Interim Report for half year ended 31 December 2016

EBOS GROUP LIMITED

INTERIM REPORT
FOR THE SIX MONTHS ENDED
31 DECEMBER 2016

EBOS GROUP LIMITED
INTERIM REPORT 2017



CONTENTS Page


Summary of Consolidated Financial Highlights 1


Shareholder Calendar 1


Auditor’s Review Report 2


Condensed Consolidated Income Statement 3


Condensed Consolidated Statement of Comprehensive Income 4


Condensed Consolidated Statement of Changes in Equity 5


Condensed Consolidated Balance Sheet 7


Condensed Consolidated Cash Flow Statement 8


Notes to the Condensed Consolidated Interim Financial Statements 9


Directory 18

1

EBOS GROUP LIMITED
INTERIM REPORT 2017
SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS



Six months
31 Dec 16
$’000
(Unaudited)
Six months
31 Dec 15
$’000
(Unaudited)
Year ended
30 Jun 16
$’000
(Audited)

Revenue 3,960,204 3,379,749 7,101,455

Earnings before net finance costs, tax expense, depreciation and
amortisation (EBITDA)

119,868

113,725

225,475

Earnings before interest and tax expense (EBIT) 107,534 101,419 200,785

Profit before income tax expense 98,602 91,744 180,715

Profit for the period 69,269 64,170 126,997

Profit for the period attributable to owners of the Company 68,785 64,170 126,997

Equity attributable to owners of the Company 1,108,189 1,070,248 1,087,277

Earnings per share 45.4c 42.5c 84.0c

Interim dividend per share 30.0c 26.0c 26.0c

Net interest bearing debt to net interest bearing debt plus equity 20.3% 26.2% 18.5%








SHAREHOLDER CALENDAR

Release of half year result 22 February 2017
Interim dividend record date 17 March 2017
Interim dividend payable 7 April 2017
Release of full year result 24 August 2017
Annual General Meeting 17 October 2017

2



INDEPENDENT REVIEW REPORT TO THE SHAREHOLDERS OF EBOS GROUP LIMITED

We have reviewed the condensed consolidated interim financial statements of EBOS Group Limited and its subsidiaries (‘the Group’) which
comprise the condensed consolidated balance sheet as at 31 December 2016, and the condensed consolidated income statement,
condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the six months ended on
that date, and a summary of significant accounting policies and other explanatory information on pages 3 to 16.

This report is made solely to the Group’s shareholders, as a body. Our review has been undertaken so that we might state to the Group’s
shareholders those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Group’s shareholders as a body, for our engagement, for this
report, or for the opinions we have formed.

Board of Directors’ Responsibilities
The Board of Directors are responsible on behalf of the Group for the preparation and fair presentation of the condensed consolidated
interim financial statements, in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting and for such
internal control as the Board of Directors determine is necessary to enable the preparation and fair presentation of the condensed
consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Our Responsibilities
Our responsibility is to express a conclusion on the condensed consolidated interim financial statements based on our review. We
conducted our review in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity
(‘NZ SRE 2410’). NZ SRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the
condensed consolidated interim financial statements, taken as a whole, are not prepared, in all material respects, in accordance with NZ
IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting. As the auditor of EBOS Group Limited, NZ SRE 2410 requires that
we comply with the ethical requirements relevant to the audit of the annual financial statements.

A review of the condensed consolidated interim financial statements in accordance with NZ SRE 2410 is a limited assurance engagement.
The auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International
Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on those financial statements.

Other than in our capacity as auditor and the provision of due diligence, taxation advisory services and information technology services, we
have no relationship with or interests in EBOS Group Limited or its subsidiaries. These services have not impaired our independence as
auditor of the Group.

Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial
statements of the Group do not present fairly, in all material respects, the financial position of the Group as at 31 December 2016 and its
financial performance and cash flows for the six months ended on that date in accordance with NZ IAS 34 Interim Financial Reporting and
IAS 34 Interim Financial Reporting.





Chartered Accountants
21 February 2017
Christchurch, New Zealand




Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and
their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not
provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms

3

EBOS GROUP LIMITED
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 31 December 2016





Notes
Six months
31 Dec 16
$’000
(Unaudited)
Six months
31 Dec 15
$’000
(Unaudited)
Year ended
30 Jun 16
$’000
(Audited)


Revenue
2(a) 3,960,204 3,379,749 7,101,455


Income from associates
2(b) 1,948 1,852 3,823


Profit before depreciation, amortisation, net finance
costs and income tax expense

119,868

113,725

225,475
Depreciation
2(b) (6,519) (6,416) (12,933)
Amortisation of finite life intangibles
2(b) (5,815) (5,890) (11,757)
Profit before net finance costs and income tax expense
107,534 101,419 200,785
Finance income
2(b) 1,219 1,404 2,503
Finance costs
2(b) (10,151) (11,079) (22,573)
Net finance costs
2(b) (8,932) (9,675) (20,070)
Profit before income tax expense
2(b) 98,602 91,744 180,715
Income tax expense
(29,333) (27,574) (53,718)
Profit for the period
69,269 64,170 126,997


Profit for the period attributable to:

Owners of the Company
68,785 64,170 126,997
Non-controlling interests
484 - -

69,269 64,170 126,997

Earnings per share

Basic (cents per share)
45.4 42.5 84.0
Diluted (cents per share)
45.4 42.5 84.0

4

EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2016


Six months
31 Dec 16
$’000
(Unaudited)
Six months
31 Dec 15
$’000
(Unaudited)
Year ended
30 Jun 16
$’000
(Audited)


Profit for the period
69,269 64,170 126,997


Other comprehensive income

Items that may be reclassified subsequently to profit or loss:

Cash flow hedge gains/(losses)
5,074 (1,615) (4,017)
Related income tax
(1,470) 452 1,283
Translation of foreign operations
(2,270) (14,000) (18,885)
Total comprehensive income net of tax
70,603 49,007 105,378


Total comprehensive income for the period is attributable to:

Owners of the Company
70,119 49,007 105,378
Non-controlling interests
484 - -

70,603 49,007 105,378

5

EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2016


Notes
Share
capital
$’000

Share based
payments
reserve
$’000
Foreign
currency
translation
reserve
$’000
Retained
earnings
$’000




Cash flow
hedge reserve
$’000

Non-
controlling
interests
$’000
Total
$’000

Six months ended
31 December 2015 (unaudited):

Opening balance 880,628 - (17,876) 189,595 (1,319) - 1,051,028
Profit for the period - - - 64,170 - - 64,170
Other comprehensive income for
the period, net of tax
-

- (14,000) - (1,163)

- (15,163)
Payment of dividends 4 - - - (37,672) - - (37,672)
Dividends re-invested 3 7,885 - - - - - 7,885

Balance at 31 December 2015 888,513 - (31,876) 216,093 (2,482) - 1,070,248


Year ended
30 June 2016 (audited):




Opening balance 880,628 - (17,876) 189,595 (1,319) - 1,051,028
Profit for the year - - - 126,997 - - 126,997
Other comprehensive income for
the year, net of tax
-

- (18,885) - (2,734)

- (21,619)
Payment of dividends 4 - - - (77,014) - - (77,014)
Dividends re-invested 3 7,885 - - - - - 7,885

Balance at 30 June 2016 888,513 - (36,761) 239,578 (4,053) - 1,087,277

6




EBOS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
For the six months ended 31 December 2016


Notes
Share
capital
$’000
Share based
payments
reserve
$’000

Foreign
currency
translation
reserve
$’000
Retained
earnings
$’000




Cash flow
hedge reserve
$’000

Non-
controlling
interests
$’000
Total
$’000

Six months ended
31 December 2016 (unaudited):






Opening balance 888,513 - (36,761) 239,578 (4,053) - 1,087,277
Profit for the period - - - 68,785 - 484 69,269
Other comprehensive income for
the period, net of tax
-

- (2,270) -

3,604

- 1,334
Payment of dividends 4 - - - (49,372) - - (49,372)
Arising on acquisition of
subsidiaries
-

- - -

-

20,303 20,303
Share based payments - 165 - - - - 165
Effect of exchange rate
fluctuations
-

- - -

-

(412) (412)

Balance at 31 December 2016 888,513 165 (39,031) 258,991 (449) 20,375 1,128,564

7

EBOS GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEET
As at 31 December 2016




Notes
31 Dec 16
$’000
(Unaudited)
31 Dec 15
$’000
(Unaudited)
30 Jun 16
$’000
(Audited)
Current assets
Cash and cash equivalents

175,679

115,810

120,251
Trade and other receivables 1,134,832 869,559 1,320,387
Prepayments 9,093 6,671 8,234
Inventories 596,174 548,776 578,513
Current tax refundable

83

88

83
Other financial assets – derivatives
8
576

468

-
Total current assets 1,916,437 1,541,372 2,027,468

Non-current assets






Property, plant and equipment 106,914 102,884 97,973
Capital work in progress 8,303 - 6,494
Prepayments 209 330 234
Deferred tax assets

43,730

44,547

47,043
Goodwill 859,858 828,922 829,163
Indefinite life intangibles 107,316 92,058 91,147
Finite life intangibles 56,263 61,779 55,341
Investment in associates

34,480

35,576

36,778
Other financial assets

-

-

1,255
Total non-current assets 1,217,073 1,166,096 1,165,428
Total assets

3,133,510

2,707,468

3,192,896

Current liabilities
Trade and other payables 1,424,184 1,028,647 1,611,611
Finance leases

118 540 143
Bank loans
7
188,866 307,970 106,976
Current tax payable 12,862 13,577 18,203
Employee benefits 34,134 29,368 35,598
Other financial liabilities – derivatives 8 4,154 6,638 8,652
Total current liabilities

1,664,318 1,386,740 1,781,183

Non-current liabilities
Bank loans
7
274,778 186,458 260,672
Trade and other payables 14,297 10,324 12,926
Deferred tax liabilities 46,622 48,936 46,120
Finance leases - 109 36
Employee benefits

4,931 4,653 4,682
Total non-current liabilities 340,628 250,480 324,436
Total liabilities 2,004,946 1,637,220 2,105,619
Net assets

1,128,564 1,070,248 1,087,277

Equity
Share capital 3 888,513 888,513 888,513
Share based payments reserve

165 - -
Foreign currency translation reserve (39,031) (31,876) (36,761)
Retained earnings 258,991 216,093 239,578
Cash flow hedge reserve (449) (2,482) (4,053)
Equity attributable to owners of the company

1,108,189 1,070,248 1,087,277
Non-controlling interests 20,375 - -
Total equity

1,128,564 1,070,248 1,087,277

8


EBOS GROUP LIMITED
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 December 2016





Notes
Six months
31 Dec 16
$’000
(Unaudited)
Six months
31 Dec 15
$’000
(Unaudited)
Year ended
30 Jun 16
$’000
(Audited)


Cash flows from operating activities

Receipts from customers
4,146,399 3,280,499 6,536,472
Interest received
1,219 1,404 2,503
Dividends received from associates
682 590 1,113
Payments to suppliers and employees
(4,053,068) (3,195,047) (6,238,864)
Taxes paid
(37,218) (29,812) (54,529)
Interest paid
(10,151) (11,079) (22,573)
Net cash inflow from operating activities
5 47,863 46,555 224,122


Cash flows from investing activities

Sale of property, plant & equipment
45 5,046 5,209
Purchase of property, plant & equipment
(13,471) (5,853) (9,771)
Payments for capital work in progress
(1,852) - (6,494)
Payments for intangible assets
(670) (958) (1,354)
Acquisition of associates
- (1,107) (1,107)
Acquisition of subsidiaries
(11,961) (89,457) (89,724)
Investment in other financial assets
- - (1,255)
Net cash (outflow) from investing activities
(27,909) (92,329) (104,496)


Cash flows from financing activities

Proceeds from issue of shares
3 - 7,885 7,885
Proceeds from borrowings
85,848 84,429 -
Repayment of borrowings
- - (36,061)
Dividends paid to equity holders of parent
4 (49,372) (37,672) (77,014)
Net cash inflow/(outflow) from financing activities
36,476 54,642 (105,190)


Net increase in cash held
56,430 8,868 14,436
Effect of exchange rate fluctuations on cash held during
the period

(1,002)

(2,579)

(3,706)
Net cash and cash equivalents at beginning of period
120,251 109,521 109,521
Net cash and cash equivalents at end of period
175,679 115,810 120,251

9


EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 31 December 2016

1. FINANCIAL STATEMENTS

These unaudited condensed consolidated interim financial statements have been prepared in accordance with Generally Accepted
Accounting Practice (“GAAP”). They comply with the New Zealand Equivalent to International Accounting Standard 34 (NZ IAS 34)
“Interim Financial Reporting” and International Accounting Standard IAS 34, as applicable for profit orientated entities.
During the period the Group recognised a non-controlling interest in a subsidiary acquired. The fair value of the non-controlling
interest was measured as the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Aside from
this new policy the same accounting policies and methods of computation are applied in the interim financial statements as were
applied in the financial statements for the year ended 30 June 2016. These financial statements should be read in conjunction with
the financial statements and related notes included in the Group’s Annual Report for the year ended 30 June 2016. The information
is presented in thousands of New Zealand dollars unless otherwise stated.

2. PROFIT FROM OPERATIONS


Six months
31 Dec 16
$’000
(Unaudited)
Six months
31 Dec 15
$’000
(Unaudited)
Year ended
30 Jun 16
$’000
(Audited)

(a)
Revenue



Revenue from the sale of goods

3,890,309 3,326,984 6,989,949

Revenue from the rendering of services

69,895 52,765 111,506

3,960,204

3,379,749

7,101,455




(b)
Profit before income tax expense



Profit before income tax has been arrived at after
crediting/(charging) the following gains and losses
from operations:







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

2

(191)

(274)

Change in fair value of derivative financial
instruments

- (770) (770)

Income from associates

1,948

1,852

3,823







Profit before income tax has been arrived at after
(charging) the following expenses by nature:







Cost of sales

(3,593,238) (3,044,051) (6,418,523)

Write-down of inventory

(2,842) (2,012) (6,392)


Net finance costs:



Finance income

1,219 1,404 2,503

Finance costs

(10,151)

(11,079)

(22,573)

Total net finance costs

(8,932) (9,675) (20,070)





Impairment on trade & other receivables

(465)

(861)

(2,423)

Depreciation of property, plant & equipment

(6,519)

(6,416)

(12,933)

Amortisation of finite life intangibles

(5,815) (5,890) (11,757)

Operating lease rental expenses

(16,038) (14,766) (30,352)

Donations

(17) (81) (101)

Employee benefit expense

(119,025)

(106,251)

(220,960)

Defined contribution plan expense

(6,448) (6,299) (12,635)

Other expenses

(104,213) (92,594) (187,373)

Total expenses, net of interest revenue

(3,863,552) (3,288,896) (6,923,519)

Profit before income tax expense

98,602

91,744

180,715

10

EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2016

3. SHARE CAPITAL


Six months
31 Dec 16
Six months
31 Dec 15
Year ended
30 Jun 16
No.
’000
$’000
(Unaudited)
No.
’000
$’000
(Unaudited)
No.
’000
$’000
(Audited)


Fully paid ordinary
shares












Balance at beginning
of period

151,314 888,513 150,687 880,628 150,687 880,628













Dividend reinvested –












October 2015

- - 627 7,885 627 7,885



Shares issued –
September 2016

600 - - - - -





151,914

888,513

151,314

888,513

151,314

888,513

4. DIVIDENDS

Six months
31 Dec 16
Six months
31 Dec 15
Year ended
30 Jun 16
Cents per
share
$’000
(Unaudited)
Cents per
share
$’000
(Unaudited)
Cents per
share
$’000
(Audited)

Recognised amounts

Fully paid ordinary shares
Final – prior year

32.5 49,372 25.0 37,672 25.0 37,672
Interim – current year

- - - - 26.0 39,342


32.5 49,372 25.0 37,672 51.0 77,014



Unrecognised amounts


Final dividend

- - - - 32.5 49,372
Interim dividend

30.0 45,574 26.0 39,342 - -


30.0 45,574 26.0 39,342 32.5 49,372


The Board approved an interim dividend of 30.0 cents per share on 21 February 2017. The record date for the dividend is 17 March
2017 and the dividend will be paid on 7 April 2017.

11

EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2016


5. NOTES TO THE CASH FLOW STATEMENT


Six months
31 Dec 16
$’000
(Unaudited)
Six months
31 Dec 15
$’000
(Unaudited)
Year ended
30 Jun 16
$’000
(Audited)

Reconciliation of profit for the period with cash
flows from operating activities



Profit for the period

69,269 64,170 126,997



Add/(less) non-cash items:


Depreciation of property, plant and equipment

6,519

6,416

12,933
Amortisation of finite life intangibles

5,815

5,890

11,757
(Gain)/loss on sale of property, plant & equipment

(2) 191 274
Income from associates

(1,948) (1,852) (3,823)
Expense recognised in respect of share based
payments

165 - -
Loss on derivative financial instruments

- 770 770
Deferred tax

(1,816) 212 (4,819)


8,733 11,627 17,092







Movements in working capital:


Trade and other receivables

185,555 (65,720) (516,548)
Prepayments

(834) 1,373 (94)
Inventories

(17,661) (30,504) (60,241)
Current tax refundable/(payable)

(5,341) (3,413) 1,218
Trade and other payables

(186,056) 76,672 662,238
Provision for employee benefits

(1,215) (4,378) 1,880
Foreign currency translation of opening working
capital balances

(3,316) (14,249) (18,400)


(28,868) (40,219) 70,053



Working capital items relating to investing activities

682 1,701 6,706
Working capital items acquired on acquisition

(1,953) 9,276 3,274



Net cash inflow from operating activities

47,863 46,555 224,122

12

EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2016


6. SEGMENT INFORMATION

(a) Products and services from which reportable segments derive their revenues
The Group’s reportable segments under NZ IFRS 8 are as follows:

Healthcare: Incorporates the sale of human healthcare products in a range of sectors, own brands, retail healthcare and
wholesale activities.

Animal care: Incorporates the sale of animal care products in a range of sectors, own brands, retail and wholesale activities.

Corporate: Includes net financing costs and central administration expenses that have not been allocated to the healthcare or
animal care segments.

(b) Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:


Six months
31 Dec 16
$’000
(Unaudited)
Six months
31 Dec 15
$’000
(Unaudited)
Year ended
30 Jun 16
$’000
(Audited)

Revenue from external customers

Healthcare
3,744,059 3,169,276 6,686,415
Animal care
216,145 210,473 415,040

3,960,204 3,379,749 7,101,455
Segment result (EBITDA)

Healthcare
106,659 99,755 195,028
Animal care
21,115 19,587 42,308
Corporate
(7,906) (5,617) (11,861)

119,868 113,725 225,475
Segment expenses

Healthcare:

Depreciation of property, plant and equipment
(5,970) (5,766) (11,691)
Amortisation of finite life intangibles
(4,591) (4,683) (9,283)
Income tax expense
(28,909) (26,855) (52,607)

(39,470) (37,304) (73,581)
Animal care:

Depreciation of property, plant and equipment
(549) (650) (1,242)
Amortisation of finite life intangibles
(1,224) (1,207) (2,474)
Income tax expense
(5,317) (4,958) (10,803)

(7,090) (6,815) (14,519)
Corporate:

Net finance costs
(8,932) (9,675) (20,070)
Income tax credit
4,893 4,239 9,692

(4,039) (5,436) (10,378)
Profit for the period

Healthcare
67,189 62,451 121,447
Animal care
14,025 12,772 27,789
Corporate
(11,945) (11,053) (22,239)

69,269 64,170 126,997

‘

13

EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2016


6. SEGMENT INFORMATION (Continued)

The accounting policies of the reportable segments are consistent with the Group’s accounting policies. Segment result
represents profit before depreciation, amortisation, net finance costs and tax. This is the measure reported to the chief
operating decision maker for the purposes of resource allocation and assessment of segment performance.

(c) Segment assets
The following balance sheet and cash flow items are not allocated to operating segments as they are not reported to the
chief operating decision maker at a segment level:
- Assets
- Liabilities
- Capital expenditure

(d) Revenues from major products and services
The Group’s major products and services are transacted the same as its reportable segments i.e. healthcare, animal care and
corporate.

(e) Geographical information
The Group operates in two principal geographical areas; New Zealand (country of domicile) and Australia.

The Group’s revenue from external customers by geographical location (of the reportable segment) and information about its
segment assets (non-current assets excluding financial instruments, investments in associates and deferred tax assets) are
detailed below:

Six months
31 Dec 16
$’000
(Unaudited)
Six months
31 Dec 15
$’000
(Unaudited)
Year ended
30 Jun 16
$’000
(Audited)

Revenue from external customers

New Zealand
761,251 737,225 1,468,037
Australia
3,198,953 2,642,524 5,633,418

3,960,204 3,379,749 7,101,455

Non-current assets

New Zealand
286,278 286,558 286,171
Australia
852,585 799,415 794,181

1,138,863 1,085,973 1,080,352

(f) Information about major customers
No revenues from transactions with a single customer amount to 10% or more of the Group’s revenues (December 2015: Nil,
June 2016: Nil).


7. BANK FACILITY AND BORROWINGS

The Group fully complies with and operates within the financial covenants under the arrangements with its bankers. At 31
December 2016 the Group had unutilised term and revolving cash advance facilities of $86.3m (December 2015: $87.7m, June
2016: $85.3m).
The Group also has a trade debtor securitisation facility of which $255.1m was unutilised at 31 December 2016 (December 2015:
$182.7m, June 2016: $337.3m).

14

EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2016

7. BANK FACILITY AND BORROWINGS (Continued)

As at 31 December 2016 the maturity profile of the Group’s term debt, working capital and securitisation facilities was:


Facility Amount Maturity
Term debt facilities $2.7m Within the next 12 months
Working capital facility $85.0m 1-2 years
Securitisation facility $441.3m 1-2 years
Term debt facilities $92.4m 1-2 years
Term debt facilities $99.9m 2-3 years
Term debt facilities $31.9m 3-4 years
Term debt facilities $51.9m 4+ years



8. FINANCIAL INSTRUMENTS

The Group enters into foreign currency forward exchange contracts to hedge trading transactions, including anticipated
transactions, denominated in foreign currencies and uses interest rate swaps to manage cash flow interest rate risk.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is
designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the
nature of the hedge relationship. The Group designates certain derivatives as cashflow hedges of highly probable forecast
transactions.




Fair value of derivative financial instruments
Six months
31 Dec 16
$’000
(Unaudited)
Six months
31 Dec 15
$’000
(Unaudited)
Year ended
30 Jun 16
$’000
(Audited)

Other financial assets – derivatives:

Foreign currency forward exchange contracts
576 468 -

576 468 -


Other financial liabilities – derivatives:

Foreign currency forward exchange contracts
(132) (1,103) (1,475)
Interest rate swaps
(4,022) (5,535) (7,177)

(4,154) (6,638) (8,652)

The Group has categorised these derivatives, both financial assets and financial liabilities, as Level 2 under the fair value
hierarchy contained within NZ IFRS 13.

The fair value of foreign currency forward exchange contracts is determined using a discounted cashflow valuation. Key inputs
include observable forward exchange rates, at the measurement date, with the resulting value discounted back to present
values.

Interest rate swaps are valued using a discounted cashflow valuation. Key inputs for the valuation of interest rate swaps are the
estimated future cash flows based on observable yield curves at the end of the reporting period, discounted at a rate that
reflects the credit risk of the various counterparties.

There have been no changes in valuation techniques used for either foreign currency forward exchange contracts or interest rate
swaps during the current reporting period.

There were no transfers between fair value hierarchy levels during either the current or prior periods.

15

EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2016

9. ACQUISITION OF SUBSIDIARIES
The following material acquisitions of subsidiaries took place during the period.
On 31 October 2016 the Group acquired the Terry White Group (‘TWG’). EBOS Group transferred its Chemmart business assets,
investment in VIM Health Pty Limited, and cash of $19.1m to the acquiree, in return for a controlling equity interest in TWG
(50.000002%). The transaction also permitted TWG to make a $13.8m payment to the TWG shareholders that were in place
immediately preceding the acquisition by EBOS. Details of the acquisition are as follows:

Assets and liabilities acquired:

Carrying Value
$’000
(Unaudited)
Fair value
adjustment
$’000
(Unaudited)
Fair value on
acquisition
$’000
(Unaudited)
Current assets

Cash and cash equivalents

5,442 - 5,442
Trade and other receivables

9,321 - 9,321
Prepayments

1,148 - 1,148
Inventories

7,596 (136)
1
7,460



Non-current assets


Property, plant and equipment

2,930 - 2,930
Deferred tax assets

1,078 1,030
2
2,108
Indefinite life intangibles

1,918 14,858
3
16,776
Finite life intangibles

5,280 1,012
3
6,292



Current liabilities


Trade and other payables

(11,407) (16,039)
4
(27,446)
Current tax payable

(1,632) - (1,632)
Employee benefits

(1,914) - (1,914)



Non-current liabilities


Bank loans

(14,542) (299)
5
(14,841)
Trade and other payables

(674) (707)
4
(1,381)
Deferred tax liabilities

(108) (6,072)
2
(6,180)
Loans to related parties

(1,278) - (1,278)
Employee benefits

(350) - (350)
Net assets acquired

2,808 (6,353) (3,545)



Goodwill on acquisition

27,559



Less disposal of associate

(3,711)
Consideration:


Non-controlling interest arising on acquisition 20,303

Cash and cash equivalents acquired on acquisition 5,442
Net cash inflow from acquisition 5,442




1. To recognise the fair value of inventory acquired on acquisition.
2. To recognise the deferred tax impact of fair value adjustments.
3. To recognise the fair value of intangible assets (including brands, finite life and indefinite life assets) acquired on acquisition.
4. To recognise additional liabilities identified on acquisition.
5. To recognise the fair value of borrowings acquired on acquisition.

Due to the timing of the acquisition the above figures have not yet been able to be finalised and are currently considered
provisional.

16


EBOS GROUP LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
For the six months ended 31 December 2016

9. ACQUISITION OF SUBSIDIARIES (Continued)

Goodwill arising on acquisition
Goodwill arose on the acquisition of the business operations of TWG because the cost of acquisition included a control premium
paid. In addition, goodwill resulted from the consideration paid for the benefit of future expected cash flows above the current
fair value of the assets acquired and the expected synergies and future market benefits expected to be obtained. These benefits
are not recognised separately from goodwill as the expected future economic benefits arising cannot be reliably measured and
they do not meet the definition of identifiable intangible assets.

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

Impact of the acquisition on the results of the Group for the period ended 31 December 2016
TWG contributed $967,000 to the Group profit for the period. Group revenue for the period includes $23,702,000 in respect of
TWG. Had the TWG acquisition been effective at 1 July 2016, the revenue of the Group from continuing operations would have
been $3,990,025,000 and the profit for the period from continuing operations would have been $70,039,000.

Transaction costs incurred on the acquisition of TWG were $2,389,000 for the period.


10. EVENTS AFTER BALANCE DATE

Subsequent to 31 December 2016, the Board approved an interim dividend to shareholders. For further details please refer to
Note 4.

17




EBOS GROUP LIMITED
DIRECTORY

CORPORATE HEAD OFFICE AUSTRALIA HEAD OFFICE
108 Wrights Road Level 7, 737 Bourke Street
PO Box 411 Docklands
Christchurch 8024 Melbourne 3008
New Zealand Australia
Telephone +64 3 338 0999 Telephone +61 3 9918 5555
E-mail: ebos@ebosgroup.com
Internet: www.ebosgroup.com

DIRECTORS
Mark Waller Chairman
Elizabeth Coutts Independent Director
Peter Kraus
Stuart McGregor
Sarah Ottrey Independent Director
Peter Williams


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