VERIS LIMITED — Annual Report 2017

Aug 16, 2017

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Veris Limited 30 June 2017 Annual Financial Report

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Veris Limited Annual Financial Report 30 June 2017

Directors Report

Contents

Directors’ report	2
Consolidated Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income	26
Consolidated Statement of Financial Position	27
Consolidated Statement of Changes in Equity	28
Consolidated Statement of Cash Flow	29
Notes to the Consolidated Financial Statements	30
Directors’ declaration	70
Independent auditor’s report	71
Lead Auditors’ Independence Declaration	76
Additional Information	77
Corporate information	79

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Veris Limited Annual Financial Report 30 June 2017

Directors Report

Your Directors present their report together with the consolidated financial statements of Veris Limited ABN 80 122 958 178 (“the Company” or “Veris”) and the entities it controlled (together referred to as ‘’the Group’’) at the end of, or during, the year ended 30 June 2017.

Information on Directors

Directors of the Company during the whole of the financial year ended 30 June 2017 and up to the date of this report are as follows:

NAME	PERIOD OF DIRECTORSHIP
Derek La Ferla Independent Non-Executive Chairman	Appointed 28 October 2011
Tom Lawrence Non-Executive Director	Appointed 13 October 2011
Karl Paganin Non-Executive Director	Appointed 19 October 2015
Adam Lamond Managing Director	Appointed 13 October 2011 (Managing Director from 29 March 2017

The experience, other directorships or special responsibilities of the directors in office at the date of this report are as follows:

Derek La Ferla- Independent Non-Executive Chairman

Experience

Mr La Ferla is an experienced corporate lawyer and company director with more than 30 years' experience. He has held senior positions with some of Australia's leading law firms, and is currently a Partner with Western Australian firm, Lavan Legal, in the firm's Corporate Services Group. Mr La Ferla also serves as the chairman of Sandfire Resources Limited and Threat Protect Australia Limited and is a director of Goldfields Money Limited. He is a fellow of the Australian Institute of Company Directors (AICD) and member of the AICD Western Australian Council.

Special Responsibilities

Member of the Nomination and Remuneration Committee Member of the Audit and Risk Committee

Other Listed Company Directorships in last 3 years

Sandfire Resources Limited (May 2010 – Current) Threat Protect Australia Limited (September 2015 – Current) Goldfields Money Limited (November 2015 – Current)

Interests in Shares of Veris

567,704 fully paid ordinary shares

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Veris Limited Annual Financial Report 30 June 2017

Directors Report

Information on Directors (continued)

Adam Lamond - Managing Director

Experience

Mr Lamond has over 20 years’ commercial experience with particular expertise in construction and infrastructure activities across Australia. Mr Lamond held the position of Chief Executive Officer of Veris Limited from its listing in October 2011 to January 2014. Mr Lamond held the role of Executive Director – Business Development from January 2014 to March 2017, when he was appointed Managing Director. During his time Mr Lamond has led the Company into its new strategic direction evolving Veris into a national professional service business delivering town planning, urban design, survey and spatial solutions to the infrastructure, property and resource markets throughout Australia.

Special Responsibilities

Member of the OHS Committee

Interests in Shares of Veris 45,841,815 fully paid ordinary shares

Tom Lawrence - Independent Non-Executive Director

Experience

Mr Lawrence is a qualified accountant with a Bachelor of Laws and a Masters Degree in taxation. Mr Lawrence was the principal of Lawrence Business Management for over 15 years, providing tax and management advice to a diverse range of businesses. He now works as a solicitor for Capital Legal, advising clients on a broad range of business related transactions. Mr Lawrence has been an advisor to Veris from its inception.

Special Responsibilities

Chairman of the Audit and Risk Committee Member of the Nomination and Remuneration Committee Member of the OHS Committee

Interests in Shares of Veris 3,662,596 fully paid ordinary shares

Karl Paganin - Independent Non-Executive Director

Experience

Mr Paganin has over 15 years senior experience in Investment Banking, specialising in transaction structuring, equity capital markets, mergers and acquisitions and strategic management advice to listed companies. Mr Paganin was a Director of Major Projects and Senior Legal Counsel for Heytesbury Pty Ltd (the private trading company of the Holmes à Court Family) which was the proprietor of John Holland Group Pty Ltd. Mr Paganin holds degrees in Law (B.Juris, LLB) and Arts (BA) from the University of Western Australia and is a Non-Executive Director of ASX listed Southern Cross Electrical Engineering Limited and Vice Chairman of the not for profit charity, Autism West Support Inc.

Special Responsibilities

Chairman of the Nomination and Remuneration Committee Member of the Audit and Risk Committee Member of the OHS Committee

Other Listed Company Directorships in last 3 years Southern Cross Electrical Engineering Ltd (June 2015 – current) Interests in Shares of Veris 5,500,000 fully paid ordinary shares

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Veris Limited Annual Financial Report 30 June 2017

Directors Report

Information on Company Secretary

Lisa Wynne - Company Secretary

Experience

Ms Lisa Wynne is a Chartered Accountant and Chartered Secretary with significant experience working with publicly listed companies. Former owner of a consulting company, for 11 years, Ms Wynne provided corporate and financial services to public companies and held the role of Company Secretary and Chief Financial Officer of a number of ASX listed companies.

Directors Meetings

The number of directors meetings and number of meetings attended by each of the directors of the Group during the financial year are:

Director	Board Meetings	Board Meetings	Audit & Risk Committee	Audit & Risk Committee	Remuneration & Nomination Committee	Remuneration & Nomination Committee	Occupational Health & Safety Committee	Occupational Health & Safety Committee
	A	B	A	B	A	B	A	B
Derek La Ferla	11	11	4	4	3	3	*	*
Adam Lamond	11	11	*	*	*	*	2	3
Tom Lawrence	11	11	4	4	3	3	3	3
Karl Paganin	10	11	3	4	3	3	2	3

A = Number of Meetings attended B = Number of meetings held during the time the director held office during the year * = Not a member of the relevant committee

Dividends

Dividends paid or declared by the Company to members since the end of the previous financial year were:

Declared and paid during the year 2017	Cents per share (cents)	Franked amount per share (cents)	Total Amount $’000(1)	Record Date	Date of Payment
Final FY2016 ordinary	0.5	0.5	1,368	29 August 2016	12 September 2016

(1) The Dividend paid in cash to shareholders was $1,060,000 and 1,024,415 shares were issued under the Veris Dividend Reinvestment Plan. The Dividend Reinvestment Plan’s shortfall shares were underwritten by Veritas Securities Limited and 3,532,005 shares were issued to Veritas on the same date at 30.02 cents per share raising $1,060,307 (net of underwriting fees). The 30.02 cents price per share was based on 5% discount to the VWAP 5 days following the record date.

After the balance sheet date the directors have approved to pay a dividend of 0.5 cent per share out of 2017 financial year profits.

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Directors Report

Principal Activities

Veris is a national professional service business delivering planning, urban design, survey and geospatial solutions to the infrastructure, property and resource markets throughout Australia. Veris Limited is the Group’s holding company that is listed on the ASX under the code VRS.

Veris Limited has two operating segments in the 2017 financial year namely Survey Professional Services and Infrastructure Construction. Infrastructure operations were discontinued in July 2017. The focus in the 2018 financial year will be on the Surveying Professional Services operating segment and the Communications operating segment. The Communications business has been extracted from the infrastructure operations and will form part of the group business moving forward.

Surveying Professional Services

As a market leading town planning, urban design, survey and spatial solutions business Veris delivers quality service to clients across a range of industry sectors. The three most significant sectors being:

• Infrastructure

• Property

• Resources

Communications Technology

Veris also owns AQURA Technologies Pty Ltd (formerly OTOC Australia Pty Ltd). The construction operations of OTOC Australia were discontinued in July 2017 at which time the company changed its name to AQURA Technologies to represent its focus on communications technologies. AQURA complements the accomplished existing spatial solution capabilities of the survey segment with highly specialised ICT and Communications services, offering industry- leading technology solutions.

Significant Changes

The following significant changes in the nature of the activities of the Group occurred during the year:

• The acquisition of Sydney based construction surveying firm Lawrence Group Pty Ltd in July 2016.

• The acquisition of WKC spatial a leading pipeline ad infrastructure surveying business in August 2016.

• Payment of the Group’s maiden dividend of $0.005 per share in August 2016.

• Completion of $12.0 million placement to sophisticated and institutional investors through the issue of 44.44 million fully paid ordinary shares at a price of $0.27 per share in September 2016.

• At the company’s Annual General Meeting of shareholders held in November 2016 it was resolved to change the company’s name from OTOC Limited to Veris Limited. OTOC Limited was previously listed on the ASX under the code OTC, its listing name has now been updated to VRS.

• The acquisition of Goodwin Midson, a geospatial, cadastral surveying and engineering business in November 2016.

• The acquisition of Lester Franks a spatial engineering and surveying business in December 2016  CBA continued supporting the business with the approval of increased banking facilities for the Group, namely the cash advance facility to fund potential future acquisitions was increased from $10.0m to $25.0m, and additional asset refinancing facility agreed for $4.5m.

• The acquisition of LANDdata a Canberra based surveying business, which was settled subsequent to 2017 financial year end on 31 July 2017.

• The completion of a major government sector construction and installation project in Nauru by OTOC Australia.

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Veris Limited Annual Financial Report 30 June 2017

Directors Report

Operating and Financial Review

Veris is a national professional service business delivering town planning, urban design, survey and spatial solutions to the infrastructure, property and resource markets throughout Australia.

For the year ended 30 June 2017 the Group reported NPAT (Net Profit after Tax from operating activities of $48,000 (2016: $19,698,000)

In 2017 Veris Group continued to implement its national professional services strategy with the acquisition of quality East Coast businesses. These along with existing acquisitions delivered enhanced exposure to the construction, property and civil infrastructure markets on the East Coast. The Group was rebranded to Veris to reflect the focus on professional services at a national level. In the financial year 2017 OTOC Australia operations completed a number of large projects, with the most notable being the offshore work on Nauru Island. In financial year 2018 this business will be discontinued, as the Group is moving away from the low margin, high risk work in this sector.

During the 2017 financial year the Group progressed its integration activities of the professional services surveying business. It has established shared service support functions and a new operating model which focuses on inclusion, consolidation and efficiencies. 2018 financial year will focus on the group wide implementation and completion of integration activities across the national surveying business. There will be strong focus on driving organic growth, and revenue and cost synergies. We expect to continue our progress on acquiring businesses that enhance the service offering and/or geographic market position of our business including further expansion into complementary town planning & urban design and geospatial segments. 2018 will also see the launch of the AQURA business - AQURA complements the accomplished existing spatial solution capabilities of the survey segment with highly specialised ICT and communications services, offering industry- leading technology solutions.

Key points to assist in understanding Veris’ results are as below:

Key Item	FY2017 $000	FY2016 $000	Comments
Revenue	107,875	120,858	Revenue from surveying was up 40%, whilst revenue from infrastructure was down 44%
Underlying EBITDA*	9,814	16,176	$9.4m of EBITDA was generated from the Surveying Professional Services, $4m from Infrastructure Construction and the balance was attributed to cover Corporate costs. Construction EBITDA reduced by $8m as a result of the completion of a major project during the year.
Acquisition costs/(income)	1,192	(1,336)	The group purchased four companies in 2017 plus commenced work on securing some future acquisitions. The prior year included reversals of vendor payments.
Net Assets	66,937	53,298	Net assets mainly increased due to a capital raising in the year.
Working Capital**	18,769	10,994	The main driver of the change was a reclassification of the banking facility to Non- Current from Current Liabilities as this was re- negotiated duringtheyear.

*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.

** Working capital is defined as current assets less current liabilities.

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Directors Report

Operating and Financial Review (continued)

Underlying EBIT and EBITDA is a non-IFRS measure that in the opinion of Veris provides useful information to assess the financial performance of the Group. A reconciliation between statutory results and underlying results is provided below. The non-IFRS measure is unaudited:

	FY2017 $000	FY2016 $000	.
Statutory profit/(loss) aftertax	48	19,698
Add back: Tax benefit Net finance expense Restructuring costs Acquisition costs Share-based payment	(2,134) 846 1,309 1,192 298	(9,750) 751 173 (1,336) 1,050
UnderlyingEBITprofit	1,559	10,586
Depreciationand amortisation	8,255	5,590
Underlying EBITDA	9,814	16,176

Risks

There are specific risks associated with the activities of the Group and general risks which are largely beyond the control of the Company and the Directors. The most significant risks identified that may have a material impact on the future financial performance of the Company and the market price of the Group’s shares are:

Project Delivery Risk

Execution of projects involves professional judgment regarding scheduling, development and delivery. Failure to meet scheduled milestones could result in professional product liability, warranty or other claims against the Company. The Company maintains a range of review processes, insurance policies and risk mitigation programs designed to closely monitor progress and services and outputs delivered.

Legal and Contractual Risk

Errors, omissions or incorrect rates and quantities mean the Group may not achieve full benefits of project deliverables and may lead to a negative impact on financial performance. Additionally, failure to understand the contract terms can lead to disputes with third parties and litigation over contractual terms. The Company seeks to mitigate these risks by following a tendering process and estimation programme and using the knowledge and experience of staff to conduct pricing appropriately and contract review and screening.

Political Risk

Major infrastructure and civil work may depend on Government approval and funding. Project timing may vary when government approval and funding is either delayed and/or withheld due to reasons such as political, economic and environmental changes. The Group have diversified its revenue base across multiple sectors, suppliers and states to mitigate and reduce potential impact to results.

Integration Risk

In the last 3 years Veris has purchased 8 companies as part of its strategy to create a national professional services business. To fully derive benefits from this, Veris are integrating the acquired businesses so that synergies and economies of scale can continue to be achieved and to offer a better service to our growing national customer base. This will mitigate against companies operating in silos with increased costs and risks to the Group. Veris has already established shared service support functions and a new operating model which focuses on inclusion, consolidation, controls and efficiencies.

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Veris Limited Annual Financial Report 30 June 2017

Directors Report

Goodwill

As a result of the acquisition of 8 companies Veris has purchased a significant amount of Goodwill. This Goodwill has been generated by the vendors of the acquired businesses over a number of years and has resided in a variety of business names. Veris has created a national corporate brand that it is currently transitioning the goodwill generated by the individual vendors, into to create corporate Goodwill in the Veris Brand. This mitigates the risk associated with individuals as the business grows in scale.

Significant Changes in State of Affairs

There were no significant changes in the state of affairs of the Group other than that referred to in the financial statements or notes thereto and sections of this report.

Events Subsequent to Reporting Date

Subsequent to the 30 June, the Group have decided to discontinue the Infrastructure division of OTOC Australia following the completion of existing projects. The Communications division of OTOC Australia has been renamed AQURA Technologies and will continue its operations which include the provision of support to Veris professional services business.

On 31 July 2017, Veris Australia purchased LANDdata Surveys PTY LTD, a leading surveying consultancy with operations in the Australian Capital Territory and New South Wales. This acquisition will enhance Veris’ experience and expertise in commercial, residential, land development and government infrastructure projects and increasing the Group’s national footprint.

Veris Limited has declared after the balance sheet date that it will pay a fully franked dividend for 2017 of 0.5 cents per share in September 2017.

Likely Developments

The Veris Group continues on its national strategy of developing a national professional services business and increasing its capabilities and geographical market presence.

Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.

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Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report - Audited

The directors are pleased to present your Company’s 2017 remuneration report which sets out the remuneration information for Veris Limited’s non-executive directors, executive directors and other key management personnel. The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001. This Remuneration Report forms part of the Directors’ Report. For the purposes of this report ‘Key Management Personnel’ (KMP) of the Company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly.

The report contains the following sections:

• a) Directors and Executive Disclosures

• b) Remuneration Policy

• c) Remuneration Advice

• d) Relationship between remuneration and the Company’s performance

• e) Details of share-based compensation and bonuses

• f) Voting and comments made at the Company’s 2016 Annual General Meeting

• f) Contractual Arrangements

• h) Details of remuneration

• i) Analysis of bonuses included in remuneration

• j) Equity Instrument Disclosure Relating to Key Management Personnel

a) Director and Executive Disclosures

The details of directors and key management personnel disclosed in this report are outlined below.

Non-Executive
Directors
Derek La Ferla	Chairman	(Independent)
Tom Lawrence	Non-Executive Director	(Independent)
Karl Paganin	Non-Executive Director	(Independent)
Executive KMP
Adam Lamond	Managing Director	(Original appointment date 13 October 2011, appointed
		Managing Director 29 March 2017)
Brian Mangano	Chief Financial Officer
Lisa Wynne	Company Secretary
Simon Thomas	Chief Executive Officer	(Resigned 29 March 2017)

b) Remuneration policy

The Group has high expectations of its personnel and its executive leadership team. The Group aligns the performance outcomes of its executives with its own corporate outcomes and as such remuneration will be based on merit, performance and responsibilities assigned and undertaken.

Remuneration & Nomination Committee

The Group has a Remuneration and Nomination Committee, which is responsible for:

• Assessing appropriate remuneration policies, levels and packages for Board Members, the CEO or MD, and (in consultation with the CEO or MD) other senior executive officers;

• Monitoring the implementation by the Group of such remuneration policies; and

• Recommending the Group’s remuneration policy so as to:

• motivate directors and management to pursue the long-term growth and success of the Group within an appropriate control framework; and

• demonstrate a clear relationship between key executive performance and remuneration.

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Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report – Audited (continued)

Non-executive director remuneration policy

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time-to-time by a general meeting. The Constitution was amended by special resolution of the members on 23 November 2016 with the aggregate remuneration increasing from $250,000 to $500,000 per annum, which is to be apportioned amongst Non-Executive Directors.

The Company has entered into service agreements with its current Non-Executive Directors; refer details of the contractual arrangements on page 19 of this remuneration report. Retirement payments, if any, are agreed to be determined in accordance with the rules set out in the Corporations Act 2001 at the time of the Directors retirement or termination. Non-Executive Directors’ remuneration may include an incentive portion consisting of bonuses and/or options, as considered appropriate by the Board, which may be subject to shareholder approval in accordance with the ASX Listing Rules.

Executive remuneration policy

The Company’s remuneration policy is to ensure the remuneration package appropriately reflects the person’s duties and responsibilities and that remuneration is competitive in attracting, retaining and motivating people of the highest quality. The Company aims to reward executives with a level of remuneration commensurate with their position and responsibilities within the Company so as to attract and retain executives of the highest calibre, whilst incurring a cost that is acceptable to shareholders.

The overall executive remuneration framework has three components and is presented in the diagram below:

• Base pay and superannuation

• Short-term incentives (STIs)

• Long-term incentives (LTIs) through participation in Company’s Performance Rights Plan

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Remuneration Report – Audited (continued)

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Remuneration Framework
EXECUTIVE REMUNERATION FRAMEWORK
FIXED REMUNERATION
Comprises base salary and superannuation
VARIABLE REMUNERATION
At Risk Components (STI/LTI)
STI PLAN LTI PLAN
Annual reward in the form of a cash bonus of 20%- Annual grant of performance rights with a three
50% of Total Fixed Remuneration determined by year vesting period subject to the achievement of
performance against annual financial, safety and Total Shareholder Return (TSR) and Earnings Per
personal Key Performance Indicators Share (EPS) hurdles (equally weighted)
Performance Measures (Annual) Performance Measures (3 Years)
FY17 Plan
50% 50%
Absolute Veris Absolute Veris EPS
40%
50% CEO TSR [(A)] target – 3 year
pool [(B)]
10%
Pre FY17 Plans
50% 50%
EBITDA TRIFR INDIVIDUAL
rTSR [(C)] compared to EPSCAGR [(D)]
the ASX All
Ordinaries Index
Other 40%
KMPs
55%
5%
EBITDA TRIFR INDIVIDUAL
STI at Risk LTI at Risk
20%-50% of TFR 60-100% of TFR
----- End of picture text -----

(A) TSR means the Total Shareholder Return of VRS

(B) Absolute EPS target means a normalised Earnings Per Share pooled over 3 years, i.e. setting an aggregate value of dollars of EPS that must be achieved over the three years (i.e. a pool consisting of year 1 EPS plus year 2 EPS plus year 3 EPS)

(C) rTSR means Relative total Shareholder Return

(D) EPSCAGR means Earnings Per Share Compounded Annual Growth

(E) TRIFR means Total Recordable Injury Frequency Rate

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Veris Limited Annual Financial Report 30 June 2017

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Remuneration Report – Audited (continued)

The table and graphs below represent the target remuneration mix for the KMP’s in the current year. The short-term incentive and the long-term incentive amount is provided based on target levels and not the value granted during the year.

		At Risk	At Risk
	Fixed Remuneration	Short-term Incentive	Long-Term Incentive
MD(1)	100%	-	-
CEO(1)	42%	17%	42%
CFO	45%	18%	36%
Company Secretary	53%	16%	32%

(1) CEO, Simon Thomas resigned as CEO on 29 March 2017 and Executive Director, Adam Lamond was appointed to the role of MD. Mr Lamond’s did not participate in either the STI or the LTI Plan in either his role as Executive Director or MD.

Total Fixed Remuneration

The Base Salary is a monetary recognition for the undertaking of task and assumption of responsibilities in line with an individual’s role in the organisation. It is set against industry and regional benchmarking for role, market conditions and complexity of task. Where appropriate independent remuneration advice is obtained. There are no guaranteed base pay increases included in any executive contracts. Statutory superannuation is payable in addition to the base pay.

Short-term incentives

Executives have the opportunity to earn an annual short-term incentive (STI) if predefined targets are achieved (KPIs). The Group’s STIs are paid in the form of cash and are calculated as a percentage of Total Fixed Remuneration, based on achievement of set financial, safety and personal KPIs that provide a measured return to the organisation set by the Remuneration and Nomination Committee. The behaviours of our employees against the values of the Company are also assessed through a performance evaluation process. STIs play a key role in aligning superior operational outcomes for shareholders with the remuneration outcomes for management.

For the financial year ended 30 June 2017 the KMP’s had target STIs of between $52,000 and $186,000, which represents between 20% and 50% of the KMP’s individual Total Fixed Remuneration) linked to EBITDA, safety and personal performance hurdles within their individual roles.

The KPI’s cover financial, non-financial, company and individual objectives, chosen as they represent the key drivers for the short-term success of the business and provide a framework for delivering long-term value. The KPI’s for the KMP’s are as follow:

Measure	Weighting	KPI	Rationale
Safety	5%-10%	TRIFR	Safety is paramount and the inclusion of safety in the incentive plan reflects the Company’s commitment to provide an incident-free work environment
Financial	40%	Underlying EBITDA	Key profitably driver
Individual	50%-55%	Based on individual objectives set annually which align with the Company’s strategy and assist with the Company meeting its overall performance targets	Drives focus on key performance elements that align to overall company performance targets and strategy

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Remuneration Report – Audited (continued)

The Remuneration and Nomination Committee is responsible for determining the STI payable based on an assessment of whether the KPIs are met. The performance evaluation in respect of the year ended 30 June 2017 has taken place and STIs payable to the KMP’s have been accrued and presented in the table outlined in part (h) of this report. Excluding, the outgoing CEO, approximately 51% of the target STIs for the KMP’s were assessed as achieved and payable.

Long-term Incentives

The Group bases its Long Term Incentive Plan (LTI) on a combination of continued valued service of the particular executive and overall corporate performance of the Group as a whole so as to align each of the executives’ incentives with the total performance of the Group.

In 2014 the Group adopted a Performance Rights Plan (“Plan”) as an essential part of retaining senior executives in an increasingly competitive market. The Plan provides the long term incentive component of the remuneration for executives and KMP’s to be identified by the Board. The purpose of the Plan is to issue a performance based bonus in the form of Performance Rights based on KPI’s and performance hurdles to encourage alignment of personal and shareholder interest and:

• Foster a long term perspective within the employees necessary to increase shareholder return;

• Drive sustainable, long term performance of the Company;

• Retain key senior executives;

• Provide an opportunity for employees to participate in the Company’s share price performance; and

• Ensure that the Company has a remuneration model that makes it an attractive employment option for talented personnel

LTI Performance measures and hurdles (including tenure provisions) are determined by the Board and linked to financial measures.

During the period, the Group issued 3,002,848 Performance Rights under the Plan.

The value of the Performance Rights offered as LTIs represents between 32% and 42% of the KMP’s individual Total Fixed Remuneration. The mechanism for converting the LTI dollar value of the rights into the number of Performance Rights that were granted was based on the Company’s 30-day volume weighted average price per share prior to 31 August 2016.

Vesting of the Performance Rights is subject to the achievement of the two separate financial performance hurdles (over a three year vesting period) outlined in the table below. Subject to the achievement of the performance hurdles, each Key Executive Performance Right may be converted (on a one for one basis) into one Share.

	50%	Absolute TSR**	50% Absolute EPS Pool (cents per share)***	50% Absolute EPS Pool (cents per share)***
Performance Vesting* Hurdles:**	<100%	Nil	<6	Nil
	>100% < 180%	Pro-rata vesting between 25% and100%	>6 < 6.5	pro rata vesting between 25%-100%
	180%>	100%	6.5>	100%

• Safety must be maintained at all times and no LTI’s will vest in the instance of a major safety breach such as a serious injury or fatality

• ** Performance of management measured against absolute shareholder return target

• *** Performance of management measured against a normalised EPS pooled approach setting an aggregate

• value of dollars of EPS that must be achieved over the three years (i.e. a pool consisting of year 1 EPS plus year 2 EPS plus year 3 EPS)

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Remuneration Report – Audited (continued)

The Board believes a Total Shareholder Return (“TSR”) performance hurdle alongside the use of an Earnings per Share (“EPS”) hurdle provides an appropriate balance. These performance measures are mutually exclusive, meaning, that if one measure is not met, there is still the ability to earn an LTI under the other measure.

Absolute TSR

Veris’ justification for the use an absolute TSR target as opposed to a comparison against a selected comparator group is companies such as Veris that are in a diversification and growth phase and small to mid-capitalised are unique in their operations and appropriate and relevant comparator groups are difficult to identify.

EPS Pool

Veris’ believes that pooling the EPS over three years focuses on long term EPS performance, incorporating all performance periods into the final outcome.

Subject to the terms and conditions of a grant of a Performance Right, the Board has discretion determine that all or a portion of the unvested Performance Rights automatically vest and automatically exercise on the occurrence of a Change of Control.

Remuneration Review

The Board is in the process of conducting a full review of the current remuneration structure of the Group to apply for the next and future financial years.

c) Remuneration Advice

Remuneration is regularly compared with the external market by participation in industry salary surveys and during recruitment activities generally. During the period, the Board engaged, consulting firm, The Reward Practice to provide independent advice in the form of a written report detailing benchmarking of executive long-term incentive structures to ensure effective alignment with business requirements, key shareholder group expectations. During the period no remuneration recommendations, as defined by the Corporations Act, were provided by the Reward Practice.

d) Performance Linked Compensation

The following table shows key performance indicators for the Group over the last five years.

	Financial Year Ended 30 June	2017	2016	2015	2014	2013
LTI	Closing SharePrice ($)	0.15	0.23	0.07	0.14	0.12
	EPS (cents)	0.02	7.4	(3.6)	2.8	2.5
STI	Profit/(Loss) from Continuing Operations ($’000)	48	19,698	(8,786)	5,496	5,208
	Average % of Maximum STI awarded toExecutives(i) (%)	25%	92%	34%	59%	-
	Dividendspaid($’000)	1,368	-	-	-	-
(i)	Represents STI payable/paid as a	percentage of the maximum STI payable.

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Veris Limited Annual Financial Report 30 June 2017

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Remuneration Report – Audited (continued)

e) Details of share-based compensation and bonuses

(i) Options

No options were granted to directors and key management personnel during or since the end of the reporting period.

(ii) Performance Rights granted as compensation to key management personnel

The following Performance Rights over ordinary shares were granted to key management personnel during the reporting period:

Key Management Personnel	Number of Performance Rights Granted During 2017	Vesting Condition(A)	Vesting Hurdle(B)	Grant Date	Exercise Price	Fair value at grant date(C)	Expiring date
Adam Lamond	-	-	-	-	-	-	-
Simon Thomas	-	-	-	-	-	-	-
Brian Mangano	828,848	3 years’ service	50% Absolute TSR and 50% Absolute 3Yr EPS pool	5 June 2017	-	$0.063	30 June 2019
Lisa Wynne	328,500	3 years’ service	50% Absolute TSR and 50% Absolute 3Yr EPS pool	5 June 2017	-	$0.063	30 June 2019

(A) All Performance Rights granted under the Plan during the reporting period will not vest until the Vesting Conditions imposed by the Board are satisfied.

(B) Vesting is conditional on the Group achieving certain performance hurdles. Details of the performance criteria and vesting are included in the long-term incentives discussion on page 16,17 and 18 of this report.

(C) The fair value of the Performance Rights has been calculated at grant date and measured using Monte Carlo simulation model incorporating the probability of the relative TSR vesting condition being met. This amount is allocated to remuneration over the vesting period (i.e. in years 1 July 2016 to 30 June 2019). An unexercised Performance Right will lapse upon the earlier to occur of:

• i. failure to satisfy the applicable vesting conditions;

• ii. the holder purporting to transfer the Performance Right otherwise than with the consent of the Board or by force of law;

• iii. the employment of the holder ceasing, where such a condition was imposed on the grant of the Performance Right;

iv. in the opinion of the Board, the holder commits any fraudulent or dishonest act or is in breach of his or her obligations to the Company or subsidiary;

• v. the expiry date; or

vi. the seven year anniversary of the date of grant of the Performance Rights.

15

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report – Audited (continued)

(iii) Exercise of Performance Rights Granted as Compensation in Prior Years

During the period, the following shares were issued on the vesting of performance rights previously granted as compensation in previous financial years:

Key Management Personnel	Number of Shares	Amount paid $/share
Adam Lamond	-	-
Simon Thomas	2,477,344	-
Brian Mangano	435,000	-
Lisa Wynne	73,973	-

(iv) Details of Long Term Incentives affecting current and future remuneration

Key Management Personnel	Instrument	#	Grant date	% vested in year	# vested in year	% forfeited/la psed in year(A)	# forfeited /lapsed in year	Finan cial years in which grant vests	Face value of vested rights(B)
Simon Thomas	Performance Rights	2,390,625	12 Nov 2014	25%	597,656	75%	1,792,968	2017	$89,648
		1,368,750	20 Jan 2016	50%	684,375	50%	684,375	2017	$102,656
		4,106,250	20 Jan 2016	-	-	100%	4,106,250	2018	-
		7,865,625
Brian Mangano	Performance Rights	870,000	12 Nov 2014	45%	391,500	55%	478,500	2017	$58,725
		650,077	20 Jan 2016	100%	650,077	-	-	2017	$97,511
		1,950,229	20 Jan 2016	-	-	-	-	2018	-
		828,848	5 June 2017	-	-	-	-	2019	-
		4,299,154
Lisa Wynne	Performance Rights	147,945	12 Nov 2014	45%	66,575	55%	81,370	2017	$9,986
		220,588	20 Jan 2016	100%	220,588	-	-	2017	$33,088
		661,765	20 Jan 2016	-		-	-	2018	-
		328,500	5 June 2017	-	-	-	-	2019	-
		1,104,271

(A) The percentage forfeited in the year represents the reduction from the maximum number of instruments available to vest due to performance criteria not being achieved or cessation of employment.

(B) The face value of the vested rights is based on the share price as at 30 June 2017 of 15 cents multiplied by the number of rights vested.

16

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report – Audited (continued)

(v) Vesting and Exercise of Performance Rights Granted as Remuneration

FY2015 LTI Plan Performance Outcomes

As the Company had been lacking a long term incentive plan until the introduction of the Plan in 2014, in the prior periods, the Board has adopted a transitional vesting approach for the grant of rights to long standing KMP’s (CEO, CFO and Company Secretary) and therefore 50% of the LTI performance rights issued to KMP’s in November 2014 were subject to the Group achieving the EPSCAGR and rTSR growth rates set out in the table below over a three year period 1 July 2014 to 30 June 2017.

The table below outlines the hurdles linked to vesting of the FY2015 Performance Rights and the performance of the Group against these hurdles.

**50% rTSR **	**50% rTSR **		**50% EPS CAGR **	**50% EPS CAGR **
Hurdle		Performance 30/06/17	Hurdle		Performance 30/06/17
< 50% percentile	Nil		<6%	Nil
>50th percentile, <75th percentile	50%, plus 2% for every one percentile increase above 50th percentile	70th Percentile	>6%-<24%	pro rata vesting between 25%-100%	(8%)
75th percentile or more	100%		24%>	100%

The achievement of the above hurdles was assessed in August 2017 against the base FY2014 EPS of 2.8 cents and base share price of Veris at 30 June 2014 of 10 cents.

Total Shareholder Return

Veris’ TSR was 55% during the performance period 1 July 2014 to 30 June 2017 ranking Veris in the 70[th] percentile against the ASX All Ordinaries Index, resulting in the following outcomes for the vesting of the FY2015 Performance Rights:

• 1,055,731 Performance Rights vested ; and

• 50,897 Performance Rights lapsed

Normalised Earnings Per Share

Veris’ normalised EPS has decreased by 8% since the beginning of the performance period of 1 July 2014 to 30 June 2017, hence, failing the minimum 6% growth target, resulting in the following outcomes for the vesting of the FY2015 Performance Rights:

• 508,973 Performance Rights lapsed

Cessation of Employment

A further 1,792,969 Performance Rights lapsed during the financial year following the resignation of Veris’ CEO.

17

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report – Audited (continued)

FY2016 LTI Plan Performance Outcomes

As the Company had been lacking a long term incentive plan until the introduction of the Plan in 2014, in the prior periods, the Board has adopted a transitional vesting approach for the grant of rights to long standing KMP’s (CEO, CFO and Company Secretary) and therefore 25% of the LTI performance rights issued to KMP’s in January 2016 were subject to the Group achieving the EPSCAGR and rTSR growth rates set out in the table below over the two year period 1 July 2015 to 30 June 2017.

The table below outlines the hurdles linked to vesting of the FY2015 Performance Rights and the performance of the Group against these hurdles.

	50% rTSR			50% EPS CAGR	50% EPS CAGR
	Hurdle	Performance 30/06/17		Hurdle	Performance 30/06/17
< 50% percentile	Nil		<5%	Nil
>50th percentile, <75th percentile	50%, plus 2% for every one percentile increase above 50th percentile	92nd Percentile	>5%- <25%	pro rata vesting between 25%- 100%	33%
75th percentile or more	100%		25%>	100%

The achievement of the above hurdles was assessed in August 2017 against the base FY2015 Normalised EPS of 0.9 cents and base share price of Veris at 30 June 2015 of 7 cents.

Total Shareholder Return

Veris’ TSR was 118% during the performance period 1 July 2015 to 30 June 2017 ranking Veris in the 92[nd] percentile against the ASX All Ordinaries Index, resulting in the following outcomes for the vesting of the FY2016 Performance Rights:

• 1,119,707 Performance Rights vested

Normalised Earnings Per Share

Veris’ normalised EPS has increased by 33% since the beginning of the performance period of 1 July 2015 to 30 June 2017, hence achievement of the EPS growth target by 100%, resulting in the following outcomes for the vesting of the FY2015 Performance Rights:

• 435,332 Performance Rights vested

Cessation of Employment

4,790,625 Performance Rights lapsed during the financial year following the resignation of Veris’ CEO.

f) Voting and comments made at the Company’s 2016 Annual General Meeting

The adoption of the Remuneration Report for the financial year ended 30 June 2016 was put to the shareholders of the Company at the Annual General Meeting held 23 November 2016. The Company received more than 98% of votes, of those shareholders who exercised their right to vote, in favour of the remuneration report for the 2016 financial year. The resolution was passed without amendment on a show of hands.

18

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report – Audited (continued)

g) Contractual Arrangements

On appointment to the board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the board policies and terms, including remuneration, relevant to the office of director.

Remuneration and other terms of employment for the managing director, chief executive officer, chief financial officer and other key management personnel are also formalised in service agreements. Major provisions of the agreements relating to remuneration are set out below.

Name	Term of agreement	Base Salary including superannuation	Termination
Derek La Ferla	Mr La Ferla will hold office until the next annual general meeting of the Company where he may be subject to retirement by rotation under the company’s constitution.	$125,744	In accordance with the company’s constitution and the Corporations Act 2001 (Cth).
Adam Lamond(A) (B) (C) & (D)	Until validly terminated in accordance with the terms of the Agreement.	$414,616	Termination by Company with reason – 1 months’ notice Termination by Company without reason – 3 months’ notice (or payment of the equivalent of 5 months’ salary to dispense ofthenotice period)
Tom Lawrence	Mr Lawrence will hold office until the next annual general meeting of the Company where he may be subject to retirement by rotation under the company’s constitution.	$77,305	In accordance with the company’s constitution and the Corporations Act 2001 (Cth).
Karl Paganin	Mr Paganin will hold office until the next annual general meeting of the Company where he may be subject to retirement by rotation under the company’s constitution.	$77,305	In accordance with the company’s constitution and the Corporations Act 2001 (Cth).
Simon Thomas (resigned 29 March 2017)(A) (B) & (C)	Until validly terminated in accordance with the terms of the Agreement.	$465,374	Termination by Company with reason – 1 months’ notice Termination by Company without reason – 3 months’ notice (or payment of the equivalent of 5 months’ salary to dispense ofthenotice period)
Brian Mangano(A) (B) & (C)	Until validly terminated in accordance with the terms of the Agreement.	$331,538	Termination by Company with reason – 1 months’ notice Termination by Company without reason – 3 months’ notice (or payment of the equivalent of 5 months’ salary to dispense ofthenotice period)
Lisa Wynne(A) (B) & (C)	Until validly terminated in accordance with the terms of the Agreement.	$200,000	Termination by Company with reason – 1 months’ notice Termination by Company without reason – 3 months’ notice (or payment of the equivalent of 5 months’ salary to dispense ofthenotice period)

19

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report – Audited (continued)

• (A) Key management personnel are also entitled to receive on termination of employment their statutory entitlements of accrued annual and long service leave, together with any superannuation benefits.

• (B) Key management personnel’s contracts allow for participation in the Company’s Long-Term Incentive Plan (subject to Board and Shareholder approval, if applicable).

• (C) These contracts provide for the provision of short-term incentives by way of a cash bonus subject to key performance indicators to be determined by the Remuneration & Nomination Committee annually.

• (D) Mr Lamond was an Executive Director for the period 1 July 2016 to 29 March 2017 and received an annual salary of $126,650 during that period. On 29 March 2017, Mr Lamond was appointed to the role of Managing Director.

h) Remuneration of directors and key management personnel of the group for the current and previous financial year

		Short-ter	m employee benefits	m employee benefits	Post- employ- ment benefits	Ter B	mination enefits	Share- based Payments
		Salary & fees $	STI Cash bonus (A) $	Non- monetary $	Super- annuation $	$	Perfor- mance Rights $(E)	Perfor- mance Rights $(E)	Total $	Proportion of remuneration performance related
Directors
Non-Executive
	Directors
Derek La Ferla (Chairperson)	2017	115,983	-	-	7,343	-	-	-	123,326	-
	2016	114,834	-	-	10,909		-		125,744	-
Tom Lawrence	2017	77,305	-	-	-	-	-	-	77,305	-
	2016	77,305	-	-	-	-	-	-	77,305	-
Karl Paganin	2017	77,305	-	-	-	-	-	-	77,305	-
	2016	47,588	-	-	-	-	-	-	47,588	-
Executive Director
Adam Lamond (Managing Director)(C)	2017	178,804	-	-	9,891	-	-	-	188,695	-
	2016	120,000	-	-	6,650	-	-	-	126,649	-
Total ’	2017	449,397	-	-	17,234	-	-	-	466,631	-
Directors Remuneration	2016	359,727	-	-	17,559	-	-	-	377,286	-

20

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report – Audited (continued)

		Short-	term employee benefits	term employee benefits	Post- employ -ment benefit s	Termi Ben	nation efits	Share- based Payment s
			benefits
		Salary & fees $	STI Cash bonus (A) $	Non- monetar y $	Super- annuation $	$	Perfor- mance Rights $(E)	Perfor- mance Rights $(E)	Total $	Proportion of remuneration performance related
Other Executives
Simon Thomas (CEO, resigned 29 March 2017)	2017	330,981	-	-	24,520	251,981	(239,324)	116,645	484,712	24%
	2016	446,067	172,189	-	19,308	-	-	461,651	1,099,215	58%
Brian Mangano (CFO)	2017	295,788	67,454	-	28,100	-	-	229,818	621,160	48%
	2016	291,130	126,648	-	33,163	-	-	196,652	647,593	50%
Lisa Wynne (Company Secretary)(D)	2017	145,000	26,735	-	14,623	-	-	73,165	259,523	38%
	2016	126,093	36,724	-	11,400		-	54,186	228,403	40%
Total Executives’ Remuneration	2017	771,679	94,189	-	67,242	251,981	(239,324)	419,627	1,365,395	38%
	2016	863,290	335,561	-	63,871	-	-	712,489	1,975,211	33%
Total Directors’ and Executives’ Remuneration	2017	1,221,076	94,189	-	84,477	251,981	(239,324)	419,627	1,832,026	28%
	2016	1,223,017	335,561	-	81,430		-	712,489	2,352,497	45%

Notes in relation to the table of directors’ and executive officers’ remuneration

(A) Short-term incentive bonus is for the achievement of KPIs within their individual roles for the financial year ended 30 June 2017. The performance evaluation in respect of the year ended 30 June 2017 has taken place and the short-term incentive bonuses have been accrued but not yet paid.

(B) Salary and Fees includes annual leave and long service leave.

(C) Adam Lamond served as an Executive Director from January 2014 to March 2017, when he was appointed Managing Director.

(D) Pro-rata based on annual salary of $200,000.

(E) The value of the Performance Rights granted or lapsed in the year is the fair value of the rights calculated at grant date. This amount is allocated to remuneration over the vesting periods (in years 1 July 2015 to 30 June 2019). The fair value of the Performance Rights has been measured using Monte Carlo simulation model.

21

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report – Audited (continued)

i) Analysis of bonuses included in remuneration – audited

Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to key management personnel during the period are detailed below.

		Short-term incentive bonus	Short-term incentive bonus
Key Management Personnel	Maximum Potential Value of STI Payment$	Included in remuneration $(A)	% of Maximum Potential STI Payment Awarded	% Maximum Potential STI Payment Forfeited
Adam Lamond	-	-	-	-
Simon Thomas	186,150	-	-	100%(B)
Brian Mangano	132,615	67,454	51%	49%(C)
Lisa Wynne	52,560	26,735	51%	49%(C)

(A) Amounts included in remuneration for the financial year is for the achievement of 90% of personal KPIs and performance within their individual roles for the financial year ended 30 June 2017. The performance evaluation in respect of the year ended 30 June 2017 has taken place however the shortterm incentive bonuses have been accrued but not yet paid.

(B) The amounts forfeited are due to the cessation of employment of the CEO.

(C) The amounts forfeited are due to Financial and Safety KPIs not being met in relation to the financial year.

j) Equity Instrument Disclosure Relating to Key Management Personnel

Analysis of movements in Performance Rights issued, held and transacted by directors and key management personnel

KMP	# Held 1 July 2016	Granted in year	Grant Value(A)	Grant Face Value(B)	Number Vested in year	Number forfeited / lapsed in year	Number held at 30 June 2017
Adam Lamond Simon Thomas Brian Mangano Lisa Wynne	-	-	-	-	-	-	-
	7,865,625	-	-	-	(1,282,032)	(6,583,594)	-
	3,470,306	828,848	$52,217	$124,327	(1,041,576)	(478,500)	2,779,078
	1,030,298	328,500	$20,696	$49,275	(287,163)	(81,370)	990,265

(A) The value of the Performance Rights granted in the year is the fair value of the rights calculated at grant date. This amount is allocated to remuneration over the vesting period (i.e. in years 1 July 2015 to 30 June 2018). The fair value of the Performance Rights has been measured using Monte Carlo simulation model incorporating the probability of the relative TSR vesting condition being met.

(B) The face value of the rights granted during the year is based on the share price as at grant date of 12 cents multiplied by the number of rights granted.

22

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Remuneration Report – Audited (continued)

Analysis of movements in Shares issued, held and transacted by directors and key management personnel

The number of ordinary shares in the Company held during the reporting period by each director and other key management personnel of the Group, including their personally related parties are set out below. There were no shares granted as compensation during the reporting period.

	Balance at 30/06/2016	Movement	Balance at 30/06/2017
Directors
Derek La Ferla	562,500	5,204	567,704
Adam Lamond	50,266,815	(4,425,000)	45,841,815
Tom Lawrence(A)	3,662,596	-	3,662,596
Karl Paganin	4,746,929	753,071	5,550,000
KMP’s
Simon Thomas(B)	50,000	2,477,344	2,527,344
Brian Mangano(C)	1,300,000	536,202	1,836,202
Lisa Wynne(C)	-	75,205	75,205
Total	60,588,840	(577,974)	60,010,866

(A) Includes 439,998 shares held by OTC ESP Pty Ltd as trustee of the Veris Employee Share Plan of which Tom Lawrence is a Director but in which shares Tom Lawrence has no beneficial interest.

(B) KMP shareholding at cessation of employment.

(C) KMP shareholdings do not include the Performance Rights which have vested during the period as Performance Rights do not convert to ordinary shares until the Board notifies the employee and provides a vesting notification advising them that the Performance Rights have vested. The vesting notice will be provided following the finalisation of the audit for the period.

THIS CONCLUDES THE AUDITED REMUNERATION REPORT

Shares Under Option

As at 30 June 2017 there are no shares under option.

Indemnification and Insurance of Officers

During the financial year the Group paid insurance premiums of $31,000 (2016: $24,000) to insure the directors, secretaries and executive officers of the Group and its subsidiary companies.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the directors and officers in their capacity as directors and officers of Veris Limited and its subsidiary companies, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group. The directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ liability and legal expenses insurance contracts, as such disclosure is prohibited under the terms of the contract.

23

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Non-Audit Services

During the year KPMG, the Group’s auditor, has performed certain other services in addition to its statutory duties.

The board has considered the non-audit services provided during the year by the auditor and in accordance with advice provided by the Audit Committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

All non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed by the Audit Committee to ensure they do not impact the integrity and objectivity of the auditor; and the non-audit services provided do not undermine the general principals relating to the auditor independence as set out in APES110 Code of Ethics for the Professional Accountants, as they did not involve reviewing or auditing the auditors own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.

Details for the amounts paid to KPMG, the Group’s auditor, and its related practices for audit and nonaudit services to the Group provided during the year are set out below.

Audit services: Audit and review of the financial reports Services other than audit services: Other services (Due Diligence) Other services (Integration) Earn out audit	Consolidated 2017 $000 2016 $000 222 195 142 76 405 - - 25
	769 296

Environmental Regulations and Performance

It is the Group’s policy to comply with all environmental regulations applicable to it. The Company confirms, for the purposes of section 299(1)(f) of the Corporations Act 2001 that it is not aware of any breaches by the Group of any environmental regulations under the laws of the Commonwealth of Australia, or of a State of Territory of Australia.

In the majority of the Veris’ business situations, Veris is not the owner or operator of plant and equipment requiring environmental licences. Veris typically assists its clients with the management of their environmental responsibilities, rather than holding those responsibilities directly.

The Group is not aware of any breaches by Veris of any environmental regulations under the laws of the Commonwealth of Australia, or of a State or Territory.

Proceedings on Behalf of the Group

There are no proceedings on behalf of the Group under Section 237 of the Corporations Act 2001 in the financial year or at the date of the report.

Lead auditor’s independence declaration

The lead auditor’s independence declaration is set out on page 76 and forms part of the directors’ report for the year ended 30 June 2017.

24

Veris Limited Annual Financial Report 30 June 2017

Directors Report

Rounding off

The Company is of a kind referred to in ASIC Instrument 2016/191 and in accordance with that Instrument, amounts in the condensed consolidated interim financial statements and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Corporate Governance Statement

Veris is committed to implementing sound standards of corporate governance. In determining what those standards should involve, the Group has had regard to the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (3rd Edition) (“ASX Recommendations”). This corporate governance statement outlines the key principles and practices of the Company which in the terms of the Group’s Corporate Governance Charter, define the Group’s system of governance. A copy of the Group’s Corporate Governance Statement has been placed on the Group’s website under the Investors tab in the corporate governance section - http://www.veris.com.au/media/1228/veris_corporate_governance_statement.pdf

Signed in accordance with a resolution of the directors:

==> picture [153 x 53] intentionally omitted <==

Derek La Ferla

Chairman Dated at Perth 16 August 2017

25

Veris Limited Annual Financial Report 30 June 2017

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2017

Note Revenue 2 Operating Expenses Depreciation 13 Amortisation 14 Acquisition related (cost)/income 3 Restructuring costs Share-based payment Results from operating activities Financial income Finance costs Net finance costs Profit (loss) before income tax Income tax benefit 15 Profit for the year Total comprehensive income for the year Earnings per share Basic earnings cents per share 4 Diluted earnings cents per share 4	2017 2016 $000 $000 107,875 120,858 (98,061) (104,682)
	9,814 16,176 (4,087) (2,550) (4,168) (3,040) (1,192) 1,336 (1,309) (173) (298) (1,050)
	(1,240) 10,699 55 69 (901) (820)
	(846) (751)
	(2,086) 9,948
	2,134 9,750
	48 19,698
	48 19,698
	0.02 7.40
	0.02 7.40

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

26

Veris Limited Annual Financial Report 30 June 2017

Consolidated Statement of Financial Position As at 30 June 2017

Note Assets Current assets Cash and cash equivalents 17 Trade and other receivables 10 Work in progress Other current assets Current tax asset Total current assets Non-current assets Plant and equipment 13 Intangible assets 14 Deferred tax asset 16 Total non-current assets Total assets Liabilities Current Liabilities Trade and other payables 11 Deferred vendor payments 7 Loans and borrowings 19 Employee benefits 12 Current tax liability Total current liabilities Non-current liabilities Loans and borrowings 19 Deferred vendor payments 7 Employee benefits 12 Total non-current liabilities Total liabilities Net assets Equity Share capital 20 Share based payment reserve 22 Retained earnings Total equity	30 Jun 2017 30 Jun 2016 $000 $000 14,574 12,968 15,983 14,353 4,616 6,750 1,118 1,856 - 42
	36,291 35,969
	11,049 8,048 40,525 31,844 7,636 6,716
	59,210 46,608
	95,501 82,577
	7,291 10,384 1,544 2,700 2,593 7,799 5,481 4,092 613 -
	17,522 24,975
	8,935 3,593 1,200 300 907 411
	11,042 4,304
	28,564 29,279
	66,937 53,298
	37,283 22,622 1,747 1,449 27,907 29,227
	66,937 53,298

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

27

Veris Limited Annual Financial Report 30 June 2017

Consolidated Statement of Changes in Equity For the Year Ended 30 June 2017

Balance at 1 July 2016 Total comprehensive income for the year Profit for the period Total comprehensive profit for the year Transactions with owners of the Company, recognised directly in equity Issue of ordinary shares (net of costs) Dividends paid Share-based payment transactions Total transactions with owners of the Company Balance at 30 June 2017 Balance at 1 July 2015 Total comprehensive income for the year Profit for the year Total comprehensive profit for the year Transactions with owners of the Company, recognised directly in equity Issue of ordinary shares (net of costs) Dividends paid Share-based payment transactions Total transactions with owners of the Company Balance at 30 June 2016	Note 20 21 Note		Share Capital Share Based Payment Reserve Retained Earnings Total Equity $000 $000 $000 $000
			22,622 1,449 29,227 53,298
			- - 48 48
			- - 48 48
			14,661 - - 14,661
			- - (1,368) (1,368)
			- 298 - 298
			14,661 298 (1,368) 13,591
			37,283 1,747 27,907 66,937
			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
	20		467 - - 467
	21		- - - -
			- 1,050 - 1,050
			467 1,050 - 1,517
			22,622 1,449 29,227 53,298

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

28

Veris Limited Annual Financial Report 30 June 2017

Consolidated Statement of Cash Flow For the Year Ended 30 June 2017

Note Cash flows 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 18 Cash flows from investing activities Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Deferred vendor payment Acquisition of subsidiaries net of cash acquired Net cash (used in) investing activities Cash flows from financing activities Dividends paid Repayment of borrowings and lease liabilities Proceeds from share issues (net of costs) Net cash (used in) from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 July Cash and cash equivalents at 30 June 17	2017 2016 $000 $000 121,706 130,133 (114,737) (113,765)
	6,969 16,368 272 160 (901) (820) 55 69
	6,395 15,777
	395 547 (822) (1,348) (2,545) (2,400) (7,500) (3,158)
	(10,472) (6,359)
	(1,060) - (5,578) (6,632) 12,321 -
	5,683 (6,632)
	1,606 2,786 12,968 10,182
	14,574 12,968

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

29

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

BASIS OF PREPARATION

REPORTING ENTITY

Veris Limited (the “Company” or “Veris”) is a for-profit company domiciled in Australia. The Company’s registered office is at Level 12, 3 Hasler Road, Osborne Park WA 6017. The consolidated financial statements of the Company as at and for the year ended 30 June 2017 comprises the Company and its subsidiaries (together referred to as the “Group”). The Group is a diversified infrastructure and survey solutions company.

STATEMENT OF COMPLIANCE

The consolidated financial statements are general purpose financial statements prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (IASB). This consolidated annual report was approved by the board of directors on 16 August 2017.

NOTE INDEX

GROUP PERFORMANCE		NET DEBT
Operating Segments……………………………	1	Cash and cash equivalents…………………	17
Revenue…………………………………………..	2	Reconciliations of operating profit after	18
Acquisitions……………………………………….	3	income tax to net cash inflow from
Earnings per share…………………………….	4	operating activities……………………………..
Subsequent events…………………………….	5	Loans and borrowings………………………..	19
RISK MANAGEMENT		EQUITY
Critical accounting estimates and judgements……………………………………….	6	Share capital……………………………………. Dividends………………………………………….	20 21
Financial instruments………………………....	7	Share-based payments……………………….	22
Commitments for expenditure……………….	8
Contingent liabilities……………………………	9
		OTHER INFORMATION
WORKING CAPITAL		Related party transactions……………………	23
Trade and other receivables……………….	10	Remuneration of auditors…………………….	24
Trade and other payables………………….	11
		GROUP STRUCTURE
CAPITAL EMPLOYED		Subsidiaries………………………………………	25
Employee benefits……………………………..	12	Deed of cross guarantee……………………	26
Property, plant and equipment and impairment……………………………………….	13	Parent entity financial information…………	27
Intangible assets……………………………….	14
		ACCOUNTING POLICIES
TAXATION		Basis of preparation……………………………	28
Income taxes…………………………………… Deferred tax assets/liabilities………………	15 16	Summary of significant accounting policies New standards and interpretations not yet adopted…………………………………………….	29 30
		Determination of fair values………………….	31

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

GROUP PERFORMANCE 1. OPERATING SEGMENTS

The Group has two reportable segments that are being managed separately by the service provided as described below:

• Surveying Professional Services – provides surveying, mapping and town planning services across Australia

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

Information regarding the results of each reporting segment is detailed below for the year ended 30 June 2017.

Revenues Inter-segment revenues External revenues Costs Inter-segment costs External costs EBITDA Depreciation Amortisation EBIT* for reportable segments Segment assets Segment liabilities	Surveying Professional Services Infrastructure Construction Total
	2017 2016 2017 2016 2017 2016 $000 $000 $000 $000 $000 $000 68,831 49,382 42,414 73,080 111,245 122,462 (2,056) (1,565) (1,314) (39) (3,370) (1,604)
	66,775 47,817 41,100 73,041 107,875 120,858 (59,394) (39,960) (38,223) (61,920) (97,617) (101,880) 2,056 267 1,314 1,337 3,370 1,604
	(57,338) (39,693) (36,909) (60,583) (94,247) (100,276) 9,437 8,124 4,191 12,458 13,628 20,582 (3,531) (1,986) (422) (552) (3,953) (2,538) (4,168) (3,040) - - (4,168) (3,040)
	1,738 3,098 3,769 11,906 5,507 15,004 2017 2016 2017 2016 2017 2016 $000 $000 $000 $000 $000 $000 69,301 52,777 8,807 18,043 78,108 70,820 (15,018) 11,988 (4,587) 10,736 (19,605) 22,724

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

**EBIT is defined as earnings before interest, tax, impairment, restructuring, share-based payments and acquisition costs.

Revenue from one major customers of the Group (Canstruct Pty Ltd), individually represents more than 10% of total Group revenue, represented $24.7 million during the year ended 30 June 2017. (2016: Canstruct represented more than 10% total Group revenue; $49.3 million).

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

1. OPERATING SEGMENTS (CONTINUED)

RECONCILIATIONS OF REPORTABLE SEGMENT REVENUES, PROFIT OR LOSS, ASSETS AND LIABILITIES

LIABILITIES
Revenues Total revenue for reportable segments Elimination of inter-segment revenue Consolidated revenue Expenses Total expenses for reportable segments Elimination of inter-segment costs Unallocated amounts - other corporate expenses Consolidated expenses Profit (loss) EBIT for reportable segments Unallocated amounts - other corporate expenses Acquisition related cost/income Restructuring costs Net finance expense Consolidated profit (loss) before income taxes Assets Total assets for reportable segments Other unallocated amounts Consolidated total assets Liabilities Total liabilities for reportable segments Other unallocated amounts Consolidated total liabilities	2017 2016 $000 $000 111,245 122,445 (3,370) (1,587) 107,875 120,858 97,617 101,880 (3,370) (1,604) 3,814 4,406 98,061 104,682 5,507 15,004 (4,246) (5,468) (1,192) 1,336 (1,309) (173) (846) (751) (2,086) 9,948
	2017 $000 2016 $000 78,108 70,820 17,393 11,757 95,501 82,577 19,605 22,724 8,959 6,555 28,564 29,279

2. REVENUE Surveying Professional Services Infrastructure Construction rendering of services	2017 $000 2016 $000 66,775 47,817 41,100 73,041
	107,875 120,858

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

3. ACQUISITIONS

During the year, the Company made the following acquisitions as part of its national surveying and strategic plan as detailed below:

ACQUISITION OF BUSINESS – LAWRENCE GROUP PTY LTD.

On 29 July 2016, the Group entered into an agreement to acquire Lawrence Group Pty Ltd, a Sydneybased surveying consultancy. The purchase price comprises of $3,900,000 in cash and $1,500,000 in the Company’s shares. A further $1,000,000 in cash will be paid if Lawrence achieves performance milestones. A net working capital adjustment will be paid (refunded) following completion of the acquisition. Details of the acquisition including total consideration transferred, goodwill recognition, identifiable assets acquired and liabilities assumed was provided at note 3 in the Company’s 30 June 2016 Annual report. Further to the items identified on acquisition, the Company has agreed to a net working capital adjustment which amounted to a refund of $299,000. Subject to the Share Sale Agreement with the vendors, no performance milestones had elapsed during the year.

The following summarises the recognised amounts of assets acquired and liabilities assumed at the acquisition date

Cash Customer Relationships Trade and other receivables WIP Other current assets Property, plant and equipment Deferred tax asset Trade and other payables Employee benefits Loans and borrowings Current Tax Liability Deferred Tax Liability	30 June 2016 Disclosure $000 At Settlement $000
	136 1,980 1,208 - 33 1,046 - (485) (262) (818) (173) - 174 1,980 1,145 320 92 1,025 182 (864) (344) (863) (1) (594)
	2,665 2,252

Goodwill

The amendment to the provisional goodwill recognised as a result of the above amendments is as follows:

Total consideration transferred Fair value of identifiable assets and liabilities Goodwill	30 June 2016 Disclosure $000 At Settlement $000
	6,385 (2,665) 6,085 (2,252)
	3,720 3,833

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

3. ACQUISITIONS (CONTINUED)

ACQUISITION OF BUSINESS – WKC SPATIAL

On 5 August 2016, the Group’s subsidiary Whelans Australia Pty Ltd (“Whelans”) acquired the business and certain assets of WKC Spatial (“WKC”). WKC is a geospatial, cadastral surveying and engineering business, based in Midland, Western Australia. The purchase consideration of $1,900,000 was paid in cash with an additional scope for a royalty of 10% of the revenue for specific projects related to the prior owner’s business development activities. The acquisition provides expertise and established client relationships within the gas infrastructure industry, complementing existing activities already undertaken by Whelans. The business has been fully integrated with the Whelans operations.

In the period since acquisition to 30 June 2017, WKC contributed revenue of $2,989,893 and EBIT profit of $38,473 to the Group’s results. If the acquisition had occurred on 1 July 2016, The Company estimates that revenue would have been $3,288,882 and contributed EBIT profit would have been $38,473. In determining these amounts, Management have assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 July 2016.

Consideration transferred

The following table summarises the acquisition- date fair value of each major class of consideration transferred.

Cash	$000
	1,900
	1,900

At balance date, the company is of the view that the specific circumstances to incur a liability for the potentially payable royalty are not yet sufficient to warrant accounting for in accordance with AASB 3.

Identifiable assets acquired and liabilities assumed

The following summarises the recognised amounts of assets acquired and liabilities assumed at the acquisition date.

Customer Relationships Property, plant and equipment Employee benefits - current Deferred Tax Liability Additional rectification liability works – pre-acquisition project	$000 1,200 954 (302) (360) (263) 1,229

The fair values of assets and liabilities have been determined on a provisional basis. Goodwill

Goodwill arising from the acquisition has been recognised as follows:

Total consideration transferred Fair value of identifiable assets and liabilities Goodwill	$000 1,900 (1,229) 671

The goodwill is attributable mainly to the skills and technical talent of WKC Spatial’s workforce, and the synergies expected to be achieved from integrating the company into Whelans existing surveying business.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

3. ACQUISITIONS (CONTINUED)

ACQUISITION OF BUSINESS - GOODWIN MIDSON

On 2 November 2016, the Group’s subsidiary Queensland Surveying Pty Ltd acquired the business and certain assets of Hillmir Pty Ltd trading as Goodwin Midson (“Goodwin Midson”), a geospatial, cadastral surveying and engineering business, based in Brisbane Queensland. The purchase consideration of $500,000 was paid in cash with an additional royalty payment of 5% of gross revenue for the proceeding 12 month period, estimated at a maximum value of $100,000.

The acquisition provides expertise and established client relationships within the construction and telecommunications industries, significant survey expert witness reputation and additional capacity for cadastral, geospatial, drafting, and Geographic Information Systems (GIS).

In the period since acquisition to 30 June 2017, Goodwin Midson contributed revenue of $1,375,000 and EBIT of $243,000 to the Group’s results. If the acquisition had occurred on 1 July 2016, The Company estimates that revenue would have been $2,060,000 and contributed EBIT would have been $365,000. In determining these amounts, Management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 July 2016.

Consideration transferred

The following table summarises the acquisition- date fair value of each major class of consideration transferred.

Cash Deferred vendor payment	$000 500 100 600

Deferred vendor payment

As part of the purchase price, Queensland Surveying has agreed to pay the vendor a royalty payment in respect of awarded future work and developed relationships with established clients, amounting to 5% of the revenue specific to the Goodwin Midson business for the following 12 months from date of settlement, payable quarterly. A full provision of $100,000 amounting to the maximum estimated amount payable has been recognised as deferred consideration at acquisition on the basis that the revenue target will be reached. If the targets are not reached, the fair value amount of the deferred consideration will be reduced in accordance with the asset sale agreement.

Identifiable assets acquired and liabilities assumed

The following summarises the recognised amounts of assets acquired and liabilities assumed at the acquisition date.

entifiable assets acquired and liabilities assumed e following summarises the recognised amounts of assets acquired and liabilities quisition date.	assumed at the
Cash (overdraft) Customer Relationships Property, plant and equipment Employee benefits Deferred Tax Liability	$000
	(16) 576 81 (144) (173)
	324

The fair values of assets and liabilities have been determined on a provisional basis.

Goodwill

Goodwill arising from the acquisition has been recognised as follows:

Total consideration transferred Fair value of identifiable assets and liabilities Goodwill	$000
	600 (276)
	324

The goodwill is attributable mainly to the skills and technical talent of Goodwin Midson’s workforce, and the synergies expected to be achieved from integrating the company into the Group’s existing surveying business.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

3. ACQUISITIONS (CONTINUED)

ACQUISITION OF BUSINESS – LESTER FRANKS SURVEY & GEOGRAPHIC PTY LTD

On 1 December 2016, the Group acquired the assets of Lester Franks Survey & Geographic Pty Ltd, a specialist geospatial, surveying and engineering business. Consideration paid was $1,700,000 cash, issue of $500,000 ordinary shares and potential future performance consideration of up to $1,400,000, subject to the achievement of financial hurdles.

The acquisition brings specialised surveying skills to the group, including high-end 3D scanning, metrology and consulting capabilities.

In the period since acquisition to 30 June 2017, Lester Franks contributed revenue of $4,300,000 and an EBIT loss of $63,000 to the Group’s results. If the acquisition had occurred on 1 July 2016, The Company estimates that contributed revenue and would have been $6,882,000 and EBIT profit of $85,000. In determining these amounts, The Company has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 July 2016.

Consideration transferred

The following table summarises the acquisition- date fair value of each major class of consideration transferred.

Cash Equity instruments (1,852 million ordinary shares) Deferred vendor payment Provision for net asset adjustment due January 2017	$000 1,767 481 1,400 104 3,752

Deferred vendor payment

As part of the purchase price the Company has agreed to pay the vendors of Lester Franks an earn-out of $1,400,000 in two tranches over 2 years subject to meeting certain EBITDA hurdles of at least $2,800,000 and Revenue of $6,250,000 in a performance period. A full provision of $1,400,000 has been recognised as deferred consideration at acquisition on the basis that management forecasts targets will be reached. If the targets are not reached, the fair value amount of the deferred consideration will be reduced in accordance with the asset sale agreement and credited to profit or loss.

Identifiable assets acquired and liabilities assumed

The following summarises the recognised amounts of assets acquired and liabilities assumed at the acquisition date.

Cash Customer Relationships Trade and other receivables WIP Other current assets Property, plant and equipment Current tax asset Deferred tax asset Trade and other payables Employee benefits Loans and borrowings Deferred Tax Liability – Customer relationships	$000
	58 2,900 1,155 233 189 1,392 138 207 (681) (861) (1,473) (870)
	2,387

The fair values of assets and liabilities have been determined on a provisional basis.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

3. ACQUISITIONS (CONTINUED)

Goodwill

Goodwill arising from the acquisition has been recognised as follows:

odwill odwill arising from the acquisition has been recognised as follows:
Total consideration transferred Fair value of identifiable assets and liabilities Goodwill	$000
	3,752 (2,387)
	1,365

The goodwill is attributable mainly to the skills and technical talent of Lester Frank’s workforce, and the complementary addition to geographical and capability spread to the existing survey businesses previously acquired by Veris Limited.

Acquisition of business – LANDdata Surveys Pty Ltd

On 31 July 2017, the Group entered into an agreement to acquire the business and certain assets of LANDdata Survey PTY LTD, a Canberra and Sydney-based surveying consultancy. The purchase price comprises $3.8 million in cash. A net adjustment of up to $350,000 will be paid (refunded) following completion of the acquisition. A further $1.0 million in cash will be paid if LANDdata achieves performance milestones. In addition an incentive bonus will be paid if the Gross Margin over a two year period is greater than certain values.

The acquisition of LANDdata enhances the Group’s surveying businesses in New South Wales, and provides an entry into the ACT market, adding scale and capability to the Group’s existing surveying businesses.

Consideration transferred

The following table summarises the acquisition-date fair value of each major class of consideration transferred.

Cash Deferred vendor payment	2017 $000
	3,450
	1,960
	5,410

Deferred vendor payment

As part of the purchase price the Company has agreed to pay the LANDdata an earn out of up to $1.0 million cash over 2 years subject to meeting certain Revenue and Gross Margin hurdles of at least $5.3 million and 30% respectively in a performance period with a cap on revenue of $5.8 million in Period 1 and $11.5m combined revenue for Period 1 and 2. An additional incentive bonus will also be paid at the end of Milestone Period 2 if Gross Margin is greater than $4.4 million. This also includes up to $350,000 net adjustment on acquisition.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

3. ACQUISITIONS (CONTINUED)

Identifiable assets acquired and liabilities assumed

The following summarises the recognised amounts of assets acquired and liabilities assumed at the acquisition date.

quisition date.
Customer Relationships Other current assets Property, plant and equipment Employee benefits Deferred tax liability	2017 $000
	3,360
	44
	322
	(238)
	(1,008)
	2,480

The fair values of intangible assets and contingent liabilities have been determined on a provisional basis.

Goodwill

Goodwill arising from the acquisition has been recognised as follows:

odwill arising from the acquisition has been recognised as follows:
Total consideration transferred Fair value of identifiable assets and liabilities Goodwill	2017 $000
	5,410
	(2,480)
	2,930

The goodwill is attributable mainly to the skills and technical talent of LANDdata Group’s workforce, and the synergies expected to be achieved from integrating the company into the Group’s existing surveying business.

ACQUISITION COSTS

The Group incurred acquisition costs of $1,192,000 to acquire new surveying businesses which is recognised in the Statement of Profit and Loss and Other Comprehensive Income. In prior year Incurred acquisition costs of $1.2 million to acquire new surveying businesses which is recognised in the Statement of Profit and Loss and Other Comprehensive Income are offset by a $2.5 million write-back of deferred vendor payment for a surveying business. Net position ($1.3 million).

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

4. EARNINGS PER SHARE Earnings used to calculate basic EPS ($000) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS (number of shares) Basic earnings per share (cents per share)	2017 2016 48 19,698 309,734,798 264,625,881
	0.02 7.40

Diluted Earnings per share

There is no material impact on basic EPS arising from dilutive potential shares.

5. SUBSEQUENT EVENTS

Subsequent to the 30 June, the Group have decided to discontinue the Infrastructure division of OTOC Australia following the completion of existing projects. The Communications division of OTOC Australia has been renamed AQURA Technologies and will continue its operations which include the provision of support to Veris professional services business.

On 31 July 2017, Veris Australia purchased LANDdata Surveys PTY LTD, a leading surveying consultancy with operations in the Australian Capital Territory and New South Wales. This acquisition will enhance Veris’ experience and expertise in commercial, residential, land development and government infrastructure projects and increasing the Group’s national footprint. Refer to Note 3.

Veris Limited has declared after the balance sheet date that it will pay a fully franked dividend for 2017 of 0.5 cents per share in September 2017.

Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.

RISK MANAGEMENT

6. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the consolidated financial statements in conformity with IFRSs require management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

Critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements relate to contract revenue, contract work in progress and deferred vendor payments. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period which the estimates are revised and in any future periods affected.

Contract revenue and work in progress

Revenue from construction contracts is recognised using the percentage of completion method. Judgement is exercised in determining the stage of completion of the contract and in reliably estimating the total contract revenue and contract costs to completion. The stage of contract completion is generally measured by reference to physical completion. An assessment of total labour hours and other costs incurred to date as a percentage of estimated total costs for each contract is used if it is an appropriate proxy for physical completion. Task lists and milestones are also used to calculate or confirm the percentage of completion if appropriate.

The key judgement in determining revenue from construction contracts is estimating the unapproved variations and claims to be included in project forecast revenue and work in progress. The Company uses its best estimate and its expertise to determine the value included supported by qualified external experts where necessary. The outcome of the events which are the subject of these judgements are by nature uncertain such that final positions resolved with clients can differ materially from original estimates which may impact the recoverability of work in progress.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

6. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

Deferred vendor payments

As part of the purchase price of the four acquisitions during the year, the Group agreed to pay the vendors performance payments subject to the acquisitions reaching certain targeted earn out values – one of these acquisitions was based on EBITDA measures, another on Gross Margin & Revenue, and the other two were based on royalties Revenue. The value for deferred vendor payment is estimated based on actual results to date plus forecasts. Actual results may differ from these estimates. This information is set out under Note 3 and 7.

7. FINANCIAL INSTRUMENTS

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board has established an Audit & Risk Committee, which is responsible for overseeing how manage monitors risk and reviewing the adequacy of the risk management framework in relation to the risks faced by the Group. The Committee reports regularly to the Board of Directors on its activities.

Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through their training and management standards and procedures, aim to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The fair values and carrying amounts of various financial instruments recognised at reporting date are noted below:

oted below:
		2017		2016
		Carrying	Fair Values	Carrying	Fair Values
		Amount		Amount
		$000	$000	$000	$000
Cash and cash equivalents		14,574	14,574	12,968	12,968
Trade and other receivables		15,983	15,983	14,353	14,353
Trade and other payables		7,291	7,291	10,384	10,384
Hire purchase liabilities		(8,153)	(8,153)	(6,811)	(6,811)
Cash advance facility		(3,375)	(3,375)	-	-
Commercial bills (drawn)		-	-	(4,582)	(4,582)
Deferred vendor payments – Bosco		-	-	(1,500)	(1,500)
Jonson
Deferred vendor payments	–	(70)	(70)	(900)	(900)
Goodwin
Deferred vendor payments – Linker		(300)	(300)	(600)	(600)
Deferred vendor payments	–	(1,000)	(1,000)	-	-
Lawrence
Deferred vendor payments – Lester		(1,374)	(1,374)	-	-
Franks

The carrying amounts of the financial instruments are a reasonable approximation of their fair values, on account of their short maturity cycle.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

7. FINANCIAL INSTRUMENTS (CONTINUED) Measurement at fair values

i . Valuation techniques and significant unobservable inputs The following table shows the valuation technique used in measuring Level 3 fair values at 30 June 2017, as well as the significant unobservable inputs used.

Type	Valuation Technique	Significant unobservable inputs	Inter-relationship between significant unobservable inputs and fair value measurement
Deferred vendor payments	The Company forecast that Linker, Lawrence and Lester Franks will reach their targeted earn out values and therefore have recognised the maximum amount payable under the contract for contingent consideration. For Goodwin and WKC an estimate of potential revenue has been used to determine contingent consideration. Given that payments are due within two years of acquisition the amount recognised approximates tofair value.	For Linker and Lawrence the target is EBITDA, For WKC and Goodwin it’s revenue, and for Lester Franks it’s a combination of Gross Margin and Revenue. For further details refer to the Deferred Vendor Payment table below.	The estimated fair value of the deferred vendor payments would decrease if any of the conditions were not met. Generally, a change in the annual revenue will impact all companies, and for Linker, Lawrence and Lester Franks we expect a change in revenue to be accompanied by a directionally similar change in margin.

ii . Level 3 fair values

Sensitivity analysis

For the fair values of deferred vendor payments, reasonably possible changes at 30 June 2017 to one of the significant unobservable inputs, holding other inputs constant, would have the following effects.

Deferred Vendor Payments

EBITDA Target $000 Target equals 810 Target between* 810 – 1,010 Target greater than 1,010 Total	Linker**
	Tranche 1 Period 1 Payout 1/05/16 – 30/04/17 Tranche 2 Period 2 Payout 1/05/17 – 30/04/18
	$000 $000
	- 100
	- 200
	- -
	- 300

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

7. FINANCIAL INSTRUMENTS (CONTINUED)

Deferred Vendor Payments continued

Revenue Target $000 10% Revenue Total Revenue $000 5% Gross Revenue Total	WKC *Tranche 1 Period 1 Payout 6/08/16 – 5/08/17 Tranche 2 Period 2 Payout 6/08/17 – 5/08/18 EBITDA Target $000 $000 $000 - - 0 – 1,199 - - 1,200 – 1,400 - - > 1,400 - - Goodwin Midson Tranche 1 Period 1 Payout 1/11/16 – 31/10/17 Gross Profit Margin & Revenue Target $000** 70 Margin < 45% & Revenue < 6,250 - Margin > 45% & Revenue > 6,250 - Margin < 45% & > 2,813 & Revenue > 6,250 & 70	Lawrence
		Tranche 1 Period 1 Payout 1/08/16 – 29/07/17 Tranche 2 Period 2 Payout 1/08/17 – 29/07/18
		$000 $000
		- -
		300 300
		200 200
		500 500
		Lester Franks
		Tranche 1 Period 1 Payout 1/12/16 – 30/11/17 Tranche 2 Period 2 Payout 1/12/17 – 30/11/18
		$000 $000
		- -
		674 -
		- 700
	70	674 700

• In this range the deferred vendor payment will be earned on a dollar for dollar basis up to a maximum of $0.75 million for Bosco Jonson, $0.1 million for Queensland Surveying and $0.2 million for Linker. If the minimum targets are not met, then no vendor payment is made.

** The following deferred vendor payments were made during the year; THG $0.7 million; Bosco Jonson $1.5 million; and Linker $0.3 million. In addition, $30k Royalty payments were made during the year in respect of Goodwin Midson. *** The earn out targets for WKC were not achieved and hence no payments have been made.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

7. FINANCIAL INSTRUMENTS (CONTINUED)

Risk Management Strategies

The Group is primarily exposed to (i) credit risks; (ii) liquidity risks; and (iii) interest rate risks. The nature and extent of risk exposure, and the Group's risk management strategies are noted below.

Credit risks

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

As detailed in Note 1, revenue from one major customers of the Group (Canstruct Pty Ltd), individually represents more than 10% of total Group revenue, and represent approximately $24.7 million, during the year ended 30 June 2017 (2016: Canstruct; $49.3 million). The Company is implementing its diversification strategy to mitigate this risk, through its acquisition surveying businesses.

Credit risk is kept continually under review and managed to reduce the incidence of material losses being incurred by the non-receipt of monies due.

Credit risk is managed through monitoring and follow-up of accounts receivable on a regular basis, and follow up on overdue customer balances.

Bad debts are written off in the year in which they are identified. Specific provisions are made against identified doubtful debts. An assessment of expected losses is made based on past experience and customer payment history patterns.

There has been no change in the above policy since the prior year. The Group typically trades with counterparts that are considered blue-chip as a means of mitigating credit risk. The Group’s maximum exposure to credit risk is:

Cash and cash equivalents Trade and other receivables	2017 $000 2016 $000 14,574 12,968 15,983 14,353 30,557 27,321

The Group does not hold collateral against the credit risks, however, management considers the credit risks to be low on account of the risk management policy noted above. The trading terms generally offer 30 days credit from the date of invoice. As of the reporting date, none of the receivables have been subject to renegotiated terms.

The ageing analysis of past due trade and other receivables at reporting date are:

0 – 30 days not past due Past due 1 – 30 days Past due 31 – 60 days Past due 61 – 90 days Past due 90 days Provision for impairment Total	2017 $000 2016 $000 9,921 10,753 3,499 2,064 1,139 504 985 675 700 355 (261) (152)
	15,983 14,199

The Group is also subject to credit risks arising from the failure of financial institutions that hold entity’s cash and cash equivalents. However, the management considers this risk to be negligible.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

7. FINANCIAL INSTRUMENTS (CONTINUED)

The Group’s maximum exposure to credit risk for trade and other receivables at the reporting date by geographic region was $16,279,000 (2016: $14,353,000) for Australia. The allowance for impairment for 2017 amounted to ($261,000) (2016: $152,000).

Based on historic default rates, the Group believes that no impairment allowance is necessary in respect of trade receivables not past due or past due by up to 30 days.

The movement in the allowance for impairment in respect trade receivables during the year was as follows:

Balance 1 July Impairment loss reversed Impairment loss provided Total	2017 $000 2016 $000 152 64 (143) - 252 88
	261 152

Liquidity risks

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements. Liquidity risk is the risk that the Group will encounter difficulties to meet its contractual obligations arising from the financial liabilities.

Liquidity risk is constantly monitored and managed through forecasting short term operating cash requirements and the committed cash outflows on financial liabilities.

Maturity analysis of contractual undiscounted cash flows on financial liabilities at reporting date. There has been no change in the above policy since prior year.

The following are the contractual maturities of financial liabilities including interest:

2017 Non-derivative financial liabilities Hire purchase liabilities Trade and other payables Deferred vendor payments Cash advance facility 2016 Non-derivative financial liabilities Hire purchase liabilities Trade and other payables Deferred vendor Payments Commercial Bill
	Carrying Amount $000 Contractual Cash Flows $000 6 Months or less $000 6 – 12 Months $000 1 – 2 Years $000 2 – 5 Years $000 >5 Years $000
	8,153 8,541 1,098 931 1,154 5,358 -
	7,291 7,291 7,291 - - - -
	2,744 2,744 1,244 300 1,200 - -
	3,375 5,021 583 576 1,135 2,727 -
	21,563 23,597 10,216 1,807 3,489 8,085 -
	Carrying Amount $000 Contractual Cash Flows $000 6 Months or less $000 6 – 12 Months $000 1 – 2 Years $000 2 – 5 Years $000 >5 Years $000 6,811 7,339 1,800 1,706 3,125 708 - 10,384 10,384 10,384 - - - - 3,000 3,000 1,950 750 300 - - 4,582 4,827 4,827 - - - - 24,777 25,550 18,961 2,456 3,425 708 -

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

44

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

7. FINANCIAL INSTRUMENTS (CONTINUED)

Market risk

Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Group’s income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate risk

Interest rate risk is the risk that the fair values and cash-flows of the Group's financial instruments will be affected by changes in the market interest rates.

The Group's cash and cash equivalents, and loans and borrowings are exposed to interest rate risks. The average nominal interest rate is 4.59% for loans and borrowings (2016: 5.85%), for all current facilities in note 19, and sensitivity is calculated for a 1% change.

Consolidated Group Cash and cash equivalents Loans and borrowings	2017 2016 +1% -1% +1% -1% $000 $000 $000 $000 146 (146) 129 (129) (115) 115 (114) 114
	31 (31) 15 (15)

Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors has not implemented a formal capital management policy or a dividend policy.

There were no changes in the Group’s approach to capital management during the year. The Group is not subject to externally imposed capital requirements. Capital comprises share capital and retained earnings.

Currency risk

The Group receivables are all denominated in Australian dollars and accordingly no currency risk exists.

8. COMMITMENTS

Operating leases

Commitments in relation to future minimum lease payments under non-cancellable operating leases:

Not later than one year Later than one year but not later than five years Later than five years Total commitments not recognised in financial statements	2017 $000 2016 $000 2,412 2,220 3,624 1,282 - -
	6,036 3,502

The non-cancellable operating leases are predominately for the lease of office and staff accommodation. The leases are generally for a term of between 1 to 5 years.

9. CONTINGENT LIABILITIES

There were no contingent liabilities as at the date of this report.

45

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

WORKING CAPITAL

10. TRADE AND OTHER RECEIVABLES

0. TRADE AND OTHER RECEIVABLES
Trade receivables Other receivables	2017 $000 2016 $000 15,772 14,199 211 154
	15,983 14,353

The Group’s exposure to credit and currency risk is disclosed in note 7.

11. TRADE AND OTHER PAYABLES

1. TRADE AND OTHER PAYABLES
Trade and other payables	2017 $000 2016 $000 7,291 10,384
	7,291 10,384

The Group’s exposure to liquidity risk related to trade and other payables is disclosed in note 7.

CAPITAL EMPLOYED

12. EMPLOYEE BENEFITS

Current Annual leave Long service leave Other employee provisions Non-current Long service leave 3. PLANT AND EQUIPMENT Leasehold Improvements at cost Less: accumulated depreciation Plant and equipment at cost Less: accumulated depreciation Motor vehicles at cost Less: accumulated depreciation Total written down value	2017 $000 2016 $000 2,554 2,057 2,107 1,398 820 637
	5,481 4,092
	907 411
	907 411
	2017 $000 2016 $000 425 64 (72) (8)
	353 56
	21,453 16,190 (13,554) (10,619)
	7,899 5,571
	7,703 6,236 (4,906) (3,815)
	2,797 2,421
	11,049 8,048

13. PLANT AND EQUIPMENT

Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the current financial year are set out below

46

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

13. PLANT AND EQUIPMENT – (CONTINUED)

2017 Carrying amount at 1 July 2016 Acquired through business acquisitions Additions at cost Disposals at carrying value Depreciation Carrying amount at 30 June 2017 2016 Carrying amount at 1 July 2016 Acquired through business acquisitions Additions at cost Disposals at carrying value Depreciation Carrying amount at 30 June 2017	Leasehold Improvements $000 Plant & Equipment $000 Motor Vehicles $000 Total $000 56 5,571 2,421 8,048 77 2,972 489 3,538 284 2,488 1,154 3,926 - (197) (179) (376) (64) (2,935) (1,088) (4,087) 353 7,899 2,797 11,049
	Leasehold Improvements $000 Plant & Equipment $000 Motor Vehicles $000 Total $000
	74 5,048 2,777 7,899
	- 118 202 320
	- 2,380 275 2,655
	- (256) (20) (276)
	(18) (1,719) (813) (2,550)
	56 5,571 2,421 8,048

Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the comparative financial year are set out above.

The carrying value of finance leased assets at 30 June 2017 is $5.0 million (2016: $3.4 million).

Impairment Loss

The Group assesses whether there are indicators that assets, or groups of assets, may be impaired at each reporting date (goodwill is assessed annually regardless of indicators, refer Note 14). No impairment indicators were identified during the year ended 30 June 2017.

Where an indicator of impairment exists, a formal estimate of the recoverable amount is made. Veris has made an assessment of the recoverable amount of its assets as at 30 June 2017. No impairment loss was recognised in the year ended 30 June 2017 (2016: $nil).

14. INTANGIBLE ASSETS

Carrying amount at 1 July 2015 Additions Amortisation Impairment Carrying value 1 July 2016 Additions Amortisation Impairment Carrying amount at 30 June 2017	Goodwill $000 Customer Relationships $000 Total $000 21,922 8,436 30,358 3,546 980 4,526 - (3,040) (3,040) - - -
	25,468 6,376 31,844
	6,193 6,656 12,849
	- (4,168) (4,168)
	- - -
	31,661 8,864 40,525

47

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

14. INTANGIBLE ASSETS – (CONTINUED)

Goodwill has arisen on businesses purchased during the course of the year and an impairment review will be carried out annually. At present there are no indicators to suggest an impairment is necessary.

Impairment Review

The Group tests annually whether the above intangible assets are impaired, in accordance with the accounting policy stated in note 29 d(i). An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The recoverable amount of goodwill and other intangible assets, including those with indefinite useful lives are determined based on value in use of the company’s CGU’s which management have assessed to be its business operations. The discounted cash flow method (value in use) estimates the value of the CGU as being equal to the present value of the future cash flows which are expected to be derived from the CGU.

Goodwin Midson forms part of the Queensland Surveying CGU whilst WKC forms part of the Whelans CGU.

Goodwill has been allocated to these CGUs as follows:

Geo-metric Bosco Jonson Queensland Surveying Linker Surveying Whelans Lawrence Lester Franks Carrying value of consolidated goodwill	2017 $000 2016 $000 7,022 7,022 11,693 11,693 3,543 3,219 3,315 3,315 890 219 3,833 - 1,365 -
	31,661 25,468

The recoverable amount of goodwill is tested at the CGU level. Value in use calculations are performed to assess the recoverable amount of the CGU. Value in use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Recoverable amount testing – Key assumptions

In determining value in use, it is necessary to make a series of assumptions to estimate future cash flows. The key assumptions requiring judgement include projected cash flows, growth rate estimates, discount rates, working capital and capital expenditure. The key assumptions utilised in the “value in use” calculations across all CGUs are budgeted EBITDA, long term growth rate (2.9%) and discount rate (ranging from 8.2% to 9.5%) due to the similar nature of the businesses.

(i) Projected cash flows

The Group determines the recoverable amount based on a “value in use” calculation, using five years cash flow projections based on the budget for the year ending 30 June 2018 and the management forecast for the subsequent financial years ending 30 June 2022.

Budgeted EBITDA has been based on past experience and the Group’s assessment of economic and regulatory factors affecting the industry within which the Group operates.

(ii) Long term growth rate

The future annual growth rates for FY 2023 onwards to perpetuity are based on a growth rate of 2.9% (ii) Discount rate (ranging from 8.2% to 9.5%)

Post tax nominal discount rates ranging from 8.2% to 9.5% reflect the Group’s estimate of the time value of money and risks specific to each CGU.

48

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

14. INTANGIBLE ASSETS – (CONTINUED)

Sensitivities

The directors and management have performed an assessment of reasonably possible changes in the key assumptions and have not identified any instances which could cause the carrying amount of the Group’s sole CGU to exceed its recoverable amount.

Following impairment testing for the current reporting period, no impairment of intangible assets has been recognised as the recoverable amount of the Group’s CGU which all of its assets are assigned exceeds the carrying amount of the CGU.

15. INCOME TAX BENEFIT

Current tax - Australia Current tax – Foreign Jurisdiction Deferred tax Adjustment for prior periods Income tax benefit reported in income statement	2017 $000 2016 $000 - - 717 - (2,405) (2,009) (446) (7,741)
	(2,134) (9,750)

The prima facie tax on the result from ordinary activities before income tax is reconciled to the income tax as follows:

Reconciliation of effective tax rate (Loss)/ Profit before income tax Income tax at 30% (2016: 30%) Foreign Jurisdiction tax at 10% Add (less) tax effect of: Other non-allowable/ assessable items Research and development offset Adjustment for prior periods Adjustment - other Income tax benefit attributable to the Group	2017 $000 2016 $000 (2,086) 9,948 (626) 2,984 717 - (1,561) (4,493) (218) (500) (111) (7,558) (335) (183) (2,134) (9,750)

49

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

16. DEFERRED TAX ASSETS/ LIABILITIES

Deferred tax liability Work in progress Plant & Equipment Employee Benefits Provisions Intangibles Carried forward R&D offset available Carried forward tax losses available Other Tax assets/ (liabilities)	Assets Liabilities Net 2017 $000 2016 $000 2017 $000 2016 $000 2017 $000 2016 $000 - - (1,349) (573) (1,349) (573) 307 607 (30) (70) 277 537 1,838 1,329 - - 1,838 1,329 226 259 - - 226 259 - - (3,477) (1,932) (3,477) (1,932) 7,875 6,942 - - 7,875 6,942 1,924 - - - 1,924 - 330 134 (8) 20 322 154
	12,500 9,271 (4,864) (2,555) 7,636 6,716

Movement in deferred tax balances Opening balance Raising deferred tax liability on intangibles – Business Combinations Subsidiaries acquired opening balances Prior year adjustments Charge to profit or loss Closing deferred tax asset	2017 $000 2016 $000 6,716 (926) (2,193) (294) 401 90 306 5,837 2,405 2,009
	7,636 6,716

The Company has provided construction and installation services external to Australia through a permanent establishment in another country. The earnings from this permanent establishment are subject to the taxation regime within that country and are considered exempt from Australian income tax.

The current year impact of this tax treatment is a $0.7 million (2016:$4.2 million) income tax credit being recognised in the statement of comprehensive income and a deferred tax asset of $0.7 million (2016:$4.2 million) being reflected in the balance sheet as at 30 June 2017.

50

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

NET DEBT

17. CASH AND CASH EQUIVALENTS

Cash at bank and in hand Cash and cash equivalents in the statement of cash flows	2017 $000 2016 $000 14,574 12,968
	14,574 12,968

The Group’s exposure to interest rate risk and a sensitivity analysis for the financial assets and liabilities disclosed in note 7.

18. RECONCILIATION OF CASH FLOW FROM OPERATIONS WITH PROFIT AFTER INCOME TAX

Cash flows from operating activities Profit/(loss) after income tax Non-cash flows in profit: Depreciation (Note 13) Amortisation of intangible assets (Note 14) Deferred vendor payment adjustment Other Share based payment Income tax expense/ (benefit) Change in trade and other debtors Change in other assets Change in work in progress Change in trade creditors Change in provisions and employee benefits Net cash provided by operating activities	2017 $000 2016 $000 48 19,698 4,087 2,550 4,168 3,040 - (2,500) (257) (328) 298 1,050 (2,134) (9,750)
	6,210 13,760 598 1,461 804 361 2,759 (3,911) (4,313) 3,755 337 351
	6,395 15,777

Significant non-cash investing and financing transactions Property, plant and equipment of $3.0 million (2016: $1.2 million) was acquired under finance leases.

19. LOANS AND BORROWINGS

Current liabilities Hire purchase liabilities (HP) Cash advance facility Commercial Bill Non-current liabilities Hire purchase liabilities Cash advance facility	2017 $000 2016 $000 1,843 3,217 750 - - 4,582
	2,593 7,799
	6,310 3,593 2,625 -
	8,935 3,593

51

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

19. LOANS AND BORROWINGS – CONTINUED

Terms and debt repayment schedule

Terms and conditions of outstanding loans were as follows:

				2017	2017	2016
				$000		$000
	Nominal	Year of		Face Carrying		Face	Carrying
	interest rate%	maturity		Value	Amount	Value	Amount
Hire purchase	4.7 – 7.68	2016 – 2019		8,153	8,153	6,810	6,810
liabilities (HP)
Cash advance	4.59	2017 – 2019		3,375	3,375	-	-
facility
Commercial bill	4.64		2017	-	-	4,582	4,582
				11,528	11,528	11,392	11,392
All loans and borrowings are denominated in Australian Dollars.
	Facility				Facility
	Available		Used	Unused	Available	Used	Unused
	2017		2017	2017	2016	2016	2016
	$000		$000	$000	$000	$000	$000
Cash advance facility (a) 25,000			(3,375)	21,625	-	-	-
Commercial bills (b)		-	-	-	4,582	(4,582)	-
Insurance Bonds	15,000		(1,753)	13,247	20,000	(1,783)	18,217
Other (c)	10,300		(1,345)	8,955	10,700	-	10,700
Total financing facilities 50,300			(6,473)	43,827	35,282	(6,365)	28,917

All loans and borrowings are denominated in Australian Dollars.

a) The Group secured a Cash advance facility during 2017. This facility refinanced the existing Commercial bill facility which was due to mature in 2017. The carrying amount of this facility was $3.4 million as at 30 June 2017 (2016: $0.0 million). The funds are available for purchasing acquisitions. The facility is repayable in tranches over the next three years. The loan contains covenants stating that at the end of each quarter the Group is to maintain, the Group’s Leverage Ratio (defined in the covenant as the Group’s Total Debt plus 50% of drawn Bank Guarantees and Insurance Bonds) is to be less than 2.5 times EBITDA and the Group will maintain a Cashflow available for Debt Service (CFADS) of 1.25. The Group is in compliance with the covenants at 30 June 2017.

b) In 2016 The Group had a secured bank loan with carrying amount of $4.6 million. This loan matured in 2017 and CBA agreed to pay this facility out from the new Cash advance facility negotiated by the Group. At 30 June 2017 the balance outstanding was $0.0 million. In 2016 this loan was repayable in tranches over the next year. The loan contained covenants stating that at the end of each quarter the Group is to maintain cash and debtors (less than 90 days excluding related party transactions) of no less than $15 million, the Group’s Leverage Ratio (defined in the covenant as the Group’s Total Debt plus 50% of drawn Bank Guarantees and Insurance Bonds) is to be less than 2.5 times EBITDA and the Group will maintain an Interest Coverage Ratio of not less than 4 times. The Group is in compliance with the covenants at 30 June 2016.

c) Other facilities include a $5 million bank overdraft, $5 million multi option facility, bank guarantees and credit card facility.

Lease liabilities are effectively secured as the rights to leased assets revert to the lessor in the event of default.

52

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

19. LOANS AND BORROWINGS – CONTINUED

Hire Purchase Liabilities	Hire Purchase Liabilities
Hire purchase liabilities of the Group are payable as follows:
	Future		Present value	Future		Present
	minimum HP	Interest	of minimum	minimum	Interest	value of
	payments		HP payments	HP		minimum
				payments		HP
						payments
	2017	2017	2017	2016	2016	2016
	$000	$000	$000	$000	$000	$000
Less than 1 year	2,029	(186)	1,843	3,458	(307)	3,151
Between 1 & 5	6,512	(202)	6,310	3,881	(222)	3,659
years
	8,541	(388)	8,153	7,339	(529)	6,810

EQUITY

20. CAPITAL AND RESERVES

Share capital Balance at the beginning of the year Issued for cash (net of costs) Conversion of Performance Rights Issued as consideration for business combinations Balance at the end of the year	2017 2016 2017 2016 $000 $000 No. of Shares No. of Shares 22,622 22,155 266,470,630 264,248,408 12,626 - 49,000,865 - 3,431,522 2,035 467 6,802,347 2,222,222
	37,283 22,622 325,705,364 266,470,630

Issues of ordinary shares

• On 29 July 2016, 4,950,495 ordinary shares were issued at a fair value price of $0.31 per share as part consideration for the acquisition of Lawrence Group Pty Ltd (see note 3).

• On 12 September 2016, 4,666,420 shares were issued at a price of $0.3002 in accordance with the DRP.

• On 5 October 2016, $12,000,000 was raised by issuing 44,444,445 new ordinary shares at $0.27 per share.

• On 2 December 2016, 1,851,852 ordinary shares were issued at a fair price of $0.27 per share as part consideration for the acquisition of Lester Franks Survey & Geographic Pty Ltd (see note 3).

The Group does not have authorised capital or par value in respect of its issued shares.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Group. All shares rank equally with regard to the Group’s residual assets.

21. DIVIDENDS

On 16 August 2016 the Company declared a fully franked dividend for 2016 of 0.5 cents per share, totalling $1,368,000 (2015: nil). The Dividend paid in cash to shareholders was $1,060,000 and 1,024,415 shares issued under the Dividend Reinvestment Plan (DRP). The Dividend Reinvestment Plan’s shortfall shares were underwritten by Veritas Securities Limited and 3,532,005 shares were issued to Veritas on the same date at 30.02 cents per share raising $1,060,307 (net of underwriting fees). The 30.02 cents price per share was based on 5% discount to the VWAP 5 days following the recording date.

53

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

21. DIVIDENDS – CONTINUED

Franking Credit Balance

The amount of franking credits available for the subsequent financial year are: Franking account balance as at the end of financial year at 30% (2016:30%)	2017 $ 2016 $ 5,191,567 5,599,788

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.

The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:

• franking credits that will arise from the payment of the current tax liabilities;

• franking debits that will arise from the payment of dividends recognised as a liability at the yearend;

• franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at the year-end; and

• franking credits that the entity may be prevented from distributing in subsequent years.

22. SHARE-BASED PAYMENTS

As at 30 June 2017, the Group had the following share-based payment arrangements.

(i) 2015 Performance Rights

On 12 November 2014, the Group granted Performance Rights to eligible employees under the Group’s Long Term Incentive Plan to motivate and reward their performance in achieving specified performance milestones in respect of the financial years ended 30 June 2015 to 30 June 2017. The Performance Rights are subject to continued employment and achievement of (relative total shareholder return and compounded earnings per share growth), and vesting times as follows:

Number of Performance Rights granted	Vesting Date (A)	Lapsed (B)	Vested (C)		Vesting Hurdles	Vesting Hurdles	Vesting Hurdles	Vesting Hurdles
					**50% rTSR **		**50% EPS CAGR **
2,149,490	30 June 2015	2,149,490	-		<50th percentile	Nil	<6%	Nil
2,149,491	30 June 2016	-	2,149,491		>50th percentile, <75th percentile	50%, plus 2% for every one percentile increase above 50th percentile	>6%- <24%	pro rata vesting between 25%- 100%
4,298,981	30 June 2017	2,842,565	1,456,416		75th percentile or more	100%	24%>	100%
8,597,962		4,992,055	3,605,907

54

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

22. SHARE-BASED PAYMENTS – CONTINUED

• (A) On vesting, Performance Rights will automatically convert to ordinary shares on a one to one basis. Performance Rights that do not vest will lapse.

An unvested Performance Right will lapse on the earlier to occur of:

• i. failure to satisfy applicable vesting conditions;

• ii. the holder purporting to transfer the Performance Right otherwise than with the consent of the Board or by force of law;

• iii. the employment of the holder ceasing, where such a condition was imposed on the grant of the Performance Right;

• iv. in the opinion of the Board, the holder commits any fraudulent or dishonest act or is in breach of his or her obligations to the Company or subsidiary;

• v. the expiry date; or vi. the seven year anniversary of the date of grant of Performance Rights

• (B) During the period 2,842,565 Performance Rights lapsed due to the following: 1,792,968 on cessation of employment; 954,178 as 100% of the 2015 EPSCAGR financial performance hurdle was not achieved (EPSCAGR = (8%)); and 95,419 as only 90% of the 2015 rTSR financial performance hurdle was achieved (rTSR = 70[th] percentile)

• (C) During the period 1,456,416 Performance Rights vested due to the following; 597,656 on cessation of employment under the good leaver provisions of the Plan; and 858,760 due to the achievement of 90% of the 2015 rTSR financial performance hurdle (rTSR = 70[th] percentile)

(ii) 2016 Performance Rights

On 20 January 2016, the Group granted Performance Rights to eligible employees under the Group’s Long Term Incentive Plan in respect of the financial years ended 30 June 2016 to 30 June 2018. Subject to continued employment and achievement of financial performance hurdles (relative total shareholder return and compounded earnings per share growth), the Performance Rights will vest as follows:

Number of Performance Rights granted	Vesting Date (A)	Lapsed (B)	Vested (C)			Vesting Hurdles	Vesting Hurdles	Vesting Hurdles	Vesting Hurdles
						50% rTSR		50% EPS CAGR
2,239,415	30 June 2017	684,375	1,555,039			<50th percentile	Nil	5%	Nil
15,698,638	30 June 2018	6,772,917	-			>50th percentile , <75th percentile	50%, plus 2% for every one percentile increase above 50th percentile	>5%- <25%	pro rata vesting between 25%-100%
17,938,053		7,457,292	1,555,039			75th percentile or more	100%	25%>	100%

(A) On vesting, Performance Rights will automatically convert to ordinary shares on a one for one basis. Performance Rights that do not vest will lapse. An unvested Performance Right will lapse upon the earlier to occur of:

• i. failure to satisfy the applicable vesting conditions;

ii. the holder purporting to transfer the Performance Right otherwise than with the consent of the Board or by force of law;

iii. the employment of the holder ceasing, where such a condition was imposed on the grant of the Performance Right;

iv. in the opinion of the Board, the holder commits any fraudulent or dishonest act or is in breach of his or her obligations to the Company or subsidiary;

v. the expiry date; or vi. the seven year anniversary of the date of grant of the Performance Rights.

(B) During the year ended 30 June 2017, 7,457,292 Performance Rights lapsed on cessation of employment of executives

• (C) During the year ended 30 June 2017, 1,555,039 Performance Rights vested due to the following: 684,374 on cessation of employment under the good leaver provisions of the Plan; and 870,665 due to the acheivment of 100% of the 2016 rTSR financial performance hurdle and the 2016 EPSCAGR hurdle (rTSR = 92[nd] percentile; EPSCAGR = 33%).

55

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

22. SHARE-BASED PAYMENTS – CONTINUED

(iii) 2017 Performance Rights

On 5 June 2017, the Group granted Performance Rights to eligible employees under the Group’s Long Term Incentive Plan in respect of the three financial years ended 30 June 2017 to 30 June 2019. Subject to continued employment and achievement of financial performance hurdles (relative total shareholder return and compounded earnings per share growth), the Performance Rights will vest as follows:

Number of Performance Rights granted	Vesting Date (A)	Lapsed during the period	Vested during the Period			Vesting Hurdles	Vesting Hurdles	Vesting Hurdles	Vesting Hurdles
						50% TSR(B)		50% 3 Year Absolute EPS Pooling (C)
3,002,848	30 June 2019	-	-			<100%	Nil	< 6	Nil
						100% < 180%	Pre-rata vesting between 25% and 100%	>6- <6.5	pro rata vesting between 25%- 100%
3,002,848
						180%	100%	6.5>	100%
		-	-

(A) On vesting, Performance Rights will automatically convert to ordinary shares on a one for one basis. Performance Rights that do not vest will lapse. An unvested Performance Right will lapse upon the earlier to occur of:

i. failure to satisfy the applicable vesting conditions;

ii. the holder purporting to transfer the Performance Right otherwise than with the consent of the Board or by force of law;

iii. the employment of the holder ceasing, where such a condition was imposed on the grant of the Performance Right;

iv. in the opinion of the Board, the holder commits any fraudulent or dishonest act or is in breach of his or her obligations to the Company or subsidiary;

v. the expiry date; or

vi. the seven year anniversary of the date of grant of the Performance Rights.

(B) Performance of management measured against the absolute shareholder return target

(C) Performance management measured against a normalised EPS pooled approach setting an aggregate value of dollars of EPS that must be achieved over the three years (i.e. a pool consisting of year 1 EPS plus year 2 EPS plus year 3 EPS

56

Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

22. SHARE-BASED PAYMENTS – CONTINUED

(iv) Measurement of Fair Values of Share-Based Payments

The fair value of the 2017 Performance Rights issued under the Group’s Long Term Incentives during the period (22(iii)) has been measured using the Monte Carlo simulation model incorporating the probability of the relative TSR vesting condition being met. The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payments plans were as follows:

	Tranche A(A)	Tranche A(A)	Tranche B(B)
Performance Measure	Absolute TSR	3 Year EPS Pool	Absolute **TSR **
Weighting of Performance Measure	50%	50%	100%
Exercise price	N/A	N/A	N/A
Volatility	70%	70%	70%
Performance Period	3 Years: 1 Jul 2016–30 Jun 2019
Risk Free Rate	1.57%	1.57%	1.57%
RemainingLife (years)	2.07	2.07	2.07
Fair value atgrant date	$0.016	$0.016	$0.110

(A) Issued to Key Management Personnel and Executives

(B) Issued to other Senior Executives

(C) The measure of expected volatility used is the annualised standard deviation of the continuously compounded rates of return on the share over a period of time.

Unvested Unlisted Performance Rights

All of the 3,002,848 Performance Rights issued during 2017 remain unvested at 30 June 2017. 8,925,722 of the Performance Rights issued during 2016, remain unvested at 30 June 2017.

OTHER INFORMATION

23. RELATED PARTIES

Key management personnel compensation

The key management personnel compensation included in ‘employee benefits’ is as follows:

Short-term employee benefits Post-employment benefits Share-based payment Termination benefit - Cash Termination benefit – Share-based	2017 2016 $ $ 1,315,265 1,558,578 84,477 81,430 419,627 712,489 251,981 - (239,324) -
	1,832,026 2,352,497

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

23. RELATED PARTIES (CONTINUED)

During the year, the Company did not have or repay any loans from related parties (2016: $nil).

Individual directors and executives compensation disclosures

Information regarding individual directors and executive’s compensation and some equity instruments disclosures as required by Corporations Regulations 2M.3.03 is provided in the remuneration report section of the directors’ report on pages 9 to 23.

Apart from the details disclosed in this note, no director has entered into a material contract with the Group since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year-end.

24. AUDITOR’S REMUNERATION

Audit and review services

KPMG Audit and review of financial reports Due Diligence Integration Earn Out Audit	2017 2016 $ $ 222,320 195,500 141,861 75,950 405,029 - - 25,000
	769,210 296,450

GROUP STRUCTURE

25. SUBSIDIARIES

The following entities are consolidated:

Name of Entity	Country of	Ownership Interest	Ownership Interest
	Incorporation	2017	2016
		%	%
Parent Entity
Veris Limited	Australia
Controlled Entity
OTOC Australia Pty Ltd	Australia	100	100
Emerson Stewart Pty Ltd	Australia	100	100
Whelans Australia Pty Ltd	Australia	100	100
Whelans International Pty Ltd	Australia	100	100
Bosco Jonson Pty Ltd	Australia	100	100
Geo-metric Surveying Pty Ltd	Australia	100	100
Linker Surveying Pty Ltd	Australia	100	100
Queensland Surveying Pty Ltd	Australia	100	100
Southern Hemisphere Investments Pty Ltd	Australia	100	100
A Perfect Day Elise Pty Ltd	Australia	100	100
TBBK Pty Ltd	Australia	100	100
Lawrence Group Pty Ltd	Australia	100	-
Lester Franks Pty Ltd	Australia	100	-
Veris Australia Pty Ltd	Australia	100	-

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

26. DEED OF CROSS GUARANTEE

Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, all the wholly-owned subsidiaries of Veris Limited are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and Directors’ report.

It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee (“the Deed”). The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company is wound up.

The consolidated statement of comprehensive income and consolidated statement of financial position, comprising the Company and controlled entities which are a party to the Deed as at 30 June 2017, after eliminating all transactions between parties to the Deed of Cross Guarantee, as of and for the year ended 30 June 2017 is the same as the consolidated statement of comprehensive income and consolidated statement of financial position of the Group as of and for the year ended 30 June 2017.

27. PARENT ENTITY DISCLOSURES

As at, and throughout, the financial year ended 30 June 2017 the parent company of the Group was Veris Limited.

Results for the Year Profit/(loss) for the year Other comprehensive income Total comprehensive profit/ (loss) for the year Financial position of parent entity at year end Current assets Total assets Current liabilities Total liabilities Total equity of the parent entity comprising of: Share capital Reserves Accumulated loss Total equity	2017 2016 $000 $000 2,629 2,201 - -
	2,629 2,201
	2017 2016 $000 $000 19,027 4,707 69,756 46,923 1,490 4,388 20,885 13,676 37,283 22,622 39,844 40,143 (28,256) (29,518)
	48,871 33,247

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

28. BASIS OF PREPARATION

(a) Presentation Currency

These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency. The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instruments 2016/191 dated 1 April 2016. All financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated.

(b) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:

• financial instruments at fair value through profit or loss are measured at fair value

29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

(a) Basis of consolidation

(i) Business combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards), then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based measure of the replacement awards compared with the marketbased measure of the acquiree’s awards and the extent to which the replacement awards relate to precombination service.

(ii) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(iii) Transactions eliminated on consolidation

Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

(b) Financial instruments

(i) Non-derivative financial assets

The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group has the following non-derivative financial assets: loans and receivables.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise trade and other receivables.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(i) Non-derivative financial liabilities

The Group initially recognises financial liabilities (including liabilities designated at fair value through profit or loss) on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group has the following non-derivative financial liabilities: loans and borrowings, bank overdrafts, and trade and other payables.

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at fair value for performance shares, and amortised cost using the effective interest rate method for all others.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(ii) Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. Dividends on ordinary shares are recognised as a liability in the period in which they are declared.

(c) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised in profit or loss.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(c) Property, plant and equipment (continued)

(iii) Depreciation

Depreciation is recognised in profit or loss on either a straight-line or diminishing value basis over the estimated useful lives of each part of an item of property, plant and equipment. Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use.

The depreciation rates for the current and comparative periods are as follows:

 Plant and equipment 25%  Motor vehicles 20%  Leasehold Improvements 20%

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

(d) Intangible assets and goodwill

(i) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill acquired in a business combination is not amortised. Instead goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on disposal of an entity include the carrying amount of goodwill relating

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

to the entity sold. Goodwill is allocated to individual cash generating units for the purpose of impairment testing.

(ii) Other intangible assets

Other intangible assets including customer relationships that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses.

(iii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

(iv) Amortisation

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

• Customer relationships 3-5 years

(e) Impairment

(i) Non-derivative financial assets (including receivables)

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active market for a security.

The Group considers evidence of impairment for receivables and are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics.

In assessing collective impairment the Group uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and employee benefit assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains of losses on re-measurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated.

(f) Employee benefits

(i) Other long-term employee benefits

The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods plus related on-costs. That benefit is discounted to determine its present value.

(ii) Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(iii) Share-based payment transactions

The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the actual number of share options for which the related service and non-market vesting conditions are met.

(g) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

(h) Revenue

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Construction contract revenue is recognised in profit or loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue is recognised in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognised as incurred unless they create an asset related to future contract activity.

(i) Work in progress

Work in progress represents the gross unbilled amount expected from customers for contract work performed to date. It is measured at cost plus profit recognised to date less progress billings and recognised losses. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group's contract activities based on normal operating capacity.

(j) Leased assets

(i) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(ii) Lease classification

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and the leased assets are not recognised in the Group's statement of financial position. Investment property held under an operating lease is recognised on the Group's statement of financial position at its fair value.

(k) Finance income and expense

Finance income comprises interest income on funds invested and fair value gains on remeasurement to fair value of financial liabilities. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance expenses comprise interest expense on borrowings. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit and loss using the effective interest method.

(l) Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(i) Tax consolidation

The Group and its wholly-owned entities are part of a tax-consolidated group. As a consequence, all members of the tax-consolidated group are taxed as a single entity from that date. The head entity within the tax-consolidated group is Veris Limited.

The Group recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the tax-consolidated group will be available

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Notes to the Consolidated Financial Statements

29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

against which the asset can be utilised. Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability is recognised by the head entity only.

(ii) Nature of tax funding arrangements and tax sharing arrangements

The head entity, in conjunction with other members of the tax-consolidated group, has entered into a tax funding arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax amounts. The head entity in conjunction with other members of the tax-consolidated group has also entered into a tax sharing agreement. The tax sharing agreement provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.

(iii) Goods and services tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(m) Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

Following the reverse acquisition, earnings per share have been calculated in accordance with the specific guidance provided in AASB 3 Business Combination .

(n) Segment reporting

The Group determines and presents operating segments based on the information that internally is provided to the CEO, who is the Group's chief operating decision maker. Comparative segment information has been re-presented in conformity with the transitional requirements of such standard. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. All operating segments' operating results are regularly reviewed by the Group's CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial

Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Group's headquarters), head office expenses, and income tax assets and liabilities.

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Veris Limited Annual Financial Report 30 June 2017

Notes to the Consolidated Financial Statements

29. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and intangible assets other than goodwill.

(o) Prior year comparatives

Certain comparative information has been re-presented so it is in conformity with the current year classification.

(p) Changes in accounting policies

Veris has adopted all of the new and revised Accounting Standards and Interpretations issued by the AASB that are relevant to the operations of Veris and effective for reporting periods beginning on or after 1 July 2015.

30. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

A number of new accounting standards and amendments have been issued but are not yet effective, none of which have been early adopted by the Group in this financial report. These new standards and amendments, when applied in future periods are not expected to have a material impact on the financial position or performance of the Group, other than as set out below.

AASB15 Revenue from Contracts with Customers

AASB 15 Revenue from Contracts with Customers (AASB 15) is effective for periods beginning on 1 January 2018. AASB 15 defines principles for recognising revenue and introduces new disclosure requirements. From a Group perspective, AASB15 revenue will be recognised at an amount that reflects the consideration which an entity expects to be entitled to in exchange for transferring goods or services to a customer. The Group is currently undertaking an assessment of the potential impact of this standard, and is not considering early adopting AASB15.

AASB16 Leases

AASSB16 Leases (AASB 16) I s effective for periods beginning on 1 January 2019. AASB 16 requires lessees to recognise most leases on balance sheets as lease liabilities, with the corresponding right-of-use assets. Lessees must apply a single model for all recognised leases, but will have the option not to recognise ‘short-term’ leases and leases of ‘low-value’ assets.

The Group is currently undertaking an assessment of the potential impact of this standard. The likely impact is that operating leases disclosed at Note 8, will be recognised on balance sheet as a right to use asset and a corresponding lease liability. The Group is not currently considering early adopting AASB 16.

31. DETERMINATION OF FAIR VALUES

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the methods set out below. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Property, plant and equipment

The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of plant, equipment, fixtures and fittings is based on the quoted market prices for similar items.

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Notes to the Consolidated Financial Statements

31. DETERMINATION OF FAIR VALUES (CONTINUED)

(ii) Intangible assets

The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.

(iii) Trade and other receivables

The fair value of trade and other receivables, excluding construction work in progress, but including service concession receivables, is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date.

(iv) Share-based payment transactions

The fair value of employee stock options is measured using a binomial option pricing model. The fair value of share performance rights is measured using the Monte Carlo formula.

Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

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Veris Limited Annual Financial Report 30 June 2017

Directors’Declaration

1. In the opinion of the directors of Veris Limited (“the Company”):

2. (a) the consolidated financial statements and notes set out on pages 26 to 69 and the Remuneration report on pages 9 to 23 in the Directors’ report, are in accordance with the Corporations Act 2001 including:

   • (i) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance for the financial year ended on that date; and

   • (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

3. (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

4. There are reasonable grounds to believe that the Company and the group entities identified in note 25 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC Class Order 98/1418.

5. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and the chief financial officer for the financial year ended 30 June 2017.

6. The directors draw attention to page 30 to the consolidated financial statements, which includes a statement of compliance with International Financial Reporting Standards.

Signed in accordance with a resolution of the directors:

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Derek La Ferla Chairman

Dated at Perth 16 August 2017

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Independent Auditor’s Report

To the shareholders of Veris Limited

Report on the audit of the Financial Report

Opinion

We have audited the Financial Report of Veris Limited (the Company).

In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001 , including:

• giving a true and fair view of the Group’s financial position as at 30 June 2017 and of their financial performance for the year ended on that date; and

• complying with Australian Accounting Standards and the Corporations Regulations 2001 .

The Financial Report comprises:

• Consolidated statement of financial position as at 30 June 2017

• Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended

• Notes including a summary of significant accounting policies

• Directors’ Declaration.

The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report.

We are independent of the Group and Company in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.

Key Audit Matters

The Key Audit Matters we identified are:

• Goodwill and intangible assets value

• Acquisitions (including deferred vendor payments)

Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Report of the current period.

These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

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Goodwill and intangible assets value ($40.5m)

Refer to Note 14 to the Financial Report

The key audit matter

How the matter was addressed in our audit

A key audit matter for us was the Group’s annual testing of goodwill and intangible assets, given the size of the balance (being 42.4% of total assets). We focused on the significant forward looking assumptions of the Group applied in their value in use model, including:

• Forecast cash flows – the Group has a number of surveying businesses in different geographies and service different industries which operate in varying economic conditions. These conditions lead to greater audit effort to gather evidence across those businesses, industries and geographies.

• Forecast growth rates and terminal growth rates –the Group’s models are sensitive to small changes in these assumptions, reducing available headroom. This drives additional audit effort specific to their feasibility and consistency of application to the Group’s strategy.

• Discount rate – these are complicated in nature and vary according to the conditions and environment the specific Cash Generating Unit (CGU) is subject to from time to time.

In addition to the above, the carrying amount of the net assets of the Group exceeded the Group’s market capitalisation at year end, increasing the possibility of goodwill and intangibles being impaired. This further increased our audit effort in this key audit area.

The Group has a number of operating businesses and has begun an integration strategy following the 8 acquisitions in recent years. This has necessitated our consideration of the Group’s determination of CGUs, based on the status of the integration and the smallest group of assets to generate largely independent cash flows.

In assessing this key audit matter, we involved senior audit team members, including valuation specialists, who understand the Group’s business, industry and the economic environments it operates in.

Our procedures included:

• We assessed the Group’s determination of the CGUs against the requirements of accounting standards, based on our understanding of the Group’s business and the progression of the integration of the acquired subsidiaries. We analysed the Group’s internal reporting to assess how earnings are monitored and reported, the independency of cash flow generation and the implications to CGU identification

• We considered the appropriateness of the value in use method applied by the Group to perform the annual test of goodwill for impairment against the requirements of the accounting standards

• We assessed the accuracy of previous forecast cash flows by comparing to actuals to challenge the ability of the Group to estimate future cash flows

• Working with our valuation specialists, we used our knowledge of the Group and their industry, to challenge the value in use model and key assumptions, including:

• Comparing forecast cash flows to the Group’s board approved budget and challenging significant growth by analysing the forecast pipeline of work and understanding the industry and geographical drivers of this growth

• Comparing the Group’s growth assumptions to historical averages and relevant published studies of industry trends

• Analysing the discount rate against publicly available data of a group of comparable companies.

• We assessed the Group’s underlying methodology and documentation for the allocation of corporate costs before full integration takes place, to the forecast cash flows contained in the value in use model, for consistency with our understanding of the business and the criteria in the accounting standards

• We considered the sensitivity of the models by varying key assumptions, such as forecast growth rates, terminal growth rates and discount rates, within a reasonably possible range, to identify those assumptions at higher risk of bias or inconsistency in application and to focus our further procedures.

• We assessed the Group’s analysis of the market capitalisation shortfall versus the total recoverable amount of all CGUs. This included consideration of the market capitalisation range implied by recent share price trading ranges and broker target valuation ranges.

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Acquisitions (including deferred vendor payments $2.7m)

Refer to Note 3 and Note 7 to the Financial Report

The key audit matter

How the matter was addressed in our audit

Acquisitions are a Key Audit Matter due to

• Their number and size;

• The level of judgement required by us in evaluating the Group’s purchase price allocation including identifiable intangible assets acquired

• The level of judgement required by us in evaluating the Group’s determination of the liability in relation to potential deferred vendor payments for earn-out arrangements

During the current financial year, the Group has made 4 acquisitions being Lawrence Group Pty Ltd, WKC Spatial, Goodwin Midson and Lester Franks Survey and Geographic Pty Ltd.

The significant judgements we focussed on included:

• Estimation of the fair value of the customer relationships intangible asset - involves judgements of future revenues, gross margins, customer retention rates and discount rates. Given the Group have no history with the acquired businesses, there is judgement involved in determining the accuracy of forecast information, thereby increasing audit risk.

Determination of the liability in relation to potential deferred vendor payments for earnout arrangements - the earn-out arrangements vary in each contract and are dependent on future revenue, future EBIT or future EBITDA of the acquired businesses. As described above, the risk surrounding the Group’s forecasts means that there are a wider range of possible outcomes, and therefore a focus of our audit.

For each acquisition during the current financial year, our procedures included:

• Reading the sale and purchase agreement to understand the nature and fair value of consideration, the identification of assets and liabilities acquired and the key terms and conditions

• Critically evaluating the model developed by the Group to determine the fair value of the customer relationship intangible asset. This included:

• Comparing the forecast future revenue, gross margins and customer retention rates to pre-acquisition documentation available regarding the prior performance of the acquired business

• Comparing forecast gross margins and customer retention rates to the estimates made for other acquisitions made by the Group, adjusted for our knowledge of the acquired customer base and Group’s strategy

• Assessing the discount rate applied, using our knowledge of the Group and its industry, as well as comparing it against the discount rate used for impairment testing purposes

For each business acquired that remains in the earn-out period as at 30 June 2017 our procedures for assessing the liability for earn out arrangements included:

• Comparing forecast revenue, EBIT or EBITDA to recent results and our understanding of the Group’s initial strategy on acquisition to challenge the Group’s assessment of the likelihood of a future deferred vendor payment

• Re-calculating the liability recognised and assessing the components of the liability recognised for earn out arrangements against the criteria contained in the contract for consistency

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Other Information

Other Information is financial and non-financial information in Veris Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the Other Information.

The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report, Remuneration Report, Corporate Governance Statement and Shareholder Information. The Chairman’s Report, Managing Director’s Report and Overview of operations are expected to be made available to us after the date of the Auditor's Report.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.

In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report.

Responsibilities of the Directors for the Financial Report

The Directors are responsible for:

• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001

• implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error

• assessing the Group and Company’s ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objective is:

• to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and

• to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this Financial Report.

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at:

http://www.auasb.gov.au/auditors_files/ar2.pdf. This description forms part of our Auditor’s Report.

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Report on the Remuneration Report

Opinion

In our opinion, the Remuneration Report of Veris Limited for the year ended 30 June 2017, complies with Section 300A of the Corporations Act 2001 .

Directors’ responsibilities

The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001 .

Our responsibilities

We have audited the Remuneration Report included in Directors’ report for the year ended 30 June 2017.

Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards .

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KPMG

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R Gambitta Partner Perth

16 August 2017

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Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To the Directors of Veris Limited

I declare that, to the best of my knowledge and belief, in relation to the audit of Veris Limited for the financial year ended 30 June 2017 there have been:

• i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

• ii. no contraventions of any applicable code of professional conduct in relation to the audit

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KPMG

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R Gambitta Partner Perth

16 August 2017

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

Veris Limited Annual Financial Report 30 June 2017

Additional Information

Additional Information per ASX Listing Rules - Unaudited

Additional information requires by ASX Listing Rules and not disclosed elsewhere in this report is set out below.

Corporate Governance Statement

The Group’s Corporate Governance Statement can be found at:

http://www.veris.com.au/media/1228/veris_corporate_governance_statement.pdf

Shareholder Information as at 11 August 2017

Top 20 Shareholders of Quoted Securities

Rank	Name	Shares	% of Issued
			Capital
1	OCEAN TO OUTBACK ELECTRICAL PTY LTD FAMILY A/C>	45,204,315	13.88
2	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	28,779,540	8.84
3	NATIONAL NOMINEES LIMITED	27,623,536	8.48
4	J P MORGAN NOMINEES AUSTRALIA LIMITED	25,338,769	7.78
5	CITICORP NOMINEES PTY LIMITED	13,672,502	4.20
6	REINDEER INVESTMENTS PTY LIMITED A/C>	11,710,105	3.60
7	CONCEPT WEST COMMUNICATIONS PTY LTD A/C>	11,508,540	3.53
8	RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD A/C>	7,644,942	2.35
9	INSIDE-OUT CARPENTRY SERVICES PTY LTD FAMILY A/C>	7,320,000	2.25
10	CITICORP NOMINEES PTY LIMITED A/C>	7,145,016	2.19
11	BERTOLI CONTRACTING PTY LTD	6,303,597	1.94
12	SILCHESTER INVESTMENTS PTY LTD	4,066,622	1.25
13	BNP PARIBAS NOMS PTY LTD	4,007,977	1.23
14	MR CRAIG GRAEME CHAPMAN	4,000,000	1.23
15	MRS JASMINE KRKLJES	3,470,000	1.07
16	MR DARIO ANGELO AMARA	2,758,049	0.85
17	TELDAR CORPORATION PTY LIMITED A/C>	2,500,000	0.77
18	S & C LAWRENCE PTY LTD	2,475,248	0.76
19	MR SHANE LAWRENCE	2,475,247	0.76
20	MR THOMAS BRIAN LAWRENCE + MS FRANCINE MAREE HUGHES	2,220,940	0.68
Total		220,224,945	67.61

77

Veris Limited Annual Financial Report 30 June 2017

Additional Information

ADDITIONAL INFORMATION

Substantial Holders of 5% or more of fully paid ordinary shares

Shareholder	Number	Shares	Voting **Power **
OCEAN TO OUTBACK ELECTRICAL	45,841,815	45,841,815	14.07%
PARADICE INVESTMENT MGT	21,281,655	21,281,655	6.53%
COMMONWEALTH BANKOF AUSTRALIA	18,194,451	18,194,451	5.59%
PERPETUAL LIMITED	22,428,430	22,428,430	6.89%

Distribution of Shareholders

		Performance
Spread of Holdings	Ordinary Shares
		Rights
1 – 1,000	30	-
1,001 –5,000	124	-
5,001 – 10,000	117	-
10,001 – 100,000	547	12
100,001 –	235	13
Total on Register	1,053	25

Non-Marketable Parcels

Number of shareholders holding less than a marketable parcel is 99.

Voting Rights

Ordinary Shares

Voting rights on a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Performance Rights

There are no voting rights attached to Performance Rights

Restricted Securities

Number of Securities	Type of Securities	**Escrow Type **	Date Escrow Ends
2,222,222	Ordinary Shares	Voluntary	1-May-18
925,926	Ordinary Shares	Voluntary	1-Dec-17
925,926	Ordinary Shares	Voluntary	1-Dec-18

Unquoted Equity Securities

There are 11,928,570 unquoted Performance Rights on issue with 25 holders.

Securities Exchange

The Group is listed on the Australian Securities Exchange. The Home exchange is Perth. The ticker code is VRS.

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_

Perth

Corporate Information

The registered office of the company is:

Level 12, 3 Hasler Road Locked Bag 9 Osborne Park WA 6017 Australia T 08 9317 0600 F 08 9317 0611 mail@Veris.com.au Veris.com.au

Veris Limited Level 12, 3 Hasler Road Osborne Park WA 6017

Company Secretary:

Lisa Wynne

The principal place of business is:

Veris Limited Level 12, 3 Hasler Road Osborne Park WA 6017 Telephone: (08) 9317 0600

Share Registry:

Computer Share Level 11, 172 St Georges Terrace Perth WA 6000 Telephone: (08) 9323 2005

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