EBOS Group Limited Annual Report 2019

FY2019 Annual Report · EBOS Group Limited
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Annual Report  
2019

03

Contents

The investments we have made in 
our people and a strong and diverse 
business ensure that we are well 
positioned for the future and have 
the capabilities that will enable our 
continued support of better healthcare 
and animal care across Australia and 
New Zealand.

04

Foreword

14

EBOS Group 
Overview

20

Business 
Highlights

30

Our Board

06

Summary  
of Results

08

CEO &  
Chairman’s Report

16

Supporting 
healthcare across 
our markets

18

Building leading  
animal care and  
consumer brands

26

Community

32

Financial 
Summary

27

Social  
Responsibility

36

Financial 
Report

94

Corporate 
Governance

38

Independent  
Auditor’s Report to 
the Shareholders

42

Financial 
Statements

98

Director’s interests 
and disclosures

105

Directory

All figures referred to in this report are in Australian dollars unless otherwise stated.

EBOS Group 2019 Annual ReportFinancialsCorporate GovernanceDirectors’ Interests & DisclosuresDirectoryBusiness Overview04 EBOS Group 2019 Annual Report

EBOS Group 2019 Annual Report

05

Foreword

Every day, communities across Australia 
and New Zealand benefit from the work 
we do at EBOS Group. Through the timely 
distribution of medicines to those who 
need them most, our support of a broad 
network of pharmacies, hospitals, medical 
clinics and aged care facilities, and the 
provision of some of the most trusted 
consumer and animal care brands –  
our commitment to improving the health 
and wellbeing of people and animals is 
embedded in everything we do. 

We continue to reinforce our capabilities 
across the entire supply chain, through 
targeted acquisitions and major investments 
in technology and infrastructure designed to 
complement and strengthen our business. 
We are proud to maintain our position as the 
largest Trans-Tasman marketer, wholesaler 
and distributor of healthcare and animal  
care products.

The investments we have made in our  
people and a strong and diverse business 
ensure that we are well positioned for the 
future and have the capabilities that will 
enable our continued support of better 
healthcare and animal care across Australia 
and New Zealand.

Our approach is reflected in our financial 
performance, where we have delivered 
further increases in returns to our valued 
shareholders. We trust that you will enjoy 
reading this year’s Annual Report on the 
performance of your company and we thank 
you for your continued support. 

Highlights

$6.9b
revenue

$26.6m $93.6m
investment in  
net capital works

acquisition  
investment

Our shareholders

7,599 
shareholders*

71.5c

* As at 31 July 2019

Our business

3,600

staff  
members

total dividends per share 
*NZ cents per share

72%
AUS

28%
NZ

57 

locations in Australia and New Zealand

42
%

58
%

82% healthcare

18% animal care

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Symbion Brisbane pharmaceutical distribution facility

 
 
 
 
 
06

EBOS Group 2019 Annual Report

EBOS Group 2019 Annual Report

07

Summary 
of Results

Financial Highlights

Reported Results

 $6.9 billion revenue 

$137.7 million net profit after tax +0.3% increase

$250.4 million EBITDA +0.1% increase

89.8 cents earnings per share -0.6% decrease

NZ 71.5 cents dividend per share +4.4% increase

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2015

2016

2017

2018

2019

2015

2016

2017

2018

2019

Five year EBITDA trend
For the year to 30 June ($millions)

Five year NPAT trend
For the year to 30 June ($millions)

Underlying Results

 $6.9 billion revenue 

$144.4 million net profit after tax +5.2% increase

$261.6 million EBITDA +4.6% increase

94.2 cents earnings per share +4.3% increase

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2015

2016

2017

2018

2019

2015

2016

2017

2018

2019

Five year EBITDA trend
For the year to 30 June ($millions)

Five year NPAT trend
For the year to 30 June ($millions)

Excludes one-off items for transaction costs incurred on M&A, warehouse transition and restructuring costs, net of the gain on sale from disposal of a 
surplus property.

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Segment & Divisional Earnings Overview

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

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14%
Animal Care
46%
Pharmacy (Wholesale and Retail)
6%
Consumer Products
8%
Contract Logistics
26%
Institutional Healthcare

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EBITDA

Revenue

82%

Australia

18%

New Zealand

77%

Australia

23%

New Zealand

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08

EBOS Group 2019 Annual Report

EBOS Group 2019 Annual Report

09

CEO & Chairman’s  
Report

EBOS delivered another year of 
increased momentum in 2019 as 
the Company positioned itself for 
the next wave of growth in 2020.

The result reflects the Board 
and management’s adherence to 
the core business strategy that 
has consistently delivered for 
shareholders over time by growing 
the business through carefully 
calculated investment decisions 
that drive both our Healthcare 
and Animal Care businesses in 
Australia and New Zealand.

Business Highlights for  
the year
EBOS reported solid growth in 
underlying earnings in what has been 
a strategically important year for the 
Group. Operating in highly competitive 
and regulated markets, the Group has 
withstood a range of challenges and 
changing market dynamics and still 
delivered a solid result for shareholders. 

Our Retail Pharmacy division was 
particularly active throughout 2019 as 
we moved to 100% ownership of the 
Terry White Group (TWG) and retained 
our wholesale contract with Blooms 
The Chemist, one of Australia’s largest 
independent pharmacy groups. We also 
signed the Chemist Warehouse Group 
(CWG) pharmaceutical contract, which 
commenced on 1 July 2019. 

The decision by CWG to select EBOS as 
its exclusive pharmaceutical distributor 
was a great endorsement of EBOS’ 
Wholesale Pharmacy division and is 
a reflection of the Group’s high level 
of expertise and excellent service 
standards. The partnership with CWG 
will see EBOS deliver pharmaceutical 
products to more than 450 Chemist 
Warehouse and My Chemist stores in 
Australia, generating approximately  
$1 billion in additional revenue in the 
first year. 

Importantly, with the commencement of 
the CWG partnership, EBOS was focused 
on ensuring there would be no adverse 
impact on our existing loyal pharmacy 
and hospital customers.  
It is therefore pleasing to report that we 
have successfully commenced servicing 
the CWG stores while still maintaining 
the high standards we pride ourselves 
on for all our existing customers.  
This is in no small way a function of the 
dedicated teams who work hard each 
and every day for our customers and the 
communities we serve.

The decision by CWG to select EBOS  
as its partner was also an endorsement 
of our broader capital investment 
strategy and reflects the efficiencies 
we have made over a number of years 
to our operations. 

In the last financial year we 
commenced operations in two new 
facilities in Brisbane and Sydney, 
together with a smaller distribution 
centre in Darwin. In New Zealand we 
opened a new facility in Christchurch 
servicing our Healthcare business, 
while in Auckland we opened a new 
Healthcare Logistics facility and 
neared completion of our new shared 
distribution and manufacturing 
facility. This new facility, which has a 
significant footprint of 10,000m², will 
see the consolidation of six separate 
New Zealand locations, enabling more 
streamlined stock and delivery services 
to our customers. Furthermore, the 
new site will house our Red Seal 
manufacturing operations, as well as 
providing significant storage capacity 
for our growing Endeavour Consumer 
Health business. 

The year was also highlighted by 
several strategic acquisitions as we 
continue to build our Healthcare and 
Animal Care businesses. The total value 
of investments for the year was  
$93.6 million and, in addition to 
acquiring the minority shares in TWG, 
also included three small-to-medium- 
sized bolt-on acquisitions. 

The first of these acquisitions was 
Warner & Webster, a medical  
and surgical supplies wholesaler 
servicing Victoria and South Australia, 
providing further opportunity to grow 
our share of the medical consumable 
market for our Healthcare business. In 
our Animal Care business we acquired 
Therapon, a Victoria-based veterinary 
distribution business that will operate 
under our Lyppard vet wholesale 
business. Finally, our Endeavour 
Consumer Health business acquired 
Quitnits, a leading natural head lice 
product range, which adds to our 
consumer health brands portfolio.

The ongoing success of the EBOS 
business strategy to ‘invest for 
growth’ through disciplined capital 
management, and acquire businesses 
and brands that can deliver shareholder 
value, was part of the reasoning for the 
Group’s equity capital raising in May 
2019. The Group successfully raised 
NZ$175 million in new capital, a clear 
indication that our strategy continues 
to resonate with a range of investors. 
The funds raised will provide us with 
enhanced financial capacity for further 
strategic acquisitions and organic 
growth opportunities so that we can 
continue the long-term strategic 
growth of the Group.

As we have stated previously, 
we operate in highly competitive 
and regulated markets and it was 
therefore pleasing that the Australian 
Government recognised, at the 
conclusion of its recent review into 
the Community Service Obligation 
(CSO), the importance of the wholesale 
industry in providing Australians 
with equal access to medicines in 
accordance with the National Medicines 
Policy. However, if the wholesale 
industry is to maintain its service 
standards then it requires additional 
financial support through increased 
CSO funding and a sustainable 
wholesale margin. The financial stability 
of the industry is at a critical juncture, 
with wholesalers being significantly 

CEO John Cullity and Chairman Mark Waller

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10

EBOS Group 2019 Annual Report

EBOS Group 2019 Annual Report

11

EBOS Group thanks  
Mark Waller

On 15 October 2019, EBOS Group Chairman Mark 
Waller will retire after more than 30 years service 
with the Company.

Mr Waller joined EBOS in March 1984 as its Chief Financial 
Officer before assuming the position of Chief Executive  
Officer in 1987 during a challenging period for the Company.  
At that time, EBOS was a very small player in the New Zealand 
healthcare industry, with annual revenues of approximately  
NZ$8 million primarily from marketing and distributing surgical 
and dental supplies under license from manufacturers. 

Facing significant pressure from larger competitors and  
multi-national corporations, Mr Waller sought to create a 
business that followed customers over their lifetime and  
drove a culture that attracted some of the best and brightest 
minds in the industry.

Over the next 27 years, he led the Group on an ambitious 
yet disciplined growth strategy, overseeing many successful 
mergers and acquisitions, including the purchase of Symbion in 
2013 for NZ$1.1 billion, and significantly increasing the Group’s 
presence in Australia. Under his leadership, EBOS Group grew  
to become the largest Trans-Tasman healthcare and animal 
care company with revenues in excess of NZ$6 billion.

After handing over the reins as CEO in 2014, Mr Waller assisted 
EBOS in an advisory role focussed on acquisition projects 
before assuming the position of Group Chairman in 2015.

During his career Mark has received many business accolades 
including receiving the Chief Executive of the Year Award at 
the Deloitte 200 Awards in 2011 and was the recipient of the 
Leadership Award at the INFINZ Industry Awards in 2014.  
Mark received the ultimate recognition for his significant 
contribution to New Zealand business with his induction into 
the New Zealand Business Hall of Fame in August 2019. 

Mr Waller will depart EBOS Group acknowledged as a warm and 
personable leader and a pivotal figure who was central to the 
Group’s sustained and significant growth in shareholder value.

On behalf of his fellow Directors, staff and shareholders, 
we extend our sincere thanks to Mr Waller for his significant 
contribution to the Group over more than 30 years. We wish 
him all the best for his well earned retirement. 

Mr Waller will 
depart EBOS Group 
acknowledged as a 
warm and personable 
leader and a pivotal 
figure who was 
central to the Group’s 
sustained and 
significant growth in 
shareholder value.

impacted by Pharmaceutical 
Benefits Sceme (PBS) reforms, and 
approximately 80% of distribution 
volumes now generating a margin 
of less than $1 given there has been 
no effective increase in wholesaler 
remuneration for the past five years.

EBOS, together with other members 
of the National Pharmaceutical 
Services Association (NPSA), continues 
to actively engage with the federal 
government and federal minister for 
health with respect to successfully 
resolving these matters as part of 
negotiations for the 7th Community 
Pharmacy Agreement.

The Directors have announced a final 
dividend of NZ 37 cents per share, 
which takes full-year dividends to  
NZ 71.5 cents per share, an increase of 
4.4% on the prior year. The full details 
relating to the dividend are included in 
the Financial Summary section of this 
Annual Report.

The Future
Throughout the last financial year 
EBOS Group has maintained its upward 
momentum, while at the same time 
positioning itself for future growth 
through investment in our distribution 
network, acquiring new businesses and 
brands, securing new customers and 
importantly, renewing and maintaining 
existing customer relationships. 

Our shared success reflects the effort 
and commitment across EBOS and we 
are incredibly grateful to all our staff 
in New Zealand and Australia for their 
daily contribution to our business and 
the communities we serve.

The investments we have made in 
our people, and a strong and diverse 
business, ensure that we are well 
positioned for the future and have the 
capabilities that will enable continued 
support of better healthcare and 
animal care across the markets in 
which we operate.

John Cullity 
Chief Executive Officer

Mark Waller 
Chairman

A message from Mark Waller
After more than 30 years with the 
company I have made the decision 
to retire as Chairman of EBOS Group 
effective 15 October 2019.

I am immensely proud of the time  
I have spent with this company having 
joined EBOS in March 1984 and then 
becoming CEO in 1987 when it was 
a small player in the New Zealand 
healthcare industry with annual revenue 
of approximately NZ$8 million.  
It would be fair to say we embarked on 
an ambitious growth strategy over the 
subsequent years and it is with a great 
deal of personal satisfaction that EBOS 
Group is now positioned as the largest 
trans-Tasman healthcare and animal 
care company.

I’ve enjoyed the challenge and 
opportunity tremendously and I feel  
it is now the right time to retire. Above 
anything else my greatest enjoyment has 
been gained through the people I have 
worked with over the many years and 
I wish the future Chairman and Board, 
Executive and Staff across New Zealand 
and Australia all the very best and I look 
forward to seeing the company continue 
to grow from strength to strength.

Mark Waller 
Chairman

All figures in Australian dollars unless otherwise stated.

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TerryWhite Chemmart pharmacy

Our commitment  
is to supporting 
great community 
health outcomes 
across Australia  
and New Zealand.

 
 
 
 
 
14

EBOS Group 2019 Annual Report

EBOS Group 2019 Annual Report

15

EBOS Group 
Overview

Healthcare

Animal Care

Community Pharmacy

Institutional Healthcare

Contract Logistics

Consumer Products

Animal Care

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Symbion Brisbane pharmaceutical distribution facility

 
 
 
 
 
16

EBOS Group 2019 Annual Report

EBOS Group 2019 Annual Report

17

Supporting healthcare  
across our markets

Healthcare

Brett Barons 
CEO Symbion

Our business is founded on a simple principle – 
an unwavering commitment to supporting better 
healthcare outcomes in communities across 
Australia and New Zealand.

It is this commitment that is driving us to make 
positive impacts in the lives of more Australians and 
New Zealanders than ever before – supporting their 
wellbeing by increasing accessibility to an expansive 
range of medicines, therapeutic goods and other 
leading healthcare products.

While we remain firmly focused on the present – 
delivering vital medicines and healthcare products 
from our 34 warehouses across both countries and 
supporting pharmacists to succeed as clinicians and 
business owners every day – more than ever we are 
looking ahead to the future needs of an ever-changing 
healthcare market.

We continue to make significant investments in our 
people and the infrastructure and technology of 
tomorrow, to ensure that our commitment remains  
as strong in the future as it is today.

Manufacturer services

Our distribution network

Our customers

Our brands

Symbion

Community 
pharmacy

Retail 
brands

Manufacturers

Zest

Healthcare  
Logistics

Clinect

ProPharma 
and PWR

EBOS Healthcare 
and Warner  
& Webster

Hospitals

Aged care

Onelink

Primary care

DoseAid

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TerryWhite Chemmart

Cincotta Discount 
Chemist

healthSAVE

Pharmacy Choice

GoodPrice Pharmacy 
Warehouse

HPS

Vantage

Data and 
technology

Minfos

Intellipharm

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18

EBOS Group 2019 Annual Report

EBOS Group 2019 Annual Report

19

Building leading animal 
care and consumer brands

Animal Care and Consumer Brands

Our customers

Our brands

Sean Duggan 
CEO Animal Care and Consumer Brands

While we increasingly turn our attention to global consumer 
markets – especially South-East Asia – the cornerstone of our 
business remains our commitment to delivering trusted brands 
to our valued customers in Australia and New Zealand.

Our success has been underpinned by key performers Black Hawk, 
Vitapet and Red Seal, and we are committed to strengthening 
these brands further through investments in marketing, product 
innovation and a focus on high quality products.

In Animal Care, both the Black Hawk and Vitapet brands continue 
to enjoy growing support from animal lovers seeking higher quality 
products that are aligned to the humanisation of pets and us 
viewing them as part of our families. Black Hawk continues to 
achieve strong sales in Australia and, since launching into New 
Zealand, has built a strong customer base and dedicated following.

Built on a commitment to helping New Zealand families care for 
those they love, Red Seal’s recent growth has been underpinned by 
uptake from major retailers in Australia and other key international 
markets, as we continue to drive innovation in the tea and 
toothpaste categories.

The key strength of our business remains our people – 
knowledgeable and passionate employees who are engaged in 
our journey to build great brands that add value to the lives of 
Australians and New Zealanders.

Lyppard  
Vet Wholesale

Masterpet

Endeavour 
Consumer Health

Online retailers

Veterinarians

Pet specialty

Grocery and  
supermarkets

Online retailers

Pharmaceutical 
wholesalers

Specialty 
retailers

Grocery and  
supermarkets

Consumer 
brands

Black Hawk

Vitapet

Aristopet

Animal 
care

Consumer 
brands

Red Seal

Faulding

Anti-Flamme

Floradix

Gran’s Remedy

Quitnits

Consumer 
health

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20

EBOS Group 2019 Annual Report

EBOS Group 2019 Annual Report

21

Business Highlights

EBOS Group is firmly committed to 
delivering the supply chain capabilities of 
tomorrow. In recent years, the Group has 
undertaken a major strategic investment 
program to strengthen the core of our 
business and ensure that we can support 
the future needs of our customers and 
continue to deliver great health outcomes 
to the community.

In total, the Group has invested $80 million in four 
projects across Australia and New Zealand, which 
will underpin the capabilities of our Healthcare 
business and add significant scale to our Animal 
Care and Consumer Brands operations.

Looking to the future, we have confidence that  
the new facilities we have commissioned will  
provide us with the capabilities, room for growth,  
efficiency and productivity that is demanded by  
our customers, while positioning us well to capture 
new opportunities and adapt to the ever-changing 
needs of local and global healthcare and animal 
care markets.

Australia
In the past 12 months, we have completed two 
major projects designed to support the future 
capabilities of our Healthcare business in Australia.

In October 2018, Symbion unveiled its new highly 
automated distribution centre in Acacia Ridge, 
Queensland.

Built at a cost of $59 million, the facility represents 
a significant investment in the Group’s wholesaling 
capabilities and ensures that we can continue 
to meet the needs of Australia’s ever-changing 
pharmaceutical market.

Earlier in 2018, the Group opened the new 
headquarters for its Healthcare Logistics business  
in Pemulwuy, New South Wales.

Designed to service the pre-wholesale market, the 
$15 million distribution centre will add significant 
scale to our operations. At 25,000m2 – roughly the 
size of four soccer pitches – it has been sized for 
growth and is the largest facility across the Group.

These combined investments underline EBOS 
Group’s commitment to servicing the current and 
future needs of Australia’s healthcare market. With 
the Group’s contract to supply Chemist Warehouse 
Group commencing on 1 July 2019, the additional 
scale and capability these facilities provide will be 
critical to ensuring we are equipped to handle the 
volumes required by this contract.

New Zealand
EBOS Group has significantly strengthened its  
New Zealand Healthcare business with the 
development of two major distribution centres to 
service customers across the country.

In Christchurch, the Group has recently  
opened a new shared facility for its wholesaling 
business ProPharma and institutional healthcare 
supplier EBOS Healthcare.

The new site provides significantly increased 
capacity to ensure that both businesses are 
equipped to handle the future demands of the  
New Zealand healthcare market and it has been 
built to best environmental practices, while also 
featuring enhanced protection against earthquakes.

In August 2019, the Group unveiled its second major 
New Zealand project – a new distribution centre in 
Auckland for Endeavour Consumer Health.

The facility represents the consolidation of six 
separate locations and will enable more streamlined 
stock management and increased delivery 
efficiencies for customers. Built at a cost of  
$4 million, the 10,000m2 facility will house Red Seal 
toothpaste manufacturing operations, as well as 
providing significant storage capacity for healthcare 
and consumer products.

Looking to the future,  
we have confidence that 
the new facilities we have 
commissioned will provide 
us with the capabilities, 
room for growth, efficiency 
and productivity that 
is demanded by our 
customers.

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Business  
Highlights

TerryWhite Chemmart

In late 2018, EBOS Group 
announced that it had acquired 
all minority shares in the Terry 
White Group (TWG) and moved to 
100% ownership of TWG, which 
is responsible for the TerryWhite 
Chemmart retail pharmacy 
network.

Founded 60 years ago as a single owner-
operated pharmacy in Queensland, 
TerryWhite Chemmart has since grown to 
become one of Australia’s leading retail 
networks. Today, the company has a 
network of approximately 450 community 
pharmacies across the country and over 
two million Australians visit a TerryWhite 
Chemmart pharmacy each month, 
highlighting the enormous reach of the 
brand. The owner-operated pharmacies 
continue to deliver personalised care 
direct from pharmacist to customer – 
guided by the best selection of health 
products and beauty brands.

TerryWhite Chemmart maintains a strong 
focus on its integrated education program 
for pharmacists, enabling them to build  
on their clinical skills and knowledge.  
A key element of this program is 
TerryWhite Chemmart Masterclass,  
a year-round program that brings 
together pharmacists across the country 
and culminates in an annual three-day 
education conference.

This year’s Masterclass was held in 
Melbourne at the end of April and was 
attended by over 400 pharmacists and 
support staff, with a focus on the critical 
role pharmacists play in the community, 
fostering quality patient experiences and 
better health outcomes.

TerryWhite Chemmart – that’s real chemistry

The increase in access to the range 
of immunisations administered by 
pharmacists has been a key topic of the 
Masterclass in recent years and, so far in 
2019, TerryWhite Chemmart pharmacists 
have administered over 250,000 flu 
vaccinations – a 48% increase on the 
previous year. Reinforcing this expanded 
scope of practice is a major focus for 
TerryWhite Chemmart.

In March 2019, the company unveiled 
its new brand campaign, that’s real 
chemistry, with the objective of building 
upon the trusted relationship between 
pharmacists and their customers – 
highlighting this as a point of difference 
to position TerryWhite Chemmart as a 
frontline healthcare leader. The campaign 
was rolled out across traditional and 
digital media platforms around Australia, 
including TV, outdoor, press, digital and 
owned assets such as social media, 
website, electronic direct marketing, 
catalogues and point of sale.

EBOS Group is well positioned to achieve 
long-term sustainable growth for 
TerryWhite Chemmart and is committed 
to ensuring the brand continues to 
succeed in a competitive and constantly 
evolving retail pharmacy sector.

TerryWhite Chemmart 
maintains a strong focus 
on its integrated education 
program for pharmacists, 
enabling them to build on 
their clinical skills and 
knowledge.

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Business  
Highlights

Red Seal toothpaste and fruit tea products

Red Seal strengthens Asian presence
Red Seal’s growth in global markets continued at 
pace in the 2018-19 financial year, highlighted by  
an increased presence in China, Korea and Japan, 
and expansion into Malaysia.

Since launching into China in 2012, Red Seal has 
become a brand of choice for Chinese consumers 
seeking high-quality health food, natural toothpaste 
and teas. Driven by strong marketing and New 
Zealand’s reputation for producing quality natural 
health products, Red Seal is now available in more 
than 1,600 online stores and 4,000 bricks-and-
mortar retail outlets across China.

A key part of the recent success of Red Seal has 
come through its deepening engagement with  
major e-commerce platforms including Kaola, 
Little Red Book, JD, VIP and Alibaba-owned Tmall. 
In August 2018, Red Seal took part in an event in 
Auckland to launch Tmall’s Amazing New Zealand 
page, which showcased a range of leading New 
Zealand health products and was broadcast to  
8.6 million consumers across the world. Tmall is 
the world’s second largest ecommerce platform, 
with 500 million monthly active users and the event 
paid immediate dividends for Red Seal, with sales 
increasing by 300% in the first day following the 
launch of the Amazing New Zealand page.

Beyond China, Red Seal continues to target 
expansion in other key Asian markets and, in June 
2018, the brand launched its range of natural 
toothpaste products into Malaysia.

Closer to home, Red Seal has enjoyed continued 
success in the Australian market, with an expanded 
presence in grocery stores. Driving this success 
are Red Seal fruit teas, which are now available in 
a range of flavours through both Woolworths and 
Coles nationally and with feedback from customers 
being overwhelmingly positive. In the New Zealand 
market, despite some intense competitive activity, 
Red Seal maintained its strong leadership in the 
natural toothpastes segment, while the popularity of 
Red Seal fruit teas continues to grow year on year.

Red Seal continues to be a driver of significant 
global and local success for EBOS Group and the 
brand has a strong future as consumers increasingly 
gravitate towards trusted natural health products.

Black Hawk driving better animal  
nutrition across key markets
The 2019 financial year has been another exciting 
period for Black Hawk, headlined by strong sales 
growth and the expansion of its range of Original 
and Grain Free dog and cat food products.

The brand’s continued success is driven by its 
philosophy of creating better relationships between 
pets and people. This has seen it consolidate its 
position as a leading premium animal care brand 
in Australia and New Zealand, while underpinning 
expansion into new markets across South-East Asia.

The Black Hawk commitment to ensuring pet 
owners understand the importance of great food 
saw the brand come face-to-face with pet owners 
at dog parks, beaches and other high-traffic areas 
across Australia as part of its caravan tour.  
This tour provided people with samples of Black 
Hawk products and drove engagement with the 
Black Hawk DogCheck™ tool, which enables pet 
owners to check their dog’s weight against an ideal 
target range.

Black Hawk continues to forge strong partnerships 
with key advocates for the brand across Australia 
and New Zealand. Breeders have enjoyed multiple 
‘Best in Show’ successes after switching to Black 
Hawk products and these relationships, along with 
those with vets, retail staff and other advocates, 
play an important role in strengthening the 
Black Hawk credentials and building consumer 
confidence.

The company has also proudly partnered with New 
Zealand Land Search and Rescue Inc. (LandSAR) 
as the official feeding partner for the organisation’s 
search and rescue dogs.

LandSAR is a national volunteer organisation 
providing land search and rescue services to the 
police and public of New Zealand. Black Hawk 
is proud to provide its specialised Working Dog 
formula to LandSAR, which will ensure its dogs have 
access to quality nutrition that will give them the 
energy they need to succeed in often challenging 
search and rescue environments.

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A member of LandSAR’s search and rescue pack, Rocket

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forge strong partnerships 
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EBOS Group 2019 Annual Report

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Community

Christchurch tragedy
We were shocked and saddened by the act of terrorism that 
took place in Christchurch, New Zealand on Friday 15 March 
2019. It is always difficult to comprehend events such as this 
when they take place anywhere in the world, but when they 

occur so close to home, the impact is far more profound.

EBOS Group has a strong connection with Christchurch – 
many of our businesses operate there and our origins can be 
traced to the Christchurch-based Early Brothers Trading Co. 
Ltd of the early 1920s.

The events of 15 March required a rapid, coordinated response 
across all of our Christchurch sites to ensure the safety of our 
staff and the continued supply of critical medicine deliveries 
to our customers. The picking and delivery of orders to 
our ProPharma customers in Christchurch and Nelson was 
redirected to other distribution centres so that staff could 
either remain at home, or head home when it was safe to do 
so. In addition, the Group established a support phone line 
for staff requiring assistance during and after the terrorist 
incident.

In the aftermath, EBOS Group – on behalf of staff 
and shareholders – made the decision to support the 
Christchurch Foundation’s ‘Our People, Our City’ fund to assist 
in meeting the short-and long-term needs of the families 
most affected by the tragedy.

The event is a sad reminder that there are those out there 
who seek to divide with acts of unspeakable horror. However, 
the response and solidarity shown by local and global 
communities should give us great hope that Christchurch can 
grow stronger as a result. And that’s something we’re proud to 
be a part of.

The response and 
solidarity shown by local 
and global communities 
should give us great hope 
that Christchurch can 
grow stronger as a result.

Social  
Responsibility

EBOS Group is committed to social responsibility across Australia and New Zealand. We are  
committed to being good corporate citizens and our actions reflect in the positive impacts in the 
communities where we operate. 

We maintain a strong commitment to operating our business in line with best environmental practice and supporting a 
variety of charitable initiatives, including our Match-Funding program, which supports staff who take part in charitable 
events or fundraisers by matching their donations.

In the 2018-19 financial year, EBOS Group supported 14 charities through the Match-Funding program and 17 charities in total. 
Some of the key highlights from our Social Responsibility program are detailed below.

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Offsetting our carbon emissions
We are pleased to report that in the 2019 financial year, 
EBOS Group offset 100% of the carbon emissions associated 
with its fleet of vehicles across Australia and New Zealand. 
This was achieved thanks to our continued partnership with 
Trans-Tasman not-for-profit organisation Greenfleet, and sees 
the Group contribute to planting approximately 41,000 trees 
annually to offset almost 11,000 tonnes of carbon emissions.

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41,000

trees  
planted

2,344m2

of solar panels  
installed

The Group has taken measures to offset its environmental 
impact through the installation of solar panels at its new 
distribution centres in New South Wales and Queensland.  
In total, 2,344 square metres of panels have been installed, 
covering an area approximately the size of six basketball courts.

TerryWhite Chemmart and  
Ovarian Cancer Australia
Over the past 13 years, TerryWhite Chemmart has raised 
more than $1.4 million for Ovarian Cancer Australia 
(OCA) through holding morning teas, cake stalls and 
other fundraising events across its extensive community 
pharmacy network.

EBOS Healthcare  
immunisation program
EBOS Healthcare is a strong supporter of the annual 
influenza vaccination initiative coordinated by the 
Immunisation Coalition of Australia.

In 2019, this has seen around 1,000 people receive  
free flu vaccines at two public events in Melbourne,  
with EBOS Healthcare a key contributor through the 
donation of vaccines for the event.

$1.4m

raised for Ovarian Cancer Australia 
through morning tea fundraising

1,000

free flu  
vaccines  
administered

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An unwavering 
commitment to 
quality ensures our 
brands are trusted 
by pet owners 
across Australia 
and New Zealand.

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EBOS Group 2019 Annual Report

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31

Our Board 

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. Sarah 
is a director of Whitestone Cheese 
Limited, Skyline Enterprises Limited and 
subsidiaries, Mount Cook Alpine Salmon 
Limited, Christchurch International 
Airport Ltd 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.

6. Stuart McLauchlan  
Independent Director
Stuart McLauchlan was appointed to 
the EBOS Group Limited Board in July 
2019. Stuart is a Chartered Fellow of 
the Institute of Directors and a Past 
President. He is a chartered accountant, 
partner of GS McLauchlan & Co, and a 
Fellow of the New Zealand Institute of 
Chartered Accountants. He is currently 
Chairman of Scott Technology Limited 
and ADInstruments Ltd. He is a director 
of Ngai Tahu Tourism Ltd, UDC Finance 
Ltd and Argosy Properties Ltd as well 
as a number of private companies. He 
is also a governor of the New Zealand 
Sports Hall of Fame.

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 Master 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 Brewery 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. 

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. In August 
2019 Mark was inducted into the New 
Zealand Business Hall of Fame.

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, Director of 
Tennis Auckland Region Incorporated 
and Member, Marsh New Zealand 
Advisory Board.

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, Sanford Limited and the Yellow 
Group of Companies, 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, immediate 
past President of the Institute of Directors 
Inc. and former Chief Executive of the 
Caxton Group of Companies.

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Financial 
Summary 

EBOS has delivered a solid year in 
underlying earnings and a strong 
cash flow result.

Group revenue was broadly in line 
with last year at $6.9 billion, negatively 
impacted by a $425 million combined 
impact of the further reduction in 
hepatitis C medicine sales and the 
impact of Government PBS reforms. 
Revenue growth excluding these 
impacts was 5.7%, driven by growth in 
our core businesses.

During the year the business completed 
several strategic acquisitions, 
transitioned into two new distribution 
facilities in Brisbane and Sydney and 
announced it was successful in signing 
an agreement with the CWG to be 
the exclusive wholesale distributor of 
pharmaceuticals from FY20. 

In FY19, the Group’s statutory results 
were negatively impacted by net 
non-recurring charges of $11.2 million 
($6.7 million after tax) relating to M&A 
costs, costs incurred in rationalising 
warehousing facilities and employee 
redundancy costs. For clarity, the 
comparative results below are shown 
on both an underlying and reported 
(statutory) basis. 

Underlying Earnings Before Net 
Finance Costs, Tax, Depreciation and 
Amortisation (EBITDA) of $261.6 million 
grew by $11.6 million, representing an 
increase of 4.6%. Reported EBITDA of 
$250.4 million was slightly ahead of  
last year.

Underlying Net Profit After Tax (NPAT) 
attributable to shareholders increased 
by 5.2% to $144.4 million. Reported 
NPAT increased by $0.4 million on the 
prior year to $137.7 million.

Healthcare

Acquisitions completed

The Healthcare segment generated a 
4.6% increase in Underlying EBITDA on 
sales revenue that was 0.9% lower to 
last year.

The Australian business recorded a 
decline of 3.5% in revenue, although 
Underlying EBITDA grew 5.7%.  
The revenue decline was driven by a 
$257 million reduction in hepatitis C 
medicine sales and the impact of PBS 
price reforms of $168 million. EBITDA 
growth was assisted from strong 
growth in our Institutional Healthcare 
and Contract Logistics business units. 

The New Zealand Healthcare operations 
again delivered solid revenue growth 
of 8.7% with EBITDA marginally ahead 
of last year. FY19 EBITDA growth was 
impacted by cost increases in labour 
and freight in our wholesale businesses.

Animal Care

The Animal Care segment recorded 
EBITDA growth of 5.7% for the year 
as the business continues to benefit 
from the excellent performance of 
our branded products. Full year Black 
Hawk sales increased 11.4% with strong 
growth achieved across both Australia 
and New Zealand. Black Hawk remains 
one of Australia and New Zealand’s 
fastest growing premium pet food 
brands with leading market positions  
in the pet specialty retail channel.

Total Animal Care revenue growth of 
1.0% was impacted by a decline in 
our Lyppard wholesale business as 
a result of the decision of an animal 
health manufacturer to bypass the 
wholesale channel, which affected 
revenue by approximately $21 million. 
Notwithstanding this, Lyppard 
strengthened its market presence 
with the acquisition of Therapon in 
November 2018, a Victoria-based 
veterinary wholesale business.

During the year EBOS invested $93.6 
million in strategic acquisitions, which 
included the following transactions:

•  The acquisition of all minority shares 

in TWG.

•  The acquisition of Warner & Webster,  

a medical and surgical supplies 
wholesaler servicing Victoria and 
South Australia.

•  The acquisition of Therapon,  
a Victoria-based Veterinary 
distribution business.

•  The acquisition of Quitnits, a leading, 
trusted head lice products business  
in Australia. 

Operating Cash Flow, Net Debt 
and Return on Capital Employed

Operating cash flow before capital 
expenditure was solid at $118.5 million. 
The investment in working capital of  
$51 million for the year primarily reflects 
the further reduction in the cash benefit 
of the Group’s hepatitis C business and 
the investment in inventory required 
ahead of commencement of trading 
with CWG on 1 July 2019. 

Net Capital expenditure for the year 
was $26.6 million and primarily 
comprised final payments on the 
new distribution facility in Brisbane 
and other improvements across 
the Symbion warehouse network in 
preparation for the increased volumes 
from CWG stores. 

In May 2019, the Group successfully 
raised NZ$175 million in new capital. 
Funds received from the equity raising 
have initially been used to repay bank 
debt, and are expected to be deployed 
from FY20 on strategic acquisitions and 
organic growth opportunities.  

As a result of the debt repayment, the 
Group’s Net Debt/EBITDA ratio at  
30 June 2019 decreased to 1.41x.

Return on Capital Employed (ROCE) 
of 15.9% declined marginally from 
June 2018 (-0.4%), reflecting the higher 
investment in net working capital.

Dividends

The Directors are pleased to announce 
a final dividend of NZ 37 cents per 
share, which takes full year dividends 
to NZ 71.5 cents per share, an increase 
of 4.4% on the prior year.

The record date for the final dividend 
is 27 September 2019 and the 
dividend will be paid on 11 October 
2019. The final dividend will again be 
imputed to 25% for New Zealand tax 
resident shareholders and will be fully 
franked for Australian tax resident 
shareholders. The Board confirms 
that the Dividend Reinvestment Plan 
(DRP) will be operational for the final 
dividend, and shareholders can elect 
to take shares in lieu of a dividend 
at a discount of 2.5% to the volume 
weighted average price (VWAP).

Outlook

EBOS recorded a strong underlying 
financial performance in FY19 and 
the Group is confident of a significant 
increase in earnings in FY20.

A performance update will be provided 
to shareholders at the Annual Meeting 
on 15 October 2019.

57 locations  
in Australia and 
New Zealand

EBOS Group 2019 Annual ReportEBOS Group 2019 Annual ReportFinancialsCorporate GovernanceDirectors’ Interests & DisclosuresDirectoryBusiness OverviewEBOS Group is 
trusted to deliver 
when care is 
needed most.

35

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37

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 Financial Statements 

Introducing this report 

48

Section E: How we fund the business

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 

52

55

58

60

61

66

70

71

72

73

74

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 

Additional stock exchange information 

Key

Key judgements and other judgements made

Accounting policy

Subsequent event

Explanatory note

Risks

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  

21 August 2019

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 2019.

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 2019 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.

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38

42

42

43

44

46

47

48

75

76

77

78

79

81

83

85

87

89

89

89

90

90

91

92

EBOS Group 2019 Annual ReportEBOS Group 2019 Annual ReportFinancialsCorporate GovernanceDirectors’ Interests & DisclosuresDirectoryBusiness Overview 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
38

39

Independent Auditor’s  
Report to the Shareholders

Report on the Audit of the Consolidated Financial Statements

Opinion 

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 2019, and the 
consolidated income statement, statement of comprehensive income, statement of changes in 
equity and cash flow statement 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 42 to 91, present 
fairly, in all material respects, the consolidated financial position of the Group as at 30 June 2019, 
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’).

Basis for Opinion 

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 impacted 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 which, 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 AUD9.6m.

Audit Materiality

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.

Key audit matter

How our audit addressed the key audit matter

Goodwill and Indefinite Life Intangible Asset Impairment Assessment

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 

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.

The Group has $947m of goodwill and $124m of indefinite life 
intangible assets, including brands of $96m, on the balance 
sheet at 30 June 2019 as detailed in note B1 to the financial 
statements. 

The carrying values of goodwill and brands 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 brands 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 (CGUs) 
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.  
The key assumptions applied in the above models are:

•  annual revenue and expense growth rates for the five-year 

forecast period;

• pre-tax discount rates;

• royalty rates; and

• terminal growth rates. 

The Group has assessed the recoverable amount of each cash- 
generating unit (‘CGU’) or group of CGUs 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 five-year 

forecast period;

• pre-tax discount rates; and

• terminal growth rates. 

We have included the impairment assessments of goodwill 
and brands 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 2019 Annual ReportEBOS Group 2019 Annual ReportFinancialsCorporate GovernanceDirectors’ Interests & DisclosuresDirectoryBusiness Overview40

EBOS Group 2019 Annual Report

41

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.

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.

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

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 

21 August 2019

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Symbion Brisbane pharmaceutical distribution facility

EBOS Group 2019 Annual Report 
 
 
 
 
42

43

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.

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 2019

Revenue

Income from associates

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)

A3

A4

A4

2019 
A$’000

2018 
A$’000

For the financial year ended 30 June 2019

6,930,360

6,986,731

Profit for the year

4,203

4,140

Other comprehensive income

Items that may be reclassified subsequently to profit or loss:

Cash flow hedge (losses)/gains

Related income tax

Movement in foreign currency translation reserve

Items that will not be reclassified subsequently to profit or loss:

Movement on equity instruments fair valued through other comprehensive income

Total comprehensive income net of tax

Total comprehensive income for the year is attributable to:

Owners of the Company

Non-controlling interests

250,410

(16,438)

(15,623)

218,349

1,927

(27,261)

193,015

(56,288)

136,727

137,700

(973)

136,727

89.8

89.8

250,052

(16,210)

(15,689)

218,153

1,631

(22,502)

197,282

(58,013)

139,269

137,274

1,995

139,269

90.4

90.4

2019 
A$’000

2018 
A$’000

136,727

139,269

(9,432)

2,784

12,013

5,365

370

142,462

143,435

(973)

142,462

2,060

(588)

(9,297)

(7,825)

(1,424)

130,020

128,025

1,995

130,020

Notes to the financial statements are included on pages 48 to 91.

Notes to the financial statements are included on pages 48 to 91.

EBOS Group 2019 Annual ReportEBOS Group 2019 Annual ReportFinancialsCorporate GovernanceDirectors’ Interests & DisclosuresDirectoryBusiness Overview 
 
44

45

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 2019

Notes

2019 
A$’000

2018 
A$’000

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

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

166,620

897,796

9,603

723,517

83

611

149,869

916,861

9,041

535,082

59

1,306

1,798,230

1,612,218

174,463

6,508

650

54,348

947,055

123,582

46,569

41,074

9,733

1,403,982

3,202,212

112,166

58,329

-

48,682

893,796

121,717

58,877

37,009

9,269

1,339,845

2,952,063

1,288,319

1,170,128

168,307

12,883

40,805

10,717

147,149

11,431

40,724

1,980

1,521,031

1,371,412

Consolidated Balance Sheet continued

As at 30 June 2019

Non-current liabilities

Bank loans

Trade and other payables

Deferred tax liabilities

Employee benefits

Total non-current liabilities

Total liabilities

Net assets

Equity

Share capital

Share-based payments reserve

Foreign currency translation reserve

Retained earnings

Equity instrument fair valued through other comprehensive income

Cash flow hedge reserve

Equity attributable to owners of the Company

Non-controlling interests

Total equity

Notes

E3

C3

A3  (b)

E1

2019 
A$’000

2018 
A$’000

364,038

13,941

57,330

6,612

441,921

1,962,952

1,239,260

931,811

3,937

(10,792)

323,635

(1,054)

(5,206)

1,242,331

(3,071)

1,239,260

435,121

13,484

53,258

5,944

507,807

1,879,219

1,072,844

763,636

2,144

(22,805)

308,499

(1,424)

1,442

1,051,492

21,352

1,072,844

Notes to the financial statements are included on pages 48 to 91.

Notes to the financial statements are included on pages 48 to 91.

EBOS Group 2019 Annual ReportEBOS Group 2019 Annual ReportFinancialsCorporate GovernanceDirectors’ Interests & DisclosuresDirectoryBusiness Overview46

47

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.

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 2019

Notes

2019 
A$’000

2018 
A$’000

Balance at 30 June 2018

763,636

2,144

(22,805)

308,499

(1,424)

1,442

21,352

1,072,844

Payments for capital work in progress

For the financial year ended  
June 2019

Notes

Share 
capital 
A$’000

Share- 
based  
payments 
A$’000

Foreign 
currency 
translation 
reserve 
A$’000

Retained 
earnings 
A$’000

Balance at 1 July 2017

763,636

466

(13,508)

264,239

Profit for the year

Other comprehensive income  
for the year, net of tax

Payment of dividends

E2

Share-based payments

-

-

-

-

-

-

-

1,678

-

137,274

(9,297)

-

(1,424)

1,472

-

-

(93,014)

-

-

-

-

-

-

-

-

(9,249)

(93,014)

1,678

Equity 
instruments 
fair valued 
through 
other com-
prehensive 
income 
reserve 
A$’000

Cash flow 
hedge 
reserve 
A$’000

Non- 
controlling 
interests 
A$’000

Total 
A$’000

-

-

(30)

19,357

1,034,160

-

1,995

139,269

Balance at 1 July 2018

763,636

2,144

(22,805)

308,499

(1,424)

1,442

21,352

1,072,844

Profit for the year

Other comprehensive income for  
the year, net of tax

Payment of dividends

Share-based payments

Dividends reinvested

Institutional placement

Share issue costs

Arising on acquisition of remaining 
non-controlling interest

Transfer of non-controlling interest

E2

E1

E1

E1

B2

-

-

-

-

5,719

165,493

(3,037)

-

-

-

-

-

1,793

-

-

-

-

-

-

137,700

-

-

(973)

136,727

12,013

-

370

(6,648)

-

-

-

-

-

-

-

(99,336)

-

-

-

-

-

(23,228)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

5,735

(99,336)

1,793

5,719

165,493

(3,037)

23,228

-

Balance at 30 June 2019

931,811

3,937

(10,792)

323,635

(1,054)

(5,206)

(3,071)

1,239,260

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 intangible assets

Acquisition of subsidiaries

Investment in other financial assets

Net cash (outflow) from investing activities

Cash flows from financing activities

Proceeds from issue of shares

Proceeds from borrowings

Repayment of borrowings

Dividends paid to equity holders of parent

Net cash inflow/(outflow) from financing activities

(46,678)

(46,678)

Net increase/(decrease) 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

E1

E5

E5

E2

7,032,507

7,055,426

1,927

1,394

1,631

859

(6,834,753)

(6,813,234)

(55,271)

(27,261)

118,543

7,703

(27,239)

(5,735)

(1,227)

(93,445)

(110)

(120,053)

168,175

23,077

(74,955)

(99,932)

16,365

14,855

1,896

149,869

166,620

(60,044)

(22,502)

162,136

155

(15,838)

(39,750)

(2,492)

(21,207)

(9,717)

(88,849)

-

27,077

(9,003)

(91,993)

(73,919)

(632)

(3,701)

154,202

149,869

Notes to the financial statements are included on pages 48 to 91.

Notes to the financial statements are included on pages 48 to 91.

EBOS Group 2019 Annual ReportEBOS Group 2019 Annual ReportFinancialsCorporate GovernanceDirectors’ Interests & DisclosuresDirectoryBusiness Overview 
 
 
 
 
 
 
 
 
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49

Notes to the consolidated financial statements
For the financial year ended 30 June 2019.

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.

• 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

Critical accounting estimates and judgements

The financial statements have been prepared in 
accordance with Generally Accepted Accounting 
Practice (‘GAAP’). They comply with New Zealand 
Equivalents to NZ IFRS and other applicable reporting 
standards as appropriate for profit-oriented entities.

The financial statements comply with International 
Financial Reporting Standards (‘IFRS’). 

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

The Company is an 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 Australian 
dollars, unless otherwise stated.

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).

Introducing this report continued

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. 

Presentation currency – change in accounting policy

The Group’s revenues, profits and cash flows are 
primarily generated in Australian dollars (AUD) and are 
expected to remain principally denominated in AUD 
in the future. Effective from 1 July 2017, the Group 
changed the currency in which it presents its financial 
statements from New Zealand dollars (NZD) to AUD 
in order to better reflect the underlying performance 
of the Group. A change in presentation currency is a 
change in accounting policy which, is accounted for 
retrospectively. 

Statutory financial information included in the Group’s 
financial statements for the year ended 30 June 2018, 
previously reported in NZD, has been restated into 
AUD using the procedures outlined below: 

•  Assets and liabilities denominated in currencies 
other than AUD were translated into AUD at the 
closing rates of exchange on the last day of the 
relevant accounting period. 

•  Revenues and expenses in currencies other than 
AUD were translated into AUD at the transaction 
date rate. 

•  Share capital and reserves were translated at the 
historic rates prevailing at the transaction dates. 

•  In each case, the rates of exchange were consistent 

with those used by the Group in the relevant 
accounting period. 

In undertaking the translation of financial statements 
into an Australian dollar presentation currency,  
it was determined that goodwill associated with the 
Symbion acquisition in Australia in 2013, previously 
denominated in New Zealand dollars, should be 
denominated in Australian dollars as it aligns with the 
functional currency of the underlying operations of the 
acquired entity. Comparative periods have been also 
adjusted to allow comparability between periods.  
This adjustment, (1 July 2017: $61.6m and  
30 June 2018: $43.6m), impacted the balance sheet 
only, with decreases to goodwill and equity balances, 
with no impact on the income statement or cash flow 
statement in the comparative period. 

The Directors have not included the original amounts 
and the adjustment as we consider this would not 
be meaningful to users of the financial statements 
as these financial statements are now presented in 
Australian dollars.

Adopting of new and revised standards and interpretations 

In the current year, the Group adopted all mandatory 
new and amended standards and interpretations. 

During the current year, NZ IFRS 9 Financial 
Instruments (NZ IFRS 9) and NZ IFRS 15 Revenue from 
Contracts with Customers (NZ IFRS 15) were adopted. 
A summary of the effect of the change in accounting 
policy and disclosures resulting from the application 
of these new standards is described below.

NZ IFRS 9 (2014) Financial Instruments: 

In the current year, the Group has applied NZ IFRS 9 
Financial Instruments (as revised in 2014), effective  
1 July 2018.

NZ IFRS 9 introduced new requirements for:

1)  classification and measurement of financial assets 

and financial liabilities;

2) impairment of financial assets; and

3) general hedge accounting. 

Details of these new requirements as well as 
their impact on the Group’s consolidated financial 
statements are described below. 

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Introducing this report continued

Adopting of new and revised standards and 
interpretations continued

(i) Classification and measurement of financial assets 
and liabilities:

NZ IFRS 9 includes revised guidance on the 
classification and measurement of financial 
instruments. The standard divides all financial assets 
that are currently in the scope of NZ IAS 39 into two 
classifications – those measured at amortised cost and 
those measured at fair value.

Where assets are measured at fair value, gains and losses 
are either recognised entirely in profit or loss (‘FVTPL’),  
or recognised in other comprehensive income (‘FVTOCI’).

For debt instruments the FVTOCI classification is 
mandatory for certain assets unless the fair value 
option is elected. While for equity instruments, the 
FVTOCI classification is optional. The classification 
of a financial asset is made at the time it is initially 
recognised.

All financial assets and financial liabilities are initially 
measured at fair value. All recognised financial assets 
that are within the scope of NZ IFRS 9 are required to 
be measured subsequently at amortised cost, or at fair 
value on the basis of the entity’s business model for 
managing the financial assets and the contractual cash 
flow characteristics of those financial assets.

As a result of the adoption of this standard, financial 
assets previously classified as loans and receivables 
are now classified as amortised cost.

The Group’s investment in MedAdvisor Pty Limited, 
previously classified as an available-for-sale financial 
instrument, has been reclassified as being measured at fair 
value through other comprehensive income. Any changes 
in the fair value of this investment are accumulated 
within the fair value reserve within equity. The investment 
is fair valued using its listed share price as it is traded 
in an active market (Australian Securities Exchange,  
the ASX). The Group would transfer the accumulative 
amount from this reserve to retained earnings if the 
investment is derecognised. No reclassification to 
profit or loss would occur upon derecognition.

The Directors believe this designation is appropriate 
as the investment is considered to be a long-term 
strategic investment by the Group. At 30 June 2019, the 
value of this investment was $9.6m. The investment in 
MedAdvisor is presented as ‘Other financial assets’  
in the balance sheet as a non-current asset.

There is no impact on the Group’s accounting for 
financial liabilities, as the new requirements only 
affect the accounting for financial liabilities that are 
designated at fair value through profit or loss and the 
Group does not have such liabilities.

(ii) Impairment of financial assets:

NZ IFRS 9 requires an expected credit loss (ECL) model 
as opposed to an incurred credit loss model under 
NZ IAS 39. The expected credit loss model requires 
the Group to account for expected credit losses and 
changes in those expected credit losses at each 
reporting date to reflect changes in credit risk since 
initial recognition of the financial assets. In other words, 
it is no longer necessary for a credit event to have 
occurred before credit losses are recognised.

NZ IFRS 9 allows a simplified approach for measuring 
the loss allowance at an amount equal to lifetime 
ECL for trade receivables (refer note C1). As a result of 
adopting this new standard no adjustment to the loss 
allowance was required.

(iii) General hedge accounting: 

The new general hedge accounting requirements 
retain the three types of hedge accounting, however, 
the effectiveness test has been replaced with the 
principle of an ‘economic relationship’. Retrospective 
assessment of hedge effectiveness is also no longer 
required. An assessment of the Group’s current hedging 
relationships indicated that they qualified as continuing 
hedging relationships upon application of NZ IFRS 9. 

No other changes on these financial statements has 
been recognised as a result of adopting this standard.

NZ IFRS 15 Revenue from Contracts with Customers: 

NZ IFRS 15 Revenue from Contracts with Customers 
also became effective for the Group on 1 July 2018. 

Revenue is measured based on the consideration 
specified in a contract with a customer and excludes 
amounts collected on behalf of third parties.  
The Group recognises revenue when it transfers  
control of a product or service to a customer. 
The Group has applied the modified approach on 
transitioning to NZ IFRS 15 and has applied the  
standard on initial application being 1 July 2018.  
No material impact on these financial statements has 
been recognised as a result of adopting this standard. 

Introducing this report continued

Foreign currency 

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.

Other accounting policies

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

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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:

Community Pharmacy

Institutional Healthcare

Contract Logistics Services

Contract Logistics Sales

Consumer Products

Interdivisional eliminations

Healthcare

Animal Care

2019  
A$’000

3,704,123

2,292,697

63,012

454,987

113,931

(80,434)

6,548,316

382,044

6,930,360

2018  
A$’000

3,871,426

2,239,592

58,480

395,730

108,616

(65,272)

6,608,572

378,159

6,986,731

Recognition and measurement

Community Pharmacy and Institutional Healthcare

Revenue is derived from the supply of human healthcare products to pharmacies in Australia and New Zealand,  
in accordance with agreed terms with the customer. Following delivery, the customer obtains control as it has full 
discretion over the manner of distribution and price to sell the goods, has the primary responsibility when onselling the 
goods and bears the risks of loss in relation to the goods. 

A receivable is recognised by the Group when it loses control which is when the goods are delivered to the customer as 
this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time 
is required before payment is made. 

The transaction price may be adjusted for customers who pay their account in full, earlier than what standard credit 
terms would require, or for incremental costs incurred in obtaining a sales contract, which are recognised over the 
contractual period. Under our standard terms with customers product returns, refunds and provision for warranties 
provided are in accordance with local requirements. Accumulated experience has been used to determine that such 
returns are not significant.

A receivable is recognised by the Group when it 
loses control which is when the goods are delivered 
to the customer as this represents the point in 
time at which the right to consideration becomes 
unconditional, as only the passage of time is 
required before payment is made. 

The transaction price may be adjusted for customers 
who pay their account in full, earlier than what 
standard credit terms would require. Under our 
standard terms with customers product returns, 
refunds and provision for warranties provided are in 
accordance with local requirements. Accumulated 
experience has been used to determine that such 
returns are not significant.

Animal Care 

Revenue is derived from the supply of animal care 
products to pet retail and vet clinics across Australia 
and New Zealand. Upon delivery, the customer 
assumes full control as it has complete discretion 
over the manner of distribution and pricing of goods, 
has the primary responsibility when onselling the 
goods and bears the risks of loss in relation to the 
goods. 

A receivable is recognised by the Group when it 
loses control, which is when the goods are delivered 
to the customer as this represents the point in 
time at which the right to consideration becomes 
unconditional, as only the passage of time is 
required before payment is made. 

Under our standard terms with customers product 
returns, refunds and provision for warranties 
provided are in accordance with local requirements. 
Accumulated experience has been used to 
determine that such returns are not significant.

A1. Revenue and expenses continued

(a) Revenue continued

Recognition and measurement

Contract Logistics

Sales: Sales consist of the sale of human healthcare 
products to a wide range of healthcare customers 
(wholesalers, pharmacies and medical centres)  
in accordance with agreed terms with the customer.  
A receivable is recognised by the Group when it loses 
control, which is when the goods are confirmed to 
be onsold by the customer, as this represents the 
point in time at which the right to consideration 
becomes unconditional, as only the passage of time 
is required before payment is made.  

Under our standard terms with customers product 
returns, refunds and provision for warranties 
provided are in accordance with local requirements. 
Accumulated experience has been used to 
determine that such returns are not significant.

Service fees: Revenue is derived from the provision 
of logistics services for a fee to overseas-based 
healthcare manufacturers for their operating 
activities in Australia and New Zealand. Service fees 
are typically charged for storage of manufacturer’s 
inventory holdings and pick, pack and delivery 
services provided over a period of time, typically 
on a monthly basis, as specified within contractual 
rates agreed with the manufacturer. 

The performance obligation is satisfied either  
at a point in time or over time, as applicable,  
at which point the right to consideration becomes 
unconditional, as only the passage of time is 
required before payment is made. 

Consumer Products 

Revenue is derived from the supply of EBOS’ own 
branded human healthcare products, such as Red 
Seal, Faulding, Nature’s Kiss, Quitnits and Floradix, 
to pharmacies and supermarkets in Australia and 
New Zealand and overseas distributors for export 
markets. Following delivery, the customer assumes 
control as it has full discretion over the manner of 
distribution and pricing of goods, has the primary 
responsibility when onselling the goods and bears 
the risks of loss in relation to the goods. 

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A1. Revenue and expenses continued 

(b) Expenses

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

One-off items (1)

Cost of sales

Writedown of inventory

Impairment gain/(loss) on trade and other receivables

Depreciation of property, plant and equipment

Amortisation of finite life intangibles

Operating lease and rental expenses

Donations

Employee benefit expense

Defined contribution plan expense

Other expenses

Total expenses

2019 
A$’000

(11,212)

2018  
A$’000

-

(6,121,500)

(6,196,382)

(2,570)

341

(16,438)

(15,623)

(42,796)

(210)

(283,024)

(15,985)

(207,197)

(6,716,214)

(3,711)

(1,753)

(16,210)

(15,689)

(39,685)

(243)

(272,771)

(14,967)

(211,307)

(6,772,718)

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.

(1)   One-off items comprise merger and acquisition, warehouse transition and restructuring costs incurred, $14.1m,  
net of a gain on the sale of excess land held, $2.9m, during the period.

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.

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  
(CGUs). 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.

(b) Segment revenues and results

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

Revenue from external customers ($’000)

2019

2018

94%   
$6,548,316
Healthcare

6%   
$382,044
Animal Care

95%   
$6,608,572
Healthcare

5%   
$378,159
Animal Care

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A2. Segment information continued

(b) Segment revenues and results continued

EBITDA ($’000)

$215,949 $216,579

Healthcare

$48,271

$45,655

Animal Care

2019

2018

($13,810)

($12,182)

Corporate

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

$133,132

$130,822

Healthcare

Associate information:

$33,045

$30,485

Animal Care

2019

2018

($28,477)

($24,033)

Corporate

Included in the segment results above is income from associates:

Animal Care

Healthcare

Total income from associates

2019  
A$’000

3,573

630

4,203

2018 
A$’000

3,271

869

4,140

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

2019 
A$’000

2018 
A$’000

2019  
A$’000

2018 
A$’000

2019  
A$’000

2018 
A$’000

Depreciation

(15,698)

(15,326)

(740)

(884)

Amortisation of finite life intangibles

(13,464)

(13,273)

(2,159)

(2,416)

-

-

-

-

Net finance costs

-

-

-

-

(25,334)

(20,871)

Tax (expense)/benefit

(54,628)

(55,163)

(12,327)

(11,870)

10,667

9,020

(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

2019 
A$’000

2018 
A$’000

2019  
A$’000

2018 
A$’000

2019 
A$’000

2018 
A$’000

Continuing operations

Revenue from external customers

5,345,133

5,528,590

1,585,227

1,458,141

6,930,360

6,986,731

Non-current assets

1,014,531

973,408

294,029

280,746

1,308,560

1,254,154

(d) Information about major customers

No revenues from transactions that are with a single customer amount to 10% or more of EBOS’ revenues (2018: 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.

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A3. Taxation

(a) Tax expense recognised in Consolidated Income Statement

Tax expense comprises:

Current tax expense/(credit):

Current year

Adjustments for prior years

Deferred tax expense/(credit):

Current year

Adjustments for prior years

Total tax expense

2019  
A$’000

2018  
A$’000

55,602

(2,375)

53,227

1,086

1,975

3,061

56,288

58,858

(1,753)

57,105

(593)

1,501

908

58,013

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

193,015

197,282

Tax expense calculated at 28% (2018: 28%)

Non-deductible expenses

Effect of different tax rates of subsidiaries operating in  
overseas jurisdictions

(Over) provision of tax expense in prior years

Other adjustments

Total tax expense

54,044

872

3,001

(400)

(1,229)

56,288

55,239

1,327

3,263

(253)

(1,563)

58,013

The tax rates used are principally the corporate tax rates of 28% (2018: 28%) payable by New Zealand and 30% (2018: 30%) 
payable by Australian corporate entities on taxable profits under tax law in each jurisdiction.  

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

Other payables

Other financial assets – derivatives

Intangible assets

Gross deferred tax assets:

Property, plant and equipment

Other payables

Other financial assets – derivatives

Intangible assets

Tax losses carried forward

(c) Imputation credit account balances

2019  
A$’000

(7,425)

(911)

(142)

(48,852)

(57,330)

12,553

31,998

2,843

6,583

371

54,348

2018  
A$’000

(3,218)

(185)

(152)

(49,703)

(53,258)

8,684

34,680

17

4,965

336

48,682

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

2019  
A$’000

2018 
A$’000

7,573

6,986

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.

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60

61

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

2019  
A$’000

2018  
A$’000

2019 
A$’000 

2018 
A$’000

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

137,700

137,274

137,700

137,274

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

153,320

151,914

153,320

151,914

Earnings per share                                                             Cents

89.8

90.4

89.8

90.4

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 dilutive potential ordinary shares in determining the 
denominator.

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 in regard to the estimates for future 
cash flows for goodwill and indefinite life intangibles 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

Adjustment due to finalisation of acquisition in the prior year

Effects of foreign currency exchange differences

Net book value

2019  
A$’000

893,796

43,749

650

8,860

947,055

2018 
A$’000

889,259

14,745

(2,976)

(7,232)

893,796

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’ CGUs or groups of CGUs expected to benefit from the synergies of the 
combination. 

CGUs 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 CGU 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 unit on a pro-
rata basis. Any impairment loss on goodwill is recognised immediately in profit or loss and is not subsequently 
reversed.

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B1. Goodwill and intangibles continued

(b) Indefinite life intangibles

Terry White 
Chemmart 
Brands 
A$’000

Other 
Healthcare 
Brands 
A$’000

Franchise 
Network 
A$’000

Animal 
Care 
Brands 
A$’000

 Healthcare 
Trademarks 
A$’000

Total 
A$’000

Gross carrying amount

Balance at 1 July 2017

36,550

21,160

10,954

25,180

16,392

110,236

Acquisitions through business 
combinations

Effects of foreign currency exchange 
differences

-

-

12,649

(390)

-

-

-

-

12,649

(213)

(565)

(1,168)

Balance at 30 June 2018

36,550

33,419

10,954

24,967

15,827

121,717

Effects of foreign currency exchange 
differences

-

961

-

248

656

1,865

Balance at 30 June 2019

36,550

34,380

10,954

25,215

16,483

123,582

Recognition and measurement

B1. Goodwill and intangibles continued

(c) Cash-generating units 

The carrying amount of goodwill and indefinite life intangibles allocated to CGUs or groups of CGUs is as follows:

Goodwill

Indefinite life intangibles

2019  
A$’000

2018 
A$’000

2019  
A$’000

2018 
A$’000

Healthcare Australia1

Healthcare New Zealand2

624,914

583,549

12,746

12,649

69,911

67,195

21,646

20,784

Healthcare: Pharmacy/Logistics NZ3

90,870

87,248

16,483

15,826

Healthcare: Terry White Group 4

10,999

10,637

47,492

47,492

Animal Care5

150,361

145,167

25,215

24,966

947,055

893,796

123,582

121,717

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.

Indefinite life intangible assets represent purchased brands, trademarks and 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.

For the year ended 30 June 2019, the Directors have determined that there is no impairment of any of the CGUs containing 
goodwill, brands, trademarks or the franchise network asset (2018: Nil).

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.   

Key judgement: impairment assessment assumption

The recoverable amounts of CGUs 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. 

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B1. Goodwill and intangibles continued

(c) Cash-generating units continued

Key estimate: value-in-use calculation

B1. Goodwill and intangibles continued

(d) Finite life intangibles

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:

2019 

2018

Goodwill

Annual revenue growth rates

2.5% - 7.0%

3.5% - 7.1%

Allowance for increases in expenses

1.8% - 5.8%

3.0% - 6.7% 

Pre-tax discount rates

Terminal growth rate 

12.3% - 13.8%

12.3% - 14.1%

2.5%

2.5%

Customer 
relationships/ 
contracts 
A$’000

Other 
A$’000

Total 
A$’000

Gross carrying amount

15,553

107,099

122,652

Accumulated amortisation and impairment

(10,388)

(53,387)

(63,775)

Balance at 30 June 2018

5,165

53,712

58,877

Gross carrying amount

19,063

106,874

125,937

Accumulated amortisation and impairment

(13,949)

(65,419)

(79,368)

Balance at 30 June 2019

5,114

41,455

46,569

Key estimate: value-in-use calculation

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

Aggregate amortisation recognised as an expense during the year:

Indefinite life intangibles 

Annual revenue growth rates

2.5% - 7.0%

3.8% - 7.0%

Allowance for increases in expenses

1.8% - 5.6%

3.0% - 7.0%

Customer relationships and contracts

Royalty rate

Pre-tax discount rates

Terminal growth rate 

3.0% - 11.8%

3.0% - 8.3%

Other

13.3% - 20.8%

13.2% - 17.9%

2.5%

2.5%

2019 
A$’000

2018 
A$’000

12,238

3,385

15,623

13,535

2,154

15,689

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 CGUs, or groups of CGUs to exceed their recoverable 
amount.

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 one and 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.

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B1. 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 CGU 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 (CGU) is estimated to be less than its carrying amount,  
the carrying amount of the asset (CGU) 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 (CGU) 
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 (CGU) 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

2019:

Principal 
activities

Date of 
acquisition

Cost of 
acquisition 
A$’000

100% of the business assets of Warner and Webster Pty Ltd

Healthcare

August 2018

34,353

B2. Acquisition information continued

Current assets

Cash and cash equivalents

Trade and other receivables

Prepayments

Inventories

Non-current assets

Property, plant and equipment

Deferred tax assets

Current liabilities

Trade and other payables

Current tax payable

Employee benefits

Non-current liabilities

Employee benefits

Net assets acquired

Carrying value 
A$’000

Fair value 
adjustment 
A$’000

Fair value on 
acquisition 
A$’000

1,588

5,807

144

2,992

347

-

(5,685)

(43)

(537)

-

(280) 1

(50) 2

(716) 3

-

744 4

(675) 5

(5) 6

(51) 7

(235)

4,378

(167) 7

(1,200)

1,588

5,527

94

2,276

347

744

(6,360)

(48)

(588)

(402)

3,178

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B2. Acquisition information continued

B2. Acquisition information continued

Carrying value 
A$’000

Fair value 
adjustment 
A$’000

Fair value on 
acquisition 
A$’000

Impact on the Consolidated Cash Flow Statement of all acquisitions during the year:

Goodwill on acquisition

Total consideration

Less cash and cash equivalents acquired

Deferred purchase consideration

Net cash outflow from acquisition

Judgements made:

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

2. To recognise the fair value of prepayments on acquisition.

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

4. To recognise deferred tax asset balance on acquisition.

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

6. To recognise additional tax liability on acquisition.

7. To recognise the fair value of employee benefits on acquisition.

31,175

34,353

(1,588)

(750)

32,015

Subsidiaries acquired

Consideration

Cash and cash equivalents

Deferred purchase consideration

Total consideration

Represented by

Net assets acquired

Goodwill on acquisition

Total consideration

2019 
A$’000

2018 
A$’000

48,364

4,347

52,711

8,312

44,399

52,711

48,364

46,678

(1,597)

93,445

22,030

(1,549)

20,481

8,712

11,769

20,481

22,030

-

(823)

21,207

Net cash outflow on acquisition of subsidiaries and non-controlling interests

Cash and cash equivalents consideration

Non-controlling interest

Less cash and cash equivalents acquired

Net cash consideration paid

During the period the Group also acquired the remaining equity interest in Terry White Chemmart Pty Ltd (TWC) for $46.7m.  
This payment represented an excess over the non-controlling interest’s share of net assets of $23.2m, which has been taken 
directly to reserves. As the Group held a greater than 50% equity share in TWC, it was already considered to be a subsidiary of 
the Group.

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 Warner and Webster Pty Ltd (‘WW’) because the cost of acquisition included a control 
premium paid. In addition, goodwill resulted from the consideration paid for the benefit of future expected cash flows above 
the current fair value of the assets acquired and the expected synergies and future market benefits expected to be obtained. 
These benefits are not recognised separately from goodwill as the expected future economic benefits arising cannot be reliably 
measured and they do not meet the definition of identifiable intangible assets. 

WW was acquired as it is a profitable Australian healthcare distribution business, which the Group believes fits strategically with 
its Australian healthcare business assets. 

Impact of the acquisition on the results of the Group for the period ended 30 June 2019

WW contributed $1,252,000 to the Group profit for the period. Group revenue for the period includes $36,684,000 in respect 
of WW. Had the WW acquisition been effective at 1 July 2018, the revenue of the Group from continuing operations would have 
been $6,938,436,000 and the profit for the period would have been $136,951,000.

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Section C: Operating assets and liabilities used by EBOS

C1. Trade and other receivables continued

Recognition and measurement

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 expected credit losses (ii)

2019 
A$’000

879,551

32,050

(13,805)

897,796

2018 
A$’000

909,905

24,707

(17,751)

916,861

Recognition and measurement

Trade receivables are measured on initial recognition at fair value and are subsequently carried at amortised cost.  
They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. 

The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty 
and there is no realistic prospect of recovery.

The Directors believe that the carrying amount of trade and other receivables approximates their fair value.

(i)  Trade receivables are non-interest bearing. Interest may be charged on outstanding overdue balances in accordance with the 

terms and conditions under which goods are supplied. Trade debtors generally have terms of 30 days.

(ii) Provision for expected credit losses

Current 
A$’000

30–60  
days 
A$’000

60–90  
days 
A$’000

90+  
days 
A$’000

Total 
A$’000

Trade receivables – total

807,688

53,372

8,933

9,558

879,551

Provision for expected credit losses – total

(533)

(864)

(3,463)

(8,945)

(13,805)

The Group recognises a loss allowance for expected credit losses (‘ECL’) on trade receivables. The amount of ECLs 
is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial 
instrument.

The Group measures the provision for ECL using the simplified approach to measuring ECL, which uses a lifetime 
expected loss allowance for all trade receivables. The Group determines lifetime ECLs for groups of trade receivables 
with shared credit risk characteristics. Groupings are based on customer, trading terms and ageing.

An ECL rate is determined based on the historic credit loss rates for the Group, adjusted for other current observable 
data that may materially impact the Group’s future credit risk. This other observable data includes specific factors in 
relation to each debtor or general economic conditions of the industry in which the debtors operate.

Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than  
90 days past due unless the Group has reasonable basis that a more lagging default criterion is more appropriate.

C2. Inventories

Raw materials – at cost

Finished goods – at cost

2019 
A$’000

1,746

721,771

723,517

2018 
A$’000

718

534,364

535,082

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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72

73

C3. Trade and other payables

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

2019 
A$’000

2018 
A$’000

Section Overview

Current

Trade payables

Other payables

Deferred purchase consideration

Non-current

Other payables

1,190,599

91,069

6,651

1,288,319

13,941

13,941

1,078,171

89,653

2,304

1,170,128

13,484

13,484

Recognition and measurement

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. 

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

The Directors consider that the carrying amount of trade payables approximates to their fair value.

Trade payables are unsecured and are generally settled within the month following the invoice date.

This section explains what capital assets, such as property, plant and equipment, 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 
A$’000

Buildings 
A$’000

Leasehold 
improvements 
A$’000

Plant and 
equipment 
A$’000

Office equipment, 
furniture and fittings 
A$’000

Total 
A$’000

Cost

33,057

16,996

21,164

62,482

21,965

155,664

Accumulated depreciation

-

(5,531)

(7,336)

(23,257)

(7,374)

(43,498)

Balance at 30 June 2018

33,057

11,465

13,828

39,225

14,591

112,166

Cost

28,690

40,385

34,900

100,063

28,025

232,063

Accumulated depreciation

-

(6,660)

(9,867)

(29,263)

(11,810)

(57,600)

Balance at 30 June 2019

28,690

33,725

25,033

70,800

16,215

174,463

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

250,000

200,000

150,000

100,000

50,000

$112,166

$81,714

$969

($4,814)

$866

$174,463

($16,438)

-

Opening NBV

Additions/ 
transfers from 
WIP

Acquisitions

Disposals

Depreciation

Forex

Closing NBV

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75

D1. Property, plant and equipment continued

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: two to 15 years

• Plant and equipment: two to 20 years

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

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, to provide appropriate returns to shareholders while 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

2019 
No. 
000’s

2019 
Total 
A$’000

2018 
No. 
000’s

2018 
Total 
A$’000

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

Balance at beginning of financial year

152,539

763,636

151,914

763,636

D2. Capital work in progress

Capital work in progress

2019 
A$’000

6,508

6,508

2018 
A$’000 

58,329

58,329

Dividend reinvested – April 2019

Institutional placement – May 2019

Institutional placement costs

Shares issued under the long-term 
executive incentive scheme

– September 2017

286

5,719

8,883

165,493

(3,037)

-

-

-

-

-

-

625

-

-

-

-

Capital work in progress relates to buildings under construction. The additional cost to complete the project is estimated at 
$6,317,000 (2018: $11,984,000).

H4

161,708

931,811

152,539

763,636

Treasury stock

Opening stock

Shares scheme – shares issued

2019 
No. 
000’s

1,225

-

1,225

2018 
No. 
000’s

600

625

1,225

Recognition and measurement

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its 
liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs. 

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77

E2. Dividends

Recognition and measurement

E3. Borrowings

Dividends are approved by the Board in New Zealand dollars. Dividends recognised in the Statement of Changes in 
Equity are converted from New Zealand dollars to Australian dollars at the exchange rate applicable on the date the 
dividend was approved. 

Unrecognised dividends are converted at the exchange rate applicable on the reporting date. 

Current

2019 
A$’000

2018 
A$’000 

Recognised amounts

Fully paid ordinary shares:

Final – prior year

Interim – current year

Dividends per share 

Unrecognised amounts

Final dividend

Subsequent event

2019

2018

A$ Cents 
per share

Total 
A$’000

A$ Cents 
per share

Total 
A$’000

Non-current

Bank loans (ii)

364,038

435,121

Bank loans – securitisation facility (i)

168,307

147,149

32.4

33.2

65.6

49,057

50,279

99,336

30.3

30.7

61.0

46,185

46,829

93,014

(i)  EBOS, through a subsidiary company, has a trade debtor securitisation facility of $400.0m (2018: $400.0m) of which $231.7m 
was unutilised at 30 June 2019 (2018: $252.9m). 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 2019, the value of trade receivables provided as security under this securitisation facility was $212.5m  
(2018: $190.4m). The net cash flows associated with the securitisation program are disclosed in the Consolidated Cash Flow 
Statement as cash flows from financing activities.

(ii)  EBOS has bank term loans and working capital facilities of $635m (2018: $556.8m), of which $270.9m was unutilised at  

35.4

57,205

32.6

49,711

30 June 2019 (2018: $121.6m). 

EBOS is in full compliance with its debt facility financial covenants. All bank loans, excluding the securitisation facility,  
are secured by a charge over the assets of EBOS.

A dividend of NZ 37.0 cents per share was declared on 21 August 2019 with the dividend being payable on 11 October 
2019. The anticipated cash impact of the dividend is approximately $50.6m (2018: $49.7m).

Recognition and measurement

The following table shows dividends approved in New Zealand dollars:

Recognised amounts

Fully paid ordinary shares:

Final – prior year

Interim – current year

Dividends per share 

Unrecognised amounts

Final dividend

2019 
NZ$ Cents 
per share

2018 
NZ$ Cents 
per share

35.5

34.5

70.0

33.0

33.0

66.0

37.0

35.5

New Zealand dollar dividends paid to equity holders of the parent are translated into Australian dollars and disclosed in the cash 
flow statement at the foreign currency exchange rate applicable on the date they are paid.

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.

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79

E4. Borrowings facilities maturity profile

E5. Operating cash flows

As at 30 June 2019, EBOS had unrestricted access to the following lines of available credit:

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

Facility

Term debt facilities ($AUD)

Term debt facilities ($NZD)

Term debt facilities ($AUD/$NZD)

Term debt facilities ($AUD)

Working capital facilities ($AUD/$NZD)

Securitisation facility ($AUD)

Amount (AUD) 
$ millions

$58.0

$66.7

$50.0

$292.9

$167.3

$400.0

Maturity

1–2 years

1–2 years

2–3 years

3–4 years

< 1 year

1–2 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 $532.3m (2018: $582.3m). 

Less than 
1 year 
A$’000

1–2 years 
A$’000

2–3 years 
A$’000

3–4 years 
A$’000

4–5 years 
A$’000

5+ years 
A$’000

Total 
A$’000

16,445

213,821

84,687

261,833

-

20,907

20,648

255,079

59,150

294,363

-

-

576,786

650,147

Bank loans

2019

2018

Financing activities

Bank overdraft facility, reviewed annually and payable at call:

Amount unused

Bank loan facilities with various maturity dates through to May 2023 
(2018: May 2023)

Amount used

Amount unused

2019 
A$’000

2018 
A$’000 

1,395

1,395

1,348

1,348

532,345

510,293

1,042,638

582,270

374,511

956,781

For the financial year ended 30 June 2019

Profit for the year

Add/(less) non-cash items:

Depreciation

(Gain)/loss on sale of property, plant and equipment

Amortisation of finite life intangible assets

Share of profit from associates, net of dividends received

Expense recognised in respect of share-based payments

Deferred tax

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

2019 
A$’000

2018 
A$’000

136,727

139,269

16,438

(2,267)

15,623

(4,203)

1,793

3,061

30,445

19,065

(1,212)

(188,435)

1,428

118,648

749

(1,201)

(50,958)

(2,951)

5,280

118,543

16,210

15

15,689

(4,140)

772

908

29,454

73,728

(1,590)

8,777

(1,979)

(92,073)

2,251

1,663

(9,223)

1,652

984

162,136

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E5. Operating cash flows continued

Reconciliation of debt:

Section F: EBOS Group structure

Section Overview

Bank loans

582,270

(51,878)

1,953

532,345

F1. Subsidiaries

1 July 2018 
A$’000

Net (repayments) 
A$’000

Foreign currency 
movement 
A$’000

30 June 2019 
A$’000

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.

Bank loans

567,346

18,074

(3,150)

582,270

1 July 2017 
A$’000

Net drawings 
A$’000

Foreign currency 
movement 
A$’000

30 June 2018 
A$’000

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.

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 (formerly Healthcare Distributors Pty Limited)

Australia

Masterpet Corporation Limited

Masterpet Australia Pty Limited

Botany Bay Imports and Exports Pty Limited

Aristopet Pty Ltd 

EAHPL Pty Limited (formerly EBOS Australia Holdings Pty Limited)

ZHHA Pty Ltd

ZAP Services Pty Ltd

Symbion Pty Ltd

Intellipharm Pty Ltd

Clinect Pty Ltd

Lyppard Australia Pty Ltd

New Zealand

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Ownership Interests 
and Voting Rights

Country of  
Incorporation

2019

2018

Australia

100%

100%

Australia

Australia

New Zealand

New Zealand

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%

DoseAid Pty Limited (formerly APHS Packaging Pty Ltd)

Australia

100%

100%

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

Blackhawk Premium Pet Care Pty Limited

Australia

Australia

Endeavour Consumer Health Limited (formerly Healthcare Distributors Limited)

New Zealand

100%

100%

100%

100%

100%

100%

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F1. Subsidiaries continued

Ownership Interests 
and Voting Rights

F1. Subsidiaries continued

Subsidiaries (all balance dates 30 June unless otherwise noted)

Country of  
Incorporation

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

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

Endeavour CH Pty Ltd (formerly 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

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

2019

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%

2018

100%

100%

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%

Subsidiaries (all balance dates 30 June unless otherwise noted)

CC Pharmacy Promotions Pty Limited

CC Pharmacy Management Pty Limited

Shanghai EBOS Business Co. Ltd

ACN 618 208 969 Pty Ltd

Warner and Webster Pty Ltd

W & W Management Services PL

Ownership Interests 
and Voting Rights

2019

100%

100%

100%

100%

100%

100%

2018

100%

100%

-

100%

-

-

Country of  
Incorporation

Australia

Australia

China

Australia

Australia

Australia

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 have been included in the Group results for the year to 30 June 2019. 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.

F2. Investment in associates

Name of associate company

Principal activities

Proportion 
of shares 
and voting 
rights 
acquired

Cost of 
acquisition 
A$’000

Date of 
acquisition

Animates NZ Holdings Limited

Animal Care supplies

December 2011

50%

17,353

Good Price Pharmacy Franchising Pty Limited

Healthcare supplies

October 2014

25.77%

Good Price Pharmacy Management Pty Limited

Healthcare supplies

October 2014

25.77%

3,592

3,592

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.

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85

F2. Investment in associates continued

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

Section G: How we manage risk

Section Overview

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

Share of profits of associates

Share of dividends 

Net foreign currency exchange differences

Balance at the end of the financial year

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

2019 
A$’000

71,983

(31,643)

40,340

19,599

129,464

9,563

4,203

37,009

4,203

(1,394)

1,256

41,074

20,430

-

-

2018 
A$’000

68,061

(34,862)

33,199

15,755

120,147

9,900

4,140

34,661

4,140

(859)

(933)

37,009

19,823

-

-

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, coordinates 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 dollars, Thai baht, euro and British pound).

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

It is the policy of the Group to enter into foreign exchange forward contracts to manage the foreign currency risk associated 
with anticipated sales and purchase transactions typically out to 12 months of the exposure generated. It is the policy of the 
Group to enter into foreign exchange forward contracts for up to 100% of forecasted foreign currency transactions for the next  
six months and up to 80% of six to 12 months of forecasted foreign currency transactions.

All forward foreign currency contracts entered into fixed the exchange rate of highly probable forecast transactions, 
denominated in foreign currencies, and are designated as cash flow hedges to reduce the Group’s cash flow exposure resulting 
from variable movements in exchange rates. 

The Group performs a qualitative assessment of effectiveness of hedges using the critical terms of the underlying transaction 
and hedging instrument. It is expected that the value of the forward contracts and the value of the corresponding hedged items 
will systematically change in opposite direction in response to movements in the underlying exchange rates.

EBOS enters into forward foreign exchange contracts only in accordance with the Board approved treasury policy.

Recognition and measurement

No sources of ineffectiveness emerged from these hedging relationships. 

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.

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87

G1. Financial risk management continued

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.

The risk is assessed and managed by the use of 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.

It is the policy of the Group to enter into interest rate swap contracts to manage interest rate risk associated with floating rate 
Group borrowings of up to 100% of the exposure generated.

All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts, are designated as cash 
flow hedges to reduce the Group’s cash flow exposure resulting from variable interest rates on borrowings. The interest rate 
swaps and the interest payments on the loan occur simultaneously, and the amount accumulated in equity is reclassified to 
profit or loss over the period that the floating rate interest payments on debt affect profit or loss.

The Group performs a qualitative assessment of the effectiveness of hedges using the critical terms of the underlying 
transaction and hedging instrument. It is expected that the value of the interest rate swaps and the value of the corresponding 
hedged items, (floating rate borrowings), will systematically change in opposite direction in response to movements in the 
underlying exchange rates.

No sources of ineffectiveness emerged from these hedging relationships.

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. All bank balances are assessed to have low credit risk at each reporting date as they are held with reputable 
international banking institutions.

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. Credit assessments are undertaken to determine the 
credit quality of the customer, taking into account their financial position, past experience and other relevant factors. Individual 
risk limits are granted in accordance with the internal credit policy and authorised via appropriate personnel as defined by the 
Group’s delegation of authority manual.

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 2018.

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)

2019 
A$’000

2018 
A$’000

611

-

611

40

10,677

10,717

1,289

17

1,306

-

1,980

1,980

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

Recognition and measurement

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 counter parties.

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 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.

•  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.

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

As hedge accounting has been applied for all derivatives, and no hedge ineffectiveness has occurred during the period, 
the movement in these instruments has been recognised on the other comprehensive income. 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. Hedging gains or losses are recognised in the profit or loss when the hedged 
items affect the profit or loss, except where they are hedging non-financial items, in which case they are recognised 
as an adjustment to the initial carrying value of the non-financial items (basis adjustment). When a forward contract is 
used in a cash flow hedge relationship the Group has designated the change in fair value of the entire forward contract, 
i.e. including the forward element, as the hedging instrument.

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89

G2. Financial instruments continued

Cash flow hedges

At the inception of a hedge relationship, the Group documents the relationship between the hedging instrument and  
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. 

Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging 
instrument that is used in a hedging relationship is highly effective in offsetting changes in the cash flows of the hedged 
item attributable to the hedged risk.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges,  
is recognised in other comprehensive income and accumulated as a separate component of equity in the hedging 
reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

Outstanding forward foreign currency contracts: nominal value

Buy Australian dollars

Buy euro

Buy British pounds

Buy Thai bhat

Buy US dollars

Outstanding interest rate swap contracts: nominal value

Less than 1 year

1 to 3 years

3 to 5 years

Greater than 5 years

2019 
A$’000

9,983

3,378

3,203

7,944

21,354

45,862

2019 
A$’000

26,473

145,815

195,000

-

2018 
A$’000 

7,918

8,172

3,029

4,807

26,292

50,218

2018 
A$’000 

75,098

76,212

159,590

-

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

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

2019 
A$’000

3,002

3,002

2019 
A$’000

1,127

1,352

2,479

37,996

108,394

47,012

193,402

2018 
A$’000

2,509

2,509

2018 
A$’000

9,251

1,346

10,597

32,893

97,550

58,713

189,156

367,288

310,900

Operating leases relate to certain land, buildings, plant and equipment, with lease terms of between one and 12 years with 
options to extend for a further one to 19 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.

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91

H4. Related party disclosures

Key management personnel compensation

Short-term employee benefits

2019 
A$’000

11,692

11,692

2018 
A$’000

11,284

11,284

EBOS operates a long-term incentive share scheme whereby eligible staff receive cash and performance rights entitling each 
holder of the performance right to one new share per right issue. Performance rights do not vest until performance conditions 
are met over a three-year period. In the current year 180,300 performance rights were issued with a three-year performance 
period of 1 July 2018 to 30 June 2021 (2018: Nil).

EBOS also 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. In 2018, 625,000 shares were issued with an issue price of NZ$17.35.  
The performance period in relation to these shares is 1 July 2017 to 30 June 2020. 

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

Advisory services

Taxation compliance

Other auditors (Ernst & Young)

Audit of subsidiary financial statements

Audit related services for review of interim financial statements

2019 
A$’000

2018 
A$’000

679

197

5

5

886

-

-

-

556

162

72

-

790

186

50

236

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 (refer to pages 50–52). 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 – effective for the Group for the period beginning 1 July 2019

NZ IFRS 16 Leases introduces a comprehensive model for the identification of lease arrangements and accounting treatments 
for both lessors and lessees. NZ IFRS 16 will supersede the current lease guidance including NZ IAS 17 Leases and the related 
interpretations when it becomes effective on 1 July 2019.

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

The right-of-use asset is initially measured at cost, and subsequently measured at cost (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, among others. 

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.

The Group will apply NZ IFRS 16 on 1 July 2019 using the modified retrospective (full simplified) transition method and the 
practical expedient that the right to use asset will match the lease liability. Comparative periods presented will not be restated.

Based on our assessment we expect that almost all of the Group’s leases that contribute to non-cancellable operating lease 
commitments of $193.4m (2018: $189.2m), as disclosed in Note H2, will meet the definition of a lease under NZ IFRS 16.  
The following impacts are expected on implementation of the new requirements:

•  A material right-of-use asset and a lease liability will be recognised on the balance sheet, with the difference posted to 

retained earnings.

• Finance costs will increase due to the impact of the interest component of the lease liability.

• Depreciation expense will increase due to depreciation of the right-of-use asset over the lease term.

• Lease rental operating expenses will reduce to close to nil.

•  In the cash flow statement, operating cash outflows will decrease, and financing cash outflows will increase as repayment of 

the principal balance in the lease liability will be classified as a financing activity.

The expense previously recorded in relation to operating leases will move from being included in operating expenses (and within 
EBITDA), to depreciation and finance expense. The impact on net earnings before income tax of an individual lease over its term 
remains the same; however, the new standard will result in a higher interest expense in the early years, and lower in the later 
years of a lease, compared with the current straight-line expense profile of an operating lease.

There will be no impact on actual cash payments. 

To finalise the implementation of the new standard, management will make a final determination of the discount rates and 
options periods for each of its leases. The Group will apply NZ IFRS 16 on 1 July 2019 using the modified retrospective  
(full simplified) transition method. Comparative periods presented will not be restated. The Group will recognise a right-of-use 
asset and a corresponding liability in respect of all these leases unless they qualify for low value or short-term leases upon the 
application of NZ IFRS 16. 

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93

Additional stock exchange information

Additional stock exchange information continued

As at 31 July 2019

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

Accident Compensation Corporation – NZCSD ACCI40

FNZ Custodians Limited

Custodial Services Limited A/C 4

Custodial Services Limited A/C 3

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

National Nominees New Zealand Limited – NZCSD NNLZ90

JP Morgan Nominees Australia Limited

HSBC Nominees A/C New Zealand Superannuation Fund Nominees Limited – 
NZCSD SUPR40

BNP Paribas Nominees (NZ) Limited – NZCSD COGN40

Whyte Adder No 3 Limited

Citicorp Nominees Pty Limited 

Custodial Services Limited A/C 2

Tea Custodians Limited Client Property Trust Account – NZCSD TEAC40

HSBC Custody Nominees (Australia) Limited

BNP Paribas Nominees (NZ) Limited – NZCSD BPSS40

Fully paid shares

60,525,721

10,135,878

8,495,930

6,612,420

4,330,244

3,588,344

3,477,196

2,574,456

2,531,815

2,491,965

2,447,125

2,391,995

1,896,696

1,883,312

1,796,425

1,633,086

1,406,479

1,224,696

1,201,534

1,154,240

Percentage of  
paid capital

37.43

6.27

5.25

4.09

2.68

2.22

2.15

1.59

1.57

1.54

1.51

1.48

1.17

1.16

1.11

1.01

0.8

0.76

0.74

0.71

Substantial product holders

The following information is provided in compliance with section 293 of the Financial Markets Conduct Act and is stated as at  
30 June 2019.

The total number of ordinary shares in the Company as at 30 June 2019 was 161,708,121. The total number of unquoted 
performance rights as at 30 June 2019 was 180,300.

121,799,557

75.31

Sybos Holdings Pte Limited

FMR LLC

Fully paid  
ordinary shares

Percentage of  
paid capital

60,525,721

15,457,115

75,982,836

37.43

10.13

47.56

Distribution of shareholders and shareholdings

Holders

Fully paid  
ordinary shares

Percentage of  
paid capital

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

3,286

2,983

725

550

55

7,599

1,492,994

7,219,193

5,151,962

12,210,729

135,633,243

161,708,121

0.92

4.46

3.19

7.55

83.88

100.00

Unmarketable parcels as at 31 July 2019

As at 31 July 2019, there were 104 shareholders (with a total of 997 shares) holding less than a marketable parcel of shares, 
based on the closing price of the Company’s shares on the ASX of A$23.78. 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 ongoing 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.

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Corporate 
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 NZ Companies 
Act, NZX Listing Rules and NZX Corporate Governance Code 
dated 1 January 2019 (2019 Code), the following disclosures 
are included in the Annual Report.

The 2019 Corporate Governance Statement relating to the 
Company and its subsidiaries (the Group) 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 be found in the Group’s 
Corporate Governance Code at https://ebosgroup.gcs-web.
com/corporate-governance.

Diversity
The Group has a Diversity Policy, 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 2018/19 year:

Objective

Progress during 2018/19

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.

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 2019 the Board appointed 
Stuart McLauchlan as a new director whose appointment 
took effect from 1 July 2019. As part of the process to 
appoint a new director, a number of female candidates were 
considered. Having regard to the Board’s structure and the 
Board’s assessment of skill requirements for the Board and 
Mr McLauchlan’s extensive experience, it was determined to 
appoint Mr McLauchlan.

As at 30 June 2019 the proportion of females that were 
Officers (as defined in the NZX Listing Rules) was 29%,  
a slight increase compared to 30 June 2018 (25%).

More broadly, in relation to recruitment for any senior roles 
within the Group, it is the practice of the Group to ensure 
that suitably qualified female candidates are identified as 
part of the recruitment process.

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 reviews 
taking into account relevant experience, qualifications and 
performance).

A detailed gender pay equity analysis was undertaken in 2018. 

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

EBOS will conduct further gender pay equity analysis from 
time to time.

Continue to promote family friendly and flexible workplace 
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 (including by introducing relevant policies to businesses 
acquired during the year). It is recognised that such policies 
contribute to retaining talent and reducing staff turnover. 

Gender representation

The Group’s gender representation as at 30 June 2019 was as follows:

Board

2017/18

2018/19

Officer

2017/18

2018/19

Female %

Female (no.)

Male %

Male (no.)

40

40

2

2

60

60

3

3

Female %

Female (no.)

Male %

Male (no.)

25

29

2

2

75

71

6

5

Officer has the meaning given in the NZX Listing Rules.

Group

2017/18

2018/19

Female %

Male %

55

58

45

42

Director independence

The Board’s assessment of the independence of each 
person that was a director as at 30 June 2019 is set out 
below.

Name#

Status*

Appointment date

Mark Waller

Independent

1987

Elizabeth Coutts

Independent

July 2003

In addition, the Board notes that Mark Waller has no 
affiliation with any major shareholder of the Company  
and did not have any such affiliation during his tenure as  
the EBOS Managing Director/Chief Executive Officer.  
In relation to Elizabeth Coutts and Sarah Ottrey, the Board 
is unanimously of the view that each director brings, among 
other things, an independent view to decisions in relation to 
EBOS and that their tenure is not, of itself, an indication that 
they are no longer independent. 

Stuart McGregor

Non-independent

July 2013

CEO remuneration

Sarah Ottrey

Independent

September 2006

Peter Williams

Non-independent

July 2013

#Mr Stuart McLauchlan became a director on 1 July 2019 (i.e. after the 

Company’s balance date)  

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

Director as defined under the NZX Listing Rules.   

Mark Waller, Elizabeth Coutts and Sarah Ottrey have been 
determined as Independent Directors as that term is defined 
in the NZX Listing Rules. In respect of Mark Waller, the Board 
members unanimously believe that he acts independently 
as a director and as Chairman, notwithstanding his previous 
appointment as Managing Director/CEO, which ceased in 
2014. This assessment is based on the experiences of those 
of them who have worked with him, and in particular, having 
regard to the high degree of professionalism he has at all 
times displayed as an EBOS director and as Chairman.  

In the year ended 30 June 2019, Mr John Cullity received 
fixed remuneration, a short-term incentive and a grant of 
performance rights as part of a long-term incentive plan.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 103 and 104 which are 
reported according to accounting standards.

1 Mr Cullity’s fixed remuneration and short-term incentive payments are 
expressed in Australian dollars.

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97

Long-Term Incentive (LTI) plan

In the year ended 30 June 2019, EBOS introduced a 
performance rights plan whereby eligible employees receive 
performance rights entitling each holder on exercise of the 
performance right to one ordinary share per performance 
right granted or a cash payment in lieu. Performance rights 
do not vest and cannot be exercised unless and until 
performance conditions are met.

In the financial year ended 30 June 2019, Mr Cullity was 
issued 47,500 performance rights as part of an LTI plan  
with a performance period from 1 July 2018 to 30 June 2021  
(LTI 2018/21).

The performance conditions for the LTI 2018/21 are:

-  continuous employment with the Group during the 

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

-  growth in the Company’s earnings per share in each year 

of the performance period or 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 2018 to 30 June 2021.

2019 Code

Under NZX Listing Rule 3.8.1(b), EBOS is required to state in the Annual Report those recommendations in the 2019 Code 
that were not followed in the financial year ended 30 June 2019.

Recommendation

Comment

3.4 – Nomination Committee

5.2 – Remuneration Policy

8.4 – additional equity

The Board does not have a nomination committee.  
The Board has determined, having regard to the current 
composition of the Board, that a nomination committee is 
not currently required. The Board undertakes the functions 
that were previously delegated to a nominations committee.

EBOS has a Remuneration Policy. The policy does not 
include the relative weightings of remuneration and 
performance criteria. This information is included in the 
annual Corporate Governance Statement (available on the 
Company’s website) to ensure it accurately reflects the 
remuneration structures. 

During the financial year, the Company conducted a 
successful placement of shares to raise NZ$175 million.

The Board determined that a placement, rather than pro-
rata equity raise, was the most practical, timely and effective 
method of raising capital. A pro-rata rights issue was 
considered to be challenging given the size of the capital 
raise and that it would have extended the duration of the 
process. 

The accounting values of remuneration reported in 
accordance with the accounting standards may not always 
reflect what a person was actually paid during the financial 
year, particularly due to the valuation of share-based 
payments and accrual of short-term incentives.

Fixed remuneration

In the financial year ended 30 June 2019 Mr Cullity received 
fixed remuneration of $1,150,531. This includes compulsory 
superannuation contributions.

Short-Term Incentive (STI) payment

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 the financial year ended 30 June 2019, Mr Cullity received 
an STI payment of $487,500. This payment was based on the 
financial performance of the Group for the prior year  
(that is, the year ended 30 June 2018) (2018 STI). Mr Cullity 
was appointed as CEO during the year ended 30 June 2018 
and as such the 2018 STI payment is related to his role as  
CEO and previous role as Chief Financial Officer. 

With regard to the 2018 STI, a target was set by reference  
to the Group’s 2018 Profit Before Tax results (Target).  
The calculation of Mr Cullity’s 2018 STI was based on the 
following criteria:

-  If the Group’s Profit Before Tax (PBT) results were less than 

80% of the Target, no STI was payable.

-  If the Group’s PBT results were between 80% of the Target 
and the Target, an STI between 35% and 75% of Mr Cullity’s 
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 Cullity’s 
maximum STI entitlement was payable.

Mr Cullity received his maximum STI entitlement under the 
2018 STI.

2019 STI

In relation to the STI for the year ended 30 June 2019,  
a similar structure for the STI was adopted and it is 
anticipated that the payment of an STI amount to Mr Cullity 
will be made during the 2020 financial year.

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99

Directors’ interests 
and disclosures

Disclosure of interests

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 
during the year ended 30 June 2019, as follows:

EM 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.

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

SC Ottrey: Director of Whitestone Cheese Ltd, Sarah 
Ottrey Marketing Ltd, Skyline Enterprises Limited and 
subsidiaries, Mount Cook Alpine Salmon Limited and 
Christchurch International Airport Ltd. Member of 
the Institute of Directors – Otago Southland Branch 
committee.

MB Waller: Director of EBOS Group Ltd and subsidiaries.  

PJ 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.

Indemnity and insurance

In accordance with section 162 of the Companies Act 1993 
and the constitution of the Company, the Company has 
given indemnities to, and has effected insurance for, the 
Directors and executives of the Company and its related 
companies which, except for some specific matters 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.

Directors’ shareholdings

Number of fully paid shares held as at

30 June 2019

30 June 2018

EM Coutts  

– Indirect beneficial interest

SC Ottrey  

– Directly held together with another

– Indirect beneficial interest

MB Waller  

– Directly held together with others

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

Attendance at board and committee meetings

32,500

8,176

3,050

506,692

71,592

30,000

8,079

3,050

535,265

71,592

EM Coutts

SC Ottrey

SJ McGregor

MB Waller

PJ Williams

Board

Audit & Risk

Remuneration

Eligible
to Attend

Attended

Eligible
to Attend

Attended

Eligible
to Attend

Attended

6

6

6

6

6

6

6

5

6

6

3

3

3

3

3

3

2

2

2

2

2

2

Share dealings by directors

Directors’ remuneration and other benefits

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.

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 2019 were as follows (expressed in New Zealand dollars):

Director

EM Coutts

SC Ottrey

MB Waller

Ordinary Shares 
Purchased/(Sold)

Consideration 
Paid/(Received)

2,500

97

6,427

NZ$54,747

NZ$2,049

NZ$135,738

Date of  
Transaction

7 May 2019

5 April 2019

5 April 2019

(35,000)

(NZ$756,472)

20, 21 and 22 March 2019

EM Coutts

SJ McGregor 

SC Ottrey

MB Waller

PJ Williams

*This includes fees paid for additional services provided.

30 June 2019

30 June 2018

$193,000*

$162,500

$153,000

$317,500

$150,000

$161,750

$151,875

$143,000

$296,875

$140,000

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100

EBOS Group 2019 Annual Report

101

Disclosures relating to subsidiaries

Subsidiary

Current Directors

Subsidiary

Current Directors

Subsidiary

Current Directors

Subsidiary

Current Directors

ACN 618 208 969 Pty Ltd

Alchemy Holdings Pty Ltd

Alchemy Sub-Holdings Pty Ltd

Aristopet Pty Ltd

Beaphar Pty Ltd

BFCMC Pty Ltd

Blackhawk Premium Pet Care  
Pty Ltd

Botany Bay Imports Exports Pty Ltd

CC Pharmacy Investments Pty Ltd

CC Pharmacy Management Pty Ltd

CC Pharmacy Promotions Pty Ltd

Chem Plus Pty Ltd

Chemmart Holdings Pty Ltd

J Cullity 
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S Duggan
M Waller*

J Cullity
S Duggan
M Waller*

J Cullity
S McGregor#
A White*

J Cullity
S McGregor#

J Cullity
S Duggan
M Waller*

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

Cincotta Holding Company Pty Ltd

Clinect Pty Ltd

Clinect NZ Pty Limited

Collaboration Medical Clinics Pty Ltd

Developing People Pty Ltd

DoseAid Pty Ltd

EAHPL Pty Ltd

EBOS Group Australia Pty Ltd

EBOS Health & Science Pty Ltd

EBOS PH Pty Ltd

Endeavour CH Pty Ltd

Endeavour Consumer Health Limited

J Cullity
S McGregor#

J Cullity
S McGregor
M Waller*

J Cullity
M Waller

J Cullity  
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity  
S McGregor# 
R Higham* 
J McKellar* 
K Sclavos* 
T White*
D Lewis*

J Cullity
S McGregor
M Waller*

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
M Waller

Healthcare Supply Partners Pty Ltd

J Cullity

Hospharm Pty Ltd

HPS Brands Pty Ltd

HPS Corrections Pty Ltd

HPS Finance Pty Ltd

HPS Holdings Group (Aust) Pty Ltd

HPS Hospitals Pty Ltd

HPS IVF Pty Ltd

HPS Services Pty Ltd

Intellipharm Pty Ltd

Lite Living Pty Ltd

Lyppard Australia Pty Ltd

Masterpet Australia Pty Limited

Masterpet Corporation Limited

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor 
M Waller *

J Cullity  
S McGregor# 
R Higham* 
J McKellar* 
K Sclavos* 
T White*
D Lewis*

J Cullity
S McGregor
M Waller*

J Cullity
S Duggan
M Waller*

J Cullity
S Duggan
M Waller

Masterpet Logistics Pty Ltd

Mega Save Management Pty Ltd

Nexus Australasia Pty Limited#

PBA Finance No. 1 Pty Ltd

PBA Finance No. 2 Pty Ltd

PBA Wholesale Pty Ltd

Pet Care Distributors Pty Ltd

Pet Care Holdings Australia Pty Ltd

Pets International Pty Ltd

Pharmacy Brands Australia Pty Ltd

J Cullity
S Duggan
M Waller*

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity
S McGregor#
M Waller*

J Cullity
S McGregor#
M Waller*

J Cullity
S Duggan
M Waller*

J Cullity
S McGregor#
A White*

EBOS Group 2019 Annual ReportFinancialsCorporate GovernanceDirectors’ Interests & DisclosuresDirectoryBusiness Overview102

103

Disclosures relating to subsidiaries continued

Employee remuneration

Subsidiary

Current Directors

Subsidiary

Current Directors

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

Ventura Health Pty Ltd

J Cullity 
M Waller

J Cullity
M Waller

J Cullity
S McGregor#
M Waller*

J Cullity
S McGregor 
D Lewis*

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis 
S Hughes

J Cullity  
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity
S McGregor#

VIM Health Pty Ltd

VIM Health IP Pty Ltd

Vitapet Corporation Pty Limited

Warner & Webster Pty Ltd

W & W Management Services Pty Ltd

You Save Management Pty Ltd

ZAP Services Pty Ltd

ZHHA Pty Ltd

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity 
S McGregor#
R Higham* 
J McKellar*
K Sclavos* 
T White*
D Lewis*

J Cullity
S Duggan
M Waller*

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor#

J Cullity
S McGregor
M Waller*

J Cullity
S McGregor
M Waller*

#S McGregor is an alternate director for J Cullity. 

*Ceased to be a director during the year ended 30 June 2019.

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 
employee remuneration range below.

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

300,000–310,000

310,000–320,000

320,000–330,000

330,000–340,000

340,000–350,000

360,000–370,000

370,000–380,000

400,000–410,000

410,000–420,000

420,000–430,000

440,000–450,000

450,000–460,000

30 June 2019 
Number of Employees

109 

72 

69 

77 

45 

39 

36

20

25

25

20

12

14

11

10

10

5

3

6

2

4 

2 

3 

3 

1

1 

3 

3 

1 

1

1

1

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EBOS Group 2019 Annual Report

105

Employee  
remuneration (NZ$)

470,000–480,000

490,000–500,000

510,000–520,000

560,000–570,000

570,000–580,000

610,000–620,000

650,000–660,000

660,000–670,000

680,000–690,000

720,000–730,000

760,000–770,000

900,000–910,000

910,000–920,000

920,000–930,000

1,160,000–1,170,000

1,230,000–1,240,000

1,830,000–1,840,000

1,920,000–1,930,000

3,910,000–3,920,000

Auditor

30 June 2019 
Number of Employees

1 

1 

2 

1 

2 

1 

1 

1 

1 

1 

1 

2 

1 

1 

1 

1 

1 

1 

1 

The Company’s Auditor, Deloitte Limited, 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

Sean Duggan 
CEO Animal Care and  
Consumer Brands

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,  
15 October 2019 at 2.00 pm, at  
Addington Raceway & Events Centre, 
75 Jack Hinton Drive, Addington, 
Christchurch, New Zealand.

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

Stuart McLauchlan 
Independent Director

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

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98

EBOS Group 2019 Annual Report

Symbion Brisbane pharmaceutical distribution facility

Our commitment remains as strong as 
ever to supporting better healthcare and 
animal care across Australia and  
New Zealand, and it’s this singular focus 
that enables our continued strength as  
a business.

Through substantial investments in  
our people and our capabilities across 
the entire supply chain, the Group is 
well positioned to achieve sustained 
success and capture new opportunities 
in constantly evolving markets,  
while ensuring we continue to deliver for 
our customers, each and every day.

www.ebosgroup.com