.69m, which is 9.4% higher than the
adjusted 2006 result.
Earnings per share this year was a weighted 31.7 cents on
increased capital.
Balance sheet
A sound financial position has been maintained by EBOS, with a
solid increase in net assets a feature of this year’s balance sheet.
Total group assets increased to $137.23m from $134.73m, based
on current assets of $90.02m ($86.25m) and non-current assets
of $47.20m ($48.48m). Current liabilities declined significantly to
$34.97m from $62.03m largely due to the substantial reduction
in bank loans to $1.1m from $22.2m following repayments made
possible by the success of the rights issue made in December
2006. For the same reason non-current liabilities were lower at
$8.10m ($16.94m), reflecting a reduction of $8.81m in longer
term bank loans.
Net assets increased to $94.15m from $55.76m in the previous
year.
Total borrowings stood at $9.91m at year end compared with
$42.73m in 2006. Net interest-bearing debt, to net interest-
bearing debt plus equity, was reduced to 9.5% from 42.3%
in 2006.
Operating net cash flow was $7.25m compared with $8.35m
last year.
Post balance date
PRNZ Ltd became a priority project in the second half, resulting in
the biggest acquisition in EBOS Group history taking place, post-
balance date. The consolidation of EBOS and PRNZ will result in a
substantially larger group and bring an increase in total group debt
to approximately $70m.
The total $86.85m acquisition is being funded by a mixture of
debt and equity:
• Debt funding of approximately $43m from ANZ
Institutional Bank; and equity of approximately
$43m, arising from the issue of an estimated
9.4 million new EBOS shares to a number of
investors. These transactions comprise:
– $14.25m by the issue of 3.0m shares at $4.75
to the vendors of PRNZ.
– $11.75m by the issue of 2,526,594 EBOS
shares to financial institutions and habitual
investors at a price of $4.65 per share.
– $17.5m by the issue of 3.77m shares to
existing EBOS shareholders through their
participation in the Share Purchase Plan
mailed to shareholders in early September.
Holders of EBOS shares as at 5.00 pm on
4 September 2007 are entitled to participate
in the SPP and shareholders are reminded that
the closing date for participation in this capital
raising is 5.00 pm 28 September 2007. Shares
issued under the SPP will be allotted no later
than 4 October 2007. Brokerage costs related
to the SPP are being met by the company.
The increase in debt to almost $70m, from the very low level
of $9.1m pre-acquisition, is significant, however the overall
leverage and interest cover will remain well within prudent
6
levels. Total interest bearing debt to interest bearing debt plus
equity will increase to 33% which is comfortably lower than the
corresponding ratio before the 2006 rights issue. Total debt to
enterprise value will be approximately 25%. Projected interest
cover is approximately 5 times.
Dividend
The directors are pleased to report that dividend payments will
be maintained at the higher level set in 2006 and will also
include shares issued to expand the capital base including recent
placements and the SPP. The final dividend of 13 cents per share
is payable on 26 October 2007 and, with the interim dividend of
9.5 cents per share, comprises a total of 22.5 cents per share for
the year. This year’s total dividend payment is $9.51m ($6.22m for
the 2006 year).
Board
Harry Vollemaere retired from the Board at the 2006 Annual
Meeting held on 9 November 2006 having made a significant
contribution during 12 years service as a Director.
Sarah Ottrey B.Com was appointed as an independent director on
18 September 2006. Sarah has a strong background in marketing
and we are already seeing the benefits of her experience around
the Board table.
Peter Merton, Chief Executive of PRNZ Ltd, has accepted an
invitation to join the Board and will bring his considerable
knowledge of the pharmaceutical distribution and logistics
industries gained over several years.
Employees
This year’s results once again reflect the strong commitment made
by our management and staff in New Zealand, Australia and
Papua New Guinea. Their ability to maintain traction in changing
economic conditions and achieve positive go-forward is an
underlying driver of the company’s success and the Board thanks
them most sincerely for their efforts. I would particularly note the
efforts made by Mark Waller our CEO, and Dennis Doherty, Chief
Financial Officer, in bringing the PRNZ acquisition to a successful
conclusion. Whilst EBOS is no stranger to acquisitions, the scale
and complexity of this one far exceeded anything we have tackled
before.
Outlook
In the coming year, EBOS will do much more than sustain
its growth path in the core healthcare markets. The PRNZ
transaction will introduce a significant broadening of the
group’s business base, with PRNZ’s market leading position in
wholesale pharmaceutical supplies and pre-wholesale logistics
complementing the existing EBOS businesses.
Based on the results for the year ended 30 June 2007, the
consolidation of PRNZ is projected to increase EBOS turnover by
approximately 270% on an annualised basis to NZ$1.1bn and
pre-tax earnings by almost 50%.
The acquisition follows the most disruptive period in foreign
exchange markets since the float of the New Zealand dollar. We
have seen the excellent June year improvement in transtasman
earnings partly “lost in translation”. Whilst we continue to see our
future in the dynamic Australian market as particularly bright, we
also consider that the integration of PRNZ, an entirely domestic
New Zealand business, should help to mitigate currency risk.
A continuation of the improved financial performance of EBOS
Australia under the guidance of Tony Norris was a very pleasing
feature of our 2007 performance. We anticipate further business
development, and are close to bringing two other deals to a
conclusion which will further bolster earnings.
The Board thanks shareholders for their positive support of recent
capital initiatives. Shareholders can be assured that increasing
total shareholder value remains a key objective of your Directors
on your behalf.
Rick Christie
Chairman of Directors
7
Managing Director’s review
For many years by way of growth and strategic acquisitions, EBOS Group Ltd has been moving to
offset the reality of being based in a relatively small national market.
Our first step outside of the New Zealand economy was achieved when EBOS purchased an initial
interest in a healthcare distribution business operating in eastern Australia. From that starting position,
the group has evolved into a robust transtasman structure operating multiple Healthcare and Scientific
businesses on a group wide financial reporting system based in Christchurch, New Zealand.
The Group is now reaping the benefits of the significant investment made into the Australian
operations over several years, with the recent 2005-06 reorganisation of Australian healthcare
activities into EBOS Australia producing stronger earnings growth.
Through incremental steps, EBOS has continued to grow revenue and earnings in each of the last
seven years.
A fundamental goal is to increase shareholder value in alignment with this trend.
The key to the company’s consistency in financial performance and reliability of dividends for its
investors has been to achieve operational excellence – itself based on the highest possible levels of
customer satisfaction – in the ongoing businesses, whilst newly acquired businesses must be earnings
accretive from day one.
Supply chain initiatives
At the heart of our operations is our known ability to cost-
effectively move suppliers’ products through a distribution supply
chain and into multiple business channels.
Performance 2006-07
The year’s underlying net profit for the group exceeded growth in
revenue. Overall cost increases flowed through as higher labour
and transport costs.
EBOS undertook several initiatives to meet customer needs,
including:
The benefit of measures to improve supply chain efficiencies will
be more evident in the current year.
• Relocation of the New Zealand procurement
team to Auckland to align with sales and
marketing.
• Opening of new warehousing facilities.
• Out-sourcing of a planned expansion of supply
chain logistics in the South Island.
• Investment in new forecasting and inventory
monitoring software.
Platform for growth
The EBOS acquisition strategy is founded on the principle of
investing only in businesses that are already proven performers in
their field and capable of future growth.
EBOS Group was further positioned in the June 2007 year to
provide a platform for significant expansion. In December $36.8m
was raised by way of a rights issue with the net proceeds used to
reduce bank borrowings. This placed the Group in a strong position
to fund further growth initiatives:
• The purchase of a successful Australian-
based healthcare distribution business, Vital
Medical Supplies (Australia) Pty Ltd, which is a
nationwide supplier focusing on primary care.
• The quantum step in operational size taken in
August 2007 with the acquisition of PRNZ Ltd.
• Further potential acquisitions in healthcare
and scientific product distribution are under
consideration.
Healthcare
EBOS New Zealand has sustained a growth path in Healthcare
sector sales with revenue of $273.9m from our combined New
Zealand, Australia and Pacific Islands operations.
EBOS New Zealand, led by Kelvin Hyland, General Manager,
sustained robust operating results in a very competitive market.
This was despite lower margins for the division’s Hospital
business unit. The Primary Care business unit maintained its
pre-eminent market position and along with the Dental business
enjoyed another year of growth. The Consumer and Aged Care/
Rehabilitation units both performed well.
EBOS Australia has again performed strongly with excellent gains
in earnings before interest and tax under the leadership of Tony
Norris, the general manager of EBOS Group Pty Ltd. The successful
restructuring of the business model along the lines proven in
New Zealand has been one of the keys to its success.
During the course of 2006-07, the group acquired Vital Medical
Supplies, a first-rate family-owned business in the Australian
medical supplies market. It will continue to operate under its own
successful brand.
International returned to a more normal trading cycle after a year
or two of spectacular growth.
Health Support Ltd, led by its general manager Greg Managh,
is performing consistently well in the early years of a long term
supply contract with Auckland regional district health boards
and took a leadership role in EBOS Group supply chain logistics
management. We forecast further growth for Health Support.
8
In summary we have an excellent team that is capable of
satisfying the multiple goals of shareholders, customers, suppliers
and staff.
We relish the challenge and opportunities available to EBOS Group
over the next three to four years.
Mark Waller
Managing Director and Chief Executive Officer
Scientific
Under Derek Brown, overall Scientific group managing director,
Australia-based Quantum Scientific achieved excellent sales and
earnings growth. The vibrancy of the Australian life science sector
is an important generator of demand for scientific equipment.
However, the last year was a transition period for the New
Zealand subsidiary Global Science and Technology Ltd which led to
lower revenue and profit overall for the Scientific group.
Angus Cooper has made a significant contribution in support of
all Business Units and on a range of exciting projects as General
Manager Business Development.
The future
EBOS has much to look forward to as we step up in both business
size and future opportunity. We see the New Zealand and
Australian economies as likely to emerge from the present cycle
of uncertainty in good shape. Investors will become more aware
of value and asset risk whilst for our part we expect to see more
realistically priced assets.
We are focussed on our immediate and core values:
• Building on our acquisition of PRNZ as we seek
to add value to this exciting enterprise within
EBOS Group.
• The completion of further Healthcare and
Scientific sector investments that further
enhance our market position and expand our
offerings to customers.
• The revitalisation of the New Zealand scientific
business.
• Start to consolidate the multiple IT platforms
currently at use in the group.
• Embracing change in demanding times.
9
Healthcare
Group activities in Healthcare produced increased revenue and earnings and contributed
positively to the overall group result for 2007.
The strong market position of EBOS in the Australasian healthcare sector is founded on the
purchasing power of a unified business model. The same strength provides international
suppliers and manufacturers with ready access to key markets.
EBOS New Zealand
Achieving incremental revenue growth depends on our ability to
efficiently meet the supply needs of medical professionals and
their customers across several business channels.
The EBOS product range of healthcare products is huge and
exceeds 50,000 stock units. Meeting the diverse needs of medical
professionals working across a wide healthcare spectrum creates a
complex market place with expectations of high levels of service.
Accordingly, we are moving to improve systems and processes
that at times came under pressure from the exceptional growth of
the recent years. A new initiative is the appointment of a Service
Delivery Manager.
Our proven marketing solution to multiple sales channels is to
adopt a specialist approach to different markets. Separate business
units led by individual managers, each supported by dedicated
sales teams and product specialists, operate in five core markets.
• hospitals – This year lacked the avian flu related
sales of 2006 and there was softer demand
for medical equipment. Health budgets remain
under considerable pressure and we expect the
centrally led drive for cost effectiveness among
District Health Boards to continue. Demanding
market conditions have sustained margin
compression. EBOS is adapting to the market
conditions of DHBs wanting “more from less”.
The focus on achieving a strong position in
theatre, ED, ICU and infection control products
has resulted in solid sales of our core brands.
Future growth will include a focus on niche
electromedical equipment.
• primary Care –The devolution of first-phase
healthcare to private sector Primary Health
Organisations is now at an advanced stage.
EBOS is working to establish strategic alliances
with larger buying groups of GPs and wellness
centres. EBOS offers a wide range of products
spanning woundcare and allergy products
through to clinical diagnostic equipment.
Excellent sales growth in the 2007 year reflected
the strong market presence of this business
unit. Our success in Primary Care is based on a
strong partnership with leading brands including
Welch Allyn diagnostics and Smith & Nephew
woundcare.
• Consumer – Our retail healthcare business
unit operates in a highly dynamic and exciting
market place and again demonstrated a high
level of commitment in achieving very good
results in an increasingly competitive and
tightening market. During the year, consumer
spending was again impacted by higher interest
rates, food price inflation and petrol price surges
yet EBOS Consumer products performed well.
Our market relationships are assisting the strong
growth by Mentholatum and the EBOS-owned
Antiflamme brand.
Baby products such as the popular retail brand
AVENT performed strongly with our product
knowledge supporting excellent sales growth.
The unit’s biggest market for retail products
is Pharmacy, where EBOS account managers
continue to build strong partnerships with large
buying groups such as Pharmacy Brands, Life
Pharmacy and Radius Pharmacy.
There is strong growth in Variety stores, such as
the FTC department store group. In the Grocery
channel EBOS is performing well in the ‘fast
moving consumer goods’ market where we are
supplying retail supermarket chains operated
by the Foodstuffs and Progressive Enterprises
groups.
• Dental – The dental business unit had a very
strong year and is benefiting from industry
consolidation trends and a drive for high quality
brands and leading edge technology that
complement the brand position of the practice.
The market promotion of the SciCan range of
high speed sterilisation units, with promotional
partner BMW, was a huge success. The KaVo
and Gendex ranges continued to be brand
winners and our strategic focus on premium
quality equipment sales differentiates EBOS in
the market. Major institutional refurbishment
projects will be key priorities in the current year.
• aged Care/Rehabilitation – Driven by
demographic changes this unit enjoyed
exceptional revenue growth. Margin compression
was intense and influenced partly by static
levels of funding. The trend towards sector
consolidation in retirement villages under
corporate ownership has led to opportunities
for increased business based on our complete
supply solution across consumables and
equipment. Village operators are seeking quality
products that complement their own brand.
Our seating and mobility products represented in
the rehabilitation portfolio continued to perform
exceptionally well led by the Quickie and Jay
brands.
10
11
The Consumer Division produced a steady result with little to
compare against historically due to the prior operational structure.
The EBOS owned Allersearch brand continued to lead in the
market in Asthma management whilst new products are currently
being sourced and launched.
Operational consolidation also took place during the third quarter
with a move to a new office and warehouse complex in Brisbane
in conjunction with our fellow group company Quantum Scientific.
Healthcare
EBOS Australia
EBOS Group Pty produced an excellent result following its first
full financial year following the major restructure of the business
activities that took place in the second half of the
2005-06 year.
Sales grew organically in excess of 9% and gross margin was
improved. With a 10% reduction in operating expenses this
resulted in an increase in pre-tax profit of 47%.
The restructure resulted in improved customer focus in the
respective healthcare sectors. This allowed a clearer direction for
the Company in its sales and marketing strategies. The national
Customer Service team was restructured and sales management
teams were aligned accordingly to their respective divisions.
The Primary Division remained the backbone of the business
accounting for approximately 50% of the Company’s sales.
Customer relationships were strengthened and strategic new
business located and secured. Meeting the customer needs with
product focus was also a highlight for the year.
The Hospital Division produced an excellent result due mainly to
the continuing success and growth of its major exclusive agency
representations. This is expected to continue with the recent
addition of the Eschmann range of operating theatre equipment.
Likewise the Aged Care Division saw tremendous growth with a
complementary mix of both consumable and capital equipment
sales. Becoming a true “partner” with many of the larger aged
care providers has been a key to our success. This has involved
solution finding in respect of product selection and service
provision. This strategy has been complemented by strategic
association with certain major suppliers to the industry.
The pure essence of a family business
In July 2007, EBOS Group acquired an exciting Australian healthcare
company, Vital Medical Supplies (Australia) Pty Ltd, with a business culture
that we admire.
“It’s about people together,” is the way Pieter and Marijke Vriens, the
brother and sister management team behind the exceptional success of
Vital Medical Supplies, describe their business philosophy.
Cooperation, creativity and a good dose of fun has propelled the growth
of this family business. Vital has built strong and motivated teams in:
• Sales – Operating in Sydney, New South Wales, South Coast,
Mid North Coast, Melbourne and the Gold Coast.
• Customer Service
• Warehouse with a total range of 50,000 items ranging from equipment
and accessories, surgical instruments, medical consumables, pharmaceuticals.
The Vriens are proud of their committed and dedicated staff and what they have achieved based on family values, staff
loyalty and customer satisfaction. EBOS is proud that this great team has joined our Australia group, sharing a common work
ethic and a positive vision of the future. Our combined strength in the Primary Care marketplace is unequalled.
12
International
EBOS International made another valuable contribution to revenue
and earnings, although below the exceptionally strong results
from past years when we booked the completion of several major
contracts.
Pacific Islands’ economic activity generally reached a plateau; this
impacted on national health budgets, and resulted in steady rather
than strong demand for health products.
Despite quieter trading conditions, each national market has its
own characteristics. EBOS International maintains an excellent
business profile as an exporter of medical consumables and a
wide range of equipment across the hospital, primary care, dental
and scientific markets.
The business unit’s Customer Service programme “Total
Service and Support” includes product expertise, post-purchase
training, after-sales in-country technical support and equipment
maintenance programmes from our New Zealand base plus the
EBOS Health & Science (PNG) Ltd branch, based in Port Moresby,
Papua New Guinea.
During the year the business unit has positioned a full-time
Scientific sales representative as a member of the Pacific Islands
team, with the objective of establishing a stronger presence for
products from EBOS Group members Quantum Scientific and
Global Science & Technology.
Our business relationship with major international aid agencies
remains important and whilst the refocusing of aid programmes
can alter the level of sales opportunities, we continue to be seen
as a knowledgeable, reliable, supportive and ethical company.
Key achievements during the year included:
• Participation in European Union aid projects
in the Cook Islands, leading to the installation
of portable dental equipment to increase the
coverage of dental treatment to the greater
population
• Provision of general medical equipment for the
main hospital on Rarotonga under a contract
from the Cook Islands Government.
• Supplying a number of World Health Organisation
projects with medical equipment including
medical laboratory refrigerator and freezers, ECG
machines and biochemistry analysers.
• AusAID contracts for the supply of consumables
to the Solomon Islands and specialist operating
theatre equipment for supply to hospitals in
Papua New Guinea.
• Further contracts for the installation of
Shimadzu/Konica-Minolta X-Ray equipment in
Papua New Guinea and Fiji where they are now
the standard used by the Ministry of Health.
• A complete laboratory set up for Ramu Sugar
(PNG’s largest sugar supplier) as part of their
expansion programme
The second half of the year saw further development of
programmes and systems for our International business. These are
not expected to have a great influence on current sales but we are
expecting favourable results as we move forward in to the third
quarter for next year.
13
Healthcare
Health Support Ltd
Our wholly-owned subsidiary Health Support Ltd had another
strong year with increased revenue. Operating as a brand
neutral wholesaler and logistics business distributing medical
consumables, surgical products and pharmaceuticals, Health
Support is successfully managing contracts held with both public
and private hospitals.
The company’s Point Chevalier, Auckland distribution complex had
a very active year and it became essential to construct additional
capacity, with 880 sqm of storage space opened in January 2007,
taking the total capacity to approximately 8,000 sqm.
This additional space has been quickly utilised.
The EBOS Group decision to out-source distribution in Christchurch,
rather than include new capacity as part of the parent company’s
group investment in a new group head office, will enable EBOS
and Health Support to flexibly respond to volumes generated by
the existing business. The change will also support the pursuit
of new business opportunities in regions such as Canterbury and
Otago.
Health Support took a leadership role in EBOS group procurement
during the year having re-engineered existing software
systems. The EBOS Group’s procurement team was repositioned
to Auckland. The group supply chain is being restructured to
handle volume expansion, in particular bulkier products lines.
Initiatives undertaken include consolidation of purchasing with
the purchasing team relocated to Auckland, new warehousing
space commissioned and outsourcing of some warehouse and
distribution activities.
The company is in the third year of its supply contracts with the
three Auckland Region District Health Boards (Auckland, Counties-
Manakau and Waitemata) and has adapted well to the new lower
margin business model where Health Support is rewarded on a
fee for service basis.
Auckland District health Board is the biggest healthcare customer
in New Zealand and its end user is the clinical professional
delivering patient care. The Health Support service aggregates
demand from many suppliers into one delivery channel, with
orders packed for each individual end user on at hospital wards,
theatres or in dispensing pharmacies
Health Support operates a single source supply chain for all
consumables used on a hospital ward by end users, with many
separate consumable items packaged in to a single just-in-time
delivery ready for use. In the case of the Auckland DHB, orders
proceed to some 500 delivery points. The key value for the
customer is the way the Health Support supply chain minimises
hospital investment in inventory and storage space.
Another important attribute, however, is service excellence.
Re-ordering from the ward level is fully electronic, direct into
Health Support systems, and orders are delivered over the
subsequent 24 hours. Health Support provides convenience,
reliability and consistency in a cycle completed over 2 million
times a year. The economics of the Health Support service are
compelling; our emphasis on high-quality services is the additional
point of difference.
The same business model applied to the DHB contract also
supports supply to the Ascot and Mercy private hospitals in
Auckland and is under current trial by the Southern Cross
Healthcare group in three of that organisation’s Auckland hospitals.
This is an exciting development with potential for a national roll-
out across the 14 hospitals within the Southern Cross network.
Health Support continues to develop third party logistics business
with new contracts, thereby offering our service expertise to
suppliers.
In addition to hospital pharmacy, the company continues to
supply the retail pharmacy channel, accident & emergency clinics,
ambulatory services and medical clinics.
14
Scientific
Global Science and Technology Ltd
The fiscal year 2007 saw some significant changes within the
Global Science organisation with the consolidation of product
portfolios and the re-allocation of sales territories in order to
provide more efficiency in our business in what continues to be a
challenging market.
We continue to be a premier supplier of an extensive range of
leading brands of instrumentation and laboratory consumables to
research, industrial and clinical organisations nationwide. A further
strength of Global Science is our ability to provide customers with
a high level of support both in terms of product information from
a team of tertiary qualified scientific representatives and product
specialists. Technical service is provided by an in-house team of
highly qualified technical support engineers.
The development of strong business relationships with our
customers continues to be a focus. Our success in this regard is
evidenced by Global Science holding a preferred supplier status
with key industrial customers including Fonterra Co-operative
Group Ltd and Tegel Foods Ltd.
Global Science is committed to continuing the development and
refining of systems and processes along with the identification
of products that complement our current portfolio to ensure
customer satisfaction.
Quantum Scientific Pty Ltd
Quantum Scientific is one of Australia’s premier suppliers of Life
Science products. With a full range of equipment and consumables
on offer Quantum Scientific can satisfy the most demanding needs
of the Australian based researcher and is renowned for offering
more than just a product but a total solution to help the research
scientist obtain the best from their research.
Developing partnerships with researchers has always been
the foundation of our success and has helped form long term
professional relationships in the Australian marketplace.
An excellent example of this approach is the way the Quantum
Scientific team helped the Queensland Brain Institute become
established in Brisbane, Australia. To set up a new institute from
the very beginning is a significant task requiring considerable
resources and planning.
The Quantum team were there from the outset acting as a
resource for sourcing of equipment, relocation of existing
equipment from interstate and providing relocation advice for
some of their existing staff.
The Quantum team went the extra mile right through the whole
process including project meetings with architects to ensure that
power requirements, heat loads and physical space requirements
were planned well in advance. This process assisted laboratory
staff to avoid costly delays. The relationship with the Queensland
Brain Institute is more than just supplier / customer; it is one
of trust and partnership and reflects the philosophy underlying
Quantum Scientific’s success.
We will look to expand our activities beyond the confines of the
Life Science market to achieve further growth.
15
PRNZ adds a new pillar to EBOS
EBOS Group took a major step forward in the New Zealand healthcare market in August 2007
when it acquired the previously unlisted PRNZ Ltd, the parent company for ProPharma and
Healthcare Logistics.
PRNZ Ltd is complementary to the EBOS group in that PRNZ operates in the pharmaceutical
distribution industry, whilst EBOS New Zealand is focused on the distribution of medical
supplies and equipment, and retail healthcare, dental and aged care products.
Propharma
The main operating subsidiary is Pharmacy Retailing (NZ)
Ltd, which manages ProPharma, a wholesale supplier of
pharmaceuticals to retail pharmacy stores from eight locations
nationally. This business unit has long term supply relationships
with leading pharmacy groups under the Pharmacybrands
trading umbrella, including Unichem, DispensaryFirst and Amcal.
Pharmacybrands itself was excluded from the deal.
Further supply relationships exist with Radius Pharmacy, Life
Pharmacy and independent pharmacies supplied through the
Vantage buying and marketing group.
In total approximately 550 pharmacies use ProPharma as their
primary supplier.
Other business includes supply contracts with the Otago and
Waikato District Health Boards and a contract to supply ‘OTC’
products directly to clients of the Accident Compensation
Commission.
PRNZ had invested heavily in IT infrastructure over the past two
years and will implement a significant upgrade of its SAP system
over the final quarter of the 2007 calendar year.
Healthcare Logistics
This business unit is a pre-wholesale business providing
distribution and logistics support to multinational pharmaceutical
manufacturers.
Services are provided to more than 40 multinational companies
typically under fee-for-service supply contracts. Demand for this
service is increasing as suppliers seek to reduce operational costs
by streamlining their New Zealand operations or reviewing the
rationale for this type of business in New Zealand. Healthcare
Logistics has a solid long-term record of high quality customer
service and an efficient IT infrastructure and logistics’ expertise
allows the company to profitably operate in a normally low
margin industry.
The Healthcare Logistics service model ranges from fully
agency services to out-sourced warehousing operating from a
purpose built location in the Auckland Airport logistics precinct.
Negotiations continue in respect to securing further space in the
Auckland area.
Healthcare Logistics operates a state-of-the art warehouse
providing cold chain distribution and temperature and humidity
controlled storage.
Financial impact of the expansion
The acquisition of PRNZ satisfies the EBOS criteria of requiring
at least a 15% rate of return on an EBITDA basis from new
investment and is expected to deliver:
• Projected revenue from PRNZ will take combined
group revenue to $1.15bn on an annualised
basis.
• A significant pre-tax earnings contribution lifting
projected combined EBOS group EBITDA to
approximately $35m.
• An increase in total assets of the combined
group to more than $400m.
The enhanced scale of the group will further consolidate EBOS’s
position as an NZX 50 company on the New Zealand Exchange and
increase the trading liquidity of the company’s shares.
Other benefits
Information Technology – Post-acquisition all EBOS group IT
functions will be centralised on the PRINZ system, resulting in
operational efficiencies in EBOS business units and overtaking the
need for a parallel upgrade.
Distribution – Healthcare Logistics has a proven distribution
model that provides a cost-effective solution for multinational
pharmaceutical suppliers. PRNZ has proven expertise in
pharmaceutical distribution that may be relevant to other aspect
of the combined business.
Business Diversification – PRNZ provides EBOS with an exposure
to pharmaceuticals wholesaling and distribution that it did not
previously have.
Growth prospects – Developments in supply chain management
arising in New Zealand may have potential for introduction to the
group’s Australian businesses.
16
17
18
Board of Directors
RICK ChRIsTIe MSC (HONS), FNZID, FNZIM (65)
(Chairman)
Joined the EBOS Group Ltd Board in June 2000, and appointed
chairman in April 2003. Member of the Audit and Risk Committee,
the Remuneration Committee and the Nomination Committee.
Mr Rick Christie is a professional director with a breadth of
governance and management experience in the oil and petrol-
chemical industries. Former chief executive of the diversified
investment company Rangatira Ltd, a former managing director
of Cable Price Downer and former chief executive of Trade New
Zealand. He is the chairman of AgResearch Ltd, Vcomms Ltd and
Health Support Ltd and a director of the Growth & Innovation
Advisory Board, Provenco Group Ltd, Tourism Holdings Ltd,
Wakefield Health Ltd and the NZ Pork Industry Board. Previously,
deputy chairman of the Foundation for Research, Science &
Technology and chairman of the Victoria University Foundation
Board of Trustees. He is also a Fellow of the Royal Society of Arts,
Manufacturers and Commerce in London. He is a former director of
Television New Zealand and the New Zealand Symphony Orchestra
and a past president of Chamber Music New Zealand.
MaRK WaLLeR BCOM, ACA, FNZIM (53)
(Chief executive and Managing Director)
Mark Waller has been chief executive officer and managing
director of EBOS Group Ltd since 1987. He is a member of the
Remuneration Committee. He is a director of Global Science &
Technology Ltd, Health Support Ltd, Health Support Properties
Ltd, EBOS Group Pty Ltd, EBOS Health & Science Pty Ltd, EBOS
Investments Pty Ltd, Vital Medical Supplies (Australia) Pty Ltd
and Scott Technology Ltd.
peTeR KRaUs MA(HONS), DIP ENG (56)
(Deputy Chairman)
Peter Kraus is an Auckland businessman who has been a director
of EBOS Group Ltd since 1990. He is a member of the Nomination
Committee. He is a director of Whyte Adder No.3 Ltd, Strand
Holdings Ltd, Strand Management Ltd, Herpa Properties Ltd,
Health Support Ltd, Ecostore Company Ltd, Oceania Attractions Ltd,
ISL International Ltd, Hapimana Properties Ltd and Huckleberry
Farms Ltd.
eLIZaBeTh CoUTTs BMS, CA (48)
Appointed to the EBOS Group Ltd Board July 2003. She is a
member of the Audit and Risk Committee and the Nomination
Committee. Elizabeth Coutts is a professional director. She is a
past director of Air New Zealand Ltd, the Health Funding Authority
and Trust Bank New Zealand, member of the Pharmaceutical
Management Agency (Pharmac), commissioner for both the
Commerce and Earthquake Commissions and chief executive of
the Caxton Group of Companies and Carter building supply group.
Her current directorships include chairman of Life Pharmacy Ltd,
consultant and former deputy chairman of Public Trust, chairman
to the Audit, Finance and Risk Committee of the Ministry of
Health, director of Skellerup Industries Ltd and board member of
Sport & Recreation NZ and external monetary policy adviser to the
Governor of the Reserve Bank of New Zealand.
saRah oTTReY BCOM (42)
Appointed to the EBOS Group Ltd Board 18 September 2006.
Sarah is a marketing specialist advising various high profile
clients. She is a board member of Wellesley College in Wellington,
past board member of the Public Trust. Sarah has held senior
marketing management positions with Unilever and DB Breweries.
haRRY VoLLeMaeRe LLB (65)
Appointed to the EBOS Group Ltd Board April 1994, Harry
Vollemaere is senior partner of a law firm in Auckland.
Mr Vollemaere resigned as a director on 9 November 2006.
BaRRY WaLLaCe MCOM (HONS), CA (54)
Appointed to the EBOS Group Ltd Board October 2001. He is
chairman of the Audit and Risk Committee and member of the
Remuneration Committee. Barry Wallace is a chartered accountant
with a background in financial management with companies
such as Rank Xerox New Zealand Ltd and David Reid Electronics.
He is a former chief executive of Health Support Ltd. He is the
financial manager for a private group of companies. He is a
director of Whyte Adder No.3 Ltd, Strand Holdings Ltd, Strand
Management Ltd, Herpa Properties Ltd, Health Support Ltd, Health
Support Properties Ltd, Global Science & Technology Ltd, Ecostore
Company Ltd, Eco Tech Solutions Ltd, Oceania Attractions Ltd, ISL
International Ltd, Hapimana Properties Ltd, Huckleberry Farms Ltd
and Allum Management Services Ltd.
The above named Directors held office during the year and since the end of the financial year
except for Mr Harry Vollemaere who resigned 9 November 2006 and Sarah Ottrey who was
appointed on 18 September 2006.
19
Corporate Governance Statement
The Board and management of EBOS Group Ltd are committed to ensuring that the Company adheres
to best practice and governance principles and maintains high ethical standards. The Board has agreed
to regularly review and assess the Company’s governance structures to ensure they are consistent, both
in form and in substance, with best practice. These are set out in the Company’s Corporate Governance
Code, the full content of which can be found on the Company’s website (www.ebos.co.nz). The Board
considers that the Company’s Corporate Governance policies, practices and procedures substantially
comply with the New Zealand Exchange Corporate Governance Best Practice Code.
Code of Ethics
The EBOS Code of Ethics is the framework of standards by which
the directors and employees of EBOS and its related companies are
expected to conduct their professional lives, and covers conflicts
of interest, receipt of gifts, confidentiality, expected behaviour,
delegated authority and compliance with laws and policies.
Role of the Board and Management
The Board is responsible for the direction and supervision of the
business and affairs of the Company and the monitoring of the
performance of the Company on behalf of shareholders. The Board
also places emphasis on regulatory compliance.
Responsibility for the day to day management of the Company has
been delegated to the Chief Executive Officer/Managing Director
and his management team.
Board composition
The Board is elected by the shareholders of EBOS Group Ltd.
At each annual meeting at least one third of the directors retire by
rotation. The Board currently comprises the following non-executive
directors: Chairman, Rick Christie; Peter Kraus; Elizabeth Coutts;
Sarah Ottrey and Barry Wallace. It has the following executive
director Mark Waller, Chief Executive Officer/Managing Director.
Rick Christie, Elizabeth Coutts and Sarah Ottrey have been
determined as Independent Directors, (as defined under the NZX
Listing Rules and the EBOS Group Ltd Corporate Governance Code).
Board Committees
Specific responsibilities are delegated to the Audit and Risk
Committee, the Remuneration Committee and the Nomination
Committee. Each of these committees has a charter setting
out the committee’s objectives, procedures, composition and
responsibilities. Copies of these charters are available on the
Company’s website.
Audit and Risk Committee
The Audit and Risk Committee provides the Board with assistance
in fulfilling their responsibility to shareholders, the investment
community and others for overseeing the Company’s financial
statements, financial reporting processes, internal accounting
systems, financial controls, and annual external financial audit
and EBOS’s relationship with its external auditor. In addition, the
Audit and Risk Committee is responsible for the establishment of
policies and procedures relating to risk oversight, identification,
management and control. Members of the Audit and Risk
Committee are Barry Wallace (Chairman), Rick Christie and
Elizabeth Coutts.
Remuneration Committee
The Remuneration Committee provides the Board with
assistance in establishing relevant remuneration policies
and practices for directors, executives and employees. Members
of the Remuneration Committee are Rick Christie (Chairman),
Barry Wallace and Mark Waller.
Nomination Committee
The procedure for the appointment and removal of directors is
ultimately governed by the Company’s Constitution. A director is
appointed by ordinary resolution of the shareholders although
the Board may fill a casual vacancy. The Board has delegated to
the Nomination Committee the responsibility for recommending
candidates to be nominated as a director on the Board and
candidates for the committees. When recommending candidates
to act as director, the Nomination Committee takes into account
such factors as it deems appropriate, including the experience
and qualifications of the candidate. The current members of the
Nomination Committee are Rick Christie (Chairman), Elizabeth
Coutts and Peter Kraus. The majority of the members of the
Nomination Committee are independent.
Board processes
Messrs R. Christie, P. Kraus, B. Wallace and M. Waller are also
directors and attend board meetings of Health Support Ltd, a
wholly owned subsidiary of EOBS Group Ltd. Messrs B. Wallace and
M. Waller are also directors and attend board meetings of Global
Science & Technology Ltd, a wholly owned subsidiary of EBOS Group
Ltd. The table on page 23 shows attendances at the board and
committee meetings during the year ended 30 June 2007.
Share trading by Directors and Officers
The Company has formal procedures that directors and officers
must follow when trading EBOS shares. They must notify and obtain
the consent of the Board prior to any trading. All trading must be
conducted within two prescribed trading windows. These periods
commence from the date on which the annual result and half-
yearly results are announced and conclude on the following
30 November and 30 April respectively.
Shareholder participation
The Board aims to ensure that shareholders are informed of all
major developments affecting the Group’s state of affairs.
Information is communicated to shareholders in the Annual Report
and the Interim Report. The Board has adopted a policy of
Continuous Disclosures that complies with the NZX Listing Rules.
The Board encourages full participation of shareholders at the
Annual Meeting to ensure a high level of accountability and
identification with the Group’s strategies and goals. Investors
can obtain information on the company from its website
(www.ebos.co.nz). The site contains recent NZX announcements
and reports.
20
21
Directors’ Report
Your Directors are pleased to submit to shareholders their report and financial statements
for the year ended 30 June 2007.
Principal activities
EBOS Group Limited (the Company) is listed on the NZSX board
of the New Zealand Exchange (NZX) under the securities code
EBO. EBOS Group is the largest New Zealand owned independent
national distributor and marketer of medical, dental, and scientific
supplies in New Zealand. Significant business operations are also
conducted in Australia, Papua New Guinea and the Pacific.
The Company markets world class healthcare and scientific brands
sourced from leading international manufacturers.
EBOS operates in two key areas:
Dividend
The directors approved a final dividend of 13 cents per share to
be paid on 26 October 2007, requiring $6m, and making a total
of 22.5 cents per share for the year (2006 22.5 cents per share).
Both the interim and final dividends carry full imputation credits.
Directors
Peter Krauss and Barry Wallace retire by rotation in accordance
with the Company’s constitution and being eligible offer
themselves for re-election.
• Healthcare – which incorporates a range of
sectors, own brands, retail healthcare and
wholesale activities servicing public and private
hospitals, primary care providers, dentists,
rehabilitation facilities and retirement villages
and aged care facilities through dedicated
business units and pharmacy, grocery, variety/
baby and industrial safety, and to physiotherapy
clinics.
Through EBOS Group Ltd based in Auckland,
Wellington and Christchurch we service the total
New Zealand healthcare market.
EBOS Australia, based in Sydney, Brisbane
and Melbourne, services the Eastern Australia
primary care market, national hospitals and aged
care markets and the national retail pharmacy
market with a range of healthcare consumables,
medical equipment and retail consumer
products.
Health Support Ltd is a wholly owned
logistics specialist moving medical supplies,
pharmaceuticals and consumables to public and
private hospitals and pharmacy in New Zealand.
• Scientific – Global Science & Technology Ltd
in New Zealand and with its wholly owned
subsidiary Quantum Scientific Pty Ltd, is an
Australasian wide provider of laboratory
consumables, life sciences equipment and
technical support to industry and research
laboratories.
Issued capital
As at 30 June 2007 the Company had on issue 36,843,963
ordinary fully paid shares, with 9,210,035 shares issued during
the year.
Group results
Annual group operating revenue was NZ$307m in the year ended
30 June 2007 (2006 $300m). Operating profit before finance costs
and tax of NZ$17.13m (2006 $20.03m) was earned for the year
ended 30 June 2007. The net profit for the period after interest
and tax was NZ$10.32m (2006 $11.55m). Earnings per share
were 31.7 cents (2006 41.8 cents).
Directors’ interests
Share dealings by Directors
The Directors tabled on page 19 have disclosed to the Board
under section 148(2) of the Companies Act 1993 particulars of
acquisitions or dispositions of relevant interests in ordinary shares
during the year – refer table on page 23.
Disclosure of interests by Directors
In accordance with section 140(2) of the Companies Act 1993, the
directors named below have made general disclosure of interest,
by a general notice disclosed to the Board and entered in the
Company’s interest register, as follows:
R.G.M. Christie: Chairman of AgResearch Ltd, Vcomms Ltd, Health
Support Ltd, and Director of Growth & Innovation Advisory Board,
Provenco Group Ltd, Tourism Holdings Ltd, Wakefield Health Ltd
and NZ Pork Industry Board.
P.F. Kraus: Director of Whyte Adder No.3 Ltd, Strand Holdings Ltd,
Strand Management Ltd, Herpa Properties Ltd, Health Support Ltd,
Ecostore Company Ltd, Oceania Attractions Ltd, ISL International
Ltd, Hapimana Properties Ltd and Huckleberry Farms Ltd.
E.M. Coutts: Chairman of Life Pharmacy Limited, Consultant and
former Deputy Chairman of Public Trust, Chairman Audit, Finance
and Risk Committee of the Ministry of Health, Director of Skellerup
Industries Ltd, board member of Sport & Recreation NZ and
External monetary policy adviser to the Governor of the Reserve
Bank of New Zealand.
B.J. Wallace: Director of Allum Management Services Ltd, Global
Science and Technology Ltd, Health Support Ltd, Health Support
Properties Ltd, Whyte Adder No.3 Ltd, Strand Holdings Ltd, Strand
Management Ltd, Herpa Properties Ltd, Ecostore Company Ltd, Eco
Tech Solutions Ltd, Oceania Attractions Ltd, ISL International Ltd,
Hapimana Properties Ltd and Huckleberry Farms Ltd.
M.B. Waller: Director of Global Science and Technology Ltd, Health
Support Ltd, Health Support Properties Ltd, EBOS Health & Science
Pty Ltd, EBOS Group Pty Ltd, EBOS Investments Pty Ltd, Vital
Medical Supplies (Australia) Pty Ltd and Scott Technology Ltd.
22
Directors’ Report & Disclosures
Use of Company information
During the year the Board received no notices from directors of the company requesting to use company information
received in their capacity as directors, which would not otherwise have been available to them.
Share dealings by Directors
Director
E M Coutts
P F Kraus
M B Waller
M B Waller
– Held by associated persons
– Held by associated persons
– Held by associated persons
Directors’ shareholdings
Number of fully paid shares held as at
Ordinary Shares
Purchased (Sold)
Consideration
Paid (Received)
3,333
637,925
50,000
1,166
13,332
2,551,700
200,000
4,664
Date of
Transaction
December 2006
December 2006
December 2006
December 2006
E M Coutts
R G M Christie
P F Kraus
H J Vollemaere
M B Waller
Attendance
R Christie
P Kraus
E Coutts
S Ottrey
H Vollemaere
B Wallace
M Waller
– Held by associated persons
– Non beneficially held – Staff share purchase scheme
– Held by associated persons
– Held by associated persons
– Non beneficially held – Staff share purchase scheme
30 June 2007
30 June 2006
3,000
13,333
116,650
2,422,686
120,000
405,702
4,666
116,650
3,000
10,000
98,850
1,784,761
120,000
355,702
3,500
98,850
Board*
Eligible to Attended
Audit & Risk Committee Remuneration Committee Nomination Committee
Eligible to Attended
Eligible to Attended
Eligible to Attended
Attend
Attend
Attend
Attend
11
11
8
6
4
13
13
11
7
8
6
4
13
13
3
-
3
-
-
3
-
3
-
3
-
-
3
-
1
-
-
-
-
1
1
1
-
-
-
-
1
1
1
1
1
-
-
-
-
1
1
1
-
-
-
-
* Includes attendance by directors at subsidiary company board meetings.
Indemnity and insurance
In accordance with section 162 of the Companies Act 1993 and the constitution of the company, the Company has given indemnities to, and
has effected insurance for, the directors and executives of the Company and its related companies which, except for some specific matters
which are expressly excluded, indemnify and insure directors and executives against monetary losses as a result of actions undertaken
by them in the course of their duties. Specifically excluded are certain matters, such as the incurring of penalties and fines which may be
imposed for breaches of law.
23
24
Directors’ Report
Directors’ Remuneration and other benefits
Directors’ remuneration and other benefits required to be disclosed pursuant to section 211(1) of the Companies Act 1993 for the year
ended 30 June 2007 were as follows:
EBOS Group Limited
R.G.M. Christie
P.F. Kraus
E.M. Coutts
S.C. Ottrey
H.J. Vollemaere
B.J. Wallace
M.B. Waller
(Chief Executive Officer and Managing Director)
*Includes performance bonus and other emoluments
Global Science & Technology Limited
B.J. Wallace
Health Support Limited
R.G.M. Christie
P.F. Kraus
B.J. Wallace
Salary
*Other benefits
2007
$85,000
$60,000
$45,000
$31,505
$14,465
$45,000
$218,200
$581,724
2006
$75,000
$52,500
$40,000
-
$35,000
$40,000
$210,850
$712,127
$10,000
$10,000
$17,500
$10,000
$10,000
$17,500
$10,000
$10,000
Employee Remuneration
Grouped below, in accordance with section 211 of the Companies Act 1993, are the number of employees or former employees of the
company and its subsidiaries, including those based in Australia, who received remuneration and other benefits in their capacity as
employees totalling NZ$100,000 or more during the year.
Employee Remuneration
Remuneration (NZ$)
100,000 – 110,000
110,000 – 120,000
120,000 – 130,000
130,000 – 140,000
140,000 – 150,000
150,000 – 160,000
180,000 – 190,000
190,000 – 200,000
200,000 – 210,000
220,000 – 230,000
300,000 – 310,000
330,000 – 340,000
Number of Employees
2007
2006
2
3
3
6
1
-
1
-
2
-
1
-
7
6
5
3
2
2
1
1
2
1
-
1
Auditors
The Company’s Auditors, Deloitte, will continue in office in accordance with the Companies Act 1993.
The Directors are satisfied that the provision of non-audit services, during the year by the auditor is compatible with the general standard
of independence for auditors imposed by the Companies Act 1993. Details of amounts paid or payable to the auditor for non-audit services
provided during the year by the auditors are outlined in note 5 to the financial statements.
R.G.M. Christie
Chairman
28 August 2007
M.B. Waller
Managing Director
25
EBOS Group Limited
Financial Report
For the financial year ended 30 June, 2007
EBOS Group Limited
Directors’ Responsibility statement
As at 30 June, 2007
The Directors of EBOS Group Limited are pleased to present to shareholders the financial statements for EBOS Group and its controlled
entities (together the “group”) for the year to 30 June 2007.
The Directors are responsible for presenting financial statements in accordance with New Zealand law and generally accepted
accounting practice, which give a true and fair view of the financial position of company and the group as at 30 June 2007 and the
results of their operations and cash flows for the year ended on that date.
The Directors consider the financial statements of the company and the group have been prepared using accounting policies which have
been consistently applied and supported by reasonable judgements and estimates and that all relevant financial reporting and accounting
standards have been followed.
The Directors believe that proper accounting records have been kept which enable with reasonable accuracy, the determination of the
financial position of the company and group and facilitate compliance of the financial statements with the Financial Reporting Act 1993.
The Directors consider that they have taken adequate steps to safeguard the assets of the company and 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 Financial Statements are signed on behalf of the Board by:
Mark Waller
Chief Executive Officer and Managing Director
Rick Christie
Chairman
28 August 2007
26
AUDIT REPORT
TO THE SHAREHOLDERS OF EBOS GROUP LIMITED
We have audited the financial statements on pages 28 to 66. The financial statements provide information about the past
financial performance and financial position of EBOS Group Limited and group as at 30 June 2007. This information is stated
in accordance with the accounting policies set out on pages 32 to 39.
Board of Directors’ Responsibilities
The Board of Directors is responsible for the preparation, in accordance with New Zealand law and generally accepted
accounting practice, of financial statements which give a true and fair view of the financial position of EBOS Group Limited
and group as at 30 June 2007 and of the results of operations and cash flows for the year ended on that date.
Auditors’ Responsibilities
It is our responsibility to express to you an independent opinion on the financial statements presented by the Board of
Directors.
Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements.
It also includes assessing;
•
• whether the accounting policies are appropriate to the company and group circumstances, consistently applied and
the significant estimates and judgements made by the Board of Directors in the preparation of the financial statements, and
adequately disclosed.
We conducted our audit in accordance with New Zealand auditing standards. We planned and performed our audit so as to
obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence
to obtain reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud
or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial
statements.
Other than in our capacity as auditor and the provision of financial advisory services, we have no relationship with or interests
in EBOS Group Limited or any of its subsidiaries.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion:
• proper accounting records have been kept by EBOS Group Limited as far as appears from our examination of those
•
records; and
the financial statements on pages 28 to 66.
– comply with generally accepted accounting practice in New Zealand;
– comply with International Financial Reporting Standards; and
– give a true and fair view of the financial position of EBOS Group Limited and group as at 30 June 2007 and the results
of their operations and cash flows for the year ended on that date.
Our audit was completed on 28 August 2007 and our unqualified opinion is expressed as at that date.
Chartered Accountants
Christchurch, New Zealand.
27
EBOS Group Limited
Income statement
For the Financial Year ended 30 June, 2007
Revenue
Profit before depreciation,
finance costs and income tax expense
Depreciation
Profit before finance costs and tax
Finance costs
Profit before income tax expense
Income tax expense
Profit for the period
Earnings per share:
Basic (cents per share)
Diluted (cents per share)
Notes
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
2
2
2
2
3
307,276
300,486
67,010
65,670
18,842
(1,711)
17,131
(2,189)
14,942
(4,623)
21,697
(1,662)
20,035
(2,924)
17,111
(5,563)
8,561
(408)
8,153
(1,181)
6,972
(1,161)
8,460
(379)
8,081
(1,239)
6,842
(1,827)
10,319
11,548
5,811
5,015
27
27
31.7
31.7
41.8
41.8
28
Notes to the financial statements are included on pages 32 to 66.
EBOS Group Limited
Balance sheet
As at 30 June, 2007
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Current tax refundable
Other financial assets - derivatives
Advances to subsidiaries
Finance leases
Deferred sale proceeds
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Goodwill
Indefinite life intangibles
Capital work in progress
Prepayments
Finance leases
Deferred sale proceeds
Shares in subsidiaries
Total non-current assets
Total assets
Current liabilities
Bank overdraft
Trade and other payables
Finance leases
Bank loans
Current tax payable
Employee benefits
Other financial liabilities - derivatives
Advances from subsidiaries
Deferred purchase consideration
Total current liabilities
Non-current liabilities
Bank loans
Finance leases
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Foreign currency translation reserve
Retained earnings
Total equity
Notes to the financial statements are included on pages 32 to 66.
Notes
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
6
7
8
3
9
10
11
3
12
13
14
7
10
15
16
17
16, 18
16
3
19
16
20
16
16, 18
1,772
41,230
1,090
45,211
624
12
-
86
-
1,938
38,202
865
43,470
539
1,049
-
57
133
200
9,786
101
15,008
441
-
10,118
86
-
90,025
86,253
35,740
10,525
1,129
27,387
6,316
240
1,432
172
-
-
11,054
1,086
27,869
6,463
-
1,223
229
558
-
757
379
1,728
4,960
240
-
172
-
39,801
47,201
48,482
48,037
137,226
134,735
83,777
635
29,679
74
1,101
1,082
2,305
95
-
-
3,508
28,852
66
22,209
543
2,351
-
-
4,500
34,971
62,029
7,985
120
8,105
16,796
147
16,943
349
5,261
27
-
-
980
95
1,546
-
8,258
-
74
74
43,076
78,972
8,332
94,150
55,763
75,445
21
22
22
63,150
(485)
31,485
26,837
668
28,258
63,150
-
12,295
94,150
55,763
75,445
13
9,911
114
13,638
390
678
141
57
-
24,942
1,504
404
1,728
4,960
-
-
229
-
39,801
48,626
73,568
123
6,253
27
14,696
-
1,083
1,864
4,500
28,546
4,508
101
4,609
33,155
40,413
26,837
-
13,576
40,413
29
EBOS Group Limited
statement of Recognised Income & expense
For the Financial Year ended 30 June, 2007
Notes
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
Translation of foreign operations:
Exchange differences taken to equity
Net income recognised directly in equity
Profit for the period
22
(1,153)
(1,153)
698
698
10,319
11,548
Total recognised income and expense for the period
9,166
12,246
-
-
5,811
5,811
-
-
5,015
5,015
EBOS Group Limited
statement of Changes in equity
For the Financial Year ended 30 June, 2007
Equity at start of period
55,763
53,516
40,413
41,393
Profit for period attributable to
members of the parent entity
Movement in foreign currency translation
reserve
10,319
11,548
5,811
5,015
22
(1,153)
698
-
-
Total recognised income and expenses
9,166
12,246
5,811
5,015
Dividends paid to company shareholders
Shares issued
Minority interests on acquisition of subsidiary
24
21
23
(7,092)
36,313
-
(6,074)
79
(4,004)
(7,092)
36,313
-
(6,074)
79
-
Equity at end of period
94,150
55,763
75,445
40,413
30
Notes to the financial statements are included on pages 32 to 66.
EBOS Group Limited
Cash Flow statement
For the Financial Year ended 30 June, 2007
Cash flows from operating activities
Receipts from customers
Interest received
Dividends received from subsidiaries
Payments to suppliers and employees
Taxes paid
Interest paid
Notes
Group
2007
$’000
Group
2006
$’000
302,802
102
-
(289,258)
(4,203)
(2,189)
300,250
186
-
(283,554)
(5,609)
(2,924)
Parent
2007
$’000
63,762
665
2,724
(60,713)
(1,187)
(1,181)
Parent
2006
$’000
62,677
37
1,644
(60,050)
(1,802)
(1,240)
Net cash inflow from operating activities
26
7,254
8,349
4,070
1,266
Cash flows from investing activities
Sale of property, plant & equipment
Receipt of deferred sale proceeds
Advances from subsidiaries
Purchase of property, plant & equipment
Payments for capital work in progress
Purchase of intangible assets
Advances to subsidiaries
Acquisition of subsidiary company
1,388
691
-
(2,183)
(240)
-
-
(4,500)
66
133
-
(1,455)
-
(34)
-
(7,505)
1,360
-
6,521
(450)
(240)
-
(16,817)
(4,500)
3
-
2,736
(221)
-
-
-
(4,500)
26
Net cash (outflow) from investing activities
(4,844)
(8,795)
(14,126)
(1,982)
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
Dividends paid to equity holders of parent
36,313
6,500
(35,319)
(7,092)
80
10,685
(3,428)
(6,074)
36,313
6,500
(25,704)
(7,092)
Net cash inflow from financing activities
402
1,263
10,017
Net increase/(decrease) in cash held
Effect of exchange rate fluctuations on cash held
Net cash and cash equivalents at beginning
of the year
Net cash and cash equivalents at the end of the year
Cash and cash equivalents
Bank overdrafts
2,812
(105)
817
188
(1,570)
(2,575)
1,137
(1,570)
1,772
(635)
1,938
(3,508)
1,137
(1,570)
(39)
-
(110)
(149)
200
(349)
(149)
80
7,800
(1,096)
(6,074)
710
(6)
-
(104)
(110)
13
(123)
(110)
Notes to the financial statements are included on pages 32 to 66.
31
EBOS Group Limited
Notes to the Financial statements
For the Financial Year ended 30 June, 2007
1.
SUMMARY OF ACCOUNTING POLICIES
Statement of Compliance
EBOS Group Ltd (“the Company”) is a profit-oriented company incorporated in New Zealand, registered under the Companies Act 1993
and listed on the New Zealand Exchange.
The company operates in two business segments, being Healthcare and Scientific – Healthcare incorporates the sale of healthcare
products in a range of sectors, own brands, retail healthcare and wholesale activities, and Scientific incorporates the sale of laboratory
consumables, life sciences equipment and technical support to industry and research laboratories.
The Company is a reporting entity and issuer for the purposes of the Financial Reporting Act 1993 and its financial statements comply
with that Act.
The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (‘NZ GAAP’).
They comply with New Zealand Equivalents to International Financial Reporting Standards (“NZ IFRS”) and other applicable reporting
standards as appropriate for profit oriented entities.
Compliance with NZ IFRS ensures that the consolidated financial statements comply with International Financial Reporting Standards
(“IFRS”). The parent entity financial statements also comply with IFRS.
Basis of Preparation
The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain financial instruments.
Cost is based on the fair value of the consideration given in exchange for assets.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of
relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June, 2007 and the
comparative information presented in these financial statements for the year ended 30 June, 2006.
The information is presented in thousands of New Zealand dollars.
Critical Judgements in applying accounting policies
In the process of applying the accounting policies, management has made the following judgements that have had the most significant
effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).
In the application of NZ IFRS management is required to make judgements, estimates and assumptions about carrying values of assets
and liabilities that are not readily apparent from other sources. 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 of
making the judgements. Actual results may differ from these estimates. 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 the revision and future periods if the revision affects both current and future periods.
32
1.
SUMMARY OF ACCOUNTING POLICIES contd.
Key Sources of Estimation Uncertainty
Judgements made by management in the application of NZ IFRS that have significant effects on the financial statements and estimates
with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial
statements.
Critical judgements made by management principally relate to the assessment of impairment of goodwill, indefinite life intangibles
and the recognition of revenue on significant contracts subject to renewal. The group determines whether goodwill and indefinite life
intangibles are impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units
to which the goodwill and indefinite life intangibles are allocated. The assumptions used in this estimation of recoverable amount and
the carrying amount of goodwill and indefinite life intangibles are discussed in notes 12 and 13. It is assumed for significant contracts
that they will be rolled over for each period of renewal.
Determining the recoverable amounts of goodwill and intangible assets requires the estimation of the effects of uncertain future events at
balance date. These estimates involve assumptions about risk assessment to cash flows or discount rates used, future changes in salaries
and future changes in price affecting other costs.
Specific accounting policies
The following specific accounting policies have been adopted in the preparation and presentation of the financial statements.
a) Basis of consolidation – purchase method
The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the group,
being the company (the parent entity) and its subsidiaries as defined in NZ IAS-27 ‘Consolidated and Separate Financial Statements’.
A list of subsidiaries appears in note 15 to the financial statements. Consistent accounting policies are employed in the preparation and
presentation of the consolidated financial statements.
On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of
acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.
Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is
credited to the income statement in the period of acquisition. The interest of minority shareholders is stated at the minority’s proportion
of the fair values of the assets and liabilities recognised. Subsequently, any losses applicable to the minority interest in excess of the
minority interest are allocated against the interests of the parent.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated Income Statement from the effective
date of acquisition or up to the effective date of disposal, as appropriate.
All significant inter-company transactions and balances are eliminated on consolidation.
In the Company’s financial statements, investments in subsidiaries are recognised at their cost, less any adjustment for impairment.
b) Goodwill
Goodwill represents the excess of the purchase consideration over the fair value of the identifiable tangible and identifiable intangible
assets, liabilities and contingent liabilities of the subsidiary recognised at the time of acquisition of a business or subsidiary. Goodwill is
initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the groups cash-generating units expected to benefit from the
synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more
frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than
the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
33
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
1.
SUMMARY OF ACCOUNTING POLICIES contd.
c) Indefinite life intangible assets
Indefinite life intangible assets represent purchased brand names and are initially recognised at cost. Such intangible assets are regarded
as having indefinite useful lives and they are tested annually for impairment on the same basis as for goodwill.
d) Finite life intangible assets
Finite life intangible assets are recorded at cost less accumulated amortisation. Amortisation is charged on a straight line basis over their
estimated useful life. The estimated useful life and amortisation period is reviewed at the end of each annual reporting period.
e) Intangible assets acquired in a business combination
All potential intangible assets acquired in a business combination are identified and recognised separately from goodwill where they
satisfy the definition of an intangible asset and their fair value can be measured reliably.
f) Property, plant, and equipment
The group has five classes of property, plant and equipment:
• Freehold land;
• Buildings;
• Leasehold improvements;
• Plant and Vehicles, and
• Office equipment, furniture and fittings.
Property, Plant and Equipment is initially recorded at cost.
Cost includes the original purchase consideration and those costs directly attributable to bring the item of Property, Plant and Equipment
to the location and condition for its intended use.
After recognition as an asset Property, Plant and Equipment is carried at cost less accumulated depreciation and impairment losses.
When an item of Property, Plant and Equipment is disposed of, any gain or loss is recognised in the Income Statement and is calculated
as the difference between the sale price and the carrying value of the item.
Depreciation is provided for on a straight line basis on all Property, Plant and Equipment other than freehold land, at depreciation rates
calculated to allocate the assets’ cost less estimated residual value, over their estimated useful lives.
Leased assets are depreciated over the shorter of the unexpired period of the lease and the estimated useful life of the assets.
Major depreciation periods are:
• Buildings
• Leasehold improvements
• Plant
• Office equipment, furniture and fittings
• Motor vehicles
33 to 100 years
5 to 15 years
5 to 20 years
5 to 8 years
4 to 5 years
g) Impairment of Assets
At each balance sheet date, the group reviews the carrying amounts of its non current assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other
assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
34
1.
SUMMARY OF ACCOUNTING POLICIES contd.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an
impairment loss is recognised as income immediately.
h) Taxation
The income tax expense charged to the income statement includes both the current year’s provision and the income tax effect of:
• Taxable temporary differences, except those arising from initial recognition of goodwill; and
• Deductible temporary differences to the extent that it is probable that they will be utilised.
Temporary differences arising from transactions, other than business combinations, affecting neither accounting profit nor taxable profit
are ignored.
The group’s liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet
date.
Deferred tax is not recognised on temporary differences associated with investments in subsidiaries, because:
• The parent company is able to control the timing of the reversal of the differences; and
• They are not expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
i) Inventories
Inventories are recognised at the lower of cost, determined on a weighted average basis, and net realisable value. Cost comprises direct
materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their
present location and condition. Net realisable value represents the estimated selling price in the ordinary course of business, less all
estimated costs of completion and costs to be incurred in marketing, selling and distribution.
j) Leases
The group leases certain plant and equipment and land and buildings.
Finance leases, which effectively transfer to the group substantially all of the risks and benefits incident to ownership of the leased item,
are capitalised at the present value of the minimum lease payments. The leased assets and corresponding liabilities are recognised and
the leased assets are depreciated over the period the group is expected to benefit from their use. Lease payments are apportioned between
finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged directly to the Income Statement.
Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the lease items,
are included in the determination of the net surplus in equal instalments over the period of the lease. Lease incentives received are
recognised as an integral part of the total lease payments made and also spread on a basis representative of the pattern of benefits
expected to be derived from the leased asset.
k) Foreign Currency Translation
Functional and Presentation Currency
The financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which
the entity operates (“the functional currency”).
The consolidated financial statements are presented in New Zealand dollars, which is the Company’s functional and presentation
currency.
35
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
1.
SUMMARY OF ACCOUNTING POLICIES contd.
Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the
transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign
currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the Income
Statement for the period.
Foreign Operations
On consolidation, the assets and liabilities of the group’s overseas operations are translated at exchange rates prevailing at the reporting
date. Income and expense items are translated at the average rates for the period. Exchange differences arising, if any, are recognised in
the foreign currency translation reserve, and recognised in profit or loss on disposal of the foreign operation.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after the date of transition to NZ IFRS are treated
as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date.
l) Goods & Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except for receivables and payables
which are recognised inclusive of GST.
Cash flows are included in the cash flow statement on a net basis. The GST component of cash flows arising from investing and
financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
m) Financial Instruments
Financial assets and financial liabilities are recognised on the group’s balance sheet when the group becomes a party to the contractual
provisions of the instrument.
Cash & Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Trade & Other Receivables
Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using
the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the Income Statement
when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial
recognition.
Equity Instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Trade & Other Payables
Trade payables are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest rate method.
Borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated
with the borrowing. After initial recognition, these loans and borrowings are subsequently measured at amortised cost using the effective
interest rate method which allocates the cost through the expected life of the loan or borrowing. Amortised cost is calculated taking into
account any issue costs, and any discount or premium on drawdown.
Bank loans are classified as current liabilities (either advances or current portion of term debt) unless the group has an unconditional
right to defer settlement of the liability for at least 12 months after the balance sheet date.
36
1.
SUMMARY OF ACCOUNTING POLICIES contd.
Derivative Financial Instruments
The group enters into foreign currency forward exchange contracts to hedge trading transactions, including anticipated transactions,
denominated in foreign currencies and from time to time uses interest rate swaps to manage cash flow interest rate risk.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to
their fair value. Derivative instruments entered into by the group do not qualify for hedge accounting. Changes in the fair value of any
derivative financial instrument that does not qualify for hedge accounting are recognised in the Income Statement.
Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The nominal value less estimated credit risk adjustments of trade receivables and payables are assumed to approximate their fair values.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current
market interest rate that is available to the group for similar financial instruments.
n) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and
services provided in the normal course of business, net of returns, discounts, allowances and GST. The following specific recognition
criteria must be met before revenue is recognised:
Sale of Goods
Sales of goods are recognised when significant risks and rewards of owning the goods are transferred to the buyer, when the revenue can
be measured reliably and when management effectively ceases involvement or control.
Rendering of Services
Revenue from services rendered is recognised when it is probable that the economic benefits associated with the transaction will flow
to the entity. The stage of completion at balance date is assessed based on the value of services performed to date as a percentage of the
total services to be performed.
Interest Income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which
is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying
amount.
Dividend Income
Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.
o) Cash Flow Statement
The cash flow statement is prepared exclusive of GST, which is consistent with the method used in the income statement.
Definition of terms used in the cash flow statement:
Cash includes cash on hand, demand deposits, and short-term highly liquid investments that are readily convertible to a known amount
of cash and are subject to an insignificant risk of change in value.
Operating activities include all transactions and other events that are not investing or financing activities.
Investing activities are those activities relating to the acquisition and disposal of current and non-current investments and any other non-
current assets.
Financing activities are those activities relating to changes in the equity and debt capital structure of the company and group and those
activities relating to the cost of servicing the company’s and the group’s equity capital.
37
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
1.
SUMMARY OF ACCOUNTING POLICIES contd.
p) Employee entitlements
A liability for annual leave and long service leave is accrued and recognised in the statement of financial position. The liability is equal
to the present value of the estimated future cash outflows as a result of employee services provided at balance date.
Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the
remuneration rate expected to apply at the time of settlement.
Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured at the present value
of the estimated future cash outflows to be made by the Group in respect of services provided up to reporting date.
q) Segment Reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that
are different from those of other business segments.
A geographical segment is engaged in providing products or services in a particular economic environment, where the risks and returns
are different from those of segments operating in other economic environments.
The group’s primary reporting format is business segments and its secondary format is geographical.
r) Non-current assets held for sale and discontinued operations
Non-current assets (and disposal groups – being a group of assets to be disposed of by sale or otherwise) classified as held for sale are
measured at the lower of carrying amount and fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal
group) is available for immediate sale in its present condition. The sale of the asset (or disposal group) is expected to be completed
within one year from the date of classification.
A discontinued operation is a component of the group’s business that represents a separate major line of business or geographical area
of operations. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as
held for sale, if earlier.
s) New standards and Interpretations
Standards and interpretations that have been issued or amended but are not yet effective that have not been adopted by the Group and
Company for the annual reporting period ending 30 June 2007 and which are relevant are as follows:
Reference
Title
Summary
NZ IFRS 7
Financial
Instruments:
Disclosures
Introduces new
requirements
to improve the
information on
financial instruments
that is given in
entities’ financial
statements. It
replaces some of
the requirements in
NZ IAS32 Financial
Instruments: Disclosure
and Presentation.
Application
date for
Company
30 June 2008
Application
date of
standard
Impact on
Company
financial report
1 January 2007
NZ IFRS 7 is a
disclosure standard
so will have no
impact on the
amounts included
in the Company’s
financial statements.
38
Application
date for
Company
30 June 2010
1.
SUMMARY OF ACCOUNTING POLICIES contd.
Reference
Title
Summary
Application
date of
standard
Impact on
Company
financial report
NZ IFRS 8
Operating
segments.
1 January 2009
Specifies how an
entity should report
information about its
operating segments
in annual financial
reports.
NZ IFRS 8 is a
disclosure standard
so will have no
impact on the
amounts included
in the Company’s
financial statements.
However, the
amendments will
result in changes
to the Operating
Segments
disclosures
included in the
Company’s
financial report.
39
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
2.
PROFIT FROM OPERATIONS
Revenue
(a)
Revenue consisted of the following items:
Revenue from the sale of goods
Revenue from the sale of goods to subsidiaries
Revenue from the rendering of services
Management fees - external
Management fees – inter group
Interest revenue - inter group
Interest revenue - other
Dividends from subsidiaries
Other revenue
Profit before income tax expense
(b)
Profit/(loss) before income tax has been arrived
at after crediting/(charging) the following gains
and losses from operations:
Gain/(loss) on disposal of property, plant and
equipment
Change in fair value of derivative financial instruments
Profit/(loss) before income tax has been arrived
at after charging the following expenses by nature:
Cost of sales
Purchases from subsidiaries
Write-down of inventory
Finance costs:
Bank interest
Other interest expense
Total finance costs
Net bad and doubtful debts arising from:
Parent entity
Subsidiaries
Depreciation of property, plant and equipment
Operating lease rental expenses:
Minimum lease payments
Donations
Employee benefit expense
Other expenses
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
305,002
-
1,996
-
-
-
102
-
176
298,744
-
1,556
-
-
-
186
-
-
59,830
3,335
-
-
456
634
31
2,724
-
59,516
3,968
-
-
456
49
37
1,644
-
307,276
300,486
67,010
65,670
541
(1,123)
(28)
1,269
598
(773)
(2)
762
(235,428)
-
(851)
(232,456)
-
(720)
(2,189)
-
(2,907)
(17)
(40,540)
(1,680)
(258)
(1,018)
(163)
(41,557)
(1,230)
(292)
(1,237)
(2)
(2,189)
(2,924)
(1,181)
(1,239)
11
(13)
(10)
(1,711)
(3,045)
(12)
(25,802)
(22,691)
(3)
(37)
(1,662)
(3,035)
(7)
(25,077)
(18,695)
(13)
-
(408)
(992)
(11)
(7,592)
(7,188)
(3)
-
(379)
(926)
(5)
(7,330)
(6,627)
Total expenses
(291,752)
(284,616)
(59,863)
(59,588)
40
3.
INCOME TAXES
Income tax recognised in income statement
(a)
Tax expense/(credit) comprises:
Current tax expense/(credit):
Current year
Adjustments for prior years
Other adjustments
Deferred tax (credit)/expense:
Origination and reversal of temporary differences
Adjustments for prior years
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
4,681
(40)
9
4,650
(80)
53
(27)
5,857
-
134
5,991
(336)
(92)
(428)
1,259
(124)
-
1,135
8
18
26
1,889
-
106
1,995
(190)
22
(168)
Total tax expense
4,623
5,563
1,161
1,827
The prima facie income tax expense on pre-tax
accounting profit from operations reconciles to
the income tax expense in the financial
statements as follows:
Profit before income tax expense
Income tax expense calculated at 33%
Non-deductible expenses/(non-assessable income)
Effect of different tax rates of subsidiaries
operating in other jurisdictions
Domestic dividends received
Unused tax losses
(Over)/under provision of income tax
in previous year
Other adjustments
14,942
17,111
6,972
6,842
4,930
(224)
(177)
-
-
99
(5)
5,647
37
-
-
(163)
(92)
134
2,301
(128)
-
(899)
-
(106)
(7)
2,258
(17)
-
(542)
-
22
106
Total tax expense/(income)
4,623
5,563
1,161
1,827
The tax rates used in the above reconciliation are principally the corporate tax rates of 33% and 30% payable respectively by
New Zealand and Australian corporate entities on taxable profits under tax law in each jurisdiction. The effect of the change in
the New Zealand tax rates from 33% to 30% with effect from 1 July 2008 is not material.
41
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
3.
INCOME TAXES contd.
Current tax assets and liabilities
(b)
Current tax assets:
Current tax refundable
Current tax liabilities:
Current tax payable
(c)
Deferred tax balance
Deferred tax assets comprise:
Temporary differences
Deferred tax liabilities comprise:
Temporary differences
Taxable and deductible temporary differences arise from the following:
2007
Gross deferred tax liabilities:
Property, plant & equipment
Provisions
Gross deferred tax assets:
Property, plant & equipment
Provisions
Doubtful debts & impairment losses
Other financial liabilities - derivatives
Other
42
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
624
539
441
390
1,082
543
-
-
1,209
1,116
386
419
(80)
(30)
1,129
1,086
(7)
379
(15)
404
Group
Opening Charged to
income
balance
$’000
$’000
Closing
balance
$’000
(30)
-
(30)
68
666
179
40
163
1,116
(43)
(7)
(50)
7
(3)
91
(40)
38
93
(73)
(7)
(80)
75
663
270
-
201
1,209
3.
INCOME TAXES contd.
2006
Gross deferred tax liabilities:
Property, plant & equipment
Gross deferred tax assets:
Property, plant & equipment
Provisions
Doubtful debts & impairment losses
Other financial liabilities - derivatives
Other
2007
Gross deferred tax liabilities:
Property, plant & equipment
Other financial liabilities - derivatives
Gross deferred tax assets:
Property, plant & equipment
Provisions
Doubtful debts & impairment losses
Other financial liabilities - derivatives
Group
Opening Charged to
income
balance
$’000
$’000
Closing
balance
$’000
(3)
(3)
21
490
136
14
-
661
(27)
(27)
47
176
43
26
163
455
(30)
(30)
68
666
179
40
163
1,116
Parent
Opening Charged to
income
balance
$’000
$’000
Closing
balance
$’000
(15)
-
(15)
37
258
101
23
419
15
(7)
8
8
(48)
30
(23)
(33)
-
(7)
(7)
45
210
131
-
386
43
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
3.
INCOME TAXES contd.
2006
Gross deferred tax liabilities:
Property, plant & equipment
Other financial liabilities - derivatives
Gross deferred tax assets:
Property, plant & equipment
Provisions
Doubtful debts & impairment losses
Other financial liabilities - derivatives
Parent
Opening Charged to
income
balance
$’000
$’000
Closing
balance
$’000
(3)
(32)
(35)
-
175
91
5
271
(12)
32
20
37
83
10
18
148
(15)
-
(15)
37
258
101
23
419
No liability has been recognised in respect of the amount of temporary differences associated with undistributed earnings
of subsidiaries because the group is in a position to control the timing of the reversal of the temporary differences and it is
probable that such differences will not reverse in the foreseeable future.
Imputation credit account balances
(d)
Balance at beginning of the period
Attached to dividends received
Taxation paid
Attached to dividends paid
Other
Group
2007
$’000
5,335
-
2,236
(3,407)
19
Group
2006
$’000
4,603
-
3,639
(2,907)
-
Parent
2007
$’000
1,848
246
1,086
(3,407)
(25)
Parent
2006
$’000
2,190
810
1,755
(2,907)
-
Balance at end of the period
4,183
5,335
(252)
1,848
Imputation credits available directly and
indirectly to shareholders of the parent
company, through
Parent company
Subsidiaries
(252)
4,435
4,183
1,848
3,487
5,335
44
4.
KEY MANAGEMENT PERSONNEL COMPENSATION
Compensation
Short-term employee benefits
Post-employment benefits
5.
REMUNERATION OF AUDITORS
Auditor of the parent entity (Deloitte)
Audit of the financial statements
Audit related services from adoption of NZ IFRS
Taxation services
Other Auditors of entities in the group
Audit of the financial statements
6.
TRADE & OTHER RECEIvABLES
Trade receivables (i)
Allowance for doubtful debts
Other receivables
Group
2007
$’000
2,925
188
3,113
Group
2006
$’000
3,056
146
3,202
Parent
2007
$’000
1,776
188
1,964
Parent
2006
$’000
1,940
146
2,086
164
96
4
264
54
54
152
31
20
203
48
48
74
96
-
170
-
-
79
21
13
113
-
-
39,700
(235)
1,765
37,469
(301)
1,034
41,230
38,202
9,860
(138)
64
9,786
9,995
(125)
41
9,911
(i) Trade receivables are non-interest bearing and generally on monthly terms. No interest is charged on the trade receivables for
the first 60 days from the date of the invoice. Thereafter, interest may be charged at 3% per annum on the outstanding balance.
An allowance has been made for estimated irrecoverable amounts from the sale of goods, determined by reference to past default
experience. The movement in the allowance of $66,000 in the group and $13,000 in the parent was recognised in the Income
Statement for the current financial year.
45
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
7.
PREPAYMENTS
Current portion
Term portion
8.
INvENTORIES
Raw Materials
At cost
Finished Goods
At cost
At net realisable value
9.
OTHER FINANCIAL ASSETS - DERIvATIvES
At fair value:
Foreign currency forward contracts
Interest rate swaps
10.
DEFERRED SALE PROCEEDS
Current
Non current
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
1,090
1,432
2,522
865
1,223
2,088
101
-
101
114
-
114
161
132
37
-
44,558
492
43,158
180
14,501
470
45,211
43,470
15,008
13,458
180
13,638
-
12
12
-
-
-
981
68
1,049
133
558
691
-
-
-
-
-
-
621
57
678
-
-
-
The deferred sale proceeds relate to the sale of the residual 51% shareholding in Biomed Limited on 1 July, 2004 and were repayable
over five years at the bank base rate for five year fixed rate term loans plus 2%. The deferred sales proceeds were repaid in full during
the financial year.
46
11.
PROPERTY, PLANT AND EQUIPMENT
Freehold
land
at
cost
$’000
1,417
-
-
-
Buildings
at
cost
$’000
6,031
46
(1)
-
Gross carrying amount
Balance at 1 July, 2005
Additions
Disposals
Net foreign currency exchange differences
Balance at 30 June, 2006
1,417
6,076
Additions
Disposals
Net foreign currency exchange differences
-
(217)
-
771
(669)
-
Group
Leasehold
improv.
at
cost
$’000
Plant and Office equip.
furniture &
fittings at
cost
$’000
vehicles
at
cost
$’000
Total
$’000
19,956
1,885
(619)
334
788
97
-
54
939
83
(3)
(52)
3,546
640
(414)
141
8,174
1,102
(204)
139
3,913
9,211
21,556
762
(100)
(121)
549
(337)
(162)
2,165
(1,326)
(335)
Balance at 30 June, 2007
1,200
6,178
967
4,454
9,261
22,060
Accumulated depreciation
Balance at 1 July, 2005
Disposals
Depreciation expense
Net foreign currency exchange differences
Balance at 30 June, 2006
Disposals
Depreciation expense
Net foreign currency exchange differences
Balance at 30 June, 2007
Net book value
As at 30 June, 2006
As at 30 June, 2007
-
-
-
-
-
-
-
-
-
(915)
1
(168)
-
(224)
40
(107)
(17)
(1,859)
191
(481)
(71)
(5,966)
81
(906)
(101)
(8,964)
313
(1,662)
(189)
(1,082)
(308)
(2,220)
(6,892)
(10,502)
146
(179)
-
-
(106)
22
33
(524)
62
298
(902)
117
477
(1,711)
201
(1,115)
(392)
(2,649)
(7,379)
(11,535)
1,417
1,200
4,994
5,063
631
575
1,693
1,805
2,319
1,882
11,054
10,525
47
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
11.
PROPERTY, PLANT AND EQUIPMENT contd.
Parent
Freehold
land
at
cost
$’000
Buildings
at
cost
$’000
Leasehold
improv.
at
cost
$’000
Plant and Office equip.
furniture &
fittings at
cost
$’000
vehicles
at
cost
$’000
Total
$’000
4,202
349
(186)
217
-
-
217
-
(217)
-
-
-
-
-
-
-
-
670
-
(1)
669
-
(669)
179
23
-
202
4
-
666
124
(30)
760
322
(21)
2,470
202
(155)
2,517
4,365
97
(199)
423
(1,106)
-
206
1,061
2,415
3,682
(136)
-
(7)
(143)
146
(3)
(54)
-
(20)
(74)
-
(20)
(433)
27
(115)
(2,039)
153
(237)
(2,662)
180
(379)
(521)
(2,123)
(2,861)
-
(163)
198
(222)
344
(408)
-
(94)
(684)
(2,147)
(2,925)
217
-
526
-
128
112
239
377
394
268
1,504
757
Gross carrying amount
Balance at 1 July, 2005
Additions
Disposals
Balance at 30 June, 2006
Additions
Disposals
Balance at 30 June, 2007
Accumulated depreciation
Balance at 1 July, 2005
Disposals
Depreciation expense
Balance at 30 June, 2006
Disposals
Depreciation expense
Balance at 30 June, 2007
Net book value
As at 30 June, 2006
As at 30 June, 2007
Group Plant includes finance leases capitalised with a cost of $332,000 (2006 $294,000) and book value of $235,000 (2006 $239,000).
Parent plant includes finance leases capitalised with a cost of $134,000 (2006 $134,000) and book value of $92,000 (2006 $126,000).
At 30 June, 2007 land and buildings with a carrying value of $6.2million has been determined by Telfer Young (Auckland) Limited, in
accordance with NZ IAS16, to have a fair value of $10.9 million.
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
179
106
524
902
168
107
481
906
1,711
1,662
3
20
163
222
408
7
20
115
237
379
Aggregate depreciation recognised as an expense
during the year:
Buildings
Leasehold improvements
Plant and vehicles
Office equipment, furniture & fittings
48
12.
GOODWILL
Gross carrying amount
Balance at beginning of financial year
Additional amounts recognised from business
combinations occurring during the period
Effects of foreign currency exchange differences
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
27,869
19,887
1,728
1,728
-
(482)
7,436
546
-
-
-
-
Net book value
27,387
27,869
1,728
1,728
Allocation of goodwill to cash-generating units
Goodwill has been allocated for impairment testing purposes to the following cash-generating units representing the lowest level at
which management monitor goodwill:
• Australian Hospital and Primary Healthcare sector (EBOS Group Pty Limited) – Healthcare Australia.
• New Zealand Dental, Consumer, Hospital, Primary Healthcare, Aged Care and International Product Supplies (EBOS Group
Limited) – Healthcare NZ.
• New Zealand Hospital Procurement and logistic services (Health Support Limited) – Logistics NZ.
• Australasia Scientific Supplies (Global Science & Technology Limited) – Scientific.
The carrying amount of goodwill allocated to the Healthcare Australia cash-generating unit, and to the Scientific cash-generating unit is
significant in comparison with the total carrying amount of goodwill. The carrying amount of goodwill allocated to the Healthcare NZ
and Logistics NZ cash-generating units is not. However, the recoverable amounts of the operations in New Zealand and Australia are
based on some of the same key assumptions. The carrying amount of goodwill allocated to cash-generating units is as follows:
Healthcare Australia
Healthcare NZ (Parent)
Logistics NZ
Scientific
Group
2007
$’000
7,502
1,728
1,468
16,689
Group
2006
$’000
7,984
1,728
1,468
16,689
27,387
27,869
During the year ended 30 June 2007, management have determined that there is no impairment of any of the cash generating units
containing goodwill.
The recoverable amounts (i.e. higher of value in use and fair value less costs to sell) of those units are determined on the basis of value
in use calculations. Management has determined that the recoverable amount calculations are most sensitive to changes in the following
assumptions:
Healthcare Australia, Healthcare NZ and Scientific – Gross margin being maintained during a period of cost increases driven by
movements in foreign currency and cost inflation pressures, and maintaining market share during the budget period.
49
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
12.
GOODWILL contd.
Logistics NZ – controlling cost inflation pressures and maintenance of/replacement of major contracts during the budget period.
Gross margins during the period for Healthcare Australia , Healthcare NZ, Logistics NZ and Scientific are estimated by
management based on average gross margins achieved before the start of the budget period. Market shares during the budget
period are assessed by management based on average market shares achieved in the period immediately before the start of the
budget period, adjusted each year for any anticipated growth.
The value in use calculation uses cash flow projections based on financial budgets approved by management covering a five year period.
Annual growth rates of 2%, which is below current historical growth rates; an allowance of 4% for inflation to expenses, and pre tax
discount rates of 14.7% to 15.4% have been applied to these projections. Cash flows beyond the five year period have been extrapolated
using a steady 2% growth rate. Management also believes that any reasonably possible change in the key assumptions would not cause
the carrying amount of any of the cash generating units to exceed their recoverable amount.
13.
INDEFINITE LIFE INTANGIBLE ASSETS
Group
Natures Kiss Allersearch Liceblaster
$’000
$’000
$’000
Gross carrying amount
Balance at 1 July, 2005
Net foreign currency exchange differences
Balance at 30 June, 2006
Net foreign currency exchange differences
2,390
-
2,390
-
2,570
-
2,570
-
1,359
144
1,503
(147)
Total
$’000
6,319
144
6,463
(147)
Balance at 30 June, 2007
2,390
2,570
1,356
6,316
2,390
2,390
2,570
2,570
1,503
1,356
Natures Kiss Allersearch
$’000
$’000
Parent
2,390
2,570
2,390
2,570
2,390
2,570
2,390
2,390
2,570
2,570
6,463
6,316
Total
$’000
4,960
4,960
4,960
4,960
4,960
Net book value
As at 30 June, 2006
As at 30 June, 2007
Gross carrying amount
Balance at 1 July, 2005
Balance at 30 June, 2006
Balance at 30 June, 2007
Net book value
As at 30 June, 2006
As at 30 June, 2007
50
13.
INDEFINITE LIFE INTANGIBLE ASSETS contd.
The carrying amount of brands (indefinite life intangibles) has been allocated to the cash generating units referred to in Note 12 as
follows:
Healthcare Australia
Healthcare NZ (Parent)
2007
$000
3,926
2,390
6,316
2006
$000
4,073
2,390
6,463
Management have assessed these as having an indefinite useful life. In coming to this conclusion management considered expected
expansion of the usage of the brands across other products and markets, the typical product life cycle of these assets, the stability of the
industry in which the brands are operating, the level of maintenance expenditure required and the period of legal control over the brands.
During the year ended 30 June 2007, management have determined that there is no impairment of any of the brands. The recoverable
amounts are determined on the basis of value in use calculations. Management has determined that the recoverable amount calculations
are most sensitive to change in the following assumptions.
The calculation of the recoverable amount for each of the brands in the group and the parent has been determined based on a
value in use calculation that uses cash flow projections based on financial budgets approved by management covering a five-year
period. Annual growth rates of 2%, and an allowance of 4% for inflation to expenses, and pre-tax discount rates of 14.7% to
15.4% has been applied to these projections. Cash flows beyond the five-year period have been extrapolated using a steady
2% growth rate. Management also believes that any reasonably possible change in the key assumptions would not cause the
carrying amount of the brands to exceed their recoverable amount.
14.
CAPITAL WORK IN PROGRESS
Capital work in progress
Group
2007
$’000
240
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
-
240
-
The capital work in progress relates to the construction of an office building in Christchurch. The total cost to complete the project is
approximately $3.2 million.
51
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
15.
SUBSIDIARIES
Parent and Head Entity
Ebos Group Limited
Subsidiaries (all balance dates 30 June)
Ebos Group Pty Limited
Ebos Health & Science Pty Limited
Health Support Limited
- Health Support Properties Limited
Global Science & Technology Limited
- Quantum Scientific Pty Limited
16.
BORROWINGS
Current
Bank overdrafts (i)
Bank loans (i)
Finance lease liabilities (ii)
Advances from Subsidiaries (at call) (iii)
Non-current
Bank loans (i)
Finance lease liabilities (ii)
Total borrowings
Country of
Incorporation
Australia
Australia
New Zealand
New Zealand
New Zealand
Australia
2007
100%
100%
100%
100%
100%
100%
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
635
1,101
74
-
1,810
7,985
120
9,915
3,508
22,209
66
-
25,783
16,796
147
42,726
349
-
27
1,546
1,922
-
74
2006
100%
100%
100%
100%
100%
100%
Parent
2006
$’000
123
14,696
27
1,864
16,710
4,508
101
1,996
21,319
Secured by a floating charge over the group’s assets.
Secured by the assets leased.
(i)
(ii)
(iii) Unsecured
17.
TRADE & OTHER PAYABLES
Trade payables
Other payables
24,957
4,722
23,945
4,907
29,679
28,852
3,853
1,408
5,261
3,719
2,534
6,253
52
18.
LEASES
Finance leases
Minimum future lease payments
Finance leases relate to office equipment and warehouse racking with lease terms of 4 years. The group has options to purchase the
equipment for a nominal amount at the conclusion of the lease agreements.
Finance lease liabilities
Minimum Future Lease Payments
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
Not later than 1 year
Later than 1 year and not later than
5 years
Minimum lease payments*
Less future finance charges
93
151
244
(50)
Present value of minimum lease payments 194
84
185
269
(56)
213
34
94
128
(27)
101
34
128
162
(34)
128
Included in the financial statements as:
Finance leases - current portion
Finance leases - non current portion
Present Value of Minimum
Future Lease Payments
Parent
2007
$’000
Group
2006
$’000
Group
2007
$’000
74
120
194
-
194
74
120
194
66
147
213
-
213
66
147
213
27
74
101
-
101
27
74
101
Parent
2006
$’000
27
101
128
-
128
27
101
128
*Minimum future lease payments includes the aggregate of all lease payments and any guaranteed residual.
Operating leases
Leasing arrangements
Operating leases relate to certain property and equipment. All operating lease contracts contain market review clauses in the event that
the company/group exercises its option to renew. The company/group does not have an option to purchase the leased asset at the expiry
of the lease period.
Operating leases
Non-cancellable operating lease payments
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
19.
OTHER FINANCIAL LIABILITIES - DERIvATIvES
At fair value:
Foreign currency forward contracts
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
2,775
5,963
484
9,222
2,610
5,167
815
8,592
842
196
61
758
770
-
1,099
1,528
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
95
95
-
-
95
95
-
-
53
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
20.
DEFERRED PURCHASE CONSIDERATION
Deferred purchase consideration
Group
2007
$’000
-
-
Group
2006
$’000
4,500
4,500
Parent
2007
$’000
-
-
Parent
2006
$’000
4,500
4,500
The deferred purchase consideration arose on the acquisition of the remaining 33% interest in Global Science and Technology Limited:
Total deferred purchase consideration
Less paid during the year
Balance at end of financial year
21.
SHARE CAPITAL
Fully paid ordinary shares
Balance at beginning of financial year
Issue of shares to executives and staff
under employee share ownership scheme
Rights issue 20 December 2006
Share issue costs
4,500
(4,500)
9,000
(4,500)
4,500
(4,500)
9,000
(4,500)
-
4,500
-
4,500
2007
No.
’000
2007
$’000
2006
No.
’000
2006
$’000
27,634
26,837
27,594
26,758
-
9,210
-
-
36,840
(527)
40
-
-
79
-
-
36,844
63,150
27,634
26,837
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Changes to the Companies Act in 1993 abolished the authorised capital and par value concept in relation to share capital from 1 July,
1994. Therefore, the company does not have a limited amount of authorised capital and issued shares do not have a par value.
Given the immateriality of the amounts involved the issue of shares to executives and staff under the employee ownership scheme have
not been accounted for pursuant to NZ IFRS-2: Share Based Payment.
22.
RESERvES
Foreign currency translation reserve
Balance at beginning of financial year
Translation of foreign operations
Acquisition of foreign subsidiary
Balance at end of financial year
Group
2007
$’000
668
(1,153)
-
(485)
Group
2006
$’000
(30)
729
(31)
668
Exchange differences, principally relating to the translation from Australian dollars, being the functional currency of the group’s foreign
controlled entities in Australia, into New Zealand dollars, are brought to account by entries made directly to the foreign currency
translation reserve.
54
22.
RESERvES contd.
Retained Earnings
Balance at beginning of financial year
Net profit attributable to members of the parent entity
Dividends provided for or paid (note 24)
Group
2007
$’000
28,258
10,319
(7,092)
Group
2006
$’000
22,784
11,548
(6,074)
Parent
2007
$’000
13,576
5,811
(7,092)
Parent
2006
$’000
14,635
5,015
(6,074)
Balance at end of financial year
31,485
28,258
12,295
13,576
23. MINORITY INTERESTS
Balance at beginning of financial year
(Acquisition) of minority interests
Balance at the end of financial year
24.
DIvIDENDS
Recognised amounts
Fully paid ordinary shares
- Final – prior year
- Interim – current year
Unrecognised amounts
Final dividend
Group
2007
$’000
-
-
-
2007
Cents per
share
2007
Total
$’000
2006
Cents per
share
13.0
9.5
22.5
3,592
3,500
7,092
12.5
9.5
22.0
Group
2006
$’000
4,004
(4,004)
-
2006
Total
$’000
3,449
2,625
6,074
13.0
6,015
13.0
3,592
55
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
25.
ACQUISITION OF BUSINESSES
Name of Business Acquired
2006:
Additional 33% of Global Science & Technology Limited
(increasing shareholding to 100%)
100% of business assets of Scientific Supplies Limited
Description of Acquisition Activity
2006
Principal
activity
Date of
acquisition
Scientific Supplies
Scientific Supplies
1 July, 2005
1 December, 2005
Cost of
acquisition
$’000
9,440
2,565
12,005
33% of Global
Book
Fair value
value adjustments
Net Assets Acquired
$’000
$’000
Fair value
on
acquisition
$’000
Business assets of Scientific Supplies Limited
Book
Fair value
value adjustments
$’000
$’000
Fair value
on
acquisition
$’000
Total fair
value on
acquisition
$’000
Current assets:
Inventories
Non-current assets:
Property, plant and equipment
Current liabilities:
Trade and other payables
Net assets acquired
Minority interest
Goodwill on acquisition
Consideration
-
-
-
-
-
-
-
-
-
-
-
-
4,004
4,004
5,436
9,440
Further details of the businesses acquired are disclosed in note 26.
537
163
(135)
565
-
-
-
-
537
163
537
163
(135)
(135)
565
-
565
2,000
2,565
565
4,004
4,569
7,436
12,005
At 1 July 2005 on acquisition of the remaining minority interest in Global Science & Technology Limited the fair value of the net assets
was equal to the book value.
56
26.
NOTES TO THE CASH FLOW STATEMENT
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
(a)
Businesses acquired
Note 25 sets out details of the businesses acquired.
Details of the acquisitions are as follows.
Consideration
Cash and cash equivalents
Deferred purchase consideration (Note 20)
Represented by:
Net assets acquired (Note 25)
Investment in subsidiaries
Minority interest
Goodwill on acquisition
Consideration
Net cash outflow on acquisition
Cash and cash equivalents consideration
(b)
Financing facilities
Financing facilities
Bank overdraft facility, reviewed annually and
payable at call:
Amount used
Amount unused
Secured bank loan facilities with various maturity
dates through to December 2009:
Amount used
Amount unused
-
-
-
-
-
-
-
-
7,505
4,500
12,005
565
-
4,004
7,436
12,005
-
-
-
-
-
-
-
-
4,500
4,500
9,000
-
9,000
-
-
9,000
4,500
7,505
4,500
4,500
635
2,361
2,996
3,508
5,125
8,633
349
901
1,250
123
627
750
9,086
20,000
39,005
2,184
-
20,000
29,086
41,189
20,000
19,204
2,200
21,404
57
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
26.
NOTES TO THE CASH FLOW STATEMENT contd.
(c)
Reconciliation of profit for the period
with cash flows from operating activities
Profit for the period
Add/(less) non-cash items:
Depreciation
(Gain)/loss on sale of property, plant and equipment
Loss/(gain) on derivatives/financial instruments
Deferred tax
Provision for doubtful debts
Foreign currency (gain)/loss on translation of working
capital balances
Movement in working capital:
Trade and other receivables
Finance lease receivables
Prepayments
Inventories
Current tax refundable/payable
Trade and other payables
Employee benefits
Movements in items treated as investing activities
Net cash inflow from operating activities
27.
EARNINGS PER SHARE CALCULATION
Basic earnings per share (refer Income Statement and note 21)
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
10,319
11,548
5,811
5,015
1,711
(541)
1,123
(43)
(66)
(1,375)
809
(2,962)
28
(434)
(1,741)
454
827
(46)
1,662
28
(1,269)
(428)
(126)
1,057
924
(1,652)
-
657
(6,397)
378
2,425
64
408
(598)
773
25
12
-
620
113
29
13
(1,370)
(51)
(992)
(103)
379
2
(762)
(169)
-
-
(550)
(805)
-
(34)
(3,028)
193
362
113
(3,874)
(4,525)
(2,361)
(3,199)
-
7,254
402
8,349
-
-
4,070
1,266
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
Earnings
Weighted average number of ordinary shares
for the purposes of basic earnings per share
Group
2007
$’000
Group
2006
$’000
10,319
11,548
32,504
27,634
Diluted earnings per share (refer Income Statement and note 21)
The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:
Earnings
Weighted average number of ordinary shares for the
purpose of diluted earnings per share
58
Group
2007
$’000
Group
2006
$’000
10,319
11,548
32,504
27,634
28.
COMMITMENTS FOR EXPENDITURE
(a) Capital expenditure commitments
Property, Plant and Equipment
Intangible assets
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
3,343
6,031
717
-
3,119
-
-
-
A significant portion of the expenditure relates to the purchase of Vital Medical Supplies (Australia) Ltd – refer note 32.
Lease commitments
(b)
Finance lease liabilities and non-cancellable operating lease commitments are disclosed in note 18 to the financial statements.
29.
CONTINGENT LIABILITIES & CONTINGENT ASSETS
Contingent liabilities
Guarantees given to third parties
Guarantees arising from the deed of cross guarantee
with other entities in the wholly-owned group
Group
2007
$’000
Group
2006
$’000
Parent
2007
$’000
Parent
2006
$’000
75
-
75
-
75
75
15,088
15,991
The company has entered into a deed of guarantee for certain wholly-owned subsidiaries. The amount disclosed as a contingent liability
represents total liabilities of the group of companies party to that, less the liabilities recognised by the group. The extent of which an
outflow of funds will be required is dependent on the future operations of the entities that are party to the deed of guarantee being more
or less favourable than currently expected. The deed of guarantee may continue to operate indefinitely.
SEGMENT INFORMATION
30.
Information on business segments (primary reporting format)
Segment Revenue
Revenue
Healthcare
Scientific
Inter-segment (i)
Group
2007
$’000
Group
2006
$’000
273,936
39,009
(5,669)
263,684
42,817
(6,015)
307,276
300,486
(i) Inter-segment sales are recorded at amounts equal to competitive market prices charged to external customers for similar goods.
Profit before finance costs and tax
Healthcare
Scientific
Profit for the period
Healthcare
Scientific
Segment assets
Healthcare
Scientific
Segment liabilities
Healthcare
Scientific
13,462
3,669
17,131
8,549
1,770
14,124
5,911
20,035
7,829
3,719
10,319
11,548
105,647
31,579
102,628
32,107
137,226
134,735
38,351
4,725
43,076
67,653
11,319
78,972
59
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
30.
SEGMENT INFORMATION contd.
Healthcare Healthcare
2006
$’000
2007
$’000
Scientific
2007
$’000
Scientific
2006
$’000
Acquisition of segment assets
Depreciation and amortisation of segment assets
1,805
1,325
1,110
1,252
361
386
563
410
Products and services within each business segment
For management purposes, the group is organised into two major operating divisions - Healthcare and Scientific. These divisions are the
basis on which the group reports its primary segment information. The principal products and services of each of these divisions are as
follows:
• Healthcare: Incorporates the sale of healthcare products in a range of sectors, own brands, retail healthcare and wholesale activities.
• Scientific: Incorporates the sale of laboratory consumables, life sciences equipment and technical support to industry and research
laboratories.
Information on geographical segments (secondary reporting format)
Revenue
New Zealand
Australia
Eliminations
Profit before finance costs and tax
New Zealand
Australia
Profit for the period
New Zealand
Australia
Segment assets
New Zealand
Australia
Group
2007
$’000
Group
2006
$’000
232,922
80,023
(5,669)
227,384
79,117
(6,015)
307,276
300,486
8,997
8,134
17,131
5,550
4,769
13,051
6,984
20,035
7,266
4,282
10,319
11,548
98,502
38,724
96,568
38,167
137,226
134,735
New Zealand New Zealand
2006
$’000
2007
$’000
Australia
2007
$’000
Australia
2006
$’000
Acquisition of segment assets
1,785
1,256
381
417
The group’s two divisions operate in two principal geographical areas - New Zealand and Australia.
60
31.
RELATED PARTY DISCLOSURES
(a)
Parent Entities
The parent entity in the group is EBOS Group Limited.
(b)
Equity interests in Related Parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 15 to the financial statements.
(c)
Transactions with Related Parties
Transactions involving the parent entity
Amounts receivable from and payable to related parties at balance date are disclosed on the parent company balance sheet, and Note 16
of these financial statements.
During the financial year, EBOS Group Limited received dividends of $2,724,000 (2006: $1,644,000) from its subsidiaries.
During the financial year, EBOS Group Limited provided accounting and administration services to its subsidiaries for a consideration
of $456,000 (2006: $456,000) and charged royalties for the use of brand names and patents totalling $269,322 (2006: $221,316).
During the financial year, EBOS Group Limited rented warehouse space and contracted labour from its subsidiaries for a total cost of
$349,494 (2006 $319,705).
Terms/price under which related party transactions were entered into
All loans advanced to and payable by subsidiaries are unsecured, subordinate to other liabilities and are at call. Interest rates determined
by the directors were 8.3% - 9.1%. During the financial year, EBOS Group Limited received interest of $634,000 (2006: $49,000) from
loans to subsidiaries, and paid interest of $163,000 (2006: $185,654) to subsidiaries.
No amounts were provided for doubtful debts relating to debts due from related parties at reporting date (2006: Nil).
Guarantees provided or received
As detailed in note 29, EBOS Group Limited has entered into a deed of cross guarantee with certain wholly-owned subsidiaries.
(d)
Key Management Personnel Remuneration
Details of key management personnel remuneration are disclosed in note 4 to the financial statements.
Other Transactions Involving Related Parties
(e)
During the financial year Global Science & Technology Ltd and Quantum Scientific Pty Ltd rented premises from interests associated
with key management personnel, P Balchin, F Spurway and D Brown. Rents of $614,178 (2006: $643,083) were paid.
During the financial year Global Science & Technology Ltd and Quantum Scientific Pty Ltd paid amounts totalling $331,641 (2006:
$705,015) to interests associated with the same key management personnel for the provision of management services.
61
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
32.
SUBSEQUENT EVENTS
On 1 July 2007 the group acquired all of the business assets of Vital Medical Supplies (Australia) Ltd a Sydney based supplier of
medical goods to the health industry for approximately NZ$6.2 million.
33.
FINANCIAL INSTRUMENTS
(a)
Financial risk management objectives
The group’s corporate treasury function provides services to the two segments, co-ordinates access to domestic and international
financial markets, and manages the financial risks relating to the operation of the group.
The group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
The use of financial derivatives is governed by the group’s policies approved by the Board of Directors, which provide written principles
on the use of financial derivatives. Compliance with policies and exposure limits is reviewed on a regular basis.
The group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
The group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign currency risk,
including:
•
•
forward foreign exchange contracts to hedge the exchange rate risk arising on imports of product;
interest rate swaps to mitigate the risk of rising interest rates.
(b)
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, and the basis of measurement
applied in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial
statements.
The group also mitigates the risk of rising interest rates by entering into fixed interest rate bank loans.
(c)
Foreign currency risk management
The group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise.
Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.
Forward foreign exchange contracts
It is the policy of the group to enter into forward foreign exchange contracts to cover specific foreign currency payments and receipts
within 60 to 100% of the exposure generated. The group also enters into forward foreign exchange contracts to manage the risk
associated with anticipated sales and purchase transactions out to 12 months within 20% to 75% of the exposure generated.
62
33.
FINANCIAL INSTRUMENTS contd.
Outstanding Contracts
Buy Australian Dollars
Less than 3 months
3 to 6 months
6 to 12 months
Buy Euro
Less than 3 months
3 to 6 months
6 to 12 months
Buy Pounds
Less than 3 months
3 to 6 months
6 to 12 months
Buy US Dollars
Less than 3 months
3 to 6 months
6 to 12 months
Buy Swiss Francs
Less than 3 months
3 to 6 months
Buy Japanese Yen
Less than 3 months
3 to 6 months
Average
exchange rate
2006
2007
Foreign currency
2007
FC’000
2006
FC’000
Contract value
2007
$’000
2006
$’000
Fair value
2007
$’000
2006
$’000
0.883
0.905
-
0.540
-
-
0.400
-
-
0.742
0.736
-
0.865
0.865
0.829
0.515
0.502
0.481
0.354
0.348
0.329
0.658
0.653
0.613
0.792
-
0.850
0.838
880
100
-
200
-
-
50
-
-
500
100
-
80
-
1,200
1,326
1,000
1,150
1,050
900
280
255
220
1,000
850
700
150
150
86.864
-
75.968
74.598
3,000
-
6,000
6,000
996
110
-
370
-
-
125
-
-
674
136
-
101
-
35
-
1,387
1,533
1,207
2,232
2,090
1,871
791
733
670
1,521
1,301
1,141
176
179
79
80
(24)
-
-
(19)
-
-
(7)
-
-
(22)
(4)
-
(15)
-
(4)
-
79
91
24
185
131
56
56
41
2
129
105
25
24
21
7
5
(95)
981
The vast majority of the above financial instruments relate to the parent entity. The fair value of forward foreign exchange contracts
outstanding are recognised as other financial assets/liabilities. Hedge accounting has not been adopted.
(d) Interest rate risk management
The group is exposed to interest rate risk as it borrows funds at both fixed and floating interest rates. The risk is managed by
maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts and forward
interest rate contracts.
Interest rate swap contracts
Under interest rate swap contracts, the group agrees to exchange the difference between fixed and floating rate interest amounts
calculated on agreed notional principal amounts. Such contracts enable the group to mitigate the risk of changing interest rates on debt
held. The fair value of interest rate swaps are based on market values of equivalent instruments at the reporting date.
Outstanding Contracts
Outstanding variable rate for fixed contracts
Less than 1 year
1 to 2 years
Average
contracted fixed
interest rate
Notional principal
amount
Fair value
2007
%
2006
%
2007
$’000
2006
$’000
2007
$’000
2006
$’000
5.79
-
6.51
6.10
2,203
-
6,741
5,661
2,203
12,402
12
-
12
17
51
68
In the current year the above financial instruments relate to a subsidiary entity. In the prior year the vast majority of the above financial
instruments related to the parent entity. The fair value of interest rate swaps outstanding are recognised as other financial assets/
liabilities. Hedge accounting has not been adopted.
63
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
33.
FINANCIAL INSTRUMENTS contd.
Maturity profile
The following table details the group’s exposure to interest rate risk:
Weighted Variable
interest
rate
average
effective
interest
rate
%
$’000
Fixed Maturity Dates
1-2
Years
2-3
Years
3-4
Years
4-5
Years
Non
interest
5+ bearing
Years
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Less
than 1
year
$’000
7.4
1,772
9.0
86
86
57
57
57
57
58
58
1,772
12.3
635
10.0
7.3
74
1,101
74
1,101
46
6,884
41,230
624
12
1,772
41,230
624
12
258
41,866
43,896
29,679
1,082
2,305
95
635
29,679
194
9,086
1,082
2,305
95
635
1,175
1,175
6,930
33,161
43,076
Weighted Variable
interest
rate
average
effective
interest
rate
%
$’000
Fixed Maturity Dates
1-2
Years
2-3
Years
3-4
Years
4-5
Years
Non
interest
5+ bearing
Years
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Less
than 1
year
$’000
Group - 2007
Financial assets:
Cash and cash equivalents
Trade and other receivables
Current tax refundable
Other financial assets
Finance leases
Financial liabilities:
Bank overdraft
Trade and other payables
Finance leases
Bank loans
Current tax payable
Employee benefits
Other financial liabilities
Group - 2006
Financial assets:
Cash and cash equivalents
Trade and other receivables
Current tax refundable
Other financial assets
Finance leases
Deferred sale proceeds
0.0
1,938
9.0
11.3
57
133
57
133
57
425
57
58
1,938
38,202 38,202
539
1,049
286
691
539
1,049
Financial liabilities:
Bank overdraft
Trade and other payables
Finance leases
Bank loans
Current tax payable
Employee benefits
Deferred purchase consideration
9.5
10.0
7.7
1,938
190
190
482
57
58
39,790 42,705
3,508
66
60
28,631 10,374
40
27
20
3,508
28,852 28,852
213
39,005
543
2,351
4,500
543
2,351
4,500
3,508 28,697 10,434
40
27
20
36,246 78,972
64
33.
FINANCIAL INSTRUMENTS contd.
Weighted Variable
interest
rate
average
effective
interest
rate
%
$’000
Fixed Maturity Dates
1-2
Years
2-3
Years
3-4
Years
4-5
Years
Non
interest
5+ bearing
Years
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Less
than 1
year
$’000
Parent - 2007
Financial assets:
Cash and cash equivalents
Trade and other receivables
Current tax refundable
Advances to subsidiaries
Finance leases
7.4
200
8.6
9.0
10,118
86
200 10,204
57
57
57
57
58
58
Financial liabilities:
Bank overdraft
Trade and other payables
Finance leases
Employee benefits
Other financial liabilities
Advances from subsidiaries
12.3
349
9.1
8.6
27
27
27
20
1,546
9,786
441
200
9,786
441
10,118
258
10,227
20,803
5,261
980
95
349
5,261
101
980
95
1,546
Parent - 2006
Financial assets:
Cash and cash equivalents
Trade and other receivables
Current tax refundable
Other financial assets
Advances to subsidiaries
Finance leases
Financial liabilities:
Bank overdraft
Trade and other payables
Finance leases
Bank loans
Employee benefits
Advances to subsidiaries
Deferred purchase consideration
349
1,573
27
27
20
6,336
8,332
Weighted Variable
interest
rate
average
effective
interest
rate
%
$’000
Fixed Maturity Dates
1-2
Years
2-3
Years
3-4
Years
4-5
Years
Non
interest
5+ bearing
Years
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Less
than 1
year
$’000
0.0
13
8.4
9.0
140
58
198
13
11.8
123
57
57
57
57
57
57
58
58
9.1
8.0
8.4
27
14,696
27
4,508
1,864
27
27
20
9,911
390
678
13
9,911
390
678
140
287
10,979
11,419
6,253
1,083
4,500
123
6,253
128
19,204
1,083
1,864
4,500
123 16,587
4,535
27
27
20
11,836
33,155
65
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2007
33.
FINANCIAL INSTRUMENTS contd.
(e)
Credit Risk Management
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the group.
The group has adopted a policy of only dealing with credit worthy counter parties and obtaining sufficient collateral where appropriate,
as a means of mitigating the risk of financial loss from defaults.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit
evaluation is performed on the financial condition of the trade receivables and, where appropriate, credit guarantee insurance cover is
purchased (refer note 29).
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the group’s
maximum exposure to credit risk without taking account of the value of any collateral obtained.
The group does not have any significant credit risk exposure to any single counter party or any group of counter parties having similar
characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counter parties are banks with
high credit ratings assigned by international credit rating agencies.
(f)
Fair value of financial instruments
The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements
approximates their fair values.
The fair values and net fair values of financial assets and financial liabilities are determined as follows:
•
•
•
the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are
determined with reference to quoted market prices; and
the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models
based on discounted cash flow analysis.
the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available use is made of
discounted cash flow analysis using the applicable yield curve for the duration of the instruments.
Transaction costs are included in the determination of net fair value.
(g)
Liquidity risk management
The group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously
monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
66
EBOS Group Limited
additional stock exchange Information
As at 31 July, 2007
Twenty Largest Shareholders
First NZ Capital Custodians Ltd (Python Portfolios Ltd)
Accident Compensation Corporation
Whyte Adder No.3 Ltd
Forsyth Barr Custodians Ltd
National Nominees New Zealand Ltd
HSBC Nominees (New Zealand) Ltd
Custodial Services Ltd
M.B. Waller & A.L. Waller
P. Gardiner-Garden
Forsyth Barr Custodians Ltd
Tea Custodians Ltd
Forsyth Barr Custodians Ltd
Asset Custodian Nomineees Ltd
New Plymouth District Council
Hubbard Churcher Trust Management Ltd
Investment Custodial Services Ltd
Citibank Nominees (New Zealand) Ltd
Custodial Services Ltd
Forsyth Barr Custodians Ltd
Custodial Services Ltd
Fully paid Percentage of
paid capital
shares
3,678,521
2,489,479
2,422,686
774,518
753,082
729,605
581,327
405,702
377,200
371,861
333,333
329,349
312,094
296,491
201,912
181,245
177,309
176,440
171,324
167,953
9.98%
6.76%
6.58%
2.10%
2.04%
1.98%
1.58%
1.10%
1.02%
1.01%
0.90%
0.89%
0.85%
0.80%
0.55%
0.49%
0.48%
0.48%
0.47%
0.46%
14,931,431
40.52%
Substantial Security Holders
As at 31 July 2007 the following persons are deemed to be substantial security holders in accordance with Section 26 of the Securities
Amendment Act 1988.
Python Portfolios Ltd
Accident Compensation Corporation
Whyte Adder No.3 Limited
Fully paid Percentage of
paid capital
shares
3,678,521
2,489,479
2,422,686
9.98%
6.76%
6.58%
8,590,686
23.32%
Distribution of Shareholders and Shareholdings
Holders
Fully paid Percentage of
paid capital
shares
Size of Holding
1 to 999
1,000 to 4,999
5,000 to 9,999
10,000 to 49,999
50,000 to 99,999
100,000 to 499,999
500,000 to 999,999
1,000,000 and over
Total
Registered Address of Shareholders
New Zealand
Overseas
Total
519
1,863
644
506
34
23
4
3
265,468
4,510,074
4,385,369
9,034,215
2,292,212
4,927,407
2,838,532
8,590,686
0.72%
12.24%
11.90%
24.52%
6.22%
13.38%
7.70%
23.32%
3,596
36,843,963
100.00%
3,508
88
36,020,791
823,172
97.77%
2.23%
3,596
36,843,963
100.00%
Waivers Granted by the NZX
The company applied a waiver during the year from the NZX in respect of Listing Rule 9.2.1, so that Whyte Adder No.3 Limited could
sub-underwrite the December 2006 Renounceable Rights Issue, on terms substantially the same as those agreed with all other sub-
underwriting parties, without the requirement to seek and obtain shareholder approval by way of ordinary resolution.
67
Chairman
Chief Executive and Managing Director
Deputy Chairman
Directors
R.G.M. Christie
M.B. Waller
P.F. Kraus
E.M. Coutts
S.C. Ottrey
B.J. Wallace
D.C. Doherty
Corporate Secretary
Chief Executive
Managing Director - Scientific
General Manager – Business Development
Chief Financial Officer
General Manager – EBOS Healthcare NZ
General Manager – Health Support Ltd
General Manger – EBOS Group Pty Ltd
executives
M.B. Waller
D. Brown
A.J. Cooper
D.C. Doherty
K.R. Hyland
G. Managh
A. Norris
auditor
Deloitte
Christchurch
Bankers
ANZ National Bank Limited
Christchurch
solicitor
Chapman Tripp
Christchurch
share Register
Computershare Investor Services Ltd
Private Bag 92119
Auckland
NEW ZEALAND
Telephone: (09) 488-8777
EBOS Group Limited
Directory
Corporate office
324 Cashel Street
P O Box 411
CHRISTCHURCH
Telephone (03) 366-2199
Fax (03) 379-3248
E-mail: ebos@ebos.co.nz
Internet: www.ebos.co.nz
other Locations
Auckland Office
243-249 Bush Road
P O Box 302-161
Albany, Auckland
NEW ZEALAND
Wellington Office
498 Hutt Road
Lower Hutt
NEW ZEALAND
subsidiaries
Health Support Limited
56 Carrington Road, Pt Chevalier
Auckland
NEW ZEALAND
EBOS Group Pty Limited
Unit 2, 109 Vanessa Street
Kingsgrove, NSW 2208
AUSTRALIA
EBOS Health & Science Pty Limited
Unit 2, 109 Vanessa Street
Kingsgrove, NSW 2208
AUSTRALIA
EBOS Health & Science (PNG) Limited
GB House, Kunai Street
Hohola, Waigani NCD
PAPUA NEW GUINEA
Global Science & Technology Limited
241 Bush Road, Albany
Auckland
NEW ZEALAND
Quantum Scientific Pty Limited
31 Archimedes Place
Murarrie, Queensland
AUSTRALIA
shareholder enquiries
Shareholders with enquiries about share transactions, change of address or dividend payments
should contact the Share Registrar – Computershare Investor Services Ltd.
68