EBOS GROUP LIMITED — Annual Report 2015

Aug 25, 2015

Appendix 4E Final Report for the Year Ended 30 June 2015

RESULTS FOR ANNOUNCEMENT TO THE MARKET

The following information is presented in accordance with ASX listing rule 4.3A and should be read in conjunction with the attached EBOS Group Limited Financial Report for the Financial Year Ended 30 June 2015.

1. Details of the reporting period and the previous corresponding period

Current reporting period ‐ the year ended 30 June 2015 Previous corresponding reporting period ‐ the year ended 30 June 2014

This report and the Consolidated Financial Report are presented in New Zealand dollars, the Group’s presentation currency.

2. Results for announcement to the market

Group results (NZD000’s)	30 June 2015 NZD$000 (Audited)	30 June 2014 NZD$000 (Audited)	Change % (actual FX rates)	Change % (constant FX rates)
Revenue	6,068,080	5,757,234	+5.4%	+7.2%
EBITDA	196,695	175,422	+12.1%	+14.2%
Depreciation and amortisation	24,118	22,583	+6.8%	+8.7%
Earnings before interest and tax (EBIT)	172,577	152,839	+12.9%	+15.0%
Profit before tax (PBT)	150,668	125,781	+19.8%	+22.0%
Net profit after tax (NPAT)	105,941	92,069	+15.1%	+16.9%
Basic EPS – (CPS)	70.8	62.8	+12.7%	+14.6%
Net tangible asset backing per ordinary share – ($)	$0.60	$0.59	+1.2%

	Dividends	Amount per security	Franked amount per security to 30% tax rate
	Final dividend payable 16 October 2015 Final dividend – previous corresponding period	25.0c 20.5c	‐ ‐
	Key dates for the 2015 Final Dividend: Ex‐dividend date Record date: DRP participation election date: DRP pricing period: Dividend payment date: 30 September 2015 02 October 2015 [5:00pm NZ Time] 05 October 2015 05 October 2015 to 09 October 2015 (both inclusive) 16 October 2015 Other comments: The final dividend will be imputed to 25% for New Zealand tax resident shareholders, and a supplementarydividendpaid to eligible non‐resident shareholders.

In a presentation change in the current year interest revenue of $2,299,000 (June 2014: $2,819,000) is now included within net finance costs rather than revenue. Comparative information has also been presented on a similar basis for consistency.

For supplementary comments on the Group’s financial results refer to the Results Presentation and Media Release issued 26 August 2015.

3. Consolidated Statement of Comprehensive Income

• Please refer to the Consolidated Statement of Comprehensive Income in the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015.

4. Consolidated Balance Sheet

• Please refer to the Consolidated Balance Sheet in the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015.

5. Consolidated Cash Flow Statement

• Please refer to Consolidated Cash Flow Statement in the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015.

6. Consolidated Statement of Changes in Equity

Please refer to the Consolidated Statement of Changes in Equity in the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015.

7. Dividends Paid

	Amount per	Total Date of
	Share	Amount payment
Paid during the year ended
30 June 2014
Final June 2013	15.0 cents	$21,992,000 22 October 2013
Interim June 2014	20.5 cents	$30,260,000 4 April 2014
	___________
Paid during the year ended
30 June 2015
Final June 2014	20.5 cents	$30,490,000 17 October 2014
Interim June 2015	22.0 cents	$32,941,000 2 April 2015
	_______
Declared in respect of the year
ended 30 June 2015
Final June 2015	25.0 cents	$37,672,000 16 October 2015
	___________

8. Dividend Reinvestment Plan

EBOS operates a dividend reinvestment plan (‘DRP’) for its shareholders. All shares issued under the DRP rank pari passu with existing issued shares. Details of the dividend reinvestment plan can be found on the company’s website www.ebosgroup.com. The last date for the receipt of an election notice for participation in the DRP for the 2015 final dividend is 5 October 2015.

The price of each EBOS share to be issued under the DRP is the volume weighted average sale price (‘VWAP’) in NZD for a share calculated on all price setting trades of shares which take place through the NZSX Main Board over the ‘DRP Pricing Period’.

If no sales of shares occur during the DRP Pricing Period then the VWAP will be deemed to be the sale price for a share on the first price setting trade of shares which takes place after the DRP pricing period. If in the opinion of the EBOS Board, any exceptional or unusual circumstances have artificially affected the VWAP, EBOS may make such adjustment to that price as it considers reasonable.

The EBOS Board has approved a discount of 2.5% to the VWAP for the shares to be issued under the DRP for the 2015 final dividend.

9. Subsidiaries

During the year, on 31 October 2014, the Group acquired 100% of the shares in Blackhawk Premium Pet Care Pty Limited for $64,160,000. Refer to note 24 of the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015 for further details of the acquisition.

The contribution of Blackhawk Premium Pet Care Pty Limited is not considered material in the understanding of the Consolidated Financial Report.

The Group did not lose control of any entities during the current year.

10. Associates and Joint Ventures

Refer to Note 16 of the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015.

The contribution of the Group’s Associates and Joint Ventures is not considered material in the understanding of the Consolidated Financial Report.

11. Other significant information

• Refer to the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015.

12. Foreign Entities

The Consolidated Financial Statements are presented in New Zealand dollars and comply with International Financial Reporting Standards (“IFRS”).

13.

Commentary on the Results for the period

• 13.1 The earnings per security and the nature of any dilution.

• Please refer to Note 26 of the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015.

• 13.2 Returns to shareholders including distributions and buy backs.

• Please refer to Notes 21 and 23 of the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015.

• 13.3 Significant features of operating performance.

• Please refer to the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015 and to the Results Presentation issued on 26 August 2015.

• 13.4 The results of segments that are significant to an understanding of the business as a whole.

• Please refer to Note 29 of the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015.

• 13.5 A discussion of trends in performance.

• Please refer to the attached Consolidated Financial Report for the Financial Year Ended 30 June 2015 and to the Results Presentation issued on 26 August 2015.

• 13.6 Any other factors which have affected the results in the period or which are likely to affect results in the future, including those where the effect could not be quantified.

• Please refer to the Results Announcement and Results Presentation issued on 26 August 2015.

14. Independent Audit Opinion

• The Consolidated Financial Statements included in the Consolidated Financial Report have been audited and the Auditor has given an unmodified opinion.

15. Annual Meeting

The annual meeting will be held as follows:

Place: ‘The Great Hall’, Chateau on the Park, Cnr Deans Avenue & Kilmarnock Street, Riccarton, Christchurch, New Zealand Date: Tuesday, 27 October, 2015 2:00pm Time: Approximate date the annual Friday, 25 September 2015 report will be available:

16. Audit Committee

The entity has a formally constituted Audit and Risk Committee.

EBOS GROUP LIMITED FINANCIAL REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

EBOS GROUP | ANNUAL REPORT 2015

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EBOS GROUP LIMITED FINANCIAL STATEMENTS YEAR ENDED 30 JUNE 2015

FINANCIAL STATEMENTS YEAR ENDED 30 JUNE 2015
CONTENTS	Page
Directors’ Responsibility Statement	3
Independent Auditor’s Report	4
Consolidated Income Statement	5
Consolidated Statement of Comprehensive Income	5
Consolidated Balance Sheet	6
Consolidated Statement of Changes in Equity	7
Consolidated Cash Flow Statement	8
Notes to the Consolidated Financial Statements	9
Additional Stock Exchange Information	48
Directory	50

EBOS GROUP | ANNUAL REPORT 2015

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EBOS GROUP LIMITED DIRECTORS’ RESPONSIBILITY STATEMENT

The Director s of EBOS Gr o up Limited are pleased to present t o sharehold e rs the financial statem e nts for EBO S G roup and it s controlled e ntities (tog e ther the “Group”) for t h e year to 3 0 June 2015.

The Director s are respon s ible for pre s enting fina n cial statem e nts in accor d ance with N ew Zealan d law and generally acc e pted accounting practi c e, which gi v e a true and fair view of the financial position of the Group a s a t 30 June 2015 and the r esults of th e ir operations and cash f l ows for the year ended on that dat e .

The Director s consider th e financial s t atements o f the Group h ave been prepared usi n g accounting policies w hich have been consist e ntly applied and suppor t ed by reas o nable judgements and e stimates an d that all r e levant fina n cial reporti n g and acco u nting stand a rds have b e en followe d .

The Director s believe tha t proper acc o unting rec o rds have been kept whi c h enable with reasonable accuracy, t h e determin a tion of the financial po s ition of the Group and f acilitate co m pliance of the financial statements w ith the Fina n cial Report i ng Act 201 3 .

The Director s consider th a t they hav e taken adequate steps t o safeguard t he assets o f the Group, and to prevent and d etect fraud and other i r regularities. Internal co n trol procedures are als o considere d to be s u fficient to p rovide a re a sonable assurance as to the integrit y and reliability of the fi n ancial statements.

The financial statements a re signed on behalf of the Board by:

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Mark Waller Director

Rick Christie Chairman

25 August 20 1 5

EBOS GROUP | A NNUAL REPORT 2015

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INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF EBOS GROUP LIMITED

Report on the Consolidated Financial Statements

W e have audit e d the accomp a nying consoli d ated financial statements o f EBOS Group Limited and it s subsidiaries ( ‘the Group’) o n p a ges 5 to 47, w hich comprise the consolida t ed balance sh e et as at 30 Ju n e 2015, and t h e consolidate d income state m ent, stateme n t o f comprehensi v e income, st a tement of ch a nges in equit y and cash flo w statement f or the year t h en ended, an d a summary o f significant acco u nting policies a nd other expl a natory inform a tion.

T h is report is made solely to the company’s shareholders, a s a body. Our audit has be e n undertaken so that we m i ght state to t h e c o mpany’s shar e holders those matters we ar e required to s t ate to them in an auditor’s r e port and for n o other purpo s e. To the fullest e x tent permitte d by law, we do not accept o r assume resp o nsibility to anyone other th a n the compan y ’s shareholders as a body, f o r o u r audit work, f or this report, or for the opinions we have f o rmed.

Board of Directors’ Responsibility for the Consolidated Financial Statements

T h e Board of D irectors are r e sponsible for the preparation and fair p r esentation of these consoli d ated financial statements, in a c cordance wit h New Zealand Equivalents to International F inancial Repo r ting Standard s , Internationa l Financial Rep o rting Standar d s a n d generally a c cepted accounting practice in New Zeala n d, and for su c h internal co n trol as the B o ard of Direct o rs determine is n e cessary to en a ble the prep a ration of cons o lidated finan c ial statements that are free f rom material misstatement, whether due t o f r aud or error.

Auditor’s Responsibilities

Our responsibili t y is to expres s an opinion o n these consoli d ated financial statements b a sed on our au d it. We condu c ted our audit i n a c cordance wit h International Standards on A uditing and International St a ndards on Au d iting (New Ze a land). Those s t andards requi r e t h at we compl y with ethical requirements and plan and perform the audit to obtain reasonable assurance ab o ut whether t h e c o nsolidated fin a ncial stateme n ts are free from material mi s statement.

An audit involv e s performing procedures to obtain audit e vidence abou t the amounts and disclosur e s in the cons o lidated financial s t atements. T h e procedures selected depend on the auditor’s judgement, includi n g the assess m ent of the r i sks of material m isstatement o f the consolidated financial s t atements, wh e ther due to f r aud or error. In making thos e risk assessm e nts, the audit o r c o nsiders internal control rele v ant to the entity’s preparation and fair pres e ntation of th e consolidated f inancial state m ents in order t o d e sign audit procedures that are appropri a te in the cir c umstances, b u t not for th e purpose of e xpressing an opinion on t h e e f fectiveness of the entity’s in t ernal control. A n audit also i n cludes evalua t ing the appro p riateness of t h e accounting p olicies used a n d t h e reasonableness of account i ng estimates, a s well as the o v erall presentation of the consolidated fina n cial statement s .

W e believe that the audit evid e nce we have o btained is sufficient and appr o priate to pro v ide a basis for o ur audit opini o n.

Other than in o ur capacity as auditor and the provision of due diligenc e , financial m o delling and in f ormation tec h nology adviso r y a s sistance, we have no relatio n ship with or interests in EBO S Group Limite d or any of its s ubsidiaries. These services h a ve not impair e d o u r independen c e as auditor o f the Company and Group.

Opinion

I n our opinion, t he consolidat e d financial sta t ements on pa g es 5 to 47 pr e sent fairly, in all material re s pects, the fin a ncial position o f E B OS Group Li m ited and its su b sidiaries as at 30 June 2015, and their fina n cial performa n ce and cash fl o ws for the ye a r then ended in a c cordance wit h New Zealand Equivalents to International F inancial Repo r ting Standard s , Internationa l Financial Rep o rting Standar d s a n d generally accepted accounting practice in New Zealand.

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Chartered Accountants 2 5 August 2015 C h ristchurch, N e w Zealand

T h is audit report rel a tes to the consolid a ted financial statements of EBOS Group Limited for the y ear ended 30 Jun e 2015 included on E BOS Group Limite d ’s website. The B o ard of Directors is responsible for the maintenance and i ntegrity of EBOS G r oup Limited’s website. We have not b een engaged to re p ort on the integrity of the EBOS Group Li m ited’s website. We accept no responsibility for any cha n ges that may have occurred to the consolidated financial statements since t hey were initially p resented on the w e bsite. The audit r e port refers only to the consolidated financial statements named above. It d o es not provide an opinion on any other information whi c h may have been h y perlinked to/from these consolidated financial stateme n ts. If readers of thi s report are concer n ed with the inher e nt risks arising fro m electronic data c o mmunication the y s h ould refer to the p u blished hard copy of the audited con s olidated financial s tatements and rel a ted audit report d a ted 25 August 20 1 5 to confirm the in f ormation included in the audited consolidated financial statements presente d on this website. L e gislation in New Z e aland governing t h e preparation and dissemination of fi n ancial statements may differ from legislation in other jurisdictions.

EBOS GROUP | A NNUAL REPORT 2015

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EBOS GROUP LIMITED

CONSOLIDATED INCOME STATEMENT

EBOS GROUP LIMITED CONSOLIDATED INCOME STATEMENT
		2015	2014
For the Financial Year Ended 30 June,2015	Notes	$’000	$’000
Revenue	2 (a)	6,068,080	5,757,234
Income from Associates	2 (b)	2,861	1,567
Profit before depreciation, amortisation,
net finance costs and tax expense		196,695	175,422
Depreciation	2 (b)	(12,108)	(10,173)
Amortisation of finite life intangibles	2(b)	(12,010)	(12,410)
Profit before net finance costs and tax expense		172,577	152,839
Finance income	2 (b)	2,299	2,819
Finance costs	2(b)	(24,208)	(29,877)
Profit before tax expense	2 (b)	150,668	125,781
Tax expense	3	(44,727)	(33,712)
Profit for theyear		105,941	92,069
Earnings per share:
Basic (cents per share)	26	70.8	62.8
Diluted (cents per share)	26	70.8	62.8

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		2015	2014
For the Financial Year Ended 30 June,2015	Notes	$’000	$’000
Profit for the year		105,941	92,069
Other comprehensive income
Items that may be reclassified subsequently to profit
or loss:
Cash flow hedges movement (losses)	22	(2,224)	(2,423)
Related tax benefit to cash flow hedges	22	631	701
Translation of foreign operations	22	11,993	(24,194)
Total comprehensive income net of tax benefit		116,341	66,153

Notes to the financial statements are included on pages 9 to 47.

EBOS GROUP | ANNUAL REPORT 2015

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EBOS GROUP LIMITED CONSOLIDATED BALANCE SHEET

		2015	2014
As at 30 June,2015	Notes	$’000	$’000
Current assets
Cash and cash equivalents		109,521	88,698
Trade and other receivables	6	803,839	699,276
Prepayments	7	7,935	6,748
Inventories	8	518,272	491,624
Current tax refundable	3	88	83
Other financial assets ‐ derivatives	9	2,184	1,442
Total current assets		1,441,839	1,287,871
Non‐current assets
Property, plant and equipment	10	111,599	84,854
Capital work in progress	11	‐	20,872
Prepayments	7	439	54
Deferred tax assets	3	48,284	36,589
Goodwill	12	764,618	720,875
Indefinite life intangibles	13	79,043	56,576
Finite life intangibles	14	69,325	77,502
Investment in associates	16	34,911	24,100
Total non‐current assets		1,108,219	1,021,422
Total assets		2,550,058	2,309,293
Current liabilities
Trade and other payables	18	952,257	821,391
Finance leases	17, 19	153	155
Bank loans	17	153,245	153,334
Current tax payable	3	16,990	14,219
Employee benefits		33,573	28,830
Other financial liabilities ‐ derivatives	20	6,047	3,404
Total current liabilities		1,162,265	1,021,333
Non‐current liabilities
Bank loans	17	272,852	250,826
Trade and other payables	18	10,042	9,778
Deferred tax liabilities	3	48,853	43,407
Finance leases	17, 19	191	680
Employee benefits		4,827	4,230
Total non‐current liabilities		336,765	308,921
Total liabilities		1,499,030	1,330,254
Net assets		1,051,028	979,039
Equity
Share capital	21	880,628	861,549
Foreign currency translation reserve	22	(17,876)	(29,869)
Retained earnings	22	189,595	147,085
Cash flow hedge reserve	22	(1,319)	274
Total equity		1,051,028	979,039

Notes to the financial statements are included on pages 9 to 47.

EBOS GROUP | ANNUAL REPORT 2015

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EBOS GROUP LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

			Foreign
			currency		Cash flow
		Share	translation	Retained	hedge
For the Financial Year Ended		capital	reserve	earnings	reserve	Total
30 June,2015	Notes	$’000	$’000	$’000	$’000	$’000
Balance at 1 July, 2013		201,288	(5,675)	107,268	1,996	304,877
Profit for the year		‐	‐	92,069	‐	92,069
Other comprehensive income for
the year, net of tax benefit		‐	(24,194)	‐	(1,722)	(25,916)
Payment of dividends	23	‐	‐	(52,252)	‐	(52,252)
Dividends re‐invested	21	20,496	‐	‐	‐	20,496
Shares issued under rights issue	21	149,119	‐	‐	‐	149,119
Share issue costs	21	(7,356)	‐	‐	‐	(7,356)
Issue of consideration shares	21	498,147	‐	‐	‐	498,147
Share issue costs	21	(145)	‐	‐	‐	(145)
Balance at 30 June 2014		861,549	(29,869)	147,085	274	979,039
Balance at 1 July, 2014		861,549	(29,869)	147,085	274	979,039
Profit for the year		‐	‐	105,941	‐	105,941
Other comprehensive income for
the year, net of tax benefit		‐	11,993	‐	(1,593)	10,400
Payment of dividends	23	‐	‐	(63,431)	‐	(63,431)
Dividends re‐invested	21	19,079	‐	‐	‐	19,079
Balance at 30 June 2015		880,628	(17,876)	189,595	(1,319)	1,051,028

Notes to the financial statements are included on pages 9 to 47.

EBOS GROUP | ANNUAL REPORT 2015

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EBOS GROUP LIMITED CONSOLIDATED CASH FLOW STATEMENT

		2015	2014
For the Financial Year Ended 30 June,2015	Notes	$’000	$’000
Cash flows from operating activities
Receipts from customers		5,994,123	5,732,731
Interest received		2,299	2,819
Dividends received from associates		301	‐
Payments to suppliers and employees		(5,785,720)	(5,561,884)
Taxes paid		(53,006)	(29,637)
Interestpaid		(24,208)	(29,877)
Net cash inflow from operating activities	25(c)	133,789	114,152
Cash flows from investing activities
Sale of property, plant & equipment		458	1,351
Purchase of property, plant & equipment		(14,977)	(11,725)
Payments for capital work in progress		‐	(20,115)
Payments for intangible assets		(464)	(3,467)
Acquisition of associates	16	(6,710)	(3,520)
Acquisition of subsidiaries	25(a)	(57,414)	(366,853)
Net cash(outflow) from investing activities		(79,107)	(404,329)
Cash flows from financing activities
Proceeds from issue of shares		19,079	162,114
Proceeds from borrowings		23,584	310,327
Repayment of borrowings		(15,161)	(233,136)
Dividendspaid to equityholders ofparent	23	(63,431)	(52,252)
Net cash(outflow)/inflow from financing activities		(35,929)	187,053
Net increase/(decrease) in cash held		18,753	(103,124)
Effect of exchange rate fluctuations on cash held		2,070	(6,192)
Net cash and cash equivalents at the beginning of
theyear		88,698	198,014
Net cash and cash equivalents at the end of theyear		109,521	88,698
Cash and cash equivalents		109,521	88,698

Notes to the financial statements are included on pages 9 to 47.

EBOS GROUP | ANNUAL REPORT 2015

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EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Financial Year ended 30 June, 2015

1. SUMMARY OF ACCOUNTING POLICIES

1.1 STATEMENT OF COMPLIANCE

EBOS Group Limited (“the Company”) is a profit‐oriented company incorporated in New Zealand, registered under the Companies Act 1993 and listed on both the New Zealand and Australian Stock Exchanges.

The Company operates in two business segments, being Healthcare and Animal care. Healthcare incorporates the sale of healthcare products in a range of sectors, own brands, retail healthcare, wholesale activities, and logistics. Animal care incorporates the sale of animal care products in a range of sectors, own brands, retail and wholesale activities.

The Company is a FMA reporting entity for the purposes of the Financial Reporting Act 2013 and the Financial Markets Conduct Act 2013, and its financial statements comply with these Acts.

The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (‘NZ GAAP’). They comply with New Zealand Equivalents to International Financial Reporting Standards (“NZ IFRS”) and other applicable reporting standards as appropriate for profit oriented entities.

The financial statements comply with International Financial Reporting Standards (“IFRS”).

The Group is a Tier 1 for‐profit entity in terms of the External Reporting Board Standard A1: Accounting Standard Framework (For‐ profit Entities Update).

1.2 BASIS OF PREPARATION

The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain financial instruments.

Cost is based on the fair value of the consideration given in exchange for assets.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June, 2015 and the comparative information presented in these financial statements for the year ended 30 June, 2014. In a presentation change in the current year, interest revenue is now included within net finance costs rather than revenue. Comparative information has also been presented on a similar basis for consistency.

The information is presented in thousands of New Zealand dollars.

1.3 CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

In the application of NZ IFRS, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on‐going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of NZ IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.

Critical judgements made by management principally relate to the identification of intangible assets such as brands and customer relationships separately from goodwill, arising on acquisition of a business or subsidiaries and the recognition of revenue on significant contracts subject to renewal where the receipt of cash flows does not match the services provided.

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EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

1.4 KEY SOURCES OF ESTIMATION UNCERTAINTY

Key sources of estimation uncertainty relate to assessment of impairment of goodwill and indefinite life intangibles.

The Group determines whether goodwill and indefinite life intangibles are impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units to which the goodwill and indefinite life intangibles are allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill and indefinite life intangibles are discussed in notes 12 and 13. It is assumed that significant contracts will be rolled over for each period of renewal.

An impairment assessment of goodwill has been conducted in the current year. Management have determined that there is no impairment of any of the cash generating units containing goodwill (refer Note 12).

Determining the recoverable amounts of goodwill and intangible assets requires the estimation of the effects of uncertain future events at balance date. These estimates involve assumptions about risk assessment to cash flows or discount rates used, future changes in salaries and future changes in price affecting other costs.

1.5 SPECIFIC ACCOUNTING POLICIES

The following specific accounting policies have been adopted in the preparation and presentation of the financial statements.

a) Basis of Consolidation

The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the Group, being the Company (the Parent entity) and its subsidiaries as defined in NZ IFRS‐10 ‘Consolidated Financial Statements’ . A list of subsidiaries appears in note 15 to the financial statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method.

The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition‐related costs are recognised in profit or loss as incurred.

Where applicable, the cost of acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant NZ IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.

The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

All significant inter‐company transactions and balances are eliminated on consolidation.

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture or joint operation. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Investments in associates are incorporated in the Group financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the Consolidated Balance Sheet at cost as adjusted for post‐acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long‐term interests that, in substance, form part of the Group’s net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Where necessary, adjustments are made to bring the associates accounting policies into line with those of the Group.

EBOS GROUP | ANNUAL REPORT 2015

10

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

a) Basis of Consolidation (continued)

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. The Group’s goodwill accounting policy is set out below. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss as a bargain purchase gain.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

b) Goodwill

Goodwill arising on the acquisition of the subsidiary is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non‐controlling interest in the acquiree and the fair value of the acquirer’s previously‐held equity interest (if any) in the acquiree over the fair value of the identifiable net assets recognised.

If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non‐controlling interests in the acquiree and the fair value of the acquirer’s previously‐ held equity interests (if any) in the acquiree, the excess is recognised immediately in profit or loss as a bargain purchase gain.

Goodwill is not amortised, but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash‐generating units or groups of cash‐generating units expected to benefit from the synergies of the combination. Cash‐generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. The recoverable amount is the higher of fair value less cost to sell and value in use. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro‐rata on the basis of the carrying amount of each asset in the unit. Any impairment loss is recognised immediately in profit or loss and is not subsequently reversed.

c) Indefinite Life Intangible Assets

Indefinite life intangible assets represent purchased brand names and trademarks and are initially recognised at cost. Such intangible assets are regarded as having indefinite useful lives and they are tested annually for impairment on the same basis as for goodwill.

d) Finite Life Intangible Assets

Finite life intangible assets are recorded at cost less accumulated amortisation. Amortisation is charged on a straight line basis over their estimated useful life. The estimated useful life of finite life intangible assets is 1 to 10 years. The estimated useful life and amortisation period is reviewed at the end of each annual reporting period.

e) Intangible Assets Acquired in a Business Combination

All potential intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair value can be measured reliably.

f) Property, Plant and Equipment

The Group has five classes of Property, plant and equipment:

• Freehold land;

• Buildings;

• Leasehold improvements;

• Plant and equipment; and

• Office equipment, furniture and fittings.

Property, plant and equipment is initially recorded at cost.

EBOS GROUP | ANNUAL REPORT 2015

11

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

f) Property, Plant, and Equipment (continued)

Cost includes the original purchase consideration and those costs directly attributable to bring the item of property, plant and equipment to the location and condition for its intended use.

After recognition as an asset, property, plant and equipment is carried at cost less accumulated depreciation and impairment losses.

When an item of property, plant and equipment is disposed of, any gain or loss is recognised in the Consolidated Income Statement and is calculated as the difference between the sale price and the carrying value of the item.

Depreciation is provided for on a straight line basis on all property, plant and equipment other than freehold land, at depreciation rates calculated to allocate the assets’ cost less estimated residual value, over their estimated useful lives.

Leased assets are depreciated over the shorter of the unexpired period of the lease and the estimated useful life of the assets.

The following useful lives are used in the calculation of depreciation:

• Buildings 20 to 50 years

• Leasehold improvements 2 to 15 years  Plant and equipment 2 to 20 years  Office equipment, furniture and fittings 2 to 10 years

g) Impairment of Assets

At each balance sheet date, the Group reviews the carrying amounts of its non‐current assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash‐generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre‐tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (cash‐generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash‐generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, other than for Goodwill and Indefinite life intangible assets, the carrying amount of the asset (cash‐generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash‐generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately. Impairment losses cannot be reversed for Goodwill and Indefinite life intangible assets.

h) Taxation

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Consolidated Income Statement because it excludes items of income and expense that are taxable or deductible in other years and further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

EBOS GROUP | ANNUAL REPORT 2015

12

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

h) Taxation (continued)

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current tax and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items recognised in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or in determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the business combination.

i) Inventories

Inventories are recognised at the lower of cost, determined on a weighted average basis, and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price in the ordinary course of business, less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

j) Leases

The Group leases certain plant and equipment and land and buildings.

Finance leases, which effectively transfer to the Group substantially all of the risks and benefits incidental to ownership of the leased item, are capitalised at the present value of the minimum lease payments. The leased assets and corresponding liabilities are recognised and the leased assets are depreciated over the period the Group is expected to benefit from their use. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the Consolidated Income Statement.

Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the lease items, are included in the determination of profit or loss in equal instalments over the period of the lease. Lease incentives received are recognised as an integral part of the total lease payments made and are spread on a basis representative of the pattern of benefits expected to be derived from the leased asset.

k) Foreign Currency Translation

Functional and Presentation Currency

The financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”).

The consolidated financial statements are presented in New Zealand dollars, which is the Company’s functional currency and the Group’s presentation currency.

EBOS GROUP | ANNUAL REPORT 2015

13

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

k) Foreign Currency Translation (continued)

Transactions and Balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non‐monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the Consolidated Income Statement for the year.

Foreign Operations

On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing at the reporting date. Income and expense items are translated at the average rates for the period. Exchange differences arising, if any, are recognised in the foreign currency translation reserve, and recognised in profit or loss on disposal of the foreign operation.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date.

l) Goods & Services Tax

Revenues, expenses, liabilities and assets are recognised net of the amount of goods and services tax (GST), except for receivables and payables which are recognised inclusive of GST.

Cash flows are included in the Cash Flow Statement on a net basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

m) Financial Instruments

Financial assets and financial liabilities are recognised on the Group’s Balance Sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial Assets

Financial assets are classified into the following specific categories: “financial assets at fair value through profit or loss” (FVTPL), “held to maturity” investments, “available for sale” (AFS) financial assets and “loans and receivables”. The category depends on the nature and purpose of the financial assets and is determined at initial recognition. The categories used are set out below:

Cash & Cash Equivalents:

Cash and cash equivalents comprise cash on hand and demand deposits, and other short‐term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Financial Assets at Fair Value through Profit and Loss (FVTPL):

Derivative assets are classified as FVTPL unless hedge accounting is applied.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.

Loans and Receivables:

Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Loans and receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in the Consolidated Income Statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Equity Instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

EBOS GROUP | ANNUAL REPORT 2015

14

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

m) Financial Instruments (continued)

Financial Liabilities

Financial liabilities are classified as either financial liabilities at “fair value through profit or loss” (FVTPL) or “other financial liabilities” measured at amortised cost. The classifications used are set out below:

Financial Liabilities at Fair Value through Profit and Loss (FVTPL):

Derivative liabilities are classified as FVTPL unless hedge accounting is applied.

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest paid on the financial liability.

Other Financial Liabilities:

Trade and other payables, including advances from subsidiaries and bank loans, are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest method.

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received plus issue costs associated with the borrowing. After initial recognition, these loans and borrowings are subsequently measured at amortised cost using the effective interest method which allocates the cost through the expected life of the loan or borrowing. Amortised cost is calculated taking into account any issue costs, and any discount or premium on drawdown.

Bank loans are classified as current liabilities (either advances or current portion of term debt) unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Derivative Financial Instruments

The Group enters into foreign currency forward exchange contracts to hedge trading transactions, including anticipated transactions, denominated in foreign currencies and from time to time 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 cash flow hedges of highly probable forecast transactions.

Cash Flow Hedges

At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an on‐going basis, the Group documents whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in cash flows of the hedged items.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other comprehensive income and accumulated as a separate component of equity in the hedge reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non‐financial asset or a non‐financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.

Hedge accounting is discontinued when the Group either revokes the hedging relationship or the hedging instrument expires or is terminated, exercised or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in profit or loss.

n) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of returns, discounts, allowances and GST. Revenue is recognised when it is considered probable that the economic benefits of the transaction will be received. The following specific recognition criteria must be met before revenue is recognised:

EBOS GROUP | ANNUAL REPORT 2015

15

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

n) Revenue Recognition (continued)

Sale of Goods

Sales of goods are recognised when significant risks and rewards of owning the goods are transferred to the buyer, when the revenue (and related costs) can be measured reliably , when it is probable that the economic benefits associated with the transaction will flow to the entity and when management effectively ceases involvement or control.

Rendering of Services

Revenue from services rendered is recognised when it is probable that the economic benefits associated with the transaction will flow to the entity. The stage of completion at balance date is assessed based on the value of services performed to date as a percentage of the total services to be performed.

Interest Income

Interest income is recognised in the income statement as it accrues, using the effective interest method.

Effective Interest Method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period to the carrying amount of the financial asset.

Dividend Income

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

o) Cash Flow Statement

The Cash Flow Statement is prepared exclusive of GST, which is consistent with the method used in the income statement.

Definition of terms used in the cash flow statement:

Operating activities include all transactions and other events that are not investing or financing activities.

Investing activities are those activities relating to the acquisition and disposal of current and non‐current investments and any other non‐current assets.

Financing activities are those activities relating to changes in the equity and debt capital structure of the Group and those activities relating to the cost of servicing the Group’s equity capital.

p) Employee Entitlements

A liability for annual leave and long service leave is accrued and recognised in the consolidated balance sheet. The liability is equal to the present value of the estimated future cash outflows as a result of employee services provided at balance date. Provisions are classified as non‐current only if the Group has a legal entitlement not to make payment within a 12 month period, to the employee in which the obligation has been accrued.

Provisions made in respect of employee benefits expected to be settled within 12 months are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured at the present value of the estimated future cash outflows to be made by the Group in respect of services provided up to reporting date.

EBOS GROUP | ANNUAL REPORT 2015

16

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

q) Segment Reporting

The Group’s operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker (Chief Executive Officer) in order to allocate resources to the segment and to assess its performance.

r) Adoption of New Revised Accounting Standards and Interpretations

No new accounting standards or interpretations have been adopted during the year which has had a material impact on these financial statements.

The Group has not yet fully assessed the impact of NZ IFRS 15 ‘Revenue from Contracts with Customers’ which will be effective from the 2019 financial year.

EBOS GROUP | ANNUAL REPORT 2015

17

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

2. PROFIT FROM OPERATIONS

Notes	2015 $’000 2014 $’000
(a) Revenue Revenue consisted of the following items: Revenue from the sale of goods Revenue from the renderingof services	5,979,980 5,671,996 88,100 85,238
	6,068,080 5,757,234
(b) Profit before tax expense Profit before tax expense has been arrived at after crediting/(charging) the following gains and losses from operations: (Loss) on disposal of property, plant and equipment Change in fair value of derivative financial instruments Share of equity accounted investments 16 Profit before tax expense has been arrived at after crediting/(charging) the following expenses by nature: Cost of sales Write‐down of inventory Net finance costs: Finance income Finance costs	(88) (4) 323 (213) 2,861 1,567 (5,464,445) (5,187,151) (3,483) (3,771) 2,299 2,819 (24,208) (29,877)
Total net finance costs Impairment loss on trade & other receivables Depreciation of property, plant & equipment 10 Amortisation of finite life intangibles 14 Operating lease rental expenses Donations Employee benefit expense Defined contribution plan expense Other expenses	(21,909) (27,058) (1,869) (1,684) (12,108) (10,173) (12,010) (12,410) (27,009) (25,563) (124) (107) (198,695) (195,232) (11,560) (11,141) (167,296) (158,513)
Total expenses	(5,920,508) (5,632,803)
Profit before tax expense	150,668 125,781

EBOS GROUP | ANNUAL REPORT 2015

18

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

3. INCOME TAXES

	2015 $’000 2014 $’000
(a) Tax expense recognised in income statement Tax expense/(credit) comprises: Current tax expense/(credit): Current year Adjustments forprioryears	52,279 39,378 741 700
Deferred tax expense/(credit): Origination and reversal of temporary differences Adjustments forprioryears	53,020 40,078 (4,163) (6,133) (4,130) (233)
	(8,293) (6,366)
Total tax expense	44,727 33,712
The prima facie tax expense on pre‐tax accounting profit from operations reconciles to the tax expense in the financial statements as follows: Profit before tax expense Tax expense calculated at 28% (2014: 28%) Non‐deductible expenses/(non‐assessable income) Effect of different tax rates of subsidiaries operating in other jurisdictions (Over)/under provision of tax expense in previous year Other adjustments	150,668 125,781 42,187 35,219 3,310 (4,031) 2,347 1,944 (3,389) 467 272 113
Total tax expense	44,727 33,712

The tax rates used are principally the corporate tax rates of 28% (2014: 28%) payable by New Zealand and 30% (2014: 30%) payable by Australian corporate entities on taxable profits under tax law in each jurisdiction.

	2015	2014
	$’000	$’000
(b) Current tax assets and liabilities
Current tax assets:
Current tax refundable	88	83
Current tax liabilities:
Current tax payable	16,990	14,219
(c) Deferred tax balance
Deferred tax assets comprise:
Temporary differences	48,284	36,589
Deferred tax liabilities comprise:
Temporarydifferences	(48,853)	(43,407)
	(569)	(6,818)

EBOS GROUP | ANNUAL REPORT 2015

19

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

3. INCOME TAXES CONTINUED

Taxable and deductible temporary differences arise from the following:

			Charged to
		Charged	other		Foreign
	Opening	to	comprehensive		currency	Closing
	balance	income	income	Acquisitions	movements	balance
2015	$’000	$’000	$’000	$’000	$’000	$’000
Gross deferred tax liabilities:
Property, plant and equipment	(1,982)	(2,093)	‐	‐	‐	(4,075)
Provisions	(37)	(181)	‐	‐	(2)	(220)
Other financial assets ‐ derivatives	(267)	(373)	358	‐	‐	(282)
Intangible assets	(41,121)	4,116	‐	(6,380)	(891)	(44,276)
	(43,407)	1,469	358	(6,380)	(893)	(48,853)
Gross deferred tax assets:
Property, plant and equipment	11,242	(912)	‐	‐	543	10,873
Provisions	22,746	3,060	‐	‐	894	26,700
Other financial liabilities – derivatives	1,551	609	273	‐	44	2,477
Intangible assets	‐	4,592	‐	3,071	‐	7,663
Tax losses carried forward	1,050	(525)	‐	‐	46	571
	36,589	6,824	273	3,071	1,527	48,284
Net movement in deferred tax		8,293	631	(3,309)
2014
Gross deferred tax liabilities:
Property, plant and equipment	(1,773)	(209)	‐	‐	‐	(1,982)
Provisions	(9)	(12)	‐	‐	(16)	(37)
Other financial assets ‐ derivatives	(290)	(248)	170	‐	101	(267)
Intangible assets	(46,293)	1,897	‐	‐	3,275	(41,121)
	(48,365)	1,428	170	‐	3,360	(43,407)
Gross deferred tax assets:
Property, plant and equipment	6,211	5,623	‐	‐	(592)	11,242
Provisions	25,180	(334)	‐	‐	(2,100)	22,746
Other financial liabilities – derivatives	1,379	‐	531	‐	(359)	1,551
Tax losses carried forward	1,591	(351)	‐	‐	(190)	1,050
	34,361	4,938	531	‐	(3,241)	36,589
Net movement in deferred tax		6,366	701

	2015	2014
	$’000	$’000
(d) Imputation credit account balances
Imputation credits available directly and indirectly to
shareholders of the parent company:	1,713	(660)

EBOS GROUP | ANNUAL REPORT 2015

20

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

4. KEY MANAGEMENT PERSONNEL COMPENSATION

	2015	2014
	$’000	$’000
Short‐term employee benefits	12,249	12,137
	12,249	12,137

5. REMUNERATION OF AUDITORS

5. REMUNERATION OF AUDITORS
Auditor of the Group
Audit of the financial statements	537	562
Audit related services for review of interim financial statements not
included above	168	177
Due diligence	105	‐
Information technology services	6	47
Financial modelling assistance	61	49
Assurance services for indirect tax compliance	5	17
	882	852

All non‐audit services provided by the Group’s auditors require pre‐approval by the Audit and Risk Committee. Before any non‐audit services are approved, the Audit and Risk Committee must be satisfied that the provision of such services will not have any influence on the independence of the Group’s auditors.

6. TRADE AND OTHER RECEIVABLES

Trade receivables (i)	804,763	703,821
Other receivables	15,948	11,971
Allowance for impairment(ii)	(16,872)	(16,516)
	803,839	699,276

(i) Trade receivables are non‐interest bearing and generally on monthly terms. Interest may be charged on outstanding overdue balances in accordance with the terms and conditions under which goods are supplied.

(ii) Allowance for Impairment
Balance at the beginning of the year	(16,516)	(17,048)
Impairment loss recognised on trade receivables	(1,869)	(1,684)
Amounts written off as uncollectible	2,186	719
Effect of foreign currencyexchange differences	(673)	1,497
	(16,872)	(16,516)

In determining the recoverability of trade and other receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expected liquidation proceeds. The Group does not hold any collateral over these balances. The net carrying amount is considered to approximate its fair value.

EBOS GROUP | ANNUAL REPORT 2015

21

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

6 . TRADE & OTHER RECEIVABLES CONTINUED

	2015 $’000 2014 $’000
(iii) Ageing of impaired trade and other receivables Current 30 ‐ 60 days 60 ‐ 90 days 90 days+	2,746 4,217 2,824 3,040 1,890 1,303 8,506 8,656
	15,966 17,216

(iv) Ageing of past due but not impaired trade and other receivables
Included in the trade and other receivables balance are debtors with a carrying amount of $65.681m (2014: $62.918m) which are
past due at the reporting date for which the Group has not provided any impairment as the amounts are still considered
recoverable.
30 ‐ 60 days	50,105	45,952
60 ‐ 90 days	9,286	6,380
90 days+	6,290	10,586
	65,681	62,918
7. PREPAYMENTS
Current	7,935	6,748
Non current	439	54
	8,374	6,802
8. INVENTORIES
Finished Goods
At cost	518,272	491,624
	518,272	491,624
9. OTHER FINANCIAL ASSETS ‐ DERIVATIVES
At Fair Value:
Foreign currency forward contracts (i)	270	6
Foreign currency forward contracts (ii)	1,914	97
Interest rate swaps(ii)	‐	1,339
	2,184	1,442

(i) Financial asset carried at fair value through profit or loss (“FVTPL”).

(ii) Designated and effective as cash flow hedging instrument carried at fair value.

The Group has categorised these derivatives, both financial assets (as above) and financial liabilities (refer to Note 20), as Level 2 under the fair value hierarchy contained within NZ IFRS 13.

The fair value of forward foreign exchange contracts is determined using a discounted cash flow 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 cash flow valuation. Key inputs for the valuation of interest rate swaps are the estimated future cash flows based on observable yield curves at the end of the reporting period, discounted at a rate that reflects the credit risk of the various counterparties.

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

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

EBOS GROUP | ANNUAL REPORT 2015

22

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

10. PROPERTY, PLANT AND EQUIPMENT

					Office
	Freehold		Leasehold	Plant and	equipment
	land	Buildings	improvements	equipment	furniture &
	at	at	at	at	fittings at
	cost	cost	cost	cost	cost	Total
	$’000	$’000	$’000	$’000	$’000	$’000
Gross carrying amount
Balance at 1 July 2013	30,240	19,294	10,063	34,910	21,708	116,215
Additions	‐	56	555	5,171	2,611	8,393
Disposals	‐	‐	(13)	(2,863)	(5,399)	(8,275)
Net foreign currency exchange
differences	(2,595)	(950)	(783)	(2,489)	(936)	(7,753)
Balance at 30 June 2014	27,645	18,400	9,822	34,729	17,984	108,580
Additions	‐	7	7,381	24,270	4,401	36,059
Disposals	‐	(52)	(977)	(2,921)	(703)	(4,653)
Acquisitions through business
combinations	‐	‐	‐	345	67	412
Reclassification	‐	1,004	‐	‐	(1,004)	‐
Net foreign currency exchange
differences	1,131	415	362	1,225	743	3,876
Balance at 30 June 2015	28,776	19,774	16,588	57,648	21,488	144,274
Accumulated depreciation
Balance at 1 July 2013	‐	(2,637)	(1,573)	(6,681)	(10,193)	(21,084)
Disposals	‐	‐	13	2,458	4,357	6,828
Depreciation expense	‐	(944)	(1,124)	(4,833)	(3,272)	(10,173)
Net foreign currency exchange
differences	‐	25	95	397	186	703
Balance at 30 June 2014	‐	(3,556)	(2,589)	(8,659)	(8,922)	(23,726)
Disposals	‐	52	766	2,586	703	4,107
Depreciation expense	‐	(774)	(1,358)	(6,853)	(3,123)	(12,108)
Reclassification	‐	(871)	‐	‐	871	‐
Net foreign currency exchange
differences	‐	(57)	(120)	(507)	(264)	(948)
Balance at 30 June 2015	‐	(5,206)	(3,301)	(13,433)	(10,735)	(32,675)
Net book value
As at 30 June 2014	27,645	14,844	7,233	26,070	9,062	84,854
As at 30 June 2015	28,776	14,568	13,287	44,215	10,753	111,599
					2015	2014
					$’000	$’000
Aggregate depreciation recognised as an expense during		the year:
Buildings					774	944
Leasehold improvements					1,358	1,124
Plant and equipment					6,853	4,833
Office equipment,furniture & fittings					3,123	3,272
				12,108		10,173

EBOS GROUP | ANNUAL REPORT 2015

23

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

11. CAPITAL WORK IN PROGRESS

	2015	2014
	$’000	$’000
Capital work in progress	‐	20,872

The 2014 capital work in progress related to both a custom built warehouse ($20,058,000) – the cost to complete the project was $4,384,000, and software development ($814,000) – the cost to complete the project was $138,000.

12. GOODWILL

		2015	2014
	Notes	$’000	$’000
Gross carrying amount
Balance at beginning of financial year		720,875	722,158
Recognised from business acquisition during the year	24	43,152	‐
Effects of foreign currencyexchange differences		591	(1,283)
Net book value		764,618	720,875

Allocation of goodwill to cash‐generating units

Goodwill has been allocated for impairment testing purposes to the following cash generating units or groups of cash generating units, representing the lowest level at which management monitors goodwill:

• Australian Hospital, Pharmacy and Primary Healthcare sectors: Healthcare Australia.

• New Zealand Consumer, Hospital, Primary Healthcare, Aged Care and International Product Supplies: Healthcare NZ.

• New Zealand Pharmacy Wholesaler and Logistic Services: Healthcare ‐ Pharmacy/Logistics NZ.

• New Zealand and Australia Animal care sectors: Animal care.

The carrying amount of goodwill allocated to cash‐generating units or groups of cash generating units is as follows:

	2015	2014
	$’000	$’000
Healthcare Australia	503,513	502,627
Healthcare NZ	1,728	1,728
Healthcare – Pharmacy/Logistics NZ	95,043	95,043
Animal care	164,334	121,477
	764,618	720,875

During the year ended 30 June, 2015 management has determined that there is no impairment of any of the cash generating units containing goodwill (2014: Nil).

During the year the Group undertook a reorganisation of its internal reporting structure, combining its Animal care operations acquired from previous acquisitions. As a consequence Goodwill that was previously allocated to its Animal care New Zealand and Australian operations has now been allocated to a combined cash generating unit on a consistent basis with this new structure. Comparative figures have also been restated for comparability purposes.

EBOS GROUP | ANNUAL REPORT 2015

24

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

12. GOODWILL CONTINUED

The recoverable amounts (i.e. higher of value in use and fair value less costs to sell) of those units are determined on the basis of value in use calculations. Management has determined that the recoverable amount calculations are most sensitive to changes in the following assumptions:

Market shares during the assessment period are assessed by management based on average market shares achieved in the period immediately before the start of the budget period, adjusted each year for any anticipated growth.

• Gross margins during the assessment period are estimated by management based on average gross margins achieved before the start of the assessment period, adjusted for expected changes in the business or sector in which the business operates.

Operating costs during the assessment period are estimated by management based on current trends at the start of the assessment period, adjusted for expected changes in the business or sector in which the business operates.

The value in use calculation uses cash flow projections based on financial forecasts approved by management covering a five year period and managements past experience.

Annual growth rates of 1.7% to 7.0% (2014: 0.9% to 4.6%), an allowance of 1.8% to 7.0% (2014: 1.0% to 4.5%) for increases in expenses, and pre‐tax discount rates of 12.6% to 13.7% (2014: 12.7% to 13.7%) have been applied to these projections. Cash flows beyond the five year period have been extrapolated using a 2.5% (2014: 2.0% to 2.5%) growth rate. Management also believes that any reasonable possible change in the key assumptions would not cause the carrying amount of any of the cash generating units to exceed their recoverable amount.

13. INDEFINITE LIFE INTANGIBLES

		Other
	Symbion	Pharmacy	Animal care
	Brands	Brands	Brands	Trademarks	Total
	$’000	$’000	$’000	$’000	$’000
Gross carrying amount
Balance at 1 July 2013	28,561	6,413	7,110	17,240	59,324
Net foreign currencyexchange differences	(2,615)	(133)	‐	‐	(2,748)
Balance at 30 June 2014	25,946	6,280	7,110	17,240	56,576
Acquisitions through business
combinations	‐	‐	21,387	‐	21,387
Net foreign currencyexchange differences	1,142	58	(120)	‐	1,080
Balance at 30 June 2015	27,088	6,338	28,377	17,240	79,043
Net book value
As at 30 June 2014	25,946	6,280	7,110	17,240	56,576
As at 30 June 2015	27,088	6,338	28,377	17,240	79,043

EBOS GROUP | ANNUAL REPORT 2015

25

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

13. INDEFINITE LIFE INTANGIBLES CONTINUED

The carrying amount of indefinite life intangibles (brands and trademarks) has been allocated to cash generating units, or groups of cash generating units, as follows:

	2015	2014
	$’000	$’000
Healthcare Australia	31,036	29,836
Healthcare NZ	2,390	2,390
Healthcare ‐ Pharmacy/Logistics NZ	17,240	17,240
Animal care	28,377	7,110
	79,043	56,576

Management has assessed these assets as having an indefinite useful life. In coming to this conclusion management considered expected expansion of the usage of the brands across other products and markets, the typical product life cycle of these assets, the stability of the industry in which the brands are operating, the level of maintenance expenditure required and the period of legal control over the brands and trademarks.

During the current year management has determined that there is no impairment of any of the brands and trademarks (2014: Nil).

The calculation of the recoverable amounts for indefinite life intangibles have been determined based on a value in use calculation that uses cash flow projections based on financial forecasts approved by management covering a five‐year period.

Management has determined that the recoverable amount calculations are most sensitive to change in the following assumptions. Annual growth rates of 1.7% to 5.9% (2014: 1.4% to 3%), and an allowance of 1.8% to 5.9% (2014: 1.4% to 3%) for increases in expenses, and pre‐tax discount rates of 13.1% to 17.9% (2014: 13.1% to 19.2%) have been applied to these projections. Cash flows beyond the five‐year period have been extrapolated using a 2.5% (2014: 2% to 2.5%) growth rate. Management also believes that any reasonably possible change in the key assumptions would not cause the carrying amount of the brands to exceed their recoverable amount.

14. FINITE LIFE INTANGIBLES

			Customer
	Supply		Relationships/
	Contracts	Software	Contracts	Total
	$’000	$’000	$’000	$’000
Gross carrying amount
Balance at 1 July 2013	1,490	2,258	94,417	98,165
Additions	‐	3,148	‐	3,148
Net foreign exchange differences	‐	(228)	(8,646)	(8,874)
Balance at 30 June 2014	1,490	5,178	85,771	92,439
Additions	‐	464	‐	464
Disposals	‐	(262)	‐	(262)
Reclassification	‐	(203)	(908)	(1,111)
Net foreign exchange differences	‐	583	3,622	4,205
Balance at 30 June 2015	1,490	5,760	88,485	95,735

EBOS GROUP | ANNUAL REPORT 2015

26

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

14. FINITE LIFE INTANGIBLES CONTINUED

			Customer
	Supply		Relationships/
	Contracts	Software	Contracts	Total
	$’000	$’000	$’000	$’000
Accumulated amortisation & impairment
Balance at 1 July 2013	(1,490)	(415)	(1,115)	(3,020)
Amortisation expense	‐	(1,818)	(10,592)	(12,410)
Net foreign exchange differences	‐	93	400	493
Balance at 30 June 2014	(1,490)	(2,140)	(11,307)	(14,937)
Disposals	‐	262	‐	262
Amortisation expense	‐	(1,260)	(10,750)	(12,010)
Reclassification	‐	203	908	1,111
Net foreign exchange differences	‐	(101)	(735)	(836)
Balance at 30 June 2015	(1,490)	(3,036)	(21,884)	(26,410)
Net book value
As at 30 June 2014	‐	3,038	74,464	77,502
As at 30 June 2015	‐	2,724	66,601	69,325

EBOS GROUP | ANNUAL REPORT 2015

27

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

15. SUBSIDIARIES

Parent and Head Entity

EBOS Group Limited

The following entities comprise the trading and holding companies of the Group:

		Ownership Interests	Ownership Interests
		and Voting Rights
Subsidiaries (all balance dates 30 June unless otherwise noted)	Country of Incorporation	2015	2014
Pet Care Holdings Australia Pty Limited
(formerly EBOS Healthcare (Australia) Pty Limited)	Australia	100%	100%
EBOS Group Australia Pty Limited	Australia	100%	100%
EBOS Health & Science Pty Limited	Australia	100%	100%
PRNZ Limited	New Zealand	100%	100%
Pharmacy Retailing NZ Limited	New Zealand	100%	100%
EBOS Limited Partnership	Australia	100%	100%
Pet Care Distributors Pty Limited
(formerly Healthcare Distributors Pty Limited)	Australia	100%	100%
Masterpet Corporation Limited	New Zealand	100%	100%
Nature’s Recipe Pet Foods Limited	New Zealand	100%	100%
Masterpet Australia Pty Limited	Australia	100%	100%
Botany Bay Imports and Exports Pty Limited	Australia	100%	100%
Aristopet Pty Ltd	Australia	100%	100%
EAHPL Pty Limited
(formerly EBOS Australia Holdings Pty Limited)1	Australia	100%	100%
ZHHA Pty Ltd	Australia	100%	100%
ZAP Services Pty Ltd	Australia	100%	100%
Symbion Pty Ltd	Australia	100%	100%
Intellipharm Pty Ltd	Australia	100%	100%
Clinect Pty Ltd	Australia	100%	100%
Lyppard Australia Pty Ltd	Australia	100%	100%
DoseAid Pty Limited
(formerly APHS Packaging Pty Ltd)	Australia	100%	100%
Symbion Pharmacy Services Trade Receivables Trust_2_	Australia	100%	100%
Blackhawk Premium Pet Care Pty Limited	Australia	100%	0%

1. The EBOS Limited Partnership was dissolved subsequent to 30 June 2015.

2. Balance date is 31 December; the results of the Trust have been included in the Group results for the year to 30 June 2015.

EBOS GROUP | ANNUAL REPORT 2015

28

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

16. INVESTMENT IN ASSOCIATES

			Proportion
			of shares and	Cost of
	Principal	Date of	voting rights	acquisition
Name of business acquired	activities	acquisition	acquired	$’000
Animates NZ Holdings Limited	Animal care supplies	December 2011	50%	18,150
VIM Health Pty Limited	Healthcare supplies	December 2013	50%	3,520
Good Price Pharmacy Franchising
Pty Limited	Healthcare supplies	October 2014	25%	3,918
Good Price Pharmacy
Management Pty Limited	Healthcare supplies	October 2014	25%	3,918

The reporting date for Animates NZ Holdings Limited is 30 June. Animates NZ Holdings Limited is incorporated in New Zealand.

The reporting date for VIM Health Pty Limited, Good Price Pharmacy Franchising Pty Limited and Good Price Pharmacy Management Pty Limited is 30 June. They are incorporated in Australia.

Although the company holds 50% of the shares and voting power in both Animates NZ Holdings Limited and VIM Health Pty Limited these entities are not deemed to be a subsidiary as the other 50% is held by other single shareholders in both cases, therefore the Group is unable to exercise control over these entities.

The summary financial information in respect of the Group’s associates is set out below:

Statement of financial position
	2015	2014
	$’000	$’000
Total assets	47,424	41,620
Total liabilities	(26,887)	(24,480)
Net assets	20,537	17,140
Group’s share of net assets	9,691	8,570
Income Statement
Total revenue	94,868	68,522
Total profit for the year	7,597	3,134
Group’s share of profits of associates	2,861	1,567

Movement in the carrying amount of the Group’s investment in associates:

Movement in the carrying amount of the Group’s investment in associates:
	2015 $’000 2014 $’000
Balance at the beginning of the financial year New investments_1_ Share of profits of associates Share of dividends Net foreign currencyexchange differences	24,100 19,013 7,829 3,520 2,861 1,567 (301) ‐ 422 ‐
Balance at the end of the financial year Goodwill included in the carrying amount of the Group’s investment in associates The Group’s share of the contingent liabilities of associates The Group’s share of capital commitments of associates _1_Consideration for new investments comprises: Cash Deferred purchase consideration	34,911 24,100 21,749 15,945 ‐ ‐ ‐ ‐ 6,710 3,520 1,119 ‐
	7,829 3,520

EBOS GROUP | ANNUAL REPORT 2015

29

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

17. BORROWINGS

17. BORROWINGS
	2015	2014
	$’000	$’000
Current
Bank loans (i)	‐	22,755
Bank loans – securitisation facility (ii)	153,245	130,579
Finance lease liabilities(iii)	153	155
	153,398	153,489
Non‐current
Bank loans (i)	272,852	250,826
Finance lease liabilities(iii)	191	680
	273,043	251,506
Total borrowings	426,441	404,995

• (i) The Group has bank term loans and revolving cash advance facilities of $364.5m (2014: $361.2m), of which $91.7m was unutilised at 30 June 2015 (2014: $87.6m). The Group was released from a negative pledge deed in favour of the Group’s syndicated banks on 31 October 2014 when the significant provisions of the negative pledge deed, including the guarantee over the Group’s assets, were incorporated in an updated facilities agreement.

There have been no breaches of the banking covenants.

• (ii) The Group, through a subsidiary company, has a trade debtor securitisation facility of $430.9m (2014: $450.3m) of which $277.7m was unutilised at 30 June 2015 (2014: $319.7m). The securitisation facility involves Symbion Pty Limited providing security over the future cash flows of specific trade receivables of Symbion Pty Limited, which meet certain criteria, in return for cash finance on a contracted percentage of the security provided. As recourse, in the event of default by a trade debtor, remains with Symbion Pty Limited the trade receivables provided as security and the funding provided are recognised on the Group’s Consolidated Balance Sheet.

At 30 June 2015, the value of trade receivables provided as security under this securitisation facility was $197.9m (2014: $180.3m). The net cash flows associated with the securitisation programme are disclosed in the cash flow statement as cash flows from financing activities.

The Symbion Pharmacy Services Trade Receivables Trust (“SPS Trust”), which is consolidated, was established solely for the purpose of purchasing qualifying trade receivables from Symbion Pty Limited and funding the same from lenders. The SPS Trust has directly provided funding to Symbion Pty Limited to acquire the rights to the cash flows of the securitised receivables. The SPS Trust is consolidated as the Group has the exposure, or rights, to variable returns from its involvement with the Trust and the Group considers that it has existing rights that give it the current ability to direct the relevant activities of the Trust.

• (iii) Secured by the assets leased.

The fair value of non‐current borrowings is approximately equal to their carrying amount.

As at 30 June 2015 the Group maintains the following lines of credit:

	Amount (NZD)
Facility	$millions	Maturity
Term debt facilities	$79.3m	August 2016
Term debt facilities	$95.4m	August 2018
Term debt facilities	$98.2m	August 2019
Working capital facilities	$91.7m	July 2015_1_
Securitisation facility	$430.9m	August 2017

1 Subsequent to year end the term of the Group’s working capital facilities was extended by one year from July 2015 to July 2016.

EBOS GROUP | ANNUAL REPORT 2015

30

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

18. TRADE AND OTHER PAYABLES

	2015	2014
	$’000	$’000
Current
Trade payables	865,482	775,774
Other payables	80,069	45,617
Deferredpurchase consideration	6,706	‐
	952,257	821,391
Non‐current
Otherpayables	10,042	9,778
Total trade and otherpayables	962,299	831,169

19. LEASES

Finance leases

Minimum future lease payments

Finance leases relate to office equipment, plant and motor vehicles. The Group has options to purchase the equipment for a nominal amount at the conclusion of the lease agreements.

Finance lease liabilities

Finance lease liabilities	Finance lease liabilities
Minimum Future Lease Payments Present Value of Minimum Future Lease Payments 2015 $’000 2014 $’000 2015 $’000 2014 $’000
Not later than 1 year 167 Later than 1year and not later than 5years 208	167 153 155 701 191 680
Minimum lease payments* 375 Less future finance charges (31)	868 344 835 (33) ‐ ‐
Present value of minimum lease payments 344 Included in the financial statements as: Finance leases ‐ current portion Finance leases ‐ non currentportion	835 344 835 153 155 191 680
	344 835

*Minimum future lease payments include the aggregate of all lease payments and any guaranteed residual.

The fair value of the finance lease liabilities is approximately equal to their carrying value.

Operating leases

Leasing arrangements

Operating leases relate to certain property and equipment, with lease terms of between one to fifteen years with options to extend for a further one to twenty years. All operating lease contracts contain market review clauses in the event that the Group exercises its option to renew. The Group does not have an option to purchase the leased asset at the expiry of the lease period.

	2015	2014
	$’000	$’000
Operating leases
Non‐cancellable operating lease payments
Not longer than 1 year	22,734	22,422
Longer than 1 year and not longer than 5 years	60,296	67,408
Longer than 5years	47,440	54,631
	130,470	144,461

EBOS GROUP | ANNUAL REPORT 2015

31

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

20. OTHER FINANCIAL LIABILITIES ‐ DERIVATIVES

	2015	2014
	$’000	$’000
At fair value:
Foreign currency forward contracts (i)	‐	59
Foreign currency forward contracts (ii)	‐	894
Interest rate swaps(ii)	6,047	2,451
	6,047	3,404

(i) Financial liability carried at fair value through profit or loss (“FVTPL”).

(ii) Designated and effective as cash flow hedging instrument carried at fair value.

21. SHARE CAPITAL

	2015	2015	2014	2014
	No.		No.
	000’s	$’000	000’s	$’000
Fully paid ordinary shares
Balance at beginning of financial year	148,720	861,549	65,546	201,288
Dividend reinvested
‐ October 2013	‐	‐	996	9,500
‐ April 2014	‐	‐	1,110	10,996
‐ October 2014	1,019	8,904	‐	‐
‐ April 2015	948	10,175	‐	‐
Rights issue – July 2013	‐	‐	22,941	149,119
Share issue costs	‐	‐	‐	(7,356)
Issue of consideration shares – July 2013	‐	‐	58,127	498,147
Share issue costs	‐	‐	‐	(145)
	150,687	880,628	148,720	861,549

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Changes to the Companies Act in 1993 abolished the authorised capital and par value concept in relation to share capital from 1 July, 1994. Therefore, the company does not have a limited amount of authorised capital and issued shares do not have a par value.

EBOS GROUP | ANNUAL REPORT 2015

32

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

22. RESERVES

	2015	2014
	$’000	$’000
Foreign currency translation reserve
Balance at beginning of the year	(29,869)	(5,675)
Translation of foreign operations	11,993	(24,194)
Balance at end of theyear	(17,876)	(29,869)

Exchange differences, principally relating to the translation from Australian dollars, being the functional currency of the Group’s foreign controlled entities in Australia, into New Zealand dollars being the Group’s presentation currency, are brought to account by entries made directly in other comprehensive income and accumulated in the foreign currency translation reserve.

	2015	2014
	$’000	$’000
Retained Earnings
Balance at beginning of the year	147,085	107,268
Profit for the year	105,941	92,069
Dividends(note 23)	(63,431)	(52,252)
Balance at end of theyear	189,595	147,085
Cash Flow Hedge Reserve
Balance at beginning of the year	274	1,996
(Loss) recognised on cash flow hedges	(2,224)	(2,423)
Related income tax	631	701
Balance at end of theyear	(1,319)	274

The cash flow hedge reserve represents gains and losses recognised on the effective portion of cash flow hedges. The cumulative deferred gain or loss on the hedge is recognised in profit or loss when the hedged transaction impacts profit or loss.

23. DIVIDENDS

	2015		2014
	Cents per	Total	Cents per	Total
	share	$’000	share	$’000
Recognised amounts
Fully paid ordinary shares
‐ Final ‐ prior year	20.5	30,490	15.0	21,992
‐ Interim ‐ currentyear	22.0	32,941	20.5	30,260
	42.5	63,431	35.5	52,252
Unrecognised amounts
Final dividend	25.0	37,672	20.5	30,490

A dividend of 25.0 cents per share was declared on 25 August 2015 with the dividend being payable on 16 October 2015. As the dividend reinvestment plan will be in operation for this dividend shareholders may elect to reinvest part or all of their dividends in the Company. The anticipated cash impact of the dividend is approximately $26.4m (2014: $19.5m).

EBOS GROUP | ANNUAL REPORT 2015

33

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

24. ACQUISITION OF SUBSIDIARIES

			Proportion	Cost of
	Principal	Date of	of shares	acquisition
Name of business acquired	activities	acquisition	acquired	$’000
2015:
Blackhawk Premium Pet Care	Animal care
PtyLimited	supplies	October 2014	100%	64,160
Assets and liabilities acquired 2015:
		Blackhawk	Fair value	Fair value
		Group	adjustment	on acquisition
		$’000	$’000	$’000
Current assets
Cash and cash equivalents		1,119	‐	1,119
Trade and other receivables		4,297	‐	4,297
Prepayments		6	‐	6
Inventories		305	‐	305
Non‐current assets
Property, plant and equipment		412	‐	412
Indefinite life intangibles		‐	21,387_1_	21,387
Deferred tax assets		‐	3,071_2_	3,071
Current liabilities
Trade and other payables		(1,310)	(361)3	(1,671)
Employee benefits		(53)	‐	(53)
Current tax payable		(1,485)	‐	(1,485)
Non‐current liabilities
Deferred tax liabilities		‐	(6,380) 2	(6,380)
Net assets acquired		3,291	17,717	21,008
Goodwill on acquisition				43,152
Total consideration				64,160
Less cash and cash equivalents acquired				(1,119)
Deferredpurchase consideration				(5,627)
Net cash(outflow) on acquisition				(57,414)

1. To recognise the ‘BlackHawk’ brand as a result of a valuation performed at acquisition.

2. To recognise additional deferred tax assets and liabilities incurred.

3. To recognise additional liabilities identified as part of the acquisition.

EBOS GROUP | ANNUAL REPORT 2015

34

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

24. ACQUISITION OF SUBSIDIARIES CONTINUED

Goodwill arising on acquisition

Goodwill arose on the acquisition of Blackhawk Premium Pet Care Pty Limited (‘Blackhawk’) because the cost of acquisition included a control premium paid. In addition, 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.

Blackhawk was acquired as it is a profitable premium animal food business which the Group believes fits strategically with its Animal care business assets.

Impact of the acquisition on the results of the Group

Blackhawk contributed $3,200,000 to the Group profit for the year. Group revenue for the year includes $17,732,000 in respect of Blackhawk. Had the Blackhawk acquisition been effective at 1 July 2014, the revenue of the Group from continuing operations would have been $6,077,013,000, and the Group profit for the year from continuing operations would have been $107,404,000.

25. NOTES TO THE CASH FLOW STATEMENT

	2015 $’000 2014 $’000
(a) Subsidiaries acquired Note 24 sets out details of the subsidiaries acquired. Details of the acquisitions are as follows: Consideration Cash and cash equivalents Shares issued Deferredpurchase consideration	58,533 366,853 ‐ 498,147 5,627 (865,000)
Total consideration	64,160 ‐
Represented by: Net assets acquired (Note 24) Goodwill on acquisition	21,008 ‐ 43,152 ‐
Total consideration	64,160 ‐
Net cash outflow on acquisition Cash and cash equivalents consideration Less Cash and cash equivalents acquired	58,533 366,853 (1,119) ‐
Net cash considerationpaid	57,414 366,853

On 5 July 2013, in accordance with the sale and purchase agreement to purchase the Symbion Group, the full deferred consideration payable balance of $865m was settled in favour of the previous owners of the Symbion Group, the Zuellig Group. This consideration was made through an issue of EBOS Group Limited shares to the Zuellig Group of $498m and cash consideration of $367m. The cash consideration paid was funded by additional debt funding of $134m and cash reserves.

EBOS GROUP | ANNUAL REPORT 2015

35

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

25. NOTES TO THE CASH FLOW STATEMENT CONTINUED

	2015 $’000 2014 $’000
(b) Financing facilities Bank overdraft facility, reviewed annually and payable at call: Amount unused	1,674 1,664
	1,674 1,664
Bank loan facilities with various maturity dates through to August 2019 (2014: July 2017) Amount used Amount unused	426,097 404,162 369,357 407,370
	795,454 811,532
(c) Reconciliation of profit for the year with cash flows from operating activities Profit for the year Add/(less) non‐cash items: Depreciation Loss on sale of property, plant and equipment Amortisation of finite life intangible assets Share of profits from associates (Gain)/loss on derivative financial instruments Deferred tax Provision for doubtful debts	105,941 92,069 12,108 10,173 88 4 12,010 12,410 (2,861) (1,567) (323) 213 (8,293) (6,366) 355 (531)
	13,084 14,336
Movement in working capital: Trade and other receivables Prepayments Inventories Current tax refundable/payable Trade and other payables Employee benefits Foreign currencytranslation of workingcapital balances	(104,918) 37,684 (1,572) 1,051 (26,648) 66,726 2,766 9,386 131,130 (69,965) 5,340 1,464 13,973 (38,599)
Cash costs classified as investing activities: Working capital items relating to investing activities Workingcapital items acquired	20,071 7,747 (6,706) ‐ 1,399 ‐
Net cash inflow from operating activities	133,789 114,152

EBOS GROUP | ANNUAL REPORT 2015

36

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

26. EARNINGS PER SHARE CALCULATION

	2015	2014
Basic earnings per share (refer Income Statement and Note 21)	Cents	Cents
Basic earnings per share	70.8	62.8
	$’000	$’000
Earnings used in the calculation of total basic earnings per share	105,941	92,069
Weighted average number of ordinary shares
for the purposes of calculating basic earnings per share	149,671	146,681
Diluted earnings per share (refer Income Statement and Note 21)	Cents	Cents
Diluted earnings per share	70.8	62.8
	$’000	$’000
Earnings used in the calculation of total diluted earnings per share	105,941	92,069
Weighted average number of ordinary shares
for thepurposes of calculatingdiluted earningsper share	149,671	146,681

EBOS GROUP | ANNUAL REPORT 2015

37

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

27. COMMITMENTS FOR EXPENDITURE

	2015	2014
	$’000	$’000
Capital expenditure commitments
Plant	‐	4,384
Software development	340	138
	340	4,522
Operating expenditure commitments
Purchase and distribution of products	2,086	‐

28. CONTINGENT LIABILITIES & CONTINGENT ASSETS

	2015	2014
	$’000	$’000
Contingent liabilities
Guarantees given to third parties	12,520	16,613

A subsidiary company (PRNZ Limited) is guarantor for certain loans made to pharmacies by the ANZ National Bank Limited amounting to $3.691m (2014: $5.273m). The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required.

A performance bond of up to $Nil (2014: $1m) was also held by the bank on behalf of a supplier, as was a performance guarantee of $0.585m (2014: $0.529M)

Property lease guarantees of $8.155m (2014: $8.428m) are held by the bank on behalf of landlords of the Group.

Also refer to note 17 for details of the Group’s borrowing facilities.

EBOS GROUP | ANNUAL REPORT 2015

38

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

29. 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 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 funding 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:

	2015	2014
	$’000	$’000
Revenue from external customers
Healthcare	5,692,888	5,418,356
Animal care	375,192	338,878
	6,068,080	5,757,234
Profit/(loss) before depreciation, amortisation, finance costs and tax expense
Healthcare	170,167	153,055
Animal care	37,118	29,431
Corporate	(10,590)	(7,064)
	196,695	175,422
Segment expenses
Healthcare:
Depreciation	(10,762)	(8,693)
Amortisation of finite life intangibles	(9,695)	(10,401)
Tax expense	(41,655)	(34,644)
	(62,112)	(53,738)
Animal care:
Depreciation	(1,346)	(1,480)
Amortisation of finite life intangibles	(2,315)	(2,009)
Tax expense	(11,616)	(7,701)
	(15,277)	(11,190)
Corporate:
Net finance costs	(21,909)	(27,058)
Tax credit	8,544	8,633
	(13,365)	(18,425)
Profit/(loss) for the year
Healthcare	108,055	99,317
Animal Care	21,841	18,241
Corporate	(23,955)	(25,489)
	105,941	92,069
Associate Information:
Included in the segment results above is Income from associates of:
Animal care	2,066	1,433
Healthcare	795	134

EBOS GROUP | ANNUAL REPORT 2015

39

EBOS GROUP LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

29. 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 expense. 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

Assets are not allocated to segments as they are not reported to the chief operating decision maker at a segment level.

(d) Revenues from major products and services

The Group’s major products and services are the same as the reportable segments i.e. healthcare, animal care and corporate. Revenues are reported above under (b) Segment revenues and results.

(e) Geographical information

The Group operates in two principal geographical areas; New Zealand 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 and deferred tax assets are detailed below:

	2015 $’000 2014 $’000
Continuing and discontinued operations Revenue from external customers New Zealand Australia	1,343,884 1,278,650 4,724,196 4,478,584
Non‐current assets New Zealand Australia	6,068,080 5,757,234 206,410 207,395 818,614 753,338
	1,025,024 960,733

(f) Information about major customers

No revenues from transactions with a single customer amount to 10% or more of the Group’s revenues (June 2014: Nil).

EBOS GROUP | ANNUAL REPORT 2015

40

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

30. RELATED PARTY DISCLOSURES

(a) Parent Entities

The Parent entity in the Group is EBOS Group Limited.

(b) Equity interests in Related Parties

Equity interests in subsidiaries

Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 15 to the financial statements.

(c) Transactions with Related Parties

As at 30 June 2015 no balances were owing to or from related parties of EBOS Group (2014:nil)

(d) Key Management Personnel Remuneration

Details of key management personnel remuneration are disclosed in note 4 to the financial statements.

EBOS GROUP | ANNUAL REPORT 2015

41

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

31. FINANCIAL INSTRUMENTS

(a) Financial risk management objectives

The Group’s corporate treasury function provides services to the Group’s entities, co‐ordinates access to financial markets, and manages the financial risks relating to the operation of the Group.

The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide written principles on the use of financial derivatives. Compliance with policies and exposure limits is reviewed on a regular basis.

(b) Market risk

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign currency risk, including:

• forward foreign exchange contracts to hedge the exchange rate risk arising on imports of product; and

• interest rate swaps to mitigate the risk of rising interest rates.

(c) Foreign currency risk management

The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.

Forward foreign exchange contracts

The Group enters into forward foreign exchange contracts to manage the risk associated with anticipated future sales and purchase transactions denominated in foreign currencies in accordance with the Group’s Board approved treasury policy.

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

Therefore the Group has categorised these derivatives as Level 2 under the fair value hierarchy contained within NZ IFRS 13.

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

EBOS GROUP | ANNUAL REPORT 2015

42

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

31. FINANCIAL INSTRUMENTS CONTINUED

		Average	Foreign	currency	Contract value	Contract value		Fair value
	Exchange rate		2015	2014	2015	2014	2015	2014
Outstanding Contracts	2015	2014	FC’000	FC’000	$’000	$’000	$’000	$’000
Buy Australian Dollars
Less than 3 months	0.932	0.940	800	703	858	748	54	9
3 to 6 months	0.906	‐	500	‐	552	‐	20	‐
6 to 9 months	0.903	‐	250	‐	277	‐	10	‐
Buy Euro
Less than 3 months	0.636	0.650	758	2,138	1,192	3,291	63	62
3 to 6 months	0.652	0.632	1,024	648	1,570	1,025	136	1
6 to 9 months	0.656	0.628	512	648	781	1,032	78	5
Buy Pounds
Less than 3 months	0.460	‐	250	‐	544	‐	29	‐
6 to 9 months	0.443	‐	385	‐	869	‐	18	‐
9 to 12 months	0.441	‐	200	‐	454	‐	9	‐
Buy THB
Less than 3 months	23.688	28.355	40,270	60,000	1,700	2,116	36	(5)
3 to 6 months	22.592	28.269	44,800	24,000	1,983	849	(42)	1
6 to 9 months	23.019	28.202	30,500	24,000	1,325	851	2	4
9 to 12 months	23.077	‐	18,000	‐	780	‐	5	‐
Buy US Dollars
Less than 3 months	0.768	0.832	5,396	6,415	7,026	7,709	888	(373)
3 to 6 months	0.717	0.819	5,029	4,875	7,014	5,949	402	(331)
6 to 9 months	0.737	0.837	4,065	4,000	5,518	4,781	476	(140)
9 to 12 months	‐	0.836	‐	2,500	‐	2,990	‐	(68)
12 to 15 months	‐	0.832	‐	1,350	‐	1,622	‐	(14)
					32,443	32,963	2,184	(849)

The fair value of forward foreign exchange contracts outstanding are recognised as other financial assets/liabilities. Hedge accounting is applied for certain forward foreign exchange contracts. Typically these contracts that have hedge accounting applied are for periods greater than 3 months.

EBOS GROUP | ANNUAL REPORT 2015

43

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

31. FINANCIAL INSTRUMENTS CONTINUED

(d) Interest rate risk management

The Group is exposed to interest rate risk as it borrows funds at floating interest rates. The risk is managed by the use of interest rate swap contracts.

Interest rate swap contracts

Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on debt held. The fair value of interest rate swaps are based on market values of equivalent instruments at the reporting date.

	Average	contracted	Notional	principal
	fixed interest rate			amount		Fair value
	2015	2014	2015	2014	2015	2014
Outstanding Contracts	%	%	$’000	$’000	$’000	$’000
Outstanding variable rate for fixed contracts
Less than 1 year	4.22	3.38	2,239	50,391	(16)	(54)
1 to 3 years	3.42	3.24	146,858	113,252	(2,924)	632
3 to 5 years	3.54	3.77	60,369	80,402	(2,215)	(1,472)
Greater than 5years	5.18	5.14	10,000	15,000	(892)	(219)
			219,466	259,045	(6,047)	(1,113)

The fair value of interest rate swaps outstanding are recognised as other financial assets/liabilities. Hedge accounting has been adopted. Interest rate swaps are valued using a discounted cash flow valuation. Key inputs for the valuation of interest rate swaps are the estimated future cash flows based on observable yield curves at the end of the reporting period, discounted at a rate that reflects the credit risk of the various counterparties.

Therefore the Group has categorised these derivatives as Level 2 under the fair value hierarchy contained within NZ IFRS 13. There were no transfers between fair value hierarchy levels during the current or prior periods.

(e) Liquidity

The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve banking facilities by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities.

The following tables detail the Group’s remaining contractual maturity for its financial assets and financial liabilities at balance date. The tables have been drawn up based on the undiscounted cash flows of the financial assets and liabilities. The table includes both interest and principal cash flows.

EBOS GROUP | ANNUAL REPORT 2015

44

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

31. FINANCIAL INSTRUMENTS CONTINUED

					Maturity	Dates
	Weighted
	average
	effective	On	Less than					5+
	interest	Demand	1 year	1‐2 Years	2‐3 Years	3‐4 Years	4‐5 Years	Years	Total
Group ‐ 2015	rate %	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Financial assets:
Cash and cash equivalents	2.1	109,521	‐	‐	‐	‐	‐	‐	109,521
Trade and other receivables	‐	803,839	‐	‐	‐	‐	‐	‐	803,839
Other financial assets
‐ derivatives	‐	‐	2,184	‐	‐	‐	‐	‐	2,184
		913,360	2,184	‐	‐	‐	‐	‐	915,544
Financial liabilities:
Trade and other payables	‐	941,203	11,054	521	521	521	521	3,125	957,466
Finance leases	8.6	‐	167	208	‐	‐	‐	‐	375
Bank loans	4.0	‐	16,979	93,579	161,454	99,923	98,806	‐	470,741
Other financial liabilities
‐ derivatives	‐	‐	6,047	‐	‐	‐	‐	‐	6,047
		941,203	34,247	94,308	161,975	100,444	99,327	3,125	1,434,629
					Maturity	Dates
	Weighted
	average
	effective
	interest	On	Less than					5+
	rate	Demand	1 year	1‐2 Years	2‐3 Years	3‐4 Years	4‐5 Years	Years	Total
Group ‐ 2014	%	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Financial assets:
Cash and cash equivalents	2.4	88,698	‐	‐	‐	‐	‐	‐	88,698
Trade and other receivables	‐	699,276	‐	‐	‐	‐	‐	‐	699,276
Other financial assets
‐ derivatives	‐	‐	1,442	‐	‐	‐	‐	‐	1,442
		787,974	1,442	‐	‐	‐	‐	‐	789,416
Financial liabilities:
Trade and other payables	‐	808,338	13,053	4,349	521	521	521	3,646	830,949
Finance leases	8.6	‐	167	701	‐	‐	‐	‐	868
Bank loans	4.6	‐	37,328	219,825	98,651	81,198	‐	‐	437,002
Other financial liabilities
‐ derivatives	‐	‐	3,404	‐	‐	‐	‐	‐	3,404
		808,338	53,952	224,875	99,172	81,719	521	3,646	1,272,223

EBOS GROUP | ANNUAL REPORT 2015

45

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

31. FINANCIAL INSTRUMENTS CONTINUED

(f) Sensitivity analysis

(i) Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates for financial instruments at the balance date. The analysis is prepared assuming the amount of the financial instrument outstanding at the balance sheet date was outstanding for the whole year.

The impact to Profit for the Year and Total Equity as a result of a 100 basis point movement in interest rates is as follows:

	2015	2014
	$’000	$’000
+ 100 basis point shift up in yield curve
Impact on Profit	‐	‐
Impact on Total Equity	4,971	5,620
‐ 100 basis point shift down in yield curve
Impact on Profit	‐	‐
Impact on Total Equity	(5,142)	(5,863)

(ii) Foreign currency sensitivity analysis

The following table details the Group’s sensitivity to a 10% increase or decrease in the foreign currency rate against the presentation currency of the Group. The sensitivity analysis below is determined on exposure to outstanding foreign currency contracts and foreign currency monetary items, and adjusts their translation at the yearend for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and equity where the functional currency weakens 10% against the relevant currency.

	2015	2014
	$’000	$’000
+ 10% shift in NZD rate
Impact on Profit for the Year	(709)	(196)
Impact on Total Equity	(3,436)	(3,138)
‐ 10% shift in NZD rate
Impact on Profit for the Year	709	196
Impact on Total Equity	3,436	3,173

EBOS GROUP | ANNUAL REPORT 2015

46

EBOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

For the Financial Year ended 30 June, 2015

31. FINANCIAL INSTRUMENTS CONTINUED

(g) Credit risk management

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with credit worthy counter parties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults.

Trade receivables consist of a large number of customers, spread across diverse sectors and geographical areas. On‐going credit evaluation is performed on the financial condition of the trade receivables.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

The maximum credit risk associated with guarantees provided by the Group are disclosed in note 28.

The Group does not have any significant credit risk exposure to any single counter party or any Group of counter parties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counter parties are banks with high credit ratings assigned by international credit rating agencies.

(h) Fair value of financial instruments

The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values.

The fair values and net fair values of financial assets and financial liabilities are determined as follows:

• the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices;

• the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis; and

• the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available use is made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments.

(i) Liquidity risk management

The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

(j) Capital risk management

The Group manages its capital, meaning Total Shareholders’ Funds, to ensure that each entity within the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity. The Group has certain capital risk management covenants under its negative pledge agreement with its bankers, such as retaining minimum shareholder funds. None of its banking covenants were breached during the year. The Group’s overall strategy remains unchanged from 2014.

32. EVENTS AFTER BALANCE DATE

Subsequent to year end the Board has approved a final dividend to shareholders. For further details please refer to note 23.

EBOS GROUP | ANNUAL REPORT 2015

47

ADDITIONAL STOCK EXCHANGE INFORMATION As at 31 July, 2015

Twenty Largest Shareholders Sybos Holdings Pte Limited HSBC Nominees (New Zealand) Limited – NZCSD HKBN90 Whyte Adder No 3 Limited JP Morgan Chase Bank – NZCSD CHAM24 Accident Compensation Corporation – NZCSD ACCI40 Citibank Nominees (New Zealand) Limited – NZCSD CNOM90 Tea Custodians Limited – NZCSD TEAC40 FNZ Custodians Limited Forsyth Barr Custodians Limited 1‐33 Custodial Services Limited A/C 3 National Nominees New Zealand Limited – NZCSD NNLZ90 HSBC Nominees (New Zealand) Limited – NZCSD HKBN45 Herpa Properties Limited Forsyth Barr Custodians Limited 1‐17.5 Investment Custodial Services Limited A/C C Custodial Services Limited A/C 2 BNP Paribas Nominees (NZ) Limited – NZCSD COGN40 Custodial Services Limited A/C 18 UBS Nominees Pty Limited Forsyth Barr Custodians Limited 1‐30

Fully paid shares Percentage of paid capital 60,275,458 40.00% 9,027,232 5.99% 7,227,503 4.80% 7,126,096 4.73% 4,067,738 2.70% 2,827,233 1.88% 2,763,661 1.83% 2,619,585 1.74% 2,331,606 1.55% 2,145,929 1.42% 2,125,504 1.41% 1,609,097 1.07% 1,368,922 0.91% 850,289 0.56% 827,112 0.55% 797,629 0.53% 783,599 0.52% 779,902 0.52% 746,170 0.50% 679,974 0.45%

110,980,239 73.66%

Substantial Security Holders

As at 31 July 2015 the following persons are deemed to be substantial security holders in accordance with Section 26 of the Securities Markets Amendment Act 1988.

Markets Amendment Act 1988.
			Percentage of paid
		Fully paid shares	capital
Sybos Holdings Pte Limited		60,275,458	40.00%
Fidelity Holdings		15,038,999	9.98%
Whyte Adder No 3 Limited & Herpa Properties Limited		8,596,425	5.71%
		83,910,882	55.69%
			Percentage of paid
**Distribution of Shareholders and Shareholdings **	Holders	Fully paid shares	capital
Size of Holding
1 to 1,000	1,845	890,517	0.59%
1,001 to 5,000	3,076	7,682,266	5.10%
5,001 to 10,000	879	6,202,453	4.12%
10,001 to 100,000	750	16,667,446	11.06%
100,001 and over	48	119,244,429	79.13%
Total	6,598	150,687,111	100.00%

Unmarketable parcel as at 31 July 2015

As at 31 July 2015, there were 212 shareholders (with a total of 4,591 shares) holding less than a marketable parcel of shares under the ASX Listing Rules, based on the closing share price of A$8.95. The ASX Listing Rules define a marketable parcel of shares as a parcel of shares of not less than A$500.

EBOS GROUP | ANNUAL REPORT 2015

48

ADDITIONAL STOCK EXCHANGE INFORMATION CONTINUED

Waivers from the NZX and ASX Listing Rules

Waivers granted from the application of NZX and ASX Listing Rules are published on the Company’s website.

The terms of the Company’s admission to the ASX and on‐going listing requires the following disclosures:

1. The Company is not subject to Chapters 6, 6A, 6B and 6C of the Australian Corporations Act dealing with the acquisition of shares (including substantial holdings and takeovers).

2. Limitations on the acquisition of securities imposed under New Zealand law are as follows:

3. (a) In general, securities in the Company are freely transferable and the only significant restrictions or limitations in relation to the acquisition of securities are those imposed by New Zealand laws relating to takeovers, overseas investment and competition.

4. (b) The New Zealand Takeovers Code creates a general rule under which the acquisition of 20% or more of the voting rights in the Company or the increase of an existing holding of 20% or more of the voting rights of the Company can only occur in certain permitted ways. These include a full takeover offer in accordance with the Takeovers Code, an acquisition approved by an ordinary resolution, an allotment approved by an ordinary resolution, a creeping acquisition (in certain circumstances), or compulsory acquisition of a shareholder holding 90% or more of the shares.

5. (c) The New Zealand Overseas Investment Act 2005 and Overseas Investment Regulations 2005 (New Zealand) regulate certain investments in New Zealand by overseas interests. In general terms, the consent of the New Zealand Overseas Investment Office is likely to be required where an ‘overseas person’ acquires shares in the Company that amount to 25% or more of the shares issued by the Company, or if the overseas person already holds 25% or more, the acquisition increases that holding.

6. (d) The New Zealand Commerce Act 1986 is likely to prevent a person from acquiring shares in the Company if the acquisition would have, or would be likely to have, the effect of substantially lessening competition in the market.

Voting Rights

Shareholders may vote at a meeting of shareholders either in person or by Proxy, Attorney, or Representative. Where voting is by show of hands or by voice every shareholder present in person or representative has one vote.

In a poll every shareholder present in person or by representative has one vote for each share.

Use of Cash and Cash Equivalents

In accordance with ASX Listing Rule 4.10.19 the Board has determined that the Company has used cash and cash equivalents that it had at the time of its admission to the ASX in a way consistent with its business objectives from the period of its admission to the ASX on 3 December 2013 to 30 June 2015.

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DIRECTORY

REGISTERED OFFICES 108 Wrights Road Level 3, 484 St Kilda Road P O Box 411 Melbourne 3004 Christchurch 8024 PO Box 7300 New Zealand Melbourne 8004 Telephone +64 3 338 0999 Australia E‐mail: ebos@ebos.co.nz Telephone +61 3 9918 5555 E‐mail: ebos@ebosgroup.com

WEBSITE ADDRESS Internet: www.ebosgroup.com

DIRECTORS Rick Christie Independent Chairman Mark Waller Executive Director Elizabeth Coutts Independent Director Peter Kraus Stuart McGregor Sarah Ottrey Independent Director Barry Wallace Peter Williams SENIOR EXECUTIVES Patrick Davies Chief Executive Officer Brett Barons General Manager, Symbion Pharmacy and ProPharma Michael Broome Group General Manager, HCL and Symbion Contract Logistics Simon Bunde General Manager, Group Operations & Strategy Janelle Cain General Counsel John Cullity Chief Financial Officer and Company Secretary Sean Duggan Chief Executive Officer, Animal Care Tim Goldenberg Group Human Resources Manager Kelvin Hyland General Manager, EBOS Healthcare David Lewis General Manager, Onelink Australia Stuart Spencer General Manager, Group Business Development Andrew Vidler General Manager, Retail Services AUDITOR Deloitte Christchurch

SECURITIES EXCHANGE

EBOS Group Limited shares are quoted on the New Zealand Securities Exchange and the Australian Securities Exchange (NZ/ASX code: EBO).

SHARE REGISTER

Computershare Investor Services Ltd Computershare Investor Services Pty Ltd Private Bag 92119 GPO Box 3329 Auckland 1142 Melbourne, Victoria 3001 New Zealand Australia Telephone: +64 9 488 8777 Telephone: 1800 501 366

Managing Your Shareholding Online:

To change your address, update your payment instructions and to view your Investment portfolio including transactions, please visit:

www.computershare.com/investorcentre General enquiries can be directed to:

• enquiry@computershare.co.nz

• Private Bag 92119, Auckland 1142, New Zealand or GPO Box 3329, Melbourne, Victoria 3001, Australia

• Telephone (NZ) +64 9 488 8777 or (Aust) 1800 501 366

• Facsimile (NZ) +64 9 488 8787 or (Aust) +61 3 9473 2500

Please assist our registrar by quoting your CSN or shareholder number.

NOTICE OF ANNUAL MEETING

The Annual Meeting of EBOS Group Limited will be held on Tuesday, 27 October 2015 at the Chateau on the Park, Cnr Deans Avenue and Kilmarnock Street, Christchurch, New Zealand, at 2.00pm.

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