VERIS LIMITED — Interim / Quarterly Report 2018

Feb 27, 2018

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Veris Limited

31 December 2017 Interim Financial Report

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Veris Limited Interim Financial Report December 2016

2

Directors’ report	3
Condensed consolidated interim financial statements	7
Condensed consolidated statement of financial position	7
Condensed consolidated statement of profit or loss and comprehensive	8
income
Condensed consolidated statement of changes in equity	9
Condensed consolidated statement of cash flows	10
Basis of Preparation	11
Notes to the condensed consolidated interim financial statements	12
Directors’ declaration	19
Independent auditor’s report on review of condensed consolidated interim	20
financial
Lead auditor’s independence declaration	22
Corporate information	23

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Veris Limited Interim Financial Report December 2017

DIRECTORS’ REPORT

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The directors of Veris Limited (the “Company” or “Veris”) present their report together with the consolidated financial statements of the group comprising Veris Limited and its controlled entities (together referred to as “the Group”), for the six months ended 31 December 2017 and the independent review report thereon.

DIRECTORS

The directors of the Company at any time during or since the end of the interim period are:

Name Role	Period of Directorship
Non-executive
Derek La Ferla 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
Executive
Adam Lamond Executive Director	Appointed 13 October 2011

Derek La Ferla | Non-Executive Chairman

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

Mr La Ferla is a member of the Nomination and Remuneration Committee and the Audit and Risk Committee.

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

584,501 fully paid ordinary shares

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Veris Limited Interim Financial Report December 2017

DIRECTORS’ REPORT (continued)

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Tom Lawrence | Non-Executive Director

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.

Special Responsibilities

Mr Lawrence is the Chairman of the Audit and Risk Committee and a member of the Nomination and Remuneration Committee and OHS Committee.

Directorships in last 3 years

None

Interests in Shares

3,222,598 fully paid ordinary shares

Karl Paganin | Non-Executive Director

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

Mr Paganin is the Chairman of the Nomination and Remuneration Committee and a member of the Audit and Risk Committee and OHS Committee.

Directorships in last 3 years

Southern Cross Electrical Engineering Ltd (June 2015 – current)

Interests in Shares

5,662,721 fully paid ordinary shares

Adam Lamond | Executive Director

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 this 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.

Directorships in last 3 years

None

Interests in Shares

45,841,815 fully paid ordinary shares

Veris Limited Interim Financial Report December 2017

Page 4 VERIS.COM.AU

DIRECTORS’ REPORT (continued)

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PRINCIPAL ACTIVITIES

Veris is a national professional service business delivery 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 2018 financial year namely Survey Professional Services and Communications. The latter is a new segment and its business has been extracted from the Infrastructure Construction Segment operations that existed in the 2017 financial year.

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

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 existing spatial solution capabilities of the survey segment with specialised ICT and Communications services, offering industryleading technology solutions.

REVIEW OF OPERATIONS

Veris’ revenue from continued operations during the period ended 31 December 2017 was $46,266,000; up from $31,560,000 in the prior corresponding period. The increase was primarily driven by the surveying segment revenue increasing from $29,451,000 to $41,298,000. This growth was the result of the Group’s strategy of developing a premier national surveying business with desirable exposure to property and civil infrastructure markets, particularly focused in New South Wales, Victoria and Queensland, which has offset declining revenues from Western Australia.

Veris surveying EBITDA (EBITDA is defined as earnings before depreciation, amortisation, interest, tax, impairment, restructuring, share-based payments, discontinued operations and acquisition costs and is an unaudited non-IFRS measure) was $5,594,000 (1H FY17: $3,577,000) being a 56% increase on the prior corresponding half. Veris expects survey division EBITDA to be stronger in 2H FY2018 given an upward trend in month-on-month results in the first half, indications of continued growth in the East Coast infrastructure markets and full period earnings from the LANDdata acquisition. This expected progression validates the Company’s strategic commitment, to move away from its traditional construction focus in WA and deliver premium Professional Services across Australia.

The recently launched AQURA Technologies brand achieved revenue for the half of $4,968,000 with an EBITDA contribution of $120,000. AQURA is expected to contribute higher revenue and earnings in the second half as several projects are delivered.

The OTOC Australia construction business was discontinued at the commencement of the half year. As a result of the sale of redundant equipment, the discontinued operation contributed a $280,000 to the group EBITDA during 1H FY18 and a loss after tax of $46,000.

The Company has a strong balance sheet to maintain organic growth and fund further acquisitions which includes Cash $8,108,000 and approximately $22,000,000 in undrawn acquisition lending facilities.

Veris Limited Interim Financial Report December 2017

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DIRECTORS’ REPORT (continued)

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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:

	31 Dec	31 Dec
For the six months ended:	2017	2016
	$000	$000
Total comprehensive income/(loss) for the period	(1,666)	181
Add back:
Tax (benefit)/expense	(82)	(803)
Net finance expense	433	313
Restructuring costs	1,059	180
Acquisition costs	610	849
Share-based payment	354	396
EBIT profit	708	1,116
Depreciation	1,365	1,477
Amortisation	2,116	1,954
Discontinued Operations	46	(2,815)
EBITDA	4,235	1,732

LEAD AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor’s independence declaration is set out on page 22 and forms part of the directors’ report for the six months ended 31 December 2017.

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.

Signed in accordance with a resolution of the directors:

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Derek La Ferla

Chairman

Dated at Perth this 27 day of February 2018

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Veris Limited Interim Financial Report December 2017

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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Note Assets Current assets 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 Liabilities 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 5 Retained earnings Total equity	31 Dec 2017 30 Jun 2017 $000 $000 8,108 14,574 17,767 15,983 5,765 4,616 1,565 1,118
	33,205 36,291
	12,879 11,049 44,210 40,525 6,680 7,636
	63,769 59,210
	96,974 95,501
	8,174 7,291 2,008 1,544 3,200 2,593 6,059 5,481 535 613
	19,976 17,522
	10,524 8,935 1,110 1,200 996 907
	12,630 11,042
	32,606 28,564
	64,368 66,937
	37,662 37,283 2,101 1,747 24,605 27,907
	64,368 66,937

The condensed notes on pages 12 to 18 are an integral part of these consolidated interim financial statements.

Veris Limited Interim Financial Report December 2017

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME

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For the six months ended 31 December 2017 Note Revenue Expenses Depreciation Amortisation Acquisition related cost Restructuring costs Share-based payment Results from operating activities Finance income Finance costs Net finance costs Profit (loss) before income tax Income tax benefit (expense) 6 Profit (loss) from continuing operations Profit (loss) from discontinued operations, net of tax 7 Profit (loss) for the period Total comprehensive income (loss) for the period _Prior year amounts have been re-presented to exclude discontinued operations. Refer note 7_ Earnings per share Basic earnings cents per share Diluted earnings cents per share Earnings per share from continuing operations* Basic earnings cents per share Diluted earnings cents per share	2017 2016 $000 $000* 46,266 31,560 (42,031) (29,828)
	4,235 1,732 (1,365) (1,477) (2,116) (1,954) (610) (849) (1,059) (180) (354) (396)
	(1,269) (3,124) 7 23 (440) (336)
	(433) (313)
	(1,702) (3,437)
	82 803
	(1,620) (2,634)
	(46) 2,815
	(1,666) 181
	(1,666) 181
	(0.50) 0.06
	(0.50) 0.06
	(0.50) (0.89)
	(0.50) (0.89)

The condensed notes on pages 12 to 18 are an integral part of these consolidated interim financial statements.

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Veris Limited Interim Financial Report December 2017

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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For the six months ended 31 December 2017

Note Share Capital Share Based Payment Reserve Retained Earnings Total Equity $000 $000 $000 $000 Balance at 1 July 2017 37,283 1,747 27,907 66,937 Total comprehensive income for the period Loss for the period - - (1,666) (1,666) Total comprehensive profit for the period - - (1,666) (1,666) Transactions with owners of the Company, recognised directly in equity Issue of ordinary shares (net of costs) 379 - - 379 Dividends paid - - (1,636) (1,636) Share-based payment transactions 5 - 354 - 354 Total transactions with owners of the Company 379 354 (1,636) (903) Balance at 31 December 2017 37,662 2,101 24,605 64,368 During the period the company issued 2.2 million shares valued at $379,000 as a result of the Dividend Reinvestment Plan. For the six months ended 31 December 2016 Note Share Capital Share Based Payment Reserve Retained Earnings Total Equity $000 $000 $000 $000 Balance at 1 July 2016 22,622 1,449 29,227 53,298 Total comprehensive income for the period Profit for the period - - 181 181 Total comprehensive profit for the period - - 181 181 Transactions with owners of the Company, recognised directly in equity Issue of ordinary shares (net of costs) 14,664 - - 14,664 Dividends paid - (1,368) (1,368) Share-based payment transactions 5 - 396 - 396 Total transactions with owners of the Company - 396 (1,368) 13,692 Balance at 31 December 2016 37,286 1,845 28,040 67,171	Share Capital Share Based Payment Reserve Retained Earnings Total Equity $000 $000 $000 $000	Share Capital Share Based Payment Reserve Retained Earnings Total Equity $000 $000 $000 $000
	37,283 1,747 27,907 66,937
	- - (1,666) (1,666)
	- - (1,666) (1,666)
	379 - - 379
	- - (1,636) (1,636)
	- 354 - 354
	379 354 (1,636) (903)
	37,662 2,101 24,605 64,368
	22,622 1,449 29,227	53,298
	- - 181	181
	- - 181	181
	14,664 - -	14,664
	- (1,368)	(1,368)
	- 396 -	396
	- 396 (1,368)	13,692
	37,286 1,845 28,040	67,171

During the period the company issued 2.2 million shares valued at $379,000 as a result of the Dividend Reinvestment Plan.

The condensed notes on pages 12 to 18 are an integral part of these consolidated interim financial statements.

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Veris Limited Interim Financial Report December 2017

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

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For the six months ended 31 December 2017 Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Cash generated from operations 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 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 31 December	2017 2016 $000 $000 48,611 59,457 (48,864) (57,945)
	(253) 1,512 (491) (472) 12 27
	(732) 1,067
	2,678 229 (714) (295) (1,249) (1,771) (3,630) (7,500)
	(2,915) (9,337)
	(1,256) (1,060) (1,563) (3,575) - 12,340
	(2,819) 7,705
	(6,466) (565) 14,574 12,968
	8,108 12,403

The condensed notes on pages 12 to 18 are an integral part of these consolidated interim financial statements.

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Veris Limited Interim Financial Report December 2017

BASIS OF PREPARATION

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REPORTING ENTITY

Veris Limited (the “Company” or “Veris”) is a for-profit company domiciled in Australia. The condensed consolidated interim financial statements of the Company as at and for the six months ended 31 December 2017 comprises the Company and its subsidiaries (together referred to as the “Group”). The Group is a diversified survey solutions and communications company.

The consolidated annual financial statements of the Group as at and for the year ended 30 June 2017 are available upon request from the Company’s registered office at Level 12, 3 Hasler Road Osborne Park WA 6017 or at www.Veris.com.au.

STATEMENT OF COMPLIANCE

The condensed consolidated interim financial statements are general purpose financial statements prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001, and with IAS 34 Interim Financial Reporting .

Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended 30 June 2017. The consolidated interim financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated annual financial statements of the Group as at and for the year ended 30 June 2017.

These condensed consolidated interim financial statements were approved by the Board of Directors on 27 February 2018.

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with the legislative instrument, amounts in the consolidated interim financial statements have been rounded off to the nearest thousand dollars, unless otherwise stated.

JUDGEMENTS AND ESTIMATES

Preparing interim financial statements requires 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.

The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2017.

SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Group in the condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2017.

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Veris Limited Interim Financial Report December 2017

NOTES

1. OPERATING SEGMENTS

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

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

• Communications – provides specialised ICT and Communications services

Information regarding the results of each reporting segment is detailed below for the six months ended 31 December.

Information about reportable segments

Revenues Inter-segment revenues External revenues Costs Inter-segment costs External costs EBITDA Depreciation Amortisation EBIT* for reportable segments Segment assets Segment liabilities	Surveying Communications Total*
	2017 2016 2017 2016 2017 2016 $000 $000 $000 $000 $000 $000 43,188 30,380 5,024 2,109 48,212 32,489 (1,890) (929) (56) - (1,946) (929)
	41,298 29,451 4,968 2,109 46,266 31,560 (37,614) (26,351) (4,884) (2,245) (42,498) (28,596) 1,910 477 36 - 1,946 477
	(35,704) (25,874) (4,848) (2,245) (40,552) (28,119) 5,594 3,577 120 (136) 5,714 3,441 (1,289) (1,419) - - (1,289) (1,419) (2,116) (1,954) - - (2,116) (1,954)
	2,189 204 120 (136) 2,309 68 Dec 2017 June 2017 Dec 2017 June 2017 Dec 2017 June 2017 $000 $000 $000 $000 $000 $000 82,570 69,301 5,624 5,074 88,194 74,375 (22,979) (15,018) (5,182) (1,628) (28,161) (16,646)

There was no material concentration of revenue across customers during the six months ended 31 December 2017. (2016: two major customers of more than 10% represented approximately $21,900,000).

*Prior year amounts have been re-presented to exclude discontinued operations. Refer note 7

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

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

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Veris Limited Interim Financial Report December 2017

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1. OPERATING SEGMENTS (CONTINUED)

RECONCILIATIONS OF REPORTABLE SEGMENT REVENUES, PROFIT OR LOSS, ASSETS AND 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 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 48,212 32,489 (1,949) (929)
	46,266 31,560 42,498 28,596 (1,946) (477) 1,479 1,709
	42,031 29,828 2,309 68 (1,909) (2,163) (610) (849) (1,059) (180) (433) (313)
	(1,702) (3,437)
	Dec 2017 $000 June 2017 $000 88,194 74,375 8,780 21,126
	96,974 95,501
	28,161 16,646 4,445 11,918
	32,606 28,564

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Veris Limited Interim Financial Report December 2017

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2. ACQUISITIONS

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

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 $3,800,000 million in cash. A net adjustment of up to $350,000 will be paid (refunded) following completion of the acquisition. A further $1,000,000 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.

In the period since acquisition to 31 December 2017, LANDdata contributed revenue of $2,392,000 and EBITDA of $429,000 to the Group’s results. If the acquisition had occurred on 1 July 2017, Management estimates that revenue would have been $2,725,000 and EBITDA would have been $424,000.

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 Provision for Net Adjustment Deferred vendor payment Actual Net Adjustment	Dec 2017 $000 3,800 (350) 1,610 129 5,189

Deferred vendor payment

As part of the purchase price, the company has agreed to pay the vendor a milestone payment of $500,000 for period 1 and a further $500,000 for period 2 subject to meeting certain Gross Margin and Revenue hurdles in a performance period. An additional Incentive Bonus is also payable at the end of Period 2 provided that Gross Margin is above $4,400,000. A full provision for the milestone payments of $1,000,000 and $610,000 for the Incentive Bonus 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 with a credit to profit.

The identified assets and liabilities reflected at settlement were revised as follows:

Customer Relationships Other current assets Deferred Tax Asset Property, plant and equipment Employee benefits Deferred Tax Liability	Dec 2017 $000 3,360 32 71 328 (238) (1,008) 2,545

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

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Veris Limited Interim Financial Report December 2017

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2. ACQUISITIONS (continued)

Goodwill arising from the acquisition has been recognised as follows:

oodwill arising from the acquisition has been recognised as follows:
Total consideration transferred Fair value of identifiable assets and liabilities Goodwill	Dec 2017 $000
	5,189 (2,545)
	2,644

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

The Group incurred acquisition costs of $610,000 to acquire new surveying businesses which is recognised in the Statement of Profit and Loss and Other Comprehensive Income.

3. DIVIDENDS

On 17 August 2017 the Company declared a fully franked dividend for 2017 of 0.5 cents per share, totalling $1,636,000; (2016: $1,368,000) with a record date of 1 September 2017. On 15 September the Dividend paid in cash to shareholders was $1,256,000 and 2,238,596 shares issued under the Dividend Reinvestment Plan at a price of 16.90 cents per share. The price per share was based on 5% discount to the volume weighted average price of Veris Shares 5 days following the record date.

4. FINANCIAL INSTRUMENTS

The Group’s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 30 June 2017.

5. SHARE-BASED PAYMENTS

As at 31 December 2017, the Group had the following share-based payment arrangements.

(i) 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	7,086,642	-		>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		7,771,017	1,555,039		75th percentile or more	100%	25%>	100%

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Veris Limited Interim Financial Report December 2017

5. SHARE-BASED PAYMENTS (CONTINUED)

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• (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 achievement of 100% of the 2016 rTSR financial performance hurdle and the 2016 EPSCAGR hurdle.

• (D) During the half-year ended 31 December 2017, 313,725 Performance Rights lapsed on cessation of employment of Management Personnel.

(ii) 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	72,000	-			<100%	Nil	< 6	Nil
						100% < 180%	Pre-rata vesting between 25% and 100%	>6- <6.5	pro rata vesting between 25%- 100%
						180%	100%	6.5>	100%
3,002,848		72,000	-

(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:

vii. failure to satisfy the applicable vesting conditions;

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

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

x. 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;

xi. the expiry date; or

xii. 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

(D) During the half-year ended 31 December 2017, 72,000 Performance Rights lapsed on cessation of employment of Management Personnel.

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Veris Limited Interim Financial Report December 2017

5. SHARE-BASED PAYMENTS (CONTINUED)

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

The fair value of the Performance Rights issued under the Group’s Long Term Incentives 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%
Remaining Life (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 2,930,848 Performance Rights issued during 2017 remain unvested at 31 December 2017. 8,611,996 of the Performance Rights issued during 2016, remain unvested at 31 December 2017.

6. TAX EXPENSE (BENEFIT)

Tax expense is recognised based on the best estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period.

Reconciliation of effective tax rate:

Profit (loss) before income tax – continuing operations Income tax at 30% (2016: 30%) Add (less) tax effect of: Other non-allowable /assessable items Adjustments for prior periods Income Tax Expense / (Benefit) – continuing operations Profit (loss) before income tax – discontinued operations Income tax at 30% (2016: 30%) Add (less) tax effect of: Effect of Foreign Tax rates on tax payable Other non-allowable /assessable items Adjustments for prior periods Income Tax Expense / (Benefit) – discontinued operations	2017 2016 $000 $000 (1,702) (3,437)
	(511) (1,031) 360 204 69 24
	(82) (803)
	43 2,607
	13 782 - (990) - - 76 -
	89 (208)

Page 17 VERIS.COM.AU

Veris Limited Interim Financial Report December 2017

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7. DISCONTINUED OPERATIONS

In July 2017, the construction operations of OTOC Australia’s Infrastructure business were discontinued. The Communications business has been extracted from the Infrastructure operations and forms part of the continued operations of the group.

The construction operations were not previously classified as held-for-sale or as a discontinued operation.

Results of Discontinued Operations

Revenue Expenses Results from discontinued operating activities Depreciation Restructuring Net finance costs Profit (loss) from discontinued operations for the period before tax Income tax (expense)/ benefit Profit (loss) from discontinued operations for the period, net of tax Earnings per share Basic earnings cents per share Diluted earnings cents per share Cash flows from (used in) discontinued operations Net cash flows from (used in) operating activities Net cash flows from (used in) investing activities Net cash flows from (used in) financing activities Net cash flow for the period	6 months ended 31 Dec 2017 6 months ended 31 Dec 2016 $000 $000 1,752 23,423 (1,472) (20,284)
	280 3,139 (177) (211) - (188) (60) (133)
	43 2,607 (89) 208
	(46) 2,815
	(0.01) 0.95 (0.01) 0.92
	2017 2016 $000 $000 187 5,113 2,654 124 (133) (1,287)
	2,708 3,950

8. SUBSEQUENT EVENT

No significant subsequent events occurred since the end of the period.

Page 18 VERIS.COM.AU

Veris Limited Interim Financial Report December 2017

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DIRECTORS’ DECLARATION

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

1. the condensed consolidated financial statements and notes set out on pages 7 to 18, are in accordance with the Corporations Act 2001 including:

2. (a) giving a true and fair view of the Group’s financial position as at 31 December 2017 and of its performance for the six month period ended on that date; and

3. (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

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

Signed in accordance with a resolution of the directors:

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Derek La Ferla

Chairman

Dated at Perth this 27 day of February 2018

Page 19 VERIS.COM.AU

Veris Limited Interim Financial Report December 2017

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Independent Auditor’s Review Report

To the shareholders of Veris Limited

Report on the Financial Report

Conclusion

We have reviewed the accompanying Interim Financial Report of Veris Limited.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Half-year Financial Report of Veris Limited is not in accordance with the Corporations Act 2001 , including:

• [giving a true and fair view][of the ] [Group’s ] financial position as at 31 December 2017 and of its performance for the Half-year ended on that date; and

• [complying with ] [Australian Accounting ] Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

The Interim Financial Report comprises:

• Condensed Consolidated statement of financial position as at 31December 2017

• Condensed Consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed Consolidated statement of cash flows for the Half-year ended on that date

• Notes 1 to 8 comprising a summary of significant accounting policies and other explanatory information

• The Directors’ Declaration.

The Group comprises Veris Limited (the Company) and the entities it controlled at the Half-year’s end or from time to time during the Half-year Period.

Responsibilities of the Directors for the Half-year Financial Report

The Directors of the Company are responsible for:

• the preparation of the Half-year Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001

• for such internal control as the Directors determine is necessary to enable the preparation of the Half-year Financial Report that is free from material misstatement, whether due to fraud or error.

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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Auditor’s responsibility for the review of the Half-year Financial Report

Our responsibility is to express a conclusion on the Half-year Financial Report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the Half-year Financial Report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s financial position as at 31 December 2017 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As auditor of Veris Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an Interim Financial Report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

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KPMG

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R Gambitta Partner Perth

27 February 2018

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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 review of for the half-year ended 31 December 2017 there have been:

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

• ii. no contravention of any applicable code of professional conduct in relation to the review

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KPMG

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R Gambitta Partner Perth

27 February 2018

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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_

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

CORPORATE INFORMATION

The registered office of the company is:

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

The principal place of business is:

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

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