EBOS Group Limited
Annual Report 2009
1
Ebos key revenue streams
Healthcare and scientific sales and marketing,
where we drive demand for specific brands.
Pharmaceutical and medical wholesaling.
As a key service provider of pharmaceuticals and
medical consumables to hospitals.
As a key service provider to multi-national healthcare
manufacturers.
2
EBOS Group Limited Annual Report 2009
Highlights
Financial Performance and Trends
Chairman’s Report
Managing Director’s Review
Board of Directors
Corporate Governance Statement
Directors’ Report
EBOS Group Limited Financial Report
Directors’ Responsibility Statement
Audit Report
Income Statement
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Additional Stock Exchange Information
EBOS Group Limited Directory
2
2
4
6
14
16
18
22
22
23
24
25
26
27
28
68
69
1
Highlights of the year ended 30 June 2009
Australia recorded very strong profit growth as we leveraged off our national
operating platform.
All Healthcare businesses improved their earnings over the prior year.
Strong cash flows enabled $11.6 million bank debt to be repaid, and net debt to
net debt plus equity ratio reduced to 19.6%.
Our wholesale and logistics businesses benefited from rigorous cost reductions
and containment measures.
With stronger second six months our scientific businesses recorded a solid profit
result at 91% of the prior year.
Financial performance and trends
1,344.9
1,092.0
307.3
300.5
281.0
38.7
33.6
19.7
16.7
21.7
19.2
18.8
11.5
10.3
9.0
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
Revenue ($ millions)
EbITDA ($ millions)
NPAT ($ millions)
2009
2008
2007
2006
2005
Net cash inflow from operating activities ($’000)
33,310
28,546
162,039
147,304
25.0c
41.1c
4.4
23.0c
37.6c
3.7
7,254
92,195
22.5c
31.7c
7.8
8,349
55,763
22.5c
41.8c
6.9
6,532
49,512
21.5c
32.5c
7.7
19.6%
32.0%
8.1%
42.3%
40.2%
Shareholders’ interest ($’000)
Distributions cents per share
Earnings per share
Interest cover
Net interest bearing debt to net interest
bearing debt plus equity
2
3
EBOS Group Limited Annual Report 2009
Chairman’s report
The EBOS Board of Directors is again pleased to report a record performance by EBOS Group Limited for the
year ending 30 June 2009, reflecting a group-wide effort to further lift our trading performance and generate
stronger cash flows. The result was doubly pleasing as it was achieved despite weak market conditions in
both New Zealand and Australia.
The biggest growth step ever taken by EBOS, was the 2007 expansion into the pharmaceutical distribution
and logistics sector. Accordingly, it is significant that business activities involved in the acquisitions of 2007
and 2008 have performed right up to expectations.
Strong teamwork has produced excellent performances from our New Zealand and Australian Healthcare
businesses while Scientific has produced sound results.
The EBOS board is pleased to see strong leadership on key economic, regulatory and social issues by the
new Government. The changes coming through may include steps towards greater efficiencies in the
District Health Board sector in which EBOS has relevant experience and knowledge.
EBOS has improved its ranking, by market capitalisation in the NZX-50, with resultant increased interest
in the company from equity analysts.
Results
In the year ended 30 June 2009, revenue was up 23.2% to a
new record at $1,345m ($1,092m in 2008). Earnings before
interest, tax, amortisation and depreciation level was a record
$38.71m, and a 15.1% improvement on the $33.63m achieved in
2008.
Net profit after tax of $19.73m was 18.4% higher than the 2008
result of $16.66m and is after interest costs of $7.93m (2008
$8.33m) and tax expense of $7.05m (2008 $5.88m).
The trading results reflect on three key revenue streams:
• Healthcare sales and marketing where we
drive demand for specific brand,
• Scientific sales and marketing – as above
where we drive demand.
(Both of these sectors are trans-Tasman.)
• Wholesale/Logistics where we are a key
service provider to large customers for
Pharmaceuticals, OTC products and
medical consumables. These businesses are
exclusively in NZ.
Earnings per share increased from 37.6 cents to 41.1 cents on
the capital base of 48.98 million shares on issue, as at 30 June
2009. This outcome confirms the positive trend in earnings
growth since 2006.
balance sheet
EBOS has strengthened its financial position with significant
debt reduction over the past year, a highlight.
Net debt at balance date was $39.4m (2008 $69.7m), with
strong operating cash flows, and the company has achieved a
satisfactory and conservative ratio of debt to debt plus equity
of 19.6%.
The group has completed the first period of three-year
banking arrangements.
Net assets increased to $162.04m ($147.30m). Current assets
stand at $314.58m ($299.72m) and non-current assets at
$185.25m ($186.47m), with current liabilities at $254.25m
($322.77m) and non-current liabilities at $83.54m ($16.12m).
Total equity stands at $162.04m compared with $147.30m in
2008 when it was substantially increased by share placements
made with financial institutions, and a well supported Share
Purchase Plan.
Operational cash flow generation in 2009 was a record
$33.3m and compares with last year’s $28.54m, which was
also a significantly improved result. The further increase
was achieved by a major internal focus on managing group
inventory and working capital.
4
outlook
EBOS has every reason to remain optimistic about our
future prospects. We have a very strong market position
with a diversified base that is resilient to business impacts
encountered by the economy in general. We have achieved
this by building our capability in key areas of logistics and
marketing, by making acquisitions based on careful selection
and disciplined decision-making, and by strong management
of working capital. We offer our suppliers an effective choice
of market channels and provide our customers with the very
best sources of products and services.
Our conservative balance sheet provides the flexibility to
seek further expansion opportunities and EBOS will continue
to evaluate industry prospects for those that can add
shareholder value.
I encourage shareholders to attend the Annual Shareholders’
Meeting to be held at Christchurch on Thursday 22 October
2009, and thank you for your strong support of the company.
Rick Christie
Chairman of Directors
Dividend and bonus share Distribution
The directors have approved a bonus share distribution of
14.5 cents per share, to be issued on 2 October 2009, making a
total distribution of 25 cents per share for the year. The record
date for the bonus share distribution is 4 September 2009.
Shareholders have the option to have these shares purchased
back by the company for cash. When shareholders support
the bonus share distribution opportunity, cash is retained
in the business to either fund future growth or improve net
earnings from reduced funding costs.
board
During an extraordinary year of uncertainty for the New
Zealand and Australian economies, EBOS has benefited from
the commitment and combined business experience of its
directors. I express my sincere thanks for the efforts and
support of the board over this period. During the past year
Peter Merton ceased his management responsiblity for
PRNZ Ltd, with those functions shifting internally, however he
remains a valued member of the EBOS board. Mark Stewart
was appointed by the board as a director in September 2008
and he has made a valuable contribution.
Management and Employees
We are very fortunate with the calibre of our management
and we have again been well served by Mark Waller and his
team. Notwithstanding the increased scale and reach of
the EBOS Group, managements’ efforts have ensured the
continuation of a successful business culture in which almost
1,000 employees can experience the satisfaction of being part
of EBOS’s pursuit of excellence across all of its operations.
The further improvement in our corporate results during
a most challenging business environment confirms a
willingness on their part to want EBOS to excel, and this
has been vital to meeting the challenges of 2008-09. My
special thanks to the senior management team who have
been integral to the process of sharpening the group’s overall
performance.
5
EBOS Group Limited Annual Report 2009
Managing Director’s review
During the past year EBOS Group Limited has produced an outstanding performance particularly when
measured against the background of the current major recession.
In contrast to slowing growth in many business sectors most of the markets in which EBOS operates had a
dynamic year to June 2009. Our diversification across national markets was of immense benefit, with the
economy of Australia not as heavily impacted as that of New Zealand. Our operations in Australia made a
major contribution to group earnings.
It is important that our suppliers, customers and investors know that we believe in our ability to grow and
maintain service excellence and enduring value whatever the stage of the business cycle.
The impact of the global economic crisis on EBOS has been mitigated because the business sectors in
which we operate – Healthcare and Scientific – service the fundamental demands of our society that do not
diminish because there is a downturn.
EBOS has continued to deliver on growth expectations even
in a difficult and complex economic environment. We have
reported solid performances across all group trading divisions
as reported below under ‘Operational’ markets.
Earnings Before Interest, Taxation, Depreciation and
Amortisation (‘EBITDA’), was a record $38.7m, a 15.1%
improvement over last year. This represents a doubling in the
level of EBITDA during the past five years. EBOS has averaged
Earnings Per Share of 36.9 cents over that period, during
which issued capital has substantially increased.
From an investment perspective, EBOS is viewed by
commentators as a defensive business that is able to ride
through economic cycles, better than most companies.
However, the group’s trading resilience in the face of negative
economic forces is not simply fortuitous – our growth
strategies have created this position.
The continuing record performance reflects an intentional
strategy to grow by way of incremental steps in industry
sectors that we understand and then achieving optimal
performance from each component of the group.
The major acquisition of PRNZ broadened the market reach of
the group in Healthcare Logistics and Pharmacy Wholesale.
We have also concentrated on achieving excellence in service
delivery upstream to our manufacturer customers, and
downstream to our customers in Hospitals, Primary Care,
Consumer, Rehabilitation and Aged Care, Pharmacy and
Scientific markets.
The lesson of the past year is that massive shifts in global
and domestic markets can occur at short notice. Increased
business transparency is required not only externally but
internally. It is a time to closely manage business risk and
EBOS is doing this very effectively.
The project undertaken to upgrade our analysis and
awareness of our business matrices has greatly assisted
management’s understanding of where EBOS can improve
business unit performance and prevent leakage of hard-won
revenue gains. Improved efficiency and cost containment is
critical to current and future success.
Access to a ‘digital dashboard’ of Key Performance Indicators
(‘KPI’s’) has enabled managers to constantly monitor sales
performance, costs of sale and gross profit generated and
our customer service levels. We have also made broad
improvements on working capital management.
This flow of key operational data coupled with ongoing
positive customer feedback has confirmed that EBOS
managers are making the right choices.
This focus on working capital and rigorous KPI’s makes EBOS
a sound, reliable, business partner in uncertain times.
Our internal drive for improved performance has resulted in
operational cash flow reaching a record $33.3m in the 2009
year.
6
7
EBOS Group Limited Annual Report 2009
Managing Director’s review continued
Strong operating cash flows have enabled EBOS to steadily
reduce debt ratios and we are pleased to report excellent
progress in this area given the heightened market awareness
generally of the importance of balance sheet strength. Our
sound net interest bearing debt to debt plus equity position is
well illustrated in the trend for the past five years:
Ratio of Debt to Debt + Equity
2005
40.2%
2006
42.3%
2007
8.1%
2008
32.0%
2009
19.6%
Net debt at year-end was $39.4m compared with $69.7m at
June 2008.
Our strong balance sheet position is assisted by a
combination of cash flow and the rollover last year of our
bank facilities until 2011. EBOS has a three year $120m banking
facility. The conservative balance sheet provides head-room
for further expansion.
operational Markets
EBOS’s financial results reflect our overall performance in
providing suppliers with the best possible channels to market
and understanding the challenges facing our customers
during the economic downturn. EBOS managers have worked
hard to ensure that our customers are aware that we are
ready to provide solutions to help them meet such challenges.
Ebos Healthcare Australia and New Zealand
Australia
The excellent performance of our overall Healthcare
operations in Australia & New Zealand reflected our strong
multi-channel business model.
Another record year confirms that EBOS Australia is now
a major generator of group earnings. Revenue growth was
up by 10.9% with very strong organic profit growth as we
leveraged off our broader market platform.
Our underlying resilience was based on strong positions in
the Primary Care (GPs, medical centres) market, Hospitals
market and Aged Care sector. Primary Care growth was very
strong. Infection control products continued to be a great
success for the Hospitals division where EBOS had excellent
growth overall. A major focus on the infection prevention
market has created a new strategic partnership with
significant growth projected over the next 5 years.
8
The Aged Care Division has rolled out a ‘one stop shop’
strategy with a major drive for equipment sales and built a
better presence in this important growth market.
There is considerable potential to use the now fully integrated
EBOS Australia as the platform for future growth, both
generic and via acquisitions. Our trans-tasman presence is
increasingly important to the overall Group.
New Zealand
The EBOS New Zealand sales and marketing business
delivered improved earnings.
Primary Care
This business unit operates in a sector of the economy
that has been relatively insulated from the recession and
is one of our top performing units. Inventories have been
reduced by 40%. Improved margins and stock-turns have
been achieved on cleaner stock levels and resources are
being channelled into growth areas.
Hospitals
With District Health Board downwards pressure on
pricing making margins acutely tight, and no further
savings able to be made, this business unit is continuing
to adapt.
As a result EBOS intends to focus more on clinical
specialty areas such as – Medical Equipment, Infection
Control and Anaesthesia/Critical Care – to which we
dedicate a number of sales specialists and account
managers.
EBOS is also seeking new products relevant to a broader
range of specialty areas including surgery specialties,
cardiology and radiology.
Aged Care/Rehabilitation
This business unit achieved a further record result in
a market sector facing huge cost pressures. Very good
partnerships with large retirement village groups have
been established through our experienced marketing
and sales team offering a complete supply solution and
adding value.
While the level of equipment sales in the second half
reflected the financial downturn and lowered capital
expenditure, new supply contracts for rehabilitation
products supported ongoing growth.
This sector will continue to grow as demographics drive
demand.
Consumer
Another excellent year for our retail healthcare
business despite a tough retail sector. With consumers
concentrating the spending on essential items for
short-term use we broadened our market position across
pharmacy, grocery, and other retail channels and won
market share. All of our leading brands achieved growth.
Pacific Islands
Our Pacific Islands business continues to grow with
expansion into radiology and scientific markets. We
forecast ongoing growth and investment as many Pacific
nations face up to their critical need to invest more in
healthcare. EBOS is an important and proven solution
partner for them.
scientific Australia and New Zealand
After a slow start a positive result was recorded for our
Scientific portfolio of businesses. The Scientific businesses
encountered weaker trading conditions during the first half
of the year with a slowing in equipment sales caused by lower
levels of capital expenditure.
Customers also withheld expenditure due to uncertainty over
future funding levels.
The global financial crisis led to a sharp decline in production
rates for minerals from the Australian resource sector and
reduced requirements for assays and laboratory consumables.
The Scientific group has adapted to this by maximising
opportunities to broaden the business base into defensive
sectors such as the food industry.
We anticipated a cyclical industry downturn when we
acquired Crown Scientific Pty Ltd which is an Australia wide
distributor of scientific consumables and equipment.
There are early signs of confidence returning in the Australian
private sector where EBOS companies are leading suppliers of
scientific equipment and consumables.
Key groups in Australia have announced additional funding
for life sciences and medical research institutes and the
Science sector has benefited from Federal Government
stimulus programmes. Several new research institutes being
established should represent good opportunities for the
Australian Scientific group. However, trading conditions in
Australia are likely to remain subdued for the first part of the
current year.
In New Zealand the performance of our Scientific business
improved in quiet trading conditions; however, new business
opportunities remain scarce.
The newly integrated Med-Bio Ltd, a supplier in New Zealand
of consumables and clinical diagnostic equipment to public
and private pathology laboratories, performed well in a very
competitive market.
9
EBOS Group Limited Annual Report 2009
Managing Director’s review continued
Logistics and Wholesale
Our major wholesale/logistics businesses based in New
Zealand benefited from strict cost reduction and containment
measures and remain competitive in their markets, achieving
revenue and profit growth as a result.
Healthcare Logistics consolidated its market leadership
in out-sourced warehousing and logistics to multinational
manufacturers of pharmaceuticals, medical devices and
healthcare products on a full service brand-neutral basis.
It expanded managed warehousing space by 3,000 sqm
to 11,500 sqm to meet increased demand for streamlined
logistics services.
We took a further step forward in our services provided to
pharmaceuticals and healthcare product manufacturers.
The range of services includes customer services, pick-pack-
despatch and debtor management, essentially offering the
efficiencies of a ‘virtual organisation’ in New Zealand.
Since June 2009, we have commenced distribution into the
consumer sector for additional substantial logistics customers
which is a bright start to the current year.
Health Support again provided an effective bridge between
manufacturers and the public and private healthcare sector.
The soundness of this business model for DHB’s has lead to
significant volume growth and cost savings for customers.
Further progress was made in the logistics partnership with
Southern Cross Healthcare where we are supplying the
organisation’s hospitals in New Zealand.
Influenza H1N1
EBOS Group was designated an essential health sector
business when Avian ‘Flu raised pandemic fears last
year.
The competency and rapid response capability of
our Healthcare teams in Australia and New Zealand
was further demonstrated following the onset of the
Influenza H1N1 (‘Swine ‘flu’) pandemic in 2008-09.
When H1N1 emerged we readily topped up essential
stocks of pharmaceuticals, gloves and masks held by
critical health services.
EBOS also replenished required medicines, masks and
hand sanitisers through pharmacy and grocery channels
to meet general demand for preventative products.
In response to increased awareness of infection risk
EBOS will expand the level of group activities dedicated
to infection prevention, based on a products range
(masks, gloves, sanitisers, gowns and drapes, waste
disposal equipment) for the professional health market.
The formation of a new business unit in Australia
to focus on infection prevention from 1 July 2009 is
expected to generate positive cash flow from 2010.
EBOS Australia has led the way with the penetration of
aged care and hospitals markets by our infection control
and waste disposal equipment range.
In New Zealand EBOS Healthcare will align with District
Health Boards, Primary Health Organisations, industrial
sector groups and retailers to provide infection
prevention. However, New Zealand compliance
standards in this field lag those of Australia.
10
11
EBOS Group Limited Annual Report 2009
Managing Director’s review continued
Our pharmacy wholesale business continued to grow by
improving its service KPIs and working capital management
over the year in a sector where top-line volume felt the effects
of price reductions. This trend continues and will be mitigated
by ongoing cost controls and ProPharma’s market share
in pharmacy. Underlying volume demand for prescription
products and core over-the-counter cough, colds, pain, and
allergy ranges remained strong despite the recession.
However, we believe that future growth prospects lie in the
area of providing services to District Health Boards. Changes
foreshadowed in national supply arrangements may offer
opportunities for growth.
Our wholesale operations continue to invest in systems
improvements via technology to ensure our pharmacy and
DHB customers are well serviced.
Supply contracts with DHBs have operated well and provide
greater efficiency and cost savings for customers. We have
consolidated our business in non-DHB markets such as
leading private hospitals and customers in regional secondary
care.
12
At corporate level, EBOS now operates as “Two Countries,
One Group” with knowledge sharing between management
teams located in each country, joint initiatives in pursuit of
business opportunities, and integrated financial management.
The group will continue to drive operational efficiencies and
closely manage costs and cash flows to ensure we remain
competitive for customers and produce the best possible
routes to market for suppliers.
Our current conservative gearing levels provide the maximum
ability to consider further growth initiatives.
Put simply, we are still in growth mode.
Mark Waller
Managing Director
Health sector Review
Since the end of our financial year, a committee headed by
former Treasury Secretary Murray Horn has recommended to
Government the creation of a National Health Board.
We will closely monitor any Government review of the
District Health Board system that might now arise,
particularly given our many ‘touch-points’ in the health sector
and our ability to efficiently interface with hospital markets.
We believe that the available EBOS business models offer a
unique proposition to meet health sector needs. Our Logistics
and Wholesale businesses are successfully contributing to
health sector efficiencies in both private hospitals and the
state sector.
The Future
If we can emulate the success of the last decade our future
should be exciting. We have come through the worst of the
recessionary cycle and shown our resilience and reliability.
Our ongoing growth is a tribute to our staff in all areas of the
business who step forward every day to give their best effort.
The tremendous operational momentum that underpins the
ongoing success of the group owes a great deal to all of our
staff and their support in accepting change. Over the past two
years EBOS Group has more than simply grown bigger – it has
also greatly improved the processes within the business.
Australia and New Zealand are well-positioned to come out of
the down-cycle in reasonable shape and the economic crisis
is stimulating more rapid change in the way we interrelate as
nations.
13
EBOS Group Limited Annual Report 2009
board of Directors
RICK CHRISTIE MSC (HONS), FNZID, FNZIM (67)
(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 Argenta Ltd, and Health Support Ltd
and a director of the Growth & Innovation Advisory Board,
Tourism Holdings Ltd, Wakefield Health Ltd and the NZ Pork
Industry Board. Previously chairman of AgResearch Ltd,
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 (55)
(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, EBOS Group Pty Ltd,
EBOS Health & Science Pty Ltd, Healthcare Distributors
Pty Ltd, PRNZ Ltd and its associated companies, Quantum
Scientific Pty Ltd, Vital Medical Supplies (Australia) Pty Ltd
and Scott Technology Ltd.
PETER KRAUS MA (HONS), DIP ENG (58)
(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 and Trustee of the
Perpanida Trust and The Annalise Trust.
ELIZABETH COUTTS BMS, CA (50)
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 former, Chairman of Meritec Group, Chairman
of Industrial Research, and Life Pharmacy Ltd, director of
Air New Zealand Ltd, the Health Funding Authority and
Trust Bank New Zealand, former deputy chairman of Public
Trust, board member of Sport and Recreation NZ, member
of the Pharmaceutical Management Agency (Pharmac),
commissioner for both the Commerce and Earthquake
Commissions and former external monetary policy adviser
to the Governor of the Reserve Bank of New Zealand and
chief executive of the Caxton Group of Companies and Carter
building supply group. Her current directorships include
chair of Urwin & Co Ltd, chair of the Audit, Finance and Risk
Committee of the Ministry of Health, director of Ravensdown
Fertiliser Co-operative Ltd and Skellerup Industries Ltd.
PETER MERTON BPharm (47)
Appointed to the EBOS Group Ltd Board 12 September 2007.
Peter has worked in the retail, manufacturing, distribution
and wholesale areas of the pharmacy industry in New
Zealand, Asia and Africa since the early eighties. In 1987
he joined Zuellig Pharma in New Zealand where he worked
for the Zuellig group and then API until 2005. From 1997
through 2008 he was chief executive officer of PRNZ Ltd.
He is a director of Pharmacy Brands Ltd, Cape Healthcare Ltd,
Pharmacy Events Ltd, and Trustee of Pentz Trust.
SARAH OTTREY BCOM (44)
Appointed to the EBOS Group Ltd Board 18 September 2006.
Sarah is a marketing specialist advising various high profile
clients and is a Strategic Marketing Consultant to
DB Dominion Breweries Ltd. She is a past board member
of the Public Trust. Sarah has held senior marketing
management positions with Unilever and DB Breweries.
14
MARK STEWART BCOM (46)
Appointed to the EBOS Group Ltd Board 8 September 2008.
Mark commenced working for the PDL Group of Companies
in 1983. From 1987 to 2001 he held senior executive roles and
had directorship responsibilities, for a number of companies
in the PDL Group and was Managing Director of MasterTrade
Group Ltd from July 1991 until October 1994, gaining
experience in manufacturing, sales and marketing in the
Asian and Australasian markets.
Since October 2001 he has been Managing Director of
Masthead Ltd, the private investment vehicle of the Stewart
Family. He is a director of Masthead Holdings Ltd, Masthead
Ltd, Masthead Services Ltd, Masthead Investments Ltd,
Masthead Portfolios Ltd, Masthead Management Ltd,
Windwhistle Holdings Ltd, Forwood Forestry Ltd, Southern
Excursions Ltd, Stravon Safaries Ltd, Twinmark Investments
Ltd (in liq.), Python Portfolios Ltd, Woodbent Hill Ltd,
Laindon Ltd, Andos Holdings Ltd, Anaconda Ltd, Proteus
Group Holdings Ltd, Medusa Ltd, Lesley Hills Holdings Ltd,
and Newco No1 Ltd and a alternate director of Wakefield
Health Ltd.
BARRY WALLACE MCOM (HONS), CA (56)
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, Global Science & Technology Ltd, PRNZ
Ltd and its associated companies, Ecostore Company Ltd,
Eco Tech Solutions Ltd, Oceania Attractions Ltd, ISL
International Ltd, Hapimana Properties Ltd, Huckleberry
Farms Ltd and Allum Management Services Ltd and a Trustee
of The Perpanida Trust and The Annalise Trust.
The above named Directors held office during the year and
since the end of the financial year except for Mark Stewart
who was appointed on 8 September 2008.
15
EBOS Group Limited Annual Report 2009
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.
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.
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; Peter Merton (who resigned
as Chief Executive of PRNZ Ltd on 31 December 2008);
Sarah Ottrey, Mark Stewart and Barry Wallace. It has one
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).
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.
16
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
The table on page 20 shows attendances at the board and
committee meetings during the year ended 30 June 2009.
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.
17
EBOS Group Limited Annual Report 2009
Directors’ Report
Your Directors are pleased to submit to shareholders their report and financial statements
for the year ended 30 June 2009.
Principal activities
EBOS Group Limited (the Company) is listed on the NZX
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, 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 business segments being
Healthcare and Scientific
• Healthcare incorporates the sales and
marketing of healthcare products to a
wide range of sectors and the provision of
wholesale distribution services of health
sector consumables, pharmaceuticals and
‘over-the-counter’ products, and
• Scientific incorporates the sale and
marketing of laboratory consumables, life
sciences equipment and the provision of
technical support to industry and research
laboratories.
Issued capital
As at 30 June 2009 the Company had on issue 48,980,799
ordinary fully paid shares, with 1,958,958 shares issued during
the year.
Group results
Annual group operating revenue was NZ$1,345m in the year
ended 30 June 2009 (2008 $1,092m). Operating profit before
finance costs and tax of NZ$34.7m (2008 $30.9m) was earned
for the year ended 30 June 2009. The net profit for the period
after interest and tax was NZ$19.7m (2008 $16.6m). Earnings
per share were 41.1 cents (2008 37.6 cents).
Operating cash flow of $33.3m (2008 $28.5m) was generated
in the year.
Distribution
The Directors approved a final distribution of 14.5 cents per
share making a total of 25 cents per share for the year (2008
23 cents per share). Bonus shares under the Distribution Plan
will be issued on 2 October 2009.
Directors
Sarah Ottrey, Peter Kraus and Barry Wallace retire by rotation
in accordance with the Company’s constitution and being
eligible offer themselves for re-election.
Directors’ interests
Share dealings by Directors
The Directors tabled on page 14 have disclosed to the Board
under section 148(2) of the Companies Act 1993 particulars of
acquisitions of dispositions of relevant interests in ordinary
shares during the year – refer table on page 19.
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 Argenta Ltd, and Health Support
Ltd, and Director of Growth & Innovation Advisory Board,
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 and Trustee of the Perpanida Trust and
the Annalise Trust.
E.M. Coutts: Chair of Urwin & Co Ltd, Chair Audit, Finance
and Risk Committee of the Ministry of Health, and Director
Ravensdown Fertiliser Co-operative Ltd, and Skellerup
Industries Ltd.
P.M. Merton: Director of Pharmacy Brands Ltd, Cape
Healthcare Ltd, Pharmacy Events Ltd, and Trustee of
Pentz Trust.
18
S.C. Ottrey: Strategic Marketing Consultant to DB Dominion
Breweries Ltd.
M.J. Stewart: Director of Masthead Holdings Ltd, Masthead
Ltd, Masthead Services Ltd, Masthead Investments Ltd,
Masthead Portfolios Ltd, Masthead Management Ltd,
Windwhistle Holdings Ltd, Forwood Forestry Ltd, Southern
Excursions Ltd, Stravon Safaries Ltd, Twinmark Investments
Ltd (in Liq.), Python Portfolios Ltd, Woodbent Hill Ltd,
Laindon Ltd, Andos Holdings Ltd, Anaconda Ltd, Proteus
Group Holdings Ltd, Medusa Ltd, Lesley Hills Holdings Ltd,
and Newco No1 Ltd.
Alternate Director of Wakefield Health Limited.
B.J. Wallace: Director of Allum Management Services Ltd,
Global Science and Technology Ltd, Health Support Ltd,
PRNZ Ltd and its associated companies, 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 and Trustee of the
Perpanida Trust and The Annalise Trust.
M.B. Waller: Director of Global Science and Technology Ltd,
Health Support Ltd, EBOS Health & Science Pty Ltd, EBOS
Group Pty Ltd, Healthcare Distributors Pty Ltd, PRNZ Ltd and
its associated companies, Quantum Scientific Pty Ltd, Scott
Technology Ltd, and Vital Medical Supplies (Australia) Pty Ltd.
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
R G M Christie – All non beneficially held
Issue of restricted staff shares
Maturing staff shares
E M Coutts
– Held by associated persons
P F Kraus
P F Kraus
– Held by associated persons
S C Ottrey
– Held by associated persons
P M Merton
M J Stewart
Director of Python Portfolios Ltd
– Non beneficially held
M B Waller
– Held by associated persons
Non beneficially held
Issue of restricted staff shares
Maturing staff shares
B.J. Wallace
Non beneficially held – Director of Whyte
Adder No.3 Ltd
Director of Herpa
Properties Ltd
Ordinary Shares
Purchased (Sold)
Consideration Paid
(Received)
Date of
Transaction
1,654
1,694
43,550
(26,152)
447
297
1,000
102,789
19,439
76,474
14,463
4,500
90
47,479
35,324
145,294
108,097
569
424
1,654
43,550
(26,152)
1,694
102,789
76,474
19,439
14,463
$7,195
$7,948
$108,875
Nil
$1,944
$1,393
Nil
$447,132
$84,560
$358,800
$67,831
$18,450
$422
$206,534
$165,733
$632,029
$507,169
$2,475
$1,988
$7,195
$108,875
Nil
$7,948
$447,132
$358,801
$84,560
$67,831
October 2008
April 2009
March 2009
Sept 08-Mar 2009
October 2008
April 2009
April 2009
October 2008
October 2008
April 2009
April 2009
October 2008
April 2009
October 2008
April 2009
October 2008
April 2009
October 2008
April 2009
October 2008
March 2009
Sept 08-Mar 2009
April 2009
October 2008
April 2009
October 2008
April 2009
19
EBOS Group Limited Annual Report 2009
Directors’ Report continued
Directors’ Report & Disclosures
Use of Company information continued
Directors’ shareholdings
Number of fully paid shares held as at
E M Coutts
R G M Christie
P F Kraus
P M Merton
S C Ottrey
M J Stewart
B J Wallace
M B Waller
Attendance
R Christie
P Kraus
E Coutts
P Merton
S Ottrey
M Stewart
B Wallace
M Waller
– Held by associated persons
– Non beneficially held – Staff share purchase scheme
– Held by associated persons
– Held by associated persons
– Held by associated persons
– Non beneficially held – Director of Python Portfolios Ltd
– Non beneficially held – Director of Whyte Adder No.3 Ltd/
Herpa Properties Ltd
– Held by associated persons
– Non beneficially held – Staff share purchase scheme
30 June 2009
30 June 2008
3,000
15,152
170,976
1,000
4,154,297
1,613,725
4,590
4,938,268
4,154,297
404,957
19,255
170,976
3,000
14,408
150,230
Nil
3,941,132
1,530,922
Nil
4,684,877
3,941,132
405,957
18,262
150,230
Board
Eligible to
Attend
Attended
10
10
10
10
10
9
10
10
10
10
10
10
9
6
10
10
Audit & Risk Committee Remuneration Committee
Eligible to
Attend
Eligible to
Attend
Attended
Attended
3
–
3
–
–
–
3
3
3
–
3
–
–
–
3
3
1
–
–
–
–
–
1
1
1
–
–
–
–
–
1
1
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.
20
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 2009 were as follows:
2009
2008
EBOS GROUP LIMITED
R.G.M. Christie
P.F. Kraus
E.M. Coutts
P. Merton
M.J. Stewart
S.C. Ottrey
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
($163,087 Salary & Other Benefits)
Salary
* Other benefits
$106,000
$75,000
$53,000
$25,000
$40,625
$50,000
$56,000
$455,200
$875,000
Nil
Nil
Nil
Nil
$104,800
$74,100
$52,400
$287,325
–
$49,400
$55,000
$218,200
$829,000
$10,000
$8,750
$5,000
$5,000
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
160,000 – 170,000
170,000 – 180,000
180,000 – 190,000
190,000 – 200,000
200,000 – 210,000
220,000 – 230,000
230,000 – 240,000
240,000 – 250,000
250,000 – 260,000
260,000 – 270,000
270,000 – 280,000
300,000 – 310,000
400,000 – 410,000
440,000 – 450,000
500,000 – 510,000
Number of Employees
2009
2008
18
11
14
6
12
5
1
1
–
2
1
1
2
1
1
2
–
–
–
1
1
13
10
6
8
4
–
4
–
4
–
2
–
4
1
–
–
1
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
20 August 2009
M.b. Waller
Managing Director
21
EBOS Group Limited
Financial Report
For the financial year ended 30 June, 2009
EBOS Group Limited
EBOS Group Limited
Directors’ Responsibility statement
Directors’ Responsibility statement
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 2009.
The Directors are responsible for presenting financial statements in accordance with New Zealand law and generally accepted
accounting practice, which give a true and fair view of the financial position of the company and the group as at 30 June 2009 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
20 August 2009
22
AUDIT REPORT
TO THE SHAREHOLDERS OF
EBOS GROUP LIMITED
We have audited the financial statements on pages 24 to 67. The financial statements provide information about the past
financial performance and financial position of EBOS Group Limited and group as at 30 June 2009. This information is stated
in accordance with the accounting policies set out on pages 28 to 35.
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 2009 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:
•
the significant estimates and judgements made by the Board of Directors in the preparation of the financial statements, and
• whether the accounting policies are appropriate to the company and group circumstances, consistently applied 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 information technology and due diligence 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 24 to 67:
-
-
- give a true and fair view of the financial position of EBOS Group Limited and group as at 30 June 2009 and the
comply with generally accepted accounting practice in New Zealand;
comply with International Financial Reporting Standards; and
results of their operations and cash flows for the year ended on that date.
Our audit was completed on 20 August 2009 and our unqualified opinion is expressed as at that date.
Chartered Accountants
ChRISTChuRCh, NEW ZEALAND.
This audit report relates to the financial statements of EBOS Group Limited for the year ended 30 June 2009 included on EBOS Group Limited’s website. The Board
of Director’s is responsible for the maintenance and integrity of EBOS Group Limited’s website. We have not been engaged to report on the integrity of EBOS Group
Limited’s website. We accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
The audit report refers only to the financial statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/
from these financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the
published hard copy of the audited financial statements and related audit report dated 20 August 2009 to confirm the information included in the audited financial
statements presented on this website. Legislation in New Zealand governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
23
EBOS Group Limited
Income statement
For the Financial Year ended 30 June, 2009
Revenue
Profit before depreciation, amortisation,
finance costs and income tax expense
Depreciation
Amortisation of finite life intangibles
Profit before finance costs and tax
Finance costs
Profit before income tax expense
Income tax (expense)/credit
Profit for the period
Earnings per share:
Basic (cents per share)
Diluted (cents per share)
Notes
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
2 (a)
1,344,946
1,092,020
78,519
69,851
2 (b)
2 (b)
2 (b)
2 (b)
3
38,711
(3,364)
(644)
34,703
(7,926)
26,777
(7,050)
33,634
(2,620)
(137)
30,877
(8,334)
22,543
(5,880)
13,811
(446)
-
13,365
(4,687)
8,678
1,395
19,727
16,663
10,073
8,171
(316)
-
7,855
(4,591)
3,264
31
3,295
25
25
41.1
41.1
37.6
37.6
24 Notes to the financial statements are included on pages 28 to 67.
EBOS Group Limited
balance sheet
As at 30 June, 2009
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Current tax refundable
Other financial assets - derivatives
Advances to subsidiaries
Finance leases
Total current assets
Non-current assets
Property, plant and equipment
Capital work in progress
Finance leases
Prepayments
Deferred tax assets
Goodwill
Indefinite life intangibles
Finite life intangibles
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
Total current liabilities
Non-current liabilities
Bank loans
Trade and other payables
Deferred tax liabilities
Finance leases
Employee benefits
Notes
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
6
7
8
3
9
10
11
7
3
12
13
14
15
16
17
16, 18
16
3
19
16
16
17
3
16, 18
33,609
150,720
2,203
127,380
562
-
-
108
16,136
150,426
2,789
126,704
3,428
130
-
108
1,845
10,430
1,018
9,100
23
-
11,878
108
314,582
299,721
34,402
19,444
-
57
856
6,540
133,915
23,730
709
-
22,103
916
115
1,176
3,992
133,062
23,756
1,353
-
4,386
-
57
-
2,433
1,728
4,960
-
128,630
3
239,457
551
2,250
3,678
4,767
3,550
-
277
233,039
225
82,971
1,886
3,984
387
-
3
7,376
27
1,000
-
1,612
2,691
5,072
254,256
322,769
17,781
70,000
4,936
7,612
186
804
1,250
5,318
7,796
890
867
38,000
-
1,488
20
-
Parent
2008
$’000
121
8,572
47
14,131
1,316
-
12,298
108
36,593
4,352
-
115
-
527
1,728
4,960
-
128,630
16
6,907
27
48,100
-
1,383
384
5,512
62,329
-
-
1,488
47
-
1,535
185,251
186,473
142,194
140,312
499,833
486,194
176,596
176,905
Total non-current liabilities
83,538
16,121
39,508
Total liabilities
Net assets
Equity
Share capital
Foreign currency translation reserve
Retained earnings
Cash flow hedge reserve
Total equity
337,794
338,890
57,289
63,864
162,039
147,304
119,307
113,041
20
21
21
21
105,861
1,586
56,555
(1,963)
105,752
2,044
39,645
(137)
105,861
-
14,810
(1,364)
105,752
-
7,554
(265)
162,039
147,304
119,307
113,041
Notes to the financial statements are included on pages 28 to 67.
25
EBOS Group Limited
statement of Changes in Equity
For the Financial Year ended 30 June, 2009
Notes
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
Equity at start of period
147,304
92,195
113,041
73,957
Profit for the period
Movement in foreign currency translation
reserve
Cash flow hedges (loss) taken to equity
Related income tax
Total recognised income and expenses
Dividends paid to company shareholders
Shares issued
19,727
16,663
10,073
3,295
(458)
(2,555)
729
2,529
(250)
113
-
(1,570)
471
-
(378)
113
17,443
19,055
8,974
3,030
(2,817)
109
(6,548)
42,602
(2,817)
109
(6,548)
42,602
21
21
21
22
20
Equity at end of period
162,039
147,304
119,307
113,041
26
Notes to the financial statements are included on pages 28 to 67.
EBOS Group Limited
Cash Flow statement
For the Financial Year ended 30 June, 2009
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
2009
$’000
Group
2008
$’000
1,343,550
878
-
(1,298,807)
(4,385)
(7,926)
1,086,298
234
-
(1,041,501)
(8,151)
(8,334)
Parent
2009
$’000
64,679
688
11,350
(59,272)
1,254
(4,687)
Parent
2008
$’000
65,532
1,069
-
(58,783)
(879)
(4,591)
Net cash inflow from operating activities
24c
33,310
28,546
14,012
2,348
Cash flows from investing activities
Sale of property, plant & equipment
Advances from subsidiaries
Purchase of property, plant & equipment
Payments for capital work in progress
Advances to subsidiaries
Businesses acquired
Investment in subsidiary company
2,969
-
(1,867)
(916)
-
(1,452)
-
295
-
(6,315)
(150)
-
(86,968)
-
156
-
(602)
-
(21)
-
-
4
8,185
(3,710)
-
(6,398)
(72,315)
(2,264)
24a
Net cash (outflow) from investing activities
(1,266)
(93,138)
(467)
(76,498)
Cash flows from financing activities
Proceeds from issue of shares
Payment of share issue costs
Proceeds from borrowings
Repayment of borrowings
Dividends paid to equity holders of parent
Subvention income from subsidiaries
109
-
-
(11,600)
(2,817)
-
29,382
(1,031)
59,793
(2,500)
(6,548)
-
109
-
-
(9,100)
(2,817)
-
29,382
(1,031)
48,100
-
(6,548)
4,501
22
Net cash inflow/(outflow) from financing activities
(14,308)
79,096
(11,808)
74,404
Net increase in cash held
Effect of exchange rate fluctuations on cash held
Net cash and cash equivalents at beginning
of the year
17,736
11
14,504
218
1,737
-
254
-
15,859
1,137
105
(149)
Net cash and cash equivalents at the end of the year
33,606
15,859
Cash and cash equivalents
Bank overdrafts
33,609
(3)
16,136
(277)
33,606
15,859
1,842
1,845
(3)
1,842
105
121
(16)
105
Notes to the financial statements are included on pages 28 to 67.
27
EBOS Group Limited
Notes to the Financial statements
For the Financial Year ended 30 June, 2009
1.
SUMMARY OF ACCOUNTING POLICIES
1.1 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.
The Financial Statements comply with International Financial Reporting Standards (“IFRS”).
1.2 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, 2009 and the
comparative information presented in these financial statements for the year ended 30 June, 2008.
The information is presented in thousands of New Zealand dollars.
1.3 Critical Judgements in applying accounting policies
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.
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 identification of intangible assets such as brands separately from
goodwill, arising on acquisition of a business or subsidiaries and the recognition of revenue on significant contracts subject to renewal
where the receipt of cashflows does not match the services provided.
28
1.
SUMMARY OF ACCOUNTING POLICIES cont.
1.4 Key Sources of Estimation Uncertainty
Key sources of estimation uncertainty relate to assessment of impairment of goodwill and indefinite life intangibles.
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 that significant contracts 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.
1.5 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.
29
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
1.
SUMMARY OF ACCOUNTING POLICIES cont.
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 of finite life intangible assets is 1 to 8 years. 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.
The following useful lives are used in the calculation of depreciation:
• Buildings
• Leasehold improvements
• Plant
• Office equipment, furniture and fittings
• Motor vehicles
20 to 100 years
2 to 15 years
2 to 20 years
2 to 10 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.
30
1.
SUMMARY OF ACCOUNTING POLICIES cont.
Where an impairment loss subsequently reverses, other than for Goodwill and indefinite life intangible assets, 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. Impairment losses can
not be reversed for Goodwill and indefinite life intangible assets.
h) Taxation
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement
because it excludes items of income and expense that are taxable or deductible in other years and further excludes items that are never
taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by
the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all
deducible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or
from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates,
and interest in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary differences and they are 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 sufficent taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled
or the asset realised, based on tax (and tax laws) that have been enacted or subsantively enacted by the balance sheet date. The
measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner which the Group
expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforecable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets
and liabilities on a net basis.
Inventories
i)
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.
31
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
1.
SUMMARY OF ACCOUNTING POLICIES cont.
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.
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 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.
Financial assets are classified into the following specific categories: “financial assets at fair value through profit or loss” (FVTPL), “held
to maturity” investments, “available for sale” (AFS) financial assets and “loans and receivables”. The category depends on the nature
and purpose of the financial assets and is determined at initial recognition. The categories used are set out below:
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.
Loans and Receivables
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and
receivables.
Loans and 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.
32
1.
SUMMARY OF ACCOUNTING POLICIES cont.
Financial Liabilities
Financial liabilities are classified as either financial liabilities at “fair value through profit or loss” (FVTPL) or “other financial
liabilities” measured at amortised cost. The classifications used are set out below:
Other Financial Liabilities
Trade and other payables are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest
rate method.
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received plus issue costs associated
with the borrowing. After initial recognition, these loans and borrowings are subsequently measured at amortised cost using the effective
interest 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.
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. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as
a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. The
group designates certain derivatives as cashflow hedges of highly probable forecast transactions.
Cashflow hedges
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item,
along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the group documents whether the hedging instrument that is used in a hedging relationship is highly
effective in offsetting changes in cashflows of the hedged items.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cashflow hedges are deferred in equity.
The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss. however,
when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and
losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset and
liability.
hedge accounting is discontinued when the group revokes the hedging relationship, the hedging instrument expires, is terminated,
exercised or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in equity and
is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to
occur, the cumulative gain or loss that was deferred in equity is recognised immediately in profit or loss.
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:
33
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
1.
SUMMARY OF ACCOUNTING POLICIES cont.
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.
Effective Interest Method
The effective interest rate method is a method of calculating the amortised cost of a financial asset and of allocating interest income over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points
paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the
expected life of the financial asset, or, where appropriate, a shorter period to the carrying amount of the financial asset.
Royalties
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement. Royalties determined on
a time basis are recognised on a straight line basis over the period of the agreement. Royalty arrangements that are based on production,
sales and other measures are recognised by reference to the underlying agreement.
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:
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.
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.
34
1.
SUMMARY OF ACCOUNTING POLICIES cont.
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
The Group and Parent have adopted all new standards as issued by the Financial Reporting Standards Board except for those listed in
the table below. Initial application of the following standards will not affect any of the amounts recognised in the financial statements,
but may change the disclosures presently made in relation to the Group and Parent’s financial statements:
Standard
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied
in the year ending
NZ IFRS 3 Business Combinations
NZ IFRS 7 Financial Instruments : Disclosure (revised standard)
NZ IFRS 8 Operating Segments
NZ IAS 1 Presentation of Financial Statements (revised standard)
NZ IAS 23 Borrowing Costs (revised standard)
NZ IAS 27 Consolidated and Separate Financial Statements (revised standard)
NZ IFRIC 17 Distributions of Non Cash Assets to owners
1 July 2009
1 January 2009
1 January 2009
1 January 2009
1 January 2009
1 July 2009
1 July 2009
30 June 2010
30 June 2010
30 June 2010
30 June 2010
30 June 2010
30 June 2010
30 June 2010
There were no changes to accounting policies during the year.
35
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
2.
PROFIT FROM OPERATIONS
Revenue
(a)
Revenue consisted of the following items:
Revenue from the sale of goods - external
Revenue from the sale of goods - inter group
Revenue from the rendering of services
Management fees - external
Management fees - inter group
Interest revenue - inter group
Interest revenue - other
Royalty income - inter group
Dividends - inter group
Subvention income - inter group
Other revenue
Profit before income tax expense
(b)
Profit 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 before income tax has been arrived
at after charging the following expenses by nature:
Cost of sales - external
Purchases inter group
Write-down of inventory
Finance costs:
Bank interest
Other interest expense
Total finance costs
Net bad and doubtful debts arising from:
Impairment loss on trade & other receivables
Depreciation of property, plant and equipment
Amortisation of finite life intangibles
Operating lease rental expenses:
Minimum lease payments
Donations
Employee benefit expense
Other expenses
Notes
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
1,334,458
-
6,469
2,638
-
-
878
-
-
-
503
1,083,068
-
6,101
2,232
-
-
234
-
-
-
385
56,192
9,441
-
-
483
513
175
365
11,350
-
-
55,432
7,923
-
-
631
920
148
296
-
4,501
-
1,344,946
1,092,020
78,519
69,851
301
(736)
(63)
75
61
(736)
(8)
88
(1,192,969)
-
(2,097)
(962,491)
-
(878)
(7,371)
(555)
(7,667)
(667)
(42,120)
(2,346)
(940)
(4,571)
(116)
(41,068)
(1,891)
(444)
(4,584)
(7)
(7,926)
(8,334)
(4,687)
(4,591)
10
14
(549)
(3,364)
(644)
(7,029)
(42)
(59,762)
(43,352)
(40)
(2,620)
(137)
(6,176)
(50)
(52,548)
(36,215)
(6)
(446)
-
(835)
(7)
(9,704)
(8,075)
(2)
(316)
-
(890)
(5)
(8,964)
(8,496)
Total expenses
(1,317,734)
(1,069,489)
(69,166)
(66,667)
Profit before income tax expense
26,777
22,543
8,678
3,264
36
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
Adjustments related to changes in tax rates or
impostion of new taxes
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 30%/(2008: 33%)
Non-deductible expenses/(non-assessable income)
Effect of differences arising from investment
interests in other jurisdictions
Effect of different tax rates of subsidiaries
operating in other jurisdictions
(Over)/under provision of income tax
in previous year
Adjustments related to changes in tax rates
Other adjustments
Notes
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
8,998
(10)
65
9,053
(2,024)
21
-
(2,003)
5,891
21
30
5,942
(25)
2
(39)
(62)
-
3
36
39
(1,408)
(26)
-
(1,434)
26,777
22,543
8,678
3,264
8,033
(524)
7,439
(81)
2,603
(3,658)
1,077
18
(353)
(1,203)
(353)
(1,203)
-
(349)
11
-
(117)
23
(40)
91
-
(23)
-
36
-
(26)
30
4
(96)
20
41
(35)
(31)
-
(6)
41
42
(31)
Total income tax expense /(credit)
7,050
5,880
(1,395)
Total income tax expense/(credit)
7,050
5,880
(1,395)
The tax rates used in the above reconciliation are principally the corporate tax rates of 30% (2009 year) and 33% (2008 year) payable by
New Zealand and 30% payable by Australian corporate entities on taxable profits under tax law in each jurisdiction.
37
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
3.
INCOME TAXES cont
Current tax assets and liabilities
(b)
Current tax assets:
Current tax refundable
Current tax liabilities:
Current tax payable
Deferred tax balance
(c)
Deferred tax assets comprise:
Temporary differences
Deferred tax liabilities comprise:
Temporary differences
Taxable and deductible temporary differences arise from the following:
2009
Gross deferred tax liabilities:
Property, plant & equipment
Provisions
Intangible assets
Gross deferred tax assets:
Property, plant & equipment
Provisions
Doubtful debts & impairment losses
Other financial liabilities – derivatives
Other
38
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
562
3,428
23
1,316
3,678
1,886
-
-
6,540
3,992
2,433
527
(7,612)
(7,796)
(1,488)
(1,488)
(1,072)
(3,804)
945
(961)
Group
Opening Charged to Charged to
equity
income
balance
$’000
$’000
$’000
(244)
(18)
(7,534)
(7,796)
45
2,953
635
113
246
3,992
181
-
3
184
211
501
(118)
4
1,221
1,819
-
-
-
-
-
-
-
729
-
729
Closing
balance
$’000
(63)
(18)
(7,531)
(7,612)
256
3,454
517
846
1,467
6,540
3.
INCOME TAXES cont
2008
Gross deferred tax liabilities:
Property, plant & equipment
Provisions
Other financial liabilities – derivatives
Intangible assets
Gross deferred tax assets:
Property, plant & equipment
Provisions
Doubtful debts & impairment losses
Other financial liabilities – derivatives
Other
2009
Gross deferred tax liabilities:
Intangible assets
Gross deferred tax assets:
Property, plant & equipment
Provisions
Doubtful debts & impairment losses
Other financial liabilities – derivatives
Tax losses carried forward
2008
Gross deferred tax liabilities:
Intangible assets
Other financial liabilities - derivatives
Gross deferred tax assets:
Property, plant & equipment
Provisions
Doubtful debts & impairment losses
Other financial liabilities – derivatives
Group
Opening Charged to Charged to Acquisitions
balance
$’000
income
$’000
equity
$’000
$’000
(72)
-
(8)
(1,955)
(2,035)
75
663
270
-
201
1,209
8
(18)
8
-
(2)
(30)
128
(79)
-
45
64
-
-
-
-
-
-
-
-
113
-
113
Closing
balance
$’000
(244)
(18)
-
(7,534)
(180)
-
-
(5,579)
(5,759)
(7,796)
-
2,162
444
-
-
2,606
45
2,953
635
113
246
3,992
Parent
Opening Charged to Charged to
equity
income
balance
$’000
$’000
$’000
Closing
balance
$’000
(1,488)
-
-
(1,488)
21
218
175
113
-
527
(10)
119
(134)
-
1,459
1,434
-
-
-
472
-
472
Parent
Opening Charged to Charged to
equity
income
balance
$’000
$’000
$’000
(1,488)
(7)
(1,495)
45
210
131
-
386
-
7
7
(24)
8
44
-
28
-
-
-
-
-
-
113
113
11
337
41
585
1,459
2,433
Closing
balance
$’000
(1,488)
-
(1,488)
21
218
175
113
527
39
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
3.
INCOME TAXES cont.
No liability has been recognised in respect of the amount of temporary differences including foreign currency translation reserves
associated with undistributed earnings of off-shore 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.
(d) Imputation credit account balances
Balance at beginning of the period
Attached to dividends received
Taxation paid
Attached to dividends paid
Other credits
Other debits
Group
2009
$’000
4,808
3,064
2,710
(3,792)
244
(2,410)
Group
2008
$’000
4,183
-
3,987
(3,144)
72
(290)
Parent
2009
$’000
(2,628)
3,064
(1,254)
(727)
118
(177)
Parent
2008
$’000
(252)
-
879
(3,144)
-
(111)
Balance at end of the period
4,624
4,808
(1,604)
(2,628)
Imputation credits available directly and
indirectly to shareholders of the parent
company, through
Parent company
Subsidiaries
(1,604)
6,228
(2,628)
7,436
4,624
4,808
40
4.
KEY MANAGEMENT PERSONNEL 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
Due diligence
Information technology services
Other Auditors of entities in the group
Audit of the financial statements
6.
TRADE & OTHER RECEIVABLES
Trade receivables (i)
Other receivables
Allowance for impairment (ii)
Group
2009
$’000
4,340
227
4,567
Group
2008
$’000
3,732
178
3,910
Parent
2009
$’000
2,686
227
2,913
Parent
2008
$’000
2,424
178
2,602
403
-
-
-
75
478
-
-
287
15
12
141
-
455
91
91
115
-
-
-
75
190
-
-
100
-
-
141
-
241
-
-
151,104
750
(1,134)
149,546
1,598
(718)
10,475
93
(138)
150,720
150,426
10,430
8,647
63
(138)
8,572
(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. The
Group’s ProPharma Pharmacy business unit generally holds collateral over its trade receivables balances.
(ii) Allowance for Impairment
Balance at the beginning of the year
Arising from businesses acquired
Impairment loss recognised on trade receivables
Amounts written off as uncollectible
Amounts recovered during year
Impairment losses reversed
(718)
-
(549)
138
(5)
-
(1,134)
(235)
(520)
(40)
8
-
69
(718)
(138)
-
(7)
7
-
-
(138)
(138)
-
(2)
-
-
2
(138)
In determining the recoverability of trade and other receivables, the Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to reporting date. The concentration of credit risk is limited due to the customer
base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the
allowance for doubtful debts.
41
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
6.
TRADE & OTHER RECEIVABLES cont
(iii) Aging of impaired trade and other receivables
90 days+
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
(1,134)
(1,134)
(718)
(718)
(138)
(138)
(138)
(138)
(iv) Aging of past due but not impaired trade and other receivables
Included in the trade and other receivables balance are debtors with a carrying amount of group $21,855,000 (2008: $34,429,000)
and parent $3,330,000 (2008: $2,952,000) which are past due at the reporting date for which the Group and/or parent has not
provided any impairment as the amounts are still considered recoverable.
30 - 60 days
60 - 90 days
90 days+
7.
PREPAYMENTS
Current portion
Term portion
8.
INVENTORIES
Finished Goods
At cost
At net realisable value
9.
OTHER FINANCIAL ASSETS - DERIVATIVES
At fair value:
Interest rate swaps (i)
14,682
3,386
3,787
27,743
3,067
3,619
21,855
34,429
2,203
856
3,059
2,789
1,176
3,965
1,554
574
1,202
3,330
1,018
-
1,018
1,815
292
845
2,952
47
-
47
127,380
-
126,204
500
127,380
126,704
9,100
-
9,100
13,631
500
14,131
-
-
130
130
-
-
-
-
(i) Designated and effective as cashflow hedging instrument carried at fair value.
42
10.
PROPERTY, PLANT AND EQUIPMENT
Freehold
land
at
cost
$’000
Buildings
at
cost
$’000
Group
Leasehold
improv.
at
cost
$’000
Plant and Office equip.
furniture &
fittings at
cost
$’000
vehicles
at
cost
$’000
Total
$’000
Gross carrying amount
Balance at 1 July, 2007
Additions
Disposals
Acquisitions through business
combinations
Net foreign currency exchange
differences
1,200
698
-
1,353
-
6,178
2,757
-
1,091
967
48
(158)
4,454
1,007
(587)
9,261
1,698
(1,196)
22,060
6,208
(1,941)
1,701
2,947
1,047
8,139
-
82
195
229
506
Balance at 30 June, 2008
3,251
10,026
2,640
8,016
11,039
34,972
Additions
Disposals
Acquisitions through business
combinations
Net foreign currency exchange
differences
-
(1,356)
124
(1,197)
-
-
-
-
26
(599)
3
(11)
1,077
(672)
57
(39)
2,078
(705)
3,305
(4,529)
22
(37)
82
(87)
Balance at 30 June, 2009
1,895
8,953
2,059
8,439
12,397
33,743
Accumulated depreciation
Balance at 1 July, 2007
Disposals
Depreciation expense
Net foreign currency exchange
differences
Balance at 30 June, 2008
Disposals
Depreciation expense
Net foreign currency exchange
differences
Balance at 30 June, 2009
Net book value
As at 30 June, 2008
As at 30 June, 2009
-
-
-
-
-
-
-
-
-
(1,115)
-
(218)
(392)
103
(366)
(2,649)
279
(887)
(7,379)
1,233
(1,149)
(11,535)
1,615
(2,620)
-
(41)
(111)
(177)
(329)
(1,333)
(696)
(3,368)
(7,472)
(12,869)
141
(298)
-
522
(393)
527
(1,143)
697
(1,530)
1,887
(3,364)
9
14
24
47
(1,490)
(558)
(3,970)
(8,281)
(14,299)
3,251
1,895
8,693
7,463
1,944
1,501
4,648
4,469
3,567
4,116
22,103
19,444
43
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
10.
PROPERTY, PLANT & EQUIPMENT cont.
Freehold
land
at
cost
$’000
-
698
-
698
-
(4)
Buildings
at
cost
$’000
-
2,711
-
2,711
124
-
Parent
Leasehold
improv.
at
cost
$’000
Plant and Office equip.
furniture &
fittings at
cost
$’000
vehicles
at
cost
$’000
206
3
-
209
9
(16)
1,061
88
(34)
1,115
167
(446)
2,415
424
(1,138)
1,701
275
(669)
Total
$’000
3,682
3,924
(1,172)
6,434
575
(1,135)
Gross carrying amount
Balance at 1 July, 2007
Additions
Disposals
Balance at 30 June, 2008
Additions
Disposals
Balance at 30 June, 2009
694
2,835
202
836
1,307
5,874
Accumulated depreciation
Balance at 1 July, 2007
Disposals
Depreciation expense
Balance at 30 June, 2008
Disposals
Depreciation expense
Balance at 30 June, 2009
Net book value
As at 30 June, 2008
As at 30 June, 2009
-
-
-
-
-
-
-
-
-
(15)
(15)
-
(95)
(94)
-
(21)
(115)
16
(19)
(684)
24
(137)
(797)
355
(164)
(2,147)
1,135
(143)
(1,155)
669
(168)
(2,925)
1,159
(316)
(2,082)
1,040
(446)
(110)
(118)
(606)
(654)
(1,488)
698
694
2,696
2,725
94
84
318
230
546
653
4,352
4,386
Group plant includes finance leases capitalised with a cost of $1,398,000 (2008: $1,612,000) and book value of $728,000
(2008: $1,157,000). Parent plant includes finance leases capitalised with a cost of $134,000 (2008: $134,000) and book value of $25,000
(2008: $59,000).
Land and buildings in Auckland with a carrying value of $5,939,000 (2008: $6,100,000) were last valued on 30 June 2009 and
determined by Telfer Young (Auckland) Limited, in accordance with NZ IAS16, to have a fair value of $9,600,000 (2008: $10,900,000).
Land and buildings in Christchurch with a carrying value of $3,419,000 (2008: $3,394,000) were acquired during the last two years and
are stated at cost less depreciation.
Land and buildings in Wellington with a 2008 carrying value of $2,427,000 were sold in December 2008 for $2,785,000.
Aggregate depreciation recognised as an expense
during the year:
Buildings
Leasehold improvements
Plant and vehicles
Office equipment, furniture & fittings
44
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
298
393
1,143
1,530
3,364
218
366
887
1,149
2,620
95
19
164
168
446
15
21
137
143
316
11.
CAPITAL WORK IN PROGRESS
Capital work in progress
-
916
-
-
The capital work in progress relates to software development. The total cost to complete the project is $Nil (2008: $968,000).
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
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
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
133,062
27,387
1,728
1,728
1,131
(278)
105,015
660
-
-
-
-
Net book value
133,915
133,062
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 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.
• New Zealand Pharmacy Wholesaler and Logistic Services (PRNZ Limited) – Pharmacy/Logistics NZ
The carrying amount of goodwill allocated to cash-generating units is as follows:
healthcare Australia
healthcare NZ (Parent)
Logistics NZ
Scientific
Pharmacy/Logistics NZ
Group
2009
$’000
16,775
1,728
1,468
20,369
93,575
Group
2008
$’000
17,010
1,728
1,468
19,281
93,575
133,915
133,062
Parent
2009
$’000
Parent
2008
$’000
-
1,728
-
-
-
1,728
-
1,728
-
-
-
1,728
45
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
12.
GOODWILL cont.
During the year ended 30 June 2009, management have determined that there is no impairment of any of the cash generating units
containing goodwill (2008: Nil).
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 – Maintaining market share and gross margin being maintained during a period
of high volatility in foreign currency during the budget period.
Logistics NZ and Pharmacy/Logistics NZ – Maintaining market share and controlling operational costs during the budget period.
Gross margins during the period for healthcare Australia, healthcare NZ, Logistics NZ, Scientific and Pharmacy/Logistics NZ 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% to 5% (2008: 2%), which is below current historical growth rates; an allowance of 2% (2008: 4%) for
inflation to expenses, and pre tax discount rates of 14.2% to 14.8% (2008: 15.1%) have been applied to these projections. Cash flows
beyond the five year period have been extrapolated using a steady 2% (2008: 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.
46
13.
INDEFINITE LIFE INTANGIBLES
Group
Natures Kiss Allersearch Liceblaster Trademarks
$’000
$’000
$’000
$’000
Gross carrying amount
Balance at 1 July, 2007
Acquisitions through business combinations
Net foreign currency exchange differences
Balance at 30 June, 2008
Acquisitions through business combinations
Net foreign currency exchange differences
2,390
-
-
2,390
-
-
2,570
-
-
2,570
-
-
1,356
-
200
1,556
-
(26)
-
17,240
-
17,240
-
-
Total
$’000
6,316
17,240
200
23,756
-
(26)
Balance at 30 June, 2009
2,390
2,570
1,530
17,240
23,730
Net book value
As at 30 June, 2008
As at 30 June, 2009
Gross carrying amount
Balance at 1 July, 2007
Balance at 30 June, 2008
Balance at 30 June, 2009
Net book value
As at 30 June, 2008
As at 30 June, 2009
2,390
2,390
2,570
2,570
1,556
1,530
17,240
17,240
23,756
23,730
Natures Kiss
$’000
Parent
Allersearch
$’000
2,390
2,390
2,390
2,390
2,390
2,570
2,570
2,570
2,570
2,570
Total
$’000
4,960
4,960
4,960
4,960
4,960
47
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
13.
INDEFINITE LIFE INTANGIBLES cont.
The carrying amount of brands (indefinite life intangibles) has been allocated to the cash generating units as follows:
healthcare Australia
healthcare NZ (Parent)
Pharmacy/Logistics NZ
Group
2008
$’000
4,126
2,390
17,240
23,756
2009
$’000
4,100
2,390
17,240
23,730
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 2009, management have determined that there is no impairment of any of the brands.
The calculation of the recoverable amounts for Natures Kiss; Allersearch and Liceblaster brands and Pharmacy/Logistics NZ
Trademarks have 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. Management has determined that the recoverable amount calculations are most
sensitive to change in the following assumptions. Annual growth rates of 2% to 5% (2008: 2%), and an allowance of 2% (2008: 4%)
for inflation to expenses, and pre-tax discount rates of 14.3% to 14.6% (2008:15.1%) have been applied to these projections. Cash
flows beyond the five-year period have been extrapolated using a steady 2% (2008:2%) 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.
FINITE LIFE INTANGIBLES
Gross carrying amount of Supply Contracts
Balance at beginning of financial period
Accumulated amortisation & impairment
Balance at beginning of financial period
Amortisation expense
Balance at end of financial period
Net book value at end of financial period
Allocated to cash generating units as follows:
Pharmacy/Logistics NZ
48
Group
2009
$’000
2008
$’000
1,490
1,490
(137)
(644)
(781)
709
-
(137)
(137)
1,353
Group
2009
$’000
709
2008
$’000
1,353
15.
SUBSIDIARIES
Parent and Head Entity
Ebos Group Limited
Subsidiaries (all balance dates 30 June)
Ebos Group Pty Limited
Vital Medical Supplies (Australia) Pty Limited
Ebos health & Science Pty Limited
health Support Limited
- health Support Properties Limited
Global Science & Technology Limited
- Quantum Scientific Pty Limited
PRNZ Limited
EBOS Limited Partnership
- EBOS Investments 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
Australia
New Zealand
New Zealand
New Zealand
Australia
New Zealand
Australia
Australia
Ownership Interests
and Voting Rights
2009 and 2008
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
3
2,250
551
-
2,804
70,000
186
277
82,971
225
-
83,473
1,250
890
3
1,000
27
5,072
6,102
38,000
20
16
48,100
27
5,512
53,655
-
47
72,990
85,613
44,122
53,702
(i)
Bank term loans and revolving cash advance facilities operate under a negative pledge deed provided to ANZ National Bank
Limited by the parent company and its subsidiaries.
Secured by the assets leased.
(ii)
(iii) unsecured.
17.
TRADE & OTHER PAYABLES
Current
Trade payables
Other payables
Non-current
Other payables
228,171
11,286
220,473
12,566
239,457
233,039
4,936
5,318
5,404
1,972
7,376
-
5,242
1,665
6,907
-
Total trade & other payables
244,393
238,357
7,376
6,907
49
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
18.
LEASES
Finance leases
Minimum future lease payments
Finance leases relate to office equipment, plant and motor vehicles. 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
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
Present Value of Minimum
Future Lease Payments
Parent
2009
$’000
Group
2008
$’000
Group
2009
$’000
Not later than 1 year
Later than 1 year and not later than
5 years
684
215
494
773
Minimum lease payments*
Less future finance charges
899
(162)
1,267
(152)
34
26
60
(13)
34
60
94
(20)
551
186
737
-
225
890
1,115
-
Present value of minimum
lease payments
737
1,115
47
74
737
1,115
Included in the financial statements as:
Finance leases - current portion
Finance leases - non current portion
551
186
737
225
890
1,115
27
20
47
-
47
27
20
47
Parent
2008
$’000
27
47
74
-
74
27
47
74
*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
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
6,692
15,288
11,725
6,366
15,809
8,160
759
719
-
717
590
529
33,705
30,335
1,478
1,836
50
19.
OTHER FINANCIAL LIABILITIES - DERIVATIVES
At fair value:
Foreign currency forward contracts (i)
Interest rate swaps (ii)
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
742
2,808
3,550
7
380
387
742
1,949
2,691
7
377
384
(i) Financial liability carried at fair value through profit or loss (“FVTPL”).
(ii) Designated and effective as cashflow hedging instrument carried at fair value.
20.
SHARE CAPITAL
Fully paid ordinary shares
Balance at beginning of financial period
Issue of shares to executives and staff
under employee share ownership scheme
Shares issued to vendors of PRNZ Ltd – August 2007
Institutional placement of shares to partially fund
PRNZ Ltd acquisition – September 2007
Shares issued under Share Purchase Plan to partially
Fund PRNZ Ltd acquisition – October 2007
Bonus shares issued under Profit Distribution Plan
- May 2008
- October 2008
- April 2009
Share issue costs
2009
No.
’000
2009
$’000
2008
No.
’000
2008
$’000
47,022
105,752
36,844
63,150
44
109
54
134
47,066
105,861
36,898
63,284
-
-
-
-
-
1,115
800
-
-
-
-
-
-
-
-
-
3,000
14,250
2,527
11,749
3,763
9,290
834
-
-
-
17,500
43,499
-
-
-
(1,031)
48,981
105,861
47,022
105,752
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. Since the inception of the employee ownership scheme in
December 1994 293,350 shares have been issued raising $408,130.
51
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
21.
RESERVES
Foreign currency translation reserve
Balance at beginning of the period
Translation of foreign operations
Balance at end of the period
Group
2009
$’000
2008
$’000
2,044
(458)
1,586
(485)
2,529
2,044
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.
Retained Earnings
Balance at beginning of the period
Profit for the period
Dividends provided for or paid (note 22)
Group
2009
$’000
39,645
19,727
(2,817)
Group
2008
$’000
29,530
16,663
(6,548)
Parent
2009
$’000
7,554
10,073
(2,817)
Parent
2008
$’000
10,807
3,295
(6,548)
Balance at end of the period
56,555
39,645
14,810
7,554
Cash Flow Hedge Reserve
Balance at beginning of the period
Gain/(loss) recognised on cash flow hedges
Related income tax
Balance at end of the period
(137)
(2,555)
729
(1,963)
-
(250)
113
(137)
(265)
(1,570)
471
(1,364)
-
(378)
113
(265)
The hedging reserve represents gains and losses recognised on the effective portion of cash flow hedges. The cumulative deferred gain
or loss on the hedge is recognised in profit or loss when the hedged transaction impacts profit or loss.
22.
DIVIDENDS
Recognised amounts
Fully paid ordinary shares
- Final - prior year
- Interim - current year
Unrecognised amounts
Final dividend
2009
Cents per
share
2009
Total
$’000
2008
Cents per
share
13.5
10.5
24.0
1,504
1,313
2,817
13.0
9.5
22.5
2008
Total
$’000
5,998
550
6,548
14.5
1,800
13.5
1,504
A bonus share distribution of 14.5 cents per share was declared on 20 August 2009 with the shares to be issued on 2 October 2009.
Shareholders may elect to sell these shares back to the Company. It is anticipated the cash impact of the sell back will be approximately
$1,800,000 (2008: $1,504,000).
52
23.
ACQUISITION OF BUSINESSES
Name of Business Acquired
2009:
100% of business assets of MedBio Limited
Principal
activity
Date of
acquisition
Cost of
acquisition
$’000
Scientific Supplies
1 July 2008
2008:
100% of business assets of Vital Medical Supplies
Pty Limited (Vital)
100% PRNZ Limited
100% of business assets of Tasmanian Medical Supplies
Pty Limited (TasMed)
100% of business assets of Crown Scientific
Pty Limited (Crown)
Medical Supplies
Medical Supplies
1 July 2007
29 August, 2007
Medical Supplies
1 October, 2007
Scientific Supplies
1 November, 2007
Description of Acquisition Activity
2009
Net Assets Acquired
Current assets:
Trade and other receivables
Prepayments
Inventories
Non-current assets:
Property, plant and equipment
Current liabilities:
Trade and other payables
Net assets acquired
Goodwill on acquisition
Consideration
The contribution to net surplus for the year attributable to the purchase of MedBio Limited was $215,000.
Book Value
MedBio
Fair value
adjustments
$’000
$’000
Fair value
on
acquisition
$’000
233
7
99
82
(100)
321
1,131
1,452
-
-
-
-
-
-
-
-
1,452
1,452
6,739
86,565
3,931
8,538
105,773
233
7
99
82
(100)
321
1,131
1,452
53
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
23.
ACQUISITION OF BUSINESSES cont.
Description of Acquisition Activity
2008
Vital and Tasmed
Fair value
Book
value adjustments
Net Assets Acquired
$’000
$’000
Fair value
on
acquisition
$’000
Crown
Fair value
Book
value adjustments
$’000
$’000
Fair value
on
acquisition
$’000
Total fair
value on
acquisition
$’000
Current assets:
Trade and other receivables
Provision for doubtful debts
Prepayments
Inventories
Non-current assets:
Property, plant and equipment
Current liabilities:
Trade and other payables
Finance leases
Employee benefits
Non-current liabilities
Finance leases
Net assets acquired
Goodwill on acquisition
Consideration
4,495
-
82
2,545
499
(5,669)
-
(131)
-
1,821
-
-
-
-
-
-
-
-
-
-
4,495
-
82
2,545
3,743
(19)
29
6,577
499
1,092
(4,258)
(617)
(447)
(154)
5,946
(5,669)
-
(131)
-
1,821
8,848
10,669
-
-
-
-
-
-
-
-
-
-
3,743
(19)
29
6,577
8,238
(19)
111
9,122
1,092
1,591
(4,258)
(617)
(447)
(154)
5,946
2,593
8,539
(9,927)
(617)
(578)
(154)
7,767
11,441
19,208
54
23.
ACQUISITION OF BUSINESSES cont.
Net Assets Acquired
Current assets:
Cash and cash equivalents
Trade and other receivables
Provision for doubtful debts
Prepayments
Inventories
Non-current assets:
Property, plant and equipment
Capital work in progress
Deferred tax assets
Goodwill
Indefinite life intangibles
Finite life intangibles
Current liabilities:
Trade and other payables
Finance leases
Bank loans
Current tax payable
Employee benefits
Non-current liabilities
Bank loans
Deferred tax liabilities
Finance leases
Trade and other payables
Net assets acquired
Goodwill on acquisition
Consideration
Less shares issued
Less cash & equivalents acquired
Net cash outflow on acquisition
PRNZ
Book
Value adjustments
$’000
$’000
SUMMARY
Fair value Fair value on Fair value on
acquisition
acquisition
$’000
$’000
4,555
93,815
(501)
245
58,651
5,454
769
2,431
20,181
-
-
(162,852)
(146)
(2,500)
(115)
(1,167)
(14,000)
-
(318)
(5,536)
-
-
-
-
-
1,094
-
-
(18,730)
17,240
1,490
-
-
-
-
-
-
(5,619)
-
-
(1,034)
(4,525)
4,555
93,815
(501)
245
58,651
6,548
769
2,431
1,451
17,240
1,490
(162,852)
(146)
(2,500)
(115)
(1,167)
(14,000)
(5,619)
(318)
(5,536)
(5,559)
92,124
86,565
(14,250)
(4,555)
4,555
102,053
(520)
356
67,773
8,139
769
2,431
1,451
17,240
1,490
(172,779)
(763)
(2,500)
(115)
(1,745)
(14,000)
(5,619)
(472)
(5,536)
2,208
103,565
105,773
(14,250)
(4,555)
67,760
86,968
The contribution to net surplus for the 2008 year attributable to the purchase of the net assets of Vital and TasMed was $1,640,000,
to the purchase of Crown was $ Nil and to the purchase of PRNZ Limited was $5,500,000. had these business combinations all been
effected 1 July, 2007 the revenue of the consolidated entity would have been approximately $1,250,000,000, and the net profit after tax
approximately $17,700,000.
55
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
24.
NOTES TO THE CASH FLOW STATEMENT
(a)
Businesses acquired
Note 23 sets out details of the businesses acquired.
Details of the acquisitions are as follows.
Consideration
Cash and cash equivalents
Shares issued at market price of $4.75 per share
Represented by:
Net assets acquired (Note 23)
Investment in subsidiaries
Goodwill on acquisition
Consideration
Net cash outflow on acquisition
Cash and cash equivalents consideration
Less cash and cash equivalents acquired
(b)
Financing facilities
Financing facilities
Bank overdraft facility, reviewed annually and
payable at call:
Amount used
Amount unused
Bank loan facilities with various maturity
dates through to August 2011
Amount used
Amount unused
56
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
1,452
-
91,523
14,250
1,452
105,773
321
-
1,131
2,208
-
103,565
1,452
105,773
1,452
-
1,452
91,523
(4,555)
86,968
-
-
-
-
-
-
-
-
-
-
3
3,567
3,570
277
3,308
3,585
3
1,247
1,250
72,250
39,000
84,221
32,900
39,000
19,000
111,250
117,121
58,000
72,315
14,250
86,565
-
86,565
-
86,565
72,315
-
72,315
16
1,234
1,250
48,100
16,900
65,000
24.
NOTES TO THE CASH FLOW STATEMENT cont.
(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
Amortisation of finite life intangible assets
Loss/(gain) on derivatives/financial instruments
Deferred tax
Provision for doubtful debts
Movement in working capital:
Trade and other receivables
Finance lease receivables
Prepayments
Inventories
Current tax refundable/payable
Trade and other payables
Employee benefits
Foreign currency (gain)/loss on translation of working
capital balances
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
19,727
16,663
10,073
3,295
3,364
(301)
644
736
(2,003)
416
2,856
(710)
58
906
(676)
4,658
6,036
720
2,620
63
137
(75)
(97)
(37)
2,611
(109,159)
35
(1,443)
(81,493)
(2,000)
208,678
2,546
446
(61)
-
736
(1,433)
-
(312)
(1,858)
58
(971)
5,031
1,293
469
229
316
8
-
(88)
(36)
-
200
1,214
35
54
877
(875)
1,646
403
(504)
2,619
-
-
10,488
19,783
4,251
3,354
Movements in items treated as investing/financing activities
239
(10,511)
-
(4,501)
Net cash inflow from operating activities
33,310
28,546
14,012
2,348
25.
EARNINGS PER SHARE CALCULATION
Basic earnings per share (refer Income Statement and note 20)
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
2009
$’000
Group
2008
$’000
19,727
16,663
47,996
44,348
Diluted earnings per share (refer Income Statement and note 20)
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
Group
2009
$’000
Group
2008
$’000
19,727
16,663
47,996
44,348
57
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
26.
COMMITMENTS FOR EXPENDITURE
(a)
Capital expenditure commitments
Property, Plant and Equipment
Intangible assets
(b)
Lease commitments
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
-
-
736
1,740
-
-
736
1,740
Finance lease liabilities and non-cancellable operating lease commitments are disclosed in note 18 to the financial statements.
27.
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
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
6,751
7,162
158
150
-
-
33,250
28,549
In August 2008 the company renegotiated its bank facilities. Bank term loans and revolving cash advance facilities operate under a
negative pledge deed provided to ANZ National Bank Limited by the company and its subsidiaries. Previously 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.
A subsidiary company (PRNZ Limited) is guarantor for certain loans made to pharmacies by the ANZ National Bank Limited amounting
to $5,593,000 (2008: $6,012,000). The directors are of the opinion that provisions are not required in respect of these matters, as it is not
probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
A performance bond of up to $1,000,000 (2008: $1,000,000) is also held by the bank on behalf of a supplier.
58
28.
SEGMENT INFORMATION
Information on business segments (primary reporting format)
Segment Revenue
Revenue
healthcare
Scientific
Inter-segment (i)
Group
2009
$’000
Group
2008
$’000
1,342,719
66,745
(64,518)
1,075,945
61,719
(45,644)
1,344,946
1,092,020
(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
30,852
3,851
34,703
17,145
2,582
19,727
26,482
4,395
30,877
13,488
3,175
16,663
455,055
44,778
442,525
43,669
499,833
486,194
325,054
12,740
328,732
10,158
337,794
338,890
Healthcare Healthcare
2008
$’000
2009
$’000
Scientific
2009
$’000
Scientific
2008
$’000
Acquisition of non-current segment assets
Depreciation and amortisation of segment assets
3,017
3,426
26,217
2,355
1,530
582
172
402
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.
59
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
28.
SEGMENT INFORMATION cont.
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
2009
$’000
Group
2008
$’000
1,233,580
175,884
(64,518)
986,001
151,663
(45,644)
1,344,946
1,092,020
19,736
14,967
34,703
10,284
9,443
18,702
12,175
30,877
9,073
7,590
19,727
16,663
413,544
86,289
411,491
74,703
499,833
486,194
New Zealand New Zealand
2008
$’000
2009
$’000
Australia
2009
$’000
Australia
2008
$’000
Acquisition of non-current segment assets
3,950
25,780
597
609
The group’s two divisions operate in two principal geographical areas - New Zealand and Australia.
60
29.
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 $11,350,000 (2008: $Nil) from its subsidiaries.
During the financial year, EBOS Group Limited received subvention income of $Nil (2008: $4,501,002) from its subsidiaries.
During the financial year, EBOS Group Limited provided accounting and administration services to its subsidiaries for a consideration
of $483,000 (2008: $631,000) and charged royalties for the use of brand names and patents totalling $365,000 (2008: $269,000).
During the financial year, EBOS Group Limited rented warehouse space and contracted labour from its subsidiaries for a total cost of
$342,000 (2008: $322,000).
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 6.0% - 9.7% (2008: 9.3% - 9.7% ). During the financial year, EBOS Group Limited received interest of $513,000
(2008: $920,000) from loans to subsidiaries, and paid interest of $109,000 (2008: $Nil) to subsidiaries.
No amounts were provided for doubtful debts relating to debts due from related parties at reporting date (2008: $Nil).
Guarantees provided or received
As detailed in note 27, 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.
(e)
Other Transactions Involving Related Parties
During the financial year Quantum Scientific Pty Ltd leased premises from interests associated with key management personnel,
D Brown. Rents of $406,000 (2008: $394,000) were paid.
During the financial year Quantum Scientific Pty Ltd paid amounts totalling $373,000 (2008: $425,000) to interests associated with the
same key management personnel for the provision of management services.
Peter Merton a Director of the parent company and a key manager of the group, received remuneration of $177,000 (2008:$367,000) for
services provided as Chief Executive of PRNZ Ltd. Mr Peter Merton retired as Chief Executive of PRNZ Limited on 31 December 2008.
61
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
30.
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.
(b) Market Risk
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.
(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.
Outstanding Contracts
Buy Australian Dollars
Less than 3 months
3 to 6 months
Buy Euro
Less than 3 months
Buy Pounds
Less than 3 months
Buy US Dollars
Less than 3 months
3 to 6 months
Buy Swiss Francs
Less than 3 months
Buy Japanese Yen
Less than 3 months
3 to 6 months
Average
exchange rate
2008
2009
Foreign currency
2009
FC’000
2008
FC’000
Contract value
2009
$’000
2008
$’000
Fair value
2009
$’000
2008
$’000
0.801
0.803
0.869
700
4,100
200
874
5,107
230
(1)
0.426
0.495
1,100
1,710
2,584
3,457
(187)
0.372
0.396
455
400
1,224
1,010
(49)
0.544
0.771
0.770
1,650
2,100
250
3,035
2,722
325
(450)
49
21
(24)
(25)
(8)
9
53.583
80.464
-
26,000
25,000
485
311
(55)
(29)
8,202
13,162
(742)
(7)
The above financial instruments relate to the group and parent entity. The fair value of forward foreign exchange contracts outstanding
are recognised as other financial assets/liabilities. hedge accounting has not been adopted for the forward foreign exchange contracts.
62
30.
FINANCIAL INSTRUMENTS cont.
(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
1 to 3 years
3 to 5 years
Outstanding Contracts
Outstanding variable rate for fixed contracts
1 to 3 years
3 to 5 years
Group
Average
contracted fixed
interest rate
2009
%
2008
%
Notional principal
amount
2009
$’000
2008
$’000
Fair value
2009
$’000
2008
$’000
7.78
5.13
-
7.70
58,612
4,000
-
66,299
(2,721)
(87)
62,612
66,299
(2,808)
-
(250)
(250)
Parent
Average
contracted fixed
interest rate
2009
%
2008
%
Notional principal
amount
2009
$’000
2008
$’000
Fair value
2009
$’000
2008
$’000
7.91
-
-
7.80
40,000
-
-
45,000
(1,949)
-
40,000
45,000
(1,949)
-
(377)
(377)
The fair value of interest rate swaps outstanding are recognised as other financial assets/liabilities. hedge accounting has been adopted.
Liquidity
(e)
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve banking facilities by continuously
monitoring forecast and actual cashflows and matching maturity profiles of financial assets and liabilities.
The following tables detail the Group’s remaining contractual maturity for its financial assets and financial liabilities. The tables have
been drawn up based on the undiscounted cash flows of the financial assets and liabilities. The table includes both interest and principal
cash flows.
63
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
30.
FINANCIAL INSTRUMENTS cont.
Weighted
average
effective
On
interest Demand
rate
%
$’000
Less
than 1
year
$’000
Maturity Dates
Total
1-2
Years
2-3
Years
3-4
Years
4-5
Years
5+
Years
$’000
$’000
$’000
$’000
$’000
$’000
2.3 33,609
150,720
9.0
184,329
10.8
3
239,457
9.1
5.1
-
118
118
67
67
33,609
150,720
-
185
-
-
-
- 184,514
536
683
5,935
3,550
536
216
3,570
536
536
536
70,595
3
6,427 248,564
899
80,100
3,550
239,460
10,704
4,322
71,131
536
536
6,427 333,116
Weighted
average
effective
On
interest Demand
rate
%
$’000
Less
than 1
year
$’000
Maturity Dates
Total
1-2
Years
2-3
Years
3-4
Years
4-5
Years
5+
Years
$’000
$’000
$’000
$’000
$’000
$’000
7.3 16,136
150,426
9.0
166,562
13.3
277
232,889
9.1
9.5
130
118
248
67
67
560
494
90,853
387
560
494
1,369
67
67
560
279
16,136
150,426
130
252
-
-
- 166,944
560
560
277
7,275 242,964
1,267
92,222
387
233,166
92,294
2,423
839
560
560
7,275 337,117
Group - 2009
Financial assets:
Cash and cash equivalents
Trade and other receivables
Other financial assets
Finance leases
Financial liabilities:
Bank overdraft
Trade and other payables
Finance leases
Bank loans
Other financial liabilities
Group - 2008
Financial assets:
Cash and cash equivalents
Trade and other receivables
Other financial assets
Finance leases
Financial liabilities:
Bank overdraft
Trade and other payables
Finance leases
Bank loans
Other financial liabilities
64
30.
FINANCIAL INSTRUMENTS cont.
Weighted
average
effective
On
interest Demand
rate
%
$’000
Less
than 1
year
$’000
Maturity Dates
Total
1-2
Years
2-3
Years
3-4
Years
4-5
Years
5+
Years
$’000
$’000
$’000
$’000
$’000
$’000
2.3
1,845
10,430
7.3
9.0
12,745
118
12,275
12,863
3
7,376
10.8
9.1
3.5
7.3
34
1,035
2,691
5,442
67
67
-
-
-
-
-
-
-
-
26
1,330
38,222
1,845
10,430
12,745
185
25,205
3
7,376
60
40,587
2,691
5,442
7,379
9,202
1,356
38,222
-
-
-
56,159
Weighted
average
On
effective
interest Demand
rate
%
$’000
121
8,572
Less
than 1
year
$’000
13,466
118
7.3
9.5
9.0
13.3
9.1
9.6
9.5
8,693
13,584
16
6,907
34
52,727
384
6,036
Maturity Dates
Total
1-2
Years
2-3
Years
3-4
Years
4-5
Years
5+
Years
$’000
$’000
$’000
$’000
$’000
$’000
67
67
67
67
34
26
121
8,572
13,466
252
-
-
-
22,411
16
6,907
94
52,727
384
6,036
Parent - 2009
Financial assets:
Cash and cash equivalents
Trade and other receivables
Advances to subsidiaries
Finance leases
Financial liabilities:
Bank overdraft
Trade and other payables
Finance leases
Bank loans
Other financial liabilities
Advances from subsidiaries
Parent - 2008
Financial assets:
Cash and cash equivalents
Trade and other receivables
Advances to subsidiaries
Finance leases
Financial liabilities:
Bank overdraft
Trade and other payables
Finance leases
Bank loans
Other financial liabilities
Advances from subsidiaries
6,923
59,181
34
26
-
-
-
66,164
In 2008 the group secured banking facilities for the three years to August 2011.
The group maintains the following lines of credit:
$3.5 million (2008: $2.0 million) overdraft facility. Interest is payable at the base rate plus specified margin. A loan facility
of $111 million (2008: $121 million) of which $109 million (2008: $117 million) is for 2 years.
The group renews its facilities on an annual basis to ensure an appropriate portion matures on a rolling basis.
65
EBOS Group Limited
Notes to the Financial statements (continued)
For the Financial Year ended 30 June, 2009
30.
FINANCIAL INSTRUMENTS cont.
(f)
Sensitivity Analysis
(i) Interest Rate Sensitivity Analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for financial instruments at the
balance date. The analysis is prepared assuming the amount of the financial instrument outstanding at the balance sheet date
was outstanding for the whole year.
The impact to Profit for the Period and Total Equity as a result of a 100 basis point movement in interest rates is as follows:
+ 100 basis point shift up in yield curve
Impact on Profit for the Period
Impact on Total Equity
- 100 basis point shift down in yield curve
Impact on Profit for the Period
Impact on total Equity
(ii) Foreign Currency Sensitivity Analysis
Group
2009
$’000
Group
2008
$’000
Parent
2009
$’000
Parent
2008
$’000
-
779
-
(801)
-
952
-
(985)
-
480
-
(494)
-
650
-
(673)
The following table details the Group’s sensitivity to a 10% increase or decrease in foreign currencies against the Group’s
functional currency (New Zealand dollars). The sensitivity analysis includes any outstanding foreign currency denominated
monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number
below indicates an increase in profit and equity where the functional currency strengthens 10% against the relevant currency.
For a 10% weakening against the relevant currency there would be an equal and opposite impact on the profit and equity.
+ 10% shift in NZD rate
Impact on Profit for the Period
Impact on Total Equity
- 10% shift in NZD rate
Impact on Profit for the Period
Impact on Total Equity
Group
2009
$’000
(673)
673
823
(823)
Group
2008
$’000
(1,215)
1,215
1,486
(1,486)
Parent
2009
$’000
(673)
673
823
(823)
Parent
2008
$’000
(1,215)
1,215
1,486
(1,486)
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end
exposure does not reflect the exposure during the year.
(g)
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.
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.
66
30.
FINANCIAL INSTRUMENTS cont.
(h)
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.
(i)
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.
(j)
Capital Risk Management
The Group manages its capital to ensure that each entity within the Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and equity. The Group’s overall strategy remains unchanged from 2008.
67
EBOS Group Limited
Additional stock Exchange Information
As at 31 July, 2009
Twenty Largest Shareholders
Python Portfolios Ltd
Accident Compensation Corporation
Whyte Adder No.3 Ltd
Elite Investment holdings Ltd
P.M. Merton & CWM Trustee Company Ltd
Forsyth Barr Custodians Ltd
Custodial Services Ltd
herpa Properties Ltd
Forsyth Barr Custodians Ltd
New Zealand Superannuation Fund Nominees Ltd
Superlife Trustee Ltd
hubbard Churcher Trust Management Ltd
Tea Custodians Ltd
Forsyth Barr Custodians Ltd
M.B. & A.L. Waller
P. Gardiner-Garden
Citibank Nominees (New Zealand) Ltd
FNZ Custodians Ltd
Investment Custodial Services Ltd
Custodial Services Ltd
Fully paid Percentage of
paid capital
shares
4,938,268
3,547,830
3,493,602
1,613,725
1,613,725
1,483,995
916,077
660,695
624,390
588,425
517,411
510,067
443,210
423,566
404,957
385,389
364,822
277,645
273,039
245,519
10.08%
7.24%
7.13%
3.29%
3.29%
3.03%
1.87%
1.35%
1.27%
1.20%
1.06%
1.04%
0.90%
0.86%
0.83%
0.79%
0.74%
0.57%
0.56%
0.50%
23,326,357
47.60%
Substantial Security Holders
As at 31 July 2009 the following persons are deemed to be substantial security holders in accordance with Section 26 of the Securities
Amendment Act 1988.
Python Portfolios Ltd
Whyte Adder No.3 Ltd and herpa Properties Ltd
Accident Compensation Corporation
Fully paid Percentage of
paid capital
shares
4,938,268
4,154,297
3,547,830
10.08%
8.48%
7.24%
12,640,395
25.80%
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
68
829
2,049
763
560
32
26
6
6
269,077
5,249,504
5,204,832
9,985,665
2,192,940
5,570,571
3,817,065
16,691,145
0.55%
10.72%
10.63%
20.39%
4.48%
11.37%
7.79%
34.07%
4,271
48,980,799
100.00%
4,074
197
46,303,491
2,677,308
94.53%
5.47%
4,271
48,980,799
100.00%
Chairman
Chief Executive and Managing Director
Deputy Chairman
Chief Executive
General Manager – Healthcare Logistics
Managing Director - Scientific
General Manager – Business Development
Chief Financial Officer
General Manager – Sales & Marketing Healthcare
General Manager - ProPharma
General Manager – Health Support Ltd
General Manager – EBOS Group Pty Ltd
Directors
Rick Christie
Mark Waller
Peter Kraus
Elizabeth Coutts
Peter Merton
Sarah Ottrey
Mark Stewart
Barry Wallace
Executives
Mark Waller
Michael Broome
Derek Brown
Angus Cooper
Dennis Doherty
Kelvin Hyland
David Lewis
Greg Managh
Anthony 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
108 Wrights Road
P O Box 411
CHRISTCHURCH
Telephone (03) 338-0999
Fax (03) 339-5111
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
subsidiaries
PRNZ Limited
54 Carbine Road
Mt Wellington
Auckland
NEW ZEALAND
Health Support Limited
56 Carrington Road, Pt Chevalier
Auckland
NEW ZEALAND
EBOS Group Pty Limited &
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
Vital Medical Supplies (Australia) Pty Ltd
Unit 29-31, 276-278 Newline Road
Dural, NSW 2158
AUSTRALIA
shareholder Enquiries
Shareholders with enquiries about share transactions, change of address or dividend payments
should contact the Share Registrar – Computershare Investor Services Ltd.
69
One of the leading independent (non multi-national) companies in the healthcare supplies market place.
ebos@ebos.co.nz
70