EBOS GROUP LIMITED — Interim / Quarterly Report 2015

Feb 24, 2015

EBOS GROUP LIMITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

EBOS GROUP LIMITED INTERIM REPORT 2015

CONTENTS	Page
Summary of Consolidated Financial Highlights	1
Shareholder Calendar	1
Auditor’s Review Report	2
Condensed Consolidated Income Statement	3
Condensed Consolidated Statement of Comprehensive Income	3
Condensed Consolidated Statement of Changes in Equity	4
Condensed Consolidated Balance Sheet	5
Condensed Consolidated Cash Flow Statement	6
Notes to the Condensed Consolidated Interim Financial Statements	7
Directory	15

EBOS GROUP LIMITED INTERIM REPORT 2015 SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS

Six months 31 Dec 14 $’000 (Unaudited) Six months 31 Dec 13 $’000 (Unaudited)	Year ended 30 Jun 14 $’000 Audited
Revenue 3,119,873 3,000,051 EBITDA 100,345 94,786 EBIT 88,479 83,437 Profit before income tax expense 77,014 69,347 Net profit for the period 53,949 49,409 Shareholders’ equity 1,002,286 961,131 Earnings per share 36.2c 34.0c Net interest cover 8.8x 6.7x Net interest bearing debt to net interest bearing debt plus equity 26.9% 26.7% Net asset backing per share 669c 651c	5,757,234 175,422 152,839 125,781 92,069 979,039 62.8c 6.5x 24.4% 658c

SHAREHOLDER CALENDAR

Release of half year result 25 February 2015 Interim dividend record date 13 March 2015 Interim dividend payable 2 April 2015 Release of full year result Late August 2015 Final dividend payable Late October 2015 Annual General Meeting 27 October 2015

1

REVIEW REPORT TO THE SHAREHOLDERS OF EBOS GROUP LIMITED

We have reviewed the condensed consolidated interim financial statements of EBOS Group Limited and its subsidiaries (“the Group”) which comprise the condensed consolidated balance sheet as at 31 December 2014, and the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated cash flow statement for the six months ended on that date, and a summary of significant accounting policies and other explanatory information on pages 3 to 14.

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

Board of Directors’ Responsibilities

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

Our Responsibilities

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

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

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

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements of the Group do not present fairly, in all material respects, the financial position of the Group as at 31 December 2014 its financial performance and cash flows for the six months ended on that date in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting.

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24 February 2015
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Chartered Accountants, Christchurch, New Zealand

This review report relates to the unaudited condensed consolidated interim financial statements of EBOS Group Limited for the six months ended 31 December 2014 included on EBOS Group Limited’s website. The Board of Directors are responsible for the maintenance and integrity of EBOS Group Limited’s website. We have not been engaged to report on the integrity of EBOS Group Limited’s website. We accept no responsibility for any changes that may have occurred to the unaudited condensed consolidated interim financial statements since they were initially presented on the website. The review report refers only to the unaudited condensed consolidated interim financial statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these unaudited condensed consolidated interim financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the unaudited condensed consolidated interim financial statements and related review report dated 24 February 2015 to confirm the information included in the unaudited condensed consolidated interim financial statements presented on this website. Legislation in New Zealand governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

2

EBOS GROUP LIMITED CONDENSED CONSOLIDATED INCOME STATEMENT

For the Six Months ended 31 December 2014

Notes Revenue 2(a) Income from associates 2(b) Profit before depreciation, amortisation, net finance costs and income tax expense Depreciation 2(b) Amortisation of finite life intangibles 2(b) Profit before net finance costs and income tax expense Finance income 2(b) Finance expense 2(b) Net finance costs 2(b) Profit before income tax expense 2(b) Income tax expense Profit for theperiod Earnings per share Basic (cents per share) Diluted (cents per share)	Six months 31 Dec 14 $’000 (Unaudited) 3,119,873 933 100,345 (5,649) (6,217) 88,479 1,192 (12,657) (11,465) 77,014 (23,065) 53,949 36.2 36.2	Six months 31 Dec 13 $’000 (Unaudited) 3,000,051 619 94,786 (5,187) (6,162) 83,437 1,461 (15,551) (14,090) 69,347 (19,938) 49,409 34.0 34.0	Year ended 30 Jun 14 $’000 (Audited)
			5,757,234 1,567 175,422 (10,173) (12,410)
			152,839 2,819 (29,877)
			(27,058)
			125,781 (33,712)
			92,069
			62.8 62.8

EBOS GROUP LIMITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the Six Months ended 31 December 2014

Profit for the period Other comprehensive income Items that may be reclassified subsequently to profit or loss: Cash flow hedge (losses)/gains Related income tax Translation of foreign operations Total comprehensive income net of tax	Six months 31 Dec 14 $’000 (Unaudited) 53,949 (811) 223 (8,528) 44,833	Six months 31 Dec 13 $’000 (Unaudited) 49,409 404 (137) (20,695) 28,981	Year ended 30 Jun 14 $’000 (Audited)
			92,069 (2,423) 701 (24,194)
			66,153

3

EBOS GROUP LIMITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the Six Months ended 31 December 2014

Notes Six months ended 31 December 2013 (unaudited): Opening balance Profit for the year Other comprehensive income for the year, net of tax Payment of dividends 4 Dividends re-invested 3 Shares issued - rights issue 3 Share issue costs Issue of consideration shares 3 Share issue costs Balance at 31 December 2013 Year ended 30 June 2014 (audited): Opening balance Profit for the year Other comprehensive income for the year, net of tax Payment of dividends 4 Dividends re-invested 3 Shares issued - rights issue 3 Share issue costs Issue of consideration shares 3 Share issue costs Balance at 30 June 2014 Six months ended 31 December 2014 (unaudited): Opening balance Profit for the year Other comprehensive income for the year, net of tax Payment of dividends 4 Dividends re-invested 3 Balance at 31 December 2014	Share capital $’000 201,288 - - - 9,500 149,119 (7,356) 498,147 (145) 850,553 201,288 - - - 20,496 149,119 (7,356) 498,147 (145) 861,549 861,549 - - - 8,904 870,453	Foreign currency translation reserve $’000 (5,675) - (20,695) - - - - - - (26,370) (5,675) - (24,194) - - - - - - (29,869) (29,869) - (8,528) - - (38,397)	Retained earnings $’000 107,268 49,409 - (21,992) - - - - - 134,685 107,268 92,069 (52,252) - - - - - 147,085 147,085 53,949 - (30,490) - 170,544	Hedge reserve $’000 1,996 - 267 - - - - - - 2,263 1,996 - (1,722) - - - - - - 274 274 - (588) - - (314)	Total $’000
					304,877 49,409 (20,428) (21,992) 9,500 149,119 (7,356) 498,147 (145)
					961,131
					304,877 92,069 (25,916) (52,252) 20,496 149,119 (7,356) 498,147 (145)
					979,039
					979,039 53,949 (9,116) (30,490) 8,904
					1,002,286

4

EBOS GROUP LIMITED CONDENSED CONSOLIDATED BALANCE SHEET

As at 31 December 2014

Notes Current assets Cash and cash equivalents Trade and other receivables Prepayments Inventories Current tax refundable Other financial assets – derivatives 8 Total current assets Non-current assets Property, plant and equipment Capital work in progress Prepayments Deferred tax assets Goodwill Indefinite life intangibles Finite life intangibles Investment in associates Total non-current assets Total assets Current liabilities Trade and other payables Finance leases Bank loans 7 Current tax payable Employee benefits Other financial liabilities – derivatives 8 Total current liabilities Non-current liabilities Bank loans 7 Trade and other payables Deferred tax liabilities Finance leases Employee benefits Total non-current liabilities Total liabilities Net assets Equity Share capital 3 Foreign currency translation reserve Retained earnings Cash flow hedge reserve Total equity	31 Dec 14 $’000 (Unaudited) 68,836 785,018 5,533 515,397 82 1,761 1,376,627 108,250 731 34 35,421 763,461 75,708 69,694 32,344 1,085,643 2,462,270 914,690 163 176,021 12,238 26,099 4,540 1,133,751 260,492 14,630 46,545 250 4,316 326,233 1,459,984 1,002,286 870,453 (38,397) 170,544 (314) 1,002,286	31 Dec 13 $’000 (Unaudited) 92,580 755,396 7,269 505,835 1,401 2,630 1,365,111 98,437 693 - 28,936 721,046 56,941 82,067 22,620 1,010,740 2,375,851 874,358 968 176,560 19,615 22,460 1,668 1,095,629 262,641 9,605 40,073 2,566 4,206 319,091 1,414,720 961,131 850,553 (26,370) 134,685 2,263 961,131	30 Jun 14 $’000 (Audited)
			88,698 699,276 6,748 491,624 83 1,442
			1,287,871
			84,854 20,872 54 36,589 720,875 56,576 77,502 24,100
			1,021,422
			2,309,293
			821,391 155 153,334 14,219 28,830 3,404
			1,021,333
			250,826 9,778 43,407 680 4,230
			308,921
			1,330,254
			979,039
			861,549 (29,869) 147,085 274
			979,039

5

EBOS GROUP LIMITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the Six Months ended 31 December 2014

Notes Cash flows from operating activities Receipts from customers Interest received Payments to suppliers and employees Taxes paid Interestpaid Net cash inflow from operating activities 5 Cash flows from investing activities Sale of property, plant & equipment Purchase of property, plant & equipment Payments for capital work in progress Payments for intangible assets Acquisition of associates Acquisition of subsidiaries 11 Net cash (outflow) from investing activities Cash flows from financing activities Proceeds from issue of shares 3 Proceeds from borrowings Repayment of borrowings Dividendspaid to equityholders ofparent 4 Net cash inflow from financing activities Net (decrease) in cash held Effect of exchange rate fluctuations on cash held during the period Net cash and cash equivalents at beginningofperiod Net cash and cash equivalents at end ofperiod	Six months 31 Dec 14 $’000 (Unaudited) 3,021,876 1,192 (2,952,414) (27,494) (12,657) 30,503 637 (9,920) - (102) (5,581) (57,414) (72,380) 8,904 53,433 (8,667) (30,490) 23,180 (18,697) (1,165) 88,698 68,836	Six months 31 Dec 13 $’000 (Unaudited) 2,927,400 1,461 (2,855,278) (8,460) (15,551) 49,572 476 (15,485) - (631) (2,988) (366,853) (385,481) 151,118 317,717 (211,011) (21,992) 235,832 (100,077) (5,357) 198,014 92,580	Year ended 30 Jun 14 $’000 (Audited)
			5,732,731 2,819 (5,561,884) (29,637) (29,877)
			114,152 1,351 (11,725) (20,115) (3,467) (3,520) (366,853)
			(404,329) 162,114 310,327 (233,136) (52,252)
			187,053 (103,124) (6,192) 198,014
			88,698

6

EBOS GROUP LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the Six Months ended 31 December 2014

1. FINANCIAL STATEMENTS

These unaudited condensed consolidated interim financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (“NZ GAAP”). They comply with the New Zealand Equivalent to International Accounting Standard 34 (NZ IAS 34) “Interim Financial Reporting” and International Accounting Standard IAS 34, as applicable for profit orientated entities.

In a presentation change in the current period, interest revenue is now included within net finance costs rather than revenue. Comparative information has also been presented on a similar basis for consistency. Aside from this change in presentation the same accounting policies and methods of computation are applied in the interim financial statements as were applied in the financial statements for the year ended 30 June 2014. These financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report for the year ended 30 June 2014. The information is presented in thousands of New Zealand dollars unless otherwise stated.

2. PROFIT FROM OPERATIONS

(a) (b)		Revenue Revenue from the sale of goods Revenue from the renderingof services Profit before income tax expense Profit before income tax has been arrived at after crediting/(charging) the following gains and losses from operations: Gain on sale of property, plant and equipment Change in fair value of derivative financial instruments Share of profits of associates Profit before income tax has been arrived at after (charging) the following expenses by nature: Cost of sales Write-down of inventory Net finance costs: Interest revenue Interest expense Total net finance costs Impairment on trade & other receivables Depreciation of property, plant & equipment Amortisation of finite life intangibles Operating lease rental expenses Donations Employee benefit expense Defined contribution plan expense Other expenses Total expenses,net of interest revenue Profit before income tax expense	Six months 31 Dec 14 $’000 (Unaudited) 3,074,892 44,981 3,119,873 6 (6) 933 (2,813,355) (1,134) 1,192 (12,657) (11,465) (765) (5,649) (6,217) (12,800) (82) (100,404) (5,892) (86,029) (3,043,792) 77,014	Six months 31 Dec 13 $’000 (Unaudited) 2,955,281 44,770 3,000,051 286 (115) 619 (2,701,778) (1,550) 1,461 (15,551) (14,090) (1,249) (5,187) (6,162) (12,993) (41) (97,585) (5,576) (85,283) (2,931,494) 69,347	Year ended 30 Jun 14 $’000 (Audited)
					5,671,996 85,238
					5,757,234
					(4) (213) 1,567 (5,187,151) (3,771) 2,819 (29,877)
					(27,058) (1,684) (10,173) (12,410) (25,563) (107) (195,232) (11,141) (158,513)
					(5,632,803)
					125,781

7

EBOS GROUP LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)

For the Six Months ended 31 December 2014

3. SHARE CAPITAL

No. ’000 Fully paid ordinary shares Balance at beginning of period 148,720 Dividend reinvested – October 2013 - April 2014 - October 2014 1,019 Rights issue – July 2013 - Share issue costs - Issue of consideration shares – July 2013 - Share issue costs - 149,739	Six months 31 Dec 14 (Unaudited) Total $’000 861,549 - - 8,904 - - - - 870,453	No. ’000 65,546 996 - - 22,941 - 58,127 - 147,610	Six months 31 Dec 13 (Unaudited) Total $’000 201,288 9,500 - - 149,119 (7,356) 498,147 (145) 850,553	No. ’000 65,546 996 1,110 - 22,941 - 58,127 - 148,720	Year ended 30 Jun 14 (Audited) Total $’000
					201,288 9,500 10,996 - 149,119 (7,356) 498,147 (145)
					861,549

4. DIVIDENDS

	Recognised amounts Fully paid ordinary shares Final – prior year Interim – currentyear Unrecognised amounts Final dividend Interim dividend	Six months 31 Dec 14 (Unaudited) Cents per share Total $’000 20.5 30,490 - - 20.5 30,490 - - 22.0 32,943 22.0 32,943	Six months 31 Dec 13 (Unaudited) Cents per share Total $’000 15.0 21,992 - - 15.0 21,992 - - 20.5 30,260 20.5 30,260	Year ended 30 Jun 14 (Audited) Cents per share Total $’000 15.0 21,992 20.5 30,260 35.5 52,252 20.5 30,490 - - 20.5 30,490

The Board approved an interim dividend of 22.0 cents per share on 24 February 2015. The record date for the dividend is 13 March 2015 and the dividend will be paid on 2 April 2015. The Group’s dividend reinvestment plan will be operable for this interim dividend.

8

EBOS GROUP LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)

For the Six Months ended 31 December 2014

5. NOTES TO THE CASH FLOW STATEMENT

Reconciliation of profit for the period with cash flows from operating activities Profit for the period Add/(less) non-cash items: Depreciation of property, plant and equipment Amortisation of finite life intangibles Gain on sale of property, plant & equipment Share of profits of associates Loss on derivative financial instruments Deferred tax Movements in working capital: Trade and other receivables Prepayments Inventories Current tax refundable/(payable) Trade and other payables Provision for employee benefits Foreign currency translation of opening working capital balances Working capital items relating to investing activities Working capital items acquired on acquisition Net cash inflow from operating activities	Six months 31 Dec 14 $’000 (Unaudited) 53,949 5,649 6,217 (6) (933) 6 (1,821) 9,112 (85,742) 1,235 (23,773) (1,980) 98,151 (2,645) (9,496) (24,250) (9,709) 1,401 30,503	Six months 31 Dec 13 $’000 (Unaudited) 49,409 5,187 6,162 (286) (619) 115 (2,901) 7,658 (18,967) 584 52,515 13,464 (17,171) (4,930) (32,990) (7,495) - - 49,572	Year ended 30 Jun 14 $’000 (Audited)
			92,069 10,173 12,410 4 (1,567) 213 (6,366)
			14,867 37,153 1,051 66,726 9,386 (69,965) 1,464 (38,599)
			7,216 - -
			114,152

9

EBOS GROUP LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)

For the Six Months ended 31 December 2014

6. SEGMENT INFORMATION

(a) Products and services from which reportable segments derive their revenues

The Group’s reportable segments under NZ IFRS 8 are as follows:

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

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

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

(b) Segment revenues and results

The following is an analysis of the Group’s revenue and results by reportable segment:

Revenue from external customers Healthcare Animal care Segment result (EBITDA) Healthcare Animal care Corporate Segment expenses Healthcare: Depreciation of property, plant and equipment Amortisation of finite life intangibles Income tax expense Animal care: Depreciation of property, plant and equipment Amortisation of finite life intangibles Income tax expense Corporate: Net finance costs Income tax credit Profit for the period Healthcare Animal care Corporate	Six months 31 Dec 14 $’000 (Unaudited) 2,928,736 191,137 3,119,873 88,541 16,843 (5,039) 100,345 (4,973) (5,039) (23,880) (33,892) (676) (1,178) (3,782) (5,636) (11,465) 4,597 (6,868) 54,649 11,207 (11,907) 53,949	Six months 31 Dec 13 $’000 (Unaudited) 2,823,018 177,033 3,000,051 81,922 15,720 (2,856) 94,786 (4,439) (5,139) (20,133) (29,711) (748) (1,023) (4,402) (6,173) (14,090) 4,597 (9,493) 52,211 9,547 (12,349) 49,409	Year ended 30 Jun 14 $’000 (Audited)
			5,418,356 338,878
			5,757,234 153,055 29,431 (7,064)
			175,422 (8,693) (10,401) (34,644)
			(53,738) (1,480) (2,009) (7,701)
			(11,190) (27,058) 8,633
			(18,425) 99,317 18,241 (25,489)
			92,069

10

EBOS GROUP LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)

For the Six Months ended 31 December 2014

6. SEGMENT INFORMATION (Continued)

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

(c) Segment assets

• The following balance sheet and cash flow items are not allocated to operating segments as they are not reported to the chief operating decision maker at a segment level:

• Assets

• Liabilities

• Capital expenditure

(d) Revenues from major products and services

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

(e) Geographical information

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

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

Revenue from external customers New Zealand Australia Non-current assets New Zealand Australia	Six months 31 Dec 14 $’000 (Unaudited) 672,285 2,447,588 3,119,873 208,455 809,423 1,017,878	Six months 31 Dec 13 $’000 (Unaudited) 649,619 2,350,432 3,000,051 207,002 752,182 959,184	Year ended 30 Jun 14 $’000 (Audited)
			1,278,650 4,478,584
			5,757,234
			207,395 753,338
			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 (December 2013: Nil, June 2014: Nil).

7. BANK FACILITY AND BORROWINGS

The Group fully complies with and operates within the financial covenants under the arrangements with its bankers. At 31 December 2014 the Group had unutilised term and revolving cash advance facilities of $89.6m (December 2013: $79.8m, June 2014: $87.6m).

The Group also has a trade debtor securitisation facility of which $226.3m was unutilised at 31 December 2014 (December 2013: $310m, June 2014: $319.7m).

11

EBOS GROUP LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)

For the Six Months ended 31 December 2014

7. BANK FACILITY AND BORROWINGS (Continued)

During the current period the Group renegotiated some of the terms and conditions of its securitisation and term debt facilities.

This renegotiation included an extension of the expiry date of the securitisation facility to August 2017, previously September 2015, and a voluntary reduction in the available facility limit from NZ$438.6m (A$420m) to $NZ402.0m (A$385m).

The term of the Group’s existing bank debt facilities have also been extended as part of these renegotiations. As a result the maturity profile of the Group’s term debt, working capital and securitisation facilities are now:

Facility Term debt facilities Term debt facilities Term debt facilities Working capital facilities Securitisation facility	Amount $76.9m $92.0m $91.6m $89.9m $402.0m	Maturity August 2016 August 2018 August 2019 July 2015 August 2017

8.

FINANCIAL INSTRUMENTS

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

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

Fair value of derivative financial instruments Other financial assets – derivatives: Foreign currency forward exchange contracts Interest rate swaps Other financial liabilities – derivatives: Foreign currency forward exchange contracts Interest rate swaps	Six months 31 Dec 14 $’000 (Unaudited) 1,761 - 1,761 (30) (4,510) (4,540)	Six months 31 Dec 13 $’000 (Unaudited) 1,077 1,553 2,630 - (1,668) (1,668)	Year ended 30 Jun 14 $’000 (Audited)
			103 1,339
			1,442
			(953) (2,451)
			(3,404)

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

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

12

EBOS GROUP LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)

For the Six Months ended 31 December 2014

8. FINANCIAL INSTRUMENTS (Continued)

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

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

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

9. RELATED PARTY DISCLOSURES

EBOS Group Limited is the immediate parent, ultimate parent and controlling party.

As at 31 December 2014 no balances were owing to or from related parties of EBOS Group Limited (December 2013: Nil, June 2014: Nil).

No amounts owed to related parties have been written off or forgiven during the period.

10. EVENTS AFTER BALANCE DATE

Subsequent to 31 December 2014, the Board approved an interim dividend to shareholders. For further details please refer to Note 4.

13

EBOS GROUP LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)

For the Six Months ended 31 December 2014

11. ACQUISTION OF SUBSIDARIES

On 31 October 2014 the Group acquired 100% control over the issued capital of Blackhawk Premium Pet Care Pty Limited. Details of the acquisition are as follows:

Assets and liabilities acquired:

Assets and liabilities acquired:
Current assets Cash and cash equivalents Trade and other receivables Prepayments Inventories Non-current assets Property, plant and equipment Indefinite life intangibles Current liabilities Trade and other payables Employee benefits Taxation payable Non-current liabilities Deferred tax liabilities Net assets acquired Goodwill on acquisition Total consideration Less cash and cash equivalents acquired Deferredpurchase consideration Net cash(outflow) on acquisition	Carrying Value $’000 Fair value adjustment $’000 Fair value on acquisition $’000
	1,119 - 1,119 4,298 - 4,298 6 - 6 305 - 305 412 - 412 - 21,387_1_ 21,387 (1,309) (361)2 (1,670) (53) - (53) (1,485) - (1,485) - (6,416) 3 (6,416)
	3,293 14,610 17,903 46,257
	64,160 (1,119) (5,627)
	(57,414)

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

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

3. To recognise additional deferred tax liabilities incurred.

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 supply 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 $874,000 to the Group profit for the period. Group revenue for the period includes $4,362,000 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 $3,129,000,000 and the profit for the period from continuing operations would have been $55,400,000.

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EBOS GROUP LIMITED DIRECTORY

CORPORATE HEAD OFFICE

108 Wrights Road P O Box 411 Christchurch 8024 New Zealand Telephone +64 3 338 0999 E-mail: ebos@ebos.co.nz Internet: www.ebosgroup.com

AUSTRALIA HEAD OFFICE

Level 3, 484 St Kilda Road PO Box 7300 Melbourne 3004 Australia Telephone +61 3 9918 555

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 Michael Broome Group General Manager, Contract Logistics Simon Bunde General Manager, Group Operations & Strategy Angus Cooper General Manager, Group Projects, Mergers & Acquisitions John Cullity Chief Financial Officer Sean Duggan Chief Executive Officer, Animal Care Tim Goldenberg Group Human Resources Manager Kelvin Hyland General Manager, EBOS Healthcare David Lewis General Manager, Propharma Greg Managh Group Chief Information Officer Stuart Spencer General Manager, Group Business Development Sarah Turner General Counsel Andrew Vidler General Manager, Retail Services

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.

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