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Mantra Group Limited and its controlled entities Appendix 4D Financial statements for the half year ended 31 December 2017 Company details

Name of entity Mantra Group Limited ABN 69 137 639 395 Reporting period For the half year ended 31 December 2017 Comparative reporting period For the half year ended 31 December 2016 Results for announcement to the market $'000 Up/(Down) Movement

$’000 Revenue from ordinary activities 366,223 Up 10,059 Profit from ordinary activities after tax attributable to members 25,138 Down (5,394) Net profit for the period attributable to members 25,138 Down (5,394) Dividend information If the Scheme of Arrangement (‘Scheme’) with AccorHotels is approved, under the terms of the Scheme, Mantra Group shareholders will be entitled to receive $3.96 cash per share. Mantra Group has the discretion to pay shareholders a special dividend of up to a maximum of 23.5 cents per share which will be deducted from the $3.96 headline value. In this context, Mantra Group will not be declaring a dividend in respect of the half year. Net Tangible Assets per security

31 Dec 2017 31 Dec 2016 $ $ Net tangible assets /(liabilities) per ordinary security

(0.29) (0.14)

This information should be read in conjunction with the 2017 Annual Financial Report of Mantra Group Limited and its controlled entities and any public announcements made in the period by Mantra Group Limited in accordance with the continuous disclosure requirements of the Corporations Act 2001 and Listing Rules. Additional Appendix 4D disclosure requirements can be found in the Directors’ Report and the consolidated financial statements for the half-year ended 31 December 2017. This report is based on the consolidated financial statements for the half-year ended 31 December 2017 of Mantra Group Limited and its controlled entities, which have been reviewed by PricewaterhouseCoopers. The Independent Auditor’s Review Report provided by PricewaterhouseCoopers is included in the consolidated financial statements for the half-year ended 31 December 2017. Signed ________________________ Date: 14 February 2018 Kerry Robert East Chief Executive Officer Gold Coast

INTERIM REPORT

FOR THE HALF-YEAR ENDED 31 DECEMBER 2017ABN: 69 137 639 395 ASX CODE: MTR

2 MANTRA GROUP INTERIM REPORT 31 DECEMBER 2017

Interim report - 31 DECEMBER 2017

MANTRA GROUP LIMITEDABN: 69 137 639 395

CONTENTSDirectors’ report 3

Auditor’s independence declaration 8

Interim financial report

Consolidated statement of comprehensive income 9

Consolidated statement of financial position 10

Consolidated statement of changes in equity 11

Consolidated statement of cash flows 12

Notes to the consolidated financial statements 13

Directors’ declaration 27

Independent auditor’s review report to the members 28

NOTE REGARDING NON-IFRS FINANCIAL INFORMATIONWithin this report, Mantra Group Limited (Mantra Group) has included certain non-IFRS financial information. This information is presented to assist in making appropriate comparisons with prior periods and to assess the operating performance of the business. Mantra Group uses these measures to assess the performance of the business and believes that the information is useful to investors.

The following non-IFRS measures have not been reviewed but have been extracted from Mantra Group’s reviewed financial statements:• EBITDAI - Group profit before interest, taxation, depreciation, amortisation and impairment, or reversals of impairment;

• Underlying EBITDAI - EBITDAI before transaction costs; and

• Underlying NPAT - Net profit after tax before transaction costs, impairment or reversals of impairment and related tax impacts.

The Directors believe that these measures provide useful information about the financial performance of Mantra Group as they remove the impact of key accounting adjustments, financing charges and taxation. These measures, however, should be considered as supplements to the income statement and cash flow measures that have been presented in accordance with the Australian Accounting Standards and not as a replacement for them. Because these non-IFRS financial measures are not based on Australian Accounting Standards, they do not have standard definitions, and the way Mantra Group calculates these measures may differ from similarly titled measures used by other companies. Readers should therefore not place undue reliance on these non-IFRS financial measures.

A reconciliation of underlying EBITDAI and underlying NPAT to the nearest measure prepared in accordance with IFRS is included in note A1, segment information and note D1, earnings per share, respectively.

3MANTRA GROUP INTERIM REPORT 31 DECEMBER 2017

Your Directors present their report on the consolidated entity, referred to hereafter as Mantra Group or the Group, consisting of Mantra Group Limited (the Company) and the entities it controlled at the end of, or during, the half-year ended 31 December 2017.

DIRECTORSThe following persons were directors of Mantra Group during the whole of the half-year and up to the date of this report:

Peter Bush

Andrew Cummins

Kerry Robert East (Bob East)

David Gibson

Elizabeth (Liz) Savage

Melanie Willis

PRINCIPAL ACTIVITIESREVIEW OF OPERATIONSMantra Group is the leading Australian-based hotel and resort operator. Mantra Group’s portfolio consists of 136 properties and over 18,000 rooms across Australia, New Zealand, Indonesia and Hawaii. Through its portfolio, Mantra Group operates the second largest network of accommodation properties in Australia (by total room number).

Approximately 2.5 million guests per year stay in Mantra Group branded accommodation. In addition to providing accommodation, Mantra Group’s core services include management of guest relations and reception areas, restaurants and bars, conference and function centres, pool and entertainment facilities and offices.

Properties in Mantra Group’s portfolio range from luxury retreats and coastal resorts to serviced apartments and hotels in CBD and key leisure destinations. The Group, through its diverse portfolio range and brand names, targets a cross section of consumers in both the domestic and international visitor segments of the accommodation industry.

Mantra Group operates the properties in its portfolio under four brands: Peppers, Art Series, Mantra and BreakFree. The Art Series brand was added to the portfolio in November 2017 following the acquisition of seven properties trading under this brand. As at 31 December 2017, the Group had paid $49.1 million in respect of this acquisition. The balance of the purchase price of $2.6 million was paid in February 2018 following settlement of The Chen management letting rights contract in accordance with the conditions of the sale agreement.

Mantra Group operates its properties under a range of operating structures. The operating structures used by Mantra Group provide it with long-term property management contracts across its portfolio and strong contractual rights to operate the properties. In particular, Lease Rights, Management Letting Rights and Hotel Management Rights also provide Mantra Group with flexible and targeted development and operating options. Other models include Management Agreements and Marketing Services Agreements.

Directors’ report


The split of keys in building by operating model and keys under management by geographic location as at 31 December 2017 was as follows:

KEYS IN BUILDINGS BY OPERATING MODEL:

Management Letting Rights (MLR)

Marketing Service Agreements (MSA)

Hotel Management Rights (HMR)

Lease Rights (LR)

Management Agreements (MA)

TOTAL KEYS IN BUILDINGS: 24,000+

LR22.7%

MSA1.6%

MA11.2%

HMR2.8%

MLR61.7%

KEYS UNDER MANAGEMENT BY GEOGRAPHIC LOCATION

GOLD COAST

TROPICAL NORTH QUEENSLAND (TNQ)

MELBOURNE

SUNSHINE COAST

SYDNEY

OTHER VICTORIA (VIC)

NEW ZEALAND (NZ)

NORTHERN NEW SOUTH WALES (Nrth NSW)

NORTHERN TERRITORY (NT)

OTHER NSW (NSW)

WESTERN AUSTRALIA (WA)

SOUTH AUSTRALIA (SA)

BRISBANE

TASMANIA (TAS)

AUSTRALIAN CAPITAL TERRITORY (ACT)

INDONESIA (IND)

HAWAII

TOTAL KEYS UNDER MANAGEMENT: 18,000+

GOLD COAST20.9%

TNQ7.6%

MELBOURNE15.9%

SUNSHINECOAST5.2%

SYDNEY5.7%

VIC4.4%

NZ3.6%

Nrth NSW2.7%

NSW3.1%

NT2.9%

WA4.2%

SA4.2%

BRISBANE8.8%

TAS2.2% ACT

2.7%

IND0.3%

HAWAII5.8%

Mantra Group has more than 5,900 team members to carry out its core functions, which include operations, sales, revenue and distribution, marketing and digital, portfolio and asset management, information technology and corporate activities.

1.2 BUSINESS SEGMENTS

Mantra Group generates its revenue under the following three core business segments:

• Resorts;

• CBD; and

• Central Revenue and Distribution (CR&D).

Mantra Group’s Resorts and CBD segments operate properties varied by location and targeted customer and utilise all of the Mantra Group’s brands and operating structures. The Central Revenue and Distribution segment (‘CR&D’) manages Mantra Group’s in-house customer management, online booking service, distribution and digital marketing platforms. For financial reporting purposes, CR&D also includes fees earned by Mantra Group under Management Agreements.


1.3 GROUP FINANCIAL PERFORMANCE Operating revenue for the six months ended 31 December 2017 (‘the period’) was $366.2m, an increase of $10.1m or 2.8% on the same period last year. Revenue for the period benefited from continued growth in domestic and international travel, particularly to Queensland and New Zealand regions, and strong demand in Sydney, Canberra and Adelaide.

The Group attained occupancy of 81.9% at an average rate of $177.08 compared to last year’s occupancy and rate of 82.2% and $176.33 respectively for the same period. This resulted in RevPAR of $145.07 for the current period compared to $144.91 for the prior corresponding period, an increase of $0.16 or 0.1%.

During the six months ended 31 December 2017, Mantra Group acquired ten new properties - Mantra Sydney Airport Hotel (Sydney), Mantra Macarthur Hotel (Canberra), Peppers FV (Brisbane) and the seven Art Series Hotel Group properties: The Watson (Adelaide); The Olsen, The Blackman, The Cullen, The Larwill, and The Chen (all Melbourne); and The Johnson (Brisbane). All new properties joined the CBD segment, with the exception of Mantra Sydney Airport Hotel, a Management Agreement property, which joined the CR&D segment. New properties increased available rooms by 2.6% in the six month period.

Underlying* earnings before interest, taxation, depreciation, amortisation and impairment (‘underlying EBITDAI’) for the period was $56.6m, a decrease of $2.1m or 3.6% on the prior corresponding period. The underlying EBITDAI margin of 15.5% decreased by one percentage point compared to the 16.5% achieved in the previous comparable period. Refer below for further details.

Transaction costs of $0.7m were incurred during the period in respect of the acquisition of the Art Series Hotel Group on 22 November 2017. This acquisition has been treated as a business combination under AASB 3 Business Combinations. As a result, all transaction costs associated with the transaction have been expensed in the consolidated statement of comprehensive income.

The Group also incurred costs of $2.0m in respect of the proposed acquisition by AccorHotels. These costs include professional services fees and expenses arising from the long term incentive plan which was modified by the Scheme Implementation Agreement.

Underlying* net profit after tax for the period of $27.6m was $1.9m (6.3%) lower than underlying net profit after tax in the prior corresponding period. After taking account of transaction costs incurred in respect of the business combination and the costs of the proposed acquisition by AccorHotels, net profit after tax of $25.1m was $5.4m (17.7%) lower than the same period in the prior year. While finance costs have remained similar to the previous corresponding period, tax expense for the period of $11.6m was $2.1m or 15.2% lower than the same period in the prior year which is in line with decreased earnings in the period. The effective tax rate was 31.6% .

Mantra Group’s revenue and underlying EBITDAI by business segment is summarised below with a comparison of revenue and underlying EBITDAI to the previous corresponding period.

REVENUE BY BUSINESS SEGMENT DEC 2017 DEC 2016

$’000 $’000

Resorts 165,583 163,036

CBD 172,156 162,796

Central Revenue and Distribution 26,561 28,250

Corporate 1,923 2,082

TOTAL SEGMENT REVENUE 366,223 356,164

UNDERLYING* EBITDAI BY BUSINESS SEGMENT

DEC 2017 DEC 2016

$’000 $’000

Resorts 26,349 28,075

CBD 26,644 26,299

Central Revenue and Distribution 18,492 18,834

Corporate (14,873) (14,502)

TOTAL UNDERLYING* EBITDAI 56,612 58,706

*Underlying EBITDAI is EBITDAI excluding transaction costs associated with business combinations of $0.7m (H1FY2017: $1.7m) and costs of $2.0m associated with the proposed acquisition by AccorHotels (H1FY2017: nil). Underlying NPAT also excludes a net reversal of impairment (H1FY2018: nil (H1FY2017: $3.2m)) and related tax impacts.


The key factors affecting Mantra Group’s performance in the current period compared to the prior corresponding period by segment are as follows:

RESORTS

Resorts revenue increased by $2.6m, from $163.0m to $165.6m, an increase of 1.6%. RevPAR increased by 0.5%. Underlying this growth in particular was increased average room rate of $3.85 in the Queensland regions, an increase of 2.2%. The growth in the average room rate was restricted by a reduction in Group business, as some Gold Coast venues are unavailable in advance of the Commonwealth Games. New Zealand also enjoyed an increase in average room rate of $12.73 or 7.3%. The Australian and New Zealand operations continue to benefit from strong short term domestic travel demand, particularly to Queensland, as well as an increase in international travellers taking advantage of low cost carriers.

By contrast, results from the US operations have been impacted by a number of new and renovated hotel openings in Waikiki in the period. This resulted in a loss of some contracted business early in the period which was not replaced until later in the period. Also the increased supply has impacted average room rate. Finally there has also been a general reduction in demand for hotel rooms and conference facilities in the region which has had a negative impact on occupancy levels during the period.

Resorts underlying EBITDAI decreased from $28.1m to $26.3m, a decrease of $1.8m or 6.1%. EBITDAI margin also decreased by 1.3 percentage points to 15.9%. With the exception of annual award payroll increases, costs have been maintained within CPI parameters.

CBD

CBD revenue increased by $9.4m or 5.7% to $172.2m for the period compared with $162.8m in the previous corresponding period. RevPAR decreased by 0.5%. There were nine properties added to the CBD segment during the period which increased available rooms by 6.4% on the same period last year and contributed $9.1m to revenue. Organic revenue remained in line with prior corresponding period and organic EBITDAI fell by 1.0%.

Revenue in this segment has been positively impacted by the following:

• Strong average room rate increases in ACT, Sydney and Adelaide of 4.0% on average. The increase in average room rate has been strongest in the corporate and entertainment sectors; and

• Large increases in occupancy in Brisbane, South Australia and Darwin of 6.3%. Brisbane has benefited from certain one -off events such as the world title boxing match in July and the Ashes in November. Brisbane, Adelaide and Darwin have all benefited from increased corporate travel.

By contrast, revenue in this segment has been negatively impacted by the following:

• RevPAR in Melbourne and Perth has decreased by 3.2% and 9.5% respectively. In Melbourne the reduction has been brought about by a reduction in constrained demand brought about by new supply. In Perth, the increased supply of hotel rooms and subsequent rate discounting in line with the broader market has negatively impacted the results in this region.

CBD underlying* EBITDAI increased marginally from $26.3m to $26.6m for the period, an increase of $0.3m or 1.3%.

CENTRAL REVENUE AND DISTRIBUTION

Operating revenue in the CR&D segment decreased from $28.3m to $26.6m, a decrease of $1.7m or 6.0%. Underlying* EBITDAI in the CR&D segment also decreased from $18.8m to $18.5m, a decrease of $0.3m or 1.8%. The results of this segment were principally driven by one off termination fees received in the prior corresponding period which were not received in the current year.

CORPORATE

The Corporate segment includes the costs for the centralised shared services providing the management team, sales and marketing, digital, finance, legal, acquisitions and asset management support. Net costs of $14.9m have increased by $0.4m compared to the prior corresponding period. Costs increases have resulted from the integration of the Art Series central services. Excluding these costs, net costs from the corporate segment would have decreased.


CASH AND CASH FLOW The Group continues to generate strong operating cash inflows from operations, with net cash inflow from operating activities increasing by $11.3m or 44.8% from $25.1m to $36.4m in the current period.

During the period, the Group increased the facility limit of Tranche B of the Syndicated Facility Agreement by $30m.

DIVIDENDS If the Scheme of Arrangement (‘Scheme’) with AccorHotels is approved, under the terms of the Scheme, Mantra Group shareholders will be entitled to receive $3.96 cash per share. Mantra Group has the discretion to pay shareholders a special dividend of up to a maximum of 23.5 cents per share which will be deducted from the $3.96 headline value. In this context, Mantra Group will not be declaring a dividend in respect of the half year.

PROPOSED ACQUISITION BY ACCORHOTELSThe proposed acquisition of the Group by AccorHotels was a key Board and management focus in the period and will continue to be so for the remainder of FY2018. On current timelines, and assuming regulatory, shareholder and other approvals are secured, it is anticipated that the transaction will close in the last quarter of FY2018.

Costs to date in respect of this proposed acquisition are $2.0 million. If the acquisition were to complete in the second-half of the financial year total costs will be approximately $14.7 million. Costs to date include professional services fees and the increase Long Term Incentive Plan charge as a result of the modification of the Plan following the signing of the Scheme Implementation Agreement.

AUDITOR’S INDEPENDENCE DECLARATIONA copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 8.

ROUNDING OF AMOUNTS

The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the directors’ report and financial report. Amounts in the directors’ report and financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order.

This report is made in accordance with a resolution of Directors.

Peter Bush Kerry Robert East Director Director

Gold Coast 14 February 2018


Auditor’s Independence Declaration

As lead auditor for the review of Mantra Group Limited for the half-year ended 31 December 2017, I declare that to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Mantra Group Limited and the entities it controlled during the period.

Kristin StubbinsPartnerPricewaterhouseCoopers

Sydney14 February 2018

PricewaterhouseCoopers, ABN 52 780 433 757One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.auLevel 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2017

HALF YEAR

NOTES 2017 2016

$’000 $’000

REVENUE FROM CONTINUING OPERATIONS 366,223 356,164

Other income 23 9

Employee benefits expense (125,335) (117,266)

Operating expenses (111,279) (110,171)

Occupancy and utilities expenses (64,917) (60,169)

Depreciation and amortisation expense C1, C2 (14,607) (13,523)

Transaction costs associated with business combinations A2 (699) (1,692)

Costs associated with proposed acquisition by AccorHotels D5 (1,962) -

Administration expenses (8,103) (9,861)

Impairment reversal C3 - 3,217

Finance costs (net) (2,600) (2,485)

PROFIT BEFORE INCOME TAX 36,744 44,223

Income tax expense D2 (11,606) (13,691)

PROFIT FOR THE PERIOD 25,138 30,532

OTHER COMPREHENSIVE INCOME

Item that may be reclassified to profit or loss

Exchange differences on translation of foreign operations (1,769) 2,791

OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD, NET OF TAX (1,769) 2,791

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 23,369 33,323

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO THE OWNERS OF MANTRA GROUP LIMITED 23,369 33,323

NOTES CENTS CENTS

EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY:

Earnings per share D1 8.5 10.3

Diluted earnings per share D1 8.4 10.3

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.


CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017

NOTES

31 DECEMBER 2017

30 JUNE 2017

$’000 $’000

ASSETS

CURRENT ASSETS

Cash and cash equivalents B1 64,316 62,923

Trade and other receivables 87,321 54,152

Inventories 3,527 3,099

Current tax receivables 1,606 1,686

Other current assets 3,361 8,321

TOTAL CURRENT ASSETS 160,131 130,181

NON-CURRENT ASSETS

Receivables 635 613

Other non-current assets 4,100 4,100

Property, plant and equipment C1 168,184 157,658

Intangible assets C2 571,833 513,352

Deferred tax assets 356 356

TOTAL NON-CURRENT ASSETS 745,108 676,079

TOTAL ASSETS 905,239 806,259

LIABILITIES

CURRENT LIABILITIES

Trade and other payables 64,953 52,595

Current tax liabilities - 2,348

Employee benefit obligations 16,370 16,554

Derivative financial instruments - 13

Advance deposits 43,689 26,103

TOTAL CURRENT LIABILITIES 125,011 97,613

NON-CURRENT LIABILITIES

Borrowings B1 186,355 135,252

Deferred tax liabilities 104,789 91,930

Provisions 3,853 3,516

TOTAL NON-CURRENT LIABILITIES 294,997 230,698

TOTAL LIABILITIES 420,008 328,311

NET ASSETS 485,231 477,948

EQUITY

Share capital B2 414,252 414,252

Other reserves 228,611 228,620

Accumulated losses (157,632) (164,924)

TOTAL EQUITY 485,231 477,948

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2017

ATTRIBUTABLE TO OWNERS OF MANTRA GROUP LIMITED

SHARE CAPITAL

OTHER RESERVES

ACCUMULATED LOSSES

TOTAL EQUITY

$’000 $’000 $’000 $’000

BALANCE AT 1 JULY 2016 412,321 230,085 (179,339) 463,067

Profit for the half-year - - 30,532 30,532

Other comprehensive income - 2,791 - 2,791

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD - 2,791 30,532 33,323

TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:

Issue of shares on Dividend Reinvestment Plan 1,132 - - 1,132

Issue of shares on share purchase plan 254 - - 254

Dividends paid - - (16,321) (16,321)

Employee share schemes – value of employee services - 282 - 282

Transaction costs arising on issue of shares (net of tax) (63) - - (63)

1,323 282 (16,321) (14,716)

BALANCE AT 31 DECEMBER 2016 413,644 233,158 (165,128) 481,674

BALANCE AT 1 JULY 2017 414,252 228,620 (164,924) 477,948

Profit for the half-year - - 25,138 25,138

Other comprehensive income - (1,769) - (1,769)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD - (1,769) 25,138 23,369

TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:

Dividends paid - - (17,846) (17,846)

Employee share schemes – value of employee services - 1,760 - 1,760

- 1,760 (17,846) (16,086)

BALANCE AT 31 DECEMBER 2017 414,252 228,611 (157,632) 485,231

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.


CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2017

HALF YEAR

NOTES 2017 2016

$’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers (inclusive of goods and services tax) 383,305 371,784

Payments to suppliers and employees (inclusive of goods and services tax) (330,082) (331,262)

53,823 40,522

Transaction costs relating to business combinations A2 (699) (922)

Interest received 432 352

Interest paid (2,740) (2,555)

Income taxes paid (14,404) (12,255)

NET CASH INFLOW FROM OPERATING ACTIVITIES 36,412 25,142

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for property, plant and equipment C1 (10,812) (7,833)

Payments of deposits for other acquisitions A3 (220) (5,683)

Payments for intangible assets C2 (8,272) (3,804)

Proceeds from sale of property, plant and equipment 350 152

Proceeds from sale of intangible assets - 76

Payments for business acquisitions, net of cash acquired A2 (49,119) (67,624)

NET CASH (OUTFLOW) FROM INVESTING ACTIVITIES (68,073) (84,716)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issues of shares and other equity securities - 191

Proceeds from borrowings 51,000 15,000

Borrowing costs (100) (63)

Dividends paid to Company’s shareholders (17,846) (15,190)

NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES 33,054 (62)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,393 (59,636)

Cash and cash equivalents at the beginning of the financial year 62,923 117,091

Effects of exchange rate changes on cash and cash equivalents - (770)

CASH AND CASH EQUIVALENTS AT END OF PERIOD 64,316 56,685

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.


Mantra Group Limited is a company limited by shares, incorporated and domiciled in Australia and is a for profit entity for the purpose of preparing financial statements. Its registered office and principal place of business is at Level 15, 50 Cavill Avenue, Surfers Paradise, QLD 4217. Its shares are listed on the Australian Securities Exchange (‘ASX’).

SIGNIFICANT JUDGEMENTS AND ESTIMATESIn the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates of future events. Judgements and estimates which are material to the financial statements include:

- Assessment of accounting treatment of property acquisitions (Note A2)

- Assessment of the useful economic life of an asset or that an asset has indefinite life (Note C2)

- Carrying value assessment of property, plant and equipment and intangible assets (Note C3)

- Assessment of the probability and timing of the completion of the proposed acquisition by AccorHotels (Note D3)

KEEPING IT SIMPLEThe ‘keeping it simple’ explanations provide a high level overview of the accounting treatment of the more complex sections of the financial statements. The notes provide explanations and additional disclosure to assist readers’ understanding and interpretation of the financial statements and include information required by accounting standards or ASX Listing Rules.

Notes to the consolidated financial statements About this report

CORPORATE INFORMATION The financial statements of Mantra Group Limited (‘the Company’) for the six months ended 31 December 2017 are for the consolidated entity consisting of the Company and its subsidiaries (together referred to as ‘the Group’ or ‘Mantra Group’).


BASIS OF PREPARATIONThis interim financial report for the six months reporting period ended 31 December 2017 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this financial report is to be read in conjunction with the annual report of the Company for the year ended 30 June 2017 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The financial report for the year ended 30 June 2017 is accessible at www.mantragroup.com.au.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

The following standards will be applicable in future reporting periods and the Group will adopt the standards upon the operative date.

• AASB 9 Financial Instruments (effective 1 January 2018)

• AASB15 Revenue from contracts with customers (effective 1 January 2018)

• AASB 16 Leases (effective 1 January 2019)

The Group set out the status of the assessment of the impact of these new standards on the results of the Group in the June 2017 financial statements. Since that date, the Group’s Financial Reporting team continues to finalise its works in respect of AASB 9 and continues to assess the impact of AASB16. The Group’s view on the impact of these standards on the financial statements remains unchanged to that reported in the June 2017 financial statements.


Notes to the consolidated financial statements A: Results for the period

This section provides additional information about those individual line items in the financial statements that the directors consider most relevant in the context of the operations of the entity.

A1 Segment information page 15

A2 Business combinations page 17

A3 Pre-acquisition deposits page 18

A1 SEGMENT INFORMATION

KEEPING IT SIMPLESegment reporting requires presentation of financial information based on the information that is internally provided to the Chief Executive Officer (CEO). The chief measure used by the CEO to monitor performance is EBITDAI.

The four reportable segments of the business are as follows:

• Resorts - operates retreats and resorts in key leisure destinations, principally under Management Letting Right (MLR) agreements;

• CBD - operates properties in major cities throughout Australia, principally under Lease Rights (LR) agreements;

• Central Revenue and Distribution - operates the Group’s in-house customer management and booking services, through which it earns fees from bookings made through its central reservation system. Management fees earned on properties under Management Agreements are also included in this segment; and

• Corporate - Revenue includes revenue received under Marketing Services Agreements. Costs include sales and marketing and head office costs.

None of the segments included are aggregated segments and the operating segments are consistent with the June 2017 financial report.


The segment information provided to the Chief Executive Officer for the reportable segments is as follows:

RESORTS CBDCENTRAL

REVENUE AND DISTRIBUTION

CORPORATE TOTAL

$’000 $’000 $’000 $’000 $’000

HALF-YEAR DECEMBER 2017

Total segment revenue 165,617 172,168 26,561 11,722 376,068

Inter-segment revenue (34) (12) - (9,799) (9,845)

REVENUE FROM EXTERNAL CUSTOMERS 165,583 172,156 26,561 1,923 366,223

UNDERLYING EBITDAI* 26,349 26,644 18,492 (14,873) 56,612

Transaction costs - - - (2,661) (2,661)

EBITDAI 26,349 26,644 18,492 (17,534) 53,951

HALF-YEAR DECEMBER 2016

Total segment revenue 163,070 162,808 28,250 11,171 365,299

Inter-segment revenue (34) (12) - (9,089) (9,135)

REVENUE FROM EXTERNAL CUSTOMERS 163,036 162,796 28,250 2,082 356,164

UNDERLYING EBITDAI* 28,075 26,299 18,834 (14,502) 58,706

Transaction costs - - - (1,692) (1,692)

EBITDAI 28,075 26,299 18,834 (16,194) 57,014

*Underlying EBITDAI is EBITDAI excluding transaction costs of $0.7m associated with business combinations (H1FY2017: $1.7m) (refer note A2) and costs of $2.0m associated with the proposed acquisition by AccorHotels (H1FY2017: nil) (refer note D5).

REVENUE FROM EXTERNAL CUSTOMERS

CBD

Resorts

CR&D

Corporate

0.5%

45.2%

47.0%

7.3%

CBD

Resorts

CR&D

Corporate

0.6%

45.7%

45.8%

7.9%

2017 2016

UNDERLYING EBITDAI* EXCLUDING CORPORATE SEGMENT

36.9%

CBD

Resorts

CR&D

37.3%

25.9%CBD

Resorts

CR&D

25.7%35.9%

38.3%

2017 2016


OTHER SEGMENT INFORMATION

SEGMENT REVENUE

Sales between segments are carried out at arm’s length and are eliminated on consolidation. The revenue from external parties reported to the Chief Executive Officer is measured in a manner consistent with that in the consolidated statement of comprehensive income.

EARNINGS BEFORE INTEREST, TAX, DEPRECIATION, AMORTISATION AND IMPAIRMENT (EBITDAI)

The Chief Executive Officer assesses the performance of the operating segments using EBITDAI. A reconciliation of underlying EBITDAI* to statutory operating profit before income tax is provided as follows:

HALF YEAR

31 DECEMBER 2017 31 DECEMBER 2016

$’000 $’000

UNDERLYING EBITDAI* 56,612 58,706

Transaction costs associated with business combinations (699) (1,692)

Costs associated with proposed acquisition by AccorHotels (1,962) -

Finance costs (net) (2,600) (2,485)

Depreciation (7,680) (6,843)

Amortisation (6,927) (6,680)

Reversal of impairment - 3,217

PROFIT BEFORE INCOME TAX 36,744 44,223

*Underlying EBITDAI is EBITDAI excluding transaction costs of 0.7m associated with business combinations (H1FY2017: $1.7m) (refer note A2) and costs of $2.0m associated with the proposed acquisition by AccorHotels (H1FY2017: nil) (refer note D5).

A2 BUSINESS COMBINATIONS

SIGNIFICANT JUDGEMENTS AND ESTIMATESAssessment of the acquisition of properties as asset acquisitions or business combinations requires management judgement regarding the terms of the individual contract. The main impacts of the different accounting treatments are that if the transaction is accounted for as a business combination, the assets and liabilities acquired, as well as the consideration paid, have to be fair valued. Also the transaction costs incurred in respect of the business combination are expensed to the statement of comprehensive income.

SUMMARY OF ACQUISITIONS

CURRENT PERIOD

During the interim reporting period, the Group completed one acquisition which has been accounted for as a business combination. Details of this acquisition are included below.

ART SERIES HOTEL GROUP

On 22 November 2017 Mantra Group acquired the Art Series Hotel Group, a portfolio of seven luxury 4-5 star unique hotels in popular cultural hubs in key Australian capital cities.


Details of the purchase consideration and the net assets acquired are as follows:

$’000

PURCHASE CONSIDERATION

Cash paid 49,119

The provisionally determined fair values of the assets and liabilities recognised as a result of the acquisition are as follows:

FAIR VALUE

$’000

Current assets 967

Property, plant and equipment 8,276

Intangible assets 41,487

Deferred tax asset 189

Provision for employee benefits (1,800)

Deferred tax liability (13,571)

NET IDENTIFIABLE ASSETS ACQUIRED 35,548

Add: Goodwill 13,571

NET ASSETS ACQUIRED 49,119

Acquisition related costs of $0.7m in respect of this business combination are included in the consolidated statement of comprehensive income. As noted above, as at 31 December 2017 the Group had paid $49.1m in respect of this acquisition. The balance of the purchase price of $2.6m was paid in February 2018 following settlement of The Chen management letting rights contract in accordance with the conditions of the sale agreement.

REVENUE AND PROFIT CONTRIBUTION

The acquired business contributed revenue of $6.7m, EBITDAI of $0.7m and net profit after tax of $0.3m to the Group for the period from the date of acquisition to 31 December 2017.

If the acquisition had occurred on 1 July 2017, consolidated revenue and consolidated profit for the half year ended 31 December 2017 would have been $390.1m and $25.8m respectively. These amounts have been calculated using the Group accounting policies and by adjusting the results of the operations to reflect the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to land and buildings and intangible assets had applied from 1 July 2017, together with the consequential tax effects.

PRIOR PERIOD

During the prior interim reporting period, the Group acquired three properties. Details of these business combinations were disclosed in note A4 of the Group’s annual financial statements for the year ended 30 June 2017.

PURCHASE CONSIDERATION - CASH OUTFLOW

HALF YEAR


$’000 $’000

OUTFLOW OF CASH TO ACQUIRE BUSINESSES, NET OF CASH ACQUIRED

Cash consideration for the period ended 31 December 49,119 67,624

Movement in pre-acquisition deposits - 8,342

49,119 75,966

A3 PRE-ACQUISITION DEPOSITSDuring the current and prior periods Mantra Group signed a number of agreements to acquire management rights and management agreements, all subject to customary conditions. At balance date, deposits of $5.4m were held in respect of these agreements (H1FY2017: $5.7m).


Notes to the consolidated financial statements B: Funding the business

Mantra Group focuses on maintaining a strong balance sheet through managing cash and debt levels. The funding strategy also considers the Group’s expenditure, growth, and acquisition requirements, and the desire to return dividends to shareholders.

This section provides more information on how the business is funded.

B1 Net debt page 19

B2 Equity page 19

B1 NET DEBT

31 DECEMBER 2017

30 JUNE 2017

$’000 $’000

Cash and cash equivalents 64,316 62,923

Secured non-current borrowings (186,355) (135,252)

NET DEBT (122,039) (72,329)

On 14 December 2017, the Group increased the facility limit of Tranche B of the Syndicated Facility Agreement by $30m. The expiry date of Tranche B was also extended to 13 January 2019.

On 27 December 2017 the Group did not renew its interest rate swap of $70m. The Group’s borrowings were therefore not hedged as at 31 December 2017.

B2 EQUITY

KEEPING IT SIMPLEIssued capital represents the amount of consideration received for securities issued by Mantra Group.

When the Company issues its shares, the consideration for these shares, including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.


SHARE CAPITAL

31 DECEMBER 2017

30 JUNE 2017

31 DECEMBER 2017

30 JUNE 2017

SHARES SHARES $’000 $’000

Ordinary shares - fully paid 297,428,917 297,428,917 414,252 414,252

ORDINARY SHARES

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.


Notes to the consolidated financial statements C: Operating assets

This section highlights the primary operating assets used to support the Group’s operating activities.

C1 Property, plant and equipment page 21

C2 Intangible assets page 22

C3 Carrying value assessment of intangible assets page 23

C1 PROPERTY, PLANT AND EQUIPMENTLAND AND BUILDINGS

PLANT AND EQUIPMENT

LEASEHOLD IMPROVEMENTS TOTAL

$’000 $’000 $’000 $’000

AT 30 JUNE 2017

Cost or fair value 152,327 94,470 14,343 261,140

Accumulated depreciation (41,032) (56,334) (6,116) (103,482)

Net book amount 111,295 38,136 8,227 157,658

HALF-YEAR ENDED 31 DECEMBER 2017

Opening net book amount 111,294 38,136 8,227 157,658

Exchange differences (494) (32) (6) (532)

Additions 380 7,676 2,756 10,812

Disposals (335) (15) - (350)

Depreciation charge (1,500) (5,428) (752) (7,680)

Acquisition of business 3,750 4,526 - 8,276

Closing net book amount 113,096 44,863 10,225 168,184

AT 31 DECEMBER 2017

Cost 155,463 106,216 17,092 278,771

Accumulated depreciation (42,367) (61,353) (6,867) (110,587)

Net book amount 113,096 44,863 10,225 168,184


C2 INTANGIBLE ASSETS

SIGNIFICANT JUDGEMENTS AND ESTIMATESAssessment of the useful economic life of an asset or that an asset has an indefinite life requires management judgement and is reassessed at each reporting date. If an asset’s useful life was assessed to be shorter or longer than that disclosed, the amortisation expense for the period would be higher or lower, respectively.

GOODWILL

INTELLECT-UAL

PROPERTY AND OTHER

INTANGIBLES

BRAND NAMES AND

TRADEMARKS

MANAGEMENT LETTING RIGHTS

LEASE RIGHTSHOTEL

MANAGEMENT RIGHTS

TOTAL

$’000 $’000 $’000 $’000 $’000 $’000 $’000

AT 30 JUNE 2017

Cost 242,312 22,609 11,460 357,004 153,102 26,605 813,092

Accumulated amortisation and impairment (119,670) (19,401) (1,004) (109,333) (48,939) (1,393) (299,740)

Net book amount 122,642 3,208 10,456 247,671 104,163 25,212 513,352

HALF-YEAR ENDED 31 DECEMBER 2017

Opening net book amount 122,642 3,208 10,456 247,671 104,163 25,212 513,352

Exchange differences - 2 - (504) - (262) (764)

Additions - 868 - 6,210 - 4,036 11,114

Amortisation charge - (911) (2) (3,697) (1,883) (434) (6,927)

Acquisition of business 13,571 - 5,500 - 32,341 3,646 55,058

Closing net book amount 136,213 3,167 15,954 249,680 134,621 32,198 571,833

AT 31 DECEMBER 2017

Cost 255,883 23,479 16,959 362,578 185,443 34,002 878,344

Accumulated amortisation (119,670) (20,312) (1,005) (112,898) (50,822) (1,804) (306,511)

Net book amount 136,213 3,167 15,954 249,680 134,621 32,198 571,833


C3 CARRYING VALUE ASSESSMENT OF INTANGIBLE ASSETS

KEEPING IT SIMPLEThe Group tests property, plant and equipment and intangible assets for impairment to ensure they are not carried at above either the amount for which they could be sold (fair value less costs of disposal ‘FVLCD’), or the amount they would generate by being used in the business (value in use). These tests are carried out:- At least annually for goodwill and brand names; and- Where there is an indication that the assets may be impaired (which is assessed at least each reporting date).

SIGNIFICANT JUDGEMENTS AND ESTIMATESThese calculations require the use of estimates and judgements regarding a number of items including forecast results, growth rates, discount rates and multiples applicable to each Cash Generating Unit (‘CGU’). Such estimates are subject to change as a result of changing economic and operational conditions. Actual cash flows may therefore differ from forecasts and could result in changes in the recognition of impairment charges or credits in future periods.

REVERSAL OF IMPAIRMENT

Impairment losses recognised in prior periods for intangible assets and property, plant and equipment are assessed at each reporting date for indications that the impairment loss has decreased or may no longer exist. The impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount of the asset and is reversed only to the extent that the carrying amount of the asset does not exceed the carrying amount that would have been determined, net of amortisation or depreciation, had not impairment losses been recognised.

IMPAIRMENT TEST FOR MANAGEMENT LETTING RIGHTS, LEASE RIGHTS AND HOTEL MANAGEMENT RIGHTS

As at the reporting date, to the extent that there are indicators of impairment or reversal of impairment, Management Letting Rights, Lease Rights and Hotel Management Rights are tested for impairment or reversal of impairment at the individual property level which is the smallest identifiable group of assets which generates cash flows which are largely independent of each other.

During the period, no impairment or reversal of impairment (H1FY2017: reversal of impairment of $3.2m) was recognised in relation to management letting rights, lease rights and hotel management rights. Details of the H1FY2017 reversal of impairment is included in the interim report for that period.


Notes to the consolidated financial statements D: Other information

This section of the notes includes other information that must be disclosed to comply with the accounting standards and other pronouncements or because it provides further information which may be useful for the users of the interim report.

D1 Earnings per share page 24

D2 Income tax expense page 25

D3 Share based payments page 25

D4 Events occurring after the reporting period page 26

D5 Contingent liabilities page 26

D1 EARNINGS PER SHARE

KEEPING IT SIMPLEEarnings per Share (EPS) is the amount of post-tax profit attributable to each share.

UNDERLYING EARNINGS PER SHARE

HALF YEAR31 DECEMBER 2017 31 DECEMBER 2016

$’000 $’000Total underlying earnings per share attributable to the ordinary equity holders of the Group 9.3 9.9

RECONCILIATION OF UNDERLYING NET PROFIT AFTER TAX, USED TO CALCULATE UNDERLYING EARNINGS PER SHARE, TO STATUTORY NET PROFIT AFTER TAX IS PROVIDED AS FOLLOWS:

HALF YEAR31 DECEMBER 2017 31 DECEMBER 2016

$’000 $’000Underlying net profit after tax 27,603 29,465

Transaction costs associated with business combinations (699) (1,692)

Costs associated with proposed acquisition by AccorHotels (1,962) -

Reversal of impairment - 3,217

Tax effect 196 (458)

Net profit after tax 25,138 30,532


D2 INCOME TAX EXPENSEIncome tax expense is recognised based on management’s estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the six-month period to 31 December 2017 is 31.6% (H1FY2017:31.0%).

D3 SHARE BASED PAYMENTSThis note provides an update on the Long Term Incentive Plan that was introduced in H1FY2016.

KEEPING IT SIMPLEThe share-based payments scheme described in this section was established by the Board to provide long-term incentives to the Group’s senior executives based on shareholder returns taking into account the Group’s financial and operational performance. Eligible executives may be granted performance rights on terms and conditions determined by the Board from time to time. The fair value of rights granted under the scheme is recognised as an employee benefit expense with a corresponding increase in equity.

The Company provides benefits to certain employees under a Long Term Incentive Plan (LTIP) whereby employees render services in exchange for rights over shares which are accounted for as share-based payments.

The LTIP was implemented in November 2015 and continues in the current period. A description of the LTIP is included in the June 2017 annual report.

YEAR GRANT DATE EXPIRY DATE EXERCISE PRICE

BALANCE AT START OF THE YEAR

GRANTED DURING THE

YEAR

EXERCISED DURING THE

YEAR

OTHER CHANGES

DURING THE YEAR

BALANCE AT END OF THE

YEAR

NUMBER NUMBER NUMBER NUMBER NUMBER

Long Term Incentive Plan (2016) 26/11/15 25/11/19 - 279,341 - - - 279,341

Long Term Incentive Plan (2017) 17/11/16 16/11/20 - 345,363 - - - 345,363

Long Term Incentive Plan (2018) 22/11/17 21/11/21 - - 481,356 - - 481,356

Total 624,704 481,356 - - 1,106,060

MODIFICATION OF SHARE BASED PAYMENTS ARRANGEMENTS

In October 2017, Mantra Group signed the Scheme Implementation Agreement (‘SIA’) setting out how the proposed acquisition of Mantra Group by AccorHotels would be effected. Under the SIA any performance rights issued under the Long Term Incentive Plan which had not vested by the date shareholder approval is obtained will vest and convert to Mantra shares at that time. This clause has the impact of shortening the vesting period and also removing the EPS and TSR hurdles and is considered to be a modification of the LTIP. The change in fair value of the options at the date of the modification was determined to be as follows:

• For performance rights issued in FY2016, performance rights previously subject to TSR hurdles, an increase of $2.00.

• For performance rights issued in FY2017, performance rights previously subject to TSR hurdles, an increase of $2.61

There was no change to the fair value of performance rights previously subject to EPS hurdles.

The incremental fair values are recognised as an expense over the period from October 2017 to the end of the estimated vesting period, currently estimated to be April 2018. The expense for the original option grant will continue to be recognised as if the terms had not been modified, but over the shortened vesting period.

FAIR VALUE OF OPTIONS GRANTED

In order to ascertain the fair value of transaction options granted, a probability weighted average value was calculated using the fair value assuming no AccorHotels transaction and a fair value assuming the AccorHotels transaction completes. The assessed fair value at grant date of performance rights granted during the half year ended 31 December 2017 linked to the Company’s TSR performance assuming no AccorHotels transaction was $1.099 per performance right (2017: $1.12). The assessed fair value of performance


rights linked to the Company’s EPS performance assuming no AccorHotels transaction was $3.22 (2017: $3.22). The fair value is independently determined using a Binomial Call Option Pricing Model which takes into account the exercise price, the term of the option, the impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk free interest rate for the term of the performance right and the correlations and volatilities of the peer group companies.

The model inputs for performance rights granted during the half year ended 31 December 2017 included:

• performance rights are granted for no consideration and vest based on Mantra Group Limited’s TSR ranking with a peer group of the members of the S&P/ASX 200 Industrials Index during the performance period. Mantra Group Limited’s EPS performance over three years and the continued employment of participants at specific dates

Exercise price: Nil

Grant date: 22 November 2017

Expiry date: 21 November 2021

Share price at grant date: $3.22

Expected price volatility of the company’s shares: 25% to 35%

Expected dividend yield: 3.6%

Risk-free rate: 2.02%

The expected price volatility is based on an analysis of the historical volatility of comparable companies and Industry Constituents adjusted for any expected changes to future volatility due to publicly available information.

The alternative valuation is that the proposed transaction completes and the fair value of the performance rights is $3.96. The change in the fair value of the performance rights is detailed above.

EXPENSES ARISING FROM SHARE-BASED PAYMENT TRANSACTIONS

Total expenses arising from share-based payment transactions recognised during the period were as follows:

HALF YEAR


$’000 $’000

Long term incentive plan 1,768 282

D4 EVENTS OCCURRING AFTER THE REPORTING PERIODOn 22 November 2017, Mantra Group acquired the Art Series Hotel Group. As at 31 December 2017, the Group had paid $49.1m in respect of this acquisition. The balance of the purchase price of $2.6m was paid in February 2018 following settlement of The Chen management letting rights contract in accordance with the conditions of the sale agreement.

No other matter or circumstance has occurred subsequent to period end that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group or economic entity in subsequent financial periods.

D5 CONTINGENT LIABILITIESCosts to date in respect of the proposed acquisition by AccorHotels total $2.0m. If the acquisition was to complete in the second-half of the financial year total costs will be approximately $14.7m. These costs include professional services fees and the increased Long Term Incentive Plan charge as a result of the modification of the plan following the signing of the SIA.


In the Directors’ opinion:

(a) the interim report and notes set out on pages 9 to 26 are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

(ii) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2017 and of its performance for the half-year ended on that date, and

(b) there are reasonable grounds to believe that Mantra Group Limited 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 Directors.

Peter Bush Kerry Robert East Director Director

Gold Coast 14 February 2018

Directors’ declaration


Independent auditor's review report to the members of Mantra Group Limited

Report on the Half-Year Financial ReportWe have reviewed the accompanying half-year financial report of Mantra Group Limited (the Company), which comprises the consolidated statement of financial position as at 31 December 2017, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors' declaration for Mantra Group Limited. The consolidated entity comprises the Company and the entities it controlled from time to time during the half-year.

Directors' responsibility for the half-year financial reportThe directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement whether due to fraud or error.

Auditor's responsibilityOur responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Australian Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated entity’s financial position as at 31 December 2017 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Mantra Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

IndependenceIn conducting our review, we have complied with the independence requirements of the Corporations Act2001.

PricewaterhouseCoopers, ABN 52 780 433 757 One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000, GPO BOX 2650 Sydney NSW 2001T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.auLevel 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.


ConclusionBased on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Mantra Group Limited is not in accordance with the Corporations Act 2001 including:

1. giving a true and fair view of the consolidated entity’s financial position as at 31 December 2017 andof its performance for the half-year ended on that date;

2. complying with Accounting Standard AASB 134 Interim Financial Reporting and the CorporationsRegulations 2001.

Matters relating to the electronic presentation of the reviewed half-year financial reportThis review report relates to the half-year financial report of the Company for the half-year ended 31 December 2017 included on Mantra Group Limited’s web site. The Company’s directors are responsible for the integrity of the Mantra Group Limited web site. We have not been engaged to report on the integrity of this web site. The review report refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the reviewed half-year financial report to confirm the information included in the reviewed half-year financial report presented on this web site.

PricewaterhouseCoopers

Kristin StubbinsPartner

Sydney14 February 2018

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