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EBOS GROUP 2O2O ANNUAL REPORT
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THROUGH THE FOUNDATIONS
WE HAVE BUILT IN A STRONG
AND DIVERSE BUSINESS,
EBOS HAS MAINTAINED ITS
STEADFAST COMMITMENT TO
STANDING BESIDE ITS CUSTOMERS
AND THE COMMUNITIES THEY
SERVE. AS WE TOGETHER STRIVE
TO OVERCOME UNPRECEDENTED
CHALLENGES, EBOS REMAINS
FOCUSSED ON DELIVERING HIGH
QUALITY HEALTHCARE AND ANIMAL
CARE ACROSS OUR MARKETS.
CONTENTS
FOREWORD
SUMMARY
OF RESULTS
CEO AND CHAIR
REPORT
EBOS GROUP
OVERVIEW
DISASTER
RELIEF
ENVIRONMENT, SOCIAL
AND GOVERNANCE
OUR RECONCILIATION
ACTION PLAN
CHARITY
AND COMMUNITY
BUSINESS
HIGHLIGHTS
OUR
BOARD
FINANCIAL
SUMMARY
FINANCIAL
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
DIRECTORS’ INTERESTS
AND DISCLOSURES
DIRECTORY
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EBOS GROUP 2O2O ANNUAL REPORT
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FOREWORD
EBOS, along with our customers
and the communities we serve, has
faced significant and unprecedented
challenges in 2020. As we together
strive to overcome these difficulties,
EBOS remains focussed on delivering
high quality healthcare and animal care
across our markets, underpinned by
the strong and diverse foundations our
business is built upon.
As New Zealanders and Australians have faced
these challenges with strength and resilience,
EBOS has stood firm in the face of supply chain
pressures never before encountered to meet
significantly increased demand for healthcare
and animal care products and services.
The dedication and tireless efforts of our more
than 3,700 employees and the strength of our
business, which has been strategically built over
time, has ensured we have continued to deliver in
a time of great need. Importantly, we have never
lost sight of our commitment to the exceptional
service standards we set for ourselves and that
are expected of us, no matter the environment or
difficulties we face.
As we look ahead to the next year and beyond,
we are buoyed by our shared response to these
challenges, reinforcing the integral role our
business plays in supporting the health and
wellbeing of New Zealanders and Australians.
EBOS remains in a strong financial position thanks
to a proven business strategy that is underpinned
by a commitment to all our stakeholders and the
communities in which we operate. This ensures that
we continue to deliver strong business outcomes
and leading products and services that are relied
upon by thousands of people every day.
AS WE LOOK AHEAD
TO THE NEXT YEAR
AND BEYOND, WE
ARE BUOYED BY OUR
SHARED RESPONSE TO
THESE CHALLENGES,
REINFORCING THE
INTEGRAL ROLE OUR
BUSINESS PLAYS IN
SUPPORTING THE HEALTH
AND WELLBEING OF
NEW ZEALANDERS AND
AUSTRALIANS.
Highlights
$8.8b
revenue
$28.9m
net investment in capital works
$44.6m
acquisition investment spend
Our shareholders
9,388
shareholders
77.5c
total dividends
per share (NZ)
Our business
3,700
employees
72% 28%
Australia
New Zealand
61 locations in New
Zealand and Australia
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORY 6
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EBOS GROUP 2O2O ANNUAL REPORT
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SUMMARY
OF RESULTS
Financial Highlights
$8.8 billion
revenue $162.5 million reported
NPAT
+ 26.5% increase
+ 18.0% increase
$296.6
+13.4% increase
million
underlying
EBITDA
Segment & divisional earnings overview
Data based on gross operating revenue, which comprises revenue less cost of sales and
write down of inventory.
100.6 cents earnings
per share
+12.0% increase
77.5 cents dividend
per share (NZ)
+8.4% increase
Reported Results
2020
2019
2018
2017
2016
8,766
2020
333.6
6,930
6,987
7,203
6,541
2019
2018
2017
2016
250.4
250.1
221.5
207.7
Animal
Care
13%
Healthcare
87%
49% Pharmacy
25% Institutional
8% Contract Logistics
5% Consumer Products
13% Animal Care
Five year revenue trend
For the year to 30 June ($millions)
Five year EBITDA trend
For the year to 30 June ($millions)
Revenue
Underlying EBITDA
Underlying Results
2020
2019
2018
2017
2016
168.3
144.4
137.3
130.9
117.0
2020
2019
2018
2017
2016
296.6
261.6
250.1
228.2
207.7
Five year NPAT trend
For the year to 30 June ($millions)
Five year EBITDA trend
For the year to 30 June ($millions)
All figures are in Australian dollars, unless otherwise stated.
80% Australia
20% New Zealand
85% Australia
15% New Zealand
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORY
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EBOS GROUP 2O2O ANNUAL REPORT
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It is pleasing to report on
the 2020 financial year
and with that a record
financial result for EBOS.
CEO & CHAIR
REPORT
John Cullity
Chief Executive Officer
Elizabeth Coutts
Chair
This year’s result demonstrates
the strength of our business with
both Healthcare and Animal Care
contributing to the significant
increase in revenue and earnings.
This reinforces our strategy
and underlines EBOS’ ongoing
commitment to operating a diverse
portfolio of high-performing
businesses.
HIGHLIGHTS
We have faced significant
challenges over the past year
with an ongoing global pandemic,
a significant measles outbreak
and natural disasters. In these
unprecedented times of uncertainty
and adversity, EBOS is fortunate
to be an industry leader of scale,
operating in markets where the
majority of our products and
services are essential items.
We have continued to deliver
for our customers and serve the
communities where we operate,
while also generating strong growth.
In driving this growth, EBOS has
remained focussed on maintaining
the high standards of service
that we pride ourselves on. This
commitment was highlighted as we
achieved significant growth and
substantially higher sales volumes
in Healthcare, while not sacrificing
on our commitment of quality
service to our loyal customers.
Our Community Pharmacy business
had a particularly strong year as it
benefited from the increased scale
of its operations as it commenced
supply to the Chemist Warehouse
pharmacy network. The business
performed exceptionally well in
managing these increased volumes,
particularly when having to deal
with the combined impacts of
the Australian bushfire crisis and
COVID-19.
While the Australian bushfires were
the focus for resources in December
and January, the onset of COVID-19,
in March, saw consumers in
both New Zealand and Australia
stockpile ethical and over-the-
counter medicines at levels never
before encountered. While this
unprecedented pandemic driven
demand did stretch our capabilities
for a short period, our Healthcare
business withstood the test.
This was largely thanks to the
significant investments in capital
expenditure to automate our
sites, increase capacity, improve
productivity and the efforts and
commitment of our employees.
Looking to the consumer facing
side of our Community Pharmacy
business, TerryWhite Chemmart
(TWC) increased its standing
as one of Australia’s largest
community pharmacy networks.
During the financial year, TWC’s
network grew by 26 pharmacies
and the network achieved notable
sales growth, driven by increased
brand awareness, customer
satisfaction and new partnerships
with Qantas Frequent Flyer, Bupa
and Afterpay. In addition to this,
TWC pharmacists administered
more than 550,000 influenza
vaccinations through an in-store
clinic program and provided much
needed front-line health care and
support to communities throughout
the COVID-19 pandemic. We
acknowledge and thank our
network partners and their
employees for their tireless efforts.
WE REMAIN
CONFIDENT IN
THE ABILITY
OF EBOS TO
EXPAND
EBOS’ Institutional Healthcare
business also performed strongly
with elevated demand from hospital
customers in preparedness for
COVID-19 patients. The recently
acquired LMT (“Life. Movement.
Technology.”) and National Surgical
(LMT) medical devices business
also contributed to the strong
performance despite a temporary
reduction in elective surgeries
from late March as hospitals took
measures to free up resources for
the potential influx of COVID-19
patients. Notwithstanding this,
LMT continued to service customers
performing trauma and emergency
surgery, having shown foresight in
forward ordering equipment and
supplies in anticipation of supply
chain issues arising from the
pandemic.
The benefits of EBOS’ ongoing
capital expenditure initiatives
were reinforced with our Contract
Logistics business continuing to
grow and attract new customers
thanks to recently opened facilities
in both Sydney and Auckland.
EBOS’ Animal Care and Consumer
Products businesses also
benefited from additional capital
investment with the opening of
a new distribution centre for our
Australian veterinary wholesale
business Lyppard, and a new,
shared distribution centre and
manufacturing plant in Auckland
for Consumer Products. It is these
investments that ensure our
businesses can continue to provide
an exceptional level of service to
customers.
Black Hawk continued to build
its position as a thought leader
in animal care and pet nutrition,
underpinned by the brand’s belief
that ‘Every Ingredient Matters’.
Marketing activity focussed on
delivering a campaign aligned to
this positioning and was supported
by community partnerships that
reinforced the brand’s strong
reputation with consumers across
Australia and New Zealand.
Red Seal marketing activity was
also increased, delivering a summer
campaign in Australia that included
event sponsorship, partnerships
with influencers and competitions
to drive customer engagement on
social media. In New Zealand, the
first part of its new global brand
positioning, ‘Incredible Inside’,
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was launched, highlighting Red
Seal’s ethos: ‘When you put
incredible in, you get incredible out’.
The launch included a television
campaign encouraging resilience
and care for each other during New
Zealand’s COVID-19 lock-down.
In June 2020, the 7th Community
Pharmacy Agreement (CPA) was
finalised, providing regulatory
certainty for our Healthcare
business in Australia with additional
investment in the Community
Service Obligation (CSO) Funding
Pool and a restructured wholesale
mark-up for Pharmaceutical
Benefits Scheme (PBS) medicines.
We are pleased that, through this
agreement, the Government has
recognised both the vital role of
retail pharmacy in meeting the
community’s health needs as well
as the critical role CSO wholesalers
play in ensuring the timely
distribution of medicines across
Australia. As Australia’s leading
pharmaceutical wholesaler, we are
very grateful to the Federal Minister
for Health, The Hon. Greg Hunt
MP, and his Department for their
recognition of the importance of
our industry to Australia’s medicine
supply chain and their careful
consideration of the many issues
leading to this agreement.
COVID-19 RESPONSE
In the early stages of the emerging
COVID-19 pandemic EBOS formed
a Pandemic Response Team
(PRT) consisting of the CEO and
his direct reports. The PRT has
the structures in place to rapidly
identify and evaluate issues, the
authority to make any decision
needed to minimise the risks related
to COVID-19 and provide guidance
and support to our employees.
Following the advice and direction
of the local health authorities
relevant to our New Zealand
and Australian locations, and
with specific consideration to
each individual operational site
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EBOS GROUP 2O2O ANNUAL REPORT
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CEO & Chair
Report continued ...
and office, the PRT approved the
implementation of a number of
measures as the situation developed.
These measures included the
immediate introduction of strict
travel restrictions for all employees,
banning external visitors to EBOS
offices, locking down all critical
warehouse sites with only employees
and essential contractors allowed on
site, and the introduction of additional
hygiene, social distancing, health
monitoring and cleaning practices
across all sites and offices.
Specific protocols were developed for
the management of a confirmed case
of COVID-19 at a site or office, and
back-up plans were developed should
a senior executive of EBOS be unable
to work due to COVID-19. Regular
and agile internal communications
for all employees updating them
on developments, issuing personal
safety and protection messages
and providing advice around mental
health and wellbeing for both
employees and their families were
also implemented.
With the introduction of working from
home (WFH) we ensured all those
impacted had the resources and
equipment required for their home
office and we provided support to
employees as to how to manage
their daily working life at home as
best as possible. Our IT team did
an exceptional job in managing the
WFH transition in a very short time.
In New Zealand and Australia, many
businesses, large and small, have
been faced with very challenging
decisions regarding their workforce.
We are fortunate that we operate
in sectors that have so far proven
resilient and we have not been faced
with difficult decisions regarding
workforce reductions.
COMMUNITY
EBOS is committed to ensuring its
behaviour and actions have a positive
impact on the communities where it
operates.
With the significant challenges
facing New Zealand and
Australia, EBOS has been active
in supporting communities locally
and abroad as they dealt with
major crises. These challenges
continue with the worldwide fight
against COVID-19.
During the year, EBOS
commenced two major projects
that underpin our ongoing
commitment to making a
difference to our communities.
In June 2020, we received
endorsement from Reconciliation
Australia for our first
Reconciliation Action Plan (RAP)
as we seek to embed greater
organisational understanding
and awareness of Australia’s First
Peoples. This RAP represents
the commencement of a journey
for EBOS, as we seek to forge
deeper connections with these
communities through meaningful
actions that contribute towards
creating a reconciled Australia.
We thank Reconciliation Australia
for its support throughout this
process and we look forward
to implementing the initiatives
outlined in our RAP over the next
12 months and beyond.
In 2020, EBOS also commenced
an Environmental, Social and
Governance (ESG) program.
The ESG program will serve as
a framework for responsible
organisational practices that
ensure EBOS maintains its social
licence to operate. This program
formalises many of the measures
already in place enabling more
structured activity that can be
accurately reported on to ensure
that we continue to meet our
organisational objectives to be a
responsible corporate leader.
These activities came on top
of our ongoing commitment to
support a variety of not-for-profit
and community initiatives through
our Match Funding program
or through specific support for
events such as the Australian
bushfires.
OUR EMPLOYEES
As previously highlighted, our
response to the COVID-19
pandemic has been extensive.
While we remained fully
committed to serving our
customers as effectively as
possible in the face of significant
challenges, our primary objective
throughout has been the wellbeing
of our employees.
In our most recent Employee
Engagement Survey, we were
pleased to see strong results in
the areas of pride in working for
EBOS, safety in the workplace
and care for the wellbeing of
employees. This year we also
asked for more specific feedback
on the senior leadership team
and the direction of the business
with 78% (which is 17% above
benchmark) of our employees
having a high degree of
confidence in the leadership and
direction of EBOS. It is rewarding
to have this endorsement in the
direction we are taking.
The challenges of 2020 have
brought out the very best in
our employees, and the Board
and executive could not be
prouder of the unwavering
commitment displayed in the face
of exceptional circumstances
and often restrictive conditions.
Importantly, the work of our
employees over the past 12
months has further highlighted
the critical role we play as part of
the healthcare systems in both
New Zealand and Australia.
We know many of our employees
showed great commitment
through their hard work in our
distribution centres away from
family and friends, while others
had to adjust to the unique
challenges of working from
home. To each and every one of
them, we would like to convey
our sincere appreciation for their
amazing commitment and drive
to get the job done and showcase
the strength of this great
organisation.
DIVIDEND
The Directors have announced a
final dividend of NZ 40.0 cents per
share, which takes the full-year
dividends to NZ 77.5 cents per
share, an increase of 8.4% on the
prior year.
THE FUTURE
We are pleased with our record
result in 2020 and, in line with our
strategy, we will continue to look
for investment opportunities that
will contribute to our ongoing
expansion.
While there will continue to be
uncertainty in the world for some
time, our robust business gives
us confidence and appetite
to continue to take sensible
commercial risks. In many
ways, the current environment
will provide us with significant
opportunities to grow both
organically and by acquisition.
We look forward to the challenge
and thank shareholders for their
ongoing support and trust in the
Board, executive and employees
of EBOS.
John Cullity
CEO
Elizabeth Coutts
Chair
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EBOS GROUP 2O2O ANNUAL REPORT
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INSPIRED BY
EXPERIENCE AND
IN THE PURSUIT OF
GREATER DIVERSITY,
MRS COUTTS TURNED
HER FOCUS TO BECOMING
A PROFESSIONAL
DIRECTOR
CHAIR PROFILE
Elizabeth Coutts was
appointed as Chair of the
Board on 16 October 2019
following the retirement
of long-serving Chair and
former EBOS Managing
Director and Chief
Executive Officer,
Mark Waller.
Mrs Coutts is a highly
experienced director who has
been a member of the EBOS
Board since July 2003 and is
EBOS’ first female Chair.
and sectors, including with
leading organisations such
as Air New Zealand, Ports of
Auckland, Sport NZ and Oceania
Healthcare Limited.
After growing up on a dairy farm
in Matamata on New Zealand’s
North Island, Mrs Coutts has
forged a standout professional
career that included her being
appointed as the CEO of Caxton
Group at age 31, which had been
one of New Zealand’s largest
privately owned companies.
In her time at Caxton Group,
Mrs Coutts was responsible
for leading the company’s
operations across global
markets, including Australia,
Asia and the US. Through her
success in this role, Mrs Coutts
was appointed to her first
directorship with Trust Bank
New Zealand at age 34.
Inspired by the experience and in
the pursuit of greater diversity,
Mrs Coutts turned her focus
to becoming a professional
director. Over more than two
decades, she has held a variety
of board positions across a
diverse range of industries
Mrs Coutts has a wealth
of experience working in
complex and challenging
environments and understands
how to navigate the breadth of
circumstances and challenges
that an organisation can
encounter. She places a strong
focus on risk management,
relationships and finances
and firmly believes that an
organisation’s success is
underpinned by good people
who are backed up by robust
systems and processes.
In 2016, Mrs Coutts was
recognised for her services
to governance in the Queen’s
Birthday Honours when she was
appointed as an Officer of the
New Zealand Order of Merit.
Mrs Coutts is also a Chartered
Fellow of Chartered Accountants
Australia and New Zealand and a
Chartered Fellow and immediate
past President of the Institute of
Directors.
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EBOS GROUP 2O2O ANNUAL REPORT
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EBOS GROUP
OVERVIEW
Healthcare
Animal Care
Community Pharmacy
Institutional Healthcare
Contract Logistics
Consumer Products
Animal Care
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORY 16
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EBOS GROUP 2O2O ANNUAL REPORT
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DISASTER RELIEF
COVID-19
Like many businesses across Australia and New Zealand, EBOS felt the significant
impacts of COVID-19. New challenges have emerged, bringing about changes to
our daily lives, the ways in which we work and the demands placed upon us as we
all work to overcome this global pandemic.
Importantly, we enacted plans and implemented
measures focussed heavily on ensuring the
health and safety of our employees during the
pandemic, as detailed on the page opposite.
On the frontline of healthcare, our pharmacist
partners were instrumental in the successful
COVID-19 response across both Australia and
New Zealand. Their resilience and commitment
to the health of their communities cannot be
overstated and they demonstrated an incredible
ability to adapt to changing circumstances.
Numerous examples of innovation have surfaced
from across EBOS, including TWC pharmacists
in the rural South Australian community of
Naracoorte who provided a home delivery
service for the elderly and raised money to
purchase essential products for those unable to
leave their homes.
While this period has not been without its
complexities, in many ways, EBOS can consider
itself fortunate. EBOS’ wholesale, distribution
and retail healthcare businesses are essential
services, playing an integral role in maintaining
the continued supply of medicines and healthcare
products to communities across Australia and
New Zealand. This ensured our Healthcare
business remained open and operational
throughout the government-imposed shutdowns,
continuing to support the health and wellbeing
of the citizens across both countries. During
March and April, Symbion, along with the other
members of the National Pharmaceutical Services
Association (NPSA), distributed more than 70
million PBS medicines across Australia. In March,
the total number of medicines distributed were up
by 70% when compared with the same time in the
previous year.
However, throughout this crisis, we have never
wavered in our commitment to our customers
and the communities we serve. Our workforce of
more than 3,700 employees has demonstrated
strength and resilience in responding to these
challenges to ensure that we continued to deliver
the healthcare, animal care and consumer
products that New Zealanders and Australians
rely upon every day.
COVID-19 HEALTH AND SAFETY
General
• the immediate introduction of strict travel
restrictions for all employees;
• banning external visitors to all EBOS offices
and critical warehouse sites;
• introduction of additional hygiene, health
monitoring, social distancing, temperature
checking and cleaning practices across all
sites and offices;
• specific protocols were developed for
each business unit for the management
of a confirmed case of COVID-19 at a site
or office;
• substitution plans were developed should a
senior executive of EBOS be unable to work
due to COVID-19;
• regular and agile internal communications
for all employees updating them on related
developments;
• regular reporting of suspected or confirmed
cases to the Pandemic Response Team in
relation to symptoms, medical assessment
and testing;
• thermal cameras installed at specific sites to
monitor body temperature of all personnel
prior to entering the workplace;
• communications displayed on noticeboards
and regular warehouse floor talks on
personal hygiene, physical distancing and
other safety measures;
• provision of disposable masks and hand
sanitiser to use away from work; and
• poster campaign on ‘Doing our bit to stop
the spread’.
Working from Home (WFH)
• all employees provided resources and
equipment required for their home office;
• support to employees on how to manage
their daily working life at home;
• HR and IT team support to assist all
employees in the WFH transition;
• support for managers through e-learn
on managing Distributed Teams;
• mental health and wellbeing via online
internal wellness portal; and
• personal safety and protection messages
• engagement initiatives such as ‘Activate
and advice on mental health and wellbeing
for both employees and their families were
also implemented;
August’ a step challenge for all employees
to participate in, a Resilience Project
webinar, Pilates and mindfulness sessions.
• free flu vaccinations available for all
employees; and
• employee assistance program lines
available 24/7.
Critical Sites and Distribution Centres
• locking down all critical warehouse sites
with only employees and essential
contractors allowed on site;
• Personal Protective Equipment (PPE)
was issued to all employees;
• adjustment of shifts where possible to
reduce the risk of cross-infection;
• all persons entering the site to comply
with the health disclosure statement prior
to entry;
Returning to Office
• risk assessment of all sites conducted prior
to employees returning to the workplace;
• consultation with managers and teams on
safe return to work plans for those returning
to non-critical sites;
• information provided to employees on safety
measures in regard to personal hygiene,
physical distancing, health monitoring
and working teams to minimise the risk of
infection in office locations; and
• maintaining teams WFH where possible
especially in high-risk areas.
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EBOS GROUP 2O2O ANNUAL REPORT
19
DISASTER RELIEF
NEW ZEALAND
VOLCANIC ERUPTION AND
MEASLES OUTBREAK
AUSTRALIAN BUSHFIRES
At the height of the outbreak
in September and October,
Healthcare Logistics and
ProPharma processed more than
114,000 doses of the measles
vaccine. In addition, our teams
worked in conjunction with
the National Crisis Centre to
coordinate the daily supply of
the vaccine to priority groups.
In Samoa, EBOS International
helped quell the spread of measles
by assisting in the delivery of
ventilators to a local hospital and
supported the medical laboratory
at the Tupua Tamasese Meaole
Hospital by expediting deliveries to
the laboratory.
In late 2019 and through
the first two months of
this year, Australia was
devastated by a major
bushfire emergency
that significantly
impacted almost every
state and territory.
The fires burned a total
of 18.6 million hectares,
destroyed 3,500 homes
and resulted in the
tragic loss of at least 34
lives and an estimated
one billion wildlife.
In December 2019,
the volcanic island
Whakaari (White
Island) off the coast of
New Zealand erupted,
tragically claiming the
lives of 21 people and
injuring 26 others.
As a key partner in the New
Zealand healthcare supply chain,
EBOS’ hospital distribution
business Onelink had a critical
role to play in responding to
the Whakaari eruption. Onelink
services the main hospital where
patients were admitted and
worked in conjunction with local
health authorities to provide
emergency specialised burns
dressings and theatre supplies
required to treat the injured.
In an incredibly high-pressure
situation, Onelink’s teamwork,
experience and commitment
shone through, helping to support
a coordinated response to care for
the injured.
Just a few months prior to the
Whakaari eruption, EBOS was
called on to support a measles
outbreak in New Zealand that also
affected communities in Samoa.
In New Zealand, there were more
than 2,000 confirmed cases during
2019, with EBOS playing a key
role in assisting the NZ Ministry of
Health with the supply of measles
vaccinations to help combat the
outbreak.
Throughout the crisis, EBOS
played a critical role in supporting
communities across Australia as
they battled these fires. Our teams
coordinated with federal, state
and local authorities to provide
vital medicines and emergency
healthcare products to the worst
impacted areas. We also donated
supplies to people in need,
including those caring for the large
number of injured animals.
EBOS also provided significant
financial assistance for recovery
efforts in addition to donating
products including hydration
tablets, masks, eye drops, ice
bricks, eskies and sanitation
products for those in need. This
financial aid included donations
to BlazeAid, which focuses on
replacing burnt fencing; injured
wildlife care organisation WIRES;
and support for independent
pharmacies impacted by the fires.
Further, TerryWhite Chemmart,
together with its network partners
and EBOS, made a significant
donation to the Australian Red
Cross Bushfire Appeal.
For our healthcare distribution
businesses, road closures and
constantly changing conditions
presented significant challenges in
delivering medicines into affected
communities. In some cases,
this required the redirection of
distribution routes by more than
500 kilometres around the closures
and staging of stock in refrigerated
trailers to ensure deliveries could
be made during the small windows
when roads were open.
EBOS’ Animal Care business also
had a key role to play in ensuring
the continued supply of products
to support the care of wildlife
injured in the bushfires. Working
with support agencies, including
the RSPCA and Animal Aid,
EBOS coordinated the delivery
of items such as food, veterinarian
products, crates, bowls, beds
and collars into fire-affected
communities. In addition,
EBOS donated more than
$100,000 worth of goods to
support animals and pet owners
impacted by the fires.
The support EBOS was able to
provide communities impacted
by the fires would not have been
possible without the dedication
of our teams across Australia,
who worked as one in response
to ever changing conditions
and challenges to support our
customers during this time.
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EBOS GROUP 2O2O ANNUAL REPORT
21
ENVIRONMENT, SOCIAL
AND GOVERNANCE
As the largest healthcare
and animal care
company in New Zealand
and Australia, EBOS
acknowledges that
we have significant
responsibilities as a
leading corporate citizen
to manage our business
in a manner that reflects
the expectations of our
communities.
In the 2019-20 financial year,
EBOS, under the guidance
of the Board and Executive
Leadership Team, commenced
the implementation of a formal
Environmental, Social and
Governance (ESG) program
to set out the organisation’s
standards for responsible
corporate practice and formalise
the measures that will ensure
we maintain our social licence to
operate.
More so than at any time in the
past, corporate organisations
need to be acutely aware of the
responsibilities they have to
the community. Equally, there
is a growing expectation that
organisations will adopt a formal
approach to delivering and
managing these responsibilities.
EBOS already undertakes a
wide variety of initiatives that
fall within the ESG framework;
however, the purpose of
undertaking a formal, structured
ESG program is to ensure all
of this activity is consolidated
and can be accurately reported
on. This will help ensure our
approach remains aligned to
the objectives set out in the
framework and that we continue
to meet the expectations of our
stakeholders in being responsible
corporate citizens.
Under the ESG framework,
the Board sets out three key
areas of focus (opposite).
The ESG framework will be
guided by an ESG Steering
Committee, which will work to
identify and assess our current
performance across these areas
and set out recommended
targets that are measurable
and achievable.
ENVIRONMENT
EBOS’ performance as a steward of nature.
• Furthering our relationship with Greenfleet to offset EBOS’ carbon footprint.
• Development of a Climate Statement.
> Increasing the use of renewable energy.
> Lowering our carbon footprint.
> Improving waste management.
> More efficient water usage.
SOCIAL
Manage relationships with stakeholders and the community.
• Promoting health and wellbeing among our employees.
• Furthering our commitment to gender equality and employee diversity.
• Fostering positive culture and engagement among our employees.
• Implementation of our Australian Reconciliation Action Plan (RAP).
• Supporting community and selected charitable causes.
• Growing customer relationships.
GOVERNANCE
How our company is governed.
• Executive and non-executive employee remuneration.
• Fostering diversity on the Board.
• Operating a profitable business.
• Responsible procurement strategies and processes.
• Maintaining adherence to modern slavery and ethical trade laws.
• Reporting integrity.
• Ensuring legal compliance.
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EBOS GROUP 2O2O ANNUAL REPORT
23
EBOS LAUNCHES
AUSTRALIAN
RECONCILIATION
ACTION PLAN
In 2020, EBOS was
pleased to launch its
first Reconciliation
Action Plan (RAP) as
part of our commitment
to reconciliation
between Aboriginal
and Torres Strait
Islander peoples and
the broader Australian
population.
Shooting Star by
Gavin Wanganeen
In line with this vision, EBOS has set
out a series of key objectives for
the RAP, which are to:
• Build organisational awareness
of Aboriginal and Torres Strait
Islander peoples, cultures,
histories, knowledge, rights and
achievements.
• Support career opportunities
for Aboriginal and Torres
Strait Islander peoples in our
businesses.
• Build relationships with Aboriginal
and Torres Strait Islander peoples,
communities and organisations to
support our reconciliation journey.
• Recognise dates of significance
relating to Aboriginal and
Torres Strait Islander peoples
and participate and celebrate
National Aboriginal and Islander
Day Observance Committee
(NAIDOC) Week to promote
awareness of histories and
communities.
• Establish and maintain a RAP
Working Group to implement the
initiatives outlined in our RAP.
EBOS is excited to commence
this journey and has developed a
clear plan to ensure reconciliation,
cultural understanding and
equality becomes more deeply
embedded in our business as we
work towards a more reconciled
Australia.
For EBOS, reconciliation is a
journey – one of understanding
and embracing Aboriginal and
Torres Strait Islander peoples and
their cultures and forging deeper
connections between Indigenous
and non-Indigenous Australians.
In developing and implementing
the RAP, EBOS consulted closely
with Reconciliation Australia, to
develop our own unique principles
and vision for reconciliation. EBOS
was also pleased to engage with
former Australian Rules Football
star and celebrated Indigenous
artist Gavin Wanganeen to bring
this vision to life through his
colourful and deeply meaningful
artwork.
Gavin’s artwork, entitled Shooting
Star, tells a unique story of looking
down through the stars and the
Milky Way to Country or home. In
this instance, it is the view down to
EBOS and a recognition of EBOS’
work in the healthcare and animal
care industries.
Beyond the artwork, EBOS has set
out a clear vision for reconciliation,
which is:
• To create a society that is fair,
equal and just for all Australians,
where relationships are
strengthened between Aboriginal
and Torres Strait Islanders and
non-Indigenous peoples, for the
benefit of all Australians.
• We seek to understand and
embrace reconciliation at
EBOS and develop a greater
understanding of Aboriginal and
Torres Strait Islander peoples and
their cultures.
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EBOS GROUP 2O2O ANNUAL REPORT
25
MASTERPET HAS BEEN
A PROUD SUPPORTER
OF BACKTRACK AND IS
HONOURED TO BE PART
OF THE MISSION TO
HELP YOUNG AUSSIES
WHO HAVE LOST THEIR
WAY IN LIFE
CHARITY AND
COMMUNITY
Community is central to everything we do at EBOS – it is at the heart of our business
and underlines the critical role we play in improving the health and wellbeing of people
and animals across New Zealand and Australia.
As part of this, EBOS maintains a deep commitment
to making a difference in the communities where
we operate. Through various charitable initiatives
and engagement with not-for-profits and local
organisations, EBOS seeks to give back to the
communities that continue to support us, every day.
In 2019-20, EBOS supported 23 charities through the
Match-Funding program and 28 charities in total. Some
of the key highlights are detailed below.
BACKTRACK BOUNDS AHEAD ON MISSION TO HELP
AUSSIE YOUTH
Since being founded in 2006, in Bernie Shakeshaft’s
shed in the regional New South Wales town of Armidale,
BackTrack Youth Works has grown to become
recognised as one of Australia’s most successful
support programs for disadvantaged youth.
Working with kids who are at a real risk of falling
through the cracks of society, BackTrack aims to
keep them alive, out of jail and enable them to chase
their hopes and dreams. Under Bernie’s leadership
as founder and CEO, BackTrack has forged a new
beginning for more than 1,000 young people. The
program has achieved incredible success, with 87%
of participants gaining either full-time employment
or going on to engage in training and further
education, while the juvenile crime rates in Armidale
have dropped by 35%.
Since its early days, when the program involved
at-risk youth in Armidale being given a dog to care for
in order to instil in them principles of responsibility and
a sense of purpose, BackTrack has grown significantly.
The organisation has now expanded to offer programs
in five regional towns across New South Wales that
provide training, education and work experience
designed to build confidence and develop real-world
skills that translate to meaningful lives and long-term
employment. In 2020, these efforts culminated in Bernie
being named as Australia’s Local Hero as part of the
Australian of the Year Awards.
However, while the organisation has developed
significantly, the core mission remains the same and
the dogs are as important as ever.
Since 2014, Masterpet has been a proud supporter
of BackTrack and is honoured to be part of the
mission to help young Aussies who have lost their
way in life through a shared love of dogs and the life
changing benefits and unconditional love they provide.
Masterpet continues to feed the 36-strong pack of
BackTrack dogs with premium Black Hawk food at no
cost and covers all the vet bills for their health checks.
“People that own dogs and whose lives are wrapped
up around them understand what we do better than
most,” Bernie said.
“I think these kind of partnerships shine a strong and
positive light on two organisations who are working
hand in hand in Australia to provide solutions for
young people who are doing it tough, while supporting
wonderful working dogs in the process”.
SUPPORTING MALPA FOR SIX YEARS
For thousands of years the Ngangkari – the traditional
Aboriginal healers in Central Australia – have passed
on their skills to young children. The idea of children
being ‘doctors’ is deeply embedded in Indigenous
culture and life. Now this idea is getting a new injection
of life with the MALPA Young Doctors’ project.
The project employs respected community members
to teach both the traditional and contemporary ways
of creating healthy communities. Grade four Aboriginal
and non-Aboriginal students participate in the 15-week
project where they are empowered to become health
leaders to their younger peers and their community.
This helps create stronger communities and even
opens career pathways in health.
Since 2014, EBOS has provided over 1,400 health packs
which are presented to students during the project
graduation ceremonies. The packs include essential
health items such as antiseptic creams, cotton buds,
hand sanitiser, toothbrushes and toothpaste, tissues,
bandaids, tweezers, fungal cream, eye drops, vitamins,
sunscreen and other items.
“When the kids are handed the health packs at
graduation they are just ecstatic”, said Don Palmer,
MALPA CEO.
“To be equipped with health supplies that they can take
home to their families and communities is so valuable”.
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The MAPLA Young Doctors’ project was
founded to address the vast inequality
in health between Aboriginal and non-
Aboriginal Australians.
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EBOS GROUP 2O2O ANNUAL REPORT
27
BUSINESS
HIGHLIGHTS
Healthcare
The 2020 financial year was a period
of strong growth for EBOS’ Healthcare
business. Highlights throughout the period
included increased wholesale revenues,
reignited growth of our TerryWhite
Chemmart pharmacy network, EBOS’
expansion into the medical device
sector and further developments in our
Healthcare Logistics and Institutional
Healthcare businesses.
EBOS continues to build on our commitment
to delivering leading healthcare solutions to
communities across New Zealand and Australia.
Our commitment is underpinned by a proven strategy
of investing for growth, pursuing targeted acquisitions
in core and adjacent markets, and disciplined capital
management.
The year also saw the business face significant
challenges, with COVID-19 stretching our Healthcare
businesses to the limit. However, with the investments
we have made in technology and infrastructure
over the past decade, the business was able to not
only withstand the added pressure, but also use the
experience to improve on processes and to be more
agile. Ultimately, we learned from gaps that may have
appeared during the peak of the pandemic, which at
times saw order volumes up 70% year on year. Looking
ahead, we are confident that we can meet the needs
of our customers, no matter the situation we face.
With the commencement of supply to the Chemist
Warehouse pharmacy network in July 2019, EBOS
recorded substantially higher sales volumes within our
Australian Community Pharmacy wholesale business.
This additional volume was integrated seamlessly
within our business over the first six months of the
financial year, ensuring we were well positioned to
respond to the significant supply chain pressures
created by the Australian bushfire crisis and COVID-19.
In total, EBOS distributed more than 342 million
medicines and healthcare products to customers
across Australia and New Zealand in the year ended
30 June 2020.
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June 2020 also marked a significant milestone for
EBOS’ wholesale distribution business, Symbion,
with the completion of negotiations for the 7th
Community Pharmacy Agreement (CPA). Symbion,
together with members of the NPSA, was actively
engaged in negotiations with the Department of
Health and the Federal Health Minister in respect of
a successful outcome. The new CPA, which runs until
July 2025, provides EBOS’ wholesale business with
additional certainty due to a $92 million increase in
Community Service Obligation (CSO) funding.
Throughout 2020, EBOS was integral in responding
to significant early-season demand for flu
vaccinations through our Healthcare Logistics, EBOS
Healthcare and Symbion businesses. Working closely
with health authorities in New Zealand and Australia,
EBOS distributed nearly 4 million vaccine doses at
the time of reporting, compared to 2.8 million in the
2019 season.
EXPANSION INTO ANZ’S MEDICAL DEVICE MARKET
During the 2020 financial year, EBOS announced
a significant addition to the business with the
acquisition of LMT (“Life. Movement. Technology.”)
and National Surgical, which marked EBOS’ entry
into the Australian and New Zealand medical
devices sector.
The acquisition is an initial entry point for EBOS into
the $8 billion sector and provides a strong platform
for growth in a new pillar of our Healthcare portfolio.
Over the last 25 years, LMT and National Surgical
have built a strong presence in Australia and New
Zealand, providing products and services to the
Orthopaedic, Spine, Neuro, ENT, Plastics and, most
recently, the Sports Medicine community.
Medical device distribution presents a natural
adjacency to EBOS’ existing capabilities and offers
strong economic fundamentals and promising
organic growth rates. Consistent with our proven
strategy, EBOS Devices will continue to grow its
presence through further bolt-on acquisitions.
TERRYWHITE CHEMMART SURGES AHEAD
TerryWhite Chemmart (TWC) continued to build
momentum as Australia’s leading professional
service pharmacy network during the 2020 financial
year. EBOS delivered strong like-for-like sales growth
at 4%, dispensary sales were up 6% and the network
grew by a further 26 pharmacies during the period.
The continued focus on delivering a differentiated
brand position and ‘Real Chemistry’ to Australian
community pharmacy resulted in improvements in
brand awareness and greater customer satisfaction.
This has seen TWC voted as the #1 pharmacy for
customer satisfaction by Roy Morgan in each month
since November 2019.
The business also increased focus on digital health
technology and innovation. New downloads of TWC’s
Health App increased by 246% and the introduction
of a click-and-collect service through the app saw
average weekly orders double in the space of a
month. In June 2020, the company also launched
an improved ecommerce solution, providing more
convenience and strengthening the customer
experience.
TWC established key partnerships during the period
with Drive Yello and Qantas. The partnership with
delivery provider Drive Yello boosted home delivery
capacity across the TWC store network, while the
major partnership with Qantas Frequent Flyer offers
customers the ability to earn Qantas Points for
purchases made across TWC’s expansive network
of community pharmacies.
In 2020, TWC also reinforced its position as the
leading pharmacy provider of flu vaccinations,
administering over 575,000 vaccinations. Central
to the TWC brand proposition is a continuing
commitment to industry leading pharmacist
professional development, which saw 400
pharmacists attend the TWC Masterclass in-house
event, supported further through full-year online
development and resources.
EBOS CONTINUES TO BUILD
ON OUR COMMITMENT
TO DELIVERING LEADING
HEALTHCARE SOLUTIONS
TO COMMUNITIES ACROSS
NEW ZEALAND AND
AUSTRALIA.
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EBOS GROUP 2O2O ANNUAL REPORT
29
BUSINESS
HIGHLIGHTS
of its kind in the world, featuring on
more than 10,000 product packages
in over 116 countries. Red Seal aims
to have at least 90% of its range of
teas UTZ-certified by 2024.
EBOS also opened a new
shared distribution centre and
manufacturing plant in Auckland for
Consumer Products, underlining our
commitment to continuing to invest
in our core operations.
The 10,000m2 facility houses Red
Seal toothpaste manufacturing
operations and provides significant
storage capacity for our Endeavour
Consumer Health business. The site
represents the consolidation of six
separate New Zealand locations,
enabling more streamlined stock
management and increased delivery
efficiencies for our customers. It is as
a result of these investments that we
continue to provide an exceptional
level of service to our customers and
keep up with demand, even under
testing conditions.
EBOS also expanded its global
footprint with the opening of a
shared Endeavour Consumer Health
and Animal Care office in Shanghai,
China. This office will support both
businesses’ operations, servicing
their growing customer bases and
positioning EBOS well for increased
scale and business development
opportunities in the region.
ENDEAVOUR CONSUMER HEALTH
POSITIONS FOR GROWTH
This financial year focussed on
product and brand development,
providing the business with a
springboard for future growth
across New Zealand, Australian and
Asian markets.
In response to consumer demand,
Red Seal developed and launched
its first range of whitening
toothpastes. The brand continued
to reinforce its presence in the
Australian grocery market with
the entry of this new product into
Woolworths supermarkets in March
2020. The year also saw the ongoing
success of the Red Seal Hot and
Cold Brew tea range, with the cold
brew, in particular, filling a growing
market niche.
Supporting the brand’s presence
in Australian grocery, Red Seal
partnered with the Moonlight
Cinema to deliver a summer
experiential campaign that included
on site sampling competitions and
partnerships with key influencers
to drive customer engagement on
social media.
In New Zealand, Red Seal launched
the ‘Incredible Inside’ marketing
campaign underlining the brand’s
revamped ethos; ‘When you put
incredible in, you get incredible
out’. The campaign was aired on
New Zealand television and was
supported by a strong online
presence, including a website
dedicated to providing health tips
during COVID-19.
During the year, Red Seal also
obtained certification from global
sustainability program UTZ for
certification of its range of teas.
UTZ promotes sustainable farming
practices of coffee, cocoa, tea and
hazelnuts and is the largest program
BLACK HAWK
CONTINUES TO
DELIVER MARKETING
ACTIVITY DESIGNED TO
GENERATE EMOTIONAL
CONNECTIONS
BETWEEN PETS AND
THEIR OWNERS
DRIVING GROWTH IN ANIMAL CARE
EBOS’ Animal Care business
reinforced strong relationships in
domestic and global consumer
markets throughout the year,
building upon our commitment
to delivering trusted animal care
products to pet owners across
New Zealand, Australia and Asia.
The commencement of
operations at Lyppard’s new
veterinary wholesale facility
in Sydney, continued growth
of Black Hawk in New Zealand
and Australia, growth of Vitapet
treats sales in grocery and an
increase in Lyppard’s market
share were among the key
highlights across the business
during the past 12 months.
Investment in marketing activity
has seen the Black Hawk brand
continue to gain respect as a
thought leader in the space of
animal care and pet nutrition.
Reinforcing the brand’s mandate
that ‘Every Ingredient Matters’
was central to the brand’s
marketing activity through the
2020 financial year.
The brand enlisted Australian
health and nutrition social
figure, Luke Hines, to provide
expert advice in conjunction with
Black Hawk vet Dr Lee to help
customers further understand
the importance of a healthy
diet based on real ingredients
and the overall wellness of our
animals. Black Hawk’s new
marketing campaign focussed
on the emotional connection
between pets and their owners.
The beautifully shot television
commercial resonated with
consumers across Australia and
New Zealand and was supported
by a strong digital and social
media presence.
The campaign was reinforced
with community partnerships
including Black Hawk sponsoring
the Moonlight Cinema, the
country’s largest outdoor
cinema experience, as well as the
brand’s longer term sponsorship
activations at the Royal
Melbourne and Sydney Easter
Shows and the 4 Paws Marathon.
During the year, Black Hawk also
launched its first wet cat food,
offering cat owners Australian-
made, grain-free options that
feature top quality natural
ingredients. The range includes
six new products, covering all life
stages including kitten, adult and
mature cats, as well as a variety
of meat protein options.
In August 2019, Black Hawk
officially launched in Thailand
as the brand continued its
expansion into an increasing
number of Asian consumer
markets.
Lyppard’s new 3,500m2 facility
in New South Wales commenced
operations at the end of 2019.
The new site provides the
business with significantly
increased scale compared to its
former site and is ideally located
in a strategic transport corridor.
Under recent supply chain
pressures, this helped ensure
the continual supply of animal
medicine to veterinarians across
the state.
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EBOS GROUP 2O2O ANNUAL REPORT
31
1.
2.
3.
4.
5.
6.
OUR BOARD
1. ELIZABETH COUTTS,
INDEPENDENT CHAIR
ONZM, BMS, FCA
Elizabeth Coutts was appointed
to the EBOS Group Limited Board
in July 2003. She is Chairman of
the Remuneration Committee and
a member of the Audit and Risk
Committee. She is Chair of Ports of
Auckland Ltd, Oceania Healthcare
Ltd and Skellerup Holdings Limited
and Director of EBOS Group
subsidiaries in New Zealand 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, the
Yellow Group of Companies
and Tennis Auckland Region
Incorporated, 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.
2. NICK DOWLING,
INDEPENDENT DIRECTOR
BCA (Hons); BA
Nick was appointed to the EBOS
Group Limited Board in February
2020. Nick is currently the Chief
Operating Officer at Balmoral
Australia, a family office engaged
in the tourism, wine, maritime
services and investment sectors.
Prior to Balmoral Australia, Mr
Dowling was Managing Director
and CEO, Australia and New
Zealand and at New Hope
Group Co. Ltd, a private Beijing
based corporation engaged in
agribusiness and food, real estate
and infrastructure, chemicals,
finance and investment. He has
also held senior roles at UBS,
Goldman Sachs, JP Morgan and
Morgan Stanley. He currently
sits on the Advisory Board of
AEH Group and is a director of
a number of Balmoral Australia
companies.
3. 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 a 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 and Donaco
International Limited.
6. 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 MCLAUCHLAN,
INDEPENDENT DIRECTOR
Stuart was appointed to the
EBOS Group Limited Board in
July 2019. He is Chairman of the
Audit and Risk Committee and
a member of the Remuneration
Committee. 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 Institute of
Chartered Accountants Australia
and New Zealand. He is currently
chairman of Scott Technology
Ltd, ADInstruments Ltd and UDC
Finance Ltd. He is also a director
of Argosy Properties Ltd as well as
a number of private companies.
He is also a governor of the New
Zealand Sports Hall of Fame, and
Member, Marsh New Zealand
Advisory Board. He was formerly a
director of Ngai Tahu Tourism Ltd.
5. SARAH OTTREY,
INDEPENDENT DIRECTOR
BCOM
Sarah was appointed to the
EBOS Group Limited Board in
September 2006. She is a member
of the Remuneration Committee.
Sarah is Chair of Whitestone
Cheese Limited and a director of
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.
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32
EBOS GROUP 2O2O ANNUAL REPORT
33
FINANCIAL SUMMARY
EBOS has delivered
record revenue and
earnings as well as an
excellent operating
cash flow result for
the year.
Group revenue increased to $8.8
billion, up 26.5% on the prior year,
benefiting from growth across all of
EBOS’ businesses. The increase in
revenue for the year was primarily
attributable to significantly higher
sales volumes in our Community
Pharmacy and Institutional Healthcare
businesses.
While COVID-19 did cause a period of
unprecedented demand during March
2020, the overall financial impact of
the pandemic was broadly neutral for
FY20.
During the year, EBOS continued to
invest in both organic and inorganic
growth opportunities with a total
investment of $73.5 million for the year.
This spend included a beachhead
acquisition into the Australasian
Medical Devices market and a new
facility for our Consumer Products
distribution and manufacturing
operations in New Zealand.
Underlying Earnings Before Net
Finance Costs, Tax, Depreciation and
Amortisation (EBITDA) of $296.6 million
grew by $34.9 million representing an
increase of 13.4%. Reported EBITDA
of $333.6 million was significantly
higher than last year by $83.2 million,
although this increase included a
$39.6 million benefit from the
introduction of the new accounting
standard for leases.
Underlying Net Profit After Tax (NPAT)
attributable to shareholders increased
by 16.5% to $168.3 million. Reported
NPAT increased by $24.8 million or
18.0% from that of the prior year to
$162.5 million.
For clarity, the comparative results
presented above are shown on both
an underlying and reported (statutory)
basis.
Underlying NPAT results exclude the
negative impact of the new accounting
standard for leases ($5.5 million),
non-recurring costs incurred of $2.6
million (NPAT impact of $2.1 million)
and the one-off tax benefit recognised
during the year ($1.7 million).
HEALTHCARE
The Healthcare business reported a
27.4% increase in revenue above last
year which contributed to a 14.8%
increase in underlying EBITDA for
the year.
In Australia, Healthcare revenue
increased by $1.7 billion (+33.1%) and
underlying EBITDA increased 19.6%,
underpinned by the performance
of our Community Pharmacy,
Institutional Healthcare and Contract
Logistics businesses.
New Zealand Healthcare revenue grew
by 8.5%, however, underlying EBITDA
was affected by cost increases in
labour and freight and softer overseas
demand for our consumer products
impacted by regulatory changes in the
daigou export channel.
ANIMAL CARE
The Animal Care business recorded an
underlying EBITDA increase of 8.3% for
the year, as the business continued its
momentum of solid growth.
Animal Care revenue of $425.1 million,
representing an increase of $43.1
million (+11.3%), was attributable
to sales growth from our branded
products businesses and higher
sales volumes by our Australian
veterinary wholesale business,
Lyppard. Lyppard’s sales growth was
attributable to both customer growth
and a full year’s contribution from our
recently acquired Therapon business.
EBOS HAS
DELIVERED A
SOLID YEAR IN
UNDERLYING
EARNINGS AND A
STRONG CASH
FLOW RESULT.
DIVIDENDS
The Directors are pleased to
announce a final FY20 dividend
of NZ 40.0 cents per share which
equates to a full-year dividend
of NZ 77.5 cents per share, an
increase of 8.4% on the prior year.
The record date for the final
dividend is 25 September 2020
and the dividend will be paid
on 9 October 2020. 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).
The increase in sales of our key
brands, Black Hawk, 12.3%, and
Vitapet, 15.1%, during the year
was achieved on the back of our
continued investment in brand
awareness across both Australia
and New Zealand.
OPERATING CASH FLOW, NET
DEBT AND RETURN ON CAPITAL
EMPLOYED
EBOS has reported operating
cash flows before capital
expenditure of $229.2 million.
This cash result reflects EBOS’
increased earnings for the period,
while maintaining an ongoing
focus and commitment to
industry leading working capital
management.
Net capital expenditure for the
year of $28.9 million included the
development of a new Consumer
Products distribution and
manufacturing facility in Auckland
and continued investment across
EBOS’ warehouse operations.
This new manufacturing facility
will allow for further capacity
of the manufacture of Red
Seal toothpaste to supply both
domestic and international sales
channels.
In March 2020, EBOS successfully
extended the maturity tenor of
approximately $200 million of
term debt facilities for a further
three years. At the same time,
EBOS also increased the facility
limit of the extended facility to
$250 million, allowing for further
funding capacity as we continue
to seek investment opportunities
as part of our growth strategy.
Return on Capital Employed
(ROCE) of 17.1% (+1.2%) and a net
debt to EBITDA ratio of 1.11x (down
0.30x), excluding the impact
of the new lease accounting
standard, represented a strong
improvement on June 2019. The
improvement in these key ratios
is reflective of both the strong
earnings growth and excellent
operating cash flows generated
for the year.
ACQUISITION
During the year, EBOS acquired
the LMT/National Surgical Group
for $34.0 million. This acquisition
represented a beachhead
investment into the $8 billion
Australia and New Zealand
medical devices sector.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORY 34
EBOS GROUP 2O2O ANNUAL REPORT
35
FINANCIAL REPORT
CONTENTS
Directors’ Responsibility Statement
Independent Auditor’s Report
Financial Statements
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
Introducing this report
46
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
50
53
56
58
59
64
68
69
70
71
72
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. Leases
H7. New accounting standards
Additional stock exchange information
KEY
Key judgements and other judgements made
Accounting policy
Subsequent event
Risks
Explanatory note
35
36
40
40
41
42
44
45
46
73
74
75
76
77
79
81
83
85
87
87
87
88
88
88
90
91
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:
Elizabeth Coutts
Chair
Stuart McLauchlan
Director
19 August 2020
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 2020.
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 2020 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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37
37
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 2020,
and the consolidated income statement, statement of comprehensive income, statement
of changes in equity and statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements, on pages 40 to 90, present
fairly, in all material respects, the consolidated financial position of the Group as at 30 June
2020, 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 Company in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence
Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board
and the International Ethics Standards Board for Accountants’ International Code of Ethics
for Professional Accountants (including International Independence Standards), and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other assignments for the Group in the area of taxation compliance services.
These services have not impaired our independence as auditor of the Group. In addition to this,
partners and employees of our firm deal with the Group on normal terms within the ordinary
course of trading activities of the business of the Group. The firm has no other relationship with,
or interest in, the Group.
We consider materiality primarily in terms of the magnitude of misstatement in the financial
statements of the Group that in our judgement would make it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced (the
‘quantitative’ materiality). In addition, we also assess whether other matters that come to our
attention during the audit would in our judgement change or influence the decisions of such a
person (the ‘qualitative’ materiality). We use materiality both in planning the scope of our audit
work and in evaluating the results of our work.
We determined materiality for the Group financial statements as a whole to be AUD $11.5m.
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
The Group has $970m of goodwill and $123m of indefinite life
intangible assets, including brands of $95m, on the balance
sheet at 30 June 2020 as detailed in note B1 to the financial
statements.
The carrying values of goodwill and indefinite life intangible
assets are dependent on the future cash flows expected to be
generated by the underlying businesses, and there is a risk if
these cash flows do not meet the Group’s expectations that
the assets may be impaired.
The Group tests goodwill and indefinite life intangible assets
at least annually by determining the recoverable amount
(the higher of value-in-use or fair value less costs to sell) of
the individual assets where possible, or otherwise the cash
generating units to which the assets belong and comparing
the recoverable amounts of the assets to their carrying values.
The impairment assessment models prepared by the Group
contain a number of significant assumptions. Changes in
these assumptions might lead to a change in the carrying
value of indefinite life intangible assets and goodwill.
The Group has assessed the recoverable amount of brands
based on fair value using the relief from royalty method.
The key assumptions applied in the above models are:
We considered whether the Group’s methodology
for assessing impairment is compliant with NZ IAS
36: Impairment of Assets. We focussed 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). This also included consideration of
the impact of COVID-19 on both forecast revenue and
profitability of the CGU’s; 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
• Annual revenue and expense growth rates for the 5 year
methodology;
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 CGU’s to which goodwill
has been allocated based on value-in-use models. The key
assumptions applied in the value-in-use models are:
• Annual revenue and expense growth rates for the 5 year
forecast period;
• pre-tax discount rates; and
• terminal growth rates.
We have included the impairment assessments of goodwill
and indefinite life intangible assets as a key audit matter
due to the significance of the balances to the financial
statements and the level of judgement applied by the Group
in determining the key assumptions used to determine the
recoverable amounts.
• 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.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT
38
39
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.
Directors’
responsibilities for the
consolidated financial
statements
The directors are responsible on behalf of the Group for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the directors determine is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s
responsibilities
for the audit of the
consolidated financial
statements
In preparing the consolidated financial statements, the directors are responsible on behalf of the
Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs and ISAs (NZ)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements
is located on the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/
audit-report-1
This description forms part of our auditor’s report.
Restriction on use
This report is made solely to the Company’s shareholders, as a body. Our audit has been
undertaken so that we might state to the Company’s shareholders those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company’s
shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Mike Hawken, Partner
For Deloitte Limited
Christchurch, New Zealand
19 August 2020
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BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 4O
EBOS GROUP 2O2O ANNUAL REPORT
41
FINANCIAL STATEMENTS
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
The Consolidated Income Statement presents income earned and expenditure incurred by the Group during the financial year in
determining profit.
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 2020
Revenue
Notes
A1(a)
2020
A$’000
2019
A$’000
For the financial year ended 30 June 2020
8,765,540
6,930,360
Profit for the year
Income from associates
F2
3,355
4,203
Items that may be reclassified subsequently to profit or loss:
Other comprehensive income
Profit before depreciation, amortisation,
net finance costs and tax expense (EBITDA)
Depreciation
Amortisation
Profit before net finance costs and tax expense
Finance income
Finance costs – borrowings
Finance costs – leases
Profit before tax expense
Tax expense
Profit for the year
Profit for the year attributable to:
Owners of the Company
Non-controlling interests
Earnings per share:
Basic (cents per share)
Diluted (cents per share)
A1(b)
A1(b)
H6
A3
A4
A4
333,599
(56,870)
(16,276)
260,453
1,387
(23,657)
(8,126)
230,057
(68,541)
161,516
162,518
(1,002)
161,516
100.6
100.6
250,410
(16,438)
(15,623)
218,349
1,927
(27,261)
-
193,015
(56,288)
136,727
137,700
(973)
136,727
89.8
89.8
Cash flow hedge (losses)
Related income tax
Movement in foreign currency translation reserve
Items that will not be reclassified subsequently to profit or loss:
Movement on equity instruments fair valued through other comprehensive income
Total comprehensive income net of tax
Total comprehensive income for the year is attributable to:
Owners of the Company
Non-controlling interests
2020
A$’000
2019
A$’000
161,516
136,727
(2,414)
766
(7,378)
(9,026)
926
153,416
154,418
(1,002)
153,416
(9,432)
2,784
12,013
5,365
370
142,462
143,435
(973)
142,462
I
B
U
S
N
E
S
S
O
V
E
R
V
I
E
W
F
I
N
A
N
C
I
A
L
S
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
R
E
M
U
N
E
R
A
T
I
O
N
R
E
P
O
R
T
&
D
I
S
C
L
O
S
U
R
E
S
I
D
R
E
C
T
O
R
S
’
I
N
T
E
R
E
S
T
S
I
D
R
E
C
T
O
R
Y
NOTES TO THE FINANCIAL STATEMENTS ARE INCLUDED ON PAGES 46 TO 9O.
NOTES TO THE FINANCIAL STATEMENTS ARE INCLUDED ON PAGES 46 TO 9O.
42
43
Consolidated Balance Sheet
Consolidated Balance Sheet continued
The Consolidated Balance Sheet presents a summary of the Group’s assets, liabilities and equity at the end of the financial year.
As at 30 June 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Current tax refundable
Other financial assets – derivatives
Total current assets
Non-current assets
Property, plant and equipment
Capital work in progress
Prepayments
Deferred tax assets
Goodwill
Indefinite life intangibles
Finite life intangibles
Right of use assets
Investment in associates
Other financial assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Bank loans
Lease liabilities
Current tax payable
Employee benefits
Other financial liabilities – derivatives
Total current liabilities
Notes
2020
A$’000
2019
A$’000
C1
C2
G2
D1
D2
A3 (b)
B1 (a)
B1 (b)
B1 (d)
H6
F2
C3
E3
H6
G2
244,778
1,022,587
12,484
737,699
2,177
109
166,620
897,796
9,603
723,517
83
611
2,019,834
1,798,230
173,704
5,783
327
131,039
969,623
122,500
43,792
222,931
46,679
10,578
174,463
6,508
650
54,348
947,055
123,582
46,569
-
41,074
9,733
1,726,956
3,746,790
1,403,982
3,202,212
1,413,914
246,921
33,846
17,505
42,774
12,629
1,288,319
168,307
-
12,883
40,805
10,717
1,767,589
1,521,031
As at 30 June 2020
Non-current liabilities
Bank loans
Lease liabilities
Trade and other payables
Deferred tax liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share-based payments reserve
Foreign currency translation reserve
Retained earnings
Equity instrument fair valued through other comprehensive income
Cash flow hedge reserve
Equity attributable to owners of the Company
Non-controlling interests
Total equity
Notes
E3
H6
C3
A3 (b)
E1
2020
A$’000
2019
A$’000
324,916
203,300
3,988
128,825
7,298
668,327
2,435,916
1,310,874
961,486
6,601
(18,170)
372,012
(128)
(6,854)
1,314,947
(4,073)
1,310,874
364,038
-
13,941
57,330
6,612
441,921
1,962,952
1,239,260
931,811
3,937
(10,792)
323,635
(1,054)
(5,206)
1,242,331
(3,071)
1,239,260
NOTES TO THE FINANCIAL STATEMENTS ARE INCLUDED ON PAGES 46 TO 9O.
NOTES TO THE FINANCIAL STATEMENTS ARE INCLUDED ON PAGES 46 TO 9O.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 44
45
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
The Consolidated Cash Flow Statement presents the cash generated and used by the Group during the financial year.
For the financial year ended 30 June 2020
Notes
2020
A$’000
2019
A$’000
The Consolidated Statement of Changes in Equity presents the components of capital and reserves of the Group and explains the movements
in each component during the financial year.
For the financial year ended
June 2020
Notes
Share
capital
A$’000
Share-
based
payments
A$’000
Foreign
currency
translation
reserve
A$’000
Retained
earnings
A$’000
Equity
instruments
fair valued
through
other com-
prehensive
income
reserve
A$’000
Cash flow
hedge
reserve
A$’000
Non-
controlling
interests
A$’000
Total
A$’000
Balance at 1 July 2018
763,636
2,144
(22,805)
308,499
(1,424)
1,442
21,352
1,072,844
Cash flows from operating activities
Receipts from sale of goods and services
Interest received
Dividends received from associates
Payments for purchase of goods and services
Taxes paid
Interest paid
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
E2
E1
E1
E1
Arising on acquisition of remaining
non-controlling interest
B2
Transfer of non-controlling interest
-
-
-
-
5,719
165,493
(3,037)
-
-
-
-
-
1,793
-
-
-
-
-
-
137,700
-
-
(973)
136,727
Net cash inflow from operating activities
12,013
-
370
(6,648)
-
-
-
-
-
-
-
(99,336)
-
-
-
-
-
(23,228)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,735
(99,336)
1,793
5,719
165,493
(3,037)
(46,678)
(46,678)
23,228
-
Cash flows from investing activities
Sale of property, plant and equipment
Purchase of property, plant and equipment
Payments for capital work in progress
Payments for intangible assets
Investment in associates
Acquisition of subsidiaries
Investment in other financial assets
Net cash (outflow) from investing activities
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 financing activities
Balance at 1 July 2019
931,811
3,937
(10,792)
323,635
(1,054)
(5,206)
(3,071)
1,239,260
Profit for the year
Other comprehensive income
for the year, net of tax
Payment of dividends
Share-based payments
Dividends reinvested
Employee LTI shares exercised
E2
E1
E1
Employee share plan shares issued E1
Employee share issue costs
E1
-
-
-
-
23,032
6,353
358
(68)
-
-
-
2,664
-
-
-
-
-
162,518
-
-
(1,002)
161,516
(7,378)
-
926
(1,648)
-
-
-
-
-
(114,141)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(8,100)
(114,141)
2,664
23,032
6,353
358
(68)
Balance at 30 June 2020
961,486
6,601
(18,170)
372,012
(128)
(6,854)
(4,073)
1,310,874
Proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Dividends paid to equity holders of parent
Net cash (outflow)/inflow from financing activities
Net increase in cash held
Effect of exchange rate fluctuations on cash held
Net cash and cash equivalents at the beginning of the year
Net cash and cash equivalents at the end of the year
NOTES TO THE FINANCIAL STATEMENTS ARE INCLUDED ON PAGES 46 TO 9O.
NOTES TO THE FINANCIAL STATEMENTS ARE INCLUDED ON PAGES 46 TO 9O.
F2
E5
B2
E1
E5
E5
H6
8,725,652
7,032,507
1,387
630
1,927
1,394
(8,397,655)
(6,834,753)
(69,037)
(31,785)
229,192
369
(18,310)
(5,918)
(5,053)
(3,694)
(40,868)
143
(73,331)
29,675
40,630
(1,236)
(31,957)
(111,834)
(74,722)
81,139
(2,981)
166,620
244,778
(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
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 46
47
Notes to the consolidated financial statements
For the financial year ended 30 June 2020.
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 Limited and its controlled entities
(together ‘the Group’ or ‘EBOS’).
Information is considered relevant and material if:
• the amount is significant because of its size and nature;
• it is important to assist the readers understanding of the results of EBOS;
• it helps to explain to the reader the changes in the business and/or operations of EBOS; or
• it relates to an aspect of operations that is important to the future performance of EBOS.
EBOS Group Limited (‘the Company’) is a profit-oriented company incorporated in New Zealand, registered under the
Companies Act 1993 and dual listed on both the New Zealand Stock Exchange and the Australian Securities Exchange.
Basis of preparation
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 International Financial Reporting
Standards (‘NZ IFRS’) and other applicable reporting
standards as appropriate for profit oriented entities.
The financial statements comply with International
Financial Reporting Standards (‘IFRS’).
EBOS is a Tier 1 for-profit entity in terms of the
New Zealand External Reporting Board Standard A1.
The Company is a FMC reporting entity for the
purposes of the Financial Markets Conduct Act 2013,
and its financial statements comply with this Act.
The financial statements have been prepared on the
basis of historical cost, except for the revaluation of
certain financial instruments. Cost is based on the
fair value of the consideration given in exchange for
assets.
The information is presented in thousands of
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
regards 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).
The Group applied NZ IFRS 16 on 1 July 2019 using
the modified retrospective (full simplified) transition
method. At transition, lease liabilities were measured
at the present value of the remaining lease
payments, discounted at the incremental borrowing
rate (IBR) as at 1 July 2019. ROU assets are measured
equal to lease liabilities, adjusted for initial direct
costs incurred when entering into the leases, less
any incentives received on commencement date.
Comparative periods were not restated.
Lease payments included in the measurement of the
lease liability comprise:
• fixed lease payments, less incentives receivable;
• variable lease payments that depend on an index
or rate, initially measured using the index or rate at
the commencement date;
• the amount expected to be payable by the lessee
under residual value guarantees;
• the exercise price of purchase options, if the lessee
is reasonably certain to exercise the options; and
• payments of penalties for terminating the lease,
if the lease term reflects the exercise of an option
to terminate the lease.
The lease liability is presented as a separate line in
the Consolidated Balance Sheet.
The lease liability is subsequently measured by
increasing the carrying amount to reflect interest
on the lease liability and by reducing the carrying
amount to reflect the lease payments made.
INTRODUCING THIS REPORT CONTINUED
Basis of consolidation
The Group’s 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.
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 period, NZ IFRS 16 Leases (NZ IFRS 16)
has been adopted. A summary of the effect of
the change in accounting policy and disclosures
resulting from the application of the new standard is
described below.
NZ IFRS 16 Leases
In the current year, the Group has applied NZ IFRS
16 Leases, effective 1 July 2019. NZ IFRS 16 (replaces
NZ IAS 17 ‘Leases’) sets out the principles for the
recognition, measurement, presentation and
disclosure of leases. It requires lessees to account
for all leases under a single on balance sheet
model, similar to accounting for finance leases
under NZ IAS 17.
The adoption of NZ IFRS 16 results in the Group
recognising a right of use (ROU) asset and
corresponding liability for all leases with a term of
more than 12 months, excluding low value assets.
Operating lease expense is replaced by depreciation
expense on the ROU assets and interest expense on
the lease liabilities as they amortise.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT
48
49
INTRODUCING THIS REPORT CONTINUED
INTRODUCING THIS REPORT CONTINUED
Adopting of new and revised standards and interpretations
continued
The ROU assets are presented as a separate line in
the Consolidated Balance Sheet.
Adopting of new and revised standards and interpretations
continued
Foreign currency
Functional currency
The Group remeasures the lease liability (and makes
a corresponding adjustment to the related ROU
asset) whenever:
• the lease term has changed or if there is a change
in the assessment of exercise of a purchase option,
in which case the lease liability is remeasured by
discounting the revised lease payments using a
revised discount rate;
• the lease payments change due to changes in an
index or rate or a change in expected payment
under a guaranteed residual value, in which cases
the lease liability is remeasured by discounting the
revised lease payments using the initial discount
rate; and
• a lease contract is modified and the lease
modification is not accounted for as a separate
lease, in which case the lease liability is remeasured
by discounting the revised lease payments using a
revised discount rate.
The Group did not make any such adjustments
during the periods presented.
The ROU assets comprise the initial measurement
of the corresponding lease liability, lease payments
made at or before the commencement day less any
lease incentives receivable and any initial direct
costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs
to dismantle and remove a leased asset, restore the
site on which it is located and restore the underlying
asset to the condition required by the terms and
conditions of the lease, a provision is recognised
and measured under NZ IAS 37 Provisions,
Contingent Liabilities and Contingent Assets and a
corresponding amount added to the ROU asset.
ROU assets are depreciated over the shorter period
of either the lease term or the useful life of the
underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the ROU asset reflects
that the Group expects to exercise a purchase
option, the related ROU asset is depreciated over the
useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The Group applies NZ IAS 36 Impairment of Assets
to determine whether a ROU asset is impaired and
accounts for any identified impairment loss under
this standard.
Variable rents that do not depend on an index
or rate are not included in the measurement of
the lease liability and the ROU asset. The related
payments are recognised as an expense in the
period in which the event or condition that triggers
those payments occurs and are included in the line
‘operating lease rental expenses’ in the Consolidated
Income Statement.
As a practical expedient, NZ IFRS 16 permits
a lessee not to separate non-lease components,
and instead account for any lease associated
non-lease components as a single arrangement.
The expense that would previously be recorded
as an operating lease expense moved from being
included in operating expenses, to depreciation and
finance expense from 1 July 2019.
The impact on net earnings before income tax of
an individual lease over its term remains the same,
however, the new standard results in a higher
expense in early years, and lower in later years of
a lease as compared to the straight line expense
profile of an operating lease under NZ IAS 17.
IBR is the rate of interest that a lessee would have
to borrow over a similar term, and with a similar
security, the funds necessary to obtain an asset
of a similar value to the ROU asset in a similar
environment. The IBR was determined based on the
interest rate on the external borrowing facilities
available to the Group adjusted for the weighted
average lease term.
The weighted average IBR applied to lease liabilities
on 1 July 2019 was 3.41%.
The aggregate lease liability and ROU asset
recognised in the consolidated statement of
financial position as at 1 July 2019 and the Group’s
operating lease commitment at 30 June 2019 can
be reconciled as follows:
Lease liability recognised
on transition
Future minimum lease payments
under non-cancellable operating
leases as at 30 June 2019
Future lease payments on renewal
options that are reasonably certain
Effect of discounting
A$’000
193,402
93,756
(41,537)
Lease liability as at 1 July 2019
245,621
Right of Use Asset recognised
on transition
Land and buildings
Office, Plant and equipment
Motor Vehicles
A$’000
225,624
8,576
2,746
Right of Use Assets as at 1 July 2019
236,946
In applying the modified retrospective approach,
the Group has taken advantage of the following
practical expedients:
• a single discount rate has been applied to
portfolios of leases with reasonably similar
characteristics;
• leases with a term of less than 12 months have
been considered short-term leases;
• leases with a remaining term of 12 months or less
from the date of application have been accounted
for as short term leases even though the initial
term of the leases from lease commencement
date may have been more than 12 months; and
• a lessee may use hindsight, such as in determining
the lease term if the contract contains options to
extend or terminate the lease.
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.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 5O
EBOS GROUP 2O2O ANNUAL REPORT
51
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
2020
A$’000
5,090,153
2,565,111
74,107
638,149
115,438
(142,530)
8,340,428
425,112
8,765,540
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
Recognition and measurement
Community Pharmacy and Institutional Healthcare
Revenue is derived from the supply of human healthcare products to pharmacies, hospitals and other healthcare
providers in Australia and New Zealand, in accordance with agreed terms with the customer. Following delivery of the
goods, 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 on selling the goods and bears the risks of loss in relation to the goods.
A receivable is recognised by the Group when it passes control of the goods, 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 the Group’s standard terms with customers, product returns, refunds and provision for
warranties 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 passes 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
the Group’s standard terms with customers product
returns, refunds and provision for warranties 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 of the
goods, the customer assumes full control as it has
complete discretion over the manner of distribution
and pricing of goods, has the primary responsibility
when on-selling the goods and bears the risks of
loss in relation to the goods.
A receivable is recognised by the Group when
it passes control of the goods, 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 the Group’s standard terms with
customers product returns, refunds and provision
for warranties 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
passes control of the goods which is when the goods
are confirmed to be on sold 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 agency
products and EBOS’ own branded human
healthcare products, such as Red Seal, Grans
Remedy, Faulding, Natures Kiss and Quitnits, to
pharmacies and supermarkets in Australia and
New Zealand and overseas distributors for export
markets. Following delivery of the goods, 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
on selling 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 (loss)/gain on trade and other receivables
Depreciation of property, plant and equipment
Depreciation on right of use assets
Amortisation of finite life intangibles
Operating lease and rental expenses
Donations
Employee benefit expense
Defined contribution plan expense
Other expenses
Total expenses
2020
A$’000
(2,600)
2019
A$’000
(11,212)
(7,843,282)
(6,121,500)
(4,450)
(1,095)
(19,523)
(37,347)
(16,276)
(5,091)
(419)
(302,535)
(17,222)
(258,602)
(8,508,442)
(2,570)
341
(16,438)
-
(15,623)
(42,796)
(210)
(283,024)
(15,985)
(207,197)
(6,716,214)
(1) 2020: One-off items comprise merger and acquisition costs incurred. 2019: 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 year.
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(d) 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
has 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. From 1 July 2019, this policy only applies to
short term and low value leases.
A1. Revenue and expenses continued
(b) Expenses continued
Employee expenses
Provision is made for benefits owing to employees in respect of wages and salaries, annual leave, long service
leave and employee incentives for services rendered. Provisions are recognised when it is probable they will be
settled and can be measured reliably. They are carried at the remuneration rate expected to apply at the time
of settlement and discounted to the present value of the expected payment to the employee at balance date.
Net finance costs
Finance costs include bank interest and amortisation of costs incurred in connection with borrowing facilities.
Finance costs are expensed immediately as incurred, using the effective interest method, unless they relate to
acquisition and development of qualifying assets, in which case they are capitalised.
Interest income is recognised on a time-proportionate basis using the effective interest method.
A2. Segment information
(a) Reportable segments
EBOS GROUP LIMITED
Healthcare Segment
Animal Care Segment
Corporate Segment
Sale of healthcare products in a
range of sectors, own brands,
retail healthcare, pharmacy
services and wholesale activities.
Sale of animal care products in a
range of sectors, own brands,
retail and wholesale activities.
Includes net funding costs and
central administration expenses
that have not been allocated to the
Healthcare or Animal Care segments.
EBOS’ major products and services are the same as the reportable segments, i.e. Healthcare and Animal Care, with no major
products and services allocated to corporate.
(b) Segment revenues and results
The following is an analysis of EBOS’ revenue and results by reportable segment:
Revenue from external customers (A$’000)
2020
2019
95%
$8,340,428
Healthcare
5%
$425,112
Animal Care
94%
$6,548,316
Healthcare
6%
$382,044
Animal Care
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 54
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A2. Segment information continued
(b) Segment revenues and results continued
EBITDA (A$’000)
$290,408
$215,949
Healthcare
$57,658
$48,271
Animal Care
2020
2019
($14,467)
($13,810)
Corporate
Net profit/(loss) after tax for the year attributable to owners of the Company (A$’000)
$162,489
$133,132
Healthcare
Associate information:
$35,942
$33,045
Animal Care
2020
2019
($35,913)
($28,477)
Corporate
Included in the segment results above is income from associates:
Animal Care
Healthcare
Total income from associates
2020
A$’000
2,661
694
3,355
2019
A$’000
3,573
630
4,203
A2. Segment information continued
(b) Segment revenues and results continued
The following is an analysis of other financial information by reportable segment:
Healthcare
Animal Care
Corporate
2020
A$’000
2019
A$’000
2020
A$’000
2019
A$’000
2020
A$’000
2019
A$’000
Depreciation of property, plant and
equipment
(18,724)
(15,698)
(799)
(740)
-
Depreciation on right of use assets
(31,012)
-
(5,193)
-
(1,142)
Amortisation of finite life intangibles
(14,416)
(13,464)
(1,860)
(2,159)
-
-
-
-
Net finance costs
-
-
-
-
(30,396)
(25,334)
Tax (expense)/benefit
(64,769)
(54,628)
(13,864)
(12,327)
10,092
10,667
(c) Geographical information
EBOS operates in two principal geographical areas: New Zealand and Australia.
EBOS’ revenue from external customers by geographical location and information about its segment assets
(non-current assets), excluding investments in associates and deferred tax assets, are detailed below:
Australia
New Zealand
Group
2020
A$’000
2019
A$’000
2020
A$’000
2019
A$’000
2020
A$’000
2019
A$’000
Continuing operations
Revenue from external customers
7,045,396
5,345,133
1,720,144
1,585,227
8,765,540
6,930,360
Non-current assets
1,194,822
1,014,531
354,416
294,029
1,549,238
1,308,560
(d) Information about major customers
No revenues from transactions that are with a single customer amount to 10% or more of EBOS’ revenues (2019: Nil).
Recognition and measurement
The reportable segments of EBOS have been identified in accordance with NZ IFRS 8 ‘Operating Segments’.
The Group’s operating segments are identified on the basis of internal reports about components of the Group that
are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to
assess its performance.
The accounting policies of EBOS have been consistently applied to the operating segments. Profit before
depreciation, amortisation, net finance costs and tax expense (EBITDA) is the measure reported to the chief
operating decision-maker for the purposes of resource allocation and assessment of segment performance.
Assets are not allocated to operating segments as they are not reported to the chief operating decision-maker at
a segment level.
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A3. Taxation
(a) Tax expense recognised in Consolidated Income Statement
Tax expense comprises:
Current tax expense:
Current year
Adjustments for prior years
Deferred tax (credit)/expense:
Current year
Adjustments for prior years
Total tax expense
2020
A$’000
2019
A$’000
72,459
(665)
71,794
(3,181)
(72)
(3,253)
68,541
55,602
(2,375)
53,227
1,086
1,975
3,061
56,288
The prima facie income tax expense on pre-tax accounting profit from operations
reconciles to the income tax expense in the financial statements as follows:
Profit before tax expense
230,057
193,015
Tax expense calculated at 28% (2019: 28%)
Non-deductible expenses
Effect of different tax rates of subsidiaries operating in
overseas jurisdictions
(Over) provision of tax expense in prior years
Other adjustments
Total tax expense
64,416
2,635
3,953
(737)
(1,726)
68,541
54,044
872
3,001
(400)
(1,229)
56,288
The tax rates used are principally the corporate tax rates of 28% (2019: 28%) payable by New Zealand and 30% (2019: 30%)
payable by Australian corporate entities on taxable profits under tax law in each jurisdiction.
A3. Taxation continued
(b) Deferred tax assets and liabilities
Taxable and deductible temporary differences arise from the following:
Gross deferred tax liabilities:
Property, plant and equipment
Other payables
Other financial assets – derivatives
Right of use assets
Intangible assets
Gross deferred tax assets:
Property, plant and equipment
Other payables
Other financial assets – derivatives
Lease liabilities
Intangible assets
Tax losses carried forward
(c) Imputation credit account balances
2020
A$’000
(6,169)
(1,074)
(73)
(66,488)
(55,021)
(128,825)
13,611
34,461
3,775
68,596
9,597
999
131,039
2019
A$’000
(7,425)
(911)
(142)
-
(48,852)
(57,330)
12,553
31,998
2,843
-
6,583
371
54,348
Imputation credit account balances
Imputation credits available directly and indirectly to
shareholders of the parent company
2020
A$’000
2019
A$’000
7,531
7,573
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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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
2020
A$’000
2019
A$’000
2020
A$’000
2019
A$’000
Earnings used in the calculation of
total earnings per share
A$’000
162,518
137,700
162,518
137,700
Weighted average number of ordinary shares for
the purposes of calculating earnings per share
No.
(000’s)
161,557
153,320
161,557
153,320
Earnings per share
Cents
100.6
89.8
100.6
89.8
Basic earnings per share is calculated by dividing the profit attributable to the shareholders of the company by the
weighted average number of ordinary shares on issue during the year excluding shares held as treasury stock.
Diluted earnings per share assumes conversion of all 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 regards 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
2020
A$’000
947,055
27,706
-
(5,138)
969,623
2019
A$’000
893,796
43,749
650
8,860
947,055
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.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 6O
EBOS GROUP 2O2O ANNUAL REPORT
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B1. Goodwill and intangibles continued
(b) Indefinite life intangibles
TerryWhite
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 2018
36,550
33,419
10,954
24,967
15,827
121,717
Acquisitions through business combinations
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
Effects of foreign currency exchange
differences
-
(557)
-
(144)
(381)
(1,082)
Balance at 30 June 2020
36,550
33,823
10,954
25,071
16,102
122,500
Recognition and measurement
Indefinite life intangible assets represent purchased brands, trademarks and a franchise network asset that are
initially recognised at fair value. These intangible assets are tested annually for impairment on the same basis as for
goodwill.
Judgement: useful lives of indefinite life intangible assets
The Directors have assessed these brands, trademarks and a franchise network asset as having an indefinite useful
life. In coming to this conclusion, the expected expansion of these assets across other products and markets,
the typical product life cycle of these assets, the stability of the industry in which the assets are operating, the level
of maintenance expenditure required and the period of legal control over these assets has been considered.
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
2020
A$’000
2019
A$’000
2020
A$’000
2019
A$’000
Healthcare Australia 1
Healthcare New Zealand 2
642,710
624,914
12,689
12,746
68,295
69,911
21,146
21,646
Healthcare: Pharmacy/Logistics NZ 3
88,769
90,870
16,102
16,483
Healthcare: TerryWhite Group 4
20,306
10,999
47,492
47,492
Animal Care 5
149,543
150,361
25,071
25,215
969,623
947,055
122,500
123,582
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 – TerryWhite Group.
5 New Zealand and Australia Animal Care.
For the year ended 30 June 2020, the Directors have determined that there is no impairment of any of the CGUs containing
goodwill, brands, trademarks or the franchise network asset (2019: Nil).
Key judgement: impairment assessment assumption
The recoverable amounts of cash generating units is determined on the basis of value in use calculations.
The recoverable amount calculations are most sensitive to changes in the following assumptions:
Revenue
Estimated by management based on revenue achieved in the period immediately before the
start of the assessment period and adjusted each year for any anticipated growth.
Operating costs
Estimated by management based on current trends at the start of the assessment period and
adjusted for expected changes in the business or sector in which the business operates.
Discount rates
Estimated by management based on a current market assessment of the time value of money,
cost of capital and risks specific to the asset to which the cash flows generated by that asset
are being assessed.
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B1. Goodwill and intangibles continued
(c) Cash-generating units continued
Key estimate: value-in-use calculation
The value-in-use calculation uses cash flow projections based on financial forecasts, approved by the Board and
management covering a five year period, including terminal value, and managements past experience. The following
estimates were used in the value-in-use calculation:
Goodwill
Annual revenue growth rates
Allowance for increases in expenses
Pre-tax discount rates
Terminal growth rate
2020
2019
2.5% - 6.3%
2.2% - 6.0%
2.5% - 7.0%
1.8% - 5.8%
12.5% - 13.8%
12.3% - 13.8%
2.5%
2.5%
B1. Goodwill and intangibles continued
(d) Finite life intangibles
Customer
relationships/
contracts
A$’000
Other
A$’000
Total
A$’000
Gross carrying amount
19,063
106,874
125,937
Accumulated amortisation and impairment
(13,949)
(65,419)
(79,368)
Balance at 30 June 2019
5,114
41,455
46,569
Gross carrying amount
31,959
106,874
138,833
Accumulated amortisation and impairment
(16,421)
(78,620)
(95,041)
Balance at 30 June 2020
15,538
28,254
43,792
Key estimate: value-in-use calculation
The fair value of indefinite life intangibles has been calculated using the relief from royalty method. The following
estimates were used:
Aggregate amortisation recognised as an expense during the year:
Indefinite life intangibles
Annual revenue growth rates
Allowance for increases in expenses
Royalty rate
Pre-tax discount rates
Terminal growth rate
3.0% - 6.9%
2.2% - 6.0%
2.5% - 7.0%
1.8% - 5.6%
3.0% - 11.8%
3.0% - 11.8%
13.3% - 20.8%
13.3% - 20.8%
Customer relationships and contracts
Other
2.5%
2.5%
Recognition and measurement
2020
A$’000
2019
A$’000
13,201
3,075
12,238
3,385
16,276
15,623
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.
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 to 12 years)
the following characteristics have been assessed: (i) expected expansion of the usage of the assets, (ii) the typical
product life cycle of these assets, (iii) the stability of the industry in which the assets are operating, and (iv) the level
of maintenance expenditure required. The estimated useful life and amortisation period is reviewed at the end of
each annual reporting period.
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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
Principal activities
2020:
Date of
acquisition
Cost of
acquisition
A$’000
100% of the business assets of LMT Surgical Pty Ltd
and National Surgical Pty Ltd (LMT Group)
Healthcare
September 2019
29,080
B2. Acquisition information continued
Current assets
Trade and other receivables
Prepayments
Inventories
Carrying value
A$’000
Fair value
adjustment
A$’000
Fair value on
acquisition
A$’000
4,265
746
(255) 1
-
4,010
746
14,070
(1,371) 2
12,699
Current tax refundable
138
-
138
Non-current assets
Property, plant and equipment
Deferred tax assets
Right of use assets
Current liabilities
Bank overdraft
2,684
263
4,077
(1,352)
(703) 3
795 4
-
-
Trade and other payables
(6,960)
(323) 5
Lease liabilities
Current tax payable
Employee benefits
Non-current liabilities
Bank loans
Deferred tax liabilities
Net assets acquired
(4,219)
(82)
(1,390)
(996)
(17)
-
-
-
-
-
11,227
(1,857)
1,981
1,058
4,077
(1,352)
(7,283)
(4,219)
(82)
(1,390)
(996)
(17)
9,370
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B2. Acquisition information continued
B2. Acquisition information continued
Carrying value
A$’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
Plus bank overdraft acquired
Deferred purchase consideration
Net cash outflow from acquisition
Judgements made:
19,710
29,080
1,352
(3,500)
26,932
1. To recognise the fair value of trade and other receivables on acquisition.
2. To recognise the fair value of inventories on acquisition.
3. To recognise the fair value of property, plant and equipment on acquisition.
4. To recognise deferred tax assets on acquisition.
5. To recognise the fair value of trade and other payables on acquisition.
Recognition and measurement
Acquisition of subsidiaries and businesses are accounted for using the acquisition method.
The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by EBOS in exchange for control of the acquiree. Acquisition-related
costs are recognised in profit or loss as incurred.
Where applicable, the cost of acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted against
the cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair
value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant NZ
IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.
Goodwill arising on acquisition
Goodwill arose on the acquisition of the LMT Group 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.
The LMT Group was acquired as it is a profitable Australasian medical device business which the Group believes fits strategically
with its Australasian healthcare business assets.
Impact of the acquisition on the results of the Group for the period ended 30 June 2020
The LMT Group contributed $1,124,000 to the Group profit for the period. Group revenue for the period includes $26,442,000 in
respect of the LMT Group. Had the LMT Group acquisition been effective at 1 July 2019, the revenue of the Group from continuing
operations would have been $8,774,944,000 and the profit for the period would have been $161,640,000.
Subsidiaries acquired
Consideration
Cash and cash equivalents
Deferred purchase consideration
Total consideration
Represented by
Net assets acquired
Goodwill on acquisition
Total consideration
Net cash outflow on acquisition of subsidiaries and non-controlling interests
Cash and cash equivalents consideration
Non-controlling interest
Less cash and cash equivalents acquired
Plus bank overdraft acquired
Net cash consideration paid
2020
A$’000
2019
A$’000
39,516
(2,073)
37,443
9,737
27,706
37,443
39,516
-
-
1,352
48,364
4,347
52,711
8,312
44,399
52,711
48,364
46,678
(1,597)
-
40,868
93,445
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 68
69
SECTION C: OPERATING ASSETS AND LIABILITIES USED BY EBOS
Section Overview
This section provides further analysis on the significant operating assets and liabilities of EBOS. These balances
comprise the material net working capital balances used by EBOS to run its day to day operating activities.
C1. Trade and other receivables
Trade receivables (i)
Other receivables
Allowance for expected credit losses (ii)
Recognition and measurement
2020
A$’000
997,450
37,940
(12,803)
1,022,587
2019
A$’000
879,551
32,050
(13,805)
897,796
Trade receivables are measured on initial recognition at fair value and are subsequently carried at amortised cost.
They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.
The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty
and there is no realistic prospect of recovery.
The Directors believe that the carrying amount of trade and other receivables approximates their fair value.
(i) Trade receivables are non-interest bearing. Interest may be charged on outstanding overdue balances in accordance with the
terms and conditions under which goods are supplied. Trade debtors generally have terms of 30 days.
(ii) Provision for expected credit losses
Not due
A$’000
30–60
days
A$’000
60–90
days
A$’000
90+
days
A$’000
Total
A$’000
Trade receivables – total
953,573
31,541
5,128
7,208
997,450
Provision for expected credit losses – total
(654)
(3,865)
(2,963)
(5,321)
(12,803)
C1. Trade and other receivables continued
Recognition and measurement
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
2020
A$’000
2,459
735,240
737,699
2019
A$’000
1,746
721,771
723,517
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.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT
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EBOS GROUP 2O2O ANNUAL REPORT
71
C3. Trade and other payables
SECTION D: CAPITAL ASSETS USED BY EBOS TO OPERATE OUR BUSINESS
2020
A$’000
2019
A$’000
Section Overview
Current
Trade payables
Other payables
Deferred purchase consideration
Non-current
Other payables
1,296,851
112,485
4,578
1,413,914
3,988
3,988
1,190,599
91,069
6,651
1,288,319
13,941
13,941
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.
This section explains what capital assets, such as property, plant and equipment, that EBOS uses to operate
its business activities. This section also describes the material movements in capital assets during the year.
D1. Property, plant and equipment
Freehold
land
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
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
Cost
28,649
42,437
38,421
104,287
31,985
245,779
Accumulated depreciation
-
(7,882)
(12,204)
(36,360)
(15,629)
(72,075)
Balance at 30 June 2020
28,649
34,555
26,217
67,927
16,356
173,704
Trade payables are unsecured and are generally settled within the month following the invoice date.
Reconciliation of the carrying amount from the beginning to the end of the year (A$’000)
250,000
200,000
$174,463
$17,414
$2,196
150,000
100,000
50,000
-
($458)
$173,704
($19,523)
($388)
Opening
balance
Additions/
transfers from
WIP
Acquisitions
Disposals
Depreciation
Forex
Closing
Balance
I
B
U
S
N
E
S
S
O
V
E
R
V
I
E
W
F
I
N
A
N
C
I
A
L
S
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
R
E
M
U
N
E
R
A
T
I
O
N
R
E
P
O
R
T
&
D
I
S
C
L
O
S
U
R
E
S
I
D
R
E
C
T
O
R
S
’
I
N
T
E
R
E
S
T
S
I
D
R
E
C
T
O
R
Y
72
73
D1. Property, plant and equipment continued
Recognition and measurement
Property, plant and equipment is initially recorded at cost. Cost includes the original purchase consideration and
those costs directly attributable to bringing the item of property, plant and equipment to the location and condition
for its intended use. After recognition as an asset, property, plant and equipment is carried at cost less accumulated
depreciation and impairment losses.
Depreciation of property, plant and equipment assets, other than freehold land, is calculated on a straight-line basis.
This allocates the cost or fair value amount of an asset, less any residual value, over its estimated useful life.
Judgements and estimates – useful lives
EBOS estimates the remaining useful life of assets as follows:
• Buildings: 20 to 50 years.
• Leasehold improvements: two to 15 years.
• Plant and equipment: two to 20 years.
• Office equipment, furniture and fittings: two to 10 years.
SECTION E: HOW WE FUND THE BUSINESS
Section Overview
This section explains how EBOS funds its operations and shows the sources of other available facilities that it
may call upon if required to fund its operational or future investing activities.
Capital management
EBOS manages its capital, meaning total shareholders’ funds, to provide appropriate returns to shareholders whilst
maintaining a capital structure that safeguards its ability to remain a going concern and optimises the cost of capital.
E1. Share capital
Fully paid ordinary shares
2020
No.
000’s
2020
Total
A$’000
2019
No.
000’s
2019
Total
A$’000
The residual value and useful lives are reviewed and if appropriate, adjusted at each reporting date.
Balance at beginning of financial year
161,708
931,811
152,539
763,636
D2. Capital work in progress
Capital work in progress
2020
A$’000
2019
A$’000
5,783
5,783
6,508
6,508
Capital work in progress relates to buildings under construction and software development. The additional cost to complete the
projects is estimated at $4,492,000 (2019: $6,317,000).
Dividend reinvested – October
Dividend reinvested – April
Issue of shares to staff under employee share plan
Employee share issue costs
Institutional placement – May 2019
Institutional placement costs
Shares vested under the long term executive
incentive scheme (Note H4)
415
724
17
-
-
-
-
9,301
13,731
358
(68)
-
-
6,353
-
286
-
-
-
5,719
-
-
8,883
165,493
-
-
(3,037)
-
162,864
961,486
161,708
931,811
Treasury stock
Opening stock
Share scheme – shares fully vested
Share scheme – shares forfeited
Recognition and measurement
2020
No.
000’s
1,225
(600)
(40)
585
2019
No.
000’s
1,225
-
-
1,225
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct
issue costs.
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75
E2. Dividends
Recognition and measurement
Dividends are approved by the Board in New Zealand dollars. Dividends recognised in the Statement of Changes in
Equity are converted from New Zealand dollars to Australian dollars at the exchange rate applicable on the date the
dividend was approved.
Unrecognised dividends are converted at the exchange rate applicable on the reporting date.
Recognised amounts
Fully paid ordinary shares:
Final – prior year
Interim – current year
Dividends per share
Unrecognised amounts
Final dividend
Subsequent event
2020
2019
A$ Cents
per share
Total
A$’000
A$ Cents
per share
Total
A$’000
35.0
35.9
70.9
56,378
57,763
114,141
32.4
33.2
65.6
49,057
50,279
99,336
37.4
60,846
35.4
57,205
A dividend of NZ 40.0 cents per share was declared on 19 August 2020 with the dividend being payable on
9 October 2020. The anticipated cash impact of the dividend is approximately $51.7m (2019: $50.6m).
The following table shows dividends approved in New Zealand dollars:
Recognised amounts
Fully paid ordinary shares:
Final – prior year
Interim – current year
Dividends per share
Unrecognised amounts
Final dividend
2020
NZ$ Cents
per share
2019
NZ$ Cents
per share
37.0
37.5
74.5
35.5
34.5
70.0
40.0
37.0
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.
E3. Borrowings
Current
Bank loans – securitisation facility (i)
Bank loans (ii)
Non-current
Bank loans (ii)
2020
A$’000
2019
A$’000
179,408
67,513
246,921
168,307
-
168,307
324,916
364,038
(i) EBOS, through a subsidiary company, has a trade debtor securitisation facility of $400.0m (2019: $400.0m)
of which $220.6m was unutilised at 30 June 2020 (2019: $231.7m). 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 2020, the value of trade receivables provided as security under this securitisation facility was $226.9m
(2019: $212.5m). The net cash flows associated with the securitisation program are disclosed in the Consolidated Cash
Flow Statement as cash flows from financing activities.
Subsequent event
Subsequent to 30 June 2020, the Group extended the $400m trade debtor securitisation facility for a further three
years. The maturity date of the facility is now August 2023.
(ii) EBOS has gross bank term loan facilities of $692.7m (2019: $635m), of which $300.3m was unutilised at 30 June 2020
(2019: $270.9m). In March 2020, the Group refinanced approximately $200m of bank term loans and working capital
facilities. The facility limit was increased to $250m and the maturity date was extended to March 2023.
EBOS is in full compliance with its debt facility financial covenants. All bank loans, excluding the securitisation facility,
are secured by a charge over the assets of EBOS.
Recognition and measurement
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received plus issue
costs associated with the borrowing. After initial recognition, these loans and borrowings are subsequently measured
at amortised cost using the effective interest method which allocates the cost through the expected life of the loan or
borrowing. The fair value of non-current borrowings is approximately equal to their carrying amount.
Bank loans are classified as current liabilities unless EBOS has an unconditional right to defer settlement of the liability
for at least 12 months after the balance sheet date.
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77
E4. Borrowings facilities maturity profile
E5. Operating cash flows
As at 30 June 2020, EBOS had unrestricted access to the following lines of available credit:
Reconciliation of profit for the year with cash from operating activities:
Facility
Term debt facilities ($AUD)
Term debt facilities ($NZD)
Term debt facilities ($AUD)
Term debt facilities ($AUD/$NZD)
Securitisation facility ($AUD) (i)
A$millions
Maturity
$58.0
$41.8
$50.0
$542.9
$400.0
< 1 year
< 1 year
1–2 years
2–3 years
< 1 year
(i) Subsequent to balance date this facility was extended to August 2023 – refer note E3.
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 $571.8m (2019: $532.3m):
For the financial year ended 30 June 2020
Profit for the year
Add/(less) non-cash items:
Depreciation of property, plant and equipment
Depreciation on right of use assets
(Gain)/loss on sale of property, plant and equipment
Amortisation of finite life intangible assets
Share of profit from associates, net of dividends received
Expense recognised in respect of share-based payments
Less than
1 year
A$’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
Deferred tax
Bank loans
2020
2019
Financing activities
255,819
39,622
293,091
-
16,445
213,821
84,687
261,833
-
-
-
-
588,532
576,786
Bank overdraft facility, reviewed annually and payable at call:
Amount unused
Bank loan facilities with various maturity dates through to May 2023
(2019: May 2023)
Amount used
Amount unused
2020
A$’000
2019
A$’000
1,368
1,368
1,395
1,395
571,838
520,909
532,345
510,293
1,092,747
1,042,638
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
2020
A$’000
2019
A$’000
161,516
136,727
19,523
37,347
88
16,276
(3,355)
2,664
(3,253)
69,290
(124,791)
(2,558)
(14,182)
2,528
115,642
2,655
210
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)
(20,496)
(50,958)
10,092
8,790
229,192
(2,951)
5,280
118,543
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 78
79
E5. Operating cash flows continued
Reconciliation of debt:
SECTION F: EBOS GROUP STRUCTURE
Section Overview
1 July 2019
A$’000
Net borrowings
A$’000
Borrowings
acquired
A$’000
Foreign currency
movement
A$’000
30 June 2020
A$’000
This section provides information to assist in understanding the Group’s legal structure and how it affects the
financial position and performance of the Group. Details of businesses acquired are presented in Section B.
Bank loans
532,345
39,394
996
(898)
571,837
F1. Subsidiaries
1 July 2018
A$’000
Net (repayments)
A$’000
Borrowings
acquired
A$’000
Foreign currency
movement
A$’000
30 June 2019
A$’000
Bank loans
582,270
(51,878)
-
1,953
532,345
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 Ltd
EBOS Group Australia Pty Ltd
EBOS Health & Science Pty Ltd
PRNZ Limited
Pharmacy Retailing NZ Limited
Pet Care Distributors Pty Limited
Masterpet Corporation Limited
Masterpet Australia Pty Ltd
Botany Bay Imports and Exports Pty Ltd
Aristopet Pty Ltd
EAHPL Pty Limited
ZHHA Pty Ltd
ZAP Services Pty Ltd
Symbion Pty Ltd
Intellipharm Pty Ltd
Clinect Pty Ltd
Lyppard Australia Pty Ltd
DoseAid Pty Ltd
Symbion Trade Receivables Trust 1
Blackhawk Premium Pet Care Pty Ltd
Endeavour Consumer Health Limited
Nexus Australasia Pty Ltd
EBOS PH Pty Ltd
Ownership Interests
and Voting Rights
Country of
Incorporation
Australia
2020
100%
2019
100%
Australia
100%
100%
Australia
100%
100%
New Zealand
100%
100%
New Zealand
100%
100%
Australia
100%
100%
New Zealand
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
New Zealand
100%
100%
Australia
100%
100%
Australia
100%
100%
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 8O
EBOS GROUP 2O2O ANNUAL REPORT
81
F1. Subsidiaries continued
F1. Subsidiaries continued
Ownership Interests
and Voting Rights
Subsidiaries (all balance dates 30 June unless otherwise noted)
Country of
Incorporation
TerryWhite Group Pty Ltd
Chemmart Holdings Pty Ltd
TW&CM Pty Ltd
TWC IP Pty Ltd
PBA Wholesale Pty Ltd
VIM Health Pty Ltd
PBA Finance No. 1 Pty Ltd
PBA Finance No 2 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 Ltd
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
Ventura Health Pty Ltd
You Save Management Pty Ltd
Mega Save Management Pty Ltd
Cincotta Holding Company Pty Ltd
CC Pharmacy Investments Pty Ltd
CC Pharmacy Promotions Pty Ltd
CC Pharmacy Management Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2020
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%
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%
100%
Subsidiaries (all balance dates 30 June unless otherwise noted)
Shanghai EBOS Business Co. Ltd
ACN 618 208 969 Pty Ltd
Warner and Webster Pty Ltd
W & W Management Services PL
EBOS Medical Devices NZ Limited
EBOS Medical Devices Australia Pty Ltd
LMT Surgical Pty Ltd
National Surgical Pty Ltd
Healthcare Supply Partners Pty Ltd
Ownership Interests
and Voting Rights
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
2019
100%
100%
100%
100%
-
-
-
-
-
Country of
Incorporation
China
Australia
Australia
Australia
New Zealand
Australia
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 (‘the Trust’) have been included in the Group results for the year to 30 June 2020. 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$’000
Date of
acquisition
Animates NZ Holdings Limited
Animal Care supplies
December 2011
50%
17,353
Good Price Pharmacy Franchising Pty Limited
Healthcare supplies
October 2014
44.18%
Good Price Pharmacy Management Pty Limited
Healthcare supplies
October 2014
44.18%
7,286
7,286
The reporting date for Animates NZ Holdings Limited is 30 June. Animates NZ Holdings Limited is incorporated in
New Zealand.
Although the company holds 50% of the shares and voting power in Animates NZ Holdings Limited this entity is not
deemed to be a subsidiary as the other 50% is held by a single shareholder, therefore EBOS is unable to exercise control
over this entity.
The reporting date for Good Price Pharmacy Franchising Pty Limited and Good Price Pharmacy Management Pty Limited
is 30 June. They are incorporated in Australia.
The Group acquired a further 18.41% of shares and voting rights in Good Price Pharmacy Franchising Pty Limited and
Good Price Pharmacy Management Pty in April 2020 taking the proportion of shares held from 25.77% to 44.18%.
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F2. Investment in associates continued
The summary financial information in respect of the Group’s associates is set out below:
Statement of Financial Position
Total assets
Total liabilities
Net assets
Group’s share of net assets
Income Statement
Total revenue
Total profit for the year
Group’s share of profits of associates
Movement in the carrying amount of the Group’s investment in associates:
Balance at the beginning of the financial year
New investments
Share of profits of associates
Share of dividends
Net foreign currency exchange differences
Balance at the end of the financial year
2020
A$’000
88,450
(41,314)
47,136
23,267
131,730
7,719
3,355
41,074
3,694
3,355
(630)
(814)
46,679
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
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
23,772
20,430
-
-
-
-
Recognition and measurement
An associate is an entity over which EBOS has significant influence and that is neither a subsidiary nor an interest in a
joint venture or joint operation. EBOS has significant influence when it has the power to participate in the financial and
operating policy decisions of the investee, but is not in control or joint control over those policies.
Investments in associates are incorporated in the Group’s financial statements using the equity method of accounting.
Under the equity method, investments in associates are carried in the Consolidated Balance Sheet at cost and adjusted
for post-acquisition changes in EBOS’ share of the net assets of the associate, less any impairment in the value of
individual investments and less any dividends. Losses of an associate in excess of EBOS’ interest in that associate are
recognised only to the extent that EBOS has incurred legal or constructive obligations or made payments on behalf of
the associate.
Any excess of the cost of acquisition over EBOS’ share of the net fair value of the identifiable assets, liabilities and
contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is
included within the carrying amount of the investment and is assessed for impairment as part of that investment.
SECTION G: HOW WE MANAGE RISK
Section Overview
This section describes the financial risks that EBOS has identified and how it manages these risks, to protect its
financial position and financial performance. Management of these risks includes the use of financial instruments
to hedge against unfavourable interest rate and foreign currency movements.
G1. Financial risk management
The EBOS corporate treasury function provides services to the Group’s entities, 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 the 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.
No sources of ineffectiveness emerged from these hedging relationships.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 84
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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.
G2. Financial instruments
Derivatives
Other financial assets – derivatives (at fair value)
Forward foreign exchange contracts (i)
Interest rate swaps (i)
Other financial liabilities – derivatives (at fair value)
Forward foreign exchange contracts (i)
Interest rate swaps (i)
(i) Designated and effective as a cash flow hedging instrument carried at fair value.
2020
A$’000
2019
A$’000
109
-
109
367
12,262
12,629
611
-
611
40
10,677
10,717
No sources of ineffectiveness emerged from these hedging relationships.
Recognition and measurement
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 and 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 2019.
EBOS has categorised these derivatives, both financial assets and financial liabilities, as Level 2 under the fair value
hierarchy contained within NZ IFRS 13 Fair Value Measurement. 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 in 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.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 86
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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 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 baht
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
2020
A$’000
9,415
4,889
4,917
8,514
32,851
60,586
2020
A$’000
51,034
264,781
25,000
-
2019
A$’000
9,983
3,378
3,203
7,944
21,354
45,862
2019
A$’000
26,473
145,815
195,000
-
340,815
367,288
SECTION H: OTHER DISCLOSURES
Section Overview
This section includes the remaining information relating to EBOS that is required to be presented so as to
comply with its financial reporting requirements.
H1. Contingent liabilities
Contingent liabilities
Guarantees given to third parties
H2. Commitments for expenditure
Capital expenditure commitments:
Plant
Software development
H3. Subsequent events
Subsequent event
2020
A$’000
505
505
2019
A$’000
3,002
3,002
2020
A$’000
2019
A$’000
766
-
766
1,127
1,352
2,479
Subsequent to year end the Board has approved a final dividend to shareholders. For further details please refer
to note E2.
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H4. Related party disclosures
Key management personnel compensation
Short-term employee benefits
2020
A$’000
12,173
12,173
2019
A$’000
11,692
11,692
EBOS operates a long-term incentive share scheme whereby eligible staff receive performance rights entitling each holder of
the performance right to 1 new share per right issued. Performance rights do not vest until performance conditions are met over
a three year period. In the current year 205,263 performance rights were issued with a three-year performance period of 1 July
2019 to 30 June 2022 (2019: 180,300 with a three-year performance period of 1 July 2018 to 30 June 2021).
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$17.35. The performance period
in relation to these shares is 1 July 2017 to 30 June 2020.
H5. Remuneration of auditors
All non-audit services provided by the Group’s auditor require pre-approval by the Audit and Risk Committee. Before any
non-audit services are approved, the Audit and Risk Committee must be satisfied that the provision of such services will not have
any influence on the independence of the auditors.
H6. Leases continued
Accumulated depreciation
Balance as at 1 July 2019
Depreciation expense
Balance as at 30 June 2020
Net book value
As at 30 June 2020
Land and
buildings
A$’000
Office, Plant and
equipment
A$’000
Motor vehicles
A$’000
-
(33,594)
(33,594)
-
(2,310)
(2,310)
-
(1,443)
(1,443)
Total
A$’000
-
(37,347)
(37,347)
212,060
8,226
2,645
222,931
Amounts recognised in profit and loss
Depreciation on right of use assets
Finance costs – leases
Expense relating to short term leases and low value assets
Auditor of the Group (Deloitte)
Audit of the financial statements
Audit related services for review of interim financial statements
Advisory services
Taxation compliance
H6. Leases
Right of use assets
Cost
Balance as at 1 July 2019
Additions
Balance as at 30 June 2020
2020
A$’000
2019
A$’000
Lease liabilities
Current
Non-current
614
220
-
6
840
679
197
5
5
886
Total
A$’000
236,946
23,332
260,278
Maturity analysis (undiscounted future cash flows)
Year 1
Year 2
Year 3
Year 4
Year 5
Onwards
Cash outflows for leases
Interest on lease liabilities
Repayments of lease liabilities
Short term leases and low value asset leases
Land and
buildings
A$’000
Office, Plant and
equipment
A$’000
Motor vehicles
A$’000
225,624
20,030
245,654
8,576
1,960
10,536
2,746
1,342
4,088
2020
A$’000
37,347
8,126
5,091
33,846
203,300
40,960
38,800
35,436
33,494
30,348
91,672
270,710
(8,126)
(31,957)
(5,091)
(45,174)
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 9O
EBOS GROUP 2O2O ANNUAL REPORT
91
H6. Leases continued
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
37,996
108,394
47,012
193,402
Prior year operating leases relate to certain land, buildings, plant and equipment, with lease terms of between one to 12 years
with options to extend for a further one to 18 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.
H7. New accounting standards
The Group has adopted all new accounting standards that have become effective during the current year. The adoption of
these new standards has had no impact upon these financial statements, aside from that already disclosed in relation to IFRS 16
‘Leases’.
ADDITIONAL STOCK EXCHANGE INFORMATION
As at 31 July 2020
Twenty largest shareholders
Sybos Holdings Pte Limited
Fully paid shares
Percentage of
paid capital
30,525,721
18.74
HSBC Nominees (New Zealand) Limited – NZCSD HKBN90
Citibank Nominees (New Zealand) Limited – NZCSD CNOM90
13,881,061
9,275,939
JP Morgan Chase Bank NA NZ Branch-Segregated Clients Acct – NZCSD CHAM24
8,621,230
Forsyth Barr Custodians Limited 1 – CUSTODY
Accident Compensation Corporation – NZCSD ACCI40
JP Morgan Nominees Australia Limited
Custodial Services Limited A/C 4
FNZ Custodians Limited
National Nominees New Zealand Limited – NZCSD NNLZ90
Tea Custodians Limited Client Property Trust Account – NZCSD TEAC40
BNP Paribas Nominees (NZ) Limited – NZCSD COGN40
BNP Paribas Nominees (NZ) Limited – NZCSD BPSS40
Custodial Services Limited A/C 3
HSBC Nominees (New Zealand) Limited A/C State Street – NZCSD HKBN45
HSBC Nominees A/C New Zealand Superannuation Fund Nominees Limited
– NZCSD SUPR40
HSBC Custody Nominees (Australia) Limited
Custodial Services Limited A/C 2
New Zealand Depository Nominee Limited A/C 1 Cash Account
Whyte Adder No 3 Limited
6,126,404
6,020,540
4,336,788
3,963,154
3,890,843
3,594,337
3,304,546
3,163,120
3,054,660
3,038,930
2,834,923
2,233,229
2,073,350
1,851,791
1,845,546
1,796,425
8.52
5.70
5.29
3.76
3.70
2.66
2.43
2.39
2.21
2.03
1.94
1.88
1.87
1.74
1.37
1.27
1.14
1.13
1.11
Substantial product holders and number of securities
The following information is provided in compliance with section 293 of the Financial Markets Conduct Act and the ASX
Listing Rules.
Number of ordinary shares
As at balance date
As at 31 July 2020
162,864,001
162,869,721
115,432,537
70.88
Number of unquoted performance rights
As at balance date
As at 31 July 2020
341,995
338,245
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ADDITIONAL STOCK EXCHANGE INFORMATION CONTINUED
Substantial holder
name*
Ordinary shares as at
balance date
Percentage of share
capital as at balance
date
Ordinary shares as at
31 July 2020
Percentage of share
capital as at 31 July 2020
Sybos Holdings Pte
Limited
FMR LLC
30,525,721
14,868,783
*based on substantial holding notices received by the Company
Distribution of shareholders and shareholdings
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
18.74%
9.13%
30,525,721
13,214,395
18.74%
8.11%
Holders
Fully paid
ordinary shares
Percentage of
paid capital
4,722
3,304
755
544
63
9,388
2,017,140
7,842,887
5,398,418
11,857,894
135,753,382
162,869,721
1.24
4.82
3.31
7.28
83.35
100.00
Unmarketable parcels
As at 31 July 2020, there were 184 shareholders (with a total of
2,105 shares) holding less than a marketable parcel of shares
based on the closing price of the Company’s shares on the
ASX of A$20.34. The ASX Listing Rules define a marketable
parcel of shares as a parcel of shares of not less than A$500.
Waivers granted 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. In a poll,
every shareholder present in person or by proxy, attorney or
representative has one vote for each share.
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BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 94
95
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 2020 (2020 Code), the following disclosures
are included in the Annual Report.
The 2020 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 2019/20 year:
Objective
Progress during 2019/20
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.
Continue to ensure that the remuneration of females in
salaried roles is objectively reviewed against the remuneration
of males in comparable roles in order to eliminate inequity
based on gender (with such review taking into account relevant
experience, qualifications and performance).
Continue to promote family friendly and flexible work
place practices including but not limited to parental
leave, flexible return to work arrangements, flexible
work arrangements and employee assistance programs.
During the year ended 30 June 2020, the Board appointed Nick
Dowling as a new director whose appointment took effect from
1 February 2020. 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 Dowling’s extensive
experience, it was determined to appoint Mr Dowling.
In seeking to appoint any further new directors to the Board,
it will have regard to the gender mix of the Board.
As at 30 June 2020, the proportion of females that were Officers
(as defined in the NZX Listing Rules) was 33%, an increase
compared to 30 June 2019 (29%).
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.
A detailed gender pay equity analysis was undertaken in 2018.
EBOS expects to conduct a further gender pay equity
analysis shortly.
EBOS continued to promote these policies throughout the
year (including by introducing relevant policies to businesses
acquired during the year).
As part of its review of human resources policies, EBOS also
introduced a family domestic violence leave policy during the year.
As part of its response to COVID-19 a number of office-based
employees worked from home and had flexible workplace
arrangements. EBOS will undertake a review to learn more about
how to effectively manage flexible arrangements in the future.
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 2020 was as follows:
Board
2018/19
2019/20
Officer
2018/19
2019/20
Female %
Female (no.) Male %
Male (no.)
40
33.3
2
2
60
66.6
3
4
Female %
Female (no.) Male %
Male (no.)
29
33
2
3
71
66
5
6
Officer has the meaning given in the NZX Listing Rules.
Group
2018/19
2019/20
Female %
Male %
58
58
42
42
Director independence
2020 Code
The Board’s assessment of the independence of each
person that was a director as at 30 June 2020 is set out
below.
Under NZX Listing Rule 3.8.1(b), EBOS is required to state
in the Annual Report which recommendations in the 2020
Code were not followed in the financial year ended
30 June 2020.
Name
Status
Appointment date
Recommendation
Comment
Elizabeth Coutts
Independent
July 2003
Nicholas Dowling
Independent
February 2020
3.4 – Nomination
Committee
Stuart McGregor
Non-independent July 2013
Stuart McLauchlan
Independent
July 2019
Sarah Ottrey
Independent
September 2006
Peter Williams
Non-independent July 2013
Elizabeth Coutts, Nicholas Dowling, Stuart McLauchlan
and Sarah Ottrey have been determined as Independent1.
Nicholas Dowling and Stuart McLauchlan were both
recently appointed to the Board and do not have
relationships which may impact the Board’s assessment
of their independence. In relation to Elizabeth Coutts
and Sarah Ottrey, the Board is unanimously of the view
that each director brings, amongst 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.
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
Company’s Corporate Governance
Statement (as required under
the policy) to ensure it accurately
reflects the remuneration structures.
5.2 – Remuneration
policy
1 Independent means that the director is considered to be an Independent
Director as defined under the NZX Listing Rules and independent having
regard to the factors set out in the ASX Corporate Governance Council’s
Corporate Governance Principles & Recommendations.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 96
97
REMUNERATON
Remuneration Overview
The Board is responsible for:
Table 1: FY2020 STI plan
EBOS Group Limited presents this remuneration overview for
the Company and its controlled entities for the year ended
30 June 2020. This overview provides details beyond those
required under New Zealand laws and the NZX Corporate
Governance Code. The Board considers that it is important
to provide an appropriate level of transparency around
the Group’s approach to remuneration beyond these strict
requirements in order to encourage confidence in the
Group’s executive and non-executive director remuneration
processes.
This overview provides details of the Group’s approach to
remuneration including incentive plans for senior executives
that were in place for the reporting year and remuneration
received by the CEO.
Remuneration Philosophy and Principles
It is recognised that in order to support the business and
its strategy, the Group must attract and retain people of a
high calibre. Accordingly, the Board sets the remuneration
of directors and executives with regard to this and other
business objectives.
Specifically in relation to executives, it is the policy of the
Group to align components of executive remuneration
with the performance of the Group. Accordingly, executive
remuneration comprises fixed and ‘at risk’ (or performance-
based) elements which are both short and long-term in
nature. The purpose of this policy is to ensure that the
interests of the executives, the Group and its shareholders
are aligned during the period over which the business results
are realised.
As a result the remuneration framework is structured to
promote the long-term sustainable growth of the Group
with a significant portion of performance-based executive
remuneration awarded as rights to equity.
Remuneration Governance
As set out in the Charter for the Remuneration Committee,
the Committee is responsible for reviewing, recommending
and, if delegated by the Board, setting, in accordance with
the Group’s Remuneration Policy and Group practices,
all components of the remuneration of the directors and
executives. The charter for the Remuneration Committee is
included as Appendix C to the Corporate Governance Code
which can be found at https://ebosgroup.gcs-web.com/
corporate-governance.
The Remuneration Committee is responsible for:
• approving the remuneration of executives; and
• recommending non-executive director remuneration to
the Board.
• approving non-executive director remuneration; and
• approval of remuneration policies.
Members of the Remuneration Committee during the year
were:
• Elizabeth Coutts (Chair from 15 October 2019);
• Stuart McLauchlan (appointed 15 October 2019);
• Sarah Ottrey; and
• Mark Waller (Chair until 15 October 2019, resigned
15 October 2019).
Executive Remuneration Framework
The Group’s remuneration structure for executives, including
the CEO, comprises three elements:
• Total Fixed Remuneration (TFR);
• Short-Term Incentive (STI); and
• Long-Term Incentive (LTI).
The following summarises each component of executive
remuneration. A summary of the remuneration of the CEO,
Mr John Cullity, is set out below.
a. Total Fixed Remuneration (TFR)
Fixed remuneration may include a component of
compulsory superannuation contributions for Australian-
based executives and KiwiSaver contributions for New
Zealand-based executives. Executives fixed remuneration
is set by reference to the person’s position, performance
at EBOS, market data for comparable companies,
their qualifications and their experience.
b. Short Term Incentive (STI)
The STI is currently an annual cash payment which is
dependent on the achievement of a combination of Group
and individual performance measures.
The performance measures are set by reference to the
executive’s responsibilities and particular projects relevant
to that executive and the business or function for which
they are responsible. The purpose of the STI is to reward
executives for meeting measurable objectives linked to a
financial year.
For example, for executives that are responsible for
businesses in the Group, their performance measures may
be set by reference to the performance of that business and
the Group as a whole.
For executives that have functional responsibilities,
their performance objectives may be set by reference
to the financial performance of the Group.
Feature
Purpose
Eligibility
Approach
Align individual performance with Group objectives.
Provide individuals with a competitive market position for total reward (i.e. variable and fixed
pay components).
Those considered for participation in the program must be able to impact the performance
of their own work area, their business or function and also contribute to the Group’s overall
performance.
Instrument
Cash
Performance Criteria
The following criteria must be met before any payments are made:
• Group Profit Before Tax (PBT) target for the financial year; and where relevant,
• Business unit EBIT target for the financial year (Healthcare or Animal Care & Consumer Brands).
c. Long Term Incentive (LTI)
EBOS Group has a long-term incentive plan. The table below sets out the key terms for the LTIs granted during the year
ended 30 June 2020.
Table 2: LTI 2019/22 plan
Feature
Purpose
Eligibility
Approach
Align a portion of executives’ total remuneration with the medium to long term performance
of the Group.
The Remuneration Committee determines whether an LTI plan will operate and the extent
(if any) to which each executive is invited to participate in an LTI plan.
Instrument
Performance Rights (PRs) which are rights to acquire ordinary shares in the Company for
nil consideration.
Settlement
PRs can be settled either in equity or a cash equivalent at the discretion of the Board.
Performance period
Three years from 1 July 2019 to 30 June 2022.
Vesting conditions
• Continuous employment with the Group;
• Growth in the Company’s earnings per share in each year of the performance period or
cumulatively over the performance period must equal or exceed a specific percentage
target.
Dividends and
voting rights
PRs do not have voting rights or accrue dividends.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 98
99
Table 2: LTI 2019/22 plan continued
Feature
Clawback
Approach
The Board has broad discretion to adjust downwards including to zero unvested or vested LTI
awards where, in the opinion of the Board, the CEO or an executive has:
• acted fraudulently, dishonestly or engaged in gross misconduct or is in breach of their
obligations to the Group;
• acted in a way that has contributed to material reputational damage to the Group; or
• received PRs that have vested as a result of fraud, dishonesty or breach of obligations of any
person or as a result of a material misstatement of the financial statements of the Group.
Restriction on
hedging
Hedging of PRs by executives is not permitted.
Change of control
Vesting of PRs is subject to Board discretion.
Cessation of
employment
Resignation: subject to the Board determining otherwise, unvested PRs are forfeited. Vested PRs
remain on foot.
Termination for cause: if an Executive’s employment is terminated for cause, subject to the Board
determining otherwise, unvested and vested performance rights are forfeited.
Termination without cause (including circumstances such as redundancy and retirement): the
Board shall determine the treatment of unvested performance rights. All vested PRs remain on
foot unless otherwise determined by the Board.
d. Executive Remuneration Mix
The Group’s Remuneration Policy does not include the relative weightings of remuneration and performance criteria.
As required under the Group’s Remuneration Policy, the relative weightings of realised executive remuneration components
in the financial year ended 30 June 2020 is set out in the Group’s Corporate Governance Statement.
CEO Remuneration
a. Past Financial Performance
The table below presents the financial performance for EBOS Group Limited for the previous 5 financial years.
Table 3: Past Financial Performance
2020
2019
2018
2017
2016
b. Key terms of CEO employment contract
The table below sets out the key terms of Mr Cullity’s employment contract.
Table 4: CEO Contract
Contract duration
Notice period –
company
Notice period –
CEO
Termination provision
(where notice provided)
Post-employment
restraint
Ongoing until
terminated by
either party
12 months unless for
cause
12 months
12 months
18 months
c. CEO Remuneration Outcomes for FY20
The table below sets out the remuneration outcomes for Mr Cullity during the 2020 and 2019 financial years.
Table 5: Summary of total realised remuneration
Financial year
Fixed remuneration
(including superannuation)
STI
LTI
2020
2019
A$1,350,000
A$1,150,000
A$1,000,000
A$1,150,531
A$487,500
-
The amounts set out in this section may differ from the
amounts included in Note H4 to the Financial Report and
the table of employee remuneration included on pages
102 and 103 which are reported according to accounting
standards. The accounting values of remuneration
reported may not 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. A summary of total realised remuneration
received by Mr Cullity during the year ended 30 June 2020
is set out in Table 5 above.
Fixed remuneration
In the financial year ended 30 June 2020, Mr Cullity
received fixed remuneration of A$1,350,000. This includes
compulsory superannuation contributions.
• If the Group’s underlying 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 underlying 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
2019 STI.
2020 STI
In relation to the STI for the year ended 30 June 2020,
a similar structure for the STI was adopted. Mr Cullity’s
maximum STI entitlement under the 2020 STI is $1,350,000
and it is expected that Mr Cullity will receive the maximum
STI entitlement during the 2021 financial year.
A$162.5m
A$137.7m
A$137.3m
A$125.9m
A$117.0m
Short Term Incentive (STI) payment
Long Term Incentives
NPAT 1
Basic EPS
A$100.6cps
A$89.8cps
A$90.4cps
A$83.0cps
A$77.4cps
Share price at end of financial year
NZ$21.61
NZ$23.15
NZ$17.95
NZ$17.50
NZ$16.36
Total dividends in period
NZ$77.5cps
NZ$71.5cps
NZ$68.5cps
NZ$63.0cps
NZ$58.5cps
Total shareholder return 2
(3.30%)
32.95%
6.49%
10.82%
65.32
Note 1: Net profit after tax attributable to owners of the company.
Note 2: Total shareholder return is calculated as the share price at the end of the year plus dividends declared in relation to that year.
In the financial year ended 30 June 2020, Mr Cullity
received an STI payment of $1,150,000. This payment was
based on the financial performance of the Group for the
prior year (that is, the year ended 30 June 2019) (2019 STI).
With regard to the 2019 STI, a target was set by reference
to the Group’s 2019 Underlying Profit Before Tax results
(Target). The calculation of Mr Cullity’s 2019 STI was based
on the following criteria:
• If the Group’s underlying Profit Before Tax (PBT) results
were less than 80% of the Target, no STI was payable.
During the year ended 30 June 2020, Mr Cullity received
long term incentives of A$1,000,000.
The performance conditions for the performance rights
granted during the year ended 30 June 2020 are described
in section c and Table 2 above.
The maximum LTI opportunity for Mr Cullity in the form of
equity instruments for the year ended 30 June 2020 was
A$1,000,000.
BUSINESS OVERVIEWFINANCIALSCORPORATE GOVERNANCEREMUNERATION REPORTDIRECTORS’ INTERESTS & DISCLOSURESDIRECTORYEBOS GROUP 2O2O ANNUAL REPORT 1OO
EBOS GROUP 2O2O ANNUAL REPORT
1O1
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 2020 were as follows:
Table 8: Non-executive director fees paid in New Zealand dollars during the year ended 30 June 2020
Director
E Coutts
N Dowling**
S McGregor
S McLauchlan
S Ottrey
P Williams
M Waller##
Base Fee*
$
Audit and Risk
Committee*
$
273,478
66,374
160,000
160,000
160,000
160,000
93,043
23,315
-
17,500
26,596
-
-
5,088
Remuneration
Committee*
$
17,092
-
-
7,092
10,000
-
5,815
Total
$
313,885
66,374
177,500
193,688
170,000
160,000
103,946
*Includes fees as Chair of Board or a Committee.
** Mr Dowling commenced as a director on 1 February 2020.
## Mr Waller retired as a director on 15 October 2019.
Long term incentives in the form of equity instruments received by Mr Cullity in previous financial years were:
Table 6: LTIs – Chief Executive Officer
Performance Period
Instrument
LTI – 2019/2022
1 July 2019 to 30 June 2022
45,455 Performance Rights
LTI – 2018/2021
1 July 2018 to 30 June 2021
47,500 Performance Rights
LTI - 2017/2020
1 July 2017 to 30 June 2020
110,000 loan-backed shares
LTI - 2016/2019
1 July 2016 to 30 June 2019
95,000 loan-backed shares
Vesting of LTI shares
Non-Executive Director Remuneration
In previous financial years, EBOS operated a long term
incentive share plan whereby EBOS provided an interest
free, non-recourse loan to participating senior executives,
including Mr Cullity, in order for those executives to
purchase shares in the Company.
The Group issued 95,000 shares to Mr Cullity as part of the
LTI 2016/19 plan (prior to his appointment as Chief Executive
Officer). The performance conditions were tested following
the end of the performance period and, as the conditions
were satisfied, the shares vested during the year ended 30
June 2020. The loan balance in respect of these shares as at
30 June 2020 was NZ$1,529,073.
The remuneration of non-executive directors is set by
reference to the time commitment and responsibilities of
the non-executive directors (including any commitment as
a member of a Board committee) and is set at a level which
is designed to attract and retain experienced and qualified
Board members and provide appropriate remuneration for
their time and expertise. Market rates for non-executive
director remuneration for comparable companies (by size,
industry classification and/or complexity) are also taken into
account.
Non-executive directors do not receive performance-based
remuneration.
The Group issued 110,000 shares to Mr Cullity as part of the
LTI 2017/20 plan (prior to his appointment as Chief Executive
Officer). The performance conditions were tested following
the end of the performance period and, as the conditions were
satisfied, the shares will vest in August 2020. The loan balance
in respect of these shares as at 30 June 2020 was NZ$1,731,202.
Total remuneration for non-executive directors is subject
to an aggregate fee pool limit of NZ$1,410,000 (including
payments made in respect of KiwiSaver and compulsory
superannuation contributions) in any financial year. The fee
pool was approved by shareholders at the Annual Meeting
held on 15 October 2019.
Table 7: Non-executive director fees by position
Position
Chairman
Director (other than Chairman)
Chair of Audit and Risk Committee
Chair of Remuneration Committee
Member of Audit and Risk Committee
Member of Remuneration Committee
Fees (NZD)
$320,000
$160,000
$37,500
$20,000
$17,500
$10,000
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1O2
EBOS GROUP 2O2O ANNUAL REPORT
1O3
Employee Payment Bands
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
300,000–310,000
320,000–330,000
330,000–340,000
340,000–350,000
350,000–360,000
360,000–370,000
370,000–380,000
380,000–390,000
400,000–410,000
420,000–430,000
430,000–440,000
440,000–450,000
450,000–460,000
460,000–470,000
Employee
remuneration (NZ$)
530,000–550,000
590,000–600,000
640,000–650,000
730,000–740,000
800,000–810,000
810,000–820,000
840,000–850,000
1,220,000–1,230,000
1,280,000–1,290,000
1,350,000–1,360,000
1,490,000–1,500,000
1,690,000–1,700,000
3,560,000–3,570,000
30 June 2020
Number of Employees
143
74
75
67
52
42
34
14
25
19
22
14
11
8
12
6
5
4
4
4
2
1
3
1
5
3
4
3
1
1
1
2
1
30 June 2020
Number of Employees
1
1
1
1
2
1
1
1
1
1
1
1
1
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1O4
EBOS GROUP 2O2O ANNUAL REPORT
1O5
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 2020, as follows:
E.M. Coutts: Chair of Urwin & Company Ltd, Oceania
Healthcare Ltd, Ports of Auckland Ltd and Skellerup
Holdings Ltd, Director of Tennis Auckland Region
Incorporated, Director of EBOS Group subsidiaries in New
Zealand and Member, Marsh New Zealand Advisory Board.
N.W Dowling: Director of ABI Dowling Pty Ltd, Balmoral
Australia Pty Ltd, Balmoral Financial Investments Pty Ltd,
Balmoral Operations Pty Ltd, BPI Property Investments Pty
Ltd and BPI Property Developments Pty Ltd.
S.J. McGregor: Director of Symbion Pty Ltd and other
EBOS Group subsidiaries.
S.J. McLauchlan: Chairman of Scott Technology Limited,
Analog Digital Instruments Limited, UDC Finance Limited,
BPac Clinical Services Ltd, Cargill Hotel 2002 Ltd, Compass
Agribusiness Ltd, Foundation Studies Ltd, G S McLauchlan
& Co, Otago Community Hospice and Wood Solutions.
Director of Argosy Property Ltd, Dunedin Casinos Ltd,
NZ Whisky and Scenic Circle Hotels. Governor, NZ Sports
Hall of Fame. Member, Marsh NZ Advisory Board.
S.C. Ottrey: Chair of Whitestone Cheese Ltd and Director
of Sarah Ottrey Marketing Ltd, Skyline Enterprises Limited
and its subsidiaries, Mount Cook Alpine Salmon Limited
and Christchurch International Airport Ltd. Member of the
Institute of Directors – Otago Southland Branch committee.
P.J. Williams: Executive of The Zuellig Group and director of
associated companies, a director of Pharma Industries Ltd, CB
Norwood Pty Ltd, Cambert and Green Cross Health Limited.
M.B. Waller: Director of EBOS Group Limited and
subsidiaries. Note Mr Waller retired as a director of EBOS
Group Limited and subsidiaries on 15 October 2019.
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.
Share dealings by Directors
The Directors have disclosed to the Board under section 148(2) of the Companies Act 1993 particulars of acquisitions or
disposals of a relevant interest in the Company’s shares.
Directors’ shareholdings
Director
Elizabeth Coutts
– Indirect/beneficial interest
– Direct non-beneficial interest/trustee of EBOS Staff Share Plan
Stuart McLauchlan – Indirect/beneficial interest
Sarah Ottrey
– Indirect/beneficial interest
– Held with associated person
30 June 2020
30 June 2019
33,313
71,592
2,037
3,050
8,380
32,500
Nil
Nil
3,050
8,176
Mark Waller**
– Held with associated persons
506,692
506,692
– Direct non-beneficial interest/trustee of EBOS Staff Share Plan
Nil
71,592
** Mr Waller retired as a director of EBOS Group Limited on 15 October 2019.
Attendance at Board and committee meetings
Elizabeth Coutts
Nick Dowling##
Stuart McGregor
Stuart McLauchlan
Sarah Ottrey
Peter Williams
Mark Waller**
Board
Audit & Risk
Remuneration
Eligible
to Attend
Attended
Eligible
to Attend
Attended
Eligible
to Attend
Attended
10
5
10
10
10
10
2
10
5
8
8
10
10
2
3
-
3
2
-
-
1
3
-
3
2
-
-
1
3
-
-
2
3
-
1
3
-
-
2
3
-
1
## Nick Dowling joined the Board on 1 February 2020.
** Mark Waller retired from the Board on 15 October 2019.
Director
Elizabeth Coutts
Stuart McLauchlan
Sarah Ottrey
Ordinary Shares
Purchased/(Sold)
Consideration
Paid/(Received) (NZD)
365
71,592**
448
2,000
37
92
112
Date of
Transaction
11 October 2019
2 December 2019
3 April 2020
$8,818
Nil
$9,076
$46,000
26 November 2019
$750
$2,223
$2,269
3 April 2020
11 October 2019
3 April 2020
** This acquisition was as a result of Ms Coutts’ appointment as a trustee of the EBOS Staff Share Plan.
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1O6
EBOS GROUP 2O2O ANNUAL REPORT
1O7
Disclosures relating to subsidiaries
Subsidiary
Current Directors
Subsidiary
Current Directors
Subsidiary
Current Directors
Subsidiary
Current Directors
Collaboration Medical Clinics Pty Ltd J Cullity
HPS Corrections Pty Ltd
S McGregor#
Collaboration Medical Clinics
Investments Pty Ltd
J Cullity
M McLoughlin*
HPS Finance Pty Ltd
Blackhawk Premium Pet Care Pty Ltd J Cullity
EBOS Health & Science Pty Ltd
ACN 618 208 969 Pty Ltd
Alchemy Holdings Pty Ltd
Alchemy Sub-Holdings Pty Ltd
Aristopet Pty Ltd
Beaphar Pty Ltd
BFCMC 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#
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
Cincotta Holding Company Pty Ltd
Clinect Pty Ltd
Clinect NZ Pty Limited
S McGregor#
J Cullity
S Duggan
M Waller*
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
M Waller*
Developing People Pty Ltd
DoseAid Pty Ltd
EAHPL Pty Ltd
EBOS Group Australia Pty Ltd
J Cullity
S McGregor#
J Cullity
S McGregor
M Waller*
J Cullity
S McGregor#
J Cullity
S McGregor#
J Cullity
S McGregor#
EBOS Medical Devices Australia Pty
Ltd
J Cullity
S McGregor#
EBOS Medical Devices NZ Limited
EBOS PH Pty Ltd
Endeavour CH Pty Ltd
E Coutts
J Cullity
L Hansen
S McGregor*
J Cullity
S McGregor#
J Cullity
S McGregor#
Endeavour Consumer Health Limited E Coutts
J Cullity
L Hansen
M Waller*
Healthcare Supply Partners Pty Ltd
J Cullity
Hospharm Pty Ltd
HPS Brands Pty Ltd
J Cullity
S McGregor#
J Cullity
S McGregor#
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
LMT Surgical Pty Ltd
Lyppard Australia Pty Ltd
Masterpet Australia Pty Limited
Masterpet Corporation Limited
Masterpet Logistics Pty Ltd
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#
J Cullity
S McGregor#
J Cullity
S McGregor
M Waller*
J Cullity
S Duggan
M Waller*
E Coutts
J Cullity
S Duggan*
L Hansen
M Waller*
J Cullity
S Duggan
M Waller*
National Surgical 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
Pet Care Wholesalers Pty Ltd
Pets International Pty Ltd
Pharmacy Brands Australia Pty Ltd
Pharmacy Retailing (NZ) Limited
PRNZ Limited
Richard Thomson Pty 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#
M Waller*
J Cullity
S McGregor#
M Waller*
J Cullity
S McGregor#
J Cullity
S Duggan
M Waller*
J Cullity
S McGregor#
E Coutts
J Cullity
L Hansen
M Waller*
E Coutts
J Cullity
L Hansen
M Waller*
J Cullity
S McGregor#
M Waller*
J Cullity
S McGregor
M Waller*
Mega Save Management Pty Ltd
J Cullity
S McGregor#
Symbion Pty Ltd
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1O8
EBOS GROUP 2O2O ANNUAL REPORT
1O9
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 on pages 102 to 103.
Auditor
The Company’s auditor, Deloitte, will continue in office in
accordance with the Companies Act 1993.
The Directors are satisfied that the provision of non-audit
services, during the year by the auditor is compatible with the
general standard of independence for auditors imposed by
the Companies Act 1993. Details of amounts paid or payable to
the auditor for non-audit services provided during the year by
the auditor are outlined in note H5 of the financial statements.
Elizabeth Coutts
Chair of Directors
Stuart McLauchlan
Director
Disclosures relating to subsidiaries continued
Subsidiary
Current Directors
Terry White Group Pty Ltd
J Cullity
S McGregor#
D Lewis*
S Hughes*
Tony Ferguson Weight Management
Pty Ltd
J Cullity
S McGregor#
TW&CM Pty Ltd
TWC IP Pty Ltd
Ventura Health Pty Ltd
VIM Health Pty Ltd
VIM Health IP Pty Ltd
Vitapet Corporation Pty Limited
Warner & Webster Pty Ltd
J Cullity
S McGregor#
J Cullity
S McGregor#
J Cullity
S McGregor#
J Cullity
S McGregor#
J Cullity
S McGregor#
J Cullity
S Duggan
M Waller*
J Cullity
S McGregor#
W & W Management Services Pty Ltd J Cullity
You Save Management Pty Ltd
ZAP Services Pty Ltd
ZHHA Pty Ltd
Shanghai EBOS Business
Management Co Ltd
S McGregor#
J Cullity
S McGregor#
J Cullity
S McGregor
M Waller*
J Cullity
S McGregor
M Waller*
J Cullity
* Ceased to be a director during the year ended 30 June 2020.
# Alternate director.
DIRECTORY
Janelle Cain
General Counsel
Sean Duggan
CEO Animal Care and
Consumer Brands
Leonard Hansen
Acting Chief Financial Officer
David Lewis
EGM Strategy
Jacinta McCarthy
Group GM – Human Resources
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,
13 October 2020 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
Elizabeth Coutts
Independent Director
Nick Dowling
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
Simon Bunde
EGM Strategic Operations
and Innovation
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EBOS GROUP 2O2O ANNUAL REPORT
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