GTN Limited
ABN 38 606 841 801
Annual Report 2017
CONTENTS
Item
Chairman and CEO’s Letter
About GTN
Corporate Governance
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Consolidated Financial Report
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder information
Corporate Directory
Page
1
2
6
7
22
34
35
41
90
91
97
101
CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S
LETTER
Dear Shareholders,
On behalf of the Board of Directors, we are pleased to announce that GTN Limited (“GTN” or the
“Company”) has completed another productive and successful year and are pleased to present its
annual report for fiscal year ending 30 June 2017.
GTN reported net revenues for the year of $213.6 million, including $35.1 million for the seven month
period we operated in the United States. Excluding the United States operations, which were not
included in the Prospectus Forecast, GTN reported net revenues for the year of $178.5 million which
was 1% ahead of Prospectus Forecast and 7% ahead of last year with all four operating segments
exceeding the previous year in local currency. Adjusted EBITDA was $48.9 million which exceeded
Prospectus Forecast by 7% and NPATA was $32.5 million which was 26% higher than Prospectus
Forecast, also excluding the U.S. operations. In addition, revenue, EBITDA, Adjusted EBITDA, NPAT
and NPATA were significantly higher than Pro Forma and statutory fiscal 2016 results, once again
excluding the United States fiscal 2017 performance. We would like to commend our local
management for delivering such outstanding results on the heels of a strong fiscal 2016.
In December 2016, we exercised our option to acquire substantially all of the assets of Radiate Media
LLC for total consideration (including assumed liabilities) of approximately $17.8 million USD (~$24.1
million AUD). Since closing the acquisition, our USTN subsidiary has commenced a multi-year
affiliation with the CBS Radio group as well as entering into important new affiliation agreements with
radio stations owned by Entercom, Beasley, Cox, Emmis and other prominent radio groups. As
expected, we have experienced large initial losses while we work to turn the division around. We
believe the upside to be significant given the United States is the largest advertising market in the
world and we currently have a weekly audience in excess of 150 million people.
In anticipation of the start-up losses associated with our entry into the United States, we raised
additional capital during FY2017 via a non-renounceable entitlement offering and a dividend
reinvestment plan which was partially underwritten. The net proceeds of these offerings were $66
million and significantly upgraded our already strong balance sheet. As of 30 June 2017, we had
cash balances of $100.7 million and debt of $100 million, effectively having negative net debt.
In July 2017, we commenced operations in Porto Alegre, our fourth Brazilian market. Brazil had the
strongest growth of any of our markets in fiscal 2017 and we hope to significantly increase our market
penetration in Brazil in the coming years.
We are very pleased with our initial full year as a public company. The Company acquired a strong
platform in the United States, the largest advertising market in the world, exceeded Prospectus
Forecast revenue, EBITDA, Adjusted EBITDA, NPAT and NPATA with its original holdings and
opened a new market in Brazil. GTN has low leverage, produces strong cash flow, and has exciting
growth opportunities.
Once again we would like to thank our management and employees for their outstanding effort and
our shareholders for their support. We look forward to a successful and productive fiscal 2018.
William L. Yde III
Managing Director and Chief Executive Officer
Robert Loewenthal
Chairman
1
About GTN
Overview of GTN
GTN provides a broad reach advertising platform that enables advertisers to reach large
audiences frequently and effectively. GTN is one of the largest broadcast media advertising
platforms by audience reach in Australia, Canada and the United Kingdom and is progressing
towards its goal of achieving this status in Brazil and the United States.
GTN is the largest supplier of traffic information reports to radio stations in its operating
geographies excluding the United States which commenced operations in FY 2017. In exchange
for providing these and other reports and in certain cases cash compensation, GTN receives
commercial advertising spots adjacent to traffic, news and information reports from its large
network of radio and television stations (“Affiliates”). The spots are bundled together by GTN
and sold to advertisers on a national, regional or specific market basis.
GTN’s advertising platform provides advertisers with high impact campaigns because
advertisements are ideally placed during peak audience times and are aired frequently across
large audiences. GTN’s advertisements are short in duration, adjacent to engaging information
reports and are often read live on the air by well-known radio and television personalities. This
product is designed to create high audience engagement and high recall among listeners,
leading to a high return on investment for advertisers.
This has enabled GTN to establish longstanding relationships with large, national advertisers,
resulting in strong growth in revenue since GTN’s inception.
GTN has successfully established itself within its Affiliates’ operations by providing them with
quality, timely and important information. In some cases, GTN also provides cash compensation
to Affiliates in exchange for advertising spots, which, in many cases, allows Affiliates to convert
an important programming segment from a cost centre to a profit centre. This stable income
stream can constitute a material portion of the Affiliates’ overall profits, further solidifying GTN’s
position within their operations.
GTN currently operates in Australia, Canada, the United Kingdom, Brazil and the United States -
five of the 10 largest advertising markets in the world. GTN began operations in Australia in
1997, and has selectively and successfully expanded into other attractive markets including,
most recently, the United States, the largest advertising market in the world, via its purchase of
Radiate Media.
In FY2017, 95% of GTN’s Revenues were generated through the sale of radio advertising spots
and 5% were generated through the sale of television advertising spots and fees.
Overview of GTN’s divisions
Country
Australia
Canada
Kingdom
Brazil
States
Population
(millions)
24.6
36.3
65.6
207.7
323.1
United
United
GTN years of
operation
FY 2017
revenue (1)
% of FY 2017
revenue (1)
(years)
20
12
8
5
1
(millions)
98.7
28.0
40.9
11.0
35.1
(%)
46%
13%
19%
5%
16%
GTN
(#)
10.9m
14.4m
27.5m
14.8m
164.4m
2
audience
radio (2)
radio
radio
radio
radio
5.6m TV
8.4m TV
120.6m TV
(#)
125 radio
108 radio
247 radio 44 radio 1,051 radio
13 TV
(%)
100%
5 TV
50%
57 TV
100%
55%
99%
(%)
88%
86%
80%
48%
60%
(‘000’s)
866
598
1,396
151
1,689
Number of
affiliates
Proportion of
metropolitan
commercial
radio
listeners in
GTN’s
existing
markets
GTN
penetration
within
existing
metropolitan
commercial
radio markets
FY 2017
spots
inventory (3)
(1) Amounts may not add due to rounding
(2) Includes 769 thousand listeners in regional markets rated by GfK.
Excludes listeners in markets not rated by GfK. The population of the
markets not rated by GfK but serviced by ATN is approximately 4.9
million persons.
(3) USTN spots inventory only includes period of GTN Limited ownership
(December 2016 – June 2017).
Operating model
GTN provides an advertising platform designed to enable advertisers, generally large national
advertisers, to reach high-value demographics cost effectively. The advertising spots GTN offers
are adjacent to information reports that listeners are typically highly engaged with, as this
content is “of use” to the consumer, such as traffic and news. The advertising spots are generally
10 seconds long and read live by well-known on-air personalities. GTN is able to obtain radio
spots that are primarily aired during peak listenership hours (i.e. during morning and afternoon
commutes). The placement and format of GTN’s advertising spots are designed to maximise
efficacy, enhance recall and minimise switching during advertisements.
Advertisers purchase a schedule of radio spots on a national, regional or specific market basis.
The schedule includes spots on all radio Affiliates in the relevant market. Spots sold in
advertising packages are allocated on a percentage-based rotation such that each advertiser
receives a pro rata share of advertising spots on each Affiliate throughout the relevant markets.
GTN does not sell spots on individual radio Affiliates.
3
In order to provide this advertising platform, GTN must appeal to the radio and television stations
that provide the advertising spots GTN sells to advertisers. GTN accomplishes this by providing
Affiliates with information reports at no charge, and in some cases, provides cash compensation
to the Affiliates in exchange for advertising spots, allowing Affiliates, in many cases, to turn an
important programming segment from a cost centre into a profit centre. Affiliate contracts are
typically multi-year, generally cover all of an Affiliate’s stations across the relevant market and
provide a fixed number of spots over the life of the agreement.
By focusing on traffic reports, GTN believes it provides a better product to its Affiliates than the
stations could create on their own. GTN collates information for its traffic reports from a range of
sources including aircraft, access to government traffic centres, third party providers, radio
scanners and station listener lines, to provide up-to-the-minute information to Affiliates.
GTN value proposition
Revenue model
GTN primarily generates revenue by selling schedules of advertising spots to large advertisers.
The majority of GTN’s advertising revenue is generated through advertising agencies who have
been engaged by advertisers. In these situations, GTN attempts to maintain a relationship with
the advertisers directly to assist with the sale process. GTN also sells some spots directly to
advertisers.
Each of GTN’s operating geographies has generally been able to grow its spots inventory each
year. Inventory is grown either through expanding the Affiliate network (in existing or new
markets) or growing the number of spots under contract with existing Affiliates.
GTN can accommodate orders from advertisers with short lead times, providing advertisers the
flexibility to conduct timely and relevant campaigns. Advertisers book a significant portion of
orders not more than four weeks in advance. This short forward sales pipeline is typical for the
radio business.
Value proposition to advertisers
GTN provides a different value proposition to advertisers in comparison with traditional
advertising models as summarised below. This has enabled GTN to build a loyal customer base,
comprised primarily of large advertisers.
Audience reach: GTN operates one of the largest broadcast media advertising platforms by
audience reach in Australia, Canada and the United Kingdom, and GTN’s goal is to achieve
the same status in each market GTN enters, including the United States and Brazil. This
enables advertisers to communicate with a large number and broad demographic of potential
consumers.
4
High frequency: GTN’s advertisements are heard frequently throughout the day on every
Affiliate in the purchased market or region, enabling advertisers to communicate their
message repeatedly. This format is designed to maximise efficacy, enhance recall and
minimise switching during advertisements.
High engagement: GTN’s advertising spots are adjacent to information reports that have
been found to be useful and engaging for listeners. In 2015, GTN commissioned a research
study conducted by Neuro Insight which measured brain activity and demonstrated that traffic
update content was the most engaging content for listeners.
Ideal placement: A large proportion of GTN advertising spots are aired during morning and
afternoon commute periods, which generally have the largest audience.
High recall: GTN’s advertisements are designed to provide high recall rates by being short in
duration (10 seconds), adjacent to information reports and standalone to other
advertisements.
Audience consistency: Advertisers using GTN’s platform are less exposed to ratings
swings of individual radio affiliate stations since GTN’s customers receive spots on multiple
radio affiliate stations.
Audience coverage: GTN sells spots on a national, regional or specific market basis. This
allows the product to be relevant for both nationally and regionally-focused advertisers.
Value proposition to broadcasters
GTN provides a strong value proposition to broadcasters as summarised below. This has
allowed GTN to develop longstanding relationships with Affiliates and consistently grow its
network of Affiliates. GTN seeks to provide Affiliates with:
Tailored content: GTN customises the information reports that it provides to Affiliates by
providing pertinent and geographically-relevant information that meets the content and style
requirements of each Affiliate. This helps to ensure that the reports appeal to each Affiliate’s
target audience;
Quality product: GTN commits substantial resources to its information gathering and
dissemination capabilities, including considerable training of its reporters and producers.
Consequently, Affiliates receive more substantive and higher quality reports than they would
likely be able to cost effectively produce themselves;
Cost efficiencies: Affiliates utilise GTN’s reports instead of having to procure this
information on their own, which could require significant capital outlay in order to acquire
aircraft and other information gathering infrastructure. This allows Affiliates to eliminate the
non-core operating costs associated with real time content development, which is
particularly helpful to Affiliates that are not large enough to cost effectively produce traffic
reports on their own;
Contractual earnings: GTN provides station compensation to certain Affiliates in the form
of cash payments. These station compensation payments represent stable recurring cash
flows for these Affiliates and, in some instances, form a material part of that Affiliate’s overall
profits; and
Revenue opportunity: Affiliates are permitted to sell sponsorships at the opening of an
information report (i.e. “this report is brought to you by”), providing them with a revenue
source without a cost base.
By addressing multiple needs of our radio and television station Affiliates and providing our
advertising customers with a highly effective advertising vehicle, we are able to meet the needs
of both constituencies and continue to grow our business.
5
Corporate Governance
The Corporate Governance Statement outlining GTN Limited’s corporate governance framework
and practices in the form of a report against the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations, 3rd Edition, is available on the GTN Limited
website at http://www.gtnetwork.com.au/home/?page=corporate-governance in accordance with
ASX listing rule 4.10.3. The Directors approved the 2017 Corporate Governance Statement on
29 August 2017.
6
Directors’ Report
The Directors present their report together with the consolidated financial statements of GTN
Limited and its Controlled Entities (“Group”), for the year ended 30 June 2017 and the auditor’s
report thereon.
Directors and Company Secretaries
Robert Loewenthal
Independent Non-
Executive Chairman
Chairman of the Nomination
and Remuneration Committee
Member of the Audit and Risk
Committee
Robert Loewenthal has over 10 years of experience in the radio industry.
He currently operates a private corporate advisory and consulting business, Free
Trade Hall, and is the founder of the Whooshkaa Podcasting Platform.
Robert is also a director of the Media Industry Charity, ‘Unltd’. Robert formerly
held the role of Managing Director of Macquarie Radio Network, where he had
previously acted as Chief Operating Officer and company secretary.
Robert is a Chartered Accountant and holds a Bachelor of Commerce degree
from The University of Sydney.
William Yde III (“Bill”)
Managing Director and
Chief Executive Officer
Mark Anderson
Non-independent
Non-Executive Director
Member of the Audit and Risk
Committee and Nomination and
Remuneration Committee
Bill Yde has 34 years of experience in the radio and media industry.
Bill co-founded The Australia Traffic Network (“ATN”) in 1997, later co-founding
GTN and has served as Chief Executive Officer and President since its inception
in 2005.
Prior to forming ATN, Bill founded Wisconsin Information Systems, Inc. (trading
as the Milwaukee Traffic Network) in 1994, and expanded its operations to
create traffic networks in Milwaukee, Oklahoma City, Omaha and Albuquerque
before the business was sold to Metro Networks, Inc. (now part of iHeartMedia,
Inc.).
Bill holds a Bachelor of Arts degree in Accounting from Indiana University and is
a Certified Public Accountant.
Mark Anderson has over 15 years of experience in the private equity and finance
industry.
Mark is currently a Managing Director of GTCR. In addition to GTN, he is
currently a director on the boards of Beeline, Cision, Lytx, Vivid Seats and XIFIN.
Mark holds a Master of Business Administration from Harvard Business School
and a Bachelor of Science from the McIntire School of Commerce at the
University of Virginia.
7
David Ryan AO
Independent Non-
Executive Director
Chairman of the Audit and
Risk Committee
Member of the Nomination and
Remuneration Committee
David Ryan AO has over 40 years of experience in commercial banking,
investment banking and operational business management.
David has been a non-executive director on the board of Lend Lease since 2004,
where he serves as the chairman of the Risk Management and Audit Committee
and a member of the People and Culture Committee and the Nomination
Committee.
David is also currently a director of First American Title Insurance Company of
Australia Pty Ltd, a director of First Mortgage Services Pty Ltd and a director of
Sunshine Coast Destination Limited.
David has previously held positions as a non-executive director of Aston
Resources from 2011 until its merger with Whitehaven Coal and as non-
executive chairman of Transurban Holdings (appointed director in 2003,
chairman in 2007, and resigned in 2010).
David holds a Bachelor of Business from the University of Technology, Sydney
and is a Fellow of the Australian Institute of Company Directors and of CPA
Australia.
Anna Sandham
Joint Company Secretary
Anna Sandham is a Chartered Company Secretary employed by Company
Matters Pty Limited. Anna is an experienced company secretary and
governance professional with over 20 years’ experience in various large and
small, public and private, listed and unlisted companies.
Anna has previously worked for companies including AMP Financial Services,
Westpac Banking Corporation, BT Financial Group and NRMA Limited.
Anna is a fellow of the Governance Institute of Australia, in addition to being a
member of their Legislative Review Committee.
Patrick Quinlan
Joint Company Secretary
Patrick Quinlan is the finance manager for the Australian and Canadian entities,
as well as being the joint company secretary for GTN Limited.
Patrick holds a Bachelor of Business degree from University of Western Sydney
and is a member of CPA Australia. Patrick is currently studying to be a chartered
secretary at Governance Institute of Australia.
Senior Executives
The Senior Executives of the Company at any time during or since the end of the financial year
are:
Scott Cody
Scott Cody has 30 years of experience in the radio media industry.
Chief Operating Officer and
Chief Financial Officer
Prior to joining Global Traffic Network, Scott held various positions with Metro
Networks, Inc./ Westwood One, serving as Vice President of Finance from 1997
to 2002 and Senior Vice President of Business Development from 2002 to 2005.
Prior to joining Metro Networks, Inc./ Westwood One, Scott was Vice President
of Finance for Tele-Media Broadcasting Company.
Scott graduated with a Bachelor of Arts in Accounting and Finance from Juniata
College.
8
Gary Worobow
Executive Vice President,
Business and Legal
Affairs
Christopher Thornton
(“Chris”)
National Sales Director
The Australia Traffic Network
(“ATN”)
Victor Lorusso (“Vic”)
Chief Operations Manager
ATN
John Quinn
Chief Operating Officer
United Kingdom Traffic Network
(”UKTN”)
Gary Worobow has over 20 years of experience in the radio and media
industry.
He was previously a member of the Global Traffic Network Board from
2006 to 2009. Prior to joining Global Traffic Network, Gary held the position
of Executive Vice President and General Counsel of Five S Capital
Management, Inc. from 2006 to 2009, Executive Vice President, Business
Affairs and Business Development for Metro Networks Inc./ Westwood
One, Inc. from 2003 to 2006 and as Senior Vice President and General
Counsel from 1999 to 2002.
Gary was a founder and the General Counsel of Columbus Capital
Partners and held the positions of Senior Vice President, General Counsel
and board member for Metro Networks, Inc./ Westwood One from 1995 to
1999.
Gary holds a Bachelor of Arts from the University of Rochester, a Masters
of Business Administration from the Simon School, University of Rochester
and a Juris Doctor from the Fordham Law School.
Chris Thornton has over 25 years of experience in the radio, media and
sales industries.
Chris is currently the National Sales Director for ATN after joining in 2005.
Prior to joining ATN, Chris held positions as a National Agency Sales
Manager for the Macquarie Radio Network and a Senior Account Manager
for Southern Cross Radio.
Chris obtained a Marketing Certificate from TAFE NSW, a Graduate
Certificate in Management and a Masters of Business Administration from
the Australian Institute of Business.
Vic Lorusso has over 18 years of experience in the media industry, all of
those with ATN in various operational and management positions.
Vic is currently the Chief Operations Manager for ATN after joining in 1999.
Vic is also an airborne traffic reporter for the Ten Network and various radio
stations. In addition to his role with ATN, Vic is associated with a number of
charities throughout the country including the Variety Children’s Charity,
Redkite, Miracle Babies Foundation, Diabetes
Association NSW, Cure Cancer Foundation and the Special Olympics
Foundation.
Vic has a Business Licence for Real Estate.
John Quinn has over 30 years of experience in the radio and media
industry.
John is currently the Chief Operating Officer of Global Traffic Network’s
United Kingdom operations after joining Global Traffic Network in 2009
following its acquisition of UBC Media’s commercial division.
Prior to the acquisition, John was the Chief Operating Officer and a director
of UBC Media (a company listed on AIM, a sub-market of the London Stock
Exchange) and has held numerous other sales and management positions
within the United Kingdom commercial radio industry.
Lee Sibian (“Lannie”)
Lannie Sibian has over 30 years of experience working in the radio and
advertising industries.
President and Executive
Lannie joined CTN in 2012 as President and Executive Vice-President of
9
Vice-President Sales
Canadian Traffic Network (“CTN”)
Sales for CTN. Prior to joining CTN, Lannie was General Sales Manager at
Rogers Broadcasting between 2001 and 2012 and previously held senior
sales positions at Standard Broadcasting Ltd., Rawlco Communications
and Rogers Media.
Lannie holds an Executive Masters of Business Administration from the
University of Western Ontario, Richard Ivey School of Business.
Meetings of Directors
The number of meetings of the Board of Directors and its committees that were held during the
year and the number of meetings attended by each director are summarised in the table below.
Board
Audit and Risk
Management
Committee
Nomination and
Remuneration
Committee
Held
Attended
Held
Attended
Held
Attended
Gary Miles (1)
William Yde III
Mark
Anderson
David Ryan
Robert
Loewenthal
10
13
13
13
13
9
12
13
13
13
(1) Resigned 28 February 2017
Principal activities
5
-
7
7
2
5
-
7
7
2
3
-
5
2
5
3
-
5
2
5
The principal activity of GTN during the course of the financial year was that of provider of an
advertising platform to advertisers in Australia, United Kingdom, Canada, Brazil and the United
States.
Operating Strategy
The Company’s operating strategy is to grow its business through the obtaining of more
advertising inventory and selling a higher proportion of and obtaining a higher price per unit of
advertising inventory. The Company strategy to obtain more advertising inventory consists of
the following:
Obtain more advertising inventory from existing radio and television stations for existing
products. This is primarily accomplished by the payment of higher station
compensation.
Have existing radio stations provide advertising inventory outside traditional traffic
reporting, such as the number of stations in Australia where we currently receive
advertising inventory adjacent to news reports.
10
Expansion into additional operating regions within our current countries, such as the
expansion into regional markets in Australia and Porto Alegre in Brazil.
Expansion into additional countries, for example our commencement of operations in the
United States in 2016.
This growth strategy is subject to a number of risks, some of which are out of our control. Some
of these risks and our strategy for mitigating them are as follows:
Loss of key radio station Affiliates
In FY 2017, 95% of our revenue came from the sale of advertising inventory obtained from our
radio station Affiliates. Loss of significant radio station Affiliates would have a material impact on
our revenue. We attempt to defend against this risk in the following ways:
Provide a high quality product that resonates with stations’ listeners and would be
difficult for the stations to replicate in a cost effective manner, if at all.
For the most important radio stations, pay a significant amount to the stations in the form
of station compensation. For our most important Affiliates, this amount has become a
significant portion of their EBITDA based on our review of their public filings.
Decline in demand for traffic reports on radio
Individuals have other means of getting traffic information, including the internet, smart phone
aps, navigation systems, etc. and we expect that such options will continue to proliferate in the
future. It is possible that in the future that such other options will decrease the demand for our
traffic reports from radio stations. We attempt to defend against this possibility in two ways:
First, by paying significant station compensation, we attempt to make it a very difficult
decision to reduce or eliminate the number of traffic reports broadcast.
Second, since we sell our reports as a network of information reports, we are educating
clients that the key element is that their spot be adjacent to high demand information
content, rather than just traffic. In Australia, approximately 22% of our advertising
inventory in the five metro markets is adjacent to news reports.
We believe that combining high levels of compensation to stations to encourage their continued
provision of advertising inventory with an advertiser base that understands that while traffic is a
very effective area to place spots today, but is not the only attractive placement option, is the
best way to protect against a decline in interest in traffic reports broadcast on traditional radio.
Decline in popularity of radio and television in general
Virtually all of our revenue is derived from the sale of spots on radio and television stations. A
decline in the popularity of these mediums as either an entertainment option or advertising
medium would likely have a material negative impact on our revenues and profitability. While to
a certain extent this risk is out of our control, we have employed several strategies to attempt to
mitigate this risk:
Our product is different than traditional radio despite being broadcast on radio stations.
We sell a broad reach across all demographics with the spots having the further
advantage of sole placement, adjacent to popular information programming elements
and generally read live by the announcer. In our opinion, all of these things make our
advertising product more effective than traditional radio advertising. We believe this
contention is supported by the fact that our revenue growth consistently surpasses that
of the overall radio market in the markets in which we operate.
We continue to explore other platforms where our content and sales ability would
translate to. To date, these explorations have not been successful but we plan to
continue to research and pursue additional opportunities outside of radio and television.
Decline in advertising market in general
Our business model is currently almost entirely based on the sale of advertising, which is cyclical
in nature. While we cannot control the fluctuations in the advertising market, we attempt to
mitigate this risk by providing a compelling advertising product that is both effective for
11
advertisers and not easily replicated by “buying around” our networks. A certain level of
advertising is still sold even in down business cycles so we attempt to position ourselves as a
key portion of an advertiser’s strategy, even if they are reducing their overall expenditures.
Expansion into new markets
Expansion into new markets entails risk as there is an upfront investment of monetary resources
to purchase equipment (often helicopters) and to fund the initial operating losses and working
capital requirements. There is also the opportunity cost of a diversion of management’s time
and focus away from the current operations. The Company attempts to mitigate this risk by a
thorough due diligence process prior to committing significant resources to a new market. In
addition, the Company hires virtually all of its employees in the local market, which gives market
insights that would not otherwise be readily available. The Company believes by training local
personnel in the Company’s business model, the likelihood of success is increased.
Foreign exchange fluctuations can have a negative impact on financial performance
A significant portion of our revenues (54% in FY 2017) are generated outside of Australia and
subject to currency exchange fluctuations between AUD and the local currency of those entities.
On a pro forma basis this amount would be even higher since our current period statement of
profit and loss only includes seven months of our recently acquired United States operations.
We expect the portion of revenue subject to foreign exchange fluctuations will increase in the
future as we anticipate that our Canada, Brazil and United States operations will grow faster than
the overall group revenues. We do not hedge for foreign currency fluctuations at this time and
currently do not have an intention to do so although we may enter into such hedging
arrangements in the future. This risk is mitigated by each country incurring virtually all their
expenses in local currency as well. The impact of this is should revenue be reduced by an
unfavourable currency movement, expenses will also be reduced, which would be considered a
favourable movement. The negative impact to the financial statements is only on the net
difference between the revenue and expenses. However, this net amount can still be material
based on the magnitude of the currency shifts.
Review and Results of Operations
Operating and Financial Review
In June 2016, the GTN completed its initial public offering of shares (“IPO”). For FY2017,
(excluding the United States operations which were not included in the forecast), GTN exceeded
the Prospectus Forecast for revenue, EBITDA, Adjusted EBITDA, NPAT and NPATA on a
statutory basis while exceeding pro forma and statutory FY 2016 results by a significant margin.
The non-IFRS measurements used are defined in the table below and further discussed later in
the report.
(m)(4)
Revenue
EBITDA(2)
Adjusted EBITDA(3)
NPAT
Statutory
FY17
Actual
213.6
20.0
28.9
6.2
Statutory
FY17
Actual
Ex United
States
Statutory
FY17
Prospectus
% Difference
178.5
177.4
40.2
48.9
28.2
37.2
45.6
21.1
1%
8%
7%
33%
Less:
FY17
Actual
United
States
35.1
(20.1)
(19.9)
(22.0)
12
NPATA(1)
NPATA per share
(cents)(5)
12.3
(20.2)
32.5
25.7
$0.06
$(0.10)
$0.16
$0.13
26%
26%
(1)
NPATA is defined as net profit after tax adjusted for the tax effected amortization arising from acquisition
related intangible assets.
(2) EBITDA is defined as net profit after tax (earnings) before the deduction of interest expense/income, income
taxes, depreciation and amortization.
(3) Adjusted EBITDA is defined as EBITDA adding back the non-cash interest income related to the long term
prepaid affiliation agreement with Southern Cross Austereo which is treated as a financing transaction, foreign
exchange gains and losses and transaction costs.
(4) Amounts in tables may not add due to rounding
(5) Statutory Ex United States and Statutory Prospectus results based on IPO shares issued of 201.2 million
assuming shares were outstanding for the entire period, excluding the impact of non-renounceable entitlement
offer and dividend reinvestment plan of which the purpose was to fund the United States operations.
(m)(4)
Revenue
EBITDA(2)
Adjusted EBITDA(3)
NPAT
NPATA(1)
NPATA per share
(cents)(5)
(m)(4)
Revenue
EBITDA(2)
Adjusted EBITDA(3)
NPAT
NPATA(1)
NPATA per share
(cents)(5)
Statutory
FY17
Actual
Ex United
States
178.5
40.2
48.9
28.2
32.5
Statutory
Actual
FY16
%
Difference
166.1
12.0
35.1
(17.2)
(4.2)
7%
234%
39%
NM
NM
NM
$0.16
($0.02)
Statutory
FY17
Actual
Ex United
States
178.5
40.2
48.9
28.2
32.5
$0.16
Pro Forma
FY16 Actual
%
Difference
166.1
31.1
34.6
5.8
18.8
7%
29%
41%
390%
73%
$0.09
73%
(1) NPATA is defined as net profit after tax adjusted for the tax effected amortization arising from acquisition
related intangible assets.
(2) EBITDA is defined as net profit after tax (earnings) before the deduction of interest expense/income, income
taxes, depreciation and amortization.
(3) Adjusted EBITDA is defined as EBITDA adding back the non-cash interest income related to the long term
prepaid affiliation agreement with Southern Cross Austereo which is treated as a financing transaction, foreign
exchange gains and losses and transaction costs.
(4) Amounts in tables may not add due to rounding
(5) Statutory Ex United States, Statutory FY16 and Pro Forma FY 16 results based on IPO shares issued of 201.2
million assuming shares were outstanding for the entire period, excluding the impact of non-renounceable
13
entitlement offer and dividend reinvestment plan of which the purpose was to fund the United States
operations.
Revenue
Overall revenue exceeded Prospectus Forecast by $36.3 million, or 20%. Excluding the impact
of the newly acquired United States operations, revenue exceeded Prospectus Forecast by $1.2
million or 1%. Revenue (excluding the United States operations) increased $12.4 million or 7%
over FY 2016. Revenue exceeded forecast for the Australian (ATN), Brazil (BTN) and Canadian
(CTN) business units while the United Kingdom business unit (UKTN) exceeded forecast
revenue in local currency but was impacted by unfavourable foreign exchange differences.
FY17 Revenue by Geographic Segment
(m)(4)
Australia (ATN)
Canada (CTN)
United Kingdom (UKTN)
Brazil (BTN)
Total before United States
United States (USTN)
Total
FY17 Actual
FY17 Prospectus
% Difference
98.7
28.0
40.9
11.0
178.5
35.1
213.6
91.8
26.0
51.0
8.6
177.4
-
177.4
8%
8%
(20)%
28%
1%
-
20%
Group revenue was up $12.4 million (7%) from FY 2016 (excluding United States) with all four
forecasted operating segments exceeding the previous year’s revenue in local currency.
(m)(4)
Australia (ATN)
Canada (CTN)
United Kingdom (UKTN)
Brazil (BTN)
Total before United States
United States (USTN)
Total
EBITDA
FY17 Actual
FY16 Actual
% Difference
98.7
28.0
40.9
11.0
178.5
35.1
213.6
89.8
23.6
47.5
5.2
166.1
-
166.1
10%
19%
(14)%
112%
7%
-
29%
Adjusted EBITDA excluding the United States for FY 2017 was $48.9 million, exceeding
Prospectus Forecast by $3.2 million (+7%).
(m)(4)
Revenue
Actual FY17
Statutory
Less:
Total
Statutory
United
States
Statutory
Ex United
States
FY 17
Statutory
Prospectus
Forecast
213.6
35.1
178.5
177.4
1%
14
Actual FY17
Statutory
Less:
Total
Statutory
United
States
Statutory
Ex United
States
FY 17
Statutory
Prospectus
Forecast
(145.5)
(43.9)
(101.6)
(106.9)
(5)%
(47.6)
(11.1)
(36.4)
(33.1)
10%
(0.1)
(0.2)
(0.2)
(193.6)
20.0
8.5
0.2
0.2
28.9
-
(0.2)
-
(55.2)
(20.1)
-
0.2
-
(19.9)
(0.1)
-
(0.2)
(0.2)
(40)%
-
-
-
-
(1)%
8%
(138.4)
(140.2)
40.2
37.2
8.5
-
0.2
48.9
8.5
0%
-
-
-
-
45.6
7%
(m)(4)
Network operations and station
compensation expenses
Selling, general and
administrative expenses
Equity based compensation
expense
Transaction costs
Net F/X losses
Operating expenses
EBITDA
Interest income on Southern
Cross Austereo Affiliate Contract
Transaction costs
Net F/X losses
Adjusted EBITDA
NPATA
The Group reported NPATA of $32.5 million (excluding the United States), exceeding
Prospectus Forecast by 26%.
The stronger than forecast NPATA (ex United States) result was driven primarily by lower
operating expenses due to differences in forecast and actual foreign exchange rates as well as a
$5.0 million tax benefit related to the recognition of previously unrecognized CTN tax assets,
primarily net operating losses from previous periods.
FY17 Cash Flow
The Group reported strong cash flow from operations. GTN’s strong liquidity position is
underpinned by the positive cash impact of the long-term affiliate agreement signed with the
Southern Cross Austereo Group in February 2016.
(m)(4)
FY17 Results
Adjusted EBITDA
Non-cash items in Adjusted EBITDA
Change in working capital
Impact of new Southern Cross Austereo
Affiliate Contract
Operating free cash flow before capital
expenditure
Capital expenditure
Net free cash flow before financing, tax
Actual
USTN
Actual Ex
USTN
FY17
Prospectus
28.9
0.1
10.3
(19.9)
-
11.5
48.9
0.1
(1.2)
45.6
0.2
(1.4)
3.5
-
3.5
3.5
42.9
(3.5)
(8.4)
(0.2)
51.3
(3.3)
48.0
(2.5)
15
(m)(4)
and dividends
FY17 Results
39.4
(8.6)
48.0
45.5
Due to the modest working capital requirements, positive cash impact of the Southern Cross
Austereo prepayment and low capital expenditures, a significant portion of Adjusted EBITDA is
converted into net free cash flow before financing, tax and dividends (excluding the impact of the
start-up United States operations which generate significant losses and accordingly use
significant cash). As a result of GTN’s strong cash generation and the non-renounceable
entitlement offer and dividend reinvestment offering proceeds, the Group’s cash balance was
$100.7 million at 30 June 2017. The Group also has a $15 million bank facility which is undrawn
as of 30 June 2017.
The Group has outstanding debt principal at 30 June 2017 of $100 million and negative net debt
(principal less cash balances) of $0.7 million. Due to the negative net debt, the ratio of net debt
to Adjusted EBITDA is not meaningful at 30 June 2017. The Group’s debt is only secured by the
Groups’ Australia and United Kingdom operations. Based on the applicable covenants for the
Group’s debt facility, the leverage is 1.24x at 30 June 2017. The EBITDA used for the
calculation of the leverage under the debt facility differs from that of Adjusted EBITDA used
herein.
Segment Adjusted EBITDA
Adjusted EBITDA by segment (excluding allocation of corporate overhead) exceeded
Prospectus Forecast in Australia, Brazil and Canada while UK reached forecast for the period
despite lower than forecast revenue due to currency head winds. Corporate overhead was
negatively impacted by FY 2017 costs not dropping from FY 2016 levels as originally forecast
along with additional costs related to managing USTN, primarily in the form of additional
executive management compensation.
(m)(4)
Australia (ATN)
Canada (CTN)
United Kingdom (UKTN)
Brazil (BTN)
Other (1)
Total before United States
United States (USTN)
Total
FY17 Actual
FY17 Prospectus % Difference
43.4
5.9
4.4
1.3
(6.1)
48.9
(19.9)
28.9
40.9
4.0
4.4
0.6
(4.3)
45.6
-
45.6
6%
47%
-
118%
(43)%
7%
-
(37)%
(1) Primarily corporate overhead
Key operating metrics
Key operating metrics by jurisdiction (local currency)
Australia
Radio spots inventory ('000s)
Radio sell-out rate (%)
Average radio spot rate (AUD)
Canada
Notes
1
2
3
16
FY2017
Actual
866
81%
134
Prospectus
Forecast
761
82%
142
Radio spots inventory ('000s)
Radio sell-out rate (%)
Average radio spot rate (CAD)
United Kingdom
Total radio impacts available ('000)
Radio sell-out rate (%)
Average radio net impact rate (GBP)
Brazil
Radio spots inventory ('000s)
Radio sell-out rate (%)
Average radio spot rate (BRL)
United States
Radio spots inventory ('000s)
Radio sell-out rate (%)
Average radio spot rate (USD)
1
2
3
4
5
6
1
2
3
1,7
2,7
3,7
598
67%
66
19,055
99%
1.3
151
64%
277
1,689
74%
17
582
62%
62
19,090
94%
1.3
143
61%
280
N/A
N/A
N/A
1. Available radio advertising spots adjacent to traffic, news and information reports.
2. The number of radio spots sold as a percentage of the number of radio spots available.
3. Average price per radio spot sold net of agency commission.
4. The UK market measures inventory and units sold based on impacts instead of spots. An impact is a
thousand listener impressions.
5. The number of impressions sold as a percentage of the number of impressions available.
6. Average price per radio impact sold net of agency commission.
7. Only includes period owned by GTN Limited (December 2016 – June 2017).
Foreign exchange rates
A significant portion of the Company’s revenue and expenses are in a currency other than
Australia dollars (“AUD”). The actual and forecast annual exchange rates utilized in preparing
the annual consolidated statement of profit or loss and other comprehensive income are as
follows:
FY2017
Actual
FY2017
Forecast
0.75
1.00
0.60
2.43
0.70
0.93
0.47
2.80
AUD:USD
AUD:CAD
AUD:GBP
AUD:BRL
Ordinary share offerings
In December 2016, the Company launched a fully underwritten 1 for 9.7 pro rata non-
renounceable entitlement offer to its existing shareholders for 20.7 million shares at $2.90 per
share. The institutional component was completed on 5 December 2016 and the retail
component was completed on 20 December 2016.
The gross proceeds of $60.2 million were offset by costs related to the equity raising of
approximately $1.5 million and the net proceeds were approximately $58.6 million.
17
On 31 March 2017, pursuant to its dividend reinvestment plan, the Company issued 2.8 million
shares at $2.70 per share. The gross proceeds of $7.5 million were offset by costs related to the
equity raising of approximately $45 thousand and the net proceeds were approximately $7.4
million. The dividend reinvestment plan was partially underwritten.
The purpose of the equity raisings is to fund the post-acquisition start-up costs of the Company’s
entry in the United States and a substantial majority of the funds not utilized for that purpose
were held in cash at 30 June 2017.
m(4)
Shares
(‘000’s)
Amount
($,000’s)
Balance, 30 June 2016
201,212
378,948
Entitlement offering
20,744
58,612
Dividend reinvestment plan
2,765
7,421
Balance, 30 June 2017
224,721
444,981
Radiate Acquisition
On 5 December 2016, the Company’s United States Traffic Network, LLC (“USTN”) subsidiary
acquired substantially all the assets of Radiate Media LLC, a company that provides traffic
reporting services and sells advertising on radio and television stations for consideration of
approximately $18.1 million USD ($24.4 million AUD). The acquisition is the Company’s entry
into the United States market as the Radiate business is similar to that of the Group’s existing
operations. Radiate was the second largest traffic report service in the United States, which is
the largest advertising market in the world.
The acquired business contributions to the Group’s FY17 results (for the period from 5
December 2016 to 30 June 2017) were:
(m)(4)
Revenue
EBITDA
Adjusted EBITDA
NPAT
NPATA
FY17 Actual
35.1
(20.1)
(19.9)
(22.0)
(20.2)
On a pro forma basis, if the acquisition has occurred on 1 July 2016, preliminary consolidated
revenue and consolidated loss after tax for the year ended 30 June 2017 would have been
approximately $57.8 million and $24.1 million, respectively.
Dividends
An interim dividend of $0.056 per share (fully franked) for the six month period ending 31
December 2016 was declared 28 February 2017 and paid to holders of record as of 13 March
2017. A final dividend of $0.048 per share (fully franked) was declared 31 August 2017 and will
be paid to holders of record as of 7 September 2017.
18
Non-IFRS measurements
● EBITDA is earnings before interest, tax, depreciation and amortisation.
Management uses EBITDA to evaluate the operating performance of the business
without the non-cash impact of depreciation and amortisation and before interest and tax
charges, which are significantly affected by the capital structure and historical tax
position of the Company.
EBITDA can be useful to help understand the cash generation potential of the business
because it does not include the non-cash charges for depreciation and amortisation.
However, management believes that it should not be considered as an alternative to net
free cash flow from operations and investors should not consider EBITDA in isolation
from, or as a substitute for, an analysis of the Company’s results of operations;
● Adjusted EBITDA is EBITDA adjusted to include the non-cash interest income arising
from the long-term prepaid Southern Cross Austereo Affiliate Contract which is
discussed above.
Management considers that Adjusted EBITDA is an appropriate measure of GTN's
underlying EBITDA performance. Otherwise, the EBITDA would reflect significant non-
cash station compensation charges without offsetting non-cash interest income arising
from the treatment of the contract as a financing arrangement.
● NPATA is net profit (loss) after tax adjusted to add-back the tax effected impact of
amortization of intangible assets related to the purchase accounting arising from
GTCR’s acquisition of Global Traffic Network, Inc. in September 2011 and the
Company’s acquisition of Radiate Media in December 2016.
Management considers it appropriate to disclose NPATA because the amortization of
the intangibles related to purchase accounting is both a non-cash charge and there will
be no future cash outlays to “replace” these assets once fully amortized.
Non-IFRS information has not been audited.
Likely developments and expected results
The Company’s prospects and strategic direction are discussed in the Operating Strategy
section of the Directors’ Report.
Further information about likely developments in the operations of the Company and the
expected results of those operations in future financial years has not been included in the report
because disclosure of the information would be likely to result in prejudice to the Company.
Significant changes in the state of affairs
Except as outlined elsewhere in this Directors’ Report, there were no significant changes in the
affairs of the Group during the fiscal year.
Events since the end of financial year
Except as outlined in the Financial Statements and elsewhere in this Directors’ Report, no matter
or circumstance has arisen since 30 June 2017 that has significantly affected the Group’s
operations, results or state of affairs or may do so in future years.
Environmental regulation
The operations of the Group are not subject to any particular or significant environmental
regulation or law.
19
Insurance of officers and Directors
Pursuant to its constitution, GTN may indemnify Directors and officers, past and present, against
liabilities that arise from their position as a Director or officer allowed under law. Under the deeds
of access, indemnity and insurance, GTN indemnifies each Director against liabilities to another
person that may arise from their position as a director of GTN to the maximum extent permitted
by law. The deeds of access, indemnity and insurance stipulate that GTN will reimburse and
compensate each Director for any such liabilities, including reasonable legal costs and
expenses, except where a Director’s act is fraudulent, criminal, dishonest or wilfully deceitful.
Pursuant to its constitution, GTN may arrange and maintain directors’ and officers’ insurance for
its Directors to the maximum extent permitted by law. Under the deeds of access, indemnity and
insurance, GTN must use reasonable endeavours to obtain such insurance during each
Director’s period of office and for a period of seven years after a Director ceases to hold office.
This seven year period can be extended where certain proceedings or investigations commence
before the seven year period expires.
GTN has obtained insurance in respect to directors’ and officers’ liability for the year ended 30
June 2017 and thereafter. These insurance policies insure against certain liabilities (subject to
exclusions) of persons that have been directors or officers of GTN or its direct or indirect
subsidiaries to the extent allowed by the Corporations Act 2001.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of GTN, or to intervene in any proceedings to which GTN is a party,
for the purposes of taking responsibility on behalf of GTN for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of GTN with leave of the Court
under section 237 of the Corporations Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory
audit duties where the auditor’s expertise and experience with the Group is important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers Australia and its
related companies) for audit and non-audit services provided during the year are included in
Note 10 of the Consolidated Financial Report.
The Board has considered the position and, in accordance with advice received from the Audit
and Risk Committee, is satisfied the provision of the non-audit services is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. The
Directors are satisfied that the provision of non-audit services by the auditor, as set forth below,
did not compromise the auditor independence requirements of the Corporations Act 2001 for the
following reasons:
● all non-audit services have been reviewed by the Audit and Risk Committee to ensure
they do not impact the impartiality and objectivity of the auditor
● none of the services undermine the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional Accountants.
During the year the following fees were paid or payable for non-audit services provided by the
auditor of GTN and its related practices:
Other assurance services
Other assurance services
Due diligence
Remuneration from other assurance services
2017
$
2016
$
123,000
123,000
1,189,000
1,189,000
20
Taxation services
Tax compliance
Tax advice on mergers and acquisitions
Due diligence
Remuneration for taxation services
441,000
49,000
139,000
629,000
244,000
167,000
1,956,000
2,367,000
Total remuneration for non-audit services
752,000
3,556,000
*Included in the above fees are amounts paid to network firms of PricewaterhouseCoopers Australia.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the
Corporations Act 2001 is set forth on page 34.
Rounding of amounts
GTN is of a kind referred to in ASIC Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the
Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with
that ASIC Corporations Instrument to the nearest thousand dollars, or in certain cases, the
nearest dollar.
Directors’ interests in shares and options of GTN
The relevant interests of each Director in the equity of GTN as of the date of this Directors’
Report are disclosed in the Remuneration Report.
This report was made in accordance with a resolution of the Directors.
Robert Loewenthal
Chairman
31 August 2017
21
Remuneration Report
The directors present the GTN 2017 remuneration report, outlining key aspects of our
remuneration policy and framework, and remuneration awarded this year.
The report is structured as follows:
a) Key management personnel (KMP) covered in this report
b) Remuneration policy and link to performance
c) Elements of remuneration
d) Link between remuneration and performance
e) Remuneration expenses for executive KMP
f) Contractual arrangements with executive KMP
g) Non-executive director arrangements
h) Additional statutory information
(a) Key management personnel covered in this report
Non-executive and executive directors (see pages 7 to 8 - for details about each
director)
Gary Miles (resigned 28 February 2017)
William Yde III
Mark Anderson
David Ryan AO
Robert Loewenthal
Other key management personnel
Name
Scott Cody
Gary Worobow
Position
Chief Operating Officer and Chief Financial Officer
Executive Vice President, Business and Legal Affairs
Key management personnel are those executive management members that have
responsibility and authority for planning, controlling and directing resources for the entire
group. Other senior executives, such as jurisdictional management, are not considered
to be key management personnel for the purposes of the remuneration report as their
duties are related to their geographic area of operation only and do not extend to
strategic direction and control of resources of the Group.
Changes since the end of the reporting period
None
(b) Remuneration policy and link to performance
Our remuneration committee is made up of non-executive directors (a majority of whom are
independent). The committee reviews and makes recommendations to the Board about our
remuneration policy and structure annually to align it to business needs and meet our
business principles. From time to time, the committee may also engage external
remuneration consultants to assist with this review (see section (h)(v) Reliance on external
remuneration consultants). In particular, the policies and practices are designed to:
● enable the Company to attract, retain and motivate directors, executives and
employees who will create value for shareholders within an appropriate risk
management framework by providing remuneration packages that are equitable and
externally competitive;
● be fair and appropriate having regard to the performance of the Company and the
relevant director, executive or employee;
●foster exceptional human talent and motivate and support employees to pursue the
growth and success of the Company in alignment with the Company’s values; and
22
● equitably and responsibly reward employees, having regard to the performance of the
Company, individual performance and statutory and regulatory requirements.
Remuneration Framework
Purpose
Element
Fixed
Remuneration
(FR)
Short-term
incentive (STI)
Long-term
incentive (LTI)
Provide
competitive
market salary
Reward for in
year
performance
Alignment to
long-term
shareholder
value
Performance
metrics
N/A
Potential
Value
Varies
Adjusted EBITDA
Varies
Varies
50% relative total
shareholder return
(TSR)
50% adjusted EPS
growth
Changes for
FY18
Reviewed in
line with market
positioning
Targets
adjusted on an
annual basis
Expected to be
granted in FY18
Balancing short-term and long-term performance
Annual incentives are set at levels designed to maximize performance.
Long-term incentives consist of share options that vest one third after two years and two
thirds after three years (subject to performance criteria) and are designed to align
management’s interests with those of the shareholders and encourage retention.
Assessing performance
The Board has overall responsibility for executive remuneration and receives
recommendations from the Remuneration Committee. To assist with its assessment of
executive compensation the committee receives reports on performance from management
which are based on independently verifiable data such as financial measures and
independent market data. There are no “claw-back” provisions in any of the performance
based remuneration plans.
(c) Elements of remuneration
(i)
Fixed annual remuneration (FR)
Executives may receive their fixed remuneration as cash or cash with non-monetary benefits
such as health insurance and similar benefits. FR is reviewed annually or upon promotion or
change in circumstance. Superannuation is included for Australia based employees and
directors only.
(ii)
Short-term incentives (STI)
Feature
Maximum
bonus
Performance
Metrics
Description
CEO – $370,620, other executive management $123,420 to
$189,403
100% of the maximum bonus is paid for achieving 100% of the
performance metrics
Aligns executive compensation with market expectations.
Metric
Adjusted
EBITDA
Target
FY18 Board
approved
Adjusted
EBITDA target
Weighting Reason
Adjusted
100%
EBITDA is
primary criteria
by which
investors judge
performance
23
Delivery of STI 100% paid upon conclusion of fiscal year after completion of
Board
discretion
audit of financial statements
The Board has discretion to adjust remuneration outcomes up
or down in certain situations to prevent any inappropriate
reward outcomes.
Note: Amounts are paid in USD and amounts to be paid are based on estimated
USD/AUD exchange rate of 1.3006:1.
Feature
Share price
bonus
Performance
Metrics
Description
CEO – $118,866, other executive management $19,847 to
$56,371.
100% based on share price being at least $2.71 on 30 June
2018.
Compensate executives for granting stock options at $2.74
per share rather than IPO price of $1.90 per share due to
unfavourable United States tax implications for executives.
Metric
Share
price
Weighting Reason
100%
Target
Share price of
at least $2.71
per share at
30 June 2018.
Compensation for
lost value from
increase in stock
price from date of
IPO.
Delivery of STI
Board
discretion
100% paid upon conclusion of fiscal year.
The Board has discretion to adjust remuneration outcomes up
or down in certain situations to prevent any inappropriate
reward outcomes.
Note: Amounts are paid in USD and amounts to be paid are based on estimated
USD/AUD exchange rate of 1.3006:1.
(iii)
Long-term incentives (“LTIP”)
Executive key management personnel participate in the LTIP comprising of annual
grants of options which vest one third after two years and two thirds after three years
and are subject to performance conditions summarized below.
Feature
Allocation
Description
CEO 70% FR, Other executive management 50% of FR.
Target allocation is based on fair value of the grant, which
vests over three years.
Performance
Metrics
50% subject to performance condition based on the
Company’s relative total shareholder return (TSR) compared
to members of the ASX 300 (excluding financials and
resources) over the performance period
TSR ranking
Up to and including the 50th percentile
Between the 51st and 75th percentile
(inclusive)
At and above 75th percentile
Percentage to
vest
0%
Pro rata straight
line between 50%
and 100%
100%
50% subject to performance condition based on Company’s
24
earnings per share (EPS) growth (adjusted for one-off items
associated with the IPO and amortisation of intangibles and
excluding United States Traffic Network, LLC operations, as
determined by the Board) over the performance period
EPS Compound annual growth
rate
Less than threshold
Between threshold and stretch target
(inclusive)
Percentage to
vest
0%
Pro rata straight
line between 50%
and 100%
Above stretch target
100%
Exercise Price Exercise price equal to share price on date of grant.
Forfeiture and
termination
Options will lapse if performance conditions are not met. Any
unvested options granted will be forfeited where the participant
resigns or is dismissed during the performance period.
However, if the participant is considered a good leaver their
unvested options will vest or remain on foot.
Feature
Description
United States performance
bonus
Bonus pool to award shareholder value creation related to the
improvement in the Group’s United States operations which
commenced effective 1 December 2016.
Allocation
Eligibility
Allocation to be determined at time of grant
Offers to participants in this plan may be made at the Board’s
discretion to employees of GTN involved in any US Operations or
any other person that the Board determines to be eligible to receive
an award under this plan (“Award”).
Determination Dates
30 June 2018 and 30 June 2019
Award amount calculation
The aggregate amount of Awards will be calculated on the basis of
the following formula:
A = (E x 10) – TCI) x 2.5%
where:
A = the aggregate amount of Awards to be granted in respect of a
Determination Date.
E = EBITDA of the US Operations for the financial year ending on
the relevant Determination Date.
TCI = the sum of the following (without double-counting):
(a) the aggregate equity and debt capital raised and borrowings
incurred by GTN and its subsidiaries to finance the
acquisition of the US Operations;
25
(b) the aggregate equity and debt capital raised and borrowings
incurred by GTN and its subsidiaries to otherwise finance
the US Operations; and
(c) any operating losses of the US Operations up to the last
day of the first month in which the US Operations’ cash
income is equal to or greater than cash expenses for that
month (i.e., achieves break-even cash flow),
(“Total Capital Invested”).
TCI as of 30 June 2018 will be calculated from 18 October 2016
to that date.
TCI as of 30 June 2019 will be calculated from 1 July 2018 to
that date. Where “A” is not a positive number on the initial
Determination Date, TCI as of 30 June 2019 will also include an
additional amount calculated on the basis of the following
formula:
A1 = TCI1 - (E1 x 10)
Where:
A1 = the additional amount added to TCI as of 30 June 2019
TCI1 = TCI as of 30 June 2018
E1 = EBITDA of the US Operations for the financial year ending
on 30 June 2018
.
The making of an Award will be subject to the Board determining
that GTN as a whole has also performed satisfactorily during the
financial year preceding the relevant Determination Date. This
performance condition is intended to avoid any misalignment of the
incentives provided to key management with the overall
performance of GTN.
The amount of the Award to be allocated to the Managing Director
as of the relevant Determination Date will be allocated by the
Nomination and Remuneration Committee. The amount of
remaining Awards to other key management for that Determination
Date will be allocated by the Managing Director.
The Award to the Managing Director will be paid in cash but, if
shareholders approve, 50% of the Award will be paid by way of
issue of restricted shares. Shareholder approval will be required
under ASX Listing Rule 10.11 at the time of issue of restricted
26
Performance condition
Allocation of Awards
Payment
shares.
The Award to other members of management will be paid 50% in
cash and 50% by way of issue of restricted shares.
Issue price of restricted shares Restricted shares under this plan will be issued at the market price
on the day of issue.
Vesting of restricted shares
50% of the restricted shares issued under this plan will vest on the
first anniversary of the date of issue and the other 50% on the
second anniversary of the date of issue.
Rights associated with
restricted shares.
Restricted shares will have all the same rights as other ordinary
shares (including dividend and voting rights) subject to the
restrictions on dealing below.
Restrictions on dealing with
restricted shares
The holder of restricted shares must not sell, transfer, encumber,
hedge or otherwise deal with the restricted shares until those
restricted shares vest.
Cessation of employment
The holder of restricted shares will be free to deal with the ordinary
shares on vesting of the restricted shares, subject to the
requirements of GTN’s securities trading policy.
Any unvested restricted shares issued under this plan will be
forfeited where the holder of restricted shares resigns or is
dismissed before the restricted shares vest. However, if the
participant is considered a good leaver, their unvested restricted
shares will vest immediately or in accordance with the initial vesting
timetable.
(d)
Link between remuneration and performance
The Company’s pro forma adjusted EBITDA (excluding the newly acquired United
States segment) performance was strong for fiscal 2017 exceeding prospectus
forecast by 7% (41% increase over pro forma fiscal 2016). As a result, executive
management received 100% of their bonus potential for the period.
As a recently listed entity a five year analysis of Company performance versus
remuneration was not performed as the Board does not feel the Company
compensation plans and performance as a private company is meaningful to its
current compensation plans and performance as a listed entity. The Company has
reached its Prospectus Forecast Adjusted EBITDA target for both FY2016 and
FY2017 and executive management received 100% of their short-term incentive
potential.
(e) Remuneration expenses for executive KMP
Fixed remuneration
Non-
Post-
27
Variable
Remuneration
Equity
based
Name
Year
Cash
Salary
monetary
benefits
employment
benefits
Other
Cash
bonus
comp
Total
(1)(2)
(2)
(5)
(3)(4)
(6)
Executive
Management
William Yde
III
(7)(5)
2017
655,336
2016
803,035
Scott Cody
(7)(5)
2017
2016
416,840
531,796
Gary
Worobow
(7)(5)
2017
333,099
2016
471,778
-
-
-
-
-
-
-
-
-
-
31,818
359,959
79,117
1,126,230
17,619
3,922,295
1,466
4,744,415
31,818
17,619
168,855
2,330,450
35,791
653,304
586 2,880,451
-
31,818
90,536
16,954
472,407
-
17,619
1,534,173
220
2,023,790
(1) Includes superannuation where applicable
(2) Excludes non-monetary benefits such as health insurance, annual leave, long service, social
security, Medicare that are extended to all or substantially all employees. Payments for annual leave
are considered a component of cash salaries.
(3) Amounts for FY16 relate to GTN Limited’s predecessor company which granted equity (in the form of
Class D units) and phantom equity to certain management. This plan was cancelled as part of the
IPO restructuring and each remaining participant (excluding Mr. Yde) received a nominal sum
($1,000 USD) as full consideration for the plan. Compensation expense is based on the amount of
expense recognized in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income and was calculated using a Black-Scholes valuation model. Further information with regards
to these calculations can be found in Note 26 (Equity based compensation) of the Consolidated
Financial Report included as part of the Annual Report.
(4) Amounts for FY17 based on expense recognized in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income.
(5) United States based executive management receives cash stipend in lieu of the provision of health
insurance and similar employee benefits. The amount of the stipend was USD 1,000 per month until
June 2016 when it was increased to USD 2,000 per month.
(6) All amounts translated into AUD at the average exchange rate for the year.
(7) Paid in United States dollars (USD).
(f) Contractual arrangements with executive KMP’s
Component
CEO Description
Fixed remuneration(1)
Contractual term
Notice by the
individual/Company
$758,175 to 30 September
2018, $931,099 from 1
October 2017 to 1 October
2018, minimum 5% increase
per annum thereafter.
Ongoing contract
By the Employee voluntarily
upon at least twelve (12)
months written notice to the
Company, such notice not to
28
Other executive
management description
Range between $395,072
and $485,457 to 30
September 2017, range
between $497,519 and
$600,255 from 1 October
2017 to 1 October 2018,
minimum 5% increase per
annum thereafter.
Ongoing contract
By the Employee voluntarily
upon at least twelve (12)
months written notice to the
Company, such notice not to
be given prior to 1 July 2017.
Should the executive
terminate their employment
after 1 July 2017, they will be
entitled to up to one year
severance. Severance is
calculated based on a
formula that subtracts the
required transition time (as
determined by the Company)
from the maximum one year
period.
Entitled to pro-rata STI for the year
By the Company without
Cause upon twelve (12)
months written notice to
Employee.
Entitled to pro-rata STI for the year
Immediately
be given prior to 1 July 2017.
Should the executive
terminate their employment
after 1 July 2017, they will be
entitled to up to one year
severance. Severance is
calculated based on a formula
that subtracts the required
transition time (as determined
by the Company) from the
maximum one year period.
By the Company without
Cause upon twelve (12)
months written notice to
Employee.
Immediately
Termination of employment
(without cause)
Termination of employment
(with cause) or by the individual
No STI entitlement.
(1) Based on USD/AUD exchange rate of 1.3006:1.
(g) Non-executive director arrangements
Non-executive directors receive a fixed monthly fee for participating on the board. They do not
receive performance based fees or retirement allowances. The directors’ fees are inclusive of
superannuation where applicable. The chairperson does not receive additional fees for
participating in or chairing committees, rather this is taken into account as part of their overall
director fee.
The current base fees were reviewed in fiscal 2016 when the board of directors was established.
Fees will be reviewed annually by the board taking into account comparable roles at comparable
sized companies and other available market data. The board may engage an independent
remuneration advisor at its discretion.
The maximum annual aggregate directors’ fee pool limit is $550,000 and was approved by the
shareholders on 12 May 2016.
Base fees
Chair
Other independent non-executive directors (1)
$128,000
$90,000
Additional fees
Audit and risk committee – Chair
Audit and risk committee – member
Nomination and remuneration committee –
Chair
Nomination and remuneration committee –
member
$40,000
-
-
-
(1) Mark Anderson is a non-executive director that is not considered independent due to
GTCR’s large shareholdings in the Company. Mr. Anderson is a managing director
of GTCR. Mr. Anderson receives no compensation from the Company for his
directorship.
29
All non-executive directors enter into a service agreement with the Company in the form of a
letter of appointment. The letter summarises the board policies and terms, including
remuneration, relevant to the office of director.
Non-executive director remuneration
Name
Year
Base fee
Audit and Risk
Committee
Remuneration
and
Nomination
Committee
Total
G Miles (1)(2)(3)
M Anderson
R Loewenthal (4)
D Ryan
Total non-
executive director
remuneration
2017
2016
2017
2016
2017
2016
2017
2016
83,862
8,989
-
-
102,667
6,250
90,000
6,250
-
-
-
-
-
-
40,000
2,778
-
-
-
-
83,862
8,989
-
-
6,666
694
109,333
6,944
-
-
130,000
9,028
2017
2016
276,529
21,489
40,000
2,778
6,666
694
323,195
24,961
(1) Paid in Canadian dollars (CAD). Amount translated into AUD based on same
exchange rates as annual financial statements.
(2) Excludes fees paid as a consultant to the Company prior to becoming a director.
(3) Resigned effective 28 February 2017
(4) Named Acting Chairman effective 1 March 2017
Relative proportions of fixed vs variable remuneration expense
(h) Additional statutory information
(i)
The following table shows the relative proportions of remuneration that are linked to performance
and those that are fixed, based on the amounts disclosed as statutory remuneration expense
above:
Relative proportions of fixed vs variable remuneration expense
Fixed
remuneration
2017
At Risk – STI
At Risk – LTI*
2017
2017
Name
Executive directors
W Yde
61%
Other key management personnel of the group
69%
S Cody
77%
G Worobow
32%
26%
19%
7%
5%
4%
* Where applicable, the expenses include negative amounts for expenses reversed during
the year
30
(ii)
Performance based remuneration granted and forfeited during the year
The following table shows for each KMP how much of their STI cash bonus was awarded
and how much was forfeited. It also shows the value of options that were granted, exercised
and forfeited during FY 2017.
Total STI bonus (cash)
Total
Opportunity
$
2017
359,959
168,855
90,536
Name
B Yde (1)
S Cody (2)
G Worobow
(3)
Value
granted
$
LTI Options
Value
exercised
%
2017
2017
Awarded
%
2017
100
100
100
673,390
304,629
144,298
-
-
-
Forfeited
%
2017
-
-
-
(1) USD 271,517. Includes USD 137,094 bonus to partially compensate for stock
options being granted at $2.74 per share rather than the initial public offering
price of $1.90. Amounts in the table have been translated into AUD based on
the exchange rate used to prepare the financial statements.
(2) USD 127,367. Includes USD 65,016 bonus to partially compensate for stock
options being granted at $2.74 per share rather than the initial public offering
price of $1.90. Amounts in the table have been translated into AUD based on
the exchange rate used to prepare the financial statements.
(3) USD 68,291. Includes USD 22,890 bonus to partially compensate for stock
options being granted at $2.74 per share rather than the initial public offering
price of $1.90. Amounts in the table have been translated into AUD based on
the exchange rate used to prepare the financial statements.
(iii)
Terms and conditions of equity-based payment arrangements.
2017
Name &
Grant Date
Balance
at the
start of
the year
Unvested
Granted as
Compensation
Vested
Exercised
Forfeited
Balance at the end of the
year
#
%
#
%
Vested and
exercisable
Unvested
Stock Options
W Yde
5 Apr
2017
S Cody
(1)
5 Apr
2017
G
Worobow
(1)
5 Apr
2017
-
-
-
968,906
-
-
-
-
-
-
968,906
438,315
-
-
-
-
-
-
438,315
207,623
-
-
-
-
-
-
207,623
31
Ordinary Shares
2017
Name
Balance at
the start of
year
Received
during the
year on
exercise of
stock
options
W. Yde
3,426,717
M. Anderson (1)
D. Ryan (3)
R. Loewenthal (3)
S. Cody
G. Worobow (2)
-
68,421
15,789
-
10
Shares
Purchased
Shares
Sold
Balance at
the end of
the year
-
-
-
-
-
-
176,691
-
7,054
1,628
-
-
-
-
-
-
-
-
3,603,408
-
75,475
17,417
-
10
(1) Excludes GTCR holdings.
(2) Initial shares upon forming GTN Limited.
(3) Shares held indirectly through superannuation fund.
(iv)
Other transactions with key management
Mr. Miles, our former non-executive chairman, prior to becoming our non-executive
chairman provided consulting services to the Company. His fees, translated from CAD into
AUD (based on the exchange rates used to prepare the financial statements) were as
follows:
● FY 2017
● FY 2016
N/A
$143,684
In addition, Mr. Miles held 105,059 phantom Class D equity units that were granted on 30
April 2012. The expense recognized with relation to these units was as follows:
● FY 2017
● FY 2016
N/A
($24,806)
The equity-based compensation plan was cancelled in June 2016 as part of the restructuring
related to the IPO and Mr. Miles received a nominal amount (USD 1,000) for his consent to
the termination of the plan. Since the Phantom Equity units provide no rights to acquire
equity in the Partnership and it was expected that these Phantom Equity units would be
cash-settled, the Phantom Equity expense was treated as a liability rather than additional
capital. Once the plan was cancelled, the liability no longer existed and the expense
recognized in prior years was reversed, which resulted in the negative expense in FY 2016.
The Company terminated the consulting agreement prior to Mr. Miles joining the board and
no further consideration is due.
Mr. Yde’s daughter is employed by the Company as an accountant. Her cash salary
(translated from USD to AUD at the same exchange rates as the Company’s financial
statements) was:
●FY2017
●FY2016
$161,706
$164,710
32
The Board considers the compensation received by Mr. Yde’s daughter to be consistent with
the compensation that would be paid to unrelated third parties for a similar position and thus
has not included any of these payments in Mr. Yde’s remuneration disclosures.
(v)
Reliance on external remuneration consultants
During fiscal 2017, the Board engaged KPMG for benchmarking and indicative option
valuation related to executive compensation. KPMG was paid $22,550 for these services.
During fiscal 2017, the Board engaged Mercer to advise on the Company’s United States
performance bonus plan. Mercer was paid $12,500 for these services.
(vi)
Voting of shareholders at last year’s annual general meeting
Resolution 7 – Approval of GTN US Incentive Plan and termination benefits
For
164,191,283
(99.63%)
Against
Abstain
Proxy’s Discretion
0
0
605,000
(0.37%)
33
Auditor’s Independence Declaration
As lead auditor for the audit of GTN Limited for the year ended 30 June 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 audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of GTN Limited and the entities it controlled during the
period.
MW Chiang
Partner
PricewaterhouseCoopers
Sydney
31 August 2017
34
GTN Limited
ACN 606 841 801
Consolidated Financial Report
For the year ended 30 June 2017
35
Contents
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Page
37
38
39
40
41
90
36
GTN Limited
For the year ended 30 June 2017
37
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2017
Revenue
Other income
Interest income on long-term prepaid affiliate contract
Network operations and station compensation expenses
Selling, general and administrative expenses
Equity based compensation expenses
Transaction expenses
Depreciation and amortisation
Finance costs
Foreign currency transaction loss
Profit (loss) before income tax
Income tax expense
Profit (loss) for the year
Notes
7
7
7
8
26
8
8
8
8
2017
$’000
213,648
487
8,471
(145,482)
(47,570)
(132)
(202)
(11,173)
(5,235)
(228)
12,584
2016
$’000
166,124
256
3,581
(101,919)
(32,867)
170
(14,029)
(19,931)
(8,160)
(5,461)
(12,236)
9
(6,379)
(4,998)
6,205
(17,234)
Other comprehensive income (loss) for the year, net of income tax:
Items that may be reclassified to profit or loss
Foreign currency translation reserve
Unrealised gain (loss) on interest rate swaps
Items that won’t be reclassified to profit or loss
(2,540)
(3)
(200)
799
Total other comprehensive income (loss) for the year
(2,543)
599
Total comprehensive income (loss) for the year
3,662
(16,635)
Earnings per share attributable to the ordinary equity holders:
Basic and diluted earnings per share (cents)
Total profit/ (loss) for the year and other comprehensive income are fully attributable to members of the Company
$0.03
24
$(0.11)
This statement should be read in conjunction with the notes to the financial statements.
GTN Limited
For the year ended 30 June 2017
38
Consolidated Statement of Financial Position
As at 30 June 2017
Assets
Current
Cash and cash equivalents
Trade and other receivables
Other current assets
Current assets
Non-current
Property, plant and equipment
Intangible assets
Goodwill
Deferred tax assets
Other assets
Non-current assets
Total assets
Liabilities
Current
Trade and other payables
Deferred revenue
Current tax liabilities
Provisions
Current liabilities
Non-current
Trade and other payables
Financial liabilities
Deferred tax liabilities
Derivatives
Other liabilities
Provisions
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
Notes
11
12
13
16
15
14
17
13
18
20
17
19
18
21
17
22
23
19
25
2017
$’000
100,727
53,678
4,842
159,247
6,768
85,221
97,997
4,679
98,244
292,909
452,156
57,613
5,430
683
1,167
64,893
66
97,569
16,796
5
77
409
114,922
179,815
272,341
2016
$’000
49,063
33,625
1,890
84,578
6,485
70,678
96,258
-
99,099
272,520
357,098
27,258
544
2,320
855
30,977
68
96,806
13,779
-
72
452
111,177
142,154
214,944
444,981
4,295
(176,935)
272,341
378,948
6,706
(170,710)
214,944
This statement should be read in conjunction with the notes to the financial statements.
GTN Limited
For the year ended 30 June 2017
39
Consolidated Statement of Changes in Equity
For the year ended 30 June 2017
Common
Control
Reserve
$’000
Foreign Currency
Translation Reserve
$’000
Hedging Reserve
$’000
Equity Based
Payments
Reserve
$’000
Accumulated
Losses
$’000
29,430
(799)
2,097
(127,795)
Notes
Balance at 1 July 2015
Total comprehensive income:
Net loss
Other comprehensive income/(loss)
Transactions with owners in their capacity as owners:
Preferred equity dividends
Repurchase of equity units
Reverse existing capital resulting from restructure
Ordinary shares issued to existing shareholders
Ordinary shares issued
Costs relating to share issue net of tax
Common control reserve from restructure
Equity based compensation
Balance at 30 June 2016
Total comprehensive income:
Net profit
Other comprehensive income (loss)
Transactions with owners in their capacity as owners
Dividends
Ordinary shares issued
Costs relating to share issue net of tax
Equity based compensation
Balance at 30 June 2017
25
Issued
Capital
$’000
248,717
-
-
-
25,681
(3,406)
(270,992)
298,306
83,997
(3,355)
-
-
130,231
378,948
-
-
-
67,622
(1,589)
-
66,033
444,981
This statement should be read in conjunction with the notes to the financial statements.
-
-
-
-
-
-
-
-
-
-
(24,655)
-
(24,655)
(24,655)
-
-
-
-
-
-
-
-
(24,655)
Total
Equity
$’000
151,650
(17,234)
599
(16,635)
-
(3,406)
(270,992)
298,306
83,997
(3,355)
(24,655)
34
-
-
-
-
-
-
-
-
-
-
34
34
(17,234)
-
(17,234)
(25,681)
-
-
-
-
-
-
-
(42,915)
63,294
2,131
(170,710)
214,944
-
-
-
-
-
-
132
132
6,205
-
6,205
(12,430)
-
-
-
(6,225)
6,205
(2,543)
3,662
(12,430)
67,622
(1,589)
132
57,397
2,263
(176,935)
272,341
-
(200)
(200)
-
-
-
-
-
-
-
-
(200)
29,230
-
(2,540)
(2,540
-
-
-
-
(2,540)
26,690
-
799
799
-
-
-
-
-
-
-
-
799
-
-
(3)
(3)
-
-
-
-
(3)
(3)
GTN Limited
For the year ended 30 June 2017
40
Consolidated Statement of Cash Flows
For the year ended 30 June 2017
Operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Income tax paid
Net cash from operating activities
Investing activities
Purchase of property, plant and equipment
Long-term prepaid station affiliate agreement
Acquisition of business
Net cash used in investing activities
Financing activities
Proceeds from borrowings
Proceeds from offering of stock (net of transaction costs)
Equity interests repurchased
Dividends
Repayment of borrowings
Deferred financing costs
Net cash from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Exchange differences on cash and cash equivalents
Notes
2017
$’000
2016
$’000
28
216,336
(180,140)
487
(4,467)
(7,730)
24,486
(3,529)
-
(22,027)
(25,556)
-
64,068
-
(10,465)
-
-
53,603
52,533
49,063
(869)
172,304
(154,474)
244
(7,170)
(6,838)
4,066
(2,270)
(100,000)
-
(102,270)
155,459
80,642
(3,406)
-
(105,913)
(4,229)
122,553
24,349
25,880
(1,166)
Cash and cash equivalents, end of year
11
100,727
49,063
This statement should be read in conjunction with the notes to the financial statements.
GTN Limited
For the year ended 30 June 2017
41
41
Notes to the Consolidated Financial Statements
Corporate information
1
Nature of operations
GTN Limited and its subsidiaries (the “Company”’) provides traffic and news information reports to radio
and/or television stations in Australia and international markets, including Canada, the United Kingdom,
Brazil and the United States. The Company derives a substantial majority of its revenues from the sale of
commercial advertising adjacent to information reports. The Company obtains these advertising commercials
from radio and television stations in exchange for information reports and/or cash compensation.
General information
GTN Limited is a registered Victoria company under the Corporations Act of 2001. GTN Limited was
formed on 2 July 2015 as A.C.N. 606 841 801. On 4 June 2016, pursuant to a public offering of GTN
Limited’s shares, GTCR Gridlock Holdings (Cayman), L.P. (“Cayman”) was merged into GTN Limited. Any
financial information prior to the merger pertains to Cayman. GTN Limited had no operations prior to the
merger.
Cayman was a Cayman Islands limited partnership that formed on 25 July 2011 for the purpose of acquiring
Global Traffic Network, Inc. (“GTN”). The purchase of GTN was completed 28 September 2011 with GTN
becoming a wholly owned indirect subsidiary of Cayman. Certain subsidiaries of GTN were transferred to
other indirect subsidiaries of Cayman. GTCR Gridlock Partners, Ltd. was the General Partner (the “General
Partner”) of Cayman.
GTN Limited is a company limited by shares, incorporated and domiciled in Australia. The address of GTN
Limited’s registered office and its principal place of business is Level 42, Northpoint, 100 Miller Street North
Sydney, NSW Australia 2060.
The consolidated financial statements for the year ended 30 June 2017 (including comparatives) were
approved and authorised for issuance on 31 August 2017. The directors have the power to amend and reissue
the financial statements.
GTN Limited
For the year ended 30 June 2017
42
42
Summary of significant accounting policies
2
The significant accounting policies that have been used in the preparation of these consolidated financial
statements are summarised below. These policies have been consistently applied to all the period presented
unless otherwise stated. The financial statements are for the group consisting of GTN Limited and its
subsidiaries.
2.1 Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001. GTN Limited is a for-profit entity for the purpose of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of GTN Limited also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
● available-for-sale financial assets, financial assets and liabilities (including derivative instruments), certain
classes of property, plant and equipment and investment property – measured at fair value,
● assets held for sale – measured at fair value less cost of disposal, and
● defined benefit pension plans – plan assets measured at fair value.
2.2 Basis of consolidation
The Company’s financial statements consolidate those of GTN Limited and all of its subsidiaries (the
“Group”) as of 30 June 2017. The Company controls a subsidiary if it is exposed, or has rights, to variable
returns from its involvement with the subsidiary and has the ability to affect those returns through its power
over the subsidiary. All subsidiaries have a reporting date of 30 June.
All transactions and balances between the Group are eliminated on consolidation, including unrealised gains
and losses on transactions between the Company and its subsidiaries. Where unrealised losses on “intra-
group” asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a
Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies adopted by the Company.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are
recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
2.3 Business combination
The Company applies the acquisition method in accounting for business combinations.
The consideration transferred by the Company to obtain control of a subsidiary is calculated as the sum of
the acquisition date fair values of assets transferred, liabilities incurred and the equity interests issued by the
Company, which includes the fair value of any asset or liability arising from a contingent consideration
arrangement. Acquisition costs are expensed as incurred.
GTN Limited
For the year ended 30 June 2017
43
43
The Company recognises identifiable assets acquired and liabilities assumed in a business combination
regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the
acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of
the sum of (a) fair value of consideration transferred; (b) the recognised amount of any non-controlling
interest in the acquiree; and (c) acquisition-date fair value of any existing equity interest in the acquiree, over
the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the
sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss
immediately.
2.4 Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars (AUD). ATN, Aus Hold Co and
GTN Limited’s functional currency is Australian dollars (AUD); CTN’s functional currency is Canadian
dollars (CAD); UK Hold Co, UKTN and UK Commercial’s functional currency is British pounds (GBP); and
BTN’s functional currency is Brazilian real (BRL). The remaining subsidiaries functional currency is United
States dollars (USD).
The functional currency of GTN Limited is AUD. These financial statements presentation currency is AUD
which is the functional currency of the largest portion of the Company’s operations.
Foreign currency transactions and balances
Foreign currency transactions are translated using the exchange rates prevailing at the dates of the
transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such
transactions and from the re-measurement of monetary items at year end exchange rates are recognised in
profit or loss.
Loans between Group entities are eliminated upon consolidation. Where the loan is between Group entities
that have different functional currencies, the foreign exchange gain or loss is not eliminated and is recognized
in the consolidated statement of profit and loss unless the loan is not expected to be settled in the foreseeable
future and thus forms part of the net investment in the foreign operation. In such a case, the foreign
exchange gain or loss is recognized in other comprehensive income.
Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the
exchange rates at the date of the transaction), except for non-monetary items measured at fair value which are
translated using the exchange rates at the date when fair value was determined.
Foreign operations
In the Company’s financial statements, all assets, liabilities and transactions of entities with a functional
currency other than AUD are translated into AUD upon consolidation. Goodwill and fair value adjustments
arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation
and translated at the closing rate. The functional currency of the entities in the Company has remained
unchanged during the reporting period.
GTN Limited
For the year ended 30 June 2017
44
44
On consolidation, assets and liabilities have been translated into AUD at the closing rate at the reporting date.
Income and expenses have been translated into AUD at the average rate over the reporting period. Exchange
differences are charged/credited to other comprehensive income and recognised in the currency translation
reserve in equity. On disposal of a foreign operation the cumulative translation differences recognised in
equity are reclassified to profit or loss and recognised as part of the gain or loss on disposal.
2.5 Revenue recognition
Advertising revenue
Advertising revenue is earned and recognised at the time commercial advertisements are broadcast.
Advertising revenues are reported net of commissions provided to third party advertising agencies that
represent a majority of the advertisers. Payments received or amounts invoiced in advance are deferred until
earned and such amounts are included as a component of deferred revenue in the accompanying consolidated
statement of financial position. Sales taxes, goods and service taxes, value added taxes and similar charges
collected by the Company on behalf of government authorities are not included as a component of revenue.
Interest and dividend income
Interest income and expenses are reported on an accrual basis using the effective interest method. Dividend
income, other than those from investments in associates, is recognised at the time the right to receive
payment is established.
2.6 Network operations and station compensation expenses
The cost of producing and distributing the radio and television traffic and news reports and services and the
obtaining of advertising inventory are considered network operations and station compensation expenses.
These consist mainly of personnel, aviation costs, facility costs, third party content providers and station
compensation. Network operations and station compensation expenses are recognised when incurred.
2.7 Station compensation and reimbursement
The Company generally enters into multiyear contracts with radio and television stations. These contracts call
for the provision of various levels of service (including, but not limited to providing professional
broadcasters, gathering of information, communications costs and aviation services) and, in some cases, cash
compensation or reimbursement of expenses. Station compensation and reimbursement is a component of
network operations and station compensation expenses on the accompanying consolidated statement of
profit or loss and other comprehensive income and is recognised over the terms of the contracts, which is not
materially different than when the services are performed.
2.8 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. Trade receivables are generally due for settlement
within 30 days. They are presented as current assets unless collection is not expected for more than 12
months after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for
impairment of trade receivables) is used when there is objective evidence that the Company will not be able
to collect all amounts due according to the original terms of the receivables. Significant financial difficulties
GTN Limited
For the year ended 30 June 2017
45
45
of the debtor, probability that the debtor will enter bankruptcy or financial re-organisation, and default or
delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is
impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and
the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in profit or loss within selling, general and administrative
expenses. When a trade receivable for which an impairment allowance had been recognised becomes
uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of
amounts previously written off are credited against selling, general and administrative expenses in profit or
loss.
2.9 Goodwill
Goodwill represents the future economic benefits arising from a business combination that are not
individually identified and separately recognised. Goodwill is carried at cost less accumulated impairment
losses. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made
to those cash-generating units or groups of cash-generating units that are expected to benefit from the
business combination in which the goodwill arose. The units or groups of units are identified at the lowest
level at which goodwill is monitored for internal management purposes, being the operating segments.
2.10 Intangible assets
Intangible assets are stated at cost (or fair value if acquired in a business combination) and subsequently
carried at cost less accumulated amortisation and impairment losses. Intangible assets with definite lives are
amortised over their expected useful lives on a straight line basis, as follows:
station contracts: 14-15 years
advertising contracts: 4.5-5 years
software: 3 years
Amortisation expense is not reflected for intangible assets with indefinite lives such as trade names and the
Company annually tests these assets for impairment. There is no residual value recognised with regard to
intangible assets subject to amortisation.
2.11 Property, plant and equipment
IT equipment, motor vehicles, aircraft and other equipment
IT equipment, motor vehicles, aircraft and other equipment (comprising furniture and fittings) are initially
recognised at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the
assets to the location and condition necessary for it to be capable of operating in the manner intended by the
Company’s management.
GTN Limited
For the year ended 30 June 2017
46
46
IT equipment, motor vehicles, aircraft and other equipment are subsequently measured using the cost model,
cost less subsequent depreciation and impairment losses. An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable
amount.
Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of
computer equipment, motor vehicles, aircraft and other equipment. The following useful lives are applied:
computer equipment: 3-5 years
motor vehicles: 7 years
helicopters and fixed wing aircraft: 6-8 years
helicopters engine rebuilds: 2-3 years
furniture, equipment and other: 5 years
recording, broadcasting and studio equipment: 5 years.
Material residual value estimates and estimates of useful life are updated as required, but at least annually.
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference
between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss
within other income or other expenses.
2.12 Leased assets
Finance leases
The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the
risks and rewards of ownership of the leased asset. Where the Company is a lessee in this type of
arrangement, the related asset is recognised at the inception of the lease at the fair value of the leased asset or,
if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is
recognised as a finance lease liability. The corresponding finance lease liability is reduced by lease payments
net of finance charges. The interest element of lease payments represents a constant proportion of the
outstanding capital balance and is charged to profit or loss, as finance costs over the period of the lease.
Operating leases
All other leases are treated as operating leases. Where the Company is a lessee, payments on operating lease
agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as
maintenance and insurance, are expensed as incurred.
2.13 Impairment testing of goodwill, other intangible assets and property, plant and
equipment
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). As a result, some assets are tested individually for
impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating
units that are expected to benefit from synergies of the related business combination and represent the lowest
level within the Company at which management monitors goodwill.
Cash-generating units to which goodwill has been allocated (determined by the Company’s management as
equivalent to its operating segments) and trade names are tested for impairment at least annually. All other
GTN Limited
For the year ended 30 June 2017
47
47
individual assets or cash-generating units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying
amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use.
To determine the value-in-use, management estimates expected future cash flows from each cash-generating
unit and determines a suitable discount rate in order to calculate the present value of those cash flows. The
data used for impairment testing procedures are directly linked to the Company’s latest approved budget,
adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount
factors are determined individually for each cash-generating unit and reflect management’s assessment of
respective risk profiles, such as market and asset-specific risks factors.
Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that
cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-
generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an
impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-
generating unit’s recoverable amount exceeds its carrying amount.
2.14 Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the financial instrument, and are measured initially at fair value adjusted by transactions costs,
except for those carried at fair value through profit or loss, which are measured initially at fair value.
Subsequent measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire,
or when the financial asset and all substantial risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
General and specific borrowing costs that are directly attributable to the acquisition of a qualifying asset are
capitalised during the period of time that is required to complete and prepare the asset for its intended use or
sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their
intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets other than those designated and effective as
hedging instruments are classified into the following categories upon initial recognition:
loans and receivables;
All financial assets are subject to review for impairment at least at each reporting date to identify whether
there is any objective evidence that a financial asset or a group of financial assets is impaired. Different
criteria to determine impairment are applied for each category of financial assets, which are described below.
GTN Limited
For the year ended 30 June 2017
48
48
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within selling, general and administrative expenses.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial recognition, these are measured at amortised cost using the effective
interest method, less provision for impairment. Discounting is omitted where the effect of discounting is
immaterial. The Company’s cash and cash equivalents, trade and most other receivables fall into this category
of financial instruments.
Individually significant receivables are considered for impairment when they are past due or when other
objective evidence is received that a specific counterparty will default. Receivables that are not considered to
be individually impaired are reviewed for impairment in groups, which are determined by reference to the
industry and region of a counterparty and other shared credit risk characteristics. The impairment loss
estimate is then based on recent historical counterparty default rates for each identified group.
Deferred loan costs relate to the costs related to the debt financing and are amortised using the effective
interest method over the five year life of the loan. Expense recognised related to the effective interest
method is recognised as a component of finance costs in the Company’s consolidated statement of profit or
loss and other comprehensive income. Any deferred loan costs outstanding upon prepayment or refinancing
of debt balances are immediately expensed as a component of finance costs.
Classification and subsequent measurement of financial liabilities
The Company’s financial liabilities include borrowings, trade and other payables and derivative financial
instruments.
Financial liabilities are measured subsequently at amortised cost using the effective interest method, and are
carried subsequently at fair value with gains or losses recognised in profit or loss.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit
or loss are included within finance costs or finance income.
Derivative financial instruments and hedge accounting
Derivative financial instruments are accounted for as hedging instruments in cash flow hedge relationships,
which requires a specific accounting treatment. To qualify for hedge accounting, the hedging relationship
must meet several strict conditions with respect to documentation, probability of occurrence of the hedged
transaction and hedge effectiveness.
All derivative financial instruments used for hedge accounting are recognised initially at fair value and
reported subsequently at fair value in the statement of financial position.
To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging
instruments in cash flow hedges are recognised in other comprehensive income and included within the
hedging reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or
loss.
GTN Limited
For the year ended 30 June 2017
49
49
At the time the hedged item affects profit or loss, any gain or loss previously recognised in other
comprehensive income is reclassified from equity to profit or loss and presented as a reclassification
adjustment within other comprehensive income. However, if a non-financial asset or liability is recognised as
a result of the hedged transaction, the gains and losses previously recognised in other comprehensive income
are included in the initial measurement of the hedged item.
If a forecast transaction is no longer expected to occur any related gain or loss recognised in other
comprehensive income is transferred immediately to profit or loss. If the hedging relationship ceases to meet
the effectiveness conditions, hedge accounting is discontinued and the related gain or loss is held in the equity
reserve until the forecast transaction occurs.
2.15 Income taxes
Income tax expense for the period is the tax payable on the current period’s taxable income based on the
national tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax base of the asset and liabilities and their carrying amount in the
financial statements.
Deferred income taxes are calculated using the liability method on temporary differences between the
carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the
initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction
is a business combination or affects tax or accounting profit. Deferred tax on temporary differences
associated with investments in subsidiaries is not provided if reversal of these temporary differences can be
controlled by the Company and it is probable that reversal will not occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to
their respective period of realisation, provided they are enacted or substantively enacted by the end of the
reporting period.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against
future taxable income, based on the Company’s forecast of future operating results which is adjusted for
significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit.
Deferred tax liabilities are always provided for in full.
Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off
current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax benefit or expense in profit
or loss, except where they relate to items that are recognised in other comprehensive income (such as the
revaluation of land) or directly in equity, in which case the related deferred tax is also recognised in other
comprehensive income or equity, respectively.
(ii) Tax consolidation legislation
GTN Limited and its wholly-owned Australian controlled subsidiaries will implement the tax consolidation
legislation.
GTN Limited
For the year ended 30 June 2017
50
50
The head entity, GTN Limited, and the controlled subsidiaries in the tax consolidated group account for their
own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a stand-alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, GTN Limited also recognizes the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed
from controlled subsidiaries in the tax consolidated group.
The subsidiaries will also enter into a tax funding arrangement under which the wholly-owned entities fully
compensate GTN Limited for any current tax payable assumed and are compensated by GTN Limited for
any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are
transferred to GTN Limited under the tax consolidation legislation. The funding amounts are determined by
reference to the amounts recognized in the wholly-owned subsidiaries’ financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice
from the head entity, which is issued as soon as practicable after the end of each financial year. The head
entity may also require payment of interim funding amounts to assist with its obligations to pay tax
instalments.
Assets or liabilities arising under tax funding agreements with tax consolidated subsidiaries are recognized as
current amounts receivable or payable to other entities in the group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding
agreement are recognized as a contribution to (or distribution from) wholly-owned tax consolidated
subsidiaries.
2.16 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.
2.17 Employee Benefits
Short-term employee benefits
Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled
wholly within twelve months after the end of the period in which the employees render the related service.
Examples of such benefits include wages and salaries, non-monetary benefits and accumulating sick leave.
Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the
liabilities are settled.
Other long-term employee benefits
The Company’s liabilities for annual leave and long service leave are included in other long term benefits
when they are not expected to be settled wholly within twelve months after the end of the period in which
the employees render the related service. They are measured at the present value of the expected future
payments to be made to employees. The expected future payments incorporate anticipated future wage and
salary levels, experience of employee departures and periods of service, and are discounted at rates
determined by reference to market yields at the end of the reporting period on high quality corporate bonds
or government bonds that have maturity dates that approximate the timing of the estimated future cash
outflows. Any re-measurements arising from experience adjustments and changes in assumptions are
recognised in profit or loss in the periods in which the changes occur. The obligations are presented as
GTN Limited
For the year ended 30 June 2017
51
51
current liabilities on the statement of financial position if the entity does not have an unconditional right to
defer settlement for at least 12 months after the reporting period regardless of when the actual settlement is
expected to occur.
2.18 Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of
financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12
months from the reporting date.
2.19 Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the company, excluding
any costs of servicing equity other than ordinary shares by the weighted average number of ordinary shares
outstanding during the financial year adjusted for bonus elements in ordinary shares issued during the year
and excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the amounts used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of additional ordinary shares that would have been
outstanding assuming the conversion of all dilutive potential ordinary shares.
Prior to the Company’s initial public offering, the share capital of the Company consisted of partnership units
that were converted into share capital as part of the IPO restructuring. Earnings per share calculations
presented herein assume the conversion took place at the beginning of the periods presented to provide a
uniform presentation.
2.20 Equity and reserves
Issued capital represents the fair value of shares that have been issued. Any transaction costs associated with
the issuing of shares are deducted from issued capital.
Other components of equity include the following:
Foreign currency translation reserve – comprises foreign currency translation differences arising on the
translation of financial statements of the Company’s foreign entities into AUD.
Hedging reserve – comprises changes in the fair value of interest rate hedges that are deemed effective.
Equity based payments reserve – comprises the cumulative charge to the statement of profit or loss and
other comprehensive income for employee equity-settled equity-based remuneration.
Common control reserve – represents difference between the fair value of the shares issued under the
initial public offering net of transaction costs, plus carried forward reserves and accumulated losses and
the book value of the total equity of the predecessor company.
Retained earnings include all current and prior period retained profits including those related to GTCR
Gridlock Holdings (Cayman), L.P, the predecessor company to GTN Limited.
GTN Limited
For the year ended 30 June 2017
52
52
2.21 Equity based remuneration
The Company operated equity-settled equity-based remuneration plans for its employees. The Company also
operated a cash-settled equity-based remuneration plan for its employees.
All goods and services received in exchange for the grant of any equity-based payment are measured at their
fair values. Where employees are rewarded using equity-based payments, the fair values of employees’
services are determined indirectly by reference to the fair value of the equity instruments granted. This fair
value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example
profitability and sales growth targets and performance conditions).
All equity-settled equity-based remuneration is ultimately recognised as an expense in profit or loss with a
corresponding credit to equity based payments reserve. If vesting periods or other vesting conditions apply,
the expense is allocated over the vesting period, based on the best available estimate of the number of equity
instruments expected to vest.
Non-market vesting conditions are included in assumptions about the number of equity instruments that are
expected to become exercisable. Estimates are subsequently revised if there is any indication that the number
of equity instruments expected to vest differs from previous estimates. Any cumulative adjustment prior to
vesting is recognised in the current period. No adjustment is made to any expense recognised in prior
periods if equity instruments ultimately exercised are different to that estimated on vesting.
Upon exercise of equity instruments, the proceeds received net of any directly attributable transaction costs
are allocated to issued capital.
2.22 Provisions, contingent liabilities and contingent assets
Provisions for legal disputes, onerous contracts or other claims are recognised when the Company has a
present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic
resources will be required from the Company and amounts can be estimated reliably. Timing or amount of
the outflow may still be uncertain.
Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been
developed and implemented, and management has at least announced the plan’s main features to those
affected by it. Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the
most reliable evidence available at the reporting date, including the risks and uncertainties associated with the
present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the class of obligations as a whole. Provisions are
discounted to their present values, where the time value of money is material.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the
obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related
provision.
GTN Limited
For the year ended 30 June 2017
53
53
No liability is recognised if an outflow of economic resources as a result of present obligation is not probable.
Such situations are disclosed as contingent liabilities, unless the outflow of resources is remote in which case
no liability is recognised.
2.23 Goods and services taxes (GST)
Revenues, expenses and assets are recognized net of any amount of associated GST, value added taxes
(VAT), Quebec sales tax (QST), harmonized sales tax (HST) and similar taxes unless the tax incurred is not
recoverable from the taxation authority. In such case the tax is recognized as part of the cost of the
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST and related taxes receivable or payable.
The net amount of these taxes recoverable from, or payable to, the taxation authority is included in trade and
other payables in the balance sheet.
Cash flows are presented on a gross basis. The components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash
flows.
2.24 Long-term prepaid affiliate contract
Long term prepayments of station compensation are accounted for as a financing arrangement whereby non-
cash interest income over the term of the contractual agreement is recognized based on an estimate of the
radio stations’ incremental borrowing rate with similar terms which will reduce over time as the prepayment is
amortised. Station compensation expense is also recognized over the contract period equal to the
prepayment amount plus the total non-cash interest income on a straight line basis over the expected term of
the contract including renewal periods, if it is more likely than not the contract will be extended. Additional
station compensation expense over the contract period is recognized equal to any cash payments, including
an estimate of inflationary adjustments expected to be paid on a straight line basis over the contract term.
2.25 Rounding of amounts
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the financial statements.
Amounts in the financial statements have been rounded off in accordance with that ASIC Corporations
Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
2.26 Significant management judgement in applying accounting policies and estimation
uncertainty
When preparing the financial statements, management undertakes a number of judgements, estimates and
assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Significant management judgement
The following are significant management judgements in applying the accounting policies of the Company
that have the most significant effect on the financial statements.
Recognition of deferred tax balances
The extent to which deferred tax balances are recognised is based on an assessment of the probability of the
Company’s future taxable income against which the deferred tax assets can be utilised or liabilities assessed.
GTN Limited
For the year ended 30 June 2017
54
54
In addition, significant judgement is required in assessing the impact of any legal or economic limits or
uncertainties in various tax jurisdictions. See Note 17.
Impairment
In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit
based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty
relates to assumptions about future operating results and the determination of a suitable discount rate. See
Note 14.
Useful lives of depreciable assets
Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the
expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may
change the utility of certain property, plant and equipment. See Note 16.
Fair value of financial instruments
Management uses valuation techniques to determine the fair value of financial instruments (where active
market quotes are not available) and non-financial assets. This involves developing estimates and
assumptions consistent with how market participants would price the instrument. Management bases its
assumptions on observable data as far as possible but this is not always available. In that case management
uses the best information available. Estimated fair values may vary from the actual prices that would be
achieved in an arm’s length transaction at the reporting date. See Note 4(d).
Recoverability of long-term prepaid station compensation
Management reviews the recoverable amount of long-term prepaid station compensation at each reporting
period, analysing such factors as number of advertising spots received, market conditions for the advertising
spots, ratings of the stations, counter party risk (i.e. the financial viability of the provider of the advertising
spots and its ability to continue to meet its obligations) and other relevant factors to determine the
recoverability of long-term prepaid station compensation over its contractual term. See Note 13.
Business combinations
The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the
Company taking into consideration all available information at the reporting date. Fair value adjustments on
the finalisation of the business combination accounting is retrospective, where applicable, to the period the
combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation
reported. See Note 34.
2.27 Parent entity financial information
The financial information for the parent entity, GTN Limited disclosed in Note 31 has been prepared on the
same basis as the consolidated financial statements except as set out below.
(i) Investment in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of GTN Limited. Dividends
received are recognized when the right to receive the dividend is established.
GTN Limited
For the year ended 30 June 2017
55
55
2.28 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker.
2.29 Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at
the discretion of the Company, on or before the end of the reporting period but not distributed at the end of
the reporting period.
2.30 Corporate restructure
GTN Limited was incorporated as an Australian public company on 2 July 2015 and acquired GTCR
Gridlock Holdings (Cayman), L.P. as part of a restructure in conjunction with the initial public offering of
GTN Limited’s stock.
The Company elected to account for the purchase of Cayman by GTN Limited as a capital re-organisation
rather than a business combination. In the Company’s judgement, the continuation of the existing accounting
values is consistent with the accounting that would have occurred if the assets and liabilities had already been
in a structure suitable to IPO and most appropriately reflects the substance of the internal restructure. As
such, the consolidated financial statements of the Company have been presented as a continuation of the pre-
existing accounting values of assets and liabilities in the Cayman consolidated financial statements. In
adopting this approach, the Company notes that there is an alternate view that such a restructure should be
accounted for as a business combination that follows the legal structure of GTN Limited being the acquirer.
If this view had been taken, the net assets of the GTN Group would have been uplifted to fair value based on
the market capitalisation at completion with consequential impacts on the consolidated statement of profit or
loss and other comprehensive income statement and the consolidated statement of financial position.
Changes in accounting policies
3
3.1 Change in accounting policy and retrospective restatement
In November 2016, the International Financial Reporting Interpretation Committee (“IFRIC”) published its
findings regarding the expected manner of recovery of intangible assets with indefinite useful lives for the
purpose of measuring deferred income tax. The IFRIC stated that in applying IAS 12, Income Taxes, an
entity determines the expected manner of recovery of the carrying amounts of intangible assets with
indefinite useful lives and reflects the tax consequences that follow from the expected manner of recovery.
The IFRIC clarified that an intangible asset with an indefinite useful life is not a non-depreciable asset
because non-depreciable assets have an infinite life and that indefinite is not the same as infinite. Based on the
guidance of this decision, the Company has retrospectively changed its accounting policy with regard to the
recognition of deferred taxes related to indefinite life intangibles. Prior to this clarification, the Company’s
accounting policy for deferred income taxes assumed that its intangible assets with indefinite lives
(tradenames) would be recovered through sale. Accordingly, the Company is required to change its
accounting policy with regard to deferred income taxes on intangible assets with indefinite useful lives to
reflect the full difference between the carrying amount and tax basis of said assets based on an assumption
that the indefinite life intangible assets will be recovered through use unless there is a specific plan to sell
these assets. See Note 14 and Note 17 for the detail of the restatement amounts.
3.2 New and revised standards that are effective for these financial statements
A number of new and revised standards and an interpretation became effective for the first time to annual
periods beginning on or after 1 July 2016. Information on these new standards is presented below.
GTN Limited
For the year ended 30 June 2017
56
56
AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB
1031 Materiality
The Standard completes the AASB’s project to remove Australian guidance on materiality from Australian
Accounting Standards. This Standard was first adopted for the year ending 30 June 2016 and there was no
material impact on the financial statements.
AASB 2014-1 Amendments to Australian Accounting Standards
Part D of AASB 2014-1 makes consequential amendments arising from the issuance of AASB 14. These
amendments were first adopted for the year ending 30 June 2017 and there was no material impact on the
financial statements.
Part E of AASB 2014-1 makes amendments to Australian Accounting Standards to reflect the AASB’s
decision to defer the mandatory application date of AASB 9 Financial Instruments to annual reporting
periods beginning on or after 1 January 2018. Part E also makes amendments to numerous Australian
Accounting Standards as a consequence of the introduction of Chapter 6 Hedge Accounting into AASB 9
and to amend reduced disclosure requirements for AASB 7 Financial Instruments: Disclosures and AASB
101 Presentation of Financial Statements. Refer to the section on AASB 9 below.
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to
AASB 101
The amendments:
-
-
-
clarify the materiality requirements in AASB 101, including an emphasis on the potentially
detrimental effect of obscuring useful information with immaterial information
clarify that AASB 101’s specified line items in the statement(s) of profit or loss and other
comprehensive income and the statement of financial position can be disaggregated
add requirements for how an entity should present subtotals in the statement(s) of profit and loss
and other comprehensive income and the statement of financial position
clarify that entities have flexibility as to the order in which they present the notes, but also emphasise
that understandability and comparability should be considered by an entity when deciding that order
remove potentially unhelpful guidance in IAS 1 for identifying a significant accounting policy.
These amendments were first adopted for the year ending 30 June 2017 and there was no material impact on
the financial statements.
-
-
3.3 Accounting Standards issued but not yet effective and not been adopted early by
the Company
At the date of authorisation of these financials statements, certain new standards, amendments and
interpretations to existing standards have been published but are not yet effective, and have not been adopted
early by the Company. Management anticipates that all of the relevant pronouncements will be adopted in the
Company’s accounting policies for the first period beginning after the effective date of the pronouncement.
Information on new standards, amendments and interpretations that are expected to be relevant to the
Company’s financial statements is provided below. Certain other new standards and interpretations have been
issued but are not expected to have a material impact on the Company’s financial statements.
AASB 9 Financial Instruments
AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities.
These requirements improve and simplify the approach for classification and measurement of financial assets
compared with the requirements of AASB 139. The main changes are:
a. Financial assets that are debt instruments will be classified based on: (i) the objective of the entity’s
business model for managing the financial assets; and (ii) the characteristics of the contractual cash
flows.
GTN Limited
For the year ended 30 June 2017
57
57
b. Allows an irrevocable election on initial recognition to present gains and losses on investments in
equity instruments that are not held for trading in other comprehensive income (instead of in profit
or loss). Dividends in respect of these investments that are a return on investment can be recognised
in profit or loss and there is no impairment or recycling on disposal of the instrument.
Introduces a ‘fair value through other comprehensive income’ measurement category for particular
simple debt instruments.
c.
d. Financial assets can be designated and measured at fair value through profit or loss at initial
recognition if doing so eliminates or significantly reduces a measurement or recognition
inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses
on them, on different bases.
e. Where the fair value option is used for financial liabilities the change in fair value is to be accounted
for as follows:
the change attributable to changes in credit risk are presented in other comprehensive income (‘OCI’)
the remaining change is presented in profit or loss
-
-
If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in
credit risk are also presented in profit or loss.
Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into
AASB 9:
-
-
classification and measurement of financial liabilities; and
derecognition requirements for financial assets and liabilities.
AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that
enable entities to better reflect their risk management activities in the financial statements.
Furthermore, AASB 9 introduces a new impairment model based on expected credit losses. This model
makes use of more forward-looking information and applies to all financial instruments that are subject to
impairment accounting. The amendment is effective for annual periods beginning on or after 1 January 2018
but is available for early adoption.
The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based on the entity’s
preliminary assessment, the Standard is not expected to have a material impact on the transactions and
balances recognised in the financial statements when it is first adopted for the year ending 30 June 2019.
AASB 15 – Revenue from Contracts with Customers
AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related
Interpretations:
-
-
-
-
establishes a new revenue recognition model
changes the basis for deciding whether revenue is to be recognised over time or at a point in time
provides new and more detailed guidance on specific topics (e.g., multiple element arrangements,
variable pricing, rights of return, warranties and licensing)
expands and improves disclosures about revenue
The amendment is effective for annual periods beginning on or after 1 January 2018 but is available for early
adoption. The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on
the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions
and balances recognised in the financial statements when it is first adopted for the year ending 30 June 2019.
AASB 16 – Leases
AASB 16 removes the balance sheet distinction between operating and finance leases for lessees. Changes
under AASB 16 will predominately affect lessees with almost all leases going on the balance sheet. The asset
(the right to use the leased item) and a financial liability to pay rentals are recognized under the new standard
with the only exemption being short-term and low-value leases. The new standard will be effective from 1
GTN Limited
For the year ended 30 June 2017
58
58
January 2019 but is available for early adoption. At this stage, the Company is not able to estimate the effect
of the new rules on the financial statements. The Company does not expect to adopt the new standard
before 1 July 2019.
AASB 2016-1 – Recognition of Deferred Tax Assets for Unrealized Losses
AASB 2016-1 amends AASB 112 – Income Taxes to clarify the requirements on the recognition of deferred
tax assets for unrealized debt instruments measured at fair value. The amendment is effective for annual
periods beginning on or after 1 January 2017 but is available for early adoption.
The entity is yet to undertake a detailed assessment of the impact of AASB 2016-1. However, based on the
entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions
and balances recognised in the financial statements when it is first adopted for the year ending 30 June 2018.
AASB 107 – Statement of cash flows
AASB 2016-2 requires additional disclosures that will enable users of financial statements to evaluate changes
in liabilities arising from financing activities. The amendment requires disclosures of changes arising from:
● cash flows, such as drawdowns and repayments of borrowings
● non-cash changes, such as acquisitions, disposals and unrealized exchange differences.
The amendment is effective for annual periods beginning on or after 1 January 2017 but is available for early
adoption. Given the amendment is limited to additional disclosure the Company expects no impact on its
financial statements when it is first adopted for the year ending 30 June 2018.
There are no other standards that are not yet effective and that would be expected to have a material impact
on the entity in the current or future reporting periods and on foreseeable future transactions.
Financial risk management
4
The Company's activities expose it to a variety of financial risks: market risk (including currency risk, interest
rate risk and price risk), credit risk and liquidity risk. The Company's overall risk management program seeks
to minimise potential adverse effects on the financial performance of the Company. The Company uses
derivative financial instruments to manage interest rate risk exposures on borrowings.
Risk management is carried out by the senior management team with oversight from the audit and risk
committee and the board. The senior management team identifies, evaluates, reports and manages financial
risks in close co-operation with the Company's operation units in accordance with the Board policy.
The Company holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Interest bearing liabilities
2017
$’000
100,727
53,678
154,405
57,613
97,569
2016
$’000
49,063
33,625
82,688
27,258
96,806
GTN Limited
For the year ended 30 June 2017
Derivative financial instruments
Other liabilities
(a) Market risk
59
5
77
155,264
-
72
124,136
59
(i) Cash flow and fair value interest rate risk
Market risk is the risk that the fair value or future cash flows of a financial asset or financial liability will
fluctuate because of changes in market prices. Market risk comprises interest rate risk.
The Company's main interest rate risk arises from long term borrowings, cash, receivables and derivatives.
Borrowings issued at variable rates expose the Company to cash flow interest rate risk. The Company has
utilized fixed rate interest rate swaps and interest rate collars to manage interest rate risk. In June 2016, the
Company terminated its fixed rate interest rate swap and 30 June 2016 all of the Company’s debt was at a
variable rate. In August 2016, the Company entered into an interest rate collar on $50 million of its variable
debt that runs until 9 February 2018. The hedge was determined to be effective when entered into and is
tested for effectiveness at each balance sheet date and been found effective.
The Company has managed its cash flow interest rate risk by using various interest rate derivatives. Such
interest rate derivatives have the economic effect of converting borrowings from floating rates to fixed rates.
The interest rate derivatives the Company has employed are fixed rate interest rate swaps and interest rate
collars. Under the fixed rate interest rate swaps, the Company agrees with other parties to exchange, at
specified intervals (mainly monthly), the difference between fixed contract rates and floating rate interest
amounts calculated by reference to the agreed notional principal amounts. Under interest rate collars, such
exchanges only occur should the floating interest rate fall outside the floor or the ceiling of the collar.
Otherwise the interest is paid on a floating rate basis.
As at the end of the reporting period, the Company had the following variable rate cash and borrowings
outstanding:
2017
2016
Weighted
average
interest rate
%
0.61%
5.24%
Weighted
average
interest rate
%
0.94%
5.34%
Cash and cash equivalents
Borrowings – unhedged portion(1)
Net exposure to cash flow interest rate risk
Balance
$’000
49,063
(100,000)
(50,937)
(1) A portion of the hedged debt of $50 million is subject to cash flow risk because the hedging mechanism is
Balance
$’000
100,727
(50,000)
50,727
an interest collar which allows the interest rate to float between the interest rate floor and ceiling.
On 11 November 2011, the Company’s Aus Hold Co subsidiary borrowed $76.5 million (which included
$2.85 million loan fee deducted from the proceeds by the lenders) from a consortium of three banks in
Australia (Term Loan A and Term Loan B, collectively “Term Loans” or “Term Loan”). The interest rate on
the majority of the Term Loan was fixed until the repayment date (either by scheduled principal payments or
the date of maturity) via a fixed rate interest swap. The interest rate spread was subject to increase and
decrease based on the leverage ratio as defined in the Term Loan agreement. The Term Loan was refinanced
GTN Limited
For the year ended 30 June 2017
60
60
in November 2015 and again in February 2016. The fixed rate interest rate swap was novated and remained
in place during both refinancings prior to being settled in June 2016. See Note 21.
Effective 9 August 2016, in satisfaction of the interest rate hedging requirements under the Term Loan, the
Company’s Aus Hold Co subsidiary entered into interest rate collar agreements for $50 million of the Facility
C bullet loan. The interest rate collar agreements expire effective 9 February 2018. The interest rate collar
agreements set a range of interest rates at which below the floor interest rate (based on one month BBSY)
Aus Hold Co pays the counter party the difference between the floor interest rate and actual interest rate on
the nominal amount of the interest rate collar agreements whilst the counter party pays Aus Hold Co any
difference between the ceiling interest rate and BBSY. The floor interest rate is 1.55% and the ceiling rate is
2.20%. Aus Hold Co incurred no upfront costs to enter into the interest rate collar agreements and to date
neither party has been required to make a payment to the other. At 30 June 2017, the fair value of the
interest rate collar was $5 thousand in favour of the counter party. Since the interest rate collar agreements
have been determined to be effective at inception and as of 30 June 2017, the expense related to the change
in fair value (net of taxes) has been charged to hedging reserve in other comprehensive income.
An official increase/decrease in interest rates of 100 (2016: 100) basis points would have favourable/adverse
effect on profit before tax of $507 thousand (2016: favourable/adverse $509 thousand) per annum. The
favourable/adverse would be $7 thousand dollars (2016: N/A) in a scenario where the maximum possible
amount of the movement occurred outside the collar ceiling or floor.
(ii) Foreign currency risk
Exposures to currency exchange rates arise from the sales and purchases by its subsidiaries that are
denominated in currencies other than the subsidiaries’ functional currency.
The Company does not enter into forward exchange contracts to mitigate the exposure to foreign currency
risk.
Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are
disclosed below. The amounts shown are those reported to key management translated into AUD at the
closing rate:
USD
$’000
Short Term Exposure
CAD
$’000
GBP
$’000
BRL
$’000
Long Term Exposure
Other
$’000
USD
$’000
GBP
$’000
CAD
$’000
BRL
$’000
30 June 2017
Financial assets
28,433
Financial liabilities (31,719)
15,847
(6,029)
10,307
(3,530)
Total exposure
(3,286)
9,818
6,777
30 June 2016
Financial assets
Financial liabilities
659
(1,178)
13,339
(6,528)
10,228
(5,390)
Total exposure
(519)
6,811
4,838
1,950
(1,409)
541
1,398
(1,087)
311
49
(161)
(112)
35
(211)
(176)
-
(13)
(13)
-
-
-
-
(5)
(5)
-
(10)
(10)
-
(10)
(10)
-
(11)
(11)
-
(17)
(17)
-
-
-
There are no material transactions in subsidiaries entities made in currencies other than the functional
currency. Therefore no sensitivity analysis on foreign currencies affecting profit or loss has been prepared.
GTN Limited
For the year ended 30 June 2017
(b) Credit risk
61
61
Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument
and cause a financial loss. The Company has exposures to credit risk on cash and cash equivalents and
receivables. Our maximum exposure to credit risk is based on the total value of our financial assets net of any
provision for loss.
Ongoing credit evaluation is performed on the financial condition of customers and, where appropriate, an
allowance for doubtful debtors is raised. Increased attention is paid to past due clients to determine
collectability of outstanding receivables. The credit quality of debtors that are not impaired is assessed by
reference to historical information with regards to default rates. Debtor write-offs have historically been
immaterial.
Refer to Note 2.26 for management’s process to evaluate the recoverability of the long-term prepayment and
the exposure to credit risk.
The Company's policy is to engage major financial institutions to provide financial facilities to the Company,
thereby minimising credit risk on cash deposits. The Company does not have any cash balances or derivative
financial instruments with any financial institution rated below “A”.
(c) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities.
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an
adequate amount of committed credit facilities, and the ability to refinance borrowings.
(i) Financing arrangement
The Company had access to the following undrawn borrowing facilities at the end of the reporting period:
Total facilities
Bank loan facility
Used at balance date
Bank loan facility
Unused at balance date
Bank loan facility
(ii) Maturities of financial liabilities
Contractual maturities of financial liabilities
2017
$’000
2016
$’000
115,000
115,000
100,000
100,000
15,000
15,000
Within
1 year
$’000
Between
1 and 2
years
$’000
Between
2 and 5
years
$’000
Over
5 years
$’000
Total
contractual
cash flows
$’000
Carrying
Amount
(assets)/
liabilities
$’000
At 30 June 2017
Non-derivatives
GTN Limited
For the year ended 30 June 2017
Non-interest bearing
Trade and other payables
Other liabilities
Interest bearing
Bank loans(1)(2)
Derivatives
Interest rate collars
Total
57,613
-
-
-
-
77
4,165
4,165
106,675
-
5
-
61,778
4,170
106,752
-
-
-
-
-
57,613
57,613
77
77
115,005
97,569
5
5
172,700
155,264
62
62
(1) Cash flows include an estimate of future contractual payments of interest
(2) Carrying amounts are net of capitalized transaction costs
Within
1 year
Between
1 and 2
years
Between
2 and 5
years
Over
5 years
Total
contractual
cash flows
Carrying
Amount
(assets)/
Liabilities
$’000
$’000
$’000
$’000
$’000
$’000
27,258
-
-
-
-
72
4,400
4,400
111,452
-
-
-
31,658
4,400
111,524
-
-
-
-
-
27,258
27,258
72
72
120,252
96,806
-
-
147,582
124,136
At 30 June 2016
Non-derivatives
Non-interest bearing
Trade and other payables
Other liabilities
Interest bearing
Bank loans(1)(2)
Derivatives
Interest rate swaps
Total
(1) Cash flows include an estimate of future contractual payments of interest
(2) Carrying amounts are net of capitalized transaction costs
(d) Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement
or for disclosure purposes.
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the
following fair value measurement hierarchy:
(a)
(b)
(c)
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (level 2), and
inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(level 3).
The following table presents the Company’s assets and liabilities measured and recognised at fair value at 30
June 2017 and 30 June 2016.
63
63
GTN Limited
For the year ended 30 June 2017
30 June 2017
Assets
Total Assets
Liabilities
Derivatives – interest rate collars
Total Liabilities
at 30 June 2016
Assets
Total Assets
Liabilities
Derivatives – interest rate swaps
Total Liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
5
5
-
-
-
-
5
5
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
-
-
-
-
-
-
-
-
(i) Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include the fair value of interest rate swaps is
calculated as the present value of the estimated future cash flows based on observable yield curves.
All of the resulting fair value estimates are included in level 2.
Capital Management
5
(a) Risk management
The Company’s objectives when managing capital are to
(i) safeguard its ability to continue as a going concern so it can continue to provide returns to the
shareholders and
(ii) maintain an optimal capital structure to reduce the cost of capital.
In order to accomplish these goals, the Company has entered into a secured bank loan with regard to its
Australia and United Kingdom operations. Under the term of the loans, the borrowers are required to
comply with the following financial covenants:
(a) Total gearing ratio(TGR) (not greater than 3.00x at 30 June 2017) (actual 1.24x)
(b) Interest coverage ratio (at least 3.50x at 30 June 2017)(actual 11.30x)
(c) Debt service ratio (at least 1.10x at 30 June 2017)(actual 9.79x)
The borrowers were in compliance with these and all other requirements of the loan for all periods presented.
The Group’s consolidated TGR on at 30 June 2017 was not applicable since net debt was negative. The
Company targets to have a maximum total gearing ratio of less than 2.0x but does not target a minimum
TGR.
6
Interests in subsidiaries
Set out below details of the subsidiaries held directly and indirectly by the Company:
Name of the
Subsidiary
Country of Incorporation &
Principal Place of Business
Proportion of Ownership
Interests Held by the
Company
GTN Limited
For the year ended 30 June 2017
64
30-June-2017 30-June-2016
64
Australia (3)
United States (Delaware) (1)
United States (Nevada) (1)
Australia (NSW)
GTN Holdings Pty Limited (“LuxCo 1”)(2)
GTN US Holdco, Inc. (‘US Hold Co”) (6)
Global Traffic Network, Inc. (“GTN”)
Gridlock Holdings (Australia) Pty Limited (“Aus Hold
Co”) (4)
The Australia Traffic Network Pty Limited (“ATN”)
GTN Management, Inc. (“US Management Co”)(7) United States (Delaware)
GTCR Gridlock International (Luxembourg) S.a r.l.
(“LuxCo 2”)
Canadian Traffic Network ULC (“CTN”)
GTN Holdings (UK) Limited (“UK Hold Co”) (5)
Australia (NSW)
Luxembourg
Canada (Alberta)
United Kingdom (England &
Wales)
United Kingdom (England &
Wales)
United Kingdom (England &
Wales)
Global Traffic Network Commercial (UK) Limited
(“UK Commercial”)
Global Traffic Network (UK) Limited (“UKTN”)
GTCR Gridlock Holdings (Brazil) S.a r.l. (“LuxCo 3”) Luxembourg
BTN Servicos de Informacao do Transito ltda
(“BTN”)
United States Traffic Network, LLC
United States
Brazil
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
N/A
(1) Resident of Australia for tax purposes but still subject to U.S. taxes. Principal place of business
Australia.
(2) Formerly GTCR Gridlock Holdings (Luxembourg) S.a r.l.
(3) Migrated to Australia from Luxembourg effective July 2016
(4) Formerly GTCR Gridlock Holdings (Australia) Pty Limited
(5) Formerly GTCR Gridlock Holdings (UK) Limited
(6) Formerly GTCR Gridlock Holdings, Inc.
(7) Formerly GTCR Gridlock Management, Inc.
7
Revenue and other income
From continuing operations
Sales revenue
Sale of advertising commercials – net of agency commissions
Other income
Interest on bank deposits
Other
2017
$’000
2016
$’000
213,648
213,648
166,124
166,124
487
-
487
244
12
256
Interest income on long-term prepaid affiliate contract
8,471
3,581
8
Expenses
Profit/(Loss) before income tax includes the following specific
expenses:
Employee benefits expense
51,788
43,747
2017
$’000
2016
$’000
GTN Limited
For the year ended 30 June 2017
65
65
Defined contribution superannuation expenses
886
845
Amortisation and depreciation
11,173
19,931
Finance costs of bank loan and line of credit
Rental expenses relating to operating leases
Foreign exchange (gain) loss on intercompany loans within the group
Transaction expenses
5,235
2,373
228
202
8,160
1,803
5,461
14,029
Income tax expense
9
The major components of tax expense and the reconciliation of the expected tax expense based on the
statutory tax rate at 30% (2016: 30%) and the reported tax expense in profit or loss are as follows:
Income (loss) before tax
Tax rate: 30% (2016 30%)
Taxes on foreign earnings
Tax effect of permanent differences
Write-off of DTA due to restructure
Foreign tax credits
(Recognition of previously unrecognised tax losses)/ unrecognized tax
losses
Foreign jurisdiction tax, net of federal tax benefit
Over-provision for income tax in prior year
Effect of tax rate changes
Accrual of uncertain tax position
Current year losses not recognised
Other
Income tax expense
Expense
Current
Deferred
Income tax expense
Other comprehensive income
Current
Deferred
2017
$’000
12,584
3,775
10,938
374
-
(10,610)
(5,388)
(1,090)
(198)
(312)
-
8,424
466
6,379
2017
$’000
8,039
(1,660)
6,379
-
(2)
(2)
2016
$’000
(12,236)
(3,671)
5,005
213
6,866
(5,198)
1,683
(44)
(202)
-
86
-
260
4,998
2016
$’000
6,440
(1,442)
4,998
-
(431)
(431)
GTN Limited
For the year ended 30 June 2017
66
66
The recognition of deferred tax assets is limited to the extent that the Company anticipates making sufficient
taxable profits in the future to absorb the reversal of the underlying timing differences. The Company has an
unrecognised deferred tax asset of $5,473 thousand (2016: $10,395 thousand) in relation to the tax losses as
management does not anticipate the Company will make sufficient taxable profits in the foreseeable future to
utilise this asset.
96++
10 Auditor’s remuneration
Auditor remuneration details are as follows:
Audit and other assurance services
Auditors of the Company:
Audit and review of financial statements
Other assurance services
Due diligence
Remuneration from audit and other assurance services
Taxation services
Auditors of the Company:
Tax compliance
Tax advice on mergers and acquisitions
Due diligence
Remuneration for taxation services
2017
$
2016
$
830,000
842,000
123,000
953,000
1,189,000
2,031,000
441,000
49,000
139,000
629,000
244,000
167,000
1,956,000
2,367,000
Total auditor’s remuneration
1,582,000
4,398,000
*Included in the above fees are amounts paid to network firms of PricewaterhouseCoopers Australia.
11 Cash and cash equivalents
Cash and cash equivalents consist the following:
Cash at bank and in hand:
Cash at bank and in hand
Short term deposits
Cash and cash equivalents
12 Trade and other receivables
Trade and other receivables consist of the following:
Trade receivables
Allowance for doubtful debtors
Trade receivables
2017
$’000
97,339
3,388
100,727
2017
$’000
54,363
(685)
53,678
2016
$’000
49,063
-
49,063
2016
$’000
34,370
(745)
33,625
GTN Limited
For the year ended 30 June 2017
67
67
All amounts are short-term. The net carrying value of trade receivables is considered a reasonable
approximation of fair value.
All of the Company’s trade and other receivables have been reviewed for indicators of impairment. Certain
trade receivables were found to be impaired and impairment losses of $145 thousand (2016: $103 thousand)
has been recorded accordingly within selling, general and administrative expenses.
The movement in the allowance for doubtful debts can be reconciled as follows:
Balance 1 July
Amounts written off (uncollectable)
Impairment reversal (loss)
Balance 30 June
Trade receivables aging analysis at 30 June is:
Not past due
Not more than 3 months
More than 3 months
Total
2017
$’000
(745)
205
(145)
(685)
2017
$’000
37,515
12,352
4,496
54,363
2016
$’000
(672)
30
(103)
(745)
2016
$’000
29,934
2,112
2,324
34,370
13 Other assets
Other assets reflected on the consolidated statement of financial position consist of the following:
Current
Prepaid station affiliate contract(i)
Option to purchase business
Prepaids and other current assets
Non-Current
Prepaid station affiliate contract(i)
Other assets
2017
$’000
3,444
-
1,398
4,842
97,927
317
98,244
2016
$’000
834
268
788
1,890
98,831
268
99,099
(i) ATN made a $100 million prepayment of station compensation to a radio station group in February 2016.
This is being accounted for as a financing arrangement whereby ATN will record non-cash interest income
over the term of the contractual agreement, based on an estimate of radio station group’s incremental
borrowing rate with similar terms (estimated to be 8.5% per annum), which will reduce over time as the
prepayment is amortised. ATN will also record station compensation expense over the contract period equal
to the $100 million prepayment plus the total non-cash interest income, which will be recognised on a straight
line basis over the 30 year contract term. ATN will make annual recurring cash payments commencing on 1
February 2017 of $2.75 million payable on a monthly basis that will be indexed by the lower of CPI and 2.5%.
ATN will record an additional station compensation expense over the contract period equal to the total
recurring indexed cash payments, which will be recognised straight line over the 30 year contract term.
GTN Limited
For the year ended 30 June 2017
68
68
14 Goodwill
The movements in the net carrying amount of goodwill and trade names (Note 15) are as follows:
Gross carrying amount
Balance 1 July
Trade names
2017
$’000
2016
$’000
12,464
12,663
Acquired goodwill & tradenames
Net exchange difference
Carrying amount at 30 June
-
(123)
12,341
-
(199)
12,464
Goodwill
2017
$’000
96,258
2,143
(404)
97,997
2016
$’000
97,465
-
(1,207)
96,258
Due to the long term and indefinite nature of goodwill and trade names, amortisation expense is not reflected
and the Company annually reviews goodwill and trade names for impairment.
Due to the retrospective restatement of the financial statements discussed in Note 3.1, the carrying amount of
goodwill increased as follows:
Gross carrying amount
Balance 1 July
Net exchange difference
Carrying amount at 30 June
$’000
Previous
93,885
(1,169)
92,716
Goodwill
2016
$’000
Adjustment
3,580
(38)
3,542
$’000
Restated
97,465
(1,207)
96,258
Impairment testing
For the purpose of annual impairment testing, goodwill and trade names are allocated to the following cash-
generating units, which are the units expected to benefit from the synergies of the business combinations in
which the goodwill and trade names pertain.
Australia
Canada
United Kingdom
United States
Goodwill and trade names allocation at 30 June
2017
$’000
96,223
3,776
8,279
2,060
110,338
2016
$’000
96,080
3,908
8,734
-
108,722
The recoverable amounts of the cash-generating units were determined based on value-in-use calculations,
covering a detailed five-year forecast, followed by an extrapolation of expected cash flows for the units’
remaining useful lives using the growth rates determined by management. The present value of the expected
cash flows of each segment is determined by applying a suitable discount rate.
GTN Limited
For the year ended 30 June 2017
Growth rates and discount rates used in calculations:
69
69
Australia
Canada
United Kingdom
United States
Australia
Canada
United Kingdom
United States
Discount Rates
2017
Pre-Tax
2016
Pre-Tax
10.8%
15.8%
15.8%
25.0%
10.9%
15.8%
15.8%
N/A
Average Growth Rates
Revenue
EBITDA
2017
2016
2017
2016
5%
6%
1%
5%
7%
1%
7%
18%
0%
10%
27%
(3%)
32%
N/A
NM(1)
N/A
(1) NM – Not meaningful as beginning EBITDA is negative
Growth rates
The growth rates reflect lower than the historic revenue growth rate of respective cash-generating units in the
local currency of the respective units (excluding the newly acquired United States cash generating unit).
Expenses are then estimated based on a projected growth rate if fixed in nature or in relation to revenue if
variable. The base year for each calculation is the Company’s approved internal budget for the coming fiscal
year. The long term growth rate utilized was 1%.
Discount rates
The discount rates reflect appropriate adjustments relating to market risk and specific risk factors of each
unit.
Cash flow assumptions
The calculations use cash flow projections based on financial budgets approved by management covering a
five-year period. Cash flows beyond the five-year period assume a 1% long term growth rate which does not
exceed the long-term average growth rates for the industry in which each CGU operates.
Significant estimate: Impact of possible changes in key assumptions
Management is not currently aware of any other reasonably possible changes in key assumptions that would
result in impairment.
Intangible assets
15
Detail of the Company’s intangible assets and their carrying amounts are as follows:
Gross carrying amount
Station
contracts
$’000
Advertising
contracts
$’000
Software
$’000
Trade names
$’000
Total
$’000
70
GTN Limited
For the year ended 30 June 2017
Balance at 1 July 2016
Acquired intangibles
Net exchange differences
Balance at 30 June 2017
Amortisation
Balance at 1 July 2016
Amortisation
Net exchange differences
Balance at 30 June 2017
Carrying amount 30 June 2017
Gross carrying amount
Balance at 1 July 2015
Net exchange differences
Balance at 30 June 2016
Amortisation
Balance at 1 July 2015
Amortisation
Net exchange differences
Balance at 30 June 2016
Carrying amount 30 June 2016
88,106
13,896
(1,402)
100,600
65,346
9,194
(997)
73,543
(29,892)
(65,346)
(6,754)
297
(36,349)
64,251
89,481
(1,375)
88,106
(23,969)
(6,575)
652
(29,892)
58,214
(1,051)
667
(65,730)
7,813
66,360
(1,014)
65,346
(55,303)
(10,807)
764
(65,346)
-
-
12,464
165,916
70
1,055
(41)
1,014
-
(201)
3
(198)
816
-
-
-
-
-
-
-
-
-
(123)
24,145
(2,563)
12,341
187,498
-
-
-
-
12,341
12,663
(199)
12,464
-
-
-
-
12,464
(95,238)
(8,006)
967
(102,277)
85,221
168,504
(2,588)
165,916
(79,272)
(17,382)
1,416
(95,238)
70,678
The Company expects to either renew or replace its advertiser contracts and software and renew its station
contracts beyond their expected life. Amortisation expense for the years ended 30 June 2017 and 30 June
2016 was $8,006 thousand and $17,382 thousand respectively. Indefinite life intangible assets (trade names)
are also subject to impairment testing as disclosed in Note 14.
16 Property, plant and equipment
Details of the Company’s property, plant and equipment and their carrying amount are as follows:
Gross carrying amount
Balance 1 July 2016
Additions
P,P & E of acquired entities
Disposals
Net exchange differences
Balance 30 June 2017
Depreciation and impairment
Balance 1 July 2016
Disposals
Net exchange differences
Depreciation
Balance 30 June 2017
Carrying amount 30 June 2017
Helicopters and
fixed wing
aircraft
$’000
Recording,
broadcasting
and studio
equipment
$’000
Furniture,
equipment and
other
$’000
15,987
3,187
-
-
(556)
18,618
(10,053)
-
335
(2,812)
(12,530)
6,088
697
53
-
-
(9)
741
(533)
-
7
(73)
(599)
142
1,561
289
169
-
(59)
1,960
(1,174)
-
34
(282)
(1,422)
538
Total
$’000
18,245
3,529
169
-
(624)
21,319
(11,760)
-
376
(3,167)
(14,551)
6,768
Helicopters and
fixed wing
Recording,
broadcasting
Furniture,
equipment and
Total
71
71
GTN Limited
For the year ended 30 June 2017
Gross carrying amount
Balance 1 July 2015
Additions
Disposals
Net exchange differences
Balance 30 June 2016
Depreciation and impairment
Balance 1 July 2015
Disposals
Net exchange differences
Depreciation
Balance 30 June 2016
Carrying amount 30 June 2016
aircraft
$’000
and studio
equipment
$’000
other
$’000
13,867
1,948
(185)
357
15,987
(7,967)
185
(93)
(2,178)
(10,053)
5,934
688
10
-
(1)
697
(435)
-
1
(99)
(533)
164
1,569
312
(15)
(305)
1,561
(932)
15
15
(272)
(1,174)
387
$’000
16,124
2,270
(200)
51
18,245
(9,334)
200
(77)
(2,549)
(11,760)
6,485
17 Current and deferred tax assets and liabilities
Current taxes can be summarised as follows:
Current tax liabilities
2017
$’000
683
2016
$’000
2,320
Deferred taxes arising from temporary differences can be summarised as follows:
1 July 2016
$’000
Recognised
in OCI*
$’000
Recognised
in Profit
and Loss
$’000
30 June 2017
$’000
Deferred Tax Assets
Annual leave accrual
Long service leave provision
Audit accrual
Superannuation accrued
Deferred rent
Hedging
Allowance for doubtful debts
Foreign exchange differences
Deferred transaction costs
Fixed asset depreciation
Net tax losses
Other
227
350
166
28
21
-
158
-
3,511
-
2,865
4
7,330
Set-off of deferred tax liabilities
pursuant to set-off provisions
Net deferred tax assets
(7,330)
-
* Other Comprehensive Income
-
-
-
-
-
2
-
-
-
-
-
-
2
133
82
(166)
(4)
-
-
(59)
6
(961)
355
3,435
(4)
2,817
360
432
-
24
21
2
99
6
2,550
355
6,300
-
10,149
(5,470)
4,679
GTN Limited
For the year ended 30 June 2017
72
72
Deferred Tax Liabilities
1 July 2016
$’000
Recognised
in OCI*
$’000
Recognised
in Profit
and Loss
$’000
30 June 2017
$’000
Intangibles
Deemed U.S. branch attribution
Prepaid expenses
Other
Set-off of deferred tax assets
pursuant to set-off provisions
Net deferred tax liabilities
* Other Comprehensive Income
18,203
2,229
670
7
21,109
(7,330)
13,779
-
-
-
-
-
(90)
(241)
1,494
(6)
1,157
18,113
1,988
2,164
1
22,266
(5,470)
16,796
Deferred tax assets consist of:
Current
Non-current
Deferred tax liabilities consist of:
Current
Non-current
2017
$’000
2016
$’000
647
9,502
10,149
-
22,266
22,266
839
6,491
7,330
-
21,109
21,109
During the year ended 30 June 2017, CTN recognized previously unrecognized deferred tax assets, primarily
related to previous years’ net operating losses. This was due to CTN generating taxable income during the
period and the expectation that taxable income would continue at least at this amount in the future. Based
upon current performance, the net operating losses of CTN would be fully utilized well before the statute of
limitations to use the losses, which is 20 years. The balance of the CTN recognized net operating loss at 30
June 2017 is $6,300 thousand.
Due to the retrospective restatement of the financial statements discussed in Note 3.1, the carrying amount of
deferred tax liabilities increased as follows:
Carrying amount at 30 June
Deferred tax liabilities
2016
$’000
Previous
10,237
$’000
Adjustment
3,542
$’000
Restated
13,779
18 Trade and other payables
Trade and other payables recognised consist of the following:
Current
Trade payables
2017
$’000
20,906
2016
$’000
17,459
GTN Limited
For the year ended 30 June 2017
Accrued payroll expenses
Accrued expenses and other liabilities
Non-current
Due to related parties
7,045
29,662
57,613
66
66
5,356
4,443
27,258
68
68
73
73
All current amounts are short-term. The carrying values of trade payables and other payables are considered
to be a reasonable approximation of fair value.
Goods and services, sales and value added taxes, which are charged by vendors to operating subsidiaries in
Australia, Canada and United Kingdom are included in trade payables until paid. The net amount of goods
and services, sales and value added tax payable (after deduction of amounts paid to vendors of the Company)
is included as a component of trade and other payables on the consolidated statement of financial position.
19 Provisions
Current
Long service leave provision
Non-Current
Long service leave provision
Lease restoration
2017
$’000
1,167
1,167
272
137
409
1,576
2016
$’000
855
855
312
140
452
1,307
The current portion of the long service leave provision includes all amounts that are either unconditional or
scheduled to become unconditional within 12 months. The entire amount of the unconditional and
scheduled to become unconditional long service leave are presented as current since the Company does not
have the unconditional right to defer settlement. However, based on past experience the Company does not
expect all employees to take the full amount of their long service leave or require payment within the next 12
months.
20 Deferred revenue
Deferred revenue
2017
$’000
5,430
5,430
2016
$’000
544
544
Payments received or amounts invoiced in advance are deferred until earned and such amounts are included
as a component of deferred revenue. The increase in deferred revenue from the year ended 30 June 2016 to
30 June 2017 was primarily due to the assumption of unfulfilled revenue liabilities as part of the Radiate
Media acquisition (Note 34).
21
Financial liabilities
Current
2017
$’000
2016
$’000
GTN Limited
For the year ended 30 June 2017
Current portion of long term debt
Non-current
Long term debt, less current portion
-
-
97,569
97,569
-
-
96,806
96,806
74
74
In February 2016, the Company amended its existing bank loan facilities to increase the total borrowing
capacity to $155 million primarily to finance the $100 million long term prepayment of a radio station
affiliation agreement. Facility A consisted of $15 million revolving line of credit, Facility B a $40 million term
loan and Facility C a $100 million bullet loan. Deferred financing costs of $3,735 thousand were incurred and
are being recognized in finance costs via the effective interest method over the term of the facilities. Part of
the proceeds from the IPO were used to repay Facility A and Facility B. Facility B was automatically
terminated as part of the repayment. At 30 June 2017, Facility C is outstanding and Facility A is available but
undrawn. A commitment fee of 45% of the applicable margin (currently 2.50%) is incurred on unutilized
portion of Facility A. The outstanding loans bear interest at BBSY plus the applicable margin.
Assets pledged as security
Bank loan facilities are secured by a first ranking charge over all ATN, Aus Hold Co, UK Hold Co, UKTN
and UK Commercial assets.
22 Derivatives
Interest rate collar contracts
(i) Classification of derivatives
Derivatives are classified as hedging instruments.
2017
$’000
5
5
2016
$’000
-
-
On 24 November 2011, as a requirement of the Term Loan, Aus Hold Co entered into fixed rate swap
agreements (“Interest Rate Swaps”) under which, effective 10 February 2012, 75% of the Term Loans’
outstanding balance (prior to any voluntary or mandatory prepayments under the excess cash flow sweep
provisions of the Term Loan) was fixed at 4.21% until November 11, 2016, the maturity date of the Term
Loan. Interest expense related to the Interest Rate Swaps was $0 and $1,256 thousand for the years ended 30
June 2017 and 30 June 2016, respectively, and is a component of finance costs on the consolidated statement
of profit or loss and other comprehensive income. The initial notional amounts of the Interest Rate Swaps
were each $28,688 thousand and reduced by a portion of the scheduled principal payments of the Term
Loans. The notional amount of the Interest Rate Swaps at 30 June 2017 and 2016 was $0. At inception and
on a quarterly basis, the Company determined that these Interest Rate Swaps were effective and therefore,
recorded the change in fair value of $799 thousand for the year ended 30 June 2016 in other comprehensive
income (net of taxes) on the consolidated statement of changes in equity. Since the Interest Rate Swaps have
been closed out, all of the recorded change in fair value has been re-classed from other comprehensive
income to finance costs in the consolidated statement of profit or loss and other comprehensive income.
Effective 9 August 2016, in satisfaction of the interest rate hedging requirements under the Term Loan, the
Company’s Aus Hold Co subsidiary entered into interest rate collar agreements for $50 million of the Facility
C bullet loan. The interest rate collar agreements expire effective 9 February 2018. The interest rate collar
GTN Limited
For the year ended 30 June 2017
75
75
agreements set a range of interest rates at which below the floor interest rate (based on one month BBSY)
Aus Hold Co pays the counter party the difference between the floor interest rate and actual interest rate on
the nominal amount of the interest rate collar agreements whilst the counter party pays Aus Hold Co any
difference between the ceiling interest rate and BBSY. The floor interest rate is 1.55% and the ceiling rate is
2.20%. Aus Hold Co incurred no upfront costs to enter into the interest rate collar agreements and through
30 June 2017 neither party has been required to make a payment to the other. At 30 June 2017, the fair value
of the interest rate collar was $5 thousand in favour of the counter party. Since the interest rate collar
agreements have been determined to be effective at inception and as of 30 June 2017, the expense related to
the change in fair value (net of taxes) has been charged to hedging reserve in other comprehensive income.
(ii) Fair value measurement
For information about the methods and assumptions used in determining the fair value of derivatives refer to
Note 4(d).
23 Other liabilities
Other
24 Earnings per share
Profit/(loss) attributable to shareholders from continuing operations
2017
$’000
77
77
2017
$’000
6,205
Weighted average number of ordinary shares used in calculating basic
earnings per share
Weighted average number of ordinary shares and potential ordinary
share used in calculating diluted earnings per share
213,697
213,697
2016
$’000
72
72
2016
$’000
(17,234)
161,284
161,284
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
$0.03
$0.03
$(0.11)
$(0.11)
At 30 June 2017 the Company had common stock equivalents of 1,614,844 outstanding in the form of
outstanding stock options. However, these common stock equivalents are excluded from the calculation of
diluted earnings per share since they are anti-dilutive due to the exercise price of the options exceeding the
Company’s share price on 30 June 2017.
25 Shareholders’ equity
At beginning of reporting period
Preferred equity dividends
Shares redeemed
Reverse existing capital structure (net)
Shares issued upon initial public offering net of
offering costs
2017
‘000’s
2017
$’000
2016
‘000’s
2016
$’000
Ordinary shares
Issued capital
Ordinary shares
Issued capital
201,212
378,948
158,503
-
-
-
-
-
-
-
-
-
(1,500)
-
248,717
25,681
(3,406)
27,314
44,209
80,642
GTN Limited
For the year ended 30 June 2017
Additional shares issued net of offering costs
At the end of the reporting period
23,509
224,721
66,033
444,981
-
201,212
76
-
378,948
76
Initial Public Offering
On 3 June 3 2016, the Company completed an initial public offering of its shares raising (net of capitalized
transaction costs) $80.6 million by issuing 44.2 million shares at an issue price of $1.90 per share. Funds
received by the Company were offset by $3.4 million in transaction costs (net of tax) incurred in relation to
the issue of the new shares in the Company. In addition to the shares issued by the Company, existing
shareholders sold 54.7 million shares of the Company’s stock. On completion of the initial public offering,
the original shareholders held 102.3 million shares of the Company’s stock. These shares were subject to a
voluntary escrow agreements. The escrow agreements for all the escrowed shares not previously released
expire on 4:15 PM on 31 August 2017, the date of the public announcement by the Company of its financial
results for the year ended 30 June 2017.
Shares
(‘000’s)
Amount
($,000’s)
Shares issued by Company
44,209
83,997
Less: Transaction expenses
-
(3,355)
Shares sold by original shareholders
54,706
103,942
Shares held by original shareholders
102,297
194,364
201,212
378,498
Prior to the offering, the Company was a Cayman limited partnership and as part of the restructuring the
existing preferred equity was converted to common shares of GTN Limited.
The number of ordinary shares outstanding has been adjusted retrospectively back to 1 July 2014 for the
corporate restructure described in Note 2.30. The comparative EPS balances have been calculated
accordingly.
In December 2016, the Company under took a fully underwritten 1 for 9.7 pro rata non-renounceable
entitlement offering to its existing shareholders for 20,744 thousand shares at $2.90 per share. The
institutional component was completed on 5 December 2016 and the retail component was completed on 20
December 2016.
The gross proceeds of $60,157 thousand were offset by costs related to the equity raising of approximately
$1,544 thousand and the net proceeds has been recognized as additional issued capital in the consolidated
statement of changes in equity. The purpose of the equity raising was to fund the post-acquisition start-up
costs of the Company’s entry in the United States and a substantial majority of the funds not expended for
that purpose were held in cash at 30 June 2017.
GTN Limited
For the year ended 30 June 2017
77
77
On 31 March 2017, pursuant to its dividend reinvestment plan, the Company issued 2,765 thousand shares at
$2.70 per share. The gross proceeds of $7,465 thousand were offset by costs related to the equity raising of
approximately $45 thousand and the net proceeds has been recognized as additional issued capital in the
consolidated statement of changes in equity. The dividend per share was $0.056. The purpose of the equity
raising was to fund the post-acquisition start-up costs of the Company’s entry in the United States and a
substantial majority of the funds not expended for that purpose were held in cash at 30 June 2017.
At 30 June 2017 the Company had a franking balance of $2,398 thousand.
26 Equity based compensation
As of 30 June 30 2017 and 2016 there were 1,614,844 and 0 outstanding stock option grants outstanding,
respectively under the Company’s Long-term Incentive Plan (“the Plan”). Options granted under the Plan
vest (subject to performance conditions) on an annual basis over three years (one third after two years and
the remaining grant after three years) and expire after five years from the date of the grant. The Plan allows
for cashless exercise under which employees surrender shares in lieu of paying the cash exercise price and
remitting the required amounts to satisfy tax withholding obligations. The Company does not anticipate
incurring cash costs under the Plan (other than de minimus payroll tax withholdings) since it does not
currently repurchase shares issued with regards to the Plan.
Stock Options
Under AASB 2, share-based compensation benefits are provided to employees via the Plan. The maximum
term of the options granted under the Plan is five years. The fair value of rights granted under the Plan is
recognised as an employee benefits expense with a corresponding increase in equity. The fair value is
measured at grant date and recognised over the period during which the employee becomes unconditionally
entitled to the rights.
The fair value at grant date is independently determined using a number of methods including the Monte-
Carlo option pricing model and the Binomial option pricing model which take into account the exercise price,
the term of the right, the vesting and performance criteria, the volume weighted average share price at grant
date, the expected price volatility of the underlying shares, the expected dividend yield and the risk free
interest rate for the term of the right.
The fair value of the rights granted is adjusted to reflect the market vesting condition, but excludes the impact
of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the
number of rights that are expected to become exercisable. At each reporting date, the Company revises its
estimate of the number of rights that are expected to become exercisable.
The employee benefits expense recognised each period takes into account the most recent estimate. The
impact of the revision to the original estimates is recognised in profit or loss with a corresponding adjustment
to equity. Shares related to the exercise of vested options under the Plan are issuable upon payment of the
strike price to the Company.
The performance criteria for vesting criteria are as follows:
Performance
Metrics
50% subject to performance condition based on the Company’s relative total
shareholder return (TSR) compared to members of the ASX 300 (excluding
financials and resources) over the performance period
TSR ranking
Up to and including the 50th percentile
Between the 51st and 75th percentile (inclusive)
Percentage to vest
0%
Pro rata straight line
between 50% and
100%
At and above 75th percentile
100%
GTN Limited
For the year ended 30 June 2017
78
78
50% subject to performance condition based on Company’s earnings per
share (EPS) growth (adjusted for one-off items associated with the IPO and
amortisation of intangibles and excluding United States Traffic Network,
LLC operations, as determined by the Board) over the performance period
EPS Compound annual growth rate
Less than threshold
Between threshold and stretch target (inclusive)
Percentage to vest
0%
Pro rata straight line
between 50% and
100%
Above stretch target
100%
The inputs used in the measurement of the fair values at grant date were as follows:
Grant date
Expiration date
Share price at grant date
5-day VWAP at grant date
Fair value at grant date
Exercise price
Expected volatility (based on historic and
expected volatility of Company’s shares)
Expected life
Expected dividends
Risk-free interest rate (based on government
bonds)
30 June 2017
5 April 2017
31 December 2021
$2.74
$2.72
$0.695
$2.74
45.00 %
4.75 years
4.00 %
2.14 %
The Company’s outstanding stock options as of 30 June 2017 were as follows:
Balance, 30 June 2016
Exercisable, 30 June 2016
Grants
Exercised
Forfeitures/expirations
Balance, 30 June 2017
Exercisable, 30 June 2017
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Fair
Value
,000’s
Shares
- $
- $
-
-
1,614,844 $ 2.74
-
$
-
$
1,614,844 $ 2.74
-
- $
-
-
-
— $
— $
-
— $ 1,122
-
— $
-
— $
4.50 years $ 1,122
-
— $
Based on the following assumptions, the fair value with regards to all options issued and outstanding as of 30
June 2017 is $1,122 thousand. As of 30 June 2017, there was $990 thousand of unrecognized compensation
cost related to non-vested share-based compensation under the Plan. The cost of the unrecognized
compensation is expected to be recognized over a weighted average period of 2.8 years on a pro rata basis
over the vesting period. This expense is based on an assumption that there will be no non-market forfeitures;
this assumption is based on the positions of the grantees of the stock options and the low number of
forfeitures under previous long term incentive plans of members of the Company’s group. The expense with
regards to stock options for the years ended 30 June 2017 and 2016 is $132 thousand and $0, respectively and
is included in selling, general and administrative expenses. The Company recognized $0 of income tax benefit
related to share-based compensation for the years ended 30 June 2017 and 2016.
GTN Limited
For the year ended 30 June 2017
79
79
Previous equity based compensation plan (terminated)
The Company terminated its equity based compensation plan as part of the restructuring related to the initial
public offering. Information related to the cancelled plans to the extent it impacts the financial statements is
provided below. The Partnership refers to GTCR Gridlock Holdings (Cayman), L.P. the predecessor of
GTN Limited.
The Partnership made available the equivalent of 4,832,730 of Class D LP units for incentive grants to
management and certain consultants (“Grantee”) of the Partnership.
The Class D LP units vested 20% on each of the first five anniversary dates of the grant and immediately
vested upon the sale of the Partnership but otherwise do not have a termination date. Upon separation of
employment, the Partnership may repurchase any unvested Class D LP units for the lower of a) the Grantee’s
original cost and b) fair market value. The Partnership may repurchase any vested Class D LP units at fair
market value, except in cases of termination for cause which such Class D LP units may be repurchased at the
same cost as unvested Class D LP units. In the event of a Grantee’s separation of employment, the
Partnership has six months to provide notice of its intent to repurchase the Class D LP units, which in certain
cases can be extended to up to eight months should not all the partners exercise their option to repurchase
the Class D LP units and these Class D LP units are offered to the partners already participating in the
purchase. Upon sale of the Partnership, the Partnership has the right to escrow 25% of the proceeds
(“Continuing Incentive Amount”) of the Class D LP units to ensure continued service from the Grantee at
their current compensation (excluding equity or other incentive based compensation) for one year. Should
the Grantee either complete the year of service or be terminated by the acquirer (except for cause) the escrow
shall be released to the Grantee otherwise the Continuing Incentive Amount shall be paid pro rata to the
Class B LP unit holders. The Class D LP unit agreement also contains a restrictive covenant which limits the
Grantees ability to compete with the Partnership (including its subsidiaries) for 48 months following the grant
date.
Due to the varying tax laws of the countries in which the Partnership’s subsidiaries operate, certain of these
incentive grants were structured as phantom equity units, which were intended to mirror the economics of
the Class D LP units (“Phantom Equity”). As such, the terms of individual country’s Phantom Equity units
vary from country to country in order to best reflect the economics of the Class D LP units. Each Phantom
Equity unit represents a contractual right to the economic value of a Class D LP unit. The Phantom Equity
units vest 20% on each of the first five anniversary dates of the grant and immediately vests upon the sale of
the Partnership but otherwise do not have a termination date. Any unvested Phantom Equity units are
forfeited upon separation of employment and all Phantom Equity units (vested and unvested) are forfeited if
the Grantee is terminated for cause. In the event of a Grantee’s separation of employment, the Partnership
for six months following the event has a cash-out option which allows the Partnership to repurchase the
vested Phantom Equity units at the fair market value of a hypothetical Class D LP unit with the same vesting
schedule and a participation threshold of USD $0.10 per unit. Upon sale of the Partnership, the Partnership
has the right to escrow 25% of the proceeds (“Continuing Incentive Amount”) of the Phantom Units to
ensure continued service from the Grantee at their current compensation (excluding equity or other incentive
based compensation) for one year. Should the Grantee either complete the year of service or be terminated
by the acquirer (except for cause) the escrow shall be released to the Grantee otherwise the Continuing
Incentive Amount shall be forfeited. Since the Phantom Equity units provide no rights to acquire equity in
the Partnership and it is expected that these Phantom Equity units will be cash-settled, the Phantom Equity
GTN Limited
For the year ended 30 June 2017
80
80
expense is treated as a liability rather than additional capital. The Phantom Equity unit agreement also
contains a restrictive covenant which limits the Grantees ability to compete with the Partnership (including its
subsidiaries) for 48 months following the grant date.
Noncash compensation expense related to Class D LP units (and Phantom Equity units) is included as a
component of selling, general and administrative expenses in the consolidated statements of operations and
was $0 thousand and $(170) thousand for the years ended 30 June 2017 and 30 June 2016, respectively. The
Partnership did not incur (other than de minimus) cash costs relating to the Class D LP units upon
termination of the plan. Class D LP units that are issued, outstanding or available for future issuance is
summarised below:
Class D LP units available for incentive compensation
Class D LP units outstanding
Phantom Equity outstanding (Class D LP unit equivalents)
Class D LP units available for issuance
Class D LP units outstanding, beginning of period
Class D LP units issued
Class D LP units cancelled
Class D LP units outstanding, end of period
Phantom Equity outstanding (Class D LP unit equivalents) outstanding,
beginning of period
Phantom Equity issued (Class D LP unit equivalents)
Phantom Equity cancelled (Class D LP unit equivalents)
Phantom Equity outstanding (Class D LP unit equivalents) end of period
2017
2016
-
-
-
-
2017
-
-
-
-
-
-
-
-
-
-
-
-
2016
3,572,018
-
(3,572,018)
-
840,955
-
(840,955)
-
The fair value of these units was estimated at the date of the grant with an option allocation methodology
utilising the Black-Scholes option pricing model. The option allocation methodology determines the fair
value of each participating class of equity based on the Partnership’s fair value of total equity and liquidation
preferences with the following assumptions:
(i)
(ii)
(iii)
(iv)
estimated term based on simplified plain-vanilla method (4 years),
a historical volatility over a period commensurate with the expected term based on observations of
volatility of publicly traded peers on a weekly basis (30.0%),
a risk-free interest rate consistent with the expected term and based on the U.S. Treasury yield curve in
effect at the time of the grant (0.71%),
annual dividend yield on preferred units consistent with the equity based compensation agreements
(8% for Class A LP units, 0% for Class B and Class D LP units). The Partnership estimated the fair
value of total equity at the date of grant using the market approach.
Based on these assumptions, the fair value with regards to all granted Class D LP units as of the grant date is
$1,985 thousand. As of 30 June 2017 and 30 June 2016, there was $0 and $0 of total unrecognised
compensation cost related to equity based compensation, respectively.
GTN Limited
For the year ended 30 June 2017
81
81
Based on these assumptions, the fair value with regards to all granted Phantom Equity units as of the grant
date is $435 thousand. As of 30 June 2017 and 30 June 2016, there was $0 and $0 of total unrecognised
compensation cost related to equity based compensation, respectively.
The Company recognised $0 thousand and $(29) thousand of income tax (expense)/benefit related to the
terminated equity-based compensation for the years ended 30 June 2017 and 30 June 2016, respectively.
Leases
27
The Company has various non-cancellable, long-term operating leases for its facilities, aviation services,
broadcast services and office equipment. The facility leases have escalation clauses and provisions for
payment of taxes, insurance, maintenance and repair expenses. Total expense under these leases is recognised
rateably over the lease terms or based on usage, based on the type of agreement. Renewal options are not
included in future minimum payments. Future minimum payments, by year and in the aggregate, under such
non-cancellable operating leases with initial or remaining terms of one year or more, consist of the following
as of 30 June 2017:
30 June 2017
30 June 2016
Within 1 year
$’000
3,435
1,759
Minimum Lease Payments Due
After 5 years
$’000
1 to 5 years
$’000
6,686
2,730
30
95
Total
$’000
10,151
4,584
The Company has an obligation to restore certain of its leased premises back to their original condition at the
end of their respective leases. As of 30 June 2017 and 30 June 2016, the Company had a liability of $137
thousand and $140 thousand, respectively, accrued which it anticipates to be the amount required to restore
the premises at the end of the leases.
The Company’s UK Commercial subsidiary outsources the majority of its radio traffic and entertainment
news operations pursuant to contracts with unrelated third parties. These expenses are a component of
network operations and station compensation expense on the accompanying consolidated statement of profit
or loss and other comprehensive income and are recognised over the term of the applicable contracts, which
is not materially different than when the services are provided. The minimum future payments under these
contracts are as follows:
30 June 2017
30 June 2016
Minimum Payments Due
Within 1 year
$’000
1 to 5 years
$’000
After 5 years
$’000
3,569
3,841
1,736
1,868
-
-
Total
$’000
5,305
5,709
The Company generally enters into multiyear contracts with radio and television stations. These contracts call
for the provision of various levels of service (including, but not limited to providing professional
broadcasters, gathering of information, communications costs and aviation services) and, in some cases, cash
compensation or reimbursement of expenses. Station compensation and reimbursement is a component of
network operations and station compensation expenses on the accompanying consolidated statement of
profit or loss and other comprehensive income and is recognised over the terms of the contracts, which is not
GTN Limited
For the year ended 30 June 2017
82
82
materially different than when the services are performed. Contractual station commitments consist of the
following:
30 June 2017
30 June 2016
Minimum Payments Due
Within 1 year
$’000
1 to 5 years
$’000
After 5 years
$’000
134,281
26,668
265,266
16,993
37,355
40,105
Total
$’000
436,902
83,766
The Company had no contingent liabilities at 30 June 2017.
28 Reconciliation of cash flows from operating activities
Details of the reconciliation of cash flows from operating activities are listed in the following table:
Cash flows from operating activities
Profit (loss) for the period
Adjustments for:
Allowance for doubtful accounts
Equity based compensation expenses
Amortisation of deferred borrowing costs
Fair value movement on derivatives
Depreciation and amortisation
Foreign currency loss
Non-cash station compensation from long-term prepaid affiliate contract
Interest income on long-term prepaid affiliate contract
Interest expense from amortisation of original issue discount
Net changes in working capital:
Change in trade and other receivables
Change in other assets
Change in deferred tax assets
Change in trade and other payables
Change in deferred revenue
Change in current tax liabilities
Change in provisions
Change in deferred tax liabilities
Change in other liabilities
Net exchange gain/(loss)
Net cash from operating activities
2017
$’000
2016
$’000
6,205
(17,234)
(60)
132
51
5
11,173
228
11,996
(8,471)
712
(6,010)
(6,058)
(4,679)
19,342
(2,080)
(1,637)
269
3,017
5
346
24,486
73
(170)
149
(1,229)
19,931
5,461
5,476
(3,581)
2,070
(4,850)
190
2,099
(613)
338
1,242
122
(4,558)
(707)
(143)
4,066
29 Related party transactions
The Company has entered into a professional services agreement with GTCR Management X LP, an affiliate
of the majority partnership owners, to provide management services. For the years ended 30 June 2017 and
30 June 2016 the Company incurred $0 and $635 thousand of expense, which is included as a component of
selling, general and administrative expenses in the consolidated statement of profit or loss and other
comprehensive income, respectively. The management agreement was terminated in June 2016.
As of 30 June 2017 and 30 June 2016, the Company had a liability of $66 thousand and $68 thousand to
entities affiliated with the majority shareholders.
GTN Limited
For the year ended 30 June 2017
83
83
30 Transactions with Key Management Personnel
Key Management Personnel remuneration includes the following expenses:
Total short term employee benefits
Total equity based compensation
Total remuneration
2017
$
2,120,079
131,862
2,251,941
2016
$
9,646,384
2,272
9,648,656
The Key Management Personnel are all paid in USD so a portion of the change in compensation from the
year ended 30 June 2016 to the year ended 30 June 2017 was due to changes in foreign exchange rates
between AUD and USD.
31 Parent Entity information
The below information relates to GTN Limited (the “Parent Entity”) which was incorporated on 2 July 2015.
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Share capital
Accumulated losses
Reserves
Total equity
Statement of profit or loss and Other Comprehensive Income
Profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss)
Guarantees entered into by the parent entity
2017
$’000
50,480
435,926
604
894
435,032
444,981
(9,949)
-
435,032
11,986
-
11,986
2016
$’000
27,544
370,688
1,245
1,245
369,443
378,948
(9,505)
-
369,443
(9,505)
-
(9,505)
In addition, there are cross guarantees given by GTN Limited (as holding entity), GTCR Gridlock Holdings
(Australia) Pty Limited (“Aus Hold Co”), The Australia Traffic Network Pty Limited (“ATN”), GTCR
Gridlock Holdings, Inc. (‘US Hold Co”) and Global Traffic Network, Inc. (“GTN”) as described in Note 32.
No liability was recognised by the parent entity or the group in relation to the above guarantees, as the fair
value of the guarantees is immaterial.
(b) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2017 or 30 June 2016. For information
about guarantees given by the parent entity, please see above.
GTN Limited
For the year ended 30 June 2017
32 Deed of cross guarantee
84
84
GTN Limited (as holding entity), Gridlock Holdings (Australia) Pty Limited (“Aus Hold Co”), The
Australia Traffic Network Pty Limited (“ATN”), GTN US Holdco, Inc. (‘US Hold Co”) and Global Traffic
Network, Inc. (“GTN”) are parties to a deed of cross guarantee under which each company guarantees the
debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the
requirement to prepare a financial report and directors’ report under ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785 issued by the Australian Securities and Investments Commission.
The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no
other parties to the deed of cross guarantee that are controlled by GTN Limited, they also represent the
‘extended closed group’.
(a) Consolidated statement of profit or loss and other comprehensive income, summary of movements
in consolidated retained earnings and consolidated statement of financial position
Set out below is a consolidated statement of profit or loss and other comprehensive income for the years
ended 30 June 2017 and 2016 of the closed group consisting of the above companies.
Consolidated statement of profit or loss and other
comprehensive income
Revenue
Other income
Interest income on long-term prepaid affiliate contract
Network operations and station compensation expenses
Selling, general and administrative expenses
Transaction expenses
Finance costs
Depreciation and amortisation
Foreign currency transaction loss
Profit (loss) before income tax
Income tax expense
Profit (loss) for the year
Other comprehensive income for the year, net of income tax
Unrealised (loss) gain on interest rate swaps
Total other comprehensive income for the year
2017
$’000
98,692
474
8,471
(48,345)
(19,690)
-
(5,235)
(5,434)
(194)
28,739
(10,528)
18,211
(5)
(5)
2016
$’000
89,813
238
3,581
(45,870)
(16,511)
(13,983)
(8,160)
(13,608)
(3,593)
(8,093)
(4,541)
(12,634)
799
799
Total comprehensive profit (loss) for the year
18,206
(11,835)
Summary of movement in consolidated retained earnings
Accumulated losses at the beginning of the financial year
Profit (loss) for the period
Dividends
Accumulated losses at the end of the financial year
(46,735)
18,211
(11,450)
(39,974)
(34,101)
(12,634)
-
(46,735)
Set out below is a consolidated balance sheet as at 30 June 2017 and 2016 of the closed group consisting of
the above companies.
Consolidated statement of financial position
2017
$’000
Restated*
2016
$’000
Assets
Current
85
85
GTN Limited
For the year ended 30 June 2017
Cash and cash equivalents
Trade and other receivables
Other current assets
Current assets
Non-current
Property, plant and equipment
Intangible assets
Goodwill
Investment in subsidiaries
Other assets
Non-current assets
Total assets
Liabilities
Current
Trade and other payables
Deferred revenue
Current tax liabilities
Provisions
Current liabilities
Non-current
Financial liabilities
Deferred tax liabilities
Derivatives
Other liabilities
Provisions
Total non-current
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
78,369
19,472
1,169
99,010
1,197
49,332
86,660
108,604
107,946
353,739
452,749
14,839
59
303
1,167
16,368
97,569
15,514
5
33
367
113,488
129,856
322,893
444,981
(82,114)
(39,974)
322,893
38,498
18,542
1,054
58,094
1,091
54,152
86,519
70,593
108,280
320,635
378,729
12,966
89
2,121
855
16,031
96,806
11,816
-
53
407
109,082
125,113
253,616
378,948
(78,597)
(46,735)
253,616
*Goodwill and deferred tax liabilities were restated in a manner consistent with the Company’s consolidated statement
of financial position discussed in Note 3.1.
33 Segment information
The Company’s chief operating decision maker, its chief executive officer analyses the Company’s
performance by geographic area and has identified five reportable segments: Australia, Brazil, Canada, United
Kingdom and United States.
The segments’ revenues are as follows:
Australia
United Kingdom
Canada
Brazil
United States
2017
$’000
2016
$’000
98,692
40,869
28,014
10,962
35,111
89,814
47,542
23,601
5,167
-
213,648
166,124
The chief operating decision maker tracks performance primarily by Adjusted EBITDA which is defined as
EBITDA adjusted for any foreign exchange profit or loss, interest income on the long-term prepaid affiliate
agreement, transaction costs and other unusual non-recurring items.
GTN Limited
For the year ended 30 June 2017
86
86
Adjusted EBITDA by Segments
Australia
United Kingdom
Canada
Brazil
United States
Other
Adjusted EBITDA
Foreign exchange loss
Transaction costs
Less: Interest income on long-term prepaid
affiliate contract
EBITDA
2017
$’000
2016
$’000
41,602
3,914
5,194
1,279
(19,922)
(3,132)
28,935
(228)
(202)
(8,471)
20,034
31,285
4,302
2,263
(1,315)
-
(1,434)
35,101
(5,461)
(14,029)
(3,581)
12,030
Depreciation and amortization
Interest income on long-term prepaid affiliate
contract
Financing costs net of interest income
Profit/(loss) before taxes and discontinued
operations
(11,173)
(19,931)
8,471
(4,748)
3,581
(7,916)
12,584
(12,236)
Segment assets and liabilities are classified by their physical location.
Segment assets
Total Assets:
Australia
United Kingdom
Canada
Brazil
United States
Total segment assets
Unallocated:
Deferred tax assets
Intercompany eliminations
Others
Total assets
Segment liabilities
Total liabilities
Australia
United Kingdom
Canada
Brazil
2017
$’000
2016
$’000
283,794
31,109
22,778
5,686
46,944
390,311
271,268
30,395
23,852
4,488
-
330,003
4,673
(926)
58,098
-
(1,486)
28,581
452,156
357,098
59,811
6,390
3,575
1,822
53,931
6,701
6,041
1,562
GTN Limited
For the year ended 30 June 2017
87
87
United States
Total segment liabilities
Unallocated:
Deferred tax liabilities
Borrowings
Derivatives
Intercompany eliminations
Others
Total liabilities
68,494
140,092
-
68,235
16,796
97,569
5
(76,951)
2,304
179,815
13,779
96,806
-
(50,970)
14,304
142,154
*Goodwill and deferred tax liabilities were restated in a manner consistent with the Company’s consolidated statement of financial
position discussed in Note 3.1
34 Business Combination
On 5 December 2016, the Company’s United States Traffic Network LLC (“USTN”) subsidiary acquired
substantially all the assets of Radiate Media LLC (“Radiate”), a company that provides traffic reporting
services and sells advertising on radio and television stations for consideration of approximately $18,067
thousand USD ($24,393 thousand AUD). The acquisition is expected to be the Company’s entry into the
United States market as the Radiate business is similar to that of the Group’s existing operations.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
Option payments previously paid
Purchase price hold-back
Total purchase consideration
$’000
22,027
338
2,028
24,393
The preliminary assets and liabilities recognized as a result of the acquisition are as follows (purchase
accounting has not been completed as of filing of report). In line with AASB3, the above fair values of
balances associated with the acquisition are provisional at the reporting date. The fair value of the assets and
liabilities recognised will be adjusted to reflect new information during the measurement period, and this will
not exceed one year from acquisition date:
Accounts receivable
Fair value $’000
13,983
88
88
GTN Limited
For the year ended 30 June 2017
Prepaids
Property, plant and equipment
Software
Station contracts
Advertiser contracts
Payables and accrued expenses
Deferred revenue
Net identifiable assets acquired
Add: goodwill
469
169
1,055
13,896
9,194
(9,550)
(6,966)
22,250
2,143
24,393
The goodwill is attributable to Radiate’s position as the second largest traffic report service in the United
States, which is the largest advertising market in the world. Goodwill related to the acquisition has been
allocated to the United States segment. The goodwill is expected to be deductible over fifteen years for
United States tax purposes.
The fair value of the station contracts and advertiser contracts of $23,090 thousand is provisional pending
completion of the final valuation of those assets. The station and advertiser contracts are expected to be
deductible for United States tax purposes over fifteen years which will differ from the amortization expense
recognition for financial reporting. No deferred tax has been recognized related to the acquisition at this
date.
Acquisition-related costs
Acquisition related costs of $202 thousand are included in transaction costs in the consolidated statement of
profit or loss and other comprehensive income.
Contingent consideration
There is no contingent consideration. However, the Company has held back $2,028 thousand from the
purchase consideration for post-closing liabilities not identified as of closing. This amount (adjusted for
identified differences in the preliminary purchase consideration) is included as a component of trade and
other payables in the accompanying consolidated statement of financial position.
GTN Limited
For the year ended 30 June 2017
Acquired receivables
89
89
The acquired receivables fair value is $13,983 thousand which consists of gross accounts receivable of
$14,393 thousand and an allowance for uncollectible accounts of $410 thousand. The fair value will be
adjusted to the amounts actually received via the holdback mechanism described above.
Revenue and loss contribution
The acquired business contributed revenue of $35,111 thousand and net loss of $21,967 thousand to the
group for the period from 5 December 2016 to 30 June 2017. On a pro forma basis, if the acquisition has
occurred on 1 July 2016, preliminary consolidated revenue and consolidated loss after tax for the year ended
30 June 2017 would have been $57,844 thousand and $24,112 thousand, respectively.
35 Events subsequent to the reporting period
No matters or circumstances have arisen since the end of the financial year which significantly affected or
may significantly affect the operations of the group, the results of those operations, or the state of affairs of
the group in future financial years.
GTN Limited
For the year ended 30 June 2017
Directors’ declaration
In the directors’ opinion:
90
90
(a)
The financial statements, set out on pages 35 to 89 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 30 June 2017 and of
its performance for the financial year ended on that date, and
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable, and
at the date of this declaration, there are reasonable grounds to believe that the members of the closed
group identified in Note 32 will be able to meet any obligations or liabilities to which they are, or may
become, subject to virtue of the deed of cross guarantee described in Note 32.
Note 2.1 confirms that the financial statements also comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer
required by section 295A of the Corporations Act 2001.
Robert Loewenthal
Chairman
Dated, this 31th day of August 2017
91
Independent auditor’s report
To the shareholders of GTN Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of GTN Limited (the Company or GTN) and its controlled entities
(together, the Group) is in accordance with the Corporations Act 2001, including:
a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of its
financial performance for the year then ended
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group’s financial report comprises:
the Consolidated Statement of Financial Position as at 30 June 2017
the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year then
ended
the Consolidated Statement of Changes in Equity for the year then ended
the Consolidated Statement of Cash Flows for the year then ended
the Notes to the Consolidated Financial Statements, which include a summary of significant
accounting policies
the Directors’ Declaration
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the
financial report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
92
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free
from material misstatement. Misstatements may arise due to fraud or error. They are considered
material if individually or in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and management structure of the
Group, its accounting processes and controls and the industry in which it operates.
GTN is the largest supplier of traffic information reports to radio stations in Australia, Canada, the United
Kingdom and Brazil. In December 2016, the Group established its presence in the United States through
the acquisition of Radiate Media, which is one of the leading short form advertising platforms in the
United States. In exchange for providing these reports, GTN receives commercial advertising spots
adjacent to traffic, news and information reports. These spots are bundled together by GTN and sold to
Advertisers. The financial report is a consolidation of these 5 geographical operating segments.
Materiality
For the purpose of our audit of GTN Limited (the Company or GTN) and its controlled entities
(together, the Group) we used overall quantitative materiality of $629,000, which represents 5% of the
Group’s profit before tax.
We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
We chose Group profit before tax because, in our view, it is the metric against which the performance of the
Group is most commonly measured and is a generally accepted benchmark.
We selected 5% based on our professional judgement noting that it is also within the range of commonly
acceptable profit related thresholds.
Audit scope
Our audit focused on where the directors made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
We conducted full scope audit work over Australia, the United States, Canada and the United Kingdom
operating segments. We engaged auditors from another PwC network firm to conduct a full scope audit over the
United Kingdom. Audit instructions were issued by our Group audit team from the PwC Australia firm to the
component audit team. On-going dialogue was held throughout the year between the Group audit team and
the component audit team including consideration of how component audits are planned and executed.
Where the directors made subjective judgements; for example, significant accounting estimates involving
assumptions and inherently uncertain future events, we focused our audit work on these areas.
Key audit matters
Amongst other relevant topics, we communicated the following key audit matters to the Audit and Risk
93
Committee:
– Recoverability of long-term prepaid affiliate contract
– Impairment of goodwill and indefinite life intangible assets
– Completeness, Valuation and Accuracy of Income taxes
– Fair value assessment on acquisition of Radiate
They are further described in the Key audit matters section of our report
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report for the current period. The key audit matters
were addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. Further, any
commentary on the outcomes of a particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Recoverability of long-term prepaid affiliate contract
Refer to
Note 2.24 Long-term prepaid affiliate contract
Note 2.26 Significant management judgement in
applying accounting policies and estimation
uncertainty compensation
This is a key audit matter because of the magnitude of the
contract prepayment ($100m) and because the assessment of
recoverability involves significant judgement.
The contract is to provide a service over 30 years which has
been paid for upfront. Management’s assessment of
recoverability of the asset held includes consideration of
factors including the number of advertising spots received,
market conditions for the advertising spots, ratings of the
stations, counter party risk (i.e. the financial viability of the
provider of the advertising spots and its ability to continue to
meet its obligations).
We assessed the terms of the contract in light of the
Group’s accounting policies.
We evaluated management’s assessment of recoverability
of the asset held by assessing internal and external
information including:
average sell-out rates of advertising spots
provided by the Affiliate;
meeting minutes of the Board and key
management personnel;
information about the Affiliate such as ASX
market announcements, latest publically
available financial information;
information about the media industry was
considered such as ‘IBISWorld Industry Report
J5610 - Radio Broadcasting in Australia’ and
the 'PwC Australia Australian Entertainment and
Media Outlook 2017 - 2021.
We assessed the disclosure for compliance with the
Group’s accounting policies.
Impairment of goodwill and indefinite life intangible assets
Refer to
We performed the following procedures:
Note 2.9 Goodwill
Note 2.13 Impairment testing of goodwill, other
intangible assets and property, plant and equipment
Note 2.26 Significant management judgement in
applying accounting policies and estimation
uncertainty
The goodwill and trade names balance is $110.3 million. This
is a key audit matter because of the magnitude of the balance
and the judgement involved in the assessment of potential
impairment as at 30 June 2017.
evaluated and challenged management’s cash flow
forecasts and the process by which they were
developed.
tested that the forecast cash flows used in the
impairment model were consistent with the most up-
to-date budgets and business plans formally approved
by the Board, including the publicly released
company Prospectus.
compared previous forecasts to actual results, to
assess the performance of the business and the
accuracy of management’s forecasting. Actual results
Key audit matter
The Group’s impairment assessment includes assumptions in
the forecasted future results of each CGU including terminal
growth rate, revenue forecasts and the discount rates applied to
future cash flow forecasts.
Valuation, Completeness and Accuracy of Income taxes
Refer to
Note 2.15 Income Taxes
Note 2.26 Significant management judgement in
applying accounting policies and estimation
uncertainty
We consider this to be a key audit matter due to the multiple
tax jurisdictions in which the Group operates and the
judgement involved in recognition of deferred tax balances.
How our audit addressed the key audit matter
for the current year were found to be in line with
forecast.
94
We challenged the following assumptions in the forecast
using internal valuation experts,:
terminal growth rate - by comparing it to economic
and industry forecasts; and
discount rate - by assessing the costs of capital for the
Group against comparable organisations, as well as
considering territory specific factors.
We tested the sensitivity calculations by varying the
assumptions. We determined the impairment testing result
was most sensitive to assumptions for revenue and
EBITDA growth rates and discount rates.
We worked with our internal taxation experts from both
Australia and another PwC network firm in the audit of
balances relating to the Group’s consolidated tax position.
This included:
assessment of uncertain tax positions and challenge of
management’s position with consideration being
given to applicable tax law, relevant case law and
alternate positions.
evaluation of management’s assessment of the
recoverability of deferred tax balances and assessment
of indicators of impairment or non-recoverability
based on consideration of factors such as taxable
income status.
testing the accuracy of deferred tax balances and
income tax expense recognised by management in the
Consolidated Statement of Profit or Loss and Other
Comprehensive Income and Consolidated Statement
of Financial Position.
Fair value assessment on acquisition of Radiate
Refer to
We performed the following audit procedures to assess the
fair value assessment performed by management:
Note 34 Business Combinations
Note 2.26 Significant management judgement in
applying accounting policies and estimation
uncertainty
During the year, the Group exercised the option to acquire
substantially all of the assets of Radiate Media LLC.
The acquisition is a key audit matter because of the magnitude
of the balances acquired and the determination of fair values of
the assets and liabilities acquired and allocation of the
purchase price involves judgement.
We read purchase agreements relating to the acquisition
and due diligence reports in relation to the acquisition to
consider the appropriateness and completeness of
managements accounting treatments in light of the
terms and conditions of the agreements.
For the valuation of advertising relationships and station
contracts we performed the following procedures with the
assistance of internal valuation experts:
assessed the competence of management’s experts by
considering their qualifications and experience
assessed the valuation methodology used to value the
intangible assets
assessed the useful economic lives of the assets
assessed the discount rate and revenue and EBITDA
forecasts used in the valuation
95
Key audit matter
How our audit addressed the key audit matter
We assessed the disclosure of the business combination for
compliance with the Group’s accounting policies.
Other information
The directors are responsible for the other information. The other information comprises the
Chairman and Chief Executive Officer’s Letter, “About GTN”, Corporate Governance,
Director’s Report, Shareholder Information and Corporate Directory included in the Company’s
annual report for the year ended 30 June 2017 but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is
materially inconsistent with the financial report or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with the Australian Auditing Standards will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
96
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 22 to 33 of the directors’ report for
the year ended 30 June 2017.
In our opinion, the remuneration report of GTN Limited, for the year ended 30 June 2017
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the remuneration report, based on our audit conducted
in accordance with Australian Auditing Standards.
PricewaterhouseCoopers
M W Chiang
Partner
Sydney
31 August 2017
SHAREHOLDER INFORMATION AS AT 1 August 2017
Number of security holders and securities on issue
Quoted equity securities
GTN has 224,720,643 fully paid ordinary shares on issue which are held by 328
shareholders.
Unquoted equity securities
GTN has no unquoted equity securities.
Voting rights
Quoted equity securities
The voting rights attached to fully paid ordinary shares are that on a show of hands,
every member present, in person or proxy, has one vote and upon a poll, each share
shall have one vote.
Distribution of security holders
Quoted equity securities
Fully paid ordinary shares
Number of
shareholders
66
124
38
73
27
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
–
and
10,001
100,000
100,001
over
Total
Number of
shares
%
28,792
223,742
307,794
1,892,996
222,267,319
20.12
37.80
11.59
22.26
8.23
100
328
224,720,643
97
Unmarketable parcel of shares
The number of shareholders holding less than a marketable parcel of fully paid ordinary
shares is 25.
227 fully paid ordinary shares comprise a marketable parcel at GTN’s closing share
price of $2.21 as at 1 August 2017.
Substantial shareholders
The number of securities held by substantial shareholders and their associates as
notified to ASX are set out below:
Fully paid ordinary shares
Name
Number of
Shares
102,296,985*
21,208,710
Current
Interest
50.80%
9.44%
Notice Date
06/06/2016
08/06/2017
GTCR Funds
Smallco Investment
Manager Limited
JCP Investment Partners
Ltd
Ausbil Investment
Management Limited
Renaissance Smaller
Companies Pty Ltd
Devon Funds Management
Limited
*includes 3,426,717 shares held on escrow by William Louis Yde III
18,086,987
13,226,174
8.05%
6.57%
12,764,407
11,257,094
5.75%
5.59%
24/04/2017
08/09/2016
19/12/2016
23/06/2016
Twenty largest shareholders
Fully paid ordinary shares
Details of the 20 largest shareholders of quoted securities by registered shareholding
are:
Name
1
2
3
4
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY
LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
Number of
shares
%IC
109,063,335
48.53
32,637,856
17,446,668
16,147,579
14.52
7.76
7.19
98
5
6
7
8
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
BNP PARIBAS NOMS (NZ) LTD
UBS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
9 MR WILLIAM L YDE III
10 MIRRABOOKA INVESTMENTS LIMITED
11
CITICORP NOMINEES PTY LIMITED
12 ANACACIA PTY LIMITED (WATTLE FUND)
13 UBS NOMINEES PTY LTD
14
CS FOURTH NOMINEES PTY LIMITED
15 MRS EVA XIRADIS
16 BNP PARIBAS NOMS PTY LTD
17
18
BRISPOT NOMINEES PTY LTD
RBC INVESTOR SERVICES AUSTRALIA
NOMINEES PTY LIMITED
19 COFLINK PTY LIMITED
20 WILLRYAN PTY LIMITED
Total
Balance of register
Grand total
Voluntary escrow
Escrow period – GTCR Funds
13,082,931
12,699,779
6,737,742
4,509,028
3,603,408
790,625
727,033
697,136
683,853
511,357
448,959
412,899
390,025
5.82
5.65
3.00
2.01
1.60
0.35
0.32
0.31
0.30
0.23
0.20
0.18
0.17
290,000
0.13
241,632
200,000
221,321,845
3,398,798
0.11
0.09
98.49
1.51
224,720,643 100.00
25% of Shares held by GTCR Funds (as defined in GTN’s Prospectus dated 12 May
2016) held in voluntary escrow commencing on the date on which completion of the
Offer occurred were released from escrow on 13 March 2017. The remaining 75% of
Shares held by GTCR Funds will be released from escrow after 4.15pm on the date of
the public announcement by GTN of its financial results for FY2017.
No shares will remain in escrow after this release.
Escrow period – William Yde III
All Shares held in voluntary escrow commencing on the date on which completion of the
Offer occurred by William Yde III will be released from escrow after 4.15pm on the date
of the public announcement by GTN of its financial results for FY2017.
99
No shares will remain in escrow after this release.
On-market buy-back
There is no current on-market buy-back.
Use of Funds
In accordance with Listing Rule 4.10.19, the Group states that it has used the cash and
assets for the whole reporting period in a form readily convertible to cash that it had at
the time of admission in a way consistent with its business objectives.
100
Corporate Directory
Directors
Robert Loewenthal - Independent Non-Executive Chairman
William Yde III - Chief Executive Officer and Managing Director
Mark Anderson - Non-Executive Director
David Ryan AO – Independent Non-Executive Director
Company secretaries
Anna Sandham
Patrick Quinlan
Registered office
Share register
Auditor
Level 42, Northpoint
100 Miller Street
North Sydney NSW 2060
Telephone: +61 2 9955 3500
Link Market Services Limited
Level 12
680 George Street
Sydney, NSW 2000
Share registry telephone: +61 1300 554 474
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay, Barangaroo
GPO Box 2650
Sydney, NSW 2001
Stock exchange listing
GTN Limited shares are listed on the Australian Securities
Exchange (ASX code: GTN)
Website
www.gtnetwork.com.au
ABN 38 606 841 801
101