ANNUAL REPORT
2018
508
People Employed
145
Sales Team
100
Service &
Technology Team
52
Customer Service
Team
Company Overview
Paragon Care has emerged as a leading provider of
equipment, devices and consumables to the healthcare
market. We also offer equipment repair, maintenance and
total equipment management through our new business unit
– Paragon Care Service & Technology – to encompass all of
our service capabilities.
Our people have given strength to the synergies that
flow from the Paragon Care Group and together we have
secured the Paragon Care name as a leading supplier of a
peerless range of high quality products and services for the
healthcare industry.
Key Market Positioning
• Extremely diverse product and service portfolio
• Extensive project management scope with installation
and commissioning capabilities
• Comprehensive service and maintenance capability
• National footprint for sales and service support
Office Locations
Head Office
State & International Offices
FAR NORTH
QUEENSLAND
BRISBANE
PERTH
ADELAIDE
SYDNEY
MELBOURNE
AUCKLAND
1
Paragon Care
Group of Companies
Our Brands
Paragon Care (ASX:PGC)
is an Australian based
listed company which has
progressively acquired
businesses in the healthcare
sector. It is an integrated
healthcare equipment and
services provider for the
Australian and New Zealand
healthcare market.
By combining a series of
strategic acquisitions of class
leading companies, Paragon
Care provides end to end
solutions including equipment
and service solutions.
One Platform
Offering a strong portfolio of products
and services across essential
healthcare procurement categories
SPECIALTY DEVICES
SPECIALTY DIAGNOSTICS
CAPITAL & CONSUMABLES
Anaesthesia
Laboratory
Capital Equipment
Ophthalmology Equipment
Stretchers
Optometry Equipment
Oxygen Equipment
Carts and Trolleys
Service and Technology
Management
Stainless Steel
Ophthalmology Equipment
Trolleys / Equipment
Optometry Equipment
Pathology Equipment
Reagents
Software
A ParagonCare Brand
Immunohaemotology
Aged Care Products
Laboratory Equipment
Medical Equipment and
Consumables
Surgical Lasers
Lithotripsy
Fusion Biopsy
Ultrasound and Accessories
Service and Technology
Management
Service and Technology
Management
Interpretive Software
Reporting Program
Storage Solutions
Medical Supplies and
Equipment
New Zealand
Medical Equipment and
Consumables
SERVICES & TECHNOLOGY
Temperature Management
Ultrasound
Newborn Hearing
Surgical and Critical
Care Products
Medical and Surgical Supplies
PARAGON CARE — FINANCIAL REPORT 2017 / 18 More Products and Services
via One Platform
We have an extremely diverse product
portfolio and offer an extensive project
management scope with installation,
services and commissioning capabilities.
Paragon Care continues to build it’s
strong representation within the following
healthcare markets:
Hospital, Acute Care
& Surgical
Aged Care
Primary Care
Eye Care
Storage Solutions
E-Health
Service &
Technology
Health. Covered.
Offering a strong portfolio of products and services across essential
healthcare procurement categories
Diagnostics 3
P A R A G O N C A R E — F I N A N C I A L R E P O R T 2 0 1 7 / 1 8
3
Contents
PARAGON CARE — FINANCIAL REPORT 2017 / 184Corporate Directory5Chairman’s Report6Directors’ Report15Auditor’s Independence Declaration under Section 307C of the Corporations Act 200117Consolidated Statement of Profit or Loss and Other Comprehensive Income18Consolidated Statement of Financial Position19Consolidated Statement of Changes in Equity12Consolidated Statement of Cash Flows21Notes to the Financial Statements56Directors’ Declaration58Independent Audit Report63Shareholder Information 4
Corporate Directory
Directors
Shane Tanner
Andrew Just
Non-Executive Chairman
Managing Director
Michael Newton
Non-Executive Director
Geoffrey Sam OAM
Non-Executive Director
Brent Stewart
Non-Executive Director
Company Secretaries
Melanie Leydin
Leonard Kocovic
Share Registry
Link Market Services Limited
Level 13, Tower 4
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 Australia Partners
Level 21, 55 Collins Street
Melbourne, VIC, 3000
Website: www.rsmi.com.au
Bankers
National Australia Bank
Solicitors
SOHO Lawyers
Level 5, 124 Exhibition Street
Melbourne, VIC, 3000
Paragon Care Limited
ABN 76 064 551 426
Registered Office
11 Dalmore Drive
Scoresby, VIC 3179
Telephone: 1300 369 559
Telephone: +61 3 8833 7800
Facsimile: +61 3 8833 7890
Principal Business Office
11 Dalmore Drive
Scoresby, VIC 3179
Telephone: 1300 369 559
Telephone: +61 3 8833 7800
Facsimile: +61 3 8833 7890
Website: www.paragoncare.com.au
PARAGON CARE — FINANCIAL REPORT 2017 / 18 5
Chairman’s
Report
Introduction
On behalf of the Board of Directors of Paragon Care Limited, I am pleased to present to you our
2018 Annual Report.
The Period in Review
The financial year ended 30th June 2018 was the busiest and most transformative year in the short history
of the Company. Nine strategic acquisitions were successfully completed that resulted in a more balanced
portfolio of businesses as well as a greater geographical reach where we materially invested for the first time
in New Zealand, Queensland and South Australia. During the 2017/18 year, Paragon has delivered on its key
strategy of becoming a less cyclical and more diversified business by key investments in the Device, Service &
Technology and Diagnostic sectors. Our Capital and Consumable business continued to grow however other
growth initiatives has seen Capital and Consumables reduce from 70% of the Company to around 40%.
Highlights for the year ended 30 June 2018 included:
• Revenues up 17% to $136.7m
• Gross Margins up from 39% to 40%
• EBITDA up 6% to $18.2m (up 15% to $19.7m before acquisition and restructuring expenses)
• EPS down from 6.2c to 5.4c (however EPS was 6.6c on Full Year Pro Forma basis)
• A 3% increase in Full Year Dividends
• Andrew Just was welcomed in January 2018 as the Company’s new CEO and Managing Director to take control
of levels of growth – both organic and via acquisition
• Brent Stewart, an accomplished healthcare professional joined the board following the acquisition of Surgical
Specialties in April
• A $69m capital raising in February 2018 at 72.5c per share (30th June 2018 closing price of 76.5c per share)
• A post balance date $45m share placement representing 15% of the Company at 91c per share via a new
strategic investor, Pioneer Pharma (Australia) Pty Ltd wholly owned subsidiary of China Pioneer Pharma
Holdings Limited
• Nine key and strategic acquisitions joined the Company including one of New Zealand’s premier healthcare
services providers, REM Systems
At the end of the 2018 financial year, on a Pro Forma basis, Paragon’s revenue was $238m, effectively double
the revenue generated in 2017. Growth of this nature is exciting but it comes with a huge amount of work
and resources required to efficiently integrate and provide a value add for our shareholders. To date, all
acquisitions over the past 9 years have been successfully integrated, managed and grown. There is a lot more
to do in extracting greater benefits, savings and synergies from these businesses. The team led by Andrew Just
are very focused on strong organic growth and the Company has invested heavily in the sales team through
both additional numbers and better training and support systems.
On behalf of the Board, I would like to thank our shareholders, employees, suppliers and distributors for their
continued support. The market Paragon operates in is still young and fragmented with solid long term growth
prospects. Our new strategic shareholder, China Pioneer Pharma Holdings give us additional opportunities
grow our business into the Asian Region and we therefore move into the 2019 year with great confidence.
On behalf of the Board, I would like to thank the employees, customers, suppliers and shareholders of Paragon
Care for their continued support. The management team led by Managing Director Andrew Just continues to
deliver outstanding results and we move into the 2018 year with great confidence.
Shane Tanner
Chairman
27 August 2018
Revenue
EBITDA
Net Profit
$136.7M
$117.2M
$93.4M
$18.2M
$17.1M
$12.1M
$10.9M
$10.2M
$7.5M
15/16
16/17
17/18
15/16
16/17
17/18
15/16
16/17
17/18
PARAGON CARE — FINANCIAL REPORT 2017 / 18 6
Directors’ Report Continued
For the year ended 30 June 2018
Directors’ Report
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 2018.
Directors
The following persons were Directors of Paragon Care Limited during the whole of the financial year and up to
the date of this report unless otherwise stated.
Mr Shane Tanner
Mr Mark Simari (Resigned 22/01/18)
Mr Michael Newton
Mr Brett Cheong (Resigned 31/05/18)
Mr Geoffrey Sam
Mr Michael Rice (Resigned 31/05/18)
Mr Andrew Just (Appointed 31/05/18)
Mr Brent Stewart (Appointed 31/05/18)
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
Net Debt
2017/18
$136.7M
$18.2M
$10.9M
$64.4M
2016/17
$117.2 M
$17.1 M
$10.2 M
$18.5 M
The Group’s performance has increased again in the 2017–18 financial year compared with 2016–17.
Revenue increased by 17% to $136.7 million whilst net profit grew 8% from a profit of $10.1 million in 2017
to $10.9 million for 2018.
PARAGON CARE — FINANCIAL REPORT 2017 / 18
7
Directors’ Report Continued
For the year ended 30 June 2018
Highlights for the year included:
• Revenues increased by 17% to $136.7M and an EBITDA of $18.2M, a 6% increase from last year, illustrating
the strategy of creating a healthcare platform for a vast range of products and servicing is successfully being
implemented into the health care sector.
• A year of strategic acquisitions and transformation with new CEO and Managing Director Andrew Just steering
nine strategic successful acquisitions, complimenting existing businesses while continuing to expand new
products and new markets.
• Paragon Care continues to increase its geographic presence with operations now in South Australia,
Queensland and New Zealand that enables the expansion for the entire Paragon Care suite of products into
these regions.
• The organic growth of many parts of the existing product ranges has continued this year on the back of
increased penetration into the health and age care sector and new product development.
• In May 2018, the Stralus C 200 Series Acute Care Bed was the Gold Winner of Good Design Award. The good
design award is a globally recognised seal for design excellence and certifies that the project has met the
international recognised criteria for design excellence.
• 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.
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 integrated services to the health and aged care sector
throughout Australia and New Zealand.
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.
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.
Further information on likely developments in the operations of the Group and the expected results of
operations have not been included in this Annual Financial Report because the Directors believe it would be
likely to result in unreasonable prejudice to the Group.
Environmental Regulations
The Group’s operations are not regulated by any significant environmental regulation under a law of the
Commonwealth or of a State or Territory.
Dividends Paid
In keeping with Directors confidence of Paragon Care, the directors have recommended the payment of a fully
franked final dividend of 2.0 cents per fully paid ordinary share) to be paid on 12th of October 2018 in respect
of the financial year ended 30 June 2018.
The dividend will be paid to all shareholders on the register of members as at the Record Date of 17th of
September 2018. This dividend has not been included as a liability in these financial statements.
In April 2018, an interim dividend of 1.1 cents per share valuing $2,990,274 fully franked was paid. The record
date was 16th March 2018 with the payment date of 12 April 2018.
Combined with the interim dividend of 1.1 cents per fully paid ordinary share in respect of the half year ended
31 December 2017, the full year dividend for 2018 will be 3.1 cents per fully paid ordinary share, a 3% increase.
With earning per share at 5.4 cents and the full year dividend of 3.1 cents per fully paid ordinary share for the
2018 represents a dividend per share payout of 57% which is at the higher end of the 40% to 60% company
dividend payment policy.
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 will be issued at a discount of 2.5% to the volume weighted
average market price of shares sold on the ASX over the 5 trading days immediately preceding the record date.
PARAGON CARE — FINANCIAL REPORT 2017 / 18 8
Directors’ Report Continued
For the year ended 30 June 2018
Directors’ Report
Information on Directors and Company Secretaries
Mr Shane Tanner
Mr Andrew Just***
Mr Brent Stewart ***
Mr Michael Newton
Mr Geoffrey Sam OAM
Mr Mark Simari **
Mr Brett Cheong *
Mr Michael Rice *
*** Appointed 31 May 2018
** Resigned 22 January 2018
Resigned 31 May 2018
*
Directors have been in office since the start of the financial year to the date of this report
(unless otherwise stated).
‘Other current directorships’ quoted below are current directorships for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted below are directorships held in the last 3 years for listed entities
only and excludes directorships of all other types of entities, unless otherwise stated.
Mr Shane Tanner
Non-Executive Chairman
Qualifications:
FCPA, ACIS
Mr Andrew Just
Managing Director &
Chief Executive Officer
Qualifications:
BEc, HeC, MBA, GAICD
Mr Brent Stewart
Non-Executive Director
Qualifications:
B Sc, B Psych, FAICD
Experience and expertise :
Andrew has more than 25 years
global experience in the healthcare
industry through previous roles as
Regional Director for Fortune 500
and ASX listed companies including
Danaher (Radiometer), Stryker,
Cochlear, GE Healthcare, Roche
and Novartis. Andrew has worked
across multiple healthcare sectors
involving functional leadership of
sales, marketing, clinical, services,
operations, supply chain and
general management. Andrew’s
track record includes successfully
delivering strong organic growth
through a clear focus on strategy
and people, led by driving customer
value.
Special responsibilities:
Member of Investment Review
Committee
Experience and expertise:
Brent is an experienced company
executive and director having
occupied numerous senior
executive and board roles over
the past 25 years. He established
and grew a successful company in
Australia and New Zealand (Market
Equity Pty Ltd) before selling to a
large multinational group (Aegis
PLC). Brent has a long association
with various segments of the
healthcare sector in Australia and
Internationally. Currently, Brent
occupies Non-Executive roles at
HBF Health Ltd, Etherington Inc and
Argonaut Ltd.
Interests in shares:
2,862,665 fully paid ordinary shares
Experience and expertise:
Shane was one of the Co-Founders
of Paragon Care Limited and has
considerable experience at both
senior executive and board level,
bringing more than 25 years’
experience in healthcare and
strategy. Shane has orchestrated
and been responsible for numerous
small and large-scale acquisitions.
He has also helped to establish
and guide a number of significant
businesses. Shane is also currently
Chairman of two successful ASX
listed healthcare businesses,
Zenitas Healthcare Limited and
Rhythm Biosciences Limited.
Shane is also Chairman of ASX
listed Funtastic Limited. Previously,
Shane was CEO of Symbion Health,
one of Australia’s largest diagnostic
businesses and Chairman of Vision
Eye Institute.
Other current directorships:
Funtastic Limited (ASX: FUN),
Rhythm Biosciences Limited
(ASX: RHY) and Zenitas Healthcare
Limited (ASX: ZNT)
Former directorships (last 3 years):
Vision Eye Institute
Special responsibilities:
Chairman of Nomination and
Remuneration Committee
Member of Investment Review
Committee
Interests in shares:
850,000 fully paid ordinary shares
PARAGON CARE — FINANCIAL REPORT 2017 / 18
9
Directors’ Report Continued
For the year ended 30 June 2018
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 2018, and the number
of meetings attended by each Director were:
Directors’ Meetings
Audit & Risk
Management Committee
Nominations &
Remuneration Committee
Eligible to attend
Number
attended
Eligible to attend
Number
attended
Eligible to attend
Number
attended
14
14
14
13
1
13
1
7
14
14
13
12
1
10
1
7
1
2
2
-
-
-
-
-
1
2
1
-
-
-
-
-
3
3
-
-
-
-
-
-
3
3
-
-
-
-
-
-
Shane Tanner
Michael Newton
Geoffrey Sam
Brett Cheong*
Brent Stuart
Michael Rice*
Andrew Just
Mark Simari*
* Resigned during the period
Mr Michael Newton
Mr Geoffrey Sam OAM
Ms Melanie Leydin
Non-Executive Director
Non-Executive Director
Company Secretary
Leonard Kocovic
Company Secretary
Qualifications:
B.App Sci., Grad Dip Bus Adm
Qualifications:
BCom, M.Hospital Administration,
M.Economics & Social Studies,
FAICD
Qualifications:
Bachelor of Business majoring in
Accounting and Corporate Law
Qualifications:
Bachelor of Business majoring in
Accounting & Commercial Law,
CPA Qualified
Experience and expertise:
Michael is an experienced operator
specialising in the industrial
chemical sector with a long history
in various executive roles with both
Unilever and ICL PLC where he
worked across Europe, Asia, U.S.
and Australia. Michael successfully
managed major diversification
programs and exceptional business
growth during his role at Symex
Holdings (now Pental Ltd). Michael
is currently Chairman of the
Power House Youth Leadership
Foundation.
Special responsibilities:
Chairman of Audit and Risk
Committee
Member of Nomination and
Remuneration Committee
Interests in shares:
403,134 fully paid ordinary shares
Experience and expertise:
Geoffrey has held numerous
successful ASX listed board
positions including Chairman of
Money 3, Director of Hutchison’s
Childcare Services and Managing
Director of Nova Health. Prior to
his appointments to ASX listed
companies, Geoffrey undertook
numerous Chief Executive positions
at Adelaide based hospitals. He
is currently the Co-Founder and
Director of HealtheCare Australia
Pty Ltd, a privately-owned health
care company comprising a portfolio
of 35 hospitals and a community
nursing and rehabilitation business.
Other current directorships:
CML Group Limited (ASX: CGR)
Special responsibilities:
Chairman of Investment Review
Committee
Member of Audit and Risk
Committee
Interests in shares:
1,343,974 fully paid ordinary shares
Experience and expertise:
Melanie holds a Bachelor of
Business majoring in Accounting
and Corporate Law. She is a
member of the Institute of
Chartered Accountants and is
a Registered Company Auditor.
She graduated from Swinburne
University in 1997, became a
Chartered Accountant in 1999
and since February 2000 has
been the principal of Leydin
Freyer. The practice provides
outsourced Company secretarial
and accounting services to public
and private companies. Melanie
has over 25 years’ experience
in the profession, including ASX
and ASIC compliance, control
and implementation of corporate
governance, statutory financial
reporting and shareholder relations.
Experience and expertise:
Leonard is the Chief Financial
Officer and joint Company Secretary
with responsibilities for finance and
corporate services.
He brings over 25 years senior
finance experience in Leading
ASX listed companies and top 200
privately owned companies.
Prior to joining Paragon Care
Limited Leonard was General
Manager Finance of Myer Holdings
Limited and Chief Financial Officer
of Conga Foods Pty Ltd and held
various senior finance roles at
Cantarella Bros and DNP Nominees
Pty Ltd.
Leonard is a member of CPA
Australia and holds a Bachelor of
Business majoring Accounting &
Commercial Law.
PARAGON CARE — FINANCIAL REPORT 2017 / 18 10
Directors’ Report Continued
For the year ended 30 June 2018
Director Shareholdings and Key Management Personnel
Directors
Shane Tanner
Mark Simari*
Michael Newton
Brett Cheong*
Michael Rice*
Geoffrey Sam
Brent Stewart**
Andrew Just**
Total
Balance at the start of the
year (or date of appointment)
Shares acquired
Shares disposed
Other changes
during the year
Balance at the end
of the year (or date
of resignation)
723,500
1,004,778
375,548
2,642,640
134,058
715,377
2,823,466
-
8,419,367
126,500
5,442
27,586
-
-
628,597
-
-
-
-
-
(344,827)
-
-
-
-
788,125
(344,827)
-
-
-
-
-
-
-
-
-
850,000
1,010,220
403,134
2,297,813
134,058
1,343,974
2,823,466
-
8,862,665
*
**
Resigned as a Director during the period
Appointed as a Director during the period
Remuneration Report
This remuneration report sets out remuneration information for
Paragon Care’s Non-Executive Directors, Executive Directors, and other
key management personnel.
Directors and key management personnel disclosed in this report
Non-Executive and Executive Directors
Non-Executive Directors’ remuneration reflects the additional
responsibilities each Director may take on from time to time.
There are no termination benefits for Non-Executive Directors.
Directors’ Fees
The current Director’s fees were last reviewed with effect from
1 July 2015. The following fees have applied:
Mr Shane Tanner
Mr Mark Simari (Resigned 22/01/18)
Mr Michael Newton
Mr Brett Cheong (Resigned as a Director 31/05/18)
Mr Geoffrey Sam
Mr Michael Rice (Resigned as a Director 31/05/18)
Mr Andrew Just (Appointed 31/05/18)
Mr Brent Stewart (Appointed 31/05/18)
Other key management personnel
Michael Rice
Chief Operations Manager
Leonard Kocovic Chief Financial Officer
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
Base Fees
Chairman
Other Non-Executive Directors
30 June 2017
30 June 2018
$120,000
$50,000
$120,000
$60,000
Executive Pay
The objective of the Group’s Executive reward framework is to ensure
reward for performance is competitive and appropriate for the results
delivered. The framework aligns Executive reward with achievement
of strategic objectives and the creation of value for shareholders, and
conforms 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
Their objective is to ensure that remuneration policies and structures
are fair, competitive and aligned with the long term interests of the
Company.
The Group has structured an Executive remuneration framework that
is market competitive and complementary to the reward strategy of the
organisation.
The Corporate Governance Statement provides further information on
the role of this committee.
Principles used to determine the nature and amount of remuneration
Non-Executive Directors
The Board’s policy is to remunerate Non-Executive Directors at
market rates for comparable companies for time, commitment and
responsibilities. Detail of the remuneration of each Non-Executive
Director is shown below. The Chairman in consultation with
independent advisors determines payments to the Non-Executive
Directors and reviews their remuneration annually, based on market
practice, duties and accountability. The maximum aggregate amount
of fees that can be paid to Non-Executive Directors is subject to
approval by shareholders in a General Meeting, and is currently
$350,000 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.
The remuneration committee is responsible for determining and
reviewing compensation arrangements. The remuneration committee
assess the appropriateness of the nature and amount of emoluments
of company Executives on a periodic basis by reference to relevant
employment market conditions and capacity to pay with the overall
objective of ensuring maximum stakeholder benefit from the retention
of a high quality Board and Executive team. Remuneration packages are
set at levels that attract and retain Executives capable of managing the
Company’s operations. Remuneration and other terms of employment
for the Managing Director and Executives have been formalised in
service agreements.
Agreements are structured as a total employment cost package which
may be delivered as a combination of cash and prescribed non-financial
benefits at the Executives’ discretion.
The Company did not receive any specific feedback at the AGM or
throughout the year on its remuneration practices.
PARAGON CARE — FINANCIAL REPORT 2017 / 18 11
Directors’ Report Continued
For the year ended 30 June 2018
Details of remuneration and service agreements
Service Agreements
On appointment to the Board, all Non-Executive Directors enter into a service agreement with the company
in the form of a letter of appointment. The letter summarises the Board policies and terms, including
compensation, relevant to the office of Director.
Remuneration and other terms of employment for Executive Directors and other senior executives and key
management are also formalised in service agreements.
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 69.0¢ and a high of 95.8¢. As at 30 June 2018 the, Company’s share price
(ASX: PGC) was 82.5¢ 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 2013
30 June 2014
30 June 2015
30 June 2016
30 June 2017
30 June 2018
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
72.9
54.0
70.0
5.6
2.2
0.8
91.0
69.0
77.0
6.2
3.0
1.1
95.8
69.0
82.5
5.4
3.1
1.1
10.37
18.20
20.58
72.26
82.69
170.1
Major provisions of the agreements as at 30 June 2018 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
Mr G J Sam
Non-Executive Director
Mr B Stewart
Non-Executive Director
Executive Directors
Mr A Just
Managing Director / CEO
Other Key Management Personnel
Mr L Kocovic
Chief Financial Officer
Mr M G Rice
Alternate Director /
Chief Operating Officer
No fixed term
$120,000
No termination benefit
No fixed term
No fixed term
No fixed term
$50,000
$50,000
$60,000
No termination benefit
No termination benefit
No termination benefit
No fixed term
$525,000
No termination benefit
No fixed term
$300,000
No termination benefit
No fixed term
$273,750
No termination benefit
PARAGON CARE — FINANCIAL REPORT 2017 / 18 12
Directors’ Report Continued
For the year ended 30 June 2018
Emoluments of Directors, Executive officers and other Executives of the Company:
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
2018
Name
Non-Executive Directors
Mr Shane Tanner
Mr Michael Newton
Mr Geoffrey Sam
Mr Brent Stewart
Executive Directors
$
120,000
43,473
43,473
5,000
Mr Mark Simari (Resigned 22/01/18)
267,839
Mr Brett Cheong (Resigned 31/05/18)
160,000
Mr Andrew Just (Appointed 31/05/18)
223,718
Other Key Management Personnel
Mr Michael Rice (Resigned 31/05/18)
250,000
Mr Leonard Kocovic
Total
275,000
1,388,502
$
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
$
4,130
4,130
10,849
22,094
-
-
7,532
15,806
34,187
11,878
23,750
25,000
90,982
$
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
2017
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 Shane Tanner
Mr Michael Newton
Mr Geoffrey Sam
Executive Directors
Mr Mark Simari
Mr Brett Cheong
Other Key Management Personnel
Mr Michael Rice
Mr Stephen Munday
Mr Leonard Kocovic
Total
$
120,000
13,103
47,096
408,000
160,000
240,000
255,000
9,519
1,252,717
$
-
-
-
-
-
-
-
-
-
$
-
-
-
$
-
34,500
4,474
27,207
30,000
-
-
25,842
-
-
22,800
35,000
865
53,049
127,639
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
Total
$
120,000
47,603
47,603
5,000
300,782
160,000
235,596
281,282
315,806
1,513,671
Total
$
120,000
47,603
51,570
465,207
160,000
288,642
290,000
10,384
1,433,406
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.
PARAGON CARE — FINANCIAL REPORT 2017 / 18 13
Directors’ Report Continued
For the year ended 30 June 2018
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:
Directors
Shane Tanner
Michael Newton
Geoffrey Sam OAM
Andrew Just
Brent Stewart
Fully paid ordinary shares (PGC)
850,000
403,134
1,343,974
-
2,283,466
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. 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.
Directors and Officers Indemnity
The Company has entered into an Indemnity Deed with each of the Directors which will indemnify them against
liability incurred to a third party (not being the Company or any related company) where the liability does not
arise out of the conduct involving a lack of good faith. The Indemnity Deed will continue to apply for a period
of 10 years after a Director ceases to hold office. There is also a Directors’ Access and Insurance Deed with
each of the Directors pursuant to which a Director can request access to copies of documents provided to the
Director whilst serving the Company for a period of 10 years after the Director ceases to hold office. There will
be certain restrictions on the Directors’ entitlement to access under the deed.
Proceedings on Behalf of Company
No person has applied for leave of the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the
purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the court.
The Company was not a party to any such proceedings during the year under section 237 of the
Corporations Act 2001.
Corporate Governance Statement
In accordance with ASX Listing Rule 4.10.3, the Company’s 2018 Corporate Governance Statement can be
found on its website at www.paragoncare.com.au
PARAGON CARE — FINANCIAL REPORT 2017 / 18 14
Directors’ Report Continued
For the year ended 30 June 2018
Auditor
RSM Australia Partners was appointed Company auditor on 27 November 2009 and will continue in office in
accordance with section 327 of the Corporations Act 2001.
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 Australia Partners, 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
221,003
122,830
2018
$
2017
$
Non Audit Services
Taxation Services
Other Services
106,418
36,075
-
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 15.
Signed in accordance with a resolution of the Directors:
Shane Tanner
Chairman
27 August 2018
PARAGON CARE — FINANCIAL REPORT 2017 / 18 15
Auditor’s Independence Declaration
PARAGON CARE — FINANCIAL REPORT 2017 / 18 THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation RSM Australia Partners Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199 www.rsm.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 2018, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS P A RANSOM Partner Dated: 27 August 2018 Melbourne, Victoria 16
Financial
Statements
PARAGON CARE — FINANCIAL REPORT 2017 / 18 17
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2018
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 and currency translation
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
3
4
2018
$
2017
$
136,747,265
117,192,924
(81,836,092)
(71,124,867)
54,911,173
46,068,057
4,674,896
364,325
(11,575,889)
(7,786,665)
(1,309,992)
(321,121)
(2,205,128)
(1,792,897)
(1,756,150)
(1,302,144)
(29,070,218)
(20,995,757)
13,668,692
14,233,798
7
(2,718,137)
(4,059,037)
10,950,555
10,174,761
53,881
53,881
131,822
131,822
11,004,436
10,306,583
10,950,555
10,174,761
11,004,436
10,306,583
22
22
5.4
5.4
6.2
6.2
PARAGON CARE — FINANCIAL REPORT 2017 / 18 18
Consolidated Statement of Financial Position
As at 30 June 2018
Note
2018
$
2017
$
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
Other receivables
Intangibles
Total non-current assets
Total Assets
Liabilities
Current liabilities
Trade and other payables
Vendor conditional payables
Interest bearing liability
Other financial liabilities
Provision for Income Tax
Provisions
Total current liabilities
Non-current liabilities
Other Payables
Vendor conditional payables
Interest bearing liability
Provisions
Total non-current liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
8
9
10
11
12
7
10
13
14
28
15
11
16
14
28
15
16
17
18
Retained earnings (Accumulated losses)
Total Equity
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
40,391,579
18,555,941
55,301,467
21,742,075
45,287,234
20,777,567
1,336,858
-
142,317,138
61,075,583
12,172,651
3,405,391
3,702,846
2,221,240
1,424,676
931,176
190,130,966
98,419,272
207,431,139
104,977,079
349,748,277
166,052,662
58,499,209
25,534,489
1,201,348
9,583,817
10,742,877
8,498,825
-
766,840
161,123
555,736
4,514,277
1,949,707
75,724,551
46,283,697
1,457,454
643,134
8,093,298
7,282,362
94,073,848
28,568,954
256,814
583,720
103,881,414
37,078,170
179,605,965
83,361,867
170,142,312
82,690,795
156,930,216
74,347,530
(100,843)
13,312,939
(154,724)
8,497,989
170,142,312
82,690,795
PARAGON CARE — FINANCIAL REPORT 2017 / 18 19
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Share Capital
Currency
Translation
Reserve
Currency
Hedge Reserve
Retained Earnings
(Accumulated
Losses)
Total Equity
$
$
$
$
$
70,636,055
38,871
(325,417)
2,420,726
72,770,235
-
-
-
-
-
-
-
-
-
-
-
-
11,157
11,157
-
-
-
10,174,761
10,174,761
120,665
-
-
-
120,665
11,157
120,665
10,174,761
10,306,583
-
-
-
3,711,475
(4,097,496)
(4,097,496)
74,347,530
50,028
(204,752)
8,497,991
82,690,797
74,347,530
50,028
(204,752)
8,497,991
82,690,797
-
-
(791,207)
(791,207)
-
-
-
10,950,555
10,950,555
845,088
-
-
-
845,088
(791,207)
845,088
10,950,555
11,004,436
-
-
-
82,582,686
(6,135,604)
(6,135,604)
156,930,216
(741,179)
640,336
13,312,942
170,142,312
Issue of share capital net of transaction costs
3,711,475
Balance at 1 July 2016
Profit / (loss) for the year
Gain / (loss) on cash flow hedge
Gain / (loss) on currency translation
Total comprehensive income for the year
Dividend issued in the year
Balance at 30 June 2017
Balance at 1 July 2017
Profit / (loss) for the year
Gain / (loss) on cash flow hedge
Gain / (loss) on currency translation
Total comprehensive income for the year
Dividend issued in the year
Balance at 30 June 2018
Issue of share capital net of transaction costs
82,582,686
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
PARAGON CARE — FINANCIAL REPORT 2017 / 18 20
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
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
2018
$
2017
$
132,449,267
117,291,989
(119,081,307)
(99,403,618)
(2,171,697)
(1,792,897)
245,834
50,753
(3,883,205)
(4,156,847)
Net cash provided by / (used in) operating activities
8(b)
7,558,892
11,989,380
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payment for plant and equipment
Payment for Intangible Assets
Loan (Advancement) / Repayment
Net cash provided by / (used in) investing activities
Cash flows from financing activities
Net proceeds / (Repayments) from 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
(106,824,485)
(2,853,347)
(2,761,798)
(1,052,505)
(3,790,111)
(3,523,340)
500,000
(500,000)
(112,876,393)
(7,929,192)
67,748,946
(1,086,696)
69,980,020
-
(4,695,808)
(3,522,941)
(5,880,020)
(11,540)
127,153,138
(4,621,177)
21,835,638
(560,989)
18,555,941
19,116,930
Cash and cash equivalents at the end of the financial period
8(a)
40,391,579
18,555,941
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.
PARAGON CARE — FINANCIAL REPORT 2017 / 18 21
Notes to and Forming Part of the Financial Statements
For the year ended 30 June 2018
NOTE 1 Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below. These policies
have been consistently applied to all years presented, unless otherwise
stated. The financial statements are for the consolidated entity
consisting of Paragon Care Limited and its subsidiaries.
(a) Basis of Preparation
These general purpose financial statements have been prepared in
accordance with Australian Accounting Standards and interpretations
issued by the Australian Accounting Standards Board and the
Corporations Act 2001. Paragon Care Limited is a for-profit entity
for the purpose of preparing the financial statements.
Australian Accounting Standards set out accounting policies that
the AASB has concluded would result in a financial report containing
relevant and reliable information about transactions, events and
conditions to which they apply. Compliance with Australian Accounting
Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).Material accounting
policies adopted in the preparation of these financial statements are
presented below. They have been consistently applied unless otherwise
stated.
These financial statements have been prepared under the historical
costs convention modified, where applicable, by the measurement
at fair value of selected non-current assets, financial assets and
financial liabilities.
(b) Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities
and results of entities controlled by the Company at the end of the
reporting period. A controlled entity is any entity over which Company
has the power to govern the financial and operating policies so as to
obtain benefits from the entity’s activities. Control will generally exist
when the parent owns, directly or indirectly through subsidiaries, more
than half of the voting power of an entity.
In assessing the power to govern, the existence and effect of holdings of
actual and potential voting rights are also considered.
Where controlled entities have entered or left the Group during the year,
the financial performance of those entities are included only for the
period of the year that they were controlled. A list of controlled entities
is contained in Note 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.
(d) Foreign Currency Translation
The consolidated financial statements are presented in Australian
dollars, which is the Company’s functional and presentation currency.
Foreign currency transactions are translated into functional currency
using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end
exchange rate.
Non-monetary items measured at historical cost continue to be carried
at the exchange rate at the date of the transaction. Non-monetary items
measured at fair value are reported at the exchange rate at the date
when fair values were determined.
Exchange differences arising on the translation of monetary items are
recognised in the Statement of Profit or Loss and Other Comprehensive
Income, except where deferred in equity as a qualifying cash flow or net
investment hedge.
(e) Revenue Recognition
Sale of goods
The group manufactures and sells a range of goods to the wholesale
and end user market. Sales of goods are recognised when a group
entity has delivered product and there is no unfulfilled obligation that
could affect the customer’s acceptance of the product. Delivery does
not occur until the products have been shipped to the customer, the
risks of obsolescence and loss have been transferred, the customer
has accepted the products in accordance with the sales contract, the
acceptance provisions have lapsed, or the group has objective evidence
that all criteria for acceptance have been satisfied.
Amounts disclosed as revenue are net of returns, trade allowances,
duties and tax paid.
No element of financing is deemed present as the sales are made with a
credit term of between 30 and 60 days which is consistent with market
practice.
Service
Revenue from service is recognised in the accounting period in which the
services are rendered. For fixed-price contracts, revenue is recognised
under the percentage of completion method, based on the actual service
provided as a percentage of the total services to be provided. Interest
revenue is recognised on an accrual basis taking into account the
interest rates applicable to the financial assets.
Dividend revenue from investments is recognised when the Group’s right
to receive payment has been established.
(f) Income Tax
The income tax expense (revenue) for the year comprises current income
tax expense (income) and deferred tax expense (income).
Current income tax expense charged to the profit or loss is the tax
payable on taxable income calculated using applicable income tax rates
enacted, or substantively enacted, as at the end of the reporting period.
Current tax liabilities (assets) are therefore measured at the amounts
expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset
and deferred tax liability balances during the year as well as unused tax
losses.
Current and deferred income tax expense (income) is charged or
credited directly to equity instead of the profit or loss when the tax
relates to items that are credited or charged directly to equity.
PARAGON CARE — FINANCIAL REPORT 2017 / 18
22
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
(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. 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 — FINANCIAL REPORT 2017 / 18 23
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
(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 uncollectible 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.
(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.
Derecognition
Fair value estimation
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, canceled 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.
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.
PARAGON CARE — FINANCIAL REPORT 2017 / 18
24
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
(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 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.
The assets’ residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
Software development
Software development costs are capitalised only when incurred.
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.
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.
PARAGON CARE — FINANCIAL REPORT 2017 / 18 25
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
(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.
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 canceled. 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.
PARAGON CARE — FINANCIAL REPORT 2017 / 18
26
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
(x) New Accounting Standards for Application in Future Periods (Continued)
Reference
Title
Summary
Impact
AASB 15
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)
AASB 16
Leases
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.
Consequential amendments arising
from the issuance of AASB 15.
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.
Consequential amendments arising
from the issuance of AASB 9.
The standard replaces AASB117
“Leases” and for lessees will
eliminate the classification of
operating leases and finance leases
2016-5
Amendments to
Australian Accounting
Standards –
Classification and
Measurement of
Share-based Payment
Transactions
Consequential amendments arising
from the issuance of International
Financial Reporting Standard
“Classification and Measurement
of Share-based Payment
Transactions” by the International
Accounting Standards Board (June
2016)
No material impact envisaged.
Application
Date
1 January 2018
No material impact envisaged.
1 January 2018
No material impact envisaged.
1 January 2018
No material impact envisaged.
1 January 2018
1 January 2019
The Group has commenced its assessment of the impact of AASB
16, however, following the acquisitions of 9 entities during the
year, in particular, the last 6 months, the assessment is still in
progress. It is expected any assessment will require a review of
its current lease agreements and other contracts to assess if
there are any embedded operating lease terms.
As at 30 June 2018, the Group has non-cancellable operating
lease commitments of $16,610,885 (refer to note 26). Under
AASB 16, the present value of these commitments would
potentially be shown as a liability on the balance sheet together
with an asset representing its right-of-use. Ongoing lease
payments currently presented as an operating expense will be
split between depreciation and interest expense. However, the
Group has not yet determined to what extent the present value of
these commitments will result in the recognition of an asset and
a liability for future payments, and its associated quantitative
impact to profit and loss. Some of the commitments may be
covered by the exception for short-term and low value leases
and some commitments may relate to arrangements that will not
qualify as leases under AASB 16.
As a result, the Standard is expected to change EBITDA, but will
unlikely materially impact the Group’s consolidated net profit
after tax.
The Group will first apply AASB 16 on 1 July 2019 and will report
under the new standard in the 30 June 2020 annual financial
report.
No material impact envisaged.
1 January 2018
PARAGON CARE — FINANCIAL REPORT 2017 / 18 27
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
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 6% 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 11.7% have
been used in all models. No impairment has been recognised in respect of goodwill at the end of the reporting
period.
Business combinations
Business combinations are initially accounted for on a provisional basis as the consolidated entity has twelve
months from acquisition date to finalise acquisition accounting. The fair value of assets acquired, liabilities
and contingent liabilities assumed are initially estimated by the consolidated entity taking into consideration
all available information at the reporting date. Fair value adjustments on the finalisation of the business
combination accounting is retrospective, where applicable, to the period the combination occurred and may
have an impact on the assets and liabilities reported.
Further, the conditional payments owing to the vendors is based on the performance of the acquired entity
which is measured by the EBITDA growth over a one to two year period. The estimation of the likely conditional
payment was based on the consideration of all available information at the reporting date.
Provision for stock obsolescence
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The
level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories
and other factors that affect inventory obsolescence.
Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The
level of provision is assessed by taking into account the recent sales experience, the ageing of receivables,
historical collection rates and specific knowledge of the individual debtor’s financial position.
PARAGON CARE — FINANCIAL REPORT 2017 / 18 28
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
NOTE 3 Revenue
Revenue
Sale of Goods
Sundry Income
Interest
Total Sundry Income
Total Revenue
NOTE 4 Other Income
Write back of vendor earnout payable (i)
Other income
(i) In June 2018, the conditional payments on the earn outs for Midas Software Solutions and Electro Medical
Group were finalised with the respective vendors. The amounts agreed to be paid to the respective vendors
was different to the contingent consideration estimated in the final acquisition accounting. Electro
Medical Groups final earnout was $695,669 and Midas Software Solutions has no final earnout due. Total
final earnout payables due of the two entities is $695,669. The impact was a reduction of the vendor
earnout payable, resulting in a writeback of $4,072,517. Refer note 28(c)
During the year ending 30 June 2017 the conditional payments on the earn outs for Western Biomedical
and Designs for Vision have been finalised with the respective vendors. The amounts agreed to be paid
to the respective vendors was different to the contingent consideration estimated in the final acquisition
accounting. The impact was a reduction to the vendor earnout payable resulting in a write back of $268,637
in the prior year. Refer Note 28(c)
NOTE 5 Expenses
Profit before income tax expense includes the following specific expenses:
Depreciation: Plant and equipment
Amortisation: Website development costs
Amortisation: R&D 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
2018
$
2017
$
136,501,431
117,142,171
245,834
245,834
50,753
50,753
136,747,265
117,192,924
2018
$
4,072,517
602,379
4,674,896
2017
$
268,637
95,688
364,325
2018
$
1,626,733
25,199
29,347
683,820
2017
$
804,533
24,858
14,831
288,485
25,976,379
19,172,825
28,341,478
20,305,532
2018
$
221,003
106,418
-
2018
$
122,830
36,075
-
327,421
158,905
PARAGON CARE — FINANCIAL REPORT 2017 / 18
29
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
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
(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%
Add tax effect of:
• Entertainment expenses
• Other non-deductible expenses
• Other non-assessable income - vendor earn out write back
• Overprovision of income tax in prior year
Less tax effect of:
• Non-assessable income
• (Overprovision) of income tax in prior year
• Other deductible expenses
Income tax expense / (benefit) attributable to profit
(d) Deferred tax assets
The balance comprises:
• Provisions / accruals
• Provision for employee entitlements
• Prepayments
• Foreign exchange gains / losses
• Provisions for stock
• Other assets
• Share issue costs
• Fixed Assets
• Carry forward tax losses
2018
$
2017
$
2,491,444
308,450
(81,757)
2,718,137
3,600,449
621,835
(163,247)
4,059,037
(385,737)
110,267
-
-
(385,737)
110,267
4,100,608
4,270,140
34,731
268,076
(1,221,755)
(81,757)
-
(381,796)
2,718,137
11,498
1,508,570
(10,968)
(558,423)
139,623
269,659
1,892,092
297,678
153,117
32,736
-
-
-
(80,592)
(163,247)
4,059,037
42,520
813,824
(243)
(37,477)
-
755,391
273,399
(3,834)
377,660
Balance after set off of deferred tax assets and (liabilities)
3,702,846
2,221,240
Deferred tax asset not recognised comprise:
Unrecognised tax losses
Timing differences
-
-
-
-
-
-
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.
PARAGON CARE — FINANCIAL REPORT 2017 / 18
30
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
NOTE 8 Statement of Cash Flows
(a) Cash at bank and on hand
Note
2018
$
2017
$
40,391,579
18,555,941
(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 and amortisation
Write-back of provision for vendor earnout.
Currency translation movement
Change in operating assets and liabilities
(Increase)/ decrease in trade debtors
(Increase)/ decrease in inventory
Increase /(decrease) in provisions
Increase /(decrease) in accounts payable and other payables
Increase/(decrease) in current tax provision
Net cash outflows from operating activities
(c) Non-cash financing and investing activities
Other Non-cash share issues
In financial year ended 30 June 2018
28(c)
10,950,555
10,174,761
2,365,100
(4,072,517)
-
(4,654,543)
(2,578,963)
267,342
6,446,986
(1,165,068)
1,132,707
(268,637)
11,157
54,130
(655,856)
27,234
1,611,694
(97,810)
7,558,892
11,989,380
55,432 shares as part consideration for the acquisition of Medtek Pty Ltd at a price of $0.9020 per share.
470,488 shares as part consideration for the earn-out payable to the vendors of the Western Biomedical business acquired in October 2015 at an
issue price of $0.9020 per share.
550,898 shares as part consideration for the acquisition of the Anaequip Medical Trust business at a price of $0.8350 per share.
8,823,338 shares as part consideration for the acquisition of Surgical Specialties business at a price of $0.7250 per share.
10,600,000 shares as part consideration for the acquisition of REM Systems business at a price of $0.7673 per share.
In financial year ended 30 June 2017
707,214 shares as part consideration for the acquisition of Meditron at a price of $0.7050 per share.
2,709,046 shares as part consideration for the acquisition of Midas Software at a price of $0.7100 per share.
902,784 shares as part consideration for the acquisition of Electro Medical Group at a price of $0.8400 per share.
(d) Financing Facilities
Refer Note 19 (c)
NOTE 9 Inventories
Current
Raw materials
Work in progress
Finished goods
Provision for inventory obsolescence
2018
$
2017
$
1,947,047
31,198
292,236
45,810
53,788,633
21,532,017
(465,411)
(127,988)
55,301,467
21,742,075
PARAGON CARE — FINANCIAL REPORT 2017 / 18
31
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
NOTE 10 Trade and Other Receivables
Current
Trade and other receivables
GST receivable
Other receivables
(a) Impaired trade receivables
As at 30 June 2018 current trade receivables of the Group with a nominal value of $nil (2017: $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 2018, trade receivables of $ 19,492,629 (2017: $7,314,840) 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
Total overdue
(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.
Non-current
Other Receivables
2018
$
2017
$
37,966,651
19,485,685
2,321,126
4,999,456
433,866
858,016
45,287,233
20,777,567
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,660,440
832,188
19,492,628
6,919,786
395,054
7,314,840
2018
$
1,424,676
1,424,676
2017
$
931,176
931,176
PARAGON CARE — FINANCIAL REPORT 2017 / 18 32
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
NOTE 11 Other Financial Assets / Liabilities
Current assets
Investments in listed shares
Foreign exchange forward contracts — Cash flow hedges
Current liabilities
Foreign exchange forward contracts — Cash flow hedges
Foreign exchange forward contracts — Cash flow hedges
Companies within the group import materials from the United States, Europe and Asia. In order to protect
against exchange rate movements, the group has entered into forward exchange contracts to purchase US
dollars and Euro. These contracts are hedging highly probable forecasted purchases for the ensuing financial
year. The contracts are timed to mature when payments for major shipments are scheduled to be made.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge
is recognised in other comprehensive income. When the cash flows occur, the group adjusts the initial
measurement of the component recognised in the balance sheet by removing the related amount from other
comprehensive income.
NOTE 12 Plant and Equipment
Non-Current Assets
Furniture, Fittings and Equipment—at cost
Less accumulated depreciation
Motor Vehicles—at cost
Less accumulated depreciation
Total Plant and Equipment
Movement in carrying amount during the year:
Beginning of year WDV
Additions at cost
Acquisition through business combinations
Disposals
Depreciation
End of year WDV
(a) Leased assets
Non-current assets includes the following amounts where the group is a lessee under a finance lease:
Leasehold equipment
Cost
Less accumulated depreciation
Written down value
2018
$
21,342
1,315,516
1,336,858
2017
$
-
-
-
-
-
161,123
161,123
2018
$
2017
$
17,111,134
6,315,345
(5,623,958)
(3,352,819)
1,485,052
(799,579)
12,172,649
1,094,810
(651,945)
3,405,391
3,405,391
2,761,797
7,681,309
(49,113)
(1,626,733)
2,982,624
1,187,658
156,022
(116,380)
(804,539)
12,172,650
3,405,391
3,913,954
(556,180)
3,357,774
1,116,953
(292,650)
824,303
PARAGON CARE — FINANCIAL REPORT 2017 / 18 33
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
NOTE 13 Intangible Assets
Website development costs
Identifiable Intangible Assets - Contracts (with business acquisitions)
Note
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.
Identifiable Intangible Assets - Contracts (with business acquisitions)
Beginning of year
Additions—REM Systems
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
Acquisition through business combinations
Amortisation
End of year
Goodwill
Beginning of year
Additions
Finalisation of Acquisition Accounting Adjustment (Refer Note 28b)
Foreign exchange difference
End of year
Goodwill
2018
$
140,732
2,493,016
1,920,799
6,345,648
2017
$
11,090
-
1,072,141
4,221,076
179,230,770
93,114,965
190,130,965
98,419,272
11,090
154,841
(25,199)
140,732
35,948
-
(24,858)
11,090
-
2,493,016
-
2,493,016
-
-
-
-
1,072,141
878,005
(29,347)
308,344
778,628
(14,831)
1,920,799
1,072,141
4,221,076
2,808,393
-
(683,820)
6,345,649
777,813
2,779,518
952,230
(288,485)
4,221,076
93,114,965
79,916,800
28(a)
88,211,545
12,036,331
(2,491,677)
1,161,834
395,937
-
179,230,770
93,114,965
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 note 2 for further details.
PARAGON CARE — FINANCIAL REPORT 2017 / 18 34
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
NOTE 14 Trade and Other Payables
Current
Trade creditors
Other creditors
Deferred purchase price
Deferred revenue
Accrued expenses
Non-Current
Other Creditors
NOTE 15 Borrowings
Current
Secured
Trade Finance Facility
Bank Loans
Lease Liabilities
Total Current Borrowings
Non-Current
Secured
Bank Loans
Lease Liabilities
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
2018
$
2017
$
41,711,338
18,529,369
10,572,007
3,562,154
1,577,838
2,108,203
2,529,822
-
2,144,595
1,298,371
58,499,208
25,534,489
1,457,454
1,457,454
643,134
643,134
2018
$
2017
$
5,859,214
4,000,000
883,663
10,742,877
10,742,877
6,263,812
2,000,000
235,013
8,498,825
8,498,825
92,321,937
28,000,000
1,751,911
568,954
94,073,848
28,568,954
94,073,848
28,568,954
5,859,214
6,263,812
96,321,937
30,000,000
2,635,573
803,967
104,816,724
37,067,779
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 National Australia 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 principle balance and is continuously utilised to provide a source of working capital
more closely matching the inventory life cycle of imported products.
PARAGON CARE — FINANCIAL REPORT 2017 / 18
35
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
NOTE 16 Provisions
Current
Employee entitlements
Non-Current
Employee entitlements
NOTE 17 Contributed Equity
Fully paid ordinary shares
(a) Ordinary shares
2018
$
2017
$
4,514,277
4,514,277
1,949,707
1,949,707
256,814
256,814
583,720
583,720
2018
$
2017
$
156,930,216
74,347,530
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-16 Balance
Number of
Shares
$
159,934,518
70,636,055
18-Jul-16
25-Jul-16
6-Oct-16
7-Oct-16
6-Apr-17
Issue of shares as part consideration for the Meditron acquisition earn-out at a price of $0.7050 per share
707,214
500,000
Issue of shares as part consideration for the Midas Software Solutions acquisition at a price of $0.7100 per share
2,709,046
1,904,459
Issue of shares pursuant to the company’s dividend re-investment plan price of $0.8350 per share
Issue of shares as part consideration for the EMG acquisition at a price of $0.8400 per share
Issue of shares pursuant to the company’s dividend re-investment plan price of $0.7900 per share
30-Jun-17
Accumulated share issue costs incurred during 2017 (net of tax)
30-Jun-17
Closing Balance
14-Aug-17
14-Aug-17
6-Oct-17
25-Jan-18
Issue of shares as part consideration for the acquisition of Medtek Pty Ltd at a price of $0.9020 per share
Issue of shares for part consideration for the earn-out payable to the vendors of the Western Biomedical
business acquired in October 2015 at an issue price of $0.9020 per share.
Issue of shares pursuant to the company’s dividend re-investment plan price of $0.8870 per share
Issue of shares as part consideration for the acquisition of the Anaequip Medical Trust business at a price of
$0.8350 per share
343,802
902,784
420,645
-
275,042
740,554
299,499
(8,079)
165,018,009
74,347,530
55,432
470,488
670,677
550,898
50,000
424,380
594,890
460,000
19-Feb-18
Issue of shares pursuant to the company’s entitlement issue to institutional investors of 1 new share for each
2.8 shares held at a price of $0.7250 per share
25,077,179
18,180,955
19-Feb-18
2-Mar-18
Placement to sophisticated and professional investors at issue price of $0.7250 per share.
Issue of shares as part consideration for the acquisition of Surgical Specialties business at a price of
$0.7250 per share
5-Mar-18
Issue of shares pursuant to the company’s entitlement issue to retail investors of 1 new share for each
2.8 shares held at a price of $0.7250 per share
36,694,414
26,603,450
8,823,338
6,396,920
15,704,966
11,386,100
5-Mar-18
Issue of shares of the shortfall of the company’s entitlement issue to retail investors of 1 new share for each
2.8 shares held at a price of $0.7250 per share
18,778,957
13,614,744
12-Apr-18
12-Jun-18
Issue of shares to pursuant to the company’s dividend re-investment plan price of $0.702 per share
Issue of shares as part consideration for the acquisition of REM Systems business at a price of
$0.7673 per share
1,203,572
844,908
10,600,000
8,133,752
30-Jun-18
Accumulated share issue costs incurred during 2018 (net of tax)
-
(4,107,412)
30-Jun-18
Closing Balance
283,647,930
156,930,217
PARAGON CARE — FINANCIAL REPORT 2017 / 18 36
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
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 2018 and 2017 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
Currency translation reserve
Movements in currency hedge reserve were as follows:
Beginning of year
Revaluation
End of year
Movements in currency translation reserve were as follows:
Beginning of year
Revaluation
End of year
2018
$
2017
$
104,816,725
37,067,779
(40,391,579)
(18,555,941)
64,425,146
18,511,838
170,142,312
82,690,795
234,567,458
101,202,633
27%
18%
2018
$
640,336
(741,179)
(100,843)
2017
$
(204,752)
50,028
(154,724)
(204,752)
845,088
640,336
(325,418)
120,666
(204,752)
50,028
(791,207)
(741,179)
38,871
11,157
50,028
PARAGON CARE — FINANCIAL REPORT 2017 / 18 37
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
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 anticipated net cash flows in foreign currency 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)
AUD to USD
AUD to Euro
NZD to USD
NZD to AUD
AUD to NZD
(ii) Interest rate risk
2018
$
2017
$
24,738,161
7,461,300
11,700,000
10,658,720
654,206
8,579,418
7,142,562
-
-
-
55,212,387
15,721,980
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, however, the Company has $30,635,574 borrowings at fixed rates.
At 30 June 2018 $74,181,152 (2017: $6,263,812) of the Company’s debt is at a variable rate of interest.
The Company’s bank loans outstanding, totaling $96,321,937 (2017: $30,000,000), are principal and interest payment loans. Monthly cash
outlays of approximately $287,000 (2017: $106,000) per month are required to service the interest payments. An official increase/decrease in
interest rates of 50 (2017: 50) basis points would have an adverse/favourable effect on the profit before tax of $342,000 (2017: $10,000) per
annum. The percentage change is based on the expected volatility of interest rates using market data and analysis forecasts. In addition,
minimum principal repayments of $4,000,000 (2017: $2,000,000) are due during the year ended 30 June 2019 (2017: 30 June 2018).
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)
2018
$
2017
$
40,391,579
18,555,941
(9,859,215)
(8,263,812)
(883,663)
(235,013)
(64,321,937)
-
(29,751,911)
(28,568,954)
(104,816,726)
(37,067,779)
PARAGON CARE — FINANCIAL REPORT 2017 / 18
38
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
NOTE 19 Financial Risk Management (Continued)
(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
2018
$
2017
$
16,500,000
6,640,785
8,000,000
1,736,188
79,500,000
15,178,063
883,663
-
-
-
-
-
32,251,910
60,053,967
2,500,000
29,250,000
129,135,573
68,053,967
24,318,848
30,986,188
PARAGON CARE — FINANCIAL REPORT 2017 / 18 39
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
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.
On 8 June 2018 National Australia Bank granted Paragon Care Ltd credit approval to increase their lending agreement facility to $126,500,000 to
support organic growth and the company’s acquisition strategy.
Contractual maturities
of financial liabilities
Weighted
average
interest rate
2018
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total
2017
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total
%
-
3.3
4.3
3.6
-
3.1
3.6
3.2
Total
contractual
cash flows
$
67,793,855
74,181,152
30,635,573
Less than 6
Months
$
59,700,557
6 to 12
Months
Between
1 and 2 Years
Between
2 and 6 Years
$
-
$
8,093,298
4,000,000
$
-
60,321,937
7,859,215
2,000,000
441,831
441,831
883,663
28,868,248
68,001,603
2,441,831
12,976,961
89,190,185
172,610,580
35,118,306
6,263,812
1,124,333
42,506,451
-
-
1,110,680
1,110,680
7,282,362
-
2,235,013
9,517,375
-
-
26,333,941
26,333,941
42,400,668
6,263,812
30,803,967
79,468,447
(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:
(i) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(ii) 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
(iii) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following table presents the Group’s assets and liabilities measured and recognised at fair value at 30 June 2018 and 30 June 2017.
At 30 June 2018
Assets
Forward foreign exchange contracts
Total assets
Liabilities
Forward foreign exchange contracts
Total liabilities
At 30 June 2017
Assets
Forward foreign exchange contracts
Total assets
Liabilities
Forward foreign exchange contracts
Total liabilities
Level 1
$
-
-
-
-
Level 2
$
1,315,516
1,315,516
-
-
Level 3
$
-
-
-
-
Total
$
1,315,516
1,315,516
-
-
Level 1
Level 2
Level 3
Total
$
-
-
-
-
$
-
-
161,123
161,123
$
-
-
-
-
$
-
-
161,123
161,123
PARAGON CARE — FINANCIAL REPORT 2017 / 18
All entities are incorporated in Australia except for
Paragon Medical Ltd which is incorporated in New Zealand.
* Dormant company
# Incorporated in New Zealand
1. Subsidiary of Paragon Care Group Pty Ltd
2. Subsidiary of Paragon Medical Pty Ltd
3. Subsidiary of Iona Medical Products Pty Ltd
4. Subsidiary of Designs For Vision Holdings Pty Ltd
5. Subsidiary of Designs For Vision (Aust) Pty Ltd
6. Subsidiary of Surgical Specialties Group Pty Ltd
7. Subsidiary of Immuno Pty Ltd
8. Subsidiary of Labgear Australia Pty Ltd
9. Subsidiary of REM Systems Pty Ltd
10. Subsidiary of Paragon Medical Ltd
40
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
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
Ownership
30 June 2018
Ownership
30 June 2017
Parent Entity
Paragon Care Limited
Subsidiaries
Paragon Care International Pty Ltd
Medtek Pty Ltd
Paragon Care Group Pty Ltd
GM Medical Pty Ltd 1.
Paragon Medical Ltd # 1.
Designed for Vision Limited #1.
REM Systems Limited #1.
REM Systems Pty Ltd #9.
Meditron Pty Ltd 1.
Western Biomedical Pty Ltd 1.
Designs For Vision Holdings Pty Ltd 1.
Designs For Vision (Aust) Pty Ltd 4.
Designs For Vision Pty Ltd 5.
Electro Medical Group Pty Ltd 1.
MIDAS Software Solutions Pty Ltd 1.
Immulab Pty Ltd 1.
Insight Surgical Pty Ltd 1.
MedTech Solution Pty Ltd 1.
Walkit Pty Ltd 1.
Surgical Specialties Holdings Pty Ltd 1.
Surgical Specialties Group Pty Ltd 1.
Surgical Specialties Pty Ltd 6.
Therapy Specialties Pty Ltd 6.
Surgical Specialties (NZ) Ltd 6.
Therapy Specialties Ltd 6.
Pergamon Technologies Pty Ltd 1.
Immuno Pty Ltd 1.
Immuno Limited 7.
Labgear Australia Pty Ltd 1.
Labgear New Zealand Limited 8.
Paragon Medical Pty Ltd
Scanmedics Pty Ltd * 2.
Axishealth Pty Ltd * 2.
Rapini Pty Ltd * 2.
Paragon Healthcare Pty Ltd 2.
Iona Medical Products Pty Ltd * 2.
Volker Australia Pty Ltd * 3.
L.R. Instruments Pty Ltd * 2.
Richards Medical Pty Ltd * 2.
Unikits Pty Ltd * 2.
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
PARAGON CARE — FINANCIAL REPORT 2017 / 18 41
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
Note 20 Related Party Disclosure (Continued)
(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 inter-company loans to its subsidiaries for working capital purposes. The inter company 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 Care Group Pty Ltd
Designs For Vision (Aust) Pty Ltd
Meditron Pty Ltd
Western Biomedical Pty Ltd
2018
$
2017
$
132,924,454
52,093,172
1,852,396
1,166,231
475,163
1,100
350,233
1,100
135,253,113
53,560,736
PARAGON CARE — FINANCIAL REPORT 2017 / 18 42
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
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:
2018
$
1,422,689
90,982
-
-
2017
$
1,305,767
127,639
-
-
1,513,671
1,433,406
Shares
Disposed
Other
Changes
-
(344,827)
Balance
1 July 2017
723,500
-
1,004,778
375,548
2,642,640
715,377
-
134,058
-
Balance
1 July 2016
610,000
1,707,611
307,699
2,642,640
Shares
Acquired
126,500
-
5,442
27,586
628,597
-
-
-
Shares
Acquired
113,500
8,167
67,849
-
585,526
129,851
134,058
38,239
-
-
-
-
-
-
-
-
-
Shares
Disposed
-
(711,000 )
-
-
-
-
-
Balance at
30 June 2018
(or date of
resignation)
850,000
-
1,010,220
403,134
2,297,813
1,343,974
2,823,466
-
-
-
-
-
-
2,823,466
-
-
134,058
-
Balance at
30 June 2017
(or date of
resignation)
723,500
1,004,778
375,548
2,642,640
715,377
134,058
38,239
Other
Changes
-
-
-
-
-
-
-
Directors
S F Tanner
A Just***
M A Simari**
M C Newton
B A Cheong*
G J Sam OAM
B M Stewart***
Other key management personnel
M G Rice*
L Kocovic
Directors
S F Tanner
M A Simari
M C Newton
B A Cheong
G J Sam OAM
Other key management personnel
M G Rice
S J Munday
*** Appointed 31 May 2018
** Resigned 2 January 2018
*
Resigned 30 May 2018
PARAGON CARE — FINANCIAL REPORT 2017 / 18 43
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
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
2018
Cents
5.4
5.4
2017
Cents
6.2
6.2
10,950,556
10,174,761
10,950,556
10,174,761
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
203,113,038
164,137,722
Weighted average number of ordinary shares used as the denominator in calculating diluted earnings per share
203,113,038
164,137,722
(e) Dividends per share (cents per share)
Final dividend for the year ended 30 June 2017 (2017: 30 June 2016) of 1.9 cents (2017: 1.4 cents) per ordinary share
3,153,342
2,286,931
Interim dividend for the year ended 30 June 2018 (2017: 30 June 2017) of 1.1 cents (2017: 1.1 cents) per ordinary share
2,982,262
1,810,565
6,135,604
4,097,496
(f) Franking Credits
Franking credits available for subsequent financial years based on a tax rate of 30%
9,688,713
8,749,714
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
• franking credits that will arise from the payment of the amount of provision for tax at the reporting date
• franking debits that will arise from the payment of dividends recommended by the Board at the reporting date
Note 23 Parent Entity Disclosures
(a) Financial Information
Profit for the Year
Total Comprehensive Income
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Shareholders Equity
Issued Capital
Reserves
Retained Earnings
Total Equity
2018
$
2017
$
(2,132,282)
(2,514,743)
(2,132,282)
(2,514,743)
11,268
15,325
124,042,027
51,746,495
(2,149,826)
(123,014)
(348,610)
(746,808)
155,169,893
74,347,530
(51,713)
-
(31,424,764)
(23,344,379)
123,693,417
51,003,151
PARAGON CARE — FINANCIAL REPORT 2017 / 18
44
44
P A R A G O N C A R E — F I N A N C I A L R E P O R T 2 0 1 7 / 1 8
45
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
Note 23 Parent Entity Disclosures (Continued)
Note 28 Business Combinations
(a) Summary of business combinations during the period:
PARAGON CARE — FINANCIAL REPORT 2017 / 18PARAGON CARE — FINANCIAL REPORT 2017 / 18Note 24 Contingent LiabilitiesSince the last annual reporting date, there have been no material changes of any contingent liabilities or contingent assets. The Group has bank guarantees outstanding totaling $1,070,787 (2017 $717,166)Note 25 Subsequent EventsOn 5 July 2018 the company purchased Lovell Surgical Pty Ltd for a $1 million cash payment. The business manufactures surgical kits which are sold by distributors including Insight Surgical Pty Ltd (a wholly owned subsidiary of Paragon Care Limited) to hospitals, day surgeries and other medical facilities across Australia. Lovell has manufacturing plants located in Melbourne operated by 40 staff; at the date of acquisition Lovell had net assets in excess of $700,000 and was operating at breakeven. The vendors of Lovell may be paid further consideration in September 2021 equal to 3.5 times FY21 EBITDA should Lovell earnings in each of the years between FY18 and FY21 exceed the preceding year.On 31 July 2018 the company issued 2,056,256 ordinary shares at an issue price of $0.7650 as part consideration for the acquisition of REM Systems Limited as announced on 8 June 2018.On 27 August 2018 the company announced an agreement to issue 50,418,386 shares at $0.91 to Pioneer Pharma (Australia) Pty Ltd wholly owned subsidiary of China Pioneer Pharma Holdings Limited for consideration of $45,880,731. The shares will be allotted on 14 September 2018.No other matters or circumstances have arisen since the year ended 30 June 2018 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. Note 26 CommitmentsLease CommitmentsThe group leases various offices under non-cancellable operating leases expiring within one to eight years. The leases have various terms, escalation clauses and renewal rights. On renewal the terms of the leases are renegotiated.Note 27 Segment ReportingThe consolidated entity operates within one operating segment only - Medical Equipment. The Medical Equipment segment supplies 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 reporting segments.20182017$$Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:Within one year3,453,155 1,645,983 Later than one year but not later than five years9,563,232 5,123,994Later than five years3,594,408 857,25116,610,795 7,627,228b) GuaranteesThe Company and its controlled entities, as listed in note 20(a), are party to a deed of cross guarantee under which each company guarantees the debts of the others.The parent entity has also given unsecured guarantees in respect of:(i) Finance leases of subsidiaries amounting to $nil (2017 — $nil)c) Other CommitmentsThe Company has no commitments to acquire property, plant and equipment.d) Contingent LiabilitiesThe parent entity did not have any contingent liabilities as at 30 June 2018.Vendor Payables20182017$$Vendor Payable from acquisitions during the year8,598,9777,828,362Vendor Payable from prior period acquisitions695,6699,037,517Total Vendor Payables9,294,64616,865,879Current Vendor Payables1,201,3489,583,517Non-current Vendor Payables8,093,2987,282,3629,294,64616,865,879REM SystemsImmulabImmunoLabgearSurgical Specialties Medtech SolutionsAnaequip MedicalInsight Surgical MedtekTotal$$$$$$$$$$Purchase Consideration - cash 53,059,844 6,614,372 1,905,885 5,753,573 24,887,665 2,554,600 1,820,064 5,302,500 649,558 102,548,061 Purchase Consideration - contingent 4,804,561 - - 1,162,777 2,125,960 - - 505,679 - 8,598,977 Purchase Consideration - shares 9,711,590 - - - 6,396,920 - 460,000 - 50,000 16,618,510 67,575,995 6,614,372 1,905,885 6,916,350 33,410,545 2,554,600 2,280,064 5,808,179 699,558 127,765,548 Net Working Capital 22,899,502 2,977,632 589,026 687,568 2,110,684 (85,688) 360,240 1,044,276 207,887 30,791,127 Identifiable Intangible - Contract 2,493,016 - - - - - - - - 2,493,016 Plant and Equipment 3,697,953 - 132,469 74,162 3,277,016 - 176,267 93,946 142,777 7,594,590 Employee Entitlements (415,186) (759,889) (257,466) (93,603) (261,057) - (120,486) (45,065) (62,634) (2,015,386)Deferred Tax Asset 176,979 227,967 77,240 28,081 111,935 - 36,146 13,519 18,790 690,657 Goodwill on consolidation 38,723,731 4,168,662 1,364,616 6,220,143 28,171,966 2,640,288 1,827,897 4,701,503 392,738 88,211,545 67,575,995 6,614,372 1,905,885 6,916,351 33,410,544 2,554,600 2,280,064 5,808,179 699,558 127,765,549Reconciliation to Cash flow:Consideration of Purchase 67,575,995 6,614,372 1,905,885 6,916,350 33,410,545 2,554,600 2,280,064 5,808,179 699,558 127,765,548 Conditional Payment (4,804,561) - - (1,162,777) (2,125,960) - - (505,679) - (8,598,977)Equity Funding (9,711,590) - - - (6,396,920) - (460,000) - (50,000) (16,618,510)Net Outflow of cash 53,059,844 6,614,372 1,905,885 5,753,573 24,887,665 2,554,600 1,820,064 5,302,500 649,558 102,548,061 46
Note 28 Business Combinations (Continued)
REM Systems
On the 8 June 2018 the Company acquired 100% of the shares in REM Systems Limited a medical distribution
company based in New Zealand. It is the leading supplier of medical and surgical products/consumables
to hospitals and specialists in Australasia. Paragon now has a platform for a direct to market strategy for
the New Zealand health and aged care sectors. Paragon has inherited a highly skilled and experienced
management team.
(a) The vendors are entitled to a payment of 4.5 times the EBITDA growth from 2017 in 2019 and 2020.
The payments are calculated on the 12 months trading to 31 March 2020 and 2021. Any payment made
in respect of FY20 is deducted from any amount payable in FY21. The payment is uncapped. The
contingent consideration was estimated by calculating the present value of the future expected cashflows.
The likely range is anticipated to be between $3.8 and $5.8 million
Impact of acquisition on the results of the Group
As the acquisition of REM Systems Limited occurred on 8 June 2018 the revenue and profit of the Group for the
year ended 30 June 2018 reflects trading for 8 June to 30 June 2018 of the acquired business.
AASB 3 Business Combinations requires disclosure of revenue and profit and loss of the acquired entity
from date of acquisition, and disclosure of revenue and profit and loss of the consolidated entity for the
current reporting period as though the acquisition date for all business combinations had been as of 1 July
2017. Management has determined that this is impracticable after consideration of all relevant factors in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
Provisional amounts
As the acquisition has only recently occurred the numbers presented for Net working capital, Plant and
equipment, Employee Entitlements, Deferred Tax Asset and Goodwill on consolidation, including the estimate
of vendor earnout are presented as provisional amounts pending the completion of the fair valuation of assets
acquired and forecasting of earnings for Financial year 2018.
PARAGON CARE — FINANCIAL REPORT 2017 / 18$Purchase considerationCash and Cash Equivalents53,059,844Vendor Earnout Estimate4,804,561Ordinary Shares in PCG 12,656,256 @ $0.76739,711,59067,575,995Fair value and carrying value of net assets acquiredNet working Capital22,899,502Plant and Equipment3,697,953Identifiable Intangible – Contract2,493,016Employee Entitlements (415,186)Deferred Tax Asset176,979Goodwill on Consolidation38,723,73167,575,995Reconciliation to cashflowConsideration of Purchase 67,575,995Conditional Payments due in May 2020 and 2021 (a)(4,804,561)Equity Funding(9,711,590)Net outflow of cash53,059,844Notes to and forming part of the Financial Statements ContinuedFor the year ended 30 June 201846FINANCIAL REPORT 2017 / 18
47
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47
Note 28 Business Combinations (Continued)
Immuno Pty Ltd
On the 24 May 2018 the Company acquired 100% of the shares in Immuno Pty Ltd a Supplier of advanced
Pathology equipment, reagents and software for customers who include major hospitals, Government and
private pathology labs, medical research centres and larger medical practices in Australia and New Zealand.
Paragon has inherited a highly skilled and experienced management team.
Impact of acquisition on the results of the Group
As the acquisition of Immuno Pty Ltd occurred on 24 May 2018 the revenue and profit of the Group for the year
ended 30 June 2018 reflects trading for 24 May to 30 June 2018 of the acquired business.
AASB 3 Business Combinations requires disclosure of revenue and profit and loss of the acquired entity
from date of acquisition, and disclosure of revenue and profit and loss of the consolidated entity for the
current reporting period as though the acquisition date for all business combinations had been as of 1 July
2017. Management has determined that this is impracticable after consideration of all relevant factors in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
Provisional amounts
As the acquisition has only recently occurred the numbers presented for Net working capital, Plant and
equipment, Employee Entitlements, Deferred Tax Asset and Goodwill on consolidation, including the estimate
of vendor earnout are presented as provisional amounts pending the completion of the fair valuation of assets
acquired and forecasting of earnings for Financial year 2018.
PARAGON CARE — FINANCIAL REPORT 2017 / 18$Purchase considerationCash and Cash Equivalents1,905,8851,905,885Fair value and carrying value of net assets acquiredNet working Capital589,026Plant and Equipment132,469Identifiable Intangible-Employee Entitlements(257,466)Deferred Tax Asset77,240Goodwill on Consolidation1,364,6161,905,885Reconciliation to cashflowConsideration of Purchase1,905,885Net outflow of Cash1,905,885Notes to and forming part of the Financial Statements ContinuedFor the year ended 30 June 2018 48
Note 28 Business Combinations (Continued)
Immulab Pty Ltd
On the 9 April 2018 the Company acquired 100% of CSL Immunohaematology business (renamed Immulab
Pty Ltd) a Supplier of vital reagent red blood cell products used in pathology laboratories across Australia
and New Zealand. It is the leading supplier of vital reagent red blood cell products to laboratories, hospitals
and specialists in Australia and New Zealand. Paragon has inherited a highly skilled and experienced
management team.
Impact of acquisition on the results of the Group
As the acquisition of 100% of CSL Immunohaematology business occurred on 9 April 2018 the revenue and
profit of the Group for the year ended 30 June 2018 reflects trading for 9 April to 30 June 2018 of the acquired
business.
AASB 3 Business Combinations requires disclosure of revenue and profit and loss of the acquired entity
from date of acquisition, and disclosure of revenue and profit and loss of the consolidated entity for the
current reporting period as though the acquisition date for all business combinations had been as of 1 July
2017. Management has determined that this is impracticable after consideration of all relevant factors in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
Provisional amounts
As the acquisition has only recently occurred the numbers presented for Net working capital, Plant and
equipment, Employee Entitlements, Deferred Tax Asset and Goodwill on consolidation, including the estimate
of vendor earnout are presented as provisional amounts pending the completion of the fair valuation of assets
acquired and forecasting of earnings for Financial year 2018.
PARAGON CARE — FINANCIAL REPORT 2017 / 18$Purchase considerationCash and Cash Equivalents6,614,3726,614,372Fair value and carrying value of net assets acquiredNet Working Capital2,977,632Employee Entitlements (759,889)Deferred Tax Asset227,967Goodwill on Consolidation4,168,6626,614,372Reconciliation to cashflowConsideration of Purchase 6,614,372Net outflow of Cash6,614,372Notes to and forming part of the Financial Statements ContinuedFor the year ended 30 June 201848FINANCIAL REPORT 2017 / 18 49
P A R A G O N C A R E — F I N AN C I A L R E P O R T 2 0 1 7 / 1 8
49
Note 28 Business Combinations (Continued)
Labgear Pty Ltd
On the 15 May 2018 the Company acquired 100% of the shares in Labgear Pty Ltd a medical distribution
company based in Queensland. It is the leading supplier of scientific products including equipment,
consumables and technical service with a national presence. Paragon now has a platform for a direct
to market strategy for the Queensland. Paragon Care has inherited a highly skilled and experienced
management team.
(a) The vendors are entitled to a payment of 4.5 times the EBITDA FY19 less the initial purchase price.
The payment is uncapped. The contingent consideration was estimated by calculating the present value
of the future expected cashflows. The likely range is anticipated to be between $700,000 and $1.4 million
Impact of acquisition on the results of the Group
As the acquisition of 100% of shares in Labgear Pty Ltd occurred on 15 May 2018 the revenue and profit of the
Group for the year ended 30 June 2018 reflects trading for 15 May to 30 June 2018 of the acquired business.
AASB 3 Business Combinations requires disclosure of revenue and profit and loss of the acquired entity
from date of acquisition, and disclosure of revenue and profit and loss of the consolidated entity for the
current reporting period as though the acquisition date for all business combinations had been as of 1 July
2017. Management has determined that this is impracticable after consideration of all relevant factors in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
Provisional amounts
As the acquisition has only recently occurred the numbers presented for Net working capital, Plant and
equipment, Employee Entitlements, Deferred Tax Asset and Goodwill on consolidation, including the estimate
of vendor earnout are presented as provisional amounts pending the completion of the fair valuation of assets
acquired and forecasting of earnings for Financial year 2018.
PARAGON CARE — FINANCIAL REPORT 2017 / 18$Purchase considerationCash and Cash Equivalents5,753,573Vendor Earnout Estimate1,162,7776,916,350Fair value and carrying value of net assets acquiredNet Working Capital687,568Plant and Equipment74,162Employee Entitlements (93,603)Deferred Tax Asset28,081Goodwill on Consolidation6,220,1436,916,350Reconciliation to cashflowConsideration of Purchase 6,916,350Conditional Payment due Sept 2020 (a)(1,162,777)Net outflow of cash5,753,573Notes to and forming part of the Financial Statements ContinuedFor the year ended 30 June 2018
50
Note 28 Business Combinations (Continued)
Surgical Specialties Pty Ltd
On the 28 February 2018 the Company acquired 100% of the shares in Surgical Specialties Group a distributor
of surgical medical devices to the Australian and New Zealand market, based in Sydney. It is the leading
distributors in Orthopaedic, Pain Management and Infection Prevention sectors. Paragon now has a
platform strong foundation in the Orthopaedic, Pain Management and Infection Prevention sectors of the
rapidly growing medical device market in both Australia and New Zealand. Paragon Care has inherited a
highly skilled and experienced management team.
(a) The vendors are entitled to a payment of 4.5 times the EBITDA growth between CY18 and CY19.
The payments are calculated on the 12 months trading to 31 Dec 2019 and 2020. Any payment
made in respect of 2019 is deducted from any amount payable in 2020. The total payment is uncapped.
The contingent consideration was estimated by calculating the present value of the future expected
cashflows. The likely range is anticipated to be between $1.1 and $3.1 million
Impact of acquisition on the results of the Group
As the acquisition of 100% of shares in Surgical Specialties Group occurred on 28 February 2018 the revenue
and profit of the Group for the year ended 30 June 2018 reflects trading for 28 February to 30 June 2018 of the
acquired business.
AASB 3 Business Combinations requires disclosure of revenue and profit and loss of the acquired entity
from date of acquisition, and disclosure of revenue and profit and loss of the consolidated entity for the
current reporting period as though the acquisition date for all business combinations had been as of 1 July
2017. Management has determined that this is impracticable after consideration of all relevant factors in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
Provisional amounts
As the acquisition has only recently occurred the numbers presented for Net working capital, Plant and
equipment, Employee Entitlements, Deferred Tax Asset and Goodwill on consolidation, including the estimate
of vendor earnout are presented as provisional amounts pending the completion of the fair valuation of assets
acquired and forecasting of earnings for Financial year 2018.
PARAGON CARE — FINANCIAL REPORT 2017 / 1850FINANCIAL REPORT 2017 / 18$Purchase considerationCash and Cash Equivalents24,887,665Vendor Earnout Estimate2,125,960Ordinary Shares in PCG 8,823,338@ $0.7256,396,92033,410,545Fair value and carrying value of net assets acquiredNet Working Capital2,110,684Plant and Equipment3,277,016Employee Entitlements (261,057)Deferred Tax Asset111,935Goodwill on Consolidation28,171,96633,410,545Reconciliation to cashflowConsideration of Purchase 33,410,545Conditional Payment due March 2020 and 2021 (a)(2,125,960)Equity Funding(6,396,920)Net Outflow of Cash24,887,665Notes to and forming part of the Financial Statements ContinuedFor the year ended 30 June 2018
51
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51
Note 28 Business Combinations (Continued)
Medtech Solutions Pty Ltd
On the 15 January 2018 the Company acquired 100% of the shares in Medtech Solutions as a “Third Party”
Medical Engineering company servicing multi-vendor, multi-modality equipment of varying technical
complexity, based in NSW. This business is highly complementary to Paragon’s existing service offerings
under the branding of Paragon Service & Technology.
Impact of acquisition on the results of the Group
As the acquisition of 100% of shares in Medtech Solution on 15 January 2018 the revenue and profit of
the Group for the year ended 30 June 2018 reflects trading for 15 January to 30 June 2018 of the acquired
business.
AASB 3 Business Combinations requires disclosure of revenue and profit and loss of the acquired entity
from date of acquisition, and disclosure of revenue and profit and loss of the consolidated entity for the
current reporting period as though the acquisition date for all business combinations had been as of 1 July
2017. Management has determined that this is impracticable after consideration of all relevant factors in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
PARAGON CARE — FINANCIAL REPORT 2017 / 18$Purchase considerationCash and Cash Equivalents2,554,6002,554,600Fair value and carrying value of net assets acquiredNet Working Capital(85,688)Goodwill on Consolidation2,640,2882,554,600Reconciliation to cashflowConsideration of Purchase 2,554,600Net Outflow of Cash2,554,600Notes to and forming part of the Financial Statements ContinuedFor the year ended 30 June 2018 52
Note 28 Business Combinations (Continued)
Anaequip Medical Pty Ltd
On the 26 January 2018 the Company acquired 100% of the shares in Anaequip Medical, a multi-agency
distributor of medical products based in South Australia. Anaequip has strong long-standing relationships
with Australian medical suppliers and distributes to a wide range of South Australian healthcare facilities
in the acute, aged care, allied health and laboratory sectors. Paragon now has increasing its geographic
reach through complimentary acquisitions and organic growth. Paragon Care has inherited a highly
skilled and experienced management team.
Impact of acquisition on the results of the Group
As the acquisition of 100% of shares in Anaequip Medical on 26 January 2018 the revenue and profit of
the Group for the year ended 30 June 2018 reflects trading for 26 January to 30 June 2018 of the acquired
business.
AASB 3 Business Combinations requires disclosure of revenue and profit and loss of the acquired entity
from date of acquisition, and disclosure of revenue and profit and loss of the consolidated entity for the
current reporting period as though the acquisition date for all business combinations had been as of 1 July
2017. Management has determined that this is impracticable after consideration of all relevant factors in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
Provisional amounts
As the acquisition has only recently occurred the numbers presented for Net working capital, Plant and
equipment, Employee Entitlements, Deferred Tax Asset and Goodwill on consolidation, including the estimate
of vendor earnout are presented as provisional amounts pending the completion of the fair valuation of assets
acquired and forecasting of earnings for Financial year 2018.
PARAGON CARE — FINANCIAL REPORT 2017 / 1852FINANCIAL REPORT 2017 / 18$Purchase considerationCash and Cash Equivalents1,820,064Ordinary Shares in PCG 550,898@ $0.835460,0002,280,064Fair value and carrying value of net assets acquiredNet Working Capital360,240Plant and Equipment176,267Employee Entitlements (120,486)Deferred Tax Asset36,146Goodwill on Consolidation1,827,8972,280,064Reconciliation to cashflowConsideration of Purchase 2,280,064Equity Funding(460,000)Net Outflow of Cash1,820,064Notes to and forming part of the Financial Statements ContinuedFor the year ended 30 June 2018 53
P A R A G O N C A R E — F I N A N C I A L R E P O R T 2 0 1 7 / 1 8
53
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
Note 28 Business Combinations (Continued)
Insight Surgical Pty Ltd
On the 22 December 2017 the Company acquired 100% of the shares in Insight Surgical Pty Ltd,a leading
supplier of ophthalmic products servicing customers Australia-wide. Insight Surgical offers a highly
complementary portfolio to Paragon’s existing business, Designs for Vision. Paragon Care has inherited a
highly skilled and experienced management team.
(a) The vendors are entitled to a payment of 3.5 times the EBITDA growth between FY17 and FY18.
The payment is uncapped. The contingent consideration was estimated by calculating the present value
of future expected cashflows.
Impact of acquisition on the results of the Group
As the acquisition of 100% of shares in Insight Surgical Pty Ltd on 22 December 2017 the revenue and profit
of the Group for the year ended 30 June 2018 reflects trading for 22 December to 30 June 2018 of the acquired
business.
AASB 3 Business Combinations requires disclosure of revenue and profit and loss of the acquired entity
from date of acquisition, and disclosure of revenue and profit and loss of the consolidated entity for the
current reporting period as though the acquisition date for all business combinations had been as of 1 July
2017. Management has determined that this is impracticable after consideration of all relevant factors in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
Provisional amounts
As the acquisition has only recently occurred the numbers presented for Net working capital, Plant and
equipment, Employee Entitlements, Deferred Tax Asset and Goodwill on consolidation, including the estimate
of vendor earnout are presented as provisional amounts pending the completion of the fair valuation of assets
acquired and forecasting of earnings for Financial year 2018.
PARAGON CARE — FINANCIAL REPORT 2017 / 18$Purchase considerationCash and Cash Equivalents5,302,500Vendor Earnout Estimate505,6795,808,179Fair value and carrying value of net assets acquiredNet Working Capital1,044,276Plant and Equipment93,946Employee Entitlements (45,065)Deferred Tax Asset13,519Goodwill on Consolidation4,701,5035,808,179Reconciliation to cashflowConsideration of Purchase 5,808,179Conditional Payment due September 2018(505,679)Net Outflow of Cash5,302,500
54
Note 28 Business Combinations (Continued)
Medtek Pty Ltd
On the 14 August 2017 the Company acquired 100% of the Medtek Pty Ltd, Medtek focuses on the Far North
Queensland region and specialises in providing high-quality biomedical engineering services and preventative
maintenance to the Medical, Scientific, Aged Care and Allied Health clientele in the region. Paragon now has
increasing penetrate the region with direct representation, expand its service and maintenance offering and
establish a sales gateway for the balance of its product portfolio. Paragon Care has inherited a highly skilled
and experienced management team.
Impact of acquisition on the results of the Group
As the acquisition of 100% of Medtek Pty Ltd, on 14 August 2017 the revenue and profit of the Group for the
year ended 30 June 2018 reflects trading for 14 August to 30 June 2018 of the acquired business.
AASB 3 Business Combinations requires disclosure of revenue and profit and loss of the acquired entity
from date of acquisition, and disclosure of revenue and profit and loss of the consolidated entity for the
current reporting period as though the acquisition date for all business combinations had been as of 1 July
2017. Management has determined that this is impracticable after consideration of all relevant factors in
accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
PARAGON CARE — FINANCIAL REPORT 2017 / 1854FINANCIAL REPORT 2017 / 18$Purchase considerationCash and Cash Equivalents649,558Ordinary Shares in PCG 55,432 @ $0.90550,000699,558Fair value and carrying value of net assets acquiredNet Working Capital207,887Plant and Equipment142,777Employee Entitlements (62,634)Deferred Tax Asset18,790Goodwill on Consolidation392,739699,558Reconciliation to cashflowConsideration of purchase 699,558Equity Funding(50,000)Net Outflow of Cash649,558Notes to and forming part of the Financial Statements ContinuedFor the year ended 30 June 2018 55
Notes to and forming part of the Financial Statements Continued
For the year ended 30 June 2018
Note 28 Business Combinations (Continued)
During the year ended 30 Jun 2018, the numbers presented for Net working capital, Plant and equipment, Employee Entitlements, Deferred Tax
Asset and Goodwill on consolidation, including the estimated of vendor earn out presented as provisional amounts for the business combinations of
MIDAS Software Solutions and Electro Medical Group as at 30 June 2017 were finalised following completion of the fair valuation of assets acquired
and forecasting of earnings for earn out purposes.
In July 2017, the provisional fair value of assets and liabilities acquired for Midas Software Solutions were finalised resulting in a reduction of
goodwill in respect of this acquisition of $2,514,844. This reduction reflects a reassessment of the conditional vendor payments.
In October 2017, the provisional fair value of assets and liabilities acquired for Electro Medical Groups were finalised resulting in a increase of
goodwill in respect of this acquisition of $23,166 and a corresponding increase in the Purchase Consideration - cash.
(c) Vendor Conditional Payable write-back
During the year ending 30 June 2018 the conditional payments on the earn outs for Western Biomedical and Designs for Vision finalised in during
the year ended 30 June 2017 were paid to the respective vendors totaling $9,583,817 in cash $9,159,436 and in shares $424,380. The impact was a
reduction to the vendor earnout payable, resulting in a write back of $268,637 in the prior year.
In June 2018, the conditional payments on the earn outs for Midas Software Solutions and Electro Medical Group were finalised with the respective
vendors. The amounts agreed to be paid to the respective vendors was different to the contingent consideration estimated in the final acquisition
accounting. Electro Medical Groups final earnout was $695,669 and Midas Software Solutions has no final earnout due. Total final earnout payables
due of the two entities is $695,669. The impact was a reduction of the vendor earnout payable, resulting in a writeback of $4,072,517. Refer other
income Note 4.
Note 29 Deed of Cross Guarantee
All entities of the consolidated entity, as listed in note 20(a), are party to a deed of cross guarantee under which each company guarantees the
debts of the others.
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements and directors’ report
under Instrument 2016/785 (as amended) issued by the Australian Securities and Investments Commission (‘ASIC’). The above companies represent
a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties to the deed of cross guarantee that are controlled by Paragon
Care Limited, they also represent the ‘Extended Closed Group’.
The Consolidated Statement of Profit or Loss and Other Comprehensive Income on page 17 and Consolidated Statement of Financial Position on
page 18 are the Consolidated Statement of Profit or Loss and Other Comprehensive Income and Consolidated Statement of Financial Position of
the ‘Closed Group’.
PARAGON CARE — FINANCIAL REPORT 2017 / 18MIDAS Software SolutionsElectro Medical GroupTotal$$$Purchase Consideration - cash - 3,464,1043,464,104Purchase Consideration - contingent1,974,8602,792,6584,767,518Purchase Consideration - shares1,904,459740,5532,645,0123,879,3196,997,31610,876,635Net Working Capital(30,000)417,298387,298Identifiable Intangible - Software952,230 - 952,230Plant and Equipment5,000 173,541,65 178,542Employee Entitlements(66,092)(199,748)(265,840)Deferred Tax Asset19,82859,92479,752Goodwill on consolidation2,998,3546,546,3009,544,6533,879,3196,997,31610,876,635Reconciliation to Cash flow:Consideration of Purchase3,879,3196,997,31610,876,635Conditional Payment (1,974,860)(2,792,658)(4,767,518)Equity Funding(1,904,459)(740,553)(2,645,012)Net Outflow of cash - 3,464,1043,464,104
56
Directors’
Declaration
For the year ended 30 June 2018
In the Directors’ opinion:
a) The financial statements and notes set out on pages 16 to 55 are in accordance with the Corporations Act
2001, including;
(i) Complying with Accounting Standards, the Corporation 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 2018 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.
Shane Tanner
Chairman
27 August 2018
PARAGON CARE — FINANCIAL REPORT 2017 / 18
57
Auditor’s
Report
PARAGON CARE — FINANCIAL REPORT 2017 / 18 58
Independent Audit Report
For the year ended 30 June 2018
PARAGON CARE — FINANCIAL REPORT 2017 / 18 THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation RSM Australia Partners Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199 www.rsm.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PARAGON CARE LIMITED Opinion We have audited the financial report of Paragon Care Limited, which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration of 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.. In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 59
Independent Audit Report Continued
For the year ended 30 June 2018
PARAGON CARE — FINANCIAL REPORT 2017 / 18 Key Audit Matters (Continued.) Key Audit Matter How our audit addressed this matter Accounting for Business Combinations Refer to Note 28 in the financial statements During the year, the consolidated entity completed a number of acquisitions as described in Note 28 of the consolidated financial statements. The consolidated entity has determined these acquisitions to be business combinations for which the purchase price includes contingent consideration. The purchase price is allocated between acquired assets and liabilities (including identified intangible assets), at their respective fair values and goodwill on consolidation of $88.2 million. This was considered a key audit matter as the accounting for the transactions is complex and involves significant judgements in applying the accounting standards. This includes the recognition and valuation of consideration paid, including contingent consideration, the identification and valuation of intangible assets, and the determination of the fair value of the tangible assets acquired. Our procedures to assess the accounting treatment of the acquisition included: • Obtaining the share purchase agreements and other associated documents and ensuring that the transactions had been accounted for in compliance with AASB 3 Business Combinations. • Testing the initial consideration to the signed purchase agreements and to bank statements; • Assessing the appropriateness of the fair values of the transactions including evaluating the recognition of the contingent consideration included in the purchase price to determine a final adjustment within the measurement period; • Assessing the forecasts used for determining the contingent consideration and comparing these against actual performance where available; • Assessing the consolidated entity’s determination of the fair value of the remaining assets and liabilities, having regard to the completeness of assets and liabilities identified, and the reasonableness of any underlying assumptions in their respective valuations, including useful lives of the intangible and tangible assets acquired; and • Reviewing the disclosures in Note 28 to the financial statements in order to assess compliance with the disclosure requirements of AASB 3. Impairment of Goodwill Refer to Note 13 in the financial statementsThe consolidated entity has goodwill of $179.2 million relating to its numerous acquisitions in recent years. This was considered a Key Audit Matter due to the materiality of the goodwill balance, and because the directors’ assessment of the ‘value in use’ of the cash generating unit (“CGU”) involves judgements about the future underlying cash flows of the business and the discount rates applied to it. For the year ended 30 June 2018 management have performed an impairment assessment over the goodwill balance by: • calculating the value in use for the CGU using a discounted cash flow model. This model used cash flows (revenues, expenses and capital expenditure) for the CGU for 5 years, with a terminal growth rate applied to the 5th year. The cash flows were then discounted to net present value using the Company’s weighted average cost of capital (WACC); and • comparing the resulting value in use of the CGU to their respective book values. Our audit procedures in relation to management’s impairment assessment involved the assistance of our Corporate Finance team where required, and included: • Assessing management’s determination that the goodwill should be allocated to a single CGU based on the nature of the Group’s business and the manner in which results are monitored and reported; • Assessing the valuation methodology used; • Challenging the reasonableness of key assumptions, including the cash flow projections, exchange rates, discount rates, and sensitivities used; and • Checking the mathematical accuracy of the cash flow model, and reconciling input data to supporting evidence, such as approved budgets and considering the reasonableness of these budgets. 60
Independent Audit Report Continued
For the year ended 30 June 2018
PARAGON CARE — FINANCIAL REPORT 2017 / 18 Key Audit Matters (Continued.) Key Audit Matter How our audit addressed this matter Impairment of Goodwill (Continued.) Refer to Note 13 in the financial statementsManagement also performed a sensitivity analysis over the value in use calculations, by varying the assumptions used (growth rates, terminal growth rate and WACC) to assess the impact on the valuations. Management have concluded there is no impairment of the carrying value of Goodwill. Inventory Valuation Refer to Note 9 in the financial statementsThe consolidated entity’s inventory balance, as disclosed in Note 9, consists primarily of finished goods of various medical equipment held for distribution. Inventory is valued at the lower of cost or net realisable value. The assessment of the net realisable value of inventory requires a significant degree of management judgment. It includes assumptions concerning the provision for obsolescence, as well as future market conditions based on changing customer needs and market trends. On the basis of the factors set out above, the valuation of inventory was considered to be a key audit matter. Our audit procedures in relation to the existence and valuation of inventory included: • Evaluating management assumptions and estimates applied to the provision for obsolescence through analysis of inventory ageing and historical sales levels by inventory product from the date the product was purchased in conjunction with assessing the quantity of products; • Assessing the company’s application of its policy for determining the provision for obsolescence; • Performing analytical procedures in respect of inventory holdings and inventory turnover; and • Testing the sales prices of inventory to ensure inventory is not being sold at less than cost. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2018, but does not include the financial report and the auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors 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 gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. 61
Independent Audit Report Continued
For the year ended 30 June 2018
PARAGON CARE — FINANCIAL REPORT 2017 / 18 Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description forms part of our auditor's report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2018. In our opinion, the Remuneration Report of Paragon Care Limited, for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001. Responsibilities 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. RSM AUSTRALIA PARTNERS P A RANSOM Partner Dated: 27 August 2018 Melbourne, Victoria 62
Shareholder
Information
PARAGON CARE — FINANCIAL REPORT 2017 / 18 63
Shareholder Information
For the year ended 30 June 2018
The shareholders information set out below was applicable as at 30 July 2018.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Number of Units
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
Total Holders
PGC
919
1,584
896
1,857
205
5,461
(b) Equity Security Holders
Twenty largest quoted equity security holders:
Ordinary shares
Ordinary Shares
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
ARGO INVESTMENTS LIMITED
JMT INVESTMENT GROUP VIC PTY LTD
NEGRONI HOLDINGS PTY LTD
JOHN RADLEY & SHIRLEY SCHOLLUM & PAUL SCHOLLUM
GRILLS INVESTMENTS PTY LTD
SHEMOZEL PTY LTD
LORA FALLS PTY LTD
BRENT MICHAEL STEWART & MICHELLE JANE STEWART
SHIRLEY MAY SCHOLLUM
JOHN KEITH RADLEY & PAUL ANDREW SCHOLLUM
MR BRIAN DUNCAN WILSHER
BMSN PTY LTD
POSSE INVESTMENT HOLDINGS PTY LIMITED
UBS NOMINEES PTY LTD
Total Top 20 PGC Shareholders
Balance of Register
Grand Total
Units
37,974,827
26,874,180
16,874,344
11,030,805
9,378,661
7,961,528
6,304,156
10,559,006
4,235,191
3,950,899
3,773,585
3,642,351
3,000,000
2,823,466
2,601,820
2,120,000
1,927,281
1,764,664
1,720,000
1,715,219
160,231,983
123,415,947
283,647,930
% of Issued Shares
13.4
9.5
5.9
3.9
3.3
2.8
2.2
3.7
1.5
1.4
1.3
1.3
1.1
1.0
0.9
0.7
0.7
0.6
0.6
0.6
56.5
43.5
100.0
PARAGON CARE — FINANCIAL REPORT 2017 / 18 64
Shareholder information Continued
For the year ended 30 June 2018
(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
The voting rights attaching to each class of equity securities are set out below:
Name
Karst Peak Capital Limited and Adam Gregory Leitzes
TOTAL SUBSTANTIAL SHAREHOLDERS
Total PGC Shares
Units
24,036,171
24,036,171
283,647,930
% of Issued
Ordinary Shares
8.5
8.5
(e) Corporate Governance Statement
In accordance with ASX Listing Rule 4.10.3, the Company’s 2018 Corporate Governance Statement can be
found on its website at www.paragoncare.com.au/corporate-governance-statement/
PARAGON CARE — FINANCIAL REPORT 2017 / 18 65
PARAGON CARE — FINANCIAL REPORT 2017 / 18 paragoncare.com.au
PARAGON CARE ANNUAL REPORT 2018