EBOS Group Limited Annual Report 2018

FY2018 Annual Report · EBOS Group Limited
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2018 
Annual 
Report

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EBOS Group Annual Report 2018 
 
 
 
 
 
Stronger together
2 Stronger together
2

We believe that by  
helping others we are  
stronger together, building 
better communities through 
our ongoing commitment 
to the provision of high 
quality healthcare and 
animal care products.

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77

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Foreword

Summary of results

EBOS Group overview

CEO and Chairman’s report

Business highlights

Our community

Our board

Financial summary

Financial report

Independent auditor’s report

Financial statements

Corporate governance

Directors’ interests & disclosures

Directory

ProPharma Christchurch pharmaceutical 
distribution facility

 
 
 
 
 
 
 
 
 
 
 
4

foreword

Stronger together

At EBOS Group, community 
is central to everything we 
do – it’s built into the values of 
every EBOS business and lived 
each day by our dedicated 
team across New Zealand and 
Australia. 

We believe that by helping others 
we are stronger together, building 
better communities through 
our ongoing commitment to 
the provision of high quality 
healthcare and animal care 
products.

EBOS Group continues to pursue 
a robust strategic investment 
program designed to strengthen 
the core of our business, and 
target new opportunities that 
extend our capabilities and 
enable us to deliver more for  
our stakeholders.

The continued financial 
strength of EBOS Group is the 
key to our success. We remain 
steadfast in our commitment to 
our shareholders, employees, 
customers and the many New 
Zealanders and Australians that 
use our products and services 
each day.

We trust you will enjoy reading 
this year’s Annual Report as we 
present what has been another 
successful period for the Group.

highlights

$7.6b

revenue

$63.2m

invested in 
capital works

our shareholders

6,959

shareholders*

$ 
149.6m

net profit 
after tax

68.5c

total dividends 
per share

* As at 16 July 2018

Stronger togetherour people

3,320

staff members

45
%

55
%

74%
AUS

26%
NZ

90% healthcare

10% animal care

ECHO program
environment, community, helping others

62

charities 
supported

trees 
planted 
to offset 
emissions  
in FY18: 22,029

52 Green Team 

members supporting 
environmental 
initiatives

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EBOS Group Annual Report 2018 
 
 
 
 
 
6

summary 
of results

Financial Highlights
+  $7.6 billion revenue 

+  $272.4 million EBITDA +16.2% increase

+  $149.6 million net profit after tax +12.2% increase

+  98.5 cents earnings per share +12.1% increase

+ 68.5 cents dividend per share for the year +8.7% increase

All figures are in New Zealand dollars, unless otherwise stated.

FIVE YEAR EBITDA TREND
For the year to 30 June ($millions)

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2018

2017

2016

2015

2014

FIVE YEAR REVENUE TREND
For the year to 30 June ($millions)

FIVE YEAR NPAT TREND
For the year to 30 June ($millions)

9
0
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2018

2017

2016

2015

2014

2018

2017

2016

2015

2014

EBITDA

Revenue

82%

Australia

18%

New Zealand

79%

Australia

21%

New Zealand

Stronger togetherSegment & Divisional Earnings Overview

Data based on gross operating 
revenue, which comprises revenue 
less cost of sales (including any 
adjustments to inventory).

L   C A R E   1 4%

A

A NI M

HEALTH

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E

8

6

%

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52 locations 
in Australia 
and New 
Zealand

5%
Consumer Products

8%
Contract Logistics

14%
Animal Care

25%
Institutional 
Healthcare

48%
Pharmacy 
(Wholesale and Retail)

Healthcare

Animal Care

EBOS Group Annual Report 2018 
 
 
 
 
 
 
8

8

Stronger together

EBOS Group 
overview

Healthcare

COMMUNITY PHARMACY

INSTITUTIONAL HEALTHCARE

CONTRACT LOGISTICS

Symbion Keysborough pharmaceutical distribution facility

Stronger togetherAnimal Care

CONSUMER PRODUCTS

ANIMAL CARE

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EBOS Group Annual Report 2018 
 
 
 
 
 
10

CEO and 
Chairman’s report

The 2018 financial year was 
another successful period for 
EBOS Group and the results 
achieved reflect a year of strong 
organic growth combined with 
the benefit of the HPS business 
acquired in the prior year.  
The results further demonstrate 
the Board and management’s 
focus on implementing our core 
strategy across our Healthcare 
and Animal Care businesses in 
both New Zealand and Australia. 

In recent years, the Group has 
committed to a major capital 
investment program involving 
new distribution centres to 
cater for growth across our 
core businesses. In 2018, our 
major capital projects in both 
Australia and New Zealand have 
all seen excellent progress. The 
new Christchurch and Sydney 
contract logistics facilities are 
now operational and our new 
Brisbane distribution facility will 
go live before the end of the 2018 
calendar year. These investments 
are a key part of our strategy 
to provide the most efficient 
warehousing and distribution 
facilities for our expanding 
portfolio of businesses.

MARK WALLER 
Chairman

JOHN CULLITY 
Chief Executive Officer

We remain confident 
in the ability of our 
Group to expand and are 
always exploring new 
opportunities for growth 
in our key markets.

Financial results
EBOS Group’s financial results 
saw strong earnings growth, with 
Earnings Before Interest, Tax, 
Depreciation and Amortisation 
(EBITDA) increasing 16.2% on 
last year, assisted by the full-year 
contribution of HPS which was 
acquired in June 2017. 

Headline revenue growth in the 
year was flat due to the impact of 
lower hepatitis C medicine sales in 
our Healthcare segment. This was 
driven by a decline in the number 
of patients taking these highly 
specialised medicines since the 
previous year.

Net Profit After Tax (NPAT) 
attributable to shareholders 
increased by 12.2% to $149.6 
million. Underlying NPAT 
(excluding one-off costs incurred 
on completing acquisitions 
undertaken in FY17) increased by 
7.9%, and underlying earnings per 
share grew by 7.8% to 98.5 cents 
per share. 

Reported growth rates were 
positively impacted by a weaker 
NZD/AUD exchange rate for the 
financial year. 

Our profit performance has 
allowed us to deliver another 
increase in our dividend to 
shareholders. The directors have 
declared a final dividend of  
35.5 cents per share, taking our 
full year dividend to 68.5 cents 
per share, an increase of 8.7%  
on the prior year. 

While these are just a few 
highlights from the full report, 
they demonstrate the ongoing 
performance across our 
healthcare and animal care 
segments.

Stronger together11

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Post Balance Date 
Announcement
In July 2018, EBOS announced it 
had won the tender to act as the 
exclusive third party distributor 
of pharmaceutical products 
to more than 400 Chemist 
Warehouse and My Chemist 
stores in Australia. EBOS expects 
to enter into a five-year supply 
agreement, to take effect from  
1 July 2019, with the potential for 
an extension of a further three 
years. EBOS estimates that sales 
to the Chemist Warehouse Group 
stores will generate approximately 
AUD$1 billion in revenue in the 
first year of the agreement.

To be selected as a trusted partner 
by Chemist Warehouse Group 
reinforces our capital investment 
strategy and reflects the 
efficiencies we have made over a 
number of years to our operations. 
It also reflects the high level of 
expertise and service standards 
that we offer the industry.
Our Future
We are very fortunate to have 
over 3,300 employees who are 
committed to our business and 
to servicing our customers’ needs 
every day. We could not deliver 
such growth across our Group 
without the efforts of our staff and 
we sincerely thank them for their 
ongoing commitment. We remain 
confident in the ability of our 
Group to expand and are always 
exploring new opportunities for 
growth in our key markets.

Healthcare
Healthcare remains the core 
business of EBOS Group and  
once again performed strongly, 
generating a 13% increase in 
EBITDA to $235.9 million. 

While Australian revenue 
declined 1.7% due to lower 
hepatitis C medicines sales, key 
investments including HPS and 
a full 12-month contribution 
from the Terry White Group, 
contributed to earnings growth 
and demonstrate the benefits 
of our diversified portfolio of 
healthcare businesses.

In the Community Pharmacy 
business, revenue growth 
(excluding sales of hepatitis C 
medicines and acquisitions) of 
1.4% (constant currency) was 
moderate due to the ongoing 
impact of PBS reforms. Sales 
in the non-prescription over-
the-counter (OTC) channel 
were marginally above last year, 
which reflects challenging retail 
environments. The business 
continues to generate efficiency 
savings from its previous capital 
investments and has a renewed 
focus on reducing operating costs 
in the current deflationary price 
environment. 

Our New Zealand Healthcare 
business continues to deliver  
solid results, increasing revenue  
by 6.2% and EBITDA up 4.6%,  
driven by Red Seal’s strong 
New Zealand performance 
in toothpastes, teas and 
supplements and the acquisition 
of Gran’s Remedy in March 2018. 

Animal Care 
The Animal Care segment recorded 
11.3% EBITDA growth for the 
period as the business continues 
to benefit from excellent growth in 
our branded products, with annual 
Black Hawk sales in Australia up 
23% from last year. Black Hawk 
continues to be one of Australia’s 
fastest growing premium pet food 
brands and is a market leader in the 
pet specialty retail channel.

In July 2017, the Group launched 
Black Hawk in New Zealand and 
sales have continued to grow over 
the course of the financial year. 
The brand’s strong acceptance 
and support from both specialty 
retailers and veterinary clinics has 
resulted in a steady increase in 
market share.

Total Animal Care revenue 
declined 2.7% for the year, 
principally due to the business 
ceasing sales of low-margin 
wholesale products to a major 
Australian retail chain and 
discontinuing sales of other 
products upon the introduction 
of Black Hawk into New Zealand. 
The business has strategically 
realigned its focus on developing 
its own brands to drive greater 
margin and shareholder value.

EBOS Group’s 50% owned 
Animates business also performed 
very well with our share of NPAT 
increasing 13% on last year.
Acquisitions
During the year we fully transitioned 
HPS into the Group, further 
expanding our leading position in 
the Institutional Healthcare market.

In October 2017, we acquired a 
strategic 14.1% shareholding in 
MedAdvisor Ltd, an Australian 
digital medication management 
company and in March 2018,  
we acquired one of New Zealand’s 
leading iconic footcare consumer 
brands, Gran’s Remedy. 

EBOS Group Annual Report 2018 
 
 
 
 
 
1212 Stronger together

business 
highlights

Finish in sight for 
Symbion’s new $55m 
Brisbane home 
Symbion’s new wholesale facility in 
Acacia Ridge, Brisbane is nearing 
completion and is due to open 
towards the end of 2018. 

The $55 million investment 
underlines EBOS’ ongoing 
commitment to, and confidence 
in, the future of Australia’s 
pharmacy industry.

Incorporating some of the latest 
automation technology, the 
Acacia Ridge facility is expected 
to operate with industry-leading 
accuracy and efficiency, ensuring 
that EBOS can continue to 
support the delivery of healthcare 
by our customers. 

Building on the success of 
the Keysborough facility in 
Melbourne, the Acacia Ridge 
development represents a  
long-term commitment by EBOS 
to the health and wellbeing of 
communities across Queensland.

The facility features some of 
the latest security and storage 
arrangements for fridge lines, 
dangerous goods and specialty 
medicines, as well as being 
built to withstand and continue 
operations during adverse 
weather conditions and floods.

The facility features LED lighting, 
energy-efficient air-conditioning 
and solar panels that are 
expected to supply 20-25% of the 
site’s energy requirements.

New Symbion Acacia Ridge pharmaceutical distribution facility

Stronger together13

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sector as discerning consumers 
increasingly seek premium 
quality products for their pets. 
In line with these trends and as 
part of its commitment to long-
term value creation, Black Hawk 
recently launched DogCheck - an 
innovative online tool designed 
to educate dog owners about 
animal health and nutrition. 
Already, 139,000 Australians 
have signed up to use DogCheck 
and the launch event in Sydney 
generated more than one million 
social media views. 

Black Hawk continues to leverage 
targeted campaigns through 
breeders, kennels and catteries 
to connect its products with more 
people and create a community 
that shares the brand organically 
through a shared belief in the 
benefits of premium quality 
animal care products.

Black Hawk leading 
the real pet food 
charge

Black Hawk continued its rapid 
growth trajectory in FY18, 
delivering record financial results 
and further strengthening both 
its Australian and international 
market presence.

The range of Original and 
Grain Free dog and cat food 
varieties achieved record sales 
in Australia, maintaining Black 
Hawk’s position as one of the 
leading real pet food brands in 
Australia. Following its launch into 
New Zealand in July 2017, Black 
Hawk has achieved swift sales 
uptake and built the foundations 
to establish itself as a leading 
animal care brand, with its 
Working Dog and Large Breed 
Original recipes gaining a strong 
foothold in the market.

The Black Hawk brand reflects 
broader health food trends that 
have permeated the animal care 

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EBOS Group Annual Report 2018 
 
 
 
 
 
14

Stronger together

Red Seal grows global 
footprint
The past financial year has been another 
successful period for Red Seal with the 
business expanding into new retail markets 
and further reinforcing its position as a 
consumer brand of choice in New Zealand.

Red Seal continues to increase its presence 
in Australia with its fruit tea range made 
available through leading supermarket 
retailer Woolworths from January 2018. 
Woolworths is currently stocking Red Seal 
fruit tea in more than 950 stores across the 
country and the launch was supported by 
a large promotional campaign across TV, 
social media and digital, public relations 
and in-store marketing. 

Toothpaste remains a strong driver of 
growth for Red Seal in Asian markets, with 
the business introducing two new products 
into South Korea. Red Seal products are 
now stocked in Costco stores across South 
Korea and Japan. China remains a key 
market for Red Seal with the business 
introducing updated packaging for its 
Raspberry Leaf Tea and partnering to 

relaunch its TMall store – an ecommerce 
platform in China that has more than 500 
million monthly active users.

Despite increased competition in the 
New Zealand market, Red Seal remains a 
leader in the Specialty Tea category. Red 
Seal launched three new tea variants in 
April 2018 and has also partnered with the 
Breast Cancer Foundation to offer Pink 
Ribbon teas, with $1 from every product 
sold donated to the foundation. Toothpaste 
has also been a strong contributor for Red 
Seal in New Zealand with the business 
continuing to grow its market share in this 
category.

Red Seal is well resourced to maintain its 
strong position in the New Zealand market, 
where it continues to be a leading natural 
consumer health brand. Combined with 
a strong emerging presence in Australia 
and several key Asian countries, Red Seal 
is now well positioned to target further 
opportunities in these exciting markets as 
consumers gravitate towards the natural 
product portfolio.

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HPS moves ahead adding 
new sites and i.Pharmacy 
technology
HPS has enjoyed a successful first full 
financial year as part of EBOS Group 
following its acquisition in June 2017. 
It has been a period of evolution for 
HPS that has seen the business build 
upon its position as a leading provider 
of outsourced pharmacy services 
to hospitals and further leverage its 
relationship with EBOS’ network of 
businesses to target new opportunities. 

HPS has continued to maintain its focus 
on growth with the opening of five new 
HPS approved pharmacies on-site at 
hospitals in Victoria, the Australian 
Capital Territory and the Northern 
Territory. With the addition of the new 
pharmacy in Darwin, there is now a HPS 
approved pharmacy in every Australian 
state and territory.

HPS’ pharmacy, St Vincent’s Private 
Hospital, Werribee, Victoria

Over the past financial year, HPS has 
successfully completed the Australia-
wide integration of DXC Technology’s 
leading inventory management 
software, i.Pharmacy. The completion 
of the rollout helps the HPS approved 
pharmacy network with seamless stock 
management and integrated business 
operations. Combined with HPS’ 
proprietary systems ClinPod and MACI, 
i.Pharmacy provides HPS’ network of 
approved pharmacies with best in class 
software systems, while the launch of 
a new website has improved the online 
ordering functionality for compounded 
medication clients.

With an Australia-wide presence, HPS 
is well positioned to target further 
business opportunities. The business is 
focussed on accelerating growth and 
realising market opportunities which 
continue to capitalise on being a part 
of EBOS Group to increase supply chain 
efficiencies and realise better service 
delivery.

 
 
 
 
 
 
 
 
 
 
16

Healthcare Logistics 
takes up residence in new 
flagship Sydney distribution 
centre

At the end of FY18, Healthcare Logistics 
(HCL) moved its Australian operations from 
Rydalmere, Sydney to a new purpose-built 
distribution centre in Pemulwuy, Sydney.

The $15 million development represents a 
significant investment by EBOS Group and 
at 25,000m2 it is the largest facility in the 
Group.

HCL’s new temperature controlled 
distribution centre features modern 
warehousing technology with ample 
storage for up to 30,000 pallets, as well 
as innovative security measures for 
controlled medicines, management of cold 
chain products and storage of dangerous 
goods. Additionally, the facility’s extensive 
roof infrastructure includes solar power 
and water recycling.

The new HCL facility has been developed 
in consultation with international experts 
in supply chain logistics and in response to 
market demand.

At nearly double the size of the previous 
facility, HCL’s new home allows for 
substantial growth in the business and 
capacity to better serve the needs of a 
larger range of principal partners.

The distribution centre will also house 
specially designed Clinical Trials storage 
and Secondary Packaging areas.

Healthcare Logistics’ 
facility, Pemulwuy, 
Sydney

Stronger togetherour 
community

The health and welfare of communities across 
New Zealand and Australia is central to 
everything we do at EBOS Group. We take our 
commitment to helping others seriously and we 
believe in going above and beyond to support 
people and communities in need.

This past financial year, EBOS Group has 
contributed money and goods to 62 charitable 
organisations through a wide variety of 
initiatives. Members of the EBOS family are 

also active organisers and participants in 
fundraising events, contributing monetary 
donations and clocking up countless hours 
volunteering to help those in need.

Together we can make a real difference to 
the lives of New Zealanders and Australians in 
need and use our position as a healthcare and 
animal care leader for good – because at EBOS 
Group we believe that Life Matters.

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EBOS Match Funding
EBOS staff show a strong 
connection to their community 
and causes.

The company has seen this 
through consistent fundraising 
and charitable activities over  
the years.

To recognise and support staff 
fundraising efforts, in February 
2018, EBOS Group launched 
Match Funding. 

Match Funding is an initiative to 
support employees who organise 
or take part in charitable events 
or activities, by matching the 
donations made by EBOS 
employees. 

To align with EBOS’ mission and 
activities, eligible charities include 
registered health and animal 
welfare charities.

500

hygiene bags 
donated to 
MALPA Young 
Doctors

Up to

lives saved 
through blood 
donations

2,000

dental kits  
donated to  
Clontarf  
Foundation

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EBOS Group Annual Report 2018 
 
 
 
 
 
18

Stronger together

Masterpet helping young Aussies 
get back on track
Masterpet is a firm believer in the role pets can play 
in helping people achieve their full potential. The bond 
we share with our pets is one of the purest examples 
of unconditional love and is built into our core values 
as a leading animal care company.

As part of its commitment to living these values, 
Masterpet has partnered with Australian youth 
organisation BackTrack, to help fund its life-
changing Paws Up program. 

BackTrack was founded by inspirational youth 
worker Bernie Shakeshaft in 2006 and delivers 
programs designed to help at-risk youth make 
meaningful connections, build job pathways and 
lead happier and healthier lives.

Based at Bernie’s farm in the regional city of 
Armidale in northern New South Wales, The Paws 
Up program sees youth handlers partnered with 
dogs to teach them high jump and learn many 
other valuable life skills in the process. Paws Up has 
developed into a highly successful dog high jumping 
team that travels to shows and invitational events 
throughout New South Wales and interstate.

Masterpet believes it’s important to give back to 
rural Australia, the home of our ingredients and 
where our food is made, and has donated $40,000 
to give Paws Up dogs access to the range of Black 
Hawk real food and Masterpet pet necessities, plus 
an additional $10,000 towards veterinary costs for 
dogs involved in the program.

Thanks to Masterpet, the Paws Up team is now also 
outfitted with official team wear and the dogs are 
healthier and happier than ever.

BackTrack’s Paws Up team at 
DogCheck Day

2017 biographers with HPS staff

HPS – a decade of empowering 
the terminally ill
Everyone has a fascinating story to tell. For people 
who have been diagnosed with a terminal illness, 
telling their story can be a really meaningful and 
rewarding experience in their final months and 
weeks of life.

Since 2008, with the support of HPS, The Mary 
Potter Foundation has been empowering people 
in palliative care to record their remarkable life 
stories for themselves and their families through 
the Calvary Biography Service.

The Mary Potter Foundation supports the Mary 
Potter Hospice and Calvary Cancer Services 
located at Calvary Hospital, North Adelaide, 
South Australia. With the help of trained 
volunteers, the Biography Service records 
patients’ stories and presents the narrative in a 
bound booklet that patients can leave to their 
families and friends – the everlasting gift of a life 
story told.

“One of the main aims of the biography service 
is to give positive affirmation of a life lived by a 
patient, a sense of who they are and to achieve 
a healing, peaceful state of being,” said Cathy 
Murphy, Executive Director of The Mary Potter 
Foundation.

“It is what happens to a patient through the 
telling of the story that makes creating a 
biography such a valued process.”

HPS has supported The Mary Potter Foundation’s 
Calvary Biography Service as the sole sponsor 
since its inception ten years ago. The company 
makes an annual donation to fund the purchase 
of equipment and booklet supplies and training 
courses for volunteers.

As an Australian healthcare leader, HPS 
recognises the importance of supporting 
community initiatives such as the Calvary 
Biography Service.

  
  
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100+

pallets of stock  
donated each year

2,500+

ice packs donated 
to Foodbank

3,293

cans collected 
and recycled 
at Onelink 
Yennora, NSW

1000+ warehouse 
lights changed 
to LED globes 
at Symbion, 
Greystanes, NSW

Symbion supports Foodbank
Waste management is becoming an increasingly 
pertinent issue in our society. As cities grow and the 
demand for goods increases, it is important we take 
steps to better manage and prevent unnecessary 
waste.

Symbion takes this responsibility seriously and 
is committed to minimising preventable waste 
through quality stock management processes. 
While some stock write-offs are inevitable, as part 
of our commitment to reducing waste, we have 
partnered with Foodbank to donate damaged 
and discontinued over-the-counter (OTC) 
products from our South Australian, Victorian and 
Queensland sites. 

Foodbank is a not-for-profit organisation that 
provides essential food, grocery and health 
products to people in need. The organisation 
collects, sorts, stores and distributes donated 
food and other items through more than 2,600 
community partners across Australia, and is 
supported by volunteers, fundraisers, state 
governments and philanthropic partners.

Symbion donates over 100 pallets of goods 
to Foodbank each year, helping to support 
Australians who cannot afford food and basic 
supplies.

Partnering with Foodbank extends Symbion’s 
support for the health and wellbeing of Australian 
communities and forms part of our commitment to 
minimise our environmental footprint.

Symbion wants to ensure that quality products 
aren’t being wasted simply due to minor 
imperfections that render them unfit for sale when 
they can help make a real difference in the lives of 
Australians who need them.

Foodbank SA CEO Greg Pattinson said that the 
support of organisations such as Symbion enables 
Foodbank to make a real impact in the lives of 
disadvantaged Australians.

“Poverty doesn’t discriminate and Foodbank 
believes that all Australians should have access 
to fresh food and basic healthcare supplies, which 
is only possible with the support of generous 
partners such as Symbion.”

 
 
 
 
 
 
 
 
 
 
  
20

our board

3.

4.

1.

2.

5.

Stronger togetherBrewery Company Limited 
in Tasmania and Managing 
Director of San Miguel Brewery 
Hong Kong Limited. In the public 
sector, he served as Chief of 
Staff to a Minister for Industry 
and Commerce in the Federal 
Government and as Chief 
Executive of the Tasmanian 
Government’s Economic 
Development Agency. He was 
formerly a director of Primelife 
Limited from 2001 to 2004. 

5. Sarah Ottrey  
Independent Director 
BCOM

Sarah Ottrey was appointed to 
the EBOS Group Limited Board 
in September 2006. She is a 
member of the Remuneration 
Committee. She is a director 
of Whitestone Cheese Limited, 
Skyline Enterprises Limited, Mount 
Cook Alpine Salmon Limited and 
Sarah Ottrey Marketing Limited. 
She is a past board member of 
the Public Trust and the Smiths 
City Group. Sarah has held senior 
marketing management positions 
with Unilever and Heineken.

1. Mark Waller 
Independent Chairman 
BCOM, FACA, FNZIM, CMinstD

Mark Waller was appointed as 
Chairman of the Board in October 
2015 and was formerly the Chief 
Executive and Managing Director 
of EBOS Group Limited from 1987 
to 30 June 2014. He is a member of 
the Audit and Risk Committee and 
Chairman of the Remuneration 
Committee. He is also a director of 
EBOS Group Limited subsidiaries. 
Mark was the recipient of the 
Leadership Award at the INFINZ 
Industry Awards in May 2014 and 
the Chief Executive of the Year 
Award at the Deloitte 200 Awards 
in 2011.

2. Elizabeth Coutts 
Independent Director 
ONZM, BMS, FCA

Elizabeth Coutts was appointed 
to the EBOS Group Limited Board 
in July 2003. She is Chairman of 
the Audit and Risk Committee and 
a member of the Remuneration 
Committee. She is Chair of Ports 
of Auckland Ltd, Urwin & Co 
Limited, Oceania Healthcare Ltd 
and Skellerup Holdings Limited 
and Director of the Yellow Pages 
group of companies and Tennis 
Auckland Region Incorporated 
and Member, Marsh New Zealand 
Advisory Board. She is President of 
the Institute of Directors Inc.
Elizabeth is a former Chairman 
of Meritec Group, Industrial 
Research, and Life Pharmacy 
Limited, former director of Air 
New Zealand Limited, the Health 
Funding Authority and Sanford 
Limited, former Deputy Chairman 
of Public Trust, former board 
member of Sport NZ, former 

member of the Pharmaceutical 
Management Agency (Pharmac), 
former Commissioner for both 
the Commerce and Earthquake 
Commissions, former external 
monetary policy adviser to the 
Governor of the Reserve Bank of 
New Zealand and former Chief 
Executive of the Caxton Group  
of Companies.

3. Peter Williams 
Peter Williams was appointed to 
the EBOS Group Limited Board 
in July 2013. Peter has been an 
executive of The Zuellig Group 
since 2000. Peter is a director 
of Pharma Industries Limited, 
Green Cross Health Limited and 
CB Norwood Pty Ltd. He is also a 
director of Cambert, a company 
marketing health and personal 
care products in South East Asia.

4. Stuart McGregor  
BCOM, LLB, MBA

Stuart McGregor was appointed 
to the EBOS Group Limited Board 
in July 2013. He is a member of the 
Audit and Risk Committee. Stuart 
was educated at the University 
of Melbourne and the London 
School of Business Administration, 
gaining degrees in Commerce and 
Law. He also completed a Masters 
of Business Administration at the 
University of Melbourne.

Currently Stuart is Chairman of 
Donaco International Limited, an 
ASX listed company. He is also 
director of Symbion Pty Ltd and 
other EBOS Group subsidiaries.

Over the last 30 years, Stuart 
has been Company Secretary 
of Carlton United Breweries, 
Managing Director of Cascade 

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EBOS Group Annual Report 2018 
 
 
 
 
 
22

financial 
summary

strategically realigned its focus 
on developing its own brands 
to drive greater margin and 
shareholder value.

Our Animates business, in 
which we hold a 50% equity 
interest, continues to perform 
strongly with our share of NPAT 
increasing 13% on last year.
Acquisitions and 
investments 
completed
In October 2017, we acquired 
a 14.1% shareholding in 
MedAdvisor Ltd, an Australian 
digital medication management 
company. This is was a strategic 
investment and during the year, 
EBOS’ subsidiaries Zest and 
TerryWhite Group Limited have 
worked closely with MedAdvisor 
to formalise commercial 
agreements. 

In March 2018, we acquired 
one of New Zealand’s leading 
footcare consumer brands, 
Gran’s Remedy. The acquisition 
of this iconic New Zealand 
brand further strengthens our 
Consumer Products business. 
Gran’s Remedy is manufactured 
and sold in New Zealand and 
is exported worldwide to many 
international markets, including 
China and South Korea.

EBOS Group has delivered 
another year of strong financial 
results, with record profit 
achieved. 

Group revenue was broadly in 
line with last year at $7.6 billion, 
negatively impacted by a  
$338 million reduction in 
hepatitis C medicine sales,  
offset by growth in our core 
businesses.  

During the year we fully 
transitioned HPS into the Group, 
further expanding our position 
in the Institutional Healthcare 
market. In October 2017,  
we acquired a strategic 14.1% 
shareholding in MedAdvisor Ltd, 
an Australian digital medication 
management company, and in 
March 2018, we acquired one of 
New Zealand’s leading footcare 
consumer brands, Gran’s Remedy.

In FY17, the business incurred 
$7 million of transaction costs 
incurred on acquisitions.  
The business did not incur these 
costs in FY18. For clarity, the 
comparative results below are 
shown on both a reported and  
an underlying basis.

Earnings Before Net Finance 
Costs, Tax, Depreciation and 
Amortisation (EBITDA) grew 
by $38 million to $272.4 million 
representing an increase of 
16.2%. Underlying EBITDA 
growth for the year was 12.8%.

Net Profit After Tax (NPAT) 
attributable to shareholders 
increased by 12.2% to $149.6 
million. Underlying NPAT 
increased by $11 million or 7.9% 
due to solid growth in operating 
earnings.

Healthcare
The Healthcare segment 
generated a 13% increase in 
EBITDA on flat sales revenue to 
last year.

The Australian business recorded 
a decline of 1.7% in revenue, 
although EBITDA grew 15.2%. 
The revenue decline was driven 
by a $338 million reduction 
in hepatitis C medicine sales. 
EBITDA growth was assisted by 
the full-year contribution of HPS 
which is performing solidly and in 
line with expectations. 

The New Zealand Healthcare 
operations again delivered a solid 
performance over the period 
with revenue increasing 6.2% 
and EBITDA increasing 4.6% with 
growth across all New Zealand 
business units.  

Animal Care
The Animal Care segment 
recorded 11.3% EBITDA growth 
for the year as the business 
continues to benefit from 
excellent growth in our branded 
products, with annual Black 
Hawk sales in Australia up 
23% on the prior year. Black 
Hawk continues to be one of 
Australia’s fastest growing 
premium pet food brands with 
a leading market position in the 
pet specialty retail channel and 
in July 2017, we successfully 
launched Black Hawk into the 
New Zealand market. 

Total Animal Care revenue 
declined for the year principally 
due to the business ceasing 
sales of low-margin wholesale 
products to a major Australian 
retail chain and discontinuing 
sales of other products upon the 
introduction of Black Hawk into 
New Zealand. The business has 

Stronger together23

Outlook
EBOS Group has recorded a 
strong financial performance in 
FY18, and the Group is confident 
of further profit growth into 
FY19 on an underlying, constant 
currency basis.

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A performance update will  
be provided to shareholders  
at the Annual Meeting on  
16 October 2018.

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Currency and Change 
in Presentation 
Currency for 2019
The Group generates 
approximately 82% of its earnings 
in Australia and the lower 
average exchange rate (-2.7 cents 
to last year) used to translate 
our Australian dollar earnings 
during the year, positively 
impacted reported EBITDA by 
approximately $5.4 million.

In order to reduce this volatility 
for future periods, the Board has 
decided to change the Group’s 
presentation currency from New 
Zealand dollars to Australian 
dollars, effective 1 July 2018.
Dividends
The directors are pleased to 
announce a final dividend of  
35.5 cents per share, which  
takes full year dividends to  
68.5 cents per share, an increase 
of 8.7% on the prior year.

The record date for the final 
dividend will be 28 September 
2018 and the dividend will be 
paid on 12 October 2018.  
The final dividend will again be 
imputed to 25% for New Zealand 
tax-resident shareholders and 
fully franked for Australian  
tax-resident shareholders.

Operating Cash 
Flow and Capital 
Expenditure
The Group achieved very 
strong operating cashflow 
(before capex) of $176.2 million, 
representing a $32.2 million 
increase on the prior year.

Capital expenditure for the period 
was $63.2 million, with $24.6 million 
spent on the new highly automated 
distribution facility in Brisbane, 
Queensland, and $14.6 million on 
the new contract logistics facility 
in Sydney, New South Wales. The 
contract logistics facility became 
operational in June 2018, and the 
new Brisbane distribution facility is 
expected to commence operations 
in the second quarter of FY19.
Net Debt and Return 
On Capital Employed
The Group’s net debt was  
$471 million at 30 June 2018,  
an increase of $36.4 million on 
the prior year, with a net debt  
to EBITDA ratio of 1.74x, down  
from 1.79x as at June 2017.  
The increase in net debt for the 
year was primarily attributable to 
investments made, including the 
capital expenditure program.

The business generated a return 
on capital employed of 15.8%. 
This is slightly lower than last 
year (16.4%), due to a higher 
investment in net working capital 
and the cost of the recently 
acquired HPS business.  
The Group’s strategy continues 
to include a strong focus on 
mergers and acquisitions for 
both its Healthcare and Animal 
Care businesses and recognises 
that the initial returns from 
acquisitions may not exceed the 
Group’s threshold ROCE target in 
the first year post acquisition.

EBOS Group Annual Report 2018 
 
 
 
 
 
24

financial 
report

Contents
DIRECTORS’ RESPONSIBILITY STATEMENT 

INDEPENDENT AUDITOR’S REPORT 

FINANCIAL STATEMENTS 

Consolidated Income Statement  

Consolidated Statement of Comprehensive Income 

Consolidated Balance Sheet 

Consolidated Statement of Changes in Equity 

Consolidated Cash Flow Statement 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

INTRODUCING THIS REPORT 

SECTION A: EBOS PERFORMANCE

A1. Revenue and expenses 

A2. Segment information 

A3. Taxation 

A4. Earnings per share 

SECTION B: KEY JUDGEMENTS MADE

B1. Goodwill and intangibles 

B2. Acquisition information 

SECTION C: OPERATING ASSETS AND LIABILITIES 
USED BY EBOS

C1. Trade and other receivables 

C2. Inventories 

C3. Trade and other payables 

SECTION D: CAPITAL ASSETS USED BY EBOS TO  
OPERATE OUR BUSINESS

D1. Property, plant and equipment 

D2. Capital work in progress 

ADDITIONAL STOCK EXCHANGE INFORMATION 

25

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30

30

31

32

34

35

36

59

60

60

61

62

64

66

68

69

72

72

72

73

73

74

75

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38

40

43

45

46

51

55

56

57

57

58

SECTION E: HOW WE FUND THE BUSINESS
E1. Share capital 

E2. Dividends 

E3. Borrowings 

E4. Borrowing facilities maturity profile 

E5. Operating cash flows 

SECTION F: EBOS GROUP STRUCTURE

F1. Subsidiaries 

F2. Investment in associates 

SECTION G: HOW WE MANAGE RISK

G1. Financial risk management 

G2. Financial instruments 

SECTION H: OTHER DISCLOSURES

H1. Contingent liabilities 

H2. Commitments for expenditure 

H3. Subsequent events 

H4. Related party disclosures 

H5. Remuneration of auditors 

H6. Changes in financial reporting standards 

Key

Key judgements and other judgements made

Accounting policy

Subsequent event

Explanatory note

Risks

Stronger together 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Directors’ 
Responsibility 
Statement 

The directors of EBOS Group 
Limited are pleased to present 
to shareholders the financial 
statements for EBOS Group 
Limited and its controlled entities 
(together the ‘Group’) for the year 
to 30 June 2018.

The directors are responsible for 
presenting financial statements 
in accordance with New Zealand 
law and generally accepted 
accounting practice, which give a 
true and fair view of the financial 
position of the Group as at  
30 June 2018 and the results of 
their operations and cash flows 
for the year ended on that date.

The directors consider the 
financial statements of the 
Group have been prepared 
using accounting policies which 
have been consistently applied 
and supported by reasonable 
judgements and estimates 
and that all relevant financial 
reporting and accounting 
standards have been followed.

The directors believe that 
proper accounting records 
have been kept which enable 
with reasonable accuracy, the 
determination of the financial 
position of the Group and 
facilitate compliance of the 
financial statements with the 
Financial Markets Conduct  
Act 2013.

The directors consider that they 
have taken adequate steps to 
safeguard the assets of the 
Group and to prevent and detect 
fraud and other irregularities. 
Internal control procedures are 
also considered to be sufficient to 
provide reasonable assurance as 
to the integrity and reliability of 
the financial statements.

The financial statements are 
signed on behalf of the Board by:

MARK WALLER 
Chairman 

ELIZABETH COUTTS 
Director  

22 August 2018

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EBOS Group Annual Report 2018 
 
 
 
 
 
 
 
 
26

independent auditor’s 
report to the shareholders

Report on the Audit of the Consolidated Financial Statements

Opinion 

Basis for Opinion 

Audit Materiality

We have audited the consolidated financial statements of EBOS Group Limited and its 
subsidiaries (the ‘Group’), which comprise the consolidated balance sheet as at 30 June 2018,  
and the consolidated income statement, statement of comprehensive income, statement 
of changes in equity and statement of cash flows for the year then ended, and notes to the 
consolidated financial statements, including a summary of significant accounting policies. 

In our opinion, the accompanying consolidated financial statements, on pages 30 to 74, present 
fairly, in all material respects, the consolidated financial position of the Group as at 30 June 
2018, and its consolidated financial performance and cash flows for the year then ended in 
accordance with New Zealand Equivalents to International Financial Reporting Standards  
(‘NZ IFRS’) and International Financial Reporting Standards (‘IFRS’).

We conducted our audit in accordance with International Standards on Auditing (‘ISAs’) and 
International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities under those 
standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated 
Financial Statements section of our report. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 
basis for our opinion.

We are independent of the Group in accordance with Professional and Ethical Standard 1 
(Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and 
Assurance Standards Board and the International Ethics Standards Board for  
Accountants’ Code of Ethics for Professional Accountants, and we have fulfilled our other ethical 
responsibilities in accordance with these requirements.

Other than in our capacity as auditor and the provision of advisory services and taxation 
services, we have no relationship with or interests in the Company or any of its subsidiaries.  
These services have not impaired our independence as auditor of the Company and Group.

We consider materiality primarily in terms of the magnitude of misstatement in the  
financial statements of the Group that in our judgement would make it probable that the  
economic decisions of a reasonably knowledgeable person would be changed or influenced  
(the ‘quantitative’ materiality). In addition, we also assess whether other matters that come to 
our attention during the audit would in our judgement change or influence the decisions of such 
a person (the ‘qualitative’ materiality). We use materiality both in planning the scope of our audit 
work and in evaluating the results of our work.

We determined materiality for the Group financial statements as a whole to be $10.5m.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most 
significance in our audit of the consolidated financial statements of the current period.  
These matters were addressed in the context of our audit of the consolidated financial 
statements as a whole, and in forming our opinion thereon, and we do not provide a separate 
opinion on these matters.

Stronger together27

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Key audit matter

How our audit addressed the key audit matter

Goodwill and Indefinite Life Intangible Asset Impairment Assessment

The Group has $1,021m of goodwill and $133m of indefinite life 
intangible assets, including brands and a franchise network, 
on the balance sheet at 30 June 2018 as detailed in note B1 to 
the financial statements. 

The carrying values of goodwill and indefinite life intangible 
assets are dependent on the future cash flows expected to be 
generated by the underlying businesses, and there is a risk if 
these cash flows do not meet the Group’s expectations that 
the assets may be impaired.

The Group tests goodwill and indefinite life intangible assets 
at least annually by determining the recoverable amount 
(the higher of value-in-use or fair value less costs to sell) of 
the individual assets where possible, or otherwise the cash-
generating units to which the assets belong and comparing 
the recoverable amounts of the assets to their carrying values.

The impairment assessment models prepared by the Group 
contain a number of significant assumptions. Changes in 
these assumptions might lead to a change in the carrying 
value of indefinite life intangible assets and goodwill. 

The Group has assessed the recoverable amount of brands 
based on fair value using the relief from royalty method and 
the recoverable amount of franchise assets based on fair 
value using the multiple-period excess earnings method.  
The key assumptions applied in the above models are:

•  annual revenue and expense growth rates for the 5 year 

forecast period;

• pre-tax discount rates;

• royalty rates;

We considered whether the Group’s methodology 
for assessing impairment is compliant with NZ IAS 
36: Impairment of Assets. We focused on testing 
and challenging the suitability of the models and 
reasonableness of the assumptions used by the Group  
in conducting their impairment reviews.

Our procedures included:

•  agreeing a sample of future cash flows to Board 

approved forecasts;

•  challenging the reliability of the Group’s revenue and 
expense growth rates by comparing the forecasts 
underlying the growth rates to historical forecasts and 
actual results of the underlying businesses (where 
applicable); and

•  assessing the reasonableness of key assumptions and 

changes to them from previous years. 

We used our internal valuation specialists to assist with 
evaluating the models and challenging the Group’s key 
assumptions. The procedures of the specialist included:

•  evaluating the appropriateness of the valuation 

methodology;

• testing the mathematical integrity of the models;

•  evaluating the Group’s determination of the pre-tax 
discount rates and royalty rates used in the models 
through consideration of the relevant risk factors for 
each CGU, the cost of capital for the Group, and market 
data on comparable businesses; and

•  comparing the terminal growth rates to market data for 

• contributory asset charge (franchise network assets); and

the industry sectors.

We evaluated the sensitivity analysis performed by 
management to consider the extent to which a change 
in one or more of the key assumptions could give rise to 
impairment in the goodwill and indefinite life intangible 
assets.

• terminal growth rates. 

The Group has assessed the recoverable amount of each 
cash-generating unit (“CGU”) or group of CGU’s to which 
goodwill has been allocated based on value-in-use models. 
The key assumptions applied in the value-in-use models are:

•  annual revenue and expense growth rates for the 5 year 

forecast period;

• pre-tax discount rates; and

• terminal growth rates. 

We have included the impairment assessments of goodwill and 
indefinite life intangible assets as a key audit matter due to the 
significance of the balances to the financial statements and 
the level of judgement applied by the Group in determining the 
key assumptions used to determine the recoverable amounts.

EBOS Group Annual Report 2018 
 
 
 
 
 
28

How our audit addressed the key audit matter

Our procedures included:

•  utilising industry knowledge to assess the Group’s 

identification of intangible assets and consider what is 
represented by residual goodwill;

•  challenging the rationale for allocation of goodwill to 

CGU’s or group’s of CGU’s;

•  comparing the forecast sales to Board approved 

forecasts; and

•  challenging the reliability of the revenue and expense 

growth rates by comparing the forecasts underlying the 
growth rates to historical forecasts and actual results of 
the underlying business.

We used our internal valuation specialists to assess 
the appropriateness of the nature and valuation of the 
intangible assets identified by the Group. This assessment 
included:

•  evaluating the appropriateness of the valuation 

methodology and testing the mathematical integrity of 
the model;

•  evaluating the pre-tax discount rate applied in the 

model through comparison to the cost of capital for the 
business and to external market data; and

•  comparing the Group’s assumed royalty rate and 

contributory asset charge to market data for similar 
intangible assets. 

Key audit matter

Acquisition Accounting

New Zealand accounting standards require the purchaser 
to identify the assets and liabilities acquired in a business 
combination, including identifiable intangible assets, and 
to measure them at fair value at the date of acquisition. 
Goodwill arising (excess of consideration paid over the fair 
value of the assets and liabilities acquired) is required to be 
allocated to the cash-generating unit (“CGU”) or groups of 
CGU’s benefiting from the acquisition.

As detailed in note B2, EBOS Group acquired 100% 
of Alchemy Holdings Pty Ltd (“Alchemy”) for a total 
consideration of NZD $163m in June 2017, and due to the 
timing of the acquisition the acquisition balance sheet was 
determined on a provisional basis as at 30 June 2017. 

During the current year the Group finalised the acquisition 
accounting of Alchemy. The finalisation of the acquisition 
accounting resulted in the recognition of indefinite life 
intangible assets, comprising brands of $9.5m, and finite life 
intangible assets, comprising customer contracts of $8.8m, 
and $127.0m of goodwill.

The Alchemy brand has been valued using the relief from 
royalty method. The key assumptions applied in the model were:

• forecast sales volumes;

• pre-tax discount rate;

• royalty rate; and

• terminal growth rate.

The customer relationships have been valued using  
the multiple-period excess earnings method.  
The key assumptions applied in the model were:

• forecast sales;

• pre-tax discount rate;

• contract useful lives; and

• contributory asset charge. 

We included the identification and valuation of intangible 
assets and the allocation of goodwill to CGU’s for the 
Alchemy acquisition as a key audit matter because the 
Group’s acquisitions are considered a key area of interest for 
investors and because of the size of this acquisition and the 
level of intangible assets. There is also significant judgement 
involved in identifying the intangible assets acquired 
and determining the appropriate methodology and key 
assumptions to calculate their fair value. 

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Other Information

The directors are responsible on behalf of the Group for the other information. The other 
information comprises the information in the Annual Report that accompanies the consolidated 
financial statements and the audit report.

Our opinion on the consolidated financial statements does not cover the other information and 
we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and consider whether it is materially 
inconsistent with the consolidated financial statements or our knowledge obtained in the audit  
or otherwise appears to be materially misstated. If so, we are required to report that fact. We have 
nothing to report in this regard.

Board of Directors’ 
Responsibilities for the 
Consolidated Financial 
Statements 

The directors are responsible on behalf of the Group for the preparation and fair presentation 
of the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such 
internal control as the directors determine is necessary to enable the preparation of consolidated 
financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s 
Responsibilities 
for the Audit of the 
Consolidated Financial 
Statements

In preparing the consolidated financial statements, the directors are responsible on behalf of the 
Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, 
matters related to going concern and using the going concern basis of accounting unless 
the directors either intend to liquidate the Group or to cease operations, or have no realistic 
alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the consolidated financial 
statements as a whole are free from material misstatement, whether due to fraud or error, and 
to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of 
assurance, but is not a guarantee that an audit conducted in accordance with ISAs and ISAs (NZ) 
will always detect a material misstatement when it exists. Misstatements can arise from fraud or 
error and are considered material if, individually or in the aggregate, they could reasonably be 
expected to influence the economic decisions of users taken on the basis of these consolidated 
financial statements.

A further description of our responsibilities for the audit of the consolidated financial statements 
is located on the External Reporting Board’s website at: 

https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-
report-1 

This description forms part of our auditor’s report.

Restriction on Use

This report is made solely to the Company’s shareholders, as a body. Our audit has been 
undertaken so that we might state to the Company’s shareholders those matters we are required 
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by 
law, we do not accept or assume responsibility to anyone other than the Company’s shareholders 
as a body, for our audit work, for this report, or for the opinions we have formed.

PAUL BRYDEN, PARTNER 
FOR DELOITTE LIMITED 
Christchurch, New Zealand 

22 August 2018

EBOS Group Annual Report 2018 
 
 
 
 
 
30

financial 
statements

Consolidated Income Statement

The Consolidated Income Statement presents income earned and expenditure incurred by EBOS Group during the financial year in 
determining profit.

For the financial year ended 30 June 2018

Revenue

Income from associates

Acquisition costs

Profit before depreciation, amortisation,  
net finance costs and tax expense (EBITDA)

Depreciation

Amortisation

Profit before net finance costs and tax expense

Finance income

Finance costs

Profit before tax expense

Tax expense

Profit for the year

Profit for the year attributable to:

Owners of the Company

Non-controlling interests

Earnings per share:

Basic (cents per share)

Diluted (cents per share)

Notes

A1(a)

F2

A1(b)

A1(b)

A1(b)

A3

A4

A4

2018 
$’000

2017 
$’000

7,609,488

7,625,854

4,501

-

272,383

(17,651)

(17,084)

237,648

1,780

(24,501)

214,927

(63,207)

151,720

149,564

2,156

151,720

98.5

98.5

4,062

(7,021)

234,427

(13,616)

(12,218)

208,593

2,079

(21,104)

189,568

(56,722)

132,846

133,279

(433)

132,846

87.8

87.8

Notes to the financial statements are included on pages 36 to 74.

Stronger together 
 
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Consolidated Statement of Comprehensive Income

The Consolidated Statement of Comprehensive Income presents profit for the year, plus gains and losses that are not recognised in the 
Consolidated Income Statement and instead are required to be taken directly to reserves within equity.

For the financial year ended 30 June 2018

Profit for the year

Other comprehensive income

Items that may be reclassified subsequently to profit or loss:

Net fair value movement on available-for-sale assets

Cashflow hedge gains

Related income tax

Translation of foreign operations

Total comprehensive income net of tax

Total comprehensive income for the year is attributable to:

Owners of the Company

Non-controlling interests

2018 
$’000

2017 
$’000

151,720

132,846

(1,552)

2,242

(640)

10,123

161,893

159,737

2,156

161,893

-

5,675

(1,653)

1,947

138,815

139,248

(433)

138,815

Notes to the financial statements are included on pages 36 to 74.

EBOS Group Annual Report 2018 
 
 
 
 
 
32

Consolidated Balance Sheet

The Consolidated Balance Sheet presents a summary of the EBOS Group assets, liabilities and equity at the end of the financial year.

As at 30 June 2018

Notes

Current assets

Cash and cash equivalents

Trade and other receivables

Prepayments

Inventories

Current tax refundable

Other financial assets - derivatives

Total current assets

Non-current assets

Property, plant and equipment

Capital work in progress

Prepayments

Deferred tax assets

Goodwill

Indefinite life intangibles

Finite life intangibles

Investment in associates

Other financial assets

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Finance leases

Bank loans

Current tax payable

Employee benefits

Other financial liabilities - derivatives

Total current liabilities

C1

C2

G2

D1

D2

A3(b)

B1(a)

B1(b)

B1(d)

F2

C3

E3

G2

Notes to the financial statements are included on pages 36 to 74.

2018 
$’000

2017 
$’000

163,256

998,760

9,854

582,877

65

1,423

162,181

1,041,849

7,834

572,001

168

19

1,756,235

1,784,052

122,186

63,540

-

53,030

1,021,170

132,589

64,136

40,315

10,097

1,507,063

3,263,298

115,876

22,923

9

49,263

1,000,050

115,940

80,084

36,455

922

1,421,522

3,205,574

1,274,624

1,327,757

25

160,293

12,452

44,362

2,157

72

155,857

14,209

40,971

2,995

1,493,913

1,541,861

Stronger together33

2018 
$’000

2017 
$’000

473,988

440,847

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58,015

82

6,475

553,167

2,047,080

1,216,218

888,513

2,318

(24,691)

326,800

(1,552)

1,571

1,192,959

23,259

1,216,218

13,837

50,783

103

5,745

511,315

2,053,176

1,152,398

888,513

490

(34,814)

277,912

-

(31)

1,132,070

20,328

1,152,398

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Consolidated Balance Sheet (continued)

Notes

E3

C3

A3(b)

E1

As at 30 June 2018

Non-current liabilities

Bank loans

Trade and other payables

Deferred tax liabilities

Finance leases

Employee benefits

Total non-current liabilities

Total liabilities

Net assets

Equity

Share capital

Share based payments reserve

Foreign currency translation reserve

Retained earnings

Available-for-sale revaluation reserve

Cashflow hedge reserve

Equity attributable to owners of the Company

Non-controlling interests

Total equity

Notes to the financial statements are included on pages 36 to 74.

EBOS Group Annual Report 2018 
 
 
 
 
 
34

Consolidated Statement of Changes in Equity

The Consolidated Statement of Changes in Equity presents the components of capital and reserves of EBOS Group and explains the 
movements in each component during the financial year.

For the financial year ended  
June 2018

Notes

Share 
capital 
$’000

Share 
based  
payments 
$’000

Foreign 
currency 
translation 
reserve 
$’000

Available 
-for-sale  
revaluation 
reserve 
$’000

Retained 
earnings 
$’000

Cashflow 
hedge 
reserve 
$’000

Non- 
controlling 
interests 
$’000

Total 
$’000

Balance at 1 July 2016

Profit for the year

Other comprehensive income  
for the year, net of tax

Payment of dividends

E2

Arising on acquisition of subsidiaries

Share based payments

Effect of exchange rate fluctuations

888,513

-

-

-

-

-

-

-

-

-

-

-

490

-

(36,761)

239,578

-

133,279

1,947

-

-

-

-

-

(94,945)

-

-

-

Balance at 30 June 2017

888,513

490

(34,814)

277,912

-

-

-

-

-

-

-

-

-

-

(4,053)

-

1,087,277

-

(433)

132,846

4,022

-

-

-

-

-

-

5,969

(94,945)

20,936

20,936

-

(175)

490

(175)

(31)

20,328

1,152,398

(31)

20,328

1,152,398

-

2,156

151,720

888,513

490

(34,814)

277,912

-

149,564

Balance at 1 July 2017

Profit for the year

Other comprehensive income for  
the year, net of tax

Payment of dividends

E2

Share based payments

Effect of exchange rate fluctuations

-

-

-

-

-

-

-

-

1,828

-

10,123

-

(1,552)

1,602

-

-

-

(100,676)

-

-

-

-

-

-

-

-

-

-

-

775

10,173

(100,676)

1,828

775

Balance at 30 June 2018

888,513

2,318

(24,691)

326,800

(1,552)

1,571

23,259

1,216,218

Notes to the financial statements are included on pages 36 to 74.

Stronger together35

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Consolidated Cash Flow Statement

The Consolidated Cash Flow Statement presents the cash generated and used by EBOS Group during the financial year.

For the financial year ended 30 June 2018

Notes

Cash flows from operating activities

Receipts from customers

Interest received

Dividends received from associates

Payments to suppliers and employees

Taxes paid

Interest paid

Net cash inflow from operating activities

Cash flows from investing activities

Sale of property, plant and equipment

Purchase of property, plant and equipment

Payments for capital work in progress

Payments for intangible assets

Acquisition of subsidiaries

Investment in other financial assets

Net cash (outflow) from investing activities

Cash flows from financing activities

Proceeds from borrowings

Repayment of borrowings

Dividends paid to equity holders of parent

Net cash (outflow)/inflow from financing activities

Net (decrease)/increase in cash held

Effect of exchange rate fluctuations on cash held

Net cash and cash equivalents at the beginning of the year

Net cash and cash equivalents at the end of the year

F2

E5

B2

E5

E5

E2

2018 
$’000

2017 
$’000

7,684,830

7,922,392

1,780

932

2,079

913

(7,421,615)

(7,694,957)

(65,255)

(24,501)

176,171

187

(17,119)

(43,516)

(2,709)

(22,816)

(10,923)

(96,896)

26,483

(10,000)

(100,676)

(84,193)

(4,918)

5,993

162,181

163,256

(65,380)

(21,104)

143,943

150

(13,507)

(22,923)

(1,164)

(183,228)

(879)

(221,551)

224,456

(10,357)

(94,945)

119,154

41,546

384

120,251

162,181

Notes to the financial statements are included on pages 36 to 74.

EBOS Group Annual Report 2018 
 
 
 
 
 
36

Notes to the consolidated 
financial statements
For the Financial Year Ended 30 June 2018

Introducing this report
The notes to the financial statements include information 
that is considered relevant and material to assist the reader 
in the understanding of the financial performance and 
financial position of EBOS Group.

Information is considered relevant and material if:

• the amount is significant because of its size and nature;

•  it is important to assist the readers understanding of the 

results of EBOS;

•  it helps to explain to the reader the changes in the business 

and/or operations of EBOS; or

•  it relates to an aspect of operations that is important to the 

future performance of EBOS.

EBOS Group Limited (the Company) is a profit-oriented 
company incorporated in New Zealand, registered under the 
Companies Act 1993 and dual listed on both the New Zealand 
Stock Exchange and the Australian Securities Exchange.

Basis of preparation

The financial statements have been prepared in 
accordance with Generally Accepted Accounting 
Practice (GAAP). They comply with New Zealand 
Equivalents to International Financial Reporting 
Standards and other applicable reporting 
standards as appropriate for profit oriented 
entities.

The financial statements comply with International 
Financial Reporting Standards. 

EBOS is a Tier 1 for-profit entity in terms of the New 
Zealand External Reporting Board Standard A1.

The Company is a FMC reporting entity for the 
purposes of the Financial Markets Conduct Act 
2013, and its financial statements comply with 
this Act. 

The financial statements have been prepared 
on the basis of historical cost, except for the 
revaluation of certain financial instruments. Cost is 
based on the fair value of the consideration given in 
exchange for assets.

The information is presented in thousands of  
New Zealand dollars, unless otherwise stated.

Critical accounting estimates and judgements

In the process of applying the Group’s accounting 
policies and the application of accounting 
standards, EBOS has made a number of 
judgements and estimates. The estimates and 
underlying assumptions are based on historic 
experience and various other factors that 
are considered to be appropriate under the 
circumstances. Therefore, there is an inherent risk 
that actual results may subsequently differ from 
the estimates made. 

These estimates and underlying assumptions 
are reviewed on an ongoing basis. Revisions to 
accounting estimates are recognised in the period 
in which the estimate is revised if the revision 
affects only that period, or in the period of the 
revision and future periods if the revision affects 
both current and future periods.

Judgements and estimates that are considered 
material to understanding the performance 
of EBOS are found in the relevant notes to the 
financial statements. Key judgements have been 
made in regard to assumptions that support the 
impairment assessment for goodwill and indefinite 
life intangibles (note B1) and the identification and 
valuation of intangibles recognised on acquisitions 
(note B2).

Basis of consolidation

The EBOS Group financial statements comprise the 
financial statements of EBOS Group Limited, the 
parent company, combined with all the entities that 
comprise the Group, being its subsidiaries (listed in 
note F1) and its share of associate investments (listed 
in note F2). The financial statements of the members 
of the Group, including associates, are prepared for 
the same reporting period as the parent company, 
using consistent accounting policies.

Subsidiaries are consolidated on the date on which 
control is obtained to the date on which control is lost.

The results of subsidiaries acquired or disposed of 
during the year are included in the Consolidated 
Income Statement from the effective date of 
acquisition or up to the effective date of disposal, 
as appropriate.

All significant inter-company transactions and 
balances are eliminated on consolidation. 

Stronger togetherINTRODUCING THIS REPORT continued 

Foreign currency 

Other accounting policies

Other accounting policies that are relevant to the reader’s 
understanding of the financial statements are included 
throughout the following notes to the financial statements.

Functional currency

The financial statements of each of the Group’s 
entities are measured using the currency of the 
primary economic environment in which that entity 
operates (the functional currency).

Transactions and balances

Foreign currency transactions are translated into 
the functional currency using the exchange rate 
on the date of the transaction. At each balance 
sheet date, monetary assets and liabilities that are 
denominated in foreign currencies are translated at 
the rates prevailing on the balance sheet date.  
Non-monetary assets and liabilities that are 
measured in terms of historical cost in a foreign 
currency are not retranslated. 

Exchange differences arising on the settlement of 
monetary items, and on the translation of monetary 
items, are included in the Consolidated Income 
Statement for the period.

Foreign operations

On consolidation, the assets and liabilities of 
EBOS’ overseas operations are translated at the 
exchange rate at the reporting date. Income and 
expense items are translated at the average rates 
for the period. Exchange differences arising are 
recognised in the foreign currency translation 
reserve (in equity), and recognised in profit or loss 
on disposal of the foreign operation.

Goodwill and fair value adjustments arising on the 
acquisition of a foreign entity are treated as assets 
and liabilities of the foreign entity and translated at 
the exchange rate at the reporting date.

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EBOS Group Annual Report 2018 
 
 
 
 
 
38

Section A: EBOS Performance

SECTION OVERVIEW

This section explains the financial performance of EBOS by:

a) displaying additional information about individual items in the Consolidated Income Statement; 

b) presenting further analysis of EBOS’ operating segments by revenue and expenses; and

c)  providing an analysis of the components of EBOS’ tax balances for the year and the current 

imputation credit account balance. 

A1. REVENUE AND EXPENSES

(a) Revenue

Revenue consisted of the following items:

Revenue from the sale of goods

Revenue from the rendering of services

2018  
$’000

7,379,765

229,723

7,609,488

2017  
$’000

7,471,918

153,936

7,625,854

RECOGNITION AND MEASUREMENT

Revenue is measured at the fair value of the consideration received or receivable and represents amounts net of 
any returns and discounts. Revenue is recognised when it is considered probable that the economic benefits of 
the transaction will be received by EBOS. The following specific recognition criteria must be met before revenue is 
recognised:

Sale of Goods

Rendering of Services

Revenue from the sale of goods is recognised when 
significant risks and rewards of owning the goods are 
transferred to the buyer. 

Revenue from services is recognised on the basis 
of the value of services performed to date as a 
percentage of the total services to be performed.

Stronger togetherA1. REVENUE AND EXPENSES continued 

(b) Expenses

Profit before tax expense has been arrived at after charging the following expenses by nature:

Cost of sales

Write-down of inventory

Impairment loss on trade and other receivables

Depreciation of property, plant and equipment

Amortisation of finite life intangibles

Operating lease rental expenses

Donations

Employee benefit expense

Defined contribution plan expense

Acquisition costs

Share based payments

Other expenses

Total expenses

2018  
$’000

(6,748,844)

(4,036)

(1,901)

(17,651)

(17,084)

(43,203)

(265)

(297,028)

(16,299)

-

(840)

(229,190)

(7,376,341)

2017  
$’000

(6,872,190)

(8,387)

(2,758)

(13,616)

(12,218)

(35,125)

(49)

(245,813)

(14,653)

(7,021)

(490)

(209,003)

(7,421,323)

RECOGNITION AND MEASUREMENT

Impairment
EBOS reviews the recoverable amount of its tangible and intangible assets, including goodwill, at each balance 
date. If the carrying value of an asset exceeds the recoverable amount, an impairment expense is recognised in the 
income statement. 

Tangible assets are grouped at the lowest levels for which there are separately identifiable cash flows  
(cash-generating units). The recoverable amount is the higher of an asset’s fair value less costs to sell and the 
present value of future cash flows expected to be generated by the asset (value in use).

Depreciation and amortisation
Depreciation is provided for on a straight-line basis on all property, plant and equipment other than freehold land,  
at depreciation rates calculated to allocate the assets’ cost less estimated residual value, over their estimated useful 
lives. Refer to note D1 for the useful lives used in the calculation of depreciation.

Amortisation is charged on a straight-line basis over the estimated useful life of finite life intangibles. Refer to note  
B1 for the useful lives used in the calculation of amortisation.

Operating lease expenses
EBOS leases certain land, buildings, plant and equipment. Operating leases are where the lessor rather than EBOS 
have effectively retained the substantial risk and benefit of ownership of a leased item. Operating lease payments 
are included in the determination of profit or loss in equal instalments over the period of the lease. Lease incentives 
received are recognised on a straight-line basis over the lease period.

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40

A1. REVENUE AND EXPENSES continued

Employee expenses
Provision is made for benefits owing to employees in respect of wages and salaries, annual leave, long service leave 
and employee incentives for services rendered. Provisions are recognised when it is probable they will be settled and 
can be measured reliably. They are carried at the remuneration rate expected to apply at the time of settlement and 
discounted to the present value of the expected payment to the employee at balance date.

Net finance costs
Finance costs include bank interest and amortisation of costs incurred in connection with borrowing facilities. 
Finance costs are expensed immediately as incurred, using the effective interest method, unless they relate to 
acquisition and development of qualifying assets, in which case they are capitalised.

Interest income is recognised on a time-proportionate basis using the effective interest method.

A2. SEGMENT INFORMATION

(a) Reportable segments 

EBOS GROUP LIMITED

HEALTHCARE SEGMENT

ANIMAL CARE SEGMENT

CORPORATE SEGMENT

Sale of healthcare products in a 
range of sectors, own brands, retail 
healthcare, pharmacy services 
and wholesale activities.

Sale of animal care products in a 
range of sectors, own brands, retail 
and wholesale activities.

Includes net funding costs and central 
administration expenses that have 
not been allocated to the healthcare 
or animal care segments.

EBOS’ major products and services are the same as the reportable segments, i.e. Healthcare and Animal Care,  
with no major products and services allocated to corporate.  

(b) Segment revenues and results

The following is an analysis of EBOS’ revenue and results by reportable segment:

Revenue from external customers ($’000)

2018

Animal Care  
$411,932
5%

2017

Animal Care  
$423,166
6%

Healthcare 

Animal Care

Healthcare $7,197,556
95%

Healthcare $7,202,688
94%

Stronger togetherA2. SEGMENT INFORMATION continued

(b) Segment revenues and results (continued)

EBITDA ($’000)

$235,867

$208,782

Healthcare

$49,761

$44,712

Animal Care

2018

2017

($13,245)

($19,067)

Corporate

 Net profit/(loss) after tax for the year attributable to owners of the company ($’000)

$142,483

$133,172

Healthcare

Associate information:

$33,226

$29,953

Animal Care

2018

2017

($26,145)

($29,846)

Corporate

Included in the segment results above is income from associates:

Animal Care

Healthcare

Total income from associates

2018  
$’000

3,554

947

4,501

2017 
$’000

3,141

921

4,062

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42

A2. SEGMENT INFORMATION continued

(b) Segment revenues and results (continued)

The following is an analysis of other financial information by reportable segment:

Healthcare

Animal Care

Corporate

2018  
$’000

2017 
$’000

2018  
$’000

2017 
$’000

2018  
$’000

2017 
$’000

Depreciation

(16,687)

(12,562)

(964)

(1,054)

Amortisation of finite life intangibles

(14,454)

(9,719)

(2,630)

(2,499)

-

-

-

-

Net finance costs

-

-

-

-

(22,721)

(19,025)

Tax (expense)/benefit

(60,087)

(53,762)

(12,941)

(11,206)

9,821

8,246

(c) Geographical information

EBOS operates in two principal geographical areas: New Zealand and Australia.

EBOS’ revenue from external customers by geographical location and information about its segment assets  
(non-current assets), excluding financial instruments and deferred tax assets, are detailed below:

Australia

New Zealand

Group

2018  
$’000

2017 
$’000

2018  
$’000

2017 
$’000

2018  
$’000

2017 
$’000

Continuing operations

Revenue from external customers

6,022,031

6,116,760

1,587,457

1,509,094

7,609,488

7,625,854

Non-current assets

1,107,893

1,048,967

305,825

286,837

1,413,718

1,335,804

(d) Information about major customers

No revenues from transactions that are with a single customer amount to 10% or more of EBOS’ revenues (2017: Nil).

RECOGNITION AND MEASUREMENT

The reportable segments of EBOS have been identified in accordance with NZ IFRS 8 ‘Operating Segments’.

The Group’s operating segments are identified on the basis of internal reports about components of the Group that 
are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to 
assess its performance.  

The accounting policies of EBOS have been consistently applied to the operating segments. Profit before 
depreciation, amortisation, net finance costs and tax expense (EBITDA) is the measure reported to the chief 
operating decision-maker for the purposes of resource allocation and assessment of segment performance.

Assets are not allocated to operating segments as they are not reported to the chief operating decision-maker  
at a segment level.

Stronger togetherA3. TAXATION

(a) Tax expense recognised in Consolidated Income Statement

Tax expense comprises:

Current tax expense/(credit):

Current year

Adjustments for prior years

Deferred tax (credit):

Adjustments for prior years

Total tax expense

2018  
$’000

2017 
$’000

64,115

(1,897)

62,218

(646)

1,635

989

63,207

59,303

(119)

59,184

(2,832)

370

(2,462)

56,722

The prima facie income tax expense on pre-tax accounting profit from operations  
reconciles to the income tax expense in the financial statements as follows:

Profit before tax expense

214,927

189,568

Tax expense calculated at 28% (2017: 28%)

Non-deductible expenses

Effect of different tax rates of subsidiaries operating in  
overseas jurisdictions

(Over)/under provision of tax expense in prior years

Other adjustments

Total tax expense

60,180

1,445

3,555

(262)

(1,711)

63,207

53,079

1,762

2,503

251

(873)

56,722

The tax rates used are principally the corporate tax rates of 28% (2017: 28%) payable by New Zealand and 30% (2017: 30%) 
payable by Australian corporate entities on taxable profits under tax law in each jurisdiction.  

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A3. TAXATION continued

(b) Deferred tax assets and liabilities

Taxable and deductible temporary differences arise from the following:

Gross deferred tax liabilities:

Property, plant and equipment

Provisions

Other financial assets – derivatives

Intangible assets

Gross deferred tax assets:

Property, plant and equipment

Provisions

Other financial liabilities – derivatives

Intangible assets

Tax losses carried forward

(c) Imputation credit account balances

2018  
$’000

(3,505)

(201)

(166)

(54,143)

(58,015)

9,460

37,778

18

5,408

366

53,030

2017 
$’000

(1,437)

(221)

(28)

(49,097)

(50,783)

9,541

35,159

802

3,499

262

49,263

Imputation credit account balances 
Imputation credits available directly and indirectly to shareholders of  
the parent company:

2018  
$’000

2017 
$’000

7,610

5,885

Imputation credits allow EBOS to pass on to its shareholders the benefit of the New Zealand income tax it has paid by 
attaching imputation credits to the dividends it distributes, reducing shareholders’ net tax obligations.

RECOGNITION AND MEASUREMENT

Income tax expense is the income tax assessed on taxable profit for the year. 

Taxable profit differs from profit before tax reported in the Consolidated Income Statement as it excludes items of 
income and expense that are taxable or deductible in other years (temporary differences) and also excludes items 
that will never be taxable or deductible (permanent differences). 

Income tax expense components are current income tax and deferred tax.

Stronger together 
 
 
 
A3. TAXATION continued

Deferred tax is income tax that is expected to be payable or recoverable in the future as a result of the unwinding of 
temporary differences. These arise from differences in the recognition of assets and liabilities for financial reporting 
and for the filing of income tax returns. 

Deferred tax is recognised on all temporary differences, other than those arising:

• from goodwill; 

•  from the initial recognition of assets and liabilities in a transaction (other than in a business combination)  

that affects neither the accounting nor taxable profit or loss; and

•  investments in associates and subsidiaries where EBOS is able to control the reversal of the temporary differences 

and such differences are not expected to reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply to the year when a liability is settled or an asset 
realised, based on tax rates and tax laws that have been enacted or substantively enacted at balance date.

A deferred tax asset is recognised to the extent it is probable that future taxable profits will be available to use the 
asset. This is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient 
taxable profits will be available in the future to utilise the deferred tax asset.

A4. EARNINGS PER SHARE

Basic earnings  
per share

Diluted earnings 
per share

2018 

2017

2018 

2017

Earnings used in the calculation of  
total earnings per share                                                                       ($’000)

149,564

133,279

149,564

133,279

Weighted average number of ordinary shares for  
the purposes of calculating earnings per share                 No. (000’s)

151,914

151,768

151,914

151,768

Earnings per share                                                                                 Cents

98.5

87.8

98.5

87.8

Basic earnings per share is calculated by dividing the profit attributable to the shareholders of the company 
by the weighted average number of ordinary shares on issue during the year excluding shares held as treasury 
stock. Diluted earnings per share assumes conversion of all diluted potential ordinary shares in determining the 
denominator.

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46

Section B: Key judgements made

SECTION OVERVIEW

This section identifies the balances and transactions to which key judgements have been made by EBOS in the 
preparation of these financial statements. Key judgements have been made with regard to the estimates for 
future cash flows for goodwill impairment assessment purposes, and the identification of intangible assets and 
recognition of goodwill for business acquisitions.

B1. GOODWILL AND INTANGIBLES

(a) Goodwill

Gross carrying amount

Balance at beginning of financial year

Recognised from business acquisition during the year (note B2)

Adjustment due to finalisation of acquisition in the prior year (note B2)

Effects of foreign currency exchange differences

2018  
$’000

1,000,050

16,062

(3,242)

8,300

2017 
$’000

829,163

171,107

-

(220)

Net book value

1,021,170

1,000,050

RECOGNITION AND MEASUREMENT

Goodwill arising on the acquisition of a subsidiary is recognised as an asset at the date that control is acquired  
(the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of 
any non-controlling interest in the acquiree and the fair value of the acquirer’s previously-held equity interest (if any) 
in the acquiree over the fair value of the identifiable net assets recognised.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, 
goodwill is allocated to each of EBOS’ cash-generating units or groups of 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. The recoverable 
amount is the higher of fair value less cost to sell and value in use. If the recoverable amount of the cash-generating 
unit is less than its carrying amount, the impairment loss is first allocated to reduce the carrying amount of any 
goodwill and then to the other assets of the cash-generating unit on a pro-rata basis. Any impairment loss on 
goodwill is recognised immediately in profit or loss and is not subsequently reversed.

Stronger togetherB1. GOODWILL AND INTANGIBLES continued

(b) Indefinite life intangibles

TerryWhite 
Chemmart 
Brands 
$’000

Other 
Healthcare 
Brands 
$’000

Franchise 
Network 
$’000

Animal 
Care 
Brands 
$’000

 Healthcare 
Trademarks 
$’000

Total 
$’000

Gross carrying amount

Balance at 1 July 2016

 25,298 

 22,247 

-

 26,362 

 17,240 

 91,147 

Acquisitions through business 
combinations

Effects of foreign currency exchange 
differences

13,034

109

-

8

11,613

(92)

-

121

-

-

24,647

146

Balance at 30 June 2017

38,441

22,255

11,521

26,483

17,240

115,940

Acquisitions through business 
combinations

Effects of foreign currency exchange 
differences

-

13,777

1,358

388

-

412

-

714

-

-

13,777

2,872

Balance at 30 June 2018

39,799

36,420

11,933

27,197

17,240

132,589

RECOGNITION AND MEASUREMENT

Indefinite life intangible assets represent purchased brands, trademarks and a franchise network asset that are 
initially recognised at fair value. These intangible assets are tested annually for impairment on the same basis as  
for goodwill.

JUDGEMENT: USEFUL LIVES OF INDEFINITE LIFE INTANGIBLE ASSETS

The directors have assessed these brands, trademarks and a franchise network asset as having an indefinite useful 
life. In coming to this conclusion the expected expansion of these assets across other products and markets,  
the typical product life cycle of these assets, the stability of the industry in which the assets are operating, the level 
of maintenance expenditure required and the period of legal control over these assets has been considered.

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48

B1. GOODWILL AND INTANGIBLES continued

(c) Cash-generating units 

The carrying amount of goodwill and indefinite life intangibles allocated to cash-generating units or groups of  
cash-generating units is as follows:

Healthcare Australia1

Healthcare New Zealand2

Healthcare: Pharmacy/Logistics NZ3

Healthcare: Terry White Group 4

Animal Care5

Goodwill

Indefinite life intangibles

2018  
$’000

2017 
$’000

2018  
$’000

2017 
$’000

651,148

643,267

13,781

3,865

73,197

65,683

22,640

18,390

95,043

95,043

38,621

34,367

163,161

161,690

17,240

51,732

27,196

17,240

49,962

26,483

1,021,170

1,000,050

132,589

115,940

1 Australian Consumer, Hospital, Pharmacy, Primary Healthcare sectors.

2 New Zealand Consumer, Hospital, Primary Healthcare, Aged Care and International Product Supplies.

3 New Zealand Pharmacy Wholesaler and Logistic Services.

4 Australia - Terry White Group.

5 New Zealand and Australia Animal Care.

For the year ended 30 June 2018, the directors have determined that there is no impairment of any of the cash-generating 
units containing goodwill, brands, trademarks and franchise network asset (2017: Nil).

KEY JUDGEMENT: IMPAIRMENT ASSESSMENT ASSUMPTION

The recoverable amounts of cash-generating units is determined on the basis of value in use calculations.  
The recoverable amount calculations are most sensitive to changes in the following assumptions:

Revenue

Estimated by management based on revenue achieved in the period immediately before  
the start of the assessment period and adjusted each year for any anticipated growth.

Operating costs

Estimated by management based on current trends at the start of the assessment period 
and adjusted for expected changes in the business or sector in which the business operates.

Discount rates

Estimated by management based on a current market assessment of the time value of 
money, cost of capital and risks specific to the asset to which the cash flows generated  
by that asset are being assessed. 

Stronger togetherB1. GOODWILL AND INTANGIBLES continued 

KEY ESTIMATE: VALUE IN USE CALCULATION

The value in use calculation uses cash flow projections based on financial forecasts approved by the Board and 
management covering a five year period, including terminal value, and management’s past experience.  
The following estimates were used in the value in use calculation:

Goodwill

Annual revenue growth rates

Allowance for increases in expenses

Pre-tax discount rates

Terminal growth rate 

2018  
$’000

2017 
$’000

3.5% - 7.1%

3.0% - 6.7% 

1.6% - 5.0%

2.7% - 5.0%

12.3% - 14.1%

12.3% - 14.3%

2.5%

2.5%

KEY ESTIMATE: VALUE IN USE CALCULATION

The in use value of indefinite life intangibles has been calculated using the relief from royalty method. 
The following estimates were used:

Indefinite life intangibles 

Annual revenue growth rates

Allowance for increases in expenses

Royalty rate

Pre-tax discount rates

Terminal growth rate 

3.8% - 7.0%

3.0% - 7.0%

2.7% - 7.0%

2.4% - 4.7%

3.0% - 8.3%

3.0% - 8.3%

13.2% - 17.9%

12.7% - 17.9%

2.5%

2.5%

Management has carried out a sensitivity analysis and believe that any reasonably possible change in the key 
assumptions would not cause the book value of any of the cash-generating units, or groups of cash-generating 
units to exceed their recoverable amount.

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B1. GOODWILL AND INTANGIBLES continued 
(d) Finite life intangibles

Gross carrying amount

Accumulated amortisation and impairment

Balance at 30 June 2017

Gross carrying amount

Accumulated amortisation and impairment

Balance at 30 June 2018

Aggregate amortisation recognised as an expense during the year:

Customer relationships and contracts

Other

Customer 
relationships/ 
contracts 
$’000

Other 
$’000

Total 
$’000

14,215

(6,971)

7,244

16,942

(11,316)

5,626

114,403

128,618

(41,563)

(48,534)

72,840

80,084

116,666

133,608

(58,156)

(69,472)

58,510

64,136

2018 
$’000

2017 
$’000

14,737

2,347

17,084

10,641

1,577

12,218

RECOGNITION AND MEASUREMENT

Finite life intangible assets are recorded at cost less accumulated amortisation. Amortisation is charged on a 
straight-line basis over their estimated useful life.

JUDGEMENT: USEFUL LIVES OF FINITE LIFE INTANGIBLE ASSETS

In determining the estimated useful life of finite life intangible assets (of a period of between 1 to 12 years)  
the following characteristics have been assessed: (i) expected expansion of the usage of the assets, (ii) the typical 
product life cycle of these assets, (iii) the stability of the industry in which the assets are operating, and (iv) the level 
of maintenance expenditure required. The estimated useful life and amortisation period is reviewed at the end of 
each annual reporting period.

Stronger togetherB1. GOODWILL AND INTANGIBLES continued

(e) Goodwill and intangibles accounting policies

ACCOUNTING POLICIES

At each balance sheet date, EBOS reviews the carrying amounts of its non-current assets to determine  
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,  
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).  
Where the asset does not generate cash flows that are independent from other assets, EBOS estimates the 
recoverable amount of the 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.

Where an impairment loss subsequently reverses, other than for goodwill, 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 cannot be reversed for goodwill.

B2. ACQUISITION INFORMATION

The following material acquisitions of subsidiaries took place during the year.

Name of business acquired

Principal activities

Date of 
acquisition

2018:

100% of the business assets of Gran’s Remedies Limited

Healthcare

March 2018

100% of the business assets of Ventura Health Pty Limited

Healthcare

April 2018

100% of the business assets of Beagle Pharmacy Group Pty Limited

Healthcare

June 2018

100% of the business assets of BFCMC Pty Limited

Healthcare

June 2018

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52

B2. ACQUISITION INFORMATION continued

Combined details of acquisitions undertaken during the current year are as follows:

Current assets

Cash and cash equivalents

Trade and other receivables

Prepayments

Inventories

Non-current assets

Property, plant and equipment

Deferred tax assets

Indefinite life intangibles

Finite life intangibles

Current liabilities

Trade and other payables

Current tax payable

Employee benefits

Non-current liabilities

Deferred tax liabilities

Employee benefits

Net assets acquired

Carrying value 
$’000

Fair value 
adjustment 
$’000

Fair value on 
acquisition 
$’000

896

1,888

91

1,468

675

183

2,898

274

(903)

(23)

(346)

-

(42)

7,059

-

(484) 2

-

(250) 3

(144) 4

228 5

1,352 1

(274) 6

(334) 7

-

-

(1,190) 5

-

(1,096)

896

1,404

91

1,218

531

411

4,250

-

(1,237)

(23)

(346)

(1,190)

(42)

5,963

Stronger togetherB2. ACQUISITION INFORMATION continued

Goodwill on acquisition

Total consideration

Less cash and cash equivalents acquired

Deferred purchase consideration

Net cash outflow from acquisition

JUDGEMENTS MADE:

Carrying value 
$’000

Fair value 
adjustment 
$’000

Fair value on 
acquisition 
$’000

16,062

22,025

(896)

(813)

20,316

1.  To recognise the fair value of a brand as a result of a valuation performed at acquisition. The brand was valued 

using the relief from royalty method. Key assumptions used in the valuation of the brand were: royalty rate of (11.8%), 
annual revenue growth rate (5.0%), pre-tax discount rate (21.4%) and terminal growth rate of (2.5%). 

2. To recognise the fair value of trade and other receivables on acquisition.

3. To recognise the fair value of inventory on acquisition.

4. To recognise the fair value of property, plant and equipment on acquisition.

5. To recognise additional deferred tax asset and liability balances on acquisition.

6. To recognise the fair value of finite life intangibles on acquisition.

7.  To recognise the fair value of trade and other payables on acquisition.

RECOGNITION AND MEASUREMENT

Acquisition of subsidiaries and businesses are accounted for using the acquisition method.

The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, 
liabilities incurred or assumed, and equity instruments issued by EBOS in exchange for control of the acquiree. 
Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the cost of acquisition includes any asset or liability resulting from a contingent consideration 
arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted 
against the cost of acquisition where they qualify as measurement period adjustments. All other subsequent 
changes in the fair value of contingent consideration classified as an asset or liability are accounted for in 
accordance with relevant NZ IFRSs. Changes in the fair value of contingent consideration classified as equity are  
not recognised.

Goodwill arising on acquisition

Goodwill arose on the acquisition of business operations because the costs of acquisition included control premiums paid. 
In addition, goodwill resulted from the consideration paid for the benefit of future expected cash flows above the current fair 
value of the assets acquired and due to the expected synergies and future market benefits expected to be obtained.  
These benefits are not recognised separately from goodwill as the expected future economic benefits arising cannot be 
reliably measured and they do not meet the definition of identifiable intangible assets. 

The businesses were acquired because they are profitable healthcare businesses which the Group believes fit strategically 
with its existing Australasian healthcare business assets. 

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B2. ACQUISITION INFORMATION continued

Impact of the acquisitions on the results of the Group

The acquired businesses contributed profit of $1.5m to the Group profit for the year. Group revenue for the year includes 
$6.0m in respect of the businesses acquired. Had the acquisitions been effective at 1 July 2017, the revenue of the Group from 
continuing operations would have been $7.630b and the profit for the period from continuing operations would have been 
$152.960m.

KEY JUDGEMENT: FAIR VALUE ADJUSTMENT 

2017: 
The Group acquired a 100% equity interest in Alchemy Holdings Pty Ltd in June 2017 for $162.8m. Due to the timing of 
the acquisition, the acquisition accounting fair value adjustments were identified as being on a provisional basis in 
the Group’s 30 June 2017 financial statements.

During the current period, the acquisition accounting adjustments have been updated to reflect independent 
valuations performed on the net assets recognised as part of the acquisition. As a result, the following 
adjustments have been recognised in the current period: the recognition of a brand indefinite life intangible asset 
($9.5m), a decrease in finite life intangible assets ($4.8m to $8.8m) and an increase in deferred tax liabilities 
($1.5m to $5.8m). Consequently the goodwill recognised on the acquisition has decreased by $3.2m to $127.0m.

Prior year balances also include the acquisition of Terry White Group.

Impact on the Consolidated Cash Flow Statement of all acquisitions and fair value adjustments during the year:

Subsidiaries acquired

Consideration

Cash and cash equivalents

Disposal of associate

Non-controlling interest

Deferred purchase consideration

Total consideration

Represented by

Net assets acquired

Goodwill on acquisition

Total consideration

Net cash outflow on acquisition

Cash and cash equivalents consideration

Less cash and cash equivalents acquired

Net cash consideration paid

2018 
$’000

2017 
$’000

23,712

-

-

(1,687)

22,025

9,205

12,820

22,025

23,712

(896)

22,816

188,767

3,710

20,936

(9,769)

203,644

32,537

171,107

203,644

188,767

(5,539)

183,228

Stronger togetherSection C: Operating assets and liabilities used by EBOS

SECTION OVERVIEW

This section provides further analysis on the significant operating assets and liabilities of EBOS. These balances 
comprise the material net working capital balances used by EBOS to run its day to day operating activities.

C1. TRADE AND OTHER RECEIVABLES

Trade receivables (i)

Other receivables

Allowance for impairment

2018  
$’000

991,182

26,915

(19,337)

998,760

2017 
$’000

1,035,971

26,746

(20,868)

1,041,849

RECOGNITION AND MEASUREMENT

Trade and other receivables are measured on initial recognition at fair value, and are subsequently carried at 
amortised cost. Allowances are made for estimated unrecoverable amounts (provision for doubtful debts), and 
these are recognised in the Consolidated Income Statement. The provision for doubtful debts is measured as the 
difference between the trade receivables carrying amount and expected present value of future cash flows, which 
has considered customer credit history and historical recovery performance and trends.

(i)  Trade receivables are non-interest bearing with credit accounts provided to customers on monthly terms. Interest may be 
charged on outstanding overdue balances in accordance with the terms and conditions under which goods are supplied.

(ii) Ageing of impaired trade and other receivables

Current

30 - 60 days

60 - 90 days

90 days+

2018  
$’000

5,038

1,205

734

13,572

20,549

2017 
$’000

2,894

1,075

835

15,169

19,973

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C1. TRADE AND OTHER RECEIVABLES continued

(iii) Ageing 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 $68.437m (2017: $71.610m)  
which are past due at the reporting date for which EBOS has not provided any impairment as the amounts are still  
considered recoverable.

30 - 60 days

60 - 90 days

90 days+

C2. INVENTORIES

Raw materials – at cost

Finished goods – at cost

2018  
$’000

56,000

8,356

4,081

68,437

2018  
$’000

782

582,095

582,877

2017 
$’000

55,396

9,608

6,606

71,610

2017 
$’000

1,860

570,141

572,001

RECOGNITION AND MEASUREMENT

Inventories consist of raw materials (for the manufacturing operations of EBOS) and finished goods. Inventories are 
recognised at the lower of cost, determined on a weighted average basis, and net realisable value. Cost comprises 
direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing 
the inventories to their present location and condition. Net realisable value represents the estimated selling price in 
the ordinary course of business, less all estimated costs of completion and costs to be incurred in marketing, selling 
and distribution.

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C3. TRADE AND OTHER PAYABLES

Current

Trade payables

Other payables

Deferred purchase consideration

Non-current

Other payables

2018  
$’000

2017 
$’000

1,174,453

97,661

2,510

1,274,624

14,607

14,607

1,229,981

94,397

3,379

1,327,757

13,837

13,837

RECOGNITION AND MEASUREMENT

Trade and other payables are initially measured at fair value and subsequently measured at amortised cost  
using the effective interest method.

Section D: Capital assets used by EBOS to operate our business

SECTION OVERVIEW

This section explains what capital assets, such as property, plant and equipment that EBOS uses to operate its 
business activities. This section also describes the material movements in capital assets during the year.

D1. PROPERTY, PLANT AND EQUIPMENT

Freehold 
land 
$’000

Buildings 
$’000

Leasehold 
improvements 
$’000

Plant and 
equipment 
$’000

Office equipment, 
furniture and fittings 
$’000

Total 
$’000

Cost

34,834

17,481

20,620

61,942

24,804

159,681

Accumulated depreciation

-

(5,468)

(5,953)

(19,454)

(12,930)

(43,805)

Balance at 30 June 2017

34,834

12,013

14,667

42,488

11,874

115,876

Cost

36,010

18,514

23,055

68,063

23,928

169,570

Accumulated depreciation

-

(6,025)

(7,992)

(25,334)

(8,033)

(47,384)

Balance at 30 June 2018

36,010

12,489

15,063

42,729

15,895

122,186

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D1. PROPERTY, PLANT AND EQUIPMENT continued

Reconciliation of the carrying amount from the beginning to the end of the year ($’000)

$160,000

$140,000

$120,000

$115,876

$19,814

$531

($205)

($17,651)

$3,821

$122,186

$100,000

$80,000

$60,000

$40,000

$20,000

-

Opening NBV

Additions/ 
transfers

Acquisitions

Disposals

Depreciation

Forex

Closing NBV

RECOGNITION AND MEASUREMENT

Property, plant and equipment is initially recorded at cost. Cost includes the original purchase consideration and 
those costs directly attributable to bringing the item of property, plant and equipment to the location and condition 
for its intended use. After recognition as an asset, property, plant and equipment is carried at cost less accumulated 
depreciation and impairment losses.  

Depreciation of property, plant and equipment assets, other than freehold land, is calculated on a straight-line basis. 
This allocates the cost or fair value amount of an asset, less any residual value, over its estimated useful life.

JUDGEMENTS AND ESTIMATES – USEFUL LIVES

EBOS estimates the remaining useful life of assets as follows:

• Buildings: 20 to 50 years

• Leasehold improvements: 2 to 15 years

• Plant and equipment: 2 to 20 years

• Office equipment, furniture and fittings: 2 to 10 years

The residual value and useful lives are reviewed and if appropriate adjusted at each reporting date.

D2. CAPITAL WORK IN PROGRESS

Capital work in progress

2018 
$’000

63,540

63,540

2017 
$’000 

22,923

22,923

Capital work in progress relates to buildings under construction. The additional cost to complete the projects is estimated  
at $13.055m (2017: $42.891m).

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Section E: How we fund the business

SECTION OVERVIEW

This section explains how EBOS funds its operations and shows the sources of other available facilities that it 
may call upon if required to fund its operational or future investing activities.

Capital management

EBOS manages its capital, meaning total shareholders’ funds and debt facilities, to provide appropriate returns to 
shareholders whilst maintaining a capital structure that safeguards its ability to remain a going concern and optimises the 
cost of capital.

E1. SHARE CAPITAL

Fully paid ordinary shares

Notes

2018 
No. 
000’s

2018 
Total 
$’000

2017 
No. 
000’s

2017 
Total 
$’000

Balance at beginning of financial year

151,914

888,513

151,314

888,513

Shares issued under the long-term executive 
incentive scheme

H4

- September 2017

- September 2016

625

-

-

-

-

600

-

-

152,539

888,513

151,914

888,513

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Opening stock

Shares scheme - shares issued

2018 
No. 
000’s

600

625

1,225

2017 
No. 
000’s

-

600

600

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RECOGNITION AND MEASUREMENT

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

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E2. DIVIDENDS

Recognised amounts

Fully paid ordinary shares:

Final - prior year

Interim - current year

Dividends per share 

Unrecognised amounts

Final dividend

SUBSEQUENT EVENT

2018

2017

Cents 
per share

Total 
$’000

Cents 
per share

Total 
$’000

33.0

33.0

66.0

50,338

50,338

100,676

32.5

30.0

62.5

49,371

45,574

94,945

35.5

54,151

33.0

50,132

A dividend of 35.5 cents per share was declared on 22 August 2018 with the dividend being payable on 12 October 
2018. The anticipated cash impact of the dividend is approximately $54.2m (2017: $50.1m).

E3. BORROWINGS

Current

Bank loans - securitisation facility (i)

Bank loans (ii)

Non-current

Bank loans (ii)

2018 
$’000

2017 
$’000 

160,293

-

160,293

154,962

895

155,857

473,988

440,847

(i)  EBOS, through a subsidiary company, has a trade debtor securitisation facility of $435.7m (2017: $447.0m) of which $275.4m 
was unutilised at 30 June 2018 (2017: $292.0m). The securitisation facility involves providing security over the future cash 
flows of specific trade receivables, which meet certain criteria, in return for cash finance on a contracted percentage of the 
security provided. As recourse, in the event of default by a trade debtor, remains with EBOS, the trade receivables provided 
as security and the funding provided are recognised on the EBOS Consolidated Balance Sheet.

At 30 June 2018, the value of trade receivables provided as security under this securitisation facility was $207.4m  
(2017: $198.9m). The net cash flows associated with the securitisation programme are disclosed in the Consolidated  
Cash Flow Statement as cash flows from financing activities.

Stronger togetherE3. BORROWINGS continued

(ii)  EBOS has bank term loans and working capital facilities of $606.5m (2017: $450.4m), of which $132.5m was unutilised at  

30 June 2018 (2017: $8.7m). 

EBOS is in full compliance with its debt facility financial covenants. Bank loans are secured over the assets of EBOS.

RECOGNITION AND MEASUREMENT

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received plus 
issue costs associated with the borrowing. After initial recognition, these loans and borrowings are subsequently 
measured at amortised cost using the effective interest method which allocates the cost through the expected life 
of the loan or borrowing. The fair value of non-current borrowings is approximately equal to their carrying amount.

Bank loans are classified as current liabilities unless EBOS has an unconditional right to defer settlement of the 
liability for at least 12 months after the balance sheet date.

E4. BORROWINGS FACILITY MATURITY PROFILE

As at 30 June 2018 EBOS had unrestricted access to the following lines of available credit:

Facility

Term debt facilities

Term debt facilities

Term debt facilities

Working capital facilities

Securitisation facility

Amount (NZD) 
$ millions

$132.9m

$54.5m

$319.1m

$100.0m

$435.7m

Maturity

2-3 years

3-4 years

4-5 years

1-2 years

2-3 years

The following table shows the remaining contractual maturity for EBOS’ borrowings at balance date. The table includes both 
interest and principal (undiscounted) cash flows, with total bank loans of $707.5m (2017: $604.0m): 

Bank loans

2018

2017

Less than 
1 year 
$’000

1-2 years 
$’000

2-3 years 
$’000

3-4 years 
$’000

4-5 years 
$’000

Total 
$’000

22,775

22,492

277,864

64,434

320,657

708,222

 18,182 

 402,310 

 98,611 

 34,358 

 50,515 

 603,976 

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E4. BORROWINGS FACILITY MATURITY PROFILE continued

Financing activities

Bank overdraft facility, reviewed annually and payable at call:

Amount unused

Bank loan facilities with various maturity dates through to May 2023 
(2017: July 2021)

Amount used

Amount unused

E5. OPERATING CASH FLOWS

Reconciliation of profit for the year with cash from operating activities:

For the financial year ended 30 June 2018

Profit for the year

Add/(less) non-cash items:

Depreciation

Loss on sale of property, plant and equipment

Amortisation of finite life intangible assets

Share of profit from associates

Expense recognised in respect of share based payments

Deferred tax

2018 
$’000

2017 
$’000 

1,468

1,468

4,290

4,290

634,281

407,964

1,042,245

596,704

300,704

897,408

2018 
$’000

2017 
$’000

151,720

132,846

17,651

16

17,084

(4,501)

840

989

32,079

13,616

497

12,218

(4,062)

490

(2,462)

20,297

Stronger togetherE5. OPERATING CASH FLOWS continued

For the financial year ended 30 June 2018

Movement in working capital:

Trade and other receivables

Prepayments

Inventories

Current tax refundable/payable

Trade and other payables

Employee benefits

Foreign currency translation of working capital balances

Balances classified as investing activities

Working capital items acquired

Net cash inflow from operating activities

Reconciliation of movement in debt facilities:

2018 
$’000

2017 
$’000

43,089

(2,011)

(10,876)

(1,654)

(52,363)

4,121

9,200

(10,494)

1,801

1,065

176,171

278,538

626

6,512

(4,079)

(282,943)

6,436

608

5,698

(2,466)

(12,432)

143,943 

1 July 2017 
$’000

Net drawings 
$’000

596,704

175

16,483

(75)

Foreign currency 
movement 
$’000

21,094

7

30 June 2018 
$’000

634,281

107

Bank loans

Finance leases

ACCOUNTING POLICIES

Cash and cash equivalents comprise cash on hand and deposits readily convertible to cash and which are not 
subject to a significant risk of change in value.

The Consolidated Cash Flow Statement is prepared exclusive of Goods and Services Tax (GST), which is consistent 
with the method used in the Consolidated Income Statement. 

• Operating activities include all transactions and other events that are not investing or financing activities.

•  Investing activities are those activities relating to the acquisition and disposal of current and non-current 

investments and any other non-current assets. 

•  Financing activities are those activities relating to changes in the equity and debt capital structure of the Group 

and those activities relating to the cost of servicing EBOS’ equity capital.

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Section F: EBOS Group structure

SECTION OVERVIEW

This section provides information to assist in understanding the EBOS Group legal structure and how it affects the 
financial position and performance of the Group. Details of businesses acquired are presented in Section B.

F1. SUBSIDIARIES

The following entities comprise the significant trading and holding companies of the Group:

Parent and head entity: EBOS Group Limited

Subsidiaries (all balance dates 30 June unless otherwise noted)

Pet Care Holdings Australia Pty Limited 
(formerly EBOS Healthcare [Australia] Pty Limited)

EBOS Group Australia Pty Limited 

EBOS Health & Science Pty Limited

PRNZ Limited

Pharmacy Retailing NZ Limited

Pet Care Distributors Pty Limited 

Masterpet Corporation Limited

Masterpet Australia Pty Limited

Botany Bay Imports and Exports Pty Limited

Aristopet Pty Ltd 

EAHPL Pty Limited

ZHHA Pty Ltd

ZAP Services Pty Ltd

Symbion Pty Ltd

Intellipharm Pty Ltd

Clinect Pty Ltd

Lyppard Australia Pty Ltd

DoseAid Pty Limited

Symbion Trade Receivables Trust  
(formerly Symbion Pharmacy Services Trade Receivables Trust)1

Blackhawk Premium Pet Care Pty Limited

Country of  
Incorporation

Australia

Australia

Australia

New Zealand

New Zealand

Australia

New Zealand

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Endeavour Consumer Health Limited 

New Zealand

Ownership Interests 
and Voting Rights

2018

2017

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

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F1. SUBSIDIARIES continued

Nexus Australasia Pty Limited

EBOS PH Pty Limited

Terry White Group Limited

Chemmart Holdings Pty Ltd

TW&CM Pty Ltd

TWC IP Pty Ltd

PBA Wholesale Pty Ltd

VIM Health Pty Ltd

Old LL Pty Ltd

PBA Finance Pty Ltd

Chem Plus Pty Ltd

Pharmacy Brands Australia Pty Ltd

VIM Health IP Pty Ltd

Tony Ferguson Weight Management Pty Ltd

Lite Living Pty Ltd

Alchemy Holdings Pty Limited

Alchemy Sub-Holdings Pty Ltd

HPS Holdings Group (Aust) Pty Ltd

HPS Hospitals Pty Ltd

HPS Corrections Pty Ltd

HPS Services Pty Ltd

Hospharm Pty Ltd

HPS IVF Pty Ltd

HPS Finance Pty Ltd

HPS Brands Pty Ltd

Natures Synergy Pty Ltd

Ventura Health Pty Limited

You Save Management Pty Limited

Mega Save Management Pty Limited

Cincotta Holding Company Pty Limited

CC Pharmacy Investments Pty Limited

CC Pharmacy Promotions Pty Limited

CC Pharmacy Management Pty Limited

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

100%

100%

50%

50%

50%

50%

50%

50%

50%

50%

50%

50%

50%

50%

50%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

50%

50%

50%

50%

50%

50%

50%

50%

50%

50%

50%

50%

50%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

-

-

-

-

-

-

-

1 The balance date of all subsidiaries is 30 June aside from the Symbion Trade Receivables Trust which has a balance date of 31 December.  
The results of the Symbion Trade Receivables Trust (‘the Trust’) have been included in the Group results for the year to 30 June 2018. The Trust 
is consolidated as EBOS has the exposure, or rights, to variable returns from its involvement with the Trust and the Group considers that it has 
existing rights that give it the current ability to direct the relevant activities of the Trust.

EBOS Group Annual Report 2018 
 
 
 
 
 
66

F2. INVESTMENT IN ASSOCIATES

Name of associate company

Principal activities

Proportion 
of shares 
and voting 
rights 
acquired

Cost of 
acquisition 
$’000

Date of 
acquisition

Animates NZ Holdings Limited

Animal Care supplies

December 2011

50%

 18,150

Good Price Pharmacy Franchising Pty Limited

Healthcare supplies

October 2014

25.77%

Good Price Pharmacy Management Pty Limited

Healthcare supplies

October 2014

25.77%

3,918

3,918

The reporting date for Animates NZ Holdings Limited is 30 June. Animates NZ Holdings Limited is incorporated in New Zealand.

The reporting date for Good Price Pharmacy Franchising Pty Limited and Good Price Pharmacy Management Pty Limited is  
30 June. They are incorporated in Australia.

Although the company holds 50% of the shares and voting power in Animates NZ Holdings Limited this entity is not deemed to be 
a subsidiary as the other 50% is held by a single shareholder, therefore EBOS is unable to exercise control over this entity.

Stronger togetherF2. INVESTMENT IN ASSOCIATES continued

The summary financial information in respect of EBOS Group’s associates is set out below:

Statement of Financial Position

Total assets

Total liabilities

Net assets

Group’s share of net assets

Income Statement

Total revenue

Total profit for the year

Group’s share of profits of associates

Movement in the carrying amount of the Group’s investment in associates:

Balance at the beginning of the financial year

Disposals

Share of profits of associates

Share of dividends 

Net foreign currency exchange differences

Balance at the end of the financial year

2018 
$’000

74,140

(37,976)

36,164

17,162

130,879

10,784

4,501

36,455

-

4,501

(932)

291

40,315

2017 
$’000

72,344

(43,051)

29,293

13,741

119,032

9,880

4,062

36,778

(3,710)

4,062

(913)

238

36,455

Goodwill included in the carrying amount of the Group’s investment 
in associates

The Group’s share of the contingent liabilities of associates

The Group’s share of capital commitments of associates

21,593

21,398

-

-

-

-

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EBOS Group Annual Report 2018 
 
 
 
 
 
 
 
68

F2. INVESTMENT IN ASSOCIATES continued

RECOGNITION AND MEASUREMENT

An associate is an entity over which EBOS has significant influence and that is neither a subsidiary nor an interest in 
a joint venture or joint operation. EBOS has significant influence when it has the power to participate in the financial 
and operating policy decisions of the investee, but is not in control or joint control over those policies. 

Investments in associates are incorporated in the EBOS Group financial statements using the equity method of 
accounting. Under the equity method, investments in associates are carried in the Consolidated Balance Sheet 
at cost and adjusted for post-acquisition changes in EBOS’ share of the net assets of the associate, less any 
impairment in the value of individual investments and less any dividends. Losses of an associate in excess of EBOS’ 
interest in that associate are recognised only to the extent that EBOS has incurred legal or constructive obligations 
or made payments on behalf of the associate.

Any excess of the cost of acquisition over EBOS’ share of the net fair value of the identifiable assets, liabilities and 
contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is 
included within the carrying amount of the investment and is assessed for impairment as part of that investment.

Section G: How we manage risk

SECTION OVERVIEW

This section describes the financial risks that EBOS has identified and how it manages these risks, to protect 
its financial position and financial performance. Management of these risks includes the use of financial 
instruments to hedge against unfavourable interest rate and foreign currency movements.

G1. FINANCIAL RISK MANAGEMENT

The EBOS corporate treasury function provides services to the Group’s entities, co-ordinates access to financial markets,  
and manages the financial risks relating to the operation of the Group.

EBOS does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. 
The use of financial derivatives is governed by Group policies approved by the Board of Directors, which provide written 
principles on the use of financial derivatives. Compliance with policies and exposure limits is reviewed by the Board of 
Directors on a regular basis.

FOREIGN CURRENCY RISK 

EBOS is exposed to foreign currency risk arising primarily from the procurement of goods denominated in foreign 
currencies (US dollar, Australian dollar, Thai baht, Euro and British pound).

Foreign exchange rate exposures are managed utilising forward foreign exchange contracts.

EBOS enters into forward foreign exchange contracts to manage the risk associated with anticipated future purchase 
transactions denominated in foreign currencies in accordance with the Board approved treasury policy.

INTEREST RATE RISK 

EBOS is exposed to interest rate risk as it borrows funds in both New Zealand dollars and Australian dollars at 
floating interest rates.  

Stronger together69

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G1. FINANCIAL RISK MANAGEMENT continued

The risk is assessed and managed by the use of interest rate swap contracts.

Under interest rate swap contracts, EBOS agrees to exchange the difference between fixed and floating rate interest amounts 
calculated on agreed notional principal amounts. Such contracts enable EBOS to mitigate the risk of changing interest rates 
on debt held.  

Interest rate swap contracts are only entered into in accordance with the Group’s Board approved treasury policy.

LIQUIDITY RISK

EBOS is exposed to liquidity risk as it must invest in significant levels of working capital such as inventory and 
accounts receivable which can impact liquidity unless they are converted to cash.  

EBOS manages liquidity risk by maintaining adequate reserves, banking facilities and reserve banking facilities by 
continuously monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities.  
Refer to note E4 for information on EBOS’ borrowings facility maturity profile.

CREDIT RISK

EBOS is exposed to the risk of default in relation to receivables owing from its Healthcare and Animal Care 
customers, hedging instruments and guarantees and deposits held with banks and other financial institutions.

EBOS has adopted a policy of only dealing with credit worthy counter parties as a means of mitigating the risk of financial loss 
from defaults.

Trade receivables consist of a large number of customers, spread across diverse sectors and geographical areas.  
Ongoing credit evaluation is performed on the financial condition of the trade receivables.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the 
maximum exposure to EBOS of any credit risk.

EBOS does not have any significant credit risk exposure to any single counter party. The credit risk on liquid funds and 
derivative financial instruments is limited because the counter parties are banks with high credit ratings assigned by 
international credit rating agencies.

EBOS has not changed its overall strategy regarding the management of risk from 2017.

G2. FINANCIAL INSTRUMENTS

Derivatives

Other financial assets – derivatives (at fair value)

Forward foreign exchange contracts (i)

Interest rate swaps (i)

Other financial liabilities – derivatives (at fair value)

Forward foreign exchange contracts (i)

Interest rate swaps (i)

(i) Designated and effective as a cash flow hedging instrument carried at fair value.

2018 
$’000

2017 
$’000

1,404

19

1,423

-

2,157

2,157

19

-

19

428

2,567

2,995

EBOS Group Annual Report 2018 
 
 
 
 
 
70

G2. FINANCIAL INSTRUMENTS continued

EBOS has categorised these derivatives, both financial assets and financial liabilities, as Level 2 under the fair value hierarchy 
contained within NZ IFRS 13. There were no transfers between fair value hierarchy levels during the current or prior periods.

The fair value of forward foreign exchange contracts is determined using a discounted cash flow valuation. Key inputs are 
based upon observable forward exchange rates, at the measurement date, with the resulting value discounted back to 
present values.

Interest rate swaps are valued using a discounted cash flow valuation. Key inputs for the valuation of interest rate swaps are 
the estimated future cash flows based on observable yield curves at the end of the reporting period, discounted at a rate that 
reflects the credit risk of the various counterparties.

Outstanding forward foreign currency contracts: nominal value

Buy Australian dollars

Buy Euro

Buy British pounds

Buy Thai bhat

Buy USD

Outstanding interest rate swap contracts: nominal value

Less than 1 year

1 to 3 years

3 to 5 years

Greater than 5 years

2018 
$’000

8,625

8,902

3,300

5,236

28,640

54,703

2018 
$’000

81,806

83,020

173,845

-

338,671

2017 
$’000 

5,566

3,694

3,584

5,283

24,766

42,893

2017 
$’000 

53,122

107,140

127,433

57,846

345,541

Stronger togetherG2. FINANCIAL INSTRUMENTS continued

RECOGNITION AND MEASUREMENT

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. EBOS designates these derivatives as 
cash flow hedges of highly probable forecast transactions.

The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates 
their fair values.

The fair values of financial assets and financial liabilities are determined as follows:

•  the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active 

liquid markets are determined with reference to quoted market prices;

•  the fair value of other financial assets and financial liabilities are determined in accordance with generally 

accepted pricing models based on discounted cash flow analysis; and

•  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.

CASH FLOW HEDGES

Changes in fair value of hedges that are designated and qualify as cash flow hedges and are considered effective 
for accounting purposes are recognised in the cash flow hedge reserve (in equity) and in other comprehensive 
income. The gain or loss relating to any ineffective element is recognised immediately in the income statement. 
Amounts accumulated in other comprehensive income are recycled in the income statement in the periods when 
the forecast transactions (hedged item) take place.

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 or liability.

Hedge accounting is discontinued when EBOS either revokes the hedging relationship or the hedging instrument 
expires or is terminated, exercised or no longer qualifies for hedge accounting. Amounts deferred in equity are 
recycled in profit or loss in the periods when the hedged item is 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.

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EBOS Group Annual Report 2018 
 
 
 
 
 
72

Section H: Other disclosures 

SECTION OVERVIEW

This section includes the remaining information relating to EBOS that is required to be presented so as to  
comply with its financial reporting requirements.

H1. CONTINGENT LIABILITIES

Contingent liabilities

Guarantees given to third parties

Guarantees principally comprise property lease guarantees on behalf of landlords of EBOS.

H2. COMMITMENTS FOR EXPENDITURE

Capital expenditure commitments:

Plant

Software development

Operating expenditure commitments:

Non-cancellable operating lease payments:

Less than one year

More than one year and less than five years

More than five years

Lease arrangements

2018 
$’000

16,222

16,222

2018 
$’000

10,078

1,466

11,544

35,831

106,264

63,958

206,053

2017 
$’000

9,640

9,640

2017 
$’000

27,697

628

28,325

32,024

81,043

42,295

155,362

Operating leases relate to certain land, buildings, plant and equipment, with lease terms of between one to twelve years with 
options to extend for a further one to nineteen years. Operating lease contracts contain market review clauses in the event 
that EBOS exercises its option to renew. EBOS does not have an option to purchase the leased asset at the expiry of the lease 
period.

H3. SUBSEQUENT EVENTS

SUBSEQUENT EVENT

Subsequent to year end the Board has approved a final dividend to shareholders. For further details please refer  
to note E2.

Stronger together73

H4. RELATED PARTY DISCLOSURES

Key management personnel compensation

Short-term employee benefits

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2017 
$’000

10,564

10,564

2018 
$’000

12,292

12,292

EBOS operates a long term incentive share plan whereby EBOS provides an interest free, non-recourse loan to participating 
senior executives in order for those executives to purchase shares in the company. While the shares are issued and held in the 
executive’s name the shares will not vest unless and until performance conditions are met. The executive cannot deal in the 
shares unless and until those shares vest. All net dividends received in respect of the shares must be applied to the repayment 
of the interest free loan.  

A total of 625,000 (2017: 600,000) shares were issued during the year with an issue price of $17.35 (2017: $18.15).  
The performance conditions in relation to these shares will be tested after the end of the performance period,  
being 1 July 2017 to 30 June 2020 (FY17 tranche: 1 July 2016 to 30 June 2019). 

H5. REMUNERATION OF AUDITORS

All non-audit services provided by EBOS Group’s auditor require pre-approval by the Audit and Risk Committee. Before any 
non-audit services are approved, the Audit and Risk Committee must be satisfied that the provision of such services will not 
have any influence on the independence of the auditors.

Auditor of the Group (Deloitte)

Audit of the financial statements

Audit related services for review of interim financial statements

Due diligence

Information technology services

Advisory services

Other Auditors (Ernst & Young)

Audit of subsidary financial statements

Audit related services for review of interim financial statements

Advisory services

2018 
$’000

606

177

-

-

78

861

203

54

-

257

2017 
$’000

683

164

25

162

9

1,043

147

37

47

231

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EBOS Group Annual Report 2018 
 
 
 
 
 
74

H6. CHANGES IN FINANCIAL REPORTING STANDARDS

No new accounting standards or interpretations have been adopted during the year which have had a material impact on 
these financial statements. The following new standards have been approved but are not yet effective which may have a 
future impact on the Group financial statements:

NZ IFRS 16 Leases

NZ IFRS 16 will supersede the current lease guidance including NZ IAS 17 Leases and the related interpretations when it 
becomes effective for EBOS in the 2020 financial year.

NZ IFRS 16 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by a customer. 
Distinctions of operating leases (off balance sheet) and finance leases (on balance sheet) are removed for lessee accounting, 
and are replaced by a model where a right-of-use asset and a corresponding liability have to be recognised for all leases by 
lessees (i.e., all on balance sheet) except for short-term leases and leases of low value assets.

The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions) less 
accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is 
initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the lease liability is 
adjusted for interest and lease payments, as well as the impact of lease modifications.

Furthermore, the classification of cash flows will also be affected as operating lease payments under NZ IAS 17 are presented 
as operating cash flows; whereas under the NZ IFRS 16 model, the lease payments will be split into a principal and an interest 
portion which will be presented as financing and operating cash flows respectively. As a result reported EBITDA will be higher 
upon the adoption of IFRS 16.

The new requirement to recognise a right-of use asset and a related lease liability is expected to have a significant impact 
on the amounts recognised in the Group’s consolidated financial statements and the directors are currently assessing its 
potential impact. The Group has begun to assess the impact of the new standard and prepare for its implementation from  
1 July 2019, however it is not considered practicable to provide a reasonable estimate of the financial effect at this time until 
the directors complete their review.

NZ IFRS 9 Financial instruments

NZ IFRS 9 establishes the principles for hedge accounting, measurement, classifications and impairment of financial assets. 
Under NZ IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting. In addition, 
the effectiveness test has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective 
testing assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s 
risk management activities have also been introduced. In relation to the impairment of financial assets NZ IFRS 9 requires an 
expected credit loss model to be applied, as opposed to an incurred credit loss model under NZ IAS 39. The expected credit 
loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each 
reporting date to reflect changes in counter party risk. This standard will be effective for EBOS in the 2019 financial year.  
The Group has reviewed NZ IFRS 9 and has concluded that applying the standard is not expected to have a material impact 
on the Group’s financial statements.   

NZ IFRS 15 Revenue from Contracts 

NZ IFRS 15 provides a single, comprehensive principles-based five-step model to be applied to all contracts with customers. 
This standard will be effective for EBOS in the 2019 financial year. The five steps in the model are: identify the contract with 
the customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction 
price to the performance obligations in the contract; and, recognise revenue when (or as) the entity satisfies a performance 
obligation. The Group has reviewed NZ IFRS 15 and has concluded that applying the standard will have an immaterial impact 
on profit and will not materially impact revenue recognised in the Group’s financial statements.

Stronger togetherAdditional stock exchange information

As at 16 July 2018

Twenty largest shareholders

Sybos Holdings Pte Limited

HSBC Nominees (New Zealand) Limited – NZCSD HKBN90

JP Morgan Chase Bank NA NZ Branch-Segregated Clients Acct – NZCSD CHAM24

Citibank Nominees (New Zealand) Limited – NZCSD CNOM90

Forsyth Barr Custodians Limited 1-CUSTODY

Whyte Adder No 3 Limited

FNZ Custodians Limited

HSBC Nominees (New Zealand) Limited A/C State Street – NZCSD HKBN45

Accident Compensation Corporation – NZCSD ACCI40

Custodial Services Limited A/C 3

JP Morgan Nominees Australia Limited

Custodial Services Limited A/C 4

Citicorp Nominees Pty Limited 

BNP Paribas Nominees (NZ) Limited – NZCSD COGN40

National Nominees New Zealand Limited – NZCSD NNLZ90

HSBC Nominees A/C New Zealand Superannuation Fund Nominees-NZCSD SUPR40

Custodial Services Limited A/C 2

HSBC Custody Nominees (Australia) Limited

BNP Paribas Nominees Pty Ltd Agency Lending DRP A/C

Custodial Services Limited A/C 18

Fully paid shares

60,525,721

9,396,808

8,088,531

5,120,961

4,239,568

3,596,425

3,173,934

3,087,292

2,509,909

2,119,985

1,800,779

1,482,048

1,473,979

1,413,241

1,238,267

1,125,314

998,685

919,798

903,905

838,481

114,053,631

74.77%

Substantial Product Holders

The following information is provided in compliance with section 293 of the Financial Markets Conduct Act 2013 and is stated 
as at 30 June 2018. The total number of ordinary shares in EBOS as at that date was 152,539,304.

Sybos Holdings Pte Limited

FMR LLC

Fully paid shares

Percentage of  
paid capital

60,525,721

15,457,115

75,982,836

39.68%

10.13%

49.81%

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39.68%

6.16%

5.30%

3.36%

2.78%

2.36%

2.08%

2.02%

1.65%

1.39%

1.18%

0.97%

0.97%

0.93%

0.81%

0.74%

0.65%

0.60%

0.59%

0.55%

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EBOS Group Annual Report 2018 
 
 
 
 
 
76

Additional stock exchange information continued

Distribution of Shareholders and Shareholdings

Holders

Fully paid shares

Size of Holding

1 to 1,000

1,001 to 5,000

5,001 to 10,000

10,001 to 100,000

100,001 and over

Total

Percentage of  
paid capital

0.84%

4.64%

3.55%

8.36%

82.61%

2,674

2,895

762

572

56

1,281,358

7,082,392

5,420,912

12,747,403

126,007,239

6,959

152,539,304

100.00%

Unmarketable Parcels as at 16 July 2018

As at 16 July 2018, there were 111 shareholders (with a total of 1,366 shares) holding less than a marketable parcel of shares, 
based on the closing price of the Company’s shares on the ASX of A$18.90. The ASX Listing Rules define a marketable parcel 
of shares as a parcel of shares of not less than A$500.

Waivers from the NZX and ASX Listing Rules

Waivers granted from the application of NZX and ASX Listing Rules are published on the Company’s website.

The terms of the Company’s admission to the ASX and on-going listing requires the following disclosures:  

1.  The Company is not subject to Chapters 6, 6A, 6B and 6C of the Australian Corporations Act dealing with the acquisition of 

shares (including substantial holdings and takeovers).

2. Limitations on the acquisition of securities imposed under New Zealand law are as follows:

(a)  In general, securities in the Company are freely transferable and the only significant restrictions or limitations in relation 
to the acquisition of securities are those imposed by New Zealand laws relating to takeovers, overseas investment and 
competition.

(b)  The New Zealand Takeovers Code creates a general rule under which the acquisition of 20% or more of the voting rights 
in the Company or the increase of an existing holding of 20% or more of the voting rights of the Company can only occur 
in certain permitted ways. These include a full takeover offer in accordance with the Takeovers Code, a partial takeover 
in accordance with the Takeovers Code, an acquisition approved by an ordinary resolution, an allotment approved by 
an ordinary resolution, a creeping acquisition (in certain circumstances), or compulsory acquisition of a shareholder 
holding 90% or more of the shares.

(c)  The New Zealand Overseas Investment Act 2005 and Overseas Investment Regulations 2005 (New Zealand) regulate 
certain investments in New Zealand by overseas interests. In general terms, the consent of the New Zealand Overseas 
Investment Office is likely to be required where an ‘overseas person’ acquires shares in the Company that amount to 
25% or more of the shares issued by the Company, or if the overseas person already holds 25% or more, the acquisition 
increases that holding.

(d)  The New Zealand Commerce Act 1986 is likely to prevent a person from acquiring shares in the Company if the 

acquisition would have, or would be likely to have, the effect of substantially lessening competition in the market.

Voting Rights

Shareholders may vote at a meeting of shareholders either in person or by proxy, attorney, or representative. Where voting is 
by show of hands or by voice every shareholder present in person or representative has one vote.

In a poll every shareholder present in person or by proxy, attorney or representative has one vote for each share.

Stronger togethercorporate 
governance

The Board and management of EBOS Group Limited are 
committed to ensuring that the Company adheres to best 
practice and governance principles and maintains high 
ethical standards.

For the purposes of compliance with the New Zealand 
Companies Act, NZX Listing Rules and NZX Corporate 
Governance Code 2017, the following disclosures are 
included in the Annual Report.

The Group’s Corporate Governance Statement can be 
found at: https://ebosgroup.gcs-web.com/corporate-
governance. The Corporate Governance Statement refers to 
a number of codes, policies and charters of the Group. These 
documents (or a summary of them) can also be found at 
https://ebosgroup.gcs-web.com/corporate-governance.

DIVERSITY
The Board adopted a Diversity Policy in July 2017, which is set 
out as Appendix F of the Corporate Governance Code. Under 
the policy, the Board is responsible for setting measurable 
objectives for achieving diversity. Set out below is the Board’s 
assessment of the objectives for the 2017/18 year:

Objective

Progress during 2017/18

Aim to increase the proportion of women on the Board 
as vacancies arise, having regard to the circumstances 
(including skill requirements) relating to the vacancies

No Board vacancies arose during the year ended  
30 June 2018

Aim to increase the proportion of women in executive 
and senior management roles as vacancies arise, having 
regard to the circumstances (including skill requirements) 
relating to the vacancies

During the year ended 30 June 2018, the number of 
females that were Officers (being the CEO and his direct 
reports) increased. As at 30 June 2018, 25% of Officers 
were female (up from 9% in the previous financial year)

Continue to ensure that the remuneration of females 
in salaried roles is objectively reviewed against the 
remuneration of males in comparable roles in order to 
eliminate inequity based on gender (with such review 
taking into account relevant experience, qualifications 
and performance)

A detailed gender pay equity analysis was undertaken, 
comparing like-for-like roles held by males and females. 

The conclusion from that analysis was that any variances 
were based on tenure in the role or experience at the time of 
appointment. 

Continue to promote family friendly and flexible work 
place practices including but not limited to parental 
leave, flexible return to work arrangements, flexible work 
arrangements and employee assistance programs

EBOS continued to promote these policies throughout 
the year. It is recognised that such policies contribute to 
retaining talent and reducing staff turnover

GENDER REPRESENTATION
The Company’s gender representation as at 30 June 2018 was as follows:

Board

2016/17

2017/18

Officer

2016/17

2017/18

Female %

Female (no.)

Male %

Male (no.)

40

40

2

2

60

60

3

3

Female %

Female (no.)

Male %

Male (no.)

9

25

1

2

91

75

9

6

Officer means the CEO and his direct reports

Group

2016/17

2017/18

Female %

Male %

57

55

43

45

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EBOS Group Annual Report 2018 
 
 
 
 
78

DIRECTOR INDEPENDENCE

The Board’s assessment of the independence of each 
current director is set out below. 

valuation of share based payments and accrual of short 
term incentives.

Fixed remuneration

Name

Status*

Appointment Date

Mark Waller

Independent

1987

Elizabeth Coutts

Independent

July 2003

Stuart McGregor Non-independent July 2013

In the financial year ended 30 June 2018 and during the 
periods in which they respectively held the office of Chief 
Executive Officer:

• Mr Davies received fixed remuneration of $1,981,110; and

• Mr Cullity received fixed remuneration of $313,194.

Sarah Ottrey

Independent

September 2006

Short Term Incentive (STI) payment

Peter Williams

Non-independent July 2013

*Independent means that the director is considered to be an Independent 

Director as defined under the NZX Listing Rules. 

CEO REMUNERATION

During the year ended 30 June 2018, the following persons 
held the office of Chief Executive Officer:

• Mr Patrick Davies – until 31 March 2018; and

• Mr John Cullity – from 1 April 2018.

The following disclosures set out the remuneration 
received by Mr Davies and Mr Cullity during the periods in 
which they held the office of Chief Executive Officer. 

In the year ended 30 June 2018 and during the period in 
which he held the office of Chief Executive Officer:

An STI payment is a performance based payment and the 
targets in relation to the STI payment are set by the Board. 
The maximum amount that the Chief Executive Officer 
may be entitled to as an STI payment is a fixed dollar 
amount (in Australian dollars). 

Mr Davies

In the financial year ended 30 June 2018, Mr Davies 
received an STI payment of $893,246. This payment was 
based on the financial performance of the Group for the 
prior year (that is, the year ended 30 June 2017) (2017 STI).  

With regard to the 2017 STI, a target was set by reference 
to the Group’s 2017 Profit Before Tax results (Target). 
The calculation of Mr Davies’ 2017 STI was based on the 
following criteria:

•  if the Group’s Profit Before Tax (PBT) results were less 

•  Mr Patrick Davies, received fixed remuneration, a short 

than 80% of the Target, no STI was payable;

term incentive payment and was provided a loan as part 
of a long-term incentive;

•  Mr John Cullity received fixed remuneration, as 

described below.1 

The Group’s policy in relation to the remuneration of the 
CEO (and other executives) is set out in its Remuneration 
Policy. A copy of this policy can be found in the Group’s 
Corporate Governance Code which is published on its 
website: www.ebosgroup.com. 

The remuneration described in this section relates to fixed 
remuneration and short term incentives paid during the 
year and long term incentive grants made during the year. 

These amounts may differ from the amounts included 
in Note H4 to the Financial Report and the table of 
employee remuneration included on pages 85 and 86 
which are reported according to accounting standards. 
The accounting values of remuneration reported in 
accordance with the accounting standards may not 
always reflect what the person was actually paid whilst he 
was CEO during the financial year, particularly due to the 

•  if the Group’s PBT results were between 80% of the 

Target and the Target, an STI between 35% and 75% of 
Mr Davies’ maximum STI entitlement was payable;

•  if the Group’s PBT results met certain stretch targets 

above the Target, an STI between 75% to 100% of  
Mr Davies’ maximum STI entitlement was payable.

Mr Davies received his maximum STI entitlement under 
the 2017 STI.

Mr Cullity

Mr Cullity did not receive an STI payment during the period 
in which he held the office of Chief Executive Officer.  

2018 STI

In relation to the STI for the year ended 30 June 2018, 
a similar structure for the STI was adopted and it is 
anticipated that the payment of an STI amount to both 
Mr Davies and Mr Cullity will be made during the 2019 
financial year.

1 Mr Davies received his fixed remuneration and short term incentive payment in Australian dollars. Mr Cullity received his fixed remuneration in Australian 

dollars. For the purposes of this disclosure the following exchange rate has been used to convert these amounts to NZ dollars: 0.9180:1 (AUD/NZD).

Stronger togetherLong Term Incentive (LTI) plan

EBOS operates a long term incentive share plan whereby 
EBOS provides an interest free, non-recourse loan to 
participating senior executives, including Messrs Davies 
and Cullity, in order for those executives to purchase 
shares in the company. While the shares are issued and 
held in the executive’s name, the shares will not vest 
unless and until performance conditions are met. The 
executive cannot deal in the shares unless and until those 
shares vest. All dividends received in respect of the shares 
must be applied to the repayment of the loan.   

In the financial year ended 30 June 2018, the Group 
provided to Mr Davies a loan of $3,644,865 as part of an 
LTI plan with a performance period from 1 July 2017 to  
30 June 2020 (LTI 2017/20). A total of 210,000 shares were 
issued to Mr Davies on 22 September 2017 with an issue 
price of $17.3565 as part of LTI 2017/20. 

Mr Cullity did not receive a long term incentive during 
the period in which he held the office of Chief Executive 
Officer.

The performance conditions for the LTI 2017/20 are:

•  continuous employment with the Group during the 

performance period (although noting that the Board has 
retained discretion relating to this condition); and

•  compound annual growth in the Company’s earnings per 
share over the performance period must equal or exceed 
a specific percentage target.

The performance conditions in relation to these shares will 
be tested after the end of the performance period being  
1 July 2017 to 30 June 2020.  

79

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EBOS Group Annual Report 2018 
 
 
 
 
80

directors’ interests 
and disclosures

DISCLOSURE OF INTERESTS

INDEMNITY AND INSURANCE

In accordance with section 140(2) of the Companies Act 
1993, the directors named below have made general 
disclosure of interest, by a general notice disclosed to the 
Board and entered in the Company’s interests register,  
as follows:

E.M. Coutts: Chair of Urwin & Co Ltd, Oceania Healthcare 
Ltd, Ports of Auckland Ltd and Skellerup Holdings Ltd, 
Director of the Yellow Pages group of companies, and 
Tennis Auckland Region Incorporated, Member, Marsh 
New Zealand Advisory Board and President, Institute of 
Directors Inc.

S.J. McGregor: Chairman of Donaco International Ltd 
and director of Symbion Pty Ltd and other EBOS Group 
subsidiaries.

S.C. Ottrey: Director of Whitestone Cheese Ltd, Sarah 
Ottrey Marketing Ltd, Skyline Enterprises Limited and 
Mount Cook Alpine Salmon Limited.

M.B. Waller: Director of EBOS Group Ltd and subsidiaries.  

P.J. Williams: Executive of The Zuellig Group and director 
of associated companies, a director of Pharma Industries 
Ltd, CB Norwood Pty Ltd, Cambert and Green Cross 
Health Limited.

In accordance with section 162 of the Companies Act 1993 
and the constitution of the Company, the Company has 
given indemnities to, and has effected insurance for, the 
directors and executives of the Company and its related 
companies which, except for some specific matters that 
are expressly excluded, indemnify and insure directors 
and executives against monetary losses as a result of 
actions undertaken by them in the course of their duties. 
Specifically excluded are certain matters, such as the 
incurring of penalties and fines, which may be imposed 
for breaches of law.

USE OF INFORMATION

There were no notices from directors of the Company 
requesting to use Company information received in their 
capacity as directors, which would not otherwise have 
been available to them.

Stronger togetherSHARE DEALINGS BY DIRECTORS

The directors have disclosed to the Board under section 148(2) of the Companies Act 1993 particulars of acquisitions or 
disposals of a relevant interest in the Company’s shares.

Director

E M Coutts

DIRECTORS’ SHAREHOLDINGS

Ordinary Shares 
Purchased/(Sold)

Consideration 
Paid/(Received)

Date of  
Transaction

1,704

$29,734.80

18 and 19 October 2017

Number of fully paid shares held as at

30 June 2018

30 June 2017

E M Coutts  

- Indirect beneficial interest

S C Ottrey  

- Directly held together with another

- Indirect beneficial interest

M B Waller  

- Directly held together with others

- Direct non-beneficial interest/trustee of EBOS Staff Share Plan

ATTENDANCE AT BOARD AND COMMITTEE MEETINGS

30,000

8,079

3,050

535,265

71,592

28,296

8,079

3,050

535,265

71,592

E M Coutts

S C Ottrey

S J McGregor

M B Waller

P J Williams

Board

Audit & Risk

Remuneration

Eligible
to Attend

Attended

Eligible
to Attend

Attended

Eligible
to Attend

Attended

6

6

6

6

6

6

6

6

6

6

3

3

3

3

3

3

3

3

3

3

3

3

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 2018 were as follows:

E M Coutts

S J McGregor 

S C Ottrey

M B Waller

P J Williams

30 June 2018

30 June 2017

$161,750

$151,875

$143,000

$296,875

$140,000

$125,500

$110,833

$110,250

$235,000

$110,000

81

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EBOS Group Annual Report 2018Directors’ Interests & Disclosures 
 
 
 
 
82

DISCLOSURES RELATING TO SUBSIDIARIES

Subsidiary

Current Directors

Subsidiary

Current Directors

ACN 618 208 969 Pty Ltd #

Alchemy Holdings Pty Ltd#

J Cullity

J Cullity

Alchemy Sub-Holdings Pty Ltd#

J Cullity

Aristopet Pty Ltd#

Beaphar Pty Ltd#

BFCMC Pty Ltd

Premium Pet Care Pty Ltd#

J Cullity

S Duggan

M Waller

J Cullity

S Duggan

M Waller

A White

J Cullity

Collaboration Medical Clinics Pty Ltd#

Developing People Pty Ltd#

DoseAid Pty Ltd#

Botany Bay Imports Exports Pty Ltd# J Cullity

S Duggan

M Waller

EAHPL Pty Ltd#

CC Pharmacy Investments Pty Ltd

J Cullity

EBOS Group Australia Pty Ltd#

CC Pharmacy Management Pty Ltd

J Cullity

CC Pharmacy Promotions Pty Ltd

J Cullity

Chem Plus Pty Ltd#

Chemmart Holdings Pty Ltd#

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

EBOS Health & Science Pty Ltd#

EBOS PH Pty Ltd#

Endeavour Consumer Health Limited#

Hospharm Pty Ltd#

HPS Brands Pty Ltd#

HPS Corrections Pty Ltd#

HPS Finance Pty Ltd#

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       

D Lewis^

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

J Cullity
S McGregor
M Waller

J Cullity
M Waller

J Cullity
M Waller

J Cullity
M Waller

J Cullity

J Cullity
M Waller

J Cullity

J Cullity

J Cullity

J Cullity

HPS Holdings Group (Aust) Pty Ltd#

J Cullity

Cincotta Holding Company Pty Ltd#

J Cullity

Clinect Pty Ltd#

Clinect NZ Pty Limited#

J Cullity

S McGregor
M Waller

J Cullity

M Waller

HPS Hospitals Pty Ltd#

HPS IVF Pty Ltd#

HPS Services Pty Ltd#

Intellipharm Pty Ltd#

J Cullity

J Cullity

J Cullity

J Cullity
S McGregor
M Waller

Stronger togetherSubsidiary

Current Directors

Subsidiary

Current Directors

Lite Living Pty Ltd#

Lyppard Australia Pty Ltd#

Masterpet Australia Pty Limited#

Masterpet Corporation Limited#*

Masterpet Logistics Pty Ltd#

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

J Cullity
S McGregor
M Waller

J Cullity
S Duggan
M Waller

J Cullity
S Duggan
M Waller

J Cullity
S Duggan
M Waller

Mega Save Management Pty Ltd

J Cullity

Nature’s Synergy Pty Ltd#

J Cullity

Nexus Australasia Pty Limited#

J Cullity

PBA Finance No. 1 Pty Ltd#

PBA Finance No. 2 Pty Ltd#

PBA Wholesale Pty Ltd#

Pet Care Distributors Pty Ltd#

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

J Cullity
M Waller

Pet Care Holdings Australia Pty Ltd#

Pets International Pty Ltd#

J Cullity
M Waller

J Cullity
S Duggan
M Waller

Pharmacy Brands Australia Pty Ltd#

A White

Pharmacy Retailing (NZ) Limited#

PRNZ Limited#

Richard Thomson Pty Limited#

Symbion Pty Ltd#

Terry White Group Limited#

Tony Ferguson Weight Management 
Pty Ltd#

TW&CM Pty Ltd#

TWC IP Pty Ltd#

J Cullity
M Waller

J Cullity
M Waller

J Cullity
M Waller

J Cullity
S McGregor
M Waller

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

Ventura Health Pty Ltd

J Cullity

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EBOS Group Annual Report 2018Directors’ Interests & Disclosures 
 
 
84

Subsidiary

Current Directors

VIM Health Pty Ltd#

VIM Health IP Pty Ltd#

Vitapet Corporation Pty Limited#

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

R Higham    
J McKellar
K Sclavos     
T White
J Cullity       
D Lewis^

J Cullity
S Duggan
M Waller

You Save Management Pty Ltd

J Cullity

ZAP Services Pty Ltd#

ZHHA Pty Ltd#

J Cullity
S McGregor
M Waller

J Cullity
S McGregor
M Waller

# P Davies retired as a director of these entities during the year ended  

30 June 2018. *Nature’s Recipe Pet Foods (NZ) Limited amalgamated with 

Masterpet Corporation Limited on 31 May 2018. The directors of Nature’s 

Recipe were M Waller and J Cullity. ^D Lewis is an alternate director for  

J Cullity.

No employee of the Group appointed as a director of the 
Company or its subsidiaries receives remuneration or other 
benefits in their role as a director. The remuneration and other 
benefits of such employees, received as employees, are included 
in the relevant bandings for remuneration disclosed under the 
employee remuneration range below.

Stronger together85

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EMPLOYEE REMUNERATION

Grouped below, in accordance with Section 211 of the Companies Act 1993, are the number of employees or former employees 
of the Company and its subsidiaries, including those based in Australia, who received remuneration and other benefits in their 
capacity as employees totalling NZ$100,000 or more during the year.

Employee 
Remuneration (NZ$)

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

210,000 – 220,000

220,000 – 230,000

230,000 – 240,000

240,000 – 250,000

250,000 – 260,000

260,000 – 270,000

270,000 – 280,000

280,000 – 290,000

290,000 – 300,000

310,000 – 320,000

320,000 – 330,000

330,000 – 340,000

340,000 – 350,000

350,000 – 360,000

360,000 – 370,000

370,000 – 380,000

380,000 – 390,000

400,000 – 410,000

410,000 – 420,000

430,000 – 440,000

440,000 – 450,000

460,000 – 470,000

30 June 2018 
Number of Employees

123

81

67

66

32

29

38

23

17

16

12

11

13

5

9

3

7

3

3

2

4

4

2

2

2

1

2

3

3

1

1

1

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EBOS Group Annual Report 2018Directors’ Interests & Disclosures 
 
 
86

Stronger together

Employee Remuneration (NZ$)

30 June 2018 
Number of Employees

490,000 – 500,000

530,000 – 540,000

560,000 – 570,000

570,000 – 580,000

660,000 – 670,000

680,000 – 690,000

730,000 – 740,000

810,000 – 820,000

840,000 – 850,000

870,000 – 880,000

990,000 – 1,000,000

1,130,000 – 1,140,000

1,150,000 – 1,160,000

1,570,000 – 1,580,000

3,160,000 – 3,170,000

AUDITOR

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

The Company’s Auditor, 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 auditor are outlined in note [H5] of the financial statements.

M B Waller
Chairman of Directors

E M Coutts
Director

directory

REGISTERED OFFICES

108 Wrights Road 
PO Box 411 
Christchurch 8024 
New Zealand 
Telephone +64 3 338 0999 
Email: ebos@ebos.co.nz

Level 7, 737 Bourke Street 
Docklands 3008 
PO Box 7300 
Melbourne 8004 
Australia 
Telephone +61 3 9918 5555 
Email: ebos@ebosgroup.com

WEBSITE ADDRESS

www.ebosgroup.com

DIRECTORS

Mark Waller 
Chairman

Elizabeth Coutts 
Independent Director

Stuart McGregor

Sarah Ottrey 
Independent Director

Peter Williams 

SENIOR EXECUTIVES

John Cullity 
Chief Executive Officer

Brett Barons 
CEO Symbion

Andrea Bell 
Chief Information Officer

Janelle Cain 
General Counsel

Sean Duggan 
CEO Animal Care and  
Consumer Brands

Tim Goldenberg 
Chief Human Resources Officer

Shaun Hughes 
Chief Financial Officer

David Lewis 
EGM Strategy

AUDITOR

Deloitte Limited 
Christchurch 

SECURITIES EXCHANGE

EBOS Group Limited shares are 
quoted on the New Zealand Securities 
Exchange and the Australian Securities 
Exchange (NZX/ASX code: EBO).

SHARE REGISTER

Computershare Investor Services Ltd 
Private Bag 92119 
Auckland 1142 
New Zealand 
Telephone: +64 9 488 8777 

Computershare Investor Services 
Pty Ltd 
GPO Box 3329 
Melbourne, Victoria 3001 
Australia 
Telephone: 1800 501 366

MANAGING YOUR 
SHAREHOLDING ONLINE:

To change your address, update your 
payment instructions and to view 
your Investment portfolio, including 
transactions, please visit:

www.computershare.com/
investorcentre 

General enquiries can be directed to:

• enquiry@computershare.co.nz 

•  Private Bag 92119, Auckland 1142, New 
Zealand or GPO Box 3329, Melbourne, 
Victoria 3001, Australia

•  Telephone (NZ) +64 9 488 8777 or 

(Aust) 1800 501 366

•  Facsimile (NZ) +64 9 488 8787 or  

(Aust) +61 3 9473 2500

Please assist our registrar by quoting 
your CSN or shareholder number.

NOTICE OF ANNUAL MEETING

The Annual Meeting of EBOS Group 
Limited will be held on Tuesday,  
16 October 2018 at 2.00pm, at 
Addington Raceway & Events Centre, 
75 Jack Hinton Drive, Addington, 
Christchurch, New Zealand.

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www.ebosgroup.com

Stronger together