REECE LIMITED — Interim / Quarterly Report 2021

Feb 24, 2021

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ASX Announcement

25 February 2021

HY21 Report

Proudly essential for 100 years

Reece Limited (“ Reece Group ”; ASX:REH) announces record financial results for the half-year ending 31 December 2020.

Attached is the HY21 Appendix 4D and half-year financial report.

For further information contact:

Michael Thorneycroft Scott Newstead Media Relations Investor Relations Reece Group Reece Group E: michael.thorneycroft@reece.com.au E: scott.newstead@reece.com.au T: 0411 639 636 T: 0437 066 512

This announcement has been authorised by Chantelle Duffy, Company Secretary at the direction of the Board of Directors.

About the Reece Group

Reece Group is a leading distributor of plumbing, waterworks and HVAC-R products to commercial and residential customers through over 800 branches in Australia, New Zealand and the United States.

Established in 1920 and listed on the Australian Securities Exchange (ASX: REH), Reece Group has approximately 8,000 employees committed to improving the lives of its customers by striving for greatness every day.

For further information on Reece Group and its portfolio of businesses please visit www.reecegroup.com.au.

118 Burwood Highway Burwood Victoria 3125

Private Bag 109 Burwood Victoria 3125

T 61 3 9274 0000 F 61 3 9274 0199

ABN 49 004 313 133 www.reecegroup.com.au

1

Appendix 4D

Half-year report for the six months ended 31 December 2020

1. Reporting period

Report for the half-year ended 31 December 2020. The information in this report should be read in conjunction with the most recent annual financial report for the year ended 30 June 2020.

Previous corresponding period is the financial year ended 30 June 2020 and half-year ended 31 December 2019.

2. Results for announcement to the market

			$A’000
Revenues from sale of goods	Up	3.8%	3,073,532
EBITDA excluding business acquisition costs and finance income/(costs), net	Up	11.8%	349,452
EBIT	Up	15.4%	236,448
Statutory net profit after tax	Up	17.3%	123,043
Net profit for the period attributable to members	Up	17.3%	123,043
Dividends	Amount per security		Franked amount per security
Interim dividend		6.0 cents	6.0 cents
Previous corresponding period – interim dividend		6.0 cents	6.0 cents

Record date for determining entitlements to the dividend is 30 March 2021 to be paid on 15 April 2021.

Review of Operations

Refer to the Review of Operations contained in the financial report for the half-year ended 31 December 2020.

3. Details of entities over which control has been gained during the period

Not applicable.

4. Net tangible assets per security Net tangible asset backing per ordinary security Explanatory note: In May 2020, Reece Limited issued 85,161,326 new shares as part of the $647 million equity raise.	31 Dec 2020 31 Dec 2019 146 cents 13 cents

Appendix 4D

Half-year report for the six months ended 31 December 2020

	31 Dec 2020	31 Dec 2019
Dividends
	$A’000	$A’000
Dividends paid during the half-year (fully franked)	38,759	79,917

5. Dividends

The final dividend relating to the year ended on 30 June 2020 of 6.0 cents (30 June 2019: 14.25 cents) was paid on 28 October 2020.

On 25 February 2021, the directors declared a fully franked dividend of 6.0 cents per fully paid ordinary share (31 December 2019: 6.0 cents) with a record date of 30 March 2021 and payment date of 15 April 2021.

6. The financial information provided in the Appendix 4D is based on the half-year financial report (attached).

7. Independent review of the financial report

The financial report has been independently reviewed. The financial report is not subject to a qualified independent review statement.

25 February 2021 Melbourne

Chantelle Duffy Company Secretary

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Table of Contents

Directors’ Report	Directors’ Report	5
Auditor’s	Independence Declaration	7
Financial	Report for the half-year ended 31 December 2020
-	Condensed Consolidated Income Statement and Condensed Consolidated	8
	Statement of Comprehensive Income
-	Condensed Consolidated Statement of Financial Position	9
-	Condensed Consolidated Statement of Changes in Equity	10
-	Condensed Consolidated Statement of Cash Flows	11
-	Notes to the Condensed Consolidated Financial Statements	12
Directors’ Declaration		17
Independent Auditor’s Review Report		18

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Directors’ Report

The Directors present their report together with the condensed financial report of the consolidated entity consisting of Reece Limited and the entities it controlled (the ‘Group’ or ‘Reece’), for the half-year ended 31 December 2020 and independent review report thereon. This financial report has been prepared in accordance with AASB 134 Interim Financial Reporting .

Directors’ Names

The names of the Directors in office at any time during the period until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

L. Alan Wilson

Peter Wilson

Tim Poole

Bruce C. Wilson

Megan Quinn

Andrew Wilson

Georgina Williams (ceased 29 October 2020)

Review of Operations

Review of Operations
	31 December 2020	31 December 2019	Variance
	($000’s)	($000s)	%
Sales	3,073,532	2,961,668	3.8%
Normalised EBITDA*	349,452	312,706	11.8%
EBIT	236,448	204,861	15.4%
Statutory net profit after tax	123,043	104,930	17.3%
EPS (cents)	19.0	18.7	2%
Dividends per share (cents)	6.0	6.0	-

HY21 has seen the Group continue to execute its strategy with resilient financial results. Sales revenue has increased by 3.8% to $3,074m (HY20: $2,962m), driven by increased sales in all geographic locations during the period. Normalised EBITDA[1] was up 11.8% to $349m (HY20: $313m) and statutory net profit after tax grew 17.3% to $123m (HY20: $105m).

Throughout the uncertainty of COVID-19, the Group has continued to accelerate its strategies across both of its geographical regions. In the US the focus has been improving the operational foundations of the business, investing in talent and elevating customer service levels. In the Australian and New Zealand region, the focus remained on the provision of customised service enhanced by digital solutions. The Group has maintained a continued focus on operational discipline and implementing strategies to drive efficiency.

The health and safety of our people and customers is a priority at Reece. In the US region, approximately 250 stores were impacted by COVID-19 during the period. The Group developed an efficient process for testing staff, deep cleaning branches and communicating with our stakeholders. This process ensured that our people and customers remained as safe as possible whilst maintaining service levels. The Australia and New Zealand (‘ANZ’) region worked within various geographical restrictions to ensure we could continue to safely support the essential work of our customers.

Despite disruptions, our branches remained open when possible, as such, the Group did not receive JobKeeper or any other government stimulus during this period. The financial performance of the Group for the six months ended 31 December 2020 has not been materially impacted by COVID-19.

1 Normalised EBITDA excludes business acquisition costs and finance income/ (costs) net.

• 5 -

Directors’ Report

Review of Operations ( cont )

US Region

In the US region, sales revenue increased by 1% to $1,509m (HY20 $1,496m) which represented an uplift of 7% on a constant currency (US Dollar) basis. COVID-19 has consistently impacted our US operations, through restrictions in certain states, short-term branch closures and increased cost of doing business. During HY21, the US region continued to optimise its branch network, with a total of 189 branches at 31 December 2020.

The Group continues to follow an insight led approach to understanding the end markets and customers. These insights have led us to trialling a new store design format at three branches. Concept branches provide the flexibility to test, learn and iterate, ultimately guiding the long-term approach for the network across the growing Sun-Belt region.

ANZ Region

In the ANZ region, sales revenue increased by 7% to $1,564m (HY20: $1,465m) in a market that continues to be impacted by operational COVID-19 restrictions.

Reece continues to deliver customised service, through quality products, strong relationships and expertise, alongside an innovation focus. The Group’s footprint in ANZ remain consistent with a total of 640 branches at 31 December 2020.

Reece Cares

Supporting those who need it most has never been more important. Through the Group’s corporate and social responsibility strategy, Reece Cares, the business strives to improve the lives of its customers and people, while having a lasting impact on the community.

There are five pillars to the Reece Cares initiative, The Reece Grant, Reece Gives, Reece Wellness, Reece Reconciliation and Reece Partners. Reece supports three charity partners that align with the causes affecting our people, customers and the industry as a whole.

Dividends

The Board has declared an interim dividend of 6.0 cents per share (HY20: 6.0 cents per share), fully franked with a record date of 30 March 2021 and payment date of 15 April 2021.

Significant changes in the state of affairs

There have been no significant changes in the Group’s state of affairs during the financial period.

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 in relation to the review for the half-year is provided with this report.

Rounding of amounts to nearest thousand dollars

In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 , the amounts in the directors’ report and in the financial report have been rounded to the nearest one thousand dollars, or in certain cases, to the nearest dollar (where indicated).

Signed in accordance with a resolution of Directors.

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L.A. Wilson Executive Chair

P.J. Wilson Group Chief Executive Officer

Melbourne 25 February 2021

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Condensed Consolidated Income Statement and Other Comprehensive Income

for the half-year ended 31 December 2020

Notes	31 Dec 2020 ($000’s) 31 Dec 2019 ($000’s)
Revenue Revenue from sale of goods 2 Other income Less: Expenses Cost of sales Employee benefits expense Depreciation Amortisation Business acquisition costs Other expenses Operating profit Finance income 3(a) Finance cost 3(b) Profit before income tax expense Income tax expense Net profit after tax Other comprehensive income Items that will not be reclassified subsequently to the income statement: Share-based payment reserve Items that may be reclassified subsequently to the income statement Items that may be reclassified subsequently to the income statement (net of tax): Exchange differences on translation of foreign operations, net of tax Change in fair value of effective cash flow hedges, net of tax Total comprehensive income/(loss), net of tax Basic earnings per share Diluted earnings per share	3,073,532 2,961,668 3,945 1,697
	3,077,477 2,963,365 2,216,171 2,133,290 348,726 345,040 90,864 89,287 22,054 17,410 86 1,148 163,128 172,329
	2,841,029 2,758,504
	236,448 204,861
	- 517 (66,561) (54,691)
	169,887 150,687 (46,844) (45,757)
	123,043 104,930
	230 96
	230 96 (66,115) 1,675 (66,738) 1,725
	(132,853) 3,400
	(9,580) 108,426
	19.0 cents 18.7 cents 19.0 cents 18.7 cents

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Condensed Consolidated Statement of Financial Position

as at 31 December 2020

Notes	31 Dec 2020 ($000’s) 30 Jun 2020 ($000’s)
Current assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Non-current assets Property, plant and equipment 5 Right-of-use assets 5 Investments Intangible assets 5 Deferred tax assets Derivative financial instruments 9 Total non-current assets Total assets Current liabilities Trade and other payables Lease liabilities Interest bearing liabilities 7 Deferred consideration 6 Current tax liability Provisions Derivative financial instruments 9 Total current liabilities Non-current liabilities Long-term payables Interest bearing liabilities 7 Lease liabilities Deferred tax payable Provisions Derivative financial instruments 9 Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings Total equity	953,797 1,004,708 854,723 931,628 1,023,314 967,510
	2,831,834 2,903,846
	625,574 655,214 615,815 688,408 11,830 1,718 1,765,056 1,970,942 51,657 49,808 - 73,949
	3,069,932 3,440,039
	5,901,766 6,343,885
	706,837 792,977 90,072 81,936 16,050 18,013 40,484 45,433 6,221 34,431 74,254 69,374 55,616 33,290
	989,534 1,075,454
	26,800 31,408 1,548,865 1,747,219 557,317 633,732 56,602 74,424 5,443 5,444 15,658 26,318
	2,210,685 2,518,545
	3,200,219 3,593,999
	2,701,547 2,749,886
	1,246,918 1,246,918 (102,239) 30,384 1,556,868 1,472,584
	2,701,547 2,749,886

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Condensed Consolidated Statement of Changes in Equity

for the half-year ended 31 December 2020

	Contributed equity Reserves Retained earnings ($000’s) ($000’s) ($000’s)	Total
		equity
		($000’s)
Balance as at 1 July 2019 Profit for the half-year Exchange differences on translation of foreign operations, net of tax Change in fair value of effective cash flow hedges, net of tax Total comprehensive income/(loss) for the half- year Transactions with owners in their capacity as owners: •Share-based payments (Note 8) •Dividends paid (Note 4)	604,849 29,580 1,357,151 - - 104,930 - 1,675 - - 1,725 -	1,991,580
		104,930
		1,675
		1,725
	- 3,400 104,930 - 96 - - - (79,917)
		108,330
		96
		(79,917)
Balance as at 31 December 2019	604,849 33,076 1,382,164	2,020,089

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	Contributed equity Reserves Retained earnings ($000’s) ($000’s) ($000’s)	Total
		equity
		($000’s)
Balance as at 1 July 2020 Profit for the half-year Exchange differences on translation of foreign operations, net of tax Change in fair value of effective cash flow hedges, net of tax Total comprehensive income /(loss) for the half- year Transactions with owners in their capacity as owners: •Share-based payments (Note 8) •Dividends paid (Note 4)	1,246,918 30,384 1,472,584 - - 123,043 - (66,115) - - (66,738) -
		2,749,886
		123,043
		(66,115)
		(66,738)
	- (132,853) 123,043 - 230 - - - (38,759)
		(9,580)
		230
		(38,759)
Balance as at 31 December 2020	1,246,918 (102,239) 1,556,868
		2,701,547

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Condensed Consolidated Statement of Cash Flows

for the half-year ended 31 December 2020

	31 Dec 2020 ($000’s) 31 Dec 20191 ($000’s)
Cash flow from operating activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid Net cash provided by / (used in) operating activities Cash flow from investing activities Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of intangibles Purchase of controlled entities / investments Net cash provided by / (used in) investing activities Cash flow from financing activities Proceeds from borrowings Repayments of borrowings Payment of lease liabilities Dividends paid Net cash provided by / (used in) financing activities Net increase / (decrease) in cash and cash equivalents Net foreign exchange translation difference Cash and cash equivalents at the beginning of the half-year Cash and cash equivalents at 31 December	3,327,691 3,253,948 (3,108,036) (2,965,560) 2,135 816 (37,779) (42,354) (84,642) (45,628)
	99,369 201,222
	(27,683) (46,678) 6,632 6,352 (3,220) (13,716) (9,606) (172,482)
	(33,877) (226,524)
	- 183,830 (8,361) (53,622) (51,360) (50,495) (38,759) (79,917)
	(98,480) (204)
	(32,988) (25,506) (17,923) 1,136 1,004,708 127,707
	953,797 103,337

1. ‘Receipts from Customers’ and ‘Payments to suppliers and employees’ have been restated to gross up for the impact of taxes. There is no impact to net cash provided/ (used in) operating activities as previously reported.

2. 11 -

Notes

for the half-year to 31 December 2020

1: Notes to the condensed half-year financial report

About this report

This condensed half-year financial report for Reece Limited and its controlled entities (the Group) for the six months ended 31 December 2020 was authorised for issue in accordance with a resolution of the directors on 25 February 2021. The information in this report should be read in conjunction with the most recent annual financial report for the year ended 30 June 2020.

The financial report covers Reece Limited and controlled entities (the Group). Reece Limited is a company limited by shares, incorporated and domiciled in Australia. Reece Limited is a for-profit entity for the purpose of preparing the financial statements. The registered offices of Reece Limited is 118 Burwood Highway, Burwood, Victoria, 3125.

The Group is a leading supplier of plumbing, bathroom, heating, ventilation, waterworks, air conditioning and refrigeration products with operations in Australia, New Zealand and the United States of America. The Group’s activities include importing, wholesaling, distribution, marketing and retailing. The Group supplies customers in the trade, retail, professional and commercial markets.

Statement of Significant Accounting Policies

The half-year consolidated financial statements have been prepared using consistent accounting policies as used in the annual financial statements for the year ended 30 June 2020. Several other amendments and interpretations also applied to the Group for the first time from 1 July 2020, but do not have an impact on the condensed half-year financial report of the Group.

The Group has not early adopted any standards or interpretations.

AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2

In September 2020, AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform Phase 2, amended standards including AASB 9 Financial Instruments , AASB 139 Financial Instruments: Recognition and

Measurement , AASB 7 Financial Instruments : Disclosures and AASB 16 Leases to address accounting issues arising following the transition to alternative benchmark rates. The amendments provide certain relief from applying specific requirements related to hedge accounting and the modification of financial assets and financial liabilities if certain criteria are met.

Where modifications to a contract, or changes in the basis for determining the contractual cash flows under a contract, are necessitated as a result of the IBOR reform, and the new basis for determining the contractual cash flows is economically equivalent to the previous basis, the relief allows an entity to reset the yield applied to such an exposure on a prospective basis. Thus, at the time of modification, where the relief applies, there is no impact to the profit or loss statement. The relief requires continuation of hedge accounting in circumstances when changes to hedged items and hedging instruments arise as a result of changes required by the IBOR reform.

The amendments, mandatorily effective for annual reporting periods beginning on or after 1 January 2021, also require additional quantitative and qualitative disclosures.

Rounding amounts

The Group has applied the relief available under the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, and accordingly, the amounts in the Directors’ Report and in the condensed half-year financial report have been rounded to the nearest one thousand dollars, or in certain cases, to the nearest dollar (where indicated).

Key judgements and estimates

In the process of applying the Group’s accounting policies, management continues to consider the impact of COVID-19 when applying judgements and estimates of future events. These key accounting judgments and estimates have not changed materially from those described in the notes to the financial statements for the year ended 30 June 2020.

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Notes

for the half-year to 31 December 2020

Note 2: Segment reporting

Segment information is presented in a manner which is consistent with the internal reporting to the Group Chief Executive Officer who is the entity’s chief operating decision maker for the purpose of performance assessment and resource allocation. The Group’s segments are based on the geographical operation of the business and comprise:

• Australia and New Zealand (ANZ)

• United States of America (US)

	ANZ	ANZ	United	States	Total	Total
	31 Dec 2020	31 Dec 2019	31 Dec 2020	31 Dec 2019	31 Dec 2020	31	Dec 2019
	($000’s)	($000’s)	($000’s)	($000’s)	($000’s)		($000’s)
Revenue	1,564,034	1,465,482	1,509,498	1,496,186	3,073,532		2,961,668
Normalised EBITDA1	235,051	208,414	114,401	104,292	349,452		312,706
Income/(expenses)
Depreciation	(58,320)	(56,050)	(32,544)	(33,237)	(90,864)		(89,287)
Amortisation	(1,797)	(432)	(20,257)	(16,978)	(22,054)		(17,410)
Business acquisition costs	-	-	(86)	(1,148)	(86)		(1,148)
Finance income	-	517	-	-	-		517
Finance costs	(48,684)	(29,929)	(17,877)	(24,762)	(66,561)		(54,691)
Segment profit before tax	126,250	122,520	43,637	28,167	169,887		150,687
Income tax expense	(34,688)	(38,804)	(12,156)	(6,953)	(46,844)		(45,757)
Segment profit after tax	91,562	83,716	31,481	21,214	123,043		104,930
	31 Dec 2020	30 Jun 2020	31 Dec 2020	30 Jun 2020	31 Dec 2020	30	Jun 2020
Current assets	1,826,695	1,750,681	1,005,139	1,153,165	2,831,834		2,903,846
Non-current assets	1,223,987	1,328,849	1,845,945	2,111,190	3,069,932		3,440,039
Total Assets	3,050,682	3,079,530	2,851,084	3,264,355	5,901,766		6,343,885
Total Liabilities	1,745,327	1,857,462	1,454,892	1,737,537	3,200,219		3,593,999

1. Normalised EBITDA is earnings before interest, tax, depreciation, amortisation, business acquisition costs and finance income/(costs) - net.

Note 3: Finance income and finance cost

		31 Dec 2020	31 Dec 2019
		($000’s)	($000’s)
a)	Finance income
	Unrealised foreign currency gain on derivative instruments	-	517
	Total finance income	-	517
b)	Finance cost
	Unrealised foreign currency (loss) on derivative instruments	(23,531)	-
	Interest on debt and borrowings	(33,167)	(44,300)
	Interest on lease liabilities	(9,863)	(10,391)
	Total finance cost	(66,561)	(54,691)

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Notes

for the half-year to 31 December 2020

Note 4: Dividends paid and proposed

Note 4: Dividends paid and proposed
	31 Dec 2020 31 Dec 2019 ($000’s) ($000’s)
The following are the dividends paid and/or proposed for the financial year: Dividends paid at 6.0 cents per share fully franked (2020: 14.25 cents) paid on 28 October 2020 (2020: 30 October 2019) Proposed dividends not recognised at the end of the half-year at 6.0 cents per share fully franked (2019: 6.0 cents) payable on 15 April 2021 (2020: 26 March 2020).	38,759 79,917
	38,759 33,649

Note 5: Property, plant and equipment, leases and intangibles assets

	Property,	plant and	Right-of-use assets	Right-of-use assets	Intangible assets	Intangible assets
	equipment
	31 Dec 2020	30 June 2020	31 Dec 2020 30 June 2020		31 Dec 2020	30 June 2020
	($000’s)	($000’s)	($000’s)	($000’s)	($000’s)	($000’s)
Net book value at 1 July	655,214	664,009	688,408	661,808	1,970,942	1,772,166
Additions and	36,732	85,139	21,809	130,292	2,964	216,223
reassessments
Disposals	(6,851)	(7,666)	(5,425)	(122)	-	(3,919)
Depreciation,	(42,926)	(86,735)	(47,938)	(101,935)	(22,054)	(43,778)
amortisation and
impairment
Net foreign exchange	(16,595)	467	(41,039)	(1,635)	(186,796)	30,250
impact
Net book value	625,574	655,214	615,815	688,408	1,765,056	1,970,942

Note 6: Business Combination

There have not been any material business combinations in HY21. In FY20 the Group acquired 100% of Todd Pipe Holdings, Inc and its controlled entities. Details of the business combination were disclosed in note 6.1 of the 2020 Annual Report.

Deferred consideration

As part of the purchase agreement of Todd Pipe, deferred consideration of US$30m is payable in cash on 31 December 2021. The deferred consideration is classified as a current liability in the balance sheet and as at 31 December 2020, the value is $40.5m (30 June 2020: $45.4m) which is the maximum amount, undiscounted.

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Notes

for the half-year to 31 December 2020

Note 7: Interest bearing liabilities

Note 7: Interest bearing liabilities
	31 Dec 2020	30 June 2020
	($000’s)	($000’s)
Term loan - current	16,050	18,013
Term loan - non-current	1,548,865	1,747,219
Total interest-bearing liabilities	1,564,915	1,765,232

The Term Loan is a fully secured USD borrowing under the Syndicated Facility with the carrying value of the borrowings translated at the spot rate at period end date. The Term loan is secured by the Group and is subject to both foreign currency and interest rate hedging instruments, refer to note 9.

Note 8: Share-based-payments

In HY21, the Group made two grants under the Reece Group Long Term Incentive Plan (the Plan). The Group CEO was issued 267,588 options based on a 29 October 2020 (Grant date) with the fair value of $5.97. The exercise price of the options is $14.46, which is the volume weighted average price of the shares over the ten trading days immediately prior to Grant Date. The grant of awards to the CEO were issued on similar terms and conditions to the FY20 grant as disclosed in the Remuneration Report 2020.

In November, Senior Executives were granted 315,716 shares under the Plan based on a grant date fair value of $4.53. The issue price of the shares of $13.07 is the volume weighted average price of the shares over the ten trading days immediately prior to 23 November 2020 (Grant Date). The shares will vest subject to achieving the performance hurdles and provided the Senior Executives remain continuously employed, or engaged with the Group at all times from Grant Date until the end of the five-year performance period. Any awards that are eligible to vest after the five-year performance period have a further two-year holding period that prohibits the Senior Executives from exercising and selling the resulting shares. Once the holding period ends, the vested shares may be exercised.

No options or plan shares have been exercised, forfeited, vested, or expired during the period.

Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transaction recognised during the period as part of employee benefit expense were $229,964 (30 June 2020: $191,700).

• 15 -

for the half-year to 31 December 2020

Notes

Note 9: Fair value measurements

Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting period.

The table below provides information about how the Group determines the fair value of various derivative financial instruments used for managing financial risk. As at 31 December 2020 and 30 June 2020, all derivative financial instruments were determined by a third party based on observable market inputs and categorised as Level 2 financial instruments using Discounted Cash Flows and standard option models. There were no transfers between categories during the period.

The carrying amounts of financial assets and financial liabilities recognised at amortised cost in the consolidated financial statements approximate their fair values.

			Consolidated Entity	Consolidated Entity
	31 December 2020			30 June 2020
	Current	Non-Current	Current	Non-Current
	($000’s)	($000’s)	($000’s)	($000’s)
Financial Assets
Trade and other receivables	854,723	-	931,628	-
Derivative financial instruments
assets
- Interest rate swaps	-	-	-	-
- Cross-currency interest rate swaps	-	-	-	73,949
Total financial instrument assets at fair value	854,723	-	931,628	73,949
Financial Liabilities
Trade and other payables	706,837	26,800	792,977	31,408
Interest-bearing liabilities	16,050	1,548,865	18,013	1,747,219
Lease liabilities	90,072	557,317	81,936	633,732
Derivative financial instruments
liabilities
- Interest rate swaps	10,698	15,658	9,287	26,318
- Forward exchange contracts	5,976	-	2,899	-
- Cross-currency interest rate swaps	38,942	-	16,450	-
- Interest payable	-	-	4,654	-
Total financial instrument liabilities at fair value	868,575	2,148,640	926,216	2,438,677

Note 10: Subsequent events

There have been no material events subsequent to the end of the half-year that require recognition or disclosure in the half-year financial report, except for the proposed interim dividend payable as detailed in note 4.

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Directors declaration

The directors declare that:

1. In the directors’ opinion, the financial statements and notes thereto, as set out on pages 8 to 16 , are in accordance with the Corporations Act 2001 :

2. (a) Comply with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 ; and

3. (b) Give a true and fair view of the financial position of the consolidated entity as at 31 December 2020 and of its performance for the half-year ended on that date.

4. In the directors’ opinion there are reasonable grounds, at the date of this declaration, to believe that the Group will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors.

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L. A. Wilson Executive Chair

P. J. Wilson Group Chief Executive Officer

Melbourne 25 February 2021

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