Veda Group Limited and its Controlled Entities Unaudited Condensed Interim Consolidated Financial Statements as of and
for the half-year ended 31 December 2015




Veda Group Limited and its Controlled Entities ABN 26 124 306 958
Unaudited Condensed Interim Consolidated Financial
Statements - 31 December 2015


Contents
Page
 
 



1



Veda Group Limited and its Controlled Entities
Unaudited condensed interim consolidated statements of profit or loss and other
comprehensive income
For the half-year ended 31 December 2015
and 2014
 
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

The above unaudited condensed interim consolidated statements of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

2


Veda Group Limited and its Controlled Entities
Unaudited condensed interim consolidated balance sheets
As at 31 December 2015 and 30 June 2015
 
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

The above unaudited condensed interim consolidated balance sheets should be read in conjunction with the accompanying notes.

3


Veda Group Limited and its Controlled Entities
Consolidated statements of changes in
equity
For the half-year ended 31 December 2015 and 2014

 
 
 
 
 
 
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


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

4


Veda Group Limited and its Controlled Entities
Consolidated statements of changes in
equity
For the half-year ended 31 December 2015 and 2014

 
 
 
 
 
 
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


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


5


Veda Group Limited and its Controlled Entities
Unaudited condensed interim consolidated statements of
cash flows For the half-year ended 31 December 2015 and
2014
 
 
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


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



6



Contents of the notes to the unaudited condensed interim
consolidated financial statements
Page



7



1 Basis of preparation of half-year report
The unaudited condensed interim consolidated financial statements are presented in Australian dollars, which is the functional currency of the company and the majority of the controlled entities in the Group. Unless otherwise stated all references to dollars refer to Australian dollars.
On 25 February 2016, Equifax Australia Pty Ltd, a wholly-owned subsidiary of Equifax Inc. acquired all of the shares on issue in the capital of the Company (under a scheme of arrangement which became effective on 11 February 2016 and was implemented on 25 February 2016) together with all options on issue which had not otherwise been cancelled. The Company was delisted (i.e. quotation of its shares was terminated and it was removed from the official list) by the ASX on 26 February 2016.

2 Summary of significant accounting policies
Veda Group Limited (the “Company”) is a company domiciled in Australia. These unaudited condensed interim consolidated financial statements as at and for the six months ended 31 December 2015 comprise the Company and its controlled entities (together referred to as the Group and individually as Group entities) and the Group’s interest in associates. The Group is a data analytics business. It provides credit information and analysis in Australia and New Zealand. It also provides information and analytic services to businesses and consumers to assist them in making decisions and managing risk.
(a)
Statement of compliance
The condensed interim consolidated financial statements are general purpose financial statements which have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”).
Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended 30 June 2015. The unaudited condensed consolidated interim financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated annual financial statements of the Group as at and for the year ended 30 June 2015. The unaudited condensed consolidated balance sheet as at 30 June 2015 included herein was derived from the audited consolidated financial statements as of that date.
The accounting policies adopted are consistent with those found in the 30 June 2015 annual financial statements.
These unaudited condensed interim consolidated financial statements were approved by the Board of Directors on 12 April 2016.
(b)
Accounting estimates and judgements
In preparing these unaudited condensed interim consolidated financial statements, Management makes judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The significant judgements made by Management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2015.
(c)
New accounting standards and interpretations
(i)
New accounting standards adopted
In the current period there has been no impact from new or revised Standards and Interpretations issued by the IASB that are relevant to the Group’s operations that would be effective for the current reporting period.
(ii)
New accounting standards released but not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2015 reporting periods and have not been early adopted by the Group. The Group's assessment of the impact of these new standards and interpretations is set out below.
IFRS 9 Financial Instruments (2013) is effective from 1 January 2018. The Group is not required to adopt this new standard until the annual reporting period ending 30 June 2019 and currently has no intention of early adopting this standard. The potential impact of the standard has been assessed at this stage as minimal.
IFRS 15 Revenue from Contracts with Customers is effective for annual reporting periods beginning on or after 1 January 2017, with early adoption permitted. The Group has no intention of early adopting this standard. The Group has not yet completed its

8



assessment of the potential impact on its consolidated financial statements resulting from the application of IFRS 15.
The IASB issued IFRS 16 Leases with an effective date of 1 January 2019. Early adoption will be permitted for entities that also adopt IFRS 15 Revenue from Contracts with Customers. The Group has no intention of early adopting this standard. The Group has not yet assessed the impact of IFRS16.
There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

3 Equifax acquisition related expenses
The Group incurred costs detailed in the following table in relation to the Equifax scheme of arrangement.
Share based payments expense was accelerated on the basis that the Board had previously resolved to accelerate vesting of grants under the Equity Incentive Plan should the Equifax acquisition scheme proceed and, after 14th December 2015, they considered that this scheme was more likely than not to proceed.
 
 
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

 



4 Operating Segments
Segment results are based on earnings before interest, taxes, depreciation and amortization (“EBITDA”) and also excludes the Group’s share of net profits and losses from associates. Segment assets and liabilities are not regularly provided to the Group’s board.
(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


9



(b) Other segment information
In addition to the reportable segments of Australia and International, the Group provides revenues from external customers for groups similar products and services as detailed in the following table:
 
 
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

Entity-wide disclosure
Revenue for New Zealand totalled $19.0m for December 2015 (December 2014: $18.2m) and non-current assets totalled $203.0m as of 31 December 2015 (30 June 2015: $197.7m). Non-current assets exclude financial instruments, deferred tax assets and employee benefit assets.

5 Finance expenses
 
 
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


6 Cash and cash equivalents
 
 
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


7 Income tax expense

10



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

8 Loans and borrowings

 
 
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


On 10 December 2013, the Group established:

An unsecured 3 year revolving facilities, consisting of an AU$240m facility and a NZ$93m facility; and
2. An unsecured 3 year AU$10 million bank guarantee facility.

On 10 September 2015, the Group amended and extended the above facilities which were due to mature in December 2016 resulting in:

An unsecured revolving facilities, consisting of:
(a)
) A$102.5m 3 year facility;
(b)
) A$102.5m 5 year facility;
(c)
) NZ$66.5m 3 year facility;

11



(d)
) NZ$66.5m 5 year facility; and

An unsecured 3 year AU$10 million bank guarantee facility.

The following table provides details of the components of the bank facilities and available cash equivalents:

 
 
 
 
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).

9 Contributed equity
 
 
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

There is no 'par value' for ordinary shares. The holders of ordinary shares are entitled to receive dividends as determined from time to time, and are entitled to one vote per share at meetings of the company.


10 Dividends
Ordinary shares
The following dividends were declared and paid by the Company during the half year ended 31 December 2015.
 
 
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


12



11 Earnings per share
The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to senior executives and employees.
Basic earnings per share
 
 
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.
12 Share-based payments
Description of share-based payment arrangements
During the period the Company granted 756,023 Deferred Share Rights (DSR’s) and 5,825,045 LTI Options under its Equity Incentive Plan.
At 31 December 2015, the Group had the following share-based payment arrangements:
Equity Incentive Plan
The fair value of instruments granted during the period were determined as follows:

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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:
 
 
ž 15 September 2016 (Tranche 1)
 
 
ž 15 September 2017 (Tranche 2)
 
 
ž 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
 
 
ž Tranche 1: 1.9%
 
 
ž 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:
 
 
ž 15 September 2018 (Tranche 1)
 
 
ž 15 September 2019 (Tranche 2)
Fair values determined using above methodology and inputs were as follows:
Tranche 1
 
$0.31
Tranche 2
 
$0.34
The number and weighted average fair value of all instruments on issue are as follows:

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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

During the period the share based payments expense was accelerated. Refer to Note 3 for details.
13 Contingent assets and contingent liabilities
(a)
Contingent liabilities
Guarantees
Guarantees issued by VA Australia Finance Pty Limited:
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).

The Company and the following subsidiaries have entered into a deed of cross guarantee:
VA Australia Finance Pty Limited
Veda Advantage Limited

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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
These guarantees may give rise to liabilities in the parent entity if the subsidiaries do not meet their obligations under the terms of the overdraft, loans, leases or other liabilities subject to the guarantees.
No material losses are anticipated in respect of any of the above contingent liabilities.
Claims
The Company is involved in various legal matters in the ordinary course of business. None of these matters is expected to give rise to a material claim against the company.
Contingent consideration
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.
Other matters
From time to time Veda also receives complaints from various parties such as consumer advocates in respect of compliance with the Privacy Act 1988 and Privacy Code. Veda takes its compliance obligations very seriously and believes it is compliant with all applicable laws and regulations. However, as is inherent in legal, regulatory and administrative proceedings, there is a risk the outcome may be unfavourable to the Group.
(b)
Contingent assets
The Group had no contingent assets at 31 December 2015 (2014: nil).

14    Business combination
During the half year ended 31 December 2015 the group made the following business acquisitions:
GCS;
Zip ID; and
ReachTEL.
These acquisitions are explained below:
(a)
Summary of acquisition - GCS
Effective 17 July 2015, the Group acquired 75% of GetCreditScore Pty Ltd (“GCS”). GCS is a business providing a web portal to allow consumers to access their credit bureau score for free and to collect leads from those consumers to use for marketing purposes.
The consideration for the acquisition consists of a payment of $75 on completion with further consideration contingent on the performance of the business as measured by the number of consumer leads generated in the first year after acquisition. The contingent consideration booked for the acquisition is $587,389.
Due to the nature of its business and the start-up phase of its operations, GCS has not yet contributed any revenue or net profit to the Group results.

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Details of the purchase consideration, the net assets acquired and goodwill are as follows:
 
 
$'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
Effective 1 July 2015, the Group acquired 100% of the companies Zip ID Holdings Pty Limited and Zip ID Pty Limited (collectively “Zip ID”). Zip ID is a business providing face to face and mobile enabled identity verification services.
The initial consideration for the purchase was $500,000 with further consideration contingent on the performance of the business as measured by 3.5 times the direct contribution earnings before interest, tax, depreciation and amortisation of the business in the third year from acquisition (with instalments required at the end of years 1 and 2). The contingent consideration booked for the acquisition is $5,701,282.
During the 6 months to 31 December 2015 Zip ID contributed revenue of $315,175 and a net loss of $375,589 to the Group results.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
 
 
$'000

 
 
 
Purchase consideration
 
 
Cash paid (net of cash acquired)
 
369

Contingent consideration
 
5,701

Total purchase consideration
 
6,097

The assets and liabilities recognised as a result of the acquisition are as follows:
 
 
$'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
Effective 1 September 2015, the Group acquired 100% of the companies Codeset Pty Limited and ReachTEL Pty Limited (collectively “ReachTEL”). ReachTEL is a provider of market research and multi-channel communications solutions designed to help customers understand their market and remove inefficiencies, increase reach and improve profitability of its customers.
The consideration for the purchase was:

$5,000,000 up-front plus working capital adjustment;
Guaranteed payments of $2,500,000 per year for the next two years; and

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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.

During the 4 months to 31 December 2015 ReachTEL contributed revenue of $1,241,890 and net profit of $641,442 to the Group results. If the acquisition had occurred on 1 July 2015 management estimates that contributed revenue would have been $1,817,557 and contributed profit for the year would have been $962,163. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 July 2015.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
 
 
$'000

 
 
 
Purchase consideration
 
 
Cash paid (net of cash acquired)
 
5,750

Differed consideration
 
4,838

Contingent consideration
 
2,429

Total purchase consideration
 
13,017

The assets and liabilities recognised as a result of the acquisition are as follows:
 
 
$'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





15Seasonality

Veda is not a highly seasonal business however revenues are typically lower than average during December and
January and higher during May and June caused by lower business activity in Australia in December and January coinciding with the Australian summer and increased business activity in May and June coinciding with the typical Australian fiscal year end. 

16    Events occurring after the reporting period

On 25 February 2016, Equifax Australia Pty Ltd, a wholly-owned subsidiary of Equifax Inc. acquired all of the shares on issue in the capital of the Company (under a scheme of arrangement which became effective on 11 February 2016 and was implemented on 25 February 2016) together with all options on issue which had not otherwise been cancelled. The Company was delisted (i.e. quotation of its shares was terminated and it was removed from the official list) by the ASX on 26 February 2016.


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