2014
Financial
RepoRt
paragon care is a leading supplier of non-diagnostic,
non-therapeutic durable medical equipment and furniture
for the health and aged care markets. over the past four
years paragon care has acquired seven companies. each
one a leading provider of innovative healthcare and
medical equipment.
lR instruments and Richards Medical are the latest
additions to the paragon care Group offering surgical
instruments, diagnostic, air management and an extensive
range of consumable medical products.
our companies are all well known in the healthcare industry
and are now growing together as one organisation offering
a peerless range of high quality products and services.
the extent of our range positions us to be very active
contributors to the planning of major healthcare projects.
Contents
4 Corporate Directory
5 Chairman’s Report
6 Directors’ Report
13 Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
15 Consolidated Statement of Profit or Loss and other Comprehensive Income
16 Consolidated Statement of Financial Position
17 Consolidated Statement of Changes in Equity
18 Consolidated Statement of Cash Flows
19 Notes to the Financial Statements
44 Directors’ Declaration
46
Independent Audit Report
48 Corporate Governance Statement
53 Shareholder Information
patient Stretchers
Mobile Surgical Units
Medical and Medication carts
Screen Systems
iV Systems
Bedding products
Mattresses
Furniture
lifting Systems
chair Systems
Shelving Systems
Service carts
Refrigeration Systems
Mortuary Systems
World class acute care and
aged care beds and furniture
the dignified care concept
Stainless steel equipment for
acute and aged care markets
Surgical instruments
Respiratory
cSSD and Surgical products
Diagnostic
Medical equipment
Paragon Care Limited Financial Report 2013/14 3
Paragon Care Limited
ABN 76 064 551 426
Registered office
Unit 1, 56 Norcal Road
Nunawading, VIC 3131
Telephone: 1300 369 559
Telephone: +61 3 8833 7800
Facsimile: +61 3 8833 7890
principal Business office
Unit 17, 56 Norcal Road
Nunawading, VIC 3131
Telephone: 1300 369 559
Telephone: +61 3 8833 7800
Facsimile: +61 3 8833 7890
www.paragoncare.com.au
Corporate Directory
Directors
Shane F tanner [Non-Executive Chairman]
Mark a Simari [Managing Director]
Michael c newton [Non-Executive Director]
Brett a cheong [Executive Director]
Company Secretary
Mark a Simari
Share Registry
link Market Services limited
Level 1, 333 Collins Street
Melbourne, VIC 3000
Locked Bag A14,
Sydney South, NSW 1235
Telephone: 1300 554 474
Facsimile: 02 9287 303
linkmarketservices.com.au
Stock Exchange Listing
australian Stock exchange
Trading Code:
PGC - ordinary shares
Auditor
RSM Bird cameron partners
Level 21, 55 Collins Street
Melbourne, VIC 3000
rsmi.com.au
Bankers
commonwealth Bank of australia
Westpac Banking corporation
Solicitors
SoHo lawyers
Suite 804 / 365 Little Collins Street
Melbourne, VIC 3000
Chairman’s Report
For the year ended 30 June 2014
Introduction
On behalf of the Board of Directors of Paragon Care Limited,
I am pleased to present to you our 2014 Annual Report.
The other pleasing aspect during 2014 was the continuous
improvement program PGC set up during the previous years.
Key results include:
The Period in Review
The 2014 financial year has been a period of significant
achievement with the successful acquisition and integration
of the LR Instruments and Richards Medical consumables
businesses. The Company improved its financial performance
during 2014 with continued strength in our core durable goods
products along with the fast start in the newly incorporated
consumables portfolio. Despite an uncertain economic
environment and increased funding pressures, Paragon Care
has continued to demonstrate strong revenue and profit
growth underpinned by year on year margin improvements.
-
-
-
-
-
-
-
-
-
Highlights of the consolidated results for the year ended
30th June 2014 included:
Revenue of $19.4M, up 13.5% year on year.
eBitDa was $1.78M, up more than 18%
on 2013 eBitDa of $1.5M.
net profit for 2014 finished at $1,085,000 compared
to $740,000 in 2013.
cash Reserves ended the year at $2.8mil
the successful acquisition of lR instruments and
Richards Medical which has expanded paragon care’s range
of product offerings and provides further exposure to hospital
operating budgets.
agreement with the Westpac Banking corporation’s Healthcare
division for a new $10m facility on favorable commercial terms.
this will provide paragon care with a significant opportunity to
develop and grow its business both organically and via further
acquisitions
leveraging the expertise acquired with lR instruments
and Richards Medical, the sales team has become a dynamic
multifaceted team with the capability to supply best in class
support to our diverse customer base.
the organisation is well underway in centralising core activities
with accounting, analytics, payroll and transactional processing
all consolidated into one team on a single platform
cost reduction and productivity initiatives in the lilydale
factory continued in 2014 with positive results in quality
and gross margins.
Outlook
The Board will continue to drive organic revenue and EBITDA
growth throughout its complimentary suite of products for
2015 with increased focus on national key account expansion,
geographical penetration and ongoing growth in the company’s
proprietary product range.
In addition to the above, the company at all times has a pipeline
of acquisition targets identified that it will explore and where
appropriate seek to secure to compliment the current core
business of the company and expand the product offering to
the market place.
The Directors would like to thank all of our staff, shareholders,
suppliers and customers for their ongoing loyalty and support
during the past twelve months.
In 2014, Paragon Care Limited (PGC) continued to produce
strong results against its core strategy of increasing its
sales base via its own proprietary products. PGC achieved
15% year over year sales growth in proprietary products as
a result of a solid performance in the Rapini and GM Medical
portfolio. Products sourced from PGC’s own product range now
constitutes 45% of total sales, with the remaining sales sourced
from suppliers concentrated in North America and Europe with
exclusive distribution agreements.
Shane Tanner
Chairman
Revenue
EBITDA
Net Profit
$19.4M
$17.1M
%
4
1
+
$1.8M
$1.5M
$1,085,000
%
8
1
+
$740,000
%
7
4
+
4 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 5
12/13
13/14
12/13
13/14
12/13
13/14
Directors’ Report
For the year ended 30 June 2014
Your Directors present their report on the consolidated entity
(referred to hereafter as the Group) consisting of Paragon Care
Limited (“Company”) and the entities it controlled at the end of,
or during, the year ended 30 June 2014.
Directors
The following persons were Directors of Paragon Care Limited
during the whole of the financial year and up to the date of this
report unless otherwise stated.
Mr Shane Tanner
Mr Mark Simari
Mr Michael Newton
Mr Brett Cheong
Principal Activities
The principal continuing activity of the Group is supply of durable
medical equipment and consumable medical product to the
health and aged care markets throughout Australia and New
Zealand.
There were no significant changes in the nature of the activities
of the Group that occurred during the year:
Operating Results and Review of Operations for the Year
Key financial highlights include:
Revenue
EBITDA
Net Profit
Debt
2013/14
$19.4M
$1.8M
$1,085,000
$4.3M
2012/13
$17.1M
$1.5M
$740,000
$4.3M
The Group’s performance improved considerably in the 2013-14
financial year compared with 2012-13. Revenue increased by
13.5% to $19.4 million whilst net profit improved from profit of
$740,000 in 2012-13 to $1,085,000 for 2013-14.
The increase in revenue was due primarily to encouraging growth
in the company’s proprietary products particularly our Rapini and
GM Medical range, along with the recent addition of our newly
acquired consumable products portfolio.
-
-
-
-
-
Highlights for the year included:
Successful integration of the LR Instruments and Richards
Medical acquisition. The buy-in from staff has been relatively
seamless and several marketing and stock related initiatives
have been implemented to facilitate future growth in the
business.
The Volker Product Range once again experienced high levels
of demand from both the acute and aged care markets.
The Rapini brand continued to expand its market presence
by establishing additional preferred supplier agreements with
key healthcare providers, as well as, introduced innovative new
products to the sector.
GM Medical had a solid year with strong demand across the
entire range of products. This was driven by a combination of
continuous production efficiencies and the development of
new product designs for the existing range.
Agreement with the Westpac Banking Corporation’s Healthcare
division for a new $10m facility on favorable commercial terms.
This will provide Paragon Care with a significant opportunity to
develop and grow its business both organically and via further
acquisitions
The Group continues to review all aspects of its operations,
improve and strengthen its supply and sales chains, expand
its product range and enhance its customer support.
The Group’s broad high quality product base has excellent
underlying growth potential, especially in view of the large
number major hospital developments in the pipeline around
Australia
Significant Changes in the State of Affairs
Contributed equity increased by $7,768,437 (from $15,040,385 to
$22,808,822) as the result of a share placement to sophisticated
and professional investors, shares issued pursuant to the
company’s dividend re-investment plan and shares issued
in consideration for the release of an obligation to repay
borrowings. Details of the changes in contributed equity are
disclosed in note 17 to the financial statements.
The net cash received from the increase in contributed equity
was used principally towards the acquisition of LR Instruments
and Richards Medical and fund working capital.
Matters Subsequent to the end of Financial Year
No matter or circumstance has arisen since 30 June 2014
that has significantly affected, or may significantly affect:
(a) the group’s operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the group’s state of affairs in future financial years.
Likely developments and expected results of operations
The Company’s focus for the coming year will be to continue
to implement its strategy to become one of Australia’s leading
providers of medical equipment and consumable products
to the health and aged care sector throughout Australia and
New Zealand. Leveraging the diverse product portfolio, Paragon
Care will continue to penetrate high growth markets driven by
the ageing of the population and continuously rising consumer
expectations and increasing government spending.
The Company will continue to seek and attempt to secure
suitable investments or businesses that are complimentary to its
existing operations and further enhance its product and service
offering to the health and aged care markets.
Further information on likely developments in the operations of
the Group and the expected results of operations have not been
included in this annual financial report because the Directors
believe it would be likely to result in unreasonable prejudice to
the Group.
Environmental Regulations
The Group’s operations are not regulated by any significant
environmental regulation under a law of the Commonwealth
or of a State or Territory.
Dividends Paid
In keeping with Directors confidence of Paragon Care, the
directors have recommended the payment of a fully franked final
dividend of $488,847 (0.75 cents per fully paid ordinary share)
to be paid on 31st October 2014 in respect of the financial year
ended 30 June 2014. The dividend will be paid to all shareholders
on the register of members as at the Record Date of 10 October
2014. This dividend has not been included as a liability in these
financial statements.
In March 2014, an interim dividend of 0.5 cents per share valuing
$324,718 fully franked was paid. The record date was 14th March
2014 with the payment date of 31st March 2014.
Paragon Care also paid a fully franked maiden dividend of 1 cent
per share with the value of $433,085 for the year ended 30 June
2013 on 31 October 2013.
The dividends attributable to June 30 2013 and the interim
divided have been included in these financial statements.
Combined with the interim dividend of 0.50c per fully paid
ordinary share paid in March 2014 in respect of the half year
ended 31 December 2013, the full year dividend for 2014 will
be 1.25c per fully paid ordinary share, a 25% increase on the
full year dividend of 1c per fully paid ordinary share for the
2013 financial year.
Company Secretary
Mr Darryl P Levin
Company Secretary, Aged 56
Qualifications:
MBA, B.Com, CA, CPA
Experience:
Over 30 years experience in senior financial roles with a number
of large public and private companies involved in a variety of
industries
Appointed as CFO on 6 October 2009 and Company Secretary
on 1 February 2010. Resigned from position February 2014.
Mr Mark A Simari
Company Secretary , Age 45
Qualifications: B.Acc, Dip FS
Experience:
Former Director of DKN Financial Group Limited, former
Director of Sage Capital Group Pty Ltd & Director of Garmak
Enterprises Pty Ltd
Appointed to position in February 2014.
Meetings of Directors
The number of meetings of the company’s Board of Directors
and of each board committee held during the year ended 30 June
2014, and the number of meetings attended by each Director
were:
Directors’
Meetings
Number
attended
Remuneration
committee
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Mr S F Tanner
Mr M A Simari
Mr M C Newton
Mr B A Cheong
12
12
12
12
12
12
12
12
1
-
1
-
1
-
1
-
Dividend Reinvestment Plan
Paragon Care operates a dividend reinvestment plan (DRP) that
enables shareholders to elect to reinvest all, or up to a portion of,
their dividends into additional shares in Paragon. The DRP was
available for the interim dividend payable on 31st March 2014.
Shares were issued at a discount of 5.0% to the volume weighted
average market price of shares sold on the ASX over the 5 trading
days immediately following the record date.
Information on Directors
The names of directors in office at any time during or since
the end of the financial year are:
Mr Shane Tanner
Mr Mark Simari
Mr Michael Newton
Mr Brett Cheong
Directors have been in office since the start of the financial
year to the date of this report (unless otherwise stated).
Directors’ qualifications, experience, and responsibilities
Mr Shane F Tanner
Non-Executive Chairman, Age 61
Qualifications: FCPA, ACIS
Experience:
Currently Chairman of Vision Group Holdings Limited
and Chairman of Funtastic Limited.
Appointed as a Director on 21 December 2005
Responsibilities:
Chairman of the Board
Chairman of the Remuneration Committee
Mr Mark A Simari
Managing Director, Age 45
Qualifications: B.Acc, Dip FS
Experience:
Former Director of DKN Financial Group Limited, former
Director of Sage Capital Group Pty Ltd & Director of Garmak
Enterprises Pty Ltd
Appointed as a Director on 13 February 2007
and Managing Director on 15 April 2007
Responsibilities:
CEO
Mr Michael C Newton
Non-Executive Director, Age 60
Qualifications:
B.App Sci., Grad Dip Bus Adm.
Experience:
Managing Director of Symex Limited from 1999 to 2007
Appointed as a Director on 22 June 2007
Responsibilities:
Member of the Remuneration Committee
Mr Brett A Cheong
Executive Director, Aged 55
Experience:
Founder and Managing Director of Axishealth May 2002 –
June 2009 and with over 30 years experience in the durable
medical equipment industry.
Appointed as a Director on 2 July 2009
Responsibilities:
Marketing Manager
6 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 7
Executive Pay
The objective of the Group’s executive reward framework is to
ensure reward for performance is competitive and appropriate
for the results delivered. The framework aligns executive reward
with achievement of strategic objectives and the creation of
value for shareholders, and conforms with market practice for
delivery of reward. The Board ensures that executive reward
satisfies the following key criteria for good reward governance
practices:
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
capital management
The Group has structured an executive remuneration framework
that is market competitive and complementary to the reward
strategy of the organisation.
-
-
-
-
-
The remuneration committee is responsible for determining
and reviewing compensation arrangements. The remuneration
committee assess the appropriateness of the nature and
amount of emoluments of company executives on a periodic
basis by reference to relevant employment market conditions
and capacity to pay with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high quality
Board and executive team. Remuneration packages are set at
levels that attract and retain executives capable of managing
the Company’s operations. Remuneration and other terms of
employment for the Managing Director and executives have been
formalised in service agreements.
Agreements are structured as a total employment cost package
which may be delivered as a combination of cash and prescribed
non-financial benefits at the executives’ discretion.
The Company did not receive any specific feedback at the AGM
or throughout the year on its remuneration practices.
Details of remuneration and service agreements
Service Agreements
On appointment to the Board, all Non-Executive Directors enter
into a service agreement with the company in the form of a letter
of appointment. The letter summarises the Board policies and
terms, including compensation, relevant to the office of Director.
Remuneration and other terms of employment for Executive
Directors and other senior executives and key management are
also formalised in service agreements.
Directors’ Report Continued
For the year ended 30 June 2014
Remuneration Report
This remuneration report sets out remuneration information for
Paragon Care’s non-executive Directors, executive Directors, and
other key management personnel.
Directors and key management personnel disclosed
in this report
name
B A Cheong
M C Newton
M A Simari
S F Tanner
position
Non-Executive and Executive Directors
– see page 7
other key management personnel
M G Rice
D P Levin
M R Parker
Chief Operating Officer
Chief Financial Officer (until February 2014)
Chief Financial Officer (April 2014 onwards)
Remuneration governance
The remuneration committee is a committee of the board.
It is primarily responsible for making recommendations to
the board on:
-
-
The over-arching executive remuneration framework
Remuneration levels of executive directors and other key
management personnel, and
-
Non-Executive Directors fees
Their objective is to ensure that remuneration policies and
structures are fair and competitive and aligned with the long
term interests of the company.
The Corporate Governance Statement provides further
information on the role of this committee.
principles used to determine the nature and amount
of remuneration.
Non-Executive Directors
The board’s policy is to remunerate non-executive Directors at
market rates for comparable companies for time, commitment
and responsibilities. Detail of the remuneration of each Non-
Executive Director is shown below. The Chairman in consultation
with independent advisors determines payments to the Non-
Executive Directors and reviews their remuneration annually,
based on market practice, duties and accountability. The
maximum aggregate amount of fees that can be paid to Non-
Executive Directors is subject to approval by shareholders in a
General Meeting, and is currently $250,000 per annum. Fees for
Non-Executive Directors are not linked to the performance of the
Company. However, to align Directors’ interests with shareholder
interests, the Directors are encouraged to hold shares in the
Company.
Non-Executive Directors’ remuneration reflects the additional
responsibilities each Director may take on from time to time.
There are no termination benefits for Non-Executive Directors.
Directors’ fees
The current Director’s fees were last reviewed with effect from
1 July 2014. The following fees have applied:
Base Fees
From
1 July 2014
From
1 July 2013 to
30 June 2014
Chairman
Other Non-Executive Directors
$77,125
$35,345
$70,125
$33,665
Company share performance & Shareholder wealth
and Director & Executive remuneration
In considering Non-Executive Director and executive
remuneration the Directors take into consideration the
Company’s share performance and shareholder wealth creation.
During the financial year the Company’s share price traded
between a low of 22.5¢ and a high of 48.5¢. As at 30 June 2014
the, Company’s share price (ASX: PGC) was 26.0¢ per share.
PGC Share Performance
Year ended
Price High ¢
Price Low ¢
Price 30 June ¢
Earnings ¢ per share
Dividends ¢
Dividends ¢ (interim)
Net Asst $’ million
30 June 2009
30 June 2010
30 June 2011
30 June 2012
30 June 2013
30 June 2014
3.5
2.0
2.2
(0.3)
Nil
Nil
3.13
3.9
2.0
2.8
0.1
Nil
Nil
5.0
2.5
4.0
0.3
Nil
Nil
3.35
5.05
43.5
19.5
19.5
(0.2)
Nil
Nil
6.45
43.5
17.0
30.5
1.7
Nil
Nil
48.5
22.5
26.0
2.0
1.0
0.5
10.37
18.23
Major provisions of the agreements as at 30 June 2014
relating to remuneration are set out below:
name
term of agreement
Base salary
including superannuation
termination benefit
non-executive Directors
Mr S F Tanner
Non-Executive Chairman
Mr M C Newton
Non-Executive Director
executive Directors
Mr M A Simari
Executive Director / CEO
Mr B A Cheong
Executive Director /
Marketing Manager
other key management personnel
Mr Matthew Parker
Chief Financial Officer
(Appointed April 2014)
Mr Michael Rice
Chief Operating Officer
Mr Darryl Levin
Chief Financial Officer
(Resigned February 2014)
No fixed term
$70,125
No termination benefit
No fixed term
$33,665
No termination benefit
1 July 2011 to
30 June 2013 *
No fixed term
$220,000 **
(consultancy package)
$144,000
(consultancy package)
6 months consultancy fee
No termination benefit
No fixed term
$180,000
No termination benefit
No fixed term
$219,853
No termination benefit
No fixed term
$179,171
No termination benefit
* Either party may terminate the agreement by giving six
months notice. The Consultancy Agreement was renewed
effective 1 July 2014 for a further two year period.
** Performance Bonus - The Consultancy Agreement
provides for a bonus to be payable upon achieving
performance criteria set in agreement with the Chairman.
No performance criteria were set and no bonus paid in the
year to 30 June 2014.
8 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 9
Directors’ Report Continued
For the year ended 30 June 2014
Emoluments of Directors, executive officers and other executives of the Company:
2014
name
Short-term employee benefits
post
employment
benefits
long term Share based
payments
benefits
cash salary
and fees
cash bonus
non
monetary
benefits
Super- long service
leave
annuation
options
total
non-executive Directors
Mr S F Tanner
Mr M C Newton
executive Directors
Mr M A Simari
Mr B A Cheong
other key management personnel
Mr M R Parker
Mr M G Rice
Mr D P Levin
total
2013
name
$
70,125
33,665
190,921
144,000
41,190
180,000
145,496
788,747
$
-
-
-
-
-
-
-
-
$
-
-
29,079
-
-
23,203
12,568
64,851
$
-
-
-
-
3,810
16,650
21,106
41,566
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
$
70,125
33,665
220,000
144,000
45,000
219,853
179,171
911,814
Short-term employee benefits
post
employment
benefits
long term Share based
payments
benefits
cash salary
and fees
cash bonus
non
monetary
benefits
Super- long service
leave
annuation
options
total
non-executive Directors
Mr S F Tanner
Mr M C Newton
executive Directors
Mr M A Simari
Mr B A Cheong
other key management personnel
Mr D P Levin
Mr M G Rice
Mr C Pearson
total
$
68,640
33,000
159,599
120,000
141,615
125,694
67,696
716,244
$
-
-
-
-
-
-
-
-
$
-
-
35,401
-
17,015
22,863
8,494
83,773
$
-
-
-
-
23,735
12,431
2,783
38,949
$
-
-
-
-
-
-
347
347
$
-
-
-
-
-
-
-
-
$
68,640
33,000
195,000
120,000
182,365
160,988
79,319
839,312
The elements of emoluments have been determined on the basis of the cost to the Company.
Except as detailed in the Remuneration Report or below, no Director has received or become entitled to receive, during or since the
financial period, a benefit because of a contract made by the Company or a related body corporate with a Director, a firm of which a
Director is a member or an entity in which a Director has a substantial financial interest. This statement excludes a benefit included
in the aggregate amount of emoluments received or due and receivable by Directors and shown in the Remuneration Report, prepared
in accordance with the Corporations regulations, or the fixed salary of a full time employee of the Company.
Directors and officers indemnity
The Company has entered into an Indemnity Deed with each of
the Directors which will indemnify them against liability incurred
to a third party (not being the Company or any related company)
where the liability does not arise out of the conduct involving a
lack of good faith. The Indemnity Deed will continue to apply for
a period of 10 years after a Director ceases to hold office. There
is also a Directors’ Access and Insurance Deed with each of the
Directors pursuant to which a Director can request access to
copies of documents provided to the Director whilst serving the
Company for a period of 10 years after the Director ceases to
hold office. There will be certain restrictions on the Directors’
entitlement to access under the deed.
Proceedings on behalf of company
No person has applied for leave of the Court under section 237
of the Corporations Act 2001 for leave to bring proceedings on
behalf of the company or intervene in any proceedings to which
the company is a party for the purpose of taking responsibility
on behalf of the company for all or any part of those proceedings.
No proceedings have been brought or intervened in on behalf
of the company with leave of the court. The Company was not
a party to any such proceedings during the year under section
237 of the Corporations Act 2001.
Directors’ interest in contracts with the Company
There are no material contracts involving Directors’ interests at
the end of the financial year nor have any been entered into since
the end of the previous financial year not otherwise disclosed in
this report.
The Paragon Healthcare business leases premises from
Mr Brett Cheong and Mrs Lynn Cheong, Mr Cheong being
a Director of the Company. The lease runs for 3 years from
1 January 2013 with an option for one further term of three years.
The rent paid is on commercial terms and the directors consider
Mr Cheong’s association with the arrangement is on arm’s-length
terms and conditions. The total rent payable to Mr and Mrs
Cheong by the Company for the year ended 30 June 2014
was $168,850.
Directors’ interests
As at the date of this report the interests of the Directors held
either directly or through entities they control, in the securities of
the Company are as follows:
Fully paid ordinary shares (pGc)
Mr S F Tanner
Mr M A Simari
Mr M C Newton
Mr B A Cheong
502,867
1,416,914
198,128
2,833,207
The Directors of the Company are encouraged to hold shares
in the Company and are permitted to trade in the Company’s
securities consistent with the Company’s securities trading
policy (refer Corporate Governance Report). All Directors sign
an agreement with the Company in which they undertake to
advise the Company whenever they or a related party trades
in the Company’s securities.
It is the Company’s policy that Directors and Executives of the
Company are required to seek the prior written approval of the
Board before entering into hedging arrangements in respect to
their holdings of company equity instruments.
The Executive or Director must provide full details of any such
hedging arrangements for consideration by the Board. The Board
will consider each approach for approval on its merits, taking
into account the size of the holding, the level of exposure, the
repayment requirements and the impact any adverse market
conditions may have on the capital structure of the company.
Indemnification and Insurance of Directors and Officers
During the financial year the Company has paid premiums to
insure all the Directors and Officers against liabilities for costs
and expenses incurred by them in defending any claims arising
out of their conduct while acting in the capacity of Director of the
Company to the extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
10 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 11
Auditor’s Independence Declaration
For the year ended 30 June 2014
Directors’ Report Continued
For the year ended 30 June 2014
Auditor
RSM Bird Cameron was appointed Company auditor on 27
November 2009 and will continue in office in accordance with
section 327 of the Corporations Act 2001. Pursuant to section
324 DAB of the Corporations Act 2001, the Board of Paragon Care
approved that Robert Miano, a partner of RSM Bird Cameron
Partners may continue to play a significant role in the audit of the
company for a further 2 years until the financial year ended 30
June 2016.
Reasons for the extension include continuity of knowledge and
experience that Robert has accumulated over the years, as well
as, key relationships formed during this period’ is considered a
material benefit to maintaining the quality of audit work for a
further period covering the two financial years ending 30 June
2015 and 2016.
The Board is satisfied that the extension of the auditor rotation
period is consistent with maintaining the quality of the audit
and would not give rise to conflict of interest situation. RSM Bird
Cameron Partners has agreed to extend the above extension.
Non-Audit Services
The Company may decide to engage the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with the Group are important.
The Board of Directors has considered the position and is
satisfied that the provision of the non audit services listed below
is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
During the year the following fees were paid or payable for
services provided by RSM Bird Cameron, the auditor of the parent
entity, its related practices and non related audit firms:
audit Services
Audit and review of financial reports
and other audit work under the
Corporations Act 2001
non audit services
Taxation services
Other services
2014
$
2013
$
71,105
72,000
16,350
-
31,000
-
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 is set out on
page 13.
Signed in accordance with a resolution of the Directors:
S F Tanner
Chairman
28th August 2014
12 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 13
Financial Statements
Consolidated Statement of Profit or Loss and other Comprehensive Income
For the year ended 30 June 2014
Revenue from continuing operations
Revenue
Cost of sales
Gross profit
Other income
Operating costs
Corporate costs
Finance costs
Selling and distribution
Employee and consultants costs (incl. directors fees and remuneration)
profit/(loss) before tax
Income tax expense
profit/(loss) from continuing operations
Other Comprehensive Income
Items that may be reclassified to Profit or Loss
Gain (Loss) on cash flow hedges
other comprehensive income for the year, net of tax
total comprehensive income for the year
Profit for the period attributable to:
Owners of the parent
Total comprehensive income for the year attributable to:
Owners of the parent
Earnings per share
Basic (cents per share)
Diluted (cents per share)
Note
2014
$
2013
$
3
4
7
24
24
19,416,931
(10,369,847)
9,047,084
23,596
17,096,447
(9,455,211)
7,641,236
20,513
(1,665,378)
(1,596,103)
(150,216)
(418,319)
(164,167)
(236,794)
(543,969)
(205,557)
(5,558,191)
(4,373,153)
1,114,409
(29,518)
1,084,891
706,173
33,430
739,603
(256,736)
(256,736)
828,155
1,084,891
1,084,891
828,155
828,155
2.0
2.0
209,307
209,307
948,910
739,603
739,603
948,910
948,910
1.7
1.7
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes which form an integral part of these financial statements.
Paragon Care Limited Financial Report 2013/14 15
Consolidated Statement of Financial Position
For the year ended 30 June 2014
Consolidated Statement of Changes in Equity
For the year ended 30 June 2014
Balance at 1 July 2012
Profit / (loss) for the year
Gain / (loss) on cash flow hedge
total comprehensive income for the year
Issue of share capital
Balance at 30 June 2013
Balance at 1 July 2013
Profit / (loss) for the year
Gain / (loss) on cash flow hedge
total comprehensive income for the year
Transfer of reserve to accumulated losses
Issue of share capital
Dividend issued in the year
Balance at 30 June 2014
Share capital Currency hedge
reserve
Accumulated
losses
Total equity
$
$
$
$
12,065,884
(66,509)
(5,553,309)
6,446,067
-
-
-
-
739,603
209,307
209,307
-
739,603
739,603
209,307
948,910
2,974,501
15,040,385
-
-
2,974,501
142,798
(4,813,707)
10,369,476
15,040,385
142,798
(4,813,707)
10,369,476
-
-
-
-
1,084,891
1,084,891
(256,736)
(256,736)
-
(256,736)
1,084,891
828,155
7,768,437
-
-
-
-
-
-
(757,803)
7,768,437
(757,803)
22,808,822
(113,938)
(4,486,619)
18,208,265
The above Consolidated Statement of Changes of Equity should be read in conjunction with the accompanying notes
which form an integral part of these financial statements.
ASSETS
current assets
Cash and cash equivalents
Inventories
Trade and other receivables
Other financial assets
total current assets
non-current assets
Plant and equipment
Deferred Tax Assets
Intangibles
total non-current assets
TOTAL ASSETS
LIABILITIES
current liabilities
Trade and other payables
Interest bearing liability
Other financial liabilities
Provision for Income Tax
Provisions
total current liabilities
non-current liabilities
Interest bearing liability
Provisions
total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Note
2014
$
2013
$
8
9
10
11
12
7
13
14
15
11
7
16
15
16
17
18
2,820,379
5,070,913
4,064,529
-
11,955,821
618,494
776,011
13,600,386
14,994,891
26,950,713
2,511,477
3,069,307
3,089,144
142,798
8,812,726
739,458
459,055
8,378,050
9,576,563
18,389,289
3,605,759
850,782
113,938
170,837
500,520
3,274,412
1,671,919
-
1,469
366,408
5,241,835
5,314,207
3,454,238
46,374
3,500,613
8,742,448
2,661,890
43,716
2,705,606
8,019,813
18,208,265
10,369,476
22,808,822
15,040,385
(113,938)
(4,486,619)
18,208,265
142,798
(4,813,707)
10,369,476
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
which form an integral part of these financial statements.
16 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 17
Consolidated Statement of Cash Flows
For the year ended 30 June 2014
Notes to and forming part of the Financial Statements
For the year ended 30 June 2014
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest and other items of similar nature paid
Interest received
Income taxes paid
Note
2014
$
2013
$
18,411,697
16,791,668
(20,134,857)
(15,451,033)
(420,457)
61,799
(3,872)
(646,077)
30,985
-
net cash provided by / (used in) operating activities
8(b)
(2,085,690)
725,543
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Proceeds from sale of business
Proceeds from sale of plant and equipment
Payment for plant and equipment
Payment for development of website / software
net cash provided by / (used in) investing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issues of securities
Dividends paid
Other - share issue costs
net cash provided by / (used in) financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
cash and cash equivalents at the end of the financial period
8(a)
(3,539,767)
-
93,527
(191,569)
(35,923)
(3,673,732)
1,686,277
(1,351,161)
6,922,603
(757,802)
(431,593)
6,068,324
308,902
2,511,477
2,820,379
-
-
68,386
(181,933)
(10,785)
(124,332)
114,680
(2,397,459)
2,974,501
-
(106,650)
585,072
1,186,283
1,325,194
2,511,477
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
which form an integral part of these financial statements.
18 Paragon Care Limited Financial Report 2013/14
Note 1 Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented,
unless otherwise stated. The financial statements are for the
consolidated entity consisting of Paragon Care Limited and its
subsidiaries.
(a) Basis of preparation
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards and
interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001. Paragon Care Limited
is a for-profit entity for the purpose of preparing the financial
statements.
Australian Accounting Standards set out accounting policies
that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions,
events and conditions to which they apply. Compliance with
Australian Accounting Standards ensures that the financial
statements and notes also comply with International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). Material accounting policies
adopted in the preparation of these financial statements are
presented below. They have been consistently applied unless
otherwise stated.
These financial statements have been prepared under the
historical costs convention modified, where applicable, by
the measurement at fair value of selected non-current assets,
financial assets and financial liabilities.
(b) Principles of consolidation
The consolidated financial statements incorporate the assets,
liabilities and results of entities controlled by the Company at
the end of the reporting period. A controlled entity is any entity
over which Company has the power to govern the financial and
operating policies so as to obtain benefits from the entity’s
activities. Control will generally exist when the parent owns,
directly or indirectly through subsidiaries, more than half of the
voting power of an entity. In assessing the power to govern, the
existence and effect of holdings of actual and potential voting
rights are also considered.
Where controlled entities have entered or left the Group during
the year, the financial performance of those entities are included
only for the period of the year that they were controlled. A list
of controlled entities is contained in Note 22 to the financial
statements.
In preparing the consolidated financial statements, all inter-
group balances and transactions between entities in the
consolidated group have been eliminated on consolidation.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with those adopted by the
parent entity.
Non-controlling interests, being the equity in a subsidiary
not attributable, directly or indirectly, to a parent, are shown
separately within the Equity section of the consolidated
Statement of Financial Position and Statement of Profit or Loss
and Other Comprehensive Income. The non-controlling interests
in the net assets comprise their interests at the date of the
original business combination and their share of changes in
equity since that date.
(c) Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who
is responsible for allocating resources, and assessing
performance of the operating segments has, been identified
as the board of directors.
(d) Foreign currency translation
The consolidated financial statements are presented in
Australian dollars, which is the Company’s functional and
presentation currency.
Foreign currency transactions are translated into functional
currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at
the year-end exchange rate.
Non-monetary items measured at historical cost continue to
be carried at the exchange rate at the date of the transaction.
Non-monetary items measured at fair value are reported at the
exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary
items are recognised in the Statement of Profit or Loss and
Other Comprehensive Income, except where deferred in equity
as a qualifying cash flow or net investment hedge.
(e) Revenue recognition
Sale of goods
The group manufactures and sells a range of goods to the
wholesale and end user market. Sales of goods are recognised
when a group entity has delivered product and there is
no unfulfilled obligation that could affect the customer’s
acceptance of the product. Delivery does not occur until the
products have been shipped to the customer, the risks of
obsolescence and loss have been transferred, the customer
has accepted the products in accordance with the sales
contract, the acceptance provisions have lapsed, or the group
has objective evidence that all criteria for acceptance have been
satisfied. Amounts disclosed as revenue are net of returns, trade
allowances, duties and tax paid.
No element of financing is deemed present as the sales are
made with a credit term of between 30 and 60 days which is
consistent with market practice.
Service
Revenue from service is recognised in the accounting period
in which the services are rendered. For fixed-price contracts,
revenue is recognised under the percentage of completion
method, based on the actual service provided as a percentage
of the total services to be provided.
Interest revenue is recognised on an accrual basis taking into
account the interest rates applicable to the financial assets.
Dividend revenue from investments is recognised when the
Group’s right to receive payment has been established.
(f) Income tax
The income tax expense (revenue) for the year comprises current
income tax expense (income) and deferred tax expense (income).
Current income tax expense charged to the profit or loss is
the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantively enacted, as at the
end of the reporting period. Current tax liabilities (assets) are
therefore measured at the amounts expected to be paid to
(recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred
tax asset and deferred tax liability balances during the year as
well as unused tax losses.
Current and deferred income tax expense (income) is charged or
credited directly to equity instead of the profit or loss when the
tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on
temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements. Deferred tax assets also result where amounts
have been fully expensed but future tax deductions are
available. No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or taxable
profit or loss.
Paragon Care Limited Financial Report 2013/14 19
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
Deferred tax assets and liabilities are calculated at the tax
rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates enacted or
substantively enacted at the end of the reporting period. Their
measurement also reflects the manner in which management
expects to recover or settle the carrying amount of the related
asset or liability.
Deferred tax assets relating to temporary differences and
unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against
which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in
subsidiaries, branches, associates, and joint ventures, deferred
tax assets and liabilities are not recognised where the timing of
the reversal of the temporary difference can be controlled and
it is not probable that the reversal will occur in the foreseeable
future.
Current tax assets and liabilities are offset where a legally
enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the
respective asset and liability will occur. Deferred tax assets and
liabilities are offset where a legally enforceable right of set-off
exists, the deferred tax assets and liabilities relate to income
taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where it is intended
that net settlement or simultaneous realisation and settlement
of the respective asset and liability will occur in future periods in
which significant amounts of deferred tax assets or liabilities are
expected to be recovered or settled.
Tax Consolidation
Paragon Care Limited and its wholly-owned Australian
subsidiaries have formed an income tax consolidated group
under tax consolidation legislation. Each entity in the Group
recognises its own current and deferred tax assets and liabilities.
Such taxes are measured using the ‘stand-alone taxpayer’
approach to allocation. Current tax liabilities (assets) and
deferred tax assets arising from unused tax losses and tax
credits in the subsidiaries are immediately transferred to the
head entity. The Group notified the Australian Taxation Office
that it had formed an income tax consolidated group to apply
from 1 July 2008. The tax consolidated group has entered
a tax funding arrangement whereby each company in the
Group contributes to the income tax payable by the Group in
proportion to their contribution to the Group’s taxable income.
Differences between the amounts of net tax assets and liabilities
derecognised and the net amounts recognised pursuant to the
funding arrangement are recognised as either a contribution by,
or distribution to the head entity.
(g) Leases
Leases of plant and equipment where the Group as lessee
has substantially all the risks and benefits of ownership are
classified as finance leases.
Finance leases are capitalised by recording an asset and a
liability at the lower of the amounts equal to the fair value of
the leased property or the present value of the minimum lease
payments, including any guaranteed residual values. Lease
payments are allocated between the reduction of the lease
liability and the lease interest expense for the period.
Assets acquired under finance leases are depreciated on a
straight-line basis over the shorter of their estimated useful
lives or the lease term.
Lease payments for operating leases, where substantially all
the risks and benefits remain with the lessor, are charged as
expenses in the periods in which they are incurred.
(h) Business combinations
Business combinations occur where an acquirer obtains control
over one or more businesses and results in the consolidation of
its assets and liabilities.
A business combination is accounted for by applying the
acquisition method, unless it is a combination involving entities
or businesses under common control. The acquisition method
requires that for each business combination one of the combining
entities must be identified as the acquirer (i.e. parent entity). The
business combination will be accounted for as at the acquisition
date, which is the date that control over the acquiree is obtained
by the parent entity. At this date, the parent shall recognise,
in the consolidated accounts, and subject to certain limited
exceptions, the fair value of the identifiable assets acquired
and liabilities assumed. In addition, contingent liabilities of the
acquiree will be recognised where a present obligation has been
incurred and its fair value can be reliably measured.
The acquisition may result in the recognition of goodwill or
a gain from a bargain purchase. The method adopted for the
measurement of goodwill will impact on the measurement of
any non-controlling interest to be recognised in the acquiree
where less than 100% ownership interest is held in the acquiree.
The acquisition date fair value of the consideration transferred
for a business combination plus the acquisition date fair value
of any previously held equity interest shall form the cost of the
investment in the separate financial statements. Consideration
may comprise the sum of the assets transferred by the acquirer,
liabilities incurred by the acquirer to the former owners of the
acquiree and the equity interests issued by the acquirer.
Fair value uplifts in the value of pre-existing equity holdings are
taken to the Statement of Profit or Loss and Other Comprehensive
Income. Where changes in the value of such equity holdings had
previously been recognised in other comprehensive income, such
amounts are recycled to profit or loss.
Included in the measurement of consideration transferred is
any asset or liability resulting from a contingent consideration
arrangement. Any obligation incurred relating to contingent
consideration is classified as either a financial liability or equity
instrument, depending upon the nature of the arrangement.
Rights to refunds of consideration previously paid are recognised
as a receivable.
Subsequent to initial recognition, contingent consideration
classified as equity is not remeasured and its subsequent
settlement is accounted for within equity. Contingent
consideration classified as an asset or a Liability is remeasured
each reporting period to fair value through the Statement of
Profit or Loss and Other Comprehensive Income unless the
change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to the business
combination are expensed to the Statement of Profit or Loss
and Other Comprehensive Income.
(i) Impairment of assets
At the end of each reporting period, the Group assesses
whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and
internal sources of information including dividends received from
subsidiaries, associates or jointly controlled entities deemed
to be out of pre-acquisition profits. If such an indication exists,
an impairment test is carried out on the asset by comparing
the recoverable amount of the asset, being the higher of the
asset’s fair value less costs to sell and value in use, to the asset’s
carrying value. Any excess of the asset’s carrying value over its
recoverable amount is expensed to the Statement of Profit or
Loss and Other Comprehensive Income.
Where it is not possible to estimate the recoverable amount of
an individual asset, the Group estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill and
intangible assets with indefinite lives.
(j) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held
at call with banks, other short term highly liquid investments
with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are shown within short term
borrowings in current liabilities on the balance sheet.
(k) Trade receivables
Trade receivables are recognised when the risks and rewards
of ownership or provision of services of the underlying sales
transactions have passed to customers. This event usually
occurs on delivery of product or provision of services to
customers. Trade receivables are recognised initially at fair
value and subsequently measured at amortised cost using
the effective interest method, less provision for impairment.
Trade receivables are generally due for settlement 30 days
after the end of the month in which the invoice was raised.
The collection of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectable are written
off. An allowance for doubtful debts is raised when the directors
consider it is probable that the debt is impaired and that it will
not be collected.
(l) Inventories
Inventories are measured at the lower of cost and net realisable
value. Costs incurred in bringing each product to its present
location and condition are comprised of direct material and
direct labour and an appropriate proportion of variable and fixed
overhead expenditure, the latter being allocated on the basis
of normal operating capacity. Costs are assigned to individual
items of inventory on the basis of weighted average costs. Net
realisable value is the estimated selling price in the ordinary
course of business less the estimated costs necessary to make
the sale.
(m) Financial instruments
Recognition and initial measurement
Financial instruments, incorporating financial assets and
financial liabilities, are recognised when the group becomes
a party to the contractual provisions of the instruments.
Financial instruments are initially measured at fair value plus
transactions costs where the instrument is not classified as
at fair value through profit or loss. Transaction costs related
to instruments classified as at fair value through profit or loss
are expensed to profit or loss immediately. Those financial
instruments entered into by the group are classified and
measured as set out below.
Derecognition
Financial assets are derecognised where the contractual rights
to receipt of cash flows expires or the asset is transferred to
another party whereby the entity no longer has any significant
continuing involvement in the risks and benefits associated with
the asset. Financial liabilities are derecognised where the related
obligations are discharged, cancelled or expired. The difference
between the carrying value of the financial liability extinguished
or transferred to another party and the fair value of consideration
paid, including the transfer of non cash assets or liabilities
assumed is recognised in profit or loss.
Classification and subsequent measurement
(i) Loans and receivables
Loans and receivables are non derivative financial assets with
fixed or determinable payments that are not quoted in an active
market and are subsequently measured at amortised cost using
the effective interest rate method.
Trade receivables, being generally on 30 day terms, are
recognised and carried at original invoice amount less provision
for any uncollectible debts. An estimate for impaired debtors is
made when collection of the full amount is no longer probable.
Bad debts are written off as incurred.
(ii) Financial liabilities
Non derivative financial liabilities (excluding financial
guarantees) are subsequently measured at amortised cost using
the effective interest rate method.
Due to their short term nature trade and other payables are not
discounted. They represent liabilities for goods and services
provided to the Group prior to the end of the financial year that
are unpaid and arise when the Group becomes obliged to make
future payments in respect of the purchase of these goods and
services. The amounts are unsecured and are usually paid within
30 days of recognition.
Hedge accounting
The group designates certain derivatives as either:
(i) hedges of the fair value of recognised assets or liabilities
or a firm commitment (fair value hedge); or
(ii) hedges of highly probable forecast transactions
(cash flow hedges).
At the inception of the transaction the relationship between
hedging instruments and hedged items, as well as the Group’s
risk management objective and strategy for undertaking various
hedge transactions is documented. Assessments, both at hedge
inception and on an ongoing basis, of whether the derivatives
that are used in hedging transactions have been and will
continue to be highly effective in offsetting changes in fair values
or cash flows of hedged items, are also documented.
(i) Fair Value Hedge
Changes in the fair value of derivatives that are designated and
qualified as fair value hedges are recorded in the Statement of
Profit or Loss and Other Comprehensive Income, together with
any changes in the fair value of hedged assets or liabilities that
are attributable to the hedged risk.
(ii) Cash Flow Hedge
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is deferred
to a hedge reserve in equity. The gain or loss relating to the
ineffective portion is recognised immediately in the Statement
of Profit or Loss and Other Comprehensive Income. Amounts
accumulated in the hedge reserve in equity are transferred to
the Statement of Profit or Loss and Other Comprehensive Income
in the periods when the hedged item will affect profit or loss.
Fair value estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or for
disclosure purposes. Unless otherwise disclosed in the notes
to the financial statements, the carrying amount of the Group’s
financial instruments approximates their fair value.
20 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 21
(v) Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing the operating
profit after income tax attributable to the Group by the weighted
average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares
issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share by taking into
account amounts unpaid on ordinary shares and any reduction
in earnings per share that will probably arise from the exercise
of options outstanding during the year.
(w) Comparative figures
When required by Accounting Standards, comparative figures
have been adjusted to conform to changes in presentation for
the current financial year.
When the Group applies an accounting policy retrospectively,
makes a retrospective restatement or reclassifies items in its
financial statements, a statement of financial position as at the
beginning of the earliest comparative period will be disclosed.
(x) New Accounting standards for application in future periods
At the date of this financial report the following standards and
interpretations, which may impact the entity in the period of
initial application, have been issued but are not yet effective.
Other than changes to disclosure formats, it is not expected that
the initial application of these new standards in the future will
have any material impact on the financial report.
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
(n) Property, Plant & Equipment
Each class of property, plant and equipment is stated at cost or
fair value as indicated less, where applicable, any accumulated
depreciation and impairment losses
Plant and Equipment
Plant and equipment are measured on the historical cost basis.
The carrying amount of plant and equipment is reviewed annually
by directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed
on the basis of the expected net cash flows that will be received
from the asset’s employment and subsequent disposal. The
expected net cash flows have been discounted to their present
values in determining recoverable amounts.
The cost of fixed assets constructed within the consolidated
group includes the cost of materials, direct labour, borrowing
costs and an appropriate proportion of fixed and variable
overheads.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to profit
or loss during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including buildings
and capitalised leased assets, but excluding freehold land, is
depreciated on either a straight-line or diminishing value basis
over the asset’s useful life to the Group commencing from the
time the asset is held ready for use. Leasehold improvements are
depreciated over the shorter of either the unexpired period of the
lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets
are:
Class of Fixed Asset
Depreciation Rate
Furniture, Fittings & Equipment
Motor Vehicles
10 - 33%
14 - 25%
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These gains and losses
are included in the Statement of Profit or Loss and Other
Comprehensive Income. When revalued assets are sold, amounts
included in the revaluation surplus relating to that asset are
transferred to retained earnings.
(o) Investments in associates
Associate companies are companies in which the Group has
significant influence through holding, directly or indirectly,
between 20% and 50% of the voting power of the company.
Investments in associates are accounted for in the financial
statements by applying the equity method of accounting whereby
the investment is initially recognised at cost and adjusted
thereafter for the post-acquisition change in the Group’s share
of net assets of the associate company. In addition the Group’s
share of the profit or loss of the associate company is included
in the Group’s profit or loss.
The carrying amount of the investment includes goodwill
relating to the associate. Any excess of the Group’s share of the
net fair value of the associate’s identifiable assets, liabilities and
contingent liabilities over the cost of the investment is excluded
from the carrying amount of the investment and is instead
included as income in the determination of the investor’s share of
the associate’s profit or loss in the period in which the investment
is acquired.
Profits and losses resulting from transactions between the Group
and the associate are eliminated to the extent of the relation to
the Group’s investment in the associate.
When the reporting dates of the Group and the associate are
different, the associate prepares, for the Group’s use, financial
statements as of the same date as the financial statements
of the Group with adjustments being made for the effects of
significant transactions or events that occur between that date
and the date of the investor’s financial statements.
When the Group’s share of losses in an associate equals or
exceeds its interest in the associate, the Group discontinues
recognising its share of further losses unless it has incurred legal
or constructive obligations or made payments on behalf of the
associate. When the associate subsequently makes profits, the
Group will resume the recognition of its share of those profits
once its share of the profits equals the share of the losses not
recognised.
(p) Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group’s share of the net identifiable
assets of the acquired business at the date of acquisition.
Goodwill is not amortised. Instead, goodwill is tested for
impairment annually, or more frequently if events or changes in
circumstances indicate it might be impaired, and is carried at
cost less accumulated impairment losses. Gains and losses on
the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose.
Software Development
Software development costs are capitalised only when incurred.
Development costs have a finite life and are amortised on a
systematic basis matched to the future economic benefits over
the useful life of the software, generally about three years. Initial
TGA registration costs have a finite life and are amortised on a
systematic basis matched to the future economic benefits over
the useful life of the product, generally 2-3 years.
(q) Trade and other payables
Trade and other payables represent liabilities for goods and
services provided to the group prior to the end of financial year
which are unpaid. The amounts are unsecured and are usually
paid within 60 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within
12 months from the reporting date. They are recognised initially
at their fair value and subsequently measured at amortised cost
using the effective interest method.
(r) Provisions
Provisions are recognised when the Group has a legal or
constructive obligation, as a result of past events, for which it is
probable that an outflow of resources will be required to settle
the obligation and the amount has been reliably estimated.
(s) Employee benefits
Wages and Salaries and Annual Leave
Liabilities in respect of wages and salaries and annual leave
are recognised, and are measured as the amount unpaid at
the reporting date at current pay rates in respect of employees’
service up to that date.
Long Service Leave
A liability for long service leave is recognised, and is measured
as the present value of expected future payments to be made in
respect of services provided by employees up to the reporting
date. Consideration is given to expected future wages and salary
levels, experience of employee departures and periods of service.
Expected future payments are discounted using interest rates
on national government guaranteed securities with terms of
maturity that match, as closely as possible, the estimated future
cash outflows.
Superannuation
The company contributed to multi-employer industry funds
which provide retirement, disability and death benefits for
employees. The company is under no legal obligation to make
up any shortfall in any of these funds.
Share Based Payments
Share-based compensation benefits may be provided directly
by the issue of ordinary shares or options to employees. The fair
value of options granted is recognised as an employee benefits
expenses with a corresponding increase in equity. The total
amount to be expensed is determined by reference to the fair
value of the options granted.
The fair value of ASX listed ordinary shares or options is
measured by the last sale price of the relevant ordinary
shares or options on the ASX on or immediately prior to the
date of issue. The fair value of unlisted options at grant date
is determined using the Black-Scholes model that takes into
account the exercise price, the term of the option, the vesting
and performance criteria, the impact of dilution, the non-
tradeable nature of the option, the share price at grant date and
expected price volatility of the underlying share, the expected
dividend yield and the risk-free interest rate for the term of the
arrangement. An expense is taken up over the period during
which the employees become entitled to the option.
(t) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred is not
recoverable from the Tax Office. In these circumstances the GST
is recognised as part of the cost of acquisition of the asset or as
part of an item of the expense. Receivables and payables in the
statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on
a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
(u) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the
proceeds. Incremental costs directly attributable to the issue of
new shares or options for the acquisition of a business are not
included in the cost of the acquisition as part of the purchase
consideration.
If the entity reacquires its own equity instruments, for
example, as the result of a share buy-back, those instruments
are deducted from equity and the associated shares are
cancelled. No gain or loss is recognised in profit or loss and the
consideration paid including any directly attributable incremental
costs (net of income taxes) is recognised directly in equity.
22 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 23
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
Reference title
Summary
application date
(financial years beginning)
AASB 9
Financial Instruments
Replaces the requirements of AASB 139 for the classification
and measurement of financial assets. This is the result of the
first part of Phase 1 of the IASB’s project to replace IAS 39.
2009-11
Amendments to Australian
Accounting Standards arising
from AASB 9
Amends AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127,
128, 131, 132, 136, 139, 1023 and 1038 and Interpretations
10 and 12 as a result of the issuance of AASB 9.
2010-7
Amendments to Australian
Accounting Standards arising
from AASB 9 (December 2010)
Amends AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121,
127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and
Interpretations 2, 5, 10, 12, 19 & 127 for amendments
to AASB 9 in December 2010
1 January 2015
(Changed to
1 January 2017
by AASB 2013-9C)
1 January 2015
1 January 2015
AASB 14
Regulatory Deferral Accounts
2012-3
2013-3
Amendments to Australian
Accounting Standards –
Offsetting Financial Assets
and Financial Liabilities
Amendments to AASB 136 –
Recoverable Amount Disclosures
for Non-Financial Assets
Specifies the financial reporting requirements for regulatory
deferral account balances that arise when an entity provides
goods or services to customers at a price or rate that is subject
to rate regulation.
1 January 2016
This Standard adds application guidance to AASB 132 to
address inconsistencies identified in applying some of the
offsetting criteria of AASB 132.
1 January 2014
This Standard amends the disclosure requirements in
AASB 136 to include additional disclosures about the fair
value measurement and discount rates when the recoverable
amount of impaired assets is based on fair value less costs
of disposal.
1 January 2014
2013-4
Amendments to Australian
Accounting Standards –
Novation of Derivatives and
Continuation of Hedge Accounting
This Standard amends AASB 139 to permit the continuation of
hedge accounting in circumstances where a derivative, which has
been designated as a hedging instrument, is novated from one
counterparty to a central counterparty as a consequence of laws
or regulations.
1 January 2014
Note 2 Critical accounting estimates and judgements
The Group makes certain estimates and assumptions concerning
the future, which, by definition will seldom represent actual
results. The estimates and assumptions that have a significant
inherent risk in respect of estimates based on future events,
which could have a material impact on the assets and liabilities
in the next financial years, are discussed below:
(i) Impairment of Goodwill
The Group assesses impairment at the end of each reporting
period by evaluating conditions and events specific to the Group
that may be indicative of impairment triggers. Recoverable
amounts of relevant assets are reassessed using value-in-use
calculations which incorporate various key assumptions. With
respect to cash flow projections for the Group’s businesses
based in Australia, revenue growth rates of be 10% have been
factored into valuation models for the next five years. This is on
the basis of management’s expectation of increased government
expenditure in both the acute and aged care market sectors,
much of which has already been publicly announced, and their
belief in the Group’s continued ability to capture a significant
share of this expenditure. The rates used incorporate allowance
for inflation. Pre-tax discount rates of 9.7% have been used in
all models. No impairment has been recognised in respect of
goodwill at the end of the reporting period.
2013-9B
Amendments to Australian
Accounting Standards –
Conceptual Framework, Materiality makes various editorial corrections to Australian Accounting
and Financial Instruments
Part B of 2013-9 makes amendments to particular Australian
Accounting Standards to delete references to AASB 1031, and
Standards.
2013-9C
Amendments to Australian
Accounting Standards –
Conceptual Framework, Materiality
and Financial Instruments
Part C of AASB 2013-9 amends AASB 9 to add Chapter 6
Hedge accounting, to permit “own credit risk” requirements
to be applied without applying the other requirements of
AASB 9 at the same time, to amend the mandatory effective
date of AASB 9 to 1 January 2017 and to amend the reduced
disclosure requirements for AASB 7 and AASB 101.
2014-1A
Amendments to Australian
Accounting Standards
Part A of 2014-1 amends various standards as a result
of the annual improvements process
2014-1B
Amendments to Australian
Accounting Standards
Part B of AASB 2014-1 makes amendments to AASB 119
Employee Benefits in relation to the requirements for
contributions from employees or third parties that are linked
to service.
1 January 2014
1 January 2015
1 July 2014
1 July 2014
2014-1C
Amendments to Australian
Accounting Standards
Part C of AASB 2014-1 makes amendments to particular
Australian Accounting Standards to delete their references
to AASB 1031.
1 July 2014
AASB 1031 Materiality
Re-issuance of AASB 1031
1 January 2014
24 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 25
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
NOTE 3 Revenue
trading Revenue
Sale of Goods
other income
Interest
total other income
Total Revenue
NOTE 4 Other Income
Net gain on disposal of fixed assets
NOTE 5 Expenses
Profit before income tax expense includes the following specific expenses:
Depreciation: Plant and equipment
Amortisation: Website development costs
Amortisation: TGA Costs
Net profit on sale of fixed assets
Employee Benefits expense
NOTE 6 Auditors’ Remuneration
During the year the auditor of the Group earned the following remuneration:
Audit and review of financial reports
Tax consulting services
Other consulting services
Total remuneration
2014
$
2013
$
NOTE 7 Income Tax
19,355,131
19,355,131
17,065,462
17,065,462
61,799
61,799
30,985
30,985
(a) income tax expense / (benefit)
Current tax
Deferred tax
Adjustments for current tax of prior periods
19,416,931
17,096,447
(b) Deferred income tax (revenue) / expense included in income tax expense comprises:
2014
$
2013
$
170,837
(82,501)
(58,818)
29,518
1,469
(34,899)
-
(33,430)
2014
$
23,596
23,596
2013
$
20,513
20,513
2014
$
2013
$
242,602
7,332
1,939
23,596
4,681,666
4,957,134
2014
$
52,250
7,000
-
59,250
240,822
15,869
-
6,445
3,521,477
3,784,614
2013
$
72,000
31,000
-
103,000
Decrease / (increase) in deferred tax assets
(Decrease) / increase in deferred tax liability
(316,955)
(34,899)
-
-
(316,955)
(34,899)
(c) the prima facie tax payable on profit before income tax is reconciled to the
income tax expense as follows;
Prima facie income tax payable on profit before income tax at 30%
334,323
211,852
Add tax effect of:
- entertainment expenses
- net capital gainon sale of businesses
- other non-deductible expenses
- income tax losses not brought to account
- overprovision of deferred tax assets in prior year
Less tax effect of:
- s40-880
- capital losses utilised
- write back of deferred tax liability on sale of businesses
- overprovision of income tax in prior year
- recognition of tax losses not previously brought to account
income tax expense / (benefit) attributable to profit
(d) Deferred tax assets
The balance comprises:
- Provisions / accruals
- Provision for employee entitlements
- Provision for stock
- Other assets
- Fixed Assets
- Carry forward tax losses
Balance after set off of deferred tax assets and (liabilities)
Deferred tax asset not recognised comprise:
Unrecognised tax losses
Timing differences
-
-
-
-
-
-
-
-
(58,818)
(245,987)
29,518
22,421
177,324
-
157,510
3,265
415,491
776,011
-
-
30,000
-
-
(30,352)
-
-
(363)
(244,567)
(33,430)
24,873
125,549
78,362
271
-
230,000
459,055
792,808
1,038,795
-
-
792,808
1,038,795
The amount of deferred tax assets which may be realised in the future is dependant on the assumption that no adverse change will
occur in income tax legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable
the benefit to be realised and comply with the conditions of deductibility imposed by the law.
26 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 27
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
NOTE 8 Statement of Cash Flows
2014
$
2013
$
NOTE 10 Trade and Other Receivables
(a) cash at bank and on hand
2,820,379
2,511,477
current
(b) Reconciliation of operating profit (loss) after income tax to net cash used
in operating activities
Operating profit after income tax
Non cash items
Depreciation & amortisation
Movement in net present value of future trailing commissions
(Profit)/loss on disposal of assets
Change in operating assets and liabilities
(Increase)/ decrease in trade debtors
(Increase)/ decrease in other debtors
(Increase)/ decrease in inventory
Increase /(decrease) in provisions
Increase /(decrease) in accounts payable and other payables
Increase/(decrease) in current tax provision
Increase/(decrease) in deferred tax asset
Net cash outflows from operating activities
(c) non cash financing and investing activities
other non cash Share issues
in financial year ended 30 June 2014
1,084,891
739,603
251,873
256,692
(a) impaired trade receivables
Trade and other receivables
GST receivable
Other receivables
-
(23,596)
(823,524)
(150,702)
(1,501,606)
(30,149)
(872,715)
296,794
(316,956)
(2,085,690)
-
(14,068)
(273,793)
(12,951)
(250,119)
(32,899)
346,509
1,469
(34,899)
725,543
In January 2014, the company issued 2,162,162 Paragon Care Ltd ordinary shares as part consideration for the acquisition
of L R Instruments and Richard Medical. The value of the shares issued as at the date of issues was $800,000.
in financial year ended 30 June 2013
Nil
(d) Financing Facilities
Refer Note 19 (c)
NOTE 9 Inventories
current
Raw material
Work in progress
Finished goods
Movements in the provision for inventory written down to net realisable value are as follows:
At 1 July
Increase through business combinations
Amounts written off
As at 30 June
2014
$
2013
$
578,246
79,548
4,413,119
5,070,913
414,244
79,548
2,575,515
3,069,307
261,205
298,368
-
(261,205)
-
-
(37,163)
261,205
As at 30 June 2014 current trade receivables of the Group with a nominal value
of $nil (2013: $nil) were impaired:
The ageing of these receivables is as follows:
Up to 3 months
4 to 6 months
Over 6 months
Movements in the provision for impairment of receivables are as follows:
At 1 July
Change for the year
Amounts written off as uncollectable
As at 30 June
(b) past due but not impaired
As at 30 June 2014, trade receivables of $1,290,653 (2013: $906,737) were past due but
not impaired. These relate to a number of independent customers for whom there is no
recent history of default. The ageing analysis of these trade receivables is as follows:
Up to 3 months
3 to 6 months
(c) other receivables
These amounts generally arise from transactions outside the usual operating activities
of the group.
(d) Fair value and credit risk
Due to the short term nature of these receivables, their carrying value is assumed
to approximate their fair value. The maximum exposure to credit risk is the fair value
of receivables.
2014
$
2013
$
3,669,645
2,815,871
171,647
223,238
200,736
72,537
4,064,529
3,089,145
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,508,609
145,464
1,654,072
1,265,951
18,636
1,284,587
28 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 29
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
NOTE 11 Derivative Financial Instruments
current assets
Foreign exchange forward contracts - cash flow hedges
current liabilities
Foreign exchange forward contracts - cash flow hedges
2014
$
-
-
113,938
113,938
2013
$
142,798
142,798
-
-
Foreign exchange forward contracts - cash flow hedges
Companies within the group import materials from the United States, Europe and Asia. In order to protect against exchange rate
movements, the group has entered into forward exchange contracts to purchase US dollars and Euro. These contracts are hedging
highly probable forecasted purchases for the ensuing financial year. The contracts are timed to mature when payments for major
shipments are scheduled to be made.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other
comprehensive income. When the cash flows occur, the group adjusts the initial measurement of the component recognised in the
balance sheet by removing the related amount from other comprehensive income.
NOTE 12 Plant and Equipment
non current assets
Furniture,Fittings and Equipment - at cost
Less accumulated depreciation
Motor Vehicles - at cost
Less accumulated depreciation
Total Plant and Equipment
Movement in carrying amount during the year:
Beginning of year WDV
Additions at cost
Acquisition through business combinations
Disposals
Depreciation
End of year WDV
(a) leased assets
Non current assets includes the following amounts where the group
is a lessee under a finance lease:
Leasehold equipment
Cost
Less accumulated depreciation
Written down value
2014
$
2013
$
1,107,177
(720,959)
590,523
(358,246)
618,494
739,458
104,024
87,545
(69,932)
(242,602)
618,494
969,332
(580,039)
732,791
(382,626)
739,458
852,665
181,933
-
(54,318)
(240,822)
739,458
724,523
(381,383)
343,140
776,916
(299,361)
477,555
NOTE 13 Intangible Assets
Website Development Costs
TGA Costs (with business acquisition)
Goodwill
Website development costs
Beginning of year
Additions at cost
Amortisation
End of year
The website development costs are amortised over two years.
tGa costs (with business acquisition)
Beginning of year
Additions - PM Medical
Amortisation
End of year
Goodwill
Beginning of year
Additions - L.R Instruments and Richards Medical
Tax Adjustments
End of year
Goodwill
2014
$
14,710
21,333
13,610,148
13,646,192
7,455
35,923
(7,332)
36,045
-
23,273
(1,939)
21,333
2013
$
7,455
-
8,370,595
8,378,050
12,539
10,785
(15,869)
7,455
-
-
-
-
8,370,595
5,239,553
(45,806)
8,370,595
-
-
13,564,342
8,370,595
After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses.
Goodwill is not amortised but is subject to impairment testing on an annual basis or whenever there is an indication of impairment.
Goodwill is attributable to the profitability of the business acquired. Impairment testing is undertaken by assessing the cash
generated from the businesses and estimating the value of the businesses using cash flow projections.
Key assumptions of these projections included:
- Management projections of income and expenses for the five years to 30 June 2018,
- Management projections for growth in each of the businesses over the five year period.
- Application of a three times multiplier for the 2018 year net cash flow to estimate the residual value.
- A discount rate of 9.5% was used, being an estimate of the Company’s weighted average cost of capital,
being the required rate of return for companies in a similar business.
The net present value estimate of the businesses exceeds the aggregate value of each cash generating unit’s assets including
the book value of goodwill. At 30 June 2014, there is no indication of impairment of goodwill.
NOTE 14 Trade and other payables
current
Trade creditors
Other creditors
Accrued expenses
2014
$
2013
$
2,198,172
1,218,977
188,609
3,605,758
2,535,448
502,972
235,992
3,274,412
30 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 31
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
NOTE 15 Borrowings
current
Secured
Bank Loans
Lease Liabilities
Unsecured
Loan
Total Current Borrowings
non current
Secured
Bank Loans
Lease Liabilities
Unsecured
Loan
Total Non Current Borrowings
(a) Secured liabilities and assets pledged as security
The total secured liabilities (current and non current) are as follows:
Bank Loans
Lease Liabilities
2014
$
2013
$
663,000
187,782
850,782
-
850,782
1,020,000
209,238
1,229,238
2,225,000
2,225,000
3,454,238
-
171,919
171,919
1,500,000
1,500,000
1,671,919
-
386,890
386,890
2,275,000
2,275,000
2,661,890
1,683,000
397,020
2,080,020
-
558,809
558,809
The bank has a first registered company charge over all assets and undertakings including uncalled capital of the consolidated entity.
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor
in the event of default.
(b) loan
The parent entity borrowed $1,500,000 from a private investor in June 2011. The loan was for a three year period and was repaid
in June 2014.
Rapini Pty Ltd is the guarantor for the private investor loan disclosed in note 15.
The parent entity borrowed $2,275,000 from a private investor in June 2012. The loan is in two tranches. The first for $1,150,000
is due for repayment on 1 January 2016 and the second for $1,125,000 is due for repayment on 1 July 2016. Interest, at 9.5% per
annum, is payable quarterly in arrears.
NOTE 16 Provisions
current
Employee entitlements
non current
Employee entitlements
2014
$
2013
$
500,520
500,520
46,374
46,374
366,408
366,408
43,716
43,716
NOTE 17 Contributed Equity
Fully paid ordinary shares
(a) ordinary shares
2014
$
2013
$
22,808,822
15,040,385
The Company has unlimited authorised capital with no par value. Ordinary shares entitle the holder to participate in dividends and
the proceeds on winding up of the Company in proportion to the number and amounts paid on the shares held. On a show of hands
every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is
entitled to one vote.
Movements in ordinary share capital in the company over the past two years were as follows:
Date
30-Jun-12
27-May-13
27-Jun-13
28-Jun-13
Opening balance
Placement to sophisticated and professional investors
at issue price of $0.27 per share.
Issue of shares pursuant to the company’s share purchase plan
at issue price of $0.27 per share
Placement to sophisticated and professional investors
at issue price of $0.27 per share.
number of Shares
32,291,892
4,843,780
$
12,065,884
1,307,821
3,507,363
947,000
2,665,476
719,680
30-Jun-13
Balance
31-Oct-13
20-Nov-13
23-Dec-13
30-Dec-13
15-Jan-14
31-Mar-14
30-Jun-14
Issue of shares pursuant to the company’s dividend re-investment
plan price of $0.35 per share
Placement to sophisticated and professional investors
at issue price of $0.37 per share.
Placement to sophisticated and professional investors
at issue price of $0.37 per share.
Shares issued in consideration for the release of an obligation
to repay borrowings at issues price of $0.37per share
Placement to sophisticated and professional investors
at issue price of $0.37 per share.
Issue of shares pursuant to the company’s dividend re-investment
plan price of $0.31 per share
Accumulated share issue cost incurred
during 2014 Fin Year (net of tax)
43,308,511
15,040,385
277,358
97,075
10,890,000
4,029,300
7,360,000
2,723,200
945,946
350,000
2,162,162
800,000
235,566
73,028
(304,165)
30-Jun-14
closing balance
65,179,543
22,808,822
(b) capital management
When managing capital, the directors’ objective is to ensure the Company continues as a going concern as well as to maintain optimal
returns to shareholders. The directors also aim to maintain a capital structure that ensures the lowest cost of capital available to
the Company. The directors are constantly monitoring the Company’s capital requirements and capital structure to take advantage
of favourable opportunities for raising capital. The directors have no current plans to issue further shares or options on the market
unless they conclude a further business acquisition. The directors monitor capital through the gearing ratio (net debt divided by total
capital). The target for the Group’s gearing ratio is below 50%.
The gearing ratios for the years ending 30 June 2014 and 2013 were as follows:
Total Borrowings
Less Cash and Cash Equivalents
net Debt
total equity
Total Capital
Gearing Ratio
The Group is not subject to any externally imposed capital requirements
2014
$
2013
$
4,305,020
(2,820,379)
1,484,641
18,208,265
19,692,906
8%
4,333,809
(2,511,477)
1,822,332
10,369,476
12,191,808
15%
32 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 33
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
NOTE 18 Reserves
Currency hedge reserve
Movements in currency hedge reserve were as follows:
Beginning of year
Revaluation
End of year
2014
$
(113,938)
(113,938)
142,798
(256,736)
(113,938)
2013
$
142,798
142,798
(66,509)
209,307
142,798
NOTE 19 Financial Risk Management
The Group’s activities expose it to a variety of financial risk: market risk (including currency risk and interest rate risk), credit risk
and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the Group. Derivative financial instruments are used by the Group
to hedge exposure to exchange rate risk associated with foreign currency transactions. Derivatives are used exclusively for hedging
purposes, ie not as trading or other speculative instruments.
(a) Market Risk
(i) Forward exchange risk
The Group enters into forward exchange contracts to buy and sell specified amounts of foreign currencies in the future at stipulated
rates. The objective in entering into the forward exchange contracts is to protect the economic entity against unfavourable exchange
rate movements for the purchases undertaken in foreign currencies.
The Group’s risk management policy is to hedge between 40% and 100% of anticiptated cash flows (purchase of inventory) in Euro /
US Dollars for the subsequent 12 months.
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was as follows:
Forward exchange contracts
- buy foreign currency (cash flow hedges)
USD
Euro
(ii) Interest rate risk
2014
$
2013
$
1,997,841
1,164,005
3,161,846
1,393,010
1,655,731
3,048,741
The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with
the floating interest rate. The Company’s policy is not to actively manage interest cost. At 30 June 2014 $483,000 (2013: $NIL)
of the Company’s debt is at a variable rate of interest.
The financial instruments exposed to interest rate risk are as follows:
Financial assets
Cash and cash equivalents (interest bearing)
Financial liabilities
Interest bearing liabilities - variable rate (current)
Interest bearing liabilities - fixed rate (current)
Interest bearing liabilities - variable rate (non current)
Interest bearing liabilities - fixed rate ( non current)
2014
$
2013
$
2,380,661
1,539,306
(483,000)
(367,782)
-
(3,454,238)
(4,305,020)
-
(1,671,922)
-
(2,661,887)
(4,333,809)
(b) credit risk
Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and
deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and
committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of “A” are
accepted. For customers, risk control assesses the credit quality of the customer, taking into account its financial position, past
experience and other factors. The compliance with credit limits by customers is regularly monitored by line management.
The Group has no significant exposure to any individual debtor of the Group and the credit risk is low for the majority of the balance.
Receivables balances are monitored on an ongoing basis and given the low risk profile of customers the Group’s exposure to bad
debts is insignificant. The Group does not have any material credit risk exposure to any single debtor or group of debtors under
financial instruments.
(c) liquidity risk
Prudent liquidity management implies maintaining sufficient cash and the availability of funding through an adequate amount of
committed credit facilities. Forecasted cash flows are used to calculate the forecasted liquidity position and to maintain suitable
liquidity levels.
34 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 35
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
NOTE 19 Financial Risk Management Continued
Financing Arrangements
The Group had access to the following borrowing facilities at the end of the reporting period:
Floating Rate
expiring within one year
Total Facility
Undrawn amount
expiring beyond one year
Total Facility
Undrawn amount
Fixed Rate
expiring within one year
Total Facility
Undrawn amount
expiring beyond one year
Total Facility
Undrawn amount
Total
Total Facility
Undrawn amount
2014
$
2013
$
600,000
117,000
600,000
600,000
-
-
180,000
1,500,000
-
-
3,245,000
2,275,000
-
-
4,025,000
117,000
4,375,000
600,681
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the
reporting date to the contractual maturity date. The amounts disclosed in the table are the undiscounted cashflows.
contractual maturities of
financial liabilities
2014
Weighted
average
interest rate
less than
6 months
%
$
6 to 12
months
Years
$
Between
1 and 2
Years
$
Between
2 and 5
cash flows
$
total
contractual
$
NOTE 19 Financial Risk Management Continued
(d) Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level
of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b) inputs other than quoted prices included in level 1 that are observable for the asset or
liability either directly (as prices) or indirectly (derived from prices) (level 2); and
(c) inputs for the asset or liability that are not based on observable market data
(unobservable inputs) (level 3).
The following table present the Group’s assets and liabilities measured and recognised at fair value
at 30 June 2014 and 30 June 2013.
at 30 June 2014
assets
Forward foreign exchange contracts
Total assets
liabilities
Forward foreign exchange contracts
Total liabilities
at 30 June 2013
assets
Forward foreign exchange contracts
Total assets
liabilities
Forward foreign exchange contracts
Total liabilities
Level 1
Level 2
Level 3
Total
$
-
-
-
-
Level 1
$
-
-
-
-
$
-
-
(113,938)
(113,938)
Level 2
$
142,798
142,798
-
-
$
-
-
-
-
Level 3
$
-
-
-
-
$
-
-
(113,938)
(113,938)
Total
$
142,798
142,798
-
-
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total
2013
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total
3,605,758
483,000
185,109
4,273,867
7.3
8.2
8.1
-
-
-
-
182,672
182,672
327,443
327,443
3,126,795
3,126,795
-
3,605,758
483,000
3,822,020
7,910,778
3,274,412
-
-
-
-
-
9.5
9.5
78,866
3,353,278
1,593,056
1,593,056
180,481
180,481
2,481,406
2,481,406
-
3,274,412
-
4,333,809
7,608,221
36 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 37
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
NOTE 20 Related party disclosure
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available
to other parties unless otherwise stated.
(a) Subsidiaries
parent entity
Paragon Care Limited
Subsidiaries
Nogarap L Pty Ltd
Paragon Healthcare Pty Ltd
Iona Medical Products Pty Ltd
Volker Australia Pty Ltd
Rapini Pty Ltd
GM Medical Pty Ltd
Paragon Medical Pty Ltd (formerly Nogarap T Pty Ltd)
L R Instruments Pty Ltd
Richards Medical Pty Ltd
Unikits Pty Ltd
All entities are incorporated in Australia.
(b) Ultimate parent
ownership
30 June 2014
ownership
30 June 2013
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Paragon Care Limited is a public company listed on ASX and details of major shareholders are shown in Shareholder Information
(c) transactions with related parties
Employees and Contractors
(d) loan to related parties
The parent entity has provided intercompany loans to its subsidiaries for working capital purposes.
The intercompany loans are repayable to the parent entity at call and no interest is payable.
Details of the loans are shown below.
loans to / (from):
Nogarap L Pty Ltd
Nogarap T Pty Ltd
Paragon Healthcare Pty Ltd
Paragon Medical Pty Ltd
2014
$
2013
$
(801,251)
(269,507)
7,384,043
5,226,773
(801,251)
(269,507)
7,319,199
-
11,540,058
6,248,441
NOTE 21 Key management personnel disclosures
a) Key management personnel compensation
Detailed remuneration disclosures are provided in the remuneration report section of the directors’ report.
The following table provides the aggregate remuneration of the key management personnel:
Short term employee benefits
Post employment benefits
Others - long term benefits
Share-based payments
2014
$
870,248
41,566
-
-
2013
$
800,016
38,949
347
-
911,814
839,312
(b) equity holdings of Key Management personnel
(i) Share holdings
Details of the key management personnel holdings of ordinary shares in the Company, including their personally related parties,
are shown in the following tables:
Directors
S F Tanner
M A Simari
M C Newton
B A Cheong
M.G. Rice
Directors
S F Tanner
M A Simari
M C Newton
B A Cheong
Balance
1 July 2013
1,702,867
1,240,970
189,567
2,833,208
100,000
Balance
1 July 2012
1,702,867
1,240,970
189,567
2,833,208
Shares
acquired
Shares
disposed
other
changes
Balance
30 June 2014
-
(1,200,000)
175,944
8,561
-
-
-
-
-
-
-
-
-
-
502,867
1,416,914
198,128
2,833,208
100,000
Shares
acquired
Shares
disposed
other
changes
Balance
30 June 2013
-
-
-
-
-
-
-
-
-
-
1,702,867
1,240,970
189,567
2,833,208
100,000
other key management personnel
M.G. Rice
100,000
Contributions to superannuation funds on behalf of employees are disclosed in the Remuneration Report in the Directors’ Report.
other key management personnel
38 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 39
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
NOTE 21 Key management personnel disclosures Continued
(ii) Option holdings
Details of the key management personnel holdings of options to acquire ordinary shares in the Company, including their personally
related parties, are shown in the following table:
Directors
Balance
1 July 2013
options
acquired
disposed /
expired
options
excercised
Balance
30 June 2014
other key management personnel
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Directors
S F Tanner
M A Simari
Balance
1 July 2012
options
acquired
disposed /
expired
options
excercised
Balance
30 June 2013
100,000
100,000
-
-
(100,000)
(100,000)
-
-
-
-
c) other transactions with key management personnel
The Paragon Healthcare business has a lease for the premises located in Norcal Road, Nunawading with Mr Brett Cheong and
Mrs Lyn Cheong, Mr Cheong being a director of the Company. The lease runs for 3 years from 1 January 2013 with an option for
one further term of three years. The rent paid is on commercial terms and the directors consider Mr Cheong’s association with
the arrangement is on arm’s-length terms and conditions. The total rent payable Mr and Mrs Cheong by the Company for the year
ended 30 June 2014 was $168,850 (2013: $171,250).
NOTE 22 Earnings per Share
(a) Basic (loss) / earnings per share (cents per share)
(b) Diluted (loss) / earnings per share (cents per share)
(c) Reconciliation of earnings used in calculating earnings per share
2014
cents
2.0
2.0
2013
Cents
1.7
1.7
Profit / (Loss) used in calculating basic earnings per share
1,084,891
739,603
Profit / (Loss) used in calculating diluted earnings per share
1,084,891
739,603
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator
in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share
Options
Weighted average number of ordinary shares used as the denominator
in calculating diluted earnings per share
(e) information concerning the classification of securities
(i) Options
number
Number
55,440,725
43,308,511
-
0
55,440,725
43,308,511
All options on issue are considered to be potential ordinary shares and have been included in the determination of diluted earnings
per share to the extent to which they are dilutive. The options have not been included in the determination of basic earnings per share.
40 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 41
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2014
NOTE 23 Parent Entity Disclosures
2014
$
2013
$
The Group leases various premises under non-cancellable operating leases expiring within two to five years. The leases have various
terms, escalation clauses and renewal rights. On renewal the terms of the leases are renegotiated.
NOTE 26 Commitments
lease commitments
(a) Financial information
Profit for the year
Total comprehensive income
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Shareholders Equity
Issued capital
Reserves
Retained earnings
Total Equity
(599,008)
(758,438)
(599,008)
(758,438)
13,958,646
14,538,409
153,684
2,378,684
7,828,208
8,289,207
278,985
2,559,802
22,808,822
15,040,385
-
-
(10,649,097)
(9,310,980)
12,159,725
5,729,405
(b) Guarantees
The Company and its controlled entities as listed in note 20 have provided financial guarantees in respect of bank loans of
subsidiaries amounting to $ nil (2013 - nil), secured by registered mortgages over all of the assets of the Company and its
subsidiaries
The parent entity has also given unsecured guarantees in respect of:
(i) finance leases of subsidiaries amounting to $100,818 (2013 - $191,102)
(c) other commitments
The Company has no commitments to acquire property, plant and equipment.
(d) contingent liabilities
The parent entity did not have any contingent liabilities as at 30 June 2014.
NOTE 24 Contingent Liabilities
Since the last annual reporting date, there has been no material change of any contingent liabilities or contingent assets.
The Group has bank guarantees outstanding totalling $39,875.
NOTE 25 Subsequent events
No other matters or circumstances have arisen since the year ended 30 June 2013 that significantly affected or may
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future
financial years.
Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows:
Within one year
Later than one year but not later than five years
2014
$
2013
$
565,846
256,404
822,250
464,383
631,426
1,095,809
NOTE 27 Segment Information
The consolidated entity operates within one operating segment only – Medical Equipment. The Medical Equipment segment
supply durable medical equipment and consumable medical product to hospitals, medical centres and aged care facilities in
Australia predominantly. The consolidated entity does not have any other reportable segments.
NOTE 28 Business Combinations
paragon Medical pty ltd
On 1st Jan 2014 the Company acquired th business and assets of a leading surgical and medical products and instrument supplier
LR Instruments and Richards Medical for a combined purchase price of $5.1 million. The acquisition of LR Instruments and Richards
Medical has expanded Paragon Care’s range of product offering and provide exposure to hospital’s operating expense budgets.
purchase consideration
Cash and cash equivalents
Ordinary shares in Paragon care (2,162,162) at $0.37)
Fair value and carrying value of net assets acquired
Net working capital
Plant and equipment
Employee Entitlements
Goodwill on consolidation
Reconciliation to cashflow
Consideration of purchase
Conditional Payment due Dec 30 2014
Equity funding
Net outflow of cash
$
4,339,767
800,000
5,139,767
$
-
60,449
(160,235)
5,239,553
5,139,767
$
5,139,767
(800,000)
(800,000)
3,539,767
impact of acquisition on the results of the Group
As the acquisition of L.R Instruments and Richard Medical occurred on 1 Jan 2014 the revenue and profit of the Group
for the year ended 30 June 2014 reflects January to June 2014 financial month performance of the acquired businesses.
42 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 43
Directors’ Declaration
For the year ended 30 June 2014
In the directors’ opinion:
a) the financial statements and notes set out on pages
15 to 44 are in accordance with the Corporations Act
2001, including;
(i) complying with Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional
requirements; and
(ii) giving a true and fair view of the consolidated entity’s
financial position as at 30 June 2013 and of its performance
for the financial year ended on that date; and
b) there are reasonable grounds to believe that Paragon Care
Limited will be able to pay its debts as and when they become
due and payable.
The directors have been given the declaration by the chief
executive officer and chief financial officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with the resolution
of the directors.
S F Tanner
Chairman
28 August 2014
Auditors’ Report
44 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 45
Independent Audit Report
For the year ended 30 June 2014
46 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 47
Corporate Governance Statement
For the year ended 30 June 2013
Paragon Care Limited (the Company) and the Board are
committed to achieving and demonstrating the highest
standards of corporate governance. The Board has reviewed
the Company’s framework and practices in the context of the
3rd edition of the ASX Corporate Governance Principles and
Recommendations released in March 2014 (the Principles and
Recommendations). The review has resulted in an adaptation
of the Company’s corporate governance practices, with effect
from 1 July 2014 to ensure they continue to meet the interests
of shareholders as the Company grows. This revised Paragon
Care Corporate Governance Statement (the Statement) and
the supplementary policies and charters may be found on the
Company’s website and a summary is to be provided in the 2014
Annual Report. The Company and its controlled entities together
are referred to as the group in this Statement.
A description of the group’s corporate governance practices
in the year ended 30 June 2014, a comparison to the Principles
and Recommendations requirements and the changes going
forward is provided below.
Principle 1
Lay solid foundations for management and oversight
The directors are responsible to the shareholders for the
performance of the group in both the short and the longer term
and seek to balance competing objectives in the best interests
of the group as a whole. The focus is to enhance the interests
of shareholders and other key stakeholders and to ensure the
group is properly managed.
The Board adopted a Board Charter with effect from 1 July 2014
and principles detailed are consistent with the responsibilities
of the Board discharged in the year to 30 June 2014.
The responsibilities of the Board include:
- Developing and approving the corporate strategy and
monitoring implementation of strategy.
- Evaluating, approving and monitoring the strategic and
financial plans of the Company.
- Evaluating, approving and monitoring the annual budgets
(including financial and other reporting) and business plans.
- Evaluating, approving and monitoring the progress of major
capital expenditure, capital management and all major
corporate transactions, including the issue of securities
of the Company.
- Appointment of the Chairman of the Company.
- Appointing, monitoring, managing the performance of, and
if necessary terminating the employment of the Managing
Director, Senior Management and Company Secretary.
The Board will consider the Managing Director and Senior
Management’s authorities and accountabilities, as well as
objectives and performance indicators to provide monitoring
benchmarks.
- Managing succession planning for the positions of Managing
Director and such other key management positions which may
be identified from time to time.
- Liaising with the Managing Director in relation to the
appointment and termination of such key management
positions which may be identified from time to time.
- Ensuring appropriate resources are available to the Managing
Director and Senior Management.
- Reviewing, ratifying and monitoring the Company’s risk and
audit framework, (including but not limited to) systems of
risk management and internal control. Reviewing, ratifying
and monitoring compliance with the Company’s risk and
audit policies and protocols.
- Reviewing, ratifying and monitoring the Company’s operations
in relation to, and compliance with relevant regulatory and
legal requirements.
- Actively and regularly involved in strategic planning and
reviewing, developing and considering strategic planning
issues and identification of opportunities and the full range
of business risks that will determine which of those
opportunities are most worth pursuing.
- Periodic review with management on how the strategic
environment is changing, what key business risks and
opportunities are appearing, how they are being managed
and what, if any, modifications in strategic direction should
be adopted.
- Reviewing and approval of all disclosures related to
any departures from the ASX principles of good corporate
governance.
- Reviewing and approval of the disclosure of any of the
Company’s policies and procedures to the general public.
- Supervision of the public disclosure of all matters that
the ASX best practice recommendations and recommend
be publicly disclosed consistent with the Continuous
Disclosure Policy approved by the Board.
- Establishing and monitoring performance and reporting
of Committees of the Board.
- Appointment of Directors to Committees established
by the Board.
- Approval and monitoring delegations of authority.
- Enhancing and protecting the reputation of the organisation
Day to day management of the group’s affairs and the
implementation of the corporate strategy and policy initiatives
are formally delegated by the Board to the managing director
and senior management team.
Any director, with the prior agreement of the Chairman (or in
the case of the Chairman by reference to one non-executive
director) may in furtherance of their duties, seek independent
professional advice at the Company’s expense.
The Board widened the responsibilities of the Remuneration
Committee to include identification and selection of directors
and senior management and renamed it the Nominations &
Remuneration Committee with effect from 1 July 2014. The
Nominations & Remuneration Committee Charter is available
on the Company’s website. In addition to being responsible
for guiding the remuneration structure of the Company this
committee will also be responsible for identifying suitable
candidates to act as directors of the Company and undertaking
appropriate checks of candidates. In the year to 30 June 2014
these responsibilities were undertaken by the full Board. The
details of the all Company’s directors can be found in the 2014
Annual Report and for directors that were elected at the 2013
Annual General Meeting in the Notice of Meeting.
All directors and senior management have written agreements
with the Company detailing the terms of their appointment.
The Company Secretary is appointed by the Board and reports
to the chairman on all Board matters.
Diversity policy
The Company values diversity and recognises the benefits it can
bring to the organisation’s ability to
achieve its goals. However given the relatively small size and
number of employees of the Company the directors do not
believe it is currently appropriate to establish formal diversity
objectives in relation to gender, age, cultural background and
ethnicity, but rather to ensure that the best candidate at the time
is appointed to any vacant position.
Principle 4
Safeguard integrity in corporate reporting
In the year ended 30 June 2014 the directors considered the
limited scope of operations and existing control systems
provided sufficient safeguard for the integrity of the Company’s
financial reporting and the full Board considered all financial
and audit matters of the Company, in lieu of an Audit Committee.
However with the growth and expansion of the business the
directors now consider it appropriate to establish an Audit &
Risk Committee, and effective 1 July 2014 this Committee will
review and make recommendations in relation to the integrity
of the Company’s financial reporting processes and its financial
statements, and oversee the risk management processes within
the Company. The Audit & Risk Committee Charter may be
viewed on the Company’s website.
The Audit & Risk Committee comprises the 2 independent
non-executive directors, contrary to the Principles and
Recommendations that suggests there be a minimum of
three members. There are only 2 independent non-executive
directors on the Company’s Board and it is not appropriate
for any executive director to be on this committee so it can be
independent of management in discharging its responsibility
of overseeing the integrity of management’s financial
administration and risk management. Consistent with the
requirements of Section 295A of the Corporations Act the
Company’s Managing Director or Chief Financial Officer provide
a declaration that, in their opinion, the financial records of the
Company for a each financial year and half year have been
properly maintained in accordance with the Act and that the
financial statements and the notes for the financial year comply
with the accounting standards and give a true and fair view of the
financial position and performance of the entity. The directors
must receive this declaration before they approve the financial
statements for the financial year and half year.
The Company policy is to appoint external auditors who clearly
demonstrate quality and independence. The performance of the
external auditor is reviewed annually and applications for tender
of external audit services are requested as deemed appropriate,
taking into consideration assessment of performance, existing
value and tender costs. Mr Robert Miano of RSM Bird Cameron
was appointed as the external auditor in November 2009. In June
2014 pursuant to §324DAA of the Corporations Act the Board
resolved to permit Mr Miano, if required, to continue as auditor
until 30 June 2016. Reasons for the extension include continuity
of knowledge and experience that Mr Miano has accumulated
over the years, as well as, key relationships formed during this
period’ is considered a material benefit to maintaining the quality
of audit work for a further period covering the two financial years
ending 30 June 2015 and 2016
The external auditor will attend the Company’s annual general
meetings and be available to answer shareholder questions
about the conduct of the audit and the preparation and content
of the audit report.
Board and senior management evaluation
The Board undertakes a self assessment of its collective
performance, the performance of the Chairman and of its
committees. The assessment also considers the adequacy of
induction and continuing education and access to information.
The results and any action plans are documented together with
specific performance goals which are agreed for the coming year.
An assessment carried out in accordance with this process was
undertaken during June 2014.
The senior management performance is evaluated annually
against operational and financial objectives agreed by the Board.
Detail on the principles and amounts of non-executive director
and senior management remuneration can be found in the
Remuneration Report section 2014 Annual Report.
Principle 2
Structure the Board to add value
In the year to 30 June 2014 the Board acted as the nomination
committee and was responsible for establishing the criteria for
Board membership, reviewing Board membership and identifying
suitable candidates to act as directors to contribute to Board’s
duties and responsibilities. Effective from 1 July 2014 the
Remuneration Committee’s role has been expanded to include
Board and senior management appointment responsibilities,
and henceforth will be referred to as the Nominations &
Remuneration Committee. The Nominations & Remuneration
Committee Charter can be found on the Company’s website.
The Board has taken every care to achieve a well-structured
Board, which includes both executive and non executive directors
with an appropriate range of skills and experience. In recognition
of the importance of independent views and the Board’s role
in supervising the activities of management, the Chairman is
an independent non-executive director and all directors are
required to exercise independent judgement and review and
constructively challenge the performance of management.
The Company as at 30 June 2014 had four directors, two of
whom are independent non executive directors (Mr Tanner, the
Chairman, and Mr Newton). The two executive directors are Mr
Simari - CEO, and Mr Cheong - Marketing Manager.
Contrary to Recommendation 2.4 the independent non-executive
directors are in the minority, but at this stage of development it
is considered appropriate for a majority of directors to have a
hands-on role within the Company. The Chairman of the Board,
Mr Tanner, is an independent, non-executive director and he, with
the other independent director, Mr Newton, provide an active role
in challenging management.
The Company ensures all directors have and maintain the skills
to discharge their roles effectively by an induction process for
new directors and development programs for directors.
Principle 3
Act ethically and responsibly
The Board expects all directors, employees and contractors to act
with the utmost integrity and objectivity, and in compliance with
the letter and the spirit of the law and Company policies striving
at all times to enhance the reputation and performance of the
Company, in the following areas;
- Business ethics
- Compliance with laws
- Personal and professional conduct
- Respect for others and improper behavior
- Dealings with suppliers, customers, advisers and regulators
- Dealing with the community
- Dealing with other employees.
The Company and its directors have always promote ethical
and responsible decision-making and effective 1 July 2014 the
Company has formalised its Code of Conduct and this may be
viewed on the Company’s website.
48 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 49
Corporate Governance Statement
For the year ended 30 June 2014
Principle 5
Make timely and balanced disclosure
The Board fully recognises its disclosure obligations under
ASX Listing Rule 3.1 and aims to ensure that shareholders are
informed of all major developments affecting the Company’s
state of affairs by:
- The Company reporting to shareholders at least
each six months.
- Ensuring that price sensitive information and matters
of material significance are reported to the ASX immediately.
- Copies of all announcements and reports are available on
the ASX website and are posted on the Company’s website
as soon as they are disclosed to the ASX.
The Company and its directors fully appreciate their
responsibilities under the ASX Listing Rules and has fully
understood and complied with the Company’s continuous
disclosure obligation notwithstanding the absence of a formal
continuous disclosure policy. However effective 1 July 2014 the
Company adopted a Continuous Disclosure Policy and this may
be viewed on the Company’s website.
Principle 6
Respect the rights of security holders
The Company aims to ensure that shareholders are kept
informed of all major developments affecting the state of affairs
of the Company. Additionally, the Company recognises that
potential investors and other interested stakeholders may wish
to obtain information about the Company from time to time.
To achieve this, the Company communicates information
regularly to shareholders and other stakeholders through a range
of forums and publications.
One of the Company’s key communication tools is its website
located at www.paragoncare.com.au .
The Company endeavours to keep its website up-to-date.
Important information about the Company can be found under
the section marked Corporate Governance on its website.
In addition to the material specifically referred to below, the
Corporate Governance section of the website includes details
of the following:
- the Company’s Board and Board Committee charters;
- the Company’s core corporate governance policies;
- any press release, analyst reports and announcements
made by the Company; and
- financial information about the Company.
The website also contains a facility for shareholders to direct
inquiries to the Company, but at present it does not provide
shareholders with the option of receiving communications
from the Company via email. The Company’s relatively small
shareholding base has not warranted the extra expense however
the Company periodically reviews this communication option.
The Company’s shareholders may also deal directly with its
share registry, Link Market Services through its website
https://investorcentre.linkmarketservices.com.au/Login/Login
Measures for communicating the following important aspects of
the Company’s affairs include:
- Notice of meeting: The Company places the full text of all
notices of meetings and explanatory material on its website.
The Company encourages shareholders to provide email
addresses so that notices of meeting and explanatory
material can be sent to shareholders via email.
- Annual General Meeting (AGM): The Company encourages
full participation of shareholders at its AGM each year. For
those shareholders who are unable to attend in person, the
Company provides an outline of the Chairman’s and the Chief
Executive Officer’s presentations on its website. Shareholders
are encouraged to lodge proxies electronically, subject to
the adoption of satisfactory authentication procedures.
The Company’s external auditor will attend the AGM and be
available to answer shareholder questions about the conduct
of the audit and the preparation and content of the auditor’s
report. The external auditor will also be allowed a reasonable
opportunity to answer written questions submitted by
shareholders to the auditor as permitted under the
Corporations Act 2001 (Cth).
- Annual Report: The Company’s Annual Report is available
on its website and contains important information about the
Company’s activities and results for the previous financial year.
Shareholders can elect to receive the Company’s Annual Report
or concise report as an electronic copy or in hard copy through
the mail.
- Announcements lodged with the ASX: All ASX announcements
made to the market, including annual and half year financial
results, are posted on the Company’s website as soon as
practicable following their release by ASX.
- Presentations: Copies of all investor presentations made
to analysts and media briefings are posted on the Company’s
website.
Principle 7
Recognise And Manage Risk
In the year to 30 June 2014 the Company did not have formal
risk management policies or a separate risk management
committee as the Board monitored the operational and financial
performance of the Company against forecasts and other key
performance measures. The Board has established internal
controls and reviews areas of operational and financial risks.
The Company has strategies to mitigate identified risks of the
business. The Company carries sufficient insurance for the size
and nature of its business to protect shareholders’ equity. From
1 July 2014 the systems of risk oversight and management
and internal control will be monitored by the Audit & Risk
Committee and its charter may be found on the Company’s
website. The Company is in the process of formalising its policies
and processes for the oversight and management of material
business risks but to date the risk review process has been
on-going and no formal review of the overall risk framework
has been undertaken to date. Following the acquisitions made
during the past financial year, the Board will undertake a review
of risk management within the Company, the broader business
risks and reporting processes.
The Company does not have an internal audit function.
The Company is small enough and the Board sufficiently
knowledgeable of the Company’s operations to evaluate
the effectiveness risk management and internal control
processes of the Company. In addition the Company’s auditor
reports upon risk management control processes and makes
recommendations for areas of improvement
Principle 8
Remunerate fairly and responsibly
The Company’s seeks to pay its directors and executives’
sufficient remuneration to attract, retain and motivate high
quality personnel. The policy objectives are as follows:
- to ensure the Company’s remuneration structures are
equitable and aligned with the long-term interests of the
Company and its shareholders and having regard to relevant
Company policies;
- to attract and retain skilled executives and directors;
- to structure short and long term incentives for executives
that are challenging and linked to the creation of sustainable
shareholder returns;
- to ensure any termination benefits for executives are
justified and appropriate; and
- to ensure the incentive for non-executive directors are
justified and not in conflict with their obligation to bring
independent judgment to matters before the Board.
In the year to 30 June 2014 the Company had a Remuneration
Committee and the details of its members and the directors’
attendance at remuneration committee meetings are set out
in the directors’ report of the 2014 Annual Report. From 1 July
2014 this committee has expanded responsibilities to include
consideration of director appointments and is to be referred to as
the Nominations & Remuneration Committee and its charter may
be found on the Company’s website.
In respect of remuneration matters the Nominations &
Remuneration Committee advises the Board on remuneration
and incentive policies and practices generally, and makes
specific recommendations on remuneration packages and
other terms of employment for executive directors, other senior
executives and non-executive directors.
Each member of the senior executive team signs a formal
employment contract at the time of their appointment covering
a range of matters including their duties, rights, responsibilities
and any entitlements on termination. The standard contract
refers to a specific formal job description.
Further information on directors (executive and non-executive)
and executives’ remuneration, including principles used to
determine remuneration, is set out in the directors’ report under
the heading “Remuneration Report” in the 2014 Annual Report.
On an annual basis the Board reviews with senior management
the past results and documented action plans together with
specific performance objectives which are agreed for the coming
year. Senior management performance is evaluated annually
against the operational and financial objectives agreed by
the Board. The Company does have an option plan available
for employees however there is no equity based performance
incentive scheme offer to senior management. The Board
considers that given the relatively small size of the Company
and its stage of development such incentive schemes are not
appropriate but this will remain under periodic review by the
Nominations & Remuneration Committee.
On behalf of the Board
S F Tanner
Chairman
Melbourne, Victoria
28 August 2014
50 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 51
Shareholder Information
Shareholder Information
For the year ended 30 June 2014
The shareholders information set out below was applicable as at 18 September 2014.
(A) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
number of Units
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Total Holders
There are 580 holders of less than a marketable parcel of ordinary shares
pGc
525
256
142
346
99
1,368
(B) Equity security holders
Twenty largest quoted equity security holders:
oRDinaRY SHaReS
name
JMT INVESTMENT GROUP VIC PTY LTD
POSSE INVESTMENT HOLDINGS PTY LIMITED
BRETT CHEONG & LYNN CHEONG
BNP PARIBAS NOMS PTY LTD
LIONEL RICHARDS NO 2 PTY LTD
UNRANDOM PTY LTD
DAK DRAFTING SERVICES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
THE AUSTRALIAN NATIONAL UNIVERSITY
WHOTIF PTY LIMITED
ROMAN LOHYN PTY LTD
MR GREGORY STEPHEN VAWDREY & MRS CHERYL MARGARET VAWDREY
GUERILLA NOMINEES PTY LTD
MR GARRY PETER CROLE
INTERPRAC FINANCIAL PLANNING PTY LTD
MR IVAN TANNER & MRS FELICITY TANNER
CITICORP NOMINEES PTY LIMITED
CHARKAROO PTY LTD
MR KEITH STERRY ADDISON WOODRUFF
JILLIBY PTY LTD
total top 20 pGc Shareholders
Balance of Register
Grand total
Units
% of issued shares
6,013,809
2,870,000
2,833,207
2,027,073
1,621,622
1,564,731
1,500,000
1,405,860
1,230,340
1,165,000
1,010,000
1,000,001
967,742
964,344
922,961
880,000
850,610
787,104
716,000
705,000
31,035,404
34,144,139
65,179,543
9.23%
4.40%
4.35%
3.11%
2.49%
2.40%
2.30%
2.16%
1.89%
1.79%
1.55%
1.53%
1.48%
1.48%
1.42%
1.35%
1.31%
1.21%
1.10%
1.08%
47.62%
52.38%
100.00%
52 Paragon Care Limited Financial Report 2013/14
Paragon Care Limited Financial Report 2013/14 53
Shareholder Information Continued
For the year ended 30 June 2014
(C) Voting rights
The voting rights attaching to each class of equity securities are set out below:
a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have
one vote and upon a poll each share shall have one vote
(D) Substantial holders
name
John Turner Group
total Substantial Shareholders
Total PGC Shares
Units
6,013,809
6,013,809
65,179,543
% of issued
ordinary shares
9.23
9.23
The above substantial shareholders hold a beneficial interest in the shares via their interests in the shareholders detailed below:
John turner Group
JMT Investments Pty Ltd
JMT Investments Pty Ltd atf John Turner Superannuation Fund
3,497,470
2,516,339
paragon care limited
aBn 44 136 627 971
Registered office
Unit 1, 56 norcal Road
nunawading Vic 3131
t +61 3 8833 7800
F +61 3 8833 7890
paragoncare.com.au
54 Paragon Care Limited Financial Report 2013/14
paragoncare.com.au