VERIS LIMITED — Annual Report 2019

Aug 29, 2019

==> picture [596 x 170] intentionally omitted <==

ASX/MEDIA RELEASE - VRS

30 August 2019

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2019

• $125.9m Group Revenue, up 18%

• Strong growth in cash generated from operations of $7.6m, (FY2018 $1.0m)

• Cash at bank $3.7m

• $2.4m reduction in net debt to $18.0m

• First full year of Elton Consulting earnings producing an EBITDA of $2.3m

• Operational Review to deliver savings of $3.0m on an annualised basis in FY2020, ensuring business is well positioned for margin growth

• Aqura EBITDA of $1.9m, up 107%

Veris Limited (ASX code: VRS) has today reported its financial results for the financial year ending 30 June 2019 (FY2019).

Veris achieved revenue growth in the year to $125.9m (FY2018 $106.8m). This was achieved in Veris Australia and Aqura Technologies businesses, with the Company also benefitting from its first full year of Elton Consulting business, a Tier 1 provider of professional and advisory services for all levels of government, private and community sectors acquired by Veris in March 2018.

In its first full year operating as one business, Veris Australia achieved multi state project awards. Elton had significant project awards in health, education, social housing, transport and social infrastructure as well as property development for state, federal and local governments and Tier 1 companies. Meanwhile, Aqura continued to provide services to key Tier 1 clients including awards of new works packages totalling in excess of $13m across its key service lines, Industrial Wireless, Content Access Networks and Unified Communications. These awards are as a result of the BHP three-year Services Contract entered into with BHP in 2019 and in addition, in 2019 Aqura successfully entered into an umbrella supply agreement with Rio Tinto demonstrating Aqura’s ability to sustain strong revenue growth year-on-year. These awards signify the demand for Aqura’s diverse range of service capabilities across Australia and New Zealand.

Underlying EBITDA[1] was $6.5m (FY2018 $11.2m). Group earnings were impacted by challenges in fully integrating the nine acquired surveying businesses within Veris Australia. In response, the Company commenced an Operational Review of Veris Australia and the Group to identify initiatives that will also have a direct and ongoing benefit to the Company’s earnings going forward. The Operational Review focused on harnessing the strength of Veris Australia aimed improving efficiencies, margins and delivering greater value for shareholders and clients. Phase 1 of the Operational Review was completed in December 2018 with Phase 2 completed in June 2019, with benefits including a circa $3 million in cost reductions on an annualised basis. The initiatives

1 Underlying EBITDA is earnings before depreciation, amortisation, interest, tax, and removes impairment, restructuring, share-based payments and acquisition costs.

Perth Office Locations Level 12, 3 Hasler Road T 08 9317 0600 Over 20 offices Veris Limited Locked Bag 9 F 08 9317 0611 across Australia ABN 80 122 958 178 Osborne Park WA 6017 Veris.wa@veris.com.au veris.com.au/contactus Australia veris.com.au

Version: VRS-TMP-113_5

==> picture [596 x 170] intentionally omitted <==

achieved under this review combine to ensure Veris is a stronger business that is well positioned for margin growth in FY2020.

In addition to improving the Veris Australia operations and successfully diversifying into professional and advisory services, the Company also developed a five-year Strategic Plan 2019-2024. This strategy was endorsed by the Veris Board in June 2019. The Veris Australia strategy includes targeting opportunities in higher value, higher margin projects with greater technical content including 3D spatial and geospatial work. Investments made in geospatial in FY19 set a strong platform to grow this work in FY20.

Veris ended the year with a cash position of $3.7m and a reduced net debt position of $18m (30 June 2018 $20.4m). The Company also delivered strong growth in cash generated from operation of $7.6m, up from a $1.0m in FY2018.

Veris Managing Director Adam Lamond said :

“FY2019 was a challenging year for Veris, with earnings impacted in the first year of fully integrating the nine acquired surveying businesses within Veris Australia. Positively, we grew revenue in the year and saw Aqura Technologies delivered strong earnings growth, while Elton Consulting delivered solid results in its first full year owned by the Company despite the impact of three elections.

Significant progress has been made in strengthening the Company’s position in response to the challenges that presented during FY2019. This includes finalisation of the national integration of the nine Veris Australia business, undertaking an Operational Review that has seen a range of corrective measures implemented in the year, including senior management changes and cost savings, and developing a clear, five-year strategic plan for 20192024 that has been endorsed by the Board and is supported by the Company’s bankers.

We have already seen improved earnings from Veris Australia business in the second half of FY2019 compared to the first half of FY2019 and I’m looking forward to FY2020 with renewed optimism to strengthening the business and delivering superior results for our shareholders.”

About Veris

Veris is a professional service business delivering surveying, professional and advisory, and geospatial services to the infrastructure, property, energy, mining and resource, defence, agribusiness, tourism, leisure and government sectors throughout Australia.

For further information please contact

Corporate Office Veris Limited Tel (08) 9317 0628

Page ii

==> picture [596 x 170] intentionally omitted <==

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2019

Results for announcement to the market

A summary of the overall results for the year ended 30 June 2019.

Veris Limited		$000
Veris Australia segment revenue	4% to	92,947
Aqura Technologies segment revenue	19% to	14,611
Elton Consulting segment revenue	256% to	18,326
Revenue from ordinary activities	18% to	125,884
Underlying EBITDA from continuing operations1	42% to	6,498
Loss from continuing operations after tax	3,696% to	(40,089)
Statutory Loss for the period attributable to members	2,974% to	(40,089)
Loss per share (basic)	2,794% to	(11.13) cents
NTA Backing	30 June 2019	30 June 2018
Net tangible asset backing per ordinary security	$0.02	$0.03

1 Underlying EBITDA is defined as earnings before depreciation, amortisation, interest, tax, impairment, restructuring, sharebased payments and acquisition costs and is an unaudited non-IFRS measure. The % increase from the prior period is the increase in EBITDA from continuing operations.

2 Net Profit After Tax Before Amortisation (NPATBA) is an unaudited non-IFRS measure.

Page 1

==> picture [596 x 170] intentionally omitted <==

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

Profit (Loss) from continuing operations Add back: Amortisation Tax benefit on amortisation (30%) Net Profit after Tax Before Amortisation (NPATBA) Tax expense (benefit) excluding amortisation Net finance expense Share-based payment Restructuring costs Acquisition costs Depreciation Impairment of Intangibles Underlying EBITDA	30 June 2019 $000 30 June 2018 $000 (40,089) (1,056) 3,898 4,096 (1,169) (1,229)
	(37,360) 1,811 (974) 358 1,339 1,006 586 1,031 3,294 1,770 95 1,628 5,087 3,585 34,431 -
	6,498 11,189

Dividends declared

On 30 August 2018 the Company declared a fully franked dividend for 2018 of 0.5 cents per share.

Preliminary financial report

This report is based on accounts that have been audited.

Net Assets and Cash Position

Veris has $3.7m cash at 30 June 2019. FY2019 net cashflow from operating activities was $6.2m. Veris repaid $6.2m in borrowings and lease liability payments during the year.

Page 2

==> picture [596 x 170] intentionally omitted <==

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019

Revenue Operating Expenses Depreciation Amortisation Acquisition Costs Restructuring Costs Share-based payment Impairment of Intangibles Results from operating activities Finance income Finance costs Net finance costs Profit (loss) before income tax Income tax benefit Profit (loss) from continuing operations Profit (loss) from discontinued operations, net of tax Profit (loss) for the year Total comprehensive income (loss) for the year Earnings per share Basic earnings/(loss) per share - cents per share Diluted earnings/(loss) per share - cents per share Earnings per share – continuing operations Basic earnings/(loss) per share - cents per share Diluted earnings/(loss) per share - cents per share	2019 2018 $000 $000 125,884 106,834 (119,386) (95,645)
	6,498 11,189 (5,087) (3,585) (3,898) (4,096) (95) (1,628) (3,294) (1,770) (586) (1,031) (34,431) -
	(40,893) (921) 3 18 (1,342) (1,024)
	(1,339) (1,006)
	(42,232) (1,927) 2,143 871
	(40,089) (1,056)
	- (248)
	(40,089) (1,304)
	(40,089) (1,304)
	(11.13) (0.39) (11.13) (0.39) (11.13) (0.32) (11.13) (0.32)

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

Page 3

==> picture [596 x 170] intentionally omitted <==

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

Cash and cash equivalents Trade and other receivables Work in progress Other current assets Total current assets Non-current assets Plant and equipment Intangible assets Deferred tax asset Total non-current assets Total assets Current liabilities Trade and other payables Deferred vendor payments Loans and borrowings Employee benefits Current tax liability Total current liabilities Non-current liabilities Loans and borrowings Deferred vendor payments Employee benefits Total non-current liabilities Total liabilities Net assets Equity Share capital Share based payment reserve Retained earnings Total equity	2019 2018 $000 $000 3,685 5,588 25,864 30,932 8,280 10,538 3,039 1,705
	40,868 48,763
	13,551 15,242 19,190 58,598 8,913 6,275
	41,654 80,115
	82,522 128,878
	18,765 17,532 3,554 2,386 3,356 6,381 9,176 9,505 534 533
	35,385 36,337
	18,403 19,647 - 3,625 1,640 1,066
	20,043 24,338
	55,428 60,675
	27,094 68,203
	43,051 40,887 2,949 2,349 (18,906) 24,967
	27,094 68,203

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

Page 4

==> picture [596 x 170] intentionally omitted <==

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019

Balance at 1 July 2018 Adjustment on initial application of AASB 9 Adjustment on initial application of AASB 15 Adjusted balance at 1 July 2018 Total comprehensive profit for the year Profit for the year Total comprehensive profit for the year Transactions with owners, recorded directly in equity Issue of ordinary shares (net of costs) Dividends paid Share based payment transactions Balance at 30 June 2019 Balance at 1 July 2017 Total comprehensive income for the year Profit for the year Total comprehensive income for the year Transactions with owners, recorded directly in equity Issue of ordinary shares (net of costs) Dividends paid Share based payment transactions Balance at 30 June 2018	Share Capital Share-based Payment Reserve Retained Earnings Total Equity $000 $000 $000 $000 40,887 2,349 24,967 68,203 - - (721) (721) - - (1,293) (1,293)
	40,887 2,349 22,953 66,189 - - (40,089) (40,089)
	- - (40,089) (40,089)
	2,164 - - 2,164 - - (1,770) (1,770) - 600 - 600
	43,051 2,949 (18,906) 27,094
	Share Capital Share-based Payment Reserve Retained Earnings Total Equity $000 $000 $000 $000 37,283 1,747 27,907 66,937 - - (1,304) (1,304)
	- - (1,304) (1,304)
	3,604 - - 3,604 - - (1,636) (1,636) - 602 - 602
	40,887 2,349 24,967 68,203

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

Page 5

==> picture [596 x 170] intentionally omitted <==

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2019

Cash flow from operating activities Receipts from customers Payments to suppliers and employees Cash generated from operations Tax received Interest paid Interest received Net cash from operating activities Cash Flows from investing activities Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Deferred Vendor Payment Acquisition of subsidiaries net of cash acquired Net cash (used in) investing activities Cash flow from financing activities Dividends paid Repayment of borrowings and lease liabilities Proceeds from loans Proceeds from share issues (net of costs) Net cash from (used in) financing activities Net increase in cash held Cash and cash equivalents at 1 July Cash and cash equivalents at 30 June	2019 2018 $000 $000 143,784 101,980 (136,212) (101,021)
	7,572 959 - 14 (1,330) (1,133) 3 22
	6,245 (138)
	1,769 3,828 (1,858) (1,844) (2,140) (1,928) 266 (14,071)
	(1,963) (14,015)
	- (1,258) (6,185) (4,575) - 11,000 - -
	(6,185) 5,167
	(1,903) (8,986) 5,588 14,574
	3,685 5,588

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

Page 6

==> picture [596 x 170] intentionally omitted <==

Notes to the Financial Statements

For the year ended 30 June 2019

Note 1: Statement of significant accounting policies

This preliminary financial report has been prepared in accordance with Australian Securities Exchange Listing rules as they relate to Appendix 4E and in accordance with the measurement requirements of Australian Accounting Standards and Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. As such, this preliminary financial report does not include all the notes of the type included in the annual financial report and accordingly, should be read in conjunction with the Annual Report for the year ended 30 June 2019, and with any public announcements made by Veris Limited during the reporting period in accordance with the disclosure requirements of the Corporations Act 2001.

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

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

Note 2: Earnings per share

ote 2: Earnings per share
	2019	2018
Earnings used to calculate basic EPS - $000	(40,089)	(1,304)
Weighted average number of ordinary shares outstanding during the
period used in calculating basic EPS	360,068,213	331,684,479
Basic earnings/(loss) per share - cents per share	(11.13)	(0.39)
Weighted average number of ordinary shares outstanding during the
period used in calculating Diluted EPS	360,068,213	331,684,479
Diluted earnings/(loss) per share - cents per share	(11.13)	(0.39)

Page 7

==> picture [596 x 170] intentionally omitted <==

Note 3: Segment Note

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

• Veris Australia – examine and record the features of a piece of land or infrastructure in order to create maps, plans, detailed descriptions and to facilitate construction

• Aqura Technologies – provides specialised ICT and Communications services

• Elton Consulting – provide expert advice to businesses, governments and not-for-profit organisations to support them to make considered and informed decisions on policy, strategy, city-making and service delivery.

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

Revenues Inter-segment revenues External revenues Costs Inter-segment costs External costs EBITDA Depreciation Amortisation EBIT* Segment assets Segment liabilities	Veris Australia Aqura Technologies Elton Consulting *Total
	2019 2018 2019 2018 2019 2018 2019 2018 $000 $000 $000 $000 $000 $000 $000 $000 93,058 94,214 14,710 12,430 18,396 5,143 126,164 111,786 (111) (4,812) (99) (140) (70) - (280) (4,952)
	92,947 89,402 14,611 12,290 18,326 5,143 125,884 106,834 (87,279) (82,191) (12,846) (11,530) (16,093) (4,110) (116,218) (97,831) 111 4,812 99 140 70 - 280 4,952
	(87,168) (77,379) (12,747) (11,390) (16,023) (4,110) (115,938) (92,878) 5,779 12,023 1,864 900 2,303 1,033 9,946 13,956 (4,811) (3,440) (171) (38) (90) (26) (5,072) (3,503) (2,908) (3,848) - - (990) (248) (3,898) (4,096)
	(1,940) 4,735 1,693 862 1,223 759 976 6,357 2019 2018 2019 2018 2019 2018 2019 2018 $000 $000 $000 $000 $000 $000 $000 $000 45,648 92,012 6,605 6,378 21,196 22,891 73,449 121,281 (29,093) (29,558) (7,380) (5,149) (2,335) (3,010) (38,808) (37,716)

*Relates to Veris Australia and legacy surveying businesses

**2018 comparative relates to 3 months from acquisition date to 30 June 2018

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

– Ends –

Page 8