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EBOS GROUP LIMITED Interim / Quarterly Report 2016

Feb 23, 2016

64813_rns_2016-02-23_84bda880-cd66-487b-98be-feead2cd666d.pdf

Interim / Quarterly Report

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EBOS GROUP LIMITED Appendix 4D

Interim Report for the Half Year Ended 31 December 2015

RESULTS FOR ANNOUNCEMENT TO THE MARKET

The following information is presented in accordance with ASX listing rule 4.2A.3 and should be read in conjunction with the attached unaudited EBOS Group Limited interim report for the six months ended 31 December 2015.

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

Current period - the half year ended 31 December 2015 Previous corresponding period - the half year ended 31 December 2014

This report and the attached consolidated interim unaudited financial statements are presented in New Zealand dollars, being the Group’s presentation currency.

2. Group financial results – Half year summary

Group results (NZD000’s) 31 December
2015
NZD$000
(Unaudited)		 31 December
2014
NZD$000
(Unaudited)		 31 December
2014
NZD$000
(Unaudited)		 Change
%
(actual FX
rates)		 Change
%
(actual FX
rates)		 Change
%
(constant
FX rates)
Revenue 3,379,749 3,119,873 + 8.3% + 9.0%
EBITDA 113,725 100,345 + 13.3% + 13.9%
Depreciation and amortisation 12,306 11,866 + 3.7% + 4.5%
Earnings before interest and tax
(EBIT)		 101,419 88,479 + 14.6% + 15.2%
Net profit after tax (NPAT) 64,170 53,949 + 18.9% + 19.6%
Basic EPS – (CPS) 42.5 36.2 + 17.5% + 18.1%
Net tangible asset backing per
ordinary share – ($)		 $0.28 $0.39 - 28.2%
Dividends Amount per
security		 Franked
amount per
security to
30% tax rate
Interim dividend
Interim dividend – previous corresponding period		 26.0c
22.0c		 100%
-
Key dates for the 2016 Interim Dividend:
Ex-dividend date: 10 March 2016
Record date: 11 March 2016 [5:00pm NZ Time]
Dividend payment date: 1 April 2016
Other comments:
The interim dividend will be imputed to 25% for New Zealand resident shareholders, and a
supplementary dividend paid to eligible non-resident shareholders.

1

For supplementary comments on the Group’s financial results refer to the Results Presentation and Media Release issued 24 February 2016.

3.

Entities acquired

On 30 November 2015, the Group acquired the business operations of Red Seal Natural Health Limited. Included in the Group profit from ordinary activities after tax for the period was $248,000 attributable to this acquisition. For further details refer to note 11 of the attached interim report.

On 31 October 2015, the Group acquired 100% control over the issued capital of Nexus Australasia Pty Ltd. The financial impact of this acquisition is considered immaterial for financial reporting purposes.

There were no disposals or loss of control over any entities during the half year ended 31 December 2015.

4. Dividends paid and declared

Amount Total
Per Share Amount Date Paid/
(cents) ($) (Payable)
______ ______ ______
Dividends paid attributable to the year ended
30 June 2015
2015 interim dividend 22.0 cents $32,941,000 2 April 2015
2015 final dividend 25.0 cents $37,673,000 16 October 2015
______________
Dividends declared in respect of the year ending
30 June 2016
2016 interim dividend 26.0 cents $39,300,000 1 April 2016

5. Dividend Reinvestment Plan

The dividend reinvestment plan will not be operable for this interim dividend.

6. Associates and Joint Ventures

The Group equity accounted the following associate entities at 31 December 2015:

Name of business
Proportion of shares and voting rights
__________ ______________
Animates NZ Holdings Limited
50%
VIM Health Pty Limited
50%
Good Price Pharmacy Management Pty Limited 25.8%
Good Price Pharmacy Franchise Pty Limited 25.8%

Income from the individual Associates has not been separately disclosed as it is considered immaterial. Total Income from Investments in Associates for the half year ended 31 December 2015 was $1,852,000 (2014: $933,000).

2

7. Foreign Entities

  • The consolidated interim unaudited financial statements are presented in New Zealand dollars and comply with International Financial Reporting Standards (“IFRS”).

8. Independent Audit Review

The consolidated interim financial statements have been reviewed by an independent Auditor, and the Auditor has given an unmodified review opinion.

EBOS GROUP LIMITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2015

EBOS GROUP LIMITED INTERIM REPORT 2016

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 16

EBOS GROUP LIMITED INTERIM REPORT 2016 SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS

Six months
31 Dec 15
$’000
(Unaudited)		 Six months
31 Dec 14
$’000
(Unaudited)
Year ended
30 Jun 15
$’000
(Audited)
Revenue
3,379,749
Earnings before interest, tax expense, depreciation and amortisation
(EBITDA)
113,725
Earnings before interest and tax expense (EBIT)
101,419
Profit before income tax expense
91,744
Net profit for the period
64,170
Shareholders’ equity
1,070,247
Earnings per share
42.5c
Net interest cover
11.8x
Net interest bearing debt to net interest bearing
debt plus equity
26.2%
Net asset backing per share
$7.07		 3,119,873
6,068,080
100,345
196,695
88,479
172,577
77,014
150,668
53,949
105,941
1,002,286
1,051,028
36.2c
70.8c
8.8x
9.0x
26.9%
23.2%
$6.69
$6.97

SHAREHOLDER CALENDAR

Release of half year result 24 February 2016 Interim dividend record date 11 March 2016 Interim dividend payable 1 April 2016 Release of full year result 25 August 2016 Annual General Meeting 19 October 2016

1

REVIEW REPORT TO THE SHAREHOLDERS OF EBOS GROUP LIMITED

INDEPENDENT REVIEW REPORT TO THE SHAREHOLDERS OF EBOS GROUP LIMITED

We have reviewed the condensed consolidated interim financial statements of EBOS Group Limited and its subsidiaries (“the Group”) which comprise the condensed consolidated balance sheet as at 31 December 2015, 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 15.

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 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 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 2015 and its financial performance and cash flows for the six months ended on that date in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting .

==> picture [88 x 39] intentionally omitted <==

23 February 2016 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 2015 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 23 February 2016 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 2015

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 costs
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 15
$’000
(Unaudited)
3,379,749
1,852
113,725
(6,416)
(5,890)
101,419
1,404
(11,079)
(9,675)
91,744
(27,574)
64,170
42.5
42.5		 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		 Year ended
30 Jun 15
$’000
(Audited)
6,068,080
2,861
196,695
(12,108)
(12,010)
172,577
2,299
(24,208)
(21,909)
150,668
(44,727)
105,941
70.8
70.8

EBOS GROUP LIMITED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 31 December 2015

Profit for the period
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Cash flow hedge (losses)
Related income tax
Translation of foreign operations
Total comprehensive income net of tax		 Six months
31 Dec 15
$’000
(Unaudited)
64,170
(1,615)
452
(14,000)
49,007		 Six months
31 Dec 14
$’000
(Unaudited)
53,949
(811)
223
(8,528)
44,833		 Year ended
30 Jun 15
$’000
(Audited)
105,941
(2,224)
631
11,993
116,341

3

EBOS GROUP LIMITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2015

Notes
Six months ended
31 December 2014 (unaudited):
Opening balance
Profit for the period
Other comprehensive income for
the period, net of tax
Payment of dividends
4
Dividends re-invested
3
Balance at 31 December 2014
Year ended
30 June 2015 (audited):
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 30 June 2015
Six months ended
31 December 2015 (unaudited):
Opening balance
Profit for the period
Other comprehensive income for
the period, net of tax
Payment of dividends
4
Dividends re-invested
3
Balance at 31 December 2015		 Share
capital
$’000
861,549
-
-
-
8,904
870,453
861,549
-
-
-
19,079
880,628
880,628
-
-
-
7,885
888,513		 Foreign
currency
translation
reserve
$’000
(29,869)
-
(8,528)
-
-
(38,397)
(29,869)
-
11,993
-
-
(17,876)
(17,876)
-
(14,000)
-
-
(31,876)		 Retained
earnings
$’000
147,085
53,949
-
(30,490)
-
170,544
147,085
105,941
-
(63,431)
-
189,595
189,595
64,170
-
(37,673)
-
216,092		 Cash flow
hedge
reserve
$’000
274
-
(588)
-
-
(314)
274
-
(1,593)
-
-
(1,319)
(1,319)
-
(1,163)
-
-
(2,482)		 Total
$’000
979,039
53,949
(9,116)
(30,490)
8,904
1,002,286
979,039
105,941
10,400
(63,431)
19,079
1,051,028
1,051,028
64,170
(15,163)
(37,673)
7,885
1,070,247

4

EBOS GROUP LIMITED CONDENSED CONSOLIDATED BALANCE SHEET

As at 31 December 2015

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 15
$’000
(Unaudited)
115,810
869,559
6,671
548,776
88
468
1,541,372
102,884
-
330
44,547
828,922
92,058
61,779
35,576
1,166,096
2,707,468
1,028,647
540
307,970
13,577
29,368
6,638
1,386,740
186,458
10,324
48,936
109
4,654
250,481
1,637,221
1,070,247
888,513
(31,876)
216,092
(2,482)
1,070,247		 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		 30 Jun 15
$’000
(Audited)
109,521
803,839
7,935
518,272
88
2,184
1,441,839
111,599
-
439
48,284
764,618
79,043
69,325
34,911
1,108,219
2,550,058
952,257
153
153,245
16,990
33,573
6,047
1,162,265
272,852
10,042
48,853
191
4,827
336,765
1,499,030
1,051,028
880,628
(17,876)
189,595
(1,319)
1,051,028

5

EBOS GROUP LIMITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 31 December 2015

Notes
Cash flows from operating activities
Receipts from customers
Interest received
Dividends received from associates
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 intangible assets
Acquisition of associates
Acquisition of subsidiaries
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/(outflow) from financing activities
Net increase/(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 15
$’000
(Unaudited)
3,280,499
1,404
590
(3,195,047)
(29,812)
(11,079)
46,555
5,046
(5,853)
(958)
(1,107)
(89,457)
(92,329)
7,885
84,430
-
(37,673)
54,642
8,868
(2,579)
109,521
115,810		 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		 Year ended
30 Jun 15
$’000
(Audited)
5,994,123
2,299
301
(5,785,720)
(53,006)
(24,208)
133,789
458
(14,977)
(464)
(6,710)
(57,414)
(79,107)
19,079
23,584
(15,161)
(63,431)
(35,929)
18,753
2,070
88,698
109,521

6

EBOS GROUP LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 December 2015

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.

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 2015. These financial statements should be read in conjunction with the financial statements and related notes included in the Group’s Annual Report for the year ended 30 June 2015. 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:
(Loss)/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 followingexpenses bynature:
Cost of sales
Write-down of inventory
Net finance costs:
Finance income
Finance costs
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 15
$’000
(Unaudited)
3,326,984
52,765
3,379,749
(191)
(770)
1,852
(3,044,051)
(2,012)
1,404
(11,079)
(9,675)
(861)
(6,416)
(5,890)
(14,766)
(81)
(106,251)
(6,299)
(92,594)
(3,288,896)
91,744		 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		 Year ended
30 Jun 15
$’000
(Audited)
5,979,980
88,100
6,068,080
(88)
323
2,861
(5,464,445)
(3,483)
2,299
(24,208)
(21,909)
(1,869)
(12,108)
(12,010)
(27,009)
(124)
(198,695)
(11,560)
(167,296)
(5,920,508)
150,668

7

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

For the six months ended 31 December 2015

3. SHARE CAPITAL

Six months
31 Dec 15
No.
’000
Total
$’000
(Unaudited)
150,687
880,628
-
-
-
-
627
7,885
151,314
888,513
Six months
31 Dec 15
Cents per
share
Total
$’000
(Unaudited)
25.0
37,673
-
-
25.0
37,673
-
-
26.0
39,342
26.0
39,342		 No.
’000
148,720
1,019
-
-
149,739
Cents per
share		 Six months
31 Dec 14
Total
$’000
(Unaudited)
861,549
8,904
-
-
870,453
Six months
31 Dec 14
Total
$’000
(Unaudited)
30,490
-
30,490
-
32,941
32,941		 No.
’000
148,720
1,019
948
-
150,687
Cents per
share
20.5
22.0
42.5
25.0
-
25.0		 Year ended
30 Jun 15
Total
$’000
(Audited)
Fully paid ordinary
shares
Balance at beginning
of period
Dividend reinvested –
October 2014
April 2015
October 2015
DIVIDENDS
Recognised amounts
Fully paid ordinary shares
Final – prior year
Interim – currentyear
Unrecognised amounts
Final dividend
Interim dividend		 861,549
8,904
10,175
-
880,628
Year ended
30 Jun 15
Total
$’000
(Audited)
20.5
-		 30,490
32,941
20.5 63,431
-
22.0		 37,673
-
22.0 37,673

4. DIVIDENDS

The Board approved an interim dividend of 26.0 cents per share on 23 February 2016. The record date for the dividend is 11 March 2016 and the dividend will be paid on 1 April 2016.

8

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

For the six months ended 31 December 2015

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
Loss/(gain) on sale of property, plant & equipment
Share of profits of associates, net of dividends
received
Loss/(gain) on derivative financial instruments
Deferred tax
Provision for doubtful debts
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 15
$’000
(Unaudited)
64,170
6,416
5,890
191
(1,262)
770
212
132
12,349
(65,852)
1,373
(30,504)
(3,413)
76,672
(4,378)
(14,249)
(40,351)
1,111
9,276
46,555		 Six months
31 Dec 14
$’000
(Unaudited)
53,949
5,649
6,217
(6)
(933)
6
(1,821)
349
9,461
(86,091)
1,235
(23,773)
(1,980)
98,151
(2,645)
(9,496)
(24,599)
(9,707)
1,399
30,503		 Year ended
30 Jun 15
$’000
(Audited)
105,941
12,108
12,010
88
(2,861)
(323)
(8,293)
355
13,084
(104,918)
(1,572)
(26,648)
2,766
131,130
5,340
13,973
20,071
(6,706)
1,399
133,789

9

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

For the six months ended 31 December 2015

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 15
$’000
(Unaudited)
3,169,276
210,473
3,379,749
99,755
19,587
(5,617)
113,725
(5,766)
(4,683)
(26,855)
(37,304)
(650)
(1,207)
(4,958)
(6,815)
(9,675)
4,239
(5,436)
62,451
12,772
(11,053)
64,170		 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		 Year ended
30 Jun 15
$’000
(Audited)
5,692,888
375,192
6,068,080
170,167
37,118
(10,590)
196,695
(10,762)
(9,695)
(41,655)
(62,112)
(1,346)
(2,315)
(11,616)
(15,277)
(21,909)
8,544
(13,365)
108,055
21,841
(23,955)
105,941

10

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

For the six months ended 31 December 2015

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 15
$’000
(Unaudited)
737,225
2,642,524
3,379,749
286,558
799,415
1,085,973		 Six months
31 Dec 14
$’000
(Unaudited)
672,285
2,447,588
3,119,873
208,455
809,423
1,017,878		 Year ended
30 Jun 15
$’000
(Audited)
1,343,884
4,724,196
6,068,080
206,410
818,614
1,025,024
  • (f) Information about major customers

No revenues from transactions with a single customer amount to 10% or more of the Group’s revenues (December 2014: Nil, June 2015: 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 2015 the Group had unutilised term and revolving cash advance facilities of $87.7m (December 2014: $89.6m, June 2015: $91.7m).

The Group also has a trade debtor securitisation facility of which $182.7m was unutilised at 31 December 2015 (December 2014: $226.3m, June 2015: $277.7m).

11

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

For the six months ended 31 December 2015

7. BANK FACILITY AND BORROWINGS (Continued)

As at 31 December 2015 the maturity profile of the Group’s term debt, working capital and securitisation facilities was:

Facility
Working capital facilities
Term debt facilities
Term debt facilities
Term debt facilities
Securitisation facility		 Amount
$90.4m
$77.6m
$93.0m
$93.5m
$410.4m		 Maturity
July 2016
August 2016
August 2018
August 2019
July 2017

Subsequent to 31 December 2015 the Group has entered into an agreement to extend the maturity date of the Securitisation facility to September 2018 and increase the facility limit by $42.6m to $453m.

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 currencyforward exchange contracts
Other financial liabilities – derivatives:
Foreign currency forward exchange contracts
Interest rate swaps		 Six months
31 Dec 15
$’000
(Unaudited)
468
468
(1,103)
(5,535)
(6,638)		 Six months
31 Dec 14
$’000
(Unaudited)
1,761
1,761
(30)
(4,510)
(4,540)		 Year ended
30 Jun 15
$’000
(Audited)
2,184
2,184
-
(6,047)
(6,047)

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 2015

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 2015 no balances were owing to or from related parties of EBOS Group Limited (December 2014: Nil, June 2015: 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 2015, the Board approved an interim dividend to shareholders. For further details please refer to Note 4.

Subsequent to 31 December 2015, the Group renegotiated the maturity date and facility limit of the Securitisation facility. For further details please refer to Note 7.

13

EBOS GROUP LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)

For the six months ended 31 December 2015

11. ACQUISITION OF SUBSIDIARIES

The following material acquisitions of subsidiaries took place during the period.

On 30 November 2015 the Group acquired the business operations of Red Seal Natural Health Limited (‘Red Seal’). Details of the acquisition are as follows:

Assets and liabilities acquired:

Assets and liabilities acquired:
Current assets
Trade and other receivables
Inventories
Non-current assets
Property, plant and equipment
Indefinite life intangibles
Current liabilities
Trade and other payables
Employee benefits
Finance lease
Non-current liabilities
Deferred tax liabilities
Net assets acquired
Goodwill on acquisition
Total consideration
Deferredpurchase consideration
Net cash(outflow) on acquisition		 Carrying Value
$’000
(Unaudited)
Fair value
adjustment
$’000
(Unaudited)
Fair value on
acquisition
$’000
(Unaudited)
4,033
(136)1
3,897
6,333
(400)2
5,933
1,492
216_3_
1,708
-
16,000_4_
16,000
(3,929)
(738)5
(4,667)
(316)
-
(316)
-
(394)6
(394)
-
(4,231)7
(4,231)
7,613
10,317
17,930
62,337
80,267
(267)
(80,000)

1. To recognise the fair value of trade and other receivables expected to be received on acquisition.

2. To recognise the fair value of inventory acquired on acquisition.

3. To recognise additional net property, plant and equipment assets identified on acquisition.

4. To recognise the ‘Red Seal’ brand as a result of a valuation performed at acquisition.

5. To recognise additional liabilities identified on acquisition.

6. To recognise a finance lease arrangement in place on acquisition.

7. To recognise additional deferred tax liability balances incurred on acquisition.

Goodwill arising on acquisition

Goodwill arose on the acquisition of the business operations of Red Seal 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.

Red Seal was acquired as it is a profitable healthcare business which the Group believes fits strategically with its Australasian Retail Services business assets.

Impact of the acquisition on the results of the Group

Red Seal contributed $248,000 to the Group profit for the period. Group revenue for the period includes $3,314,000 in respect of Red Seal. Had the Red Seal acquisition been effective at 1 July 2015, the revenue of the Group from continuing operations would have been $3,397,779,000 and the profit for the period from continuing operations would have been $65,704,000.

14

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

For the six months ended 31 December 2015

11. ACQUISITION OF SUBSIDIARIES (Continued)

During the current period the Group also acquired 100% control over the issued capital of Nexus Australasia Pty Ltd for $5.4m. The financial impact of this acquisition is considered to be immaterial for financial reporting purposes.

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
Deferred tax assets
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
(Unaudited)
Fair value
adjustment
$’000
(Unaudited)
Fair value on
acquisition
$’000
(Unaudited)
1,119
-
1,119
4,297
-
4,297
6
-
6
305
-
305
412
-
412
-
21,387_1_
21,387
-
3,071_2_
3,071
(1,310)
(361)3
(1,671)
(53)
-
(53)
(1,485)
-
(1,485)
-
(6,380) 2
(6,380)
3,291
17,717
21,008
43,152
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 deferred tax liabilities incurred.

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

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 for the period ended 31 December 2014

Blackhawk contributed $874,000 to the Group profit for the period. Group revenue for that period included $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.

15

EBOS GROUP LIMITED DIRECTORY

CORPORATE HEAD OFFICE

108 Wrights Road PO Box 411 Christchurch 8024 New Zealand Telephone +64 3 338 0999 E-mail: [email protected] Internet: www.ebosgroup.com

AUSTRALIA HEAD OFFICE

Level 3, 484 St Kilda Road PO Box 7300 Melbourne 3004 Australia Telephone +61 3 9918 5555

DIRECTORS

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

SHARE REGISTER

Computershare Investor Services Ltd Private Bag 92119 Auckland 1142 New Zealand Telephone: +64 9 488 8777

Computershare Investor Services Pty Ltd GPO Box 3329 Melbourne, Victoria 3001 Australia 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.investorcentre.com/nz General enquiries can be directed to:

  • [email protected]

  • 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.

16

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