2019 ANNUAL REPORT
ABOUT INFOMEDIA LTD
Infomedia Ltd (ASX:IFM) is an Australian-based global technology company that provides software as a service (SaaS) products to
support the growth of parts and service after sales and customer retention for global automotive manufacturers.
We are governed by our core values to:
• Accelerate performance – to be action orientated and always
accountable to our customers
We continue our aspirational journey knowing the success of
our customers, our employees and our shareholders will drive
Infomedia’s success. We aspire:
• Drive innovation & service – our technology leadership
• To be recognised as the market leading software solution
empowers our customers
provider to the after sales market
• Navigate global & steer local – our customers benefit from a
• To be admired within our industry
unified approach with local execution
• To create a great place to work
• Have fun in the fast lane – we balance hard work with a fun
• To deliver consistent, superior shareholder returns
and vibrant workplace.
2019 ANNUAL GENERAL MEETING
The 2019 Annual General Meeting of Infomedia Ltd will be held at our Infomedia’s Head Office, 3 Minna Close, Belrose NSW at
10:00am on 31 October 2019.
Infomedia Ltd shareholders will receive a formal notice of meeting by mail.
ABOUT THIS REPORT
Infomedia Ltd.’s Financial Report for this year and previous years, including half-year reports, can be accessed and viewed on our
website at https://www.infomedia.com.au/investors/annual-and-half-year-reports
Additional reports, including Infomedia’s Corporate Governance Report, Code of Conduct and oversight policies can also be accessed
and viewed on Infomedia’s website at https://www.infomedia.com.au/investors/corporate-governance
Infomedia is a technology company with a commitment to sustainability and we encourage readers to download an electronic version
of our publications instead of printing hard copies.
If you are currently receiving a printed copy of Infomedia’s 2019 Annual Report, please contact Link Market Services at
www.linkmarketservices.com.au and elect to receive our Annual Reports in electronic form. Thank you!
In this report, terms including ‘the Company’, ‘your Company’, ‘the Group’, and ‘Infomedia’ all refer to Infomedia Ltd ABN: 63 003 326 243.
In addition, terms referring ‘the year’, ‘the financial year’, ‘FY19’ and ‘the 2018/2019 year’ all refer to the 12 months to 30 June 2019.
All references to dollars are in Australian dollars unless stated otherwise.
Infomedia’s 2019 Annual Report was authorised for issue by the Board of Directors on 19 August 2019.
TABLE OF CONTENTS
CHAIRMAN & CEO REPORT
INFOMEDIA AT A GLANCE
YOUR BOARD
DIRECTORS’ REPORT
REMUNERATION REPORT
LEAD AUDITOR’S INDEPENDENCE DECLARATION
FINANCIAL REPORT
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SHAREHOLDER INFORMATION
CORPORATE DIRECTORY
FINANCIAL CALENDAR
GLOSSARY
2
8
10
12
16
37
38
74
75
79
81
81
81
© 2019 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 81
for an explanation of forward looking statements and the risks,
uncertainties and assumptions to which they are subject.
ABN: 63 003 326 243
CHAIRMAN & CEO REPORT
Dear shareholders,
On behalf of the Board, management and all our employees
around the world, Thank you! We acknowledge your continued
support of Infomedia Ltd during the 2019 financial year and feel
very positive about sharing our thoughts on the financial year
that has been.
The 2019 financial year marked another consecutive year
of delivering to our objectives to drive growth and innovation
at Infomedia Ltd. It has been a year that saw your company
accelerate performance, drive innovation and service in a period
of change, navigate opportunities globally with local execution
and invest to take advantage of key trends disrupting the global
automotive industry.
We cover these themes in Infomedia Ltd’s 2019 Annual Report
in a combined Chairman and CEO statement to reflect our
complete alignment at a critical point in Infomedia’s evolution.
The industry we support, the global automotive industry, is on
the crest of significant technological interruption and we believe
we are well positioned to capitalise on these events. Together,
we are committed to delivering the very best outcomes for our
employees, our customers and our shareholders through this
transformative period for automotive technology.
Infomedia’s earnings per share (EPS) increased 25% during the
2019 financial year to 5.19 cents per share (cps) from 4.16 cps
in the previous corresponding period (pcp).
Infomedia paid a final dividend of 2.15 cents per share, an
increase of 26% higher than last financial year. In total for the
2019 financial year, shareholders will receive in Australian dollars,
3.9 cents per share.
Infomedia reported revenue of $84.6 million for the year, an
increase of 16% on the previous year.
Net profit after tax for the year was $16.1 million, an increase
of 25% over the year. Margins (EBITDA) continued to expand
from 40% to 45%, reflecting an improvement in delivery and
efficiencies derived from scale across the business.
Cash EBITDA increased 82% to $19.1 million. Cash EBITDA
is a key metric for management to identify the cash impact of
investing in development costs that are capitalised in reported NPAT.
Infomedia’s financial position is solid with net current assets of
$9.2 million for the year. Cash and cash equivalents were up
17% from the prior financial year to $15.5 million, reflecting the
robust cash generative nature of the business. The Company has
no debt.
“...the global automotive industry is
on the crest of significant technological
interruption and we believe we are well
positioned to capitalise on these events.”
DRIVING INNOVATION AND SERVICE IN AN
EVER-CHANGING TECHNOLOGICAL ENVIRONMENT
Since 2016, we have increased our investment to grow Infomedia
sustainably into the future. We have invested in our technology,
our processes and our people to ensure:
• We are developing market leading technology
• We remain competitive globally
• We are always customer focused and
ANOTHER YEAR OF ACCELERATING PERFORMANCE
The 2019 financial year was defined by a period of delivering
strong growth while also continuing to improve margins.
Investment to date in our people, products and processes
resulted in several highlights during the year including:
• The completion of the Nissan global electronic parts contract
roll-out, ex-Japan (rolling out in the July – September quarter)
• Extending our relationship with automotive manufacturers
globally; introducing new products to existing relationships,
to new relationships and into new markets
• The acquisition and integration of Nidasu, the leading provider
of data analytics to auto makers and dealers in Australia
• Leveraging data insights assets into trial opportunities beyond
Australia has been promising; Infomedia Ltd will continue to
invest to capitalise on opportunities and drive growth in this area
• We are increasingly a desired employer in all the regions in
which we operate.
During the year, we invested in our future growth by building
innovation into our existing parts and service product suites.
This investment supported initiatives to leverage the depth of
our parts and service businesses with existing customers in new
markets, to new auto branded customers and to customers in the
wider auto manufacturing ecosystem.
Our investment also extended to the acquisition of Nidasu.
The acquisition, completed in December 2018, marked a key
step in building Infomedia’s emerging data insights business.
Leveraging data insights with our existing Microcat® electronic
parts catalogue and SuperserviceTM menus quoting tool rounds
out Infomedia’s product offer and differentiates Infomedia Ltd
from our global competitors. Data insights provide our customers
a competitive advantage.
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2019 ANNUAL REPORT 2019 ANNUAL REPORT
Jonathan Rubinsztein
CEO & Managing Director
Bart Vogel
Chairman
infomedia.com.au 3
CHAIRMAtN & CEO REPORT
NAVIGATE GLOBAL & STEER LOCAL
Infomedia is one of very few global providers of software to a
fragmented global automotive industry. Our software supports our
customers to grow the most profitable segment of the automotive
value chain, genuine parts and service, and build customer loyalty
and retention to their brands.
Our customer reach is truly worldwide with more than 170,000
users in 186 countries. We have teams in Asia Pacific,
the Americas and Europe.
During the year, our regional teams delivered strong growth
opportunities.
Asia Pacific (APAC)
The acquisition of Nidasu was a major milestone this year.
Since the aquisition of Nidasu, Infomedia now supports more
than 30 leading global automotive manufacturers in Australia
offering a much broader parts, service and data insights
solution than our global competition. We are continuing to
invest to leverage the Australian and APAC experience to
capture a wider portion of the market in other regions. As new
car sales become more competitive, automotive manufacturers
seek solutions to capture revenue in genuine after sales and
drive a better customer experience. As a result, we saw growth
in our Superservice™ suite of products and anticipate this trend
to continue through the 2020 financial year.
The Americas
We saw an increase in customer satisfaction in all markets of
the Americas particularly in Canada and South America. In the
United States, endorsement of our Microcat® electronic parts
suite by one of the largest dealer groups, set a strong base
for both growth with existing clients and new manufacturers
in the 2020 financial year. The pilot program of data to
an automotive manufacturer supplier exceeded customer
expectations and proceeded to formal contract.
Europe, the Middle East and Africa (EMEA)
We have extended our Superservice™ reach with Nissan into
multiple Scandinavian markets. We saw further traction with the
Superservice™ suite of products across Europe and continue to
see growth for Superservice™ with multiple manufacturers in the
EMEA region. Early discussions for data products are promising
and we see several opportunities for our data insights business
in Europe as we move into the 2020 financial year.
As profits from the sale of new car sales decline, global
automotive manufacturers remain increasingly focused on
retaining and growing their genuine parts and service after
sales business as well as retaining customers to their brands.
Infomedia’s products support these key objectives.
Infomedia’s customers, auto manufacturers and dealers share
two key objectives; to sell more genuine parts and service and to
retain customers to their brands from one purchase to the next.
Traditionally, the parts and service areas have been separated
and siloed, but as automakers become more focussed on
building brand loyalty and parts become more sophisticated, we
see a convergence between the parts and service segments.
We see a significant opportunity to leverage data in a way that
protects the proprietary assets of our customers and provides
additional market insight that is otherwise not available.
Collecting valuable customer data, providing accurate and
competitive pricing, processing information and turning it into
actionable insights, enables manufacturers to retain and capture
greater market share.
Large global automotive manufacturers are spending billions to
develop and produce what the global head of Volkswagen AG,
describes as “personal devices on wheels”.* Investment decisions
for automotive manufacturers are evolving from a singular focus
on the production and supply of cars to batteries, robotics and
data processing.
We believe our customers will place increasing value on the
data they collect from ever more sophisticated parts and internal
systems. Where there is uncertainty and disruption in the industry
we support, we see opportunity. We are positioned to support our
customers meet their key objectives and provide insight to the
cumulative data collected.
We will continue to invest in our people, products and processes
to capitalise on the opportunities that will arise from key areas of
disruption descending on the automotive industry.
* Bellon, T., Taylor E., Lienert P. (2019, July 12). Volkswagen zooms ahead…
Retrieved from https://www.reuters.com
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2019 ANNUAL REPORT 2019 ANNUAL REPORT
Infomedia Ltd HQ, Belrose, NSW.
infomedia.com.au 5
CHAIRMAN & CEO REPORT
Infomedia’s opportunity is to expand our reach within our existing customer base through organic growth of our parts, service
and data insights products as well as the acquisition of viable, bolt-on businesses that provide additional value to our traditional
customers, the automotive manufacturers and their dealers. We also see opportunity to offer our products to other providers in the
automotive manufacturing ecosystem.
The global automotive dealer software market is estimated to be about US$13billion and is expected to reach US$21billion by
2025.* We believe we have an opportunity to increase our market share by offering products that add value and actionable insight to
how our customers respond to a number of emerging trends. We also think there is opportunity to capture market share in the wider
global automotive ecosystem, which we estimate to be more than double the dealer market.
We see five key trends driving disruption in our customer base:
5 Key Trends Interrupting the Global Automotive Industry
1. The first is what we describe as digitisation of the
customer journey or capturing every detail of the
customer experience. Automakers are prioritising the
customer journey by capturing valuable information at
every stage of engagement. Traditionally, manufactures
have operated under a disintermediated structure,
where buyers have no direct contact with suppliers and
manufacturers. Prioritising the customer experience and
capturing valuable data is driven by the need to retain
customer loyalty from purchase to repurchase.
2. The second trend we see evolving is the dealership of
the future. We anticipate dealerships will consolidate
resulting in large multi-brand dealerships. We expect
the increasing complexity in cars and parts will result
in more sophisticated workshops within dealerships
and professionalised customer service. The impact of
technology adoption and changing customer expectations
will mean all departments within the dealership are
focussed on servicing the customer.
3. The rise of connected cars, or how the internet of things
will impact auto makers is the third trend we believe will
increase the complexity of cars and parts. We believe
cars will have more data integrated internal systems
including complex safety and proprietary parts, requiring
a specialised labour force and the need for integrated
parts and service solutions that provide quick turnaround,
are specific to individual cars and personalised to
every customer.
4. The fourth trend is autonomous driving and electric
vehicles. The sale of electric vehicles will continue to gain
traction however, research is consistent in the conclusion
that pure electric cars will still only represent between
10% and 15% of all car sales in 2030. We also believe
the shift to autonomous driving will not be significant until
2030 and the timing will be largely dependent on regulatory
decisions, technical advances and customer sentiment.
5. And the fifth trend we see as contributing to significant
disruption in the automotive sector is vehicle ownership
structures. We expect auto manufacturers will offer
branded versions of subscription car services providing
cost effective alternatives to traditional ride sharing,
car leasing, renting or purchasing.
* Orbis Research: Global Auto Dealer Software Market size, Status and Forecast 2019-2025
6 infomedia.com.au
6 infomedia.com.au
2019 ANNUAL REPORT CHAIRMAN & CEO REPORT
These five key disruptors will significantly shift the automotive
industry. We believe the Company is well placed to support
automotive manufacturers and dealers meet their key objectives
during a period of significant change in their industry. Infomedia’s
products deliver competitive advantage and enable our
customers to capture greater share of the genuine after sales
market by providing manufacturers with solutions to optimise
manufacturer parts and service pricing and customer retention.
We are well positioned to support our customers meet their key
objectives and provide insight to the cumulative data collected.
We will continue to invest in this area to capitalise on
emerging opportunities.
Our approach to strategy is agility. Whether it is innovation,
investment, acquisition or partnership we are pursuing multiple
opportunities within each of our core products in every region.
The ability to leverage smaller successes on a global scale and
increase the value we add to our customers will be the measure
of our success.
Our goal is to be the leading global software provider in the after
sales segment of the global automotive industry. We believe
we have a unique set of offerings in the parts, service and data
insights market that creates a competitive position globally.
Our focus on parts, service and data insights enables Infomedia
to offer global solutions that create additional value for
our customers.
Providing agile parts, service and data insights software that both
responds to these industry trends and is available to multiple
parties in a complex ecosystem, is a competitive advantage.
We believe we have proven we can deliver. We are committed
to maintaining top-line growth and improving margins and
we will continue to invest to further disrupt and capitalise on
opportunities starting to emerge on the back of technology
disruption across global automotive industry.
GOVERNANCE
Infomedia’s Board and Management are committed to achieving
high standards of professional conduct across all Infomedia Ltd’s
operations. Our Corporate Code of Conduct is a guide for our
employees and sets expectations for conduct and managing
responsibilities. Details of Infomedia’s corporate governance
framework, oversight policies and the Board and Management
approach to managing risk can be found on the corporate
governance section of Infomedia’s website:
https://www.infomedia.com.au/investors/corporate-governance
“Our goal is to be the leading global software
provider in the after sales segment of
the global automotive industry.”
OUTLOOK
We enter FY20 with strong, global customer relationships and
good momentum and expect to deliver continued double-digit
growth in both revenue and earnings.
Through strong execution, we believe Infomedia can continue
its current growth trajectory while also investing to take
advantage of opportunities emerging from disruption in the
automotive industry.
The Board and management are confident about Infomedia’s
position in the market. We believe we can grow Infomedia’s
business by leveraging our key assets to provide real value
to our customers while they face significant change in
their environment.
ACKNOWLEDGEMENTS
On behalf of the Board and Management, we acknowledge the
support of our customers all around the world, Thank you! We
value your relationship and your continued business. We look
forward to pursuing opportunities that arise from changes in
your industry and supporting you to continue to realise your key
objectives to grow genuine after sales and retain customers from
purchase to purchase.
We’d also like to acknowledge our employees and partners.
Your commitment, teamwork and dedication underpin Infomedia’s
ability to deliver technology that empowers our customers.
Thank you!
Bart Vogel
Chairman
Jonathan Rubinsztein
CEO & Managing Director
infomedia.com.au 7
infomedia.com.au 7
2019 ANNUAL REPORT INFOMEDIA AT A GLANCE
OEM Dealer EPC
Collision Parts Ordering
Trade Parts Ordering
Field Force Management
Mobile Chat App
A powerful suite of EPC driven parts selling solutions that are VIN-precise, user-friendly and automatically update to the latest
automotive manufacturer parts information. Infomedia’s Microcat parts suite focuses on driving parts sales, improving productivity and
delivering an improved customer experience.
Service Quoting
Vehicle Health Check
Online Service Booking
Digital Service Record
Customer Survey
Superservice is a data-driven service selling platform that empowers dealerships to create pricing transparency, grow customer trust
and improve staff productivity. The platform uses VIN-precise automotive manufacturer information to power a range of business
processes including service and repair quoting, online appointments, vehicle inspections and service history recording.
Data Management
Dealer Marketing
Customer Retention
Customer Satisfaction
OEM Programs
Data insights combines leading edge data analytics and global aftersales expertise to deliver actionable insights that support
automotive manufacturers and dealers to reduce operational costs, grow sales and retain customers to their brands from one
purchase to the next.
8 infomedia.com.au
2019 ANNUAL REPORT CUSTOMER TESTIMONIALS
“
We’ve noticed...
12 – 15% growth
in wholesale parts
...in the three months
that we’ve been using the
“
Microcat CRM application!
Mark Hatfield, Parts Manager
Jack Demmer Ford, Michigan, USA
“
Infomedia’s products have enabled us
to deliver a premium level of service to
our customers, ensuring they are kept
informed and involved at each stage
of the repair process. The level of
communication and collaboration
across our teams has increased
“
ten-fold, creating a more productive
and streamlined customer journey.
Business Improvement Team
Jardine Motors Group, United Kingdom
infomedia.com.au 9
2019 ANNUAL REPORT 2019 ANNUAL REPORT
YOUR BOARD
Images
Bart Vogel
Chairman
Jonathan Rubinsztein
CEO & Managing Director
Paul Brandling
Independent
Non-Executive Director
Clyde McConaghy
Independent
Non-Executive Director
Anne O’Driscoll
Independent
Non-Executive Director
10 infomedia.com.au
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, and was appointed as Chairman on 1 October
2016. Mr Vogel serves on the Remuneration & Nominations
Committee and the Technology & Innovation Committee.
Mr Vogel serves as Chairman of Invocare Limited and is
a Non-Executive Director of listed companies Macquarie
Telecom Group Limited and Salmat Limited. He is also a
Non-Executive 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)
and Computer Power Group. Mr Vogel has more than 20 years
experience 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. Mr Rubinsztein is also on the Advisory
board of the Missionvale charity based in Port Elizabeth, South
Africa, and a Director of Australian based, not-for-profit ticketing
platform, Humanitix.
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 Committee.
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 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 Chairman of Integrated
Research Ltd. Previously, he also served as a Non-Executive
Director of Avoka Technologies Pty 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 nearly 20
years’ experience in the automotive and related industry, as
an executive and board director of private and public listed
companies encompassing automotive, technology, publishing
and media companies.
Mr McConaghy was a Director of The Economist Intelligence Unit
and LSX-listed World Markets Research Centre’s Automotive
Divisions. He also held several senior positions in BMW Australia,
including Dealer Network Marketing Manager and National
Advertising Manager. He was also Account Director for Nissan
and Mobil at Mojo MDA/ InTouch Marketing.
He is currently a Director of Serko Ltd (NZX:ASX) and
MindGardens Neuroscience Network.
ANNE O’DRISCOLL FCA, GAICD, ANZIIF (Fellow)
Independent Non-Executive 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 also serves as Chairman of FINEOS Corporation
Holdings plc, and as a Non-Executive Director for Steadfast
Group Limited, MDA National Insurance Pty Limited and
Commonwealth Bank’s insurance subsidiaries (CommInsure).
infomedia.com.au 11
2019 ANNUAL REPORT
Operating and financial review
Company overview
Principal activities
Financial and operating review
Business objectives, strategies and outlook
Risks
13
13
13
14
15
16
Remuneration Report – Audited
DIRECTORS’ REPORT
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 of and insurance of officers
Environmental regulation
Corporate governance
Share options
Performance rights
Auditor
Non-audit services
Auditors’ independence declaration
Rounding of amounts
34
34
34
34
35
35
35
35
35
35
35
35
35
36
36
36
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 2019, along with
the independent auditor report.
The Directors’ report (including the Remuneration Report) and the annual financial report are structured to facilitate greater
understanding for the reader.
The flow of information in the Directors’ report is outlined in the table above. The flow of the financial report with key notes to
facilitate better understanding of significant matters is provided on pages 38 to 39.
Information is only being included in the 2019 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.
12 infomedia.com.au
2019 ANNUAL REPORT DIRECTORS’ REPORT
Operating and financial review
Company overview
Infomedia Ltd is a public, global technology company incorporated in New South Wales, Australia. The company is listed on the
Australian Securities Exchange under ticker code 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 around the world.
Principal activities
During the 2019 financial year, the principal activities of Infomedia Ltd consisted of:
•
•
the 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
the information management and provision of data analytics to assist automakers and dealers optimise operations, grow sales and
improve customer retention.
Financial and operating overview
Infomedia reported revenue growth of 16% to $84.598 million for the year ended 30 June 2019 (FY19), compared with revenue of
$72.935 million in the prior financial year.
The regions reported strong revenue growth in local currency except for the Americas; details are shown in note 1 on page 44 of
this 2019 Annual Report. The Americas delivered improved margins and profitability during FY19. The focus over the coming months
is to continue to drive the Americas operational restructure to improve revenue growth.
Infomedia is recruiting a new Head of the Americas, following the departure of the incumbent in June 2019. The Company
anticipates making an appointment before the end of the 2019 calendar year.
Operating leverage in the business delivered an 82% increase in Cash EBITDA in FY19, as a result of investments made in previous
years and disciplined cost management. Cash EBITDA is a key internal measure for the business.
Net profit after tax (NPAT) was $16.122 million, an increase of 25% compared with $12.897 million in the prior financial year,
despite the expected increase in amortisation of capitalised development costs related to current and future recurring revenue.
During FY19, a reassessment of the Microcat CRMTM (formerly known as FieldForce Auto CRM) acquisition resulted in a net increase
to NPAT of $0.165 million represented by a reduction in the quantum of future contingent consideration previously provided. This
was offset by an impairment against the Microcat CRMTM goodwill and an adjustment to finance costs on contingent consideration
for Microcat CRMTM.
Revenue (a)
EBITDA (b)
Development costs capitalised
Unrealised foreign currency translation losses/(gains)
Cash EBITDA
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)
2019
$’000
84,598
38,041
(18,969)
39
19,111
16,122
5.19
2.15
3.90
2019
’000
84,598
22,797
21,650
20,003
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
Movement
16%
31%
3%
82%
25%
25%
26%
26%
Movement
16%
25%
18%
3%
infomedia.com.au 13
2019 ANNUAL REPORT (b) Reconciliation of EBITDA to NPAT
EBITDA
Less: Changes in contingent consideration
Net finance costs
Depreciation, amortisation and impairment
Income tax expense
NPAT
Business objectives and strategies
DIRECTORS’ REPORT
Operating and financial review (Continued)
2019
$’000
38,041
4,262
(1,098)
(20,148)
(4,935)
16,122
2018
$’000
29,050
-
(564)
(12,824)
(2,765)
12,897
Movement
31%
57%
25%
Infomedia is an Australian-based global technology company. The business is one of very few global providers of Software as a
Service (SaaS) products that support global automotive manufacturers and their dealers, to meet their key objectives.
As the sale of new cars continues to become more competitive, global automotive manufacturers and dealers are increasingly
focused on growing genuine parts and service after sales and retaining customers to their brands from purchase to purchase.
Infomedia’s software is developed to specific requirements with original manufacturer genuine parts and service data that is
accurately priced and specific to each vehicle identification number (VIN). Designed to support globally, regionally and at an individual
dealer level, Infomedia’s software is scoped for the global automotive manufacturer and delivered to the dealer in an intuitive and
easy to use interface focussed on increasing profits, optimising price and improving the customer experience.
Infomedia will continue to pursue its financial and strategic objectives to deliver sustainable, long-term performance for Infomedia’s
shareholders by leveraging our key assets described below to take advantage of five key trends outlined in the Chairman and CEO
report on page 6 of this 2019 Annual Report.
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
Continue to expand breadth
and depth of existing global
footprint with automotive
manufacturers and partners in
the automotive ecosystem
Outlook
Maximise use of data to further
strengthen parts suite and
leverage through innovation
and adjacencies
Continue investing to
offer product with superior
functionality
Leverage our data assets to
create an analytics revenue
stream
Integrate data assets on the
platform to support automotive
manufacturers meet key
objectives
We enter FY20 with strong, global customer relationships and good momentum and expect to deliver continued double-digit growth
in both revenue and earnings.
Through strong execution, we believe Infomedia can continue its current growth trajectory while also investing to take advantage of
opportunities emerging from disruption in the automotive industry.
The Board and management are confident about Infomedia’s position in the market. We believe we can grow Infomedia’s business by
leveraging our key assets to provide real value to our customers facing significant change.
14 infomedia.com.au
2019 ANNUAL REPORT DIRECTORS’ REPORT
Operating and financial review (Continued)
Risks
Infomedia is subject to risks which may have 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) include:
Risk
Description
Risk management strategies
Loss of key licence
agreements
• Continued access to Original
• Management of key account relationships
Equipment Manufacturer (‘OEM’)
parts information is integral to
several of the Group’s product lines
• Continued investment to sustain market leading products
• Customer centric design to identify and adapt solutions to meet evolving
customer requirements
Loss of key
customers
automotive industry leads to a
degree of revenue concentration
• The relatively concentrated
• Global account management strategy
• Continuing focus on diversifying the Company’s customer base 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 and
intrinsic value propositions
• Leveraging accrued experience and capability in the sector with a global
reputation as a leading solutions provider in the parts and service space
• Regional directors charged with maintaining key relationships with OEM
clientele and maintaining detailed account management plans
Competitive risk
• Risk from existing and new
market entrants
Product
obsolescence or
substitution
• 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 market
• Competitors or OEMs may develop
leading position
Product outages
caused by software
or hardware errors
Intellectual
property risk
superior products
• Continuous upgrading of product platforms to meet technological
advancements
• Customer dissatisfaction with the
• Real time monitoring of the Company’s software products and online
Company’s software products which
fail to facilitate their critical business
operations
• Customers cancel subscriptions or
switch to competitive solutions
hosting environments to identify and correct errors quickly
• Robust product design and quality assurance testing
• Protecting integrity of data assets
• Network and product security measures
• Monitoring to identify and limit unauthorised access
• Legal restraints
Cyber risk, privacy
& data sovereignty
• Risk of targeted cyber-attack against
• Dedicated internal resources to monitor and address cyber and
Company assets
information risks as and when they arise
• Unauthorised access to or loss of
• Measures to detect and prevent unauthorised access to Company IT assets
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)
• Robust redundancy measures allowing compromised environments to
be seamlessly severed and replaced
• Re-architecture of hosting environments to support regulatory
requirements relevant to customers
• Information security management system certification aligned to ISO27001
• Internal compliance program including training for all employees on
relevant data security and privacy laws
People risk
• Loss of key executives
• Multiple touch points with key customers as part of relationship
• Loss of key customer relationships
management
• Appropriate incentives and career development opportunities for key
executives and senior management
• Identification and management of high potential employees
infomedia.com.au 15
2019 ANNUAL REPORT DIRECTORS’ REPORT
Remuneration Report – Audited
The Directors present the Infomedia’s Remuneration Report for the financial year ended 30 June 2019 (‘FY19’).
The Remuneration Report (‘Report’) is structured as follows.
Table 1 – Structure of Remuneration Report
Section
Details
A
B
C
D
E
F
G
H
I
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
Looking forward to FY20
A. Key management personnel
This Report outlines Infomedia’s remuneration philosophy, framework and outcomes for FY19 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 FY19.
Table 2 – Independent Non-Executive Directors
Current Directors
Bart Vogel
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
Table 3 – Executive KMP
Current executives
Jonathan Rubinsztein
Richard Leon
Role
CEO & Managing Director
CFO
Date of appointment
31 August 2015
1 October 2016
1 November 2013
15 December 2014
Date of appointment
14 March 2016
29 March 2016
16 infomedia.com.au
2019 ANNUAL REPORT DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
B. Remuneration governance
The 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?
The Remuneration & Nominations Committee (the ‘Remuneration Committee’ or the ‘Committee’) of the
Board presents this Remuneration Report on behalf of Infomedia Ltd.
Who are the members
of the Committee?
The Committee consists of three Non-Executive Directors. During the period the Committee
membership was comprised of Clyde McConaghy (Committee Chairman), Anne O’Driscoll and Bart Vogel.
What role does the
Committee play?
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 the period 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 also engaged with Guerdon Associates to review the Company’s long term incentive structure for Executive KMP
and Infomedia senior management personnel. As foreshadowed in the FY18 Report, the Company will implement a series of
refinements to the FY20 Executive KMP remuneration framework based on the results of the Guerdon Associates review.
Further details about the FY20 remuneration framework have been described below in section I of this Report.
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 FY18 Remuneration Report was approved at the 2018 Annual General Meeting (‘AGM’) with a vote of 96.90% of votes cast
in favour of the resolution.
infomedia.com.au 17
2019 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 graph, form a key consideration when designing and implementing
the executive remuneration framework. The company will continue to invest to capitalise on opportunities arising from key disruption trends
interrupting the global automotive industry. These trends are outlined in details on page 6 of this 2019 Annual Report.
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. During the reporting period the Company applied the following framework when setting remuneration.
18 infomedia.com.au
2019 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’)
Indicative total
potential Executive
KMP remuneration
mix(a)
40% of Total
remuneration package
30% of Total
remuneration package
30% of Total
remuneration package
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.
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.
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 FY19
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.
Options granted in 2016 are
measured over a three-year period to
FY19. Of the vested and exercised
entitlements, 50% are 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%. Rights granted in 2016
are measured and tested in three
tranches over the period FY17-
FY19 with a holding lock on
resultant shares until release of
the Company’s FY21 results.
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
For more
information
Footnote to Table 4
See section D.a below.
See section D.c below
See section D.d below
(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 for each Executive KMP,
including the monetary amounts attaching to each element.
infomedia.com.au 19
2019 ANNUAL REPORT DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
a. Employment terms
Table 5 – Employment terms of CEO & Managing Director
Term
Conditions
Service commence date 14 March 2016
Contract duration
Ongoing with no specified end date
Remuneration package
Jonathan Rubinsztein’s FY19 total potential remuneration package was $1,305,000 made up of the
following components:
Fixed remuneration
$535,000 per annum inclusive of superannuation representing 41% of total potential remuneration.
STI
$0 to $395,000 based on performance and payable in cash representing 30% of total potential
remuneration.
LTI
LTI opportunity of $375,000 per annum representing 29% of total potential remuneration. The LTI is
conferred in the form of Options and Rights.
No new LTI were awarded in FY19. 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 FY19
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.
Termination by
executive
Termination by
Company for cause
Termination by
Company (other)
Redundancy
entitlements
Post-employment
restraints
12 months non-compete and non-solicitation.
External directorships
Not permitted without written consent of the Board.
20 infomedia.com.au
2019 ANNUAL REPORT DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
Table 6 – Employment terms of CFO
Term
Conditions
Service commence date 29 March 2016
Contract duration
Ongoing with no specified end date
Remuneration package Richard Leon’s FY19 total potential remuneration was $735,031 made up of the following
components:
Fixed remuneration
$329,231 per annum inclusive of superannuation representing 45% of total potential remuneration.
STI
$0 to $205,800 based on performance and payable in cash representing 28% of total potential
remuneration.
LTI
LTI opportunity of $200,000 per annum representing 27% of total potential remuneration. The LTI is
conferred in the form of Options and Rights.
No new LTI were awarded in FY19. 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 $200,000 per
annum as at the date of grant. Further details about the LTI, including LTI vesting outcomes for the
FY19 are described below in section D.d.ii and D.d.iii.
Three months written notice.
The Company may immediately terminate the service agreement without notice, or any payment in
lieu of notice in certain circumstances including material breach, conduct having an adverse effect on
the Company’s reputation, or if the executive commits an act justifying termination at common law,
becomes bankrupt or is absent from work for more than three months in any 12-month period without
approval. Entitlements will be paid until the date of termination only.
Three months written notice or three months payment in lieu of notice (or a combination of notice and
payment in lieu of notice).
In addition to notice, the executive is entitled to 12 months fixed annual remuneration inclusive of any
statutory redundancy payments.
12 months non-compete and non-solicitation.
Termination by
executive
Termination by
Company for cause
Termination by
Company (other)
Redundancy
entitlements
Post-employment
restraints
External directorships
Not permitted without written consent of the CEO.
infomedia.com.au 21
2019 ANNUAL REPORT DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
b. Company performance
Table 7 outlines Infomedia performance delivered over the past five years.
Table 7 – Key financial performance indicators
Revenue ($’000)
Net profit after tax ($’000)
EBITDA ($’000)
Cash EBITDA ($’000)
Earnings per share (cents)
Dividends per share, exclude special
dividend (cents)
Special dividend per share (cents)
Share price at 30 June ($)
2019
84,598
16,122
38,041
19,111
5.19
3.90
-
1.70
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
Infomedia has adopted adjusted earnings before interest, tax, depreciation and amortisation (‘Cash EBITDA’) as a key measure for
the FY19 STI Gateway for Executive KMP and also as a core KPI 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.
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):
Changes in contingent consideration
Net finance costs/(income)
Depreciation, amortisation and impairment
Income tax expense
EBITDA
Development expenses capitalised
Unrealised foreign currency translation gains/(losses)
Cash EBITDA
Footnote to Table 8
2019
$’000
16,122
(4,262)
1,098
20,148
4,935
38,041
(18,969)
39
19,111
2018
$’000
12,897
-
564
12,824
2,765
29,050
(18,463)
(110)
10,477
2017
$’000
11,953
-
(36)
9,717
3,585
11,652
(13,715)
148
11,652
(a) In accordance with remuneration governance principles, the Company applied underlying performance measures which exclude
non-trading income and expenses in determining the vesting outcomes for STI and LTI.
During FY19, the non-trading income and expenses adjusted to the STI and LTI performance measures related to the
reassessment of the Microcat CRMTM acquisition. The reassessment resulted in a net change to NPAT of $0.165 million
represented by a $4.262 million reduction in the quantum of future contingent consideration previously provided for; offset by a
$3.367 million impairment against the Microcat CRMTM goodwill; and a $0.730 million adjustment to finance costs on contingent
consideration for Microcat CRMTM.
22 infomedia.com.au
2019 ANNUAL REPORT
DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
c. Short term incentive
i. Summary of CEO & Managing Director’s and the CFO’s KPIs and objectives and performance outcomes
Table 9 – KPIs and FY19 performance outcomes for the CEO & Managing Director and the CFO
Performance metrics
Weighting
Payout ratios
CEO & Managing Director KPIs and FY19 performance outcome
Financial
Cash EBITDA targets
Revenue growth
Non-financial
Targets met or exceeded:
60%
Sliding scale payment between 50%-125%
Sliding scale payment between 80%-120%
Targets met or exceeded:
Strategic growth projects
40%
Sliding scale payment between 60%-120%
Regional development projects
Global account projects
Total(b)
100%
CFO KPIs and FY19 performance outcome
Financial
Cash EBITDA targets
Revenue growth
Non-financial
Strategic growth projects
Operational projects
Total(b)
Footnote to Table 9
Targets met or exceeded:
60%
Sliding scale payment between 50%-125%
Sliding scale payment between 80%-120%
Targets met or exceeded:
40%
Sliding scale payment between 60%-120%
100%
FY19 performance
outcome/payout(a)
125%
120%
Partially met
68%
100%(b)
125%
120%
Partially met
69%
100%(b)
(a) As noted under Table 4 above, STI Gateways based on Cash EBITDA targets were met as a threshold for the STI program in
FY19 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 $395,000 and $205,800 per annum, respectively.
(c) The scope of disclosure made regarding Executive KMP performance targets is limited as the Board has formed the view
that disclosure of further detail would result in unreasonable prejudice to the entity by signalling key strategies to competitors,
suppliers and/or customers, thereby strengthening those parties’ position relative to the Company.
Table 10 – Executive KMP FY19 STI outcome
Executive KMP
Jonathan Rubinsztein
Richard Leon
Maximum
STI potential
Actual
STI Awarded
Actual STI awarded
as % of maximum
STI potential
STI forfeited as
% of maximum
STI potential
$
395,000
205,800
$
395,000
205,800
%
100%
100%
%
-
-
infomedia.com.au 23
2019 ANNUAL REPORT DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
d. Long term incentive
i. Long term incentive framework FY19
The purpose of the LTI program is to link Executive KMP performance with long term shareholder wealth creation. The details of the
FY19 Executive Incentive Plan – LTI are explained below.
Who participates?
Executive KMP participate in the scheme described in this Remuneration Report.
How was the current
Executive KMP LTI
program devised?
Why were three years’
worth of LTI issued in
2016?
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. The current program for Executive KMP will conclude upon final testing and vesting of LTI
following release of the Company’s FY19 results. A new LTI program will replace the current format
and is described in section I below in this Report.
The Board granted three years’ worth of LTI in a combination of Rights and Options. The Rights have
testing events based on the Company’s FY17, FY18 and FY19 results. The Options have testing
events based on the Company’s FY19 results. 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.
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 acquired from the exercise of the vested Options until release of the Company’s
audited accounts for the year ending 30 June 2020 (‘FY20’). The balancing 50% may be sold
after exercise.
The holding locks prevent 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.
Share Trading Policy:
The Company maintains a formal Share Trading Policy. 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 Executive KMP during FY19.
Why was retesting of
the Rights permitted?
What is the purpose
of the disposal
restrictions / holding
locks?
What governance
mechanisms does
the Company have in
place regarding LTI
and trading in shares
generally?
Does the Company
impose a minimum
shareholding
requirement?
24 infomedia.com.au
2019 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
Testing
events
Financial
Performance
hurdle
Strike
price
Performance
outcome
Retesting
of unvested
Rights
Vesting %
Holding Lock
2016 Rights
Tranche 1
2016-2017
Tranche 2
2016-2018
After release of
FY17 accounts
After release of
FY18 accounts
Tranche 3
2016-2019
After release of
FY19 accounts
Holding lock on
resultant shares
until release of
FY21 accounts
n/a
25% vesting
at 10% CAGR
above FY16 EPS
100% vesting
at 15% CAGR
above FY16 EPS
Pro rata vesting
in between 25%
and 100%
0% vesting if
less than 10%
CAGR achieved
Over 15%
CAGR above
FY16 EPS
11.7% CAGR
above FY16
EPS based on
FY18 EPS
15.5% CAGR
above FY16
EPS based on
FY19 EPS
15.5% CAGR
above FY16
EPS
No retesting is
required
100%
After release of
FY19 accounts
50% in 2018
based on FY18
EPS
50% in 2019
based on FY19
EPS
n/a
100%
2016 Options
2016-2019
After release
of FY19
accounts
Share price
must exceed
strike price
92.2
cents
$1.70 - share
price at 30
June 2019
n/a
100%
Holding lock
on 50% of
resultant shares
until release of
FY20 accounts
In accordance with remuneration governance principles, the Company applied an underlying EPS measure which excludes
non-trading income or expenses. This ensures that KMP Executive LTI outcomes are based on the true underlying performance of
the business.
infomedia.com.au 25
2019 ANNUAL REPORT DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
iii. LTI outcomes by Executive KMP
Table 11 – Movement in Rights and Options
Executive KMP
Number held at
1 July 2018
Number granted
during FY19
Number vested
and exercised
during FY19
Number lapsed
during FY19
Number held at
30 June 2019
2016 Rights
Jonathan Rubinsztein
Richard Leon
2016 Options
Jonathan Rubinsztein
Richard Leon
945,378
504,202
1,449,580
3,750,000
2,000,000
5,750,000
-
-
-
-
-
-
(238,707)
(127,311)
(366,018)
-
-
-
-
-
-
-
-
-
706,671
376,891
1,083,562
3,750,000
2,000,000
5,750,000
iv. LTI outcomes – fair value and maximum value to be recognised from grant date
Executive KMP
Grant date
($)
2016 Rights
Fair value per
Rights/ Options
Number of
Rights/Options
granted
Performance
Period
Jonathan Rubinsztein
29 January 2016
0.53-0.57
1,418,067
30 June 2017 to
30 June 2019
Maximum value
to be recognised
from grant date
($)
774,600
Richard Leon
17 February 2016
0.53-0.57
756,302
30 June 2017 to
413,600
30 June 2019
2016 Options
Jonathan Rubinsztein
29 January 2016
Richard Leon
17 February 2016
0.07
0.07
3,750,000
2,000,000
30 June 2019
30 June 2019
279,000
149,000
26 infomedia.com.au
2019 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 FY19 – 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 benefitsiii
Post-employment
benefits
(1)
(2)
(3)
Cash
salary and
leave
accruals
Short term
incentive
Non-
monetary
benefits
Super-
annuation
Termination
payments
Long
term
benefits
(4)
Share-based
payments
(5)
Long
service
leave
accruals
Performance
rights and
share options
(refer to Table 13)
Total
Jonathan Rubinsztein
2019
2018
Richard Leon
2019
2018
i. Footnote to Table 12
$
$
531,469
487,765
395,000
329,325
328,640
307,491
205,800
159,640
$
-
-
-
-
$
25,000
25,000
20,531
20,048
$
-
-
-
-
$
$
$
2,070
622
1,229
405
340,279
84,330
1,293,818
927,042
182,794
44,916
738,994
532,500
(a) The remuneration mix for the Executive KMP based on the remuneration details in Table 12 above are:
• Mr Rubinsztein: 43% fixed and 57% at-risk (2018: 55% fixed and 45% at-risk); and
• Mr Leon: 47% fixed and 53% at-risk (2018: 62% fixed and 38% 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 FY19 short term incentive has been approved by the Board and will be paid in cash in September 2019.
(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
2019
2018
Richard Leon
2019
2018
Footnote to Table 13
$
270,529
14,580
144,589
6,711
$
69,750
69,750
38,205
38,205
$
340,279
84,330
182,794
44,916
(a) The Rights value for FY19 is higher than FY18 is due to the performance hurdles forecast to be fully met in FY19 for all Rights
whilst in FY18 it was forecast to be partially met.
infomedia.com.au 27
2019 ANNUAL REPORT
DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
b. Executive KMP remuneration outcomes in FY19 – 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 FY19 – cash salary, short term incentive – cash bonus and superannuation; and
• the market value of Rights that vested and were converted to shares during FY19. The market value represents the variable
weighted average price of Infomedia shares in the four weeks following release of the Company’s FY18 results on 15 August
2018 (2018: 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 the corresponding financial year’s annual results. The VWAP over the period was $1.26
(2018: 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
Cash
salary(a)
Short term
incentive
Non-
monetary
benefits
Super-
annuation
Termination
payments
Long term
benefits
Share-based
payments
Long service
leave
accruals
Performance
rights vested
and
exercised
Total
$
$
$
$
Jonathan Rubinsztein
2019
2018
510,000
485,621
395,000
329,325
Richard Leon
2019
2018
308,700
300,384
205,800
159,640
Footnote to Table 14
-
-
-
-
25,000
25,000
20,531
20,048
$
-
-
-
-
$
-
-
-
-
$
$
301,917
1,231,917
367,941
1,207,887
161,023
196,235
696,054
676,307
(a) The remuneration mix for the Executive KMP based on the actual remuneration received details in Table 14 above are:
• Jonathan Rubinsztein: 43% fixed and 57% at-risk (2018: 42% fixed and 58% at-risk); and
• Richard Leon: 47% fixed and 53% at-risk (2018: 47% fixed and 53% 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
Executive
Bart Vogel
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
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
28 infomedia.com.au
2019 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, as approved by shareholders in 2016.
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 Non-Executive
Directors during FY19.
Does the Company
impose a minimum
shareholding
requirement?
The following table outlines Non-Executive Director fees for the Board and committees as at 30 June 2019. The quoted fees are
inclusive statutory superannuation contributions.
Table 16 – Non-Executive Director fees (inclusive of superannuation)
Board/Committee
Board
Role
Chairman
Non-Executive Directors
Audit & Risk Committee
Chairman fee
Remuneration & Nominations Committee Chairman fee
Technology & Innovation Committee
Chairman fee
Per role
$
196,000
88,500
15,000
15,000
15,000
Total
Total
$
196,000
265,500
15,000
15,000
15,000
506,500
infomedia.com.au 29
2019 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.
Table 17 – Total Non-Executive Director remuneration
Short term
employment
benefits
Board and
committee fees
Post-employment
benefits
Superannuation
$
178,995
175,224
96,017
89,307
94,521
90,115
94,521
90,115
$
17,005
16,646
7,483
8,484
8,979
8,561
8,979
8,561
Total(a)
$
196,000
191,870
103,500
97,791
103,500
98,676
103,500
98,676
Bart Vogel
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
2019
2018
2019
2018
2019
2018
2019
2018
Footnote to Table 17
(a) Base fee increases of 2.3% in respect of the Chairman, and 7.8% for other Non-Executive Directors, were applied from
1 July 2018. The increase was applied following analysis and benchmarking of Non-Executive Director fees by the Remuneration
Committee and to bring the Company in line with average Non-Executive Director fees relative to its peers. The last increase to
Non-Executive Director fees was applied in 2016.
(b) For FY19, Mr Brandling elected to receive part of the statutory superannuation contribution in cash. For FY18, Mr Brandling
was appointed Chairman of the Technology & Innovation Committee on 21 July 2017. The additional chair fees were prorated
accordingly in figures for the prior financial year.
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:
o Rights – each right will be converted into one Infomedia ordinary share for nil consideration;
o 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:
o Rights – subject to a holding lock until release of audited accounts for the year ending 30 June 2021;
o 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 2019 to the KMP. No loans were made
available to KMP during FY19.
30 infomedia.com.au
2019 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
Bart Vogel
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
Current KMP executives:
Jonathan Rubinsztein
Richard Leon
Footnote to Table 16
Balance at 30
June 2018
Number
Grant as
compensation
Number
Exercise of
share options
Number
390,000
209,809
80,000
100,000
1,027,465
371,100
-
-
-
-
-
-
-
-
-
-
-
-
Exercise of
performance
rights
Number
-
-
-
-
238,707
127,311
Total shares
held directly
and indirectly
at 30 June
2019(a)
Number
450,000
209,809
80,000
100,000
1,266,172
498,411
Net other
changes
Number
60,000
-
-
-
-
-
(a) Shares held indirectly are included in the column headed Total shares held at 30 June 2019. Total shares are held directly by
the KMP and indirectly by the KMP’s related parties, inclusive of domestic partner, dependents and entities controlled,
jointly controlled or significantly influenced by the KMP.
I. Looking Forward to FY20
a. Long term incentive framework FY20
The Board has determined that effective from FY20, the Company will transition to a rolling program of annual LTI grants to the
Company’s Executive KMP and senior management personnel. The Company intends to deliver LTI via two vehicles; performance
rights and share appreciation rights.
Having successfully settled and foundationally strengthened the Company since 2016 and having reached the end of the initial
three-year grant of LTI, it is now appropriate to re-assess and refresh the LTI structure from FY20 onwards. As noted in section B.a
above, the Company engaged with external remuneration consultants, Guerdon Associates, to review the Company’s LTI program.
The Company intends to seek shareholder approval at its 2019 AGM for the issue of LTI to the CEO & Managing Director, as
required by the ASX Listing Rules. Further details about the proposed LTI will be published in the 2019 AGM Notice of Meeting.
In the meantime, the Company provides the high-level indicative summary of the proposed terms of issue of the new LTI in the
table below.
The information provided remains subject to further refinement prior to issue of the LTI.
infomedia.com.au 31
2019 ANNUAL REPORT DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
Election of
LTI vehicle
Terms of issue
Performance period,
vesting and expiry
dates
Performance rights (‘Rights’)
Share appreciation rights (‘SARs’)
Executives will be provided an opportunity to select the apportionment of their ‘LTI Award Opportunity’
among Rights and SARs by taking 100% Rights, 50% in Rights and 50% in SARs, or 100% in SARs
Rights will be granted to the Executive KMP for nil
consideration.
SARs will be granted to the Executive KMP for nil
consideration.
The number of Rights granted will be determined
using a 30-day VWAP calculation on the Company’s
share price following release of the FY19 results
to determine a ‘Reference Price’. The ‘LTI Award
Opportunity’ referable to the Rights will be divided
by the Reference Price to determine the number of
Rights to be granted to the Executive KMP.
The Rights will be granted pursuant to the terms of
the Company’s ongoing Performance Rights and
Option Plan Rules (as amended from time to time)
Vesting of the Rights is subject to the performance
measures as described below.
The Board retains a discretion to cash settle any
vested LTI, instead of using shares.
The number of SARs to be allocated will be
determined using a Cox-Ross Rubinstein lattice
valuation model, applying the estimated value
of the SARs, as determined by an independent
qualified valuer. The number of SARs to be
allocated will be calculated by dividing the ‘LTI
Award Opportunity’ referable to the SARs by their
estimated fair value.
The SARs will be issued pursuant to the terms of
the Company’s ongoing Performance Rights and
Option Plan Rules (as amended from time to time)
Vesting of the Rights is subject to the
performance measures as described below.
The Board retains a discretion to cash settle any
vested LTI, instead of using shares.
The Rights and SARs granted for FY20 will be tested over a performance period spanning 1 July 2019
to 30 June 2022.
Subject to the attainment of the performance measures, and the continued employment of the Executive
KMP until the vesting date. The Rights and SARs will be tested for vesting following release of the
Company’s audited accounts for the year ending 30 June 2022 (‘FY22’). Unvested Rights and SARs
will lapse and be forfeited if the Performance Measures are not met. Vested Rights and SARs must be
exercised by the date that is 6 years after the grant date.
Executive KMP may exercise vested Rights and SARs up to 6 years after the date of grant. After that
time, unexercised Rights and SARs will lapse and be forfeited.
Performance
measures
Rights and SARs will vest subject to the performance measure: compound annual growth (‘CAGR’) on
earnings per share (‘EPS’) based on FY19 EPS. The plan provides for Board discretion to adjust statutory
results for non-trading items.
CAGR above FY19 EPS
% of Rights or SARs that vest
Below 10% CGAR
At 10% CAGR
Between 10% and 15% CAGR
0%
25%
Straight line pro-rata vesting
between 25% and 100%
At or above 15% CAGR
100%
Rights on vesting
and exercise
Each vested Right entitles the Executive KMP upon
exercise to receive the following:
• One Infomedia fully paid ordinary share (‘Shares’);
and
• additional Shares equal in value to dividends
received on Shares between the date of grant
and exercise. The additional Shares are calculated
as the number of Shares that would have been
acquired if dividends as announced to the ASX
between the date of grant and exercise had
been paid and reinvested in Shares, based on
the closing price of the Share at the ex-div date
during the period from grant to exercise. Fractions
of Shares will be rounded down to the nearest
whole number and no residual positive balance
carried forward.
Each vested SAR entitles the Executive KMP to
receive the benefit of share price growth over the
period between grant and exercise. Upon exercise
Executive KMP receive such number of Shares as
determined by the following calculation:
((SAR End Price-Reference Price)
×Number of SARs)
SAR End Price
Where:
= Number of Shares vested
• SAR End Price means the 5 day Volume
Weighted Average Price of the Company’s
shares up to the day of exercise; and
• Reference Price means the 30 calendar day
VWAP of the Company’s share price following
release of the FY19 results.
32 infomedia.com.au
2019 ANNUAL REPORT
DIRECTORS’ REPORT
Remuneration Report – Audited (Continued)
Price payable by
upon grant
Exercise price
Post vesting disposal
restrictions
Malus
Dividend and
voting rights
Performance rights (‘Rights’)
Share appreciation rights (‘SARs’)
Nil
Nil
Nil
Nil
Nil
Nil
The LTI will be subject to malus provisions entitling the Board, at its discretion, to pursue a range of
remedies where the Executive KMP has engaged in (among other things) fraud, dishonesty or
gross misconduct.
No dividend or voting right is attached to the Rights.
Upon vesting the recipient becomes entitled to
receive accrued dividends between the time of grant
and the time of vesting as additional Shares, as
described above in this table. Following vesting and
exercise, the recipient receives Shares with ordinary
voting right and dividend entitlement.
No dividend or voting entitlements is attached
to the SARs. Upon vesting and exercise, the
recipient receives Shares with ordinary voting
right and dividend entitlement.
This concludes the Remuneration Report, which has been audited.
infomedia.com.au 33
2019 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
Anne O’Driscoll
Role
Chairman & Independent Non-Executive Director
Chief Executive Officer & Managing Director
Independent Non-Executive Director
Independent Non-Executive Director
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
Salmat Limited
InvoCare Ltd
None
Integrated Research Limited
Tesserent Limited
Serko Limited (ASX & NZX)
Steadfast Group Limited
Period of directorship
Since 2014
Since 2017
Since 2017
Since 2015
From 2015 to 2017
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 2019, and the number of meetings attended by each director were as follows.
Board
Audit & Risk
Committee
Remuneration &
Nominations Committee
Technology &
Innovation Committee
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Bart Vogel
Jonathan Rubinsztein
Paul Brandling
Clyde McConaghy
Anne O’Driscoll
9
9
9
9
9
9
9
9
9
8
-
-
4
4
4
-
-
4
4
4
5
-
-
5
5
5
-
-
5
5
3
3
3
-
-
3
3
3
-
-
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 composition of the three committees.
Company secretaries
Daniel Wall BBA, LLB
Mr Wall is a lawyer admitted to practice in the Supreme Court of New South Wales and the High Court of Australia. Prior to joining
Infomedia he gained experience across a range of areas including commercial litigation, finance and corporate insolvency and
restructuring. 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.
34 infomedia.com.au
2019 ANNUAL REPORT DIRECTORS’ REPORT
Statutory Matters (Continued)
Significant changes in the affairs
On 13 December 2018, the Group acquired 100% of the ordinary shares in Nidasu Pty Limited. Refer to note 14 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 2019 are set out in note 3.
Matters subsequent to the end of the financial year
Other than the Board declared a final dividend of 2.15 cents per share, unfranked, there have been no matter or circumstance has
arisen since 30 June 2019 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 an 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 Third 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
The Company is currently in the process of addressing the governance framework and recommendations set out in the Fourth
Edition of the ASX Principles and will report against the revised guidelines in the financial year ending 30 June 2020.
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.
Performance rights
At the date of this report, there are 3,245,595 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 2019
and up to the date of this report. All performance rights vested and exercised during the reporting period were satisfied by the
transfer of fully paid ordinary shares purchased on market.
Auditor
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.
infomedia.com.au 35
2019 ANNUAL REPORT DIRECTORS’ REPORT
Statutory Matters (Continued)
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 20 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 20 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
19 August 2018
36 infomedia.com.au
2019 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, Sydney NSW 2085
19 August 2019
Dear Board Members
Auditor’s Independence Declaration to 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 report of Infomedia Ltd for the year ended
30 June 2019, 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 faithfully
DELOITTE TOUCHE TOHMATSU
Pooja Patel
Partner
Chartered Accountant
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
37
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 19 August 2019. 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.
44
45
46
47
50
53
56
56
Key performance metrics
Note 1. Operating segments
Note 2. Earnings per share
Note 3. Equity - dividends
Note 4. Income and expenses
Note 5. Income tax
Key note
FY19 performance overview:
• FY19 segment results by regions – no change in segments
• NPAT - $16.122 million – an 25% increase pcp
• Basic earnings per share – 5.19 cents, an 25% increase
• Final dividends per share – 2.15 cents, an 26% increase
Significant operating assets and liabilities
Key note
Note 6. Intangibles
Note 7. Trade and other receivables
Note 8 Contract liabilities
FY19 intangibles :
Increase of $11.268 million – acquisition of Nidasu Pty Limited
•
• Net increase in capitalised development costs of $4.171
million, net of amortisation expenses
FY19 trade and other receivables overview:
• Minimal recoverability issues on receivables with immaterial
provision for expected credit loss ($0.350 million),
same level as prior period
FY19 contract liabilities:
• New disclosure post application of accounting standard
AASB 15 Revenue from Contracts with Customers
• All amounts invoiced in advance during FY19 will be
recognised as revenue within 12 months
38 infomedia.com.au
2019 ANNUAL REPORT 40
41
42
43
57
58
60
60
60
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
Group’s capital and risks
Key note
Note 9. Issued capital and treasury shares held in trust
• The Group has no debt
Note 10. Financial instruments
Note 11. Contingencies
Note 12. Commitments
Note 13. Events after reporting date
• Issued capital – increase with issue as payment for Microcat
CRMTM ($0.467 million) and Nidasu ($1.400 million)
• 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 of FY19 final dividend – 2.15 cents, unfranked
Business portfolio
Key note
61
64
Note 14. Business combinations
Note 15. Interests in subsidiaries
The Group acquired the Nidasu Pty Limited, a wholly owned
subsidiary, in December 2018:
• Cash paid - $5.600 million;
• IFM shares issued - $1.400 million; and
• Contingent consideration - $4.299 million at 30 June 2019,
payable in cash and share capital
Other disclosures
Note 16. Share-based remuneration
Note 17. Cash flow information
Key note
This group of disclosures is required by the accounting
standards and the Corporations Act 2001.
Note 18. Key management personnel disclosures
Note 19. Parent entity information
Note 20. Remuneration of auditors
Note 21. Basis of preparation and other accounting policies
65
68
69
69
70
70
infomedia.com.au 39
2019 ANNUAL REPORT Infomedia Ltd
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
INFOMEDIA LTD
Consolidated statement of profit and loss and other comprehensive income
For the year ended 30 June 2019
Revenue
Expenses
Research and development expenses
Sales and marketing expenses
General and administration expenses
Total expenses
Operating profit
Other income
Net finance costs
Net foreign currency translation gain
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
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 for the year, net of tax
Note
Consolidated
2019
$'000
2018
$'000
4
4
4
4
4
5
84,598
72,935
(18,258)
(25,376)
(23,116)
(66,750)
(14,587)
(24,777)
(18,135)
(57,499)
17,848
15,436
4,268
(1,098)
39
717
(564)
73
21,057
15,662
(4,935)
(2,765)
16,122
12,897
-
424
424
10
186
196
Total comprehensive income for the year attributable to the owners of Infomedia Ltd
16,546
13,093
Basic earnings per share
Diluted earnings per share
Cents
Cents
2
2
5.19
5.13
4.16
4.15
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes
2
40 infomedia.com.au
2019 ANNUAL REPORT
INFOMEDIA LTD
Consolidated statement of financial position
As at 30 June 2019
Infomedia Ltd
Consolidated statement of financial position
As at 30 June 2019
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
Contract liabilities
Other payables
Provision for income tax
Provisions
Employee benefits
Contingent consideration
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
Retained profits
Total equity
Note
Consolidated
2019
$'000
2018
$'000
7
5
6
8
5
5
9
9
15,534
9,340
-
1,460
26,334
1,531
64,355
65,886
13,282
7,603
1,733
1,583
24,201
1,717
53,693
55,410
92,220
79,611
1,840
1,728
6,094
2,145
216
3,447
1,655
17,125
6,526
1,019
365
3,120
11,030
1,942
1,131
5,534
-
216
3,013
870
12,706
7,088
1,073
445
4,071
12,677
28,155
25,383
64,065
54,228
14,790
(1,230)
2,089
5,826
42,590
12,923
(978)
1,665
3,328
37,290
64,065
54,228
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
3
infomedia.com.au 41
2019 ANNUAL REPORT
Infomedia Ltd
Consolidated statement of changes in equity
For the year ended 30 June 2019
INFOMEDIA LTD
Consolidated statement of changes in equity
For the year ended 30 June 2019
Consolidated
Treasury
shares held
in
trust
$'000
Foreign
currency
reserve
$'000
Share-
based
payments
reserve
$'000
Cash flow
hedge
reserve
$'000
Share
capital
$'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
-
10
12,897
12,897
-
196
10
12,897
13,093
-
-
-
-
-
-
-
(574)
(111)
-
-
-
(8,063)
-
13
222
-
(893)
(8,063)
37,290
54,228
Consolidated
Treasury
shares held
in
trust
$'000
Foreign
currency
reserve
$'000
Share-
based
payments
reserve
$'000
Cash flow
hedge
reserve
$'000
Share
capital
$'000
Retained
profits
$'000
Total equity
$'000
Balance at 1 July 2018
12,923
(978)
1,665
3,328
-
37,290
54,228
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:
Contributions of equity, net of
transaction costs (note 9)
Share-based payments
Tax effect related to share-based
payments
Share allocated to employees on
vesting of performance rights
Purchase of treasury shares
Prior year adjustment for make
good expenses
Dividends paid (note 3)
-
-
-
1,867
-
-
-
-
-
-
-
-
-
-
-
-
269
(521)
-
-
-
424
424
-
-
-
-
-
-
-
-
-
-
-
1,048
1,719
(269)
-
-
-
Balance at 30 June 2019
14,790
(1,230)
2,089
5,826
-
-
-
-
-
-
-
-
-
-
-
16,122
16,122
-
424
16,122
16,546
-
-
-
-
-
1,867
1,048
1,719
-
(521)
(102)
(10,720)
(102)
(10,720)
42,590
64,065
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
4
42 infomedia.com.au
2019 ANNUAL REPORT
INFOMEDIA LTD
Consolidated statement of cash flows
For the year ended 30 June 2019
Infomedia Ltd
Consolidated statement of cash flows
For the year ended 30 June 2019
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
Payment for purchase of subsidiary, net of cash acquired
Payments for property, plant and equipment
Payments for intangibles
Payments for development costs capitalised
Net cash used in investing activities
Cash flows from financing activities
Payments for purchase of treasury shares
Dividends paid
Net cash used in financing activities
Net increase/(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
Note
Consolidated
2019
$'000
2018
$'000
17
14
14
6
3
84,548
(45,849)
38,699
39
(309)
74,129
(45,952)
28,177
60
(135)
38,429
28,102
(466)
(5,436)
(328)
(49)
(18,971)
(1,200)
-
(118)
-
(18,276)
(25,250)
(19,594)
(521)
(10,720)
(893)
(8,063)
(11,241)
(8,956)
1,938
13,282
314
(448)
13,313
417
15,534
13,282
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
5
infomedia.com.au 43
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 1. Operating segments
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019
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, tax, depreciation and amortisation (‘EBITDA’) in FY19. Comparative is changed to align
with current year’s disclosure. 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 contract.
Reportable segment information
Consolidated - 2019
Revenue
Total product revenue
Other income
Total income
EBITDA
Changes in contingent consideration
Net finance costs
Depreciation, amortisation and impairment
Profit/(loss) before income tax expense
Income tax expense
Profit after income tax expense
Consolidated - 2018
Revenue
Total product revenue
Other income
Total income
EBITDA
Net finance costs
Depreciation, amortisation and impairment
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
22,797
6
22,803
19,450
-
-
-
19,450
34,264
-
34,264
27,578
-
-
-
27,578
27,537
-
27,537
12,934
-
-
-
12,934
-
-
-
(21,921)
4,262
(1,098)
(20,148)
(38,905)
84,598
6
84,604
38,041
4,262
(1,098)
(20,148)
21,057
(4,935)
16,122
Asia Pacific
$'000
EMEA
$'000
Americas
$'000
Unallocated
$'000
Total
$'000
18,259
-
18,259
14,913
-
-
14,913
28,235
-
28,235
22,092
-
-
22,092
25,163
-
25,163
9,671
-
-
9,671
1,278
717
1,995
(17,626)
(564)
(12,824)
(31,014)
72,935
717
73,652
29,050
(564)
(12,824)
15,662
(2,765)
12,897
44 infomedia.com.au
6
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 1. Operating segments (continued)
Unallocated EBITDA
Unallocated EBITDA is represented by the following costs:
Research and development expenses
General and administration expenses
Note 2. Earnings per share
2019
$'000
2018
$'000
3,459
18,462
3,255
14,371
21,921
17,626
Consolidated
2019
$'000
2018
$'000
Profit after income tax attributable to the owners of Infomedia Ltd
16,122
12,897
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
5.19
5.13
4.16
4.15
Number
Number
311,806,000 310,824,000
(1,037,000)
(1,267,000)
310,539,000 309,787,000
Number
Number
310,539,000 309,787,000
4,524,000
1,242,000
315,063,000 311,029,000
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 and/or share options. One performance right/share option 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. For performance rights, no consideration is paid on conversion to Infomedia ordinary shares upon vesting and exercise.
For share options, strike price is payable on conversion to Infomedia ordinary shares upon vesting and exercise. These
arrangements have a dilutive effect to the basic earnings per share.
(b) Infomedia acquired Microcat CRM™ and Nidasu Pty Limited during the financial year ended 30 June 2018 and 2019,
respectively. Any potential contingent consideration to be settled in the future will be partly in the form of Infomedia Ltd ordinary
shares. As at both 30 June 2018 and 2019, the contingent consideration liability 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 any bonus elements in ordinary shares issued during the
financial year and excluding treasury shares.
7
infomedia.com.au 45
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 2. Earnings per share (continued)
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (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 2019 (2018: 30 June 2018) of 1.75 cents unfranked
(2018: 1.40 cents fully franked) per ordinary share
Final dividend for the year ended 30 June 2018 (2018: 30 June 2017) of 1.70 cents fully franked
(2018: 1.20 cents fully franked) per ordinary share
Consolidated
2019
$'000
2018
$'000
5,449
5,271
10,720
4,343
3,720
8,063
On 19 August 2019, the directors declared a final dividend of 2.15 cents per share, unfranked, to be paid on 25 September 2019. 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 27 August 2019.
Franking credits
Consolidated
2019
$'000
2018
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
2,474
347
●
●
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date;
any 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.
46 infomedia.com.au
8
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 4. Income and expenses
Profit before income tax includes the following specific income and expenses:
Revenue
Subscriptions revenue
Development and other ancillary service revenue
Consolidated
2019
$'000
2018
$'000
82,204
2,394
68,713
4,222
84,598
72,935
The disaggregation of revenue shown above is by timing of revenue recognition. Refer to the revenue recognition policy below.
Other income
Changes in contingent consideration
Other
Net finance (costs)/income
Finance income
Finance costs
Depreciation, amortisation and impairment
Depreciation
Amortisation
Impairment
Total depreciation, amortisation and impairment
Net foreign exchange gain
Cash flow hedges loss
Net foreign exchange gain
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
9
4,262
6
4,268
38
(1,136)
(1,098)
717
-
717
60
(624)
(564)
(524)
(16,257)
(3,367)
(560)
(12,166)
(98)
(20,148)
(12,824)
-
39
39
(59)
73
14
(2,230)
(2,114)
(2,299)
(2,186)
(1,048)
(13)
(35,272)
(34,164)
(22,429)
(14,798)
-
18,969
(21,718)
(11,234)
(98)
18,463
(18,258)
(14,587)
infomedia.com.au 47
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 4. Income and expenses (continued)
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
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.
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
Revenue recognition
The Group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018.
The application of AASB15 has no material financial impact.
The Group derives the majority of its revenue from recurring ‘software as a service’ subscriptions, where customers are licensed to
access and use software and associated support services.
The Group generates revenue through the following streams of revenue:
●
●
subscriptions to the Group’s software products, comprising over 95% of total revenue;
software development services to tailor off-the-shelf software solutions for specific use or functionality requirements or
integration with customers’ systems; and
ancillary services in the form of software installation and training.
●
Each of the above services delivered to customers are considered separate performance obligations even though for practical
situations they may be governed by a single legal contract with the customer.
Revenue recognition for each of the above revenue streams are as follows:
●
●
●
Subscriptions revenue:
˃ Customers are typically invoiced monthly or quarterly or yearly based on the terms in the contract with customers, and
consideration is payable when invoiced. The consideration received for quarterly or yearly invoices is recognised as
contract liabilities.
˃ Revenue is then recognised once access to the software and/or database is provided; and over time as the customer
simultaneously receives and consumes the benefit of accessing the software.
˃ Revenue is calculated based on the number of licences used and rate per licence, or as a negotiated package for large
customers.
Software development services:
˃ The software development services are typically invoiced as defined in the contract with the customers. Revenue is
recognised over time as services are delivered or in accordance with the terms of the service arrangement.
˃ Revenue is calculated based on time and/or external supplier costs.
Ancillary services:
˃ The ancillary services are software installation and training and are invoiced as defined in the contract with the
customers.
˃ Revenue is recognised over time depending on the terms of the service arrangements and usually when the customers
can access the software and/or database.
48 infomedia.com.au
10
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 4. Income and expenses (continued)
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.
11
infomedia.com.au 49
2019 ANNUAL REPORT
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Consolidated
2019
$'000
2018
$'000
4,545
436
(46)
4,935
(519)
955
436
-
436
814
2,469
(518)
2,765
71
2,398
2,469
(582)
1,887
21,057
15,662
6,317
4,699
(1,476)
3
(1,278)
1,010
405
4,981
(46)
-
(1,464)
14
-
-
34
3,283
64
(582)
4,935
2,765
Consolidated
2019
$'000
2018
$'000
(1,719)
(222)
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
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 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
Changes in contingent consideration
Impairment of goodwill
Non-deductible expenses
Current tax - prior year (overs)/unders
Deferred tax - prior year (overs)/unders
Income tax expense
Amounts credited directly to equity
Deferred tax assets
50 infomedia.com.au
12
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
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
Deferred tax asset
Movements:
Opening balance
Credited/(charged) 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
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
Consolidated
2019
$'000
2018
$'000
2,201
3,917
4
194
(6,316)
2,042
2,198
(6)
(156)
(4,078)
-
-
-
519
1,719
4,078
(6,316)
-
(71)
222
3,927
(4,078)
-
-
Consolidated
2019
$'000
2018
$'000
11,573
(17)
1,286
(6,316)
10,308
50
808
(4,078)
6,526
7,088
7,088
955
721
4,078
(6,316)
4,415
1,816
1,008
3,927
(4,078)
6,526
7,088
Consolidated
2019
$'000
2018
$'000
-
1,733
13
infomedia.com.au 51
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 5. Income tax (continued)
Provision for income tax
Provision for income tax
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Consolidated
2019
$'000
2018
$'000
2,145
-
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.
The Company has made claims under the research and development tax incentive provided by the Australian Government (R&D
incentive). The R&D incentive is claimed by way of self-assessment by the Company.
In recent times there has been a heightened level of audit activity on claims previously submitted under the R&D incentive. The
Company’s 2016 R&D claim is currently under review. There is a risk that the Australian Taxation Office and/or AusIndustry could
form a different view to the Company about the extent to which the R&D incentive could be claimed for the Company’s research and
development activities. The directors and their professional advisors are of the opinion that the R&D incentive claims in respect to
past years can be substantiated by the Company.
No provision has been recognised in the financial statements in connection with any liability that might arise and at the date of signing
this financial report, it is not practicable to estimate the financial effect of this matter, if any.
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.
52 infomedia.com.au
14
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 6. Non-current assets - intangibles
Goodwill
Less: Impairment write down
Capitalised development costs
Less: Accumulated amortisation
Software systems - at valuation
Less: Accumulated amortisation
Customer relationships - at valuation
Less: Accumulated amortisation
Brand names - at valuation
Consolidated
2019
$'000
2018
$'000
20,828
(3,367)
17,461
81,172
(42,577)
38,595
8,309
(2,233)
6,076
1,894
(385)
1,509
714
15,604
-
15,604
62,203
(27,779)
34,424
4,332
(1,022)
3,310
492
(137)
355
-
64,355
53,693
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Goodwill
$'000
Capitalised
development
costs
$'000
Software
systems
$'000
Customer
relationships
$'000
Brand
names
$'000
Total
$'000
Consolidated
Balance at 1 July 2017
Additions through business
combinations (note 14)
Additions
Disposal - cost
Disposal - accumulated
amortisation
Impairment of assets - cost
Amortisation expense
Balance at 30 June 2018
Additions
Additions through business
combinations (note 14)
Impairment of assets
Amortisation expense
12,237
27,293
723
3,367
-
-
-
-
-
15,604
-
5,224
(3,367)
-
-
18,463
-
-
(98)
(11,234)
34,424
18,969
-
-
(14,798)
3,382
-
(1,654)
1,654
-
(795)
3,310
49
3,928
-
(1,211)
-
492
-
-
-
-
(137)
355
-
1,402
-
(248)
-
-
-
-
-
-
-
-
-
714
-
-
714
40,253
7,241
18,463
(1,654)
1,654
(98)
(12,166)
53,693
19,018
11,268
(3,367)
(16,257)
64,355
Balance at 30 June 2019
17,461
38,595
6,076
1,509
15
infomedia.com.au 53
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 6. Non-current assets - intangibles (continued)
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Impairment testing
The Group performed impairment testing for goodwill on an annual basis and other intangibles where there are indicators of
impairment.
Goodwill
During the financial year ended 30 June 2019, management has undergone an internal reorganisation on the level at which the
Microcat CRM™ (known as FieldForce Auto CRM when acquired) business is monitored by management.
This resulted in the Microcat CRM™ business goodwill of $3.367 million, software systems of $2.142 million and customer
relationships of $0.191 million being separated from being monitored at the Asia Pacific segment level and monitored as a separate
cash generating unit ('CGU'), resulting in an impairment of the Microcat CRM™ business CGU.
As at 30 June 2019, an impairment charge of $3.367 million of goodwill has been applied as the carrying amount of goodwill, software
systems and customer relationships exceeded its recoverable amount within the Microcat CRM™ business CGU. The impairment
was a result of the financial under performance relative to the original forecast of Microcat CRM™ business during FY19. The
impairment expense was offset by the net gain recognised on reversal of contingent consideration from Microcat CRM™ business
acquisition of $4.262 million (refer to note 14).
The remaining 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
2019
$'000
2018
$'000
8,001
5,837
3,623
6,144
5,837
3,623
17,461
15,604
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 2020 (‘FY20’). Key assumptions are those to which the recoverable amount of the
cash generating unit is most sensitive.
The following key assumptions were used in the discounted cash flow model for the different cash generating units:
●
growth rates applied based on the FY20 budget applied were 6% to 22% (2018: 5% to 10%) for Asia Pacific, 3% to 11% (2018:
0% to 5%) for EMEA, 3% to 5% (2018: 5% to 10%) for Americas and run rate expectations for FY20 with 0% growth in projected
years for CRM (2018: Nil);
terminal growth rate applied for all reportable segments was 1.5% (2018: 2.5%);
post-tax weighted average cost of capital applied was 11.0% (2018: 10.0%) for Asia Pacific, 10.5% (2018: 10.5%) for EMEA,
10.5% (2018: 10.5%) for Americas and 18.0% for CRM (2018: Nil); and
exchange rates used in the cash flow projections for foreign operations were: AUD/USD exchange rate - $0.70 (2018: $0.74)
and AUD/EUR exchange rate - $0.62 (2018: $0.63).
●
●
●
As at 30 June 2019, the recoverable amount of net assets of the Group was greater than the carrying value of the assets and
therefore goodwill was not considered to be impaired for all other cash generating units apart from Microcat CRM™ business.
The following describes each key assumption on which management had based its cash flow projections when determining the value-
in-use of its cash generating units:
●
●
●
●
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.
Sensitivity – Asia Pacific, EMEA and Americas
No reasonable possible change in assumptions would result in the recoverable amount of a cash generating units being materially
less than the carrying value.
54 infomedia.com.au
16
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 6. Non-current assets - intangibles (continued)
Sensitivity – Microcat CRM™ business
Each of the sensitivities below assumes that a specific assumption moves in isolation, while other assumptions are held constant. A
change in one of the aforementioned assumptions could be accompanies by a change in another assumption, which may increase or
decrease the net impact.
●
●
terminal growth rate decrease by 0.5%: $0.047 million;
post-tax weighted average cost of capital increase by 1.0%: $0.112 million.
Intangible assets other than goodwill
Capitalised development costs - No impairment loss was recognised for the year ended 30 June 2019 (2018: impairment loss of
$0.098 million). The impairment loss arose from the regular review of capitalised development costs.
Software systems - There were no indicators of impairment.
Customer relationships - There were no indicators of impairment.
Brand names - 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 estimated 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 estimated 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 estimated finite useful life of three to nine years.
Brand names
Brand names acquired in a business combination are capitalised as an asset. The brand is recognised as having an infinite useful life
as there is no foreseeable limit to the period over which the brand is expected to generate cash flows. The brand names are carried at
cost less accumulated impairment losses.
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.
17
infomedia.com.au 55
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 7. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Other receivables
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Consolidated
2019
$'000
2018
$'000
9,277
(350)
8,927
413
7,771
(414)
7,357
246
9,340
7,603
Allowance for expected credit losses
The ageing of the impaired receivables provided for above are as follows.
Consolidated
Not overdue
0 to 30 days overdue
30 to 60 days overdue
Over 60 days overdue
Expected credit loss rate
Carrying amount
Allowance for expected credit
losses
2019
%
2018
%
2019
$'000
2018
$'000
2019
$'000
2018
$'000
0.2%
0.2%
0.4%
16.4%
0.1%
0.3%
0.9%
28.1%
4,926
1,692
619
2,040
4,563
1,333
460
1,415
9,277
7,771
10
3
2
335
350
7
5
4
398
414
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.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance.
To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Note 8. Current liabilities - contract liabilities
Contract liabilities
Reconciliation
Reconciliation of the contract liabilities values at the beginning and end of the current and previous
financial year are set out below:
Opening balance
Billings in advance
Transfer to revenue - included in the opening balance
Transfer to revenue - performance obligations satisfied in the current financial period
Reclassified to current assets or liabilities
Foreign currency translation differences
Closing balance
Consolidated
2019
$'000
2018
$'000
1,728
1,131
1,131
5,935
(1,131)
(4,212)
-
5
992
6,070
(781)
(4,945)
(211)
6
1,728
1,131
56 infomedia.com.au
18
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 8. Current liabilities - contract liabilities (continued)
Unsatisfied performance obligations
The aggregate amount of the contract liabilities allocated to the performance obligations that are unsatisfied at 30 June 2019 was
$1.728 million (2018: $1.131 million) and is expected to be recognised as revenue in future periods as follows:
Within 6 months
6 to 12 months
Consolidated
2019
$'000
2018
$'000
1,415
313
1,728
326
805
1,131
Accounting policy for contract liabilities
Contract liabilities represent the Group's obligation to transfer services to a customer and are recognised when a customer pays
consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier)
before the Group has transferred the services to the customer.
Note 9. Equity - issued capital and treasury shares held in trust
Consolidated
2019
Shares
2018
Shares
2019
$'000
2018
$'000
Ordinary shares - fully paid
Treasury shares held in trust - fully paid
312,426,000 310,824,000
(1,254,000)
(1,287,000)
14,790
(1,230)
12,923
(978)
311,139,000 309,570,000
13,560
11,945
Movements in ordinary share capital
Details
Balance
Date
Shares
Issue price
$'000
1 July 2017
310,824,000
Balance
Shares for part settlement of purchase of a business
Shares for part settlement of purchase of a subsidiary
30 June 2018
310,824,000
385,000
1,217,000
$1.21
$1.15
Balance
30 June 2019
312,426,000
Movements in treasury shares held in trust
12,923
12,923
467
1,400
14,790
Details
Balance
Purchase of treasury shares
Disposal of treasury shares
Balance
Purchase of treasury shares
Disposal of treasury shares
Date
1 July 2017
30 June 2018
Shares
Acquisition
price
$'000
(841,000)
(1,138,000)
725,000
(1,254,000)
(399,000)
366,000
$0.79
$0.71
$1.30
$0.73
(602)
(893)
517
(978)
(521)
269
Balance
30 June 2019
(1,287,000)
(1,230)
19
infomedia.com.au 57
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Note 9. Equity - issued capital and treasury shares held in trust (continued)
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.
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 2018 Annual Report.
Accounting policy for issued capital
Ordinary shares are classified as equity.
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 10. 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 and
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 for the Group’s products and to a lesser extent the associated costs 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 2019, there were no outstanding derivative financial instruments.
At 30 June 2019, the carrying value of foreign currency denominated cash and cash equivalents were as follows.
58 infomedia.com.au
20
2019 ANNUAL REPORT Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 10. Financial instruments (continued)
US Dollar
Euro
Consolidated
2019
$'000
2018
$'000
6,574
4,264
10,838
4,177
2,518
6,695
The Group had cash denominated in foreign currencies of $10.838 million as at 30 June 2019 (2018: $6.695 million). Based on this
exposure, had the Australian dollar weakened by 15%/strengthened by 10% (2018: 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 $1.138 million
higher/$0.759 million lower (2018: $0.703 million higher/$0.469 million lower) and equity would have been $1.138 million
higher/$0.759 million lower (2018: $0.703 million higher/$0.469 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 2019 was $0.039 million (30 June 2018: gain of $0.073 million).
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
2019
2018
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
Balance
$'000
-
0.99%
12,827
2,707
15,534
-
1.36%
7,285
5,997
13,282
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.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use
of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all
customers of the Group based on recent sales experience, historical collection rates and forward-looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure
of a debtor to engage in a repayment plan and a failure to make contractual payments for a period greater than 1 year even with
active debt collection activities.
21
infomedia.com.au 59
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 10. Financial instruments (continued)
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
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%-70% in cash and 30%-50% in Infomedia Ltd's ordinary
shares. The amount to be paid are determined by:
●
●
the net profit after tax of the Microcat CRM™ over the three year period from date of acquisition; and
the revenue and profit before tax of Nidasu Pty Limited over the three year period from date of acquisition.
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 2019, the Group has a total of cash and cash equivalents and trade and other receivables of $24.874 million
(2018: $20.885 million) to meet its future cash outflows of trade and other payables of $7.935 million (2018: $7.476 million)
when due for payment.
Note 11. Contingencies
There were no unrecognised contingent assets or contingent liabilities as at 30 June 2019 and 30 June 2018.
Note 12. Commitments
Contracted non-cancellable agreements committed at the reporting date but not recognised as liabilities or payables are provided
below.
Operating commitments
Within one year
One to five years
More than five years
Sublease income to be received
Consolidated
2019
$'000
2018
$'000
2,600
5,889
-
8,489
2,676
6,479
13
9,168
(1,029)
(1,020)
Operating lease commitments are for office accommodation both in Australia and abroad. Other commitments are IT support facilities
and office equipment.
The Company has provided a bank performance guarantee to a maximum value of $0.722 million (2018: $0.722 million) relating to
the lease commitments on its corporate headquarters.
Note 13. 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 2019 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.
60 infomedia.com.au
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2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 14. Business combinations
Acquisition of Nidasu Pty Limited - For the year ended 30 June 2019
On 13 December 2018, the Group acquired 100% of the ordinary shares of Nidasu Pty Limited. Nidasu is the leading provider of data
analytics to automakers and dealerships throughout Australia. The monthly subscription business model is highly complementary to
Infomedia’s software as a service (‘SaaS’) recurring revenue business. It represents a key step in building Infomedia’s data strategy
and presents a significant opportunity to access new customers and leverage Infomedia’s data business globally. As at 30 June 2019,
the acquisition of Nidasu is based on final purchase price accounting. None of the goodwill is expected to be deductible for tax
purposes.
For the period from 13 December 2018 to 30 June 2019, the contributed revenue to the Group was $2.271 million and profit before tax
('PBT') to the Group was $0.479 million. If the acquisition occurred on 1 July 2018, the estimated contribution to the full year results to
30 June 2019 would have been revenue of $4.166 million and PBT of $0.878 million.
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 were final as at 30 June 2019.
Identifiable intangible assets - software systems
Identifiable intangible assets - customer relationships
Identifiable intangible assets - brand names
Cash and cash equivalent
Working capital
Deferred tax
Net assets acquired
Goodwill
Representing:
Cash paid to vendor
Infomedia Ltd shares issued to vendor
Contingent consideration*
Acquisition-date fair value of the total consideration transferred
Acquisition costs expensed to profit or loss
Fair value
$'000
3,928
1,402
714
164
182
(721)
5,669
5,224
10,893
5,600
1,400
3,893
10,893
56
*
Pursuant to the Share Purchase 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.
23
infomedia.com.au 61
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 14. Business combinations (continued)
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Acquisition of Microcat CRM™ - For the year ended 30 June 2018
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 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 were 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 transferred
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.
No acquisition costs was expensed as incurred during the year ended 30 June 2018 as all acquisition costs were expensed in the
prior financial year.
The goodwill and contingent consideration for the business were reassessed at 30 June 2019 (refer to note 6).
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.
62 infomedia.com.au
24
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 14. Business combinations (continued)
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.
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 2019 is contingent consideration (2018: contingent
consideration).
Consolidated 2019
Liabilities
Contingent consideration - current
Contingent consideration - non-current
Consolidated - 2018
Liabilities
Contingent consideration - current
Contingent consideration - non-current
Level 1
$'000
Level 2
$'000
Level 3
$'000
Level 1
$'000
-
-
-
-
-
-
Level 2
$'000
-
-
-
-
-
-
1,655
3,120
4,775
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 business combinations (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 profit before tax or 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 in accordance with the corresponding Agreements. Any variation at the time of settlement
will be recognised as income or expense in profit or loss.
25
infomedia.com.au 63
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 14. Business combinations (continued)
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
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 of the business over a three year
period, subject to clawback;
Significant unobservable inputs: forecast net profit 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 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:
Opening balance at 1 July
Contingent consideration acquired in business combination
Payment during the financial year
Release of finance costs during the financial year
Changes in contingent consideration through profit and loss
Closing balance at 30 June
2019
$'000
2018
$'000
4,941
3,893
(933)
1,136
(4,262)
-
5,034
-
624
(717)
4,775
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 and Nidasu Pty Limited. The impact to the carrying value for the following unobservable
inputs are as follows:
●
●
Discount rate - a 100 basis points increase/decrease in the discount rate would decrease/increase the contingent consideration
by $0.056 million and $0.057 million (2018: $0.044 million and $0.045 million) respectively.
Profitability, adjustments on profit before tax or net profit after tax - a 5% increase/decrease in the profitability would
increase/decrease the contingent consideration by $0.420 million (2018: $0.287million).
Note 15. 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:
Name
IFM Europe Limited
IFM Americas Inc.
IFM China (WOFE)
Nidasu Pty Limited
Principal place of business /
Country of incorporation
United Kingdom
USA
China
Australia
Ownership interest
2018
2019
%
%
100%
100%
100%
100%
100%
100%
100%
-
Infomedia Ltd is the parent entity of the Group.
Transactions with related parties
There 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.
64 infomedia.com.au
26
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 16. 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.
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.
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 during the financial year ended 30 June 2016
●
●
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. Rights lapsed as performance hurdle not met;
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.
●
●
27
infomedia.com.au 65
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 16. Share-based remuneration (continued)
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Rights granted during the financial year ended 30 June 2017 (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). 50.5% vesting in FY19;
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 during the financial year ended 30 June 2017 (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 during the financial year ended 30 June 2018
●
●
●
●
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%.
Rights granted during the financial year ended 30 June 2019
●
●
●
●
Testing date: 1 October 2021;
Rights tested on testing date: 100% - if unvested, Rights lapse;
Performance hurdle: CAGR target: Compound EPS Growth percentage above FY18 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%.
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 excluding any dividends during the
performance period.
The following information relates to the Rights issued under the Plan.
2019
Grant date
Expiry date
13/10/2015
29/01/2016
17/02/2016
01/07/2016
04/10/2017
26/11/2018
01/10/2018
01/10/2019
01/10/2019
01/10/2019
30/06/2021
30/06/2020
Fair value
at grant date
Balance at
the start of
the year
$0.75
$0.53-$0.57
$0.53-$0.57
$0.48
$0.67
$1.00
529,000
945,378
504,202
403,383
882,578
-
3,264,541
Granted
Exercised
Lapsed
Balance at
the end of
the year
-
-
-
-
-
876,072
876,072
-
(238,707)
(127,311)
-
-
-
(366,018)
(529,000)
-
-
-
-
-
(529,000)
-
706,671
376,891
403,383
882,578
876,072
3,245,595
66 infomedia.com.au
28
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 16. Share-based remuneration (continued)
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
30/06/2021
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
During the year ended 30 June 2019, 366,018 Rights are vested and exercised (2018: 724,789). The value attributable to these rights
at vesting was $1.26 per Right (2018: 77.84 cents per Right). The value represents the variable weighted average price of Infomedia
shares in the four weeks following the Company's FY18 results announcement (2018: 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 provided 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.
●
●
●
●
●
●
●
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.
The following information relates to the Options issued under the Plan.
2019
Grant date
Expiry date
29/01/2016
17/02/2016
29/01/2020
17/02/2020
2018
Grant date
Expiry date
29/01/2016
17/02/2016
29/01/2020
17/02/2020
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
-
-
-
-
-
-
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
-
-
-
-
-
-
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
-
-
-
-
-
-
29
infomedia.com.au 67
2019 ANNUAL REPORT
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 16. Share-based remuneration (continued)
No Options were vested and exercisable as at 30 June 2019 (2018: 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 other vesting conditions have been taken into account.
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.
Note 17. 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
Share-based payments
Foreign exchange differences
Capitalised development costs
Non-cash finance costs
Revaluation of contingent consideration
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
Decrease in derivative assets
Decrease/(increase) in prepayments
Increase in trade and other payables
Increase in contract liabilities
Increase in provision for income tax
Decrease in other provisions
Increase/(decrease) in employee benefits
Increase in deferred tax liabilities
Consolidated
2019
$'000
2018
$'000
16,122
12,897
16,781
3,367
1,048
113
(754)
1,136
(4,262)
(1,305)
-
131
1,004
597
2,685
(54)
249
1,571
12,726
98
13
(231)
(756)
624
(717)
223
10
(54)
912
139
442
-
(111)
1,887
Net cash from operating activities
38,429
28,102
Non-cash investing and financing activities
During the financial year ended 30 June 2019, Infomedia issued $1.867 million ordinary shares as part payment for purchase of a
subsidiary and a business (2018: $Nil).
Changes in liabilities arising from financial activities
There were no liabilities arising from financial activities for cash flow purposes.
68 infomedia.com.au
30
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 18. 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
Note 19. 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
Share-based payments reserve
Retained profits
Total equity
Consolidated
2019
$
2018
$
1,924,963
87,977
3,299
523,073
1,728,982
87,300
1,027
129,246
2,539,312
1,946,555
Parent
2019
$'000
2018
$'000
16,031
12,800
16,031
12,800
Parent
2019
$'000
2018
$'000
21,007
20,705
85,178
73,795
13,051
9,835
24,078
22,500
14,790
6,612
39,698
12,923
3,845
34,527
61,100
51,295
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 2019 and 30 June 2018.
Contingent liabilities
Other than the guarantee below, there were no unrecognised contingent liabilities as at 30 June 2019 and 30 June 2018.
The parent entity has provided a bank performance guarantee to a maximum value of $0.722 million (2018: $0.722 million) relating to
the lease commitments on its corporate headquarters.
31
infomedia.com.au 69
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 19. Parent entity information (continued)
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 21, 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.
Note 20. 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
2019
$
2018
$
173,500
179,000
44,776
-
99,000
20,000
44,776
119,000
218,276
298,000
21,738
17,080
1,734
1,182
23,472
18,262
Note 21. 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 19 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.
70 infomedia.com.au
32
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 21. Basis of preparation and other accounting policies (continued)
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 Australian Accounting
Standards Board ('AASB') that are mandatory for the current reporting period.
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 9 Financial Instruments
This accounting standard is applied from 1 July 2018 and has no material financial impact.
The allowances for expected credit losses accounting policy and application details are provided in note 7 Trade and other
receivables.
AASB 15 Revenue from Contracts with Customers
This accounting standard is applied from 1 July 2018 and has no material impact on revenue recognition.
Additional disclosure are provided in accordance with this standard, refer to the following notes for details:
●
The disaggregation of revenue from contracts with customers:
˃ Note 1 – revenue breakdown by geographic regions, same disclosure as prior years; and
˃ Note 4 – revenue breakdown by timing of recognition; and
Note 8 – contract liabilities
●
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 2019 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.
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.
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.
33
infomedia.com.au 71
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
INFOMEDIA LTD
Notes to the consolidated financial statements
For the year ended 30 June 2019 (Continued)
Note 21. Basis of preparation and other accounting policies (continued)
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.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either
amortised cost or fair value depending on their classification. Classification is determined based on both the business model within
which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is
being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a
financial asset, it's carrying value is written off.
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 2019. 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 16 Leases
AASB 16 Leases is applicable to annual reporting periods beginning on or after 1 January 2019.
Under the new standard, a lessee is in essence required to:
●
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;
recognise depreciation of right of use assets and interest on lease liabilities in profit or loss over the lease term; and
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 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.
The Group has elected to:
●
●
implement this standard with the modified retrospective approach; and
measure right-of-use assets at an amount equal to the lease liability amount, adjusted for the lease incentive liability, at
transition date.
Under this standard, right-of-use assets will be tested for impairment in accordance with AASB136 Impairment of Assets. This will
also replace the previous requirement to recognise a provision for onerous lease contracts. For short term leases and leases of low
value assets, the Group will elect to recognise a lease expense on a straight-line basis as permitted by this standard.
As at 30 June 2019, the Group has non
cancellable operating lease commitments of $7.460 million.
‑
34
72 infomedia.com.au
2019 ANNUAL REPORT
Infomedia Ltd
Notes to the consolidated financial statements
30 June 2019
Note 21. Basis of preparation and other accounting policies (continued)
The estimated impact on the statement of financial position as at 1 July 2019 will be:
●
●
a right
a lease liability of $6.127 million in respect of all these leases.
use asset of $5.354 million; and
of
‑
‑
The above estimated impact included a lease incentive liability of $0.773 million previously recognised in respect of the operating
leases.
New Conceptual Framework for Financial Reporting
A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable to Infomedia Ltd for annual
reporting periods beginning on or after 1 January 2020. The application of new definition and recognition criteria as well as new
guidance on measurement will result in amendments to several accounting standards. The issue of AASB 2019-1 Amendments to
Australian Accounting Standards – References to the Conceptual Framework, is also applicable from 1 January 2020, includes such
amendments. Where the Group has relied on the conceptual framework in determining its accounting policies for transactions, events
or conditions that are not otherwise dealt with under Australian Accounting Standards, the Group 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.
35
infomedia.com.au 73
2019 ANNUAL REPORT
Infomedia Ltd
Directors' declaration
30 June 2019
In the directors' opinion:
INFOMEDIA LTD
Directors’ declaration
30 June 2019
●
●
●
●
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 21 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 2019 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
19 August 2019
74 infomedia.com.au
36
2019 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
We have audited the financial report of Infomedia Ltd (“the Company”) and its subsidiaries (the
“Entity”), which comprises the consolidated statement of financial position as at 30 June 2019, 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 directors’ 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 2019 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 Company, 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 Asia Pacific Limited and the Deloitte Network.
75
Key Audit Matters
How the Key Audit Matters were addressed in the audit
Capitalised labour
development costs
As at 30 June 2019, the Entity’s
carrying value of the product and
software development costs
capitalised as intangibles totalled
$38.6m of which $18.9m is
attributable to capitalisation in
the current financial year as
disclosed in Note 6.
Judgement is involved in
determining the quantum of
labour costs directly attributable
to develop the Entity’s product
suite and software.
Our procedures included, but were not limited to:
•
•
•
•
•
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 in the
calculations, where appropriate;
Challenging management’s key assumptions in the
labour capitalisation calculation including the
treatment of employee on-costs and contractors; and
Testing the mathematical accuracy of management’s
labour capitalisation schedule.
We also assessed the appropriateness of the disclosure in
Note 6 to the financial statements.
Contingent Consideration
Our procedures included, but were not limited to:
As at 30 June 2019, the Entity
has contingent consideration
liabilities of $4.7m, of which
$4.2m relates to its acquisition
of Nidasu in FY19 and $0.5m
relates to its acquisition of
Randem Media in FY18.
Payments will be made to the
seller if agreed net profit hurdles
are met in future periods.
Judgment is involved in
forecasting these cash flows and
the discount rate applied in
calculating the best estimate of
the amount expected to settle
the obligation.
•
•
•
•
•
Assessing management's contingent consideration
calculations against the net profit hurdle stipulated in
the respective signed share purchase agreements;
Challenging the reasonableness of key assumptions
included in the forecast cash flows including:
o
o
o
Comparing historical budget forecasts against
actual results;
Comparing forecast growth to business plans
approved by the Board; and
Performing sensitivity analysis on the
revenue growth assumptions to assess the
impact on the forecasted cash flow.
Recalculating the interest expense related to the net
present value of contingent consideration;
Testing the mathematical accuracy of management’s
contingent consideration calculation; and
Assessing the accuracy of contingent consideration
disclosed in current and non-current liabilities.
We also assessed the appropriateness of the disclosure in
Note 14 to the financial statements.
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.
76
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
77
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 16 to 33 of the Directors’ Report for
the year ended 30 June 2019.
In our opinion, the Remuneration Report of Infomedia Ltd, for the year ended 30 June 2019, 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
Pooja Patel
Partner
Chartered Accountants
Sydney, 19 August 2019
78
SHAREHOLDER INFORMATION
As at 13 August 2019
The following information is presented in compliance with ASX Listing Rules 4.10 (as relevant). The information is current as at
13 August 2019.
1. Number of shareholders
As at 13 August 2019 there were 4,667 shareholders holding a total of 312,426,494 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
Unmarketable Parcels
3. Top 20 Registered Shareholders
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
National Nominees Limited
Bell Potter Nominees Ltd
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
Citicorp Nominees Pty Limited
ECapital Nominees Pty Limited
Mr Peter Alexander Brown
Pacific Custodians Pty Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
Mirrabooka Investments Limited
Pacific Custodians Pty Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd DRP
Powerwrap Limited
Jonathan Leonard Scharrer
UBS Nominees Pty Ltd
Invia Custodian Pty Limited
CS Third Nominees Pty Limited
Total
261,107,886
38,651,089
7,500,028
4,807,216
360,275
312,426,494
6,953
83.57
12.37
2.40
1.54
0.12
100.00
13 Aug 2019
63,418,102
60,597,378
30,638,506
29,198,725
24,194,414
8,730,122
8,401,132
2,307,868
1,461,670
1,350,000
1,287,282
1,268,042
1,170,744
1,090,807
953,752
938,674
913,043
831,336
759,431
686,280
111
1,359
940
1,619
638
4,667
170
%IC
20.30
19.40
9.81
9.35
7.74
2.79
2.69
0.74
0.47
0.43
0.41
0.41
0.37
0.35
0.31
0.30
0.29
0.27
0.24
0.22
240,197,308
76.88
infomedia.com.au 79
2019 ANNUAL REPORT
SHAREHOLDER INFORMATION
As at 13 August 2019 (Continued)
4. Substantial shareholders
The share balances in this table are extracted from substantial shareholder notices received by the Company.
Shareholder
Viburnum Funds Pty Ltd ACN 126 348 990
Selector Funds Management Limited ACN 102 756 347
Pendal Group Limited ACN 126 385 822
Mitsubishi UFJ Financial Group, Inc.
TOTAL
Number of
shares
45,647,879
17,371,970
15,688,909
15,626,896
94,335,654
Voting
Power
14.61%
5.56%
5.02%
5.00%
30.19%
Date of last notice
11 October 2017
14 March 2019
15 July 2019
9 August 2019
5. Unquoted equity securities
Unquoted share options
Unquoted performance rights
6. Escrowed securities
Class
Fully paid ordinary shares
Fully paid ordinary shares
Fully paid ordinary shares
7. Voting rights
Number on issue
Number of holders
5,750,000
3,245,595
Number
608,695
385,582
608,696
2
28
Escrow End Date
13 June 2020
5 December 2021
13 December 2021
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.
8. Share buy-back
Infomedia Ltd does not have a current on-market buy-back in operation.
9. Shares purchased on-market
During the reporting period 399,158 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 $1.30 per share.
10. Corporate Governance Statement
Infomedia’s 2019 Corporate Governance Statement may be found by visiting:
http://www.infomedia.com.au/investors/corporate-governance
80 infomedia.com.au
2019 ANNUAL REPORT CORPORATE DIRECTORY
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
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
FINANCIAL CALENDAR (2020)
FINANCIAL HALF YEAR
31 December 2019
FINANCIAL HALF YEAR
RESULTS ANNOUNCEMENT
27 February 2020*
FINANCIAL YEAR END
30 June 2020
FINANCIAL YEAR END
RESULTS ANNOUNCEMENT
24 August 2020*
ANNUAL GENERAL MEETING
23 October 2020*
* Please note dates are subject to change. Any changes will be
published via a notice to the Australian Securities Exchange (ASX).
GLOSSARY
APAC
Sales region covering the area of
the Asia Pacific
Cash EBITDA Cash earnings; identifies the cash
impact of investing in development costs
that are capitalised. Cash EBITDA is a
key internal metric for Infomedia.
cps
FY19
Cents per share
The financial year from 1 July 2018 to
30 June 2019
EBITDA
Earnings before interest, tax,
depreciation and amortisation
EMEA
NPAT
OEM
pcp
Sales region covering the area of
Europe, Middle East and Africa
Net profit after tax
Original equipment manufacturer
Previous corresponding period
SaaS
Software as a Service
VIN
Vehicle identification number
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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2019 ANNUAL REPORT