EBOS GROUP LIMITED — Interim / Quarterly Report 2019

Feb 19, 2019

EBOS GROUP LIMITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2018

EBOS GROUP LIMITED INTERIM REPORT 2019

CONTENTS	Page
Summary of Consolidated Financial Highlights	1
Shareholder Calendar	1
Auditor’s Independent Review Report	2
Condensed Consolidated Income Statement	3
Condensed Consolidated Statement of Comprehensive Income	4
Condensed Consolidated Statement of Changes in Equity	5
Condensed Consolidated Balance Sheet	7
Condensed Consolidated Cash Flow Statement	8
Notes to the Condensed Consolidated Interim Financial Statements	9
Directory	19

EBOS GROUP LIMITED

INTERIM REPORT 2019

SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS

Six months 31 Dec 18 A$’000 (Unaudited) Six months 31 Dec 17 A$’000 (Unaudited)

Year ended 30 Jun 18 A$’000 (Unaudited)

Revenue 3,496,498 3,595,243 Profit before net finance costs, tax expense, depreciation and amortisation (EBITDA) 122,566 126,288 Earnings before interest and tax expense (EBIT) 107,318 110,529 Profit before income tax expense 94,962 100,741 Profit for the period 67,238 70,609 Profit for the period attributable to owners of the Company 67,045 69,891 Equity attributable to owners of the Company 1,053,285 1,026,420 Earnings per share 44.1c 46.0c Interim dividend per share (New Zealand dollars) 34.5c 33.0c

6,986,731 250,052 218,153 197,282 139,269 137,274 1,051,492 90.4c 33.0c

SHAREHOLDER CALENDAR

Interim dividend record date Interim dividend payable Release of 2019 full year results Annual General Meeting

15 March 2019 5 April 2019 22 August 2019 15 October 2019

1

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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 2018, and 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 9 to 18.

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 auditor we have no relationship with or interests in the Company or its subsidiaries.

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 2018 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 .

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Chartered Accountants

19 February 2019 Christchurch, New Zealand

2

EBOS GROUP LIMITED CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 31 December 2018

Notes Revenue 2(a) Income from associates 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 Finance costs Profit before income tax expense Income tax expense Profit for theperiod Profit for the period attributable to: Owners of the Company Non-controllinginterests Earnings per share Basic (cents per share) Diluted (cents per share)	Six months 31 Dec 18 A$’000 (Unaudited) 3,496,498 1,814 122,566 (7,490) (7,758) 107,318 942 (13,298) 94,962 (27,724) 67,238 67,045 193 67,238 44.1 44.1	Six months 31 Dec 17 A$’000 (Unaudited) 3,595,243 1,912 126,288 (8,124) (7,635) 110,529 945 (10,733) 100,741 (30,132) 70,609 69,891 718 70,609 46.0 46.0	Year ended 30 Jun 18 A$’000 (Unaudited)
			6,986,731 4,140 250,052 (16,210) (15,689)
			218,153 1,631 (22,502)
			197,282 (58,013)
			139,269
			137,274 1,995
			139,269
			90.4 90.4

3

EBOS GROUP LIMITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 31 December 2018

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 Movement on equity instruments fair valued through other comprehensive income Movement in foreign currencytranslation reserve Total comprehensive income net of tax Total comprehensive income for the period is attributable to: Owners of the Company Non-controllinginterests	Six months 31 Dec 18 A$’000 (Unaudited) 67,238 (2,158) 714 (2,593) 10,517 73,718 73,525 193 73,718	Six months 31 Dec 17 A$’000 (Unaudited) 70,609 882 (251) (1,610) (11,437) 58,193 57,475 718 58,193	Year ended 30 Jun 18 A$’000 (Unaudited)
			139,269 2,060 (588) (1,424) (9,297)
			130,020
			128,025 1,995
			130,020

4

EBOS GROUP LIMITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2018

Notes Six months ended 31 December 2017 (unaudited): Opening balance Profit for the period Other comprehensive income for the period, net of tax Dividends 4 Share basedpayments Balance at 31 December 2017 Year ended 30 June 2018 (unaudited): Opening balance Profit for the year Other comprehensive income for the year, net of tax Dividends 4 Share basedpayments Balance at 30 June 2018	Share capital A$’000 763,636 - - - - 763,636 763,636 - - - - 763,636	Share based payments reserve A$’000 466 - - - 327 793 466 - - - 1,678 2,144	Foreign currency translation reserve A$’000 (13,508) - (11,437) - - (24,945) (13,508) - (9,297) - - (22,805)	Retained earnings A$’000 264,239 69,891 - (46,185) - 287,945 264,239 137,274 - (93,014) - 308,499	Cash flow hedge reserve A$’000 (30) - 631 - - 601 (30) - 1,472 - - 1,442	Equity instruments fair valued through other comprehensive income reserve A$’000 - - (1,610) - - (1,610) - - (1,424) - - (1,424)	Non- controlling interests A$’000 19,357 718 - - - 20,075 19,357 1,995 - - - 21,352	Total A$’000
								1,034,160 70,609 (12,416) (46,185) 327
								1,046,495
								1,034,160 139,269 (9,249) (93,014) 1,678
								1,072,844

5

EBOS GROUP LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)

For the six months ended 31 December 2018

Notes Six months ended 31 December 2018 (unaudited): Opening balance Profit for the period Other comprehensive income for the period, net of tax Dividends 4 Arising on acquisition of remaining non-controlling interest 9 Share based payments Transfer of non-controlling interest Balance at 31 December 2018	Share capital A$’000 763,636 - - - - - - 763,636	Share based payments reserve A$’000 2,144 - - - - 882 - 3,026	Foreign currency translation reserve A$’000 (22,805) - 10,517 - - - - (12,288)	Retained earnings A$’000 308,499 67,045 - (49,386) - - (23,228) 302,930	Cash flow hedge reserve A$’000 1,442 - (1,444) - - - - (2)	Equity instruments fair valued through other comprehensive income reserve A$’000 (1,424) - (2,593) - - - - (4,017)	Non- controlling interests A$’000 21,352 193 - - (46,678) - 23,228 (1,905)	Total A$’000
								1,072,844 67,238 6,480 (49,386) (46,678) 882 -
								1,051,380

6

EBOS GROUP LIMITED CONDENSED CONSOLIDATED BALANCE SHEET

As at 31 December 2018

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 Other financial assets Total non-current assets Total assets Current liabilities Trade and other payables 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 Employee benefits Total non-current liabilities Total liabilities Net assets Equity Share capital 3 Share based payments reserve Foreign currency translation reserve Retained earnings Cash flow hedge reserve Equityinstruments fair valued through OCI Equityattributable to owners of the company Non-controllinginterests Total equity	31 Dec 18 A$’000 (Unaudited) 152,144 910,318 9,532 564,602 1,229 807 1,638,632 120,934 54,452 68 46,398 945,698 123,382 51,923 38,979 6,747 1,388,581 3,027,213 1,145,003 213,762 14,995 35,890 3,639 1,413,289 490,370 14,406 51,276 6,492 562,544 1,975,833 1,051,380 763,636 3,026 (12,288) 302,930 (2) (4,017) 1,053,285 (1,905) 1,051,380	31 Dec 17 A$’000 (Unaudited) 129,934 958,354 8,584 565,147 3,607 230 1,665,856 109,446 41,137 3 43,749 878,377 117,561 65,086 34,754 9,681 1,299,794 2,965,650 1,259,055 208,591 19,338 36,385 2,058 1,525,427 328,258 11,944 47,806 5,720 393,728 1,919,155 1,046,495 763,636 793 (24,945) 287,945 601 (1,610) 1,026,420 20,075 1,046,495	30 Jun 18 A$’000 (Unaudited)
			149,869 916,861 9,041 535,082 59 1,306
			1,612,218
			112,166 58,329 - 48,682 893,796 121,717 58,877 37,009 9,269
			1,339,845
			2,952,063
			1,170,128 147,149 11,431 40,724 1,980
			1,371,412
			435,121 13,484 53,258 5,944
			507,807
			1,879,219
			1,072,844
			763,636 2,144 (22,805) 308,499 1,442 (1,424)
			1,051,492
			21,352
			1,072,844

7

EBOS GROUP LIMITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 31 December 2018

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 capital work in progress Payments for intangible assets Acquisition of subsidiaries Investment in other financial assets Net cash (outflow) from investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Dividendspaid to equityholders ofparent 4 Net cash inflow/(outflow) 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 18 A$’000 (Unaudited) 3,556,358 942 959 (3,479,059) (25,647) (13,298) 40,255 98 (11,189) (5,013) (795) (92,389) (110) (109,398) 128,361 (9,169) (50,138) 69,054 (89) 2,364 149,869 152,144	Six months 31 Dec 17 A$’000 (Unaudited) 3,654,783 945 645 (3,525,717) (28,007) (10,733) 91,916 78 (8,658) (19,549) (568) (1,304) (10,535) (40,536) - (26,791) (44,947) (71,738) (20,358) (3,910) 154,202 129,934	Year ended 30 Jun 18 A$’000 (Unaudited)
			7,055,426 1,631 859 (6,813,234) (60,044) (22,502)
			162,136 155 (15,838) (39,750) (2,492) (21,207) (9,717)
			(88,849) 27,077 (9,003) (91,993)
			(73,919) (632) (3,701) 154,202
			149,869

8

EBOS GROUP LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 December 2018

1. FINANCIAL STATEMENTS

These unaudited condensed consolidated interim financial statements have been prepared in accordance with Generally Accepted Accounting Practice (“GAAP”). They comply with the New Zealand Equivalent to International Accounting Standard 34 (NZ IAS 34) “Interim Financial Reporting” and International Accounting Standard IAS 34, as applicable for profit orientated entities. 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 2018. The numbers presented for 30 June 2018 have been audited in New Zealand dollars however no audit opinion on the Australian dollar presentation for this period has yet been issued, this will occur when the 30 June 2019 financial statements are audited. Hence these numbers have been referred to as ‘unaudited’ in these financial statements. Apart from the changes noted below, the accounting policies adopted are consistent with those of the previous year.

– Presentation currency change in accounting policy:

The Group’s revenues, profits and cash flows are primarily generated in Australian Dollars (AUD) and are expected to remain principally denominated in AUD in the future. Effective from 1 July 2017 the Group changed the currency in which it presents its financial statements from New Zealand Dollars (NZD) to AUD in order to better reflect the underlying performance of the Group. A change in presentation currency is a change in accounting policy which is accounted for retrospectively.

Statutory financial information included in the Group’s interim financial statements for the six months ended 31 December 2017 and year ended 30 June 2018, previously reported in NZD, has been restated into AUD using the procedures outlined below:

• Assets and liabilities denominated in currencies other than AUD were translated into AUD at the closing rates of exchange on the last day of the relevant accounting period;

• Revenues and expenses in currencies other than AUD were translated into AUD at the transaction date rate;

• Share capital and reserves were translated at the historic rates prevailing at the transaction dates; and

• In each case, the rates of exchange were consistent with those used by the Group in the relevant accounting period.

In undertaking the translation of financial statements into an Australian dollar presentation currency it was determined that goodwill associated with the Symbion acquisition in Australia in 2013, previously denominated in New Zealand dollars, should be denominated in Australian dollars as it aligns with the functional currency of the underlying operations of the acquired entity. Comparative periods have been also adjusted to allow comparability between periods. This adjustment (1 July 2017: $61.6m, 31 December 2017: $39.0m and 30 June 2018: $43.6m) impacted the balance sheet only, with decreases to goodwill and equity balances, with no impact on the income statement or cash flow statement in the comparative periods.

The Directors have not included the original amounts and the adjustment as we consider this would not be meaningful to users of the financial statements as these financial statements are now presented in Australian dollars.

NZ IFRS 9 (2014) Financial Instruments:

Application of NZ IFRS 9 (2014) Financial Instruments, which became effective for the Group on 1 July 2018, requires an expected credit loss model, as opposed to an incurred credit loss model under NZ IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. It is no longer necessary for a credit event to have occurred before credit losses are recognised.

Under NZ IFRS 9 (2014), greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify as hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an “economic relationship”. Retrospective assessment of hedge effectiveness is also no longer required.

Impairment - Financial assets measured at amortised cost being cash and cash equivalents and trade receivables are subject to the impairment provisions of NZ IFRS 9 (2014).

The Group applies the simplified approach to recognise lifetime expected credit losses for financial assets as required or permitted by NZ IFRS 9 (2014). In general, the application of the expected credit loss model of NZ IFRS 9 (2014) results in earlier recognition of credit losses and increases the amount of loss allowance recognised for those items.

Hedge Accounting - As the new hedge accounting requirements align more closely with the Group’s risk management policies, with generally more qualifying hedging instruments and hedged items, an assessment of the Group’s current hedging relationships indicated that they qualified as continuing hedging relationships upon application of NZ IFRS 9 (2014). Similar to the Group’s current hedge accounting policy, the directors do not intend to exclude the forward element of foreign currency forward contracts from designated hedging relationships.

No material impact on these financial statements has been recognised as a result of adopting this standard, other than the Group’s equity investment in MedAdvisor Pty Ltd has been designated by the Directors as an equity instrument to be fair valued through Other Comprehensive Income (OCI) as allowable under the standard, for both the current and comparable periods presented.

9

EBOS GROUP LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 31 December 2018

1. FINANCIAL STATEMENTS (Continued)

NZ IFRS 15 Revenue from Contracts with Customers: NZ IFRS 15 Revenue from Contracts with Customers also became effective for the Group on 1 July 2018.

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer. The Group has applied the modified approach on transitioning to NZ IFRS 15 and has applied the standard on initial application being 1 July 2018. No material impact on these financial statements has been recognised as a result of adopting this standard.

The information is presented in thousands of Australian dollars unless otherwise stated.

2. PROFIT FROM OPERATIONS

(a)	Revenue Community Pharmacy Institutional Healthcare Contract Logistics services Consumer Products Interdivisional eliminations Healthcare Animal care	Six months 31 Dec 18 A$’000 (Unaudited) 1,892,192 1,154,850 234,779 59,618 (37,247) 3,304,192 192,306 3,496,498	Six months 31 Dec 17 A$’000 (Unaudited) 2,018,612 1,148,205 217,016 54,396 (32,545) 3,405,684 189,559 3,595,243	Year ended 30 Jun 18 A$’000 (Unaudited)
				3,871,426 2,239,592 454,210 108,616 (65,272)
				6,608,572 378,159
				6,986,731

Community Pharmacy

Revenue is derived from the supply of human healthcare products to pharmacies in Australia and New Zealand. Following delivery, the customer obtains control as it has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility when on selling the goods and bears the risks of loss in relation to the goods. A receivable is recognised by the Group when it loses control which is when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is made.

Institutional Healthcare

Revenue is derived from the supply of human healthcare products to public and private hospitals, medical centres, GP clinics and aged care facilities in Australia and New Zealand. Following delivery, the customer obtains control as it has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility when on selling the goods and bears the risks of loss in relation to the goods. A receivable is recognised by the Group when it loses control which is when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is made.

Contract Logistics

Sales: Sales consist of the sale of human healthcare products to a wide range of healthcare customers (wholesalers, pharmacies and medical centres). A receivable is recognised by the Group when it loses control which is when the goods are confirmed to be on sold by the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is made.

Service fees: Revenue is derived from the provision of logistical services for a fee to overseas based healthcare manufacturers for their operating activities in Australia and New Zealand. The performance obligation is satisfied either at a point in time or over time, as applicable, at which point the right to consideration becomes unconditional, as only the passage of time is required before payment is made.

10

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

For the six months ended 31 December 2018

2. PROFIT FROM OPERATIONS (Continued)

Consumer Products

Revenue is derived from the supply of EBOS’ own branded human healthcare products, such as Red Seal, Faulding, Natures Kiss, Quicknits and Floradix, to pharmacies and supermarkets in Australia and New Zealand and overseas distributors for export markets. Following delivery, the customer obtains control as it has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility when on selling the goods and bears the risks of loss in relation to the goods. A receivable is recognised by the Group when it loses control which is when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is made.

Animal care

Revenue is derived from the supply of Animal care products to pet retail and vet clinics across Australia and New Zealand. Following delivery, the customer obtains control as it has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility when on selling the goods and bears the risks of loss in relation to the goods. A receivable is recognised by the Group when it loses control which is when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is made.

(b)			Six months 31 Dec 18 A$’000 (Unaudited) (8,820) (3,090,157) (1,512) 671 (7,490) (7,758) (21,513) (15) (139,397) (8,026) (106,977) (3,390,994)	Six months 31 Dec 17 A$’000 (Unaudited) - (3,198,066) (645) (523) (8,124) (7,635) (19,059) (22) (136,737) (7,434) (108,381) (3,486,626)		Year ended 30 Jun 18 A$’000 (Unaudited) - (6,196,382) (3,711) (1,753) (16,210) (15,689) (39,685) (243) (272,771) (14,967) (211,307)
	Profit before income tax expense Profit before income tax has been arrived at after charging the following expenses by nature: One-off items (1) Cost of sales Write-down of inventory 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
						(6,772,718)

(1) One-off items comprise of merger and acquisition, warehouse transition and restructuring costs incurred, $11.7m, net of a gain on sale of excess land held, $2.9m, during the period.

11

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

For the six months ended 31 December 2018

3. SHARE CAPITAL

		Six months 31 Dec 18 No. ’000 A$’000 (Unaudited) 152,539 763,636 - - 152,539 763,636 AUD Six months 31 Dec 18 Cents per share A$’000 (Unaudited) 32.4 49,386 - - 32.4 49,386 - - 32.8 50,100 32.8 50,100		No. ’000 151,914 625 152,539 AUD Cents per share	Six months 31 Dec 17 A$’000 (Unaudited) 763,636 - 763,636 Six months 31 Dec 17 A$’000 (Unaudited) 46,185 - 46,185 - 45,787 45,787	No. ’000 151,914 625 152,539 AUD Cents per share	Year ended 30 Jun 18 A$’000 (Unaudited)
Fully paid ordinary shares Balance at beginning of period Shares issued – September 2017 DIVIDENDS Recognised amounts Fully paid ordinary shares Final – prior year Interim – currentyear Unrecognised amounts Final dividend Interim dividend							763,636 -
							763,636
							Year ended 30 Jun 18 A$’000 (Unaudited)
				30.3 -		30.3 30.7	46,185 46,829
				30.3		61.0	93,014
				- 30.0		32.6 -	49,711 -
				30.0		32.6	49,711

4. DIVIDENDS

Dividends are approved by the Board in New Zealand dollars. Dividends recognised in the Statement of Changes in Equity are converted from New Zealand dollars to Australian Dollars at the exchange rate applicable on the date the dividend was approved. Unrecognised dividends are converted at the exchange rate applicable on the reporting date. The Board approved an interim dividend of 34.5 New Zealand cents per share on 19 February 2019. The record date for the dividend is 15 March 2019 and the dividend will be paid on 5 April 2019.

The following table shows dividends approved in New Zealand dollars:

Recognised amounts Fully paid ordinary shares Final – prior year Interim – currentyear Unrecognised amounts Final dividend Interim dividend	NZD Cents per share 35.5 - 35.5 - 34.5 34.5	NZD Cents per share 33.0 - 33.0 - 33.0 33.0	NZD Cents per share
			33.0 33.0
			66.0
			35.5 -
			35.5

New Zealand dollar dividends paid to equity holders of the parent are translated into Australian dollars and disclosed in the cash flow statement at the foreign currency exchange rate applicable on the date they are paid.

12

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

For the six months ended 31 December 2018

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)/loss on sale of property, plant & equipment Income from associates Expense recognised in respect of share based payments 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 18 A$’000 (Unaudited) 67,238 7,490 7,758 (2,856) (1,814) 585 955 12,118 6,543 (559) (29,520) 2,394 (24,192) (4,286) 555 (49,065) 4,152 5,812 40,255	Six months 31 Dec 17 A$’000 (Unaudited) 70,609 8,124 7,635 (14) (1,912) 327 (149) 14,011 32,235 (1,130) (21,288) 2,380 (4,699) (2,312) 2,783 7,969 (673) - 91,916	Year ended 30 Jun 18 A$’000 (Unaudited)
			139,269 16,210 15,689 15 (4,140) 772 908
			29,454
			73,728 (1,590) 8,777 (1,979) (92,073) 2,251 1,663
			(9,223)
			1,652 984
			162,136

13

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

For the six months ended 31 December 2018

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 to Consumer Pharmacy, Institutional Healthcare, Contract Logistics and Consumer Products customers.

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 either 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 (1) Animal care Corporate(1) 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 (1) Animal care Corporate(1)	Six months 31 Dec 18 A$’000 (Unaudited) 3,304,192 192,306 3,496,498 104,270 24,319 (6,023) 122,566 (7,111) (6,679) (26,541) (40,331) (379) (1,079) (6,408) (7,866) (12,356) 5,225 (7,131) 63,939 16,453 (13,154) 67,238	Six months 31 Dec 17 A$’000 (Unaudited) 3,405,684 189,559 3,595,243 109,419 22,183 (5,314) 126,288 (7,652) (6,428) (28,834) (42,914) (472) (1,207) (5,735) (7,414) (9,788) 4,437 (5,351) 66,505 14,769 (10,665) 70,609	Year ended 30 Jun 18 A$’000 (Unaudited)
			6,608,572 378,159
			6,986,731 216,579 45,655 (12,182)
			250,052 (15,326) (13,273) (55,163)
			(83,762) (884) (2,416) (11,870)
			(15,170) (20,871) 9,020
			(11,851) 132,817 30,485 (24,033)
			139,269

(1) Includes one-off (net) costs of $8.8m for the six months to 31 December 2018, the after tax impact of these costs was $6.2m for the period (December 2017: nil, June 2018: nil).

14

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

For the six months ended 31 December 2018

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 investments in associates and deferred tax assets) are detailed below:

Revenue from external customers New Zealand Australia Non-current assets New Zealand Australia	Six months 31 Dec 18 A$’000 (Unaudited) 784,418 2,712,080 3,496,498 290,966 1,012,238 1,303,204	Six months 31 Dec 17 A$’000 (Unaudited) 722,118 2,873,125 3,595,243 264,292 956,999 1,221,291	Year ended 30 Jun 18 A$’000 (Unaudited)
			1,458,141 5,528,590
			6,986,731
			280,746 973,408
			1,254,154

• (f) Information about major customers

No revenues from transactions with a single customer amount to 10% or more of the Group’s revenues (December 2017: Nil, June 2018: 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 2018 the Group had unutilised term and working capital facilities of $143.6m (December 2017: $12.1m, June 2018: $121.6m).

The Group also has a trade debtor securitisation facility of which $186.2m was unutilised at 31 December 2018 (December 2017: $294.1m, June 2017: $252.8m).

15

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

For the six months ended 31 December 2018

7. BANK FACILITY AND BORROWINGS (Continued)

As at 31 December 2018, the maturity profile of the Group’s term debt and securitisation facilities was:

Facility Term debt and working capital facilities Term debt facilities Term debt facilities Securitisation facility	Amount $190.4m $150.6m $293.0m $400.0m	Maturity
		1-2 years 2-3 years 4-5 years 2-3 years

8. FINANCIAL INSTRUMENTS

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

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

Fair value of derivative financial instruments 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 18 A$’000 (Unaudited) 807 - 807 (182) (3,457) (3,639)	Six months 31 Dec 17 A$’000 (Unaudited) 199 31 230 (175) (1,883) (2,058)	Year ended 30 Jun 18 A$’000 (Unaudited)
			1,289 17
			1,306
			- (1,980)
			(1,980)

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

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

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

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

On 24 October 2017, the group acquired a 14.1% equity interest in MedAdvisor Ltd (ASX:MDR) for $11.2m. This investment has been classified as an equity instrument fair valued through Other Comprehensive Income and has been valued using level 1 under the fair value hierarchy, therefore using the listed share price to determine fair value at the reporting date. This investment was previously classified as an Available for Sale financial instrument in accordance with NZ IAS 39.

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

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

For the six months ended 31 December 2018

9. ACQUISITION INFORMATION

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

On 31 August 2018 the Group acquired the 100% equity interest in Warner & Webster Pty Limited (‘WW’). 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 Deferred tax assets Current liabilities Trade and other payables Current tax payable Employee benefits Non-current liabilities Employee benefits Net assets acquired Goodwill on acquisition Total consideration Less cash and cash equivalents acquired Net cash outflow from acquisition	Carrying Value A$’000 (Unaudited) Fair value adjustment A$’000 (Unaudited)	Fair value on acquisition A$’000 (Unaudited)
	1,588 - 5,807 (200)1 144 (50)2 2,992 (500)3 347 - - 493_4_ (5,685) (673)5 (43) - (537) (51)6 (235) (167) 6	1,588 5,607 94 2,492 347 493 (6,358) (43) (588) (402)
	4,378 (1,148)	3,230 30,373
		33,603
		(1,588)
		32,015

1. To recognise the fair value of trade and other receivables on acquisition.

2. To recognise the fair value of prepayments on acquisition.

3. To recognise the fair value of inventories on acquisition.

4. To recognise deferred tax assets on acquisition.

5. To recognise the fair value of trade and other payables on acquisition.

6. To recognise the fair value of employee benefits on acquisition.

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

17

EBOS GROUP LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)

For the six months ended 31 December 2018

9. ACQUISITION OF SUBSIDIARIES (Continued)

Goodwill arising on acquisition

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

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

Impact of the acquisition on the results of the Group for the period ended 31 December 2018

WW contributed $642,000 to the Group profit for the period. Group revenue for the period includes $14,314,000 in respect of WW. Had the WW acquisition been effective at 1 July 2018 the revenue of the Group from continuing operations would have been $3,504,576,000 and the profit for the period would have been $67,436,000.

During the period the Group also acquired the remaining equity interest in Terry White Chemmart Pty Ltd (TWC) for $46.7m. As the Group held a greater than 50% equity share in TWC it was already considered to be a subsidiary of the Group.

10. EVENTS AFTER BALANCE DATE

Subsequent to 31 December 2018, the Board approved an interim dividend to shareholders. For further details please refer to Note 4.

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EBOS GROUP LIMITED DIRECTORY

CORPORATE HEAD OFFICE

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

AUSTRALIA HEAD OFFICE

Level 7, 737 Bourke Street Docklands Melbourne 3008 Australia Telephone +61 3 9918 5555

DIRECTORS

Mark Waller Chairman Elizabeth Coutts Independent Director Stuart McGregor Sarah Ottrey Independent Director 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:

• 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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