VERIS LIMITED — Annual Report 2016

Aug 15, 2016

ASX/MEDIA RELEASE - OTC

16 August 2016

PRELIMINARY FINAL REPORT, YEAR ENDED 30 JUNE 2016

• EBITDA $16.2m, $1.0 million ahead of guidance

• Net Profit after Tax $19.7m

• Cash generated from operations $16.4 million

• Cash at bank $13.0m

• Maiden Fully Franked Dividend of 0.5 cents per share

• Dividend Re-investment Plan Adopted

• Revenue on Surveying Division up 25%

OTOC Limited (ASX code: OTC) has today reported its financial results for the financial year ending 30 June 2016 (FY2016).

EBITDA for the Group for FY2016 was $16.2 million, 246% ahead of prior year. This equated to a 13% margin on Revenue of $120.8 million. Net Profit after Tax was $19.7 million, 324% ahead of prior year. These results were achieved by the continuing growth of the national surveying practice which is part of OTOC’s surveying strategy, and a focused delivery model and quality returns from our infrastructure division, OTOC Australia

OTOC continues to extend its service offerings and national coverage with the recent acquisitions of Linker Surveying Pty Ltd (which contributed to FY2016 results from May 2016), Lawrence Group and WKC Spatial (the latter two joined the Group post year-end).

OTOC maintains a strong balance sheet to execute its growth strategy. FY2016 cash generated from operations was $16.4 million, up from $12.3 million in FY2015, and ended the year with cash of $13.0 million. This positive cash position is a record amount for the Group, and was achieved after $4.0 million of cash reserves were used to fund the purchase of Linker Surveying Pty Ltd and $6.6 million was used to repay borrowings and lease liability payments during the year.

In September 2016 OTOC will pay its first Fully Franked Dividend.

OTOC CEO, Simon Thomas said :

“The 2016 financial year was one of strong financial performance and growth in our business. Our results are substantially improved from the prior year and we have increased the strength of our Balance Sheet which will put us in good stead for future growth. The year ahead is exciting as we look to extend our national footprint and market share in the Survey Industry, and return benefits from organic growth, acquisition and integration synergies. Our infrastructure division also has a robust outlook on workload as we move forward into FY2017.”

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2016

Results for announcement to the market

A summary of the overall results for the year ended 30 June 2016.

OTOC Limited			$000
Revenue from ordinary activities	75%	to	120,858
Underlying EBITDA1	246%	to	16,176
Underlying EBIT2	873%	to	10,586
Statutory Profit from ordinary activities after tax attributable to members	324%	to	19,698
Statutory Profit for the period attributable to members	324%	to	19,698
Earnings per share (basic)	306%	to	7.4 cents
NTA Backing	30 June 2016		30 June 2015
Net tangible asset backing per ordinary security	$0.0805		$0.0065

1 Underlying EBITDA is defined as earnings before depreciation, amortisation, interest, tax, impairment, restructuring, share-based payments and acquisition costs and is an unaudited non-IFRS measure

2 Underlying EBIT is defined as earnings before interest, tax, impairment, restructuring, share-based payments and acquisition costs and is an unaudited non-IFRS measure

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A reconciliation between statutory results and underlying results is provided below:

		30 June 2016 $000	30 June 2015 $000
	Statutory profit (loss) after tax Add back: Tax (benefit) Net finance expense Acquisition costs/(benefit) Restructuring costs Impairment Share-based payment Underlying EBIT Depreciation and amortisation Underlying EBITDA	19,698 (9,750) 751 (1,336) 173 - 1,050 10,586 5,590 16,176	(8,786) (4,883) 698 1,219 1,515 8,468 399 (1,370) 6,051 4,681

Dividends declared

No dividends were declared or paid during the period by OTOC Limited. OTOC Limited will pay its first dividend of 0.5 cents per share on 12 September 2016. This dividend will be fully franked. The record date for determining entitlements to the dividend will be 29 August 2016. This dividend has been declared after the balance sheet date for FY2016 and has not been provided for in the FY2016 financial statements.

Dividends or distribution reinvestment plan

OTOC has adopted a Dividend Reinvestment Plan (DRP) that will apply to this dividend. The DRP has been lodged with the ASX.

Preliminary financial report

This report is based on accounts that have been audited.

Net Assets and Cash Position

OTOC has $13.0 million in cash at 30 June 2016. FY2016 cashflow from operations was $15.8 million, up from $11.6 million in FY2015. OTOC repaid $6.6 million in borrowings and lease liability payments during the year.

Control gained or lost over entities in the financial period

On 29 April 2016, OTOC acquired the assets and business of Linker Surveying Pty Ltd. This subsidiary contributed to OTOC’s reported financial result from the aforementioned date to 30 June 2016.

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016

Revenue Expenses Depreciation Amortisation Acquisition Costs Restructuring Costs Impairment Share-based payment Results from operating activities Finance income Finance costs Net finance costs Profit (loss) before income tax Income tax benefit Profit (loss) from continuing operations Profit (loss) for the year Total comprehensive income (loss) for the year Earnings per share Basic earnings/(loss) per share - cents per share Diluted earnings/(loss) per share - cents per share	2016 2015 $000 $000 120,858 68,878 (104,682) (64,197)
	16,176 4,681 (2,550) (3,982) (3,040) (2,069) 1,336 (1,219) (173) (1,515) - (1,050) (8,468) (399)
	10,699 (12,971) 69 88 (820) (786)
	(751) (698)
	9,948 (13,669) 9,750 4,883
	19,698 (8,786)
	19,698 (8,786)
	19,698 (8,786)
	7.4 (3.6) 7.4 (3.6)

The accompanying notes form an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

Cash and cash equivalents Trade and other receivables Work in progress Other current assets Current tax asset Total current assets Non-current assets Plant and equipment Deferred tax asset Intangible assets Total non-current assets Total assets Current liabilities Trade and other payables Deferred vendor payments Loans and borrowings Employee benefits Current tax liability Total current liabilities Non-current liabilities Loans and borrowings Deferred vendor payments Deferred tax liability Employee benefits Total non-current liabilities Total liabilities Net assets Equity Share capital Share based payment reserve Retained earnings Total equity	2016 2015 $000 $000 12,968 10,182 14,353 15,106 6,750 2,839 1,856 2,065 42 -
	35,969 30,192
	8,048 7,899 6,716 - 31,844 30,358
	46,608 38,257
	82,577 68,449
	10,384 6,910 2,700 5,262 7,799 6,125 4,092 3,061 - 1,721
	24,975 23,079
	3,593 9,915 300 2,038 - 926 411 408
	4,304 13,287
	29,279 36,366
	53,298 32,083
	22,622 22,155 1,449 399 29,227 9,529
	53,298 32,083

The accompanying notes form an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016

Balance at 1 July 2015 Total comprehensive profit for the year Profit for the year Total comprehensive profit for the year Transactions with owners, recorded directly in equity Issue of ordinary shares Share based payment transactions Balance at 30 June 2016 Balance at 1 July 2014 Total comprehensive loss for the year Loss for the year Total comprehensive income for the year Transactions with owners, recorded directly .in equity Issue of ordinary shares Share based payment transactions Balance at 30 June 2015	Share Capital Share-based Payment Reserve Retained Earnings Total Equity $000 $000 $000 $000 22,155 399 9,529 32,083 - - 19,698 19,698
	- - 19,698 19,698
	467 - - 467 - 1,050 - 1,050
	22,622 1,449 29,227 53,298
	Share Capital Share-based Payment Reserve Retained Earnings Total Equity $000 $000 $000 $000 9,188 - 18,315 27,503 - - (8,786) (8,786)
	- - (8,786) (8,786)
	12,967 - - 12,967 - 399 - 399
	22,155 399 9,529 32,083

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CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2016

Cash flow from operating activities Receipts from customers Payments to suppliers and employees Cash generated from operations Tax received Interest paid Interest received Net cash from operating activities Cash Flows from investing activities Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Acquisition of subsidiaries net of cash acquired Deferred vendor payment Net cash (used in) investing activities Cash flow from financing activities Proceeds from share issues (net of costs) Repayment of borrowings and lease liabilities Proceeds from borrowings Net cash from (used in) financing activities Net increase in cash held Cash and cash equivalents at 1 July Cash and cash equivalents at 30 June	2016 2015 $000 $000 130,133 88,785 (113,765) (76,465)
	16,368 12,320 160 - (820) (786) 69 88
	15,777 11,622
	547 287 (1,348) (3,157) (3,158) (21,665) (2,400) -
	(6,359) (24,535)
	- 9,868 (6,632) (4,217) - 10,641
	(6,632) 16,292
	2,786 3,379 10,182 6,803
	12,968 10,182

The accompanying notes form an integral part of these consolidated financial statements.

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Notes to the Financial Statements

For the year ended 30 June 2016

Note 1: Statement of significant accounting policies

This preliminary financial report has been prepared in accordance with Australian Securities Exchange Listing rules as they relate to Appendix 4E and in accordance with the measurement requirements of Australian Accounting Standards and Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. As such, this preliminary financial report does not include all the notes of the type included in the annual financial report and accordingly, should be read in conjunction with the Interim Financial Report for the six months ended 31 December 2015, and with any public announcements made by OTOC Limited during the reporting period in accordance with the disclosure requirements of the Corporations Act 2001.

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instruments 2016/191 issued by the Australian Securities and Investment Commission, relating to the ”rounding off” of amounts in the Directors’ Report and financial statements. Amounts have been rounded off to the nearest thousand dollars in accordance with that Class Order.

The accounting policies have been consistently applied to all years presented.

Note 2: Earnings per share

	2016	2015
Earnings used to calculate basic EPS - $000	19,698	(8,786)
Weighted average number of ordinary shares
outstanding during the period used in calculating basic	264,625,881	241,305,965
EPS
Basic earnings/(loss) per share - cents per share	7.4	(3.6)
Weighted average number of ordinary shares
outstanding during the period used in calculating Diluted	266,786,587	241,305,965
EPS
Diluted earnings/(loss) per share - cents per share	7.4	(3.6)

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Note 3: Segment Note

The Group has two reportable segments that are managed separately by the service provided. Internal management reports on the performance of these reportable segments are reviewed at least monthly by the Chief Executive Officer who is the Chief Operating Decision maker (CODM) of the Group. The operations in each of the Group’s reportable segments are:

• Surveying – provides surveying, mapping and town planning services throughout Western Australia, Victoria, Queensland, New South Wales and Sydney.

• Infrastructure – provides turnkey construction and installation services to the resources and infrastructure sectors.

Information regarding the results of each reportable segment is detailed below. Comparative segment information has been presented in conformity with the requirement of AASB 8 Operating Segments.

Revenue Inter-segment revenues External revenues Costs Inter-segment costs External costs Underlying EBITDA Depreciation Amortisation Underlying EBIT*** Segment assets Segment liabilities	Surveying Infrastructure Total 2016 $000 2015 $000 2016 $000 2015 $000 2016 $000 2015 $000 49,382 38,939 73,080 31,384 122,462 70,323 (1,565) (819) (39) (626) (1,604) (1,445)
	47,817 38,120 73,041 30,758 120,858 68,878 (39,960) (31,427) (61,920) (30,565) (101,880) (61,922) 267 626 1,337 819 1,604 1,445
	(39,693) (30,801) (60,583) (29,746) (100,276) (60,547) 8,124 7,320 12,458 1,012 20,582 8,332 (1,986) (1,906) (552) (2,028) (2,538) (3,934) (3,040) (2,069) - - (3,040) (2,069)
	3,098 3,345 11,906 (1,016) 15,004 2,329 52,777 48,158 18,043 14,455 70,820 62,613 11,988 12,361 10,736 13,388 22,724 25,749

• Underlying EBITDA is defined as earnings before depreciation, amortisation, interest, tax, impairment, restructuring, share-based payments and acquisition costs and is an unaudited non-IFRS measure.

** Underlying EBIT is defined as earnings before interest, tax, impairment, restructuring, share-based payments and acquisition costs and is an unaudited non-IFRS measure

– Ends –

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About OTOC

OTOC offers surveying, planning and design services throughout Australasia. A leading provider of professional consulting and innovative spatial solutions, OTOC delivers quality service to clients across a range of industry sectors.

OTOC Australia, OTOC’s Infrastructure division provides infrastructure construction and maintenance services to clients covering renewable energy, government, resources, utilities and remote areas.

For further information please contact

Corporate Office OTOC Limited Tel (08) 9317 0628

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