Annual Report
For the year ended 30 June 2014
Lodged with the ASX under the Listing Rule 4.3A
3P Learning Limited ABN 50 103 827 836
Dear Shareholders,
On behalf of the Board of Directors, it is my pleasure to present to you the 3P Learning Limited (3PL)
Annual Report for the financial year ended 30 June 2014. The year was significant for the company as
it was highlighted by the successful Initial Public Offer of the Company and listing on the ASX and our
continued expansion in global markets with student licenses growing 21% to 4.7 million. Group revenue
increased 13.9% to $36.1 million and profit after tax by 70.1% to $5.1 million.
This year marks the tenth anniversary of 3P Learning’s presence in online education. Over the ten years of
our history, the company has expanded successfully both its range of products as well as our geographic
presence – a trend that has continued throughout the 2013/4 financial year. We have increased our
community of students and schools using 3PL products right across the world.
The online education industry is growing rapidly, driven by the migration from printed textbooks and
workbooks to online and technology-based education resources. The quality of 3P’s products, global
sales force, scalable information technology infrastructure and track record of innovation mean 3PL is well
positioned to capture market share in this expanding industry.
3PL has emerged as one of the best known and most highly respected brands in K to 12 online education.
We got here by pursuing a clear strategic vision; maintaining a disciplined, long term viewpoint; and
instilling enduring values in a team that has no equal in talent, professionalism and excellence. 3PL is
extremely well positioned to deliver strong results for investors and to grow our businesses and global
opportunities. An extraordinary team committed to excellence and innovation provides the expertise and
wisdom to guide our decisions.
On behalf of the Board I extend my thanks to the thousands of schools and hundreds of thousands of
students who use our products and services every day, to our investors for their confidence in us and finally
to everyone on the 3PLearning team for committing their talent and tenacity to our success. We look
forward to reporting continued strong performance forwarding the years ahead.
Samuel Weiss
Chairman, 3P Learning
Dear Shareholders,
What an incredibly eventful year. It gives me great pleasure to know that you and many others are now a
part of this journey with us – a testament to the work and tenacity of the entire 3P Learning team.
3P Learning is a group of people committed to helping a generation of students love learning. Over the
last decade the hard work and creativity of the 3P team has created an award-winning learning resource
in Mathletics, delivering a proven advantage in testing around the world, relative to every other learning
resource. This is a huge and very meaningful contribution to a generation of children, based upon a
decade of research with the leading schools around the world and the reason why the company is growing
rapidly. Put simply, if you are a school without Mathletics you start with a disadvantage in the government
testing your students will undertake. That’s a hugely powerful statement.
In 2014, we introduced the next generation in learning with IntoScience. Students, through open inquiry
and discovery-based learning, are exploring and mastering difficult concepts many years ahead of when
they would be traditionally taught. They are in control of their learning, immersed in the purpose of what
they are doing, as they create solar systems, classify animals, photograph the phases of a virtual moon
and explore the world’s oldest caves system to discover how it was formed.
3P’s contribution to learning is unique, inspiring and something that all teachers and parents can believe
in.
From a commercial perspective, Mathletics has deservedly become the number one resource in primary
schools in Australia, New Zealand, South Africa and the United Kingdom. It is now rapidly growing in
Canada and the United States, delivering an advantage to those schools already.
We look forward to another great decade, as we work with UNICEF and other similarly committed
organisations, helping students have the knowledge and reasoning ability to solve the world’s problems.
Tim Power
CEO, 3P Learning
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of 3P Learning 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
The following persons were directors of 3P Learning Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Samuel Weiss (Chairman) (appointed on 2 June 2014)
Timothy Power
Roger Amos (appointed on 2 June 2014)
Claire Hatton (appointed on 2 June 2014)
Matthew Sandblom (resigned on 2 June 2014)
Lawrence Handen (resigned on 2 June 2014)
Jose Palmero (resigned on 2 June 2014)
Katherine Pike (resigned on 2 June 2014)
Alexander Harvey (resigned on 2 June 2014)
Grant Smith (resigned on 2 June 2014)
Belinda Cooney (alternate director to Alexander Harvey) (resigned on 2 June 2014)
Susan Ho (alternate director to Grant Smith) (appointed on 15 April 2014 and resigned on 2 June 2014)
Principal activities
During the financial year the principal activities of the Group consisted of developing, sales and marketing of online
educational programs to schools and parents of school-aged students. There was no significant change in the nature of
these activities during the year.
Dividends
Final dividend for the year ended 30 June 2014 of $12,500,000 representing $82.73 per ordinary share (30 June 2013:
$2,450,000 representing $16.21 per ordinary share).
As detailed in the prospectus and as part of the capital restructure and listing of the Company, pre-IPO shareholders were
entitled to a dividend of $12.5 million which was declared on 2 June 2014 and paid on 9 July 2014. The 'prospectus' refers
to the document lodged by the Company and 3P Learning SaleCo Limited with Australian Securities and Investment
Commission on 19 June 2014.
Operating and financial review
The profit for the Group after providing for income tax and non-controlling interest amounted to $5,052,000 (30 June 2013:
$2,970,000).
The Group operates in the online education segment of the global education industry, across multiple territories, with a
focus on students in grades Kindergarten to grade 12 (K-12).
The Group derives income from the sale of Student Licences and Home Licences, typically with a one year term. Licences
are sold on a per student basis. Sales are made largely through the Group’s global sales and marketing team and
websites. The Group also engages distributors to sell its products in some peripheral territories.
The Group generates approximately 90% of revenue from Student Licences sold through schools. The Group also
generates revenue from Home Licences, copyright fees and sponsorships.
While underlying business growth remains strong the results were impacted by costs associated with listing of the
Company on the Australian Stock Exchange (ASX) in July 2014 ('listing'). The Initial Public Offering impacted statutory
profit with costs of $3,346,000 recognised in the period.
Total revenue for the Group for the financial year ended 30 June 2014 was $36,161,000 (2013: $31,746,000).
1
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
All three of the Group’s segments improved their financial performance driven by strong licence growth in all regions.
Licence numbers for the Group grew 20.5% from 3.9 million to 4.7 million with average revenue per licence of $8.41. The
EMEA and the Americas were particularly strong with growth in licences of 56% and 41% respectively.
Product revenue growth was driven by Mathletics and Reading Eggs which grew at 14% and 44% respectively. The launch
of a new product, Into Science is showing promising early signs with 37,000 licences sold in the year.
The financial position of the Group is very strong, driven by sustained positive cash flow conversion from operations.
Net assets decreased by $7,220,000 due primarily to the Company declaring dividend of $12,500,000 and incurring IPO
costs of $3,346,000.
There is a deficiency of current assets over currents liabilities of $9,274,000. Current liabilities include deferred revenue of
$18,748,000 for which there are no future cash outflows and accordingly, the financial statements continue to be prepared
on a going concern basis.
The online K-12 education industry is a fast moving industry and the rate of technological change and competition is
increasing. The risk associated with the market requires Management to continually focus on innovation and change to
keep pace with competitors and new entrants to the market. The Group invested $6,438,000 in product development and
this level of investment is expected to continue to remain competitive. The current carrying value of intangible software
assets is $5,775,000.
The material business risks faced by the Group that are likely to have an effect on the financial prospects of the Group are
outlined below:
Competition risks: The Group operates in a highly competitive industry and there are a large number of participants
targeting the K-12 segment, many with significant resources and capital. The Group’s existing and potential competitors
may place pricing pressure on the product offering and may impact on the Group’s ability to retain existing customers as
well as its ability to attract new business.
Distribution rights to Reading Eggs Product risks: The Group does not own the intellectual property rights to Reading Eggs
and Reading Eggspress. The Group has a sales agency agreement to sell these products to schools in Australia and many
international markets. The loss of this agreement (which could reduce the product offering of the Group and its
attractiveness to school and home users), or the renewal of this agreement on less favourable terms, could adversely
affect the Group’s revenue and profitability.
Technology and intellectual property risks: The Group’s technology platforms and systems may be disrupted which could
affect the Group’s reputation, ability to generate income and financial performance.
Cash and cash equivalents
The Group has used cash and cash equivalents that are held at the time of listing in a way consistent with its stated
business objectives.
Significant changes in the state of affairs
On 24 April 2014, the Company changed its status from a proprietary company to a public company.
On 23 May 2014, 3P Learning Limited acquired the remaining 35% of the ordinary shares of Into Science Pty Limited for
the total consideration of $1,415,000.
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
Capital restructure and capital raising
As part of the process of listing the Company, and as detailed in the Company’s prospectus, the following events were
finalised subsequent to balance date:
2
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
Closure of 3P Employee Share Trust
On 9 July 2014, the trustee of the share trust, 3PES Pty Ltd closed the operation of the share trust by notification to all
unitholders in the trust that the units had been cancelled and shares held by the trustee were transferred to those
unitholders.
Dividend payment
On 2 June 2014, the directors declared a pre IPO dividend of $12,500,000 to be paid on 9 July 2014 to existing
Shareholders and Selling Shareholders in respect of the operation of the business prior to Listing.
Capital raising
The Company successfully raised $282.7 million pursuant to the prospectus dated 19 June 2014. The retail offer closed
on 4 July 2014, and shares commenced trading on a conditional and deferred settlement basis on 9 July 2014. Share
settlement occurred on 11 July 2014. New shares issued by the Company on 14 July 2014 amounted to 9.4 million.
Funds raised from the IPO amounting to $259.2 million were utilised by 3P Learning SaleCo Limited (a special purpose
vehicle established to sell Shares acquired from existing shareholders of the Company prior to IPO) to pay selling
shareholders to acquire 103.7 million shares. These share were transferred to new shareholders on 14 July 2014. These
shares commenced trading on a normal settlement basis as from 16 July 2014.
Conversion of Class B Shares and subsequent share split
On 10 July 2014, each Class B share on issue was converted into one fully-paid ordinary share such that the Company
has only one class of ordinary share capital on issue. In addition, the share capital of the Company underwent a share
split of 1 existing share for 830 new shares.
Binding agreement
The Group and Whatiph Business Consultants CC have entered into binding transaction for the acquisition of the South
African distributor business of Whatiph. It is estimated that the acquisition will complete on 1 October 2014.
Lead manager fee
Macquarie Capital (Australia) Limited has acted as Lead Manager to the IPO and an underwriting fee equal to 3.5% of the
funds raised was paid to Macquarie Capital (Australia) Limited upon listing on 9 July 2014. Macquarie Group Limited and
its related bodies corporate had a significant influence in the Group until the sale of shares in relation to the IPO.
No other 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
The Group’s growth is expected to be supported by the shift from printed resources to online learning resources in schools
and in homes and by governments through the introduction of curriculum frameworks that encourage the integration of
information and communications technology.
The Group’s strategy is focused on organic growth in Student Licences and Home Licences in both existing and potential
new territories. At the core of the strategy is Group’s focus on continuing to deliver quality education software in order to
retain existing users and attract new users. The Group expects to continue to increase the functionality of the products,
add additional content and invest in the development of new applications to enhance the user experience.
The principal elements of the Group’s strategic plan to increase the number of Student Licences are outlined below:
• Increase the number of school customers
• Add students within the existing school customer base
• Cross-sell other products to new and existing customers
• Improve average revenue per licence.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
3
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Samuel Weiss (appointed on 2 June 2014)
Independent Non-Executive Chairperson
AB, MS
Over 20 years of experience in senior management and directorship roles. Broad
experience in education, technology and retail companies in Australia, North America,
Europe and Asia.
Chairman of Altium Limited (ASX: ALU). Independent director of Oroton Group
Limited (ASX: ORL), Breville Group Limited (ASX: BRG) and iBuy Limited (ASX: IBY).
Former directorships (last 3 years): Non-Executive Director of iProperty Group Limited (ASX: IPP)
Special responsibilities:
Chairman of the Nomination and Remuneration Committee and Member of the Audit
and Risk Committee
130,400 ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Timothy Power
Chief Executive Officer
LLB, BA
15 years of experience in educational technology development. Executive Director
and early stage involvement in the Company since 2004 and CEO since 2007.
Timothy was the co-founder of World Education Games, Into Science Pty Ltd,
ClickView Pty Ltd and Coraggio Pty Ltd.
Other current directorships:
None
Former directorships (last 3 years): None
None
Special responsibilities:
3,036,472 ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Roger Amos (appointed on 2 June 2014)
Independent Non-Executive Director
FCA, FAICD
Over 25 years of experience in finance, business and accounting. Previously a
partner at the international accounting firm KPMG for 25 years.
Non-executive director of REA Group Limited (ASX: REA), Chairman of Tyrian
Diagnostics Limited (ASX:TDX) and Deputy Chairman of Enero Group Limited
(ASX:EGG).
Former directorships (last 3 years): Non-executive director of Austar United Communication Limited (ASX: AUN)
Special responsibilities:
Member of the Nomination and Remuneration Committee and Chairman of the Audit
and Risk Committee
8,000 ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Claire Hatton (appointed on 2 June 2014)
Independent Non-Executive Director
BSc, MBA
Over 20 years of global experience in strategy, sales, marketing and operations.
Significant experience in the digital and technology market. Previously held senior
roles at Google, Travelport and Zuji.com.
None
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Member of the Audit and Risk Committee and the Nomination and Remuneration
Committee
20,000 ordinary shares
Interests in 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.
4
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
Company secretary
Mr.Jonathan Kenny (AICD, MBA, BEcon) has over 20 years of experience in finance and operations roles for ASX listed
and multinational corporations. Broad industry experience including publishing, software, property development, data and
analytics. Prior to joining the Group, Jonathan was Chief Financial Officer of ASX listed RP Data Limited and Bravura
Solutions Pty Ltd. Jonathan was appointed Group company secretary on 28 March 2014.
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
Attended
Held
Nomination and
Remuneration Committee
Attended
Held
Audit and Risk Committee
Attended
Held
Samuel Weiss (#)
Timothy Power
Roger Amos (#)
Claire Hatton (#)
Matthew Sandblom
Lawrence Handen
Jose Palmero
Katherine Pike
Alexander Harvey
Grant Smith
Belinda Cooney (as alternate to
Alexander Harvey)
Susan Ho (as alternate to Grant
Smith)
2
12
1
2
10
10
10
10
8
7
2
3
2
12
2
2
10
10
10
10
10
10
2
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held: represents the number of meetings held during the time the director held office.
# Directors were appointed on 2 June 2014.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Remuneration report (audited)
The remuneration report, which has been audited, outlines the Key Management Personnel ('KMP') remuneration
arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
The remuneration report is set out under the following main headings:
● Principles used to determine the nature and amount of remuneration
● Details of remuneration
● Service agreements
● Share-based compensation
● Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Group's executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and conforms to the market best practice for delivery of reward. The Board of
Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance
practices:
● competitiveness and reasonableness
● acceptability to shareholders
● performance linkage / alignment of executive compensation
● transparency
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements
for its directors and executives. The performance of the Group depends on the quality of its directors and executives. The
remuneration philosophy is to attract, motivate and retain high performance and high quality personnel. This Committee
was set up on 2 June 2014.
5
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
The Nomination and Remuneration Committee has structured an executive remuneration framework that is market
competitive and complementary to the reward strategy of the Group.
Alignment to shareholders' interests:
● has economic profit as a core component of plan design
● focuses on sustained growth in shareholder wealth, through payments of dividends, growth in share price, and
delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of
value
● attracts and retains high calibre executives
Alignment to program participants' interests:
● rewards capability and experience
● reflects competitive reward for contribution to growth in shareholder wealth
● provides a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive directors and executive
remunerations are separate.
Non-executive directors' remuneration
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the
directors. Non-executive directors' fees and payments are reviewed annually by the Nomination and Remuneration
Committee. 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. Non-executive directors may receive shares as part of their remuneration.
ASX listing rules require the aggregate non-executive director’s remuneration be determined periodically by a general
meeting. The most recent determination was at the Board Meeting held on 2 June 2014, where the Board approved an
aggregate remuneration of $650,000. The aggregate non-executive directors’ remuneration was initially outlined in the
prospectus dated 19 June 2014.
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.
The executive remuneration and reward framework has four components:
● base pay and non-monetary benefits
● short-term performance incentives
● share-based payments
● other statutory components such as superannuation and long service leave
The combination of these comprises the executive's total available remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, will be reviewed annually by the
Nomination and Remuneration Committee, based on individual and business unit performance, the overall performance of
the Group and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs for the Group and provides additional value to the executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the targets of those
executives responsible for meeting those targets. STI payments are granted to executives based on specific annual targets
and key performance indicators ('KPI's') being achieved. KPI’s relate to qualitative and quantitative leadership performance
and Group finance performance.
The long-term incentives ('LTI') include long service leave, share-based payments and any annual leave not taken during
the period. Shares are awarded to executives over a period of three years based on long-term incentive measures. These
include increase in shareholders' value relative to the entire market and the increase compared to the Group's direct
competitors. The Nomination and Remuneration Committee are responsible for reviewing the long-term equity-linked
performance incentives specifically for executives. No LTI were granted during the year.
6
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
Group performance and link to remuneration
Remuneration for certain individuals is directly linked to performance of the Group. A portion of bonus and incentive
payments are dependent on defined earnings per share targets being met. The remaining portion of the bonus and
incentive payments are at the discretion of the Nomination and Remuneration Committee.
The Nomination and Remuneration Committee is of the opinion that results can be improved through the adoption of
performance based compensation and is satisfied that this improvement will continue to increase shareholder wealth if
maintained over the coming years.
An agreed set of protocols were put in place to ensure that the remuneration recommendations would be free from undue
influence from key management personnel. The Board is satisfied that these protocols were followed and as such there
was no undue influence.
Use of remuneration consultants
During the financial year ended 30 June 2014, the Group did not use any remuneration consultants.
Details of remuneration
Amounts of remuneration
Details of the remuneration of the key management personnel of the Group are set out in the following tables. In line with
Regulation 2M.3.03 of Corporation Regulations 2001, the Company has elected not to disclose comparatives.
The key management personnel of the Group consisted of the directors of 3P Learning Limited and the following persons:
● Jonathan Kenny - chief financial officer and company secretary
Short-term benefits
Post-
employment
benefits
Long-term
benefits*
Share-based
payments
Cash salary
and fees
$
Bonus
$
Non-
monetary
$
Super-
annuation
$
Leave
$
Equity-
settled
$
Total
$
15,000
8,750
7,917
385,900
85,044
502,611
-
-
-
-
-
-
-
-
-
-
-
-
1,388
809
732
-
-
-
25,820
77,540
6,474
35,223
-
77,540
-
-
-
-
-
-
16,388
9,559
8,649
489,260
91,518
615,374
2014
Non-Executive
Directors:
Samuel Weiss
Roger Amos
Claire Hatton
Executive
Directors:
Timothy Power
Other Key
Management
Personnel:
Jonathan Kenny
* This includes annual leave not taken within 12 months
Remuneration above is from the date of KMP appointment with the exception of Timothy Power who was employed for the
complete financial year.
The Directors who are not listed in the table above did not receive any remuneration during the financial year.
7
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed
Name
Non-Executive Directors:
Samuel Weiss
Roger Amos
Claire Hatton
Executive Directors:
Timothy Power
Other Key Management Personnel:
Jonathan Kenny
remuneration At risk - STI At risk - LTI
2014
2014
2014
100%
100%
100%
100%
100%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
Service agreements
Non-executive and executive directors
Non-executive directors do not have fixed term contracts with the Company. On appointment to the Board, all non-
executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter
summarises the Board policies and terms, including compensation. Non-executive directors retire by whichever is the
longer period: the third annual general meeting following their appointment, or the third anniversary date of appointment,
but may then be eligible for re-election.
Remuneration and other terms of employment for Group Executives are formalised in employment agreements. The Chief
Executive Officer and Chief Financial Officer do not have a fixed term contract with the Company. Details of the
employment agreements are as follows:
8
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
leadership performance and Group
Timothy Power
Chief Executive Officer
20 March 2014
Open ended
The Chief Executive Officer, Timothy Power, is employed by the Group under an
employment agreement. Timothy will receive a fixed annual remuneration of
$400,000, plus superannuation at a rate in line with legislative requirements. Timothy
will be eligible to receive a cash bonus of up to $100,000 or such other amount as
determined by the Board for each financial year ending after 30 June 2015. Payment
of the cash bonus will depend on the Group’s performance and Timothy’s
achievement of certain key performance indicators (which generally relate to
qualitative and quantitative
financial
performance), or as otherwise decided by the Board, regardless of whether Timothy
meets these performance indicators. As part of a long term incentive package,
Timothy may be entitled to receive Shares (Performance Shares) up to the value of
$100,000 (valued at the Offer Price). The Performance Shares will vest on or shortly
after the Company’s financial results for the financial year ending 30 June 2015 are
approved by the Board. Timothy is entitled to up to 100% of the Performance Shares
if the Company exceeds the pro forma Earnings before Interest, Tax, Depreciation
and Amortisation (“EBITDA”). No Performance Shares will vest or be issued if the
Company does not achieve the pro forma EBITDA. The Board may, at its absolute
discretion, elect to issue some or all of these shares, regardless of whether the long
term performance indicators are met. Timothy’s current long term incentive package
will be for one year only, and it is proposed that Performance Shares to be granted
under any future long term incentive plan will have a three year minimum vesting
period. Either party may terminate the employment contract by giving six months’
notice in writing. The Group may terminate by making a payment in lieu of notice. In
the event of serious misconduct or other specific circumstances warranting summary
dismissal, the Group may terminate Timothy’s employment contract immediately by
notice in writing and without payment in lieu of notice. Upon the termination of
Timothy’s employment contract, he will be subject to a restraint of trade period of 24
months. The Group may elect to reduce the restraint of trade period, or eliminate the
period in its entirety. The enforceability of the restraint clause is subject to all usual
legal requirements.
Jonathan Kenny
Chief Financial Officer
1 July 2014
Open ended
Jonathan Kenny is employed in the position of Chief Financial Officer and has
entered into an employment contract with the Group. Jonathan will receive annual
fixed remuneration of $330,000 plus superannuation at a rate in line with legislative
requirements. Jonathan will also be eligible to receive an annual cash bonus of up to
$75,000 or such other amount as determined by the Board. Payment of a cash bonus
will depend on Jonathan’s achievement of certain key performance indicators (which
generally relate to qualitative and quantitative leadership performance and Group
financial performance). Either party may terminate the employment contract by giving
six months’ notice in writing. The Group may terminate by making a payment in lieu of
notice. In the event of serious misconduct or other specific circumstances warranting
summary dismissal, the Group may terminate Jonathan’s employment contract
immediately by written notice and without payment in lieu of notice. Jonathan’s
employment contract also contains a post-employment restraint of trade period of 18
months. The Group may elect to reduce the restraint of trade period, or eliminate the
period in its entirety. The enforceability of the restraint clause is subject to all usual
legal requirements.
Key management personnel have no entitlement to termination payments in the event of serious misconduct or other
specific circumstances warranting summary dismissal.
9
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2014.
Options
There were no options over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2014.
There were no options over ordinary shares granted to or vested by directors and other key management personnel as part
of compensation during the year ended 30 June 2014.
Additional disclosures relating to key management personnel
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:
Ordinary shares
Timothy Power
Matthew Sandblom
Katherine Pike
Jonathan Kenny
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Disposals/
other
Balance at
the end of
the year
4,573
55,000
9,000
-
68,573
-
-
-
-
-
-
-
-
70
70
-
-
-
-
-
4,573
55,000
9,000
70
68,643
Ordinary shares in the table above refer to ordinary shares class A.
This concludes the remuneration report, which has been audited.
Shares under option
There were no unissued ordinary shares of 3P Learning Limited under option outstanding at the date of this report.
Shares issued on the exercise of options
There were no ordinary shares of 3P Learning 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 end of 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.
10
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' report
30 June 2014
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 31 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.
The directors are of the opinion that the services as disclosed in note 31 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 Ernst & Young
There are no officers of the Company who are former audit partners of Ernst & Young.
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 is set out
on the following page.
Auditor
Ernst & Young 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
________________________________
Samuel Weiss
Chairman
25 August 2014
Sydney
11
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Contents
30 June 2014
Contents
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of 3P Learning Limited
Shareholder information
Corporate directory
14
15
16
17
18
53
54
56
58
13
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2014
Revenue
Other income
Expenses
Employee benefits expense
Depreciation and amortisation expense
Professional fees
Technology costs
Marketing expenses
Occupancy expenses
Administrative expenses
Profit before income tax (expense)/benefit
Consolidated
Note
2014
$'000
2013
$'000
(Restated)
6
7
8
8
36,161
31,746
904
978
(15,759)
(1,947)
(4,151)
(1,239)
(3,146)
(2,289)
(1,736)
(21,662)
(1,345)
(934)
(1,213)
(1,958)
(1,682)
(1,998)
6,798
1,932
Income tax (expense)/benefit
9
(1,691)
377
Profit after income tax expense for the year
5,107
2,309
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit for the year is attributable to:
Non-controlling interest
Owners of 3P Learning Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of 3P Learning Limited
Basic earnings per share
Diluted earnings per share
25
117
117
106
106
5,224
2,415
55
5,052
5,107
55
5,169
5,224
(661)
2,970
2,309
(661)
3,076
2,415
Cents
Cents
39
39
3,343.44
3,343.44
1,965.56
1,965.56
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
14
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Statement of financial position
As at 30 June 2014
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Income tax
Other
Total current assets
Non-current assets
Receivables
Plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax
Provisions
Deferred revenue
Finance lease payable
Total current liabilities
Non-current liabilities
Provisions
Deferred revenue
Finance lease payable
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits/(accumulated losses)
Equity attributable to the owners of 3P Learning Limited
Non-controlling interest
Total equity
Consolidated
Note
2014
$'000
2013
$'000
(Restated)
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
24,442
5,895
-
2,369
32,706
-
1,322
9,124
7,415
17,861
14,782
6,630
1,514
2,153
25,079
417
1,624
3,701
4,990
10,732
50,567
35,811
7,979
1,017
13,975
18,748
262
41,981
473
813
36
1,322
4,984
-
891
14,430
256
20,561
363
93
309
765
43,303
21,326
7,264
14,485
2,352
7,954
(3,129)
7,177
87
2,352
7,165
4,319
13,836
649
7,264
14,485
The above statement of financial position should be read in conjunction with the accompanying notes
15
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Statement of changes in equity
For the year ended 30 June 2014
Consolidated
Issued
capital
$'000
Reserves
$'000
Retained
profits
$'000
Non-
controlling
interest
$'000
Total
equity
$'000
Balance at 1 July 2012
2,352
6,603
12,460
1,611
23,026
Adjustment for change in accounting policy
(note 4)
-
335
(8,661)
-
(8,326)
Balance at 1 July 2012 - restated
2,352
6,938
3,799
1,611
14,700
Profit/(loss) after income tax (expense)/benefit
for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments
Transaction with non-controlling interest
Dividends paid (note 27)
-
-
-
-
-
-
-
106
106
121
-
-
2,970
(661)
2,309
-
-
106
2,970
(661)
2,415
-
-
(2,450)
-
(301)
-
121
(301)
(2,450)
Balance at 30 June 2013
2,352
7,165
4,319
649
14,485
Consolidated
Issued
capital
$'000
Reserves
$'000
Retained
profits/
Accumulated
losses
$'000
Non-
controlling
interest
$'000
Total
equity
$'000
Balance at 1 July 2013
2,352
7,165
4,319
649
14,485
Profit after income tax (expense)/benefit for the
year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments
Acquisition of non-controlling interest in
subsidiary
Dividends paid (note 27)
-
-
-
-
-
-
-
117
117
1,470
(798)
-
5,052
-
5,052
55
-
55
5,107
117
5,224
-
-
1,470
-
(12,500)
(617)
-
(1,415)
(12,500)
Balance at 30 June 2014
2,352
7,954
(3,129)
87
7,264
The above statement of changes in equity should be read in conjunction with the accompanying notes
16
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Statement of cash flows
For the year ended 30 June 2014
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other finance costs paid
Income taxes refunded
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payments for plant and equipment
Payments for intangibles
Payments for short term deposits
Net cash used in investing activities
Cash flows from financing activities
Repayment of leases
Acquisition of non-controlling interest
Dividends paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Consolidated
Note
2014
$'000
2013
$'000
46,316
(27,309)
38,930
(34,508)
19,007
411
(114)
2,177
(3,300)
4,422
323
-
-
(2,683)
38
18,181
2,062
(332)
(6,408)
(216)
(575)
(17)
(2,009)
(6,956)
(2,601)
(267)
(1,415)
-
-
-
(2,450)
(1,682)
(2,450)
9,543
14,782
117
(2,989)
17,771
-
27
Cash and cash equivalents at the end of the financial year
10
24,442
14,782
The above statement of cash flows should be read in conjunction with the accompanying notes
17
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 1. General information
The financial statements cover 3P Learning Limited as a Group consisting of 3P Learning Limited and its subsidiaries. The
financial statements are presented in Australian dollars, which is 3P Learning Limited's functional and presentation
currency.
3P Learning Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Level 18, 124 Walker Street
North Sydney NSW 2060
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.
On 24 April 2014, the Company changed its status from a proprietary company to a public company.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 25 August 2014. The
directors have the power to amend and reissue the financial statements.
Note 2. 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
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Except for the early adoption of AASB 2013-3 ‘Amendments to AASB 136 – Recoverable Amount Disclosures for Non-
Financial Assets’, no other new, revised or amending Accounting Standards or Interpretations that are not yet mandatory
have 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 and Interpretations 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.
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
previous disclosures.
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.
18
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
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.
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.
Net current asset deficiency
As at 30 June 2014, the Group and the Company were in a net current liability position of $9,274,000 and $4,092,000
respectively for which there are no future cash outflows and accordingly, the financial statements continue to be prepared
on a going concern basis.
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.
19
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
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 3.
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 35.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of 3P Learning Limited
('Company' or 'parent entity') as at 30 June 2014 and the results of all subsidiaries for the year then ended. 3P Learning
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 subsidiaries is accounted for using the acquisition method of accounting. 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.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses
incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.
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 3P Learning 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.
20
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
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 and measured at the fair value of the consideration received or receivable to the extent it is
probable that the economic benefits will flow to the Group and the revenue can be reliably measured. A number of
recognition criteria must also be met before revenue is recognised.
Mathletics, Spellodrome and IntoScience licence revenues
The Group recognises the majority of its revenue pursuant to software licence agreements and it provides its customers
with access to the Group’s intellectual property as it exists at any given time. Revenue is therefore recognised over the
duration of the agreement or for as long as the customer has been provided access, when persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable.
Reading eggs products licence revenue
The Group recognises commission revenue pursuant to a distribution agreement when it sells a third party’s online
products to customers which provides these customers with access to the third party’s intellectual property as it exists at
any given time. Revenue from the sale of Reading Eggs Products is recorded on a net basis when the online product is
sold, consistent with an agency relationship.
Sponsorship income
Revenue is recognised in relation to sponsorship amounts provided by various external parties when the Company
becomes entitled to the benefit and all of its obligations have been fulfilled.
Translation fee
Revenue is recognised in relation to translation of educational programs to the local language of the customer base, upon
completion of the translation.
Sale of workbooks
Revenue is recognised in relation to workbook materials sold to schools and students, on sale of the items.
Copyright licence fee
Revenue is recognised in relation to copyright agency fees upon becoming entitled to compensation being at a time when
the Group’s materials and resources are reproduced by third parties.
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.
Deferred revenue
Deferred revenue is recognised on all customer contracts where appropriate as revenue is recorded over the contract
duration.
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.
21
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
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.
3P Learning Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. 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.
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.
Research and development rebate
Research and development rebate are credited against tax payable and are not treated as revenue.
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.
22
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
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, which generally have 30-60 day terms, are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method, less an allowance for impairment.
Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are
written off when identified. An impairment provision is recognised when there is objective evidence that the Group will not
be able to collect the receivable.
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 plant and equipment (excluding
land) over their expected useful lives as follows:
Office equipment
Computers
Furniture & fittings
3-5 years
3-5 years
3-7 years
An item of plant and equipment and any significant part initially recognised is derecognised upon disposal or when no
future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the
statement of comprehensive income when the asset is derecognised.
The residual values, useful lives and methods of depreciation of plant and equipment are reviewed at each financial year
end and adjusted prospectively, if appropriate.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement at
inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.
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.
Group as a lessee
Operating lease payments are recognised as an operating expense in the statement of comprehensive income on a
straight line basis over the lease term. Operating lease incentives are recognised as a liability when received and
subsequently reduced by allocating lease payments between rental expense and reduction of the liability.
23
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
Intangible assets
Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible
asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally
generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in
statement of comprehensive income in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are
amortised over the useful life and tested for impairment whenever there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at
least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset are accounted for prospectively by changing the amortisation period or method,
as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is
recognised in statement of comprehensive income in the expense category consistent with the function of the intangible
asset.
Intangible assets with an indefinite useful life are not amortised. The useful life of an intangible asset with an indefinite life
is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the
change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is
thus accounted for on a prospective basis.
Amortisation is recognised in the statement of comprehensive income on a straight-line basis over the estimated useful
lives of intangible assets, other than goodwill, from the date that they are available for use.
Internally generated intangible assets
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an
intangible asset when the Group can demonstrate:
• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
• Its intention to complete and its ability to use or sell the asset
• How the asset will generate future economic benefits
• The availability of resources to complete the asset
• The ability to measure reliably the expenditure during development
• The ability to use the intangible asset generated
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the
asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in depreciation
and amortisation.
The estimated useful lives are as follows:
• Patents and trademarks – 3 years
• Development costs – 5 years
24
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business
combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated
to each of the Group’s cash-generating units, or groups of cash generating units, that are expected to benefit from the
synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or
groups of units.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating
units), to which the goodwill relates.
When the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying
amount, an impairment loss is recognised. When goodwill forms part of a cash-generating unit (group of cash generating
units) and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in
the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of
in this manner is measured based on the relative values of the operation disposed of and the portion of the cash-
generating unit retained.
Impairment losses recognised for goodwill are not subsequently reversed.
Impairment of non-financial assets
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.
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.
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 recognised in current liabilities in respect of employees' services up to
the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
25
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months 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 share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, which are provided to employees in exchange for
the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using the Binomial 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.
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 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.
26
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
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.
Contributed equity
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.
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion
of the Company, on or before the end of the financial year but not distributed at the reporting date.
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.
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.
27
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of 3P Learning 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. 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.
28
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 2. Significant accounting policies (continued)
Annual Improvements to IFRSs 2010-2012 Cycle
These amendments affects 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 (i.e.
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 judgments 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 adoption of these amendments will not have a material impact on the Group.
29
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 3. 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.
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 2. 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.
Note 4. Restatement of comparatives
Change in accounting policy - revenue recognition
In accordance with AASB 118 ‘Revenue’, the Group previously recognised revenue in relation licences for periods up to
one year for owned products (Mathletics, Spellodrome and Into Science) as well as products sold under a distribution
agreement (Reading Eggs) at the point of sale of the licence. Revenue from the sale of Reading Eggs licences was
recognised on a gross basis with the associated royalty payment to Blake eLearning Pty Ltd included as an expense. With
the release of IFRS 15 ‘Revenue from contracts with customers’, the Group has considered the appropriateness of this
policy.
As a result, the current period’s financial statements contain a revised policy where the revenue from the sale of licences
relating to owned products are spread evenly over the term of the licence. Revenue from the sale of Reading Eggs
licences is still recognised at the point of sale of the licence, but the revenue is presented as the net amount received by
the Group. The revised policy, refer to note 2, remains in accordance with AASB 118 and is also expected to comply with
IFRS 15.
The change in accounting policy is required to be accounted for in accordance with AASB 108 ‘Accounting policies,
changes to estimates and errors’ and as such the change must be applied as if it had always been in place.
30
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 4. Restatement of comparatives (continued)
The impact of the change in accounting policy is as follows:
The impact on the statement of financial position as at 30 June 2012 was:
• Increase the liability representing the deferred revenue by $11,903,000
• Increase deferred tax asset by $3,577,000
• Increase foreign currency translation reserve by $335,000
• Net adjustment to retained earnings by $8,661,000
The impact on the statement of financial position as at 30 June 2013 was:
• Increase the liability representing the deferred revenue by $14,161,000
• Increase deferred tax asset by $4,251,000
• Increase foreign currency translation reserve by $335,000
• Net adjustment to retained earnings by $10,245,000
The impact on the statement of profit or loss and other comprehensive income for the year ending 30 June 2013 was:
•Decrease in revenue representing the deferred revenue by $5,217,000
•Increase in income tax benefit of $688,000
•Basic and diluted earnings per share has decreased by 1,047.64 cents per share.
Reclassification
Certain comparative figures have been reclassified to conform to the current year presentation.
Note 5. Operating segments
Identification of reportable operating segments
The Group is organised into geographic operating segments: Australia & New Zealand ('ANZ'), America, Canada and
South America ('Americas') and Europe, Middle-East and Africa ('EMEA'). 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.
Segment assets and liabilities are not reviewed by the CODM on a regular basis.
Intersegment transactions
Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable
that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are
eliminated on consolidation.
31
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 5. Operating segments (continued)
Operating segment information
Consolidated - 2014
$'000
$'000
$'000
$'000
ANZ
Americas
EMEA
Intersegment
eliminations
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Other revenue
Total revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
24,365
11,644
36,009
399
36,408
3,136
-
3,136
6
3,142
8,672
(1,056)
8,243
-
8,243
12
8,255
832
-
(11,644)
(11,644)
-
(11,644)
-
Consolidated - 2013
$'000
$'000
$'000
$'000
ANZ
Americas
EMEA
Intersegment
eliminations
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Other revenue
Total revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax benefit
Income tax benefit
Profit after income tax benefit
24,038
9,720
33,758
217
33,975
2,257
-
2,257
9
2,266
4,839
(1,732)
5,211
-
5,211
14
5,225
(72)
-
(9,720)
(9,720)
-
(9,720)
(48)
Total
$'000
35,744
-
35,744
417
36,161
8,448
(1,947)
411
(114)
6,798
(1,691)
5,107
Total
$'000
31,506
-
31,506
240
31,746
2,987
(1,345)
323
(33)
1,932
377
2,309
32
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 6. Revenue
Licence fees
Sponsorship income
Translation fees
Sale of workbooks
Copyright licence fees
Other
Net commission revenue
Revenue
Note 7. Other income
Net foreign exchange gain
Interest
Other income
Other income
Consolidated
2014
$'000
2013
$'000
(Restated)
30,238
168
127
262
986
417
3,963
26,753
832
-
176
975
240
2,770
36,161
31,746
Consolidated
2014
$'000
2013
$'000
67
411
426
904
474
323
181
978
33
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 8. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Fixtures and fittings
Office equipment
Computers
Total depreciation
Amortisation
Patents and trademarks
Product development
Total amortisation
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Research costs
Research costs
Professional fees included the following:
Professional fees for initial public offering
Consolidated
2014
$'000
2013
$'000
135
18
479
632
652
663
1,315
1,947
119
16
468
603
742
-
742
1,345
114
33
1,869
1,175
1,191
1,593
26
3,346
22
-
34
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 9. Income tax expense/(benefit)
Income tax expense/(benefit)
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense/(benefit)
Deferred tax included in income tax expense/(benefit) comprises:
Increase in deferred tax assets (note 17)
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Profit before income tax (expense)/benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Amortisation of intangibles
Entertainment expenses
Non-deductible expenses
Research and development
Effect of corporate tax rate change
Adjustment recognised for prior periods
Prior year temporary differences not recognised now recognised
Difference in overseas tax rates
Other
Income tax expense/(benefit)
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
Consolidated
2014
$'000
2013
$'000
(Restated)
2,917
(1,336)
110
1,322
(1,413)
(286)
1,691
(377)
(1,336)
(1,413)
6,798
2,039
128
2
82
-
105
2,356
110
(797)
(53)
75
1,691
1,932
580
-
-
25
(632)
-
(27)
(286)
-
(56)
(8)
(377)
Consolidated
2014
$'000
2013
$'000
-
-
789
237
35
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 10. Current assets - cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Consolidated
2014
$'000
2013
$'000
15,439
9,003
6,848
7,934
24,442
14,782
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying
periods between one day and three months, depending on the immediate cash requirements of the Group, and earn
interest at the respective short term deposit rates.
Bank guarantee for merchant facility and operating lease of $1,311,000 (2013: $1,311,000).
Note 11. Current assets - trade and other receivables
Trade receivables
Other receivables
Prepayments
Advertising services receivable
Consolidated
2014
$'000
2013
$'000
4,856
463
576
1,039
-
5,303
189
287
476
851
5,895
6,630
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $1,109,000 as at 30 June
2014 ($2,020,000 as at 30 June 2013).
The ageing of the past due but not impaired receivables are as follows:
Consolidated
2014
$'000
2013
$'000
1,109
2,020
Consolidated
2014
$'000
2013
$'000
-
1,514
1 to 12 months overdue
Note 12. Current assets - Income tax
Income tax refund receivable
36
Consolidated
2014
$'000
2013
$'000
2,218
151
2,369
2,009
144
2,153
Consolidated
2014
$'000
2013
$'000
-
417
Consolidated
2014
$'000
2013
$'000
904
(413)
491
3,236
(2,452)
784
148
(101)
47
834
(279)
555
2,995
(1,975)
1,020
132
(83)
49
1,322
1,624
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 13. Current assets - other
Term deposits
Other deposits
Note 14. Non-current assets - receivables
Advertising services receivable
Note 15. Non-current assets - plant and equipment
Fixtures and fittings - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
37
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 15. Non-current assets - plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2012
Additions
Disposals
Write off of assets
Depreciation expense
Balance at 30 June 2013
Additions
Write off of assets
Depreciation expense
Balance at 30 June 2014
Furniture
and fittings Computers
$'000
$'000
Office
equipment
$'000
Total
$'000
385
304
(15)
-
(119)
555
71
-
(135)
491
1,214
281
(4)
(3)
(468)
1,020
245
(2)
(479)
784
52
14
(1)
-
(16)
49
16
-
(18)
47
1,651
599
(20)
(3)
(603)
1,624
332
(2)
(632)
1,322
Plant and equipment secured under finance leases
Refer to note 33 for further information on plant and equipment secured under finance leases.
Note 16. Non-current assets - intangibles
Goodwill - at cost
Product development - at cost
Less: Accumulated amortisation
Patents and trademarks - at cost
Less: Accumulated amortisation
Consolidated
2014
$'000
2013
$'000
3,012
6,438
(663)
5,775
3,074
(2,737)
337
3,012
-
-
-
2,774
(2,085)
689
9,124
3,701
38
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 16. Non-current assets - intangibles (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2012
Additions
Amortisation expense
Balance at 30 June 2013
Additions
Amortisation expense
Balance at 30 June 2014
Goodwill
$'000
Product
development
$'000
Patents and
trademarks
$'000
Total
$'000
3,012
-
-
3,012
-
-
3,012
-
-
-
-
6,438
(663)
5,775
1,414
17
(742)
689
300
(652)
337
4,426
17
(742)
3,701
6,738
(1,315)
9,124
Impairment testing for goodwill
For the purpose of impairment testing, goodwill and indefinite life intangibles are allocated to the Group’s operating
divisions, which represents the lowest level within the Group at which the goodwill and indefinite life intangibles are
monitored for internal management purposes.
The impairment test was based on a value-in-use approach for the IntoScience and PEG Learning operating divisions.
Value-in-use for these operating divisions were determined by discounting the future cash flows generated from the
continuing use of the business and was based on the following key assumptions:
• Cash flows were projected based on actual operating results and the 5 year business plan. Cash flow beyond year 5 was
projected at a growth rate of 2%;
• Revenue was forecast based on the forecast financials prepared for the IPO;
• Other income streams were forecast in proportion to what the business has achieved historically;
• Direct costs were forecast based on the margins historically achieved by the business;
• Overheads were forecast based on current levels adjusted for inflationary increases; and
• A pre-tax discount rate of 15.6% was applied in determining the recoverable amount. The discount rate was estimated
using the Capital Asset Pricing model.
The values assigned to the key assumptions represent management’s assessment of future trends in the industry and are
based on both external and internal data sources.
Sensitivity analysis
Management estimates that any reasonable changes in the key assumptions would not have a significant impact on the
value-in-use of intangible assets and goodwill that would require the assets to be impaired.
39
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 17. Non-current assets - deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Accrued expenses
Deferred Revenue
IPO costs
Research and development offset
Royalty asset
Intangibles
Unrealised foreign exchange fluctuation
Plant and equipment
Other
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss (note 9)
Other
Closing balance
Note 18. Current liabilities - trade and other payables
Trade payables
Accrued expenses
Accrued expense for IPO
Goods and service tax
Other payables
Refer to note 28 for further information on financial instruments.
Refer to note 34 for details of related party balances.
Note 19. Current liabilities - income tax
Provision for income tax
40
Consolidated
2014
$'000
2013
$'000
(Restated)
1,254
796
5,214
714
1,431
186
(1,614)
(517)
(81)
32
7,415
4,990
1,336
1,089
7,415
131
461
4,089
-
604
50
(21)
(329)
(101)
106
4,990
3,577
1,413
-
4,990
Consolidated
2014
$'000
2013
$'000
2,143
1,464
3,004
719
649
7,979
3,068
821
-
564
531
4,984
Consolidated
2014
$'000
2013
$'000
1,017
-
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 20. Current liabilities - provisions
Operating and employee benefits
Dividend payable
Consolidated
2014
$'000
2013
$'000
1,475
12,500
13,975
891
-
891
Operating and employee benefits
Operating and employee benefits comprise of provisions for annual leave, long service leave and make good. Where an
obligation is presented as current, the Group does not have an unconditional right to defer settlement. However, based on
past experience, the Group does not expect all employees to take the full amount of accrued leave within the next 12
months.
Dividends
The provision represents dividends declared, being appropriately authorised and no longer at the discretion of the
Company, on or before the end of the financial year but not distributed at the reporting date.
Note 21. Current liabilities - Deferred revenue
Deferred revenue
Note 22. Non-current liabilities - provisions
Employee benefits
Employee benefits
Employee benefits represents provision for long service leave.
Note 23. Equity - issued capital
Ordinary shares - fully paid - class A
Ordinary shares - fully paid - class B
Consolidated
2014
$'000
2013
$'000
(Restated)
18,748
14,430
Consolidated
2014
$'000
2013
$'000
473
363
Consolidated
2014
Shares
2013
Shares
2014
$'000
2013
$'000
83,785
67,317
83,785
67,317
151,102
151,102
2,352
-
2,352
2,352
-
2,352
Ordinary shares class A
Fully paid ordinary class A shares carry one vote per share and carry the right to dividends.
41
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 23. Equity - issued capital (continued)
Ordinary shares class B
Fully paid ordinary class B shares have the following additional rights:
-on the occurrence of a liquidity event, Class B shares will have a priority distribution of capital
-on the sale of the assets of the Company, class B shares will have a priority distribution of capital
-if there is no qualified public offering of shares in the Company or no other sales of the shares within 5 years of the
effective date, the shareholders are entitled to request the Company to procure the sales of their shares. If the Company is
unable to procure a sale, the shareholders may appoint a banker on behalf of the Company to sell the Company (whether
by merger, sale of shares or otherwise).
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.
Note 24. Equity - reserves
Foreign currency reserve
Acquisition reserve
Share-based payment reserve
Consolidated
2014
$'000
2013
$'000
829
(798)
7,923
7,954
712
-
6,453
7,165
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign
operations to Australian dollars.
Acquisition reserve
The reserve resulted from the acquisition of non-controlling interests in a subsidiary. The acquisition of non-controlling
interest is not a business combination but is an equity transaction between owners. Accordingly, the difference between
consideration paid and fair value of identifiable net assets of the non-controlling interest has been accounted for in the
acquisition reserve.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
42
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 24. Equity - reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2012
Adjustment for change in accounting policy (note 4)
Foreign currency translation
Share based payments
Balance at 30 June 2013
Foreign currency translation
Share based payments
Acquisition reserve on account of acquisition on non-
controlling interest in subsidiary
Balance at 30 June 2014
Note 25. Equity - retained profits/(accumulated losses)
Retained profits at the beginning of the financial year
Profit after income tax expense for the year
Dividends payable (note 27)
Adjustment for change in accounting policy
Foreign
currency
reserve
$'000
Acquisition
reserve
$'000
Share based
payment
reserve
$'000
Total
$'000
271
335
106
-
712
117
-
-
829
-
-
-
-
-
-
-
(798)
(798)
6,332
-
-
121
6,453
-
1,470
-
6,603
335
106
121
7,165
117
1,470
(798)
7,923
7,954
Consolidated
2014
$'000
2013
$'000
4,319
5,052
(12,500)
-
12,460
2,970
(2,450)
(8,661)
Retained profits/(accumulated losses) at the end of the financial year
(3,129)
4,319
Note 26. Equity - non-controlling interest
Reserves
Retained profits/(accumulated losses)
Consolidated
2014
$'000
2013
$'000
-
87
87
1,310
(661)
649
The non-controlling interest represents the 40% interest in Mathletics LLP.
Note 27. Equity - dividends
Dividends
Final dividend for the year ended 30 June 2014 of $12,500,000 representing $82.73 per ordinary share (30 June 2013:
$2,450,000 representing $16.21 per ordinary share).
43
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 27. Equity - dividends (continued)
As detailed in the prospectus and as part of the capital restructure and listing of the Company, pre-IPO shareholders were
entitled to a dividend of $12.5 million which was declared on 2 June 2014 and paid on 9 July 2014. The 'prospectus' refers
to the document lodged by the Company and 3P Learning SaleCo Limited with Australian Securities and Investment
Commission on 19 June 2014.
Franking credits
Consolidated
2014
$'000
2013
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
7,123
6,135
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 28. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price 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 different methods to measure different types of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk.
The Board of directors have overall responsibility for the establishment and oversight of the risk management framework.
The Board has established an Audit and Risk Committee, which is responsible for managing risk. The committee reports to
the Board of Directors on its activities.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Group’s activities. The Group through its training and
management standards and procedures, aims to develop a disciplined and constructive control environment in which all
employees understand their roles and obligations.
The Audit and Risk Committee, oversees how management monitors compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the
Group.
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.
44
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 28. Financial instruments (continued)
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting
date was as follows:
Consolidated
US dollars
Euros
Pound Sterling
Canadian dollars
Other currencies
Assets
Liabilities
2014
$'000
2013
$'000
2014
$'000
2013
$'000
422
405
124
650
277
1,878
783
372
1,146
377
609
3,287
-
-
-
-
59
59
272
-
4
-
24
300
The Group had net assets denominated in foreign currencies of $1,819,000 (assets $1,878,000 less liabilities $59,000) as
at 30 June 2014 (2013: $2,987,000 (assets $3,287,000 less liabilities $300,000). 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 would have been
$182,000 higher/$182,000 lower (2013: $299,000 lower/$ 299,000 higher). The percentage change is the expected overall
volatility of the significant currencies, which is based on management's assessment of reasonable possible fluctuations.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group's exposure to interest rate risk is limited to cash at bank and short term deposits.
An official increase/decrease in interest rates of 50 (2013:50) basis points would have an adverse/favourable effect on
profit before tax of $126,000 (2013:$74,000) per annum. The percentage change is based on the expected volatility of
interest rates using market data and analysts forecasts.
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.
Majority of schools pay upfront and the nature of the customer base has a low impact on the Group's credit risk exposure.
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 by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities.
45
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 30. 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:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Consolidated
2014
$
2013
$
502,611
35,223
77,540
367,999
32,120
75,634
615,374
475,753
No share-based payment expenses or termination benefits incurred during the year (2013: Nil)
Note 31. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Ernst & Young, the auditor of the
Company:
Audit services - Ernst & Young
Audit or review of the financial statements
Other services - Ernst & Young
Financial reporting due diligence in relation to the IPO
Tax due diligence in relation to the IPO
IT due diligence in relation to the IPO
Tax advice
Preparation of financial statements
Tax and advisory
Consolidated
2014
$
2013
$
99,500
88,885
565,000
85,000
16,409
25,000
-
-
-
-
-
-
17,000
70,025
691,409
87,025
790,909
175,910
Note 32. Contingencies
There have been no contingent liabilities or assets as at reporting date which would have a material effect on the Group's
financial statements as at 30 June 2014 (2013: nil)
47
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 30. 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:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Consolidated
2014
$
2013
$
502,611
35,223
77,540
367,999
32,120
75,634
615,374
475,753
No share-based payment expenses or termination benefits incurred during the year (2013: Nil)
Note 31. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Ernst & Young, the auditor of the
Company:
Audit services - Ernst & Young
Audit or review of the financial statements
Other services - Ernst & Young
Financial reporting due diligence in relation to the IPO
Tax due diligence in relation to the IPO
IT due diligence in relation to the IPO
Tax advice
Preparation of financial statements
Tax and advisory
Consolidated
2014
$
2013
$
99,500
88,885
565,000
85,000
16,409
25,000
-
-
-
-
-
-
17,000
70,025
691,409
87,025
790,909
175,910
Note 32. Contingencies
There have been no contingent liabilities or assets as at reporting date which would have a material effect on the Group's
financial statements as at 30 June 2014 (2013: nil)
47
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 33. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Lease commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Consolidated
2014
$'000
2013
$'000
738
77
815
271
36
307
(9)
298
743
954
1,697
279
317
596
(31)
565
Operating lease commitments includes contracted amounts for commercial leases under non-cancellable operating leases
expiring within 1 to 3 years with, in some cases, options to extend. The leases have various escalation clauses. On
renewal, the terms of the leases are renegotiated.
Finance lease commitments includes contracted amounts for various plant and equipment under finance leases expiring
within 1 to 2 years. Under the terms of the leases, the Group has the option to acquire the leased assets for predetermined
residual values on the expiry of the leases.
Note 34. Related party transactions
Parent entity
3P Learning Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 36.
Key management personnel
Disclosures relating to key management personnel are set out in note 30 and the remuneration report in the directors'
report.
48
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 34. Related party transactions (continued)
Transactions with related parties
The following transactions occurred with related parties:
Other income:
Other income (software development income) from Blake eLearning Pty Ltd, a director
related entity
Payment for goods and services:
Payment for business development services from Insight Venture Partners, a director
related entity
Consolidated
2014
$
2013
$
270,980
86,800
30,853
20,000
Payment for other expenses:
Reading eggs royalty paid to Blake eLearning Pty Ltd, a director related entity
Annual strategy meeting and membership fees paid to Coraggio Pty Ltd, a director related
entity
2,943,536
2,148,713
43,537
21,024
ClickView technology was provided by ClickView Pty Limited, a director related entity for no consideration.
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables:
Trade payables to Blake eLearning Pty Ltd, a director related entity
Trade payables to Coraggio Pty Ltd, a director related entity
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 35. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
49
Consolidated
2014
$
2013
$
1,334,880
43,717
780,662
39,493
Parent
2014
$'000
2013
$'000
(Restated)
19,912
19,912
(594)
(594)
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 35. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payment reserve
Retained profits/(accumulated losses)
Total equity
Parent
2014
$'000
2013
$'000
(Restated)
20,878
13,355
36,161
24,044
24,970
21,259
25,059
21,824
2,352
7,923
827
2,352
6,453
(6,585)
11,102
2,220
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to its subsidiaries as at 30 June 2014 and 30 June 2013.
As detailed in Note 4, the comparative figures for 2013 have also been restated. The comprehensive income/(loss) has
changed from (34,000) to (594,000) with a corresponding impact on retained profits and reserves. The net asset has
changed from $5,667,000 to $2,220,000.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2013 and 30 June 2014.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, 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 36. 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 2:
Name
3P Learning Australia Pty Limited
PEG Learning Pty Limited
Into Science Pty Ltd
3P International Holdings Pty Ltd
3P Learning Pty Limited
3P Learning Limited
3P Learning Inc
3P Learning Canada
Mathletics LLP
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
New Zealand
United Kingdom
United States
Canada
India
50
Ownership interest
2013
2014
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
60.00%
100.00%
100.00%
65.00%
100.00%
100.00%
100.00%
100.00%
100.00%
60.00%
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 37. Events after the reporting period
Capital restructure and capital raising
As part of the process of listing the Company, and as detailed in the Company’s prospectus, the following events were
finalised subsequent to balance date:
Closure of 3P Employee Share Trust
On 9 July 2014, the trustee of the share trust, 3PES Pty Ltd closed the operation of the share trust by notification to all
unitholders in the trust that the units had been cancelled and shares held by the trustee were transferred to those
unitholders.
Dividend payment
On 2 June 2014, the directors declared a pre IPO dividend of $12,500,000 to be paid on 9 July 2014 to existing
Shareholders and Selling Shareholders in respect of the operation of the business prior to Listing.
Capital raising
The Company successfully raised $282.7 million pursuant to the prospectus dated 19 June 2014. The retail offer closed
on 4 July 2014, and shares commenced trading on a conditional and deferred settlement basis on 9 July 2014. Share
settlement occurred on 11 July 2014. New shares issued by the Company on 14 July 2014 amounted to 9.4 million.
Funds raised from the IPO amounting to $259.2 million were utilised by 3P Learning SaleCo Limited (a special purpose
vehicle established to sell Shares acquired from existing shareholders of the Company prior to IPO) to pay selling
shareholders to acquire 103.7 million shares. These share were transferred to new shareholders on 14 July 2014. These
shares commenced trading on a normal settlement basis as from 16 July 2014.
Conversion of Class B Shares and subsequent share split
On 10 July 2014, each Class B share on issue was converted into one fully-paid ordinary share such that the Company
has only one class of ordinary share capital on issue. In addition, the share capital of the Company underwent a share
split of 1 existing share for 830 new shares.
Binding agreement
The Group and Whatiph Business Consultants CC have entered into binding transaction for the acquisition of the South
African distributor business of Whatiph. It is estimated that the acquisition will complete on 1 October 2014.
Lead manager fee
Macquarie Capital (Australia) Limited has acted as Lead Manager to the IPO and an underwriting fee equal to 3.5% of the
funds raised was paid to Macquarie Capital (Australia) Limited upon listing on 9 July 2014. Macquarie Group Limited and
its related bodies corporate had a significant influence in the Group until the sale of shares in relation to the IPO.
No other 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.
51
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Notes to the financial statements
30 June 2014
Note 38. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Write off of investments
Share-based payments
Foreign exchange differences
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease in income tax refund due
Decrease/(increase) in deferred tax assets
Decrease in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provision for income tax
Decrease in employee benefits
Increase/(decrease) in other provisions
Increase in other operating liabilities
Net cash from operating activities
Note 39. Earnings per share
Profit after income tax
Non-controlling interest
Profit after income tax attributable to the owners of 3P Learning Limited
Consolidated
2014
$'000
2013
$'000
5,107
2,309
1,947
2
-
(293)
594
1,514
(2,425)
851
(984)
1,017
(781)
(93)
11,725
1,345
-
121
(389)
(1,303)
-
864
-
235
(1,654)
-
363
171
18,181
2,062
Consolidated
2014
$'000
2013
$'000
5,107
(55)
5,052
2,309
661
2,970
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
151,102
151,102
Weighted average number of ordinary shares used in calculating diluted earnings per share
151,102
151,102
Basic earnings per share
Diluted earnings per share
Cents
Cents
3,343.44
3,343.44
1,965.56
1,965.56
52
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Directors' declaration
30 June 2014
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 2 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; and
● there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
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
________________________________
Samuel Weiss
Chairman
25 August 2014
Sydney
53
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Shareholder information
30 June 2014
The shareholder information set out below was applicable as at 13 August 2014.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
National Nominees Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Pascal Educational Services Pty Ltd
RBC Investors Services Australia Nominees Pty Limited
Brispot Nominees Pty Ltd
Citicorp Nominees Pty Limited
Timothy Power
HSBC Custody Nominees (Australia) Limited
UBS Nominees Pty Ltd
Katherine Pike
BNP Paribas Noms Pty Ltd
RBC Investors Services Australia Nominees Pty Limited
Bond Street Custodians Limited (MACQ High Conv Fund)
BNP Paribas Nominees Pty Ltd
Bond Street Custodians Limited
Argo Investments Limited
Bond Street Custodians Limited
National Nominees Limited
Wendy Beckett
Unquoted equity securities
There are no unquoted equity securities.
56
Number
of holders
of options
over
ordinary
shares
Number
of holders
of ordinary
shares
137
141
87
188
54
607
-
-
-
-
-
-
-
-
Ordinary shares
Number held
% of total
shares
issued
26,435,440
25,590,357
17,593,272
13,695,000
9,040,239
3,987,888
3,910,221
3,036,472
2,658,172
2,503,600
2,381,376
2,079,004
1,822,900
1,460,531
990,697
802,103
700,000
635,315
605,000
519,248
120,446,835
19.62
18.99
13.06
10.16
6.71
2.96
2.90
2.25
1.97
1.86
1.77
1.54
1.35
1.08
0.74
0.60
0.52
0.47
0.45
0.39
89.39
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Shareholder information
30 June 2014
Substantial holders
Substantial holders in the Company are set out below:
National Nominees Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Pascal Educational Services Pty Ltd
RBC Investors Services Australia Nominees Pty Limited
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number held
26,435,440
25,590,357
17,593,272
13,695,000
9,040,239
% of total
shares
issued
19.62
18.99
13.06
10.16
6.71
Ordinary shares
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.
There are no other classes of equity securities.
Securities subject to voluntary escrow
Class
Expiry date
Number
of shares
Ordinary shares
The first trading day after the announcement to the
ASX of 3P Learning Limited’s audited financial
results for the financial year ending on 30 June 2015
21,892,459
57
3P Learning Limited
(Formerly known as 3P Learning Pty. Ltd.)
Corporate directory
30 June 2014
Directors
Samuel Weiss - Independent Non-Executive Chairman
Timothy Power - Chief Executive Officer
Roger Amos - Independent Non-Executive Director
Claire Hatton - Independent Non-Executive Director
Company secretary
Jonathan Kenny
Notice of annual general meeting
The details of the annual general meeting of 3P Learning Limited are:
Date: 21 November 2014
3P Learning Ltd
Level 18, 124 Walker Street
North Sydney
2:00 PM on Friday 21 November 2014
Registered office
Principal place of business
Share register
Auditor
Solicitors
3P Learning Limited
Level 18
124 Walker Street
North Sydney NSW 2060
3P Learning Limited
Level 18
124 Walker Street
North Sydney NSW 2060
The Registrar
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Ernst & Young
680 George Street
Sydney NSW 2000
King & Wood Mallesons
Level 61
Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Stock exchange listing
3P Learning Limited shares are listed on the Australian Securities Exchange (ASX
code: 3PL)
Website
http://www.3plearning.com/
Corporate Governance Statement Corporate governance statement which was approved on 22 July 2014 can be found
at http://www.3plearning.com/investors/governance/
58
3P Learning Ltd
Level 18, 124 Walker Street
North Sydney, NSW 2060
T: 1300 850 331
F: 1300 762 165
customerservice@3plearning.com.au