iSentia Holdings Pty Limited Level 3, 219-241 Cleveland St, Strawberry Hills NSW Australia 2012
2014
ANNUAL
REPORT
iSentia Group Limited > Annual Report 2014 1Chairman's Letter
01 Chairman’s letter 02
02 CEO's report 04
03 Directors’ report 10
04 Auditor's independence declaration 27
05 Corporate governance statement 28
06 Statement of profit or loss and
other comprehensive income 36
07 Statement of financial position 37
08 Statement of changes in equity 38
09 Statement of cash flows 39
10 Notes to the financial statements 40
11 Directors' declaration 85
12 Independent auditor's report to the
members of iSentia Group Limited 86
13 Shareholder information 88
> TABLE OF CONTENTS
CHAIRMAN’S
LETTER
01
iSentia Group Limited > Annual Report 20142 3Chairman's Letter
> CHAIRMAN’S LETTER
Dear Shareholder,
Following iSentia Group Limited’s listing on the Australian Securities Exchange on 5 June 2014, it is my
pleasure on behalf of the Board of Directors to introduce you to the company’s first Annual Report.
The Board appreciated the strong support shown by investors
both during our initial public offering and following our official
listing, and I am pleased to report that iSentia has exceeded
all of the FY2014 targets outlined in the prospectus.
Our revenue for FY2014 was up % on FY2013 and ahead of our prospectus forecast by %. Pro forma
EBITDA and NPATA also outperformed our prospectus forecasts, on the back of both Software-as-a-
Service (‘SaaS’) and Value Added Services (‘VAS’) revenue growth. The Board remains confident that the
company is on track to meet the prospectus forecasts for FY2015.
Our longer term growth strategy is also on track, with our premier SaaS platform in preparation for a
staged roll-out across Asia, and VAS such as insights reports and social media experiencing double-digit
growth for the company. As outlined in the prospectus, this provides the company with the platform to
benefit from the continued market growth within APAC where media intelligence services are expected to
grow at a compound annual growth rate (‘CAGR’) of % from 2013 to 2016, and within that experience
particularly strong growth in the online and social media segment which is expected to grow at %
CAGR over the same period*.
The transition from a private company to a listed public company brings with it some significant change,
most obviously in terms of governance, market disclosure and reporting. The Board and management have
put in a considerable effort to meet market requirements in relation to these matters. We look forward to
feedback on this report and to our investor presentations.
While the group is well positioned to grow through organic means, management will continue to explore
bolt on acquisition opportunities to build scale and to enter relevant new markets.
Investment in systems and products drove both productivity and critical differentiation from competitors.
The programme planned in our Asian markets to rollout improved product and system capability is of
fundamental importance to the long term growth of the company.
On behalf of the Board I wish to thank our team around the region for the great work that they have done
over the last year. They know the business, they are focused on what is important for customers, they are
innovative and they know how to turn a very important service into a terrific commercial enterprise.
Yours sincerely,
Doug Flynn
Chairman
29 August 2014
Sydney
*Burton-Taylor International Consulting LLC, ‘Asia-Pacific Media Intelligence Market’, January 2014.
Forecast DeliveredFY13
REVENUE $ – UP % ON FY13
AND AHEAD OF OUR PROSPECTUS
FORECAST OF $ BY $ OR %
$
PRO FORMA NPATA OF $ – AHEAD
OF PROSPECTUS FORECAST OF $
BY $ OR %.
$ $
PRO FORMA EBITDA OF $ –
AHEAD OF PROSPECTUS FORECAST OF
$ BY $ OR %.
$
$
$
%
%
%
iSentia Group Limited > Annual Report 20144 5CEO Report
> CEO REPORT
CEO
REPORT
02
ABOUT iSENTIA
iSentia provides many of the world’s leading organisations
with time-critical and highly relevant media intelligence
across social media, online news, print, radio and television.
Our proprietary software and systems capture, enrich and
interpret data from over 5,500 traditional media outlets,
55,500 online news sources and million user-generated
content sources.
This information is delivered via a number of proprietary
SaaS platforms that alert our clients to what is being said
about their organisations, competitors and industry “as the
news breaks”. Our market-leading Mediaportal platform
provides clients with a digital workspace to inform, organise
and report on media intelligence across their organisation.
Our client base includes many of the world’s leading brands
as well as Governments at national, provincial and local
level across the region. Our SaaS platforms, market-leading
value-added services and strong relationships are the tools
that help our clients execute their communications and
marketing strategies.
The many factors mentioned in this report have helped
us exceed our IPO Prospectus forecasts in our FY2014
results and the fundamental driver has been the hard
work, skill and focus of iSentia’s 1,100 employees across
the Asia-Pacific and I would like to thank them for their
contribution to the success of iSentia, not just in FY2014,
but over many years.
GROWTH DRIVERS
iSentia’s strong revenue performance in FY2014 was built on
a number of streams that have been actively developed by
the management team.
Value Added Services
Take up of social media, insights and database services are
driving increased spend per client. The current penetration
of value added services across the approximately
3,000-strong Australia and New Zealand client-base is in the
5%-15% range, highlighting the potential growth opportunity
that remains in these markets. There is significant further
potential to leverage iSentia’s existing client relationships to
increase client spend, underpinned by:
> the exponential growth in social media use in
communication and marketing activities;
> the increasing relevance of iSentia’s products to address
the needs of the marketing channel within clients’
organisations; and
> iSentia’s continued integration of its SaaS and VAS
products and platforms.
iSentia has transformed since the turn of the millennium from a single
market monitoring service to Asia-Pacific’s market-leading software as
a service (SaaS) media intelligence business, complemented by award-
winning value-added services (VAS). These services include monitoring
the ever-expanding world of social media, analysis reports that provide
actionable business insights and media databases that connect clients
with media influencers. It has been an exciting journey for everyone
involved with the company over this period.
In our first Annual Report as a publicly listed company, I can advise that
our transformation continues across products and services, people and
platforms and across all of our markets.
5,500
TRADITIONAL MEDIA
OUTLETS
55,500
ONLINE NEWS SOURCES
USER GENERATED
CONTENT SOURCES
28%
6%
PROPRIETARY SOFTWARE AND SYSTEMS
CAPTURE, ENRICH AND INTERPRET
DATA FROM:
28% REVENUE SHARE IN APAC
(ALMOST FIVE TIMES GREATER THAN OUR
NEAREST COMPETITOR – 6%), IN A MARKET
THAT IS FORECAST TO HAVE REVENUE
GROWTH OF % (CAGR) FROM 2013 TO 2016*
* Burton-Taylor International Consulting LLC, ‘Asia-Pacific Media Intelligence Market’,
January 2014; 2009 to 2013 CAGR is adjusted for foreign exchange (FX) movements
between 2012 and 2013.
iSentia Group Limited > Annual Report 20146 7CEO Report
CEO REPORT>
ASIA
iSentia has achieved a market-leading position with 28% revenue share in APAC (almost five times greater than our nearest
competitor), in a market that is forecast to have a revenue compound annual growth rate (‘CAGR’) of % from 2013 to
2016*, iSentia plans to continue to expand into this high-growth region supported by an in-market presence in 10 offices and
more than 600 employees across Asia with services in 12 different languages. Although being the clear market leader in the
region, there remains an excellent opportunity as potential clients move to outsource their media intelligence needs. iSentia’s
ability to attract new clients in Asia is expected to accelerate with the release of Mediaportal in most Asian markets this
financial year.
* Burton-Taylor International Consulting LLC, ‘Asia-Pacific Media Intelligence Market’, January 2014; 2009 to 2013 CAGR is adjusted for foreign exchange (FX) movements between
2012 and 2013.
INNOVATION
iSentia has a demonstrated track record of in-house product development and innovation, having developed a number of its
market-leading suite of SaaS and VAS offerings. iSentia continues to expand and enhance its platforms and services suite,
with current initiatives that include a focus on strengthening our platforms for mobility devices, increased opportunities to
promote hosted analytical tools and integrated social media and insights offerings, an innovative ‘media influencer’
database product (to analytically determine a particular media commentator’s level of market influence) and ‘media story
analysis’ (to enable clients to analyse the participants and influencers in a selected media story).
STRATEGIC ACQUISITIONS
iSentia has a history of successfully sourcing and integrating strategic acquisition and bolt-on opportunities, such as the
acquisition of AAP’s Australian and New Zealand monitoring clients in early 2014. These acquisitions have provided iSentia
with additional geographic, software and content capabilities to provide our clients with a complete, full-service media
intelligence solution within APAC. Strategic acquisitions have also generated strong synergies through the operating
leverage inherent in iSentia’s scalable, largely fixed cost platform. This has meant that many of iSentia’s strategic
acquisitions have had a payback period of less than two years. We continue to evaluate additional acquisition and bolt-on
opportunities to further enhance our market position and integrate additional product capabilities.
Eden Lau, Head of
Digital and Insights, Asia, is
driving the industry-leading
integration of social media into
our Insight reports across the
region, shown by double digit
growth for our Insights services
and two international AMEC
Awards for iSentia
Brandtology in 2014.
Jan Redshaw headed up
our AAP client integration
team, ensuring that all
Australian and NZ clients were
fully integrated into iSentia
systems and client service ahead
of schedule and under budget,
significantly contributing to
our FY14 Result.
iSentia Group Limited > Annual Report 20148 9CEO Report
CEO REPORT>
AWARDS
Value Added Services
iSentia continues to be recognised internationally for our media insight services, winning another five awards at
the Association for Measurement and Evaluation of Communications international conference in June 2014, including
Young Professional of the Year for Wellington-based Insights Specialist Ngaire Crawford, to add to the 13 awards already
won since 2010, making iSentia the world’s most awarded Media Insights company over that period.
> Best Use of Communication Management: Public Sector (Gold)
> Most Innovative Use of Measurement in a Digital Campaign (two Gold)
> Integrated Communication Measurement/Research (Silver)
> Young Professional of the Year
Our Social Media Agency TWOsocial, continued to win Awards in FY2014, including two W3 Web Creativity Awards, Silver for
PwC Australia’s social media campaign The Value Exchange and Silver for IBM Australia’s video The Journey. TWOsocial
also won the AAGE Graduate Recruitment Industry Award for Best Graduate Recruitment Video for IBM Australia.
SaaS
In January 2014, our flagship Software-as-a-Service platform, Mediaportal, was recognised by the Software and
Information Industry Association, at their Information Industry Summit in New York, with the CODiE Award for Best
Media & Information Monitoring Solution. It was particularly pleasing to be internationally recognised for over 10 years
of industry-leading development.
I would like to take this opportunity to thank shareholders for their support since our IPO in June. I have confidence
in our team and look forward to the year ahead delivering the forecast through execution of our clearly defined and
articulated strategy.
John Croll
Chief Executive Officer
29 August 2014
Sydney
New Zealand
Insights Manager
Ngaire Crawford, who has
worked on media analysis for a
number of ASX 100 companies
was named the Young Professional
of the Year at the Awards dinner
for the Association of
Measurement and Evaluation
of Communication in
Amsterdam. Chief Product Officer
Lane Cipriani was in New
York to accept the Software
and Information Industry’s
CODiE Award for the Best Media
and Information Monitoring
Solution for our premier SaaS
platform Mediaportal.
iSentia Group Limited > Annual Report 201410 11Directors' Report
DIRECTORS'
REPORT
03
The directors present their report, together with the financial statements,
on the consolidated entity (referred to hereafter as the 'group') consisting
of iSentia Group Limited (referred to hereafter as the 'company' or 'parent
entity') and the entities it controlled at the end of, or during, the year ended
30 June 2014.
> DIRECTORS' REPORT
DIRECTORS
The following persons were directors of iSentia Group
Limited during the whole of the financial year and up to
the date of this report, unless otherwise stated:
Doug Flynn – Chairman (appointed 9 May 2014)
John Croll
Pat O’Sullivan (appointed 9 May 2014)
Fiona Pak-Poy (appointed 9 May 2014)
Dr Geoff Raby (appointed 9 May 2014)
Marcus Darville (resigned 5 June 2014)
Christopher Hadley (resigned 5 June 2014)
Prior to the group reorganisation on 5 June 2014 (refer to
'Significant changes in state of affairs' below) the company
was owned and controlled by Quadrant Private Equity
Management Fund ('Quadrant'). Since listing on 5 June
2014, Quadrant does not hold any seats on the Board and
their % shareholding in the company does not provide
any rights for Board representation.
PRINCIPAL ACTIVITIES
During the financial year the principal continuing activities
of the group consisted of the provision of media intelligence
to public and private sector clients through directories,
media release distribution, monitoring of the media
and analysis.
DIVIDENDS
There were no dividends paid, recommended or declared
during the current financial year to ordinary shareholders of
iSentia Group Limited.
On 7 March 2014, an interim dividend of $8,640,375 was paid
to the then shareholders of iSentia Holdings Pty Limited, as
noted in the IPO Prospectus.
REVIEW OF OPERATIONS
The loss for the group after providing for income tax
amounted to $18,406,000 (30 June 2013: $11,479,000).
The group operates a market-leading Software-as-a-
Service business that provides many of the world’s leading
brands, companies, agencies, industry bodies and
governments with time-critical and highly relevant media
intelligence to assist them to make more informed and
timely business and communications decisions, including
strategies to protect, cultivate or enhance brand reputation
and image. In addition, the group offers a suite of market-
leading VAS offerings including social media monitoring
and analysis services, quantitative and qualitative insight
media reports and bespoke media contact databases.
This service is underpinned by the group's proprietary
software and systems that capture, enrich and interpret data
from mainstream, online and social media sources, to alert
its clients to what is being said about their organisations,
competitors and industry “as the news breaks”.
Business objectives and cash use: iSentia Group Limited has
used cash and cash equivalents, held at the time of listing,
in a way consistent with its stated business objectives.
SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
iSentia Group Limited was admitted to the Official List of
ASX Limited on 5 June 2014 with the ASX code ISD.
Corporate/group reorganisation – acquisition of iSentia
Holdings Pty Limited
Effective from 5 June 2014, the company acquired iSentia
Holdings Limited and its subsidiaries (‘Holdings’) pursuant
to a scheme whereby the company acquired 100% of the
capital of Holdings in exchange for $ million in cash
and million shares in the company. For accounting
purposes, the acquisition was treated as a group
reorganisation.
13Directors' ReportiSentia Group Limited > Annual Report 201412
DIRECTORS' REPORT>
Purchase remaining non-controlling interests in iSentia Brandtology Pte Limited ('Brandtology') and iSentia Group
Sdn. Bhd ('Mediabanc')
As set out in the IPO Prospectus, $ million of funds raised in the IPO was put toward the purchase of the remaining
non-controlled interests of Brandtology and Mediabanc. The group previously held % of Brandtology, a company
incorporated in Singapore and 90% of Mediabanc, incorporated in Malaysia.
Repayment of debt
As set out in the IPO Prospectus $ million of funds raised in the IPO was used to repay debt facilities in June 2014.
There were no other significant changes in the state of affairs of the group during the financial year.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
No matter or circumstance has arisen since 30 June 2014 that has significantly affected, or may significantly affect the
group's operations, the results of those operations, or the group's state of affairs in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Refer to the Chief Executive Officer's report for likely developments and expected results.
ENVIRONMENTAL REGULATION
The group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
INFORMATION ON DIRECTORS
Name: Doug Flynn (appointed 9 May 2014)
Title: Independent Non-Executive Chairman
Qualifications: Chemical Engineering from the University of Newcastle, New South Wales and received a MBA with distinction
from the University of Melbourne
Experience
and expertise:
Doug has over 30 years of international experience in the media and information and communication
technology industries, including holding various senior management and board positions. Previously,
Doug was Chief Executive of newspaper publisher Davies Brothers Limited, which was acquired by News
Corporation in 1989 and in 1995 was appointed the Managing Director of News International PLC. After leaving
News International in 1998, Doug joined Aegis Group Plc and was appointed as Chief Executive Officer ('CEO')
in 1999, where he was instrumental in doubling the size of the company and established a global market
research business, Synovate and internet services business, Isobar. From 2005 to 2008, Doug served as the
Chief Executive of facilities management provider Rentokil Initial Plc. Doug returned to Australia in 2008 and
from April 2008 to April 2012 was a consultant to and a director of Qin Jia Yuan Media Services Ltd, the leading
private television company in China.
Other current
directorships: Director of Seven West Media Limited and NEXTDC Limited and Chairman of Konekt Limited
Former directorships
(last 3 years): None
Special
responsibilities:
Member of the Audit and Risk Committee and the Nomination and Remuneration Committee
Interests in shares: 75,530 ordinary shares held indirectly
Name: John Croll
Title: Chief Executive Officer, Executive Director
Experience and
expertise:
John has been active in the media industry since 1982 and was appointed Chief Executive Officer and a Director
of Media Monitors (now iSentia) in 1999. Prior to his appointment, John held sales and operational roles with
Croll Communications and Media Monitors. John is currently a director and the former Asia-Pacific Chair of
the International Association for the Measurement and Evaluation of Communications ('AMEC') and a former
Executive Vice-President of FIBEP, the International Federation of Press Clipping Bureauxs. John is also a
member of the Public Relations Institute of Australia and the Australian Institute of Company Directors.
Other current
directorships: None
Former directorships
(last 3 years): None
Special responsibilities: CEO
Interests in shares: 8,006,056 ordinary shares of which 214,398 are held indirectly
Interests in options: 583,090 options
Name: Pat O’Sullivan (appointed 9 May 2014)
Title: Independent Non-Executive Director
Qualifications: Graduate of the Harvard Business School’s Advanced Management Program. CA in Australia and Ireland
Experience and
expertise:
Pat has over 30 years of international commercial and business management experience, including holding
various senior management and board positions. Previously, Pat was Chief Operating Officer and Finance
Director of Nine Entertainment Co., as well as serving as Chairman of NineMSN. Previous to this, Pat was the
Chief Financial Officer of Optus, and has also held a number of positions at Goodman Fielder, Burns, Philip &
Company, and PricewaterhouseCoopers.
Other current
directorships: Director of Limited and iiNet Limited
Former directorships
(last 3 years): iSelect Limited
Special responsibilities: Chair of the Audit and Risk Committee
Interests in shares: 29,412 ordinary shares
Name: Fiona Pak-Poy (appointed 9 May 2014)
Title: Independent Non-Executive Director
Qualifications: Honours degree in Civil Engineering from The University of Adelaide and a MBA from Harvard Business School
Experience and
expertise:
Fiona brings significant experience gained particularly with engineering and technology companies. Fiona is
currently a member of the Australian Government’s Innovation Australia Board and the National Precincts
Board, and also serves as a director of Adelaide Research & Innovation. Previously, Fiona served as director and
General Partner of Innovation Capital, an Australian/US venture capital fund that invests in Australian technology
companies. Fiona served on the boards of investee companies including Audinate, Call Journey, Opto Global and
as an alternate director of QRxPharma. Fiona was also Chair of Innovation Australia’s Clean Technology
Investment Committee. Prior to this, Fiona co-founded a catalogue and e-commerce business, was a strategy
consultant with The Boston Consulting Group, was an R&D engineer at Stratco, and also served as a Councillor
of the Australian Venture Capital & Private Equity Association ('AVCAL').
Other current
directorships: None
Former directorships
(last 3 years): None
Special responsibilities: Chair of the Nomination and Remuneration Committee and a member of the Audit and Risk Committee
Interests in shares: 29,412 ordinary shares held indirectly
15Directors' ReportiSentia Group Limited > Annual Report 201414
DIRECTORS' REPORT>
Name: Dr Geoff Raby (appointed 9 May 2014)
Title: Independent Non-Executive Director
Qualifications: Bachelor of Economics (Hons), Master of Economics and PhD degrees from La Trobe University
Experience and
expertise:
Geoff is Chairman and Chief Executive Officer of Geoff Raby & Associates, a Beijing-based business advisory
firm. He is also Co-Chair of Corrs Chambers. Additionally, Geoff is a Vice Chancellor’s Professorial Fellow at
Monash University, and a member of the Advance Global Advisory Board. Geoff was the Australian Ambassador
to China from February 2007 to August 2011 and Deputy Secretary of the Department of Foreign Affairs and
Trade from November 2002 to November 2006. Between 1993 and 1995, Geoff was head of the Trade Policy
Issues Division of the OECD, Paris.
Other current
directorships:
Chairman of SmartTrans Holdings Limited, as well being an independent director on the boards of Fortescue
Metals Group Limited, OceanaGold Corporation and Yancoal Australia Limited.
Former directorships
(last 3 years): None
Special responsibilities: Member of the Nomination and Remuneration Committee
Interests in shares: 29,412 ordinary shares
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
COMPANY SECRETARY
Nimesh Shah, CFO and Company Secretary, has over 15 years’ experience as an executive in the media and online
industries, utilising experience gained working across Australia, the UK and many parts of Asia. Much of Nimesh’s
experience has been gained in growing companies. Before working for iSentia, Nimesh was Global CFO for pioneering social
networking site, Friendster. Nimesh was also Finance Director at Fairfax Digital for seven years, playing an instrumental role
in navigating the company into the world of online publishing and transaction businesses. Prior to his appointment at Fairfax
Digital, Nimesh worked at Dell Computers in the UK, Arthur Andersen and Ernst & Young. Nimesh holds a MBA from the
Australian Graduate School of Management and a Bachelor of Commerce with Merit from The University of New South
Wales. Nimesh is also a member of The Institute of Chartered Accountants in Australia.
MEETINGS OF DIRECTORS
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2014, and the
number of meetings attended by each director were:
FULL BOARD
NOMINATION AND
REMUNERATION
COMMITTEE
AUDIT AND RISK
COMMITTEE
ATTENDED HELD ATTENDED HELD ATTENDED HELD
Doug Flynn 2 2 – – – –
John Croll 3 3 – – – –
Pat O'Sullivan 2 2 – – – –
Fiona Pak-Poy 2 2 – – – –
Dr Geoff Raby 2 2 – – – –
Marcus Darville 1 1 – – – –
Christopher Hadley 1 1 – – – –
Held: represents the number of meetings held during the time the director held office.
REMUNERATION REPORT (AUDITED)
On behalf of the Board of Directors I have pleasure in presenting the inaugural remuneration report for iSentia Group
Limited (the 'company') and its subsidiaries (‘iSentia’ or ‘group’) for the year ended 30 June 2014. The primary objective of
this report is to set out the remuneration of Key Management Personnel ('KMP') and provide a perspective on the underlying
philosophy and principles that underpin the structure and design of remuneration arrangements as the group embarks on
its next phase of growth as a listed company, underpinned by the company’s new governance and ownership structure.
In developing remuneration arrangements for KMP, prior to listing, the Board, along with the then-incoming (and current)
Nomination and Remuneration committee who were part of the due diligence committee preparing for the IPO, sought input
from external parties including remuneration advisors and legal counsel. The Board has and will continue to seek input from
these parties as well as proxy advisors and institutional shareholders. The company’s remuneration philosophy is to provide
a clear link between company strategy, shareholder returns and remuneration awarded. The remuneration structure and
policies deriving from this are desig¬ned to help build and retain our talented and motivated leadership team to deliver
growing and sustainable total returns to shareholders. We recognise that the performance of the group depends on the
quality of its directors and KMP.
The total remuneration opportunity for KMP and the proportion at risk are competitive in relation to the company’s peer
group with consideration given to the experience of the KMP and the size and complexity of their role. This process has been
undertaken in conjunction with assistance from an independent remuneration consultant.
The long term incentive plan ('LTIP') introduced for the first time this year reflects the Board’s intent to create long-term
KMP alignment and retention with performance hurdles designed to focus on growth opportunities over the medium to
longer term. It is intended that the Nomination and Remuneration Committee will consider extending rewards under the
LTIP to KMP not currently rewarded under this scheme, as well as considering further offers in future periods to the KMP
who are already in the scheme.
The remuneration report, which has been audited, outlines the KMP remuneration arrangements in accordance with the
requirements of the Corporations Act 2001 and its Regulations.
KMP are defined as those persons having authority and responsibility for planning, directing and controlling the major
activities of the group, directly or indirectly. They include directors and executives reporting directly to the Chief Executive
Officer (‘CEO’) and are listed in section '2. KMP remuneration disclosures' below.
The remuneration report is set out under the following main headings:
1. Principles used to determine the remuneration framework
2. KMP remuneration disclosures
3. Service contracts
4. Share-based compensation
5. KMP interests in iSentia securities and other information
1. Principles used to determine the remuneration framework
The objective of the group's remuneration framework is to ensure reward for performance is competitive and appropriate for
the results delivered. The framework seeks to align KMP remuneration with the achievement of strategic objectives and the
creation of value for shareholders. The Nomination and Remuneration Committee ensures KMP remuneration satisfies the
following criteria of good remuneration governance practices:
> competitiveness and reasonableness
> acceptability to shareholders
> performance linkage / alignment of KMP compensation
> transparency
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements
for directors and KMP. The Nomination and Remuneration Committee comprises three independent non-executive directors
and meets as required throughout the year. The CEO attends certain committee meetings by invitation, where management
input is required. The CEO is not present during any discussions related to his own remuneration arrangements.
17Directors' ReportiSentia Group Limited > Annual Report 201416
DIRECTORS' REPORT>
REMUNERATION REPORT (AUDITED) – CONTINUED
In consultation with external remuneration consultants (refer to the section 'Use of remuneration consultants' below),
the Nomination and Remuneration Committee has structured a remuneration framework set out in the table below that
is market competitive and complementary to iSentia’s strategic objectives.
In accordance with best practice corporate governance, the structure of non-executive directors and executive
remunerations are dealt with separately.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the
directors as well as the need to attract and retain non-executive directors of suitable calibre. Non-executive directors'
fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination and
Remuneration Committee may, from time to time, receive advice from independent remuneration consultants (refer to
'Use of remuneration consultants' below) to ensure non-executive directors' fees and payments are appropriate and in line
with the market. The chairman's fees are determined independently to the fees of other non-executive directors based on
comparative roles in the external market. The chairman is not present at any discussions relating to determination of his
own remuneration.
ASX listing rules require the aggregate non-executive directors remuneration be determined periodically by a general
meeting. Under the company’s Constitution and as set out in the IPO Prospectus, total aggregate remuneration available
to non-executive directors is set currently at $900,000 per annum. The Board will not seek any increase to this amount
at the 2014 Annual General Meeting.
The remuneration of non-executive directors is fixed and does not contain any variable component. Non-executive director
remuneration consists of directors’ fees and committee fees and is not linked to company performance. The non-executive
directors are reimbursed for expenses properly incurred in performing their duties as directors of iSentia. The Chairman of
the Board attends all committee meetings but does not receive committee fees in respect of his role as member of any
committee. Refer to 'Additional information' for non-executive director fees proposed for the year ending 30 June 2015.
Non-executive directors do not receive retirement benefits other than superannuation and they do not participate in any
incentive programs.
Whilst directors are not required under the Constitution to hold any shares, all have interests in iSentia securities, either
directly or indirectly, with all non-executive directors acquiring securities at listing (refer to section ‘5. KMP interests in
iSentia securities and other information' below). We believe this demonstrates support for the company and alignment of
interests between the directors and other shareholders.
If non-executive directors are required to perform services for the company outside of the scope of ordinary duties of a
director, the company may pay the director. No directors provided any services outside of the normal course of duty in
2013-14 and hence no additional fees have been paid.
Executive remuneration
The group aims to reward executives with a level and mix of remuneration based on their position and level of responsibility,
which has both fixed and variable components.
For the year ended 30 June 2014, the executive remuneration framework consisted of fixed remuneration and short and
long-term incentives as outlined below. The group aims to reward executives with a level and mix of remuneration
appropriate to their position, responsibilities and performance within the group and aligned with market practice.
COMPONENT OF
REMUNERATION
HOW THIS OPERATES
IN PRACTICE
TARGET AND MAXIMUM
OPPORTUNITY
PURPOSE AND LINK TO
ISENTIA STRATEGY
CHANGE
FIXED
Base salary,
allowances,
superannuation
and salary
sacrificed benefits.
Base salary is paid
in cash or fringe benefits
(such as motor vehicle).
Superannuation is paid at
the statutory rate.
Fixed remuneration is
reviewed annually.
CEO fixed remuneration
was approx. 75% of the
target remuneration for
FY2014. This will reduce
to approx. 50% for FY2015.
Fixed remuneration for
the CFO and other
executive KMP range
between 50%-75% of
the target remuneration.
To provide cash benefits
which are competitive
with equivalent roles in
peer companies.
To reward performance
relative to expectations
based on individual role
and responsibility.
Modest increase of less
than 5% for CFO, CEO
and CIO. Other KMPs
increased in line with an
increase in the scope and
responsibility of their role.
The decrease in the
proportion of fixed
remuneration for the CEO
is to increase the at-risk
component to better
incentivise performance
aligned with strategic
financial goals and
non-financial initiatives.
VARIABLE
Short Term
Incentive Plan
(‘STIP’)
STIs are paid in cash.
FY2015 STI will be paid
after the finalisation and
release of audited results
for the group.
For FY2015:
– CEO target 50% of Total
Fixed Remuneration
(‘TFR’), with a maximum
of 75% of TFR.
– CFO target 40% of TFR,
with a maximum of 60%
of TFR.
– Other executive KMP
target 30% of base
salary, with a maximum
60% of base salary.
– No portion of STIP will
be payable to the CEO
and CFO unless all
financial targets are
equalled or exceeded.
– For other executive KMP
no portion of STIP will
be payable unless at
least one of the financial
targets are equalled or
exceeded.
STI awards are only
provided where executives
meet or exceed Key
Performance Indicators
(KPIs), which are set
annually and are
components of the
group’s annual budget
and business plan.
Financial KPIs account
for 75% – 80% of available
STI and include revenue,
EBITA, EBITDA and
NPATA targets. All
financial KPIs are in line
with forecast figures
reported in the IPO
prospectus and no STI
will be paid if these
targets are not equalled
or exceeded
Non-financial KPIs
making up the remaining
20%–25% of available STI
include strategic business
objectives such as a shift
toward subscription
based revenue with
defined numerical targets
as well as individual
performance ratings as
assessed through the
year-end performance
review process.
Non-financial KPIs have
been included for all
KMP for FY2015.
For FY2014, CEO and
CFO targets 50% of base
salary, with a maximum
of % of base salary.
For FY2014, other
executive KMP target
40% of base salary with
a maximum of 42% of
base salary.
19Directors' Report
The options do not carry dividends or voting rights prior to vesting and exercise. Participants must not sell, transfer,
encumber, hedge or otherwise deal with the options.
The performance period and applicable performance conditions for any future LTI offers will be determined by the
Board and specified in the relevant offer document.
Group performance and link to remuneration
The KPIs driving STI payments for the year ended 30 June 2014 were revenue and Earnings Before Interest, Tax,
Depreciation and Amortisation ('EBITDA'). The KPIs driving STI payments for FY2015 include revenue, EBITA, EBITDA,
NPATA and personal performance rating measured though the formal year-end performance review process.
Use of remuneration consultants
During the financial year ended 30 June 2014, Egan Associates were engaged to review remuneration recommendations
regarding the benchmarking of non-executive and executive remuneration and the structure of KMP incentive
arrangements. The fees paid to Egan Associates for the remuneration recommendations were $55,550. Fees for other
services provided by the Remuneration Consultant including advisory services were $12,000.
The Nomination and Remuneration Committee is satisfied the advice received from Egan Associates is free from undue
influence from the KMP, to whom the remuneration recommendations apply, as Egan Associates was engaged by, and
reported directly to, the Nomination and Remuneration Committee. Egan Associates also confirmed the remuneration
recommendations were made free from undue influence by the group’s KMP.
2. KMP remuneration disclosures
Details of the remuneration of the KMP of the group are set out in the tables below. KPIs established through the STIP
were not achieved in FY2013 and hence no payments were made in that year. Reflecting the strong overall result of the group
in FY2014, short term incentives were paid as detailed below. The base salary of the CEO, CFO and CIO increased by less
than 5%, with the base for the other KMPs increasing in line with an expansion in the scope and responsibilities of their role.
All directors and executives listed below were considered KMP for the years ended 30 June 2013 and 30 June 2014, except
as noted. Messrs Darville and Hadley, representing Quadrant resigned as directors concurrent with the listing, although
Quadrant continues to hold a % interest in iSentia shares. All non-executive directors are independent. There were no
changes to KMP after 30 June 2014 and before this report was authorised for issue.
The KMP of the group consisted of the following directors:
> Doug Flynn – Chairman and Independent Non-Executive Director (appointed 9 May 2014)
> John Croll – CEO and Executive Director
> Pat O’Sullivan – Independent Non-Executive Director (appointed 9 May 2014)
> Fiona Pak-Poy – Independent Non-Executive Director (appointed 9 May 2014)
> Dr Geoff Raby – Independent Non-Executive Director (appointed 9 May 2014)
> Marcus Darville – Director (resigned 5 June 2014)
> Christopher Hadley – Director (resigned 5 June 2014)
And the following executives:
> Nimesh Shah – Chief Financial Officer and Company Secretary
> Joe De Battista – Chief Information Officer
> Sean Smith – Chief Executive, Australia (until 21 July 2013) and Chief Executive, Australia and New Zealand
(from 22 July 2013)
> Cameron Buckley – Chief Marketing Officer (until 31 August 2013) and Chief Executive, Asia (from 1 September 2013)
> Lane Cipriani – Chief Product Officer (from 1 June 2013)
COMPONENT OF
REMUNERATION
HOW THIS OPERATES
IN PRACTICE
TARGET AND MAXIMUM
OPPORTUNITY
PURPOSE AND LINK TO
ISENTIA STRATEGY
CHANGE
Long Term
Incentive Plan
(‘LTIP’)
In June 2014, the
Nomination and
Remuneration Committee
approved options offered
to the CEO and CFO at
50% of their FY2015 TFR.
It is the intention of
the Nomination and
Remuneration Committee
to consider annual offers
of options to KMP under
the LTIP.
Any future offer of options
to the CEO will require
shareholder approval.
CEO and CFO 50% of TFR
with total shareholder
return (‘TSR’) and
earnings per share (‘EPS’)
hurdles assessed over a 3
year performance period
ending 30 June 2017.
Further details of TSR
and EPS hurdles
explained below.
Future offers under the
LTIP are at the discretion
of the Board.
LTI awards are designed
to motivate executive KMP
to achieve iSentia’s long
term strategic goals and
only provide reward where
iSentia delivers better
shareholder value than its
peers with reference to
total shareholder return
and earnings per share.
The LTIP was put in place
for the first time in May
2014 demonstrating the
board’s commitment to
aligning longer term
interest of executives
with the company’s
strategic objectives.
To date, only the CEO and
CFO have been offered
options under the LTIP.
The Board has the
discretion to extend
offers to other executives.
For the year ended 30 June 2014, the CEO and CFO were granted options to the value of their maximum LTI opportunity.
Each option was granted with an exercise price of $ (the IPO Offer Price for the shares) and for no consideration.
Options granted to the CEO and CFO will vest subject to the satisfaction of agreed performance conditions. The performance
conditions will be tested over a performance period of three years, with no opportunity for re-test. The relevant performance
period will commence on 1 July 2014 and conclude on 30 June 2017.
The performance conditions must be satisfied in order for the options to vest and become exercisable. The performance
conditions will be based on the group’s relative total shareholder return ('TSR') and its earnings per share ('EPS') compound
annual growth rate ('CAGR') over the performance period (equally-weighted), which the Board believes provide appropriate
long term alignment with shareholders. As described in the table below, there is a minimum threshold for which any options
will vest, which the Board believes provides the right incentive to achieve suitable growth.
The group’s TSR over the performance period will be assessed against that of the constituent companies in the S&P/ASX200
Index (excluding those in the Financials, Materials and Energy sectors) ('TSR Comparator Group') over the performance period.
The percentage of options that vest and become exercisable, if any, will be determined by reference to the TSR and EPS
vesting schedules, summarised as follows:
TSR PERFORMANCE RELATIVE TO TSR COMPARABLE GROUP % OF TSR OPTIONS THAT BECOME EXERCISABLE
Less than the 50th percentile Nil
50th percentile (Threshold performance) 50%
Greater than 50th percentile but less than 75th percentile Straight-line pro-rata vesting between 50% and 100%
Greater than or equal to 75th percentile 100%
CAGR OF EPS OVER THE PERFORMANCE YEAR % OF EPS OPTIONS THAT BECOME EXERCISABLE
Less than 7% Nil
7% (Threshold performance) 25%
Between 7% and 17% Straight-line pro-rata vesting between 25% and 100%
Above 17% (Stretch performance) 100%
Any options that remain unvested at the end of the performance period will lapse immediately. The Participant must
exercise any vested options within 12 months of vesting. After 12 months, any unexercised options will lapse. The Participant
will be entitled to receive one share for each option that vests and is exercised. The Board may make an equivalent cash
payment in lieu of providing shares to the participant.
iSentia Group Limited > Annual Report 201418
DIRECTORS' REPORT>
REMUNERATION REPORT (AUDITED) – CONTINUED
21Directors' Report
SHORT-TERM BENEFITS
POST-
EMPLOYMENT
BENEFITS
LONG-TERM
BENEFITS
SHARE-BASED
PAYMENTS
2013
CASH SALARY
AND FEES
$
STI
$
NON-
MONETARY
$
SUPER-
ANNUATION
$
LONG-SERVICE
LEAVE
$
EQUITY-
SETTLED
$
TOTAL
$
Executive
Directors:
John Croll 474,030 – – 16,470 7,322 – 497,822
Other Key
Management
Personnel:
Nimesh Shah 326,880 – – 16,470 5,125 – 348,475
Joe De Battista 264,814 – – 16,470 4,110 – 285,394
Sean Smith 201,530 – – 16,470 3,254 – 221,254
Cameron
Buckley 254,286 – – 16,470 4,042 – 274,798
Lane Cipriani* 16,667 – – 1,500 192 – 18,359
1,538,207 – – 83,850 24,045 – 1,646,102
*Became a KMP 1 June 2013, therefore remuneration reported is for one month
Marcus Darville and Christopher Hadley received no remuneration as KMP for the year ended 30 June 2013.
Non-executive directors do not receive incentive payments and do not participate in the company's incentive programs.
For executive directors and other KMP, the proportion of remuneration linked to performance and the fixed proportion
are as follows:
NAME
FIXED
REMUNERATION
2014
FIXED
REMUNERATION
2013
AT RISK
2014
AT RISK
2013
Executive Directors:
John Croll 77% 100% 23% -%
Other Key Management Personnel:
Nimesh Shah 72% 100% 28% -%
Joe De Battista 79% 100% 21% -%
Sean Smith 76% 100% 24% -%
Cameron Buckley 96% 100% 4% -%
Lane Cipriani 76% 100% 24% -%
KPIs established through the STIP were not achieved for the year ended 30 June 2013 and hence no payments were made in
that year.
REMUNERATION REPORT (AUDITED) – CONTINUED
Details of the remuneration of the KMP of the group are set out in the tables below.
SHORT-TERM BENEFITS
POST-
EMPLOYMENT
BENEFITS
LONG-TERM
BENEFITS
SHARE-BASED
PAYMENTS
2014
CASH SALARY
AND FEES
$
STI
$
NON-
MONETARY
$
SUPER-
ANNUATION
$
LONG-SERVICE
LEAVE
$
EQUITY-
SETTLED
$
TOTAL
$
Non-Executive
Directors:
Doug Flynn* 21,462 – – 1,985 – – 23,447
Pat O'Sullivan* 11,923 – – 1,103 – – 13,026
Fiona Pak-Poy* 11,923 – – 1,103 – – 13,026
Dr Geoff Raby* 10,731 – – 993 – – 11,724
Executive
Directors:
John Croll 494,568 205,833 – 17,775 10,371 – 728,547
Other Key
Management
Personnel:
Nimesh Shah 342,646 143,131 – 17,775 6,962 – 510,514
Joe De Battista 277,757 92,146 – 17,775 4,417 – 392,095
Sean Smith 238,130 98,880 – 17,775 4,000 – 358,785
Cameron
Buckley** 328,320 14,498 – 17,775 4,363 – 364,956
Lane Cipriani 200,000 70,040 – 17,775 3,333 – 291,148
1,937,460 624,528 – 111,834 33,446 – 2,707,268
*Remuneration from 9 May 2014, date of appointment as Non-Executive Director
**Remuneration includes expatriate costs such as housing and travel allowance
Marcus Darville and Christopher Hadley received no remuneration as KMP for the year ended 30 June 2014.
iSentia Group Limited > Annual Report 201420
DIRECTORS' REPORT>
iSentia Group Limited > Annual Report 201422 23Directors' Report
DIRECTORS' REPORT>
REMUNERATION REPORT (AUDITED) – CONTINUED
3. Service contracts
Remuneration and other terms of employment for KMP are formalised in service contracts. All executive KMP service
contracts provide for immediate termination in the event of serious misconduct. Details of other key terms are
summarised below:
NOTICE PERIOD FOR TERMINATION
EXECUTIVE KMP CONTRACT TERM BY EXECUTIVE BY ISENTIA
John Croll No fixed term 6 months 6 months
Nimesh Shah No fixed term 3 months 3 months
Joe De Battista No fixed term 3 months 3 months
Sean Smith No fixed term 3 months 3 months
Cameron Buckley No fixed term 3 months 3 months
Lane Cipriani No fixed term 8 weeks 8 weeks
Minimum shareholding requirement
Whilst executives are not required under the company's Constitution to hold any shares, all KMP (with the exception of
Lane Cipriani) including non-executive directors have interests in iSentia securities (refer to section 5 'KMP interests in
iSentia securities and other information' below).
4. Share-based compensation
Issue of shares
There were no shares issued to directors or other KMP as part of compensation during the year ended 30 June 2014.
Options
Options were granted to the CEO and CFO for the year ended 30 June 2014. The terms and conditions of each grant of
options over ordinary shares affecting remuneration of the CEO and CFO in this financial year or future reporting years
are as follows:
GRANT DATE
VESTING DATE AND
EXERCISABLE DATE EXPIRY DATE EXERCISE PRICE
FAIR VALUE PER OPTION
AT GRANT DATE
16 June 2014 1 July 2017 30 June 2018 $ $
The performance period, to which vesting of the options is subject, is from 1 July 2014 to 30 June 2017. Further vesting
conditions include total shareholder return and earnings per share hurdles.
Options granted carry no dividend or voting rights.
The number of options over ordinary shares granted to and vested by directors and KMP as part of compensation during
the year ended 30 June 2014 are set out below:
NAME
NUMBER OF OPTIONS GRANTED
DURING THE YEAR 2014
NUMBER OF OPTIONS VESTED
DURING THE YEAR 2014
John Croll 583,090 –
Nimesh Shah 382,653 –
Values of options over ordinary shares granted, exercised and lapsed for directors and other KMP as part of compensation
during the year ended 30 June 2014 are set out below:
NAME
VALUE OF OPTIONS
GRANTED DURING
THE YEAR
$
VALUE OF OPTIONS
EXERCISED DURING
THE YEAR
$
VALUE OF OPTIONS
LAPSED DURING
THE YEAR
$
REMUNERATION
CONSISTING OF OPTIONS
FOR THE YEAR
$
John Croll 320,000 – – -%
Nimesh Shah 210,000 – – -%
5. KMP interests in iSentia securities and other information
In accordance with Class Order 14/632, issued by the Australian Securities and Investments Commission, relating to
'Key management personnel equity instrument disclosures', the following disclosures for shareholdings and option holdings
relate only to equity instruments in the company or its subsidiaries.
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the group, including their personally related parties, is set out below:
BALANCE AT
THE START OF
THE YEAR
BALANCE
AT IPO *** ADDITIONS DISPOSALS
BALANCE AT
THE END OF
THE YEAR
Ordinary shares
Doug Flynn* – – 75,530 – 75,530
John Croll** – 8,006,056 – – 8,006,056
Pat O'Sullivan – – 29,412 – 29,412
Fiona Pak-Poy* – – 29,412 – 29,412
Dr Geoff Raby – – 29,412 – 29,412
Nimesh Shah* – 821,137 – – 821,137
Joe De Battista – 492,681 – – 492,681
Sean Smith – 109,882 – – 109,882
Cameron Buckley – 270,974 – (140,539) 130,435
– 9,700,730 163,766 (140,539) 9,723,957
*All are held indirectly
**Of which 214,398 are held indirectly
***Balance at IPO relates to shares acquired as partial consideration on the sale of shares in iSentia Holdings Pty Ltd
There were no shares received as part of KMP remuneration during the year.
iSentia Group Limited > Annual Report 201424 25Directors' Report
REMUNERATION REPORT (AUDITED) – CONTINUED
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the group, including their personally related parties, is set out below:
BALANCE AT
THE START OF
THE YEAR GRANTED EXERCISED
EXPIRED/
FORFEITED/
OTHER
BALANCE AT
THE END OF
THE YEAR
Option over ordinary shares
John Croll – 583,090 – – 583,090
Nimesh Shah – 382,653 – – 382,653
– 965,743 – – 965,743
None of the options have vested or are exercisable.
Other information
As a consequence of iSentia’s listing on the Australian Securities Exchange and group reorganisation, the structure of
the Board and non-executive director remuneration changed in June 2014. Non-executive director remuneration figures
reported for the year ended 30 June 2014 represent less than two months under the new structure. Non-executive director
fees (exclusive of superannuation but inclusive of relevant committee fees) proposed for the year ending 30 June 2015 total
$470,000 in aggregate and are set out below:
NAME POSITION FY2015 FEES
Doug Flynn Independent Non-Executive Chairman $180,000
Pat O’Sullivan Independent Non-Executive Director $100,000
Fiona Pak-Poy Independent Non-Executive Director $100,000
Dr Geoff Raby Independent Non-Executive Director $90,000
iSentia aspires to a high level of corporate governance, and as a newly listed company we have sought and will continue
to seek feedback from stakeholders. We welcome feedback about how we can better convey our remuneration policy and
demonstrate how its implementation supports the company’s financial and strategic goals.
On behalf of the Nomination and Remuneration Committee
Fiona Pak-Poy
Chair
29 August 2014
Sydney
This concludes the remuneration report, which has been audited.
SHARES UNDER OPTION
Unissued ordinary shares of iSentia Group Limited under option at the date of this report are as follows:
GRANT DATE EXPIRY DATE EXERCISE PRICE NUMBER UNDER OPTION
16 June 2014 30 June 2018 $ 965,743
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
company or of any other body corporate.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
There were no ordinary shares of iSentia Group Limited issued on the exercise of options during the year ended
30 June 2014 and up to the date of this report.
INDEMNITY AND INSURANCE OF OFFICERS
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives
of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of liability and the amount of the premium.
INDEMNITY AND INSURANCE OF AUDITOR
The company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the company or
any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company
or any related entity.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility
on behalf of the company for all or part of those proceedings.
NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 32 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
DIRECTORS' REPORT>
iSentia Group Limited > Annual Report 201426 27Auditor's Independence Declaration
The directors are of the opinion that the services as disclosed in note 32 to the financial statements do not compromise
the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
> all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
> none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
OFFICERS OF THE COMPANY WHO ARE FORMER AUDIT PARTNERS OF DELOITTE
TOUCHE TOHMATSU
There are no officers of the company who are former audit partners of Deloitte Touche Tohmatsu.
ROUNDING OF AMOUNTS
The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments
Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Class
Order to the nearest thousand dollars, or in certain cases, the nearest dollar.
AUDITOR'S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 follows this
Directors' report.
AUDITOR
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Doug Flynn
Chairman
29 August 2014
Sydney
DIRECTORS' REPORT> Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX: 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7021
The Board of Directors
iSentia Group Limited
219-241 Cleveland Street
Strawberry Hills
SYDNEY NSW 2012
29 August 2014
Dear Board Members,
iSentia Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of
independence to the directors of iSentia Group Limited.
As lead audit partner for the audit of the financial statements of iSentia Group Limited for the financial year ended
30 June 2014, I declare that to the best of my knowledge and belief, there have been no contraventions of :
(i) the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
Deloitte Touche Tohmatsu
Sandeep Chadha
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu
CORPORATE GOVERNANCE STATEMENT>
iSentia Group Limited > Annual Report 201428 29Corporate Governance Statement
ASX RECOMMENDATION – 3RD EDITION COMPLIED WITH? COMMENT
1. Principle 1 – Lay solid foundations for management and oversight
A listed entity should establish and disclose the respective roles and responsibilities of its board and management and how their
performance is monitored and evaluated
A listed entity should disclose:
a) the respective roles and responsibilities
of its board and management; and
b) those matters expressly reserved to
the board and those delegated to
management.
Complies The Board has adopted a charter which is published on
the company’s website . The charter sets out
the Board’s composition, the Board’s role and responsibilities,
the relationship and interaction between the Board and
management, and the authority delegated by the Board to
management and Board committees.
A listed entity should:
a) undertake appropriate checks before
appointing a person, or putting forward
to security holders a candidate for
election as a director; and
b) provide security holders with all
material information in its possession
relevant to a decision on whether or not
to elect or re-elect a director.
Complies The company conducts appropriate checks prior to appointing
directors. The current directors were appointed prior to listing
and a complete biography of each director was presented in
the IPO Prospectus and is included in the Investor Centre of the
company’s website.
When directors are seeking election or re-election by
shareholders, the company will provide all material information
in its possession relevant to the shareholder decision to vote for
or against the election or re-election of the director in the
explanatory statement which accompanies the Notice of Meeting
for the shareholder meeting where the vote will be taken.
A listed entity should have a written
agreement with each director and senior
executive setting out the terms of their
appointment.
Complies There is a written agreement with each director which sets out
the terms of their appointment.
The company secretary of a listed entity
should be accountable directly to the board,
through the chair, on all matters to do with
the proper functioning of the board.
Complies The role of Company Secretary is performed by Nimesh Shah
who is also the CFO. Nimesh Shah reports to the chair of the
Board on matters pertaining to his role as Company Secretary to
ensure the proper functioning of the Board.
A listed entity should:
a) a diversity policy which includes
requirements for the board or a relevant
committee of the board to set
measurable objectives for achieving
gender diversity and to assess annually
both the objectives and the entity’s
progress in achieving them;
b) disclose that policy or a summary of it;
and
c) disclose as at the end of each reporting
period the measurable objectives for
achieving gender diversity set by the
board or relevant committee in
accordance with the entity’s diversity
policy and its progress towards achieving
them and either:
1. the respective proportions of men and
women on the board, in senior
executive positions and across the
whole organisation (including how the
entity has defined “senior executive”
for these purposes; or
Complies iSentia’s Diversity Policy is published on the Corporate
Governance page of the company’s website. The Diversity Policy
sets out the process by which measurable objectives to achieve
gender diversity are developed and approved.
The company’s first set of gender diversity objectives are set out
below. They will be implemented in FY2015 and progress towards
their achievement will be assessed and reported in the FY2015
Corporate Governance Statement.
INITIATIVE MEASURABLE OBJECTIVES
Identify and create development
plans for high performing and
high potential women to
improve female participation at
the senior and executive
manager level and above.
FY2014 performance review
ratings to be reviewed, along
with an assessment of potential
for all women graded as
manager, senior professional or
senior and executive managers.
An individual development plan
will be created for all women
determined to be high
performing and high potential.
Conduct and respond to a
review of gender equality
in pay.
Pay data will be analysed and a
report prepared which will
recommend specific actions to
address any identified
inequity issues.
ASX RECOMMENDATION – 3RD EDITION COMPLIED WITH? COMMENT
continued
2. if the entity is a relevant employer
under the ‘Workplace Gender Equality
Act’, the entity’s most recent ‘Gender
Equality Indicators’ as defined in and
published under that Act.
INITIATIVE MEASURABLE OBJECTIVES
Review policies and practices
outside of Australia for
compatibility to iSentia’s
diversity goals.
A review of policies and
practices in Asia will be
undertaken and will
recommend new policies or
practices if needed to support
iSentia’s diversity goals.
As at 30 June 2014 females represented 52% of all staff, 54%
of management and supervisory staff and 24% of senior and
executive managers. The Board has one female non-executive
director representing 20% of the Board.
iSentia’s ‘Workplace Gender Equality Report’ which includes
the most recent ‘Gender Equality Indicators’ is published on the
Corporate Governance page of the company’s website.
A listed entity should:
a) have and disclose a process for
periodically evaluating the performance
of the board, its committees and
individual directors; and
b) disclose, in relation to each reporting
period, whether a performance
evaluation was undertaken in the
reporting period in accordance with that
process.
Will comply The Nomination and Remuneration Committee in conjunction
with the Human Resources Department is in the process of
developing the process by which Board performance will be
assessed.
With regard to the FY2014 reporting period, the Board had been
in place for less than 2 months and a performance evaluation did
not take place during this time.
The first performance review of the Board is scheduled to take
place before June 2015.
A listed entity should:
a) have and disclose a process for
periodically evaluating the performance
of its senior executives; and
b) disclose, in relation to each reporting
period, whether a performance
evaluation was undertaken in the
reporting period in accordance with
that process.
Complies iSentia has a Remuneration Policy which is published on the
Corporate Governance page of its website. The Remuneration
Policy sets out that senior executive remuneration will be
reviewed at least annually with consideration given to
performance, amongst other factors. The annual formal
performance review for senior executives takes place in June
and July each year where performance is reviewed against
previously set objectives with weighted key result areas and
capabilities for each role.
Evaluation of performance of all senior executives was
conducted in June and July 2014.
2. Principle 2 – Structure the board to add value
A listed entity should have a board of an appropriate size, composition, skills and commitment to enable it to discharge its
duties effectively.
The board of a listed entity should:
a) have a nomination committee which:
1. has at least three members, a
majority of whom are independent
directors; and
2. is chaired by an independent director,
and disclose:
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the
members at those meetings; or
Complies The Board has established a Nomination and Remuneration
Committee. The members of the committee are Fiona Pak-Poy
(chair), Dr Geoff Raby and Doug Flynn, all of whom are
independent directors.
A copy of the charter of the Nomination and Remuneration
Committee is available on the Corporate Governance page of the
company’s website.
The Nomination and Remuneration Committee met for the first
time on 27 August 2014 and will schedule to meet as required
throughout the year.
iSentia Group Limited > Annual Report 201430 31Corporate Governance Statement
ASX RECOMMENDATION – 3RD EDITION COMPLIED WITH? COMMENT
continued
b) if it does not have a nomination
committee, disclose that fact and the
processes it employs to address board
succession issues and to ensure that the
board has the appropriate balance of
skills, knowledge, experience,
independence and diversity to enable it
to discharge its duties and
responsibilities effectively.
A listed entity should have and disclose a
board skills matrix setting out the mix of
skills and diversity that the board currently
has or is looking to achieve in its
membership.
Complies The Board has undertaken a process to determine the
competencies it requires as a whole, to effectively discharge its
duties and has summarised them into four areas as set out
below. Directors have been individually assessed against each
competency using the scale “competent / strong / high”.
Individual ratings are consolidated to determine the “score”
for the whole of the Board for each competency. In addition to
these subjective measures, the Board has created matrices to
rate its degree of gender diversity and independence. These are
also reported below.
Industry competencies Strong
Technical competencies Strong
Governance competencies Strong
Management / administration High
Gender diversity score Mid
Independence score High
A listed entity should disclose:
a) the names of the directors considered by
the board to be independent directors;
b) if a director has an interest, position,
association or relationship of the type
described in Box but the board is of
the opinion that it does not compromise
the independence of the director, the
nature of the interest, position,
association or relationship in question
and an explanation of why the board is
of that opinion; and
c) the length of service of each director.
Complies Details of all directors are set out in the Directors’ report
contained within the 2014 Annual Report. This includes whether
or not they are considered independent by the Board, a summary
of their skills and experience and their length of service.
A majority of the board of a listed entity
should be independent directors.
Complies All four non-executive directors are considered independent by
the Board.
The chair of the board of a listed entity
should be an independent director and, in
particular, should not be the same person
as the CEO of the entity.
Complies The chair of the Board, Doug Flynn is an independent director
and is not the CEO.
A listed entity should have a program for
inducting new directors and provide
appropriate professional development
opportunities for directors to develop and
maintain the skills and knowledge needed
to perform their role as directors
effectively.
Complies iSentia’s program for inducting new directors includes tours of
the business including visits to different group office locations,
product demonstrations and access to senior executives to help
facilitate a thorough understanding of the business.
iSentia is committed to ensuring its directors are adequately
skilled and informed to perform their duties effectively. Through
the annual board performance assessment process,
opportunities for development of directors’ skills and knowledge
are identified for the year ahead.
ASX RECOMMENDATION – 3RD EDITION COMPLIED WITH? COMMENT
3. Principle 3 – Act ethically and responsibly
A listed entity should act ethically and responsibly
A listed entity should:
a) have a code of conduct for its directors,
senior executives and employees; and
b) disclose that code or a summary of it.
Complies iSentia’s Code of Conduct is published on the Corporate
Governance page of its website.
4. Principle 4 – Safeguard integrity in corporate reporting
A listed entity should have formal and rigorous processes that independently verify and safeguard the integrity of its
corporate reporting.
The board of a listed entity should:
a) have an audit committee which:
1. has at least three members, all of
whom are non-executive directors and
a majority of whom are independent
directors; and
2. is chaired by an independent director,
who is not the chair of the board,
and disclose:
3. the charter of the committee;
4. the relevant qualifications and
experience of the members of the
committee; and
in relation to each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the
members at those meetings; or
b) if it does not have an audit committee,
disclose that fact and the processes it
employs that independently verify and
safeguard the integrity of its corporate
reporting, including the processes for
the appointment and removal of the
external auditor and the rotation of the
audit engagement partner.
Complies The Board has established an Audit and Risk Committee.
The members of the committee are Pat O’Sullivan (chair), Fiona
Pak-Poy and Doug Flynn, all of whom are independent directors.
The chair of the Audit and Risk Committee, Pat O’Sullivan is not
the chair of the Board.
A copy of the charter of the Audit and Risk Committee is
available on the Corporate Governance page of the company’s
website.
The relevant qualifications and experience of the member of
the Audit and Risk Committee are set out in the ‘Information on
directors’ section of the Directors’ report contained within 2014
Annual Report.
The Audit and Risk Committee met for the first time on 27
August 2014 and will schedule to meet as required throughout
the year.
The board of a listed entity should, before it
approves the entity’s financial statements
for a financial period, receive from its CEO
and CFO a declaration that, in their opinion,
the financial records of the entity have been
properly maintained and that the financial
statements comply with the appropriate
accounting standards and give a true and
fair view of the financial position and
performance of the entity and that the
opinion has been formed on the basis of
a sound system of risk management
and internal control which is
operating effectively.
Complies Prior to approving the financial statements for the financial
year ended 30 June 2014, the Board received a s295A
declaration from the CEO and CFO stating that in their opinion,
the financial records of the entity have been properly
maintained and that the financial statements comply with the
appropriate accounting standards and give a true and fair view
of the financial position and performance of the entity and that
the opinion has been formed on the basis of a sound system of
risk management and internal control which is operating
effectively.
A listed entity that has an AGM should
ensure that its external auditor attends its
AGM and is available to answer questions
from security holders relevant to the audit.
Complies iSentia’s inaugural AGM will be held on 20 November 2014.
The company’s external auditor, Deloitte Touche Tohmatsu,
has indicated that they will attend the AGM and will be available
to answer questions from shareholders relevant to the audit of
the financial report for the financial year ended 30 June 2014.
CORPORATE GOVERNANCE STATEMENT>
iSentia Group Limited > Annual Report 201432 33Corporate Governance Statement
ASX RECOMMENDATION – 3RD EDITION COMPLIED WITH? COMMENT
5. Principle 5 – Make timely and balanced disclosure
A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable person would expect to
have a material effect on the price or value of its securities.
A listed entity should:
a) have a written policy for complying with
its continuous disclosure obligations
under the Listing Rules; and
b) disclose that policy or a summary of it.
Complies iSentia’s Continuous Disclosure Policy is published on the
Corporate Governance page of its website. This policy sets out
the process by which it will comply with its continuous disclosure
obligations under the listing rules.
6. Principle 6 – Respect the rights of security holders
A listed entity should respect the rights of its security holders by providing them with appropriate information and facilities to
allow them to exercise those rights effectively.
A listed entity should provide information
about itself and its governance to investors
via its website.
Complies iSentia’s website contains information about the company and
its products and services. It also contains an Investor Centre
where information about the company’s ASX listing including
share price, market announcements, financial reports and
corporate governance practices can be located.
A listed entity should design and
implement an investor relations program
to facilitate effective two-way
communication with investors.
Complies iSentia’s shareholder communications policy is published on
the Corporate Governance page of its website. This policy is
designed to promote effective communication with shareholders
and encourage effective participation at general meetings of
the company.
A listed entity should disclose the policies
and processes it has in place to facilitate
and encourage participation at meetings of
security holders.
Complies iSentia’s shareholder Communications Policy is published on the
Corporate Governance page of its website. This policy is
designed to promote effective communication with shareholders
and encourage effective participation at general meetings of the
company.
A listed entity should give security holders
the option to receive communications from,
and send communications to, the entity
and its security registry electronically.
Complies Through the iSentia’s share registry provider, Link Market
Services, shareholders can elect to send and or receive
communications electronically.
7. Principle 7 – Recognise and manage risk
A listed entity should establish a sound risk management framework and periodically review the effectiveness of that framework.
The board of a listed entity should:
a) have a committee or committees to
oversee risk, each of which:
1. has at least three members, a
majority of whom are independent
directors; and
2. is chaired by an independent director,
and disclose:
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the
members at those meetings; or
b) if it does not have a risk committee or
committees that satisfy a) above,
disclose that fact and the processes it
employs for overseeing the entity’s risk
management framework
Complies The Board has established an Audit and Risk Committee. The
members of the committee are Pat O’Sullivan (chair), Fiona
Pak-Poy and Doug Flynn, all of whom are independent directors.
The chair of the Audit and Risk Committee, Pat O’Sullivan is not
the chair of the Board.
A copy of the charter of the Audit and Risk Committee is
available on the Corporate Governance page of the company’s
website.
The relevant qualifications and experience of the member of
the Audit and Risk Committee are set out in the ‘Information on
directors’ section of the Directors’ report contained within 2014
Annual Report. The Audit and Risk Committee met for the first
time on 27 August 2014 and will schedule to meet as required
throughout the year.
ASX RECOMMENDATION – 3RD EDITION COMPLIED WITH? COMMENT
The board or a committee of the board
should:
a) review the entity’s risk management
framework at least annually to satisfy
itself that it continues to be sound; and
b) disclose, in relation to each reporting
period, whether such a review has
taken place.
Complies iSentia has developed a risk management framework for
documenting, assessing and reporting risks and risk
management practices which was reviewed by the Board at
its meeting on 17 June 2014.
The Audit and Risk Committee met for the first time on 27 August
2014 and reviewed the risk framework and the group risk profile.
The Audit and Risk Committee will review the risk framework and
risk profile at each meeting of the Committee going forward.
A listed entity should disclose:
a) if it has an internal audit function, how
the function is structured and what role
it performs; or
b) if it does not have an internal audit
function, that fact and the processes
it employs for evaluating and continually
improving the effectiveness of its
risk management and internal
control processes.
Complies The company does not currently have an internal audit function.
The Risk and Audit Committee relies on the risk management
framework to identify potential risk exposures and requires
management to report actions, plans and projects designed
to address these exposures on a priority basis.
A listed entity should disclose whether it
has any material exposure to economic,
environmental and social sustainability
risks and, if it does, how it manages or
intends to manage those risks.
Complies The Board does not believe the company has any material
exposure to economic, environmental and social sustainability
risks. This has been determined through consultation with
management and a review of the risk register.
8. Principle 8 – Remunerate fairly and responsibly
A listed entity should pay director remuneration sufficient to attract and retain high quality directors and design its executive
remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value
for security holders.
The board of a listed entity should:
a) have a remuneration committee which:
1. has at least three members, a
majority of whom are independent
directors; and
2. is chaired by an independent director,
and disclose:
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the
members at those meetings; or.
b) if it does not have a remuneration
committee, disclose that fact and the
processes it employs for setting the level
and composition of remuneration for
directors and senior executives and
ensuring that such remuneration is
appropriate and not excessive
Complies The Board has established a Nomination and Remuneration
Committee. The members of the committee are Fiona Pak-Poy
(chair), Dr Geoff Raby and Doug Flynn, all of whom are
independent directors.
A copy of the charter of the Nomination and Remuneration
Committee is available on the Corporate Governance page of
the company’s website.
The Nomination and Remuneration Committee met for the first
time on 27 August 2014 and will schedule to meet as required
throughout the year.
CORPORATE GOVERNANCE STATEMENT>
iSentia Group Limited > Annual Report 201434 35Financial Statements
ASX RECOMMENDATION – 3RD EDITION COMPLIED WITH? COMMENT
A listed entity should separately disclose
its policies and practices regarding the
remuneration of non-executive directors
and the remuneration of executive directors
and other senior executives.
Complies iSentia has a Remuneration Policy which is published on the
Corporate Governance page of its website. The Remuneration
Policy sets out the framework for developing the structure of
executive remuneration and remuneration for non-executive
directors acknowledging the different role and responsibilities
of non-executive directors compared with executives and
senior managers.
A listed entity which has an equity-based
remuneration scheme should:
a) have a policy on whether participants are
permitted to enter into transactions
(whether through the use of derivatives
or otherwise) which limit the economic
risk of participating in the scheme; and
b) disclose that policy or a summary of it.
Complies iSentia’s Securities Trading Policy prohibits staff from entering
into derivatives with regard to unvested securities. The policy
also prohibits employees from using margin loans to acquire
securities in the company.
iSentia’s Securities Trading Policy is published on the Corporate
Governance page of its website.
CORPORATE GOVERNANCE STATEMENT>
FINANCIAL
STATEMENTS
FY14
> FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
CONSOLIDATED
NOTE 2014
$'000
2013
$'000
Assets
Current assets
Cash and cash equivalents 8 5,101 5,752
Trade and other receivables 9 22,115 19,312
Other 10 1,230 793
Total current assets 28,446 25,857
Non-current assets
Receivables 11 – 1,295
Property, plant and equipment 12 2,473 2,714
Intangibles 13 134,581 134,177
Deferred tax 14 12,529 2,600
Other 15 40 75
Total non-current assets 149,623 140,861
Total assets 178,069 166,718
Liabilities
Current liabilities
Trade and other payables 16 12,435 12,221
Borrowings 17 – 7,144
Derivative financial instruments 18 109 9,645
Income tax 19 577 763
Provisions 20 4,834 3,073
Total current liabilities 17,955 32,846
Non-current liabilities
Borrowings 21 50,615 103,084
Derivative financial instruments 22 50 3,109
Deferred tax 23 9,225 10,948
Provisions 24 1,116 516
Total non-current liabilities 61,006 117,657
Total liabilities 78,961 150,503
Net assets 99,108 16,215
Equity
Issued capital 25 403,852 37,638
Reserves 26 (255,403) 872
Accumulated losses 27 (49,341) (22,295)
Total equity 99,108 16,215
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201436 37Financial Statements
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED
NOTE 2014
$'000
2013
$'000
Revenue 4 110,562 103,006
Other income 5 226 422
Expenses
Copyright, consumables and other direct purchases (20,606) (20,240)
Employee benefits expense (52,282) (51,771)
Amortisation expenses 6 (11,084) (10,101)
Depreciation expense 6 (1,279) (1,939)
Impairment of assets 6 (804) (8,414)
Advertising costs (686) (960)
Legal costs (40) (124)
Occupancy costs (4,672) (4,473)
Travel expenses (1,022) (1,123)
Net fair value movement on put/call option (17,830) 548
Other expenses 6 (12,842) (3,440)
Finance costs 6 (14,997) (15,007)
Loss before income tax benefit (27,356) (13,616)
Income tax benefit 7 8,950 2,137
Loss after income tax benefit for the year attributable to the owners of iSentia
Group Limited 27 (18,406) (11,479)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net change in fair value of cash flow hedges taken to equity, net of tax 1,037 690
Exchange differences on translating foreign operations, net of tax (1,011) 4,772
Other comprehensive income for the year, net of tax 26 5,462
Total comprehensive income for the year attributable to the owners of
iSentia Group Limited (18,380) (6,017)
CENTS CENTS
Basic earnings per share 42 () ()
Diluted earnings per share 42 () ()
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED
NOTE 2014
$'000
2013
$'000
Cash flows from operating activities
Receipts from customers (inclusive of GST) 119,444 111,316
Payments to suppliers and employees (inclusive of GST) (92,353) (88,446)
27,091 22,870
Interest received 186 90
Other revenue 40 –
Interest and other finance costs paid (12,977) (6,353)
Income taxes paid (1,599) (278)
Net cash from operating activities 41 12,741 16,329
Cash flows from investing activities
Payment for purchase of asset acquisition (9,598) –
Payment for purchase of business, net of cash acquired 37 (437) (2,688)
Payments to vendors for prior business acquisitions – (800)
Payments for security deposits – (161)
Payments for property, plant and equipment 12 (1,154) (842)
Payments for intangibles 13 (2,878) (3,652)
Payments to acquire non-controlling interest (535) (670)
Settlement of put/call option 30 (29,993) –
Proceeds from sale of property, plant and equipment 112 –
Proceeds from release of security deposits 151 –
Net cash used in investing activities (44,332) (8,813)
Cash flows from financing activities
Proceeds from issue of shares 25 284,450 154
Share issue transaction costs (14,989) –
Proceeds from management shareholders loan 1,295 –
Proceeds of bridge loan 16,000 –
Proceeds of IPO facility loan 55,000 –
Repayment of loans and borrowings pre IPO (80,725) –
Repayment of IPO facility loan (4,000) –
Payments for share buy-backs (125) (543)
Dividends paid by iSentia Holdings Pty Limited 28 (8,640) –
Repayment of borrowings – (7,366)
Repayments of loans to shareholders (47,020) –
Repayments of leases (43) (163)
Payment to existing shareholders as part of capital restructure on IPO 25 (170,263) –
Net cash from/(used in) financin g activities 30,940 (7,918)
Net decrease in cash and cash equivalents (651) (402)
Cash and cash equivalents at the beginning of the financial year 5,752 6,154
Cash and cash equivalents at the end of the financial year 8 5,101 5,752
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201438 39Financial Statements
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
ISSUED
CAPITAL
$'000
RESERVES
$'000
ACCUMULATED
LOSSES
$'000
TOTAL EQUITY
$'000
CONSOLIDATED
Balance at 1 July 2012 37,320 (2,865) (10,816) 23,639
Loss after income tax benefit for the year – – (11,479) (11,479)
Other comprehensive income for the year, net of tax – 5,462 – 5,462
Total comprehensive income for the year – 5,462 (11,479) (6,017)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 25) 318 – – 318
Share buy-backs by iSentia Holdings Pty Limited – (543) – (543)
Transactions with non-controlling interest – (1,182) – (1,182)
Balance at 30 June 2013 37,638 872 (22,295) 16,215
ISSUED
CAPITAL
$'000
RESERVES
$'000
ACCUMULATED
LOSSES
$'000
TOTAL EQUITY
$'000
CONSOLIDATED
Balance at 1 July 2013 37,638 872 (22,295) 16,215
Loss after income tax benefit for the year – – (18,406) (18,406)
Other comprehensive income for the year, net of tax – 26 – 26
Total comprehensive income for the year – 26 (18,406) (18,380)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 25) 403,852 – – 403,852
Share buy-backs by iSentia Holdings Pty Limited (note 25) (125) – – (125)
Group reorganisation (note 25) (37,513) (256,301) – (293,814)
Dividends paid (note 28) – – (8,640) (8,640)
Balance at 30 June 2014 403,852 (255,403) (49,341) 99,108
iSentia Group Limited > Annual Report 201440 41Financial Statements
FINANCIAL STATEMENTS>
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
Any significant impact on the accounting policies of the group from the adoption of these Accounting Standards and
Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations did not have any
significant impact on the financial performance or position of the group.
The following Accounting Standards are most relevant to the group:
AASB 10 Consolidated Financial Statements
The group has applied AASB 10 from 1 July 2013, which has a new definition of 'control'. Control exists when the reporting
entity is exposed, or has the rights, to variable returns from its involvement with another entity and has the ability to affect
those returns through its 'power' over that other entity. A reporting entity has power when it has rights that give it the
current ability to direct the activities that significantly affect the investee's returns. The group not only has to consider its
holdings and rights but also the holdings and rights of other shareholders in order to determine whether it has the
necessary power for consolidation purposes.
AASB 12 Disclosure of Interests in Other Entities
The group has applied AASB 12 from 1 July 2013. The standard contains the entire disclosure requirement associated with
other entities, being subsidiaries, associates, joint arrangements (joint operations and joint ventures) and unconsolidated
structured entities. The disclosure requirements have been significantly enhanced when compared to the disclosures
previously located in AASB 127 'Consolidated and Separate Financial Statements', AASB 128 'Investments in Associates',
AASB 131 'Interests in Joint Ventures' and Interpretation 112 'Consolidation – Special Purpose Entities'.
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13
The group has applied AASB 13 and its consequential amendments from 1 July 2013. The standard provides a single robust
measurement framework, with clear measurement objectives, for measuring fair value using the 'exit price' and provides
guidance on measuring fair value when a market becomes less active. The 'highest and best use' approach is used to
measure non-financial assets whereas liabilities are based on transfer value. The standard requires increased disclosures
where fair value is used.
AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards
arising from AASB 119 (September 2011)
The group has applied AASB 119 and its consequential amendments from 1 July 2013. The standard changed the definition
of short-term employee benefits, from 'due to' to 'expected to' be settled within 12 months. Annual leave that is not expected
to be wholly settled within 12 months is now discounted allowing for expected salary levels in the future period when the
leave is expected to be taken.
AASB 127 Separate Financial Statements (Revised), AASB 128 Investments in Associates and Joint Ventures (Reissued)
and AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint
Arrangements Standards
The group has applied AASB 127, AASB 128 and AASB 2011-7 from 1 July 2013. AASB 127 and AASB 128 have been modified
to remove specific guidance that is now contained in AASB 10, AASB 11 and AASB 12 and AASB 2011-7 makes numerous
consequential changes to a range of Australian Accounting Standards and Interpretations. AASB 128 has also been
amended to include the application of the equity method to investments in joint ventures.
AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and
Financial Liabilities
The group has applied AASB 2012-2 from 1 July 2013. The amendments enhance AASB 7 'Financial Instruments:
Disclosures' and requires disclosure of information about rights of set-off and related arrangements, such as collateral
agreements. The amendments apply to recognised financial instruments that are subject to an enforceable master netting
arrangement or similar agreement.
AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle
The group has applied AASB 2012-5 from 1 July 2013. The amendments affect five Australian Accounting Standards as
follows: Confirmation that repeat application of AASB 1 'First-time Adoption of Australian Accounting Standards' is
permitted; Clarification of borrowing cost exemption in AASB 1; Clarification of the comparative information requirements
when an entity provides an optional third column or is required to present a third statement of financial position in
accordance with AASB 101 'Presentation of Financial Statements'; Clarification that servicing of equipment is covered by
AASB 116 'Property, Plant and Equipment', if such equipment is used for more than one period; clarification that the tax
effect of distributions to holders of equity instruments and equity transaction costs in AASB 132 'Financial Instruments:
Presentation' should be accounted for in accordance with AASB 112 'Income Taxes'; and clarification of the financial
reporting requirements in AASB 134 'Interim Financial Reporting' and the disclosure requirements of segment assets
and liabilities.
AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments
The group has applied AASB 2012-10 amendments from 1 July 2013, which amends AASB 10 and related standards for
the transition guidance relevant to the initial application of those standards. The amendments clarify the circumstances in
which adjustments to an entity's previous accounting for its involvement with other entities are required and the timing of
such adjustments.
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirement
The group has applied 2011-4 from 1 July 2013, which amends AASB 124 'Related Party Disclosures' by removing the
disclosure requirements for individual key management personnel ('KMP'). Corporations and Related Legislation
Amendment Regulations 2013 and Corporations and Australian Securities and Investments Commission Amendment
Regulation 2013 () now specify the KMP disclosure requirements to be included within the directors' report.
Adoption of AASB 1 'First time adoption of Australian Accounting Standards'
As a non-reporting entity the group has historically prepared ‘special purpose financial statements’ for the purposes of
satisfying the directors reporting requirements under Corporations Act 2001. As a disclosing entity the group is now required
to prepare an IFRS compliant ‘general purpose financial statements’ for the first time for the year ended 30 June 2014. In
accordance with AASB 1 ‘First time adoption of Australian Accounting Standards’ the group has adopted all relevant IFRS
standards with effect from the beginning of the comparative period, 1 July 2012. The adoption of AASB 1 has not resulted in
any changes in recognition or measurement of amounts in the financial statements.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention except for certain financial instruments
that are measured at revalued amounts or fair values, as explained in the accounting policies in this note. Historical cost is
generally based on the fair values of the consideration given in exchange for assets.
iSentia Group Limited > Annual Report 201442 43Financial Statements
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the group's accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the group only.
Supplementary information about the parent entity is disclosed in note 36.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of iSentia Group Limited
('company' or 'parent entity') as at 30 June 2014 and the results of all subsidiaries for the year then ended. iSentia Group
Limited and its subsidiaries together are referred to in these financial statements as the 'group'.
Subsidiaries are all those entities over which the group has control. The group controls an entity when the group 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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the group.
The acquisition of common control subsidiaries is accounted for at book value. The acquisition of other subsidiaries is
accounted for using the acquisition method of accounting. Refer to the 'business combinations' accounting policy for further
details. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is
recognised directly in equity attributable to the parent.
Where the group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The group recognises the
fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit
or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is iSentia Group Limited's functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rate at the date of the transaction, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the group and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration received or receivable.
Rendering of services
Revenue from the rendering of services is recognised upon the delivery of the service to the customers.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
> When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
> When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
iSentia Group Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime, effective 5 June 2014. Previously the head entity was iSentia
Holdings Pty Limited. The head entity and each subsidiary in the tax consolidated group continue to account for their own
current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in
determining the appropriate amount of taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201444 45Financial Statements
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither
a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is
held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the
asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months
after the reporting period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the
settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement between 30 and
90 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective
evidence that the group will not be able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and
default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be
impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present
value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term
receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
Derivatives are classified as current or non-current depending on the expected period of realisation.
Cash flow hedges
Cash flow hedges are used to cover the group's exposure to variability in cash flows that is attributable to particular risk
associated with a recognised asset or liability or a firm commitment which could affect profit or loss. The effective portion
of the gain or loss on the hedging instrument is recognised directly in equity, whilst the ineffective portion is recognised in
profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged
transaction when the forecast transaction occurs.
Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each
hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer
expected to occur, amounts recognised in equity are transferred to profit or loss.
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes
ineffective and is no longer a designated hedge, amounts previously recognised in equity remain in equity until the forecast
transaction occurs.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the
initial measurement, except for financial assets at fair value through profit or loss. They are subsequently measured at
either amortised cost or fair value depending on their classification. Classification is determined based on the purpose of
the acquisition and subsequent reclassification to other categories is restricted.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the group has transferred substantially all the risks and rewards of ownership.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised
in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or
group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor;
a breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due to
economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter
bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable
data indicating that there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference between the
asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been recognised
had the impairment not been made and is reversed to profit or loss.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Leasehold improvements 3-5 years
Plant and equipment 3-5 years
Furniture and fittings 3-13 years
Office equipment 3-7 years
Computer equipment 2-3 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the
estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201446 47Financial Statements
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the group will obtain ownership at the end of the
lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried
at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Customer relationships and contracts
Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful lives of between five and ten years.
Software, research and capitalised development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable
that the project will be a success considering its commercial and technical feasibility; the group is able to use or sell the
asset; the group has sufficient resources; and intent to complete the internally development or software and their costs can
be measured reliably. These capitalised costs and other software costs, purchased from third parties, are deferred and
amortised on a straight line basis over the period of their expected benefit, being their finite useful lives of between two and
four years.
Brands
Brands acquired in a business combination are not amortised, on the basis of indefinite life, which is reassessed every year.
Instead, brands are tested annually for impairment, or more frequently if events or changes in circumstances indicate that it
might be impaired, and is carried at cost less accumulated impairment losses.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date,
the loans or borrowings are classified as non-current.
Put/call options
In 2012, the group acquired 90% interest in iSentia Group Sdn. Bhd. The shareholders of the remaining 10% held various
put options and the group has various call options. The group did not recorded a non-controlling interest in accordance with
AASB 10 ‘Consolidated Financial Statements’, but rather recorded the put option as a financial liability in accordance with
AASB 132 'Financial Instruments: Presentation', measured at the estimated net present value of the expected exercise price
of the put option, with subsequent changes in the recognised value recorded in the profit or loss. The call options had
nominal value and have not been recognised.
In 2011, the group acquired % interest in iSentia Brandtology Pte Limited. The holders of the remaining % held
various put options. The group did not record a non-controlling interest in accordance with AASB 10 ‘Consolidated Financial
Statements’, but rather recorded the put option as a financial liability in accordance with AASB 132 'Financial Instruments:
Presentation', measured at the estimated net present value of the expected exercise price of the put option, with subsequent
changes in the recognised value recorded in the profit or loss. The call options have nominal value and have not been
recognised.
Both put/call options were settled in 2014.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred, including:
> interest on short-term and long-term borrowings
> interest on finance leases
Provisions
Provisions are recognised when the group has a present (legal or constructive) obligation as a result of a past event,
it is probable the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a finance cost.
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201448 49Financial Statements
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to
be settled within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date is
measured as the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the
group receives the services that entitle the employees to receive payment. No account is taken of any other vesting
conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best
estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised
in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised
in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying the Black-
Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The
cumulative charge to profit or loss until settlement of the liability is calculated as follows:
> during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
> from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of
the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers
between levels are determined based on a reassessment of the lowest level input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is
recognised in profit or loss.
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201450 51Financial Statements
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for
within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in
the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain
directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Corporate/group reorganisation – iSentia Group Limited and iSentia Holdings Pty Limited
iSentia Group Limited was incorporated on 14 January 2014. On 5 June 2014 the shareholders of the company undertook
a corporate reorganisation, in which iSentia Group Limited acquired iSentia Holdings Pty Limited. Under the principals of
corporate reorganisation, in accordance with the Australian Accounting Standards, the financial statements of iSentia Group
Limited includes the historical financial information of iSentia Holdings Pty Limited for the period before the acquisition.
Accordingly, the financial statements for the year ended 30 June 2014 presents the financial results for the consolidated
group under iSentia Group Limited for the period from acquisition to 30 June 2014 and the consolidated group under
iSentia Holdings Pty Limited for the 1 July 2013 and 30 June 2014. The comparatives presented in the financial statements
represent the financial position of iSentia Holdings Pty Limited as at 30 June 2013, and the financial performance of iSentia
Holdings Pty Limited for the year ended 30 June 2013.
This corporate reorganisation did not represent a business combination in accordance with AASB 3 ‘Business Combination’.
Instead the appropriate accounting treatment for recognising the new group structure is on the basis that the transaction is
a form of capital reconstruction and group reorganisation. Accordingly the financial statements are a continuation of iSentia
Holdings Pty Limited and as such:
> The assets and liabilities recognised and measured are at carrying amounts of iSentia Holdings Pty Limited rather
than at fair value;
> The retained earnings and other equity balances recognised are the existing retained earnings and other equity
balances of iSentia Holdings Pty Limited;
> The amount recognised as issued equity instruments are determined by adding the additional equity retained by
the group to the issued equity recorded in iSentia Holdings Pty Limited’s financial statements immediately before
the acquisition;
> No 'new' goodwill has been recognised as a result of the combination. The only goodwill that has been recognised
is the existing goodwill of iSentia Holdings Pty Limited. The difference between the consideration paid and the equity
'acquired' is reflected in equity as a 'capital contribution'; and
> The comparatives presented are that of iSentia Holdings Pty Limited.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of iSentia Group Limited, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Rounding of amounts
The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments
Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Class Order to
the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the group for the annual reporting period ended 30 June 2014. The group's assessment of the
impact of these new or amended Accounting Standards and Interpretations, most relevant to the group, are set out below.
AASB 9 Financial Instruments and its consequential amendments
This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January
2018 and completes phases I and III of the IASB's project to replace IAS 39 (AASB 139) 'Financial Instruments: Recognition
and Measurement'. This standard introduces new classification and measurement models for financial assets, using a
single approach to determine whether a financial asset is measured at amortised cost or fair value. The accounting for
financial liabilities continues to be classified and measured in accordance with AASB 139, with one exception, being that the
portion of a change of fair value relating to the entity's own credit risk is to be presented in other comprehensive income
unless it would create an accounting mismatch. Chapter 6 'Hedge Accounting' supersedes the general hedge accounting
requirements in AASB 139 and provides a new simpler approach to hedge accounting that is intended to more closely align
with risk management activities undertaken by entities when hedging financial and non-financial risks. The group will adopt
this standard and the amendments from 1 July 2018 but the impact of its adoption is yet to be assessed by the group.
AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities
The amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The amendments add
application guidance to address inconsistencies in the application of the offsetting criteria in AASB 132 'Financial
Instruments: Presentation', by clarifying the meaning of 'currently has a legally enforceable right of set-off'; and clarifies
that some gross settlement systems may be considered to be equivalent to net settlement. The adoption of the amendments
from 1 July 2014 will not have a material impact on the group.
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets
These amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The disclosure
requirements of AASB 136 'Impairment of Assets' have been enhanced to require additional information about the fair value
measurement when the recoverable amount of impaired assets is based on fair value less costs of disposals. Additionally, if
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201452 53Financial Statements
measured using a present value technique, the discount rate is required to be disclosed. The adoption of these amendments
from 1 July 2014 may increase the disclosures by the group.
AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of
Hedge Accounting
These amendments are applicable to annual reporting periods beginning on or after 1 January 2014 and amends AASB 139
'Financial Instruments: Recognition and Measurement' to permit continuation of hedge accounting in circumstances where
a derivative (designated as hedging instrument) is novated from one counter party to a central counterparty as a
consequence of laws or regulations. The adoption of these amendments from 1 July 2014 will not have a material impact on
the group.
AASB 2014-1 Amendments to Australian Accounting Standards
These amendments are in several parts. Part A makes various amendments to Australian Accounting Standards arising
from the issuance of IASB’s ‘Annual Improvements to IFRSs 2010-2012 Cycle’ and ‘Annual Improvements to IFRSs 2011-
2013 Cycle’. Part B makes amendments to AASB 119 ‘Employee in relation to the requirements for contributions from
employees or third parties that are linked to service which arise from the issuance of IASB’s ‘Defined Benefit Plans –
Employee Contributions (Amendments to IAS 19)’. Part C makes amendments to particular Australian Accounting Standards
to delete their references to AASB 1031 ‘Materiality’. Part D makes consequential amendments arising from the issuance of
AASB 14 ‘Regulatory Deferral Accounts’. Part E makes consequential amendments to numerous other Standards as a
consequence of the introduction of hedge accounting requirements into AASB 9 ‘Financial Instruments’ in December 2013.
Amendments Part A to D are applicable to annual reporting periods beginning on or after 1 July 2014 or as specified in each
Part. Amendments Part E are applicable to annual reporting periods beginning on or after 1 January 2015 or as specified in
Part E. The adoption of these amendments will not have a material impact on the group.
Annual Improvements to IFRSs 2010-2012 Cycle
These amendments affect several Accounting Standards as follows: Amends the definition of 'vesting conditions' and
'market condition' and adds definitions for 'performance condition' and 'service condition' in AASB 2 'Share-based
Payment'; Amends AASB 3 'Business Combinations' to clarify that contingent consideration that is classified as an asset or
liability shall be measured at fair value at each reporting date; Amends AASB 8 'Operating Segments' to require entities to
disclose the judgements made by management in applying the aggregation criteria; Clarifies that AASB 8 only requires a
reconciliation of the total reportable segments assets to the entity's assets, if the segment assets are reported regularly;
Clarifies that the issuance of AASB 13 'Fair Value Measurement' and the amending of AASB 139 'Financial Instruments;
Recognition and Measurement' and AASB 9 'Financial Instruments' did not remove the ability to measure short-term
receivables and payables with no stated interest rate at their invoice amount, if the effect of discounting is immaterial;
Clarifies that in AASB 116 'Property, Plant and Equipment' and AASB 138 'Intangible Assets', when an asset is revalued the
gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount (.
proportional restatement of accumulated amortisation); and Amends AASB 124 'Related Party Disclosures' to clarify that an
entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a
'related party' of the reporting entity. The adoption of these amendments will not have a material impact on the group.
Annual Improvements to IFRSs 2011-2013 Cycle
These amendments affect four Accounting Standards as follows: Clarifies the 'meaning of effective IFRSs' in AASB 1
'First-time Adoption of Australian Accounting Standards'; Clarifies that AASB 3 'Business Combination' excludes from its
scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself;
Clarifies that the scope of the portfolio exemption in AASB 13 'Fair Value Measurement' includes all contracts accounted
for within the scope of AASB 139 'Financial Instruments; Recognition and Measurement' or AASB 9 'Financial Instruments',
regardless of whether they meet the definitions of financial assets or financial liabilities as defined in AASB 132 'Financial
Instruments: Presentation'; and Clarifies that determining whether a specific transaction meets the definition of both a
business combination as defined in AASB 3 'Business Combinations' and investment property as defined in AASB 140
'Investment Property' requires the separate application of both standards independently of each other. The adoption of these
amendments will not have a material impact on the group.
IFRS 15 Revenue from Contracts with Customers
This standard is expected to be applicable to annual reporting periods beginning on or after 1 January 2017. The standard
provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written,
verbal or implied) to be identified, together with the separate performance obligations within the contract; determine
the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to
the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service,
or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation
is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the
performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance
obligation is satisfied when the service has been provided, typically for promises to transfer services to customers.
For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine
how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be
presented in an entity’s statement of financial position as a contract liability, a contract asset, or a receivable, depending
on the relationship between the entity’s performance and the customer’s payment. Sufficient quantitative and qualitative
disclosure is required to enable users to understand the contracts with customers; the significant judgements made in
applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a
customer. The group will adopt this standard and the amendments from 1 July 2017 but the impact of its adoption is yet to
be assessed by the group.
NOTE 2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Accounting for the internal restructure at Initial Public Offering (‘IPO’)
During the financial year, an internal restructure took place in preparation of the listing of the group on the Australian
Securities Exchange. This resulted in a newly incorporated company, iSentia Group Limited, becoming the legal parent of
the group, conditional on the IPO completing.
The directors elected to account for the restructure as a capital reorganisation rather than a business combination. In the
directors’ judgement, the continuation of the existing accounting values is consistent with the accounting that would have
occurred if the assets and liabilities had already been in a structure suitable to IPO and most appropriately reflects the
substance of the internal restructure. As such, the consolidated financial statements of the new iSentia Group Limited group
have been presented as a continuation of the pre-existing accounting values of assets and liabilities in iSentia Holdings Pty
Limited financial statements.
In adopting this approach the directors note that there is an alternate view that such a restructure conditional on the IPO
completing should be accounted for as a business combination that follows the legal structure of iSentia Group Limited
being the acquirer. If this view had been taken, the net assets of the group would have been uplifted to fair value by $
million, based on a market capitalisation at IPO of $ million, with consequential impacts on profit or loss and the
statement of financial position. An IASB project on accounting for common control transactions is likely to address such
restructures in the future. However, the precise nature of any new requirements and the timing of these are uncertain.
In any event, history indicates that any potential changes are unlikely to require retrospective amendments to the
financial statements.
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201454 55Financial Statements
Share-based payment transactions
The group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking
into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets
and liabilities within the next annual reporting period.
Fair value measurement hierarchy
The group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on
the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted)
in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other
than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant
to fair value and therefore which category the asset or liability is placed in can be subjective.
Goodwill and other indefinite life intangible assets
The group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in
note 1. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and
growth rates of the estimated future cash flows.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at
each reporting date by evaluating conditions specific to the group and to the particular asset that may lead to impairment.
If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of
disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Income tax
The group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in
determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The group recognises liabilities for anticipated
tax audit issues based on the group's current understanding of the tax law. Where the final tax outcome of these matters
is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period
in which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the group considers it is probable that
future taxable amounts will be available to utilise those temporary differences and losses. Such deferred tax assets are
not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of
assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount
of the deferred tax assets is reviewed at the end of each period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay
increases through promotion and inflation have been taken into account.
Business combinations
As discussed in note 1, business combinations are initially accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are initially estimated by the group taking into consideration all
available information at the reporting date. Fair value adjustments on the finalisation of the business combination
accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the
assets and liabilities, depreciation and amortisation reported.
NOTE 3. OPERATING SEGMENTS
Identification of reportable operating segments
The group has two geographical segments Australia and New Zealand ('ANZ') and Asia and a head office segment.
These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who
are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation
of resources. There is no aggregation of operating segments.
The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted
for internal reporting to the CODM are consistent with those adopted in the financial statements.
The information reported to the CODM is on at least a monthly basis. The CODM does not regularly review segment assets
and segment liabilities. Refer to statement of financial position for assets and liabilities.
Operating segment information
ANZ
$'000
ASIA
$'000
HEAD OFFICE
$'000
INTERSEGMENT
ELIMINATIONS/
UNALLOCATED
$'000
TOTAL
$'000
CONSOLIDATED – 2014
Revenue
SaaS and Content services 77,118 11,223 – – 88,341
VAS 13,005 9,216 – – 22,221
Total sales revenue 90,123 20,439 – – 110,562
Total revenue 90,123 20,439 – – 110,562
EBITDA 36,430 3,334 (21,312) – 18,452
Depreciation and amortisation (12,363)
Impairment of assets (804)
Interest revenue 186
Finance costs (14,997)
Net fair value movement on put/call option (17,830)
Loss before income tax benefit (27,356)
Income tax benefit 8,950
Loss after income tax benefit (18,406)
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201456 57Financial Statements
ANZ
$'000
ASIA
$'000
HEAD OFFICE
$'000
INTERSEGMENT
ELIMINATIONS/
UNALLOCATED
$'000
TOTAL
$'000
CONSOLIDATED – 2013
Revenue
SaaS and Content services 74,365 11,061 – – 85,426
VAS 9,997 7,583 – – 17,580
Total sales revenue 84,362 18,644 – – 103,006
Total revenue 84,362 18,644 – – 103,006
EBITDA 30,190 2,074 (11,143) – 21,121
Depreciation and amortisation (12,040)
Impairment of assets (8,414)
Interest revenue 176
Finance costs (15,007)
Net fair value movement on put/call option 548
Loss before income tax benefit (13,616)
Income tax benefit 2,137
Loss after income tax benefit (11,479)
NOTE 4. REVENUE
CONSOLIDATED
2014
$'000
2013
$'000
Rendering of services 110,562 103,006
NOTE 5. OTHER INCOME
CONSOLIDATED
2014
$'000
2013
$'000
Government grants 40 246
Interest income 186 176
Other income 226 422
NOTE 6. EXPENSES
CONSOLIDATED
2014
$'000
2013
$'000
Loss before income tax includes the following specific expenses:
Depreciation
Leasehold improvements 250 207
Furniture and fittings 113 80
Office equipment 136 172
Computer equipment 780 1,480
Total depreciation 1,279 1,939
Amortisation
Acquired software 3,051 2,553
Internally generated software 2,506 1,910
Customer relationships and contracts 5,527 5,638
Total amortisation 11,084 10,101
Total depreciation and amortisation 12,363 12,040
Impairment
Goodwill 42 6,635
Customer relationships and contracts 762 1,779
Total impairment 804 8,414
Finance costs
Interest and finance charges paid/payable 5,789 6,429
Interest and finance charges paid/payable to shareholders 6,798 6,332
Unwinding of the discount on put/call option 796 1,413
Loan establishment fee 1,614 833
Finance costs expensed 14,997 15,007
Net foreign exchange loss
Net foreign exchange loss 668 237
Rental expense relating to operating leases
Minimum lease payments 3,709 3,015
Superannuation expense
Defined contribution superannuation expense 2,669 2,829
Other expenses included the following:
IPO transaction costs 9,063 –
Impairment of receivables
Bad and doubtful debt expense 140 78
FINANCIAL STATEMENTS>
NOTE 9. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
CONSOLIDATED
2014
$'000
2013
$'000
Trade receivables 20,809 17,514
Less: Provision for impairment of receivables (232) (120)
20,577 17,394
Other receivables 987 1,216
Security deposits 551 702
22,115 19,312
Impairment of receivables
The ageing of the impaired receivables provided for above are as follows:
CONSOLIDATED
2014
$'000
2013
$'000
0 to 3 months overdue – 3
3 to 6 months overdue 71 39
Over 6 months overdue 161 78
232 120
Movements in the provision for impairment of receivables are as follows:
CONSOLIDATED
2014
$'000
2013
$'000
Opening balance 120 103
Additional provisions recognised 140 17
Unused amounts reversed (28) –
Closing balance 232 120
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $3,888,000 as at 30 June
2014 ($2,365,000 as at 30 June 2013).
The group did not consider a credit risk on the aggregate balances after reviewing credit terms of customers based on
recent collection practices.
The ageing of the past due but not impaired receivables are as follows:
CONSOLIDATED
2014
$'000
2013
$'000
0 to 3 months overdue 3,356 2,029
3 to 6 months overdue 181 303
Over 6 months overdue 351 33
3,888 2,365
iSentia Group Limited > Annual Report 201458 59Financial Statements
NOTE 7. INCOME TAX BENEFIT
CONSOLIDATED
2014
$'000
2013
$'000
Income tax benefit
Current tax 1,368 842
Deferred tax – origination and reversal of temporary differences (10,318) (2,979)
Aggregate income tax benefit (8,950) (2,137)
Deferred tax included in income tax benefit comprises:
Increase in deferred tax assets (note 14) (8,595) (516)
Decrease in deferred tax liabilities (note 23) (1,723) (2,463)
Deferred tax – origination and reversal of temporary differences (10,318) (2,979)
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit (27,356) (13,616)
Tax at the statutory tax rate of 30% (8,207) (4,085)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expenses 4,626 1,698
Tax uplift on IPO (6,306) –
Share of profits – association 119 250
Tax loss not carried forward 769 –
Sundry items 49 –
Income tax benefit (8,950) (2,137)
CONSOLIDATED
2014
$'000
2013
$'000
Amounts charged/(credited) directly to equity
Deferred tax assets (note 14) (1,334) 296
NOTE 8. CURRENT ASSETS – CASH AND CASH EQUIVALENTS
CONSOLIDATED
2014
$'000
2013
$'000
Cash on hand 49 24
Cash at bank 5,052 5,728
5,101 5,752
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201460 61Financial Statements
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
LEASEHOLD
IMPROVEMENTS
$'000
FURNITURE
AND FITTINGS
$'000
OFFICE
EQUIPMENT
$'000
COMPUTER
EQUIPMENT
$'000
TOTAL
$'000
CONSOLIDATED
Balance at 1 July 2012 690 606 415 1,581 3,292
Additions 199 101 76 466 842
Additions through business
combinations (note 37) – – – 13 13
Exchange differences (63) (23) (6) 598 506
Depreciation expense (207) (80) (172) (1,480) (1,939)
Balance at 30 June 2013 619 604 313 1,178 2,714
Additions 256 48 24 826 1,154
Disposals (7) (4) (3) (98) (112)
Exchange differences 8 (2) (1) (6) (1)
Write off of assets – (1) – (2) (3)
Depreciation expense (250) (113) (136) (780) (1,279)
Balance at 30 June 2014 626 532 197 1,118 2,473
Property, plant and equipment secured under finance leases
Refer to note 34 for further information on property, plant and equipment secured under finance leases.
NOTE 13. NON-CURRENT ASSETS – INTANGIBLES
CONSOLIDATED
2014
$'000
2013
$'000
Goodwill – at cost 71,341 72,142
Less: Accumulated impairment (6,660) (6,635)
64,681 65,507
Customer relationships and contracts – at cost 69,630 59,797
Less: Accumulated amortisation (28,355) (22,584)
Less: Accumulated impairment (1,779) (1,779)
39,496 35,434
Software and capitalised development – at cost 28,649 26,189
Less: Accumulated amortisation (16,537) (11,264)
12,112 14,925
Brands – at cost 18,292 18,311
134,581 134,177
NOTE 10. CURRENT ASSETS – OTHER
CONSOLIDATED
2014
$'000
2013
$'000
Prepayments 1,230 793
NOTE 11. NON-CURRENT ASSETS – RECEIVABLES
CONSOLIDATED
2014
$'000
2013
$'000
Receivable from shareholders – 1,295
The group maintains shareholder loan accounts, which can fluctuate throughout the year. There are fixed terms of
repayment on their amounts, which attract interest at commercial rates. The receivable is neither past due nor impaired.
NOTE 12. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
2014
$'000
2013
$'000
Leasehold improvements – at cost 3,562 3,179
Less: Accumulated depreciation (2,936) (2,560)
626 619
Furniture and fittings – at cost 1,922 1,932
Less: Accumulated depreciation (1,390) (1,328)
532 604
Office equipment – at cost 2,141 2,171
Less: Accumulated depreciation (1,944) (1,858)
197 313
Computer equipment – at cost 11,088 10,809
Less: Accumulated depreciation (9,970) (9,631)
1,118 1,178
2,473 2,714
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201462 63Financial Statements
The following key assumptions were used in the discounted cash flow model for the different region/division:
Weighted average cost of capital
Australia % (2013: %)
New Zealand % (2013: %)
South East Asia % (2013: %)
Greater China % (2013: %)
Brandtology % (2013: %)
For the financial year ended 30 June 2014, the recoverable amount of net assets of the group is greater than the carrying
value of the assets and therefore, the intangible assets are not considered to be impaired.
Sensitivity
For Australia, New Zealand, South East Asia and Brandtology, any change of the key assumptions on which the recoverable
amount is based would not cause the cash generating unit’s carrying amount to exceed its recoverable amount.
NOTE 14. NON-CURRENT ASSETS – DEFERRED TAX
CONSOLIDATED
2014
$'000
2013
$'000
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses 414 1,201
Impairment of receivables 68 26
Employee benefits 785 689
Provision for lease make good 37 23
Provision for audit fees 136 69
Loan establishment fees – 32
Accrued lease incentives 33 11
Unrealised foreign exchange gain/loss 250 57
Tax uplift on IPO 6,306 –
IPO transaction costs 2,674 –
10,703 2,108
Amounts recognised in equity:
Derivative financial instruments 48 492
IPO transaction costs 1,778 –
1,826 492
Deferred tax asset 12,529 2,600
Movements:
Opening balance 2,600 2,380
Credited to profit or loss (note 7) 8,595 516
Credited/(charged) to equity (note 7) 1,334 (296)
Closing balance 12,529 2,600
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
GOODWILL
$'000
CUSTOMER
RELATIONSHIPS
AND CONTRACTS
$'000
SOFTWARE AND
CAPITALISED
DEVELOPMENT
$'000
BRANDS
$'000
TOTAL
$'000
CONSOLIDATED
Balance at 1 July 2012 68,645 42,539 14,805 17,986 143,975
Additions – – 3,425 227 3,652
Additions through business combinations
(note 37) 1,542 69 1,297 75 2,983
Exchange differences 1,955 243 (139) 23 2,082
Impairment of assets (6,635) (1,779) – – (8,414)
Amortisation expense – (5,638) (4,463) – (10,101)
Balance at 30 June 2013 65,507 35,434 14,925 18,311 134,177
Additions – – 2,815 63 2,878
Additions through asset acquisition – 10,158 – – 10,158
Exchange differences (784) 193 (71) (82) (744)
Impairment of assets (42) (762) – – (804)
Amortisation expense – (5,527) (5,557) – (11,084)
Balance at 30 June 2014 64,681 39,496 12,112 18,292 134,581
Impairment testing
Goodwill acquired through business combinations have been allocated to the following cash-generating units:
CONSOLIDATED
2014
$'000
2013
$'000
Australia 45,400 45,450
New Zealand 3,055 2,922
South East Asia 8,702 9,294
Brandtology 7,524 7,841
64,681 65,507
Brands have been allocated to the following cash-generating units:
Australia $16,327,000 (2013: $16,228,000)
South East Asia $1,119,000 (2013: $1,201,000)
Brandtology $846,000 (2013: $882,000)
The recoverable amount of the group’s goodwill has been determined by a value-in-use calculation using discounted cash
flow model based on a 3 year projection period approved by management and extrapolated for a further 2 years using a
steady rate (Australia 3%, New Zealand 3%, South East Asia 3%, Greater China 3%, Brandtology 8%).
FINANCIAL STATEMENTS>
NOTE 19. CURRENT LIABILITIES – INCOME TAX
CONSOLIDATED
2014
$'000
2013
$'000
Provision for income tax 577 763
NOTE 20. CURRENT LIABILITIES – PROVISIONS
CONSOLIDATED
2014
$'000
2013
$'000
Employee benefits 4,834 3,073
NOTE 21. NON–CURRENT LIABILITIES – BORROWINGS
CONSOLIDATED
2014
$'000
2013
$'000
Bank loans 51,000 57,651
Loans from shareholders – 47,020
Prepaid facility costs (385) (1,587)
50,615 103,084
Refer to note 29 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non–current) are as follows:
CONSOLIDATED
2014
$'000
2013
$'000
Bank loans 51,000 64,752
Lease liability – 43
51,000 64,795
Assets pledged as security
The bank loans are secured by fixed and floating charge over the group's assets. The loan matures on 5 June 2017.
The lease liabilities are effectively secured as the rights to the leased assets, recognised in the statement of financial
position, revert to the lessor in the event of default.
iSentia Group Limited > Annual Report 201464 65Financial Statements
NOTE 15. NON-CURRENT ASSETS – OTHER
CONSOLIDATED
2014
$'000
2013
$'000
Other non-current assets 40 75
NOTE 16. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
CONSOLIDATED
2014
$'000
2013
$'000
Trade payables 2,188 2,485
Amounts received in advance 2,164 1,412
Accrued expenses 8,083 7,812
Other payables – 512
12,435 12,221
Refer to note 29 for further information on financial instruments.
NOTE 17. CURRENT LIABILITIES – BORROWINGS
CONSOLIDATED
2014
$'000
2013
$'000
Bank loans – 7,101
Lease liability – 43
– 7,144
Refer to note 21 for further information on assets pledged as security and financing arrangements.
Refer to note 29 for further information on financial instruments.
NOTE 18. CURRENT LIABILITIES – DERIVATIVE FINANCIAL INSTRUMENTS
CONSOLIDATED
2014
$'000
2013
$'000
Interest rate swap contracts – cash flow hedges 109 868
iBTS Put/call option – 8,777
109 9,645
Refer to note 29 for further information on financial instruments.
Refer to note 30 for further information on fair value measurement.
The put option is over the ordinary shares of the non-controlling interest in iSentia Brandtology Pte Limited ('iBTS')
FINANCIAL STATEMENTS>
NOTE 24. NON–CURRENT LIABILITIES – PROVISIONS
CONSOLIDATED
2014
$'000
2013
$'000
Employee benefits 370 334
Deferred lease incentives 112 37
Lease make good 122 145
Earn–out provision 512 –
1,116 516
Deferred lease incentives
The provision represents operating lease incentives received. The incentives are allocated to profit or loss in such a manner
that the rent expense is recognised on a straight–line basis over the lease term.
Lease make good
The provision represents the present value of the estimated costs to make good the premises leased by the group at the end
of the respective lease terms.
Earn–out provision
The provision represents contingent consideration payable on asset purchase. The provision is estimated initially at fair value
on acquisition. Subsequent changes to fair value is recognised in profit or loss.
DEFERRED
LEASE
INCENTIVES
$'000
LEASE
MAKE GOOD
$'000
EARN–OUT
PROVISION
$'000
CONSOLIDATED – 2014
Carrying amount at the start of the year 37 145 –
Additional provisions recognised 75 – 512
Unused amounts reversed – (23) –
Carrying amount at the end of the year 112 122 512
NOTE 25. EQUITY – ISSUED CAPITAL
CONSOLIDATED
2014
SHARES
2013
SHARES
2014
$'000
2013
$'000
Ordinary shares – fully paid 200,000,001 36,089,124 403,852 37,638
Group reorganisation
When iSentia Group Limited ('iSG') (the legal parent and legal acquirer) acquired iSentia Holdings Pty Limited ('iSH') and its
subsidiaries (the legal subsidiary), the acquisition did not meet the definition of a business combination in accordance with
AASB 3 'Business Combinations'. Instead, the acquisition has been treated as a group reorganisation.
iSentia Group Limited > Annual Report 201466 67Financial Statements
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
CONSOLIDATED
2014
$'000
2013
$'000
Total facilities
Bank loans 65,000 65,052
Used at the reporting date
Bank loans 51,000 64,752
Unused at the reporting date
Bank loans 14,000 300
Of the $14,000,000 (2013: $300,000) remaining facility, $316,000 (2013: $203,000) has been used for a bank guarantee.
NOTE 22. NON–CURRENT LIABILITIES – DERIVATIVE FINANCIAL INSTRUMENTS
CONSOLIDATED
2014
$'000
2013
$'000
Interest rate swap contracts – cash flow hedges 50 771
iGSB put/call option – 2,338
50 3,109
Refer to note 29 for further information on financial instruments.
Refer to note 30 for further information on fair value measurement.
The put options are over the ordinary shares of the non–controlling interest in iSentia Group Sdn. Bhd. ('iGSB').
NOTE 23. NON–CURRENT LIABILITIES – DEFERRED TAX
CONSOLIDATED
2014
$'000
2013
$'000
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Property, plant and equipment 27 31
Business acquisition 9,198 10,917
Deferred tax liability 9,225 10,948
Movements:
Opening balance 10,948 13,411
Charged to profit or loss (note 7) (1,723) (2,463)
Closing balance 9,225 10,948
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201468 69Financial Statements
NOTE 26. EQUITY – RESERVES
CONSOLIDATED
2014
$'000
2013
$'000
Foreign currency reserve 2,937 3,948
Hedging reserve – cash flow hedges (111) (1,148)
Capital reserve (258,229) (1,182)
Share buy–back reserve – (746)
(255,403) 872
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Hedging reserve – cash flow hedges
The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to
be an effective hedge.
Capital reserve
The reserve is used to recognise contributions from or to iSentia Group Limited and its controlled subsidiaries by
shareholders and to recognise the acquisition of non–controlling interest.
Share buy–back reserve
The reserve is used to recognise the difference between the price paid and nominal value of shares acquired.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
FOREIGN
CURRENCY
$'000
HEDGING
$'000
CAPITAL
$'000
SHARE
BUY–BACK
$'000
TOTAL
$'000
CONSOLIDATED
Balance at 1 July 2012 (824) (1,838) – (203) (2,865)
Foreign currency translation 4,772 – – – 4,772
Net change in fair value of cash flow hedges – 690 – – 690
Transactions with non–controlling interest – – (1,182) – (1,182)
Share buy–back – – – (543) (543)
Balance at 30 June 2013 3,948 (1,148) (1,182) (746) 872
Foreign currency translation (1,011) – – – (1,011)
Net change in fair value of cash flow hedges – 1,037 – – 1,037
Share buy–back – – – 746 746
Group reorganisation – – (257,047) – (257,047)
Balance at 30 June 2014 2,937 (111) (258,229) – (255,403)
Movements in ordinary share capital
DETAILS DATE SHARES $'000
Balance 1 July 2012 36,179,324 37,320
Issue of shares in iSH 307,740 769
Buy–back in iSH (397,940) (451)
Balance 30 June 2013 36,089,124 37,638
Buyback of shares in iSH 9 December 2013 (44,014) (125)
Share split on corporate reorganisation 5 June 2014 45,406,631 –
Return of capital 5 June 2014 (20,887,954) (170,263)
Adjustment to issued capital on corporate reorganisation – 256,301
Issuance of shares in iSG at $ per share 5 June 2014 139,436,214 284,450
Share issue transaction costs, net of tax 5 June 2014 – (4,149)
Balance 30 June 2014 200,000,001 403,852
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
company does not have a limited amount of authorised capital.
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.
Share buy–back
There were no on–market buy–back of iSentia Group Limited shares.
Capital risk management
The group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the
cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current company's share price at the time of the investment. The group is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk
management decisions. There have been no events of default on the financing arrangements during the financial year.
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201470 71Financial Statements
The carrying amount of the group's foreign currency denominated financial assets and financial liabilities at the reporting
date was as follows:
ASSETS LIABILITIES
2014
$'000
2013
$'000
2014
$'000
2013
$'000
CONSOLIDATED
US dollars 929 556 14 32
Singapore dollars 259 297 89 26
Malaysian ringgit 34 17 252 156
Others 291 360 36 24
1,513 1,230 391 238
The group had net assets denominated in foreign currencies of $1,122,000 (assets $1,513,000 less liabilities $391,000) as at
30 June 2014 (2013: $992,000 (assets $1,230,000 less liabilities $238,000). Based on this exposure, had the Australian dollar
weakened by 10%/strengthened by 10% (2013: weakened by 10%/strengthened by 10%) against these foreign currencies
with all other variables held constant, the group's profit before tax for the year and equity would have been $112,000
higher/$112,000 lower (2013: $99,000 lower/$ 99,000 higher). The percentage change is the expected overall volatility of the
significant currencies, which is based on management’s assessment of reasonable possible fluctuations taking into
consideration movements over the last six months each year and the spot rate at each reporting date. The actual foreign
exchange loss for the year ended 30 June 2014 was $668,000 (2013: loss of $237,000).
Price risk
The group is not exposed to any significant price risk.
Interest rate risk
The group's main interest rate risk arises from long–term borrowings. Borrowings issued at variable rates expose the group
to interest rate risk. Borrowings issued at fixed rates expose the group to fair value interest rate risk. The policy is to maintain
approximately 75% of borrowings at fixed rate using interest rate swaps to achieve this when necessary.
As at the reporting date, the group had the following variable rate cash balances, borrowings and interest rate swap contracts:
2014 2013
WEIGHTED
AVERAGE
INTEREST
RATE
%
BORROWINGS
$'000
WEIGHTED
AVERAGE
INTEREST
RATE
%
BORROWINGS
$'000
CONSOLIDATED
Bank loans % 51,000 % 64,752
Loans from shareholders –% – % 47,020
Interest rate swaps contracts % 159 % 1,639
Net exposure to cash flow interest rate risk 51,159 113,411
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
An official increase/decrease in interest rates of 50 (2013: 50 basis points point would have an adverse/favourable effect on
profit before tax of $256,000 (2013: $567,000) per annum based on the net balance.
NOTE 27. EQUITY – ACCUMULATED LOSSES
CONSOLIDATED
2014
$'000
2013
$'000
Accumulated losses at the beginning of the financial year (22,295) (10,816)
Loss after income tax benefit for the year (18,406) (11,479)
Dividends paid (note 28) (8,640) –
Accumulated losses at the end of the financial year (49,341) (22,295)
NOTE 28. EQUITY – DIVIDENDS
Dividends
There were no dividends paid, recommended or declared during the current financial year to ordinary shareholders of
iSentia Group Limited.
On 7 March 2014, an interim dividend of $8,640,375 was paid to the then shareholders of iSentia Holdings Pty Limited, as
noted in the IPO Prospectus.
Franking credits
CONSOLIDATED
2014
$'000
2013
$'000
Franking credits available for subsequent financial years based on a tax rate of 30% – 3,703
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
> franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
> franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
> franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
NOTE 29. FINANCIAL INSTRUMENTS
Financial risk management objectives
The group's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate
risk), credit risk and liquidity risk. The group's overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the group. The group uses
derivative financial instruments such as interest rate contracts to hedge certain risk exposures. Derivatives are exclusively
used for hedging purposes, . not as trading or other speculative instruments. The group uses different methods to
measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate
and foreign exchange risks and ageing analysis for credit risk.
Market risk
Foreign currency risk
The group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through
foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201472 73Financial Statements
WEIGHTED
AVERAGE
INTEREST
RATE
%
1 YEAR OR
LESS
$'000
BETWEEN 1
AND 2 YEARS
$'000
BETWEEN 2
AND 5 YEARS
$'000
OVER 5 YEARS
$'000
REMAINING
CONTRACTUAL
MATURITIES
$'000
CONSOLIDATED – 2013
Non–derivatives
Non–interest bearing
Trade payables –% 2,485 – – – 2,485
Other payables –% 512 – – – 512
Put/call option ('iBTS') –% 8,777 – – – 8,777
Put/call option ('iGSB') –% – 2,338 – – 2,338
Earn–out provision
(BuzzNumbers) –% 437 – – – 437
Interest–bearing – variable
Bank loans % 11,391 61,566 – – 72,957
Other loans – shareholders % 7,053 7,053 61,127 – 75,233
Interest–bearing – fixed rate
Lease liability –% 43 – – – 43
Total non–derivatives 30,698 70,957 61,127 – 162,782
Derivatives
Interest rate swaps net settled % 868 771 – – 1,639
Total derivatives 868 771 – – 1,639
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
NOTE 30. FAIR VALUE MEASUREMENT
Fair value hierarchy
The following tables detail the group's assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly
Level 3: Unobservable inputs for the asset or liability
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
group. The group has a strict code of credit, including obtaining agency credit information, confirming references and setting
appropriate credit limits. The group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to
credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of
those assets, as disclosed in the statement of financial position and notes to the financial statements. The group does not
hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the group to maintain sufficient liquid assets (mainly cash and cash equivalents)
and available borrowing facilities to be able to pay debts as and when they become due and payable.
The group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
CONSOLIDATED
2014
$'000
2013
$'000
Bank loans 14,000 300
Remaining contractual maturities
The following tables detail the group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
WEIGHTED
AVERAGE
INTEREST
RATE
%
1 YEAR OR
LESS
$'000
BETWEEN 1
AND 2 YEARS
$'000
BETWEEN 2
AND 5 YEARS
$'000
OVER 5 YEARS
$'000
REMAINING
CONTRACTUAL
MATURITIES
$'000
CONSOLIDATED – 2014
Non–derivatives
Non–interest bearing
Trade payables –% 2,188 – – – 2,188
Earn–out provision –% 111 168 233 – 512
Interest–bearing – variable
Bank loans % 2,379 2,379 53,182 – 57,940
Total non–derivatives 4,678 2,547 53,415 – 60,640
Derivatives
Interest rate swaps
net settled % 109 50 – – 159
Total derivatives 109 50 – – 159
FINANCIAL STATEMENTS>
iSentia Group Limited > Annual Report 201474 75Financial Statements
LEVEL 1
$'000
LEVEL 2
$'000
LEVEL 3
$'000
TOTAL
$'000
CONSOLIDATED – 2014
Liabilities
Interest rate swap contracts – cash flow hedges – 159 – 159
Earn–out provision – – 512 512
Total liabilities – 159 512 671
LEVEL 1
$'000
LEVEL 2
$'000
LEVEL 3
$'000
TOTAL
$'000
CONSOLIDATED – 2013
Liabilities
Interest rate swap contracts – cash flow hedges – 1,639 – 1,639
Put/call option ('iBTS') – – 8,777 8,777
Put/call option ('iGSB') – – 2,338 2,338
Earn–out provision (BuzzNumbers) – – 437 437
Total liabilities – 1,639 11,552 13,191
There were no transfers between levels during the financial year.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Put/call options were valued at each reporting date based on the likely settlement amount, discounted to present value.
Interest rate swap contracts have been valued at each reporting date using quoted market rates. This valuation technique
maximises the use of observable market data where it is available and relies as little as possible on entity specific estimates.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
PUT/CALL
OPTIONS
$'000
TOTAL
$'000
CONSOLIDATED
Balance at 1 July 2012 (9,082) (9,082)
Net fair value movement on put/call option 548 548
Interest unwind and foreign exchange adjustments (2,581) (2,581)
Earn–out provision recognised (BuzzNumbers) (437) (437)
Balance at 30 June 2013 (11,552) (11,552)
Net fair value movement on put/call option (17,830) (17,830)
Interest unwind and foreign exchange adjustments (1,048) (1,048)
Settlement of put/call options 29,993 29,993
Earn–out provision recognised (Two Social) (512) (512)
Earn–out provision (BuzzNumbers) payout 437 437
Balance at 30 June 2014 (512) (512)
The Two Social earn out amount is calculated based on % of the relevant revenue delivered from Two Social clients for
each earn out year.
NOTE 31. KEY MANAGEMENT PERSONNEL DISCLOSURES
Compensation
The aggregate compensation made to directors and other members of key management personnel of the group is set out below:
CONSOLIDATED
2014
$
2013
$
Short–term employee benefits 2,561,988 1,538,207
Post–employment benefits 111,834 83,850
Long–term benefits 33,446 24,045
2,707,268 1,646,102
NOTE 32. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu,
the auditor of the company, its network firms and unrelated firms:
CONSOLIDATED
2014
$
2013
$
Audit services – Deloitte Touche Tohmatsu
Audit or review of the financial statements 233,625 125,950
Other services – Deloitte Touche Tohmatsu
Tax services 168,000 108,150
401,625 234,100
Audit services – Deloitte International Associates – Services provided to International Subsidiaries
Audit or review of the financial statements 130,881 94,315
Other services – Deloitte International Associates
Tax Services 26,024 13,285
156,905 107,600
Audit services – unrelated firms
Audit or review of the financial statements 41,246 39,783
Other services – unrelated firms
Tax compliance services 12,948 8,723
54,194 48,506
Unrelated firms are for audit firms not related to Deloitte Touche Tohmatsu.
In addition to the above, $1,514,000 investigating accountants’ report and review of forecast for Initial Public Offering was
paid to Deloitte Touche Tohmatsu
FINANCIAL STATEMENTS>
Transactions with related parties
The following transactions occurred with related parties:
CONSOLIDATED
2014
$
2013
$
Other income:
Interest received on shareholders loan 80,787 83,070
Payment for other expenses:
Interest paid to shareholders on loan 6,797,748 6,332,454
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
CONSOLIDATED
2014
$
2013
$
Current receivables:
Loan to management shareholders – 1,294,984
Current borrowings:
Loan from shareholders – 47,019,984
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
NOTE 36. PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
CONSOLIDATED
2014
$'000
2013
$'000
Loss after income tax (9,086) –
Total comprehensive income (9,086) –
iSentia Group Limited > Annual Report 201476 77Financial Statements
NOTE 33. CONTINGENT LIABILITIES
CONSOLIDATED
2014
$'000
2013
$'000
Bank guarantees 316 202
NOTE 34. COMMITMENTS
CONSOLIDATED
2014
$'000
2013
$'000
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year 3,795 3,109
One to five years 7,225 7,535
More than five years 79 –
11,099 10,644
Lease commitments – finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year – 43
Total commitment – 43
Less: Future finance charges – –
Net commitment recognised as liabilities – 43
Representing:
Lease liability – current (note 17) – 43
Operating lease commitments includes contracted amounts for office accommodation and office equipment under
non-cancellable operating leases expiring within one to six years with, in some cases, options to extend. Contractual
escalation clauses have been factored into the commitments disclosed above. On renewal, the terms of the leases
are renegotiated.
NOTE 35. RELATED PARTY TRANSACTIONS
Parent entity
iSentia Group Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 38.
Key management personnel
Disclosures relating to key management personnel are set out in note 31 and the remuneration report in the directors' report.
FINANCIAL STATEMENTS>
Details of the acquisition are as follows:
FAIR VALUE
$'000
Cash and cash equivalents 87
Trade and other receivables 708
Plant and equipment 13
Intangibles 1,441
Trade payables (94)
Other payables (444)
Deferred tax liability (21)
Employee benefits (19)
Net assets acquired 1,671
Goodwill 1,542
Acquisition-date fair value of the total consideration transferred 3,213
Representing:
Cash paid or payable to vendor 2,775
Accrued earn-out 438
3,213
CONSOLIDATED
2014
$'000
2013
$'000
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred – 3,213
Less: cash and cash equivalents – (87)
Less: accrued earn-out – (438)
Net cash used – 2,688
iSentia Group Limited > Annual Report 201478 79Financial Statements
Statement of financial position
PARENT
2014
$
2013
$
Total current assets – –
Total assets 394,858 –
Total current liabilities 92 –
Total liabilities 92 –
Equity
Issued capital 403,852 –
Accumulated losses (9,086) –
Total equity 394,766 –
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2014.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2014.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment at as 30 June 2014.
Accounting period
The parent entity was incorporated on 14 January 2014 and the results are therefore for the period from incorporation to
30 June 2014.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the group, as disclosed in note 1, except for
the following:
> Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
> Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
NOTE 37. BUSINESS COMBINATIONS
Buzz Numbers Pty Limited (comparative period)
On 23 August 2012, the group acquired 100% of the ordinary shares of BuzzNumbers Pty Limited for the total consideration
transferred of $3,213,000. This is a social media intelligence partner, that provides industry leading monitoring, reporting,
coaching and insights; empowering clients to use social media in delivering key business goals. The goodwill of $1,542,000
represents the expected synergies from merging this business with the group. The acquired business contributed revenues
of $2,048,000 and loss of $144,000 to the group for the period from 23 August 2012 to 30 June 2013.
FINANCIAL STATEMENTS>
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial
statements and directors' report under Class Order 98/1418 (as amended) issued by the Australian Securities and
Investments Commission ('ASIC').
The above companies represent a 'Closed Group' for the purposes of the Class Order, and as there are no other parties to
the Deed of Cross Guarantee that are controlled by iSentia Group Limited, they also represent the 'Extended Closed Group'.
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial
position of the 'Closed Group'.
2014
$'000
2013
$'000
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Revenue 82,785 77,688
Copyright, consumables and other direct purchases (24,287) (26,843)
Depreciation and amortisation expense (11,354) (9,177)
Employee benefits expense (31,023) (30,601)
Advertising costs (601) (816)
Legal costs (23) (92)
Occupancy costs (2,048) (1,736)
Travel expenses (610) (619)
Net fair value movement on put/call option (17,830) –
Other expenses (11,558) 1,839
Finance costs (14,990) (14,672)
Loss before income tax benefit (31,539) (5,029)
Income tax benefit 10,315 1,545
Loss after income tax benefit (21,224) (3,484)
Other comprehensive income
Net change in fair value of cash flow hedges taken to equity, net of tax 1,037 690
Exchange differences on translating foreign operations, net of tax 619 –
Other comprehensive income for the year, net of tax 1,656 690
Total comprehensive income for the year (19,568) (2,794)
2014
$'000
2013
$'000
EQUITY – RETAINED PROFITS
Accumulated losses at the beginning of the financial year (18,134) (14,650)
Loss after income tax benefit (21,224) (3,484)
Dividends paid (8,640) –
Accumulated losses at the end of the financial year (47,998) (18,134)
iSentia Group Limited > Annual Report 201480 81Financial Statements
NOTE 38. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1:
OWNERSHIP INTEREST
NAME PRINCIPAL PLACE OF BUSINESS /
COUNTRY OF INCORPORATION
2014
%
2013
%
iSentia Holdings Pty Limited Australia % %
iSentia Finance Pty Limited Australia % %
iSentia Pty Limited Australia % %
Slice Media Pty Limited Australia % %
Media Monitors Pty Limited Australia % %
BuzzNumbers Pty Limited Australia % %
iSentia Limited New Zealand % %
Slice Media Limited New Zealand % %
Mediapeople Limited New Zealand % %
iSentia Pte Limited Singapore % %
iSentia Operations Sdn. Bhd. Malaysia % %
iSentia Group Sdn. Bhd. Malaysia % %
iSentia Library Group Sdn. Bhd. Malaysia % %
iSentia (M) Sdn. Bhd. Malaysia % %
iSentia (Johor Bahru) Sdn. Bhd. Malaysia % %
PT iSentia Jakarta Indonesia % %
iSentia Vietnam Co. Investment Vietnam % %
iSentia Manila Inc. Philippine % %
iSentia Monitoring Services (Thailand) Ltd Thailand % %
iSentia Brandtology Pte Limited * Singapore % %
Brandtology Sdn. Bhd. (Malaysia) Company * Malaysia % %
Brandtology, Inc. * USA % %
Brandtology Co., Ltd * China % %
Brandtology Pty Ltd Australia % %
iSentia Limited * Hong Kong % %
Beijing iSentia Information Consulting Co., Limited ** China % %
*With put and call options in place for these entities, the group’s policy is to include 100% of the earnings and statement of
financial position items into the group’s statement of profit or loss and other comprehensive income and the statement of
financial position
**previously known as Beijing Sinofile Information Consulting Co., Ltd
NOTE 39. DEED OF CROSS GUARANTEE
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others:
iSentia Group Limited
iSentia Holdings Pty Limited
iSentia Finance Pty Limited
iSentia Pty Limited
FINANCIAL STATEMENTS>
NOTE 40. EVENTS AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 30 June 2014 that has significantly affected, or may significantly affect the
group's operations, the results of those operations, or the group's state of affairs in future financial years.
NOTE 41. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FROM OPERATING ACTIVITIES
CONSOLIDATED
2014
$'000
2013
$'000
Loss after income tax benefit for the year (18,406) (11,479)
Adjustments for:
Depreciation and amortisation 12,363 12,040
Impairment of intangibles 804 8,414
Write off of property, plant and equipment 38 -
Foreign exchange differences (308) 298
Finance costs – non-cash 2,410 8,578
Net fair value movement on put/call option included under 'investing activities' 17,830 839
IPO transaction cost included under 'financing activities' 9,063 –
Other expenses – non–cash 277 –
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables (2,954) 85
Increase in deferred tax assets (8,595) (220)
Increase in prepayments (437) (39)
Decrease in other operating assets 35 27
Increase in trade and other payables 768 500
Increase/(decrease) in derivative liabilities 1 (532)
Increase/(decrease) in provision for income tax (186) 264
Decrease in deferred tax liabilities (1,723) (2,484)
Increase in employee benefits 1,761 38
Net cash from operating activities 12,741 16,329
iSentia Group Limited > Annual Report 201482 83Financial Statements
FINANCIAL STATEMENTS>
2014
$'000
2013
$'000
STATEMENT OF FINANCIAL POSITION
Current assets
Cash and cash equivalents 2,479 2,875
Trade and other receivables 14,842 11,868
Income tax refund due 4 –
Other 819 454
18,144 15,197
Non-current assets
Receivables 14,492 9,121
Investment in subsidiaries 30,095 30,095
Property, plant and equipment 965 985
Intangibles 105,700 103,686
Deferred tax 12,516 1,301
Other 40 40
163,808 145,228
Total assets 181,952 160,425
Current liabilities
Trade and other payables 11,044 8,150
Derivative financial instruments 109 868
Income tax – 143
Provisions 2,253 1,937
13,406 11,098
Non-current liabilities
Borrowings 50,615 118,962
Derivative financial instruments 50 771
Deferred tax 7,806 11,314
Provisions 1,115 516
59,586 131,563
Total liabilities 72,992 142,661
Net assets 108,960 17,764
Equity
Issued capital 403,852 37,638
Reserves (246,894) (1,740)
Accumulated losses (47,998) (18,134)
Total equity 108,960 17,764
In the directors' opinion:
> the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
> the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board as described in note 1 to the financial statements;
> the attached financial statements and notes thereto give a true and fair view of the group's financial position as at
30 June 2014 and of its performance for the financial year ended on that date;
> there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable; and
> at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in note 39 to the financial statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Doug Flynn
Chairman
29 August 2014
Sydney
iSentia Group Limited > Annual Report 201484 85Director's Declaration
NOTE 42. EARNINGS PER SHARE
CONSOLIDATED
2014
$'000
2013
$'000
Loss after income tax attributable to the owners of iSentia Group Limited (18,406) (11,479)
NUMBER NUMBER
Weighted average number of ordinary shares used in calculating basic earnings per share 148,090,996 144,056,730
Weighted average number of ordinary shares used in calculating diluted earnings per share 148,090,996 144,056,730
CENTS CENTS
Basic earnings per share () ()
Diluted earnings per share () ()
965,743 options over ordinary shares have been excluded from the above calculations as they were anti-dilutive.
NOTE 43. SHARE-BASED PAYMENTS
In May 2014, the group adopted a long term incentive plan ('LTIP') which provides eligible employees with an additional
incentive to work to improve the performance of the group acquiring options or rights as part of the remuneration for
their services.
On 16 June 2014, 965,743 options were granted to key management personnel at an issue price of $ per option and a
total transactional value of $530,000.
Set out below are summaries of options granted under the plan:
2014
GRANT DATE EXPIRY DATE
EXERCISE
PRICE
BALANCE AT
THE START OF
THE YEAR GRANTED EXERCISED
EXPIRED/
FORFEITED/
OTHER
BALANCE AT
THE END OF
THE YEAR
16/06/2014 30/06/2018 $ – 965,743 – – 965,743
965,743 – – 965,743
The weighted average remaining contractual life of options outstanding at the end of the financial year was four years.
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
GRANT DATE EXPIRY DATE
SHARE PRICE
AT GRANT DATE
EXERCISE
PRICE
EXPECTED
VOLATILITY
DIVIDEND
YIELD
RISK-FREE
INTEREST RATE
FAIR VALUE
AT GRANT
DATE
16/06/2014 30/06/2018 $ $ % % % $
FINANCIAL STATEMENTS> > DIRECTORS' DECLARATION
87Independent Auditor's ReportiSentia Group Limited > Annual Report 201486
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX: 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7021
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ISENTIA GROUP LIMITED
Report on the Financial Report
We have audited the accompanying financial report of iSentia Group Limited (the "Company"), which comprises the
statement of financial position as at 30 June 2014, the statement of profit or loss and other comprehensive income, the
statement of cash flows and the statement of changes in equity for the year ended on that date, notes comprising a
summary of significant accounting policies and other explanatory information, and the director's declaration of the
consolidated entity, comprising the company and the entities it controlled at the year's end or from time to time during the
financial year as set out on pages 31 to 80.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to
audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control, relevant to the company's preparation of the financial report that gives a true and fair view, in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Auditor's Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm
that the independence declaration required by the Corporations Act 2001, which has been given to the directors of iSentia
Group Limited, would be in the same terms if given to the directors as at the time of this auditor's report.
Opinion
In our opinion:
(a) the financial report of iSentia Group Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity's financial position as at 30 June 2014 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial statements also comply with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 18 of the directors' report for the year ended 30 June 2014.
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 responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of iSentia Group Limited for the year ended 30 June 2014, complies with section
300A of the Corporations Act 2001.
Yours sincerely
Deloitte Touche Tohmatsu
Sandeep Chadha
Partner
Chartered Accountants
Sydney, 29 August 2014
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu
Unquoted equity securities
NUMBER
ON ISSUE
NUMBER
OF HOLDERS
Options over ordinary shares issued 965,743 2
Substantial holders
Substantial holders in the company are set out below:
ORDINARY SHARES
NUMBER HELD
% OF TOTAL
SHARES
ISSUED
QUADRANT PRIVATE EQUITY MANAGEMENT . PTY LIMITED ACN 122 978 376 49,790,458
COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 10,640,104
NATIONAL AUSTRALIA BANK LIMITED ACN 004 044 937 13,950,374
PERPETUAL LIMITED ACN 000 431 827 12,490,177
Securities subject to voluntary escrow
CLASS EXPIRY DATE
% OF TOTAL
SHARES
ISSUED
Ordinary shares Escrow arrangements prevent Quadrant Funds from disposing these shares until the company’s
results for FY2015 are released to ASX. However, Quadrant is permitted to dispose up to 25% of
these shares (12,447,614 shares) in one or more transactions if both the following are satisfied: (1)
10 days after the company has released its December 2014 half year accounts to the ASX; and (2)
VWAP on each trading day in 20 consecutive trading days since listing is at least 20% higher than
the offer price of $.
49,790,457
Ordinary shares The Escrow deeds prevent Mr Croll and Mr Shah (and their associated entities) from disposing
these shares until the company’s results for FY2015 are released to ASX.
4,413,596
Ordinary shares The Escrow deeds prevent Mr Croll and Mr Shah (and their associated entities) from disposing
these shares until the company’s results for FY2016 are released to ASX.
4,413,597
58,617,650
iSentia Group Limited > Annual Report 201488 89Shareholder Information
The shareholder information set out below was applicable as at 15 August 2014.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
CONSOLIDATED
NUMBER OF
HOLDERS
OF ORDINARY
SHARES
NUMBER OF
HOLDERS
OF OPTIONS
OVER
ORDINARY
SHARES
1 to 1,000 53 –
1,001 to 5,000 136 –
5,001 to 10,000 105 –
10,001 to 100,000 153 –
100,001 and over 35 2
482 2
Holding less than a marketable parcel 7 –
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
ORDINARY SHARES
NUMBER HELD % OF TOTAL
SHARES
ISSUED
QUADRANT PRIVATE EQUITY FUND NO. 2, LP 43,189,826
J P MORGAN NOMINEES AUSTRALIA LIMITED 29,514,331
NATIONAL NOMINEES LIMITED 25,243,229
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 16,887,457
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED 13,632,409
CITICORP NOMINEES PTY LIMITED 13,267,392
BNP PARIBAS NOMS PTY LTD 7,805,169
JOHN CROLL 7,791,658
QPE CO-INVESTMENT LIMITED AS TRUSTEE FOR THE QUAY MM CO-INVESTMENT TRUST 6,600,631
BNP PARIBAS NOMS (NZ) LTD 5,688,512
UBS NOMINEES PTY LTD 4,205,595
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED 4,095,129
SMALLCO INVESTMENT MANAGER LTD 3,902,500
BRISPOT NOMINEES PTY LTD 1,974,928
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD 1,447,771
CITICORP NOMINEES PTY LIMITED 1,279,543
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD 1,148,046
NIRAV AND ANJALI PTY LIMITED AS TRUSTEE FOR THE NIRAV AND ANJALI TRUST 821,137
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 763,038
BNP PARIBAS NOMINEES PTY LTD 547,200
189,805,501
SHAREHOLDER INFORMATION>
iSENTIA OFFICE LOCATIONS & GLOBAL REACH> > CORPORATE DIRECTORY
iSentia Group Limited > Annual Report 201490 91Corporate Directory
DIRECTORS
Doug Flynn
Chairman and Independent Non-Executive Director
John Croll
Chief Executive Officer and Executive Director
Pat O'Sullivan
Independent Non-Executive Director
Fiona Pak-Poy
Independent Non-Executive Director
Dr Geoff Raby
Independent Non-Executive Director
COMPANY SECRETARY
Nimesh Shah
CFO and Company Secretary
NOTICE OF ANNUAL GENERAL MEETING
The details of the annual general meeting of
iSentia Group Limited are:
Isaac Nichols Auditorium
219-241 Cleveland Street
Strawberry Hills NSW 2012
11:00am on Thursday 20 November 2014
REGISTERED OFFICE
Level 3
219-241 Cleveland Street
Strawberry Hills, NSW 2012
Head office telephone: +61 2 9318 4036
SHARE REGISTER
Link Market Services Limited
Level 12
680 George Street
Sydney, NSW, 2000
Share registry telephone: 1300 554 474
AUDITOR
Deloitte Touche Tohmatsu
Level 9, Grosvenor Place
225 George Street
Sydney, NSW 2000
SOLICITORS
Minter Ellison
Aurora Place
88 Phillip Street
Sydney, NSW 2000
BANKERS
Westpac Banking Corporation
Westpac Place, 275 Kent Street,
Sydney, NSW 2000
STOCK EXCHANGE LISTING
iSentia Group Limited shares are listed on the Australian
Securities Exchange (ASX code: ISD)
WEBSITE
OFFICES
1 BEIJING
2 SHANGHAI
3 CHONGQING
4 HONG KONG
5 MANILA
6 HO CHI MINH CITY
7 BANGKOK
8 KUALA LUMPUR
9 SINGAPORE
10 JAKARTA
11 BRISBANE
12 SYDNEY
13 CANBERRA
14 MELBOURNE
15 ADELAIDE
16 PERTH
17 AUCKLAND
18 WELLINGTON
iSentia Group Limited > Annual Report 201492 93
GENERAL INFORMATION
The financial statements cover iSentia Group
Limited as a group consisting of iSentia
Group Limited and its subsidiaries. The
financial statements are presented in
Australian dollars, which is iSentia Group
Limited's functional and presentation
currency.
iSentia Group Limited is a listed public
company limited by shares, incorporated and
domiciled in Australia. Its registered office
and principal place of business is:
Level 3
219-241 Cleveland Street
Strawberry Hills NSW 2012
A description of the nature of the group's
operations and its principal activities are
included in the directors' report, which is not
part of the financial statements.
The financial statements were authorised for
issue, in accordance with a resolution of
directors, on 29 August 2014.
iSentia Holdings Pty Limited Level 3, 219-241 Cleveland St, Strawberry Hills NSW Australia 2012
2014
ANNUAL
REPORT
