2015FINANCIAL REPORT Paragon Care has emerged as a distinguished
provider of equipment and consumables to the
healthcare market.
Paragon Care is a Melbourne based, listed Company
with the ASX (PGC), and has progressively acquired
businesses in the healthcare sector.
Paragon Care continues to build
it’s strong representation within
the following healthcare markets:
— Acute Care
— Aged Care
— Community Care
— Primary Care
— Materials handling
— Specialised Manufacturing
— Aesthetic
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
Medical Cases and Bags
Nebulisers, Spares and Accessories
General Medical Products
Fashion Medical Scrubs
Blood Pressure,
Sphygmomanometry
Stethoscopes
Resuscitation, Respiratory
CSSD Products
Surgical Instruments
Specialist Medical, Ophthamology
Specialist Medical, Orthodontic
Aesthetics
Neonatal
Temperature Management
Ultrasound
Contents
2
3
Corporate Directory
Chairman’s Report
4 Directors’ Report
11
13
14
15
16
Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
17 Notes to the Financial Statements
40 Directors’ Declaration
41
44
Independent Audit Report
Shareholder Information
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]
Michael G Rice [Alternate Director to Mr Simari]
Company Secretary
John Osborne
Share Registry
Link Market Services Limited
Level 1, 333 Collins St
Melbourne, VIC, 3000
Locked Bag A14
Sydney South, NSW, 1235
Telephone:1300 554 474
Facsimile: (02) 9287 303
Website: www.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, Victoria 3000
Website: www.rsmi.com.au
Bankers
Westpac Banking Corporation
Solicitors
SOHO Lawyers
Suite 804 /365 Little Collins Street
Melbourne, Victoria, 3000
2
Paragon Care Limited Financial Report 2014/15 Chairman’s Report
For the year ended 30 June 2015
Introduction
On behalf of the Board of Directors of Paragon Care Limited,
I am pleased to present to you our 2015 Annual Report.
The Period in Review
The financial year ended 30 June 2015 proved to be a rewarding one for
the Paragon business and for our shareholders. It was characterised
by a strong operating performance from our core businesses which
continue to benefit from the favourable macroeconomic backdrop
underpinning growth in the healthcare industry.
Our organic and inorganic growth was particularly strong, on the
acquisition front, in October we successfully entered complimentary
lines of business through the acquisition of Scanmedics. Based in
New South Wales, Scanmedics is a leading provider of healthcare
solutions with expert interest in specialist ultrasound, newborn care,
aesthetics and cosmetic medicine in Australia and New Zealand.
The acquisition of Scanmedics offers Paragon exposure to these fast
growing specialist healthcare markets and further diversifies the
company’s revenue streams across the healthcare spectrum, both with
new products and new geographies to do business in.
Financial highlights for the year ended 30 June 2015 included:
- Revenue up 66% to $32.2m
- EBITDA of $3.74m, up 110% over the prior period and in line with
market guidance.
- Net profit after tax of $2.1m, up 90% over the prior year.
- Earnings per share of 3.2 cents, up 60% after allowing for additional
shares issued as part of the consideration for Scanmedics.
- The company’s balance sheet remains sound with Net Debt to
EBITDA ratio around 2.3 times.
- Paragon’s share price more than doubled over the course of the
financial year as investors continued to embrace our story.
To help facilitate our strong growth, from the end of calendar 2015
Paragon is consolidating most of its office and warehouse facilities to
a larger premises in Scoresby in suburban Melbourne. Our physical
space and human capital requirements continue to grow as the Group
successfully expands. I would also like to welcome Stephen Munday
as our new Chief Financial Officer who commenced with the company
in May. Stephen brings a wealth of experience having been in financial
roles with various listed companies prior to joining Paragon and has
already made a very solid contribution.
Going forward I anticipate the favourable ongoing conditions
underpinning the healthcare sector to persist as the population
continues to age. Our existing business portfolio should be able to
continue generating organic growth. The highly fragmented nature
of the industry should provide ongoing value accretive acquisition
opportunities, which will further strengthen the growth outlook
for Paragon.
Our strategy revolves around building critical mass and leveraging the
integrated manufacturing and distribution platform the company has
created. Although still a relatively young company, I believe Paragon
is building a strong track record of year on year revenue and earnings
growth that would be the envy of many other smaller companies listed
on the ASX.
On behalf of the Board I would like to thank the employees, customers,
suppliers and shareholders of Paragon Care for their continued
support. We have a first class management team led by Managing
Director, Mark Simari, and I remain very confident in the company’s
ability to continue to generate value for all key stakeholder groups
moving forward.
- Fully franked dividends for the year of 1.4 cents, up 12% from the
1.25 cents in the prior year. Paragon’s growing fully franked dividend
income stream is another attractive feature for investors.
Shane Tanner
Chairman
18 August 2015
Revenue
EBITDA
Net Profit
$32.2M
$19.4M
$17.1M
$3.7M
$1.8M
$1.5M
$2.1M
$1.1M
$0.7M
12/13
13/14
14/15
12/13
13/14
14/15
12/13
13/14
14/15
3
Paragon Care Limited Financial Report 2014/15 Directors’ Report
For the year ended 30 June 2015
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 2015.
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.
Significant changes in the state of affairs
Contributed equity increased by $802,298 (from $22,808,822 to
$23,611,121) as the result of shares issued pursuant to the company’s
dividend re-investment plan and shares issued in consideration for the
acquisition of Scanmedics. 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 Scanmedics and to fund
working capital.
Mr Shane Tanner
Mr Mark Simari
Mr Michael Newton
Mr Brett Cheong
Mr Michael Rice (Alternate Director for Mr Mark Simari)
Principal Activities
The principal continuing activity of the Group is supply of durable
medical equipment, medical devices 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
2014/15
$32.2 M
$3.74 M
$2.10M
$12.25 M
2013/14
$19.4 M
$1.8 M
$1.08M
$4.3 M
The Group’s performance improved considerably in the 2014–15
financial year compared with 2013–14. Revenue increased by 66% to
$32.2 million whilst net profit improved from profit of $1,084,891 in
2013–14 to $2,103,156 for 2014–15.
The 66% increase in revenue was due primarily to the recent addition
of our medical devices products portfolio acquired in October 2014.
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2015 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.
(d) Paragon Care has entered into conditional term sheets to acquire
Western Biomedical Pty Ltd, Designs For Vision Pty Ltd and
Meditron Pty Ltd for an upfront consideration of $66.1m.
Please refer to note 25 of the Notes to and forming part of the
Financial Statements for further information.
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.
Highlights for the year included:
Environmental Regulations
- Revenues in excess of $32m and an EBITDA of $3.74m, a substantial
increase from previous years and validation that the strategy of
creating a healthcare platform for a vast range of products and
servicing is successfully being implemented into the health care sector.
- Successful integration of the Scanmedics acquisition. The introduction
of Medical devices to the Paragon Care platform has been extremely
successful with numerous opportunities being created by the merged
businesses.
- Establishment of a New South Wales (Sydney) operations and presence
to facilitate the expansion into the region for the entire Paragon Care
suite of products.
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 the Directors’ confidence in Paragon Care, the Directors
have recommended the payment of a fully franked final dividend
of 0.80 cents per fully paid ordinary share ($574,247) to be paid on
18 September 2015 in respect of the financial year ended 30 June
2015. The dividend will be paid to all shareholders on the register of
members as at the Record Date of 31 August 2015. This dividend has
not been included as a liability in these financial statements.
- The GM Medical and Rapini product ranges both achieved record years
from a sales perspective on the back of increased penetration into the
sector and new product development.
In March 2015, a fully franked interim dividend of 0.6 cents per fully
paid ordinary share ($404,539) was paid. The record date was 10
March 2015 with the payment date of 31 March 2015.
During the year Paragon Care has continued to grow and achieve its
vision of offering its customers a broad platform of products and
services designed to assist health professionals easily access high
quality medical products, devices and consumables to deliver better
and more affordable medical outcomes to their patients.
The continued expansion of hospital, aged care and allied health and
medical facilities in Australia and the underlying strength of the health
care sector provide strong growth markets in which Paragon Care’s
products and services are sold.
Paragon Care paid a fully franked dividend of 1.25 cent per share with
the value of $813,565 for the year ended 30 June 2014 on 31 March
2014 (0.5 cents per share) and 31 October 2014 (0.75 cents per share).
The dividends attributable to June 30 2014 and the interim divided
have been included in these financial statements.
Combined with the interim dividend of 0.60c per fully paid ordinary
share paid in March 2015 in respect of the half year ended 31
December 2014, the full year dividend for 2015 will be 1.40c per fully
paid ordinary share, a 12% increase on the full year dividend of 1.25c
per fully paid ordinary share for the 2014 financial year.
4
Paragon Care Limited Financial Report 2014/15
Directors’ Report Continued
For the year ended 30 June 2015
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 has been
available since the interim dividend payable on 31 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.
Mr Michael C Newton
Non-Executive Director, Age 61
Qualifications
B.App Sci., Grad Dip Bus Adm.
Experience
Managing Director of Symex Limited from 1999
to 2007 and Chairman of The Power House Youth
Leadership Foundation.
Appointed as a Director on 22 June 2007
Information on Directors
Responsibilities Chairman of the Audit and Risk Management
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
Mr Michael Rice (Alternate Director to Mr Simari and appointed 11 June 2015)
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 62
Qualifications
FCPA, AGIA
Experience
Currently Chairman of Vision Eye Institute Limited,
Chairman of Funtastic Limited and Chairman of
BGD Limited.
Appointed as a Director on 21 December 2005
Responsibilities Chairman of the Board
Chairman of the Nominations
Remuneration Committee
Member of the Audit
Risk Management Committee
Mr Brett A Cheong
Executive Director, Age 56
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
Mr Michael G Rice
Alternate Director, Age 39
Experience
Founder and Managing Director of GM Medical—
April 2002–June 2011, Over 20 years experience
in the healthcare sector.
Appointed as an Alternate Director to Mr Simari
on 11 June 2015
Responsibilities Chief Operating Officer
Company Secretary
Mr John Osborne
Company Secretary, Age 66
Mr Mark A Simari
Managing Director, Age 46
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 Managing Director
Qualifications
BSc, FRMIT (Management), Grad Dip Corp Gov.,AGIA
Experience
Over 30 years of senior financial, administrative,
commercial and company secretarial experience
with ASX listed companies.
Appointed as Company Secretary on
13 March 2015
Prior Company Secretaries were:
Mr Parker (2 December 2014–13 March 2015) and
Mr Simari (2 February 2014–2 December 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 2015,
and the number of meetings attended by each Director were:
Directors’ Meetings
Audit Risk Management
Committee
Nominations Remuneration
Committee
Number eligible
to attend
Number
attended
Number eligible
to attend
Number
attended
Number eligible
to attend
Number
attended
12
12
12
12
1
12
12
12
12
1
1
-
1
-
-
1
-
1
-
-
2
-
2
-
-
2
-
2
-
-
Mr S F Tanner
Mr M A Simari
Mr M C Newton
Mr B A Cheong
Mr M.G. Rice
(Alternate Director)
5
Paragon Care Limited Financial Report 2014/15 Directors’ Report Continued
For the year ended 30 June 2015
Director Shareholdings
Directors’ Fees
The current Director’s fees were last reviewed with effect from
1 July 2015. The following fees have applied:
Directors
S F Tanner
M C Newton
M A Simari
B A Cheong
M G Rice
(Alternate to Mr Simari)
Remuneration Report
Total
30 June 2014
502,867
198,128
1,416,914
2,833,207
100,000
Total
30 June 2015
502,867
205,148
Base Fees
1,674,204
Chairman
2,633,208
Other Non-Executive Directors
134,058
Executive Pay
From
1 July 2015
$88,695
$40,645
From
1 July 2014 to
30 June 2015
$77,124
$35,344
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
Non-Executive and Executive Directors (see page 7)
B A Cheong
M C Newton
M A Simari
S F Tanner
Other key management personnel
M G Rice
Chief Operating Officer
M R Parker
Chief Financial Officer (until 13 March 2015)
S J Munday
Chief Financial Officer (1 June 2015 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, competitive and aligned with the long term interests of the
Company.
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 to 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 Corporate Governance Statement provides further information on
the role of this committee.
The Company did not receive any specific feedback at the AGM or
throughout the year on its remuneration practices.
Principles used to determine the nature and amount of remuneration
Details of remuneration and service agreements
Non-Executive Directors
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.
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.
6
Paragon Care Limited Financial Report 2014/15 Directors’ Report Continued
For the year ended 30 June 2015
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 26.0¢ and a high of 59.0¢. As at 30
June 2015 the, Company’s share price (ASX: PGC) was 59.0¢ per share.
PGC Share Performance
Year Ended
Price High ¢
Price Low ¢
Price 30 June ¢
Earnings ¢ per share
Dividends ¢
Dividends ¢ (Interim)
Net Asset $ million
30 June 2010
30 June 2011
30 June 2012
30 June 2013
30 June 2014
30 June 2015
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
59.0
25.0
59.0
3.2
1.35
0.6
10.37
18.20
20.58
Major provisions of the agreements as at 30 June 2015 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 Stephen Munday,
Chief Financial Officer (Appointed June 2015)
Mr Michael Rice,
Chief Operating Officer
Mr Matthew Parker,
Chief Financial Officer (Resigned March 2015)
No fixed term
No fixed term
$77,124
No termination benefit
$32,334
No termination benefit
1 July 2014 to
30 June 2016*
$250,000**
(consultancy package)
6 months consultancy fee
No fixed term
$124,000
(consultancy package)
No termination benefit
No fixed term
$240,000
No termination benefit
No fixed term
$219,000
No termination benefit
No fixed term
$180,000
No termination benefit
* Either party may terminate the agreement by giving six months’ notice. **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 2015.
7
Paragon Care Limited Financial Report 2014/15
Directors’ Report Continued
For the year ended 30 June 2015
Emoluments of Directors, Executive officers and other Executives of the Company:
2015
Name
Short-Term Employee Benefits
Post
Employment
Benefits
Long-Term
Benefits
Share-Based
Payments
Cash Salary
and Fees
Cash Bonus
Non-Monetary
Benefits
Super-
annuation
Long Service
Leave
Options
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 S J Munday
Mr M G Rice
Mr M Parker
Total
2014
Name
$
77,124
2,690
230,767
124,000
-
200,000
130,545
765,126
$
-
-
-
-
-
-
-
-
$
-
-
16,256
-
-
-
-
16,256
$
-
29,644
-
-
20,000
19,000
11,722
80,366
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
Short-Term Employee Benefits
Post
Employment
Benefits
Long-Term
Benefits
Share-Based
Payments
Cash Salary
and Fees
Cash Bonus
Non-Monetary
Benefits
Super-
annuation
Long Service
Leave
Options
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 Parker
Mr M G Rice
Mr D P Levin
Total
$
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
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
Total
$
77,124
32,334
247,023
124,000
20,000
219,000
142,267
861,748
Total
$
70,125
33,665
220,000
144,000
45,000
219,853
179,171
911,814
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.
8
Paragon Care Limited Financial Report 2014/15 Directors’ Report Continued
For the year ended 30 June 2015
Directors’ Interest in Contracts with the Company
Directors and Officers Indemnity
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 2015 was $193,164.
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.
Corporate Governance Statement
In accordance with ASX Listing Rule 4.10.3, the Company’s 2015
Corporate Governance Statement can be found on its website at
www.paragoncare.com.au/statement-of-corporate-governance
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
Mr M G Rice
502,867
1,674,204
205,148
2,633,208
134,058
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.
9
Paragon Care Limited Financial Report 2014/15 Directors’ Report Continued
For the year ended 30 June 2015
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 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
2015
$
2014
$
69,000
52,250
18,000
-
7,000
-
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 11.
Signed in accordance with a resolution of the Directors:
S F Tanner
Chairman
18 August 2015
10
Paragon Care Limited Financial Report 2014/15 Auditor’s Independence Declaration
For the year ended 30 June 2015
RSM Bird Cameron Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 3 9286 8000 F +61 3 9286 8199
www.rsmi.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Paragon Care Limited for the year ended 30 June 2015, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM BIRD CAMERON PARTNERS
R B MIANO
Partner
Melbourne, Victoria
Dated: 18 August 2015
11
Liability limited by a
scheme approved
under Professional
Standards Legislation
Major Offices in:
Perth, Sydney,
Melbourne, Adelaide,
Canberra and Brisbane
ABN 36 965 185 036
RSM Bird Cameron Partners is a member of the RSM network. Each member
of the RSM network is an independent accounting and advisory firm which
practises in its own right. The RSM network is not itself a separate legal entity
in any jurisdiction.
11
Paragon Care Limited Financial Report 2014/15 Financial Statements
12
Paragon Care Limited Financial Report 2014/15 Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2015
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
2015
$
2014
$
3
4
7
32,223,351
19,416,931
(16,712,124)
(10,369,847)
15,511,227
9,047,084
6,140
23,596
(2,950,084)
(1,665,378)
(273,382)
(696,224)
(182,829)
(150,216)
(418,319)
(164,167)
(8,718,271)
(5,558,191)
2,696,577
(593,421)
2,103,156
1,114,409
(29,518)
1,084,891
377,994
377,994
2,481,150
(256,736)
(256,736)
828,155
2,103,156
1,084,891
2,481,150
828,155
22
22
3.2
3.2
2.0
2.0
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
13
Paragon Care Limited Financial Report 2014/15 Consolidated Statement of Financial Position
For the year ended 30 June 2015
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
Other Payables
Interest bearing liability
Provisions
Total non-current liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
Note
2015
$
2014
$
8
9
10
11
12
7
13
14
15
11
16
14
15
16
17
18
3,755,847
8,413,501
7,139,034
264,056
2,820,379
5,070,913
4,064,529
-
19,572,438
11,955,821
1,193,537
834,280
618,494
776,011
18,985,712
13,600,386
21,013,529
14,994,891
40,585,967
26,950,713
6,278,612
5,522,627
-
568,217
786,317
3,605,759
850,782
113,938
170,837
500,520
13,155,773
5,241,835
67,605
-
6,730,236
3,454,238
48,771
6,846,612
20,002,385
46,374
3,500,613
8,742,448
20,583,582
18,208,265
23,611,121
22,808,822
264,056
(113,938)
(3,291,595)
(4,486,619)
20,583,582
18,208,265
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
14
Paragon Care Limited Financial Report 2014/15 Consolidated Statement of Changes in Equity
For the year ended 30 June 2015
Balance at 1 July 2013
Profit / (loss) for the year
Gain / (loss) on cash flow hedge
Total comprehensive income for the year
Issue of share capital
Dividend issued in the year
Balance at 30 June 2014
Balance at 1 July 2014
Profit / (loss) for the year
Gain / (loss) on cash flow hedge
Total comprehensive income for the year
Issue of share capital
Dividend issued in the year
Balance at 30 June 2015
Share Capital
Income Tax
Reserve
Currency
Hedge Reserve
Accumulated
Losses
Total Equity
$
15,040,385
-
-
-
7,768,437
-
22,808,822
22,808,822
-
-
-
802,299
-
23,611,121
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
$
142,798
(4,813,707)
10,369,476
-
1,084,891
(256,736)
(256,736)
-
-
-
1,084,891
-
(757,803)
1,084,891
(256,736)
828,155
7,768,437
(757,803)
(113,938)
(4,486,619)
18,208,265
(113,938)
(4,486,621)
18,208,263
-
2,103,156
377,994
377,994
-
-
-
2,103,156
-
(908,132)
2,103,156
377,994
2,481,150
802,299
(908,132)
264,056
(3,291,595)
20,583,582
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
15
Paragon Care Limited Financial Report 2014/15 Consolidated Statement of Cash Flows
For the year ended 30 June 2015
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
2015
$
2014
$
30,999,218
18,411,697
(29,269,701)
(20,134,857)
(696,224)
(420,457)
30,891
(254,310)
61,799
(3,872)
Net cash provided by / (used in) operating activities
8(b)
809,874
(2,085,690)
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Proceeds from sale of plant and equipment
Payment for plant and equipment
Payment for development of website and software
Net cash provided by / (used in) investing activities
Cash flows from financing 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)
(5,878,306)
(3,539,767)
82,588
(886,319)
(389,103)
93,527
(191,569)
(35,923)
(7,071,140)
(3,673,732)
8,385,516
1,686,277
(437,671)
(1,351,161)
157,021
(908,132)
-
6,922,603
(757,802)
(431,593)
7,196,734
6,068,324
935,468
2,820,379
3,755,847
308,902
2,511,477
2,820,379
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
16
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements
For the year ended 30 June 2015
Note 1 Summary of Significant Accounting Policies
(d) Foreign Currency Translation
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 20 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.
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.
17
Paragon Care Limited Financial Report 2014/15
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
(f) Income Tax (continued)
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.
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.
18
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,
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
(i) Impairment of Assets (Continued)
Classification and subsequent measurement
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.
(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.
19
Paragon Care Limited Financial Report 2014/15
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
(n) Property, Plant and 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.
20
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
(s) Employee Benefits
Wages and salaries and annual leave
(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.
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
corporate bond rates 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.
21
Paragon Care Limited Financial Report 2014/15
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
Reference
Title
Summary
Application Date
(Financial years beginning)
The Standard completes the AASB’s project to remove Australian
guidance on materiality from Australian Accounting Standards.
1 July 2015
AASB 2015–3
AASB 2015–4
Amendments to Australian
Accounting Standards arising
from the Withdrawal of AASB
1031 Materiality
Amendments to Australian
Accounting Standards—
Financial Reporting
Requirements for Australian
Groups with a Foreign Parent
AASB 14
Regulatory Deferral Accounts
AASB
2014–1D
Amendments to Australian
Accounting Standards
AASB 2014–3
AASB 2014–4
AASB 2014–9
AASB 2014–10
Amendments to Australian
Accounting Standards—
Accounting for Acquisitions of
Interests in Joint Operations
Amendments to Australian
Accounting Standards—
Clarification of Acceptable
Methods of Depreciation and
Amortisation
Amendments to Australian
Accounting Standards—
Equity Method in Separate
Financial Statements
This Standard amends AASB 128 to require the ultimate Australian
entity apply the equity method in accounting for an interest in
an associate or joint venture, to be consistent with the AASB 10
requirement for the ultimate Australian parent to present consolidated
financial statements when either the parent or the group is a reporting
entity, or both the parent and the group are reporting entities.
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.
Part D of AASB 2014–1 makes amendments to AASB 1 First-time
Adoption of Australian Accounting Standards, which arise from the
issuance of AASB 14 Regulatory Deferral Accounts in June 2014.
This Standard amends AASB 11 to provide guidance on the accounting
for acquisitions of interests in joint operations in which the activity
constitutes a business.
This Standard amends AASB 116 and AASB 138 to establish the
principle for the basis of depreciation and amortisation as being the
expected pattern of consumption of the future economic benefits of
an asset, and to clarify that revenue is generally presumed to be an
inappropriate basis for that purpose.
This amending standard allows entities to use the equity method
of accounting for investments in subsidiaries, joint ventures and
associates in their separate financial statements.
1 July 2015
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
Amendments to Australian
Accounting Standards—
Sale or Contribution of Assets
between an Investor and its
Associate or Joint Venture
This amending standard requires a full gain or loss to be recognised
when a transaction involves a business (even if the business is not
housed in a subsidiary), and a partial gain or loss to be recognised when
a transaction involves assets that do not constitute a business
(even if those assets are housed in a subsidiary).
AASB 2015–1
AASB 2015–2
AASB 2015–5
AASB 15
Amendments to Australian
Accounting Standards—
Annual Improvements to
Australian Accounting
Standards 2012–2014 Cycle
Amendments to Australian
Accounting Standards—
Disclosure Initiative:
Amendments to AASB 101
Amendments to Australian
Accounting Standards—
Investment Entities: Applying
the Consolidation Exception
Revenue from Contracts with
Customers
AASB 2014–5
Amendments to Australian
Accounting Standards arising
from AASB 15
AASB 9
Financial Instruments
AASB 2014–7
Amendments to Australian
Accounting Standards arising
from AASB 9 (December 2014)
22
The Standard makes amendments to various Australian Accounting
Standards arising from the IASB’s Annual Improvements process, and
editorial corrections.
1 January 2016
The Standard makes amendments to AASB 101 Presentation of
Financial Statements arising from the IASB’s Disclosure Initiative
project.
1 January 2016
This Standard makes amendments to AASB 10, AASB 12 and AASB 128
arising from the IASB’s narrow scope amendments associated with
Investment Entities.
1 January 2016
This Standard establishes principles (including disclosure
requirements) for reporting useful information about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers.
1 January 2017
Consequential amendments arising from the issuance of AASB 15.
1 January 2017
This Standard supersedes both AASB 9 (December 2010) and AASB
9 (December 2009) when applied. It introduces a “fair value through
other comprehensive income” category for debt instruments, contains
requirements for impairment of financial assets, etc.
1 January 2018
Consequential amendments arising from the issuance of AASB 9.
1 January 2018
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
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:
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 between 5% and 12% 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 16.3% have been used in all models. No impairment has been
recognised in respect of goodwill at the end
of the reporting period.
23
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
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
Amortisation: Software development costs
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
2015
$
2014
$
32,192,460
32,192,460
19,355,131
19,355,131
30,891
30,891
61,799
61,799
32,223,351
19,416,931
2015
$
6,140
6,140
2014
$
23,596
23,596
2015
$
308,474
8,771
11,636
18,711
7,538,750
7,886,342
2015
$
69,000
18,000
-
87,000
2014
$
242,602
7,332
1,939
-
4,681,666
4,933,539
2014
$
52,250
7,000
-
59,250
24
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 7 Income Tax
(a) Income tax expense / (benefit)
Current tax
Deferred tax
Adjustments for current tax of prior periods
(b) Deferred income tax (revenue) / expense included in income tax expense comprises:
Decrease / (increase) in deferred tax assets
(Decrease) / increase in deferred tax liability
2015
$
2014
$
629,557
(13,755)
(22,381)
593,421
170,837
(82,501)
(58,818)
29,518
(58,270)
(316,955)
-
-
(58,270)
(316,955)
(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%
808,973
334,323
Add tax effect of:
- Entertainment expenses
Less tax effect of:
- Non-assessable income
- 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
- Foreign exchange gains / losses
- 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
3,458
(36,629)
(22,381)
(160,000)
593,421
7,981
272,016
6,042
143,901
(12,754)
417,094
834,280
-
-
(58,818)
(245,987)
29,518
22,421
177,324
-
157,510
3,265
415,491
776,011
632,805
792,808
-
-
632,805
792,808
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.
25
Paragon Care Limited Financial Report 2014/15
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 8 Statement of Cash Flows
(a) Cash at bank and on hand
(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
2015
$
2014
$
3,755,847
2,820,379
2,103,156
1,084,891
347,592
251,873
-
-
(6,140)
(23,596)
(1,237,920)
-
(823,524)
(150,702)
(1,962,755)
(1,501,606)
196,196
1,030,634
339,111
-
(30,149)
(872,715)
296,794
(316,956)
809,874
(2,085,690)
(c) Non-cash financing and investing activities
Other Non-cash share issues
In financial year ended 30 June 2015
There were no non cash issues of shares during the year ended 30 June 2015.
In financial year ended 30 June 2014
In January 2014, the Company issued 2,162,162 Paragon Care Ltd ordinary shares as part consideration for the acquisition of
LR instruments and Richards Medical. The value of the shares issued as at the date of issue was $800,000.
(d) Financing Facilities
Refer Note 19 (c)
NOTE 9 Inventories
Current
Raw materials
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
2015
$
400,489
48,390
7,964,622
8,413,501
-
-
-
-
2014
$
578,246
79,548
4,413,119
5,070,913
261,205
-
(261,205)
-
26
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 10 Trade and Other Receivables
Current
Trade and other receivables
GST receivable
Other receivables
(a) Impaired trade receivables
As at 30 June 2015 current trade receivables of the Group with a nominal value of $nil (2014: $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 2015, trade receivables of $2,463,141 (2014: $1,654,072) 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.
2015
$
2014
$
6,313,030
3,669,645
160,752
665,252
171,647
223,238
7,139,034
4,064,529
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,110,350
352,791
2,463,141
1,508,609
145,464
1,654,072
27
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 11 Derivative Financial Instruments
Current assets
Foreign exchange forward contracts—Cash flow hedges
Current liabilities
Foreign exchange forward contracts—Cash flow hedges
2015
$
2014
$
264,056
264,056
-
-
-
-
113,938
113,938
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.
2015
$
2014
$
1,730,957
(911,674)
691,670
(317,418)
1,193,537
618,494
886,319
70,036
(72,838)
(308,474)
1,193,537
1,107,177
(720,959)
590,523
(358,246)
618,494
739,458
104,024
87,545
(69,932)
(242,602)
618,494
1,073,641
(344,614)
729,026
724,523
(381,838)
343,140
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
28
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 13 Intangible Assets
Website Development Costs
TGA Costs (with business acquisition)
R&D Projects (Under Construction)
Software development costs
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
R&D Projects (Under Construction)
Beginning of year
Additions at cost
Amortisation
End of year
Software development costs
Beginning of year
Additions
Amortisation
End of year
Goodwill
Beginning of year
Additions
Tax Adjustments
End of year
Goodwill
2015
$
7,258
9,697
60,587
308,486
18,599,684
18,985,712
2014
$
14,710
21,333
-
-
13,564,343
13,600,386
14,710
1,319
(8,771)
7,258
21,333
-
(11,636)
9,697
-
60,587
-
60,587
-
327,197
(18,711)
308,486
7,455
35,923
(28,667)
14,710
-
23,273
(1,939)
21,333
-
-
-
-
-
-
-
-
13,564,343
5,035,341
-
8,370,595
5,239,553
(45,805)
18,599,684
13,564,343
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. Refer to note 2 for further details.
29
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 14 Trade and Other Payables
Current
Trade creditors
Other creditors
Accrued expenses
Non-Current
Other Creditors
NOTE 15 Borrowings
Current
Secured
Trade Finance Facility
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:
Trade Finance Facility
Bank Loans
Lease Liabilities
2015
$
2014
$
4,888,752
993,743
396,117
6,278,612
2,198,172
1,218,977
188,609
3,605,758
67,605
67,605
2015
$
3,337,814
805,050
229,763
4,372,627
1,150,000
5,522,627
5,204,950
450,286
5,655,236
1,075,000
6,730,236
-
-
2014
$
483,000
180,000
187,782
850,782
-
850,782
1,020,000
209,238
1,229,238
2,225,000
3,454,238
3,337,814
6,010,000
680,049
10,027,863
483,000
1,200,000
397,020
2,080,020
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.
The company has entered into a trade finance facility agreement with Westpac Bank to facilitate the importation of goods into Australia from
overseas. Individual import transactions are financed for a period not exceeding 180 days after the arrival of goods in Australia. This facility has
been extended as part of the company’s overall banking arrangements with Westpac and is therefore covered by the charge. Unlike the Bank loans
this revolving trade finance facility does not have a reducing principal balance and is continuously utilised to provide a source of working capital
more closely matching the inventory life cycle of imported products.
30
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 15 Borrowings (Continued)
(b) Loan
The parent entity borrowed $2,225,000 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 $1,075,000 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
NOTE 17 Contributed Equity
Fully paid ordinary shares
(a) Ordinary shares
2015
$
786,317
786,317
48,771
48,771
2014
$
500,520
500,520
46,374
46,374
2015
$
2014
$
23,611,121
22,808,822
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 13
Balance
Number of
Shares
$
43,308,511
15,040,385
31 Oct 13
20 Nov 13
23 Dec 13
30 Dec 13
15 Jan 14
31 Mar 14
Issue of shares pursuant to the company’s dividend re-investment plan price of $0.35
per share
277,358
97,075
Placement to sophisticated and professional investors at issue price of $0.37 per share.
10,890,000
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 $0.37 per 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
7,360,000
945,946
2,162,162
235,566
4,029,300
2,723,200
350,000
800,000
73,028
30 Jun 14
Accumulated share issue cost incurred during 2014 Fin Year (net of tax)
-
(304,165)
30 Jun 14
Balance
1 Oct 14
31 Oct 14
31 Mar 15
Placement to sophisticated and professional investors at issue price of $0.3280 per share.
Issue of shares pursuant to the company’s dividend re-investment plan price of $0.3266
per share
Issue of shares pursuant to the company’s dividend re-investment plan price of $0.4923
per share
65,179,543
22,808,822
1,966,405
277,855
645,278
90,747
134,619
66,274
30 Jun 15
Closing Balance
67,558,422
23,611,121
31
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 17 Contributed Equity (Continued)
(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 2015 and 2014 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.
NOTE 18 Reserves
Currency hedge reserve
Movements in currency hedge reserve were as follows:
Beginning of year
Revaluation
End of year
2015
$
2014
$
12,252,863
(3,755,847)
8,497,016
20,583,582
29,080,598
29%
4,305,020
(2,820,379)
1,484,641
18,208,265
19,692,906
8%
2015
$
2014
$
264,056
264,056
(113,938)
(113,938)
(113,938)
377,994
264,056
142,798
(256,736)
(113,938)
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
32
2015
$
2014
$
4,624,517
5,046,323
9,670,841
1,997,841
1,164,005
3,161,846
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 19 Financial Risk Management (Continued)
(ii) Interest Rate Risk
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 2015 $3,337,815 (2014: $483,000) 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)
2015
$
2014
$
3,755,847
2,380,661
(3,337,814)
(2,184,812)
-
(483,000)
(367,782)
-
(6,730,236)
(3,454,238)
(12,252,864)
(4,305,020)
(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.
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
2015
$
2014
$
4,000,000
662,186
600,000
117,000
-
-
-
-
805,000
180,000
-
-
5,215,000
3,245,000
10,000
-
10,020,000
672,186
4,025,00
117,000
33
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 19 Financial Risk Management (Continued)
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
2015
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total
2014
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total
Weighted
average
interest rate
%
-
4.8
6.5
6.0
-
7.3
8.2
8.1
Less than 6
Months
$
6,278,612
3,337,814
413,231
10,029,657
6 to 12
Months
Between
1 and 2 Years
Between
2 and 5 Years
$
-
-
$
-
-
$
-
-
1,771,581
1,771,581
2,318,163
2,318,163
4,412,073
4,412,073
Total
contractual
cash flows
$
6,278,612
3,337,814
8,915,048
18,531,476
3,605,758
483,000
185,109
4,273,867
-
-
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
(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 2015 and 30 June 2014.
At 30 June 2015
Assets
Forward foreign exchange contracts
Total assets
Liabilities
Forward foreign exchange contracts
Total liabilities
At 30 June 2014
Assets
Forward foreign exchange contracts
Total assets
Liabilities
Forward foreign exchange contracts
Total liabilities
34
Level 1
$
-
-
-
-
Level 2
$
264,056
264,056
-
-
Level 3
$
-
-
-
-
Total
$
264,056
264,056
-
-
Level 1
Level 2
Level 3
Total
$
-
-
-
-
$
-
-
(113,938)
(113,938)
$
-
-
-
-
$
-
-
(113,938)
(113,938)
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
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
Paragon Healthcare Pty Ltd
GM Medical Pty Ltd
Scanmedics Pty Ltd *¹
Axishealth Pty Ltd *¹
Rapini Pty Ltd *¹
Paragon Care Group Pty Ltd *¹
Iona Medical Products Pty Ltd *¹
Volker Australia Pty Ltd *³
Paragon Medical Pty Ltd
L.R. Instruments Pty Ltd *²
Richards Medical Pty Ltd *²
Unikits Pty Ltd *²
Paragon Medical Ltd ²
Ownership
30 June 2015
Ownership
30 June 2014
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
All entities are incorporated in Australia except for Paragon Medical Ltd which is incorporated in New Zealand.
* Dormant company
¹ Subsidiary of Paragon Healthcare Pty Ltd
² Subsidiary of Paragon Medical Pty Ltd
³ Subsidiary of Iona Medical Products Pty Ltd
(b) Ultimate Parent
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
Contributions to superannuation funds on behalf of employees are disclosed in the Remuneration Report in the Directors’ Report.
(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):
Paragon Healthcare Pty Ltd
Paragon Medical Pty Ltd
2015
$
2014
$
6,600,950
4,978,664
6,582,792
4,957,266
11,579,614
11,540,058
35
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
NOTE 21 Key Management Personnel Disclosures
(a) Details of Key Management Personnel
Details of the Key Management Personnel remuneration and services agreements are provided in the Remuneration Report section of the
Directors’ Report.
The following table discloses the aggregate remuneration of the Key Management Personnel of the Group. Details by director and executive are
shown in the Remuneration Report section of the Directors’ Report.
Short term employee benefits
Post employment benefits
Others — long term benefits
Share-based payments
(b) Equity Holdings of Key Management Personnel
Details of the Key Management Personnel holdings of ordinary shares in the Company is shown in the following table:
2015
$
781,382
80,366
-
-
2014
$
870,248
41,566
-
-
861,748
911,814
Directors
S F Tanner
M A Simari
M C Newton
B A Cheong
Other key management personnel
M G Rice
Directors
S F Tanner
M A Simari
M C Newton
B A Cheong
Other key management personnel
M G Rice
Shares
Disposed
Other
Changes
Balance
30 June 2015
Balance
1 July 2014
502,867
1,416,914
198,128
2,833,208
Shares
Acquired
-
257,290
7,020
-
-
-
-
(200,000)
100,000
34,058
-
-
-
-
-
-
502,867
1,674,204
205,148
2,633,208
134,058
Balance
1 July 2013
1,702,867
1,240,970
189,567
2,833,208
100,000
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
(c) Other Transactions with Key Management Personnel
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 2015 was $193,164.
36
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
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
Profit / (Loss) used in calculating basic earnings per share
Profit / (Loss) used in calculating diluted earnings per share
(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
Weighted average number of ordinary shares used as the denominator
in calculating diluted earnings per share
Note 23 Parent Entity Disclosures
(a) Financial Information
Profit for the Year
Total Comprehensive Income
Current Assets
Total Assets
Current Liabilties
Total Liabilties
Shareholders Equity
Issued Capital
Reserves
Retained Earnings
Total Equity
b) Guarantees
2015
Cents
3.2
3.2
2014
Cents
2.0
2.0
2,103,156
2,103,156
1,084,891
1,084,891
66,754,955
55,440,725
66,754,955
55,440,725
2015
Cents
2014
Cents
(1,120,204)
(599,008)
(1,120,204)
(599,008)
12,773,047
13,417,524
13,958,646
14,538,409
106,557
2,502,529
153,684
2,378,684
23,611,121
22,808,822
-
-
(12,696,125)
(10,649,097)
10,914,995
12,159,725
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 (2014 — 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 $ nil (2014 — $100,818)
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 2015.
37
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
Note 24 Contingent Liabilities
Since the last annual reporting date, there have been no material changes of any contingent liabilities or contingent assets.
The Group has bank guarantees outstanding totalling $369,921 (2014 $39,875)
Note 25 Subsequent Events
No other matters or circumstances have arisen since the year ended 30 June 2015 that significantly affect 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.
On 31 July 2015 the Directors recommended the payment of a fully franked final dividend of $574,247. This dividend has not been included as a
liability in these financial statements. Further details are provided on page 4 in the Directors’ Report.
On 18 August 2015, the company announced that it had entered into conditional term sheets to acquire Western Biomedical Pty Ltd,
Designs For Vision Pty Ltd and Meditron Pty Ltd for an upfront consideration of $66.1m.
On a FY15 pro forma basis before synergies the acquisitions have the following impact: Revenue to more than triple from $32.2m to $106.0m;
EBITDA to more than triple from $3.7m to $13.5m; EPS to increase 50% from 3.2c to 4.8c; and, Balance sheet strengthened with Net Debt
to EBITDA falling from 2.3x to 1.7x. Funded by a combination of debt and a capital raising at $0.53 per share comprising: a $5.0m Placement
to vendors; a $35.0m underwritten Placement to professional and sophisticated investors; a $7.2m underwritten Rights Issue to existing
shareholders; and, a $19.0m new bank debt facility. Bell Potter Securities Limited is acting as sole Lead Manager and Underwriter to the
Conditional Placement and Rights Issue. Further information can be found in the ASX announcement by the company dated 18 August 2015.
Note 26 Commitments
Lease Commitments
The Group leases various offices 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.
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
Later than five years
2015
$
2014
$
536,683
3,291,666
2,027,678
5,856,027
565,846
256,404
-
822,250
Note 27 Segment Reporting
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.
38
Paragon Care Limited Financial Report 2014/15 Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2015
Note 28 Business Combinations
Paragon Care Limited
Business combinations for the year ended 30 June 2015
Paragon Healthcare Pty Ltd
On 1 Oct 2014 the Company acquired the business of Scanmedics Pty Ltd. Scanmedics is a leading provider of solutions to the healthcare sector
with expert interest in specialist ultrasound, newborn care, aesthetics and cosmetic medicine in Australia and New Zealand. The acquisition of
Scanmedics offers Paragon Care exposure to fast growing specialist healthcare markets and further diversifies the company’s product offerings
across the healthcare spectrum.
Purchase consideration
Cash and cash equivalents
Ordinary shares in Paragon Care (1,966,405) at $0.328
Fair value and carrying value of net assets acquired
Net working capital
Plant and equipment
Employee entitlements
Deferred tax asset
Goodwill on consolidation
Reconciliation to cashflow
Consideration of purchase
Equity funding
Net outflow of cash
$
5,878,306
645,278
6,523,584
1,529,929
70,036
(159,602)
47,881
5,035,341
6,523,585
6,523,585
(645,278)
5,878,307
Impact of acquisition on the results of the Group
As the acquisition of Scanmedics Pty Ltd occurred on 1 October 2014 the revenue and profit of the Group for the year ended 30 June 2015 reflects
trading for October 2014 to June 2015 of the acquired business.
On 30 June 2015 negotiations around funds retained in a solicitors trust for the vendors of Scanmedics were settled resulting in obsolete inventory
being written down, goodwill has been adjusted to reflect this.
39
Paragon Care Limited Financial Report 2014/15 Directors’ Declaration
For the year ended 30 June 2015
In the Directors’ opinion:
a) The financial statements and notes set out on pages 12 to 39
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 2015 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
18 August 2015
40
Paragon Care Limited Financial Report 2014/15
Auditor’s Report
41
Paragon Care Limited Financial Report 2014/15 Independent Audit Report
For the year ended 30 June 2015
RSM Bird Cameron Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 3 9286 8000 F +61 3 9286 8199
www.rsmi.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
PARAGON CARE LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Paragon Care Limited, which comprises the consolidated
statement of financial position as at 30 June 2015, and the consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended,
notes comprising a summary of significant accounting policies and other explanatory information, and the
directors' declaration of the company and the consolidated entity comprising the company and the entities it
controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that is free from
material misstatement, whether due to fraud or error.
In Note 1, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor's judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
41
Liability limited by a
scheme approved
under Professional
Standards Legislation
Major Offices in:
Perth, Sydney,
Melbourne, Adelaide,
Canberra and Brisbane
ABN 36 965 185 036
RSM Bird Cameron Partners is a member of the RSM network. Each member
of the RSM network is an independent accounting and advisory firm which
practises in its own right. The RSM network is not itself a separate legal entity
in any jurisdiction.
42
Paragon Care Limited Financial Report 2014/15 Independent Audit Report
For the year ended 30 June 2015
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We
confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of Paragon Care Limited, would be in the same terms if given to the directors as at the time of this
auditor's report.
Opinion
In our opinion:
(a)
the financial report of Paragon Care Limited is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the company's and consolidated entity’s financial positions as at 30
June 2015 and of their performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2015. The
directors of the company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Paragon Care Limited for the year ended 30 June 2015 complies with
section 300A of the Corporations Act 2001.
RSM BIRD CAMERON PARTNERS
R B MIANO
Partner
Melbourne, Victoria
Dated: 18 August 2015
18
42
43
Paragon Care Limited Financial Report 2014/15 Shareholder Information
44
Paragon Care Limited Financial Report 2014/15 Shareholder information
For the year ended 30 June 2015
The shareholders information set out below was applicable as at
13 August 2015.
(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
10,000–100,000
100,001 and over
Total Holders
PGC
551
395
243
519
83
1,791
There are 456 holders of less than a marketable parcel of ordinary shares
(b) Equity Security Holders
Twenty largest quoted equity security holders:
Ordinary shares
Ordinary Shares
Name
JMT INVESTMENT GROUP VIC PTY LTD
POSSE INVESTMENT HOLDINGS PTY LIMITED
BRETT CHEONG AND LYNN CHEONG
JMT INVESTMENT GROUP VIC PTY LTD
MR DAVID IAN GIBSON & MRS MARYANNE TAYLOR-GIBSON
DAK DRAFTING SERVICES PTY LTD
LIONEL RICHARDS NO 2 PTY LTD
BNP PARIBAS NOMS PTY LTD
UNRANDOM PTY LTD
ZERO NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
WHOTIF PTY LIMITED
ROMAN LOHYN PTY LTD
MR GREGORY STEPHEN VAWDREY & MRS CHERYL MARGARET VAWDREY
GUERILLA NOMINEES PTY LTD
MR PETER JOHN DIAMOND & MRS DIANNA ELIZABETH DIAMOND
CHARKAROO PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR KEITH STERRY ADDISON WOODRUFF
JILLIBY PTY LTD
Total Top 20 PGC Shareholders
Balance of Register
Grand Total
Units
4,502,470
3,073,003
2,633,207
2,616,339
1,866,405
1,750,000
1,621,622
1,500,046
1,174,751
1,125,000
1,105,496
1,036,828
1,010,000
1,000,001
967,742
900,00
814,992
755,338
716,000
700,000
30,869,240
36,689,182
67,558,422
% of Issued Shares
6.66%
4.55%
3.90%
3.87%
2.76%
2.59%
2.40%
2.22%
1.74%
1.67%
1.64%
1.53%
1.50%
1.48%
1.43%
1.33%
1.21%
1.12%
1.06%
1.04%
45.70%
54.30%
100.00%
45
Paragon Care Limited Financial Report 2014/15 Shareholder information Continued
For the year ended 30 June 2015
(c) Voting Rights
The voting rights attaching to each class of equity securities are set
out below:
i) 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
Posse Investment Group
DAK Drafting Services Pty Ltd and associated entities
Total Substantial Shareholders
Total PGC Shares
% of Issued
Ordinary Shares
Units
7,118,809
4,729,751
3,750,000
15,598,560
65,179,543
10.92
7.26
5.75
23.93
e) Corporate Governance Statement
In accordance with ASX Listing Rule 4.10.3, the Company’s 2015
Corporate Governance Statement can be found on its website at
www.paragoncare.com/statement-of-corporate-governance
46
Paragon Care Limited Financial Report 2014/15 Paragon Care Limited
ABN76 064 551 426
Registered Office
Unit 1, 56 Norcal Road
Nunawading VIC 3131
T +61 3 8833 7800
F +61 3 8833 7890
paragoncare.com.au
paragoncare.com.au