Costs outpace revenue growth as Veda gears up for new opportunities

Veda Group chief executive Nerida Caesar has assured investors that a sharp rise in expenses was due to investments in business opportunities and would not be ongoing.

Veda reported a net profit A$38.1 million for the six months to December, compared with a loss of $12.5 million in the previous corresponding period.

After adjusting for more than $20 million of expenses associated with the company's initial public offering at the end of 2013 and fees associated with refinancing the company, net profit for the December half was up 12.7 per cent on the pro forma result for the previous corresponding period.

The result was based on an 11 per cent increase in revenue, which rose from $146.8 million in the December half in 2013 to $163 million in the latest half.

Caesar said all the company's business units contributed to growth.

Consumer risk and identity, which includes the consumer credit bureau, fraud detection and identity validation services and credit scoring, increased revenue by 8.7 per cent over the previous corresponding period to $52.6 million.

Commercial risk and information services, which includes the commercial credit bureau, credit monitoring and business data services, increased revenue by 7.5 per cent to $67.4 million.

The international division, which is predominantly New Zealand but also includes licensing arrangements and equity interests in Asia and the Middle East, increased revenue by ten per cent to $18.7 million.

The standout performer was the B2C division, which includes VedaScore, Secure Sentinel, carhistory.com.au, the National Tenancy Database and the marketing service Inivio. It increased revenue by 29.9 per cent to $24.3 million.

At a results briefing yesterday, analysts queried the strong growth in expenses: staff costs rose by 14.6 per cent and other operating expenses rose by 15.8 per cent.

Caesar said the costs related to the company's investment in services catering to last year's introduction of comprehensive credit reporting. She said the high cost growth would not be ongoing.

She said Veda was working with a group of early movers, including one of the big banks, to build and test comprehensive credit reporting capability. Three million files had been loaded to date.

"It is going to plan. We are getting data loaded and the next phase is to get the early movers to draw down positive data," Caesar said.

Veda's move to CCR has not been without problems. The company was the subject of two complaints to the Privacy Commissioner last year - one claiming that it was not giving consumers easy access to free credit reports and the other that its paid credit reports were overpriced and incomplete.

Caesar said the complaints had not yet been resolved.

"We take all complaints seriously and we will always listen to customers," she said.

"We had 130,000 people come to us for a free report last year, so we think those reports are very easily accessible."

Veda is expecting other regulatory changes to present it with opportunities. These include the Australian Securities and Investments Commission's introduction of a register for financial planners, which will play to Veda's strengths in employment data and verification.

The company has signed up as a sponsor for the new electronic conveyancing service, PEXA, and will operate a portal for conveyancers and lawyers.

It will also look for new business opportunities when enhanced anti-money laundering due diligence requirements take effect next year.