3P Learning Limited
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
3P Learning Limited
50 103 827 836
For the year ended 30 June 2020
For the year ended 30 June 2019
2. Results for announcement to the market
$'000
Revenues from ordinary activities
up
1.0% to
54,955
Profit from ordinary activities after tax attributable to the owners of 3P
Learning Limited
down
73.8% to
Profit for the year attributable to the owners of 3P Learning Limited
down
73.8% to
1,550
1,550
The Group has adopted Accounting Standard AASB 16 'Leases' and AASB Interpretation 23 'Uncertainty over Income Tax
Treatments' for the year ended 30 June 2020. The Accounting Standard was adopted using the modified retrospective
approach and as such the comparatives have not been restated. Refer note 2 of the financial statements for further details.
Dividends
There were no dividends paid, recommended or declared during the current financial year.
Comments
The profit for the Group after providing for income tax amounted to $1,550,000 (30 June 2019: $5,911,000).
Refer to 'Operating and financial review' in the Directors' Report for detailed commentary in relation to the results for the
year.
3. Net tangible assets
Net tangible assets per ordinary security
Reporting
period
Cents
Previous
period
Cents
1.84
3.64
As noted above, the Group has adopted the Accounting Standard AASB 16 ‘Leases’ for the year ended 30 June 2020
using the modified retrospective approach. In accordance with ASIC guidance ‘19-341MR Financial reporting focuses for
31 December 2019’, the 30 June 2020 balance of right-of-use assets amounting to $2,841,000 have been excluded from
the calculation of net tangible assets, however lease receivables of $1,758,000 and lease liabilities of $4,844,000 arising in
a similar way have been included. Excluding right-of-use assets, lease receivables and lease liabilities arising upon
adoption of Accounting Standard AASB 16 'Leases', net tangible assets per ordinary security as at 30 June 2020 are 5.31
cents.
4. Audit qualification or review
The financial statements have been audited and an unqualified opinion has been issued.
5. Attachments
The Annual Report of 3P Learning Limited for the year ended 30 June 2020 is attached.
3P Learning Limited
Appendix 4E
Preliminary final report
6. Signed
As authorised by the Board of Directors
Signed ___________________________
Date: 14 August 2020
Samuel Weiss
Chairman
Sydney
2020
Annual Report
3P Learning Limited
ABN 50 103 827 836
www.3plearning.com
A message from the CEO
Dear Fellow Shareholders,
The end of this financial year marks the completion of the first year of our 20:22 Accelerate Growth plan after restructuring the
business and laying a foundation during the 2017-2019 period so 3P could profitably accelerate sales growth. There is clear
evidence that we are now gaining sales momentum and moving the business to an accelerated growth phase.
FY2020 Performance Overview
Royalty adjusted Annual Recurring Revenue
$50.0M ↑ 1% on pcp
Licences
4.7M ↑ 3% on pcp
Statutory Revenue
$55.1M ↑ 1% on pcp
EBITDA
$14.6M ↓ 18% on pcp
Net Dollar Churn Percentage
15% 2%-pts improvement on pcp
Cash
$27.1M ↑ 5% on pcp
Royalty adjusted Annual Recurring Revenue, was up 1% on prior year. This excluded any amounts from the Ministry of
Education agreement announced on 23 June 2020, as subscriptions on this agreement begin in FY21. Statutory revenue was
up 1% and licences were up 3% on prior year with all regions recording licence growth.
As expected, Underlying EBITDA was down 18% year over year driven by investments in the USA which delivered less than
expected in sales growth due to COVID-19 market impacts and sales commission accruals for our Ministry of Education
contract. Encouragingly our Net Dollar Churn Percentage improved by 2% percentage points year over year indicating an
improvement to our customer lifetime value. We ended the year with a strong cash balance of $27.1M.
Key Financial Information
A$M (unless stated)
Statutory Revenue
Underlying EBITDA
Underlying Net Profit After Tax
Statutory Net Profit After Tax
Underlying Earnings Per Share (cents)
Cash
FY2020*
FY2019
Variation %
54.9
14.6
1.7
1.6
1.21
27.1
54.4
17.7
5.9
5.9
4.24
25.8
1%
(18%)
(71%)
(73%)
(74%)
5%
*FY2020 Statutory Net Profit After Tax includes $0.1M of corporate advisory costs.
20:22 Accelerate Growth Strategy
We announced at the beginning of this financial year our 20:22 Accelerate Growth plan which has four strategic priorities to
accelerate profitable sales growth and they are:
1. Product and customer expansion
2. Accelerate profitable sales growth in the Americas
3. Enhance customer experience and retention
4. Develop a growth focussed, high performance culture
We have made significant progress against our strategic plan. A key proof point of our progress against our strategy was
securing a US$10M Mathletics and professional services contract with a Ministry of Education in the Middle East which will be
delivered and recognised in FY21. This contract could expand to a whole of country opportunity and will serve as a light
house account for other countries in that region which represents significant new TAM for 3P.
Importantly we enter FY21 with a growing funnel of other large enterprise opportunities. These enterprise opportunities are
typically larger than AU$1M in contract value, have longer sales cycles and will accelerate our growth trajectory and
complement our transactional business.
We could not have secured this large Ministry contract or developed a strong enterprise sales funnel had it not been for all the
turnaround and foundational work we did during 2017-19.
For our flagship Mathletics brand, we introduced over 30,000 new activities, refreshed the teacher and student experience,
strengthened our 7-10 offering and launched a Spanish version to address the Latin America market and serve many districts
in the USA. We launched Readiwriter Spelling in late 2019 with strong market acceptance in our core UK and Australian
markets. We have also commenced work on Readiwriter Writing which is addressing our product portfolio gaps in literacy, the
largest category of spend in K-12 education. Our focus on customer experience across product, service, sales and
marketing and our investments in more digitised and automated journeys, helped drive retention improvements in all of our
core markets. Finally, we continued our work on developing 3P’s high performing and growth focused culture. We built
internal talent through our investment in 3PYOU an online cross functional learning space to address areas we needed to
build capability and we secured strong talent externally where necessary. We responded well to the changes brought about
by COVID-19 and importantly the team continued to execute our plan despite the sudden shift to remote working.
FY21 Outlook
Our 20:22 Accelerate Growth plan remains unchanged, however we have moderated our growth expectation for the Americas
region as a result of funding uncertainty in the USA in the wake of COVID 19. In FY2021 we expect the EMEA market to
deliver strong revenue and EBITDA growth as a result of the Ministry of Education deal in the Middle East. In the APAC
market, we expect single digit revenue and EBITDA growth. In the Americas market, we expect continued market uncertainty
due to funding challenges as a result of COVID-19 however there is a pipeline of enterprise opportunities with an
expectation of licence revenue growth for the full year.
In closing, I want to say a heartfelt thank you to each and every member of the 3P team who worked tirelessly this year,
always focused on our purpose and customer, despite the extremely challenging conditions across the globe. Thank you to
my fellow Directors and you, our shareholders who put their confidence in 3P. Finally, I want to thank our customers across
the globe. We are unified at 3P in having a relentless focus on improving teaching and learning outcomes for you.
Yours sincerely
Rebekah O’Flaherty
CEO and Managing Director
3P Learning Limited
Contents
30 June 2020
Directors' report
Auditor's independence declaration
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
2
22
23
24
25
26
27
64
65
70
72
1
3P Learning Limited
Directors' report
30 June 2020
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 2020.
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)
Rebekah O’Flaherty (Chief Executive Officer)
Roger Amos
Claire Hatton
Mark Lamont
Principal activities
The Group operates within the education technology sector. During the financial year, the principal continuing activities of
the Group consisted of the development, sales and marketing of educational software to schools and to parents of school-
aged students, delivered via a software-as-a-service subscription model.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Operating and financial review
Business overview
The Group is a global leader in online education and adaptive and collaborative learning. Our suite of mathematics, literacy
and science products are designed to facilitate dynamic and engaging learning experiences for educator and learner alike
to address the complex challenges faced by teachers and students in the modern classroom. The Group engages with
teachers to develop innovative products that intuitively mirror the teacher’s workflow and day.
The Group has over 250 educators, engineers, product designers and other personnel around the world, servicing schools
in more than 100 countries. Today the Group is trusted by 4.7 million students in over 17,000 schools across the world.
Our mission is to create the teaching moments that inspire learning.
Financial review
The profit for the Group after providing for income tax amounted to $1,550,000 (30 June 2019: $5,911,000).
A reconciliation of earnings before interest, tax, depreciation and amortisation ('EBITDA') to statutory profit after tax for the
year is as follows:
Consolidated
2020
$'000
2019
$'000
Profit attributable to owners of 3P Learning Limited
1,550
5,911
Income tax expense
Profit before income tax expense
Depreciation and amortisation expense
Interest income
Finance costs
Corporate advisory costs
Underlying EBITDA*
1,407
2,957
11,407
(270)
284
197
2,834
8,745
9,131
(267)
138
-
14,575
17,747
*
Underlying EBITDA represents earnings before interest, tax, depreciation and amortisation, excluding corporate
advisory costs.
2
3P Learning Limited
Directors' report
30 June 2020
The directors have provided underlying EBITDA after careful consideration of the requirements and guidelines contained in
ASIC’s Regulatory Guide 230 'Disclosing non-IFRS financial information'. Underlying information, including this
reconciliation to net profit after income tax expense, has been provided in order to meet the demands from users of the
financial reports for information to better understand aspects of the Group’s performance. The directors believe that
underlying EBITDA is the most appropriate measure of the maintainable earnings of the Group and thereby best reflects
the core drivers of, and ongoing influences upon, those earnings.
Revenue
Total revenue for the year ended 30 June 2020 was $54,955,000 (30 June 2019: $54,415,000). The increase was largely
due to the Americas segment achieving double digit revenue growth on the sale of subscription-based products of
$1,139,000 offset by a reduction in sub-lease revenue of $592,000 as a result of adopting AASB16 ‘Leases’ with effect
from 1 July 2019.
Performance
The profit for the Group after providing for income tax amounted to $1,550,000 (30 June 2019: $5,911,000).
Depreciation and amortisation expenses in the current year increased by $2,276,000 to $11,407,000. Current year
depreciation included $1,039,000 depreciation on right-of-use assets due to the adoption of AASB 16 'Leases' with effect
from 1 July 2019. The remaining increase was the result of a Readiwriter Spelling being released to market as well as
higher costs of obtaining customer contracts.
Corporate advisory costs of $197,000 was recorded during the year ended 30 June 2020.
At 30 June 2020 the Group has $27,083,000 of cash and cash equivalents and no debt. Surplus cash balances are put on
term deposit with the Group’s bankers to maximise interest income. The Group also has a $10,000,000 working capital
facility available with its bankers, which was undrawn at 30 June 2020.
Segment review
Segment revenue for the year is as follows:
Asia-Pacific ('APAC')
Americas
Europe, Middle-East and Africa ('EMEA')
Total Revenue
Segment Underlying EBITDA is as follows:
APAC
Americas
EMEA
Total Underlying EBITDA
2020
$'000
2019
$'000
Change
Change
$'000
%
33,612
9,132
12,211
54,955
33,668
8,585
12,162
54,415
(56)
547
49
540
(0.2%)
6.4%
0.4%
1.0%
2020
$'000
2019
$'000
Change
Change
$'000
%
14,648
(2,756)
2,683
14,575
16,808
(2,273)
3,212
17,747
(2,160)
(483)
(529)
(3,172)
(12.9%)
21.2%
(16.5%)
(17.9%)
APAC segment
Revenue and other income in APAC has declined by $56,000 due to FY19 churn issues impacting on the first half of FY20
offset by an increase in copyright licence fees. Underlying EBITDA decreased by $2,160,000 due to increase sales and
marketing headcount and commission paid to support high volume demand observed during the Coronavirus (COVID-19)
pandemic.
Americas segment
Revenue in Americas grew by 6.4% to $9,132,000 driven by double digit revenue growth on the sale of subscription based
products offset by a reduction in sub-lease income of $592,000 as a result of adopting AASB 16 ‘Leases’ with effect from 1
July 2019. Underlying EBITDA has decreased by $483,000 due to higher average sales and marketing headcount during
the year.
3
3P Learning Limited
Directors' report
30 June 2020
EMEA segment
EMEA revenue has increased by 0.4% as a result of favourable exchange rate movements. Underlying EBITDA decreased
by 16.5% to $2,683,000 mainly due to variable cost associated with a Ministry of Education agreement entered into during
June 2020. No revenue, no trade receivable and no contract liability from the agreement with this Ministry of Education
customer was recognised during the year.
The Group has net assets of $26,267,000 (30 June 2019: $24,624,000) which have increased from the previous year due
to the profit for the year.
Material Business Risks
The risk associated with the market in which the Group operates requires management to continually focus on product
innovation and change to keep pace with competitors and new entrants to the market who may develop new technologies
that could impact the Group’s performance. The Group invested $10,562,000 (30 June 2019: $8,977,000) in product
development and software and this level of investment is expected to continue in order to ensure the Group’s products
remain in demand.
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 online education
participants targeting the school K-12 segment, many with significant resources and access to capital.
Product risks: The Group has distribution rights to products owned by Blake ELearning Pty Limited (Reading Eggs,
Reading Eggspress, Wordflyers or Mathseeds) but does not own the intellectual property rights to them; however the
contractual distribution rights enjoyed by the Group do not expire.
Technology risks: The Group’s technology platforms and systems might be disrupted by new technologies or become
obsolete, which could affect the Group’s reputation, ability to generate income and financial performance.
Privacy and Data Security risks: As a technology-focused education business, compliance with privacy and data security
legislation relating to managing information security and safeguarding customer and student data remains a paramount key
consideration and impacts the way we approach everything we do and the decisions we make. We take the storage of this
data incredibly seriously and place the highest priority on ensuring its security.
Revenue risk: The global school K-12 market is driven by schools’ ability to fund the purchase of education technology for
their students. A significant decline in school funding in any market could result in reduced demand for the Group’s
products.
Commercial contractual risk: During the year the Group entered into an agreement with a National Ministry of Education
customer in the Middle East region. As this is a material contract with a foreign government body, there are increased
liability risk through events such as breach of contract, claims, disputes or litigation and increased business risk such as
failure to build strong relationships or failure to meet contractual objectives.
Exchange rate risk: Volatility in exchange rates can impact the Group’s ability to maintain or grow margins, however, to a
significant extent the Group’s business currently enjoys natural hedges: the revenue that the Group obtains in a particular
foreign currency closely matches the expenses it incurs in that currency (such as the British Pound). The Board believes
that natural hedges presently mitigate any exchange rate volatility risk for the Group to an economically acceptable level.
Significant changes in the state of affairs
In June 2020 the Group, through its UK subsidiary company, entered into an enterprise agreement with a National Ministry
of Education in the Middle East. The proceeds arising from the agreement are expected to be collected and revenue
recognised within the statement of profit or loss during FY21.
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
On 24 July 2020, the banking facilities of a $10,000,000 bank loan and a $2,000,000 bank guarantee were extended from
a maturity date of 30 July 2020 to 30 August 2020.
4
3P Learning Limited
Directors' report
30 June 2020
No other matter or circumstance has arisen since 30 June 2020 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 continuing trend of more school, teachers, parents and students to
seek more engaging and interactive online learning resources with proven pedagogical efficacy.
The Group expects to continue to focus its product development and distribution efforts on the core areas of mathematics,
literacy and science online education. The Group also expects to continue to invest in its scalable internal sales, marketing
and operational systems support its growth in both existing and new territories.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Samuel Weiss
Independent Non-Executive Chairperson
AB, MS, FAICD
Significant experience as a Senior Executive and as a Non-Executive Director in
education, technology and consumer products companies in Australia, North
America, Europe and Asia.
Chairman of Altium Limited (ASX: ALU) - Director since January 2007
Other current directorships:
Former directorships (last 3 years): Surfstitch Group Limited (ASX: SRF) - from July 2016 to August 2017 and Non-
Executive Director of Citadel Group Limited (ASX: CGL) - from 15 May 2019 to 31
October 2019.
Member of the People and Culture Committee and Member of the Audit and Risk
Committee
637,277 ordinary shares
Special responsibilities:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Rebekah O’Flaherty
Chief Executive Officer
B.Ec., MBA, GAICD
Extensive experience in technology, digital, product development, sales, marketing
and distribution across Asia Pacific, Europe and United States gained over 12 years
with Hewlett Packard, Telstra and most recently Origin Energy.
Other current directorships:
None
Former directorships (last 3 years): None
None
Special responsibilities:
112,000 ordinary shares
Interests in shares:
6,089,906 options
Interests in options:
509,175 performance rights
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Roger Amos
Independent Non-Executive Director
FCA, FAICD
Over 35 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) - since July 2006, Non-
Executive Director of HT&E Limited (ASX: HT1) – since 30 November 2018 and
Chairman of Contango Asset Management Limited (ASX: CGA) - Director since
November 2017.
Former directorships (last 3 years): Deputy Chairman of Enero Group Limited (ASX: EGG) - Director from November
Special responsibilities:
Interests in shares:
2008 to October 2018.
Chairman of the Audit and Risk Committee and Member of the People and Culture
Committee
83,970 ordinary shares
5
3P Learning Limited
Directors' report
30 June 2020
Name:
Title:
Qualifications:
Experience and expertise:
Claire Hatton
Independent Non-Executive Director
BSc, MBA, GAICD
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.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Chair of the People and Culture Committee and Member of the Audit and Risk
Committee
41,526 ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Mark Lamont
Independent Non-Executive Director
BA., Dip Ed
Deep experience in the global education and EdTech sectors with particular expertise
in technology and internet applications for education, international markets and
strategic planning. Previously held roles with myinternet Ltd and Follett Corporation.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Member of the Audit and Risk Committee and Member of the People and Culture
Committee
None
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.
Company secretary
Elizabeth Wang (B. Com, LLB, GradDipACG, MAICD) was appointed as the company secretary and legal counsel on 16
July 2020. Elizabeth is an experienced company secretary and lawyer and has held various similar positions in the listed
space for the past decade.
Previous company secretary Marta Kielich resigned on 15 June 2020. Dimitri Aroney, the Chief Financial Officer, was
appointed as the company secretary for the period from 15 June 2020 to 16 July 2020.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the
year ended 30 June 2020, and the number of meetings attended by each director were:
Full Board
People and Culture
Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
Samuel Weiss
Rebekah O’Flaherty*
Roger Amos
Claire Hatton
Mark Lamont
13
13
13
13
13
13
13
13
13
13
3
3
3
3
3
3
3
3
3
3
5
5
5
5
5
5
5
5
5
5
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
*
Rebekah O’Flaherty attended the People and Culture Committee and Audit and Risk Committee meetings as an
observer.
The Board held 13 meetings, including a two-day strategic review meeting. There were five scheduled Audit and Risk
Committee meetings including a risk workshop.
6
3P Learning Limited
Directors' report
30 June 2020
Shares under option
Unissued ordinary shares of 3P Learning Limited under option at the date of this report are as follows:
Grant date
02/09/2016
21/11/2016
31/08/2017
09/11/2017
23/08/2018
09/11/2018
Expiry date
02/09/2020
02/09/2020
31/08/2021
31/08/2021
23/08/2022
23/08/2022
Exercise
price
Number
under option
$1.26
$1.26
$1.42
$1.42
$1.75
$1.75
301,740
577,750
688,331
2,644,509
691,562
2,867,647
7,771,539
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the Company or of any other body corporate.
Shares under performance rights
Unissued ordinary shares of 3P Learning Limited under performance rights at the date of this report are as follows:
Grant date
22/11/2019
Expiry date
06/09/2022
Exercise
price
Number
under rights
$0.00
641,760
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate
in any share issue of the Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of 3P Learning Limited issued on the exercise of options during the year ended 30 June
2020 and up to the date of this report.
Shares issued on the exercise of performance rights
The following ordinary shares of 3P Learning Limited were issued during the year ended 30 June 2020 and up to the date
of this report on the exercise of performance rights granted:
Date performance rights granted
21/11/2016
Exercise
price
Number of
shares issued
$0.00
100,000
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 the liability and the amount of the premium.
Indemnity and insurance of auditor
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has
been made to indemnify Ernst & Young during the financial year and up to the date of this report.
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.
7
3P Learning Limited
Directors' report
30 June 2020
Non-audit services
Details of the amounts paid or payable of $Nil (2019: $19,055) to the auditor for non-audit services provided during the
financial year by the auditor are outlined in note 26 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 26 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 partners of Ernst & Young
There are no officers of the Company who are former partners of Ernst & Young.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument 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
immediately after this directors' report.
Auditor
Ernst & Young continues in office in accordance with section 327 of the Corporations Act 2001.
8
3P Learning Limited
Directors' report
30 June 2020
Letter from the Chair of the People and Culture Committee
Dear Fellow Shareholder
On behalf of the Board, I am pleased to present our Remuneration Report for FY20. Like most companies this year, our
business has faced unprecedented complexities and challenges in the second half of the year as a result of the COVID-19
pandemic, with multi layered challenges globally including employee productivity, wellbeing, business continuity and
motivation. Your Board is proud to say that our people rose to this challenge magnificently and worked tirelessly for our
customers who were dealing with an ‘overnight’ move to virtual learning across the globe.
The business experienced rapid and large increases in customer enquiries and consequently needed to source and train
talent in record times. The Company also shifted to more flexible work arrangements as all staff became virtual, working
from home across the globe. The successful transition to working from home has led the Company to fast track our move to
‘all roles flexible’ from FY21 with everyone now having the ability to work from anywhere and to work flexible hours in any
one day. This strategy provides greater opportunity to search for talent in different jurisdictions and for more equal employee
participation regardless of location. It has also driven a reassessment of how we utilise our office space in future with a
focus now on repurposing space for connection and collaboration and potentially reducing office footprint.
Our People Priorities
As I communicated last year in my People & Culture Chair Letter, our focus on growth for FY20-22 is underpinned by an
acceleration in our investment in our people, our people technology stack as well as leveraging the investments we’ve made
in the foundations of our business over the last four years. From a people perspective we have three priorities that underpin
our ability for our team to deliver on our strategy to ‘accelerate growth and position 3P Learning as a global SaaS brand in
collaborative and adaptive teaching and learning‘. They are:
• Accelerate our focus on a high performance, high energy culture driving both pace and successful strategy delivery
•
• Create a unique and compelling employee experience that attracts and retains great talent and powers productivity.
Invest in capability building for our team
We’ve made good progress this year with all three priorities. In the first half of FY20 we launched 3PYOU, our 3P Learning
ecosystem which is the hub of our leadership development, onboarding and sales enablement strategies. Integrated with
our learning content partner LinkedIn Learning, 3PYOU is also the platform driving our new virtual event and learning
initiative which has provided a seamless transition with the move to remote working. We also launched our global HR
Information System, BambooHR, which now integrates with all people technology and provides a global source of truth for
all people data.
We have focused on attracting top talent from the external market to drive growth which we’ve been successful at doing and
has assisted our move into much larger enterprise commercial agreements. We’ve also increased our focus on strategic
selling in all regions, by upskilling existing sales leaders. Further to this, we’ve introduced Mercer Comptrx as our key
remuneration benchmarking partner to enable more robust market benchmarking during our remuneration review process in
H2, and completed a review and redesign of our sales commission structure to create a consistent global plan for all of our
sales people across all regions.
Key People Changes
In February 2020, Simon Yeandle, our Chief Financial Officer left 3P Learning. As a consequence, his long-term incentive
share options were forfeited. In April 2020, Dimitri Aroney was appointed as Chief Financial Officer. Dimitri’s remuneration
details are outlined in the Remuneration Report. He will be eligible to receive an annual short term incentive (‘STI’) with a
target STI of 25% of his fixed annual remuneration, and a long term incentive package which may entitle him to receive an
equity based award under the long term incentive (‘LTI’) plan with an ‘at target’ value equivalent to 25% of his fixed annual
remuneration.
In June 2020, Marta Kielich, our General Counsel and Company Secretary left 3P Learning. In July 2020, Elizabeth Wang
was appointed as her replacement.
Remuneration
We believe that 3P Learning’s remuneration approach provides good alignment between business objectives, shareholder
returns and executive remuneration which motivates and retains talented executives. With 3P Learning now poised to be a
growth orientated technology company, we have sharpened our Remuneration Philosophy as follows:
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3P Learning Limited
Directors' report
30 June 2020
● Equal to market for base salary - comparable to what an employee could receive in the market. Market to be determined
by securing relevant benchmarking data for each job family and location, and to be based on the 50th percentile as the
average base salary for a competent job holder.
● Above market rates for short and long term variable incentive compensation - more than what an employee could get in
the market on collation of external data from a group of relevant benchmarked companies. Various incentives are the
vehicle for driving and rewarding performance and will be reviewed annually and compared to relevant market vehicles
and quantum.
● Short term incentives, based on annual revenue and EBITDA performance, and tied to an ambitious but achievable
target and gated at 95% achievement of target. In FY20 we increased the weighting on revenue from 50% to 70% of
revenue and reduced the weighting of EBITDA from 50% to 30% to reflect the accelerating growth focus of 3P Learning.
● Long term incentives tied to revenue and EPS performance and tied to aspirational targets which are greater than STI
targets. Set over a three-year period and rewarded in the form of equity grants and gated at 95% of achievement of
target. LTI awards range from 25-50% of base remuneration and are offered to senior executives only. In FY20 we
changed the equity vehicle from options to performance rights.
●
In FY21 we plan to make changes in our Incentive Plans which include:
●
Increasing the Company wide short term incentive (which was implemented in FY18) from 3% to 5% of fixed
compensation for individuals classified as ‘team members’ increasing the portion of remuneration linked to company
performance and rewarding all staff for achievement of results.
Introduce a new plan for key ‘non-C suite talent’ who the Company identifies are in a position to materially influence the
strategic outcomes of the business. Once these participants are identified, they will be eligible to receive performance
rights upon the achievement of targets set in the year. The performance rights for these participants will vest over a two-
year period and will be awarded to the participant on the condition that they remain employed with the Company at the
time of vesting.
● The Company has improved the incentive structure for its growing Sales team.
Diversity and Inclusion
Diversity and inclusion is central to who we are at 3P Learning. In 2017 the Board set an aggressive target of 50% gender
diversity at a Board and senior leadership team level as well as in aggregate across the organisation globally. At an
aggregated level, women comprised 53% of our employees globally as at 30 June 2020. At the Board and senior leadership
team level (reporting directly to the CEO) 40% and 33% were female respectively as at 30 June 2020 which is behind our
target. 41% of the extended leadership team are female. We are pleased to say that 75% of all the people we have
promoted internally into leadership positions in FY20 have been female which is a reflection of our focus on building
diversity in the leadership pipeline. Increasingly our focus is not purely on gender diversity but also diversity of thought,
experience and background to ensure we reflect our global customer base.
As we did last year, we partnered with ‘Culture Amp’, a global software company, which facilitates real time and regular
feedback insights from our employees. These insights now underpin our employee engagement and experience roadmap,
and the analytics are already enabling a much more robust approach to measuring and tracking employee engagement.
Indeed, these insights have been critical to steer our approach to our COVID-19 engagement platform and will help us make
important decisions as we address the ongoing uncertainty associated with the coronavirus.
3P Learning’s business performance and future is underpinned by its incredible people. As we move into a new growth
phase with an increased focus on more large-scale enterprise opportunities with adaptive and tailored solutions, increasingly
sophisticated digital sales and marketing and products that utilise data and AI, aligning our people strategy becomes even
more critical. Your Board believes in our plan to invest in the areas that will make a difference now and into the future. We
are constantly reviewing our approach at 3P Learning and I welcome your feedback so we can continue to evolve our
remuneration and governance framework.
We thank you for your continued support of 3P Learning.
_________________________
Claire Hatton
Chair of the People and Culture Committee
14 August 2020
10
3P Learning Limited
Directors' report
30 June 2020
Remuneration report (audited)
1. Remuneration report overview
The Directors of 3P Learning Limited present the Remuneration Report (the Report) for the Company and its controlled
entities for the year ended 30 June 2020 (the Group). This Report forms part of the Directors’ Report and has been audited
in accordance with section 300A of the Corporations Act 2001.
The Report details the remuneration arrangements for the Company’s key management personnel (KMP) comprised of:
• Non-executive directors (NEDs)
• Executive directors and senior executives (collectively the executives).
The KMP of the Group are those persons who, directly or indirectly, have authority and responsibility for planning, directing
and controlling the major activities of the Company and Group. The table below outlines the KMP of the Group and their
movements during the financial year.
Name
Non-Executive Directors
Samuel Weiss
Roger Amos
Claire Hatton
Mark Lamont
Executive Director
Rebekah O’Flaherty
Other KMP
Simon Yeandle
Dimitri Aroney
Position
Non-executive Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Term as KMP
Full financial year
Full financial year
Full financial year
Full financial year
Managing Director (MD)/ Chief
Executive Officer (CEO)
Full financial year
Chief Financial Officer
Chief Financial Officer
Ceased 27 February 2020
Appointed 1 April 2020
The focus of this report is on the remuneration arrangements and outcomes for the KMP listed in the table above. It also
outlines information about the remuneration policy and arrangements for the Group’s senior executive team more broadly.
2. Overview of executive remuneration
Overview of 3P Learning remuneration policy and structures
The People and Culture Committee (P&CC) is responsible for developing, reviewing, making recommendations and
providing assistance and advice to, the Board on the remuneration arrangements for the Company’s directors, its executives
and in relation to key employment policies and practices. The performance of the Group depends on the quality of its
directors and senior executives. The Company’s remuneration philosophy is to attract, motivate and retain high performance
and high quality talent.
The Group's executive reward framework is based on objectives to:
• accelerate growth and profitability;
• align senior executive rewards with achievement of strategic objectives and the delivery of shareholder value; and
• provide competitive remuneration packages that recognise both individual and organisational performance.
The remuneration framework, and any potential changes to that framework, are assessed on the following guiding
principles:
• alignment to long term value creation
•
•
• motivating to executives
• encouraging of executive ownership and accountability to the Company and its stakeholders.
fairness for all stakeholders
simple to understand and administer
The P&CC and the Board have structured an executive remuneration framework that is market competitive, is designed to
retain and motivate the Company’s leadership team and sets a standard for transparency and good corporate governance.
The determination of non-executive director and executive remuneration is separately addressed below.
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3P Learning Limited
Directors' report
30 June 2020
During the reporting period the P&CC did not engage external advisors to provide insights on market practice for incentives
structures and alternate equity vehicles as well as structuring options for equity grants to non-KMP levels of management
(i.e. separate to the LTI plan used to incentivised executive level management, including KMP). The Group did not seek or
receive any remuneration recommendations within the definition of the Corporations Act.
Our executive remuneration policy and structures
The Group’s compensation policy is designed to attract, retain and motivate executives. To accomplish this goal, executives
receive fixed remuneration and variable remuneration consisting of short-and long-term incentives. Executive remuneration
levels are reviewed annually by the P&CC and agreed by the Board to determine the optimal mix between fixed and ‘at risk’
incentive components for the Chief Executive Officer and other executives.
The executive remuneration structure has three key components stated below, including what the Board has agreed is the
optimal mix between fixed and ‘at risk’ components for the Chief Executive Officer and other executives. Details for each of
the individual components in FY19, and changes implemented for FY20 are as follows:
Fixed
Variable or ‘At Risk’ Performance Based
Fixed remuneration
Attracts and retains high performance talent
Short term incentive (STI)
Rewards current year performance
Long term incentive (LTI)
Rewards longer term sustainable
performance
FY19
• Fixed salary set by
• 25 - 50% of fixed
• 25 - 50% of fixed
reference to appropriate
benchmark information and
experience of individuals
Includes superannuation
and salary-sacrifice non-
monetary benefits
•
remuneration at target STI
remuneration at target LTI
• Annual cash incentive
• Grant of options
• 12-month period
• Targets linked to group
performance:
- revenue (50%);
- underlying EBITDA (50%)
• 3-year performance period
• Performance hurdles linked
to group performance:
- revenue (50%);
- EPS growth (50%)
FY20
No change to policy and structure
• 25 - 50% of fixed
• 25 - 50% of fixed
remuneration at target STI
remuneration at target LTI
•
Increased focus on revenue
growth
• Weighting of group
performance targets
changed to:
- revenue (70%);
- underlying EBITDA (30%)
• Encourage greater
executive ownership of the
Company
• Grants of performance
rights
Elements of executive remuneration
Fixed remuneration
The fixed remuneration component consists of base salary, superannuation and other non-monetary benefits and is
designed to reward the executive’s scope of their role and responsibilities, their skills, experience and qualification and
individual and group performance.
It is also determined with reference to available market data including benchmarks to comparable roles in similar companies
and is reviewed annually by the P&CC.
The fixed remuneration for the Chief Executive Officer is reviewed annually by the P&CC, with changes to be approved by
the Board, following consideration of her performance against her annual KPIs.
Performance based remuneration
The ‘at risk’ performance-based remuneration components for executives align reward with the achievement of annual and
longer term objectives of the Group, and the optimisation of shareholder value over the short and long term.
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3P Learning Limited
Directors' report
30 June 2020
STI
The STI plan provides executives with the opportunity to earn an annual incentive award which is delivered in cash. The key
objectives of the STI program are to drive and reward outstanding performance against annual strategic financial and
operational performance objectives, promote effective management of capital and position the Company to continuously
achieve in future years.
How is it paid?
How much can executives earn?
How is performance measured?
When is it paid?
Deferral terms
100% of any STI award is paid in cash after the assessment of annual
performance.
Senior executives have a target STI opportunity of up to 25% of fixed
remuneration while the Chief Executive Officer has a target STI opportunity of up
to 50% of fixed remuneration.
Target STI is designed to deliver sustainable performance and continued growth
by retaining talent and rewarding performance and is set in the beginning of the
financial period. Participants have the opportunity to earn up to 160% of the STI
target for achieving stretch performance (i.e. above target performance against
the financial performance measures.
The STI award is gated at 95% achievement of the STI target (for example,
where, in the event of 95% of the defined target being achieved, half of the
incentive will be paid. Additionally, if more than 100% of the target is achieved,
the senior executives will be awarded a payment of more than 100% of the
incentive).
A summary of the target incentives is as follows:
Financial measure – level of
performance
Below Threshold (i.e. <95% of
Target)
At Threshold (95% of Target)
Target
Above Target (i.e. > 100% of Target)
* Pro-rata payment made between these points
% of Target incentive award*
0%
50%
100%
Up to 160%
Financial performance measures are set for executives based solely on profit
and revenue targets. The Board considers the financial measures to be
appropriate as they are aligned with the Group’s objective of delivering profitable
growth and improved shareholder returns.
For FY20, the weighting of the performance measures has been adjusted to
align with our strategy focused on acceleration of revenue growth. Currently, the
Company’s STI Plan does not include non-financial performance objectives.
A summary of the performance measures and weightings in the two prior years
are as follows:
CEO
KMP
Senior Executives
Revenue
FY19
50%
50%
50%
FY20
70%
70%
70%
Underlying EBITDA
FY20
30%
30%
30%
FY19
50%
50%
50%
The STI award is determined after the release of the Company’s full financial
year results in August following a review of performance over the year against
the STI financial performance measures by the CEO (and in the case of the
CEO, by the Board). The Board approves the final STI award based on this
assessment of performance. The STI award is wholly paid in cash within 4
months after the end of the performance period.
Payment of STI is not deferred.
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3P Learning Limited
Directors' report
30 June 2020
LTI
The objective of the LTI plan is to link the long-term reward for senior executives with the creation of shareholder value
through the allocation of equity awards which are subject to specific performance conditions.
How is it paid?
Executives are eligible to receive performance rights, which are governed by the
Company’s equity incentive plan rules. Once vesting conditions have been met,
ordinary shares will be issued to eligible executives.
How much can executives earn?
Senior Executives have a target LTI opportunity of up to 25% of fixed
remuneration and the Chief Executive Officer has a target LTI opportunity of up
to 50% of fixed remuneration.
How is performance measured?
When is it paid?
To date, all grants of performance rights have been weighted equally: revenue
and Earnings Per Share (EPS). The Board considers the combination of revenue
and EPS thresholds an appropriate balance to ensure that ‘top line’ growth is
pursued over the medium to long term, whilst growth in earnings and a focus on
shareholder value is maintained. Additionally:
•
•
the revenue threshold has been adopted in light of the Group’s desire to
accelerate growth to achieve national and international expansion; and
the EPS threshold provides a relevant indicator of shareholder value and
a clear target to drive and motivate senior executive performance.
Participants in the LTI plan can earn an ‘at target’ amount equal to a percentage
of their annual fixed remuneration in the range of 25% - 50%. The number of
performance rights awarded depends on a VWAP calculation done prior to the
release of the grant letter. The number of performance rights that will be issued
to each participant with respect to FY20 LTI grants, will be calculated by dividing
the ‘at target’ amount by the value of each right.
A summary of the proportion of performance rights that may be awarded on
financial performance is determined based on the following schedule:
Performance level
Below threshold
Threshold
Target
Stretch
% of Target incentive awarded
0%
80%
100%
150%
Performance Rights granted under the LTI plan will only vest upon satisfaction of
certain vesting conditions. The performance thresholds are defined by the Board
and grants are made in August or September of each year following the end of
the full financial year period. Once the Performance Rights vest, subject to the
terms of the plan, the Company will issue or allocate the performance rights to
the executive.
All Performance Rights have a 3-year vesting (performance) period. Any awards
which do not meet the performance conditions at the end of the performance
period will lapse.
All performance shares issued at the end of the 3-year period will rank equally in
all respects with other ordinary shares in the Company (except in regard to any
rights attaching to such other Shares by reference to a record date prior to the
date of their allocation or transfer).
Deferral terms
All Performance Rights will vest at the end of the 3-year vesting period.
14
3P Learning Limited
Directors' report
30 June 2020
What happens
leaves?
if an executive
If an executive ceases to be an employee of the Company before the vesting
date of the Performance Right by reason of resignation, dismissal, or any other
circumstance determined by the Board to be ‘Bad Leaver’, all unvested
Performance Rights lapse on the date of cessation.
Is there a clawback provision?
What happens if there is a change of
control?
If an executive ceases to be an employee of the Company before the
Performance Rights vest for any reason other than as a Bad Leaver (which may
include redundancy, retirement, death or total and permanent disability), the
Board may, in its discretion, determine that all or a portion of unvested
Performance Rights vest immediately or at some future time. If the Board does
not make a determination, Performance Rights will remain on-foot and are tested
and vest on the original vesting date to the extent that the applicable vesting
conditions have been met.
Yes. Awards may also be forfeited if a ‘claw back’ event occurs during the
performance period. A claw back event includes circumstances where an
executive has engaged in fraud, dishonesty or gross misconduct, where the
financial results that led to the equity award are subsequently shown to be
materially misstated, or where the behaviour of a senior executive brings the
Company into disrepute or impacts the Company’s long term financial strength.
Where a change of control event occurs prior to the Performance Rights vesting,
the Board may, in its discretion, determine whether all or a number of the
Performance Rights lapse at the time of the change of control event or at a
future point in time, or vest at the time of the change of control event or at a
future point in time.
Are executives eligible for dividends? Performance Rights do not carry a right to vote or to dividends or, in general, a
right to participate in other corporate actions such as bonus issues.
Changes for FY20
The Board has determined that Performance Rights, rather than share options (in FY19 and prior years), will be granted
under the LTI plan for awards from FY20 onwards. Performance Rights are more aligned with the Group’s growth profile.
3. Performance and executive remuneration outcomes in FY20
The actual remuneration earned by executives in FY20 against the prior year is set out below. This provides shareholders
with a view of the remuneration actually paid to executives for performance in FY20 and the value of LTIs that vested during
the period.
Overview of company performance
The table below shows the Group’s performance history, the Company’s share price and the effect on shareholder value
since the IPO in 2014.
Financial Year
2014
2015
Revenue ($m)
Underlying EBITDA ($m)
EPS (cents)
Share Price ($) 30 June**
36.1
13.0
4.03
-
44.2
16.9
3.04
2.22
2016
49.3
13.3
2.66
0.74
2017
52.5
16.0
(5.11)
1.05
2018
55.4
19.6
(13.42)
1.25
2019
54.4
17.7*
4.24
0.98
2020
54.9
14.6
1.11
0.86
*In this reporting period the result is the same as Statutory EBITDA
**The Company listed on the Australian Securities Exchange on 9 July 2014
15
3P Learning Limited
Directors' report
30 June 2020
Executive remuneration
Details of statutory remuneration (Australian Accounting Standards (‘AAS‘)) for Executive KMP, for the years ended 30 June
2020 and 30 June 2019, are set out below:
Executive KMP
Salary
$
Cash
STI*
$
Post
employment
benefits
(Super-
annuation)
Accounting
value of LTI
awards and
additional
incentives**
$
$
R O’Flaherty (Chief Executive Officer)
2020
2019
625,000
-
625,000 220,312
D Aroney (Chief Financial Officer)#
2020
2019
87,291
-
-
-
25,000
25,000
232,400
(6,546)
8,293
-
-
-
S Yeandle (Former Chief Financial Officer)#
2020
2019
238,105
-
25,000
(68,810)
182,558
220,514
54,412
12,659
68,810
-
Termination
Payments***
Total
Remuneration
Performance
Related
Equity
Based
$
-
-
-
-
$
%
%
882,400
863,766
95,584
-
376,853
356,395
26%
25%
-
-
26%
-
-
-
18%
35%
18%
19%
# Simon Yeandle ceased to be a member of the KMP, effective 27 February 2020. Dimitri Aroney became a member of the KMP, effective 27 February 2020 where the company
recognised Mr Aroney who was acting in a caretaker capacity and remunerated accordingly (including a pro-rated STI award) for the period 27 February 2020 to 1 April 2020
whereupon Mr Aroney was formally appointed as the Chief Financial Officer under an Executive Service Agreement, the details which are provided later in this report.
*Cash STI is physically paid after the end of the financial year to which it relates but is allocated to the earning year.
**LTI is the portion of the accounting value of LTI equity granted or to be granted for the current and prior periods attributable to the reporting period and reflects the expected
vesting outcome. 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.
*** S Yeandle’s termination payment were paid accordance with his executive service agreement.
In line with general market practice a (non-AAS) presentation of pay with respect to the FY20 and FY19 reporting periods
are provided in the table below, to give shareholders a more informative picture of actual remuneration outcomes.
Post
employment
benefits
(Super-
annuation)
LTI and
additional
incentives
vested**
Total
Remuneration
Termination
Payments
Cash STI*
Salary
$
-
R O’Flaherty (Chief Executive Officer)
$
2020
2019
625,000
625,000
220,312
D Aroney (Chief Financial Officer)#
2020
2019
87,291
-
-
-
S Yeandle (Former Chief Financial Officer)#
2020
2019
238,105
220,514
-
54,412
$
$
25,000
25,000
8,293
-
25,000
12,659
71,000
-
-
-
-
-
$
-
-
-
-
$
721,000
870,312
95,584
-
182,558***
-
445,663
287,585
# Simon Yeandle ceased to be a member of the KMP, effective 27 February 2020. Dimitri Aroney became a member of the KMP, effective 27 February 2020 where the company
recognised Mr Aroney who was acting in a caretaker capacity and remunerated accordingly (including a pro-rated STI award) for the period 27 February 2020 to 1 April 2020
whereupon Mr Aroney was formally appointed as the Chief Financial Officer under an Executive Service Agreement, the details which are provided later in this report.
* Cash STI is physically paid after the end of the financial year to which it relates but is allocated to the earning year.
**100,000 shares were issued to R O’Flaherty on 2 September 2019. 2,015,419 options were vested during the year. The intrinsic value of these vested options is nil
*** S Yeandle termination payment was made in accordance with his executive service agreement
16
3P Learning Limited
Directors' report
30 June 2020
Short term incentives
STI for the 2020 financial year
The target STI opportunity for the financial year ended 30 June 2020 was an amount equal to 25%-50% of the senior
executive’s fixed remuneration (50% in the case of the Chief Executive Officer).
Who are the participants of the STI?
There were four senior executive participants in the STI program for FY20 (the CEO and three other C-level senior
executives) and nil amounts were paid to those senior executives as STI awards relevant to the FY20 period. Specific
information relating to the STI component to the Chief Executive Officer and Chief Financial Officer for FY20 is set out
below. No payments were awarded as a result of the STI metrics not being achieved for FY20:
Performance measure
FY20 – At Target
FY20 Performance
Revenue
Underlying EBITDA**
$62,500,000
$20,700,000
$54,955,000
$14,575,000
% of Target
Incentive Award*
0%
0%
Weighting
70%
30%
*Based on the metrics outlined under ‘How much can executives earn?‘ on the previous page and pro-rated for that portion of the reporting period that the relevant executive was
employed.
**Underlying EBITDA represents earnings before interest, tax, depreciation, and amortisation, excluding corporate advisory costs.
Long term incentives
Who are the participants of the LTI?
The Chief Executive Officer and other C-level senior executives are eligible to participate in the LTI plan. As at 30 June
2020, there were 2 participants in the plan.
Performance conditions and disclosure of targets
The publication of prospective Revenue and EPS targets for future performance periods would require the disclosure of
commercially sensitive information. Accordingly, the Company will not disclose prospective targets but will disclose historic
targets and the Company’s performance against those targets. The hurdles for the options granted in FY19 will be disclosed
in August 2021 after the applicable performance period.
2018 LTI Award – Performance condition outcomes based on FY20 results
The first grant of options under the Company’s LTI plan was made in FY18, with performance conditions to be tested with
respect to the audited FY20 full year results. Consequently, no LTI Awards vested during the reporting period. Based on the
financial results for FY20, the following outcomes are expected for LTI grants awarded in FY18:
Performance measure
Revenue
EPS
FY20
At Target
$80,000,000
$0.0669
FY20
Performance
Outcome
% of Target
Incentive Awarded
Weighting
$54,955,000
$0.0111
Below threshold
Below Threshold
0%
0%
70%
30%
The Chief Executive Officer is the only member of KMP that holds FY18 LTI Awards. Based on FY20 performance, it is
expected that all of the 2,644,509 FY18 LTI options held by the Chief Executive Officer will lapse as a result of the FY20
performance thresholds not being reached.
17
3P Learning Limited
Directors' report
30 June 2020
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 have not been granted or issued equity as part of their remuneration. To preserve
independence and impartiality, non-executive directors do not receive performance related compensation and are not
eligible to participate in the Company’s equity incentive plan.
Non-executive directors' fees and payments are reviewed annually by the P&CC. The Chairman's fees are determined
independently to the fees of other non-executive directors based on comparative roles in the external market.
ASX listing rules require the aggregate non-executive directors’ remuneration be determined periodically by a general
meeting. The most recent determination was in 2017 when shareholders set the aggregate remuneration at $900,000 per
annum. Board and committee fees, as well as statutory superannuation contributions made on behalf of the non-executive
directors, are included in the aggregate fee pool.
The table below shows the structure and level of non-executive director fees (exclusive of superannuation) for the financial
years ended 30 June 2020 and 30 June 2019.
Fee applicable
Board
Audit and Risk Committee
People and Culture Committee
FY
2020
2019
2020
2019
2020
2019
Chair ($)
Member ($)
185,000
185,000
20,000
20,000
20,000
20,000
95,000
95,000
10,000
10,000
10,000
10,000
Details of the remuneration for the Chairman and independent non-executive directors for the financial years ended 30 June
2020 and 30 June 2019 are set out in the table below.
Name
S Weiss (Chairman)
R Amos
C Hatton
M Lamont
Total
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Fees and
allowances
$
205,000
Post-employment
benefits
$
19,475
205,000
125,000
125,000
125,000
125,000
115,000
115,000
570,000
570,000
19,475
11,875
11,875
11,875
11,875
10,925
10,925
54,150
54,150
Total
$
224,475
224,475
136,875
136,875
136,875
136,875
125,925
125,925
624,150
624,150
18
3P Learning Limited
Directors' report
30 June 2020
Service agreements
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 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 as at 30 June 2020 are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Rebekah O’Flaherty
Chief Executive Officer
1 June 2016
Open ended
Rebekah will receive a fixed annual remuneration of $650,000, inclusive of statutory
superannuation. Rebekah will be eligible to receive an annual short-term incentive
with a target STI of 50% of her fixed annual remuneration, as determined by the
Board. Payment of the cash bonus will depend on the Group’s performance and
Rebekah’s achievement of certain key performance indicators or at the discretion of
the Board. As part of a long-term incentive package and subject to shareholder
approval, Rebekah may be entitled to receive an equity-based award under the LTI
plan with a value equivalent to 50% of her fixed annual remuneration. Either party
may terminate the employment contract by giving six months’ notice in writing. The
Company may terminate Rebekah’s employment contract by making a payment in lieu
of notice. In the event of serious misconduct or other specific circumstances
warranting summary dismissal, the Company may terminate Rebekah’s employment
contract immediately by notice in writing and without payment in lieu of notice.
Dimitri Aroney
Chief Financial Officer
1 April 2020
Open ended
Dimitri will receive annual fixed remuneration of $285,000 inclusive of statutory
superannuation. Dimitri will be eligible to receive an annual short-term incentive with
a target STI of 25% of his fixed annual remuneration, as determined by the Board.
Payment of the cash bonus will depend on the Group’s performance and Dimitri’s
achievement of certain key performance indicators or at the discretion of the Board.
As part of a long-term incentive package Dimitri may be entitled to receive an equity-
based award under the LTI plan with a value equivalent to 25% of his fixed annual
remuneration. Either party may terminate the employment contract by giving three
months’ notice in writing. The Company may terminate Dimitri’s employment
contract by making a payment in lieu of notice. In the event of serious misconduct or
other specific circumstances warranting summary dismissal, the Company may
terminate Dimitri’s employment contract immediately by written notice and without
payment in lieu of notice.
19
3P Learning Limited
Directors' report
30 June 2020
Share-based compensation
Issue of shares
Details of shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2020 are set out below:
Name
Date
Shares
Issue price
$
Rebekah O’Flaherty
02 September 2019
100,000
$0.71
71,000
The above 100,000 shares were awarded as part of the remuneration package negotiated with Rebekah O’Flaherty upon
her commencement with the Company on 1 June 2016 as Chief Executive Officer. The performance rights were subject
to Rebekah remaining in the role of Chief Executive Officer until 1 September 2019. These were approved at the 2016
Annual General Meeting and vested on 2 September 2019 in the financial period.
Options
No options were issued to KMP as part of compensation during the year ended 30 June 2020. No NEDs held options
during the year and no additional options have been granted since the end of the reporting period as the structure of
incentive grants was changed from options to performance rights for FY20. Details of the performance hurdles are
included in the Long-Term Incentive section of this Remuneration Report. 301,704 options (comprising of former year
option plans) vested with nil intrinsic value during the financial year ended 30 June 2020.
Performance Rights
The Company issued 714,803 new performance rights to KMP during the year ended 30 June 2020 and no additional
performance rights have been granted since the end of the reporting period. The Company noted that 205,625
performance rights were forfeited during the financial year ended 30 June 2020 due to the departure of Simon Yeandle.
No performance rights have been issued to NEDs to date.
Name
Number
Accounting
Grant Date
Accounting
fair value
Exercise
Price
Vesting Date
Expiry Date
Rebekah O’Flaherty
509,175
22 Nov 2019
$0.875
Simon Yeandle
205,628
22 Nov 2019
$0.875
$0
$0
31 August
2022
31 August
2022
6 September
2023
6 September
2023
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:
Balance at the
start of the year
Received as part
of remuneration
Additions
Disposals
/other
Balance at the
end of the year
Ordinary shares
Non-Executive Directors
Samuel Weiss
Roger Amos
Claire Hatton
Mark Lamont
Executive KMP
Rebekah O’Flaherty
Dimitri Aroney
562,277
61,743
31,000
-
12,000
7,121
674,141
-
-
-
-
100,000
-
75,000
22,227
10,526
-
-
-
-
-
-
-
-
-
637,277
83,970
41,526
-
112,000
7,121
100,000
107,753
-
881,894
20
3P Learning Limited
Directors' report
30 June 2020
Other share-based holdings
The number of performance rights and options held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Balance at the
start of the year
Granted
during the
year
Vested Expired/ forfeited
Balance at the end of the year
Rebekah
O’Flaherty
Simon
Yeandle*
Options
7,527,575
-
(577,750)*
(1,437,669)**
Performance
Rights
500,000
509,175
(100,000)
(400,000)
Options
710,717
-
Performance
Rights
-
205,628
-
-
(710,717)
(205,608)
5,512,156
509,175
-
-
*577,750 options vested in FY20 with respect to FY17 LTI grant with nil intrinsic value.
**1,437,669 options lapsed in FY20 with respect to FY17 LTI plan.
Other transactions with KMP and their related parties
No loans have been made to any of the KMP or their related parties during FY20.
This concludes the remuneration report, which has been audited.
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
14 August 2020
Sydney
21
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of 3P Learning
Limited
As lead auditor for the audit of the financial report of 3P Learning Limited for the financial year ended
30 June 2020, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of 3P Learning Limited and the entities it controlled during the financial
year.
Ernst & Young
Renay Robinson
Partner
14 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
22
3P Learning Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
Revenue
Other income
Interest revenue calculated using the effective interest method
Expenses
Employee benefits expense
Depreciation and amortisation expense
Professional fees
Technology costs
Marketing expenses
Occupancy expenses
Administrative expenses and foreign exchange
Operating profit
Finance costs
Corporate advisory costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners of 3P
Learning Limited
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 attributable to the owners of 3P
Learning Limited
Note
Consolidated
2020
$'000
2019
$'000
5
54,955
54,415
6
6
6
7
148
270
195
267
(29,911)
(11,407)
(1,136)
(3,701)
(2,066)
(1,061)
(2,653)
(26,172)
(9,131)
(938)
(3,486)
(1,752)
(2,539)
(1,976)
3,438
8,883
(284)
(197)
(138)
-
2,957
8,745
(1,407)
(2,834)
1,550
5,911
(213)
(213)
(295)
(295)
1,337
5,616
Cents
Cents
Basic earnings per share
Diluted earnings per share
35
35
1.11
1.11
4.24
4.24
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
23
3P Learning Limited
Statement of financial position
As at 30 June 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Lease receivables
Other assets
Total current assets
Non-current assets
Plant and equipment
Intangibles
Right-of-use assets
Lease receivables
Deferred tax asset
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Contract liabilities
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2020
$'000
2019
$'000
8
9
10
11
12
13
14
10
7
11
15
16
17
18
7
19
16
18
19
20
21
27,083
9,520
565
1,591
38,759
651
20,865
2,841
1,193
4,758
48
30,356
25,766
9,000
-
1,812
36,578
1,042
19,551
-
-
5,031
17
25,641
69,115
62,219
8,181
23,877
-
1,615
161
1,778
35,612
3,292
-
3,229
715
7,236
7,288
24,310
14
-
389
1,479
33,480
3,356
4
-
755
4,115
42,848
37,595
26,267
24,624
34,494
7,954
(16,181)
34,374
8,049
(17,799)
26,267
24,624
The above statement of financial position should be read in conjunction with the accompanying notes
24
3P Learning Limited
Statement of changes in equity
For the year ended 30 June 2020
Consolidated
Balance at 1 July 2018
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Total equity
$'000
34,233
8,485
(23,710)
19,008
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
-
-
-
-
(295)
(295)
5,911
-
5,911
(295)
5,911
5,616
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 20)
141
(141)
-
-
Balance at 30 June 2019
34,374
8,049
(17,799)
24,624
Consolidated
Balance at 1 July 2019
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Total equity
$'000
34,374
8,049
(17,799)
24,624
Adjustment on initial adoption of AASB 'Leases' (note 2)
-
-
68
68
Balance at 1 July 2019 - restated
34,374
8,049
(17,731)
24,692
Profit after income tax expense 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:
Contributions of equity, net of transaction costs (note 20)
Share-based payments (note 34)
-
-
-
120
-
-
(213)
(213)
(71)
189
1,550
-
1,550
(213)
1,550
1,337
-
-
49
189
Balance at 30 June 2020
34,494
7,954
(16,181)
26,267
The above statement of changes in equity should be read in conjunction with the accompanying notes
25
3P Learning Limited
Statement of cash flows
For the year ended 30 June 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other finance costs paid
Income taxes paid
Note
Consolidated
2020
$'000
2019
$'000
66,981
(52,576)
289
(284)
(1,260)
63,192
(49,457)
230
(138)
(1,651)
Net cash from operating activities
33
13,150
12,176
Cash flows from investing activities
Payments for plant and equipment
Payments for intangibles
Receipts from sub-leases
Net cash used in investing activities
Cash flows from financing activities
Repayment of borrowings
Repayment of lease liabilities
Net cash used in financing activities
Net increase 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
12
33
(136)
(10,597)
528
(425)
(9,002)
-
(10,205)
(9,427)
-
(1,433)
(1,433)
1,512
25,766
(195)
(12)
-
(12)
2,737
23,014
15
Cash and cash equivalents at the end of the financial year
8
27,083
25,766
The above statement of cash flows should be read in conjunction with the accompanying notes
26
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 1. General information
The financial statements cover 3P Learning Limited as a Group consisting of 3P Learning Limited (the 'Company' or 'parent
entity') and its subsidiaries (collectively referred to as the 'Group'). 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.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 14 August 2020. 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 or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations adopted during the year are most relevant to the Group:
AASB Interpretation 23 'Uncertainty over Income Tax Treatments'
The Group has adopted Interpretation 23 from 1 July 2019. In the past, the Group has only recognised claims against tax
authorities when considered virtually certain. Following transition, claims are recognised when probable. Upon adoption of
the interpretation, the Group considered whether it has any uncertain tax positions, particularly those relating to the
Research and Development Tax Incentive in Australia. The Group has determined, based on its past claims, it is probable
that the current estimated tax treatment will be accepted by Australian Taxation Office and the tax provision is calculated in
line with tax filings.
AASB 16 'Leases'
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates
the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets,
right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line
operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in
operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier
periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses before lessor accounting under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or
loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the
principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, assets held
under a finance lease are presented as a receivable at an amount equal to the net investment in the lease. Interest
revenue is recognised over the lease term, based on a pattern reflecting the implicit rate of return on a lessor's net
investment in the lease.
At transition, for leases classified as operating leases under AASB 117 ‘Leases’, lease liabilities were measured at the
present value of the remaining lease payments, discounted using the determined incremental borrowing rate, as
appropriate for each identified lease arrangement, as at 1 July 2019. Right-of-use assets were measured at their carrying
amount as if AASB 16 had been applied since the lease commencement date, and were discounted using the lease’s
incremental borrowing rate at the date of initial application.
27
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
The Group continues to recognise leases that were classified as finance leases under AASB 117 on the balance sheet
under AASB 16. The carrying amount of the right-of-use assets and lease liabilities at 1 July 2019 were determined to be
the carrying amount of the lease assets and lease liabilities under AASB 117 immediately before that date.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated.
The impact of adoption on opening accumulated losses as at 1 July 2019 was as follows:
Recognition of lease receivables
Recognition of right-of-use assets
Recognition of lease liabilities
Derecognition of other current assets
Derecognition of plant and equipment
Derecognition of trade and other payables
Derecognition of provisions
Net impact on opening accumulated losses before tax
Recognition of net deferred tax asset
Net impact on opening accumulated losses after tax
1 July
2019
$'000
2,231
3,886
(6,291)
(28)
(145)
230
126
9
59
68
The following is a reconciliation of total operating lease commitments as at 30 June 2019 to lease liabilities as at 1 July
2019:
Operating lease commitments as at 30 June 2019 (AASB 117)
Finance lease commitments as at 30 June 2019 (AASB 117)
Operating lease commitments discount based on the weighted average incremental borrowing rate of
3.36% (AASB 16)
Lease payments under AASB 16 that were not considered as lease payments under AASB 117
Minimum lease payments (notional amount) on finance lease liabilities as at 1 July 2019
Other adjustments
Additional lease liabilities as a result of the initial application of AASB 16 on 1 July 2019
1 July
2019
$'000
6,433
(18)
(430)
253
20
33
6,291
6,291
Practical expedients applied
When adopting AASB 16 from 1 July 2019, the Group has applied the following practical expedients:
●
●
●
●
●
accounting for leases with a remaining lease term of 12 months as at 1 July 2019 as short-term leases;
excluding any initial direct costs from the measurement of right-of-use assets;
using hindsight in determining the lease term when the contract contains options to extend or terminate the lease;
utilising the exemption to not test for impairment at transition; and
separation of lease and non-lease component.
28
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Lease receivable on sub-lease:
The Group earns rental income from the sub-lease of an office premise. The agreement was classified as an operating
lease under AASB 117, and is now classified as a finance lease under AASB 16, as the risk and rewards incidental to the
ownership of the right-of-use asset arising from the head lease have been substantially transferred to the lessee.
Accordingly, at 1 July 2019, the Group recognised a total of $2,231,000 lease receivable in accordance with AASB 16.
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.
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 30.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of 3P Learning Limited as at
30 June 2020 and the results of all subsidiaries for the year then ended.
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.
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 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.
29
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Foreign currency transactions
Foreign currency transactions are translated into the entity's functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, 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
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which
takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be
delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable
consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are initially recognised as contract liabilities in the form of a separate
refund liability.
Licence revenues from own intellectual property
The Group recognises revenue pursuant to software licence agreements upon the provision of access to its customers of
the Group’s intellectual property as it exists at any given time during the period of the licence. 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.
Third party licence revenue
The Group recognises commission revenue pursuant to a distribution agreement at the point of time when it sells a third
party’s online products to customers which provide these customers with access to the third party’s intellectual property as
it exists at any given time. Revenue from the sale of third party products is recorded on a net basis when the performance
obligations in relation to the online product are completed, consistent with an agency relationship.
Copyright licence fee
Copyright licence fee revenue is earned in relation to the Group's material and resources when they are reproduced by
third parties. Revenue is recognised when the Group's entitlement is assessed by the copyright agency.
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 discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset. For 30 June 2020, interest includes interest income related to sub-leases
classified as finance lease.
30
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Sub-lease revenue (comparative period)
Sub-lease revenue is accounted for on a straight-line basis over the lease term and is recognised in the period in which the
sub-lease revenue is earned.
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 the changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied 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 at 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 expense 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 classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's 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.
31
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Costs to obtain a contract
The Group has elected to apply the optional practical expedient for sales commissions paid to employees for contracts
obtained from external customers. This allows the Group to immediately expense sales commissions (included under
employee benefits expenses) because the amortisation period of the asset that the Group otherwise would have used is
one year or less.
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 over their
expected useful lives as follows:
Furniture & fittings
Computer equipment
Office equipment
three to seven years
two to three years
three to five years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group.
Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Right-of-use assets
For year ended 30 June 2020, the determination of whether a contract or part of a contract is or contains a lease is based
on the substance of the arrangement at inception date. It will be considered as a lease if it conveys the right to use an
asset (the underlying asset) for a period in exchange for consideration.
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in
the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset,
and restoring the site or asset.
32
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of
the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted
for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss
as incurred.
Lessor Accounting
As a lessor, the Group classifies its leases as either operating or finance leases. A lease is classified as a finance lease if it
transfers substantially all the risks and rewards incidental to ownership of the underlying asset and classified as an
operating lease if it does not.
Lease receivables
For rental income from a sub-lease classified as a finance lease, a lease receivable is recognised at an amount equal to
the net investment in the lease. Subsequent to initial measurement, the lease receivable is decreased by the sub-lease
payment received, increased by interest revenue (unwinding of discounting), less any allowance for expected credit losses.
Lease accounting policy (up to 30 June 2019)
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 the 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, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Internally generated intangible assets, excluding capitalised development costs, are not capitalised and an expense is
recognised in the statement of comprehensive income in the year in which the expenditure is incurred.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
33
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Product development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is
probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or
sell the asset; the Group has sufficient resources and intent to complete the internal development and their costs can be
measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected
benefit, being their finite useful life of three years. Amortisation of the asset begins when development is complete and the
asset is available for use.
Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the
period of their expected benefit, being their finite useful life of three to ten years.
Customer contracts
Customer contracts include direct incremental costs of establishing a customer contract such as sales commissions for
resellers. Customer contracts are amortised over the period in which the related benefits are expected to be realised, being
the customer contract period.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of three years.
Impairment of non-financial assets
Goodwill is not subject to amortisation and is tested annually for impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods or services to the customer.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option
is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend
on an index or a rate are expensed in the period in which they are incurred.
34
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
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
Employee benefits expected to be settled within 12 months of the reporting date are measured at the amounts expected to
be paid when the liabilities are settled.
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months of the reporting date are measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date. 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 high quality corporate 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, that are provided to employees in exchange for
the rendering of services.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is determined using the Binomial
option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate
for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the
services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions is 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.
35
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. 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.
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.
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.
36
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument 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 2020. 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.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and
early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new
guidance on measurement that affects several Accounting Standards. Where the Group has relied on the existing
framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with
under the Australian Accounting Standards, the Group may need to review such policies under the revised framework. The
impact of Conceptual Framework on the Group's financial statements is currently under assessment.
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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may
have, on the Group based on known information. This consideration extends to the nature of the products and services
offered, customers, supply chain, staffing and geographic regions in which the Group operates.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using a Binomial model taking into
account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities
within the next annual reporting period but may impact profit or loss and equity.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected
credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the
expected impact of the COVID-19 pandemic and forward-looking information that is available. The allowance for expected
credit losses, as disclosed in note 9, is calculated based on the information available at the time of preparation. The actual
credit losses in future years may be higher or lower.
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.
37
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 3. Critical accounting judgements, estimates and assumptions (continued)
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.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement
is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the
underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods
to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical
incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease
commencement date. Factors considered may include the importance of the asset to the Group's operations; comparison
of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold
improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to
exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in
circumstances.
Product development costs
The Group capitalises development costs for a project in accordance with the accounting policy. Initial capitalisation of
costs is based on management’s judgement that technological and economic feasibility is confirmed. In determining the
amounts to be capitalised, as with the nature of Software-as-a-Service delivery model, key judgement is required in
determining whether incremental product enhancements will provide additional future economic benefit.
Estimation of useful lives of capitalised product development
Capitalised product development is amortised over its useful life. The actual lives of the assets are assessed annually and
may vary depending on a number of factors. In reassessing asset lives, factors such as technological innovation, product
life cycles and maintenance programmes are taken into account.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into geographic operating segments: Asia-Pacific ('APAC'), United States of 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
tax, depreciation and amortisation,
excluding corporate advisory costs). The accounting policies adopted for internal reporting to the CODM are consistent
with those adopted in the financial statements.
reviews underlying EBITDA
(earnings before
interest,
The information reported to the CODM is on a monthly basis. The CODM does not regularly review segment assets and
segment liabilities. Refer to statement of financial position for assets and liabilities.
38
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 4. Operating segments (continued)
Intersegment transactions
Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.
Major customers
There are no major customers that contributed more than 10% of revenue to the Group recognised for the year 30 June
2020.
Operating segment information
Consolidated - 2020
Revenue
Sales to external customers
Interest revenue
Total revenue
Underlying EBITDA*
Depreciation and amortisation
Interest revenue
Finance costs
Corporate advisory costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
APAC
$'000
Americas
$'000
EMEA
$'000
Total
$'000
33,612
158
33,770
9,132
79
9,211
12,211
33
12,244
14,648
(2,756)
2,683
54,955
270
55,225
14,575
(11,407)
270
(284)
(197)
2,957
(1,407)
1,550
*
Underlying EBITDA for the Group is before interest revenue, after eliminating inter-segment royalty income earned by
APAC operating segment of $6,230,000, and after eliminating inter-segment royalty expense incurred by Americas
operating segment of $2,439,000 and EMEA operating segment of $3,791,000. The APAC operating segment
includes inter-segment royalty income of $6,230,000, the Americas operating segment includes $2,439,000 of inter-
segment royalty expense and the EMEA operating segment includes $3,791,000 of inter-segment royalty expense.
Consolidated - 2019
Revenue
Sales to external customers
Interest revenue
Total revenue
Underlying EBITDA*
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
APAC
$'000
Americas
$'000
EMEA
$'000
Total
$'000
33,668
249
33,917
8,585
-
8,585
12,162
18
12,180
16,808
(2,273)
3,212
54,415
267
54,682
17,747
(9,131)
267
(138)
8,745
(2,834)
5,911
*
Underlying EBITDA for the Group is before interest revenue, after eliminating inter-segment royalty income earned by
APAC operating segment of $6,839,000, and after eliminating inter-segment royalty expense incurred by Americas
operating segment of $2,664,000 and EMEA operating segment of $4,175,000. The APAC operating segment
includes inter-segment royalty income of $6,839,000, the Americas operating segment includes $2,664,000 of inter-
segment royalty expense and the EMEA operating segment includes $4,175,000 of inter-segment royalty expense.
AASB 16 was adopted using the modified retrospective approach. As such, the comparatives have not been restated and
therefore are not directly comparable.
39
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 5. Revenue
Disaggregation of revenue
Revenue is disaggregated into the following categories:
Revenue from contracts with customers
Licence fees
Net commission revenue
Copyright licence fees
Other revenue
Sub-lease revenue
Sub-lease revenue
Revenue
Consolidated
2020
$'000
2019
$'000
36,919
14,452
3,210
374
54,955
40,210
10,872
2,525
216
53,823
-
592
54,955
54,415
Revenue from external customers by geographic regions is set out in note 4 operating segments. The relationship between
the disaggregated revenue information set out above and the segment information set out in note 4 operating segments is
explained below:
The Group’s main revenue-generating activity is the worldwide sale of online educational programs via licence fees and net
commission revenue. The Group generates revenue from both these categories in all operating segments (geographic
regions). Copyright licence fees and ancillary revenue streams and are generated only in the APAC operating segment.
Other revenue includes sale of workbooks and professional learning generated in all operating segments.
Licence fees are recognised over time. All other revenue streams are recognised at a point in time.
The revenue recognised in the reporting period that was included in the contract liabilities balance at the beginning of the
period was $24,310,000 (2019: $25,958,000). Contract liabilities are generally incurred at the beginning of the contract
period. Refer to note 16 for details on contract liabilities.
40
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 6. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Fixtures and fittings
Computer equipment
Office equipment
Right-of-use assets
Total depreciation
Amortisation
Product development
Patents and trademarks
Customer contracts
Software
Total amortisation
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable on borrowings
Interest and finance charges paid/payable on lease liabilities
Finance costs expensed
Net foreign exchange fluctuation
Net foreign exchange loss/(gain)
Net loss on disposal
Net loss on disposal of property, plant and equipment
Leases
Minimum lease payments
Employee benefits expense:
Salaries and wages
Bonus and commission
Superannuation
Total employee benefits expense
41
Consolidated
2020
$'000
2019
$'000
134
196
39
1,039
1,408
7,937
14
1,035
1,013
188
212
44
-
444
6,992
2
689
1,004
9,999
8,687
11,407
9,131
83
201
284
138
-
138
132
(599)
12
-
258
2,130
23,342
3,267
3,302
20,402
2,955
2,815
29,911
26,172
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 7. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustments in respect of current income tax for the previous year
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease in deferred tax assets
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expenses
Impact of foreign tax rate
Adoption of AASB 16
Current year tax benefit not recognised
Research and development tax offset
Foreign exchange fluctuation
Adjustments in respect of current income tax for the previous year
Income tax expense
Amounts credited directly to equity
Deferred tax assets
Tax losses not recognised relating to various tax jurisdictions
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at statutory tax rates
Consolidated
2020
$'000
2019
$'000
950
332
125
1,839
929
66
1,407
2,834
332
929
2,957
8,745
887
2,624
104
216
33
661
(610)
(9)
1,282
125
48
9
-
576
(489)
-
2,768
66
1,407
2,834
Consolidated
2020
$'000
2019
$'000
(59)
-
47,615
44,015
12,116
11,449
Unrecognised tax benefits includes $8,398,000 unused capital gains loss on disposal of investments (2019: $8,398,000).
42
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 7. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Leases
Accrued expenses
Contract liabilities
Royalty asset
Intangibles
Unrealised foreign exchange fluctuation
Plant and equipment
Research and development credits
Deferred tax asset
Movements:
Opening balance
Charged to profit or loss
Credited to equity
Closing balance
Income tax payable
Note 8. Cash and cash equivalents
Current assets
Cash at bank and in hand
Short-term deposits
Total cash and cash equivalents
43
Consolidated
2020
$'000
2019
$'000
55
818
4,564
1,153
(4,825)
263
8
2,722
-
706
4,639
1,247
(3,987)
210
(56)
2,272
4,758
5,031
5,031
(332)
59
5,960
(929)
-
4,758
5,031
Consolidated
2020
$'000
2019
$'000
161
389
Consolidated
2020
$'000
2019
$'000
9,833
17,250
7,261
18,505
27,083
25,766
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 9. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Total trade and other receivables
Consolidated
2020
$'000
2019
$'000
9,291
(80)
9,211
8,959
(115)
8,844
309
156
9,520
9,000
Allowance for expected credit losses
The Group has recognised a gain of $35,000 (2019: loss of $64,000) in profit or loss in respect of impairment of
receivables for the year ended 30 June 2020.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Not overdue
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Expected credit loss rate
2020
%
2019
%
Carrying amount
2019
$'000
2020
$'000
Allowance for expected
credit losses
2020
$'000
2019
$'000
0.22%
1.47%
19.50%
35.98%
0.11%
1.03%
28.06%
40.10%
8,498
551
210
32
7,967
662
278
52
9,291
8,959
19
8
41
12
80
9
7
78
21
115
The calculation of expected credit losses at 30 June 2020 has been prepared with increased rates in the Americas
segment which are expected to have an increased probability of customers delaying payment or being unable to pay due
to the Coronavirus (COVID-19) pandemic. The expected credit losses outlined above have decreased from the prior year
due to a change in the mix of aged receivables between each customer segment, with a higher contribution to aged
receivables from segments with lower expected credit loss rates when compared to the prior year.
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Unused amounts reversed
Closing balance
Consolidated
2020
$'000
2019
$'000
115
9
(17)
(27)
80
67
117
(16)
(53)
115
44
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 10. Lease receivables
Current assets
Lease receivables
Non-current assets
Lease receivables
Total lease receivables
Reconciliation
Reconciliation of the fair values at the beginning and end of the current and previous
financial year are set out below:
Opening balance
Recognised on adoption of AASB 16 (note 2)
Net cash receipt from sub-leases
Exchange differences
Interest income
Closing balance
Minimum lease commitments receivable in future financial years are as follows:
1 year or less
Between one to two years
Between two to three years
Total commitments
Less: Future interest income
Total lease receivables
Note 11. Other assets
Current assets
Prepayments
Term deposits
Non-current assets
Prepayments
Total other assets
45
Consolidated
2020
$'000
2019
$'000
565
1,193
1,758
-
2,231
(603)
55
75
1,758
Consolidated
2020
$'000
2019
$'000
619
636
598
1,853
(95)
1,758
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
2020
$'000
2019
$'000
1,548
43
1,785
27
1,591
1,812
48
17
1,639
1,829
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 12. Plant and equipment
Non-current assets
Furniture & fittings - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
Consolidated
2020
$'000
2019
$'000
1,661
(1,256)
405
2,827
(2,651)
176
270
(200)
70
1,862
(1,185)
677
2,748
(2,479)
269
304
(208)
96
Total plant and equipment
651
1,042
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 2018
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2019
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2020
Computer
Furniture
and fittings equipment
Office
equipment
$'000
$'000
$'000
Total
$'000
539
382
(70)
14
(188)
677
9
(150)
3
(134)
405
267
212
-
2
(212)
269
104
(2)
1
(196)
176
120
19
-
1
(44)
96
24
(11)
-
(39)
70
926
613
(70)
17
(444)
1,042
137
(163)
4
(369)
651
46
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 13. Intangibles
Non-current assets
Goodwill - at cost
Product development - at cost
Less: Accumulated amortisation and impairment
Patents and trademarks - at cost
Less: Accumulated amortisation
Customer contracts - at cost
Less: Accumulated amortisation
Software - at cost
Less: Accumulated amortisation
Consolidated
2020
$'000
2019
$'000
4,315
4,576
38,172
(23,452)
14,720
49,746
(36,767)
12,979
1,912
(1,816)
96
1,963
(1,747)
216
3,166
(1,648)
1,518
1,886
(1,802)
84
1,371
(1,106)
265
4,708
(3,061)
1,647
Total intangibles
20,865
19,551
During the year, the Group derecognised fully amortised product development and software assets with gross values of
$21,252,000 and $2,425,000 respectively.
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 2018
Additions
Exchange differences
Amortisation expense
Balance at 30 June 2019
Additions
Exchange differences
Amortisation expense
Goodwill
$'000
Product
development
$'000
Patents and Customer
contracts
$'000
trademarks
$'000
Software
$'000
Total
$'000
4,535
-
41
-
4,576
-
(261)
-
12,118
7,853
-
(6,992)
12,979
9,678
-
(7,937)
62
24
-
(2)
84
26
-
(14)
96
144
820
(10)
(689)
265
961
25
(1,035)
1,527
1,124
-
(1,004)
1,647
884
-
(1,013)
18,386
9,821
31
(8,687)
19,551
11,549
(236)
(9,999)
216
1,518
20,865
Balance at 30 June 2020
4,315
14,720
47
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 13. Intangibles (continued)
Impairment testing for goodwill
Goodwill acquired through business combinations has been allocated to the following cash-generating units ('CGUs'):
CGU1: APAC
CGU2: EMEA
Total
Consolidated
2020
$'000
2019
$'000
3,012
1,303
3,012
1,564
4,315
4,576
The recoverable amount of each CGU is determined based on value-in-use calculations which require the use of
assumptions. The calculations use cash flow projections based on business plan approved by management covering a five
year period. Cash flows beyond the five year period are extrapolated using the estimated growth rates stated below.
The following key assumptions were used in the discounted cash flow model for the different CGUs:
(a) Post-tax discount rate: APAC 10.9% and EMEA 10.8% (2019: APAC 9.5% and EMEA 9.6%).
(b) Operating cash flow projections are extracted from the most recent approved strategic plans or forecasts that relate to
the existing asset base. For each CGU, the cash flow projections for a five-year period have been determined based
on expectations of future performance. Key assumptions in the cash flows include sales volume growth and the costs
of doing business. These assumptions are based on expectations of market demand and operational performance.
Cash flow projections are based on risk-adjusted forecasts allowing for estimated changes in the business, the
competitive trading environment, legislation and economic growth.
(c) Terminal growth rate at 3.0% (2019: 3.0%).
For the financial year ended 30 June 2020, the recoverable amount of net assets for all CGUs is greater than the carrying
value of the assets and therefore, the goodwill is not considered to be impaired.
Sensitivity
As disclosed in note 3, management have made judgements and estimates in respect of impairment testing of goodwill.
Should these judgements and estimates not occur the resulting carrying amounts of assets may decrease.
For all CGUs, any reasonable change in the key assumptions on which the recoverable amount is based would not cause
the CGU’s carrying amount to exceed its recoverable amount.
Note 14. Right-of-use assets
Non-current assets
Right-of-use assets
Less: Accumulated depreciation
Total right-of-use assets
Consolidated
2020
$'000
2019
$'000
3,866
(1,025)
2,841
-
-
-
The Group leases offices premises under agreements of between one to six years with, in some cases, options to extend.
The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. The Group also leases
plant and equipment under agreements of between one to five years.
48
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 14. Right-of-use assets (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 2018
Balance at 30 June 2019
Recognised on adoption of AASB 16 (note 2)
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2020
Note 15. Trade and other payables
Current liabilities
Trade payables
Accrued expenses
Goods and service tax
Other payables
Total trade and other payables
Refer to note 23 for further information on financial instruments.
Note 16. Contract liabilities
Current liabilities
Contract liabilities
Non-current liabilities
Contract liabilities
Total contract liabilities
Property
leases
$'000
Other
assets
$'000
Total
$'000
-
-
3,886
33
(96)
(21)
(1,026)
2,776
-
-
-
78
-
-
(13)
65
-
-
3,886
111
(96)
(21)
(1,039)
2,841
Consolidated
2020
$'000
2019
$'000
2,884
4,360
666
271
1,942
4,098
975
273
8,181
7,288
Consolidated
2020
$'000
2019
$'000
23,877
24,310
3,292
3,356
27,169
27,666
Contract liabilities represent income billed in advance from the contracts with customers pertaining to licence revenue
which is recognised over the period of time. The aggregate amount of the transaction price allocated to the performance
obligations for current and non-current contract liabilities that are unsatisfied at the end of the reporting period were
$23,877,000 and $3,292,000 respectively as at 30 June 2020 (2019: $24,310,000 and $3,356,000 respectively) and are
expected to be recognised as revenue as outlined above. There were no significant changes in the current and non-current
contract liabilities balances during the year.
49
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 17. Borrowings
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Total borrowings
Consolidated
2020
$'000
2019
$'000
-
-
-
14
4
18
Refer to note 23 for further information on financial instruments.
Bank loan facilities
The bank loan facilities are subject to variable interest rates, which are based on the bank bill swap rate ('BBSY'), plus a
margin. The banking facilities consist of a $10,000,000 bank loan and a $2,000,000 bank guarantee that each mature on
30 July 2020. The banking facilities are secured by fixed and floating charges over the Group's assets.
Bank guarantee and ancillary facilities of $111,000 are available under 3P Learning Limited (United Kingdom) maturing in
January 2021.
Refer to note 36 for extension of loan facility subsequent to the year end.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank loans
Bank guarantee and ancillary facility
Used at the reporting date
Bank loans
Bank guarantee and ancillary facility
Unused at the reporting date
Bank loans
Bank guarantee and ancillary facility
Consolidated
2020
$'000
2019
$'000
10,000
2,111
12,111
10,000
2,000
12,000
-
1,866
1,866
-
1,798
1,798
10,000
245
10,245
10,000
202
10,202
50
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 18. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Total lease liabilities
Consolidated
2020
$'000
2019
$'000
1,615
3,229
4,844
-
-
-
Refer to note 23 for further information on financial instruments.
Refer to note 33 for details of changes in lease liabilities.
The calculation of lease liabilities above excludes a five year lease extension option for one of the office leases. Potential
future payment for the extension period is $80,000 per annum between 31 December 2024 to 31 December 2029.
Note 19. Provisions
Current liabilities
Employee benefits
Other provisions
Non-current liabilities
Employee benefits
Lease make good
Other provisions
Total provisions
Consolidated
2020
$'000
2019
$'000
1,696
82
1,418
61
1,778
1,479
305
356
54
715
257
349
149
755
2,493
2,234
Employee benefits
Employee benefits comprise of provisions for annual leave and long service leave. Where an obligation is presented as
current, the Group does not have an unconditional right to defer settlement for more than 12 months.
Lease make good
The provision represents the present value of the estimated costs to make good the premises leased by the Group at the
end of the respective lease terms.
Other provisions
The provision represents redundancy, onerous lease and storage costs. The provision represents the present value of the
estimated termination costs.
51
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 19. Provisions (continued)
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
Consolidated - 2020
Carrying amount at the start of the year
Amounts used
Exchange differences
Unwinding of discount
Unused amounts reversed
Carrying amount at the end of the year
Note 20. Issued capital
Lease make
good
$'000
Other
provisions
$'000
210
(5)
2
-
(71)
136
349
-
-
10
(3)
356
Ordinary shares - fully paid
139,484,170 139,334,170
34,494
34,374
Movements in ordinary share capital
Consolidated
2020
Shares
2019
Shares
2020
$'000
2019
$'000
Details
Balance
Issue of shares
Balance
Issue of shares
Issue of shares
Balance
Date
Shares
$'000
1 July 2018
17 September 2018
139,234,170
100,000
30 June 2019
2 September 2019
20 February 2020
139,334,170
100,000
50,000
34,233
141
34,374
71
49
30 June 2020
139,484,170
34,494
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of shares held and amounts paid on those shares. The fully paid ordinary shares have no par
value and the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group's objectives when managing capital are 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.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents. 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 would be seen
as value adding.
52
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 20. Issued capital (continued)
The Group is subject to certain financing arrangement covenants and meeting these is given priority in all capital risk
management decisions. There have been no events of default on the financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 30 June 2019 Annual Report.
Note 21. Reserves
Foreign currency reserve
Acquisition reserve
Share-based payment reserve
Consolidated
2020
$'000
2019
$'000
157
(798)
8,595
370
(798)
8,477
7,954
8,049
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 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.
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 2018
Foreign currency translation
Transfer to issued capital on issue of shares
Balance at 30 June 2019
Foreign currency translation
Share-based payments
Transfer to issued capital on issue of shares
Balance at 30 June 2020
Note 22. Dividends
Foreign
currency
reserve
$'000
Acquisition
reserve
$'000
Share-based
payment
reserve
$'000
Total
$'000
665
(295)
-
370
(213)
-
-
157
(798)
-
-
(798)
-
-
-
(798)
8,618
-
(141)
8,477
-
189
(71)
8,485
(295)
(141)
8,049
(213)
189
(71)
8,595
7,954
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
53
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 22. Dividends (continued)
Franking credits
Consolidated
2020
$'000
2019
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
81
86
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 23. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate
risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses
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 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 processes are established to identify and analyse the risks faced by the Group, to analyse the risk
exposure of the Group and appropriate procedures, controls and risk limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities.
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 cash flow forecasting.
To a significant extent, the Group’s business currently enjoys natural hedges. The revenue that the Group obtains in a
particular foreign currency closely matches the expenses it incurs in that currency (such as the British Pound). The board
believes that natural hedges presently mitigate any exchange rate volatility risk for the Group to an economically
acceptable level.
From time to time the Group enters into forward foreign exchange contracts to protect against exchange rate movements
on significant contracts with highly probable forecast cash flows.
54
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 23. Financial instruments (continued)
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities (unhedged) at the
reporting date were as follows:
Consolidated
US dollars
Euros
Pound Sterling
New Zealand dollars
Canadian dollars
Other currencies
Assets
Liabilities
2020
$'000
2019
$'000
2020
$'000
2019
$'000
716
465
1,778
89
743
17
697
141
409
-
672
126
3,808
2,045
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Group had net assets denominated in foreign currencies of $3,808,000 (assets $3,808,000 less liabilities $Nil) as at 30
June 2020 (2019: $2,045,000 (assets $2,045,000 less liabilities $Nil). Based on this exposure, had the Australian dollar
weakened by 10%/strengthened by 10% (2019: 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 $381,000 higher/$381,000
lower (2019: profit before tax would have been $205,000 higher/$205,000 lower). 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 main interest rate risk arises from its term deposits. Term deposits issued at variable rates expose the Group
to interest rate risk.
As at the reporting date, the Group had the following variable rate short term deposits:
Consolidated
Short term deposits
2020
2019
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
Balance
$'000
0.92%
17,250
2.05%
18,505
Net exposure to cash flow interest rate risk
17,250
18,505
An analysis of financial instrument liabilities by remaining contractual maturities is shown in 'liquidity and interest rate risk
management' below.
An official increase/decrease in interest rates of 50 (2019: 50) basis points would have an favourable/adverse effect on
profit before tax of $86,000 (2019: $93,000) 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 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.
55
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 23. Financial instruments (continued)
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and forward-
looking information that is available. As disclosed in note 9, due to the Coronavirus (COVID-19) pandemic, the calculation
of expected credit losses has been revised as at 30 June 2020.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than one year.
The 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.
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank loans
Bank guarantee and ancillary facility
Consolidated
2020
$'000
2019
$'000
10,000
245
10,245
10,000
202
10,202
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
-
-
3.36%
2,884
271
1,771
4,926
-
-
-
-
1,779
1,779
1,594
1,594
-
-
-
-
2,884
271
5,144
8,299
56
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 23. Financial instruments (continued)
Consolidated - 2019
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
-
-
7.40%
1,942
273
16
2,231
-
-
4
4
-
-
-
-
-
-
-
-
1,942
273
20
2,235
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above. The Group may repay debt when cash is sufficiently available, and this may occur earlier than contractually
disclosed above.
Note 24. Fair value measurement
The carrying amounts of trade and other receivables and trade and other payables approximate their fair values due to
their short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities
at the current market interest rate that is available for similar financial liabilities.
Note 25. 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
Termination benefits
Share-based payments
Total
Consolidated
2020
$
2019
$
1,520,397
112,443
182,558
163,590
1,804,024
100,607
-
(40,965)
1,978,988
1,863,666
57
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 26. 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, and its network firms:
Audit services - Ernst & Young
Audit or review of the financial statements
Other services - Ernst & Young
People advisory services
Audit services - overseas Ernst & Young firms
Audit or review of the financial statements
Note 27. Contingencies
Consolidated
2020
$
2019
$
295,595
352,731
-
19,055
295,595
371,786
45,170
37,273
The bank has given bank guarantees as at 30 June 2020 of $1,866,000 (2019: $1,798,000) for merchant facility and
operating leases.
Note 28. Commitments
Lease commitments - operating payable
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Lease commitments - finance payable
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
Lease commitments - operating receivable
Committed at the reporting date but not recognised as assets, receivables:
Within one year
One to five years
58
Consolidated
2019
$'000
1,575
4,814
44
6,433
16
4
20
(2)
18
592
1,820
2,412
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 29. Related party transactions
Parent entity
3P Learning Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 31.
Key management personnel
Disclosures relating to key management personnel are set out in note 25 and the remuneration report included in the
directors' report.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Note 30. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payment reserve
Accumulated losses
Total deficiency in equity
Parent
2020
$'000
2019
$'000
(12,183)
(14,643)
(12,183)
(14,643)
Parent
2020
$'000
2019
$'000
36,342
32,967
67,141
60,524
79,046
72,998
92,011
73,402
34,494
8,595
(67,959)
34,374
8,477
(55,729)
(24,870)
(12,878)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2020. For the year ended 30
June 2019, the parent entity and its Australian subsidiary were parties to a deed of cross guarantee under which each
company guarantees the debts of the others.
59
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 30. Parent entity information (continued)
Contingent liabilities
The parent entity has given bank guarantees as at 30 June 2020 of $1,846,000 (2019: $1,798,000) for merchant facility
and operating leases.
Capital commitments - Plant and equipment
The parent entity had no capital commitments for plant and equipment as at 30 June 2020 and 30 June 2019.
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.
Net asset deficiency
As at 30 June 2020, the parent entity was in a net liability position of $24,870,000 (2019: $12,878,000). The parent entity
has an intercompany payable to 3P Learning Australia Pty Limited of $55,991,000 (2019: $52,120,000). The parent entity
can control the payment of intercompany debts, and accordingly, the financial statements continue to be prepared on a
going concern basis.
Note 31. 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
Into Science Pty Ltd
3P International Holdings Pty Ltd
3P Learning Limited
3P Learning Limited
3P Learning Inc.
3P Learning Canada Limited
Note 32. Deed of cross guarantee
Principal place of business /
Country of incorporation
Ownership interest
2019
2020
%
%
Australia
Australia
Australia
New Zealand
United Kingdom
United States
Canada
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
On 15 June 2017, 3P Learning Limited (parent entity) and 3P Learning Australia Pty Ltd entered into a deed of cross
guarantee under which each company guarantees the debts of the other entities. By entering into the deed, the wholly-
owned entity has been relieved from the requirement to prepare financial statements and directors' report under
Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission. The above
companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no other parties
to the deed of cross guarantee that are controlled by 3P Learning Limited, they also represent the 'Extended Closed
Group'.
The deed of cross guarantee was revoked as of the date of this report. As a result, the consolidated statement of profit or
loss and other comprehensive income and statement of financial position of the 'Closed Group' for 2020 has not been
provided.
60
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 33. Cash flow information
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
Share-based payments
Foreign exchange differences
Net loss on disposal of plant and equipment
Non cash income
Non-cash customer contract
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease in deferred tax assets
Decrease/(increase) in other operating assets
Increase in trade and other payables
Decrease in provision for income tax
Increase in employee benefits
Increase/(decrease) in other provisions
Increase/(decrease) in other operating liabilities
Consolidated
2020
$'000
2019
$'000
1,550
5,911
11,407
243
289
(26)
(13)
(961)
(620)
316
59
1,164
(234)
323
7
(354)
9,131
-
(74)
-
(192)
(689)
(4,223)
981
(280)
518
(211)
203
(110)
1,211
Net cash from operating activities
13,150
12,176
Non-cash investing and financing activities
Additions to the right-of-use assets
Shares issued under employee share plan
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2018
Net cash used in financing activities
Balance at 30 June 2019
Net cash used in financing activities
Adoption of AASB 16 on 1 July 2019
Interest on lease liabilities
Acquisition of leases
Exchange differences
Other changes
Balance at 30 June 2020
61
Consolidated
2020
$'000
2019
$'000
111
120
231
-
141
141
Finance
lease payable
$'000
Lease
liabilities
$'000
Total
$'000
30
(12)
18
-
(18)
-
-
-
-
-
-
-
(1,433)
6,291
(186)
111
37
24
30
(12)
18
(1,433)
6,273
(186)
111
37
24
-
4,844
4,844
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 34. Share-based payments
The share-based payment expense for the year was $243,298 (2019: $Nil).
An equity incentive plan has been established by the Group, whereby the Group may, at the discretion of the Board, grant
performance rights and options over ordinary shares in the Company ('awards') to certain key management personnel and
employees of the Group. The awards are issued for nil consideration and are granted in accordance with performance
guidelines established by the Board.
Set out below are summaries of options/awards granted under the plan:
2020
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
02/09/2016
21/11/2016
31/08/2017
09/11/2017
23/08/2018
09/11/2018
19/11/2018
02/09/2020
02/09/2020
31/08/2021
31/08/2021
23/08/2022
23/08/2022
23/08/2022
$1.26
$1.26
$1.42
$1.42
$1.75
$1.75
$1.75
1,052,587
2,015,419
1,381,140
2,644,509
1,398,858
2,867,647
710,717
12,070,877
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(750,847)
(1,437,669)
(692,809)
-
(707,296)
-
(710,717)
(4,299,338)
301,740
577,750
688,331
2,644,509
691,562
2,867,647
-
7,771,539
Weighted average exercise price
$1.40
$0.00
$0.00
$1.45
$1.55
2019
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
02/09/2016
21/11/2016
31/08/2017
09/11/2017
23/08/2018
09/11/2018
19/11/2018
02/09/2020
02/09/2020
31/08/2021
31/08/2021
23/08/2022
23/08/2022
23/08/2022
$1.26
$1.26
$1.42
$1.42
$1.75
$1.75
$1.75
2,334,525
2,015,419
3,063,221
2,644,509
-
-
-
10,057,674
-
-
-
-
1,398,858
2,867,647
710,717
4,977,222
-
-
-
-
-
-
-
-
(1,281,938)
-
(1,682,081)
-
-
-
-
1,052,587
2,015,419
1,381,140
2,644,509
1,398,858
2,867,647
710,717
(2,964,019) 12,070,877
Weighted average exercise price
$1.35
$1.75
$0.00
$1.35
$1.40
Outstanding options/awards vested and exercisable as at 30 June 2020: 879,490 (2019: Nil).
The weighted average share price during the financial year was $1.12 (2019: $1.14) per ordinary share. The weighted
average remaining contractual life of options/awards outstanding at the end of the financial year was 1.21 years (2019:
2.14 years).
Performance rights
During the year, 981,016 performance rights were granted at a fair value of $0.875 per right. The performance rights were
granted at no exercise price and the fair value was determined based on the market value of the Company's share price on
grant date. Vesting of performance rights are subject to predetermined revenue and earnings per share growth target.
62
3P Learning Limited
Notes to the financial statements
30 June 2020
Note 34. Share-based payments (continued)
Set out below are summaries of performance rights granted under the plan:
2020
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
21/11/2016
21/11/2016
22/11/2019
01/09/2019
14/10/2019
06/09/2022
$0.00
$0.00
$0.00
100,000
400,000
-
500,000
-
-
981,016
981,016
(100,000)
-
-
(100,000)
-
(400,000)
(339,256)
(739,256)
-
-
641,760
641,760
2019
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
21/11/2016
21/11/2016
01/09/2019
14/10/2019
$0.00
$0.00
100,000
400,000
500,000
-
-
-
-
-
-
-
-
-
100,000
400,000
500,000
Performance rights vested and exercisable as at 30 June 2020 was Nil (2019: Nil). The weighted average remaining
contractual life of performance rights outstanding at the end of the financial year was 2.25 years (2019: 0.27 years).
Note 35. Earnings per share
Consolidated
2020
$'000
2019
$'000
Profit after income tax attributable to the owners of 3P Learning Limited
1,550
5,911
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
139,434,990 139,312,800
Options over ordinary shares
-
143,259
Weighted average number of ordinary shares used in calculating diluted earnings per share 139,434,990 139,456,059
Number
Number
Basic earnings per share
Diluted earnings per share
Note 36. Events after the reporting period
Cents
Cents
1.11
1.11
4.24
4.24
On 24 July 2020, the banking facilities of a $10,000,000 bank loan and a $2,000,000 bank guarantee were extended from
a maturity date of 30 July 2020 to 30 August 2020.
No other matter or circumstance has arisen since 30 June 2020 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.
63
3P Learning Limited
Directors' declaration
30 June 2020
In the directors' opinion:
●
●
●
●
the attached financial statements and notes 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 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 give a true and fair view of the Group's financial position as at 30 June
2020 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
14 August 2020
Sydney
64
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of 3P Learning Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of 3P Learning Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2020, the consolidated statement of profit and loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2020 and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
65
2
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
Capitalisation and recoverability of product development and software costs
Why significant
How our audit addressed the key audit matter
As disclosed in notes 2 and 13 to the financial
statements, the Group capitalises product
development and software costs upon meeting the
criteria set out in Australian Accounting Standard -
AASB 138 Intangible Assets.
Capitalised product development and software costs
amount to $16.2 million as at 30 June 2020. As
disclosed in note 2 to the financial statements, the
Group amortises these capitalised costs over a period
of three years.
This was considered a key audit matter due to the
value of this balance relative to total assets and the
judgments and estimates involved in determining
which costs may be capitalised throughout the life of
the project, and determining the useful life of the
asset.
Our audit procedures included the following:
Assessed the Group’s policy for capitalisation of
product development and software costs for
compliance with AASB138 Intangible Assets
Assessed the operating effectiveness of key
controls over the processes and procedures
related to the capitalisation of product
development and software costs
Tested on a sample basis, costs capitalised to
underlying evidence including timesheets,
employment contracts, payroll reports and
invoices from external suppliers to assess the
nature, eligibility and accuracy of product
development and software costs for capitalisation
in accordance with the Australian Accounting
Standards
Interviewed a sample of employees whose costs
have been capitalised and reviewed their job
descriptions to understand the nature of work
performed to corroborate the judgements and
capitalisation rates applied by management
Assessed whether the useful life of product
development and software costs is appropriate
and whether the amortisation charge during the
reporting period is reasonable
Evaluated management’s assessment of whether
there are impairment indicators on capitalised
product development and software costs, and
Considered the adequacy of the financial report
disclosures contained in notes 2 and 13
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
66
3
Revenue Recognition
Why significant
How our audit addressed the key audit matter
The Group generated $55.0 million in revenue from
customers across its global operations for the year
ended 30 June 2020.
As disclosed in notes 2 and 5 to the financial
statements, the Group’s revenue streams are either
recognised over time or at a point in time depending
on the identified performance obligations.
Given the importance of revenue to the users of the
financial statements, specifically as a key performance
indicator for the Group and a key metric for senior
management’s long-term incentive plan, this was
considered to be a key audit matter.
Our audit procedures included the following:
► Evaluated the Group’s revenue accounting and
assessed whether the Group’s accounting policies
comply with the requirements of AASB 15
Revenue from Contracts with Customers
► Assessed the operating effectiveness of key
controls over revenue recognition
► Performed data analytical procedures to
corroborate the expected correlation between
license fees and net commission revenue and
related accounts during the year
► For a sample of revenue transactions we assessed
whether revenue was recorded in the correct
period. This included testing whether revenue
transactions were recognised as deferred revenue
at balance date where applicable.
► Considered the adequacy of the revenue related
disclosures required by Australian accounting
standards
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2020 Annual Report, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
67
4
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
68
5
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 21 of the directors' report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of 3P Learning Limited for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Renay C Robinson
Partner
Sydney
14 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
69
3P Learning Limited
Shareholder information
30 June 2020
The shareholder information set out below was applicable as at 24 July 2020.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Number
of holders
of options
Number
of holders
of ordinary ordinary
shares
shares
over
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:
J P Morgan Nominees Australia Pty Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
Mutual Trust Pty Ltd
BNP Paribas Noms Pty Ltd (DRP)
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
Citicorp Nominees Pty Limited
Neweconomy Com Au Nominees Pty Limited (900 Account)
Mutual Appreciation Society Pty Limited (Garb-Weiss Super Fund A/C)
BNP Paribas Nominees Pty Ltd (IOOF Insmt Mgmt Ltd DRP)
Leopard Capital Pty Ltd (NDW Super Fund A/C)
Ms Kathryn Pike
Lcone Pty Ltd
Mr Jonathan Claude Kenny
Mr Kei Yan Cheng
Mr Roger William Sawkins & Mr Gary Robert Yong Gee (Nepean Super Fund A/C)
UBS Nominees Pty Ltd
Matthew Charles Goodson & Dianna Dawn Perron (Goodson & Perron Family A/C)
Mast Financial Pty Ltd (A To Z Investment A/C)
Colenew Pty Limited (Paul Xiradis Account)
396
369
144
165
32
1,106
246
-
-
-
-
3
3
-
Ordinary shares
% of total
Number held
62,921,490
28,128,862
15,368,998
10,213,944
4,734,965
2,697,075
2,098,873
724,322
591,672
500,000
404,920
323,594
306,759
288,856
284,280
254,584
219,708
200,000
197,750
191,000
shares
issued
45.11
20.17
11.02
7.32
3.39
1.93
1.50
0.52
0.42
0.36
0.29
0.23
0.22
0.21
0.20
0.18
0.16
0.14
0.14
0.14
130,651,652
93.65
70
3P Learning Limited
Shareholder information
30 June 2020
Unquoted equity securities
Options over ordinary shares issued
Performance rights over ordinary shares issued
Substantial holders
Substantial holders in the Company are set out below:
Viburnum Funds Pty Ltd
National Nominees Ltd ACF Australian Ethical Investment Ltd
Sterling Equity Pty Ltd
SmallCo Investment Manager Limited
Schroder Investment Management Australia Ltd
FIL Limited
Voting rights
The voting rights attached to ordinary shares are set out below:
Number
on issue
Number
of holders
7,771,539
641,760
3
2
Ordinary shares
% of total
Number held
31,951,596
21,192,583
14,201,731
13,920,288
13,778,766
9,679,718
shares
issued
22.91
15.19
10.18
9.98
9.88
6.94
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.
Options and performance rights
Options and performance rights carry no voting rights.
There are no other classes of equity securities.
71
3P Learning Limited
Corporate directory
30 June 2020
Directors
Samuel Weiss - Independent Non-Executive Chairman
Rebekah O’Flaherty - Chief Executive Officer
Roger Amos - Independent Non-Executive Director
Claire Hatton - Independent Non-Executive Director
Mark Lamont - Independent Non-Executive Director
Company secretary
Elizabeth Wang
Registered office and
Principal place of business
Share register
Auditor
3P Learning Limited
Level 18, 124 Walker Street
North Sydney NSW 2060
Head office telephone: 1300 850 331
The Registrar
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Share registry telephone: 1300 554 474
Ernst & Young
200 George Street
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
The Group’s Corporate Governance Statement, which sets out the corporate
governance practices that were in operation during the financial year and identifies
and explains any Recommendations that have not been followed and ASX Appendix
4G are released to the ASX on the same day the Annual Report is released. The
Corporate Governance Statement and Corporate Governance Compliance can be
found on the Company’s website at http://www.3plearning.com/investors/
governance/
72
the award-winning team behind
3P Learning
1300 850 331
1300 762 165
customerservice@3plearning.com.au
www.3plearning.com