Contents | Page |
Note | 2015 $'000 | 2014 $'000 | |||||||
Revenue | $ | 180,563 | $ | 162,973 | |||||
Costs of external data and products used for resale | (33,811 | ) | (29,919 | ) | |||||
Employee benefits expense | (51,476 | ) | (46,244 | ) | |||||
Depreciation and amortisation expense | (15,954 | ) | (12,508 | ) | |||||
Software, technology and communication costs | (6,315 | ) | (6,815 | ) | |||||
Occupancy costs | (3,148 | ) | (2,732 | ) | |||||
Professional and legal fees | (2,057 | ) | (1,656 | ) | |||||
Travel and accommodation | (1,844 | ) | (1,282 | ) | |||||
Marketing and publications | (2,400 | ) | (2,155 | ) | |||||
Other expenses | (3,388 | ) | (2,917 | ) | |||||
Equifax acquisition related expenses | 3 | (3,182 | ) | — | |||||
Finance income | 292 | 403 | |||||||
Finance expenses | 5 | (5,835 | ) | (6,954 | ) | ||||
Share of profit from associates | 2,693 | 1,459 | |||||||
Profit before income tax | 54,138 | 51,653 | |||||||
Income tax expense | 7 | (14,664 | ) | (13,589 | ) | ||||
Profit for the period | 39,474 | 38,064 | |||||||
Other comprehensive income (loss) | |||||||||
Items that may be reclassified subsequently to profit or loss: | |||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax | (224 | ) | (2 | ) | |||||
Exchange differences on translation of foreign operations | 4,685 | 4,706 | |||||||
Other comprehensive income for the period, net of tax | 4,461 | 4,704 | |||||||
Total comprehensive income for the period | 43,935 | 42,768 | |||||||
Profit is attributable to: | |||||||||
Owners of Veda Group Limited | 39,108 | 37,834 | |||||||
Non-controlling interests | 366 | 230 | |||||||
Profit for the period | 39,474 | 38,064 | |||||||
Total comprehensive income for the period is attributable to: | |||||||||
Owners of Veda Group Limited | 43,535 | 42,597 | |||||||
Non-controlling interests | 400 | 171 | |||||||
Total comprehensive income for the period | $ | 43,935 | $ | 42,768 | |||||
Earnings per Parent share | Cents | Cents | |||||||
Basic earnings per share | 11 | 4.6 | 4.5 | ||||||
Diluted earnings per share | 11 | 4.6 | 4.5 |
Note | 2015 $'000 | 2015 $'000 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 6 | $ | 29,872 | $ | 29,799 | |||
Trade and other receivables | 46,831 | 47,503 | ||||||
Other prepayments and deposits | 3,238 | 2,485 | ||||||
Total current assets | 79,941 | 79,787 | ||||||
Non-current assets | ||||||||
Receivables | 2,746 | 2,801 | ||||||
Investments in equity-accounted investees | 35,445 | 33,920 | ||||||
Property, plant and equipment | 6,261 | 4,772 | ||||||
Deferred tax assets | — | 14,940 | ||||||
Intangible assets | 976,324 | 938,129 | ||||||
Total non-current assets | 1,020,776 | 994,562 | ||||||
Total assets | 1,100,717 | 1,074,349 | ||||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Trade and other payables | 29,125 | 29,843 | ||||||
Deferred revenue | 6,662 | 7,439 | ||||||
Derivative financial instruments | 303 | — | ||||||
Current tax liabilities | 62 | 2,317 | ||||||
Provisions | 8,016 | 3,867 | ||||||
Employee benefits | 9,822 | 16,512 | ||||||
Total current liabilities | 53,990 | 59,978 | ||||||
Non-current liabilities | ||||||||
Borrowings | 8 | 248,444 | 226,615 | |||||
Deferred tax liabilities | 949 | — | ||||||
Provisions | 13,685 | 7,038 | ||||||
Other non-current payables | 6,080 | 6,080 | ||||||
Employee benefits | 1,345 | 1,458 | ||||||
Total non-current liabilities | 270,503 | 241,191 | ||||||
Total liabilities | 324,493 | 301,169 | ||||||
Net assets | 776,224 | 773,180 | ||||||
EQUITY | ||||||||
Contributed equity | 9 | 800,070 | 792,161 | |||||
Other reserves | 17,002 | 10,985 | ||||||
Accumulated losses | (44,033 | ) | (32,555 | ) | ||||
Capital and reserves attributable to owners of Veda Group Limited | 773,039 | 770,591 | ||||||
Non-controlling interests | 3,185 | 2,589 | ||||||
Total equity | $ | 776,224 | $ | 773,180 |
Attributable to owner of | ||||||||||||||||||||||||||||||||||||
Veda Group Limited and its Controlled Entities | ||||||||||||||||||||||||||||||||||||
Note | Contributed equity | Hedging Reserve | Share based payments reserve | Foreign currency translation reserve | Treasury Shares | Accumulated losses | Total | Non-controlling interests | Total equity | |||||||||||||||||||||||||||
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | ||||||||||||||||||||||||||||
Balance at 1 July 2015 | $ | 792,161 | $ | — | $ | 8,458 | $ | 2,527 | $ | — | $ | (32,555 | ) | $ | 770,591 | $ | 2,589 | $ | 773,180 | |||||||||||||||||
Profit after income tax | — | — | — | — | — | 39,108 | 39,108 | 366 | 39,474 | |||||||||||||||||||||||||||
Other comprehensive income (OCI): | ||||||||||||||||||||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax | — | (224 | ) | — | — | — | — | (224 | ) | — | (224 | ) | ||||||||||||||||||||||||
Exchange differences on translation of foreign operations | — | — | — | 4,651 | — | — | 4,651 | 34 | 4,685 | |||||||||||||||||||||||||||
Total comprehensive income for the period | — | (224 | ) | — | 4,651 | — | 39,108 | 43,535 | 400 | 43,935 | ||||||||||||||||||||||||||
Transactions with owners in their capacity as owners: | ||||||||||||||||||||||||||||||||||||
Dividends provided for or paid | 10 | — | — | — | — | — | (50,586 | ) | (50,586 | ) | — | (50,586 | ) | |||||||||||||||||||||||
Acquisition of treasury shares | — | — | — | — | (1,591 | ) | — | (1,591 | ) | — | (1,591 | ) | ||||||||||||||||||||||||
Share based payments | 12 | — | — | 3,181 | — | — | — | 3,181 | — | 3,181 | ||||||||||||||||||||||||||
Share options exercised | 7,909 | — | — | — | — | — | 7,909 | — | 7,909 | |||||||||||||||||||||||||||
7,909 | — | 3,181 | — | (1,591 | ) | (50,586 | ) | (41,087 | ) | — | (41,087 | ) | ||||||||||||||||||||||||
Changes in ownership interests in subsidiaries: | ||||||||||||||||||||||||||||||||||||
Acquisition of subsidiary with non-controlling interest | — | — | — | — | — | — | — | 196 | 196 | |||||||||||||||||||||||||||
Balance at 31 December 2015 | $ | 800,070 | $ | (224 | ) | $ | 11,639 | $ | 7,178 | $ | (1,591 | ) | $ | (44,033 | ) | $ | 773,039 | $ | 3,185 | $ | 776,224 |
Attributable to owner of | ||||||||||||||||||||||||||||||||
Veda Group Limited and its Controlled Entities | ||||||||||||||||||||||||||||||||
Note | Contributed equity | Hedging Reserve | Share based payments reserve | Foreign currency translation reserve | Accumulated losses | Total | Non-controlling interests | Total equity | ||||||||||||||||||||||||
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |||||||||||||||||||||||||
Balance at 1 July 2014 | $ | 791,364 | $ | (75 | ) | $ | 7,551 | $ | 3,311 | $ | (76,605 | ) | $ | 725,546 | $ | 2,046 | $ | 727,592 | ||||||||||||||
Profit after income tax | — | — | — | — | 37,834 | 37,834 | 230 | 38,064 | ||||||||||||||||||||||||
Other comprehensive income (OCI): | ||||||||||||||||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax | — | (2 | ) | — | — | — | (2 | ) | — | (2 | ) | |||||||||||||||||||||
Exchange differences on translation of foreign operations | — | — | — | 4,765 | — | 4,765 | (59 | ) | 4,706 | |||||||||||||||||||||||
Total comprehensive income for the period | — | (2 | ) | — | 4,765 | 37,834 | 42,597 | 171 | 42,768 | |||||||||||||||||||||||
Transactions with owners in their capacity as owners: | ||||||||||||||||||||||||||||||||
Dividends provided for or paid | 10 | — | — | — | — | (33,682 | ) | (33,682 | ) | — | (33,682 | ) | ||||||||||||||||||||
Share based payments | — | — | (371 | ) | — | — | (371 | ) | — | (371 | ) | |||||||||||||||||||||
— | — | (371 | ) | — | (33,682 | ) | (34,053 | ) | — | (34,053 | ) | |||||||||||||||||||||
Balance at 31 December 2014 | $ | 791,364 | $ | (77 | ) | $ | 7,180 | $ | 8,076 | $ | (72,453 | ) | $ | 734,090 | $ | 2,217 | $ | 736,307 |
2015 | 2014 | |||||||
Note | $'000 | $'000 | ||||||
Cash flows from operating activities | ||||||||
Receipts from customers (inclusive of GST) | $ | 199,487 | $ | 177,369 | ||||
Payments to suppliers and employees (inclusive of GST) | (131,595 | ) | (117,021 | ) | ||||
67,892 | 60,348 | |||||||
Income taxes paid | (2,302 | ) | (2,587 | ) | ||||
Interest received | 276 | 288 | ||||||
Net cash inflow from operating activities | 65,866 | 58,049 | ||||||
Cash flows from investing activities | ||||||||
Payments for acquisition of subsidiaries, net of cash acquired | 14 | (6,146 | ) | (4,470 | ) | |||
Payments for property, plant and equipment | (2,601 | ) | (2,032 | ) | ||||
Payments for systems software and data | (24,246 | ) | (25,112 | ) | ||||
Management loans | 855 | 668 | ||||||
Dividends received | 1,784 | 1,793 | ||||||
Contingent consideration paid | (4,035 | ) | (624 | ) | ||||
Net cash outflow from investing activities | (34,389 | ) | (29,777 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from borrowings | 8 | 40,000 | 30,000 | |||||
Repayment of borrowings | (22,473 | ) | (26,461 | ) | ||||
Dividends paid to company's shareholders | 10 | (50,586 | ) | (33,682 | ) | |||
Payment of transaction costs related to borrowings | (1,359 | ) | — | |||||
Interest and other costs paid on financial debt | (5,146 | ) | (6,516 | ) | ||||
Proceeds from exercise of share options | 7,909 | — | ||||||
Net cash outflow from financing activities | (31,655 | ) | (36,659 | ) | ||||
Net increase in cash and cash equivalents | (178 | ) | (8,387 | ) | ||||
Cash and cash equivalents at the beginning of the financial year | 29,799 | 30,028 | ||||||
Effects of exchange rate changes on cash and cash equivalents | 251 | (46 | ) | |||||
Cash and cash equivalents at the end of year | 6 | $ | 29,872 | $ | 21,595 |
Contents of the notes to the unaudited condensed interim consolidated financial statements | Page | |
(a) | Statement of compliance |
(b) | Accounting estimates and judgements |
(c) | New accounting standards and interpretations |
(i) | New accounting standards adopted |
(ii) | New accounting standards released but not yet adopted |
2015 $'000 | 2014 $'000 | |||||
Acceleration of share based payments expense | 2,107 | — | ||||
Professional and legal fees | 1,075 | — | ||||
Total Equifax acquisition related expenses | 3,182 | — |
(a) | Information about reportable segments |
31 December 2015 | Australia $'000 | International $'000 | Total $'000 | ||||||
Total Segment revenue | 161,314 | 19,249 | 180,563 | ||||||
EBITDA | 65,662 | 10,462 | 76,124 | ||||||
Depreciation and amortisation | (15,954 | ) | |||||||
Net finance costs | (5,543 | ) | |||||||
Equifax acquisition related expenses | (3,182 | ) | |||||||
Share of profit from associates | 2,693 | ||||||||
Profit before income tax | 54,183 |
31 December 2014 | Australia $'000 | International $'000 | Total $'000 | ||||||
Total Segment revenue | 144,248 | 18,725 | 162,973 | ||||||
EBITDA | 60,038 | 9,215 | 69,253 | ||||||
Depreciation and amortisation | (12,508 | ) | |||||||
Net finance costs | (6,551 | ) | |||||||
Share of profit from associates | 1,459 | ||||||||
Profit before income tax | 51,653 |
2015 $'000 | 2014 $'000 | |||||
Consumer Risk and Identity | 58,609 | 52,582 | ||||
B2C and Marketing | 32,526 | 24,299 | ||||
Commercial Risk and Information Services | 70,179 | 67,367 | ||||
Australia | 161,314 | 144,248 | ||||
International | 19,249 | 18,725 | ||||
Total revenue | 180,563 | 162,973 |
2015 $'000 | 2014 $'000 | |||||
Bank interest and finance charges paid/payable | 5,477 | 6,712 | ||||
Amortisation of capitalised borrowing costs | 358 | 242 | ||||
Finance costs recognised in profit or loss | 5,835 | 6,954 |
31 December | 30 June | |||||
2015 $'000 | 2015 $'000 | |||||
Current assets | ||||||
Bank balances | 10,090 | 8,734 | ||||
Deposits at call | 19,782 | 21,065 | ||||
Cash and cash equivalents | 29,872 | 29,799 |
Tax recognised in profit or loss | ||||||
2015 $'000 | 2014 $'000 | |||||
Current tax expense | 2,128 | 2,952 | ||||
Deferred tax expense | 12,513 | 11,306 | ||||
Under/(over) provided in prior years | 23 | (669 | ) | |||
Total income tax expense | 14,664 | 13,589 |
Numerical reconciliation between income tax expense and pre-tax accounting profit | ||||||
Profit before tax | 54,138 | 51,653 | ||||
Income tax at 30% | 16,241 | 15,496 | ||||
Tax effect of amounts which are not deductible (taxable) in calculating taxable income: | ||||||
R&D offset | (716 | ) | (965 | ) | ||
Sudry items | (82 | ) | 242 | |||
Share of net profit of associates | (802 | ) | (515 | ) | ||
Under/(over) provided in prior years | 23 | (669 | ) | |||
Tax expense recognizes in the statement of profit or loss | 14,664 | 13,589 |
31 December | 30 June | |||||
2015 $'000 | 2015 $'000 | |||||
Unsecured | ||||||
Senior Australian debt | 143,500 | 121,000 | ||||
Senior New Zealand debt | 106,682 | 106,317 | ||||
Capitalised borrowing costs | (1,738 | ) | (702 | ) | ||
Total unsecured non-current borrowings | 248,444 | 226,615 |
(a) | ) A$102.5m 3 year facility; |
(b) | ) A$102.5m 5 year facility; |
(c) | ) NZ$66.5m 3 year facility; |
(d) | ) NZ$66.5m 5 year facility; and |
• | An unsecured 3 year AU$10 million bank guarantee facility. |
31 December 2015 | 30 June 2015 | |||||||||||||
Maturity | Facility $'000 | Utilised $'000 | Facility $'000 | Utilised $'000 | ||||||||||
Revolving credit facility A | December 2016 | — | — | 240,000 | 144,229 | |||||||||
Revolving credit facility B (Note 1) | December 2016 | — | — | 83,088 | 83,088 | |||||||||
Facility A1 | September 2018 | 102,500 | 102,500 | — | — | |||||||||
Facility A | September 2020 | 102,500 | 41,000 | — | — | |||||||||
Facility A2 (Note1) | September 2018 | 62,505 | 62,505 | — | — | |||||||||
Facility B (Note 1) | September 2020 | 62,505 | 44,177 | — | — | |||||||||
Less: cash and cash equivalents | — | (29,872 | ) | — | (29,799 | ) | ||||||||
Less: capitalised borrowings costs | — | (1,738 | ) | — | (702 | ) | ||||||||
Net bank debt | 330,010 | 218,572 | 323,088 | 196,816 | ||||||||||
Note 1 - NZD denominated debt of NZ$133 million converted to AUD at an exchange rate of 0.93992 (Jun15 : NZ$93 million converted to AUD at 0.8934). |
31 December | 30 June | 31 December | 30 June | |||||||||
Shares '000 | Shares '000 | 2015 $'000 | 2015 $'000 | |||||||||
Revolving credit facility A | 846,426 | 842,455 | 800,070 | 792,161 |
Centers per share | Total amount $'000 | Date of payment | ||||
Final 2015 ordinary | 6.0 | 50,586 | 8 October 2015 | |||
Final 2014 ordinary | 4.0 | 33,682 | 9 October 2014 |
2015 | 2014 | |||||
Parent basic earnings per share (cents) | 4.6 | 4.5 | ||||
Parent diluted earnings per share (cents) | 4.6 | 4.5 | ||||
Profit for the period attributable to parent shareholders (in thousands of dollars) | 39,108 | 37,834 | ||||
In thousands of shares | ||||||
Issued ordinary shares at 1 July | 842,455 | 842,055 | ||||
Effect of allotment and issuances | 2,231 | — | ||||
Basic weighted average number of ordinary shares | 844,686 | 846,193 | ||||
In thousands of shares | ||||||
Basic weighted average number of ordinary shares | 844,686 | 842,055 | ||||
Effect of share options on issue | 8,610 | 4,138 | ||||
Diluted weighted average number of ordinary shares | 853,296 | 846,193 | ||||
At 31 December 2015, 35 million options were included in the diluted weighted average number of ordinary shares calculation. In 2014, 39 million options were included in the diluted weighted average number of ordinary shares calculation. |
DSR'S | ||
Model used | Black Scholes | |
Grant Date | 15 September 2015 | |
Share Price as the Grant Date | $2.11 | |
30 trading day VWAP prior to the Grant Date | $2.15 | |
Exercise price | Nil | |
Dividend yield | 2.90% | |
Vesting date | The DSRs will vest in three tranches: | |
15 September 2016 (Tranche 1) | ||
15 September 2017 (Tranche 2) | ||
15 September 2018 (Tranche 3) | ||
Expiration date | Immediately after vesting | |
Fair values determined using above methodology and inputs were as follows: | ||
Tranche 1 | $2.09 | |
Tranche 2 | $2.03 | |
Tranche 3 | $1.97 | |
LTI Options | ||
Model used | Monte Carlo Simulation | |
Grant Date | 15 September 2015 | |
Share Price as at the Grant Date | $2.11 | |
Exercise price- 30 trading day VWAP prior to the Grant Date | $2.15 | |
Dividend yield | 2.90% | |
Risk free rate | Rates used as follows | |
Tranche 1: 1.9% | ||
Tranche 2: 2.1% | ||
Volatility | 25% | |
Matrix of historical share prices and returns of Veda and ASX | ||
Correlation | 200 peer companies | |
TSR performance | No initial TSR performance assumed | |
Vesting date | The Options will vest in two tranches: | |
15 September 2018 (Tranche 1) | ||
15 September 2019 (Tranche 2) | ||
Fair values determined using above methodology and inputs were as follows: | ||
Tranche 1 | $0.31 | |
Tranche 2 | $0.34 |
Weighted Average Exercise Price | Number of DSR's | ||||
DSR's | |||||
Outstanding as at 1 July 2015 | — | — | |||
Granted during the period | — | 756,023 | |||
Forfeited during the period | — | — | |||
Exercised during the period | — | — | |||
Expired during the period | — | — | |||
Outstanding at 31 December | — | 756,023 | |||
Exercisable at 31 December | — | — |
Weighted Average Exercise Price | Number of DSR's | ||||
LTI Options | |||||
Outstanding as at 1 July 2015 | $2.15 | — | |||
Granted during the period | $2.15 | 5,825,045 | |||
Forfeited during the period | $2.15 | — | |||
Exercised during the period | $2.15 | — | |||
Expired during the period | $2.15 | — | |||
Outstanding at 31 December | $2.15 | 5,825,045 | |||
Exercisable at 31 December | $2.15 | — |
Weighted Average Exercise Price | Number of DSR's | ||||
Other share options | |||||
Outstanding as at 1 July 2015 | $1.99 | 38,766,664 | |||
Granted during the period | $1.99 | — | |||
Forfeited during the period | $1.99 | — | |||
Exercised during the period | $1.99 | (3,970,322 | ) | ||
Expired during the period | $1.99 | — | |||
Outstanding at 31 December | $1.99 | 34,796,342 | |||
Exercisable at 31 December | $1.99 | 34,796,342 |
(a) | Contingent liabilities |
• | Property leases to $5,025,420 (June 2015 : $4,757,920) |
• | Contractual obligations, performance and warranties in respect of certain controlled entities to nil (June 2015 : $2,881,627). |
• | VA Australia Finance Pty Limited |
• | Veda Advantage Limited |
• | Veda Advantage Solutions Group Pty Limited |
• | Veda Advantage (Australia) Pty Limited |
• | Veda Advantage Information Services and Solutions Limited |
• | Verify Holdings Australia Pty Limited |
• | Corporate Scorecard Pty Limited |
• | In acquiring the Zip ID business in July 2015, additional consideration is payable on future earn-out hurdles. The fair value of the contingent consideration at 31 December 2015 is $5.7 million. |
• | In acquiring the GCS business in July 2015, additional consideration is payable on future earn-out hurdles. The fair value of the contingent consideration at 31 December 2015 is $0.6 million. |
• | In acquiring the Reachtel business in September 2015, additional consideration is payable on future earn-out hurdles. The fair value of the contingent consideration at 31 December 2015 is $2.4 million. |
(b) | Contingent assets |
• | GCS; |
• | Zip ID; and |
• | ReachTEL. |
(a) | Summary of acquisition - GCS |
$'000 | |||
Purchase consideration | |||
Contingent consideration | 587 | ||
Total purchase consideration | 587 | ||
The assets and liabilities recognised as a result of the acquisition are as follows: | |||
$'000 | |||
Total purchase consideration | 587 | ||
Non-controlling interest (25%) | 196 | ||
Goodwill | 783 |
(b) | Summary of acquisition - Zip ID |
$'000 | |||
Purchase consideration | |||
Cash paid (net of cash acquired) | 369 | ||
Contingent consideration | 5,701 | ||
Total purchase consideration | 6,097 |
$'000 | |||
Net intangible assets acquired | 2,220 | ||
Deferred tax liabilities on intangible assets | (301 | ) | |
Other net tangible liabilities acquired | (86 | ) | |
Goodwill | 4,264 | ||
Fair value of net assets acquired | 6,097 |
(c) | Summary of acquisition - ReachTEL |
• | $5,000,000 up-front plus working capital adjustment; |
• | Guaranteed payments of $2,500,000 per year for the next two years; and |
• | Contingent consideration based on the performance of the business as measured by 2.25 times the ReachTEL revenue in the second year after acquisition. |
• | The contingent consideration booked for the acquisition is $2,428,538. |
$'000 | |||
Purchase consideration | |||
Cash paid (net of cash acquired) | 5,750 | ||
Differed consideration | 4,838 | ||
Contingent consideration | 2,429 | ||
Total purchase consideration | 13,017 |
$'000 | |||
Net intangible assets acquired | 6,500 | ||
Deferred tax liabilities on intangible assets | (554 | ) | |
Other net tangible assets acquired | 592 | ||
Goodwill | 6,479 | ||
Fair value of net assets acquired | 13,017 |