ANNUAL REPORT
infomedia.com.au
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2018 Annual Report 2018 Annual Report
TABLE OF CONTENTS
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5
CHAIRMAN’S REPORT
CEO’S REPORT
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9
PRODUCT OVERVIEW
VOICE OF THE CUSTOMER
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11
NAVIGATING GLOBAL, STEERING LOCAL
DIRECTORS’ BIOGRAPHIES
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17
DIRECTORS’ REPORT
REMUNERATION REPORT
35
LEAD AUDITOR’S INDEPENDENCE
DECLARATION
70
36
FINANCIAL REPORT
71
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
75
77
SHAREHOLDER INFORMATION
CORPORATE DIRECTORY
ABN 63 003 326 243
© 2018 Infomedia Ltd. All rights reserved worldwide. This document may not be reproduced in whole or in
part without the express written permission of Infomedia Ltd.
This Annual Report may contain forward looking statements. Please refer to page 77 for an explanation of
forward looking statements and the risks, uncertainties and assumptions to which they are subject.
infomedia.com.au
infomedia.com.au
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2018 Annual Report Infomedia’s aspirational journey
A great place
to work
Superior
shareholder returns
The success of our
customers, shareholders
and people drives
IFM’s success
Admired by
industry
Recognised market leading
software solution provider
CHAIRMAN’S REPORT
Dear Infomedia Shareholders,
FY18 PERFORMANCE
Thank you for your continued support of Infomedia Ltd in
the 2018 financial year (FY18).
IMPROVING OUR GROWTH TRAJECTORY
As foreshadowed, the 2018 financial year delivered
growth in our revenue and earnings, and was
characterised by the major streams of investment in our
products, people, processes and technology to meet the
needs of our growing customer base and future growth
opportunities. We believe our investment over the past
two years has positioned the business to deliver
an improved growth trajectory in the year ahead
and provides the platform for future product and
market expansion.
Our focus on people during the year saw investment in
both executive upskilling and the appointment of new
regional heads of sales in both the Americas and
Asia Pacific. We have also invested to ensure our product
teams and the regional teams are working in unison to
expand our global footprint.
Infomedia’s diverse employee demographic enables
Infomedia to engage with global customers at a local
level to both develop and maintain long standing
relationships with approximately 40 global automakers
and their partners, dealers and wholesale customers.
We have invested in our processes to meet the needs
of our global customers, including innovative new
measures to successfully achieve the requirements of our
largest global Microcat™ parts contract and a number
of Superservice™ contracts across Europe. The Nissan
roll-out was successfully delivered on time and on budget
in FY18. The completion of the global roll-out will make a
significant contribution to revenue growth in FY19.
We have also successfully completed the roll-out of our
Superservice product for Nissan across much of Europe.
Strong Superservice sales during the year was the result
of an extensive effort to expand our product offering with
existing customers into new markets.
Investment in technology has continued to be an area
of focus for Infomedia during the year both in terms
of infrastructure to support future growth and also in
innovation to ensure our products are competitive,
customer focused and market leading.
Infomedia’s results for FY18 were in line with the Company’s
expectation and reflected the level of investment in people,
process and technology during the year.
Infomedia reported revenue of $72.9 million for the 12
months to 30 June 2018, an increase of 3.5% on the
previous year (FY17: $70.5 million). Whilst year on year
revenue from our Microcat parts business was flat due to
the roll-off of a previously announced contract, our strong
growth in Superservice revenue in Europe and the US
contributed to the company’s performance for the year.
Revenue from contracts sold will continue to ramp up into
the financial year ending 30 June 2019 (FY19).
Net profit after tax (NPAT) was $12.9 million, up 7.9%
from the prior period (FY17: $11.9 million), reflecting
stronger growth in the second half and disciplined cost
management.
Infomedia’s financial position remains strong with net
current assets of $11.5 million at 30 June 2018 (FY17:
$13.5 million) including cash and cash equivalents of
$13.3 million (FY17: $13.3 million).
CULTURAL EVOLUTION
Infomedia competes in an exciting global industry. With
over 80% of our revenue generated outside Australia, we
are determined to nurture a corporate culture which is
diverse, high performing and customer centric.
Infomedia places emphasis on personal integrity, mutual
respect and ethical business practices underpinned by the
core values we introduced across the company last year.
These values, defined by our employees, form the basis of
our principles and how we work together as a team.
We believe our success is created when we act together to:
• Accelerate Performance: we are action orientated
and always accountable to our customers.
• Drive Innovation & Service: our technology
leadership empowers our customers.
• Navigate Global, Steer Local: our customers benefit
from a unified Infomedia approach with
local execution.
• Have Fun in the Fast Lane: we balance hard work
with a fun and vibrant workplace.
The Company recently attained certification of its
Information Security Management System in line with
ISO 27001:2015 standards. The Company has developed
comprehensive information security protocols and
processes, which the certification validates.
In addition, the Company maintains a range of internal
policies which define the Company’s expectations
and commitment to good corporate governance
and responsible business practices including a
comprehensive Code of Conduct.
Infomedia remains focused on growth in its core business,
expanding our global footprint in our parts and services
suite of products and delivering market leading software
to our automotive manufacturer and dealer customers.
We recently introduced a Whistleblower Policy to formally
communicate the right of our people to report unethical or
illegal conduct without fear of reprisal. We also adopted
a voluntary statement with respect to modern slavery in
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2018 Annual Report CHAIRMAN’S REPORT (continued)
our supply chain and replaced our Securities Trading
Policy with a new version containing a series of enhanced
governance measures.
More information can be found on our website at
www.infomedia.com.au.
CONFIDENT ABOUT THE FUTURE
Infomedia expects our growth trajectory to continue to
improve in the 2019 financial year (FY19) with the full
benefit of recurring revenue from contracts won.
The parts and service sectors of the global automotive
industry remain the most profitable sectors for automotive
manufacturers. Our business model combines the power
of an attractive business sector with the ease of use that
software as a service (SaaS) delivers to our customers.
Our product portfolio design and development is built
on helping our customers be more successful in serving
their customers.
Infomedia has a technology stack that is difficult to
replicate and parts and service product suites that are
market leading and supported globally.
We remain focused on sticking close to our core
business to capitalise on these assets and expertise.
We will look at acquiring assets that complement our core
and accelerate growth. As a SaaS provider in a growing
industry, the opportunity to support the growth of our
customers and their brands remains strong.
ACKNOWLEDGEMENTS
I am confident that we are building a stronger Infomedia
and recognise that it is the combination of our customers,
our leadership and our team that makes this possible.
I thank our customers for their continued support of
Infomedia. We are committed to providing market leading
software that supports the growth of our customers’
businesses and the retention of their customers.
I would like to acknowledge the efforts of Infomedia’s
CEO, Jonathan Rubinsztein and the Infomedia
management team for their effort over the last 12 months.
Making the right calls for the long term can be difficult
in a public company environment. Our leadership
team has made great strides in building a platform for
growth through our investment this year in product,
people, technology and customer service to help us be
recognised as a leading software solution provider to the
global automotive industry.
Thanks also go to my fellow Directors Anne O’Driscoll,
Clyde McConaghy and Paul Brandling for their
knowledge, their counsel and the collegiate manner in
which they have supported Infomedia’s aspirations.
The Board is confident of a stronger 2019 financial year
as the company continues to move forward and deliver
some positive outcomes for customers, an inspiring
environment for employees and solid returns for
our shareholders.
DIVIDEND
The Board declared a final dividend of 1.70 cents per
share fully franked for the 2018 financial year.
Bart Vogel
Chairman
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2018 Annual Report CEO’S REPORT
MESSAGE FROM THE CEO
PEOPLE
Infomedia Ltd is an Australian-based software as
a service (SaaS) provider to global automotive
manufacturers and their dealers. Our software supports
the key objectives of global car manufacturers and
dealers to increase profits in their parts and service
departments and enhance customer retention.
Our technology is difficult to replicate and our software
integrates real-time, original manufacturer data with an
interface that is accurate, intuitive and reliable.
More than 95 percent of Infomedia’s revenue is recurring.
Our software is developed in Australia, but we are a global
business with 85 percent of revenue generated overseas.
We support more than 170,000 users in 186 countries and
in 29 languages.
OUR PERFORMANCE
The 2018 financial year for Infomedia was marked by the
build completion of our global Microcat parts contract
with Nissan and a number of Superservice Menus™ and
Superservice Triage™ contracts across Europe.
FY18 revenue of $72.9 million, a 3.5% increase on the
previous corresponding period (pcp)and NPAT of $12.9
million (7.9% pcp) was in line with our expectations.
Reflecting the upfront investment required to develop
parts and service contracts won in the prior year, cash
EBITDA was $10.5 million (FY17 $11.7 million).
Our performance this year reflects a focus on improving
our growth trajectory and also on the investment in
people, process and technology that will provide a solid
foundation for scale into the future.
Infomedia aspires to be the leading software solution
provider to the parts and service sectors of the global
automotive industry.
We are focussed on the success of our customers. We
exist to help them drive the sale of more original parts
and navigate the delivery of excellent customer service to
retain loyalty to the automotive manufacturer brand.
STRATEGY
Two years ago, when I joined Infomedia I did so because
I saw an opportunity to build an exciting Australian
based, Australian developed, global software business
that supported the growing parts and service segments
of global automotive manufacturers.
At that time, we identified that our core assets required
investment and we needed to improve our delivery. We
set some clear objectives to drive performance and
progress the business in five key areas.
Initially, the aim was to simplify the business and drive
sales performance. We identified what was unique
about our business and set a plan for growth and then
communicated our strategy to all 290 employees around
the world.
We broke down silos and fostered communication
at a regional and product level to drive sales in our
existing global customer base and then linked those
to opportunities in key markets. The appointment of
new regional heads in both the Asia Pacific and North
America regions during the year further supported this
objective.
PROCESS
We prioritised delivery with investment in people, process
and technology and established a set of values that align
our culture to growth.
We committed to providing transparency to our
customers, our employees and our shareholders.
We remain focussed on leveraging these initiatives and
on building a more consistent growth trajectory.
Infomedia’s competitive advantage:
• global market leading software to
a growing industry
• software that integrates real-
time, original manufacturer data
• more than 95% of revenue is
recurring
• more than 80% of revenue
generated from outside Australia
• more than 170,000 users,
186 countries, 29 languages
TECHNOLOGY
We will continue to invest to support future growth with a
strategy concentrated in four key areas:
• strengthen and leverage our existing global footprint
through further penetration with existing customers in
current markets, increase our coverage through cross-
sell and utilising a global account sales model;
• strengthen the Microcat parts suite through innovation
and adjacencies;
•
foster a robust integrated Microcat parts and
Superservice growth platform; and,
•
leverage our data assets.
The success of our customers in the parts and service
segment of the global automotive industry will drive
Infomedia’s growth trajectory. Opportunities for further
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2018 Annual Report infomedia.com.au
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2018 Annual Report CEO’S REPORT (continued)
differentiation through acquiring assets close to our core
segments and innovation will build Infomedia’s presence
as a global market leader of parts and service software.
PRODUCT INNOVATION
Investment over the last two years resulted in the
expansion of our two core software product suites.
The Microcat electronic parts suite is a group of products
that are both scalable and built with specific, real-time
original manufacturer data. Our Microcat electronic
parts catalogue (EPC) is scaled to meet the scope of a
customer’s needs at a dealer, regional or global level.
Real-time, original manufacturer data is built into Microcat
to the customer’s requirement. We identify every part,
for every automobile make and model in every region
defined in the contract. Infomedia’s Microcat assists
an automotive dealer increase original parts sales, lift
productivity and raise customer satisfaction levels.
Our Superservice Menus software uses a customer’s
vehicle identification number (VIN) at the initial point
of service enabling the dealership service advisor to
provide a timely, fully priced and itemised service quote.
Integration of the Superservice Menus software with
Infomedia’s Superservice Triage electronic vehicle health
check instantly prices all parts, labour and additions
identified in a vehicle inspection.
Integration between Superservice Menus and
Superservice Triage empowers dealer employees
to quote quickly and accurately for complex repairs,
reducing the time spent researching parts information
and labour times and increasing on-the-spot work
authorisations.
Precise information is provided quickly in a format that is
user-friendly and deepens a customer’s understanding
and appreciation of genuine service. A customer feels
informed and confident in knowing the service process and
receiving accurate pricing ahead of vehicle collection.
“We are focussed on the success of our customers. We exist to help them drive
the sale of more original parts and navigate the delivery of excellent customer
service to retain loyalty to the automotive manufacturer brand.”
Investment in product enhancements in Infomedia’s
parts suite will supplement organic growth in the parts
business through leveraging existing information and
evaluating opportunities in adjacent markets.
The subsequent engagement and trust between the auto
brand, the dealer and the customer often results in higher
parts and labour sales, more satisfied customers and
higher retention rates beyond the warranty period.
During the year, we invested to create a more robust
and differentiated parts ordering system to extend dealer
reach to their wholesale customers in the collision and
mechanical repair segments.
Enhancements in Microcat Partsbridge provide timely
information and competitive pricing to a dealer’s
wholesale customers resulting in more original part sales
and improved customer experience.
Smaller-scale acquisition opportunities close to our core
activities will drive further growth in Infomedia’s parts
business as well as further innovation.
The acquisition last year of an Australian developed
customer relationship management (CRM) tool and the
introduction of an Infomedia developed messaging tool,
provide our customers further productivity and efficiency gains
and enhanced sales support through the entire sales channel.
Infomedia’s Superservice suite of products will drive
Infomedia’s growth into the future.
OUTLOOK
We are feeling confident about the year ahead due to the
increase in recurring revenue from contracts won in prior
periods and disciplined cost management.
We will explore acquisitions that are close to our core and
value adding. We will pursue opportunities that provide
an entry into new markets, access to new customers
or provide innovation to our existing parts and
service software.
Our goal is to deliver sustainable growth in revenue
and earnings.
Jonathan Rubinsztein
Chief Executive Officer
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2018 Annual Report PRODUCT OVERVIEW
Microcat parts suite extends parts selling beyond the dealership parts counter to
support wholesale original parts sales. Microcat has two new solution components
to improve operational efficiency, and help to transform frontline sales
processes using digital innovation.
OEM Dealer EPC
Collision Parts Ordering
Mechanical
Parts Ordering
FieldForce
Management
Mobile Chat App
The Superservice suite is powered by genuine automaker data and enables
a dealership to connect and manage every aspect of the automotive service
relationship accurately and transparently. A dealer’s customer appreciates the
accountability, honesty and efficiency. Superservice helps to reduce operating costs,
increase service volume and builds trust between dealerships and their customers.
Service Quoting
Vehicle Health Check
Online Service Booking
Digital Service Record
Real-time
Customer Survey
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2018 Annual Report VOICE OF THE CUSTOMER
Moving Nissan dealers to next generation Microcat Live™ during the year has been well
received. Microcat grows dealer parts sales, productivity and customer satisfaction.
“I cannot believe this masterpiece.”
“Kudos to the entire staff.”
WC, Coastal Nissan South Carolina, USA
Infomedia deploys its Superservice product suite as a white label solution to KIA’s
global markets. Known as CVIS (customer value innovation system), Infomedia’s
Superservice software builds profits, productivity and customer relationships.
To our customers – thank you for your support!
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2018 Annual Report NAVIGATING GLOBAL, STEERING LOCAL
Expanding our global footprint
Infomedia’s parts and service solutions are used in 186 countries.
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2018 Annual Report 2018 Annual Report
DIRECTORS’ BIOGRAPHIES
BART VOGEL BCOM (HONS), FCA, FAICD
Independent Non-Executive Chairman
Mr Vogel was appointed to the Infomedia Board of
Directors on 31 August 2015.
Mr Vogel serves on the Remuneration & Nominations
Committee and the Technology & Innovation Committee.
Mr Vogel is a director of listed companies Macquarie
Telecom Group Limited, Invocare Limited and Salmat
Limited. He is also a director of BAI Communications
Pty Ltd and the Children’s Cancer Institute of Australia.
He has extensive commercial experience from a range
of sectors including telecommunications, information
technology and business services. His executive career
included CEO roles with Asurion Australia and Lucent
Technologies (Australia and Asia Pacific), Computer
Power Group, and over 20 years in the management
consulting industry as a partner with Bain & Company,
A.T. Kearney and Deloitte.
JONATHAN RUBINSZTEIN BCom (Hons), MBA, FAICD
Chief Executive Officer (CEO) & Managing Director
Mr Rubinsztein commenced as CEO & Managing
Director on the Board of Infomedia in March 2016.
Mr Rubinsztein has a proven track record of leading
high-performance teams in the technology sector.
Mr Rubinsztein was a founding partner, CEO and
shareholder of UXC Red Rock Consulting. He also served
as a founding Director of RockSolid SQL, a private
technology company specialising in automated data
management solutions. He has been involved in a number
of Private Equity Investments in the global technology
sector and is also on the Advisory board of the Missionvale
charity based in Port Elizabeth, South Africa.
Mr Rubinsztein has been a guest lecturer at the
University of Sydney Business School and a regular
participant at TED (Technology, Entertainment and
Design) conferences.
of Hewlett-Packard South Pacific from 2002 to 2012.
Prior to that time, Mr Brandling was Vice President and
Managing Director of Compaq South Pacific between
2000 and 2002. Mr Brandling was also a member of the
International CEO Forum (Australia) from 2001 to 2012
and served as a Director of the Australian Information
Industry Association (AIIA) from 2002 to 2011.
Mr Brandling began his career as an engineer in
the motor industry working for major automotive
manufacturers in both Europe and Australia.
Mr Brandling currently serves as a Non-Executive
Director of Integrated Research Ltd and Avoka
Technologies Pty Ltd. Previously, he also served as
a Non-Executive Director of Tesserent Limited and
Vocus Communications Ltd.
CLYDE MCCONAGHY BBus, MBA, FAICD
Independent Non-Executive Director
Mr McConaghy was appointed to the Infomedia Board of
Directors on 1 November 2013. Mr McConaghy serves as
chair of the Remuneration & Nominations Committee and
as a member of the Audit & Risk Committee.
Mr McConaghy has over 20 years experience as a
senior international board director and executive of
publicly listed and private companies. His experience
encompasses both multinational and early stage
companies, in the technology, media, publishing, and
venture capital sectors. He also held several senior
positions within BMW Australia.
Mr McConaghy was a director in The Economist
Intelligence Unit in London and a founding director of
World Markets Research Centre Plc, both including
automotive industry analysis divisions. He is currently a
director of Serko Limited. He is also Managing Director of
Optima Boards, a Board advisory firm for companies and
non-for-profit entities worldwide.
Mr Rubinsztein was awarded the IT Professional of the
Year 2013 (AIIA award NSW).
ANNE O’DRISCOLL FCA, GAICD, ANZIIF (Fellow)
Independent Non-Executive Director
PAUL BRANDLING, BSc Hons, MAICD
Independent Non-Executive Director
Mr Brandling was appointed to the Infomedia Board of
Directors on 1 October 2016. Mr Brandling serves as
chair of the Technology & Innovation Committee and is a
member of the Audit & Risk Committeee.
Mr Brandling has over 30 years experience in the local
and international technology sector. He previously held
the position of Vice President and Managing Director
Ms O’Driscoll was appointed to the Infomedia Board of
Directors on 15 December 2014. Ms O’Driscoll serves as
chair of the Audit & Risk Committee and a member of the
Remuneration & Nominations Committee. Ms O’Driscoll
has over 35 years of business experience, having
qualified as a chartered accountant in 1984. She was
CFO of Genworth Australia from 2009 to 2012 and spent
over 13 years with Insurance Australia Group.
Ms O’Driscoll is on the boards of Commonwealth Bank’s
insurance subsidiaries (CommInsure), Steadfast Group
Limited and MDA National Insurance Pty Limited.
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2018 Annual Report
DIRECTORS’ REPORT
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13
13
13
14
16
Operating and financial review
Company overview
Principal activities
Financial and operating review
Business objectives, strategies and outlook
Risks
17
Remuneration Report – Audited
32
32
32
32
33
33
33
33
33
33
33
33
34
34
34
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Other statutory matters
Directors
Directorships of other listed companies
Meetings of directors
Company secretaries
Significant changes in the state of affairs
Dividends
Subsequent events
Indemnification and insurance of officers
Environmental regulation
Corporate governance
Share options
Performance rights
Auditor
Non-audit services
Auditors’ independence declaration
Rounding of amounts
Your Directors present their report, together with the consolidated financial report of
Infomedia Ltd (the ‘Company’) and its subsidiaries (together referred to as ‘Infomedia’ or the
‘Group’) for the financial year ended 30 June 2018, along with the independent auditor report.
The Directors’ report (including the Remuneration Report) and the annual financial report have been
restructured to facilitate greater understanding for the reader.
Information is only being included in the 2018 Annual Report to the extent it has been considered
material and relevant to the understanding of the financial performance and financial position of the
Group. A disclosure is considered material and relevant if, for example:
• the dollar amount is significant in size (quantitative factor);
• the dollar amount is significant by nature (qualitative factor);
• the Group’s results cannot be understood without the specific disclosure (qualitative factor);
• it is critical to allow a user to understand the impact of significant changes in the group’s business
during the period such as business acquisitions (qualitative factor);
• it relates to an aspect of the Group’s operations that is important to its future performance.
The flow of information in the Directors’ report is grouped as the table above. The flow of the
financial report with key notes to facilitate better understanding of significant matters is provided on
pages 36 and 37.
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DIRECTORS’ REPORT – Operating and financial review
Company overview
Infomedia Ltd is a global technology company, incorporated in New South Wales and listed on the Australian
Securities Exchange (ASX:IFM). The Company is headquartered in Sydney, Australia with regional offices in Australia,
the United Kingdom and the USA, serving the Group’s customers across the world.
Principal activities
During the financial year, the principal continuing activities of Infomedia consisted of:
• development and supply of Software as a Service (‘SaaS’) offerings, including electronic parts catalogues and
service quoting software systems, for the parts and service sectors of the global automotive industry; and
•
information management, analysis and data creation for the automotive and oil industries.
Financial and operating review
Infomedia reported a revenue growth of 3.5% to $72.935 million for the year ended 30 June 2018 (‘FY18’), compared with
revenue of $70.474 million in the prior financial year.
All regions reported revenue growth in local currency other than Europe (‘EMEA’) where performance was impacted
by a major contract roll-off announced in 2015.
As foreshadowed, cash EBITDA during FY18 decreased to $10.477 million compared to $11.652 million in the prior
year. The decrease related to the pre-revenue development for parts and service contracts secured in the previous
financial year.
Infomedia continues to report Cash EBITDA, adjusted earnings before interest, tax, depreciation and amortisation as a
key performance measure to identify the cash flows of investing in development costs that are capitalised in reported
NPAT. Infomedia’s Board and management believe Cash EBITDA is a transparent view of the underlying level of
activity and investment in its products.
The Company’s net profit after tax (‘NPAT’) was $12.897 million, an increase of 7.9% compared with $11.953 million
the prior financial year.
The summary of the results is shown below.
Revenue (a)
EBITDA
Development costs capitalised
Unrealised foreign currency translation (gains)/losses
Cash EBITDA (b)
NPAT
Earnings per share (cents)
Final dividend (cents)
Total annual dividend per share (cents)
(a) Revenue details
By geographical location (local currency)
Worldwide revenue (AUD)
Asia Pacific (AUD)
EMEA (EUR)
Americas (USD)
* Decrease reflects a major contract roll-off announced in 2015.
2018
$’000
72,935
29,050
(18,463)
(110)
10,477
12,897
4.16
1.70
3.10
2018
’000
72,935
18,259
18,345
19,506
2017
$’000
70,474
25,219
(13,715)
148
11,652
11,953
3.85
1.20
2.90
2017
’000
70,474
17,054
20,476
17,874
Movement
%
3.5%
15.2%
34.6%
(10.1%)
7.9%
8.1%
41.7%
6.9%
Movement
%
3.5%
7.1%
(10.4%)*
9.1%
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2018 Annual Report
DIRECTORS’ REPORT – Operating and financial review (continued)
(b) Reconciliation of EBITDA to NPAT
EBITDA
Net finance (costs)/income
Depreciation, amortisation and impairment
Income tax expense
NPAT
2018
$’000
29,050
(564)
(12,824)
(2,765)
12,897
2017
$’000
25,219
36
(9,717)
(3,585)
11,953
Movement
%
15.2%
32.0%
7.9%
The investment focus over the past two years has enabled a revenue momentum shift in the second half of FY18.
Revenue for the second half of FY18 had no revenue related to the contract roll-off announced in 2015 and saw
recurring revenue commence from contracts won in prior periods. As a result, the second half of FY18 grew by 6.3%
when compared to first half of FY18. All regions contributed to this half-on-half growth.
By geographical location (local currency)
Worldwide revenue (AUD)
Asia Pacific (AUD)
EMEA (EUR)
Americas (USD)
2H18
’000
37,590
9,750
9,354
10,195
1H18
’000
35,345
8,509
8,991
9,311
2H18:1H18
%
6.3%
14.6%
4.0%
9.5%
Infomedia’s financial position remains strong with net current assets of $11.495 million at 30 June 2018 (2017: $13.519
million). The cash and cash equivalents position closed at $13.282 million (2017: $13.313 million) reflecting the robust
cash generative nature of the business. The Company has no debt.
Business objectives, strategies and outlook
Business objectives
Infomedia is a global technology company, providing software as a service (SaaS) to the global automotive industry.
The Company’s software supports automotive manufacturers to drive productivity and profitability through their dealer
and distributor channels. Infomedia’s software solutions promote the sale of original automotive parts and the delivery
of superior service to enhance customer loyalty.
Infomedia’s software is both scalable and backed by specific, real time original manufacturer data. Infomedia’s
intuitive software is scoped for the global automotive manufacturer and delivered to the dealer service provider and
their wholesale customers with a solution focussed on increasing profits and improving the customer experience.
The software supports customers globally, regionally and at an individual dealer level.
Infomedia aspires to be the leading software solution provider to the parts and service sectors of the global
automotive industry.
The Group will continue to pursue its financial and strategic objectives to deliver sustainable, long-term performance
for Infomedia’s shareholders by focusing our strategy in four key areas.
Global footprint
Strong EPC foundation
Integrated parts &
service platform
Data assets
Strengthen and leverage
our global footprint
Explore adjacencies from
our strong EPC foundation
Leverage our integrated
parts and service platform
Leverage our data assets
Focus on global
account management
Strengthen parts product
foundation through innovation
and adjacencies
Foster a robust integrated
parts and service growth
platform
Conduct assessment and
define future data strategy
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14
2018 Annual Report DIRECTORS’ REPORT – Operating and financial review (continued)
Outlook
Board and management are confident about the year ahead.
Confidence in FY19, is underpinned by an increase in recurring revenue from contracts won in prior periods and
disciplined cost management.
The Group is exploring acquisitions that are close to its core and value adding. Infomedia will pursue opportunities
that provide an entry into new markets, access to new customers or provide innovation to its existing parts and service
software solutions.
Infomedia aims to deliver sustainable growth in revenue and earnings.
infomedia.com.au
15
2018 Annual Report DIRECTORS’ REPORT – Operating and financial review (continued)
Risks
In seeking to achieve its strategic goals, Infomedia is subject to risks which may have a material adverse effect on
operating and financial performance. The Group adopts a risk management process which is an integral part of the
Group’s corporate governance structure, and applies risk mitigation strategies where feasible. Despite best efforts,
some risks remain outside the Company’s control. Some of the key risks (in no particular order and non-exhaustively)
are discussed in the table below.
Risk
Description
Risk management strategies
• Continued access to Original Equipment
Manufacturer (‘OEM’) parts information
is integral to several of the Group’s
product lines
• Management of key account relationships
• Continued investment to sustain market leading products
• Customer service focus, including working with customers to
modify offerings to meet their needs
Loss of key
licence
agreements
Loss of key
customers
• The relatively concentrated automotive
industry leads to a degree of revenue
concentration
• Global account management receiving increased focus
• Continuing focus on securing new OEM licence
agreements to reduce concentration
• Participation in industry forums and other marketing
opportunities to ensure prominent industry positioning
• Adding value to the customer solutions in order to remain as a
technology of choice
• Focus on client satisfaction via continuous improvements in
delivery of high-speed, high uptime solutions with evolving
feature sets with intrinsic value propositions
• Leveraging accrued experience and capability in the sector with a
global reputation as a leading solutions provider in the parts space
• Regional directors charged with maintaining key relationships with
OEM customers and maintaining detailed account management
plans
Competitive
risk
• Risk from existing and new
market entrants
Product
obsolescence
or substitution
Product
outages caused
by software or
hardware errors
Intellectual
property risk
Cyber risk,
privacy & data
sovereignty
• Products do not keep pace with
• Close monitoring of market developments and direction and
developments in market needs or
technological advancements
OEM strategies
• Continued investment in research and development to sustain
• Competitors or OEMs may develop
market leading position
superior products
• Customer dissatisfaction with the
• Real time monitoring of the Company’s software products and
Company’s software products which fail to
facilitate their critical business operations
• Customers cancel subscriptions or switch
to competitive solutions
online hosting environments to identify and correct errors quickly
• Investment in industry leading platform technology
• Protecting data integrity and data privacy
• Network and product structuring and monitoring to identify and
limit unauthorised access
• Legal restraints
• Migration from disc based products
• Risk of targeted cyber-attack against
• Information security management system certification to
Company assets
ISO 27001:2015
• Unauthorised access to or loss of customer
data including personally identifiable data
• Increasingly onerous regulatory
environments governing use and cross
border transfer of data (e.g. European
General Data Protection Regulation)
• Measures to detect and prevent unauthorised access to
Company IT assets
• Robust redundancy measures allowing compromised
environments to be seamlessly severed and replaced
• Re-architecture of hosting environments to support regulatory
requirements relevant to customers
• Internal compliance program including training for all employees
on relevant data security and privacy laws
People risk
• Loss of key executives
• Investment in people and culture initiatives
• Loss of key customer relationships
• Multiple touch points with key customers as part of
• Succession planning
relationship management
• Appropriate incentives and career development opportunities
for key executives and senior management
• Identification and management of high potential employees
infomedia.com.au
16
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited
The Directors present Infomedia’s Remuneration Report for the financial year ended 30 June 2018 (‘FY18’).
The Remuneration Report (‘Report’) is structured as follows.
Table 1 – Structure of Remuneration Report
Section
Details
A
B
C
D
E
F
G
H
Key management personnel
Remuneration governance
Infomedia’s purpose and strategic priorities
Executive KMP remuneration structure and philosophy
Executive KMP remuneration details
Non-Executive Directors remuneration
Non-Executive Directors remuneration details
Additional information
A. Key management personnel
This Report outlines Infomedia’s remuneration philosophy, framework and outcomes for FY18 for all key management
personnel (‘KMP’), including all Non-Executive Directors and the Executive KMP (being the Chief Executive Officer
& Managing Director (‘CEO & Managing Director’) and the Chief Financial Officer (‘CFO’)). KMP are those persons
having authority and responsibility for planning, directing and controlling the activities of Infomedia.
The following persons were KMP during FY18.
Table 2 – Independent Non-Executive Directors
Current Directors
Bart Vogel
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
Table 3 – Executive KMP
Date of appointment
31 August 2015
1 October 2016
1 November 2013
15 December 2014
Current executives
Jonathan Rubinsztein
Richard Leon
Role
CEO & Managing Director
CFO
Date of appointment
14 March 2016
29 March 2016
infomedia.com.au
17
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
B. Remuneration governance
The Remuneration Report has been prepared in accordance with the requirements of the Corporations Act 2001 and
Accounting Standard AASB 124 Related Party Disclosures. The term ‘remuneration’ as used in this Report has the
same meaning as ‘compensation’ as prescribed in AASB 124.
Remuneration is a technical subject in the current regulatory and reporting environment. In writing this Report, the aim
is to present information in a way that is easily understood and aligned to legal reporting obligations.
Who is responsible
for presenting this
Remuneration Report?
Who are the members
of the Committee?
Why did the
membership change?
What role does the
Committee play?
The Remuneration & Nominations Committee (the ‘Remuneration Committee’ or the
‘Committee’) of the Board presents this Remuneration Report on behalf of Infomedia Ltd.
The Committee consists of three Non-Executive Directors. Committee membership was
restructured in July 2017 as follows.
1 July – 21 July 2017
From 21 July 2017
Clyde McConaghy (Chairman)
Clyde McConaghy (Chairman)
Paul Brandling
Bart Vogel
Anne O’Driscoll
Bart Vogel
The Committee membership changed following the establishment of a Technology &
Innovation Committee during FY18. Committee memberships were reconsidered and
rebalanced to ensure an appropriate mix of skills and experience on each
sub-committee, and to ensure a balanced distribution of workload.
The Committee is responsible for reviewing and determining remuneration
arrangements for the Non-Executive Directors and the Executive KMP.
The Committee is also charged with responsibility to assist and advise
the Board to fulfil its responsibilities on matters relating to:
• the composition and quantum of remuneration, bonuses, incentives and remuneration
issues relating to Executive KMP and other senior management personnel;
• policies relating to remuneration, incentives and superannuation for all employees;
• remuneration of Non-Executive Directors; and
• other matters as required.
The Committee operates in accordance with its charter, a copy of which is available on
the Company’s website at: https://www.infomedia.com.au/investors/corporate
-governance/remuneration-committee-charter/
a. External remuneration advisory services
The Remuneration Committee, subject to Board approval, directly engages with and considers market remuneration
data from external remuneration consultants as required. During FY18 the Committee engaged with Guerdon
Associates to review the Company’s remuneration structure in the context of market practice, with particular reference
to companies of similar size and sector.
The Committee will implement a series of refinements to the FY20 Executive KMP remuneration framework based on
the results of the Guerdon Associates review. No remuneration recommendations as defined by the Corporations Act
2001 were provided by Guerdon Associates.
b. Prior year Remuneration Report – AGM outcome
The Company’s FY17 Remuneration Report was approved at the 2017 Annual General Meeting (‘AGM’) with a vote of
98.79% of votes cast in favour of the resolution.
infomedia.com.au
18
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
C. Infomedia’s purpose and strategic priorities
The Company’s key strategies and purpose, articulated in the following diagram, form a key consideration when
designing and implementing the executive remuneration framework.
Our Values
TOGETHER WE CREATE SUCCESS BY:
Accelerating performance,
Driving innovation & service,
Navigating global & steering local,
Having fun in the fast lane
Through our customers, shareholders
and people we create success
Our Purpose
CUSTOMERS
We drive to make our
customers successful and
that journey to success fun
SHAREHOLDERS
We will deliver superior
market returns
PEOPLE
We create an awesome place
to work, with great people,
developing world-class
innovative products
Through our strategy, we deliver on our purpose
Our Strategy
GLOBAL FOOTPRINT
Strengthen and leverage
our global footprint
STRONG EPC PRODUCT
FOUNDATION
Explore adjacencies from
our strong EPC foundation
INTEGRATED PARTS
AND SERVICE
GROWTH PLATFORM
Build a global distribution
channel from our integrated
Parts and Service platform
DATA ASSETS
Leverage our Data assets to
create a Business Intelligence
analytics revenue stream
D. Executive KMP remuneration structure and philosophy
Infomedia’s remuneration framework aligns executive reward with achievement of strategic objectives and shareholder
returns.The performance of the Company relies upon the quality of its Directors and executives.The Company must
attract, motivate and retain skilled Directors and executives to deliver on key strategic goals. Compensation must
be competitive and appropriate for the results delivered. The Company adheres to the following framework when
setting remuneration.
infomedia.com.au
19
2018 Annual Report
DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
Table 4 – Executive KMP remuneration structure
Fixed remuneration
At risk remuneration
Total potential remuneration
Element
Fixed annual remuneration
Short term incentive (‘STI’)
Long term incentive (‘LTI’)
40% of Total remuneration
package
30% of Total remuneration
package
30% of Total remuneration
package
Indicative total
potential Executive
KMP remuneration
mix(a)
Performance
conditions
Base level of reward set around
the Australian market median
using external benchmark data.
Set in the context of the relative
skills, experience and
responsibility assigned.
At risk remuneration linked
to a combination of overall
Infomedia’s financial
performance gateways and
individual performance
gateways.
Financial measures include
Cash EBITDA, cost
management and
revenue growth.
Non-financial measures include
specific strategic objectives
relating to customer, technology,
people and product.
Executive KMP rewarded
subject to delivery of Company
financial performance in the
form of ‘STI Gateways’ which
in FY18 were linked to Cash
EBITDA performance.
Additionally, Executive KMP
are set appropriate key
performance indicators (‘KPI’)
and objectives which are both
financial and non-financial in
nature, including appropriate
stretch goals. KPIs are aligned
to strategic goals and creation
of shareholder value.
STIs are useful to reward
in year performance and
achievement of strategic
objectives.
Share options (‘Options’):
Linked to capital growth in
share price with a strike price of
92.2 cents representing a 55%
increase over the June 2016
VWAP price of 59.5 cents per
share used to calculate
the entitlement.
Measured over a three-year
period to FY19. 50% of vested
entitlements subject to a holding
lock until release of FY20
annual results.
Performance rights (‘Rights’):
Linked to compound annual
growth rate (‘CAGR’) in earnings
per share (‘EPS’) between 10%
and 15%.
The LTI ensures a robust
link between the long-term
performance of the Company
and creation of shareholder
value. The LTI acts as a valuable
part of the remuneration mix to
retain key talent and to reward
executives for performance over
an extended period.
The Options encourage delivery
of capital appreciation over the
period, whilst the Rights encourage
focus on net profit which in turn
drives shareholder returns.
The intrinsic value of the Options
and the Rights granted to
Executive KMP increases or
decreases depending on the
Company’s trading share price
Link to strategy
Fixed remuneration is set at
market levels to attract and
retain individuals with the
necessary skills, experience
and talent to pursue
strategic goals.
See section D.a below.
See section D.c below
See section D.d below
For more
information
Footnote to Table 4
(a) The remuneration mix applies in respect of maximum potential remuneration or the ‘total remuneration package’.
The remuneration mix is indicative of the overall philosophy and varies slightly between remuneration elements for
the Executive KMP. Where this is so, it has been noted in the section below summarising the terms of engagement
infomedia.com.au
20
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
for each Executive KMP, including the monetary amounts attaching to each element.
a. Employment terms
Table 5 – Employment terms of CEO & Managing Director
Term
Service
commence date
Contract duration
Remuneration
package
Termination by
executive
Termination by
Company for cause
Termination by
Company (other)
Redundancy
entitlements
Post-employment
restraints
External
directorships
Conditions
14 March 2016
Ongoing with no specified end date
Jonathan Rubinsztein’s FY18 total potential remuneration package was $1,260,000 made up of
the following components:
Fixed remuneration
$510,000 per annum inclusive of superannuation representing 40% of total potential remuneration.
STI
$0 to $375,000 based on performance and payable in cash representing 30% of total potential
remuneration.
LTI
LTI opportunity of $375,000 per annum representing 30% of total potential remuneration.
The LTI is conferred in the form of Options and Rights.
No new LTI were awarded in FY18. Mr Rubinsztein is subject to an existing LTI
package awarded upon his commencement in FY16 with vesting events in FY17, FY18 and
FY19.
The LTI conferred in FY16 represented three years worth of annual LTI opportunity of $375,000
per annum as at the date of grant. Further details about the LTI, including LTI vesting outcomes
for the FY18 are described below in section D.d.ii and D.d.iii.
Six months written notice; or
One month if the Company materially diminishes the executive’s duties without
consent or directs the executive not to perform work for a period greater than six months.
In this circumstance the executive is entitled to redundancy entitlements as outlined below.
The Company may immediately terminate the service agreement without notice,
or any payment in lieu of notice in certain circumstances including material breach, conduct
having a material adverse effect on the Company’s reputation, or if the executive commits an
act justifying termination at common law, becomes bankrupt or is absent from work for more
than three months in any 12-month period without approval. Entitlements will be paid until the
date of termination only.
Six months written notice or six months payment in lieu of notice (or a combination of notice and
payment in lieu of notice).
In addition to notice, the executive is entitled to 12 months fixed annual remuneration inclusive
of any statutory redundancy payments plus any accrued but unpaid STI and LTI or other
incentive to which the executive would have been entitled, had the executive remained
employed to the end of the relevant notice period.
12 months non-compete and non-solicitation.
Not permitted without written consent of the Board.
infomedia.com.au
21
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
Table 6 – Employment terms of CFO
Term
Service commence date 29 March 2016
Conditions
Contract duration
Ongoing with no specified end date
Remuneration package
Richard Leon’s FY18 total potential remuneration was $720,048 made up of the following
components:
Fixed remuneration
$320,048 per annum inclusive of superannuation representing 44% of total potential remuneration.
STI
$0 to $200,000 based on performance and payable in cash representing 28% of total potential
remuneration.
LTI
LTI opportunity of $200,000 per annum representing 28% of total potential remuneration.
The LTI is conferred in the form of Options and Rights.
No new LTI were awarded in FY18. Mr Leon is subject to an existing LTI package awarded
upon his commencement in FY16 with vesting events in FY17, FY18 and FY19.
The LTI conferred in FY16 represented three years worth of annual LTI opportunity of $200,000
per annum as at the date of grant. Further details about the LTI, including LTI vesting outcomes
for the FY18 are described below in section D.d.ii and D.d.iii.
Three months written notice.
The Company may immediately terminate the service agreement without notice, or any payment
in lieu of notice in certain circumstances including material breach, conduct having a material
adverse effect on the Company’s reputation, or if the executive commits an act justifying
termination at common law, becomes bankrupt or is absent from work for more than three
months in any 12-month period without approval. Entitlements will be paid until the date of
termination only.
Three months written notice or three months payment in lieu of notice
(or a combination of notice and payment in lieu of notice).
In addition to notice, the executive is entitled to 12 months fixed annual remuneration inclusive
of any statutory redundancy payments.
12 months non-compete and non-solicitation.
Termination
by executive
Termination by
Company for cause
Termination by
Company (other)
Redundancy
entitlements
Post-employment
restraints
External directorships
Not permitted without written consent of the CEO.
infomedia.com.au
22
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
b. Company performance
Table 7 outlines Infomedia performance delivered over the past five years.
Table 7 – Key financial performance indicators
Revenue ($’000)
Net profit after tax ($’000)
EBITDA ($’000)
Cash EBITDA ($’000)
Earnings per share (cents)
Dividends per share, exclude
special dividend (cents)
Special dividend per share (cents)
Share price at 30 June ($)
2018
72,935
12,897
29,050
10,477
4.16
3.10
-
0.96
2017
70,474
11,953
25,219
11,652
3.85
2.90
-
0.73
2016
68,087
10,323
20,897
n/a
3.33
2.65
-
0.69
2015
60,385
13,232
25,024
n/a
4.30
3.64
0.25
1.20
2014
57,143
12,279
24,598
n/a
4.02
3.78
-
0.75
Infomedia has adopted adjusted earnings before interest, tax, depreciation and amortisation (‘Cash EBITDA’) as a key
measure for the FY18 STI Gateway for Executive KMP and was also used as one of the KPIs for the Executive KMP.
Cash EBITDA acknowledges the cash impact of investing in development costs that are capitalised.
The Company believes Cash EBITDA offers a more transparent view of the underlying level of activity and investment
in products. By stripping out the financial impact of capitalised development costs, Cash EBITDA gives a clearer
indication of the actual cash operating costs incurred during the financial year. Accordingly, management are directly
measured and accountable for their management of costs which translates into improved bottom line results for
shareholders in current (improved EBITDA) or future periods (via reduced future amortisation expenses), depending on
the actual timing and accounting treatment of capitalised development costs actually incurred during the financial year.
As noted above the Company achieved Cash EBITDA of $10.477 million compared with $11.652 million in the prior
corresponding period. As foreshadowed, a lower FY18 Cash EBITDA result was signalled to the market during FY17
owing to:
• Contract completion: the roll-off in revenue associated with expiry of a contract on 31 December 2017 impacting
top line revenue; coupled with;
• Cash investment ahead of future revenue: significant investment required to develop Microcat parts catalogue
and Superservice Menus for a large OEM contract.These solutions have been progressively rolled out in 2018 and
are expected to continue with the full rollout to be completed during the financial year ending 30 June 2019.
The Directors carefully set the Cash EBITDA targets in consideration of these factors and expected a subdued Cash
EBITDA result in FY18. The Cash EBITDA result was offset by an improvement in both revenue and NPAT in FY18.
The reconciliation of NPAT to Cash EBITDA is provided in Table 8 below. As Cash EBITDA was introduced as a new
financial measure from 2017 onwards, no comparatives are provided for financial years prior to FY17.
Table 8 – Reconciliation of NPAT to Cash EBITDA
NPAT
Add/(less):
Net finance costs/(income)
Depreciation, amortisation and impairment
Income tax expense
Development costs capitalised
Unrealised foreign currency translation (gains)/losses
Cash EBITDA
2018
$’000
12,897
564
12,824
2,765
(18,463)
(110)
10,477
2017
$’000
11,953
(36)
9,717
3,585
(13,715)
148
11,652
infomedia.com.au
23
2018 Annual Report
DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
c. Short term incentive
i. Summary of KPIs and performance outcomes for Executive KMP
Table 9 – KPIs and FY18 performance outcomes for the CEO & Managing Director and the CFO
Performance metrics
Weighting
Payout ratios
CEO & Managing Director KPIs and FY18 performance outcome
FY18 performance
outcome/payout(a)
Financial
Cash EBITDA targets
Revenue growth
Non-financial
Customer
Technology
Strategic projects
Total
Targets met or exceeded:
60%
Sliding scale payment between 75%-120%(b)
Targets not met: 0%
Targets met or exceeded:
Sliding scale payment between 60%-100%
Target not met: 0%
40%
100%
CFO KPIs and FY18 Performance Outcome
Financial
Cash EBITDA targets
Revenue growth
Non-financial
People
Cost Management
Strategic projects
Total
Footnote to Table 9
Targets met or exceeded:
60%
Sliding scale payment between 75%-120%(b)
Targets not met: 0%
Targets met or exceeded:
Sliding scale payment between 60%-100%
Target not met: 0%
40%
100%
Partially met
52%
Partially met
36%
88%
Partially met
52%
Partially met
28%
80%
(a) STI Gateways based on Cash EBITDA targets were met as a threshold for the STI program in FY18 for Executive KMP.
(b) Stretch targets apply to financial objectives only. Despite the stretch targets, the maximum potential STI
achievement is capped at 100% of the CEO & Managing Director’s and the CFO’s STI opportunity of $375,000
and $200,000 per annum, respectively.
Table 10 – Executive KMP FY18 STI outcome
Executive KMP
Maximum STI
potential
Actual STI Awarded
Actual STI awarded
as % of maximum
STI potential
STI forfeited as %
of maximum STI
potential
Jonathan Rubinsztein
Richard Leon
$
375,000
200,000
$
329,325
159,640
%
88%
80%
%
12%
20%
infomedia.com.au
24
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
d. Long term incentive
i. Long term incentive framework
The purpose of the LTI program is to link Executive KMP performance with long term shareholder wealth creation. The
details of the FY18 Executive Incentive Plan – LTI are explained below.
Who participates?
Executive KMP
How was the current
Executive KMP LTI
program devised?
The Executive KMP LTI program was devised in consultation with external remuneration
consultants in 2016 to entice the current Executive KMP to Infomedia to drive a significant
turnaround of the Company.
Why were three
years worth of LTI
issued in 2016?
The Board granted three years worth of LTI in a combination of Rights and Options. The Rights have
testing events in FY17, FY18 and FY19. The Options have testing events in FY19. The Directors did
so to attract the calibre of talent required to steer the Company through a turnaround period.
Why was EPS chosen
as the relevant
performance hurdle
for the Rights?
Earnings per share (‘EPS’) is directly linked to shareholder value creation. It encourages
management to grow top line revenue whilst maintaining adequate cost controls to deliver strong net
profit after tax results. The compounding nature of the metric year on year provides a rigorous metric
and a sound growth proposition for shareholders.
Why was retesting
of the Rights
permitted?
What is the purpose
of the disposal
restrictions / holding
locks?
Retesting of the Rights (equally allocated in three tranches) attributable to FY17 and FY18 was
permitted on the basis that the Company was in a period of uncertainty at the time of appointing
the Executive KMP. The requirement for compound annual growth (‘CAGR’) in EPS (compared to
straight line growth) provides a stringent testing metric over the period. This is coupled with a
governance overlay in the form of a holding lock. Any resultant shares realised upon vesting of the
Rights which applies until after the release of the Company’s audited accounts for the year ending
30 June 2021 (‘FY21’) to ensure a long term sustainable growth model is pursued and aligned to
shareholders’ interests.
Disposal restrictions or ‘holding locks’ have been placed on:
• 100% of shares realised from the exercise of the vested Rights until release of the Company’s
audited accounts for the year ending 30 June 2021 (‘FY21’); and
• 50% of the shares realised from the exercise of the vested Options until release of the Company’s
audited accounts for the year ending 30 June 2020 (‘FY20’).
This prevents the Executive KMP from selling the relevant shares immediately post vesting
and helps to ensure a long term, sustainable growth model is pursued to aligned to the interests
of shareholders.
What governance
mechanisms does
the Company have
in place regarding
LTI and trading in
shares generally?
Share Trading Policy:
The Company maintains a formal Share Trading Policy which was replaced in December 2017.
The policy prohibits trading based on insider information and limits the ability of Restricted Persons
to trade in Infomedia shares to several short trading windows following the release of half year and
full year financial results and following the Annual General Meeting. The policy also prohibits short
term or speculative trading.
Prohibition against hedging:
Additionally, the Company’s Performance Rights & Option Plan Rules prohibit Plan participants from
entering into hedging arrangements to limit the risk of their ‘at risk’ LTI component.
The Company does not impose any requirement on Executive KMP to hold a minimum quantity of
Infomedia shares at any time. Refer Table 18 showing the shareholdings of KMP during FY18.
Does the Company
impose a minimum
shareholding
requirement?
infomedia.com.au
25
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
ii. Summary of outstanding KMP LTI
The Executive KMP were granted LTI in the form of a combination of Rights and Options covering the three financial
years ending 30 June 2019 as part of their appointment in 2016. Further details of the key terms of the Rights and
Options are disclosed in section H.a below.
Performance
period
2016 Rights
Testing event
Financial
Performance hurdle
Strike
price
Performance
outcome
Retesting of
unvested Rights
Vesting
%
Tranche 1
2016-2017
After release of
FY17 accounts
25% vesting at 10%
CAGR above FY16 EPS
n/a
Over 15% CAGR
above FY16 EPS
No retesting is
required
100%
Tranche 2
2016-2018
After release of
FY18 accounts
100% vesting at 15%
CAGR above FY16 EPS
Pro rata vesting in
between 25% and 100%
11.7% CAGR
above FY16 EPS
After release of
FY19 accounts
50%
Tranche 3
2016-2019
After release of
FY19 accounts
0% vesting if less than
10% CAGR achieved
n/a
2016 Options
2016-2019
After release of
FY19 accounts
Share price must exceed
strike price
92.2
cents
n/a
iii. LTI outcomes by Executive KMP
Table 11 – Movement in Rights and Options
n/a
n/a
n/a
n/a
Number held at
Executive KMP
1 July 2017
2016 Rights
Jonathan Rubinsztein
1,418,067
Richard Leon
2016 Options
Jonathan Rubinsztein
Richard Leon
756,302
2,174,369
3,750,000
2,000,000
5,750,000
Number
granted
during FY18
Number vested and
exercised during
FY18
Number lapsed
during FY18
Number held at
30 June 2018
-
-
-
-
-
-
(472,689)
(252,100)
(724,789)
-
-
-
-
-
-
-
-
-
945,378
504,202
1,449,580
3,750,000
2,000,000
5,750,000
iv. LTI outcomes – fair value and maximum value to be recognised from grant date
Fair value
per Rights/
Options
Executive KMP
Grant date
($)
2016 Rights
Number of
Rights/Options
granted
Maximum value
to be recognised
from grant date
Vesting date
($)
Jonathan Rubinsztein
29 January 2016
0.53-0.57
1,418,067
Richard Leon
17 February 2016
0.53-0.57
756,302
30 June 2017
to 30 June 2019
30 June 2017
to 30 June 2019
2016 Options
Jonathan Rubinsztein
29 January 2016
Richard Leon
17 February 2016
0.07
0.07
3,750,000
30 June 2019
2,000,000
30 June 2019
774,600
413,600
279,000
149,000
infomedia.com.au
26
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
E. Executive KMP remuneration details
In this section the remuneration of Executive KMP is presented from two different perspectives. The first is the statutory
disclosure basis. The second basis replaces the movement in the estimated value of share-based payments to which
the Executive KMP became entitled during the year. It also removes movement in leave accruals. Whilst this is referred
to as actual received, it should be noted that the relevant share-based payments are subject to holding locks (see
section H.a below) and all payments are stated before applicable income tax.
a. Executive KMP remuneration outcomes in FY18 – Statutory basis
Table 12 below discloses the remuneration for Executive KMP calculated in accordance with statutory requirements and
Accounting Standards. Refer to table note underneath Table 12 for the relevant statutory and accounting requirements.
Table 12 – Total Executive KMP remuneration - Statutory basis
Short term employment benefits
Post-employment
benefits
Long term
benefits
Share-based
payments
Total
Table note
(1)
(2)
(3)
(4)
(5)
Cash salary and
leave accruals
Short
term
incentive
Non-
monetary
benefits
Super-
annuation
Termination
payments
$
$
$
$
$
487,765
493,577
Jonathan Rubinsztein
2018
2017
Richard Leon
2018
2017
307,491
266,579
329,325
360,000
159,640
192,000
-
-
-
-
25,000
25,000
20,048
19,605
-
-
-
-
Long
service
leave
accruals
Performance
rights and
share options
(refer to Table 14)
$
622
245
405
122
$
$
84,330
405,304
927,042
1,284,126
44,916
226,487
532,500
704,793
i. Footnote to Table 12
(a) The remuneration mix for the Executive KMP based on the remuneration details in Table 12 above are:
• Mr Rubinsztein: 55% fixed and 45% at-risk (2017: 40% fixed and 60% at-risk); and
• Mr Leon: 62% fixed and 38% at-risk (2017: 41% fixed and 59% at-risk).
ii. Table note
(1) Cash salary includes amounts paid in cash plus any salary sacrifice items. Annual leave accruals are determined
in accordance with Accounting Standard, AASB 119 Employee Benefits.
(2) The FY18 short term incentive has been approved by the Board and will be paid in cash in September 2018.
(3) Superannuation contributions are paid in line with legislative requirements.
(4) Long service leave accruals are determined in accordance with Accounting Standard, AASB 119 Employee Benefits.
(5) The share-based payments value in Table 12 above represents the amount of LTI (in the form of Rights and
Options) granted for the three financial years commencing 1 July 2016 from the date of service agreements
signed in accordance with Accounting Standard, AASB 2 Share-based Payments. Further information is provided
in section D.d in this Report.
Table 13 – Breakdown of share-based payments
Performance rights(a)
$
Share options
$
Total share-based payments
$
Jonathan Rubinsztein
2018
2017
Richard Leon
2018
2017
14,580
335,554
6,711
188,282
69,750
69,750
38,205
38,205
84,330
405,304
44,916
226,487
Footnote to Table 13
(a) The Rights value for FY18 is lower than FY17 due to the performance hurdles forecast to be partially met in the year
ending 30 June 2019 whilst in FY17 it was forecast to be fully met.
infomedia.com.au
27
2018 Annual Report
DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
b. Executive KMP remuneration outcomes in FY18 – Actual received
Table 14 discloses the cash and other benefits, being amounts actually received by the Executive KMP as distinct
from the technical accounting expense. Accordingly, this table does not align with the statutory remuneration
outcomes calculated in accordance with Accounting Standards in Table 12 above.
The actual remuneration received by the Executive KMP in Table 14 below represents:
• cash received/receivable amount for FY18 – cash salary, short term incentive – cash bonus and superannuation; and
•
the market value of Rights that vested and were converted to shares during FY18. The market value represents the
variable weighted average price of Infomedia shares in the four weeks following release of the Company’s FY17
results on 28 August 2017. This period has been selected as it gives a fair indication of the value attributed by the
market assessing the performance of the Company, and by implication the Executive KMP, based on the FY17
annual results. The VWAP over the period was 77.84 cents. Whilst this is referred to as actual received, it should
be noted that the relevant share-based payments are subject to holding locks (refer section H.a below) and all
payments are stated before applicable income tax.
Table 14 – Total Executive KMP remuneration – Actual pre-tax remuneration received
Short term employment benefits
Post-employment
benefits
Long term
benefits
Share-based
payments
Total
Cash
salary(a)
$
Short term
incentive
$
Jonathan Rubinsztein
2018
2017
485,621
485,000
329,325
360,000
Richard Leon
2018
2017
300,384
250,000
159,640
192,000
Footnote to Table 14
Non-
monetary
benefits
Super-
annuation
Termination
payments
Long service
leave
accruals
Performance
rights
vested and
exercised
$
-
-
-
-
$
$
$
$
$
25,000
25,000
20,048
19,605
-
-
-
-
-
-
-
-
367,941
1,207,887
-
870,000
196,235
676,307
-
461,605
(a) The remuneration mix for the Executive KMP based on the actual remuneration received details in Table 14 above are:
• Jonathan Rubinsztein: 42% fixed and 58% at-risk (2017: 59% fixed and 41% at-risk); and
• Richard Leon: 47% fixed and 53% at-risk (2017: 58% fixed and 42% at-risk).
F. Non-Executive Directors remuneration
a. Board and committee structure
As at the date of this Report, Infomedia’s Board and Committees are structured as follows.
Table 15 – Board and committee composition
Board
Audit & Risk
Committee
Non–
Executive &
Independent
Bart Vogel
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
Executive
Jonathan Rubinsztein
(C)
3
3
3
3
(C) represents Chairman of the Board or Committee.
3
3
(C)
Remuneration &
Nominations
Committee
3
(C)
3
Technology &
Innovation Committee
3
(C)
3
infomedia.com.au
28
2018 Annual Report
DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
b. Remuneration structure and governance principles
Remuneration structure Non-Executive Directors are remunerated in the form of Board fees, Committee chair fees and
superannuation paid in line with legislative requirements. See Table 16 below for further details.
Fees payable are fixed in accordance with formal agreements held between the Non-Executive
Directors and the Company (subject to periodic increases), and are paid from an aggregate fee
pool limit of $550,000.
Directors may also be reimbursed for travel and other expenses incurred in attending to the
affairs of the Company.
The Company does not impose any requirement on Non-Executive Directors to hold a minimum
quantity of Infomedia shares at any time. Refer Table 18 showing the shareholdings of the KMP
during FY18.
Does the Company
impose a minimum
shareholding
requirement?
Table 16 – Non-Executive Director Fees (exclusive of superannuation)
Board/Committee
Board
Role
Chairman
Non-Executive Directors
Audit & Risk Committee
Chairman
Remuneration & Nominations Committee Chairman
Technology & Innovation Committee
Chairman
Per role
$
175,000
75,000
15,000
15,000
15,000
Total
Total
$
175,000
225,000
15,000
15,000
15,000
445,000
infomedia.com.au
29
2018 Annual Report DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
G. Non-Executive Directors remuneration details
Table 17 below provides remuneration details for the Non-Executive Directors on the Company’s Board.
Paul Brandling was appointed as:
• Board Director on 1 October 2016; and
• Chairman of the Technology & Innovation Committee on 21 July 2017.
Mr Brandling’s fees have been pro-rated for both the financial year ended 30 June 2017 and 2018.
Table 17 – Total Non-Executive Director remuneration
Short term
employment
benefits
Board and
committee fees
Post-
employment
benefits
Superannuation
$
175,224
150,000
89,307
56,520
90,115
90,000
90,115
90,000
$
16,646
14,250
8,484
5,344
8,561
8,550
8,561
8,550
Total
$
191,870
164,250
97,791
61,594
98,676
98,550
98,676
98,550
Bart Vogel
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
2018
2017
2018
2017
2018
2017
2018
2017
H. Additional information
a. Key terms of Rights and Options
Key terms relate to all Rights and Options granted other than those specified in section D.d.ii above:
•
•
•
the Rights and Options granted to the Executive KMP are deemed to be granted on the date when their service
agreements were signed;
the Rights and Options are granted for nil consideration;
the vesting conditions of the Rights and Options are conditional on continuous employment and meeting
performance hurdles;
• when vesting:
m Rights – each right will be converted into one Infomedia ordinary share for nil consideration;
m Options – each option will be converted into one Infomedia ordinary share by paying an exercise price of 92.2 cents;
• holding lock for vested Rights and Options:
m Rights – subject to a holding lock until release of audited accounts for the year ending 30 June 2021;
m Options – 50% of exercised Options subject to a holding lock until release of audited accounts for the year
ending 30 June 2020.
b. Loans to KMP
There were no loans at the beginning or at the end of the financial year ended 30 June 2018 to the KMP. No loans
were made available to KMP during FY18.
infomedia.com.au
30
2018 Annual Report
DIRECTORS’ REPORT – Remuneration Report – Audited (continued)
c. Shareholdings of Non-Executive Directors and the Executive KMP
Table 18 below summarises the movement in holdings of Infomedia ordinary shares during the year and the balance
at the end of the financial year, both in total and held indirectly by related parties of the KMP.
Table 18 – Movement of shareholding interests of Directors in accordance with section 205G of the
Corporations Act 2001 and the other Executive KMP
Name
Balance at
30 June 2017
Number
Grant as
compen-
sation
Number
Exercise of
share options
Number
Exercise of
performance
rights
Number
Net other
changes
Number
Total shares
held directly
& indirectly at
30 June 2018(a)
Number
Non-Executive Directors:
Bart Vogel
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
Executive KMP:
300,000
144,020
80,000
45,000
Jonathan Rubinsztein
500,000
Richard Leon
119,000
Footnote to Table 18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
90,000
65,789
-
55,000
390,000
209,809
80,000
100,000
472,689
252,100
54,776
1,027,465
-
371,100
(a) Shares held indirectly are included in the column headed Total shares held at 30 June 2018. Total shares are held
directly by the KMP and indirectly by the KMP’s related parties, inclusive of domestic partner, dependants and
entities controlled, jointly controlled or significantly influenced by the KMP.
This concludes the Remuneration Report, which has been audited.
infomedia.com.au
31
2018 Annual Report DIRECTORS’ REPORT – Statutory Matters
Directors
The following persons were Directors of Infomedia Ltd during the whole of the financial year and up to the date of this
report, unless otherwise stated.
Name
Bart Vogel
Jonathan Rubinsztein
Paul Brandling
Clyde McConaghy
Role
Chairman & Independent Non-Executive Director
Chief Executive Officer & Managing Director
Independent Non-Executive Director
Independent Non-Executive Director
Anne O’Driscoll
Independent Non-Executive Director
Directorships of other listed companies
Directorships of other listed companies held by the Directors in the three years preceding the end of the financial year
are as follows.
Name
Bart Vogel
Jonathan Rubinsztein
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
Company
Macquarie Telecom Ltd
Sedgman Ltd
Salmat Limited
InvoCare Ltd
None
Integrated Research Limited
Tesserent Limited
Vocus Communications Limited
Serko Limited (ASX & NZX)
Steadfast Group Limited
Period of directorship
Since 2014
From February 2015 to November 2015
Since 2017
Since 2017
Since 2015
From 2015 to 2017
From 2015 to 2016
Since 2014
Since 2013
Particulars of the Directors’ qualifications and experience are set out under Board of Directors on page 11.
Meetings of directors
The number of meetings of the Company’s Board of Directors (the ‘Board’) and of each Board committee held during
the year ended 30 June 2018, and the number of meetings attended by each Director were as follows.
Bart Vogel
Jonathan Rubinsztein
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
Board
Held Attended
10
10
10
10
10
10
10
10
10
10
Audit & Risk
Committee
Remuneration &
Nominations Committee
Technology &
Innovation Committee
Held Attended
-
-
5
5
5
-
-
5
5
5
Held Attended
5
-
1
5
4
5
-
1
5
4
Held Attended
4
4
4
-
-
4
4
4
-
-
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant
committee.
Refer to Table 15 in the Remuneration Report for the three committees’ members composition.
infomedia.com.au
32
2018 Annual Report DIRECTORS’ REPORT – Statutory Matters (continued)
Company secretaries
Daniel Wall BBA, LLB
Mr Wall is a lawyer, admitted to the Supreme Court of New South Wales and the High Court of Australia in 2007. He
gained experience across a range of practice areas including finance, corporate restructuring and insolvency, prior to
joining Infomedia in 2011. He also holds a Certificate in Governance Practice from the Governance Institute of Australia.
Mark Grodzicky BSc, LLB
Mr Grodzicky joined Infomedia Ltd in 2017 as General Counsel, leading the legal and company secretariat team for
Infomedia’s worldwide operations and Company Secretary. He holds degrees in Law and Science. Prior to joining
Infomedia, Mr Grodzicky, over a 30 year career, held general counsel and company secretarial roles with global IT
companies including Wang, Sun Microsystems, Digital Equipment, Compaq, HP, Getronics, UXC, CSC and DXC.
Significant changes in the affairs
On 25 August 2017, the Group completed the acquisition of a CRM software product for its customers. Refer to note
13 for details of this business acquisition.
There were no other significant changes in the state of affairs of the Group during the financial year.
Dividends
Details of dividends paid or declared by the Company during the financial year ended 30 June 2018 are set out in note 3.
Matters subsequent to the end of the financial year
Other than the Board declared a final dividend of 1.70 cents per share, fully franked, there has been no matter
or circumstance arisen since 30 June 2018 that has significantly affected, or may significantly affect the Group’s
operations, the results of those operations, or the Group’s state of affairs in future financial years:
Indemnity and insurance of officers
To the extent permitted by law, the Company has indemnified the Directors and executives of the Company for
liability, damages and expenses incurred, in their capacity as a Director or executive, for which they may be held
personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the Directors and executives
of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Corporate governance
Infomedia strives to achieve compliance with the governance recommendations set out in the Corporate Governance
Principles and Recommendations 3rd Edition, published by the ASX Corporate Governance Council (the ASX
Principles). The Company addresses the ASX Principles in a manner consistent with its relative size and resourcing
capabilities. Infomedia’s latest Corporate Governance Statement was lodged with the ASX on the same date as this
report and is available on the Company’s website, http://www.infomedia.com.au/investors/corporate-governance/
Share options
At the date of this report, there are 5,750,000 share options issued in respect of ordinary shares of Infomedia Ltd.
No person entitled to exercise the share options had or has any right by virtue of the option to participate in any share
issue of the Company or of any other body corporate.
Shares issued on the exercise of options
There were no shares issued as a result of the exercise of share options during the financial year.
Since the end of the financial year, there have been no share options exercised.
infomedia.com.au
33
2018 Annual Report DIRECTORS’ REPORT – Statutory Matters (continued)
Performance rights
At the date of this report, there are 3,264,541 performance rights issued in respect of ordinary shares of Infomedia Ltd.
Shares issued on the exercise of performance rights
There were no ordinary shares of Infomedia Ltd issued on the exercise of performance rights during the year ended 30
June 2018 and up to the date of this report. All performance rights vested and exercised during the reporting period
were satisfied by the transfer of Infomedia’s ordinary shares purchased on market.
Auditor
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 19 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by
another person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 19 to the financial statements do not
compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the
Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set
out immediately after this directors’ report.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, issued by the Australian Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this
report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
Bart Vogel
Chairman
15 August 2018
infomedia.com.au
34
2018 Annual Report Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX: 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7021
www.deloitte.com.au
The Board of Directors
Infomedia Ltd
3 Minna Close
Belrose NSW 2085
15 August 2018
Dear Board Members
Infomedia Ltd
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide
the following declaration of independence to the directors of Infomedia Ltd.
As lead audit partner for the audit of the financial statements of Infomedia Ltd for the
financial year ended 30 June 2018, I declare that to the best of my knowledge and belief,
there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely,
DELOITTE TOUCHE TOHMATSU
Sandeep Chadha
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
2018 Annual Report
FINANCIAL REPORT
Introduction
This is the financial report of Infomedia Ltd (the ‘Company’) and its subsidiaries (together
referred to as ‘Infomedia’ or the ‘Group’).
This financial report was authorised for issue, in accordance with a resolution of Directors on
15 August 2018.
The Directors have the power to amend and reissue the financial report.
About this report
Disclosures are split into five distinct groups to enable a better understanding of how the Group
has performed. We have included key notes next to each group of notes to explain its purpose and
content. Accounting policies and critical accounting judgements applied to the preparation of the
financial statements are shown where the related accounting balance or financial statement matter
is discussed.
Key performance metrics
Key note
42 Note 1. Operating segments
43 Note 2. Earnings per share
44 Note 3. Equity - dividends
45 Note 4. Income and expenses
47 Note 5. Income tax
FY18 performance overview:
• FY18 segment results by regions – no change
in segments
• NPAT - $12.897 million – a 7.9% increase pcp
• Basic earnings per share – 4.16 cents, an 8.1% increase
• Final dividends per share – 1.70 cents,
a 41.7% increase
Significant operating assets and liabilities
Key note
49 Note 6. Intangibles
FY18 intangibles :
52 Note 7. Trade and other receivables
• Capitalised development costs – continued
investment in product development – $18.463 million
(FY17: 13.715 million);
• Amortisation expense increased in line with new
revenue stream – $11.234 million (FY17: 8.474 million)
FY18 trade and other receivables overview:
• Minimal recoverability issues on receivables with
immaterial provision for impairment of receivables
($0.414 million), similar level to prior period
Group’s capital and risks
Key note
53 Note 8. Issued capital and treasury shares held
• The Group has no debt
in trust
54 Note 9. Financial instruments
55 Note 10. Contingencies
56 Note 11. Commitments
56 Note 12. Events after reporting date
• Issued capital – no change
• Foreign currency risks are managed through
hedging contracts to minimise the exposure to
significant exchange rate fluctuations
• No subsequent events after the year end other than
the declaration an of FY18 final dividend – 1.70 cents
infomedia.com.au
36
2018 Annual Report
FINANCIAL REPORT
Four financial statements
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
38
39
40
41
Business portfolio
Key note
56 Note 13. Business combinations
59 Note 14. Interests in subsidiaries
The Group acquired the Microcat CRMTM business in
August 2017
No change in subsidiaries and location of operations
Other disclosures
Key note
59 Note 15. Share-based remuneration
63 Note 16. Cash flow information
63 Note 17. Key management personnel disclosures
64 Note 18. Parent entity information
65 Note 19. Remuneration of auditors
65 Note 20. Basis of preparation and other
accounting policies
This group of disclosures is required by the accounting
standards and the Corporations Act 2001.
infomedia.com.au
37
Infomedia Ltd
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
Revenue
Expenses
Research and development expenses
Sales and marketing expenses
General and administration expenses
Total expenses
Operating profit
Other income
Net finance income/(costs)
Net foreign currency translation gains/(losses)
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners of Infomedia
Ltd
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Net change in the fair value of cash flow hedges taken to equity, net of tax
Foreign currency translation
Other comprehensive income/(loss) for the year, net of tax
Consolidated
Note
2018
$'000
2017
$'000
4
4
4
5
72,935
70,474
(14,587)
(24,777)
(18,135)
(57,499)
(13,980)
(22,846)
(18,002)
(54,828)
15,436
15,646
717
(564)
73
-
36
(144)
15,662
15,538
(2,765)
(3,585)
12,897
11,953
10
186
196
(158)
(367)
(525)
Total comprehensive income for the year attributable to the owners of Infomedia Ltd
13,093
11,428
Basic earnings per share
Diluted earnings per share
Cents
Cents
2
2
4.16
4.15
3.85
3.83
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes
infomedia.com.au
38
2018 Annual Report
Infomedia Ltd
Consolidated statement of financial position
As at 30 June 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Income tax refund due
Prepayments
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade payables
Other payables
Provisions
Employee benefits
Contingent consideration
Deferred revenue
Total current liabilities
Non-current liabilities
Deferred tax
Provisions
Employee benefits
Contingent consideration
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Treasury shares held in trust
Foreign currency reserve
Share-based payments reserve
Cash flow hedge reserve
Retained profits
Total equity
Consolidated
Note
2018
$'000
2017
$'000
7
5
6
13
5
13
8
8
13,282
7,603
1,733
1,583
24,201
1,717
53,693
55,410
13,313
7,826
2,175
1,529
24,843
1,911
40,253
42,164
79,611
67,007
1,942
5,534
216
3,013
870
1,131
12,706
7,088
1,073
445
4,071
12,677
2,150
4,820
216
3,146
-
992
11,324
4,415
989
423
-
5,827
25,383
17,151
54,228
49,856
12,923
(978)
1,665
3,328
-
37,290
12,923
(602)
905
3,499
(10)
33,141
54,228
49,856
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
infomedia.com.au
39
2018 Annual Report
Infomedia Ltd
Consolidated statement of changes in equity
For the year ended 30 June 2018
Consolidated
Treasury
shares held
in
trust
$'000
Foreign
currency
reserve
$'000
Share-
based
payments
reserve
$'000
Share
capital
$'000
Cash flow
hedge
reserve
$'000
Retained
profits
$'000
Total equity
$'000
Balance at 1 July 2016
12,449
Profit after income tax expense
for the year
Other comprehensive loss for the
year, net of tax
Total comprehensive
income/(loss) for the year
Transactions with owners in
their capacity as owners:
Share-based payments
Tax effect related to share-based
payments
Share options exercised
Purchase of treasury shares
Dividends paid (note 3)
-
-
-
-
-
474
-
-
Balance at 30 June 2017
12,923
-
-
-
-
-
-
-
(602)
-
(602)
1,272
711
148
29,578
44,158
-
(367)
(367)
-
-
-
-
-
-
-
-
812
1,976
-
-
-
-
11,953
11,953
(158)
-
(525)
(158)
11,953
11,428
-
-
-
-
-
-
812
-
-
-
(8,390)
1,976
474
(602)
(8,390)
905
3,499
(10)
33,141
49,856
Consolidated
Treasury
shares held
in
trust
$'000
Foreign
currency
reserve
$'000
Share-
based
payments
reserve
$'000
Share
capital
$'000
Cash flow
hedge
reserve
$'000
Retained
profits
$'000
Total equity
$'000
Balance at 1 July 2017
12,923
(602)
905
3,499
(10)
33,141
49,856
Profit after income tax expense
for the year
Other comprehensive income for
the year, net of tax
Total comprehensive income for
the year
Transactions with owners in
their capacity as owners:
Transfer to foreign currency
translation reserve from retained
earnings
Share-based payments
Tax effect related to share-based
payments
Share allocated to employees on
vesting of performance rights
Purchase of treasury shares
Dividends paid (note 3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
517
(893)
-
-
186
186
574
-
-
-
-
-
-
-
-
-
124
222
(517)
-
-
Balance at 30 June 2018
12,923
(978)
1,665
3,328
-
12,897
12,897
10
-
196
10
12,897
13,093
-
-
-
-
-
-
-
(574)
(111)
-
-
-
(8,063)
-
13
222
-
(893)
(8,063)
37,290
54,228
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
infomedia.com.au
40
2018 Annual Report
Infomedia Ltd
Consolidated statement of cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for property, plant and equipment
Payments for development costs capitalised
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from exercise of share options
Payments for purchase of treasury shares
Dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on balances of cash held in foreign currencies
Cash and cash equivalents at the end of the financial year
Consolidated
Note
2018
$'000
2017
$'000
16
13
8
3
74,129
(45,952)
28,177
60
(135)
70,048
(43,860)
26,188
36
(4,183)
28,102
22,041
(1,200)
(118)
(18,276)
-
-
(1,768)
(13,146)
135
(19,594)
(14,779)
-
(893)
(8,063)
474
(602)
(8,390)
(8,956)
(8,518)
(448)
13,313
417
(1,256)
14,748
(179)
13,282
13,313
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
infomedia.com.au
41
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 1. Operating segments
Identification of reportable segments
The Group is organised into three reportable segments:
●
●
●
Asia Pacific;
Europe, Middle East and Africa ('EMEA'); and
Americas, representing the combined North America and Latin and South America regions.
These reportable segments are based on the internal reports that are reviewed and used by the Chief Executive Officer & Managing
Director (who is identified as the Chief Operating Decision Maker ('CODM')) in assessing performance and in determining the
allocation of resources. There is no aggregation of reportable segments.
The reportable segments are identified by management based on the region in which the product is sold. Discrete financial
information about each of these operating segments is reported to the Board of Directors regularly.
The CODM reviews earnings before interest and tax ('EBIT'). The accounting policies adopted for internal reporting to the CODM are
consistent with those adopted in the financial statements.
Major customers
The Group has many customers to which it provides products. There is no significant reliance on any single customer.
Reportable segment information
Consolidated - 2018
Revenue
Revenue from external customers
Other income
Finance income
Total revenue
EBIT
Net finance costs
Profit/(loss) before income tax expense
Income tax expense
Profit after income tax expense
Consolidated - 2017
Revenue
Revenue from external customers
Finance income
Total revenue
EBIT
Net finance income
Profit/(loss) before income tax expense
Income tax expense
Profit after income tax expense
Asia Pacific
$'000
EMEA
$'000
Americas
$'000
Unallocated
$'000
Total
$'000
18,259
-
-
18,259
14,911
-
14,911
28,235
-
-
28,235
22,056
-
22,056
25,163
-
-
25,163
9,577
-
9,577
1,278
717
60
2,055
(30,318)
(564)
(30,882)
72,935
717
60
73,712
16,226
(564)
15,662
(2,765)
12,897
Asia Pacific
$'000
EMEA
$'000
Americas
$'000
Unallocated
$'000
Total
$'000
17,054
-
17,054
13,661
-
13,661
29,649
-
29,649
22,749
-
22,749
23,771
-
23,771
9,071
-
9,071
-
36
36
(29,979)
36
(29,943)
70,474
36
70,510
15,502
36
15,538
(3,585)
11,953
infomedia.com.au
42
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 1. Operating segments (continued)
Unallocated EBIT
Unallocated EBIT is represented by the following costs:
Research and development expenses
General and administration expenses
Note 2. Earnings per share
2018
$'000
2017
$'000
14,587
15,731
13,980
15,999
30,318
29,979
Consolidated
2018
$'000
2017
$'000
Profit after income tax attributable to the owners of Infomedia Ltd
12,897
11,953
Basic earnings per share
Diluted earnings per share
Weighted average number of ordinary shares used in calculating basic earnings per share:
Weighted average number of ordinary shares issued
Weighted average number of treasury shares held in trust
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Share options and performance rights
ª
Weighted average number of ordinary shares used in calculating diluted earnings per share
⁽
⁾
Cents
Cents
4.16
4.15
3.85
3.83
Number
Number
310,824,000
(1,037,000)
310,531,000
(136,000)
309,787,000
310,395,000
Number
Number
309,787,000
310,395,000
1,242,000
1,573,000
311,029,000
311,968,000
The weighted average number of ordinary shares or dilutive potential ordinary shares is calculated by taking into account the period
from the issue date of the shares to the reporting date unless otherwise stated as below.
(a) Infomedia operates share-based payments arrangements (in the form of a long term incentive plan) where eligible employees
may receive performance rights. One performance right will convert to one Infomedia ordinary share subject to vesting
conditions being met. These share-based payments arrangements are granted to employees free of costs and no
consideration is paid on conversion to Infomedia ordinary shares upon vesting. These arrangements have a dilutive effect to
the basic earnings per share.
(b) During the financial year ended 30 June 2018, Infomedia acquired Microcat CRM™ business, any potential contingent
consideration to be settled in the future will be partly in the form of Infomedia ordinary shares. As at 30 June 2018, the
contingent consideration recognised on the statement of financial position has not been included as dilutive potential ordinary
shares in the diluted earnings per share calculation.
Accounting policy for earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Infomedia Ltd by the weighted average
number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the
financial year and excluding treasury shares.
infomedia.com.au
43
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 2. Earnings per share (continued)
Diluted earnings per share adjusts the figures 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 shares assumed to have been issued at no consideration received in relation to dilutive potential ordinary shares.
Note 3. Equity - dividends
Dividends
Dividends paid during the financial year were as follows:
Interim dividend for the year ended 30 June 2018 (2017: 30 June 2017) of 1.40 cents fully franked
(2017: 1.70 cents fully franked) per ordinary share
Final dividend for the year ended 30 June 2017 (2017: 30 June 2016) of 1.20 cents fully franked
(2017: 1.00 cents fully franked) per ordinary share
Consolidated
2018
$'000
2017
$'000
4,343
3,720
8,063
5,287
3,103
8,390
During the financial year ended 30 June 2018, total dividends paid in relation to treasury shares held in trust controlled by the Group
was $0.030 million (2017: Nil).
On 15 August 2018, the directors declared a final dividend of 1.70 cents per share, fully franked, to be paid on 10 September 2018.
As this occurred after the reporting date, the dividends declared have not been recognised in these financial statements and will be
recognised in future financial statements.
The Company has a Dividend Reinvestment Plan ('DRP') that allows equity holders to elect to receive their dividend entitlement in the
form of the Company’s ordinary shares. The price of DRP shares is the average share market price, less a discount if any
(determined by the directors) calculated over the pricing period (which is at least five trading days) as determined by the directors for
each dividend payment date.
The Company’s DRP operates by purchasing shares on market. No discount has been applied. Election notices for participation in the
DRP in relation to this final dividend must be received by 23 August 2018.
Franking credits
Consolidated
2018
$'000
2017
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
347
4,350
● franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date;
● franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
● franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
Accounting policy for dividends
Dividends are recognised when declared during the financial year.
infomedia.com.au
9
44
2018 Annual Report Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 4. Income and expenses
Profit before income tax includes the following specific expenses:
Other income
Revaluation of contingent consideration
Net finance (costs)/income
Finance income
Finance costs
Depreciation, amortisation and impairment
Depreciation
Amortisation
Impairment
Total depreciation, amortisation and impairment
Net foreign exchange loss
Cash flow hedges loss/(gain)
Realised foreign exchange losses/(gains)
Unrealised foreign currency translation (gains)/losses
Net foreign exchange (gains)/losses
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
Employee benefits expense excluding superannuation
Employee benefits expense excluding superannuation
Research and development expenses
Total research and development costs incurred during the financial year
Amortisation of deferred development costs
Impairment on capitalised development costs
Less: development costs capitalised
Net research and development costs expensed
Consolidated
2018
$'000
2017
$'000
717
60
(624)
(564)
560
12,166
98
12,824
59
37
(110)
(73)
(14)
-
36
-
36
635
8,718
364
9,717
(346)
(4)
148
144
(202)
2,114
2,066
2,186
1,888
13
812
34,164
30,959
21,718
11,234
98
(18,463)
18,857
8,474
364
(13,715)
14,587
13,980
Critical accounting judgements, estimates and assumptions - research and development
Research and development expenses incurred relate to works provided by third parties and internal salaries and on-costs of
employees.
Research costs are expensed in the period in which they are incurred.
infomedia.com.au
10
45
2018 Annual Report Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 4. Income and expenses (continued)
Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical
feasibility, and the costs can be measured reliably.
The key judgements relate to:
●
determining the portion of the internal salary and on-costs that are directly attributable to development of the Group’s product
suite and software; and
identifying and assessing the technical feasibility of completing the intangible asset and generating future economic benefits.
●
An impairment loss is recognised if the carrying amount of the development asset exceeds its recoverable amount.
The Group determines the estimated useful lives for the capitalised development costs. The useful lives could change significantly as
a result of technical innovations or some other event. The amortisation charge will increase where the useful lives are less than
previously estimated lives, or technically obsolete or items no longer in use will be written off or written down.
Accounting policies
Foreign currency translation
The financial statements are presented in Australian dollars, which is Infomedia Ltd's functional and presentation currency.
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date.
The revenue and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which
approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in
other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and
benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all
such risks and benefits.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the
term of the lease.
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly
within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date is measured at
the present value of expected future payments to be made in respect of services provided by employees up to the reporting date.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to
maturity and currency that match, as closely as possible, the estimated future cash outflows.
infomedia.com.au
46
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 5. Income tax
Income tax expense
Current tax
Deferred tax - current year
Prior year (overs)/unders - current and deferred tax
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
Increase in deferred tax liabilities
Deferred tax - current year
Deferred tax - prior year overs
Net movement in deferred tax
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Additional research and development deduction
Effects of foreign tax rates difference
Share-based payments trust contributions
Non-deductible expenses
Current tax - prior year unders
Deferred tax - prior year overs
Income tax expense
Amounts charged/(credited) directly to equity
Deferred tax assets
Deferred tax liabilities
Consolidated
2018
$'000
2017
$'000
814
2,469
(518)
2,765
71
2,398
2,469
(582)
1,887
2,837
695
53
3,585
(803)
1,498
695
-
695
15,662
15,538
4,699
4,661
(1,464)
14
-
34
3,283
64
(582)
(1,196)
5
(308)
370
3,532
53
-
2,765
3,585
Consolidated
2018
$'000
2017
$'000
(222)
-
(1,976)
12
(222)
(1,964)
infomedia.com.au
47
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 5. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Provisions
Share-based payments
Other payables
Foreign currency exchange
Offset against deferred tax liabilities
Movements:
(Charged)/credited to profit or loss
Credited to equity
Reversal of offset against deferred tax liabilities
Offset against deferred tax liabilities
Closing balance
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Deferred development costs
Share-based payment trust contributions
Intangible assets
Offset against deferred tax assets
Deferred tax liability
Movements:
Opening balance
Charged to profit or loss
Charged to equity
Additions through business combinations
Reversal of offset against deferred tax assets
Offset against deferred tax assets
Closing balance
Income tax refund due
Income tax refund due
infomedia.com.au
48
Consolidated
2018
$'000
2017
$'000
2,042
2,198
(6)
(156)
(4,078)
1,951
1,976
(4)
4
(3,927)
-
-
(71)
222
3,927
(4,078)
803
1,976
1,148
(3,927)
-
-
Consolidated
2018
$'000
2017
$'000
10,308
50
808
(4,078)
8,169
173
-
(3,927)
7,088
4,415
4,415
1,816
-
1,008
3,927
(4,078)
5,684
1,498
12
-
1,148
(3,927)
7,088
4,415
Consolidated
2018
$'000
2017
$'000
1,733
2,175
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 5. Income tax (continued)
Critical accounting judgements, estimates and assumptions
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the
provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which
the ultimate tax determination is uncertain, for example, research and development claims. The Group recognises liabilities for
anticipated tax based on the Group's current understanding of the relevant tax regulations. Where the final tax outcome of these
matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in
which such determination is made.
Accounting policy for income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income
tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences,
unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets
are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to
be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable
profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current
tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same
taxable entity or different taxable entities which intend to settle simultaneously.
Note 6. Non-current assets - intangibles
Goodwill
Capitalised development costs
Less: Accumulated amortisation
Software systems - at valuation
Less: Accumulated amortisation
Customer relationships - at valuation
Less: Accumulated amortisation
Consolidated
2018
$'000
2017
$'000
15,604
12,237
62,203
(27,779)
34,424
4,332
(1,022)
3,310
492
(137)
355
43,837
(16,544)
27,293
2,604
(1,881)
723
-
-
-
53,693
40,253
infomedia.com.au
49
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 6. Non-current assets - intangibles (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Goodwill
$'000
Capitalised
development
costs
$'000
Software
systems
$'000
Customer
relationships
$'000
Total
$'000
Balance at 1 July 2016
Additions
Revaluation on cost (foreign exchange movements)
Revaluation on amortisation
Disposal - cost
Disposal - accumulated amortisation
Impairment of assets - cost
Impairment of assets - accumulated amortisation
Amortisation expense
Balance at 30 June 2017
Additions through business combinations (note 13)
Additions
Disposal - cost
Disposal - accumulated amortisation
Impairment of assets - cost
Amortisation expense
12,367
-
(65)
(22)
-
-
-
-
(43)
12,237
3,367
-
-
-
-
-
22,416
13,715
-
-
(6,174)
6,174
(553)
189
(8,474)
27,293
-
18,463
-
-
(98)
(11,234)
Balance at 30 June 2018
15,604
34,424
547
378
-
-
-
-
-
-
(202)
723
3,382
-
(1,654)
1,654
-
(795)
3,310
-
-
-
-
-
-
-
-
-
-
492
-
-
-
-
(137)
35,330
14,093
(65)
(22)
(6,174)
6,174
(553)
189
(8,719)
40,253
7,241
18,463
(1,654)
1,654
(98)
(12,166)
355
53,693
Impairment testing
The Group performed impairment testing for goodwill on an annual basis and other intangibles where there are indicators of
impairment.
Goodwill
Goodwill acquired through business combinations or territory acquisition has been allocated to a reportable segment (refer note 1) for
impairment testing as follows:
Asia Pacific
EMEA
Americas
Consolidated
2018
$'000
2017
$'000
6,144
5,837
3,623
2,777
5,837
3,623
15,604
12,237
Impairment assessment
The methodology used in the impairment testing is value-in-use, a discounted cash flow model, based on a five year projection from
the approved budget for the year ending 30 June 2019 (‘FY19’) of the tested segments and a terminal value.
Key assumptions are those to which the recoverable amount of reportable segment is most sensitive.
The following key assumptions were used in the discounted cash flow model for the different reportable segments:
●
growth rates applied based on the FY19 budget applied are 5% to 10% (2017: 5% to 10%) for Asia Pacific, 0% to 5% (2017: 1%
to 5%) for EMEA and 5% to 10% (2017: 5% to 10%) for Americas;
terminal growth rates applied are 2.5% (2017: 2.5%) for Asia Pacific and Americas and 2.5% (2017: 1.0%) for EMEA;
post-tax weighted average cost of capital applied is 10.0% (2017: 11.5%) for Asia Pacific, 10.5% (2017: 10.5%) for EMEA and
10.5% (2017: 10.8%) for Americas; and
exchange rates used in the cash flow projections for foreign operations are: AUD/USD exchange rate - $0.74 (2017: $0.75) and
AUD/EUR exchange rate - $0.63 (2017: $0.67).
●
●
●
infomedia.com.au
50
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 6. Non-current assets - intangibles (continued)
As at 30 June 2018, the recoverable amount of net assets of the Group is greater than the carrying value of the assets and therefore
goodwill is not considered to be impaired.
The following describes each key assumption on which management has based its cash flow projections when determining the value-
in-use of its reportable segments:
●
●
●
●
the Group will continue to have access to the data supply from automakers over the projection period;
the Group will not experience any substantial adverse movements in currency exchange rates;
the Group’s research and development program will ensure that the current suite of products remains competitive; and
the Group is able to maintain its current gross margins.
No reasonable possible change in assumptions would result in the recoverable amount of a reportable segment being materially less
than the carrying value.
Intangible assets other than goodwill
Capitalised development costs - An impairment loss of $0.098 million was recognised for the year ended 30 June 2018 (2017:
impairment loss of $0.364 million). The impairment loss arose from the regular review of capitalised development costs. Management
determined to write-off all items with net written down value below $1,000 and any projects which were cancelled during the relevant
financial year ended.
Software systems - There were no indicators of impairment.
Customer relationships - There were no indicators of impairment.
Critical accounting judgements, estimates and assumptions - goodwill
The recoverable amounts of goodwill of the relevant reportable segments have been determined based on value-in-use calculations.
These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth
rates of the estimated future cash flows.
Accounting policy for intangible assets
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or
more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated
impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed if the related asset
subsequently increases in value.
Capitalised development costs
Research costs are expensed in the period in which they are incurred. Capitalised development costs represent the up-front costs of
developing new products or enhancing existing products to meet customer needs. Development costs are capitalised when it is
probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the
asset; the Group has sufficient resources and intent to complete the development; and its costs can be measured reliably. Capitalised
development costs are amortised on a straight-line basis over the period of their expected benefit, being their finite useful life of four
to five years.
Software systems
Software systems acquired in a business combination and are amortised on a straight-line basis over the period of their expected
benefit, being their finite useful life of four to five years.
Customer relationships
Customer relationships acquired in a business combination and are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of three years.
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 7. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Impairment of receivables
The ageing of the impaired receivables provided for above are as follows.
Over 60 days overdue
Consolidated
2018
$'000
2017
$'000
7,771
(414)
7,357
7,880
(396)
7,484
246
342
7,603
7,826
Consolidated
2018
$'000
2017
$'000
414
396
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $1.436 million as at 30 June 2018
(2017: $1.764 million).
The Group did not consider credit risk on the aggregate balances after reviewing the credit terms of customers based on recent
collection practices.
The ageing of the past due but not impaired receivables are as follows:
0 to 60 days overdue
Over 60 days overdue
Consolidated
2018
$'000
2017
$'000
782
654
1,436
1,108
656
1,764
Accounting policy for trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less any provision for impairment. Trade receivables are generally due for settlement within 30 to 60 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by
reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that
the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties
of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more
than 60 days overdue) are considered indicators that the trade receivable may be 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 as the effect of discounting is immaterial.
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 8. Equity - issued capital and treasury shares held in trust
Consolidated
2018
Shares
2017
Shares
2018
$'000
2017
$'000
Ordinary shares - fully paid
Treasury shares held in trust - fully paid
310,824,000
(1,254,000)
310,824,000
(841,000)
12,923
(978)
12,923
(602)
309,570,000
309,983,000
11,945
12,321
Movements in ordinary share capital
Details
Balance
Share options exercised
Balance
Balance
Movements in treasury shares held in trust
Details
Balance
Purchase of treasury shares
Balance
Purchase of treasury shares
Disposal of treasury shares
Date
1 July 2016
Shares
Issue price
$'000
309,987,000
837,000
$0.57
30 June 2017
310,824,000
30 June 2018
310,824,000
12,449
474
12,923
12,923
Date
1 July 2016
30 June 2017
Shares
Acquisition
price
$'000
-
(841,000)
(841,000)
(1,138,000)
725,000
(1,254,000)
$0.72
$0.79
$0.71
-
(602)
(602)
(893)
517
(978)
Balance
30 June 2018
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the
number of shares held, taking into account amounts paid on those shares. The fully paid ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
Treasury shares held in trust
Treasury shares are ordinary shares of the Company bought on market by the trustee (a wholly owned subsidiary of the Group) for
the Employee Performance Rights and Option Plan (the 'plan') to meet future obligations under that plan when performance rights
and share options vest and shares are allocated to participants.
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue its
listing on the Australian Securities Exchange, provide returns for shareholders and benefits for other stakeholders.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares and take on borrowings.
The capital risk management policy remains unchanged from the 2017 Annual Report.
Accounting policy for issued capital
Ordinary shares are classified as equity.
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 8. Equity - issued capital and treasury shares held in trust (continued)
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds.
Note 9. Financial instruments
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), credit
risk and liquidity risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the
Board'). These policies include the identification and analysis of both the risk exposure of the Group as well as the appropriate
procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks where appropriate. Finance reports to the
Board on a regular basis.
The Group uses derivative financial instruments, zero cost collar contracts to hedge certain risk exposures. Derivatives are
exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to
measure different types of risks to which it is exposed. These methods include sensitivity analysis in the case of foreign exchange,
aging analysis for credit risk.
Market risk
Foreign currency risk
The Group operates and trades in three major economic currency regions (Asia Pacific; Europe, Middle East and Africa; and
Americas, including North America and Latin and South Americas); and as a result, exposures to exchange rate fluctuations arise.
These exposures mainly arise from the subscriptions of the Group’s products and to a lesser extent the associated cost relating to
these products. As the Group’s product offerings are typically made on a recurring monthly subscription basis, there is a relatively
high degree of reliability in estimating a proportion of future net cash flow exposures. The Group seeks to mitigate exposure to
movements in these currencies in extreme situations by entering into zero cost collar contracts under an approved hedging policy.
In addition to the transactional sale of products, the Group’s investment in both its European and United States subsidiaries, the
Group’s statement of financial position can be affected by movements in both the Euro ('EUR') and United States dollar ('USD')
against the Australian dollar ('AUD'), with a corresponding impact to the foreign currency reserve in equity.
As at 30 June 2018, there are no outstanding derivative financial instruments in place.
At 30 June 2018, the carrying value of foreign currency denominated cash and cash equivalents are as follows.
US Dollar
Euro
Consolidated
2018
$'000
2017
$'000
4,177
2,518
6,695
5,831
2,896
8,727
The Group had cash denominated in foreign currencies of $6.695 million as at 30 June 2018 (2017: $8.727 million). Based on this
exposure, had the Australian dollar weakened by 15%/strengthened by 10% (2017: weakened by 15%/strengthened by 10%) against
these foreign currencies with all other variables held constant, the Group's profit after tax for the year would have been $0.703 million
higher/$0.469 million lower (2017: $0.916 million higher/$0.611 million lower) and equity would have been $0.703 million
higher/$0.469 million lower (2017: $0.916 million higher/$0.611 million lower). The percentage change is the expected overall volatility
of the significant currencies, based on management's assessment of reasonable possible fluctuations. The actual foreign exchange
gain for the year ended 30 June 2018 was $0.073 million (30 June 2017: loss of $0.144 million).
infomedia.com.au
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 9. Financial instruments (continued)
Interest rate risk
The Group is not exposed to any significant interest rate risk. As at the reporting date, the Group had the following variable rate cash
and cash equivalents:
Consolidated
Cash at bank
Cash on deposit
2018
2017
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
Balance
$'000
-
1.36%
7,285
5,997
13,282
-
0.82%
9,919
3,394
13,313
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The
maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements.
Credit risk of the Group mainly arises from cash and cash equivalents and trade and other receivables.
The cash and cash equivalents are placed with major banks in those countries where the Group operates and therefore the credit risk
is minimal.
The Group’s credit risk with regard to trade receivables is spread broadly across three automotive groups - manufacturers, distributors
and dealerships. Receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not
significant. As the products typically have a monthly life cycle and are priced on a relatively low subscription price, the concentration
of credit risk is relatively low with automotive manufacturers being the exception.
Since the Group trades only with recognised third parties, collateral is not requested nor is it the Group’s policy to securitise its trade
and other receivables. The ageing analysis as disclosed in note 7 shows that majority of the Group’s trade receivables are within the
normal credit term and the receivables impairment loss is immaterial.
Liquidity risk
The Group’s exposure to liquidity risk is minimal given the relative strength of the statement of financial position and cash flows from
operations.
Given the nature of the Group’s operations and no borrowings, the Group does not have fixed or contractual payments at the
reporting date other than operating leases and contingent consideration. Contingent consideration may be payable over the next three
years with 50% in cash and 50% in Infomedia Ltd's ordinary shares. The amount to be paid is determined by the net profit after tax of
the Microcat CRM™ over the three year period from date of acquisition. Consequently the remaining contractual maturity of the
Group’s other financial liabilities are as stated in the statement of financial position and are less than 60 days.
The Group’s financial instruments exposed to interest rate and liquidity risk are:
●
●
●
cash and cash equivalents, minimal exposure to interest rate risk;
trade and other receivables and trade and other payables are non-interest bearing and with credit terms of 30 to 60 days; and
as at 30 June 2018, the Group has a total of cash and cash equivalents and trade and other receivables of $20.885 million
(2017: $21.139 million) to meet its future cash outflows of trade and other payables of $7.476 million (2017: $6.970 million)
when due for payment.
Note 10. Contingencies
There were no unrecognised contingent assets or contingent liabilities as at 30 June 2018 and 30 June 2017.
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 11. Commitments
Contracted non-cancellable leases for property committed at the reporting date but not recognised as liabilities or payables are
provided below.
Lease commitments - operating
Within one year
One to five years
More than five years
Sublease income to be received
Consolidated
2018
$'000
2017
$'000
5,111
8,712
13
2,179
7,026
956
13,836
10,161
(1,020)
(1,438)
Operating lease commitments are for office accommodation both in Australia and abroad, IT support facilities and office equipment.
The Company has provided a bank performance guarantee to a maximum value of $0.722 million (2017: $1.231 million) relating to
the lease commitments on its corporate headquarters.
Note 12. Events after the reporting period
Apart from the dividend declared as disclosed in note 3, no other matter or circumstance has arisen since 30 June 2018 that has
significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs
in future financial years.
Note 13. Business combinations
Acquisition of Microcat CRM™
On 25 August 2017, the Group acquired the assets and business of FieldForce Auto CRM and affiliated clients and businesses
(collectively renamed as ‘Microcat CRM™’). Microcat CRM™ is a complementary product supporting original parts sales for both auto
manufacturers and dealers worldwide. The business was acquired to access skilled employees and an industry leading technology
platform in customer relationship management which will enhance the suite of the Group's products and improve the value proposition
to its customers, dealers and manufacturers.
The goodwill of $3.367 million represents the strategic drivers of the business as it integrates with the Group's systems and
customers, increasing market penetration and growth. None of the goodwill is deductible for tax purposes.
The value attributed to the CRM software of $3.382 million represents the replacement cost of this software.
The acquired business contributed revenue of $0.957 million and net profit after tax (‘NPAT’) of $0.417 million to the Group for the
period from 25 August 2017 to 30 June 2018. If the acquisition occurred on 1 July 2017, the estimated contribution to the full year
results to 30 June 2018 would have been revenue of $1.149 million and NPAT of $0.501 million.
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 13. Business combinations (continued)
The fair values (as determined at acquisition date using an independent expert) of identifiable assets and liabilities in relation to this
acquisition are listed in the tables below and are final as at 30 June 2018.
Identifiable intangible assets – software systems
Identifiable intangible assets – customer relationships
Property, plant and equipment
Deferred tax
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration
Representing:
Cash paid to vendor
Contingent consideration*
Fair value
$'000
3,382
492
1
(1,008)
2,867
3,367
6,234
1,200
5,034
6,234
* Pursuant to the Business Sale Agreement, some of the consideration will be settled based on future years’ actual financial
performance of the acquired business determined on contractual terms and thus was recognised as contingent consideration by the
Group. Refer to fair value measurement section below for further details of fair value of the contingent consideration.
All acquisition costs ($0.030 million) were expensed as incurred during the year ended 30 June 2017. No further acquisition costs
were incurred during the year ended 30 June 2018.
Accounting policy for business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other
assets are acquired.
The consideration is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities
incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each
business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the
acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or accounting
policies and other pertinent conditions in existence at the acquisition-date.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the
fair value of the contingent consideration classified as an asset or liability are recognised in profit or loss. Contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the
acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is
recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net
assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the
acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the
non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the
acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts
recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained
about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12
months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.
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57
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 13. Business combinations (continued)
Fair value measurement - contingent consideration
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based
on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement
date;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;
and
Level 3: Unobservable inputs for the asset or liability.
The Group's only financial instrument measured at fair value as at 30 June 2018 is contingent consideration (2017: None).
Consolidated - 2018
Liabilities
Contingent consideration - current
Contingent consideration - non-current
Level 1
$'000
Level 2
$'000
Level 3
$'000
-
-
-
-
-
-
870
4,071
4,941
Valuation techniques for fair value measurements categorised within level 2 and level 3
The contingent consideration arose on the business combination (Refer to earlier sections within this note). The fair value was
determined using an independent expert and is estimated based on a multiple of forecast net profit after tax of the acquired business
over a three year period, subject to clawback. Any settlement of contingent consideration will be in the form of cash and Infomedia
Ltd’s ordinary shares split 50:50. Any variation at the time of settlement will be recognised as income or expense in profit or loss.
Critical accounting judgements, estimates and assumptions - fair value of financial instruments
The Group’s contingent consideration liability is measured at fair value at the end of each reporting period. The information provided
below is about how the fair value of this financial liability is determined, including the valuation technique and inputs used.
●
●
●
●
Fair value hierarchy: level 3;
Valuation technique: the fair value is calculated based on a multiple of forecast net profit after tax of the business over a three
year period, subject to clawback;
Significant unobservable inputs: forecast net profit after tax of the business and the discount rate; and
Relationship of unobservable inputs to fair value: the estimated fair value would increase/decrease if the forecast net profit after
tax or discount rate were higher/lower.
Level 3 liabilities
Movements in level 3 liabilities during the current and previous financial year are set out below:
Balance at 30 June 2017
Contingent consideration acquired in business combination
Release of finance costs during the financial year
Revaluation of contingent consideration through profit and loss
Balance at 30 June 2018
2018
$'000
-
5,034
624
(717)
4,941
Sensitivity analysis on fair value of contingent consideration
The carrying value of contingent consideration might be impacted by the changes in discount rate or the forecast net profit before tax
of the Microcat CRM™ business acquired during this financial year. The impact to the carrying value for the following unobservable
inputs are as follows:
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 13. Business combinations (continued)
●
●
Discount rate - a 100 basis points increase/decrease in the discount rate would decrease/increase the contingent consideration
by $0.044 million and $0.045 million respectively.
Profitability, adjustments on either revenue or net profit after tax - a 5% increase/decrease in the profitability per year over the
three year period would increase/decrease the contingent consideration by $0.287 million.
Note 14. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described at the end of each relevant notes and note 20:
Name
IFM Europe Ltd
IFM Americas Inc.
IFM China (WOFE)
Principal place of business /
Country of incorporation
United Kingdom
USA
China
Ownership interest
2017
2018
%
%
100%
100%
100%
100%
100%
100%
Infomedia Ltd is the parent entity of the Group.
Transactions with related parties
The were no transactions with related parties during the current or previous financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Note 15. Share-based remuneration
The ultimate objective of share-based remuneration is to align the participants with delivery of shareholder value. Long term
incentives, with appropriate performance hurdles, align participants to the longer term strategies, goals and objectives of the Group,
and provide greater incentive for senior employees to have broader involvement and participation in the Group beyond their
immediate role. Equity participation also assists the Group to attract and retain skilled and experienced senior employees.
The obligations under share-based payment arrangements are settled by either issuing new ordinary shares in the Company or
acquiring ordinary shares of the Company on market.
Trading in the Company’s ordinary shares awarded under the share-based remuneration arrangements is governed by the
Company’s Share Trading Policy. The policy restricts employees from trading in the Company’s shares when they are in a position to
be aware, or are aware, of price sensitive information. The policy also implements blackout periods which prohibit trading in the
Company’s shares in the lead up to the Group’s half-year and annual result announcements, unless Board express approval is
obtained.
The arrangements are governed by the terms of the Company’s Performance Rights and Option Plan Rules. The Executive Incentive
Plan is also supplemented by the Executive Incentive Plan Rules.
In the prior financial years, the Group had an Employee Share Options Plan which provided eligible employees with the opportunity to
subscribe for ordinary shares in the form of share options in the Company. All the share options in this plan outstanding at 1 July 2016
were exercised or lapsed during the year ended 30 June 2017.
Executive incentive plan
The Executive Incentive Plan ('the Plan') forms an integral part of the Group’s remuneration policy.
The Group provides eligible employees (including the key management personnel but excluding non-executive directors) with the
opportunity to receive short-term incentives in the form of annual cash bonuses and long-term incentives in the form of performance
rights ('Rights') and/or share options ('Options'). The Board, based on recommendations from the Remuneration & Nominations
Committee, approves the participation of each individual ('participant') in the Plan.
24
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59
2018 Annual Report Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 15. Share-based remuneration (continued)
Long term incentive – Performance rights
The Board approves the issue of Rights to eligible employees. The following general terms relate to all Rights currently on issue:
●
●
Rights are granted for nil consideration;
the vesting conditions of the Rights are not market related and are conditional on meeting the performance hurdles described
below;
participants must remain employed at any relevant vesting and/or exercise date, subject to limited exceptions contained in the
plan rules;
participants do not receive dividends and do not have voting rights until the rights are exercised and converted into shares;
before vesting, the Board will determine the number of Rights to vest based on the outcome of the performance hurdles;
when vesting, each Right converts into one Infomedia Ltd ordinary share for nil consideration upon exercise by the participants;
and
if the vesting conditions are not met then the Rights automatically lapse unless a retesting event was specified in the original
grant.
●
●
●
●
●
The following performance hurdles and vesting scales apply to the outstanding Rights on issue during the financial year:
Rights granted on 1 October 2014
Testing date: 1 August 2017;
●
Rights tested on testing date: 100% - unvested. Rights lapsed as performance hurdle not met;
●
Performance hurdle: Earnings per share ('EPS') target of 8.5 cents to be achieved in FY17; and
●
●
Vesting scale: Maximum – 120% when EPS exceeds EPS target by 10%; Minimum – nil if EPS target is not met.
Rights granted on 13 October 2015
●
●
Testing dates: 1 October 2016; 1 October 2017 and 1 October 2018;
Rights tested on testing dates: 50% on 1 October 2016 and retest unvested Rights on 1 October 2017 and test remaining 50%
plus any unvested Rights on 1 October 2018;
Performance hurdle: EBIT growth target; and
Vesting scale: Maximum – EBIT growth target of 5% for rights tested on 1 October 2016; EBIT growth target of 10% for rights
tested on 1 October 2017; and EBIT growth target of 15% for rights tested on 1 October 2018; Minimum – nil if EBIT growth
target is not met.
Rights granted on 1 July 2016 (CEO and CFO only)
●
Grant dates: 29 January 2016 and 17 February 2016 (being signing dates of service agreements) are deemed grant date for
CEO and CFO, respectively;
Testing date: Tranche 1: 33% of Rights measured over 1 July 2016-30 June 2017; Tranche 2: 33% of Rights measured over 1
July 2017-30 June 2018; Tranche 3: 33% of Rights measured over 1 July 2018-30 June 2019;
Rights retested on testing date: Tranche 1: Fully vested in FY18, no retesting is required; Tranche 2: Rights measured over 1
July 2017-30 June 2019 (final testing for unvested Rights);
Performance hurdle: Company Annual Growth Rate (‘CAGR’) target: Compound EPS Growth percentage above FY16 EPS;
Vesting scale: Below 10% CAGR: Nil; At 10% CAGR: 25%; Between 10% and 15% CAGR: straight line pro-rata vesting
between 25%-100%; At or above 15% CAGR: 100%;
Post vesting disposal restrictions: Shares acquired upon vesting of Rights can only be disposed following the announcement of
the audited results for the financial year ending 2021; and
When rights are exercised by participants, the Company has discretion to either transfer existing shares or issue new ordinary
shares to satisfy the allocation. However, any issue of new shares to the CEO & Managing Director would require shareholders
approval.
●
●
●
●
●
●
●
●
Rights granted on 1 July 2016 (other participants)
●
●
●
●
Testing date: 1 October 2019;
Rights tested on testing date: 100% - if unvested, Rights lapse;
Performance hurdle: CAGR target: Compound EPS Growth percentage above FY16 EPS; and
Vesting scale: Below 10% CAGR: Nil; At 10% CAGR: 25%; Between 10% and 15% CAGR: straight line pro-rata vesting
between 25%-100%; At or above 15% CAGR: 100%.
Rights granted on 1 July 2017
●
●
●
●
Testing date: 1 October 2020;
Rights tested on testing date: 100% - if unvested, Rights lapse;
Performance hurdle: CAGR target: Compound EPS Growth percentage above FY17 EPS; and
Vesting scale: Below 10% CAGR: Nil; At 10% CAGR: 25%; Between 10% and 15% CAGR: straight line pro-rata vesting
between 25%-100%; At or above 15% CAGR: 100%.
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60
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 15. Share-based remuneration (continued)
The fair value of the Rights under the CEO and CFO only grant is estimated as at the grant date using a Monte-Carlo Simulation
model taking into account the term until potential vesting and the conditions upon which the Rights were granted. The fair value of the
Rights for all other grants is estimated as at the grant date by reference to the share price after taking off dividends forfeited during
the performance period.
The following information relates to the Rights issued under the Plan.
2018
Grant date
Expiry date
01/10/2014
13/10/2015
29/01/2016
17/02/2016
01/07/2016
04/10/2017
01/08/2017
01/10/2018
01/10/2019
01/10/2019
01/10/2019
30/10/2020
2017
Grant date
Expiry date
01/10/2014
13/10/2015
29/01/2016
17/02/2016
01/07/2016
01/08/2017
01/10/2018
01/10/2019
01/10/2019
01/10/2019
Fair value
at grant date
Balance at
the start of
the year
Granted
Exercised
Lapsed
Balance at
the end of
the year
$1.15
$0.75
$0.53-$0.57
$0.53-$0.57
$0.48
$0.67
424,184
635,000
1,418,067
756,302
716,766
-
3,950,319
-
-
-
-
-
1,170,015
1,170,015
-
-
(472,689)
(252,100)
-
-
(724,789)
(424,184)
(106,000)
-
-
(313,383)
(287,437)
(1,131,004)
-
529,000
945,378
504,202
403,383
882,578
3,264,541
Fair value
at grant date
Balance at
the start of
the year
Granted
Exercised
Lapsed
Balance at
the end of
the year
$1.15
$0.75
$0.53-$0.57
$0.53-$0.57
$0.48
424,184
760,000
-
-
-
1,184,184
-
-
1,418,067
756,302
716,766
2,891,135
-
-
-
-
-
-
-
(125,000)
-
-
-
(125,000)
424,184
635,000
1,418,067
756,302
716,766
3,950,319
During the year ended 30 June 2018, 724,789 Rights are vested and exercised (2017: None). The value attributable to these rights at
vesting was 77.84 cents per Right. The value represents the variable weighted average price of Infomedia shares in the four weeks
following the Company's FY17 results announcement.
Long term incentive – Share options (CEO and CFO only)
The Group provides the CEO and CFO with the opportunity to subscribe for ordinary shares in the form of Options in the Company
through the Performance Rights and Option Plan.
The key terms of the Options are:
●
●
●
●
●
●
●
●
Options issued during FY17: the grant dates of 29 January 2016 and 17 February 2016 are the deemed grant date for CEO and
CFO, respectively, reflecting the dates of entering into their services agreements;
granted for nil issue consideration;
each Option entitles the participants to subscribe for one Infomedia Ltd ordinary share;
Options will become exercisable when the Company’s share price exceed the exercise price of 92.2 cents;
Options may not be exercised prior to the release of the Company’s audited results for the year ending 30 June 2019;
participants must remain employed at any relevant vesting and/or exercise date, subject to limited exceptions contained in the
Plan rules;
when Options are exercised by participants, the Company has discretion to either transfer existing shares or issue new ordinary
shares to satisfy the allocation. However, any issue of new shares to the CEO & Managing Director would require shareholder
approval; and
post vesting disposal restrictions: 50% of shares following the exercise of the Options subject to a disposal restriction until after
the release of the Company’s audited results for the year ending 30 June 2020 (Note the FY17 Annual Report contained a
typographical error referencing a holding lock until release of audited accounts for the year ending 30 June 2021).
The fair value of the Options granted under the Plan is estimated as at the grant date using a Monte-Carlo Simulation model taking
into account the term and conditions upon which the Options were granted.
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 15. Share-based remuneration (continued)
The following information relates to the Options issued under the Plan.
2018
Grant date
Expiry date
29/01/2016
17/02/2016
01/10/2019
01/10/2019
Fair value
at grant date
Balance at
the start of
the year
Granted
Exercised
Lapsed
$0.07
$0.07
3,750,000
2,000,000
5,750,000
-
-
-
-
-
-
2017
Grant date
Expiry date
Fair value
at grant date
Balance at
the start of
the year
Granted
Exercised
Lapsed
29/01/2016
17/02/2016
01/10/2019
01/10/2019
$0.07
$0.07
-
-
-
3,750,000
2,000,000
5,750,000
-
-
-
Balance at
the end of
the year
3,750,000
2,000,000
5,750,000
Balance at
the end of
the year
3,750,000
2,000,000
5,750,000
-
-
-
-
-
-
No Options are vested and exercisable as at 30 June 2018 (2017: None).
Accounting policy for share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, options over shares or rights that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using a pricing
model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option,
together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to
receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period.
The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number
of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is
the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 16. Cash flow information
Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Impairment of intangibles
Net loss on disposal of property, plant and equipment
Share-based payments
Foreign exchange differences
Capitalised development costs
Non-cash finance costs
Revaluation of contingent consideration
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease in derivative assets
Increase in prepayments
Increase in trade payables
Increase/(decrease) in provision for income tax
Increase in deferred tax liabilities
Increase/(decrease) in employee benefits
Increase in deferred revenue
Consolidated
2018
$'000
2017
$'000
12,897
11,953
12,726
98
-
13
(231)
(756)
624
(717)
223
10
(54)
912
442
1,887
(111)
139
9,353
364
4
812
35
(569)
-
-
(1,531)
92
(571)
2,962
(1,305)
707
104
(369)
Net cash from operating activities
28,102
22,041
Changes in liabilities arising from financial activities
There were no liabilities arising from financial activities for cash flow purposes.
Note 17. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out below.
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Consolidated
2018
$
2017
$
1,728,982
87,300
1,027
129,246
1,742,156
85,455
367
631,791
1,946,555
2,459,769
infomedia.com.au
63
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 18. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital and treasury shares held in trust
Cash flow hedge reserve
Share-based payments reserve
Retained profits
Total equity
Parent
2018
$'000
2017
$'000
12,800
12,800
7,284
7,284
Parent
2018
$'000
2017
$'000
20,705
21,674
73,795
60,955
9,835
9,720
22,500
14,546
12,923
-
3,845
34,527
12,923
(10)
3,499
29,997
51,295
46,409
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2018 and 30 June 2017.
Contingent liabilities
Other than the guarantee below, there were no unrecognised contingent liabilities as at 30 June 2018 and 30 June 2017.
The parent entity has provided a bank performance guarantee to a maximum value of $0.722 million (2017: $1.231 million) relating to
the lease commitments on its corporate headquarters.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018 and 30 June 2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 20, except for the following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of
an impairment of the investment.
infomedia.com.au
64
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 19. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the auditor of
the Company, and unrelated firms:
Audit services - Deloitte Touche Tohmatsu
Audit or review of the financial statements
Other services - Deloitte Touche Tohmatsu
Tax services
Other review services
Audit services - other auditors
Audit or review of the financial statements
Other services - other auditors
Tax services
Consolidated
2018
$
2017
$
179,000
198,000
99,000
20,000
103,000
-
119,000
103,000
298,000
301,000
17,080
16,689
1,182
1,148
18,262
17,837
Note 20. Basis of preparation and other accounting policies
Infomedia Ltd is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal
place of business is:
3 Minna Close
Belrose, Sydney NSW 2085
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of
the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 15 August 2018. The directors
have the power to amend and reissue the financial statements.
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 ('AASB') and the Corporations Act 2001, as appropriate for for-
profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The accounting policies adopted in the preparation of the financial statements have been consistently applied to all the years
presented, unless otherwise stated.
The financial statements are presented in Australian dollars, which is Infomedia Ltd's functional and presentation currency.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the AASB that are mandatory
for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact
on the financial performance or position of the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
infomedia.com.au
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2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 20. Basis of preparation and other accounting policies (continued)
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, financial assets and
liabilities at fair value through profit or loss.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Infomedia Ltd as at 30 June 2018 and
the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct
the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
Reclassification of comparatives
Prior period comparative information has been revised in these financial statements to conform with the current period’s presentation.
The reclassifications are:
●
●
●
the splitting out of provisions from other payables;
computer software is reclassified as intangibles from property, plant and equipment;
the splitting out of the effect of exchange rate changes on balances of cash held in foreign currencies from payments to
suppliers and employees; and
the splitting out of the other services by the Group's auditor and audit and other services by the Group's other auditors from
general and administration expenses.
●
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by
the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in
accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received or receivable.
Subscription revenue
The Group’s recurring revenue is through subscription. Subscription revenue is recognised when customers are licensed to access
the software and/or the database. Subscription revenue together with related support revenue, if any, is recognised over the service
period.
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are
unsecured and are usually paid within 30 days of recognition.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period;
or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after
the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for
the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the
settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
infomedia.com.au
66
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 20. Basis of preparation and other accounting policies (continued)
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets
are reviewed 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 carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present
value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit
to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Reserves
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to
Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees as part of their remuneration.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not
been early adopted by the Group for the annual reporting period ended 30 June 2018. The Group's assessment of the impact of these
new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous
versions of AASB 9 and introduces new classification and measurement models for financial assets.
A financial asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to
collect contractual cash flows, which arise on specified dates and are solely payments of principal and interest. All other financial
instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election
on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income.
New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management
activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance.
Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased
significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new
disclosures.
The Group will adopt this standard from 1 July 2018. As at 30 June 2018, the Group’s financial assets and liabilities can be
categorised as follows:
●
●
the financial assets only consist of cash and cash equivalents and trade and other receivables;
the financial liabilities only consist of trade and other payables (the contingent consideration liability arising from the business
combination which occurred during the period, is not included in the definition of trade and other payables for the purposes of
AASB 9);
financial assets and liabilities do not carry any financing component as at 30 June 2018;
all the financial assets and liabilities carrying values are close to fair value. This includes newly recognised contingent liabilities
arising from the business combination which occurred during the financial year; and
there are no other financial instruments at the end of the reporting period.
●
●
●
Management has assessed the implications of the new standard in particular the use of the ‘simplified approach’ to evaluate potential
impairment of the Group’s trade receivables. Based on management’s assessment, implementation of AASB 9 on 1 July 2018 is not
expected to have a significant financial impact on the Group.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018 and provides a single standard for all
revenue recognition. The core principle of AASB15 is that an entity should recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services.
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67
2018 Annual Report
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 20. Basis of preparation and other accounting policies (continued)
Specifically, the standard introduces a 5-step approach to revenue recognition:
●
●
●
●
●
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation i.e. when ‘control’ of the goods or services
underlying the particular performance obligation is transferred to the customer.
The Standard also requires an assessment of whether the costs of acquisition and costs of fulfilment of contracts should be recorded
as an asset and amortised on a systematic basis consistent with the Group’s transfer of goods and services to its customer.
Current revenue recognition
The Group derives the majority of its revenue from recurring ‘software as a service’ subscriptions, where customers are licensed to
access and use the software and associated support services. Related support revenue (if any) is recognised over the service period.
Revenue from software installations for new customers, is recognised once installation is complete.
Revenue in the Group's respective segments (as reported in Note 1, Operating Segments) is generated through one or more of the
following categories:
●
●
●
recurring subscriptions to the Group’s software products, comprising approximately 95% of total revenue;
software development services to tailor off-the-shelf software solutions for specific use or functionality requirements; and
ancillary services in the form of software installation and training.
Management considers that the economic factors affecting the nature, amount and timing of revenues and cash flows are consistent
within each category.
Under the existing Standard AASB118, the Group recognises revenue when customers are licenced to access the software and/or
the database. Related support revenue (if any) is recognised over the service period. Revenue from software installations for new
customers, is recognised once installation is complete.
Application of the new standard AASB15
The nature of Infomedia’s services is that it provides a consistent subscription based service with similar support services; however,
its contracts are tailored to meet the specific needs of its customers.
The focus of management’s assessment was to first to evaluate its standard licence to access subscription and support services
against each of the 5-steps noted above, with regards to the licencing guidance in the standard. Secondly, management has
additionally assessed any unique performance obligations and/or pricing arrangements within its material contracts to determine the
appropriate treatment for these.
Management have completed their evaluation of Infomedia’s material contracts against the 5-step approach noted above, and based
on this evaluation have determined that, other than additional disclosures required, the implementation of AASB 15 on 1 July 2018 is
not expected to have a significant financial impact on the Group.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. Under the new standard, a lessee is in
essence required to: (a) recognise all right of use assets and lease liabilities, with the exception of short term (under 12 months) and
low value leases, on the statement of financial position. The liability is initially measured at the present value of future lease payments
for the lease term. This includes variable lease payments that depend on an index or rate but excludes other variable lease payments.
The right of use asset reflects the lease liability, initial direct costs, any lease payments made before the commencement date of the
lease, less any lease incentives and, where applicable, provision for dismantling and restoration; (b) recognise depreciation of right of
use assets and interest on lease liabilities in profit or loss over the lease term; and (c) separate the total amount of cash paid into a
principal portion (presented within financing activities) and interest portion (which the Group presents in operating activities) in the
statement of cash flows.
This standard must be implemented retrospectively, either with the restatement of comparatives or with the cumulative impact of
application recognised on the date of adoption (which for the group is 1 July 2019) under the modified retrospective approach. AASB
16 contains a number of practical expedients, one of which permits the classification of existing contracts as leases under current
accounting standards to be carried over to AASB 16. Under the modified retrospective approach, on a lease-by-lease basis, the right
of use asset may be deemed to be equivalent to the liability at transition or calculated retrospectively as at inception of the lease. The
present value of the Group’s operating lease commitments (such as those detailed in note 11), excluding low value leases and short
term leases, will be shown as right of use assets and as lease liabilities on the statement of financial position.
33
infomedia.com.au
68
2018 Annual Report Infomedia Ltd
Notes to the consolidated financial statements
30 June 2018
Note 20. Basis of preparation and other accounting policies (continued)
In preparation for the transition to the new standard, management is working to an implementation plan comprising five stages:
●
●
●
●
●
Stage 1: High Level assessment of financial impact
Stage 2: Readiness for lease data collection
Stage 3: Transition plan
Stage 4: Solution and recommendation
Stage 5: Implementation by 1 July 2019
Management currently is in the process of reviewing the impact of this standard on the Group.
Revised Conceptual Framework for Financial Reporting
The revised Conceptual Framework has been issued by the International Accounting Standards Board ('IASB'), but the Australian
equivalent has yet to be published. The revised framework is applicable for annual reporting periods beginning on or after 1 January
2020 and the application of the new definition and recognition criteria may result in future amendments to several accountings
standards. Furthermore, entities who rely on the conceptual framework in determining their accounting policies for transactions,
events or conditions that are not otherwise dealt with under Australian Accounting Standards may need to revisit such policies. The
Group will apply the revised conceptual framework from 1 July 2020 and is yet to assess its impact.
infomedia.com.au
69
2018 Annual Report
Infomedia Ltd
Directors' declaration
30 June 2018
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 20 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2018 and of
its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
___________________________
Bart Vogel
Chairman
15 August 2018
infomedia.com.au
35
70
2018 Annual Report Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report to the
members of Infomedia Ltd
Opinion
We have audited the financial report of Infomedia Ltd and its subsidiaries (the “Entity”), which
comprises the consolidated statement of financial position as at 30 June 2018, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies and other explanatory
information, and the director’s declaration.
In our opinion the accompanying financial report of the Entity is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Entity’s financial position as at 30 June 2018 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
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 are independent of the Entity 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.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Entity, would be in the same terms if given to the directors as at
the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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 of the current period. These 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.
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Touche Tohmatsu Limited
Key Audit Matter and why it was considered
to be a matter of most significance in the
audit
How the Key Audit Matter was addressed in
the audit
Capitalised labour development costs
Our procedures included, but were not
limited to:
As at 30 June 2018, the Entity’s carrying
value of the product and software
development costs capitalised as
intangibles is $34.4m of which $18.5m is
attributable to capitalisation in the current
financial year as disclosed in Note 6 to the
financial report.
Judgment is involved in determining
whether the labour costs are directly
attributable to develop the Entity’s product
suite and new software and appropriate to
capitalise.
Holding discussions with
department heads involved in
product development to
understand the basis and rationale
for capitalising labour costs;
Testing on a sample basis
capitalised labour costs through
reviewing timesheets and holding
discussions with staff members
outside the finance department;
Testing on a sample basis
employees’ timesheets to assess
that all employees are included;
Challenging management’s key
assumptions in the labour
capitalisation calculation including
the treatment of employee on-
costs and contractors;
Testing mathematical accuracy of
management’s labour
capitalisation schedule; and
We also assessed the appropriateness of
the disclosure in Note 4 and Note 6 to the
financial report.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the annual report 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 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
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 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 Entity’s ability 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 Entity 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 this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the director’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Entity’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves a fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 31 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Infomedia Ltd, for the year ended 30 June 2018, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of Infomedia Ltd 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.
DELOITTE TOUCHE TOHMATSU
Sandeep Chadha
Partner
Chartered Accountants
Sydney, 15 August 2018
SHAREHOLDER INFORMATION
As at 25 July 2018
The following information is presented in compliance with ASX Listing Rules 4.10 (as relevant). The information is
current as at 25 July 2018.
1. Number of shareholders
As at 25 July 2018 there were 5,030 shareholders holding a total of 310,823,521 fully paid ordinary shares.
2. Distribution of quoted equity securities and small holdings
Fully paid ordinary shares
%
No. of holders
Range
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
The number of holders holding less than a marketable parcel is 198.
3. Top 20 registered shareholders
Name
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Bell Potter Nominees Ltd
BNP Paribas Noms Pty Ltd
BNP Paribas Nominees Pty Ltd
National Nominees Limited
Neweconomy Com Au Nominees Pty Limited
Mr Peter Alexander Brown
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd Drp
Pacific Custodians Pty Limited
UBS Nominees Pty Ltd
Pacific Custodians Pty Limited
Invia Custodian Pty Limited
Brispot Nominees Pty Ltd
Bond Street Custodians Ltd
CS Fourth Nominees Pty Limited
Zero Nominees Pty Ltd
Mojeli Pty Ltd
Bodyelectric Pty Ltd
Mr William John Laukka & Mrs Elizabeth Anne Laukka
249,090,731
48,169,658
8,178,634
5,040,882
343,616
80.14
15.50
2.63
1.62
0.11
310,823,521
100.00
66,175,145
55,457,389
32,934,497
28,526,238
13,459,773
13,300,786
6,867,333
1,536,217
1,350,000
1,292,110
1,254,142
783,505
724,789
654,431
650,785
580,000
524,187
516,071
510,000
500,000
500,000
128
1,657
1,009
1,667
569
5,030
%
21.29
17.84
10.60
9.18
4.33
4.28
2.21
0.49
0.43
0.42
0.40
0.25
0.23
0.21
0.21
0.19
0.17
0.17
0.16
0.16
0.16
Total
228,097,398
73.38
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2018 Annual Report
SHAREHOLDER INFORMATION
As at 25 July 2018 (continued)
4. Substantial shareholders
The following information is extracted from substantial shareholder notices received by the Company
Shareholder
Viburnum Funds Pty Ltd ACN 126 348 990
Number of
shares
45,647,879
Voting
Power
14.69%
Date of last notice
11 October 2017
BT Investment Management Limited
18,876,829
6.07%
26 February 2018
Yarra Funds Management Limited ACN 005 885 567; Yarra
Capital Management Holdings Pty Ltd ACN 614 782 795; Yarra
Management Nominees Pty Ltd ACN 616 681 068; AA Australia
Finco Pty Ltd ACN 614 781 172; TA SP Australia TopCo Pty Ltd
ACN 612 486 452; TA Universal Investment Holdings Ltd
17,349,049
5.58%
24 May 2018
Ellerston Capital Limited
16,671,918
5.36%
26 October 2017
Pinnacle Investment Management Group Limited
15,638,390
5.03%
20 June 2018
5. Unquoted equity securities
Unquoted share options
Unquoted performance rights
6. Voting rights
Number on issue
Number of holders
5,750,000
3,264,541
2
32
Fully paid ordinary shares: On a show of hands every member present at a meeting in person or by proxy shall have
one vote and upon a poll shall have one vote for each share represented.
Unquoted share options and performance rights: No voting rights apply unless and until the unquoted securities are
converted to fully paid ordinary shares.
7. Share buy-back
Infomedia Ltd does not have a current on-market buy-back in operation.
8. Shares purchased on-market
During the reporting period 1,137,528 shares were purchased on-market to satisfy share options or performance rights
which may vest and be exercised in future periods, as granted under employee incentive schemes. The average
purchase price was 79 cents per share.
9. Corporate Governance Statement
Infomedia’s 2017 Corporate Governance Statement may be found by visiting
http://www.infomedia.com.au/investors/corporate-governance/
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76
2018 Annual Report 2018 Annual Report
CORPORATE DIRECTORY
SHARE REGISTRY
Link Market Services
Level 12, 680 George Street,
Sydney, NSW, 2000
Telephone
+61 1300 554 474
Email
registrars@linkmarketservices.com.au
Website
http://www.linkmarketservices.com.au/
AUDITORS
Deloitte Touche Tohmatsu
Grosvenor Place
225 George Street
Sydney NSW 2000
INFOMEDIA LTD (ASX:IFM)
ABN 63 003 326 243
DIRECTORS
Bart Vogel – Non-Executive Chairman
Jonathan Rubinsztein – CEO & Managing Director
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
COMPANY SECRETARIES
Daniel Wall
Mark Grodzicky
CHIEF FINANCIAL OFFICER
Richard Leon
REGISTERED OFFICE
Address
3 Minna Close
Belrose Sydney NSW 2085
Telephone
+61 2 9454 1500
Website
www.infomedia.com.au
All statements other than statements of historical fact included within this report, including statements regarding future goals and objectives
of Infomedia, are forward-looking statements. Forward-looking statements can be identified by such words as ’looking forward’, ‘anticipate’,
‘believe’, ‘could’, ‘estimate’, ‘expect’, ‘future’, ‘intend’, ‘may’, ‘opportunity’, ‘plan’, ‘potential’, ‘project’, ‘seek’, ‘will’ and other similar words.
Future looking statements involve risks and uncertainties. These statements are based on an assessment of present economic and operating
conditions, and based on assumptions and estimations regarding future conditions, events and actions. Such statements do not guarantee
future performance, involve risk, and uncertainty. Factors such as these are beyond the control of the company, its directors and management
and could cause Infomedia’s actual results to differ materially from the results expressed in these statements. The Company does not give any
assurance that the results, performance or achievements expresses or implied by the forward-looking statements contained in this report will
actually occur. Investors are cautioned not to place reliance on these forward-looking statements. Infomedia will where required by applicable
law and stock exchange listing requirements, revise forward-looking statements or publish prospective financial information in the future.
Whilst all care has been exercised in the preparation of these materials they are not warranted as free from error. Investors should rely on the
Company’s published statutory accounts when forming any investment decisions.
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