2017
Annual Report
An annual
perspective
of real media
intelligence
Table of
Contents
2
4
10
31
34
35
36
37
38
85
86
91
Chairman’s Letter
CEO’s Report
Directors’ Report
Auditor’s independence declaration
Statementofprofitorlossandother comprehensive
income
Statementoffinancialposition
Statement of changes in equity
Statementofcashflows
Notestothefinancialstatements
Directors’ Declaration
Independent auditor’s report to the members of Isentia
Group Limited
Shareholder Information
Real data
intelligence is
centred around
our clients –
creating value for
their organisation
by informing
their decision
making with data.
Isentia Group Limited – 2017 Annual Report Chairman’s
Letter
“Our firm focus in
FY2018 is to build on
our core strengths
and pursue growth
opportunities, while
cementing our position
as a leader in data
intelligence.”
DearShareholder,
While2017FinancialYear(‘FY2017’)hasbeenachallengingandformativeyear
forIsentia,weareconfidentthatthedecisionswemadetoachieveourlong-
termstrategyhavebeentherightonesforbothclientsandshareholders.
OurfirmfocusinFY2018istobuildonourcorestrengthsandpursuegrowth
opportunities,whilecementingourpositionasaleaderindataintelligence.
Throughoutthisformativeyear,weencounteredchallengesinthetransitionof
ourcontentbusiness,metcopyrightadjustmentsfortheAustralianbusiness,
andthusreportedalowerprofitthanexpected,adisappointingoverallresult.
However,IampleasedtoreportthatthroughFY2017thefundamentalsofthe
businessremainedstrong–includingastrongbalancesheetandsolidcash
conversion.
InFY2017,wehaveworkedonbuildingthefoundationsforfuturegrowth.With
ourenhancedintegratedserviceoffer,backedbyleadingtechnology,whichis
detailedfurtherinCEOJohnCroll’sreport,wehaveimprovedourcompetitive
positionintheAustralianandNewZealandmarkets,wherewearewell
establishedandenjoyexcellentclientrelationships.Inaddition,wenowhave
excellentpresenceacrossAsia,withastrongteaminplacetodeliveracross
thesehighpotentialmarkets.
Asia provides strong
growth opportunities
for Isentia
AsignificantdrivertoIsentia’sfuture
growthwillbeinAsia,whichisakey
leverinIsentia’smediumtolong-
termgrowthstrategy.Ourgoalisto
strengthen our Asian business and
becometheclearmarketleaderin
thisregion.
I am passionate about the Asian
opportunityforIsentia.Thisregion,
withenormousconsumptionof
traditionalandsocialmedia,rich
economic centres and corporate
hubs,showsarealmarketappetite
forourintegratedservicemodel.
InFY2017weopenedinKorea–a
marketplacewithanequivalentGDP
toAustralia,the12th-largesteconomy
intheworld,oneofthemostsocially
connected through its platforms and
mobiledevices,combinedwithsome
oftheworld’slargestbrands.Wealso
openedinTaiwaninJuly2017,and
are exploring future opportunities
inAsia.
OurSydneyandSingaporeIT
developmenthubshavebeenbuilt
to set in place strong foundations
forourplatform,ensuringwehave
thebestpeopleintheworldbuilding
powerfultechnologythatwillhelpour
clientsgainstrategicadvantage.
Our technology enables us to connect
ourmarket-leadingSoftwareasa
Service(SaaS)platformdirectlyinto
Asia,ensuringaconsistentglobal
customerexperience.Thisagility
demonstrates the real potential of this
platformforourfuturegrowthacross
theregion.
Asia market
performance and
potential
TheAsianbusinessisgrowing
revenuewithmid-teensgrowthfor
FY2017,andwhileEBITDAislower
thanFY2016duetomarketentries,it
remainsasolidperformance.
Our expectations are that Asia
hasthepotentialtogrowstrongly
viaacquiredandorganicgrowth.
Currentmarketpenetrationisaround
10%to15%,withlong-termmarket
penetrationpotentialequivalentto
Australianlevels,whicharecurrently
60%to70%.Thisisunquestionablya
strongpotentialgrowthrunway
forIsentia.
WithfewAustraliandomiciled
organisations expanding into and
operatinginAsia,wehaveaunique
opportunitytoestablishafirm
footprint on Asian soil and cement
adominantregion-focusedmarket
position.
Advantage of scale and
efficiency
Buildingscaleandefficiencyisa
corestrategyofthebusiness,in
particularsothatanyinvestmentsin
launching our platform and model in
newmarketsarehighlycompetitive
againstlocal,smalleroperators.The
investmentsmadebyIsentiaoverthe
lastthreetofiveyearshaveallbeen
basedonbeingagileandadaptable,
toreachnewmarketswitheaseand
efficiency.
Enteringnewmarketsasa
technology-ledbusinessenables
amuchsmallercostofentry.Our
investmentinback-endinfrastructure,
forexample,allowsuslightertouch
marketentryasthecontentingest
into Mediaportal has been designed
toscaleandabsorbhighvolumes.
Continuing momentum
for FY2018
WeseeFY2018asayearof
cementing our transition from a
media-ledtoadata-andtechnology-
ledorganisation,andwe’re
anticipatingincreasedclienttake-up
ofourfullyintegratedservicemodel.
Doug Flynn
Chairman
22 August 2017
Sydney
2
Chairman’s Letter
3
Isentia Group Limited – 2017 Annual Report CEO’s
Report
“We have continued to
invest in technology as
a fundamental platform
for business growth and
service enhancement,
and to provide us with a
vital springboard into key
new markets.”
The2017financialyearwas
evolutionaryforIsentia.Ourchallenge
wastorespondtodynamicshifts
inthewayconsumersusemedia,
and offer clients clear insights
from complex data to inform better
decisionmaking.
Buildingonourcorestrengths,we
setinplacenewbuildingblocks
to help our clients address online
socialmediadisruptionwithnear
real-timedataintelligence–shifting
ourvaluepropositionfromdata
collectionalone,toafullyintegrated
data intelligence business including
insights,strategyandcontent
functions.
Welaunchedournewbusiness
model,forthefirsttimeofferingthree
fully integrated streams: Media &
Intelligence,Research&Insightsas
wellasStrategy&Contentservicesto
clientsacrosstheAsia-Pacific.
Technology investments
as a platform for growth
Wehavecontinuedtoinvestin
technology as a fundamental platform
forbusinessgrowthandservice
enhancement,andtoprovideus
withavitalspringboardintokeynew
markets.
Wehavemadeseveraldecisive
enhancements to our technology
platformsthisfinancialyear.These
includetransformingourback-
endsystemstomanagehigh-
scalecontentvolumesinmultiple
languagesforkeygrowthmarkets.
Approximatelysevenmillionpieces
of information are ingested on a daily
basis,combinedwithsignificant
metadatatoaddtangiblevaluefor
ourclients.
Thebusinesshasalsodelivereda
newversionofMediaportal,built
entirelyinthecloud,whichthousands
of communications professionals
acrosstheAsia-Pacificloginto,
aroundtheclock.Thishasprovided
uswithanexcellentplatformfor
deliveringarangeofenhancements
tobereleasedthroughoutFY2018.
In recognition of our clients needing
tobeinformed,wherevertheyare,and
ourstrategytobeagile,accessible
andalwaysbyourclients’sides,we’ve
deliveredanewmobileapplicationto
enablenearreal-timeaccesstoour
richdataintelligence.
Lateinthefinancialyear,wedelivered
Stories,aglobalmediaintelligence
industryfirst–aproductthatbrings
social and mainstream media
together in a single system to analyse
relativeinfluenceoveranissueor
campaignatanygiventime.Stories
helpsunlockthecomplexityfor
clients,providingthemwithaclear
opportunitytoseewheretheyshould
interactwithmediatopositiontheir
brand,orlimitacrisisinthebest
possibleway.
Withtheserobusttechnology
foundationsinplace,wearefirmly
ahead of our competitors in supplying
realdataintelligencetoclients.
4
CEO’s Report
5
Isentia Group Limited – 2017 Annual Report CEO’s Report (continued)
London
andchangemanagement,andhave
investedininformationhubsin
AustraliaandSingaporetoensurewe
havetherightskillsforthefuture.
WewereagainawardedAMEC
MeasurementCompanyoftheYear,
judgedbybothpeercompaniesfrom
aroundtheworldandacademics,
forthethirdtimeinarowthisyear.
WeattributethistoIsentia’stalented
people,whoserichinformationand
insightsaresovaluedbyourclients.
12 countries
20 offices
1,211 people
1 team
1 focus
Launch of our new
integrated service model
Increased media complexity has been
asignificantdisruptionforclients,
creatinganewmarketplaceforour
insights,reportingandanalysis
services,whichhavebeensignificant
driversofbusinessgrowthforusthis
financialyear.
Ourbusinessnowhasthreefully
integrated streams:
• Media&Intelligence,toprovide
real-timeandrelevantinformation,
• Research&Insights,providing
smart systems and people to add
depthofanalysis,and
• Strategy&Content,totake
insights into action and content
creation.
Backedbyourleadingtechnology
andpeople,themodelisastrong
differentiatorforIsentia.
Investments in people to
power our technology
Our talented people bring our rich
datatolife,andthisiswherethe
realvalueliesforourclients.This
financialyearwehaveshiftedour
people strategy to reduce numbers
inspecificareas,whileseeking
anevolvedskillsetinadvanced
technology,insightsanddata
intelligencecapabilities.
Wehavere-equippedourITteamand
engaged specialist consultancies to
powerourtechnologydevelopments
6
Beijing
Seoul
Shanghai
Hong Kong
Taipei
Bangkok
Manila
Kuala Lumpur
Ho Chi
Minh City
Singapore
Jakarta
Perth
Canberra
Brisbane
Sydney
Auckland
Adelaide
Melbourne
Wellington
CEO’s Report
7
Isentia Group Limited – 2017 Annual Report
CEO’s Report (continued)
Integrating the content business into
ournewmodel,creatingcontentfrom
theMedia&Intelligenceaswellas
Research&Insightsstreams,remains
acomponentofourlong-term
strategy.Weareconfidentthatthe
coordinatedstreamsareapowerful
clientserviceengineinthenewworld
ofdigitalcommunications,andcan
already see clients embracing the
valuepropositionandextractingreal
benefitfromtheservice.
Forecasts and financials
Overallourfinancialresultsthisyear
did not meet our expectations or
thoseofourshareholders.Assuch,
weareveryfocusedonelevatingthe
financialperformanceinFY2018,
rightacrossthebusiness.
ContentMarketing,asnoted,wasa
drag on the results as it transitioned
intothebusinessandservicemodel,
takingtheresultbackthisyearwith
a30%declineand$4.4mEBITDA
loss.Weexpectthistobeginto
makepositivecontributionaspart
oftheintegratedmodelthisyear.
InAustralia,despitecopyright
renegotiationimpacts,theMedia
Intelligencebusinessstillgrew
1%andwehavemaintainedour
competitiveadvantage.
Our Asian business continues to
performwell,andwehaveopenedin
twonewmarketsoverthepast
12months.
AswemoveintoFY2018,wehave
strengthinourcorebusiness,with
solidareasofgrowthandgoodfuture
growthprospects.
Our evolution is a
response to market
transformation: We’re
all on the journey
together
Thereisatransformationoccurring
inthecommunicationsindustry,for
Isentiaandourclients,andweareall
onthisjourneytogether.
Isentiahasevolvedsignificantlythis
yearinourstrategicposition,service
offerandvaluetoclients.Weare
nowatechnology-ledbusinesswith
incrediblecapabilitytounlockreal
datainsights,broughttolifebyhighly
talentedpeople.Ourtechnologyis
smarter,ourpeoplearesmarter,and
we’reansweringmorequestionsfor
ourclients.We’renotjustproviding
data–butinformingtheirdecision-
making.
Theintegratedbrandproposition,
product pipeline and strength in our
Asianbusinessesprovideuswith
momentumaswemoveintoFY2018.
John Croll
ChiefExecutiveOfficer
22 August 2017
Sydney
Dynamic client
engagement continues
as core strength
An amazing core strength of our
businessisthatwehavetouchpoints
withourclients,everyday,aspartof
adynamicclientengagementculture.
Wethriveonreceivingclientfeedback
andinformationdaily,andresponding
tothatdynamicallytobuildaneven
betterbusiness.Thiswillcontinueas
partofalong-termfocusonIsentia’s
strengths.
Withsomeofthedeepestdata
setsacrosstheAsia-Pacificregion,
enablingpowerfulstrategicinsights,
insomeareasweareaheadofwhere
theclientisthinking,andinother
areasweareworkingwithclientsto
unravelcomplexdata.
Ourclientsaretellinguswehave
moredatathancompetitors,and
wecandelivermoreanswers,better
insights and more informed content
strategy,allthrougharegion-wide
lens–andthisisofrealvalue
tothem.
Key challenges this
financial year
Itwasachallengingyearforthe
Australian business in that the
copyrightfeesincreased;however,I
feelconfidentinourpositiongoing
forward.
Forthecontentbusiness,there
wastransitionaldifficulty,notinthe
qualityoftheservicesitdelivered
toclients,butasittransitioned
from founder management into an
integratedbusinesswithinIsentia.
Theperformancealsofellshortof
expectations,withadeclineinboth
top-linerevenuegrowthandmargin.
8
Our business
now has three
fully integrated
streams:
Intelligence
• Socialtracking
• Media alerts
• Dailybriefings
• Media analysis
Media
• SaaS platform
• Media monitoring
• Social listening
E N C E
DIA & INTE L L I G
E
M
Clients
R
E
S
E
A
R
C
H
&
I
N
S
I
G
H
T
S
S
T
R
ATEGY & CO N T E N T
Insights
• Media insights
• Quantitative
media analysis
• Qualitative
media analysis
• Category and sector
trend analysis
Research
• Content audit
• Keywordanalysis
• Influencer
identification
• Primaryconsumer
research
Strategy
Amplification
Content Creation
• Personadevelopment
• Socialmediaadvertising
• Editorial
• Channel audit
and purpose
• Gap analysis
• Creativeideation
• Influencerprograms
• Social media campaigns
• Community management
• Video content
• Nativeadvertising
• Designdevelopment
• Pressandmedia
• UGC campaigns
distribution
• Digital campaigns
• SaaS platform
CEO’s Report
9
Isentia Group Limited – 2017 Annual Report
Directors’
Report
The directors present their report, together with the financial statements, on the
consolidated entity (referred to hereafter as the ‘group’) consisting of Isentia
Group Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the
entities it controlled at the end of, or during, the year ended 30 June 2017.
Review of operations
Thelossforthegroupafterprovidingforincometax
amountedto$13,523,000(30June2016:profitof
$24,252,000).
Information on directors
Doug Flynn
Independent Non-Executive Chairman
Directors
ThefollowingpersonsweredirectorsofIsentiaGroup
Limitedduringthewholeofthefinancialyearanduptothe
dateofthisreport,unlessotherwisestated:
Doug Flynn
Chairman and Independent
Non-ExecutiveDirector
JohnCroll
CEOandManagingDirector
PatO’Sullivan
FionaPak-Poy
DrGeoffRaby
IndependentNon-Executive
Director
IndependentNon-Executive
Director
IndependentNon-Executive
Director
Principal activities
Duringthefinancialyeartheprincipalcontinuing
activitiesofthegroupconsistedoftheprovisionofmedia
intelligenceservicestopublicandprivatesectorclients
throughmediadatabase,mediareleasedistribution,media
monitoring,socialmediamonitoring,mediaanalysisand
contentmarketing.
Dividends
Dividendspaidduringthefinancialyearwereasfollows:
Finaldividendfortheyear
ended30June2016(2016:
30June2015)of4.43cents
(2016:3.8cents)perordinary
share
Interimdividendfortheyear
ended30June2017(2016:30
June2016)of3.1cents(2016:
3.7cents)perordinaryshare
CONSOLIDATED
2017
$’000
2016
$’000
8,860
7,600
6,200
7,400
15,060
15,000
On22August2017,thedirectorsdeclareda50%franked
finaldividendfortheyearended30June2017of3.08
centsperordinaryshare,tobepaidon20September2017
to eligible shareholders on the register as at 6 September
2017.Thisequatestoatotalestimateddistributionof
$6,160,000,basedonthenumberofordinaryshareson
issueasat30June2017.Thefinancialeffectofdividends
declaredafterthereportingdateisnotreflectedinthe30
June2017financialstatementsandwillberecognisedin
subsequentfinancialreports.
10
RefertoChairman’sletterandChiefExecutiveOfficer’s
reportforfurthercommentaryonthereviewofoperations.
Significant changes in the state of
affairs
Therewerenosignificantchangesinthestateofaffairsof
thegroupduringthefinancialyear.
Matters subsequent to the end of the
financial year
Apartfromthedividenddeclaredasdiscussedabove,no
othermatterorcircumstancehasarisensince30June
2017thathassignificantlyaffected,ormaysignificantly
affectthegroup’soperations,theresultsofthose
operations,orthegroup’sstateofaffairsinfuture
financialyears.
Likely developments and expected
results of operations
Likelydevelopmentsintheoperationsofthegroupandthe
expected results of those operations are contained in the
Chairman’sletterandChiefExecutiveOfficer’sreport.
Environmental regulation
Thegroupisnotsubjecttoanysignificantenvironmental
regulationunderInternational,AustralianCommonwealth
orStatelaw.
Qualifications:
DegreeinChemicalEngineeringfromtheUniversityof
NewcastleandaMBAwithdistinctionfromtheUniversity
ofMelbourne.
Experience and expertise:
Doughasover30yearsofinternationalexperienceinthe
media and information and communication technology
industries,includingholdingvariousseniormanagement
andBoardpositions.DougisapreviousDirectorofSeven
WestMediaLtdandcurrentDirectorandChairman
ofAPNOutdoorGroupLimited,NEXTDCLimitedand
KonektLimited.Previously,DougwasChiefExecutiveof
newspaperpublisherDaviesBrothersLimited,whichwas
acquiredbyNewsCorporationin1989,andin1995was
appointedtheManagingDirectorofNewsInternational
Plc.AfterleavingNewsInternationalin1998,Dougjoined
AegisGroupPlcandwasappointedasCEOin1999,where
hewasinstrumentalindoublingthesizeofthecompany
andestablishedaglobalmarketresearchbusiness
SynovateandinternetservicesbusinessIsobar.From2005
to2008DougservedastheChiefExecutiveoffacilities
managementproviderRentokilInitialPlc.Dougreturnedto
Australiain2008andfromApril2008toApril2012wasa
consultanttoandaDirectorofQinJiaYuanMediaServices
Ltd,aprivatetelevisioncompanyinChina.
Other current directorships:
NEXTDCLimited(ASX:NXT)(Chairman),KonektLimited
(ASX:KKT)(Chairman)andAPNOutdoorGroupLimited
(ASX:APO)(Chairman)
Former directorships (last 3 years):
SevenWestMediaLimited
Special responsibilities:
MemberoftheAuditandRiskCommitteeandthe
Nomination and Remuneration Committee
Interests in shares:
73,530ordinarysharesheldindirectly
Interests in options:
None
Directors’ Report
11
Isentia Group Limited – 2017 Annual Report
Directors’ Report (continued)
Information on directors (continued)
John Croll
Chief Executive Officer, Managing Director
Qualifications:
LifeFellowofthePublicRelationsInstituteofAustralia,
FellowoftheInternationalAssociationforthe
MeasurementandEvaluationofCommunications(AMEC)
andamemberoftheInstituteofCompanyDirectors.
Experience and expertise:
Johnhasbeenactiveinthemediaindustrysince1982
andwasappointedChiefExecutiveOfficerandManaging
DirectorofIsentia(thenMediaMonitors)in1999.Priorto
hisappointment,Johnheldsalesandoperationalroles
withCrollCommunicationsandMediaMonitors.Johnisa
formerExecutiveVicePresidentofFIBEP,theInternational
FederationofPressClippingBureaus.Inadditiontohis
Industryappointments,heisChairmanofDisabilitySports
Australia.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
CEO
Interests in shares:
6,260,056ordinarysharesofwhich214,398areheld
indirectly
Interests in options:
1,622,021options
Pat O’Sullivan
Independent Non-Executive Director
Qualifications:
GraduateoftheHarvardBusinessSchool’sAdvanced
ManagementProgram,memberofCharteredAccountant
AustraliaandNewZealandandmemberoftheInstituteof
CharteredAccountantsIreland.
Experience and expertise:
Pathasover30yearsofinternationalcommercialand
businessmanagementexperience,includingholding
variousseniormanagementandboardpositions.Heis
currentlyChairmanofHealthEngine.com.auandLocal
AgentFinderandanon-executiveDirectorofCarsales.com
Limited,APNOutdoorGroupLimitedandLittleCompany
ofMaryHealthcare.PatwasformerlyChiefOperating
OfficerandFinanceDirectorofNineEntertainmentCo,
aswellasservingasChairmanofNineMSNandasan
independentdirectorofiinetLimited.Priortohisroleat
NineEntertainmentCoPatwastheCFOofOptus,andheld
anumberofpositionsatGoodmanFielder,Burns,Philp&
Company,andPwC.
Other current directorships:
Carsales.comLimited(ASX:CAR)andAPNOutdoorGroup
Limited(ASX:APO)
Former directorships (last 3 years):
iSelect Limited and iiNet Limited
Special responsibilities:
ChairoftheAuditandRiskCommitteeandamemberof
theNominationandRemunerationCommittee.
Interests in shares:
29,412ordinaryshares
Interests in options:
None
Fiona Pak-Poy
Independent Non-Executive Director
Dr Geoff Raby
Independent Non-Executive Director
Qualifications:
HonoursdegreeinCivilEngineeringfromTheUniversityof
AdelaideandaMBAfromHarvardBusinessSchool.
Qualifications:
BachelorofEconomics(Hons),MasterofEconomicsand
PhDdegreesfromLaTrobeUniversity.
Experience and expertise:
Fionabringssignificantexperiencegainedparticularly
withtechnologycompanies.Sheiscurrentlyanon-
executivedirectorofMYOBGroupLimited,TheSydney
School of Entrepreneurship and the Securities Industry
ResearchCentreofSouthEastAsia(SIRCA).Fionaisa
memberofASIC’sDirectorAdvisoryPanel.Previously,
shewasamemberoftheboardofStatePlus,theFederal
Government’sNationalPrecinctsBoardandInnovation
AustraliaBoardwheresheChairedorwasamemberofa
numberoftheinnovationcommittees.FionawasaGeneral
PartnerofanAustralianventurecapitalfundthatinvested
inAustraliantechnologycompanies.Shealsoservedas
aCouncilloroftheAustralianVentureCapitalandPrivate
EquityAssociation(AVCAL).Priortothis,Fionaco-founded
acatalogueande-commercebusiness,wasastrategy
consultantwithTheBostonConsultingGroup,anR&D
engineeratStratcoandworkedwithconsultingengineering
firmPak-PoyandKneebone.
Other current directorships:
MYOBGroupLimited(ASX:MYO)
Former directorships (last 3 years):
None
Special responsibilities:
Chair of the Nomination and Remuneration Committee and
amemberoftheAuditandRiskCommittee
Interests in shares:
29,412ordinarysharesheldindirectly
Interests in options:
None
Experience and expertise:
Geoff is an Independent Director on the boards of
OceanaGoldandYancoalAustralia.Geoffwasformerly
adirectorofASX-listedFortescueMetalsGroupLimited
(retired5December2016),SmartTransHoldingsLtdand
YPBGroupLimited.GeoffwastheAustralianAmbassador
to China from February 2007 to August 2011 and Deputy
SecretaryoftheDepartmentofForeignAffairsandTrade
fromNovember2002toNovember2006.Between1993
and1995,GeoffwasheadoftheTradePolicyIssues
DivisionoftheOECD,Paris.
Other current directorships:
OceanaGoldCorporation(ASX:OGC)andYancoalAustralia
Limited(ASX:YAL)
Former directorships (last 3 years):
SmartTransHoldingsLimited(Chairman),YPBGroup
Limited and Fortescue Metals Group Limited
Special responsibilities:
Member of the Nomination and Remuneration Committee
andamemberoftheAuditandRiskCommittee
Interests in shares:
29,412ordinaryshares
Interests in options:
None
‘Othercurrentdirectorships’quotedabovearecurrentdirectorshipsforASXlistedentitiesonlyandexcludesdirectorships
ofallothertypesofentities,unlessotherwisestated.
‘Formerdirectorships(last3years)’quotedabovearedirectorshipsheldinthelast3yearsforASXlistedentitiesonlyand
excludesdirectorshipsofallothertypesofentities,unlessotherwisestated.
12
Directors’ Report
13
Isentia Group Limited – 2017 Annual Report
Directors’ Report (continued)
Company secretary
JacquieShanahan,CompanySecretaryandLegalCounsel,joinedthegroupinAugust2015.Jacquiebringsmanyyears
ofcompanysecretarial,corporategovernanceandcommerciallawexperiencetothegroup.Shehasheldcompany
secretarialandlegalroleswithsubsidiariesofUnitedParcelServiceofAmerica,ASXlistedRocOilCompanyLimitedand
RGAAustraliaLimited(continuing).Inadditiontotheseroles,Jacquiehasbeeninvolvedintheregulationofcorporate
governancereportingattheASXandwasaseniorassociateincorporatecommercialpracticeatCorrsChambers
Westgarth.JacquieholdsBachelorofArtsandBachelorofLawsfortheUniversityofQueenslandandisamemberof
theLawSocietyofNewSouthWales,theAssociationofCorporateCounselAustraliaandasubscribermemberofthe
GovernanceInstituteofAustralia.
NimeshShah,formerCFOandCompanySecretaryceasedemploymentwiththecompanyon7July2017.
Meetings of directors
Thenumberofmeetingsofthecompany’sBoardofDirectors(‘theBoard’)andofeachBoardcommitteeheldduringthe
yearended30June2017,andthenumberofmeetingsattendedbyeachdirectorwere:
FULL BOARD
NOMINATION AND
REMUNERATION
COMMITTEE
AUDIT AND RISK
COMMITTEE
Attended
Held
Attended
Held
Attended
Held
14
15
15
15
12
15
15
15
15
15
1
–
2
2
2
2
–
2
2
2
3
–
3
3
3
3
–
3
3
3
Doug Flynn
JohnCroll
PatO'Sullivan
FionaPak-Poy
Dr Geoff Raby
Letter from the Chair of the Nomination and Remuneration
Committee
DearShareholder,
I am pleased to present to you the remuneration report on behalf of the Nomination and
RemunerationCommitteeforthefinancialyearended30June2017(‘FY2017’).Theremuneration
structurefordirectorsandseniorexecutiveshasremainedrelativelyunchangedsinceIsentiaGroup
Limited(‘Isentia’or‘group’)listedontheAustralianSecuritiesExchange(‘ASX’)inJune2014and
again,therewerenomajorchangestothelevelsofexecutiveanddirectorremunerationinFY2017.
Itwasencouragingtonotethatover99%ofvoteswerecastinfavouroftheresolutiontoadopt
thefinancialyearended30June2016remunerationreportatthe2016AnnualGeneralMeeting.
TheBoardwillcontinuetoengagewithshareholdersandothercompanystakeholdersaroundany
changestothedesignoftheremunerationandincentivesframework.
FinancialperformancewasbelowtheinternaltargetssetbytheBoardforFY2017andasaresult
noannualbonuspaymentwasawardedtoanyexecutiveKMPgiventhatthefinancialcomponentof
theshorttermincentivegatewaywasnotsatisfied.TheNominationandRemunerationCommittee
considersthatshorttermincentiveoutcomesforFY2017illustrateastrictalignmentbetween
financialperformance,annualbonuspaymentsandshareholders’interests.TheNominationand
RemunerationCommitteewillcontinuetoensurethatremunerationoutcomestokeymanagement
personnelreflectAustraliancorporategovernancebestpractice,andthereforewelcomefeedbackand
continuedengagementwithourshareholdersaroundanycomponenttoIsentia’sremunerationpolicy.
On behalf of the Nomination and Remuneration Committee
Held:representsthenumberofmeetingsheldduringthetimethedirectorheldofficeorwasamemberoftherelevant
committee.
AlldirectorsattendedallscheduledBoardmeetings.NotalldirectorswereabletoattendunscheduledBoardmeetingsheld
onshortnotice.
Fiona Pak-Poy
Chair
22 August 2017
Sydney
14
Directors’ Report
15
Isentia Group Limited – 2017 Annual Report
Directors’ Report (continued)
Remuneration report (audited)
Theprimaryobjectiveoftheremunerationreport,which
hasbeenaudited,istosetouttheremunerationfor
KeyManagementPersonnel(‘KMP’)andtheunderlying
philosophy and principles that underpin the structure and
designofremunerationarrangementsforthegroup,in
accordancewiththerequirementsoftheCorporationsAct
2001anditsRegulations.
IndevelopingremunerationarrangementsforKMP,the
Boardcontinuestowelcomefeedbackfromexternal
partiesincludinglegalcounsel,institutionalshareholders
andtheiradvisors.
KMParedefinedinAASB124‘RelatedPartyDisclosures’
as “those persons having authority and responsibility for
planning, directing and controlling the activities of the
entity, directly or indirectly, including any director (whether
executive or otherwise)”andarelistedinsection‘2.KMP
remunerationdisclosures’below.
Theremunerationreportissetoutunderthefollowing
main headings:
1. Principlesusedtodeterminetheremuneration
framework
• Non-executivedirectors’remuneration
• Executiveremuneration
• Groupperformanceandlinktoremuneration
• Shorttermincentives
• Longtermincentives
2. KMPremunerationdisclosures
3. Servicecontracts
4. Share-basedcompensation
5. KMPinterestsinIsentiasecuritiesandother
information
1. Principles used to determine the
remuneration framework
Thegroup’sremunerationphilosophyistoprovideaclear
linkbetweenthegroup’sstrategy,shareholderreturnsand
remunerationawarded.Theremunerationstructureand
policiesaredesignedtohelpbuild,retainandmotivate
Isentia’stalentedleadershipteamtodelivergrowingand
sustainablereturnsforshareholders.TheNominationand
Remuneration Committee recognises that the performance
of the group depends on the quality of its directors and
otherKMP.
Theobjectiveofthegroup’sremunerationframework
istoensurerewardforperformanceiscompetitiveand
appropriatefortheresultsdelivered.Theframeworkseeks
toalignremunerationwiththeachievementofstrategic
objectivesandthecreationoflongterm,sustainablevalue
forshareholders.TheNominationandRemuneration
Committeeensuresremunerationsatisfiesthefollowing
criteriaofAustraliancorporategovernancebestpractice:
• Competitivenessandreasonableness;
• Acceptability and alignment to shareholders’ interests;
• Alignmentbetweenpayoutcomesandbothgroupand
individualperformance;and
• Transparency.
TheNominationandRemunerationCommitteeis
responsiblefordeterminingandreviewingremuneration
arrangementsfordirectorsandotherKMP.TheNomination
and Remuneration Committee comprises three
independentnon-executivedirectorsandmeetsasrequired
throughouttheyear.ThisfinancialyeartheNomination
andRemunerationCommitteemetthreetimes.Thechief
executiveofficerattendscommitteemeetingsbyinvitation
andwhenmanagementinputisrequired.Toensurethere
arenoconflictsofinterest,thechiefexecutiveofficeris
notpresentduringanydiscussionsrelatedtohisown
remunerationarrangements.
TheNominationandRemunerationCommitteehas
structuredaremunerationframeworkthatismarket
competitiveandcomplementarytoIsentia’sstrategic
objectives.
Inaccordancewithcorporategovernancebestpractice,
theremunerationstructurefornon-executivedirectorsand
executivesaredealtwithseparately.
Non-executive directors’ remuneration
Feesprovidedtonon-executivedirectorsreflectthe
demandswhicharemadeon,andtheresponsibilities
of,thedirectors,aswellastheneedtoattractandretain
non-executivedirectorsofsuitablecalibre.Non-executive
directors’feesandpaymentsarereviewedannuallyby
theNominationandRemunerationCommittee.The
NominationandRemunerationCommitteemay,fromtime
totime,receiveadvicefromindependentremuneration
consultantstoensurenon-executivedirectors’feesand
paymentsareappropriateandconsistentwithcomparable
ASX200companies.
Thechairman’sfeesaredeterminedindependentlytothe
feesofothernon-executivedirectorsbasedoncomparative
rolesintheexternalmarket.Thechairmanisnotpresent
duringanydiscussionsconcerninghisownremuneration.
Therewasnochangetothefeespaidtonon-executive
directorsinFY2017.UnderthecompanyConstitution
andassetoutinthe2014Prospectus,totalaggregate
remunerationavailabletonon-executivedirectorsisset
atamaximumannualaggregateamountof$900,000.
ASXListingRulesrequirethatanyproposedincreaseto
theaggregatenon-executivedirectorremunerationcapis
subjecttoshareholderapproval.Non-executivedirector
feeswerewithinthisapprovedlimitforFY2017andthe
Boarddoesnotproposeanyincreasetothefeecapfor
FY2018.
Non-executivedirectorremunerationconsistsofdirectors’
fees and committee fees only and therefore does not
includeanylinktogroupperformance.Consistentwith
goodgovernanceprinciples,theabsenceofperformance-
linkedremunerationtonon-executivedirectorsservesto
protect the independence of the directors and ensures
thattheirinterestsremainproperlyalignedwiththoseof
Isentia’sshareholdersandnotwithseniormanagement.
Thenon-executivedirectorsarereimbursedforexpenses
incurredinperformingtheirdutiesasdirectorsofIsentia.
TheChairmanoftheBoardattendsallcommitteemeetings
butdoesnotreceivecommitteefeesinrespectofhisrole
asmemberofanycommittee.Non-executivedirectorsdo
notreceiveretirementbenefitsotherthansuperannuation
andtheydonotparticipateinanyincentiveprograms.
Whilstdirectorsarenotrequiredunderthecompany’s
Constitutiontoholdanyshares,allhaveinterestsinIsentia
securities,eitherdirectlyorindirectly(refertosection‘5.
KMPinterestsinIsentiasecuritiesandotherinformation’
below),holdingsuchsecuritiesdemonstratessupportfor
thecompanyandfacilitatesalignmentbetweendirectors
andlongtermshareholderwealthoutcomes.Incontextof
thecurrentshareholdingsofthenon-executivedirectors,
the Nomination and Remuneration Committee does not
regard a formal shareholding guideline to be necessary at
thistime.
Ifnon-executivedirectorsarerequiredtoperformservices
outsideofthescopeofordinarydutiesofadirector,the
company may compensate the director for additional
responsibilitiesorworkloadincurredduringthereporting
period.Nodirectorsprovidedanyservicesoutsideofthe
normal course of duty in FY2017 and hence no additional
directorfeeshavebeenpaid.
Alldirectorshaveadequatetimetodevotetogroup
activitiesandhaveinthepastyearattendedallscheduled
BoardandCommitteemeetings.Referto‘Meetingsof
directors’abovefordetailsofmeetingsattended.Notall
directorswereabletoattendunscheduledBoardmeetings
heldonshortnotice.
Executive remuneration
Thegroupaimstorewardexecutivesbasedontheir
positionandresponsibility,withalevelandmixof
remunerationwhichhasbothfixedandvariable
components,whilstensuringalignmentwithanASXlisted
peergroup.
ForFY2017,theexecutiveremunerationframework
consistedoffixedremunerationandshortandlong-term
incentivesasoutlinedbelow.
FY2017 target pay mix
FIXED
REMUNERATION
CEO
CFO*
CEOANZ
CEO Asia
50%
53%
53%
53%
STI
25%
21%
21%
21%
LTI
25%
26%
26%
26%
*references to the CFO in this report refer to Nimesh Shah unless
otherwisestated.
Thelongtermincentiveplan(‘LTIP’)wasintroducedin
2014tofocusKMPonlongtermgrowthopportunitiesthat
areexpectedtodelivershareholderwealthbenefitsover
time.Sinceitsinception,theNominationandRemuneration
CommitteehasextendedparticipationintheLTIPto
broadenengagementthroughouttheseniorexecutive
team.TheNominationandRemunerationCommittee
monitorstheeffectivenessofthisscheme
andwillcontinuetodosoinordertodrivelongterm
strategicgoals.
16
Directors’ Report
17
Isentia Group Limited – 2017 Annual Report
Directors’ Report (continued)
COMPONENT OF
REMUNERATION
HOW THIS
OPERATES IN
PRACTICE
TARGET AND
MAXIMUM
(STRETCH)
OPPORTUNITY
PURPOSE AND LINK TO
ISENTIA STRATEGY
CHANGE
FIXED
COMPONENT OF
REMUNERATION
HOW THIS
OPERATES IN
PRACTICE
LongTermIncentive
Plan(‘LTIP’)
TheLTIPwas
introducedinJune
2014toprovideafocus
onlongtermgrowth
opportunities.
Each offer made
undertheLTIPtodate
represents 50% of the
TFRoftherecipient
andisprovidedinthe
formofperformance-
basedoptions.
TheNomination
and Remuneration
Committeewillextend
participationintheLTIP
whereitisdetermined
tobeaneffective
tool in engaging the
executiveanddriving
the long term goals of
thegroup.
Any future offer of
equityincentivestothe
CEO/MDwillbeput
forwardforshareholder
approval.
JohnCrollreceivednoincrease
inbasesalaryinFY2017.Nimesh
ShahandDavidLiueachreceived
an increase in base salary of less
than5%.Followinghisappointment
asChiefExecutiveMedia
IntelligenceSeanSmithreceived
anincreaseinbasesalaryoverthe
FY2017yearofapproximately13%.
OverthisperiodSeantransitioned
fromhispreviousroleofCEOof
theAustralianandNewZealand
operations to leading the media
intelligence business globally
includingsalesandclientsservices,
acrossANZ,globalmonitoring
production(acrossallIsentia
markets)andproductdevelopment
in the media intelligence business
withcommensurateincreasein
responsibilitiesandworkload.
AsfinancialKPIscomprise68%to
75%ofavailableSTIandinclude
revenueEBITA,EBITDAandNPATA
andNetPromoterScoretargets
relevanttoeachindividual’srole,it
isaconditionoftheSTIthatnoSTI
ispaidifrelevantfinancialKPIsare
notmet.
AsfinancialKPIswerenotmetin
FY2017,noSTIpaymentswere
awardedtoeligibleparticipants
inFY2017.
Basesalary,
allowances,
superannuation
and salary
sacrificed
benefits.
Basesalaryis
paid in cash or
fringebenefits
(suchasmotor
vehicle).
Superannuation
is paid at the
statutoryrate.
Fixed
remuneration
isreviewed
annually.
n/a
Toprovidecashbenefits
whicharecompetitive
withequivalentroles
in peer companies and
offerbasepackagesthat
are designed to attract
and retain high calibre
employees.
Torewardperformance
relativetoexpectations
basedonindividualrole
andresponsibility.
STIsarepaid
in cash to
rewardeligible
executives
ondelivering
against annual
keyperformance
indicators that
arelinkedto
the group’s
strategy and
are expected to
deliverbenefits
toshareholders.
TheBoard
retains its
discretion to
rewardfor
outstanding
performance.
VARIABLE
CEO target 50%
ofTotalFixed
Remuneration(‘TFR’),
withamaximumof
75%ofTFR.
CFO target 40% of
TFR,withamaximum
of60%ofTFR.
NoportionofSTIP
willbepayableto
the CEO and CFO
unlessallfinancial
targets are equalled
orexceeded.
OtherexecutiveKMP
targets are 40% of
basesalary,witha
maximum 60% of
basesalary.
Forotherexecutive
KMPnoportionof
STIPwillbepayable
unless at least one of
thefinancialtargets
are equalled or
exceeded.
STIawardsareonly
awardedwhereexecutives
meetorexceedKey
PerformanceIndicators
(‘KPIs’),whichare
set annually and are
components of the
group’s annual budget and
businessplan.
FinancialKPIsaccount
for68%-75%ofavailable
STIandincluderevenue,
EBITA,EBITDAandNPATA
targets.NoSTIwillbepaid
if these targets are not met
orexceeded.
Non-financialKPIsthat
comprise the remaining
25%-32%ofavailable
STIopportunityinclude
strategic business
objectivessuchasNet
PromotorScore(‘NPS’),
product penetration
targets and subscription
basedrevenuemetricsand
personalperformance.
ShortTerm
Incentive(‘STI’)
Plan(‘STIP’)
18
PURPOSE AND
LINK TO ISENTIA
STRATEGY
CHANGE
LTIawardsare
designedtomotivate
participants to
achievelongterm
strategic goals and
providerewardwhere
Isentiadeliversbetter
shareholdervaluethan
its comparator group
(withreferencetothe
TSRcondition)and/or
deliverstherequisite
EPSgrowth(‘EPS
condition’).
LTIswereofferedto
allexecutiveKMPin
FY2017.
Details of the number
andvalueofLTI
granted are set out
in the option table in
section4.Share-based
compensation’below.
TARGET AND
MAXIMUM
(STRETCH)
OPPORTUNITY
VARIABLE
50%ofTFRperannum.
All performance
optionsapplyrelative
total shareholder return
(‘TSR’)andearnings
pershare(‘EPS’)
hurdles measured
overathreeyear
performanceperiod.
Allincentiveoptions
granted are issued
for nil consideration
andvestsubject
to the satisfaction
of predetermined
performance
conditions,withno
opportunityforre-
testing.
OtherthantheJune
2014offers,which
werespecifictothe
IPO,allunvested
options lapse on
resignation of the
participant.
Directors’ Report
19
Isentia Group Limited – 2017 Annual Report
Directors’ Report (continued)
Group performance and link to remuneration
Isentia’srelativesharepriceoutperformancesincelistinginJune2014isdepictedagainsttheASXAllOrdinaries
Accumulationindex(‘AllOrds’).
240
220
200
180
160
140
120
100
80
60
4
1
/
6
0
/
4
4
1
/
8
0
/
4
4
1
/
0
1
/
4
4
1
/
2
1
/
4
5
1
/
2
0
/
4
5
1
/
4
0
/
4
5
1
/
6
0
/
4
5
1
/
8
0
/
4
5
1
/
0
1
/
4
5
1
/
2
1
/
4
6
1
/
2
0
/
4
6
1
/
4
0
/
4
6
1
/
6
0
/
4
6
1
/
8
0
/
4
6
1
/
0
1
/
4
6
1
/
2
1
/
4
7
1
/
2
0
/
4
7
1
/
4
0
/
4
7
1
/
6
0
/
4
ThetablebelowshowstherevenueandEBITDAgrowthoverthepastfiveyears:
ISD
All Ords
UNAUDITED
PRO-FORMA
FY2013
UNAUDITED
PRO-FORMA
ACTUAL FY2014
FY2015
FY2016
FY2017
Revenue$m
EBITDA$m(d)
TSR(b)
EPS(cents/share)(c)
NPAT$m(e)
Staffcosts$m(a)
Staffcoststorevenueratio
103.0
22.9
–
–
7.0
51.2
49.7%
110.6
30.9
15.7%
6.4
12.8
50.3
127.3
41.9
60.2%
9.8
19.6
52.5
156.0
48.7
(5.5%)
12.1
24.3
62.8
45.5%
41.2%
40.3%
155.1
35.6
(35.9%)
(6.8)
(13.5)
63.2
40.7%
ThecompanylistedontheASXonthe5June2014.Dividendspaidand/ordeclaredinFY2015,FY2016andFY2017are
disclosedinthenotestothefinancialstatements.TherehavebeennoreturnsofcapitalmadeorproposedbytheBoard
sincethelisting.
a. ProformastaffcostsforFY2013toFY2014havebeenadjustedforareclassificationbetweenotherexpensesand
employeebenefitexpensetoconformwiththepresentationadoptedfromFY2015onwards.
b. ThegrouplistedontheASXon5June2014,thereforeTSRforFY2014isfortheperiod5June2014to30June2014.
c. ActualProformaEPSnumberfor2014iscalculatedbasedonproformaNPATof$12.8millionand200,000,001
ordinarysharesonissueasat30June2014.
d. ActualProformaEBITDAforFY2014iscalculatedbyadjustingstatutoryEBITDAof$18.5millionforrestructuringand
acquisitioncosts($3.9million),listedcompanycosts($1.2million),offercosts($9.1million)andforeignexchange
(gains)/losses($0.7million).EBITDAforFY2017iscalculatedbyadjustingstatutoryEBITDAof$4.0millionlossfor
impairmentofassets($39.4million)anddisposalofassets($0.2million).
e. ActualProformaNPATforFY2014iscalculatedbyadjustingstatutoryNPATof($18.4million)fornetfinancecost
($12.2million),offercosts($9.1million),restructuringandacquisitionscosts($3.9million),listedcompanycosts
($1.2million)andotheradjustments($7.2million).
Pro-formaamountshavebeenincludedinthetableaboveastheBoardisoftheopinionthatthesefiguresmost
appropriatelyrepresentthegroup’sunderlyingcurrentandhistoricalperformance.FY2013figuresarepresentedasper
theIPOProspectusdatedMay2014andtheFY2014ActualPro-formaispresentedaspertheFY2014FinancialResults
PresentationdatedAugust2014.
Short term incentives
FY2017 STI performance measures
TheKPIsdrivingSTIforFY2017comprisedamixofrevenue,EBITDAorNPATA,andNetPromoterScoretargetsaswellas
apersonalperformanceratingmeasuredthoughtheformalyear-endperformancereviewprocess.
PersonalperformanceKPIsinFY2017focussedondevelopinglongertermstrategiesandbuildingonstrongclient
relationships,thegeographicstrengthofthebusinessandtheintegrationofacquiredbusinessesintothegroupwitha
viewtobuildingonshareholderwealthandreturnsoverthelongerterm.InadditiontopersonalperformanceKPIs,financial
metricsareemphasisedastheyareregardedtobethemostappropriateindicatorsofIsentia’scommunicatedgrowth
strategy.
FurtherdetailaroundexecutiveKMPperformanceisprovidedbelow:
FY2017 STI – financial performance achieved
EXECUTIVE
JohnCroll
Nimesh Shah
Sean Smith
DavidLiu
METRIC
Revenue
NPATA
Revenue
NPATA
Revenue
EBITDA
Revenue
EBITDA
WEIGHTING (% OF TARGET
STI OPPORTUNITY)
PERFORMANCE OUTCOME
37.5%
37.5%
37.5%
37.5%
34.0%
34.0%
34.0%
34.0%
Belowtarget*
Belowtarget*
Belowtarget*
Belowtarget*
Belowtarget*
Belowtarget*
Belowtarget*
Belowtarget*
*Targetsvarybetweenindividualsbasedontheirroles.
20
Directors’ Report
21
Isentia Group Limited – 2017 Annual Report
Directors’ Report (continued)
FY2017 STI – Non-financial performance achieved
EXECUTIVE
WEIGHTING (% OF TARGET STI
OPPORTUNITY)
PERFORMANCE ACHIEVED
JohnCroll
Nimesh Shah
Sean Smith
DavidLiu
25%
25%
32%
32%
DeliveredaBoardapproved5-yearstrategicplanfortheIsentia
businesstoleveragethestrongclientrelationships,thegeographic
strengthofthebusinessandtheuniquedatasets.Deliveryof
strategicobjectivesagainstthe2020Strategyincludingintegrated
ITproductionplatformsandnewcloudbasedproductplatforms.
Alignedskillsofthemanagementteamfocussedonthedeliveryof
the2020Strategy.
Alignedcompanyreportingwiththe5-yearplantoimprove
companyperformance.Implementedfinancialreportingplatforms
toenhancethequalityandtimingofthefinancialreporting.
IntegratedacquisitionsontotheIsentiafinancialplatforms.
DeliveredconsistentclientserviceacrosstheAustralianand
NewZealandbusinessasmeasuredbyNPSandclientretention.
Established the Isentia product team to manage media intelligence
productsoncloudbasedplatformsandmobiledevicesasoutlined
intheIsentiastrategicplan.
ConsolidatedanIsentiapresenceinAsianofficesinthecontext
ofthelocalenvironmentandlocalrelationships.Implemented
astrongsalescultureacrossAsianbusinesses.Integrated
acquisitionsinAsiaontotheIsentiaplatformandprovidedclients
withaserviceacrossallIsentiabusinessstreams.
Thenon-financialperformancemetricsappliedforFY2017weredesignedtodriveboththegroup’sgrowthstrategyand
consolidatetheintegrationofacquiredbusinessacrossthevariouslocationsinwhichthegroupoperates.
WhilstallexecutiveseithermetorexceededtheirindividualperformancetargetsinFY2017whichdrovesignificantvalue
forthecompany,noSTIpaymentwasawardedtoeligibleKMPforFY2017asgatewayfinancialperformancefellshortof
targets.
Long term incentives
Theperformanceconditionsmustbesatisfiedinorderfortheoptionstovestandbecomeexercisable.Theperformance
conditionsarebaseduponthegroup’srelativetotalshareholderreturn(‘TSR’)anditsearningspershare(‘EPS’)compound
annualgrowthrate(‘CAGR’)overtheperformanceperiod(equally-weighted),whichprovidesappropriatealignmentwith
longtermshareholderinterests.Asdescribedinthetablebelow,thereisapro-ratavestingscaleappliedforoptionstovest,
whichtheBoardbelievesprovidestheappropriateincentivetoachievesuitableandsustainablegrowth.
Thegroup’sTSRovertheperformanceperiodwillbeassessedagainsttheTSRsofa‘ComparatorGroup’definedatthe
dateofgrant,whichrelatetocompaniesintheS&P/ASX200Index(excludingthoseintheFinancials,Materialsand
Energysectors).
Thepercentageofoptionsthatvestandbecomeexercisable,ifany,willbedeterminedbyreferencetotheTSRandEPS
vestingschedules.TheBoardconsideredthespecificvestinghurdlesandagreedthatthetargetssetforthepreviousyear
werestillappropriate,despiteincreasinglytoughmarketconditions.ItisalsotheBoard’sviewthatthesehurdlesfullyalign
executiveswithshareholders.Theyaresummarisedasfollows:
TSR PERFORMANCE RELATIVE TO TSR COMPARATOR GROUP
% OF TSR OPTIONS THAT BECOME EXERCISABLE
Less than the 50th percentile
50thpercentile(thresholdperformance)
Nil
50%
Greater than 50th percentile but less than 75th percentile
Straight-linepro-ratavestingbetween50%and100%
Greaterthanorequalto75thpercentile(stretch)
100%
CAGR OF EPS OVER THE PERFORMANCE PERIOD
% OF EPS OPTIONS THAT BECOME EXERCISABLE
Less than 7%
7%(thresholdperformance)
Between7%and17%
Nil
50%
Straight-linepro-ratavestingbetween50%and100%
Above17%(stretchperformance)
100%
Anyoptionsthatremainunvestedattheendoftheperformanceperiodlapseimmediately.Theoptionholder(‘Participant’)
mustexerciseanyvestedoptionswithin12monthsofvesting.After12months,anyunexercisedoptionslapse.The
Participantwillbeentitledtoreceiveoneshareforeachoptionthatvestsandisexercised.TheBoardretainsdiscretionto
makeanequivalentcashpaymentinlieuofprovidingsharestotheParticipant.
Theoptionsdonotcarrydividendorvotingrightspriortovestingandexercise.Participantsmustnotsell,transfer,
encumber,hedgeorotherwisedealwiththeoptions.
TheperformanceperiodandapplicableperformanceconditionsforanyfutureLTIofferswillbedeterminedbytheBoard
andspecifiedintherelevantofferdocument.
2. KMP remuneration disclosures
AlldirectorsandexecutiveslistedbelowwereconsideredKMPfortheyearended30June2017.Allnon-executivedirectors
areconsideredtobeindependent.TheChiefFinancialOfficerandCompanySecretaryNimeshShahannouncedhis
resignationfromtheCompanyon23March2017andceasedemploymenton7July2017.On6June2017theCompany
announcedtheappointmentofJamesOrlandoasnewChiefFinancialOfficerandJamescommencedemploymentwith
theCompanyon28June2017.MrOrlandoreceivednoremunerationfromtheCompanyinFY2017.Therewerenoother
changestoKMPafter30June2017andbeforethedateofthisreport.
TheKMPofthegroupinFY2017consistsofthefollowingdirectors:
• DougFlynn–ChairmanandIndependentNon-ExecutiveDirector
• JohnCroll–CEOandManagingDirector
• PatO’Sullivan–IndependentNon-ExecutiveDirector
• FionaPak-Poy–IndependentNon-ExecutiveDirector
• DrGeoffRaby–IndependentNon-ExecutiveDirector
22
Directors’ Report
23
Isentia Group Limited – 2017 Annual Report Directors’ Report (continued)
TheKMPofthegroupinFY2017consistsofthefollowingseniorexecutives:
• NimeshShah–ChiefFinancialOfficerandCompanySecretary(ceased7July2017)
• SeanSmith–ChiefExecutive,Media&Intelligence(formerlyChiefExecutive,AustraliaandNewZealand)
• DavidLiu–ChiefExecutiveAsia
ForthepurposesofthisreportareferencetoanexecutiveKMPisareferencetotheseniorexecutiveslistedaboveandthe
CEOandManagingDirector,JohnCroll.
DetailsoftheremunerationforKMPofthegrouparesetoutinthetablesbelow:
SHORT-TERM BENEFITS
POST-
EMPLOYMENT
BENEFITS
LONG-
TERM
BENEFITS
SHARE-
BASED
PAYMENTS
2017
CASH
SALARY
AND FEES
$
Non-Executive Directors:
Doug Flynn
190,000
PatO’Sullivan
110,000
FionaPak-Poy
110,000
Dr Geoff Raby
100,000
Executive Directors:
JohnCroll
654,636
Other Key Management Personnel:
Nimesh Shah*
434,926
Sean Smith
332,828
DavidLiu
464,523
JamesOrlando**
4,027
2,400,940
STI
$
NON-
MONETARY
$
SUPER-
ANNUATION
$
EMPLOYEE
BENEFIT
$
EQUITY-
SETTLED
$
TOTAL
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,050
10,450
10,450
9,500
–
–
–
–
–
–
–
–
208,050
120,450
120,450
109,500
19,616
10,889
331,885
1,017,026
19,616
–
70,000
524,542
19,616
5,667
155,795
513,906
6,172
383
–
–
150,981
621,676
–
4,410
113,853
16,556
708,661
3,240,010
*NimeshShahceasedemploymenton7July2017andreceivednoterminationbenefitsotherthanstatutoryentitlements.
**JamesOrlandocommencedemploymenton28June2017.
EquitysettledremunerationrepresentsonethirdofthevalueofoptionsgrantedinFY2015,FY2016andFY2017.Total
valueofoptionsgrantedisapportionedoverthreeyearsinlinewiththeperformanceperiodoftheoptionsgranted.
SHORT-TERM BENEFITS
POST-
EMPLOYMENT
BENEFITS
LONG-
TERM
BENEFITS
SHARE-
BASED
PAYMENTS
2016
CASH SALARY
AND FEES
$
NON-
MONETARY
$
STI
$
SUPER-
ANNUATION
$
EMPLOYEE
BENEFIT
$
EQUITY-
SETTLED
$
Non-Executive Directors:
Doug Flynn
PatO’Sullivan
FionaPak-Poy
Dr Geoff Raby
190,000
110,000
110,000
100,000
Executive Directors:
JohnCroll
654,636
Other Key Management Personnel:
Nimesh Shah
Sean Smith
DavidLiu
419,614
300,000
466,478
2,350,728
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
TOTAL
$
208,050
120,450
120,450
109,500
18,050
10,450
10,450
9,500
–
–
–
–
–
–
–
–
19,308
10,904
215,561
900,409
19,308
19,308
5,039
6,981
5,007
143,154
589,057
101,349
425,664
-
72,311
543,828
111,413
22,892
532,375
3,017,408
Non-executivedirectorsdonotreceiveincentivepaymentsanddonotparticipateinthecompany’sincentiveprograms.
ForexecutivedirectorsandotherKMP,theproportionofremunerationlinkedtoperformanceandthefixedproportion
areassetoutinthefollowingtable.TheLTIproportionofremunerationnotedinthetablebelowequatestoonethirdof
thevalueofoptionsgrantedinFY2017.BasedonAustralianaccountingstandards,thetotalvalueofoptionsgrantedis
apportionedoverthreeyearsinlinewiththeperformanceperiodoftheoptionsgranted.Assuch,shareholdersshouldnote
thattheLTIproportionswillgrowasnewoffersaremade.
FIXED REMUNERATION
AT RISK – STI
AT RISK – LTI
NAME
2017
2016
2017
2016
2017
2016
Executive Directors:
JohnCroll
67%
76%
Other Key Management Personnel:
Nimesh Shah
Sean Smith
DavidLiu
87%
70%
76%
JamesOrlando*
100%
76%
76%
87%
–%
*JamesOrlandocommencedemploymenton28June2017.
–%
–%
–%
–%
–%
–%
–%
–%
–%
–%
33%
24%
13%
30%
24%
–%
24%
24%
13%
–%
24
Directors’ Report
25
Isentia Group Limited – 2017 Annual Report Directors’ Report (continued)
3. Service contracts
RemunerationandothertermsofemploymentforKMPareformalisedinservicecontracts.AllexecutiveKMPservice
contractsprovideforimmediateterminationintheeventofseriousmisconduct.Detailsofotherkeytermsaresummarised
below:
EXECUTIVE KMP
CONTRACT TERM
BY EXECUTIVE
BY ISENTIA
NOTICE PERIOD FOR TERMINATION
JohnCroll
Nimesh Shah*
Sean Smith
DavidLiu
JamesOrlando**
Nofixedterm
Nofixedterm
Nofixedterm
Nofixedterm
Nofixedterm
6 months
3 months
3 months
3 months
6 months
6 months
3 months
3 months
3 months
6 months
*NimeshShahceasedemploymenton7July2017.
**JamesOrlandocommencedemploymenton28June2017.
NopaymentsundertheSTIPorLTIPwillbemadeintheeventofanexecutivebeingterminatedforcause.
STIpaymentsarenotpaidiftheexecutivehasceasedemploymentbeforethepaymentisapproved.TheBoardretains
discretiontolapseorpro-rateunvestedentitlementsundertheLTIPontheresignationoftheexecutive.
Minimum shareholding requirement
Thereisnominimumshareholdingrequirementforexecutivesunderthecompany’sConstitution.Thecompanyseeksto
satisfyequityexposureforexecutivesthroughthevestingofincentivesundertheLTIPovertime.
4. Share-based compensation
Issue of shares
TherewerenosharesissuedtodirectorsorotherKMPaspartofcompensationduringtheyearended30June2017.
Options
OptionsweregrantedtothefollowingKMPduringtheyearended30June2017.
ThetermsofeachgrantofoptionsoverordinarysharesaffectingremunerationofKMPinthisfinancialyearorfuture
reportingyearsareasfollows:
GRANT DATE
VESTING
DATE AND
EXERCISABLE
DATE
EXPIRY DATE
EXERCISE
PRICE
FAIR VALUE PER
OPTION AT GRANT
DATE (TSR TRANCHE)
FAIR VALUE
PER OPTION AT
GRANT DATE
(EPS TRANCHE)
16June2014
1July2017
30June2018
10 December 2014
1July2017
30June2018
19November2015
1July2018
30June2019
17November2016
1July2019
30June2020
$2.04
$2.04
$3.75
$3.47
$0.55
$1.06
$0.59
$0.69
$0.55
$1.06
$0.62
$0.71
Theperformanceperiod,towhichvestingoftheoptionsissubject,isinallcases,3yearscommencingon1Julyofthe
calendaryearofthegrant.FurthervestingconditionsrelatingtotheperformanceperiodincluderelativeTSRandEPS
growthhurdles.Theseconditionsaredetailedearlierinthisreport.Optionsgrantedcarrynodividendorvotingrights.
ThenumberandvalueofoptionsoverordinarysharesgrantedvestedandlapsedbyKMPaspartofcompensationduring
theyearended30June2017aresetoutbelow:
VALUE OF OPTIONS GRANTED
DURING THE YEAR
NUMBER OF OPTIONS
GRANTED DURING THE YEAR
NUMBER OF OPTIONS LAPSED
DURING THE YEAR
2017
$
2016
$
2017
NUMBER
2016
NUMBER
2017
NUMBER
2016
NUMBER
Executive Directors:
JohnCroll
348,970
326,684
498,627
540,304
–
Other Key Management Personnel:
Nimesh Shah
Sean Smith
DavidLiu
227,913
163,340
236,011
219,461
159,654
216,933
325,656
233,390
337,228
362,969
264,053
358,787
688,625*
–
–
–
–
–
–
*OptionsgrantedtoNimeshShahin2015and2016lapseduponhisresignation.ThetermsoftheOptionsgrantedin2014providedthat
theOptionssurviveresignation.
5. KMP interests in Isentia securities and other information
Shareholding
TherewerenosharesreceivedaspartofKMPremunerationduringtheyear.Thenumberofsharesinthecompanyheld
duringthefinancialyearbyeachdirectorandotherKMPofthegroup,includingrelatedparties,issetoutbelow:
ORDINARY SHARES
BALANCE AT
THE START OF
THE YEAR
ADDITIONS
DISPOSALS
BALANCE AT
THE END OF
THE YEAR
73,530
6,560,056
29,412
29,412
29,412
410,569
–
–
–
7,132,391
–
–
–
–
–
–
–
–
–
–
–
73,530
(300,000)
6,260,056
–
–
–
(410,569)
–
–
–
29,412
29,412
29,412
–
–
–
–
(710,569)
6,421,822
Doug Flynn*
JohnCroll**
PatO’Sullivan
FionaPak-Poy*
Dr Geoff Raby
Nimesh Shah*
Sean Smith
DavidLiu
JamesOrlando
*Allareheldindirectly.
**Ofwhich214,398areheldindirectly.
26
Directors’ Report
27
Isentia Group Limited – 2017 Annual Report Directors’ Report (continued)
Option holding
Thenumberofoptionsoverordinarysharesinthecompanyheldduringthefinancialyearbyeachdirectorandother
membersofkeymanagementpersonnelofthegroup,includingrelatedparties,issetoutbelow:
Shares under option
Unissued ordinary shares of Isentia Group Limited under
optionatthedateofthisreportareasfollows:
Duringthefinancialyear,thecompanyhasnotpaida
premium in respect of a contract to insure the auditor of
thecompanyoranyrelatedentity.
Executive Directors:
JohnCroll
Other Key Management Personnel:
Nimesh Shah
Sean Smith
DavidLiu
OPTIONS
BALANCE
AT THE
START OF
THE YEAR
GRANTED
EXERCISED
LAPSED
BALANCE
AT THE END
OF THE
YEAR
1,123,394
498,627
745,622
325,656
399,696
233,390
358,787
337,228
2,627,499
1,394,901
–
–
–
–
–
–
1,622,021
(688,625)
382,653
–
633,086
–
696,015
(688,625)
3,333,775
Noneoftheoptionshavevestedorareexercisable.
Other information
Duringthefinancialyearended30June2017,nofeeswerepaidtoexternalremunerationconsultantsandtherewereno
loansorothertransactionswiththeKMPduringtheyear.
This concludes the remuneration report, which has been audited.
Proceedings on behalf of the company
No person has applied to the Court under section
237oftheCorporationsAct2001forleavetobring
proceedingsonbehalfofthecompany,ortointervenein
anyproceedingstowhichthecompanyisapartyforthe
purposeoftakingresponsibilityonbehalfofthecompany
forallorpartofthoseproceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for
non-auditservicesprovidedduringthefinancialyearbythe
auditorareoutlinedinnote29tothefinancialstatements.
Thedirectorsaresatisfiedthattheprovisionofnon-
auditservicesduringthefinancialyear,bytheauditor
(orbyanotherpersonorfirmontheauditor’sbehalf),is
compatiblewiththegeneralstandardofindependencefor
auditorsimposedbytheCorporationsAct2001.
Thedirectorsareoftheopinionthattheservicesas
disclosedinnote29tothefinancialstatementsdo
not compromise the external auditor’s independence
requirements of the Corporations Act 2001 for the
followingreasons:
• allnon-auditserviceshavebeenreviewedandapproved
to ensure that they do not impact the integrity and
objectivityoftheauditor;and
• noneoftheservicesunderminethegeneralprinciples
relatingtoauditorindependenceassetoutinAPES110
CodeofEthicsforProfessionalAccountantsissued
bytheAccountingProfessionalandEthicalStandards
Board,includingreviewingorauditingtheauditor’s
ownwork,actinginamanagementordecision-making
capacityforthecompany,actingasadvocatefor
thecompanyorjointlysharingeconomicrisksand
rewards.
GRANT
DATE
EXPIRY
DATE
EXERCISE
PRICE
NUMBER
UNDER
OPTION
16/06/2014
30/06/2018
$2.04
965,743
10/12/2014
30/06/2018
$2.04
310,518
19/11/2015
30/06/2019
$3.75
1,717,646
17/11/2016
30/06/2020
$3.47
1,468,582
4,462,489
No person entitled to exercise the options had or has any
rightbyvirtueoftheoptiontoparticipateinanyshareissue
ofthecompanyorofanyotherbodycorporate.
Shares issued on the exercise of
options
TherewerenoordinarysharesofIsentiaGroupLimited
issued on the exercise of options during the year ended 30
June2017anduptothedateofthisreport.
Indemnity and insurance of officers
Thecompanyhasindemnifiedthedirectorsandexecutives
ofthecompanyforcostsincurred,intheircapacityasa
directororexecutive,forwhichtheymaybeheldpersonally
liable,exceptwherethereisalackofgoodfaith.
Duringthefinancialyear,thecompanypaidapremiumin
respectofacontracttoinsurethedirectorsandexecutives
of the company against a liability to the extent permitted
bytheCorporationsAct2001.Thecontractofinsurance
prohibits disclosure of the nature of the liability and the
amountofthepremium.
Indemnity and insurance of auditor
Thecompanyhasnot,duringorsincethefinancialyear,
indemnifiedoragreedtoindemnifytheauditorofthe
company or any related entity against a liability incurred by
theauditor.
28
Directors’ Report
29
Isentia Group Limited – 2017 Annual Report
Directors’ Report (continued)
Officers of the company who are former audit partners of Deloitte Touche
Tohmatsu
TherearenoofficersofthecompanywhoareformerauditpartnersofDeloitteToucheTohmatsu.
Rounding of amounts
ThecompanyisofakindreferredtoinCorporationsInstrument2016/191,issuedbytheAustralianSecuritiesand
InvestmentsCommission,relatingto‘rounding-off’.Amountsinthisreporthavebeenroundedoffinaccordancewiththat
CorporationsInstrumenttothenearestthousanddollars,orincertaincases,thenearestdollar.
Auditor’s independence declaration
Acopyoftheauditor’sindependencedeclarationasrequiredundersection307CoftheCorporationsAct2001followsthis
directors’report.
Auditor
DeloitteToucheTohmatsucontinuesinofficeinaccordancewithsection327oftheCorporationsAct2001.
Thisreportismadeinaccordancewitharesolutionofdirectors,pursuanttosection298(2)(a)oftheCorporationsAct2001.
On behalf of the directors
John Croll
ChiefExecutiveOfficerandManagingDirector
Doug Flynn
Chairman
22 August 2017
Sydney
DeloitteToucheTohmatsu
ABN74490121060
GrosvenorPlace
225 George Street
SydneyNSW2000
POBoxN250GrosvenorPlace
SydneyNSW1220Australia
DX:
Tel:
Fax:
www.deloitte.com.au
10307SSE
+61(0)293227000
+61(0)293227021
TheBoardofDirectors
Isentia Group Limited
219-241ClevelandStreet
StrawberryHills
SYDNEYNSW2012
22 August 2017
DearBoardMembers,
Isentia Group Limited
Inaccordancewithsection307CoftheCorporationsAct2001,Iampleasedtoprovidethefollowingdeclarationof
independencetothedirectorsofIsentiaGroupLimited.
AsleadauditpartnerfortheauditofthefinancialstatementsofIsentiaGroupLimitedforthefinancialyearended30June
2017,Ideclarethattothebestofmyknowledgeandbelief,therehavebeennocontraventionsof:
(i)theauditorindependencerequirementsoftheCorporationsAct2001inrelation
to the audit; and
(ii)anyapplicablecodeofprofessionalconductinrelationtotheaudit.
Yourssincerely,
DeloitteToucheTohmatsu
Sandeep Chadha
Partner
Chartered Accountants
LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.
MemberofDeloitteToucheTohmatsuLimited
30
Auditor’s Independence Declaration
31
Isentia Group Limited – 2017 Annual Report
FY17 Financial
Statements
General information
ThefinancialstatementscoverIsentiaGroupLimitedasagroupconsisting
ofIsentiaGroupLimited(the‘company’or‘parententity’)anditssubsidiaries
(collectivelyreferredtoasthe‘group’).Thefinancialstatementsarepresented
inAustraliandollars,whichisIsentiaGroupLimited’sfunctionaland
presentationcurrency.
IsentiaGroupLimitedisalistedpubliccompanylimitedbyshares,
incorporatedanddomiciledinAustralia.Itsregisteredofficeandprincipal
place of business is:
Level3
219-241ClevelandStreet
StrawberryHillsNSW2012
A description of the nature of the group’s operations and its principal
activitiesareincludedintheDirectors’report,whichisnotpartofthefinancial
statements.
Thefinancialstatementswereauthorisedforissue,inaccordancewitha
resolutionofdirectors,on22August2017.
32
FY17 Financial Statements
33
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2017
Statement of financial position
As at 30 June 2017
Revenue
Other income
Expenses
Copyright,consumablesandotherdirectpurchases
Employeebenefitsexpense
Amortisation expenses
Depreciation expense
Impairment of assets
Loss on disposal of assets
Occupancy costs
Other expenses
Finance costs
(Loss)/profit before income tax expense
Income tax expense
(Loss)/profit after income tax expense for the year attributable to the
owners of Isentia Group Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Netchangeinfairvalueofcashflowhedgestakentoequity,netoftax
Exchangedifferencesontranslatingforeignoperations,netoftax
Othercomprehensiveincomefortheyear,netoftax
Total comprehensive income for the year attributable to the owners of
Isentia Group Limited
Basicearningspershare
Diluted earnings per share
NOTE
5
6
7
7
7
7
8
38
38
CONSOLIDATED
2017
$’000
155,129
13,863
(38,558)
(63,234)
(14,561)
(1,685)
(39,399)
(254)
(5,650)
(12,092)
(2,855)
(9,296)
(4,227)
(13,523)
302
(3,538)
(3,236)
2016
$’000
155,996
70
(32,088)
(62,809)
(12,389)
(1,315)
–
–
(5,364)
(7,029)
(2,898)
32,174
(7,922)
24,252
197
(453)
(256)
(16,759)
23,996
CENTS
(6.761)
(6.761)
CENTS
12.126
12.098
Assets
Current assets
Cashandcashequivalents
Tradeandotherreceivables
Income tax refund due
Prepayments
Totalcurrentassets
Non-current assets
Property,plantandequipment
Intangibles
Deferred tax assets
Other
Totalnon-currentassets
Total assets
Liabilities
Current liabilities
Tradeandotherpayables
Borrowings
Derivativefinancialinstruments
Current tax liabilities
Provisions
Contingent consideration
Totalcurrentliabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Contingent consideration
Totalnon-currentliabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
NOTE
CONSOLIDATED
2017
$’000
2016
$’000
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
13,252
31,245
1,360
1,756
47,613
4,712
153,027
5,320
40
163,099
210,712
19,315
–
–
822
5,132
2,989
28,258
64,869
17,105
784
4,963
87,721
115,979
94,733
8,139
40,042
–
2,140
50,321
3,915
196,316
8,057
133
208,421
258,742
19,261
55,875
532
2,774
5,959
6,995
91,396
–
19,083
813
21,748
41,644
133,040
125,702
403,662
(253,673)
(55,256)
94,733
403,662
(251,287)
(26,673)
125,702
Theabovestatementofprofitorlossandothercomprehensiveincomeshouldbereadinconjunctionwiththeaccompanyingnotes
Refertonote3fordetailedinformationonRestatementofcomparatives.
Theabovestatementoffinancialpositionshouldbereadinconjunctionwiththeaccompanyingnotes
34
FY17 Financial Statements
35
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Statement of changes in equity
For the year ended 30 June 2017
Statement of cash flows
For the year ended 30 June 2017
CONSOLIDATED
Balanceat1July2015
Profitafterincometaxexpensefortheyear
Othercomprehensiveincomefortheyear,netoftax
Totalcomprehensiveincomefortheyear
Transactions with owners in their capacity as owners:
Share-basedpayments(note39)
Dividendspaid(note25)
Balanceat30June2016
CONSOLIDATED
Balanceat1July2016
Loss after income tax expense for the year
Othercomprehensiveincomefortheyear,netoftax
Totalcomprehensiveincomefortheyear
Transactions with owners in their capacity as owners:
Share-basedpayments(note39)
Dividendspaid(note25)
Balanceat30June2017
ISSUED
CAPITAL
$’000
RESERVES
$’000
ACCUMULATED
LOSSES
$’000
TOTAL
EQUITY
$’000
403,662
(251,781)
(35,925)
115,956
–
–
–
–
–
–
(256)
(256)
750
–
24,252
24,252
–
(256)
24,252
23,996
–
750
(15,000)
(15,000)
403,662
(251,287)
(26,673)
125,702
ISSUED
CAPITAL
$’000
RESERVES
$’000
ACCUMULATED
LOSSES
$’000
TOTAL
EQUITY
$’000
403,662
(251,287)
(26,673)
125,702
–
–
–
–
–
–
(13,523)
(13,523)
(3,236)
(3,236)
850
–
–
(3,236)
(13,523)
(16,759)
–
850
(15,060)
(15,060)
403,662
(253,673)
(55,256)
94,733
Theabovestatementofchangesinequityshouldbereadinconjunctionwiththeaccompanyingnotes
CONSOLIDATED
NOTE
2017
$’000
2016
$’000
Cash flows from operating activities
Receiptsfromcustomers(inclusiveofGST)
179,631
167,536
Paymentstosuppliersandemployees(inclusiveofGST)
(136,071)
(127,548)
Interestreceived
Interestandotherfinancecostspaid
Income taxes paid
Netcashfromoperatingactivities
Cash flows from investing activities
Paymentforpurchaseofbusiness,netofcashacquired
Paymentstovendorsforprioryearassetsacquisition
Paymentsforsecuritydeposits
Paymentsforproperty,plantandequipment
Paymentsforintangibles
Paymentforpurchaseofassetacquisition
Proceedsfromdisposalofproperty,plantandequipment
Netcashusedininvestingactivities
Cash flows from financing activities
Proceedsfromborrowings
Repaymentofborrowings
Dividendspaid
Netcash(usedin)/fromfinancingactivities
Netincreaseincashandcashequivalents
Cashandcashequivalentsatthebeginningofthefinancialyear
Cashandcashequivalentsattheendofthefinancialyear
62
(2,933)
(6,940)
33,749
70
(2,667)
(6,620)
30,771
–
(29,216)
(7,033)
–
(2,846)
(11,458)
(1,239)
–
(303)
(448)
(2,446)
(6,716)
(1,219)
3
(22,576)
(40,345)
15,000
(6,000)
(15,060)
(6,060)
5,113
8,139
13,252
38,500
(11,500)
(15,000)
12,000
2,426
5,713
8,139
37
27
25
9
Theabovestatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes
36
FY17 Financial Statements
37
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Note 1. Significant accounting policies
Theprincipalaccountingpoliciesadoptedinthe
preparationofthefinancialstatementsaresetoutbelow.
Thesepolicieshavebeenconsistentlyappliedtoallthe
yearspresented,unlessotherwisestated.
Parent entity information
InaccordancewiththeCorporationsAct2001,these
financialstatementspresenttheresultsofthegrouponly.
Supplementary information about the parent entity is
disclosedinnote33.
New or amended Accounting
Standards and Interpretations adopted
Thegrouphasadoptedalloftheneworamended
Accounting Standards and Interpretations issued by the
AustralianAccountingStandardsBoard(‘AASB’)thatare
mandatoryforthecurrentreportingperiod.Theadoption
of these Accounting Standards and Interpretations did not
haveanysignificantimpactonthefinancialperformanceor
positionofthegroup.
AnyneworamendedAccountingStandardsor
Interpretationsthatarenotyetmandatoryhavenotbeen
earlyadopted.
Basis of preparation
Thesegeneralpurposefinancialstatementshavebeen
preparedinaccordancewithAustralianAccounting
Standards and Interpretations issued by the Australian
AccountingStandardsBoard(‘AASB’)andtheCorporations
Act2001,asappropriateforfor-profitorientedentities.
ThesefinancialstatementsalsocomplywithInternational
Financial Reporting Standards as issued by the
InternationalAccountingStandardsBoard(‘IASB’).
Historical cost convention
Thefinancialstatementshavebeenpreparedunder
thehistoricalcostconventionexceptforcontingent
consideration payable on business combinations and
certainfinancialinstrumentsthataremeasuredatrevalued
amountsorfairvalues,asdetailedintheaccounting
policiesinthisnote.
Critical accounting estimates
Thepreparationofthefinancialstatementsrequiresthe
useofcertaincriticalaccountingestimates.Italsorequires
managementtoexerciseitsjudgementintheprocess
ofapplyingthegroup’saccountingpolicies.Theareas
involvingahigherdegreeofjudgementorcomplexity,or
areaswhereassumptionsandestimatesaresignificantto
thefinancialstatements,aredisclosedinnote2.
Principles of consolidation
Theconsolidatedfinancialstatementsincorporatethe
assets and liabilities of all subsidiaries of Isentia Group
Limited(‘company’or‘parententity’)asat30June2017
andtheresultsofallsubsidiariesfortheyearthenended.
Isentia Group Limited and its subsidiaries together are
referredtointhesefinancialstatementsasthe‘group’.
Subsidiariesareallthoseentitiesoverwhichthegroup
hascontrol.Thegroupcontrolsanentitywhenthegroup
isexposedto,orhasrightsto,variablereturnsfromits
involvementwiththeentityandhastheabilitytoaffect
thosereturnsthroughitspowertodirecttheactivitiesof
theentity.Subsidiariesarefullyconsolidatedfromthedate
onwhichcontrolistransferredtothegroup.Theyare
de-consolidatedfromthedatethatcontrolceases.
Intercompanytransactions,balancesandunrealised
gainsontransactionsbetweenentitiesinthegroupare
eliminated.Unrealisedlossesarealsoeliminatedunless
thetransactionprovidesevidenceoftheimpairmentofthe
assettransferred.Accountingpoliciesofsubsidiarieshave
beenchangedwherenecessarytoensureconsistencywith
thepoliciesadoptedbythegroup.
Theacquisitionofcommoncontrolsubsidiariesis
accountedforatbookvalue.Theacquisitionofother
subsidiaries is accounted for using the acquisition method
ofaccounting.Achangeinownershipinterest,withoutthe
lossofcontrol,isaccountedforasanequitytransaction,
wherethedifferencebetweentheconsideration
transferredandthebookvalueoftheshareofthenon-
controlling interest acquired is recognised directly in equity
attributabletotheparent.
Wherethegrouplosescontroloverasubsidiary,it
derecognisestheassetsincludinggoodwill,liabilitiesand
non-controllinginterestinthesubsidiarytogetherwithany
cumulativetranslationdifferencesrecognisedinequity.
Thegrouprecognisesthefairvalueoftheconsideration
receivedandthefairvalueofanyinvestmentretained
togetherwithanygainorlossinprofitorloss.
Operating segments
Operatingsegmentsarepresentedusingthe‘management
approach’,wheretheinformationpresentedisonthe
samebasisastheinternalreportsprovidedtotheChief
OperatingDecisionMakers(‘CODM’).TheCODMis
responsible for the allocation of resources to operating
segmentsandassessingtheirperformance.
Foreign currency translation
ThefinancialstatementsarepresentedinAustralian
dollars,whichisIsentiaGroupLimited’sfunctionaland
presentationcurrency.
Foreign currency transactions
Foreign currency transactions are translated into Australian
dollarsusingtheexchangeratesprevailingatthedates
ofthetransactions.Foreignexchangegainsandlosses
resulting from the settlement of such transactions and
fromthetranslationatfinancialyear-endexchangerates
of monetary assets and liabilities denominated in foreign
currenciesarerecognisedinprofitorloss.
Foreign operations
Theassetsandliabilitiesofforeignoperationsare
translated into Australian dollars using the exchange
ratesatthereportingdate.Therevenuesandexpenses
of foreign operations are translated into Australian dollars
usingtheaverageexchangerates,whichapproximatethe
ratesatthedatesofthetransactions,fortheperiod.All
resulting foreign exchange differences are recognised in
othercomprehensiveincomethroughtheforeigncurrency
reserveinequity.
Theforeigncurrencyreserveisrecognisedinprofitor
losswhentheforeignoperationornetinvestmentis
disposedof.
Revenue recognition
Revenueisrecognisedwhenitisprobablethatthe
economicbenefitwillflowtothegroupandtherevenue
canbereliablymeasured.
Revenueismeasuredatthefairvalueofconsideration
receivedorreceivable.Thegrouprecognisesrevenuewhen
theamountoftherevenuecanbereliablymeasured,it
isprobablethatfutureeconomicbenefitswillflowtothe
groupandspecificcriteriahavebeenmetforeachofthe
group’soperationsasdescribedbelow.
Revenueisrecognisedforthemajorbusinessoperationas
follows:
Rendering of services
Revenuefromtherenderingofservicesisrecognisedupon
thedeliveryoftheservicetothecustomers.
(i) Software as a service:
Revenuefromprovidingcustomersaccesstogroup
platformsisrecognisedinaccordancewiththetermsof
thecontractsprovidedinthesubscriptionagreement.
(ii) Value added service:
Forsocialmediamonitoring,revenueisrecognised
accordingtotermsofengagementandwhenservicehas
beenrendered.Foranalysisreports,revenueisrecognised
inproportiontotheirstageofcompletion,typicallyin
accordancewiththeachievementofcontractmilestones.
(iii) Content marketing:
Revenuefromcontentcreationandmarketingservicesis
recognised according to the terms of the engagement and
whenservicehasbeenrendered.Revenueisrecognised
inproportiontotheirstageofcompletionofthecontracts.
Stage of completion is measured by reference to labour
hours incurred to date as percentage of total estimated
labourhoursforeachcontract.Whenthecontractoutcome
cannotbemeasuredreliably,revenueisrecognisedonly
to the extent that the expenses incurred are eligible to be
recovered.
Interest
Interestrevenueisrecognisedasinterestaccruesusingthe
effectiveinterestmethod.Thisisamethodofcalculating
theamortisedcostofafinancialassetandallocatingthe
interestincomeovertherelevantperiodusingtheeffective
interestrate,whichistheratethatexactlydiscounts
estimated future cash receipts through the expected life
ofthefinancialassettothenetcarryingamountofthe
financialasset.
Other revenue
Otherrevenueisrecognisedwhenitisreceivedorwhenthe
righttoreceivepaymentisestablished.
38
FY17 Financial Statements
39
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
deferredtaxamounts.Thetaxconsolidatedgrouphas
appliedthe‘separatetaxpayerwithingroup’approachin
determining the appropriate amount of taxes to allocate to
membersofthetaxconsolidatedgroup.
Inadditiontoitsowncurrentanddeferredtaxamounts,
theheadentityalsorecognisesthecurrenttaxliabilities(or
assets)andthedeferredtaxassetsarisingfromunused
tax losses and unused tax credits assumed from each
subsidiaryinthetaxconsolidatedgroup.
Assets or liabilities arising under tax funding agreements
withthetaxconsolidatedentitiesarerecognisedas
amountsreceivablefromorpayabletootherentitiesin
thetaxconsolidatedgroup.Thetaxfundingarrangement
ensures that the intercompany charge equals the
currenttaxliabilityorbenefitofeachtaxconsolidated
groupmember,resultinginneitheracontributionbythe
head entity to the subsidiaries nor a distribution by the
subsidiariestotheheadentity.
Current and non-current classification
Assets and liabilities are presented in the statement
offinancialpositionbasedoncurrentandnon-current
classification.
Anassetisclassifiedascurrentwhen:itiseitherexpected
to be realised or intended to be sold or consumed in the
group’s normal operating cycle; it is held primarily for the
purposeoftrading;itisexpectedtoberealisedwithin12
months after the reporting period; or the asset is cash or
cashequivalentunlessrestrictedfrombeingexchanged
or used to settle a liability for at least 12 months after the
reportingperiod.Allotherassetsareclassifiedasnon-
current.
Aliabilityisclassifiedascurrentwhen:itiseitherexpected
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
within12monthsafterthereportingperiod;orthereisno
unconditional right to defer the settlement of the liability
foratleast12monthsafterthereportingperiod.Allother
liabilitiesareclassifiedasnon-current.
Deferredtaxassetsandliabilitiesarealwaysclassifiedas
non-current.
Income tax
Theincometaxexpenseorbenefitfortheperiodisthe
tax payable on that period’s taxable income based on the
applicableincometaxrateforeachjurisdiction,adjusted
by the changes in deferred tax assets and liabilities
attributabletotemporarydifferences,unusedtaxlosses
andtheadjustmentrecognisedforpriorperiods,where
applicable.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to be
appliedwhentheassetsarerecoveredorliabilitiesare
settled,basedonthosetaxratesthatareenactedor
substantivelyenacted,exceptfor:
• Whenthedeferredincometaxassetorliabilityarises
fromtheinitialrecognitionofgoodwilloranasset
or liability in a transaction that is not a business
combinationandthat,atthetimeofthetransaction,
affectsneithertheaccountingnortaxableprofits;or
• Whenthetaxabletemporarydifferenceisassociated
withinterestsinsubsidiaries,associatesorjoint
ventures,andthetimingofthereversalcanbe
controlled and it is probable that the temporary
differencewillnotreverseintheforeseeablefuture.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probablethatfuturetaxableamountswillbeavailableto
utilisethosetemporarydifferencesandlosses.
Thecarryingamountofrecognisedandunrecognised
deferredtaxassetsarereviewedateachreporting
date.Deferredtaxassetsrecognisedarereducedtothe
extent that it is no longer probable that future taxable
profitswillbeavailableforthecarryingamounttobe
recovered.Previouslyunrecogniseddeferredtaxassetsare
recognised to the extent that it is probable that there are
futuretaxableprofitsavailabletorecovertheasset.
Deferredtaxassetsandliabilitiesareoffsetonlywhere
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
entityordifferenttaxableentitieswhichintendtosettle
simultaneously.
IsentiaGroupLimited(the‘headentity’)anditswholly-
ownedAustraliansubsidiarieshaveformedanincometax
consolidatedgroupunderthetaxconsolidationregime.
Theheadentityandeachsubsidiaryinthetaxconsolidated
groupcontinuetoaccountfortheirowncurrentand
40
Cash and cash equivalents
Cashandcashequivalentsincludescashonhand,
depositsheldatcallwithfinancialinstitutions,othershort-
term,highlyliquidinvestmentswithoriginalmaturitiesof
threemonthsorlessthatarereadilyconvertibletoknown
amountsofcashandwhicharesubjecttoaninsignificant
riskofchangesinvalue.
Trade and other receivables
Tradereceivablesareinitiallyrecognisedatfairvalue
and subsequently measured at amortised cost using
theeffectiveinterestmethod,lessanyprovisionfor
impairment.Tradereceivablesaregenerallyduefor
settlementbetween30and90days.
Collectabilityoftradereceivablesisreviewedonan
ongoingbasis.Debtswhichareknowntobeuncollectable
arewrittenoffbyreducingthecarryingamountdirectly.
Aprovisionforimpairmentoftradereceivablesisraised
whenthereisobjectiveevidencethatthegroupwillnotbe
able to collect all amounts due according to the original
termsofthereceivables.Significantfinancialdifficultiesof
thedebtor,probabilitythatthedebtorwillenterbankruptcy
orfinancialreorganisationanddefaultordelinquencyin
payments(morethan60daysoverdue)areconsidered
indicatorsthatthetradereceivablemaybeimpaired.The
amountoftheimpairmentallowanceisthedifference
betweentheasset’scarryingamountandthepresentvalue
ofestimatedfuturecashflows,discountedattheoriginal
effectiveinterestrate.Cashflowsrelatingtoshort-term
receivablesarenotdiscountediftheeffectofdiscounting
isimmaterial.
Otherreceivablesarerecognisedatamortisedcost,less
anyprovisionforimpairment.
Derivative financial instruments
Derivativesareinitiallyrecognisedatfairvalueonthedate
aderivativecontractisenteredintoandaresubsequently
remeasuredtotheirfairvalueateachreportingdate.The
accountingforsubsequentchangesinfairvaluedepends
onwhetherthederivativeisdesignatedasahedging
instrument,andifso,thenatureoftheitembeinghedged.
Cash flow hedges
Cashflowhedgesareusedtocoverthegroup’sexposure
tovariabilityincashflowsthatisattributabletoparticular
risksassociatedwitharecognisedassetorliabilityor
afirmcommitmentwhichcouldaffectprofitorloss.
Theeffectiveportionofthegainorlossonthehedging
instrumentisrecognisedinothercomprehensiveincome
throughthecashflowhedgesreserveinequity,whilstthe
ineffectiveportionisrecognisedinprofitorloss.Amounts
takentoequityaretransferredoutofequityandincluded
inthemeasurementofthehedgedtransactionwhenthe
forecasttransactionoccurs.
Cashflowhedgesaretestedforeffectivenessona
regularbasisbothretrospectivelyandprospectivelyto
ensurethateachhedgeishighlyeffectiveandcontinues
tobedesignatedasacashflowhedge.Iftheforecast
transactionisnolongerexpectedtooccur,theamounts
recognisedinequityaretransferredtoprofitorloss.
Ifthehedginginstrumentissold,terminated,expires,
exercisedwithoutreplacementorrollover,orifthehedge
becomesineffectiveandisnolongeradesignatedhedge,
theamountspreviouslyrecognisedinequityremainin
equityuntiltheforecasttransactionoccurs.
Investments and other financial assets
Investmentsandotherfinancialassetsareinitially
measuredatfairvalue.Transactioncostsareincluded
aspartoftheinitialmeasurement,exceptforfinancial
assetsatfairvaluethroughprofitorloss.Suchassets
are subsequently measured at either amortised cost or
fairvaluedependingontheirclassification.Classification
is determined based on the purpose of the acquisition
andsubsequentreclassificationtoothercategoriesis
restricted.
Financialassetsarederecognisedwhentherightsto
receivecashflowsfromthefinancialassetshaveexpired
orhavebeentransferredandthegrouphastransferred
substantiallyalltherisksandrewardsofownership.
Loans and receivables
Loansandreceivablesarenon-derivativefinancialassets
withfixedordeterminablepaymentsthatarenotquotedin
anactivemarket.Theyarecarriedatamortisedcostusing
theeffectiveinterestratemethod.Gainsandlossesare
recognisedinprofitorlosswhentheassetisderecognised
orimpaired.
FY17 Financial Statements
41
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
Impairment of financial assets
Thegroupassessesattheendofeachreportingperiod
whetherthereisanyobjectiveevidencethatafinancial
assetorgroupoffinancialassetsisimpaired.Objective
evidenceincludessignificantfinancialdifficultyofthe
issuer or obligor; a breach of contract such as default or
delinquencyinpayments;thelendergrantingtoaborrower
concessions due to economic or legal reasons that the
lenderwouldnototherwisedo;itbecomesprobable
thattheborrowerwillenterbankruptcyorotherfinancial
reorganisation;thedisappearanceofanactivemarketfor
thefinancialasset;orobservabledataindicatingthatthere
isameasurabledecreaseinestimatedfuturecashflows.
Theamountoftheimpairmentallowanceforloansand
receivablescarriedatamortisedcostisthedifference
betweentheasset’scarryingamountandthepresentvalue
ofestimatedfuturecashflows,discountedattheoriginal
effectiveinterestrate.Ifthereisareversalofimpairment,
thereversalcannotexceedtheamortisedcostthatwould
havebeenrecognisedhadtheimpairmentnotbeenmade
andisreversedtoprofitorloss.
Property, plant and equipment
Plantandequipmentisstatedathistoricalcostless
accumulateddepreciationandimpairment.Historicalcost
includes expenditure that is directly attributable to the
acquisitionoftheitems.
Depreciationiscalculatedonastraight-linebasisto
writeoffthenetcostofeachitemofproperty,plantand
equipmentovertheirexpectedusefullivesasfollows:
Leaseholdimprovements
Furnitureandfittings
Officeequipment
Computerequipment
3-5years
3-13years
3-7years
2-3years
Theresidualvalues,usefullivesanddepreciationmethods
arereviewed,andadjustedifappropriate,ateachreporting
date.
Leaseholdimprovementsandplantandequipmentunder
leasearedepreciatedovertheunexpiredperiodofthe
leaseortheestimatedusefullifeoftheassets,whichever
isshorter.
Anitemofproperty,plantandequipmentisderecognised
upondisposalorwhenthereisnofutureeconomicbenefit
tothegroup.Gainsandlossesbetweenthecarrying
amountandthedisposalproceedsaretakentoprofit
orloss.
Leases
Thedeterminationofwhetheranarrangementisor
contains a lease is based on the substance of the
arrangementandrequiresanassessmentofwhetherthe
fulfilmentofthearrangementisdependentontheuseof
aspecificassetorassetsandthearrangementconveysa
righttousetheasset.
Adistinctionismadebetweenfinanceleases,which
effectivelytransferfromthelessortothelessee
substantiallyalltherisksandbenefitsincidentaltothe
ownershipofleasedassets,andoperatingleases,under
whichthelessoreffectivelyretainssubstantiallyallsuch
risksandbenefits.
Financeleasesarecapitalised.Aleaseassetandliability
areestablishedatthefairvalueoftheleasedassets,or
iflower,thepresentvalueofminimumleasepayments.
Leasepaymentsareallocatedbetweentheprincipal
componentoftheleaseliabilityandthefinancecosts,so
astoachieveaconstantrateofinterestontheremaining
balanceoftheliability.
Leasedassetsacquiredunderafinanceleaseare
depreciatedovertheasset’susefullifeorovertheshorter
of the asset’s useful life and the lease term if there is no
reasonablecertaintythatthegroupwillobtainownershipat
theendoftheleaseterm.
Operatingleasepayments,netofanyincentivesreceived
fromthelessor,arechargedtoprofitorlossonastraight-
linebasisoverthetermofthelease.
Intangible assets
Intangible assets acquired as part of a business
combination,otherthangoodwill,areinitiallymeasured
attheirfairvalueatthedateoftheacquisition.Intangible
assetsacquiredseparatelyareinitiallyrecognisedatcost.
Indefinitelifeintangibleassetsarenotamortisedandare
subsequentlymeasuredatcostlessanyimpairment.Finite
life intangible assets are subsequently measured at cost
lessamortisationandanyimpairment.Thegainsorlosses
recognisedinprofitorlossarisingfromthederecognition
of intangible assets are measured as the difference
betweennetdisposalproceedsandthecarryingamount
oftheintangibleasset.Themethodandusefullivesof
finitelifeintangibleassetsarereviewedannually.Changes
in the expected pattern of consumption or useful life are
accountedforprospectivelybychangingtheamortisation
methodorperiod.
Goodwill
Goodwillarisesontheacquisitionofabusiness.Goodwill
isnotamortised.Instead,goodwillistestedannuallyfor
impairment,ormorefrequentlyifeventsorchangesin
circumstancesindicatethatitmightbeimpaired,and
iscarriedatcostlessaccumulatedimpairmentlosses.
Impairmentlossesongoodwillaretakentoprofitorloss
andarenotsubsequentlyreversed.
Customer relationships and contracts
Customer contracts purchased or acquired in a business
combinationareamortisedonastraight-linebasisover
theperiodoftheirexpectedbenefit,beingtheirfiniteuseful
livesofbetweenfiveandtenyears.
Software, research and capitalised development
Researchcostsareexpensedintheperiodinwhichthey
areincurred.Developmentcostsarecapitalisedwhenitis
probablethattheprojectwillbeasuccessconsideringits
commercial and technical feasibility; the group is able to
useorselltheasset;thegrouphassufficientresources;
andintenttocompletetheinternaldevelopmentandtheir
costscanbemeasuredreliably.Thesecapitalisedcosts
andothersoftwarecosts,purchasedfromthirdparties,
aredeferredandamortisedonastraight-linebasisover
theperiodoftheirexpectedbenefit,beingtheirfiniteuseful
livesofbetweentwoandfiveyears.
Brands
Brandsacquiredinabusinesscombinationarenot
amortised,onthebasisofindefinitelife,whichis
reassessedeveryyear.Instead,brandsaretestedannually
forimpairment,ormorefrequentlyifeventsorchangesin
circumstancesindicatethatitmightbeimpaired,andare
carriedatcostlessaccumulatedimpairmentlosses.
Impairment of non-financial assets
Goodwillandotherintangibleassetsthathaveanindefinite
usefullifearenotsubjecttoamortisationandaretested
annuallyforimpairment,ormorefrequentlyifeventsor
changes in circumstances indicate that they might be
impaired.Othernon-financialassetsarereviewedfor
impairmentwhenevereventsorchangesincircumstances
indicatethatthecarryingamountmaynotberecoverable.
An impairment loss is recognised for the amount by
whichtheasset’scarryingamountexceedsitsrecoverable
amount.
Recoverableamountisthehigherofanasset’sfairvalue
lesscostsofdisposalandvalue-in-use.Thevalue-in-use
isthepresentvalueoftheestimatedfuturecashflows
relatingtotheassetusingapre-taxdiscountratespecific
totheassetorcash-generatingunittowhichtheasset
belongs.Assetsthatdonothaveindependentcashflows
aregroupedtogethertoformacash-generatingunit.
Trade and other payables
Theseamountsrepresentliabilitiesforgoodsandservices
providedtothegrouppriortotheendofthefinancialyear
andwhichareunpaid.Duetotheirshort-termnaturethey
aremeasuredatamortisedcostandarenotdiscounted.
Theamountsareunsecuredandareusuallypaidwithin30
daysofrecognition.
Borrowings
Loansandborrowingsareinitiallyrecognisedatthefair
valueoftheconsiderationreceived,netoftransaction
costs.Theyaresubsequentlymeasuredatamortisedcost
usingtheeffectiveinterestmethod.
Finance costs
Finance costs attributable to qualifying assets are
capitalisedaspartoftheasset.Allotherfinancecostsare
expensedintheperiodinwhichtheyareincurred.
Provisions
Provisionsarerecognisedwhenthegrouphasapresent
(legalorconstructive)obligationasaresultofapast
event,itisprobablethegroupwillberequiredtosettle
theobligation,andareliableestimatecanbemadeofthe
amountoftheobligation.Theamountrecognisedasa
provisionisthebestestimateoftheconsiderationrequired
tosettlethepresentobligationatthereportingdate,taking
intoaccounttherisksanduncertaintiessurroundingthe
obligation.Ifthetimevalueofmoneyismaterial,provisions
arediscountedusingacurrentpre-taxratespecifictothe
liability.Theincreaseintheprovisionresultingfromthe
passageoftimeisrecognisedasafinancecost.
42
FY17 Financial Statements
43
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
Theamountrecognisedinprofitorlossfortheperiodisthe
cumulativeamountcalculatedateachreportingdateless
amountsalreadyrecognisedinpreviousperiods.
Marketconditionsaretakenintoconsiderationin
determiningfairvalue.Thereforeanyawardssubjectto
marketconditionsareconsideredtovestirrespective
ofwhetherornotthatmarketconditionhasbeenmet,
providedallotherconditionsaresatisfied.
Ifequity-settledawardsaremodified,asaminimum
anexpenseisrecognisedasifthemodificationhas
notbeenmade.Anadditionalexpenseisrecognised,
overtheremainingvestingperiod,foranymodification
thatincreasesthetotalfairvalueoftheshare-based
compensationbenefitasatthedateofmodification.
Ifthenon-vestingconditioniswithinthecontrolofthe
grouporemployee,thefailuretosatisfytheconditionis
treatedasacancellation.Iftheconditionisnotwithinthe
controlofthegrouporemployeeandisnotsatisfiedduring
thevestingperiod,anyremainingexpensefortheawardis
recognisedovertheremainingvestingperiod,unlessthe
awardisforfeited.
Ifequity-settledawardsarecancelled,itistreatedasifit
hasvestedonthedateofcancellation,andanyremaining
expenseisrecognisedimmediately.Ifanewreplacement
awardissubstitutedforthecancelledaward,thecancelled
andnewawardistreatedasiftheywereamodification.
Fair value measurement
Whenanassetorliability,financialornon-financial,is
measuredatfairvalueforrecognitionordisclosure
purposes,thefairvalueisbasedonthepricethatwould
bereceivedtosellanassetorpaidtotransferaliabilityin
anorderlytransactionbetweenmarketparticipantsatthe
measurementdate;andassumesthatthetransactionwill
takeplaceeither:intheprincipalmarket;orintheabsence
ofaprincipalmarket,inthemostadvantageousmarket.
Fairvalueismeasuredusingtheassumptionsthatmarket
participantswouldusewhenpricingtheassetorliability,
assumingtheyactintheireconomicbestinterests.
Fornon-financialassets,thefairvaluemeasurementis
basedonitshighestandbestuse.Valuationtechniques
thatareappropriateinthecircumstancesandforwhich
sufficientdataareavailabletomeasurefairvalue,areused,
maximisingtheuseofrelevantobservableinputsand
minimisingtheuseofunobservableinputs.
Employee benefits
Short-term employee benefits
Employeebenefitsexpectedtobesettledwithin12
months of the reporting date are measured at the amounts
expectedtobepaidwhentheliabilitiesaresettled.
Other long-term employee benefits
Employeebenefitsnotexpectedtobesettledwithin12
months of the reporting date is measured as the present
valueofexpectedfuturepaymentstobemadeinrespect
ofservicesprovidedbyemployeesuptothereportingdate
usingtheprojectedunitcreditmethod.Considerationis
giventoexpectedfuturewageandsalarylevels,experience
ofemployeedeparturesandperiodsofservice.Expected
futurepaymentsarediscountedusingmarketyieldsatthe
reportingdateoncorporatebondswithtermstomaturity
andcurrencythatmatch,ascloselyaspossible,the
estimatedfuturecashoutflows.
Defined contribution superannuation expense
Contributionstodefinedcontributionsuperannuationplans
areexpensedintheperiodinwhichtheyareincurred.
Share-based payments
Equity-settledcompensationbenefitsareprovidedto
employees.
Equity-settledtransactionsareawardsofshares,or
optionsovershares,thatareprovidedtoemployeesin
exchangefortherenderingofservices.
Thecostofequity-settledtransactionsismeasuredatfair
valueongrantdate.Fairvalueisindependentlydetermined
usingeithertheBlack-Scholesoptionpricingmodel
orMonteCarloSimulationthattakesintoaccountthe
exerciseprice,thetermoftheoption,theimpactofdilution,
thesharepriceatgrantdateandexpectedpricevolatility
oftheunderlyingshare,theexpecteddividendyieldandthe
riskfreeinterestrateforthetermoftheoption,together
withnon-vestingconditionsthatdonotdeterminewhether
thegroupreceivestheservicesthatentitletheemployees
toreceivepayment.Noaccountistakenofanyother
vestingconditions.
Thecostofequity-settledtransactionsisrecognisedasan
expensewithacorrespondingincreaseinequityoverthe
vestingperiod.Thecumulativechargetoprofitorlossis
calculatedbasedonthegrantdatefairvalueoftheaward,
thebestestimateofthenumberofawardsthatarelikelyto
vestandtheexpiredportionofthevestingperiod.
44
group’s operating or accounting policies and other
pertinentconditionsinexistenceattheacquisition-date.
Wherethebusinesscombinationisachievedinstages,
thegroupremeasuresitspreviouslyheldequityinterest
intheacquireeattheacquisition-datefairvalueandthe
differencebetweenthefairvalueandthepreviouscarrying
amountisrecognisedinprofitorloss.
Contingent consideration to be transferred by the acquirer
isrecognisedattheacquisition-datefairvalue.Subsequent
changesinthefairvalueofthecontingentconsideration
classifiedasanassetorliabilityisrecognisedinprofitor
loss.Contingentconsiderationclassifiedasequityisnot
remeasured and its subsequent settlement is accounted
forwithinequity.
Thedifferencebetweentheacquisition-datefairvalue
ofassetsacquired,liabilitiesassumedandanynon-
controllinginterestintheacquireeandthefairvalueof
theconsiderationtransferredandthefairvalueofany
pre-existinginvestmentintheacquireeisrecognised
asgoodwill.Iftheconsiderationtransferredandthe
pre-existingfairvalueislessthanthefairvalueofthe
identifiablenetassetsacquired,beingabargainpurchase
totheacquirer,thedifferenceisrecognisedasagain
directlyinprofitorlossbytheacquirerontheacquisition-
date,butonlyafterareassessmentoftheidentification
andmeasurementofthenetassetsacquired,thenon-
controllinginterestintheacquiree,ifany,theconsideration
transferredandtheacquirer’spreviouslyheldequity
interestintheacquirer.
Businesscombinationsareinitiallyaccountedforona
provisionalbasis.Theacquirerretrospectivelyadjusts
theprovisionalamountsrecognisedandalsorecognises
additional assets or liabilities during the measurement
period,basedonnewinformationobtainedaboutthefacts
andcircumstancesthatexistedattheacquisition-date.
Themeasurementperiodendsoneithertheearlierof(i)
12monthsfromthedateoftheacquisitionor(ii)whenthe
acquirerreceivesalltheinformationpossibletodetermine
fairvalue.
Assetsandliabilitiesmeasuredatfairvalueareclassified,
intothreelevels,usingafairvaluehierarchythatreflects
thesignificanceoftheinputsusedinmakingthe
measurements.Classificationsarereviewedateach
reportingdateandtransfersbetweenlevelsaredetermined
basedonareassessmentofthelowestlevelofinputthat
issignificanttothefairvaluemeasurement.
Forrecurringandnon-recurringfairvaluemeasurements,
externalvaluersmaybeusedwheninternalexpertise
iseithernotavailableorwhenthevaluationisdeemed
tobesignificant.Externalvaluersareselectedbased
onmarketknowledgeandreputation.Wherethereisa
significantchangeinfairvalueofanassetorliabilityfrom
oneperiodtoanother,ananalysisisundertaken,which
includesaverificationofthemajorinputsappliedinthe
latestvaluationandacomparison,whereapplicable,with
externalsourcesofdata.
Issued capital
Ordinarysharesareclassifiedasequity.
Incrementalcostsdirectlyattributabletotheissueofnew
sharesoroptionsareshowninequityasadeduction,net
oftax,fromtheproceeds.
Dividends
Dividendsarerecognisedwhendeclaredduringthe
financialyearandnolongeratthediscretionofthe
company.
Business combinations
Theacquisitionmethodofaccountingisusedtoaccount
forbusinesscombinationsregardlessofwhetherequity
instrumentsorotherassetsareacquired.
Theconsiderationtransferredisthesumoftheacquisition-
datefairvaluesoftheassetstransferred,equity
instruments issued or liabilities incurred by the acquirer
toformerownersoftheacquireeandtheamountofany
non-controllinginterestintheacquiree.Foreachbusiness
combination,thenon-controllinginterestintheacquireeis
measuredateitherfairvalueorattheproportionateshare
oftheacquiree’sidentifiablenetassets.Allacquisition
costsareexpensedasincurredtoprofitorloss.
Ontheacquisitionofabusiness,thegroupassesses
thefinancialassetsacquiredandliabilitiesassumedfor
appropriateclassificationanddesignationinaccordance
withthecontractualterms,economicconditions,the
FY17 Financial Statements
45
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Earnings per share
Basic earnings per share
Basicearningspershareiscalculatedbydividingthe
profitattributabletotheownersofIsentiaGroupLimited,
excludinganycostsofservicingequityotherthanordinary
shares,bytheweightedaveragenumberofordinaryshares
outstandingduringthefinancialyear,adjustedforbonus
elementsinordinarysharesissuedduringthefinancial
year.
Diluted earnings per share
Dilutedearningspershareadjuststhefiguresusedinthe
determinationofbasicearningspersharetotakeinto
account the after income tax effect of interest and other
financingcostsassociatedwithdilutivepotentialordinary
sharesandtheweightedaveragenumberofshares
assumedtohavebeenissuedfornoconsiderationin
relationtodilutivepotentialordinaryshares.
Goods and Services Tax (‘GST’) and
other similar taxes
Revenues,expensesandassetsarerecognisednetof
theamountofassociatedGST,unlesstheGSTincurred
isnotrecoverablefromthetaxauthority.Inthiscaseitis
recognised as part of the cost of the acquisition of the
assetoraspartoftheexpense.
Receivablesandpayablesarestatedinclusiveofthe
amountofGSTreceivableorpayable.Thenetamount
ofGSTrecoverablefrom,orpayableto,thetaxauthority
isincludedinotherreceivablesorotherpayablesinthe
statementoffinancialposition.
Cashflowsarepresentedonagrossbasis.TheGST
componentsofcashflowsarisingfrominvestingor
financingactivitieswhicharerecoverablefrom,orpayable
tothetaxauthority,arepresentedasoperatingcashflows.
Commitments and contingencies are disclosed net of the
amountofGSTrecoverablefrom,orpayableto,thetax
authority.
Rounding of amounts
ThecompanyisofakindreferredtoinCorporations
Instrument2016/191,issuedbytheAustralianSecurities
andInvestmentsCommission,relatingto‘rounding-
off’.Amountsinthisreporthavebeenroundedoffin
accordancewiththatCorporationsInstrumenttothe
nearestthousanddollars,orincertaincases,the
nearestdollar.
Comparatives
Comparativesinthestatementofprofitorlossand
othercomprehensiveincomeandnotestothefinancial
statementshavebeenrealignedtocurrentyear
presentation.Therehasbeennoeffectontheprofit
fortheyear.
New Accounting Standards and
Interpretations not yet mandatory or
early adopted
Australian Accounting Standards and Interpretations
thathaverecentlybeenissuedoramendedbutarenot
yetmandatory,havenotbeenearlyadoptedbythegroup
fortheannualreportingperiodended30June2017.
Thegroup’sassessmentoftheimpactofthesenewor
amendedAccountingStandardsandInterpretations,most
relevanttothegroup,aresetoutbelow.
AASB 9 Financial Instruments
Thisstandardisapplicabletoannualreportingperiods
beginningonorafter1January2018.Thestandard
replacesallpreviousversionsofAASB9andcompletes
theprojecttoreplaceIAS39‘FinancialInstruments:
RecognitionandMeasurement’.AASB9introducesnew
classificationandmeasurementmodelsforfinancial
assets.Afinancialassetshallbemeasuredatamortised
cost,ifitisheldwithinabusinessmodelwhoseobjective
is to hold assets in order to collect contractual cash
flows,whichariseonspecifieddatesandsolelyprincipal
andinterest.Allotherfinancialinstrumentassetsareto
beclassifiedandmeasuredatfairvaluethroughprofit
orlossunlesstheentitymakesanirrevocableelection
on initial recognition to present gains and losses on
equityinstruments(thatarenotheld-for-trading)inother
comprehensiveincome(‘OCI’).Forfinancialliabilities,
designatedatfairvaluethroughprofitorloss,thestandard
requirestheportionofthechangeinfairvaluethatrelates
totheentity’sowncreditrisktobepresentedinOCI
(unlessitwouldcreateanaccountingmismatch).New
simpler hedge accounting requirements are intended to
morecloselyaligntheaccountingtreatmentwiththerisk
managementactivitiesoftheentity.Newimpairment
requirementswillusean‘expectedcreditloss’(‘ECL’)model
torecogniseanallowance.Impairmentwillbemeasured
undera12-monthECLmethodunlessthecreditriskon
afinancialinstrumenthasincreasedsignificantlysince
initialrecognitioninwhichcasethelifetimeECLmethod
isadopted.Thestandardintroducesadditionalnew
disclosures.Thegroupwilladoptthisstandardfrom1July
2018,andtheadoptionofthisstandardisnotexpectedto
significantlyimpactthefinancialstatementsonthebasis
thatthemainfinancialassetsrecognisedrepresentcash
andcashequivalentandtradereceivablesthatdonotcarry
asignificantfinancingcomponentandinvolveasingle
cashflowrepresentingtherepaymentofprincipal,whichin
thecaseoftradereceivablesisthetransactionprice.Both
assetclasseswillcontinuetobemeasuredatfacevalue.
Otherfinancialassetclassesarenotmaterialtothegroup.
Financial liabilities of the group are not impacted as the
groupdoesnotcarrythematfairvalue.
AASB 15 Revenue from Contracts with Customers
Thisstandardisapplicabletoannualreportingperiods
beginningonorafter1January2018.Thestandard
providesasinglestandardforrevenuerecognition.
Thecoreprincipleofthestandardisthatanentitywill
recogniserevenuetodepictthetransferofpromisedgoods
orservicestocustomersinanamountthatreflectsthe
considerationtowhichtheentityexpectstobeentitled
inexchangeforthosegoodsorservices.Thestandard
willrequire:contracts(eitherwritten,verbalorimplied)
tobeidentified,togetherwiththeseparateperformance
obligationswithinthecontract;determinethetransaction
price,adjustedforthetimevalueofmoneyexcludingcredit
risk;allocationofthetransactionpricetotheseparate
performanceobligationsonabasisofrelativestand-alone
sellingpriceofeachdistinctgoodorservice,orestimation
approachifnodistinctobservablepricesexist;and
recognitionofrevenuewheneachperformanceobligation
issatisfied.Creditriskwillbepresentedseparatelyas
anexpenseratherthanadjustedtorevenue.Forgoods,
theperformanceobligationwouldbesatisfiedwhenthe
customerobtainscontrolofthegoods.Forservices,the
performanceobligationissatisfiedwhentheservice
hasbeenprovided,typicallyforpromisestotransfer
servicestocustomers.Forperformanceobligations
satisfiedovertime,anentitywouldselectanappropriate
measureofprogresstodeterminehowmuchrevenue
should be recognised as the performance obligation is
satisfied.Contractswithcustomerswillbepresentedin
anentity’sstatementoffinancialpositionasacontract
liability,acontractasset,orareceivable,dependingon
therelationshipbetweentheentity’sperformanceandthe
customer’spayment.Sufficientquantitativeandqualitative
disclosure is required to enable users to understand the
contractswithcustomers;thesignificantjudgements
made in applying the guidance to those contracts; and
anyassetsrecognisedfromthecoststoobtainorfulfil
acontractwithacustomer.Thegroupexpectstoadopt
thisstandardfrom1July2018.Thegroupiscurrently
undertakingacomprehensivereviewoftheimplementation
impactsofIFRS15.Thegrouphasnotyetreacheda
determination as to the impacts of these accounting
standards.
AASB 16 Leases
Thisstandardisapplicabletoannualreportingperiods
beginningonorafter1January2019.Thestandard
replacesAASB117‘Leases’andforlesseeswilleliminate
theclassificationsofoperatingleasesandfinanceleases.
Subjecttoexceptions,aleaseliabilitywillbecapitalised
inthestatementoffinancialposition,measuredasthe
presentvalueoftheunavoidablefutureleasepayments
tobemadeovertheleaseterm.Theexceptionsrelate
toshort-termleasesof12monthsorlessandleasesof
low-valueassets(suchaspersonalcomputersandsmall
officefurniture)whereanaccountingpolicychoiceexists
wherebyeithera‘right-of-use’assetisrecognisedorlease
paymentsareexpensedtoprofitorlossasincurred.A
‘rightofuse’assetcorrespondingtotheleaseliability
willalsoberecognised,adjustedforleaseprepayments,
leaseincentivesreceived,initialdirectcostsincurred
andanestimateofanyfuturerestoration,removalor
dismantlingcosts.Straight-lineoperatingleaseexpense
recognitionwillbereplacedwithadepreciationcharge
fortheleasedasset(includedinoperatingcosts)andan
interestexpenseontherecognisedleaseliability(included
infinancecosts).Intheearlierperiodsofthelease,the
expensesassociatedwiththeleaseunderAASB16will
behigherwhencomparedtoleaseexpensesunderAASB
117.HoweverEBITDA(EarningsBeforeInterest,Tax,
DepreciationandAmortisation)resultswillbeimproved
as the operating expense is replaced by interest expense
anddepreciationinprofitorlossunderAASB16.For
classificationwithinthestatementofcashflows,thelease
paymentswillbeseparatedintobothaprincipal(financing
activities)andinterest(eitheroperatingorfinancing
activities)component.Forlessoraccounting,thestandard
doesnotsubstantiallychangehowalessoraccountsfor
leases.Thegroupwilladoptthisstandardfrom1July
2019.Informationontheundiscountedamountofthe
group’soperatingleasecommitmentsunderAASB117,the
currentleasingstandard,isdisclosedinnote31.TheGroup
isconsideringtheavailableoptionsfortransition.Todate,
workhasfocusedontheidentificationoftheprovisionsof
thestandardwhichwillmostimpactthegroup.Inthenext
financialyear,workonthedetailedreviewofthecontracts
andfinancialreportingimpactswillcommence.
46
FY17 Financial Statements
47
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
therecoverableamountoftheassetisdetermined.This
involvesfairvaluelesscostsofdisposalorvalue-in-use
calculations,whichincorporateanumberofkeyestimates
andassumptions.
Income tax
Thegroupissubjecttoincometaxesinthejurisdictions
inwhichitoperates.Significantjudgementisrequired
indeterminingtheprovisionforincometax.Thereare
manytransactionsandcalculationsundertakenduring
theordinarycourseofbusinessforwhichtheultimate
taxdeterminationisuncertain.Thegrouprecognises
liabilities for anticipated tax audit issues based on the
group’scurrentunderstandingofthetaxlaw.Wherethe
finaltaxoutcomeofthesemattersisdifferentfromthe
carryingamounts,suchdifferenceswillimpactthecurrent
anddeferredtaxprovisionsintheperiodinwhichsuch
determinationismade.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible
temporary differences only if the group considers it is
probablethatfuturetaxableamountswillbeavailable
toutilisethosetemporarydifferencesandlosses.Such
deferred tax assets are not recognised if the temporary
differencearisesfromtheinitialrecognition(otherthan
inabusinesscombination)ofassetsandliabilitiesina
transactionthataffectsneitherthetaxableprofitnorthe
accountingprofit.Thecarryingamountofthedeferredtax
assetsisreviewedattheendofeachperiodandreduced
totheextentthatitisnolongerprobablethatsufficient
taxableprofitswillbeavailabletoallowallorpartofthe
assettoberecovered.
Business combinations
Asdiscussedinnote1,businesscombinationsareinitially
accountedforonaprovisionalbasis.Thefairvalue
ofassetsacquired,liabilitiesandcontingentliabilities
assumedareinitiallyestimatedbythegrouptakinginto
considerationallavailableinformationatthereporting
date.Fairvalueadjustmentsonthefinalisationofthe
businesscombinationaccountingisretrospective,where
applicable,totheperiodthecombinationoccurredandmay
haveanimpactontheassetsandliabilities,depreciation
andamortisationreported.
Note 2. Critical accounting
judgements, estimates and
assumptions
Thepreparationofthefinancialstatementsrequires
managementtomakejudgements,estimatesand
assumptions that affect the reported amounts in the
financialstatements.Managementcontinuallyevaluatesits
judgementsandestimatesinrelationtoassets,liabilities,
contingentliabilities,revenueandexpenses.Management
basesitsjudgements,estimatesandassumptions
onhistoricalexperienceandonothervariousfactors,
includingexpectationsoffutureevents,management
believestobereasonableunderthecircumstances.The
resultingaccountingjudgementsandestimateswill
seldomequaltherelatedactualresults.Thejudgements,
estimatesandassumptionsthathaveasignificantriskof
causingamaterialadjustmenttothecarryingamountsof
assetsandliabilities(refertotherespectivenotes)within
thenextfinancialyeararediscussedbelow.
Estimation of useful lives of assets
Thegroupdeterminestheestimatedusefullivesand
related depreciation and amortisation charges for its
property,plantandequipmentandfinitelifeintangible
assets.Theusefullivescouldchangesignificantlyasa
resultoftechnicalinnovationsorsomeotherevent.The
depreciationandamortisationchargewillincreasewhere
theusefullivesarelessthanpreviouslyestimatedlives,or
technicallyobsoleteornon-strategicassetsthathavebeen
abandonedorsoldwillbewrittenofforwrittendown.
Goodwill and other indefinite life intangible assets
Thegrouptestsannually,ormorefrequentlyifevents
orchangesincircumstancesindicateimpairment,
whethergoodwillandotherindefinitelifeintangible
assetshavesufferedanyimpairment,inaccordancewith
theaccountingpolicystatedinnote1.Therecoverable
amountsofcash-generatingunitshavebeendetermined
basedonvalue-in-usecalculations.Thesecalculations
requiretheuseofassumptions,includingestimated
discount rates based on the current cost of capital and
growthratesoftheestimatedfuturecashflows.
Impairment of non-financial assets other than goodwill
and other indefinite life intangible assets
Thegroupassessesimpairmentofnon-financialassets
otherthangoodwillandotherindefinitelifeintangible
assetsateachreportingdatebyevaluatingconditions
specifictothegroupandtotheparticularassetthat
mayleadtoimpairment.Ifanimpairmenttriggerexists,
48
Note 3. Restatement of comparatives
Change in accounting policy
InNovember2016,theIFRSInterpretationsCommittee(‘IFRIC)clarifiedthatanintangibleassetwithanindefiniteuseful
lifeisnotanon-depreciableasset(unlikeland)andthatnon-amortisationdidnotnecessarilymeanthatanentitywill
recoverthecarryingamountofthatassetonlythroughsaleandnotthroughuse.Thetaxaccountingstandardrequires
deferredtaxtoberecognisedbasedonmanagement’sexpectedmannerofrecovery.Managementhavereconsideredthe
expectedrecoveryofitsindefinitelifebrandsasbeingrecoveredthroughuse.Therefore,inaccordancewiththestandards
adeferredtaxliabilityof$5,467,000hasbeenrecognisedonthebrandsacquiredinpreviousbusinesscombinationswith
acorrespondingincreaseingoodwill,intheearliestperiodpresentedon1July2015.Inaddition,adeferredtaxliabilityof
$1,829,000hasbeenrecognisedinrelationtotheacquisitionof‘KingContentPtyLimited’brand,inthecomparisonyear
ended30June2016.
Finalisation of business combination
Asdetailedinnote34,thegroupfinaliseditsbusinesscombinationsduringtheyear.Theeffectoftheadjustmentsresulted
inanincreaseinintangibleassetsby$1,296,000andanincreaseindeferredtaxliabilityof$1,296,000.
Statement of profit or loss and other comprehensive income
Whenthereisarestatementofcomparatives,itismandatorytoprovideastatementofprofitorlossandother
comprehensiveincomefortheyearended30June2016.However,astherewerenoadjustmentsmade,thegrouphas
electednottoshowthestatementofprofitorlossandothercomprehensiveincome.
Statement of financial position at the beginning of the earliest comparative period
Whenthereisarestatementofcomparatives,itismandatorytoprovideathirdstatementoffinancialpositionatthe
beginningoftheearliestcomparativeperiod,being1July2015.However,astherewerenoadjustmentsmadeasat1July
2015,thegrouphaselectednottoshowthe1July2015statementoffinancialposition.
Statement of financial position at the end of the earliest comparative period
EXTRACT
Assets
Non-current assets
Intangibles
Totalnon-currentassets
Total assets
Liabilities
Non-current liabilities
Deferred tax liabilities
Totalnon-currentliabilities
Total liabilities
Net assets
2016
$’000
REPORTED
CONSOLIDATED
$’000
ADJUSTMENT
2016
$’000
RESTATED
187,724
199,829
250,150
10,491
33,052
124,448
125,702
8,592
8,592
8,592
8,592
8,592
8,592
–
196,316
208,421
258,742
19,083
41,644
133,040
125,702
FY17 Financial Statements
49
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
Note 4. Operating segments
Identification of reportable operating segments
ThegrouphastwogeographicalsegmentsbeingAustraliaandNewZealand(‘ANZ’)andAsia/RestoftheWorld(‘Asia/
RoW’)andaheadofficesegment.Theseoperatingsegmentsarebasedontheinternalreportsthatarereviewedandused
bytheBoardofDirectors(whoareidentifiedastheChiefOperatingDecisionMakers(‘CODM’))inassessingperformance
andindeterminingtheallocationofresources.Thereisnoaggregationofoperatingsegments.
TheCODMreviewsEBITDA(earningsbeforeinterest,tax,depreciationandamortisation).Theaccountingpoliciesadopted
forinternalreportingtotheCODMareconsistentwiththoseadoptedinthefinancialstatements.
TheinformationreportedtotheCODMisonatleastamonthlybasis.
TheCODMdoesnotregularlyreviewsegmentassetsandsegmentliabilities.Refertostatementoffinancialpositionfor
assetsandliabilities.
Types of revenue
Theprincipalrevenuesareasfollows:
Software-as-a-Service (‘SaaS’)
ThegrouphasdevelopedandhostedanumberofSaaSplatforms,suchasitsflagshipMediaportalthatprovidecustomers
accesstotimecriticalandhighlyrelevantinformationaswellastoolstoanalyseandreportonmediaintelligence.
Value Added Services (‘VAS’)
Thegroupprovidessocialmediainsightsandmonitoring,customisedquantitativeandqualitativeanalysis,andindepth
analysisrequiredbycustomers.
Content Marketing
Thegroupdevelopscomprehensivecontentmarketingstrategiesandengagingdigitalcontentthatempowersbrands
toincreaseprofitabilitybycommunicatingeffectivelywithtargetaudiences.ThegroupusesCommuniqué,aproprietary
workflowmanagementplatform,tohandletheproductionprocessfromend-to-endandofferclientsatransparentwayto
overseebriefing,delivery,publicationandmeasurementofcontentingranulardetail.
Major customers
Therearenomajorcustomersthatcontributedmorethan10%ofrevenuetothegroup.
Operating segment information
CONSOLIDATED - 2017
Revenue
SaaS
VAS
Contentmarketing
Total revenue
Adjusted EBITDA
Fairvalueadjustmentoncontingentconsideration
Depreciation and amortisation
Impairment of assets
Interestrevenue
Finance costs
Loss on disposal of assets
Loss before income tax expense
Income tax expense
Loss after income tax expense
CONSOLIDATED - 2016
Revenue
SaaS
VAS
Contentmarketing
Total revenue
EBITDA
Depreciation and amortisation
Interestrevenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
ANZ
$’000
ASIA/ROW
$’000
HEAD OFFICE
$’000
TOTAL
$’000
87,498
20,361
8,684
116,543
41,876
15,833
17,063
5,690
38,586
2,872
–
–
–
–
(9,151)
103,331
37,424
14,374
155,129
35,597
13,799
(16,246)
(39,399)
62
(2,855)
(254)
(9,296)
(4,227)
(13,523)
ANZ
$’000
ASIA/ROW
$’000
HEAD OFFICE
$’000
TOTAL
$’000
86,652
20,308
12,351
119,311
51,435
15,258
13,218
8,209
36,685
8,266
–
–
–
–
(10,995)
101,910
33,526
20,560
155,996
48,706
(13,704)
70
(2,898)
32,174
(7,922)
24,252
50
FY17 Financial Statements
51
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Note 5. Revenue
Note 7. Expenses
Renderingofservices
Note 6. Other income
Governmentgrants
Interest income
Netgainrecognisedonreversalofcontingentconsideration(note27)
Other income
CONSOLIDATED
2017
$’000
155,129
2016
$’000
155,996
CONSOLIDATED
2017
$’000
2
62
13,799
13,863
2016
$’000
–
70
–
70
Otherincomeincludesfairvalueadjustmentonthecontingentconsiderationthatmayhavebeenpayableonprevious
acquisitions.Specifically,longerthanexpectedleadtimestoconvertcertainkeyprojectsandcustomershaveresulted
inlowerestimatedFY2017EBITDA(earningsbeforeinterest,tax,depreciationandamortisation)andrevenueusedto
determinetheearn-outpayment.Asaresult,thefairvalueofcontingentconsiderationhasbeenadjusted.
(Loss)/profitbeforeincometaxincludesthefollowingspecificexpenses:
Depreciation
Leaseholdimprovements
Furnitureandfittings
Officeequipment
Computer equipment
Totaldepreciation
Amortisation
Customer relationships and contracts
Acquiredsoftware
Internallygeneratedsoftware
Totalamortisation
Totaldepreciationandamortisation
Impairment
Goodwill
Customer relationships and contracts
Softwareandcapitaliseddevelopment
Brands
Totalimpairment
Finance costs
Interestandfinancechargespaid/payable
Loan establishment fee
Finance costs expensed
Net foreign exchange fluctuation
Netforeignexchangeloss/(gain)
Rental expense relating to operating leases
Lease payments
Superannuation expense and statutory contribution
Definedcontributionsuperannuationexpense
Impairment of receivables
Badanddoubtfuldebtexpense
CONSOLIDATED
2017
$’000
431
184
106
964
1,685
8,341
1,787
4,433
14,561
16,246
32,717
201
386
6,095
39,399
2,647
208
2,855
(536)
4,816
6,081
1,026
52
FY17 Financial Statements
2016
$’000
315
115
87
798
1,315
7,144
1,899
3,346
12,389
13,704
–
–
–
–
–
2,742
156
2,898
(118)
4,394
5,181
244
53
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Note 8. Income tax expense
Note 9. Current assets – cash and cash equivalents
Income tax expense
Current tax expense
Deferredtax–originationandreversaloftemporarydifferences
Prioryearunders/overs
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decreaseindeferredtaxassets(note13)
Decreaseindeferredtaxliabilities(note20)
Deferredtax–originationandreversaloftemporarydifferences
Numerical reconciliation of income tax expense and tax at the statutory rate
(Loss)/profitbeforeincometaxexpense
Taxatthestatutorytaxrateof30%
Taxeffectamountswhicharenotdeductible/(taxable)incalculatingtaxableincome:
Non-deductibleexpenses
Effectoftaxratesinoverseasjurisdictions
Current year tax loss not recognised
Researchanddevelopmenttaxoffset
Utilisationoftaxlossnotrecognisedpreviously
Taxexemptincome
Prioryearovers/unders
Current year temporary differences not recognised
Income tax expense
Amounts charged directly to equity
Deferredtaxassets(note13)
54
CONSOLIDATED
2017
$’000
3,557
(18)
688
4,227
2,099
(2,117)
(18)
(9,296)
(2,789)
7,247
120
562
2016
$’000
7,096
1,083
(257)
7,922
1,354
(271)
1,083
32,174
9,652
550
(348)
61
Cash on hand
Cashatbank
Note 10. Current assets – trade and other receivables
Tradereceivables
Less:Provisionforimpairmentofreceivables
Otherreceivables
Security deposits
(1,533)
(1,587)
Impairment of receivables
(68)
–
688
–
4,227
CONSOLIDATED
2017
$’000
–
(32)
(257)
(117)
7,922
2016
$’000
130
84
Theageingoftheimpairedreceivablesprovidedforaboveareasfollows:
Over6monthsoverdue
Movementsintheprovisionforimpairmentofreceivablesareasfollows:
Opening balance
Additionalprovisionsrecognised
Receivableswrittenoffduringtheyearasuncollectable
Closing balance
CONSOLIDATED
2017
$’000
12
13,240
13,252
CONSOLIDATED
2017
$’000
27,578
(568)
27,010
3,210
1,025
31,245
CONSOLIDATED
2017
$’000
568
CONSOLIDATED
2017
$’000
426
1,026
(884)
568
FY17 Financial Statements
2016
$’000
25
8,114
8,139
2016
$’000
34,759
(426)
34,333
4,668
1,041
40,042
2016
$’000
426
2016
$’000
196
244
(14)
426
55
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Past due but not impaired
Reconciliations
Customerswithbalancespastduebutwithoutprovisionforimpairmentofreceivablesamountto$5,019,000asat30June
2017($6,029,000asat30June2016).
Reconciliationsofthewrittendownvaluesatthebeginningandendofthecurrentandpreviousfinancialyeararesetout
below:
LEASEHOLD
IMPROVEMENTS
$’000
FURNITURE
AND FITTINGS
$’000
OFFICE
EQUIPMENT
$’000
COMPUTER
EQUIPMENT
$’000
Thegroupdidnotconsideracreditriskontheaggregatebalancesafterreviewingthecredittermsofcustomersbasedon
recentcollectionpractices.
Theageingofthepastduebutnotimpairedreceivablesareasfollows:
CONSOLIDATED
2017
$’000
3,389
741
889
5,019
CONSOLIDATED
2017
$’000
4,557
(2,704)
1,853
2,337
(1,661)
676
2,502
(2,210)
292
11,383
(9,492)
1,891
4,712
2016
$’000
5,602
116
311
6,029
2016
$’000
4,576
(3,297)
1,279
2,145
(1,553)
592
2,486
(2,216)
270
11,406
(9,632)
1,774
3,915
0to3monthsoverdue
3to6monthsoverdue
Over6monthsoverdue
Note 11. Non-current assets – property, plant and equipment
Leaseholdimprovements–atcost
Less: Accumulated depreciation
Furnitureandfittings–atcost
Less: Accumulated depreciation
Officeequipment–atcost
Less: Accumulated depreciation
Computerequipment–atcost
Less: Accumulated depreciation
56
CONSOLIDATED
Balanceat1July2015
Additions
Additions through business
combinations(note34)
Disposals
Exchange differences
Writeoffofassets
Transfersin/(out)
Depreciation expense
Balanceat30June2016
Additions
Disposals
Exchange differences
Depreciation expense
Balanceat30June2017
622
890
162
(21)
(5)
(14)
(40)
(315)
1,279
1,271
(210)
(56)
(431)
1,853
537
114
25
(2)
3
(10)
40
(115)
592
289
(13)
(8)
(184)
676
Note 12. Non-current assets – intangibles
Goodwill–atcost
Less: Accumulated impairment
Customerrelationshipsandcontracts–atcost
Less: Accumulated amortisation
Less: Accumulated impairment
Softwareandcapitaliseddevelopment–atcost
Less: Accumulated amortisation
Less: Impairment
Brands–atcost
Less: Impairment
172
127
70
(1)
(3)
(8)
–
(87)
270
152
(15)
(9)
(106)
292
1,182
1,315
104
–
(29)
–
–
(798)
1,774
1,134
(16)
(37)
(964)
1,891
CONSOLIDATED
2017
$’000
116,446
(37,555)
78,891
82,774
(50,151)
(1,980)
30,643
59,626
(34,212)
(386)
25,028
24,560
(6,095)
18,465
153,027
FY17 Financial Statements
TOTAL
$’000
2,513
2,446
361
(24)
(34)
(32)
–
(1,315)
3,915
2,846
(254)
(110)
(1,685)
4,712
2016
$’000
119,960
(6,668)
113,292
82,642
(41,941)
(1,779)
38,922
47,403
(28,020)
–
19,383
24,719
–
24,719
196,316
57
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Reconciliations
TheremaininggoodwillacquiredthroughbusinesscombinationshasbeenallocatedtothefollowingCGUs:
Reconciliationsofthewrittendownvaluesatthebeginningandendofthecurrentandpreviousfinancialyeararesetout
below:
CONSOLIDATED
GOODWILL*
$’000
CUSTOMER
RELATIONSHIPS
AND
CONTRACTS*
$’000
SOFTWARE
AND
CAPITALISED
DEVELOPMENT
$’000
BRANDS
$’000
TOTAL
$’000
Balanceat1July2015
72,352
35,066
Additions
–
–
9,992
6,677
18,590
136,000
39
6,716
40,620
8,166
7,970
6,095
62,851
Additions through business
combinations(note34)
Additions through asset
acquisition
Exchange differences
Transfersin/(out)
Amortisation expense
–
320
–
–
Balanceat30June2016
113,292
Additions
Exchange differences
Impairment of assets
Amortisation expense
Balanceat30June2017
–
(1,684)
(32,717)
–
78,891
2,645
226
(37)
(7,144)
38,922
424
(161)
(201)
(8,341)
30,643
–
(48)
37
(5,245)
19,383
12,268
(17)
(386)
(6,220)
25,028
–
(5)
–
–
2,645
493
–
(12,389)
24,719
196,316
5
12,697
(164)
(2,026)
(6,095)
(39,399)
–
(14,561)
18,465
153,027
*Refertonote34forthefinalisationofprioryearbusinesscombinationswhichhasresultedincomparativesbeingadjusted.Alsoreferto
note3fordetailsofrestatementofcomparatives.
Duringtheyear,managementhasundergoneaninternalreorganisationofitsreportingstructure.Thishasresultedinthe
KingContentgoodwillof$32,717,000andbrand$6,095,000beingseparatedfromtheANZandAsiacash-generatingunits
('CGUs')andmonitoredasaseparatecash-generatingunit,resultinginanimpairmentoftheKingContentCGU.
Asatthereportingdate,animpairmentchargeof$38,812,000hasbeenappliedasthecarryingamountofgoodwilland
brandsexceededitsrecoverableamountwithintheKingContentCGU.Theimpairmentwasaresultofthefinancialunder
performanceofKingContentPtyLimitedanditssubsidiariesduringFY2017.Thisimpairmentexpenseispartiallyoffsetby
thenetgainrecognisedonreversalofcontingentconsiderationfromtheKingContentacquisitionof$11,819,000referto
note27.
ANZ
AsiaandRestoftheWorld('Asia/RoW')
BrandshavebeenallocatedtothefollowingCGUs:
ANZ
AsiaandRestoftheWorld('Asia/RoW')
CONSOLIDATED
2017
$’000
52,356
26,535
78,891
CONSOLIDATED
2017
$’000
16,413
2,052
18,465
2016
$’000
75,470
37,822
113,292
2016
$’000
21,254
3,465
24,719
TheKingContentCGUisfullyimpaired(2016:nil).
Keyassumptionsarethosetowhichtherecoverableamountofanassetorcash-generatingunitsismostsensitive.
Therecoverableamountofthegroup’sgoodwillandindefinitelifeintangibleshavebeendeterminedbyvalue-in-use
calculations.ThefollowingkeyassumptionswereusedinthediscountedcashflowmodelforthedifferentCGUs:
1.DiscountedcashflowmodelbasedonapprovedFY2018budgetandbusinessplanforthenext4years.Terminalgrowth
ratesappliedareANZ4%,Asia/RoW9%andKingContent4%.(2016:ANZ(7%)andAsia/RoW(9%)).
2.Weightedaveragecostofcapital:ANZ11.75%(2016:11.75%),Asia/RoW:15%(2016:15%)andKingContent11.75%.
Sensitivity
FortheANZandAsiaCGU,anyreasonablechangeinthekeyassumptionsonwhichtherecoverableamountisbased
wouldnotcausetheCGU’scarryingamounttoexceeditsrecoverableamount.
Refertonote34forthefinalisationofprioryearbusinesscombinationswhichhasresultedincomparativesbeingadjusted.
Alsorefertonote3fordetailsofrestatementofcomparatives.
58
FY17 Financial Statements
59
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Note 13. Non-current assets – deferred tax assets
Note 14. Current liabilities – trade and other payables
Deferred tax assets comprise temporary differences attributable to:
Amountsrecognisedinprofitorloss:
Taxlosses
Impairmentofreceivables
Employeebenefits
Provisionforleasemakegood
Provisionforauditfees
Accruedleaseincentives
Accruals and prepayments
Unrealised foreign exchange gain/loss
Intangibles
IPOtransactioncosts
Derivativefinancialinstruments
Property,plantandequipment
Amounts recognised in equity:
Derivativefinancialinstruments
IPOtransactioncosts
Share based payment
Deferred tax assets
Movements:
Opening balance
Chargedtoprofitorloss(note8)
Chargedtoequity(note8)
Adjustmentstoprofitorloss–Prioryearunders/overs
Exchange differences
Closing balance
CONSOLIDATED
2017
$’000
2016
$’000
–
70
1,066
58
98
55
220
318
2,682
486
–
(51)
5,002
–
318
–
318
5,320
8,057
(2,099)
(130)
(487)
(21)
5,320
562
57
969
42
94
47
71
312
3,823
971
30
–
6,978
130
635
314
1,079
8,057
9,455
(1,354)
(84)
40
–
8,057
Tradepayables
Amountsreceivedinadvance
Accrued expenses
Other payables
Refertonote26forfurtherinformationonfinancialinstruments.
Note 15. Current liabilities – borrowings
Bankloans
Prepaidfacilitycosts
CONSOLIDATED
2017
$’000
3,142
5,256
9,416
1,501
2016
$’000
5,884
4,206
8,187
984
19,315
19,261
CONSOLIDATED
2017
$’000
–
–
–
2016
$’000
56,000
(125)
55,875
Refertonote19forfurtherinformationonassetspledgedassecurityandfinancingarrangements.
Refertonote26forfurtherinformationonfinancialinstruments.
Note 16. Current liabilities – derivative financial instruments
Interestrateswapcontracts–cashflowhedges
Refertonote26forfurtherinformationonfinancialinstruments.
Refertonote27forfurtherinformationonfairvaluemeasurement.
CONSOLIDATED
2017
$’000
–
2016
$’000
532
60
FY17 Financial Statements
61
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Note 17. Current liabilities – provisions
Total secured liabilities
Thetotalsecuredliabilities(currentandnon-current)areasfollows:
Employeebenefits
CONSOLIDATED
2017
$’000
5,132
2016
$’000
5,959
Amounts not expected to be settled within the next 12 months
Thecurrentprovisionforemployeebenefitsincludesallunconditionalentitlementswhereemployeeshavecompletedthe
requiredperiodofserviceandalsothosewhereemployeesareentitledtopro-ratapaymentsincertaincircumstances.The
entireamountispresentedascurrent,sincethegroupdoesnothaveanunconditionalrighttodefersettlement.However,
basedonpastexperience,thegroupdoesnotexpectallemployeestotakethefullamountofaccruedleaveorrequire
paymentwithinthenext12months.
Thefollowingamountsreflectleavethatisnotexpectedtobetakenwithinthenext12months:
Bankloans
Assets pledged as security
CONSOLIDATED
2017
$’000
65,000
2016
$’000
56,000
On7July2016,thegroupenteredintoasecondamendmentandrestatementdeedandincreasedthetotalbankloans
facilityfrom$65,000,000to$75,000,000.Thebankloansaresecuredbyfixedandfloatingchargeoverthegroup’sassets.
Therenewedfacilityisfor3yearswithamaturitydateof7July2019.
Financing arrangements
Unrestrictedaccesswasavailableatthereportingdatetothefollowinglinesofcredit:
CONSOLIDATED
2017
$’000
636
CONSOLIDATED
2017
$’000
2,989
CONSOLIDATED
2017
$’000
65,000
(131)
64,869
2016
$’000
613
2016
$’000
6,995
2016
$’000
-
-
-
Employeebenefitsobligationexpectedtobesettledafter12months
Note 18. Current liabilities – contingent consideration
Contingent consideration
Refertonote27forfurtherinformationonfairvaluemeasurement.
Note 19. Non-current liabilities – borrowings
Bankloans
Prepaidfacilitycosts
Refertonote26forfurtherinformationonfinancialinstruments.
62
Totalfacilities
Bankloans
Used at the reporting date
Bankloans
Unused at the reporting date
Bankloans
CONSOLIDATED
2017
$’000
2016
$’000
75,000
65,000
65,000
56,000
10,000
9,000
Ofthe$10,000,000(2016:$9,000,000)remainingfacility,$515,000(2016:$316,000)hasbeenusedforbankguarantees.
FY17 Financial Statements
63
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
Note 20. Non-current liabilities – deferred tax liabilities
Lease make good
Deferred tax assets comprise temporary differences attributable to:
Amountsrecognisedinprofitorloss:
Property,plantandequipment
Customer relationships and contracts from acquisition
Brandsfromacquisition
Internallygeneratedsoftware
Deferredrevenueandunpaidrent
Deferred tax liability
Movements:
Opening balance
Creditedtoprofitorloss(note8)
Additionsthroughbusinesscombinations(note34)
Adjustmentstoprofitorloss–prioryearunders/overs
Closing balance
Theprovisionrepresentsthepresentvalueoftheestimatedcoststomakegoodthepremisesleasedbythegroupatthe
endoftherespectiveleaseterms.
Movements in provisions
Movementsineachclassofprovisionduringthecurrentfinancialyear,otherthanemployeebenefits,aresetoutbelow:
CONSOLIDATED
2017
$’000
–
6,614
5,467
4,699
325
2016
$’000
(15)
8,893
7,296
2,327
582
CONSOLIDATED – 2017
Carrying amount at the start of the year
Additionalprovisionsrecognised
Unusedamountsreversed
17,105
19,083
Carrying amount at the end of the year
DEFERRED LEASE
INCENTIVES
$’000
LEASE
MAKE GOOD
$’000
243
25
(86)
182
139
56
–
195
19,083
(2,117)
–
139
17,105
14,069
(271)
5,086
199
19,083
Note 22. Non-current liabilities – contingent consideration
Contingent consideration
CONSOLIDATED
2017
$’000
4,963
2016
$’000
21,748
Refertonote34forthefinalisationofprioryearbusinesscombinationswhichhasresultedincomparativesbeingadjusted.
Alsorefertonote3fordetailsofrestatementofcomparatives.
Refertonote27forfurtherinformationonfairvaluemeasurement.
Note 21. Non-current liabilities – provisions
Note 23. Equity – issued capital
Employeebenefits
Deferredleaseincentives
Leasemakegood
Deferred lease incentives
CONSOLIDATED
2017
$’000
407
182
195
784
2016
$’000
431
243
139
813
Theprovisionrepresentsoperatingleaseincentivesreceived.Theincentivesareallocatedtoprofitorlossinsuchamanner
thattherentexpenseisrecognisedonastraight-linebasisovertheleaseterm.
CONSOLIDATED
2017
SHARES
2016
SHARES
2017
$’000
2016
$’000
Ordinaryshares–fullypaid
200,000,001
200,000,001
403,662
403,662
Ordinary shares
Ordinarysharesentitletheholdertoparticipateindividendsandtheproceedsonthewindingupofthecompanyin
proportiontothenumberofandamountspaidonthesharesheld.Thefullypaidordinaryshareshavenoparvalueandthe
companydoesnothavealimitedamountofauthorisedcapital.
Onashowofhandseverymemberpresentatameetinginpersonorbyproxyshallhaveonevoteanduponapolleach
shareshallhaveonevote.
Share buy-back
Therewerenoon-marketbuy-backofIsentiaGroupLimitedshares.
64
FY17 Financial Statements
65
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
Capital risk management
Movements in reserves
Thegroup’sobjectiveswhenmanagingcapitalaretosafeguarditsabilitytocontinueasagoingconcern,sothatitcan
providereturnsforshareholdersandbenefitsforotherstakeholdersandtomaintainanoptimumcapitalstructureto
reducethecostofcapital.
Capitalisregardedastotalequity,asrecognisedinthestatementoffinancialposition,plusnetdebt.Netdebtiscalculated
astotalborrowingslesscashandcashequivalents.
Inordertomaintainoradjustthecapitalstructure,thegroupmayadjusttheamountofdividendspaidtoshareholders,
returncapitaltoshareholders,issuenewsharesorsellassetstoreducedebt.
Thegroupwouldlooktoraisecapitalwhenanopportunitytoinvestinabusinessorcompanywasseenasvalueadding
relativetothecurrentcompany’ssharepriceatthetimeoftheinvestment.Thegroupisnotactivelypursuingadditional
investmentsintheshorttermasitcontinuestointegrateandgrowitsexistingbusinessesinordertomaximisesynergies.
Thegroupissubjecttocertainfinancingarrangementscovenantsandmeetingtheseisgivenpriorityinallcapitalrisk
managementdecisions.Therehavebeennoeventsofdefaultonthefinancingarrangementsduringthefinancialyear.
Thecapitalriskmanagementpolicyremainsunchangedfromthe30June2016AnnualReport.
Note 24. Equity – reserves
Foreigncurrencyreserve
Hedgingreserve–cashflowhedges
Share-basedpaymentsreserve
Capitalreserve
Foreign currency reserve
CONSOLIDATED
2017
$’000
2,658
–
1,898
2016
$’000
6,196
(302)
1,048
(258,229)
(253,673)
(258,229)
(251,287)
Thereserveisusedtorecogniseexchangedifferencesarisingfromthetranslationofthefinancialstatementsofforeign
operationstoAustraliandollars.Itisalsousedtorecognisegainsandlossesonhedgesofthenetinvestmentsinforeign
operations.
Hedging reserve – cash flow hedges
Thereserveisusedtorecognisetheeffectiveportionofthegainorlossofcashflowhedgeinstrumentsthatisdetermined
tobeaneffectivehedge.
Share-based payments reserve
Thereserveisusedtorecognisethevalueofequitybenefitsprovidedtoemployeesanddirectorsaspartoftheir
remuneration,andotherpartiesaspartoftheircompensationforservices.
Capital reserve
ThereserveisusedtorecognisecontributionsfromortoIsentiaGroupLimitedanditscontrolledsubsidiariesby
shareholdersandtorecognisetheacquisitionofnon-controllinginterest.
Movementsineachclassofreserveduringthecurrentandpreviousfinancialyeararesetoutbelow:
FOREIGN
CURRENCY
$’000
HEDGING
$’000
SHARE-BASED
PAYMENT
$’000
CAPITAL
$’000
TOTAL
$’000
CONSOLIDATED
Balanceat1July2015
Foreign currency translation
Netchangeinfairvalueof
cashflowhedges
Share-basedpayment
Balanceat30June2016
Foreign currency translation
Netchangeinfairvalueof
cashflowhedges
Sharebuy-back
6,649
(453)
–
–
6,196
(3,538)
–
–
Balanceat30June2017
2,658
Note 25. Equity – dividends
Dividends
Dividendspaidduringthefinancialyearwereasfollows:
(499)
–
197
–
(302)
–
302
–
–
298
(258,229)
(251,781)
–
–
750
–
–
–
(453)
197
750
1,048
(258,229)
(251,287)
–
–
850
–
–
–
(3,538)
302
850
1,898
(258,229)
(253,673)
Finaldividendfortheyearended30June2016(2016:30June2015)of4.43cents
(2016:3.8cents)perordinaryshare
Interimdividendfortheyearended30June2017(2016:30June2016)of3.1cents
(2016:3.7cents)perordinaryshare
CONSOLIDATED
2017
$’000
8,860
6,200
15,060
2016
$’000
7,600
7,400
15,000
On22August2017,thedirectorsdeclareda50%frankedfinaldividendfortheyearended30June2017of3.08cents
perordinaryshare,tobepaidon20September2017toeligibleshareholdersontheregisterasat6September2017.
Thisequatestoatotalestimateddistributionof$6,160,000,basedonthenumberofordinarysharesonissueasat30
June2017.Thefinancialeffectofdividendsdeclaredafterthereportingdateisnotreflectedinthe30June2017financial
statementsandwillberecognisedinsubsequentfinancialreports.
66
FY17 Financial Statements
67
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
Franking credits
Frankingcreditsavailableforsubsequentfinancialyearsbasedonataxrateof30%
CONSOLIDATED
2017
$’000
2,048
2016
$’000
2,720
Thegrouphadnetassetsdenominatedinforeigncurrenciesof$4,808,000(assets$5,385,000lessliabilities$577,000)
asat30June2017(2016:$3,921,000(assets$4,426,000lessliabilities$505,000).Basedonthisexposure,hadthe
Australiandollarweakenedby10%/strengthenedby10%(2016:weakenedby10%/strengthenedby10%)againstthese
foreigncurrencieswithallothervariablesheldconstant,thegroup’slossbeforetaxfortheyearandequitywouldhave
been$481,000lower/$481,000higher(2016:profitbeforetaxwouldhavebeen$392,000higher/$392,000lower).The
percentagechangeistheexpectedoverallvolatilityofthesignificantcurrencies,whichisbasedonmanagement’s
assessmentofreasonablepossiblefluctuationstakingintoconsiderationmovementsoverthelastsixmonthseachyear
andthespotrateateachreportingdate.Theactualforeignexchangegainfortheyearended30June2017was$536,000
(2016:gainof$118,000).
Theaboveamountsrepresentthebalanceofthefrankingaccountasattheendofthefinancialyear,adjustedfor:
•
•
•
frankingcreditsthatwillarisefromthepaymentoftheamountoftheprovisionforincometaxatthereportingdate
frankingdebitsthatwillarisefromthepaymentofdividendsrecognisedasaliabilityatthereportingdate
frankingcreditsthatwillarisefromthereceiptofdividendsrecognisedasreceivablesatthereportingdate
Price risk
Thegroupisnotexposedtoanysignificantpricerisk.
Interest rate risk
Note 26. Financial instruments
Financial risk management objectives
Thegroup’sactivitiesexposeittoavarietyoffinancialrisks:marketrisk(includingforeigncurrencyriskandinterestrate
risk),creditriskandliquidityrisk.Thegroup’soverallriskmanagementprogramfocusesontheunpredictabilityoffinancial
marketsandseekstominimisepotentialadverseeffectsonthefinancialperformanceofthegroup.Thegroupuses
derivativefinancialinstrumentssuchasinterestratecontractstohedgecertainriskexposures.Derivativesareexclusively
usedforhedgingpurposes,i.e.notastradingorotherspeculativeinstruments.Thegroupusesdifferentmethodsto
measuredifferenttypesofrisktowhichitisexposed.Thesemethodsincludesensitivityanalysisinthecaseofinterestrate
andforeignexchangerisksandageinganalysisforcreditrisk.
Market risk
Foreign currency risk
Thegroup’smaininterestrateriskarisesfromlong-termborrowings.Borrowingsissuedatvariableratesexposethegroup
tointerestraterisk.Borrowingsissuedatfixedratesexposethegrouptofairvalueinterestraterisk.Duringtheyear,the
groupdiscontinueditshedgingpolicy.Actualhedgeat30June2017was0%(2016:74%)oftheprincipaloutstanding.
Asatthereportingdate,thegrouphadthefollowingvariableratecashbalances,borrowingsandinterestrateswap
contracts:
CONSOLIDATED
Bankloans
Interestrateswapscontracts-cashflowhedges(notionalprincipalamount)
Cashatbank
Netexposuretocashflowinterestraterisk
2017
BALANCE
$'000
65,000
–
(13,240)
51,760
2016
BALANCE
$'000
56,000
(41,250)
(8,114)
6,636
Thegroupundertakescertaintransactionsdenominatedinforeigncurrencyandisexposedtoforeigncurrencyrisk
throughforeignexchangeratefluctuations.
Anofficialincrease/decreaseininterestratesof50(2016:50)basispointswouldhaveanadverse/favourableeffecton
lossbeforetaxof$259,000(2016:$33,000)perannumbasedonthenetbalance.
Foreignexchangeriskarisesfromfuturecommercialtransactionsandrecognisedfinancialassetsandfinancialliabilities
denominatedinacurrencythatisnottheentity’sfunctionalcurrency.Theriskismeasuredusingsensitivityanalysisand
cashflowforecasting.
Thecarryingamountofthegroup’sforeigncurrencydenominatedfinancialassetsandfinancialliabilitiesatthereporting
datewereasfollows:
ASSETS
LIABILITIES
2017
$’000
5,316
11
58
5,385
2016
$’000
3,852
200
374
4,426
2017
$’000
94
44
439
577
2016
$’000
390
–
115
505
CONSOLIDATED
US dollars
Singapore dollars
Others
68
Credit risk
Creditriskreferstotheriskthatacounterpartywilldefaultonitscontractualobligationsresultinginfinanciallosstothe
group.Thegrouphasastrictcodeofcredit,includingobtainingagencycreditinformation,confirmingreferencesand
settingappropriatecreditlimits.Thegroupobtainsguaranteeswhereappropriatetomitigatecreditrisk.Themaximum
exposuretocreditriskatthereportingdatetorecognisedfinancialassetsisthecarryingamount,netofanyprovisionsfor
impairmentofthoseassets,asdisclosedinthestatementoffinancialpositionandnotestothefinancialstatements.The
groupdoesnotholdanycollateral.
FY17 Financial Statements
69
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
Liquidity risk
Vigilantliquidityriskmanagementrequiresthegrouptomaintainsufficientliquidassets(mainlycashandcash
equivalents)andavailableborrowingfacilitiestobeabletopaydebtsasandwhentheybecomedueandpayable.
Thegroupmanagesliquidityriskbymaintainingadequatecashreservesandavailableborrowingfacilitiesbycontinuously
monitoringactualandforecastcashflowsandmatchingthematurityprofilesoffinancialassetsandliabilities.
Financing arrangements
Unusedborrowingfacilitiesatthereportingdate:
Bankloans
CONSOLIDATED
2017
$’000
10,000
2016
$’000
9,000
Ofthe$10,000,000(2016:$9,000,000)remainingfacility,$515,000(2016:$316,000)hasbeenusedforbankguarantees.
Remaining contractual maturities
Thefollowingtablesdetailthegroup’sremainingcontractualmaturityforitsfinancialinstrumentliabilities.Thetables
havebeendrawnupbasedontheundiscountedcashflowsoffinancialliabilitiesbasedontheearliestdateonwhichthe
financialliabilitiesarerequiredtobepaid.Thetablesincludebothinterestandprincipalcashflowsdisclosedasremaining
contractualmaturitiesandthereforethesetotalsmaydifferfromtheircarryingamountinthestatementoffinancial
position.
WEIGHTED
AVERAGE
INTEREST
RATE %
1 YEAR
OR LESS
$’000
BETWEEN
1 AND 2
YEARS
$’000
BETWEEN
2 AND 5
YEARS
$’000
OVER 5
YEARS
$’000
REMAINING
CONTRACTUAL
MATURITIES
$’000
CONSOLIDATED –
2017
Non-derivatives
Non-interest bearing
Tradepayables
Other payables
Contingent
consideration
Interest-bearing -
variable
–
–
–
3,142
1,501
–
–
2,989
5,122
–
–
–
–
–
–
–
–
3,142
1,501
8,111
70,264
83,018
Bankloans
4.01%
2,607
Totalnon-derivatives
10,239
2,607
7,729
65,050
65,050
WEIGHTED
AVERAGE
INTEREST
RATE %
1 YEAR
OR LESS
$’000
BETWEEN
1 AND 2
YEARS
$’000
BETWEEN
2 AND 5
YEARS
$’000
OVER 5
YEARS
$’000
REMAINING
CONTRACTUAL
MATURITIES
$’000
CONSOLIDATED –
2016
Non-derivatives
Non-interest bearing
Tradepayables
Other payables
Contingent
consideration
Interest-bearing –
variable
–
–
–
5,884
984
–
–
–
–
6,995
16,731
6,054
Bankloans
5.19%
58,153
–
–
Totalnon-derivatives
72,016
16,731
6,054
Derivatives
Interestrateswapsnet
settled
–
Totalderivatives
532
532
–
–
–
–
–
–
–
–
–
–
–
5,884
984
29,780
58,153
94,801
532
532
Note 27. Fair value measurement
Fair value hierarchy
Thefollowingtablesdetailthegroup’sassetsandliabilities,measuredordisclosedatfairvalue,usingathreelevel
hierarchy,basedonthelowestlevelofinputthatissignificanttotheentirefairvaluemeasurement,being:
Level1:Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilitiesthattheentitycanaccessatthe
measurement date
Level2:InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectlyor
indirectly
Level3:Unobservableinputsfortheassetorliability
CONSOLIDATED – 2017
Liabilities
Contingent consideration
Totalliabilities
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
–
–
–
–
7,952
7,952
7,952
7,952
70
FY17 Financial Statements
71
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
CONSOLIDATED – 2016
Liabilities
Interestrateswapcontracts–cashflowhedges
Contingent consideration
Totalliabilities
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
–
–
–
532
–
532
–
28,743
28,743
532
28,743
29,275
Therewerenotransfersbetweenlevelsduringthefinancialyear.
Thecarryingvaluesoffinancialassetsandfinancialliabilitiespresentedrepresentareasonableapproximationoffairvalue.
Thecarryingamountsoftradeandotherreceivablesandtradeandotherpayablesapproximatetheirfairvaluesduetotheir
short-termnature.Thefairvalueoffinancialliabilitiesisestimatedbydiscountingtheremainingcontractualmaturitiesat
thecurrentmarketinterestratethatisavailableforsimilarfinancialliabilities.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Interestrateswapcontractshavebeenvaluedateachreportingdateusingquotedmarketrates.Futurecashflowsare
estimatedbasedonforwardinterestrates(fromobservableyieldcurvesattheendofthereportingperiod)andcontract
interestrates,discountedataratethatreflectsthecreditriskofvariouscounterparties.Thisvaluationtechnique
maximisestheuseofobservablemarketdatawhereitisavailableandreliesaslittleaspossibleonentityspecific
estimates.
Contingentconsiderationisvaluedateachreportingdatebasedonthelikelysettlementamount,discountedtopresent
value.Thefairvalueisdeterminedusingthediscountedcashflowmethod.Significantunobservablevaluationinputsin
relationtocontingentconsiderationincludeestimatedrevenueandthediscountrate.
Level 3 assets and liabilities
Movementsinlevel3assetsandliabilitiesduringthecurrentandpreviousfinancialyeararesetoutbelow:
CONSOLIDATED
Balanceat1July2015
Contingentconsiderationrecognisedonbusinesscombinations(note34)
Contingent consideration recognised on purchase of intangibles
Net(loss)/gainrecognisedinotherexpensesinprofitorloss
Contingent consideration payout
Balanceat30June2016
Gainsrecognisedinprofitorloss
Exchange difference
Contingent consideration payout
Balanceat30June2017
72
CONTINGENT
CONSIDERATION
$’000
(384)
(27,897)
(1,426)
661
303
(28,743)
13,799
(41)
7,033
(7,952)
Thelevel3assetsandliabilitiesunobservableinputsandsensitivityareasfollows:
DESCRIPTION
UNOBSERVABLE INPUTS
RANGE (WEIGHTED
AVERAGE)
SENSITIVITY
Contingentconsideration–
SNCKoreaacquisition
Revenue
Contingentconsideration–
BeyondKorea
Revenue
Contingentconsideration–
NewPointMarketingLimited
Revenue
Rangeof$5,879,000
to$7,186,000(average
$6,533,000)
Rangeof$2,729,000
to$3,336,000(average
$3,033,000)
Rangeof$1,689,000
to$2,064,000(average
$1,877,000)
10%increaseinRevenue
wouldresultinincreaseinfair
valueby$490,000and10%
decreaseinRevenuewould
resultindecreaseinfairvalue
by$490,000.
10%increaseinRevenue
wouldresultinincreaseinfair
valueby$133,000and10%
decreaseinRevenuewould
resultindecreaseinfairvalue
by$133,000.
10%increaseinRevenue
wouldresultinincreaseinfair
valueby$142,000and10%
decreaseinRevenuewould
resultindecreaseinfairvalue
by$142,000.
Discountrateof4%wasappliedincalculatingthediscountedcashflowmodel.0.5%increaseindiscountratewould
decreasefairvalueby$40,000.0.5%decreaseindiscountratewouldincreasefairvalueofcontingentconsiderationby
$40,000.
Note 28. Key management personnel disclosures
Compensation
Theaggregatecompensationmadetodirectorsandothermembersofkeymanagementpersonnelofthegroupissetout
below:
Short-termemployeebenefits
Post-employmentbenefits
Long-termbenefits
Share-basedpayments
CONSOLIDATED
2017
$’000
2016
$’000
2,400,940
2,350,728
113,853
16,556
708,661
111,413
22,892
532,375
3,240,010
3,017,408
FY17 Financial Statements
73
Isentia Group Limited – 2017 Annual Report
FY17 Financial Statements (continued)
Note 29. Remuneration of auditors
Note 31. Commitments
DuringthefinancialyearthefollowingfeeswerepaidorpayableforservicesprovidedbyDeloitteToucheTohmatsu,the
auditorofthecompany,itsnetworkfirmsandunrelatedfirms:
Audit services – Deloitte Touche Tohmatsu
Auditorreviewofthefinancialstatements
Other services – Deloitte Touche Tohmatsu
Taxservices
Otherservices
CONSOLIDATED
2017
$’000
2016
$’000
315,000
299,500
55,000
–
55,000
370,000
55,000
45,000
100,000
399,500
Lease commitments – operating
Committedatthereportingdatebutnotrecognisedasliabilities,payable:
Withinoneyear
Onetofiveyears
Morethanfiveyears
CONSOLIDATED
2017
$’000
2016
$’000
3,975
9,088
640
13,703
3,939
5,523
–
9,462
Operatingleasecommitmentsincludescontractedamountsforofficeaccommodationandofficeequipmentundernon-
cancellableoperatingleasesexpiringwithinonetosixyearswith,insomecases,optionstoextend.Contractualescalation
clauseshavebeenfactoredintothecommitmentsdisclosedabove.Onrenewal,thetermsoftheleasesarerenegotiated.
Audit services – Deloitte International Associates – Services provided to International
Subsidiaries
Note 32. Related party transactions
Auditorreviewofthefinancialstatements
Other services – Deloitte International Associates
TaxServices
Audit services – unrelated firms
Auditorreviewofthefinancialstatements
Other services – unrelated firms
Taxcomplianceservices
UnrelatedfirmsareforauditfirmsnotrelatedtoDeloitteToucheTohmatsu.
Note 30. Contingent liabilities
Bankguarantees
74
163,620
126,169
Parent entity
IsentiaGroupLimitedistheparententity.
Subsidiaries
Interestsinsubsidiariesaresetoutinnote35.
Key management personnel
Disclosuresrelatingtokeymanagementpersonnelaresetoutinnote28andtheremunerationreportincludedinthe
directors’report.
Transactions with related parties
Therewerenotransactionswithrelatedpartiesduringthecurrentandpreviousfinancialyear.
Receivable from and payable to related parties
Therewerenotradereceivablesfromortradepayablestorelatedpartiesatthecurrentandpreviousreportingdate.
Loans to/from related parties
Therewerenoloanstoorfromrelatedpartiesatthecurrentandpreviousreportingdate.
28,890
192,510
18,114
144,283
48,116
43,901
110,330
158,446
110,336
154,237
CONSOLIDATED
2017
$’000
515
2016
$’000
316
FY17 Financial Statements
75
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Note 33. Parent entity information
Setoutbelowisthesupplementaryinformationabouttheparententity.
Statement of profit or loss and other comprehensive income
Significant accounting policies
Theaccountingpoliciesoftheparententityareconsistentwiththoseofthegroup,asdisclosedinnote1,exceptforthe
following:
•
Investmentsinsubsidiariesareaccountedforatcost,lessanyimpairment,intheparententity.
• Dividendsreceivedfromsubsidiariesarerecognisedasotherincomebytheparententityanditsreceiptmaybean
PARENT
indicatorofanimpairmentoftheinvestment.
Loss after income tax
Totalcomprehensiveincome
Statement of financial position
Totalcurrentassets
Totalassets
Totalcurrentliabilities
Totalliabilities
Equity
Issued capital
Share-basedpaymentsreserve
Accumulated losses
Totalequity
2017
$’000
(52,825)
(52,825)
PARENT
2017
$’000
1
2016
$’000
(387)
(387)
2016
$’000
–
306,300
373,335
–
–
–
–
403,662
403,662
1,898
1,048
(99,260)
(31,375)
306,300
373,335
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
TheparententityanditsAustraliansubsidiariesarepartytoadeedofcrossguaranteeunderwhicheachcompany
guaranteesthedebtsoftheothers.Nodeficienciesofassetsexistinanyofthesesubsidiaries.Refertonote36for
furtherdetails.
Contingent liabilities
Theparententityhadnocontingentliabilitiesasat30June2017and30June2016.
Capital commitments – Property, plant and equipment
Theparententityhadnocapitalcommitmentsforproperty,plantandequipmentatas30June2017and30June2016.
Note 34. Business combinations
Acquisition of Isentia SNC Korea Co., Ltd & The Beyond Co., Ltd. (comparative year)
Intheprioryear,thegroupacquired100%oftheordinarysharesofIsentiaSNCKoreaCo.Ltd(‘SNC’)and51%ofthe
ordinarysharesofTheBeyondCo.Ltd.(‘Beyond’)foratotalconsiderationof$11,305,000.
Thesebusinesscombinationswerefinalisedinthecurrentfinancialyearandthishasresultedintherecognitionof
customerrelationshipsandcontractsintangibleassetof$4,321,000,deferredtaxliabilityof$1,296,000andadecreasein
goodwillof$3,025,000.Thesebalanceswererecognisedasadjustmentstothebalancesheetasat30June2016.
Finalisationofprovisionalaccountingdidnotimpactthecomparativeyearstatementofprofitorlossandother
comprehensiveincomeoropeningaccumulatedlosses.
Detailsoftheacquisitionsaresummarisedasfollows,andhavebeenupdatedaccordingly:
Cashandcashequivalents
Tradereceivables
Prepayments
Property,plantandequipment
Customer relationships and contracts
Othernon-currentassets
Tradeandotherpayables
Deferred tax liability
Net assets acquired
Goodwill
Acquisition-datefairvalueofthetotalconsiderationtransferred
FAIR VALUE
$’000
73
436
11
52
4,321
93
(288)
(1,296)
3,402
7,903
11,305
76
FY17 Financial Statements
77
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
King Content Pty Limited (comparative year)
Intheprioryear,thegroupacquired100%oftheordinarysharesofKingContentPtyLimitedanditssubsidiaries(‘King
Content’)forthetotalconsiderationtransferredof$46,798,000.
Thebusinesscombinationwasadjustedinthecurrentfinancialyearforthechangeinaccountingpolicydisclosedinnote
3andthishasresultedintherecognitionofdeferredtaxliabilityof$1,829,000andanincreaseingoodwillof$1,829,000.
Thesebalanceswererecognisedasadjustmentstothebalancesheetasat30June2016.
Theaboveadjustmentdidnotimpactthecomparativeyearstatementofprofitorlossandothercomprehensiveincomeor
openingaccumulatedlosses.
Detailsoftheacquisitionsaresummarisedasfollows,andhavebeenupdatedaccordingly:
Cashandcashequivalents
Tradeandotherreceivables
Other current assets
Plantandequipment
Intangiblesotherthangoodwill
Tradeandotherpayables
Provisionforincometax
Deferred tax liability
Net assets acquired
Goodwill
Acquisition-datefairvalueofthetotalconsiderationtransferred
FAIR VALUE
$’000
917
4,511
113
309
17,910
(5,136)
(754)
(3,789)
14,081
32,717
46,798
Note 35. Interests in subsidiaries
Theconsolidatedfinancialstatementsincorporatetheassets,liabilitiesandresultsofthefollowingsubsidiariesin
accordancewiththeaccountingpolicydescribedinnote1:
OWNERSHIP INTEREST
NAME
IsentiaHoldingsPtyLimited
IsentiaFinancePtyLimited
IsentiaPtyLimited
SliceMediaPtyLimited
MediaMonitorsPtyLimited
BuzzNumbersPtyLimited
KingContentPtyLtd
Isentia Limited
IsentiaOperationsSdn.Bhd.
IsentiaGroupSdn.Bhd.
IsentiaLibraryGroupSdn.Bhd.
Isentia(M)Sdn.Bhd.
Isentia(JohorBahru)Sdn.Bhd.
BrandtologySdn.Bhd.(Malaysia)Company*
IsentiaPteLimited
IsentiaBrandtologyPteLimited
PTIsentiaJakarta
IsentiaVietnamCo.Investment
IsentiaManilaInc.
IsentiaMonitoringServices(Thailand)Ltd
IsentiaBangkokCompanyLimited
Brandtology,Inc.
KingContent(USA),Inc
Isentia Limited
KingContentLimited
KingContent(SG)PteLtd
BrandtologyCo.,Ltd
BeijingIsentiaInformationConsultingCo.,Limited
Shanghai Isentia Consulting Ltd
KingContentLtd
IsentiaSNCKoreaCo.,Ltd
TheBeyondCo.,Ltd.**
PRINCIPAL PLACE OF
BUSINESS / COUNTRY
OF INCORPORATION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
NewZealand
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Singapore
Singapore
Indonesia
Vietnam
Philippines
Thailand
Thailand
USA
USA
HongKong
HongKong
Singapore
China
China
China
UK
SouthKorea
SouthKorea
2017
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
2016
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
100%
100%
51%
*Denotesentitiesderegisteredduringtheyear.
**Thegroupholdsoptionsontheremainingissuedshares,whicharedeemedtohavebeenacquired,andthereforenonon-controlling
interestisrecognised.
78
FY17 Financial Statements
79
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Note 36. Deed of cross guarantee
Thefollowingentitiesarepartytoadeedofcrossguaranteeunderwhicheachcompanyguaranteesthedebtsofthe
others:
Isentia Group Limited
IsentiaFinancePtyLimited
IsentiaHoldingsPtyLimited
IsentiaPtyLimited
Byenteringintothedeed,thewholly-ownedentitieshavebeenrelievedfromtherequirementtopreparefinancial
statementsanddirectors’reportunderCorporationsInstrument2016/785issuedbytheAustralianSecuritiesand
InvestmentsCommission.
Theabovecompaniesrepresenta‘ClosedGroup’forthepurposesoftheCorporationsInstrument,andasthereareno
otherpartiestothedeedofcrossguaranteethatarecontrolledbyIsentiaGroupLimited,theyalsorepresentthe‘Extended
ClosedGroup’.
Setoutbelowisaconsolidatedstatementofprofitorlossandothercomprehensiveincomeandstatementoffinancial
positionofthe‘ClosedGroup’.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Revenue
Other income
Copyright,consumablesandotherdirectpurchases
Depreciation and amortisation expense
Employeebenefitsexpense
Impairment of assets
Occupancy costs
Other expenses
Finance costs
(Loss)/profit before income tax expense
Income tax expense
(Loss)/profit after income tax expense
Other comprehensive income
Netchangeinfairvalueofcashflowhedgestakentoequity,netoftax
Exchangedifferencesontranslatingforeignoperations,netoftax
Othercomprehensiveincomefortheyear,netoftax
Total comprehensive income for the year
EQUITY – RETAINED PROFITS
Accumulatedlossesatthebeginningofthefinancialyear
(Loss)/profitafterincometaxexpense
Dividendspaid
Accumulatedlossesattheendofthefinancialyear
80
2017
$’000
96,800
17,224
(30,747)
(9,615)
(28,377)
(37,571)
(2,295)
(4,676)
(3,109)
(2,366)
(4,685)
(7,051)
302
(800)
(498)
(7,549)
2017
$’000
(37,764)
(7,051)
(15,060)
(59,875)
2016
$’000
100,742
51
(25,808)
(8,759)
(31,312)
–
(2,259)
(4,733)
(3,176)
24,746
(6,312)
18,434
197
84
281
18,715
2016
$’000
(41,198)
18,434
(15,000)
(37,764)
STATEMENT OF FINANCIAL POSITION
Current assets
Cashandcashequivalents
Tradeandotherreceivables
Income tax refund due
Prepayments
Non-current assets
Receivablefromsubsidiaries
Investmentinsubsidiaries
Property,plantandequipment
Intangibles
Deferred tax assets
Other
Total assets
Current liabilities
Tradeandotherpayables
Borrowings
Derivativefinancialinstruments
Current tax liabilities
Provisions
Contingent consideration
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Contingent consideration
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2017
$’000
5,945
16,671
1,360
782
24,758
10,858
52,570
2,204
96,505
5,284
40
167,461
192,219
12,704
–
–
–
3,658
2,989
19,351
64,869
12,747
783
3,494
81,893
101,244
90,975
2016
$’000
2,750
19,018
–
828
22,596
9,360
90,141
1,337
95,696
7,285
40
203,859
226,455
12,150
55,875
532
1,605
4,029
6,995
81,186
–
11,487
727
20,321
32,535
113,721
112,734
403,662
(252,812)
(59,875)
90,975
403,662
(253,164)
(37,764)
112,734
FY17 Financial Statements
81
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Note 37. Reconciliation of (loss)/profit after income tax to net cash from
operating activities
Note 38. Earnings per share
(Loss)/profitafterincometaxexpensefortheyear
Adjustmentsfor:
Depreciation and amortisation
Impairment of intangibles
Writeoffofproperty,plantandequipment
Share-basedpayments
Financecosts–non-cash
Otherexpenses–non-cash
Netfairvaluemovementoncontingentconsideration
Badanddoubtfuldebtexpense
Change in operating assets and liabilities:
Decrease/(increase)intradeandotherreceivables
Increase in income tax refund due
Decrease in deferred tax assets
Decrease/(increase)inprepayments
Decrease in other operating assets
Decrease in trade and other payables
Decreaseinderivativeliabilities
Decreaseinprovisionforincometax
Decrease in deferred tax liabilities
Decreaseinemployeebenefits
Increase/(decrease)inotherprovisions
CONSOLIDATED
2017
$’000
(13,523)
16,246
39,399
254
850
–
50
(13,799)
1,026
7,755
(1,360)
2,737
384
93
(1,347)
(230)
(1,952)
(1,978)
(851)
(5)
2016
$’000
24,252
13,704
–
53
750
231
–
(661)
244
(7,756)
–
1,398
(662)
–
(510)
–
(24)
(72)
(276)
100
Netcashfromoperatingactivities
33,749
30,771
(Loss)/profitafterincometaxattributabletotheownersofIsentiaGroupLimited
CONSOLIDATED
2017
$’000
(13,523)
2016
$’000
24,252
NUMBER
NUMBER
Weightedaveragenumberofordinarysharesusedincalculatingbasicearningspershare
200,000,001
200,000,001
Adjustmentsforcalculationofdilutedearningspershare:
Optionsoverordinaryshares
–
462,887
Weightedaveragenumberofordinarysharesusedincalculatingdilutedearningspershare
200,000,001
200,462,888
Basicearningspershare
Diluted earnings per share
CENTS
(6.761)
(6.761)
CENTS
12.126
12.098
Note 39. Share-based payments
Thegrouphasalongtermincentiveplan(‘LTIP’)whichprovideseligibleemployeeswithanadditionalincentivetoworkto
improvetheperformanceofthegroupbygrantingoptionsorrightstoacquireshares.
Duringthefinancialyear1,794,238(2016:2,228,643)optionsweregranted.Theshare-basedpaymentexpensefortheyear
was$850,000(2016:$750,000).
Setoutbelowaresummariesofoptionsgrantedundertheplan:
2017
GRANT
DATE
EXPIRY
DATE
EXERCISE
PRICE
BALANCE
AT THE
START OF
THE YEAR
GRANTED
EXERCISED
16/06/2014
30/06/2018
$2.04
965,743
10/12/2014
30/06/2018
$2.04
341,348
19/11/2015
30/06/2019
$3.75
2,228,643
–
–
–
17/11/2016
30/06/2020
$3.47
–
1,794,238
3,535,734
1,794,238
–
–
–
–
–
EXPIRED/
FORFEITED/
OTHER
BALANCE
AT THE
END OF
THE YEAR
–
965,743
(30,830)
310,518
(510,997)
1,717,646
(325,656)
1,468,582
(867,483)
4,462,489
Weightedaverageexerciseprice
$3.12
$3.47
$0.00
$3.58
$3.17
Noneoftheoptionsoutstandingasat30June2017arevestedandexercisable(30June2016:Nil).
82
FY17 Financial Statements
83
Isentia Group Limited – 2017 Annual Report FY17 Financial Statements (continued)
Directors’ Declaration
2016
GRANT
DATE
EXPIRY
DATE
EXERCISE
PRICE
BALANCE
AT THE
START OF
THE YEAR
GRANTED
EXERCISED
EXPIRED/
FORFEITED/
OTHER
16/06/2014
30/06/2018
$2.04
965,743
10/12/2014
30/06/2018
$2.04
341,348
–
–
19/11/2015
30/06/2019
$3.75
–
2,228,643
1,307,091
2,228,643
–
–
–
–
–
–
–
–
BALANCE
AT THE
END OF
THE YEAR
965,743
341,348
2,228,643
3,535,734
In the directors’ opinion:
•
•
•
•
theattachedfinancialstatementsandnotescomplywiththeCorporationsAct2001,theAccountingStandards,the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
theattachedfinancialstatementsandnotescomplywithInternationalFinancialReportingStandardsasissuedbythe
InternationalAccountingStandardsBoardasdescribedinnote1tothefinancialstatements;
theattachedfinancialstatementsandnotesgiveatrueandfairviewofthegroup’sfinancialpositionasat30June
2017andofitsperformanceforthefinancialyearendedonthatdate;
therearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebtsasandwhentheybecomedue
and payable; and
• atthedateofthisdeclaration,therearereasonablegroundstobelievethatthemembersoftheExtendedClosedGroup
willbeabletomeetanyobligationsorliabilitiestowhichtheyare,ormaybecome,subjectbyvirtueofthedeedofcross
guaranteedescribedinnote36tothefinancialstatements.
Thedirectorshavebeengiventhedeclarationsrequiredbysection295AoftheCorporationsAct2001.
Weightedaverageexerciseprice
$2.04
$3.75
$0.00
$0.00
$3.12
Signedinaccordancewitharesolutionofdirectorsmadepursuanttosection295(5)(a)oftheCorporationsAct2001.
On behalf of the directors
Theweightedaveragesharepriceduringthefinancialyearwas$2.30(2016:$3.74).
Theweightedaverageremainingcontractuallifeofoptionsoutstandingattheendofthefinancialyearwasonetothree
years(2016:twotothreeyears).
Fortheoptionsgrantedduringthecurrentfinancialyear,thevaluationmodelinputsusedtodeterminethefairvalueatthe
grantdate,areasfollows:
GRANT
DATE
EXPIRY
DATE
SHARE
PRICE AT
GRANT
DATE
EXERCISE
PRICE
EXPECTED
VOLATILITY
DIVIDEND
YIELD
RISK-FREE
INTEREST
RATE
FAIR
VALUE AT
GRANT
DATE
17/11/2016
30/06/2020
$2.60
$3.47
31.00%
2.20%
1.60%
$0.69
OptionsissuedunderEPSTranche:KeyassumptionsarethesameastheTSRTranchedisclosedabove,fairvalueatgrant
dateamountedto$0.71.
Note 40. Events after the reporting period
Apartfromthedividenddeclaredasdisclosedinnote25,noothermatterorcircumstancehasarisensince30June2017
thathassignificantlyaffected,ormaysignificantlyaffectthegroup’soperations,theresultsofthoseoperations,orthe
group’sstateofaffairsinfuturefinancialyears.
John Croll
ChiefExecutiveOfficerandManagingDirector
Doug Flynn
Chairman
22 August 2017
Sydney
84
Directors’ Declaration
85
Isentia Group Limited – 2017 Annual Report
DeloitteToucheTohmatsu
ABN74490121060
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POBoxN250GrosvenorPlace
SydneyNSW1220Australia
DX:
Tel:
Fax:
www.deloitte.com.au
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+61(0)293227000
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Independent Auditor's Report
to the Members of Isentia Group Limited
Report on the Financial Report
WehaveauditedthefinancialreportofIsentiaGroupLimited(the“Company”)anditssubsidiaries(the“Group”),which
comprisesthestatementoffinancialpositionasat30June2017,thestatementofprofitorlossandothercomprehensive
income,thestatementofchangesinequityandthestatementofcashflowsfortheyearthenended,andnotestothe
financialstatements,includingasummaryofsignificantaccountingpoliciesandthedirectors’declaration.
Inouropinion,theaccompanyingfinancialreportoftheGroupisinaccordancewiththeCorporationsAct2001,including:
(i)givingatrueandfairviewoftheGroup’sfinancialpositionasat30June2017andofitsfinancialperformancefor
the year then ended; and
(ii)complyingwithAustralianAccountingStandardsandtheCorporationsRegulations2001.
Basis for Opinion
WeconductedourauditinaccordancewithAustralianAuditingStandards.Ourresponsibilitiesunderthosestandards
arefurtherdescribedintheAuditor’sResponsibilitiesfortheAuditoftheFinancialReportsectionofourreport.Weare
independentoftheGroupinaccordancewiththeauditorindependencerequirementsoftheCorporationsAct2001and
theethicalrequirementsoftheAccountingProfessionalandEthicalStandardsBoard’sAPES110CodeofEthicsfor
ProfessionalAccountants(theCode)thatarerelevanttoourauditofthefinancialreportinAustralia.Wehavealsofulfilled
ourotherethicalresponsibilitiesinaccordancewiththeCode.
WeconfirmthattheindependencedeclarationrequiredbytheCorporationsAct2001,whichhasbeengiventothedirectors
oftheCompany,wouldbeinthesametermsifgiventothedirectorsasatthetimeofthisauditor’sreport.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.
LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.
MemberofDeloitteToucheTohmatsuLimited
Key Audit Matters
Keyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceinourauditofthe
financialreportforthecurrentperiod.Thesematterswereaddressedinthecontextofourauditofthefinancialreportasa
whole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.
KEY AUDIT MATTER
Revenue recognition
Fortheyearended30June2017,theGroup’srevenue
recognisedfromcontentmarketingtotals$14.4millionas
disclosedinnote4.
Contentmarketingisarevenuestreamthatrequires
managementtoexercisejudgementtodeterminehowrevenue
shouldberecognised,basedonworkinprogress.
HOW THE SCOPE OF OUR AUDIT RESPONDED TO THE KEY
AUDIT MATTER
Ourproceduresincluded,butwerenotlimitedto:
• Assessingthecontentmarketingrevenuestream,and
challengingtheidentificationofthekeyperformance
deliverables,theallocationofrevenuetosuchdeliverables
andthetimingofrecognitionofrevenue,
• Assessing the accrued income recognised in the statement
offinancialpositionthroughsupportingdocumentation
suchastimesheets,costsincurredandenquiriesofproject
managersonthedeliverytimeframesforspecificprojects,
•
Evaluatingsupportingevidenceforthedeliveryofcontent
marketingservices,throughagreeingtocontractual
arrangementsandevidenceofcashreceiptsfrom
customers,and
• Assessing the appropriateness of the disclosures in Note 1
tothefinancialstatements.
Assessment of impairment of assets
Asat30June2017,theGroupimpaired$39.3millionof
assetsassociatedwithKingContentofwhich$32.7million
and$6.1millionisattributabletoKingContentgoodwilland
brandrespectivelyasdisclosedinnote12.
Assessing the quantum of the impairment is an area of
judgementasitisreliantonfutureforecastsoftheKingContent
business.
Ourproceduresincluded,butwerenotlimitedto:
•
Testingthemathematicalaccuracyofmanagement’s
calculations,
• Challengingmanagement’skeyassumptionsincluding
forecastsforKingContent,and
• Assessing the appropriateness of the disclosures in note 12
tothefinancialstatements.
Capitalisation of development costs
Asat30June2017,theGroup’scarryingvalueofthesoftware
anddevelopmentcostscapitalisedasintangiblestotals
$25millionofwhich$12.3millionisattributabletocapitalisation
inthecurrentfinancialyearasdisclosedinnote12.
Judgementisinvolvedindeterminingwhetherthelabourcosts
aredirectlyattributabletodeveloptheGroup’sproductsuite
andnewsoftware,andtheappropriatenessofthecoststobe
capitalised.
Ourproceduresincluded,butwerenotlimitedto:
• Makingenquiriesofdepartmentheadsinvolvedinproduct
developmenttounderstandthebasisandrationalefor
capitalisinglabourcosts,
•
Testingonasamplebasis,capitalisedlabourcoststhrough
reviewingprojectbudgetsand/ortimesheetsandholding
discussionswithstaffmembersoutsidethefinance
department,
• Challengingmanagement’skeyassumptionsinthelabour
capitalisation calculation including the treatment of
employeeon-costs,percentagesappliedtolabourcosts,
•
Testingthemathematicalaccuracyofmanagement’s
capitalisationschedule,and
• Assessing the appropriateness of the disclosures in note 12
tothefinancialstatements.
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Isentia Group Limited – 2017 Annual Report
Other Information
Thedirectorsareresponsiblefortheotherinformation.Theotherinformationcomprisestheinformationincludedinthe
Group’sannualreportfortheyearended30June2017,butdoesnotincludethefinancialreportandourauditor’sreport
thereon.
Ouropiniononthefinancialreportdoesnotcovertheotherinformationandwedonotexpressanyformofassurance
conclusionthereon.
Inconnectionwithourauditofthefinancialreport,ourresponsibilityistoreadtheotherinformationand,indoingso,
considerwhethertheotherinformationismateriallyinconsistentwiththefinancialreportorourknowledgeobtainedinthe
audit,orotherwiseappearstobemateriallymisstated.
If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,we
arerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.
The Directors’ Responsibilities for the Financial Report
ThedirectorsoftheGroupareresponsibleforthepreparationofthefinancialreportthatgivesatrueandfairviewin
accordancewithAustralianAccountingStandardsandtheCorporationsAct2001andforsuchinternalcontrolasthe
directorsdetermineisnecessarytoenablethepreparationofthefinancialreportthatgivesatrueandfairviewandisfree
frommaterialmisstatement,whetherduetofraudorerror.
Inpreparingthefinancialreport,thedirectorsareresponsibleforassessingtheabilityoftheGrouptocontinueasagoing
concern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccounting
unlessthedirectorseitherintendtoliquidatetheGrouportoceaseoperations,orhasnorealisticalternativebuttodoso.
Auditor’s Responsibilities for the Audit of the Financial Report
Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialreportasawholeisfreefrommaterial
misstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion.Reasonable
assuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewiththeAustralian
AuditingStandardswillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudor
errorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencethe
economicdecisionsofuserstakenonthebasisofthisfinancialreport.
AspartofanauditinaccordancewiththeAustralianAuditingStandards,weexerciseprofessionaljudgementandmaintain
professionalscepticismthroughouttheaudit.Wealso:
•
Identifyandassesstherisksofmaterialmisstatementofthefinancialreport,whetherduetofraudorerror,design
andperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriateto
provideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthan
foroneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,orthe
overrideofinternalcontrol.
• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriate
inthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheGroup’sinternal
control.
• Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelated
disclosuresmadebythedirectors.
• Concludeontheappropriatenessofthedirectors’useofthegoingconcernbasisofaccountingand,basedonthe
auditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificant
doubtontheGroup’sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists,weare
requiredtodrawattentioninourauditor’sreporttotherelateddisclosuresinthefinancialreportor,ifsuchdisclosures
areinadequate,tomodifyouropinion.Ourconclusionsarebasedontheauditevidenceobtaineduptothedateofour
auditor’sreport.However,futureeventsorconditionsmaycausetheGrouptoceasetocontinueasagoingconcern.
• Evaluatetheoverallpresentation,structureandcontentofthefinancialreport,includingthedisclosures,andwhether
thefinancialreportrepresentstheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation.
Wecommunicatewiththedirectorsregarding,amongothermatters,theplannedscopeandtimingoftheauditand
significantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.
Wealsoprovidethedirectorswithastatementthatwehavecompliedwithrelevantethicalrequirementsregarding
independence,andtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobear
onourindependence,andwhereapplicable,relatedsafeguards.
Fromthematterscommunicatedwiththedirectors,wedeterminethosemattersthatwereofmostsignificanceinthe
auditofthefinancialreportofthecurrentperiodandarethereforethekeyauditmatters.Wedescribethesematters
inourauditor’sreportunlesslaworregulationprecludespublicdisclosureaboutthematterorwhen,inextremelyrare
circumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequences
ofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.
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IndependentAuditor'sReporttotheMembersofIsentiaGroupLimited
89
Isentia Group Limited – 2017 Annual Report Shareholder Information
Theshareholderinformationsetoutbelowwasapplicableasat4August2017.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1to1,000
1,001to5,000
5,001to10,000
10,001to100,000
100,001andover
Holdinglessthanamarketableparcel
Equity security holders
Twenty largest quoted equity security holders
NUMBER OF
HOLDERS OF
ORDINARY
SHARES
NUMBER OF
HOLDERS OF
OPTIONS OVER
ORDINARY
SHARES
2,328
4,662
1,531
1,112
50
9,683
463
–
–
–
–
8
8
–
Thenamesofthetwentylargestsecurityholdersofquotedequitysecuritiesarelistedbelow:
HSBCCUSTODYNOMINEES(AUSTRALIA)LIMITED
JPMORGANNOMINEESAUSTRALIALIMITED
CITICORPNOMINEESPTYLIMITED
UBSNOMINEESPTYLTD
NATIONALNOMINEESLIMITED
CSTHIRDNOMINEESPTYLIMITED(HSBCCUSTNOMAULTD13A/C)
JOHNANDREWCROLL
RBCINVESTORSERVICESAUSTRALIANOMINEESPTYLTD(VFAA/C)
CITICORPNOMINEESPTYLIMITED(COLONIALFIRSTSTATEINVA/C)
RBCINVESTORSERVICESAUSTRALIANOMINEESPTYLIMITED(MBAA/C)
AUSTRALIANFOUNDATIONINVESTMENTCOMPANYLIMITED
BNPPARIBASNOMS(NZ)LTD(DRP)
MIRRABOOKAINVESTMENTSLIMITED
UBSNOMINEESPTYLTD
BNPPARIBASNOMINEESPTYLTD(AGENCYLENDINGDRPA/C)
RBCINVESTORSERVICESAUSTRALIANOMINEESPTYLTD(BKMINIA/C)
AMCILLIMITED
WARBONTNOMINEESPTYLTD(UNPAIDENTREPOTA/C)
DJERRIWARRHINVESTMENTSLIMITED
BNPPARIBASNOMSPTYLTD(DRP)
ORDINARY SHARES
NUMBER HELD
% OF TOTAL
SHARES ISSUED
34,169,504
20,598,312
15,351,210
10,823,875
10,273,168
6,812,603
6,045,658
5,238,777
5,065,882
4,650,000
3,800,000
3,098,160
2,853,816
2,294,869
2,255,703
1,945,377
1,775,000
1,697,310
1,500,000
1,273,550
17.08
10.30
7.68
5.41
5.14
3.41
3.02
2.62
2.53
2.32
1.90
1.55
1.43
1.15
1.13
0.97
0.89
0.85
0.75
0.64
141,522,774
70.77
Shareholder Information
91
Report on the Remuneration Report
Opinion on the Remuneration Report
WehaveauditedtheRemunerationReportincludedinpages20to32oftheDirectors’Reportfortheyearended30June
2017.
Inouropinion,theRemunerationReportofIsentiaGroupLimited,fortheyearended30June2017,complieswithsection
300AoftheCorporationsAct2001.
Responsibilities
ThedirectorsofIsentiaGroupLimitedareresponsibleforthepreparationandpresentationoftheRemunerationReport
inaccordancewithsection300AoftheCorporationsAct2001.Ourresponsibilityistoexpressanopiniononthe
RemunerationReport,basedonourauditconductedinaccordancewithAustralianAuditingStandards.
Yours sincerely
DeloitteToucheTohmatsu
Sandeep Chadha
Partner
Chartered Accountants
Sydney,22August2017
LiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.
MemberofDeloitteToucheTohmatsu
90
Isentia Group Limited – 2017 Annual Report Shareholder Information (continued)
Corporate Directory
Unquoted equity securities
Optionsoverordinarysharesissued
Substantial holders
NUMBER ON
ISSUE
NUMBER OF
HOLDERS
4,462,489
8
Thenamesofsubstantialshareholderswhohavenotifiedthecompanyinaccordancewithsection671Bofthe
Corporations Act 2001 are:
CommonwealthBankofAustralia
JCPInvestmentPartnersLtd
AustralianSuperPtyLtd
Yarra Funds Management Ltd
ORDINARY SHARES
NUMBER HELD
% OF TOTAL
SHARES ISSUED
19,058,562
15,978,735
11,296,003
17,090,178
9.53
7.99
5.65
8.55
Auditor
DeloitteToucheTohmatsu
Level9,GrosvenorPlace
225 George Street
Sydney,NSW2000
Bankers
WestpacBankingCorporation
WestpacPlace,275KentStreet,
Sydney,NSW2000
Stock exchange listing
Isentia Group Limited shares are listed on the Australian
SecuritiesExchange(ASXcode:ISD)
Website
www.isentia.com
Corporate governance statement
Corporategovernancestatementwhichwasapprovedat
the same time as the Annual Report can be found at
http://www.isentia.com/investor-centre/corporate-
governance
Directors
Doug Flynn
ChairmanandIndependentNon-ExecutiveDirector
John Croll
ChiefExecutiveOfficerandExecutiveDirector
Pat O'Sullivan
IndependentNon-ExecutiveDirector
Fiona Pak-Poy
IndependentNon-ExecutiveDirector
Dr Geoff Raby
IndependentNon-ExecutiveDirector
Company secretary
Ms Jacquie Shanahan
Company Secretary
Notice of annual general meeting
Thedetailsoftheannualgeneralmeetingof
Isentia Group Limited are:
Isaac Nichols Auditorium
219-241ClevelandStreet
StrawberryHills,NSW2012
11amonThursday23November2017
Registered office
Level3
219-241ClevelandStreet
StrawberryHills,NSW2012
Headofficetelephone:+61293184000
Share register
LinkMarketServicesLimited
Level12
680GeorgeStreet
Sydney,NSW2000
Share registry telephone: 1300 554 474
92
Corporate Directory
93
Isentia Group Limited – 2017 Annual Report Powered by
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Inspired by
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Isentia Group Limited – 2017 Annual Report Isentia Group Limited
Level3,219-241ClevelandStreet,
StrawberryHillsNSWAustralia2012
www.isentia.com