2021
Annual Report
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 2021
For the year ended 30 June 2020
2. Results for announcement to the market
$'000
Revenues from ordinary activities
up
4.5% to
57,448
Loss from ordinary activities after tax attributable to the owners of 3P
Learning Limited
Loss for the year attributable to the owners of 3P Learning Limited
down
down
1912.2% to
1912.2% to
(9,369)
(9,369)
In accordance with International Financial Reporting Standards Interpretations Committee ('IFRIC') clarification, the Group
retrospectively changed the accounting policy in relation to 'Software as a Service (SaaS)' arrangements. Refer to note 4 of
the financial statement for further details.
Dividends
There were no dividends paid, recommended or declared during the current financial year.
Comments
The loss for the Group after providing for income tax and non-controlling interest amounted to $9,369,000 (restated 30
June 2020: profit of $517,000).
Refer to 'Review of operations' in the Directors' Report for detailed commentary.
3. Net tangible assets
Net tangible assets per ordinary security
Reporting
period
Cents
(5.22)
Previous
period
Cents
(Restated)
3.27
Net tangible assets calculations exclude right-of-use assets and include lease receivables and lease liabilities.
4. Control gained over entities
On 28 May 2021, the Group acquired 100% of the shares in Blake eLearning Pty Ltd and its controlled entities (collectively
'Blake'). Refer to note 33 'Business combinations' of the financial statements for further details.
5. Audit qualification or review
The financial statements have been audited and an unmodified opinion has been issued.
6. Attachments
The Annual Report of 3P Learning Limited for the year ended 30 June 2021 is attached.
3P Learning Limited
Appendix 4E
Preliminary final report
7. Signed
As authorised by the Board of Directors
Signed
Matthew Sandblom
Executive Chairman
Sydney
Date: 25 August 2021
Chairman’s Letter to Shareholders
I have a long history with 3PL as I was one of the co-founders of the business along with Shane Hill and Tim Power. It was a
great company to be involved in because it made students really excited about maths and grew very quickly.
Now that I’m back as chairman and largest shareholder of 3PL (I was chairman prior to the IPO), growing the company and
getting students engaged and excited by learning will again be my main areas of focus.
The most significant event in the FY21 year was obviously the merger with Blake eLearning (BeL), a company I had been
building for the last 13 years.
There was talk before the 3PL IPO to merge BeL in, but terms could not be agreed so I’m pleased we have finally managed
to make this happen.
There is even more logic in these two companies being together now than there was 7 years ago. BeL has a proven track
record of developing new programs and product innovation, things that 3PL has struggled to do since the IPO. It also has a
fast-growing consumer market to complement 3PL’s expertise in selling to schools. There were also obvious cost synergies
that we are well on the way to fully realising.
Bringing these two companies together means the annual billings is almost $100m, which is a significant milestone that few
EdTech businesses have achieved. We also expect to have a healthy profit in the FY2022 year which means we can fund
further growth initiatives both in terms of product development and geographic market expansion.
The potential growth sources that I’m most excited about are:
• The direct-to-consumer space where we are targeting billings growth of 25% from $27.9M to $35.1M, with a focus on
the UK, US and smaller high-growth markets like South Africa and Canada.
• Negotiating Ministry of Education level multi-million-dollar deals in a variety of geographic areas, helped by having the
BeL product range available.
• We have done quite a bit of work laying the foundations in the Indian market with our distribution partner Ratna Sagar
over the last 12 months and we expect this to pay off over the next couple of years.
• Targeted bolt-on acquisitions that will help fill gaps in our offerings to schools and help grow average revenue per user.
We aim to make the accounts as transparent and as simple to read as possible. In particular, we are focused on our product
development and will only capitalise eligible product development costs that generate future economic benefits. We expect
these projects will generally be new revenue producing products that have not been released to the market.
Our strategy is to focus on our hero products of Mathletics, Reading Eggs and Mathseeds, and to sunset Readiwriter.
Readiwriter has not delivered new sales to justify the investment made resulting in a decision to fully impair Readiwriter. Hero
products are the ones we can generate tens of millions of dollars of revenue from.
The other significant items to note in the accounts were the legal, accounting and consulting costs associated with the 3 major
possible deals 3PL considered in the FY2021 year (IXL, BYJU’s, BeL) which amounted to $5.5m. There were also
$2.4m costs associated with staff restructuring and integration.
My overall business philosophy is about achieving long term profitable growth by producing products that really engage,
excite and educate. My preference is for organic growth unless an acquisition can really speed up either our time to market or
access to a market. Our core mission is to be a market leader, in major English-speaking markets, in literacy and numeracy
PreK-10.
I would also like to welcome on board our two new directors Kathy Ostin and Allan Brackin. Kathy has excellent accounting,
audit and listed board experience while Allan has been involved in multiple tech companies, about our size, and grown them
significantly either as a director or CEO.
And finally I would like to congratulate Jose Palmero on his appointment as CEO of 3PL. Jose was already interim CEO but the
board has now made this his permanent role. Jose and I have a very productive and close working relationship for over 15
years and we have complementary skills sets. The board has also agreed to change my title to Executive Chairman to reflect
my greater involvement in the business than is typical for a chairman.
Yours sincerely
Matthew Sandblom
Executive Chairman
A message from the CEO
It’s been a challenging year for 3PL, with two unsuccessful takeover approaches from IXL and BYJU’s resulting in
shareholder, management, and staff uncertainty for most of FY2021.
As mentioned in our Chairman’s Letter to Shareholders, this was ultimately resolved with a third proposition – an all-scrip
deal that received 99.9% shareholder support and enabled 3PL’s acquisition of Blake eLearning on 28 May 2021 to start
writing a new and exciting chapter in 3PL’s history.
Having successfully completed the acquisition and taken on the role of CEO, I’m pleased to report that in the 3 months since
then we have achieved the following:
1. Product Positioning – Focus on hero products
We have reviewed our product strategy and decided to concentrate on investing more in products that perform well in
numeracy and literacy across B2B and B2C globally, but particularly in our larger markets (Australia/NZ, US/Canada, UK),
and sunset products that do not have consistently high sales and high retention rates.
The greater focus will be on hero products in numeracy and literacy (Mathletics, Mathseeds and Reading Eggs). These
represent $52.5m and 97.5% of our current licence revenue. We will continue servicing existing customer obligations, but
only with basic resourcing, for ReadiWriter, STEMscopes, Gooseberry Planet and WordFlyers until they sunset naturally.
2. Simplify business processes – Align with demonstrable business growth
Our more focused product strategy has resulted in immediate flow-on benefits for sales, marketing and support functions.
Effort saved in these areas has been redirected towards selling and marketing Mathletics, Mathseeds and Reading Eggs to
further improve revenue, conversion rates and retention.
We have streamlined product development to deliver features relevant to our larger markets, where our products currently
hold established positions, but will also support initiatives in emerging markets with demonstrable business growth
opportunities.
We have reviewed business systems for further simplification, and have already moved HR, Payroll, and accounting, into a
single system. Our technology stacks will take a bit longer, as we want to manage the transition with minimum disruption.
3. Synergy savings
Since completion date we have achieved synergies worth $9.1M in annual savings, without affecting revenue potential.
These savings directly represent the simplified product and business process strategy, with $4.6M from discontinuing
ReadiWriter and related external product development teams.
Sales and marketing savings were $3.4M, mostly as a result of reducing headcount in the US while we work on improving
the product/market fit for Mathletics with additional features.
(1) Expected time to achieve annual run-rate cost savings.
(2) Annualised savings enacted in FY21 as announced on 30 June 2021.
(3) Costs incurred in FY21 to enact savings include $1.7M for employee restructure costs and $0.7M for termination of other services.
A message from the CEO
Key initiatives for FY22 – Unlocking value
The future for 3PL looks bright, with combined annual revenue of over $92M, healthy EBIT and cashflow in FY22 to allow us
to invest in product, organic growth and modest, targeted acquisitions.
We have completed most of the organizational restructure and synergies work in our first 100 days, so we are now ready to
start unlocking value.
Our key initiatives for FY22 and beyond are:
1. B2C expansion
B2C has been growing consistently and we will continue to invest in marketing and product development for this market.
For FY22, we expect more success in EMEA and AMER than in APAC, given the already high penetration of our combined
products in the APAC B2B market. We also see further opportunities in South Africa, Ireland and India and will increase
our investment as these markets grow.
B2C is a market that needs constant data and marketing optimization to achieve lower cost of acquisition (CAC) and
improve conversion rates and lifetime value (LTV).
Our approach will focus on mobile apps, user experience, and growing our B2C subscriber base. The volume and impact
of word-of-mouth marketing together with our strong advertising spend will generate a digital marketing virtuous circle
that further improves optimisation.
2. B2B existing business
Although overall revenue growth in the B2B numeracy market is likely to continue for FY22, we need to add motivation
and engagement features to Mathletics to further improve sales and retention. Mathseeds is currently offsetting the lower
renewal rates for Mathletics in the US, but this needs improvement in the short to medium term.
Our B2B Literacy products should to continue to perform well in FY22, particularly Reading Eggs.
Improving Mathletics for the B2B market is therefore our highest product priority and we expect this to go on for the better
part of FY22. The work will be done in-house which, together with our synergy savings, will result in higher profitability for
3PL.
A message from the CEO
3. B2B emerging markets and targeted new investment – Planting seeds for future growth
We see our core effort in English-speaking markets and will pursue those as a priority, but we will also take calculated risks
in emerging markets such as India, Middle East and Latin America with potential enterprise and government deals.
We are in active negotiations in the EMEA, North America, and Asia regions where discussions are progressing well.
These deals are complex and typically harder to get so we will continue engaging, but we will recognise revenue and
allocate further resources only when the deals are signed, and cash received.
During the year we’ll be investing in a standalone mobile B2C numeracy app, which we think is a market that offers
opportunities for expansion.
We are builders and our preference is to grow company value organically, but we will also explore modest, targeted
acquisitions where we identify options to either gain entry to complementary markets or speed up our development
efforts to get to those markets more quickly.
I served as Director on the 3PL Board from 2009 until its IPO in 2014, so I’m thrilled to now lead the company in this new
chapter.
Together with our strong, entrepreneurial, and result-focused team we will continue to deliver our company mission, Better
Ways to Learn, to students and educators around the world.
Yours sincerely
Jose Palmero
Chief Executive Officer
3P Learning Limited
ABN 50 103 827 836
Annual Report - 30 June 2021
3P Learning Limited
Contents
30 June 2021
Directors' report
Directors' report - remuneration 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
10
26
27
28
29
30
31
74
75
81
83
1
3P Learning Limited
Directors' report
30 June 2021
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 2021.
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:
Matthew Sandblom Non-Executive Chairman (appointed on 28 May 2021); Executive Chairman (appointed on 24 August
2021, effective on 25 August 2021)
Samuel Weiss (Non-Executive Chairman - until 28 May 2021)
Claire Hatton
Mark Lamont
Katherine Ostin (appointed on 6 August 2021)
Allan Brackin (appointed on 6 August 2021)
Rebekah O’Flaherty (resigned on 9 April 2021)
Roger Amos (resigned on 28 May 2021)
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 and ebooks 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.
Significant changes in the state of affairs
On 14 August 2020, IXL Learning Inc (‘IXL’) proposed to acquire 100% of the issued shares of the Company for a cash
price of $1.35 per share by way of a Scheme of Arrangement. The shareholders of the Company did not approve the
proposal on 20 November 2020. The agreement with IXL was subsequently terminated on 24 November 2020.
On 12 November 2020, Think and Learn Private Limited ('BYJU') proposed to acquire 100% of issued shares of the
Company for a cash price of $1.45 per share. A revised offer was later received from BYJU on 18 November 2020 for an
increased cash price of $1.50 per share. After completion of their due diligence towards the end of 2020, BYJU did not
provide a firm proposal for the Group’s consideration.
On 28 May 2021, the Group acquired 100% of the equity in Blake eLearning Pty Ltd and its controlled entities (collectively
'Blake') for the total consideration transferred of $182,221,000. The consideration was fully settled by the issuance of 137
million ordinary shares in the Company. Refer to note 33 of the financial statements for further details.
There were no other significant changes in the state of affairs of the Group during the financial year.
Review of operations
Business overview
The Group is a global leader in online education and adaptive and collaborative learning. The Group's suite of mathematics
and literacy 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 and at home.
The Group has over 350 educators, engineers, product designers and other personnel around the world, servicing schools
and parents in more than 100 countries. Today, the Group is trusted by almost 6 million students in over 17,000 schools
across the world. The Group's mission is to create and deliver better ways to learn for students and educators.
Financial review
The loss for the Group after providing for income tax and non-controlling interest amounted to $9,369,000 (restated 30 June
2020: profit of $517,000).
2
3P Learning Limited
Directors' report
30 June 2021
A reconciliation of earnings before interest, tax, depreciation and amortisation ('EBITDA') to statutory profit after tax for the
year is as follows:
Consolidated
30 June 2021 30 June 2020
(Loss)/profit attributable to owners of 3P Learning Limited
Add: Non-controlling interest
Add: Income tax (benefit)/expense
(Loss)/profit before income tax (benefit)/expense
Depreciation and amortisation expense
Impairment expense
Interest income
Finance costs
Corporate advisory costs
Restructure and integration costs
Underlying EBITDA**
$'000
$'000
(9,369)
(1)
(2,408)
517
-
965
(11,778)
1,482
9,329
4,818
(115)
237
5,476
2,450
10,417
7,783
-
(270)
284
197
-
9,476
*
Underlying EBITDA represents earnings before interest, tax, depreciation and amortisation, excluding impairment
expense, corporate advisory costs, and restructure and integration costs.
The directors have provided underlying EBITDA after careful consideration of the requirements and guidelines contained in
this
ASIC’s Regulatory Guide 230 'Disclosing non-IFRS financial information'. Underlying information, including
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 2021 was $57,448,000 (30 June 2020: $54,955,000). The acquisition of Blake
eLearning Pty Ltd contributed revenue of $3,453,000 for the period between 28 May 2021 to 30 June 2021.
Performance
The loss for the Group after providing for income tax and non-controlling interest amounted to $9,369,000 (restated 30 June
2020: profit of $517,000).
The Group has changed the accounting policy retrospectively to account for customisation and configuration costs incurred
in relation to Software-as-a-Service (‘SaaS’) arrangements as an expense. This has led to depreciation and amortisation
expenses in the current year decreasing by $1,546,000 to $9,329,000.
Following a product strategy reset to focus on ‘hero products’, impairment expense of $4,818,000 was recognised on the
Readiwriter product suite which will be sunset.
Corporate advisory costs of $5,476,000 relating to the corporate activity experienced during the year were recognised. In
addition, $2,450,000 of restructure and integration costs on incorporating Blake eLearning Pty Ltd into the Group were
recorded during the year ended 30 June 2021.
As at 30 June 2021, the Group has $24,906,000 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.
3
3P Learning Limited
Directors' report
30 June 2021
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
30 June 2021 30 June 2020 Change
$'000
$'000
$'000
Change
%
35,469
8,972
13,007
57,448
33,612
9,132
12,211
54,955
1,857
(160)
796
2,493
5.5%
(1.8%)
6.5%
4.5%
30 June 2021 30 June 2020
$'000
$'000
Change
$'000
Change
%
8,559
(1,273)
3,131
10,417
9,549
(2,756)
2,683
9,476
(990)
1,483
448
941
(10.4%)
(53.8%)
16.7%
9.9%
APAC segment
Revenue and other income in APAC has increased by $1,857,000. The acquisition of Blake eLearning Pty Ltd contributed
revenue of $3,453,000. This was offset by a change in revenue recognition on Blake products sold to schools from the date
of acquisition, 28 May 2021. Revenue recognition from this date was recorded on a straight-line basis over the service
period consistent with licence revenue, whereas previously it was recorded at the point of sale consistent with net
commission revenue. The segment did not continue to benefit from high volume demand from Coronavirus (COVID-19)
pandemic in the Financial Year 2021 ('FY21'). Underlying EBITDA has decreased by $990,000 driven by lower capitalisation
rates, and an increase in bonus expense.
Americas segment
Revenue in Americas declined by 1.8% to $8,972,000 driven by unfavourable exchange rates movements. Underlying
EBITDA has increased by $1,483,000 benefiting from a reduction in sales and marketing resources until the Mathletics
product is improved to meet the market needs. There has also been a reduction in travel expenses due to COVID-19
pandemic.
EMEA segment
EMEA revenue has increased by 6.5% as a result of increase in new business and high retention of the existing business,
offset by unfavourable exchange rate movements. Underlying EBITDA increased by 16.7% due to the improved revenue
contribution and a reduction in selling costs and general administration costs.
The Group has net assets of $194,842,000 (restated 30 June 2020: $21,610,000) which have increased from the previous
year due to acquisition of Blake eLearning Pty Ltd at consideration of $182,210,000 by issuance of 137,000,000 shares at
$1.33 per share.
Material Business Risks
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.
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.
4
3P Learning Limited
Directors' report
30 June 2021
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 the Group approaches everything it does and the decisions it makes. The Group takes
the storage of this data incredibly seriously and place the highest priority on ensuring its security.
Revenue risk: The K-12 market is driven by the schools’ ability to fund the purchase of education technology for their
students. A significant decline in school funding, changes to schools’ purchasing decision processes, or education
regulatory changes in any market could result in reduced demand for the Group’s products. Sales made directly to
consumers may also be impacted by general economic performance of a region or any regulatory changes which impact
online education or online sales.
Commercial contractual risk: The Group has 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 risks 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.
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2021 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 schools, teachers, parents and students
seeking 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
and literacy. The Group also expects to continue to invest in its scalable internal sales and marketing to 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:
Matthew Sandblom
Non-Executive Chairman (appointed on 28 May 2021); Executive Chairman
(appointed on 25 August 2021)
BA Economics
Matthew is an education entrepreneur with over 30 years of experience building
successful companies. He started his first company, Pascal Press, in 1989 to publish
school workbooks and study guides. Since then he has founded or co-founded many
successful companies including Blake education, ClickView, 3P Learning and
Blake eLearning. Matthew is driven by the idea of producing resources for
students that deliver on the promise that they provide better ways to learn than other
products. He was a major shareholder of 3P Learning until its IPO in 2014.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
137,220,000
5
3P Learning Limited
Directors' report
30 June 2021
Name:
Title:
Qualifications:
Experience and expertise:
Samuel Weiss
Independent Non-Executive Director (Non-Executive Chairman until 28 May 2021)
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): Non-Executive Director of Citadel Group Limited (ASX: CGL) - from 15 May 2019 to
Special responsibilities:
Interests in shares:
31 October 2019
Member of the People and Culture Committee and Member of the Audit and Risk
Committee (appointed Interim Chair on 28 May 2021)
637,277 ordinary shares
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:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Katherine Ostin
Non-Executive Director (appointed on 6 August 2021)
B.Com, GAICD, Chartered Accountant
Diverse and deep experience in audit and risk management, having previously been
an audit partner at KPMG between 2005 and 2017, during which time she established
and led KPMG's New South Wales Health, Ageing and Human Services Practice.
Katherine is on the Board and committee at eftpos Payments Australia, where she is
the Chair and member of various committees.
Non-Executive Director of Swift Media Ltd (ASX: SW1) since 1 October 2019; Non-
Executive Director of Capral Limited (ASX: CAA) since 17 June 2020 and Non-
Executive Director of Dusk Group Ltd (ASX: DSK) since 16 September 2020.
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Member of the Audit and Risk Committee and Member of the People and Culture
Committee
None
6
3P Learning Limited
Directors' report
30 June 2021
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Allan Brackin
Non-Executive Director (appointed on 6 August 2021)
Bachelor of Applied Science
Over 35 years of experience in the technology industry and has a proven track record
as a business builder and adviser, with experience in business strategy, sales and
marketing, process re-engineering, change management, financial management and
merger and acquisition activity along with governance. Previously was the CEO and
Managing Director of Volante Group Ltd, founder and CEO of AAG Technology
Services, Chair of Opticomm Ltd, and Chair of GBST Ltd.
Non-Executive Director of Sovereign Cloud Holdings Limited (ASX: SOV) since 16
October 2020 and Non-Executive Director of Integrated Research Limited (ASX: IRI)
since 1 February 2021.
Former directorships (last 3 years): Non-Executive Director of GBST Holdings Limited (ASX: GBT) - delisted on 7
Special responsibilities:
Interests in shares:
November 2019; Chairman of RPMGlobal Holdings Limited (ASX: RUL) - resigned on
30 June 2020; Chairman of Sensera Limited (ASX: SE1) - resigned on 20 October
2020 and Chairman of OptiComm Ltd (ASX: OPC) - delisted on 23 November 2020.
Member of the Audit and Risk Committee and Member of the People and Culture
Committee
None
Name:
Title:
Qualifications:
Experience and expertise:
Rebekah O’Flaherty (resigned on 9 April 2021)
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:
2,867,647 options
Interests in options:
509,175 performance rights
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Roger Amos (resigned on 28 May 2021)
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
'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) is the company secretary and legal counsel since 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.
7
3P Learning Limited
Directors' report
30 June 2021
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 2021, and the number of meetings attended by each director were:
Full Board
People and Culture
Committee
Attended
Held
Attended
Held
Audit and Risk Committee
Attended
Held
Matthew Sandblom*
Samuel Weiss
Claire Hatton
Mark Lamont
Rebekah O’Flaherty**
Roger Amos***
2
21
21
21
16
19
2
21
21
21
17
19
1
3
3
3
3
3
1
3
3
3
3
3
-
4
4
4
4
4
-
4
4
4
4
4
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
* Matthew Sandblom attended the People and Culture Committee meeting as an invitee.
** Rebekah O’Flaherty attended the People and Culture Committee and Audit and Risk Committee meetings as an
observer. Rebekah was granted a medical leave of absence from one Board meeting prior to her resignation as a
director on 9 April 2021.
*** Roger Amos resigned as a director of the Company and stepped down from his committee positions on 28 May 2021.
The Board held 21 meetings over the course of the financial year. The increased frequency of meetings was due to
corporate activity, COVID-19 and careful monitoring to ensure continuous disclosure obligations were fulfilled. There were
also 4 scheduled Audit and Risk Committee meetings and 3 People and Culture Committee meetings held during the
financial year.
Shares under option
Unissued ordinary shares of 3P Learning Limited under option at the date of this report are as follows:
Grant date
23/08/2018
09/11/2018
Expiry date
23/08/2022
23/08/2022
Exercise
price
Number
under option
$1.75
$1.75
691,562
2,867,647
3,559,209
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
21/12/2020
Expiry date
06/09/2022
31/08/2023
Exercise
price
Number
under rights
$0.00
$0.00
641,760
293,989
935,749
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.
8
3P Learning Limited
Directors' report
30 June 2021
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
2021 and up to the date of this report.
Shares issued on the exercise of performance rights
There were no ordinary shares of 3P Learning Limited issued on the exercise of performance rights during the year ended
30 June 2021 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the
financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company
against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the
nature of 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.
Non-audit services
Details of the amounts paid or payable of $12,875 (2020: $Nil) to the auditor for non-audit services provided during the
financial year by the auditor are outlined in note 27 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 27 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 (including Independence Standards) 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.
9
3P Learning Limited
Directors' report - remuneration report
30 June 2021
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 the financial year ended 30 June 2021
(‘FY21’). I think it’s important to acknowledge that we received a “first strike” for FY20 with 38.87% of shareholders recording
a “no’ vote against the adoption of the prior year’s Remuneration Report. This was a disappointing outcome for us, and one
that we have intended to rectify and learn from, to ensure we regain shareholders’ support this year. Feedback received
from shareholders and their advisors indicated that they were open to a change in the corporate structure of the Company
including in its leadership and that the progress of the Company’s strategic growth may have fallen short of some of the
shareholders’ expectations. Consequently, in FY21, 3P Learning underwent significant corporate activity which culminated
with the acquisition of Blake eLearning Pty Ltd (‘Blake’). As part of the acquisition and partly to address shareholder
concerns, the Board also initiated a number of changes to its composition and to the executive leadership team.
Managing Director and Chief Executive Officer transition
On 9 April 2021, Rebekah O’Flaherty, resigned as Managing Director and Chief Executive Officer (‘CEO’) of 3P Learning.
She stayed on until 10 June to assist with the integration/transition period. Rebekah left the business as a good leaver and
details of her termination payment is set out in the Remuneration Report. The Board has determined that Rebekah’s long
term incentive arrangements which existed prior to her termination will remain on-foot and will be tested and vest on their
original vesting date to the extent that their applicable vesting conditions have been met.
After the Company completed the acquisition of Blake, the Board appointed Jose Palmero to the role of Interim CEO upon
completion of the acquisition. On 24 August 2021, the Board determined that Jose Palmero, has given the Board confidence
that he is the best candidate for the CEO position. This combined with Jose’s longstanding working history with the
Executive Chairman, led the Board to resolve that Jose’s period as Interim CEO be waived and effective 25 August 2021,
Jose will become CEO on an ongoing basis. From FY22, Jose will be eligible to receive an annual short-term incentive
(‘STI’) cash payment with an ‘at target; value equivalent of 50% of his fixed annual remuneration, and a long-term incentive
(‘LTI’) equity package with an ‘at target’ value equivalent to 50% of his fixed annual remuneration.
Board changes
Matthew Sandblom was appointed as Chairman and Non-executive Director effective on 28 May 2021 and then
subsequently appointed Executive Chairman on 24 August 2021, to take effect from 25 August 2021 onwards due to his
involvement in the day-to-day operations of the Company. In relation to his appointment as Non-executive Chairperson,
Matthew requested that he receive a nominal fee of $1. Subsequent to his appointment as Executive Chairman effective 25
August 2021, the Company additionally entered into a Consultancy Agreement with Matthew for him to provide ad-hoc
strategic advisory services to the Company on an agreed hourly retainer basis up to a cap of $100,000 over the 12-month
fixed period of his consultancy. The Board will consider the appointment of a Senior Independent Director to lead the Board
in the absence of the Chair should a matter that triggers a conflict need to be addressed by the Board.
Roger Amos, resigned as a Non-executive Director and Chair of the Audit and Risk Committee, effective 28 May 2021.
Previous Chair, Sam Weiss, continues as Non-executive Director as well as Chair of the Audit and Risk Committee.
On 6 August 2021, the Board announced the appointment of two new Non-executive Directors to boost the Board’s skillset:
Allan Brackin, an experienced CEO and Chairman with a strong track record in scaling technology companies and Kathy
Ostin who has strong financial, audit and risk advisory background as well as an impressive track record of enabling
strategic and superior business outcomes. Following the release of the 30 June 2021 financial statements, your Board
intends that Kathy will become Chair of the Audit and Risk Committee moving forward. Your Board believes that these
independent director changes reflect a mix of skills, experience and personal attributes which enable it to fulfil its role
effectively.
10
3P Learning Limited
Directors' report - remuneration report
30 June 2021
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. Like most companies this year, our
business continued to face unprecedented complexities and challenges as a result of the COVID-19 pandemic, with multi
layered challenges globally including employee productivity, wellbeing, business continuity and motivation. On top of this,
the team at 3P Learning also experienced a year of transaction activity, and the consequential uncertainty that this entails.
In order to facilitate business and leadership continuity through a significant period of integration and next phase of growth
for the Company, the Board determined to pay retention bonuses to a number of executives. These cash retention bonuses
are conditional upon certain criteria being met. These included the Blake acquisition proceeding to completion and their staff
continuous employment. As the first criteria was met on 28 May 2021, the expense in connection with the retention
payments will be recognised over a 12-month period following the completion of the transaction, with the first tranche
vesting in November 2021 and the second tranche vesting in May 2022, subject to the relevant executives meeting certain
service criteria. The retention bonus awarded to KMP is set out in the Remuneration Report.
With the competitive nature of the labour market and the acquisition of Blake, we continue to sharpen our Remuneration
Philosophy which is as follows:
● 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. 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 Earnings Before Interest, Tax, Depreciation and Amortisation
(‘EBITDA’) performance, and tied to an ambitious but achievable target and gated at 95% achievement of target; and
● Long-term incentives tied to Revenue and Earnings Per Share (‘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 FY22 we plan to make changes in our Incentive Plans which include:
●
the continued review of STI hurdles to ensure they are appropriately stretched as well as achievable. We plan to use the
hurdles of Revenue and Earnings Before Interest and Tax (‘EBIT’) and will move the weighting back to 50% Revenue
(from 70% weighting) and 50% EBITDA (from 30% weighting) to have an increased focus on profitable growth. The
other change will be that the threshold will increase from 95% to 100% of target;
the continued improvement to the incentive structure for our Sales teams; and
the structure of the LTI to remain unchanged. However, the Board will continue to assess options to increase share
ownership to a broader cohort of employees.
●
●
In FY21, the Company shifted to more flexible work arrangements as all staff became virtual, working from home across the
globe. The successful transition to working from home led the Company to fast track flexibility initiatives which has led to a
reassessment of how we utilise our office space, which has in turn, led to a reduction in our office footprint. With the Blake
eLearning acquisition, the ‘all roles flexible’ policy which we introduced from FY21, with everyone now having the ability to
work from anywhere and to work flexible hours in any one day, is currently under review as the business learns how to
optimise flexible working and ensure the wellbeing of all of our employees.
Diversity and inclusion
Diversity and inclusion are 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 56% of our employees globally as at 30 June 2021. At year end at the Board level, due
to changes in the Board composition as a result of the Blake acquisition, 25% were female. At the senior leadership team
level (reporting directly to the CEO) and in the extended leadership team 50% and 54% are female respectively. We are
pleased to see that at least 50% of our internal promotions into leadership positions in FY21 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 ethnicity, 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 underpin our employee engagement and experience roadmap, and
the analytics are already enabling a much more robust approach to measuring and tracking employee engagement. These
insights have already been critical to steer our approach to change management as a result of the integration of the 3P
Learning and Blake teams, as well as the important decisions we continue to address with the ongoing uncertainty
associated with the coronavirus in all of our markets.
11
3P Learning Limited
Directors' report - remuneration report
30 June 2021
3P Learning’s business performance and future is underpinned by its incredible people and we can’t thank them enough for
their commitment and passion for the business. As we integrate 3P Learning with Blake and create a bigger, more scalable
business and navigate the challenges of a changing work world, aligning and adapting our people strategy, values, and
culture, is critical. Your Board believes in our plan to invest in the areas that will make a difference now and into the future.
We constantly review 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 People and Culture Committee
25 August 2021
Sydney
12
3P Learning Limited
Directors' report - remuneration report
30 June 2021
Remuneration report (audited)
Overview
1. “First strike” on FY20 Remuneration Report
At the 30 June 2020 (‘FY20’) Annual General Meeting, 3P Learning Limited (‘3P Learning’, ‘3PL’ or the ‘Company’) recorded
a no vote of 38.87% on the resolution to adopt the FY20 Remuneration Report resulting in a “first strike”. Feedback received
from shareholders and their advisors indicated that they were open to a change in leadership and that the progress of the
Company’s strategic growth may have fell out of alignment with some of the shareholders’ expectations. Consequently, in
FY21, 3PL underwent significant corporate activity which culminated with the acquisition of Blake eLearning Pty Ltd (‘Blake’)
on 28 May 2021 to create a larger scale educational technology company which combined 3PL’s direct to school go-to-
market with Blake’s direct to consumer marketing as well as control of Blake’s intellectual property rights to its suite of
numeracy and literacy products. As part of the acquisition and partly to address shareholder concerns, the Board also
initiated a number of changes to its composition and to the executive leadership team of which are set out in more detail in
this report.
2. Preparation of Remuneration Report
The Directors of 3P Learning present the Remuneration Report (the ‘Report’) for the Company and its controlled entities (the
‘Group’) for the year ended 30 June 2021 (‘FY21’). 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 certain senior executives (collectively the ‘executives’).
3. Key management personnel (‘KMP’) changes
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.
Position
Non-executive Chairman (until 28
May 2021)
Non-executive Director (from 28 May
2021) *
Term as KMP
Full financial year
Non-executive Director
Non-executive Director
Non-executive Director
Ceased 28 May 2021
Full financial year
Full financial year
Executive Chairman
Managing Director (‘MD’)/ Chief
Executive Officer (‘CEO’)
Chief Executive Officer (‘CEO’)
Non-executive Chairman from 28 May
2021 to 24 August 2021
Ceased on 9 April 2021
Interim CEO from 28 May 2021 to 24
August 2021
Full financial year
Dimitri Aroney
Chief Financial Officer (‘CFO’)
* As a result of Rebekah O’Flaherty resigning as Managing Director and CEO of 3PL, from 9 April 2021 to 28 May 2021, Samuel Weiss worked with the
senior executives to ensure that 3PL had strong management and leadership continuity until the completion of the acquisition of Blake. Whilst there
was no formal appointment of an interim CEO until acquisition, the Chairman acted in that capacity regarding all matters of corporate governance and
fiduciary responsibility.
13
Name
Non-executive Directors
Samuel Weiss
Roger Amos
Claire Hatton
Mark Lamont
Executive Director
Matthew Sandblom
Rebekah O’Flaherty
Other KMP
Jose Palmero
3P Learning Limited
Directors' report - remuneration report
30 June 2021
3PL appointed Jose Palmero as its new Interim CEO effective 28 May 2021, following Rebekah O’Flaherty’s resignation.
Jose was with the Pascal Press Group since 2006. During his time there he played a key role in growing and scaling the
Pascal Press Group, which includes Pascal Press, Blake Education, Blake Publishing, Video Education Australia, ClickView,
3PL (until its IPO in 2014) and Blake. He was a member of the 3PL Board from 2009 to 2014 prior to its IPO and has a
proven track record in the educational content, intellectual property and EdTech industries. Prior to Blake, Jose spent 10
years at the Copyright Agency Limited as the Group General Manager – Business Development and Strategic Planning,
Financial Controller.
On 24 August 2021, the Board determined that Jose Palmero remained the best candidate for the CEO position within the
business. Combined with his former longstanding working history with the Executive Chairman, the Board resolved that
Jose’s period as Interim CEO be waived. Effective 25 August 2021, Jose will become CEO on an ongoing basis subject to
termination by either party with six months’ notice (other than where the employment is terminated by 3PL for cause). No
other changes were made to his executive service agreement.
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.
4. 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; and
• 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, that 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.
During the reporting period the P&CC engaged external advisors, Ernst & Young, to provide advice on potential equity
grants to non-KMP levels of management as well as advice on retention payments made to certain executives as a result of
corporate activity. The total incurred cost for remuneration-related advice throughout the financial period was $12,875.
An agreed set of protocols were put in place to ensure that the recommendations would be free from undue influence from
KMP. The Board is satisfied that these protocols were followed and as such there was no undue influence.
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 CEO and other executives.
14
3P Learning Limited
Directors' report - remuneration report
30 June 2021
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 CEO and other executives. Details for each of the individual
components in both FY20 and FY21 were 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
•
•
Fixed salary set by reference to
appropriate benchmark information
and experience of individuals
Includes superannuation and salary-
sacrifice non-monetary benefits
•
•
25 - 50% of fixed remuneration at
target STI
Increased focus on revenue
growth
• Weighting of group performance
targets:
revenue (70%);
underlying EBITDA (30%)
-
-
Elements of executive remuneration
•
25 - 50% of fixed
remuneration at target LTI
• Grant of performance rights
•
Encourage greater executive
ownership of the Company
Fixed remuneration
The fixed remuneration component consists of base salary, superannuation and other non-monetary benefits and is
designed to reward the executives for 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 CEO is reviewed annually by the P&CC, with changes to be approved by the Board, following
consideration of performance against annual key performance indicators set at the start of the financial period.
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.
Short-term incentive (‘STI’)
The STI plan provides eligible 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?
100% of an STI award is paid in cash after the assessment of annual
performance.
How much can an eligible
executive earn?
Eligible executives have a target STI opportunity of up to 25% of fixed
remuneration while the CEO 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 (that is, 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 executives
will be awarded a payment of more than 100% of the incentive).
15
3P Learning Limited
Directors' report - remuneration report
30 June 2021
A summary of the target incentives is as follows:
Financial measure – level of performance
% of Target incentive
award*
Below Threshold (<95% of Target)
At Threshold (95% of Target)
Target
Above Target (> 100% of Target)
* Pro-rata payments are made between these points
0%
50%
100%
Up to 160%
Financial performance measures are set for eligible 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 FY21, the weighting of the performance measures remains unchanged and is
aligned with our continued strategy to accelerate revenue growth and therefore
are closely tied to financial performance objectives.
A summary of the performance measures and weightings in the two prior years
are as follows:
CEO
KMP
Non-KMP executives
Revenue
70%
70%
70%
Underlying EBITDA
30%
30%
30%
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 four months after the
end of the performance period.
How is performance measured?
When is it paid?
Deferral terms
Payment of STI is not deferred.
Long-term incentive (‘LTI’)
The objective of the LTI plan is to link the long-term reward for eligible executives with the creation of shareholder value
through the allocation of an equity award which are subject to specific performance conditions.
How is it paid?
Eligible executives may 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 an eligible executive
earn?
An eligible executive has a target LTI opportunity of up to 25% of fixed
remuneration while the CEO has a target LTI opportunity of up to 50% of fixed
remuneration.
How is performance measured?
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.
•
16
3P Learning Limited
Directors' report - remuneration report
30 June 2021
When is it paid?
Participants in the LTI plan can earn an LTI amount equal to a percentage of
their annual fixed remuneration in the range of 25% - 50%. The number of
performance rights awarded is calculated by dividing the dollar value of LTI
award opportunity by the value per right. The value per right is determined on a
face value basis using a 20-day VWAP.
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 financial year. Once the performance rights vest, subject to the terms of the
plan, the Company will issue or allocate the performance rights to the executives.
All performance rights have a three-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 three-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 three-year vesting period subject
to certain vesting conditions being met.
What happens if an eligible
executive leaves?
Is there a clawback provision?
What happens if there is a change of
control?
If an eligible 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 a ‘Bad Leaver’, all unvested
performance rights lapse on the date of cessation.
If an eligible 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 eligible executives entitled to
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.
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5. Performance and executive remuneration outcomes in FY21
The actual remuneration earned by executives in FY21 against the prior year is set out below. This provides shareholders
with a view of the remuneration actually paid to executives for performance in FY21 and the value of the 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
over the past five financial years. Those results are not fully comparable due to changes in accounting standards and
change of accounting policy over that period. Results from FY19 and FY20 are restated due to change of accounting policy
regarding customisation and configuration costs incurred in relation to Software-as-a-Service arrangements. These
arrangements which were previously capitalised were restated and recognised as an expense in profit or loss. AASB 16
‘Leases’ was adopted on 1 July 2019 and effective for the FY20 year, and as such, results from FY16 to FY19 are not
prepared on the same basis.
Financial Year
Revenue ($m)
Underlying EBITDA ($m)^
EPS (cents)
Share Price ($) 30 June
2017
52.5
16.0
(5.11)
1.05
2018
55.4
19.6
(13.42)
1.25
2019
54.4
12.5*
1.69
0.98
2020
55.0
9.5
0.37
0.86
2021
57.4
10.4
(6.15)
1.31
* In this reporting period the result is the same as Statutory EBITDA
^ Underlying EBITDA is earning before interest, tax, depreciation and amortisation, impairment expense, restructure and integration costs, corporate advisory costs.
Executive remuneration
Details of statutory remuneration (Australian Accounting Standards (‘AAS‘)) for executive KMP, for the years ended 30 June
2021 and 30 June 2020, are set out below:
Executive KMP
Salary
$
Cash
STI
$
Other#
$
Post
employment
benefits
(Super-
annuation)
Accounting
value of LTI
awards and
additional
incentives
Termination
Payments
Other long-
term benefit#
$
Total
$
Performance
related
Equity
based
%
%
%
J Palmero (CEO)**
2021
2020
43,715
-
R O’Flaherty (Former CEO)*
-
-
33,900
1,964
-
-
$
-
-
$
-
-
36,998
116,577
-
-
-
-
-
-
2021
2020
594,551 325,000^
(21,342)
25,000
(131,252)
625,000
-
37,617
25,000
232,400
650,000^^
-
- 1,441,957
13%
(9%)
920,017
25%
25%
D Aroney (Chief Financial Officer)
2021
2020##
265,684 28,865***
20,421
24,957
77,908###
87,291
-
7,909
8,293
-
-
-
7,717
425,552
11%
5%
4,631
108,124
-
-
* Rebekah O’ Flaherty resigned as Managing Director and CEO on 9 April 2021. She stayed with the Company until 10 June 2021 to assist with the integration period
following the acquisition of Blake. Rebekah’s existing LTI entitlements remain on foot and will be tested and vest on their original vesting date. An FY21 LTI was not
recognised for Rebekah on the basis that this was not approved at the Group’s FY20 AGM. The reversal in the table above reflects lapsed of FY17 LTI.
** Jose Palmero was appointed interim CEO on 28 May 2021 upon the completion of the Blake acquisition and his remuneration reflects a pro-rata of his annual fixed
remuneration received during the financial period. On 24 August 2021, the Board waived the interim period and noted that effective 25 August 2021, Jose would be CEO on
an ongoing basis.
*** $28,865 has been accrued for Dimitri Aroney in relation to his potential FY21 STI award. At the time that this Remuneration Report is released, the Board is determining the
appropriate STI award given the impact of the acquisition of Blake to the FY21 STI hurdles.
^ In accordance with her executive service agreement at the time, Rebekah O’Flaherty received $325,000, being the value of her unpaid award under the Company’s short-
term incentive plan as a result of the Scheme Meeting being convened in relation to IXL Learning Inc. on 20 November 2021.
^^ Termination benefits included pay in lieu of notice.
#
##
###
Represents the net movement of annual leave and long service leave entitlement respectively.
Dimitri Aroney became a member of the KMP, effective 27 February 2020.
It includes accounting value of LTI awards of $19,159 and pro-rate of retention incentive $58,749.
In line with general market practice a (non-AAS) presentation of pay with respect to the FY21 and FY20 reporting periods
are provided in the table below, to give shareholders a more informative picture of actual remuneration outcomes that have
actually vested within the financial year.
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3P Learning Limited
Directors' report - remuneration report
30 June 2021
Salary
Cash STI
$
43,715
-
J Palmero (CEO)##
2021
2020
R O’Flaherty (CEO) #
$
-
-
2021
2020
787,821*
325,000^
625,000
D Aroney (Chief Financial Officer)
2021
2020^
265,684
87,291
-
-
-
Post
employment
benefits
(Super-
annuation)
LTI and
additional
incentives
vested
$
1,964
-
25,000
25,000
24,957
8,293
$
-
-
-
71,000
-
-
Termination
payments
Total
remuneration
$
-
-
$
45,649
-
650,000^^
1,787,821
-
-
-
721,000
290,641
95,584
# Rebekah O’ Flaherty resigned as Managing Director and CEO on 9 April 2021. She stayed with the Company until 10 June 2021 to assist with the integration period
following the acquisition of Blake eLearning. Rebekah’s existing LTI entitlements remain on foot and will be tested and vest on their original vesting date.
## Jose Palmero was appointed interim CEO on 28 May 2021 upon the completion of the Blake eLearning acquisition and his remuneration reflect a pro-rata of his annual
fixed remuneration received during the financial period. On 24 August 2021, the Board waived the interim period and noted that effective 25 August 2021, Jose would be
CEO on an ongoing basis.
^ In accordance with her executive service agreement at the time, Rebekah O’Flaherty received $325,000, being the value of her unpaid award under the Company’s short
term incentive plan as a result of the Scheme Meeting being convened in relation to IXL Learning Inc. on 20 November 2021.
^^ Termination benefits included pay in lieu of notice.
^ Dimitri Aroney became a member of the KMP effective 27 February 2020.
* Salary included unused annual leave and unused long service leave
Short term incentives
STI for the 2021 financial year
The target STI opportunity for the financial year ended 30 June 2021 was an amount equal to 25% for eligible executives’
fixed remuneration and 50% in the case of the CEO.
Who are the participants of the STI?
There were four senior executive participants in the STI program for FY21 (then CEO, Rebekah O’Flaherty, CFO, Dimitri
Aroney, and two other C-level senior executives). Due to the acquisition on 28 May 2021, the Board are determining the
appropriate exercise of discretion to ensure that STI participants are not subject to a material disadvantage or obtain a
windfall gain as a result of the Blake transaction which may have impacted the appropriateness of the original STI hurdles.
Accordingly, at the time of this Report, nil amounts were paid to KMP with the exception of the former CEO who received
100% of her FY21 STI, in accordance with the terms of her employment agreement, as a result of the Scheme Meeting
being convened in relation to IXL Learning Inc., on 20 November 2021. Specific information relating to the STI component to
the CEO and CFO for FY21 is set out below.
Executive KMP
Position/title
Rebekah O’Flaherty
Dimitri Aroney
CEO
CFO
Actual/accrued STI
payment
$325,000
Accrued STI
payment
$28,865
% of target STI
payable
100%
0-38%
Performance measure
FY21 – At Target
FY21 Performance
Revenue
Underlying EBITDA**
$60,170,000
$15,602,000
$57,448,000
$10,417,000
% of Target
Incentive Award*
54.8%
0%
Weighting
70%
30%
* Based on the metrics outlined under ‘How much can an eligible executive earn?‘ above 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, impairment expense, restructure and
integration costs.
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Long term incentives
Who are the participants of the LTI?
The CEO and other C-level senior executives are eligible to participate in the LTI plan. The FY21 LTI plan for former
Managing Director and CEO, Rebekah O’Flaherty, did not receive shareholder approval at the 2020 Annual General
Meeting held on 21 January 2021. Subsequently, no LTI plan was granted to Ms O’Flaherty for the FY21 period. Jose
Palmero, who joined the Company on 28 May 2021 is eligible to participate in the FY22 LTI plan.
The Board determined that Rebekah’s cessation of employment constituted a ‘good leaver’ and that her long-term incentive
arrangements which existed prior to her termination remained on-foot and would be tested and vest on their original vesting
date to the extent that their applicable vesting conditions have been met.
As at 30 June 2021, there were four 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 FY20 will be disclosed
in August 2022 after the applicable performance period.
2019 LTI Award – Performance condition outcomes based on FY21 results
The first grant of options under the Company’s LTI plan was made in FY19, with performance conditions to be tested with
respect to the audited FY21 full year results. Based on the financial results for FY21, no LTI Awards vested during the
reporting period and the following outcomes are expected for LTI grants awarded in FY19:
Performance measure
Revenue
EPS
FY21
At Target
$73,000,000
$0.0640
FY21
Performance
Outcome
% of Target
Incentive Awarded
Weighting
$57,448,000
($0.0522)
Below threshold
Below threshold
0%
0%
50%
50%
The CEO and one other senior executive were the only executives that held FY19 LTI awards. Consequently, it is expected
that all of the 3,559,209 FY19 LTI options held by the two executives will lapse as a result of the FY21 performance
thresholds not being reached.
Additional payments awarded in FY21
During FY21, the Company completed the acquisition of Blake which effectively doubled the market capitalisation of the
Company. The Board appointed Jose Palmero to the role of CEO upon completion of the acquisition. In order to facilitate
business and leadership continuity through a significant period of integration and next phase of growth for the Company, the
Board determined to pay retention bonuses to certain executives. These cash retention bonuses were conditional upon
certain criteria being met. These included the Blake acquisition proceeding to completion and continuous employment. As
the first criteria was met on 28 May 2021, these retention payments will now vest over a 12-month period following the
completion of the transaction with the first tranche vesting in November 2021 and the second tranche vesting in May 2022,
subject to the relevant executives meeting certain service criteria. The retention bonus awarded to KMP is set out in the
table below:
Details of retention bonuses awarded to KMP in FY21
Name
Dimitri Aroney
Role
CFO
Total retention bonus
$300,000
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Directors' report - remuneration report
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6. 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 $900,000 per
annum. Board and committee fees, as well as statutory superannuation contributions made on behalf of the non-executive
directors, are included in the aggregate fee pool.
The table below shows the structure and level of non-executive director fees (exclusive of superannuation) for the financial
years ended 30 June 2021 and 30 June 2020.
Fee applicable
Board
Audit and Risk Committee
People and Culture Committee
FY
2021
2020
2021
2020
2021
2020
Chair ($)
185,000
185,000
20,000
20,000
20,000
20,000
Member ($)
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
2021 and 30 June 2020 are set out in the table below.
Name
M Sandblom (Non-executive Chairman from 28 May
2021 to 24 August 2021; Executive Chairman from 25
August 2021)*
S Weiss (Non-executive Chairman until 28 May
2021)**
R Amos #
C Hatton
M Lamont
Total
Fees and
allowances
$
Post-
employment
benefits
$
1
-
-
-
Total
$
1
-
248,333
23,592
271,925
205,000
114,583
125,000
125,000
125,000
115,000
115,000
602,916
570,000
19,475
10,885
11,875
11,875
11,875
10,925
10,925
57,277
54,150
224,475
125,468
136,875
136,875
136,875
125,925
125,925
660,193
624,150
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
* As an incoming substantial shareholder of the Company, Mr Sandblom requested that he receive a nominal fee of $1 in relation to his appointment as
Chairman and Non-executive Director effective from his commencement on 28 May 2021.
** In mid-May 2021, the Board (excluding Mr Weiss) approved a one-off additional payment of $50,000 to Mr Weiss to reflect his significant
responsibilities and duties leading up to the completion of the Blake acquisition and for the period in which he acted in the capacity of an interim CEO
between 12 April 2021 to 28 May 2021 as a result of Ms Rebekah O’Flaherty’s resignation on 9 April 2021. The additional payment was made on 15
June 2021.
# Mr Amos resigned on the 28 May 2021.
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7. 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.
Subsequent to 30 June 2021, the Board determined that the Chairman, Matthew Sandblom, has an active role in the day-to-
day management of the Company particularly in the areas of Strategy and Product. Consequently, the Board agreed that
Matthew’s title be changed to ‘Executive Chairman’ on 24 August 2021 as this better reflects his current roles and
responsibilities. Details of Matthew’s service agreement is provided below:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Matthew Sandblom
Educational Technology Strategic Advisor
25 August 2021
12 months with option to extend
Matthew will receive a fee of $300 per hour plus GST up to $100,000 per annum
The fee is in consideration for providing company strategy, product strategy and
education technology strategy advice. Either party may terminate the service
agreement by giving 60 days’ notice in writing or earlier termination for a material
breach of contract.
Remuneration and other terms of employment for executives are formalised in employment agreements. The CEO and CFO
do not have a fixed term contract with the Company. Details of the CEO’s and CFO’s employment agreements as at 30
June 2021 are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Jose Palmero
Interim CEO (from 28 May 2021 to 24 August 2021; CEO from 25 August 2021
onwards)*
28 May 2021
Open ended
Jose will receive a fixed annual remuneration of $525,000, inclusive of statutory
superannuation. Jose will be eligible to receive an annual STI package with a target
STI of 50% of his fixed annual remuneration, as determined by the Board. Payment
of the cash bonus will depend on the Group’s performance and Jose’s achievement
of certain key performance indicators or at the discretion of the Board. As part of a
LTI package, Jose may be entitled to receive an equity-based award under the LTI
plan with a value equivalent to 50% of his fixed annual remuneration. Either party
may terminate the employment contract by giving six months’ notice in writing. The
Company may terminate Jose’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 Jose’s employment
contract immediately by notice in writing and without payment in lieu of notice.
Dimitri Aroney
CFO
1 April 2020
Open ended
Dimitri will receive an annual fixed remuneration of $307,500 inclusive of statutory
superannuation. Dimitri will be eligible to receive an annual STI 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 LTI
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.
On 24 August 2021, the Board resolved that Jose period as Interim CEO be waived and that effective 25 August 2021, he would become CEO on an
ongoing basis subject to termination by either party with six months’ notice (other than where the employment is terminated by 3PL for cause).
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3P Learning Limited
Directors' report - remuneration report
30 June 2021
8. Share-based compensation
Issue of shares
No shares were issued to directors or any other key management personnel as part of compensation during the year
ended 30 June 2021.
Options
No options were issued to KMP as part of compensation during the year ended 30 June 2021. No non-executive directors
held options during the year. No options (comprising of former year option plans) vested with nil intrinsic value during the
financial year ended 30 June 2021. The Company note that 2,644,509 options lapsed during the financial year ended 30
June 2021.
Performance rights
The Company issued 93,281 new performance rights to KMP during the year ended 30 June 2021 and no additional
performance rights have been granted to any KMP since the end of the reporting period. No performance rights have
been issued to non-executive directors to date.
Name
Dimitri Aroney
Number
93,281
Accounting
grant date
10 December
2020
Accounting
fair value
Exercise price
Vesting date
Expiry date
$1.31
$0
August 2023
August 2023
9. 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 yea
Ordinary shares
Non-executive Directors
Samuel Weiss
Claire Hatton
Mark Lamont
Executive KMP
Matthew Sandblom
Jose Palmero*
Dimitri Aroney
637,277
41,526
-
220,000
-
7,121
905,924
-
-
-
-
-
-
-
-
137,000,000
-
-
137,000,000
-
-
-
-
-
-
637,277
41,526
137,220,000
7,121
137,905,924
Jose Palmero became a KMP on 28 May 2021. Although Jose’s interests do not trigger the disclosure thresholds required for the above table, the
Company notes that Jose is a beneficiary and also acts as trustee of a trust which is a 50% unitholder in BEL Unit Trust. Pascal Education Services
Pty Ltd as trustee for the BEL Unit Trust is a shareholder of 13,700,000 ordinary shares of 3PL (issued as consideration to the vendors of Blake
eLearning Pty Ltd (‘Blake’) in connection with the Company’s acquisition of Blake on 28 May 2021). For transparency, Jose has an economic
interest in 6,850,000 3PL shares.
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3P Learning Limited
Directors' report - remuneration report
30 June 2021
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
Rebekah**
O’Flaherty
Dimitri Aroney
Options
5,512,156
Performance
rights
Options
Performance
rights
509,175
-
-
-
-
-
93,381
2,644,509 options lapsed in FY21 with respect to FY18 LTI plan.
** Rebekah O’Flaherty ceased to be a member of KMP 9 April 2021
10. Other transactions with KMP and their related parties
-
-
-
-
Expired /
forfeited /
lapsed
Balance at the
end of the
year
(2,644,509)*
2,867,647
-
-
-
509,175
-
93,381
Payment for publishing and distribution services
The Group entered into a Publishing and Distribution Agreement with Kalaci Pty Ltd (trading as Pascal Press) (‘Kalaci’), a
company which both Matthew Sandblom and Jose Palmero have a beneficial economic interest. Under the agreement,
Kalaci receives a share of the net receipts received by Blake from orders placed by Blake customers and Blake receives a
share of the net receipts received by Kalaci from its sales of various Blake products to Kalaci customers. The terms of the
agreement were negotiated on arm’s length terms at the time of the Blake acquisition and is subject to normal
publishing terms and conditions. $11,076 is payable as at 30 June 2021.
Payment for transition services
The Group entered into a Transition Services Agreement with Kalaci, as part of the acquisition of Blake for a period of up
to 12 months for the purpose of sharing common administrative costs for a limited period of time following completion of
the Blake acquisition. The monthly costs under the agreement are $49,733. Any additional costs incurred are allocated on
a pro-rata basis. The agreement provides for an option to extend further if required to prevent any material disruption to
the business. $67,884 is payable as at 30 June 2021.
Lease of office premise from Matthew Sandblom
The Group leases an office premise at 655 Parramatta Road, Leichhardt NSW 2040, from Matthew Sandblom. The lease
term is 12 months with an option to renew for a further year. The terms of the lease were negotiated on arm’s length terms
at the time of the Blake acquisition and is subject to normal commercial terms and conditions. An independent valuation
was completed at the time to determine the market rent of $350,000 per annum (excluding monthly outgoings) and further
ensures the lease is on arm’s length terms and at comparable market rate. $33,167 was paid in June 2021.
Payment for software licence fees
The Group has a commercial agreement with ClickView, a company that operates a video technology platform and of
which Matthew Sandblom is a shareholder. Under the agreement, the Group is granted a licence to use ClickView’s video
storage, management, and delivery technology to deliver 3PL products. This arrangement was on foot prior to the
acquisition and remain ongoing on normal commercial terms and conditions. $15,732 is accrued as at 30 June 2021 for
usage between 1 April 2021 and 30 June 2021.
Payment for consultancy services from Matthew Sandblom
The Group has a consultancy agreement with Pascal Educational Services Pty Limited, a company which Matthew
Sandblom is a director and shareholder. Under the consultancy agreement, the Group will pay an hourly retainer of $300
per hour up to a cap of $100,000 for strategic advisory services over the consultancy period. This agreement came into
effect on 25 August 2021 and will be for a period of 12 months.
This concludes the remuneration report, which has been audited.
24
3P Learning Limited
Directors' report - remuneration report
30 June 2021
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
Matthew Sandblom
Executive Chairman
25 August 2021
Sydney
25
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 2021, 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
25 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
26
3P Learning Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Revenue
Other income
Interest revenue calculated using the effective interest method
Expenses
Employee benefits expenses
Employee benefits expenses - restructure and integration
Depreciation and amortisation expenses
Impairment of assets
Professional fees - corporate advisory costs
Professional fees - other
Technology costs
Marketing expenses
Occupancy expenses
Administrative expenses and foreign exchange
Finance costs
(Loss)/profit before income tax benefit/(expense)
Income tax benefit/(expense)
(Loss)/profit after income tax benefit/(expense) for the year
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
(Loss)/profit for the year is attributable to:
Non-controlling interest
Owners of 3P Learning Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of 3P Learning Limited
Consolidated
Note 30 June 2021 30 June 2020
$'000
$'000
(Restated)*
6
57,448
54,955
7
7
7
7
8
-
115
148
270
(34,971)
(2,450)
(9,329)
(4,818)
(5,476)
(1,139)
(3,656)
(2,534)
(654)
(4,077)
(237)
(35,010)
-
(7,783)
-
(197)
(1,136)
(3,701)
(2,066)
(1,061)
(2,653)
(284)
(11,778)
1,482
2,408
(9,370)
596
596
(8,774)
(1)
(9,369)
(9,370)
(1)
(8,773)
(8,774)
(965)
517
(213)
(213)
304
-
517
517
-
304
304
Basic earnings per share
Diluted earnings per share
* Refer to note 4 for detailed information on Restatement of comparatives.
Cents
Cents
37
37
(6.15)
(6.15)
0.37
0.37
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
27
3P Learning Limited
Statement of financial position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Lease receivables
Other assets
Total current assets
Non-current assets
Plant and equipment
Intangibles
Right-of-use assets
Lease receivables
Other assets
Deferred tax
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
Equity attributable to the owners of 3P Learning Limited
Non-controlling interest
Total equity
Consolidated
Note 30 June 2021 30 June 2020 1 July 2019
$'000
$'000
(Restated)*
$'000
(Restated)*
9
10
11
12
13
14
15
11
12
8
16
17
18
19
8
20
17
19
20
21
22
24,906
11,655
282
739
2,163
39,745
652
207,653
1,612
538
352
5,304
216,111
27,083
9,520
-
565
1,591
38,759
651
14,213
2,841
1,193
48
6,753
25,699
25,766
9,000
-
515
1,812
37,093
1,042
14,374
3,886
1,716
17
6,584
27,619
255,856
64,458
64,712
11,874
35,631
-
1,627
2,038
4,323
55,493
3,170
-
1,497
854
5,521
8,181
23,877
-
1,615
161
1,778
35,612
3,292
-
3,229
715
7,236
7,046
24,310
14
1,574
389
1,479
34,812
3,356
4
4,717
755
8,832
61,014
42,848
43,644
194,842
21,610
21,068
216,589
8,450
(30,207)
194,832
10
34,494
7,954
(20,838)
21,610
-
34,374
8,049
(21,355)
21,068
-
194,842
21,610
21,068
* Refer to note 4 for detailed information on Restatement of comparatives.
The above statement of financial position should be read in conjunction with the accompanying notes
28
3P Learning Limited
Statement of changes in equity
For the year ended 30 June 2021
Consolidated
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2019
34,374
8,049
(17,799)
Adjustment on initial adoption of AASB 16
'Leases'
Adjustment for change in accounting policy
(note 4)
-
-
-
-
68
(3,624)
Balance at 1 July 2019 - restated
34,374
8,049
(21,355)
Profit after income tax expense for the year
Other comprehensive income for the year,
net of tax -restated
Total comprehensive income for the year -
restated
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 21)
Share-based payments (note 36)
-
-
-
-
(213)
517
-
(213)
517
120
-
(71)
189
-
-
Balance at 30 June 2020
34,494
7,954
(20,838)
Refer to note 4 for detailed information on Restatement of comparatives.
-
-
-
-
-
-
-
-
-
-
24,624
68
(3,624)
21,068
517
(213)
304
49
189
21,610
Consolidated
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Non-
controlling
interest
$'000
Total equity
$'000
Balance at 1 July 2020
34,494
7,954
(20,838)
Loss after income tax benefit for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 21)
Share-based payments (note 36)
Acquisition of a subsidiary in Blake eLearning
Pty Ltd (note 33)
-
-
-
-
(9,369)
596
596
-
(9,369)
182,095
-
-
-
(100)
-
-
-
-
Balance at 30 June 2021
216,589
8,450
(30,207)
* Refer to note 4 for detailed information on Restatement of comparatives.
-
(1)
-
(1)
-
-
11
10
21,610
(9,370)
596
(8,774)
182,095
(100)
11
194,842
The above statement of changes in equity should be read in conjunction with the accompanying notes
29
3P Learning Limited
Statement of cash flows
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for plant and equipment
Payments for intangibles
Proceeds from sub-leases
Net cash used in investing activities
Cash flows from financing activities
Share issue transaction costs
Repayment of lease liabilities
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Consolidated
Note 30 June 2021 30 June 2020
$'000
$'000
(Restated)
35
33
72,221
(69,408)
134
(237)
(1,415)
66,981
(57,672)
289
(284)
(1,260)
1,295
8,054
3,605
(321)
(5,532)
553
-
(136)
(5,501)
528
(1,695)
(5,109)
35
(115)
(1,694)
-
(1,433)
(1,809)
(1,433)
(2,209)
27,083
32
1,512
25,766
(195)
Cash and cash equivalents at the end of the financial year
9
24,906
27,083
The above statement of cash flows should be read in conjunction with the accompanying notes
30
3P Learning Limited
Notes to the financial statements
30 June 2021
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 25 August 2021. 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:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The Group has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual Framework contains new
definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but
it has not had a material impact on the Group's financial statements.
Net current asset deficiency
As at 30 June 2021, the Group was in a net current liability position of $15,748,000 (2020: net current asset position of
$3,147,000) of which $35,631,000 (2020: $23,877,000) are contract liabilities that are expected to be recognised as
revenue in the next financial year with no further cash outflows to the Group. Accordingly, the financial statements continue
to be prepared on a going concern basis.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
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 31.
31
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of 3P Learning Limited as at
30 June 2021 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.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses
incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group
recognises the fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
Operating segments
Operating segments are presented on the same basis as the internal reports provided to the Chief Operating Decision
Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their
performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is 3P Learning Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into 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.
32
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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. Interest includes interest income related to sub-leases classified as a finance
lease.
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.
33
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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 rebates
Research and development rebates 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.
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.
34
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
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
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.
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.
35
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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.
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.
Product development
Research costs are expensed in the period in which they are incurred. Costs incurred for the development of software code
that enhances or modifies, or creates additional capability to, existing controlled systems and meets the definition of and
recognition criteria are recognised as intangible software assets. 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.
Capitalised development costs, including acquired product development, are amortised on a straight-line basis over the
period of the expected benefit, being their finite useful life of three to five years.
Intellectual property
Significant costs associated with acquired intellectual property rights are deferred and amortised on a straight-line basis
over the period of their expected benefit, being their finite life of up to five years.
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 and distributor relationships
Customer contracts and distributor relationships acquired are amortised over the period in which the related benefits are
expected to be realised, being their finite useful life of between one and two years for customer contracts and five years for
distributor relationships.
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.
36
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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
Trade and other payables 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.
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 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.
37
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months of the reporting date are measured at 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, the 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.
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.
38
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The acquisition method of accounting is used to account for business combinations when the acquired set of activities and
assets meets the definition of a business and control is transferred to the Group. To determine whether a set of activities
and assets constitutes a business, the Group has the choice to apply a `concentration test', which is met if substantially all
of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable
assets. Alternatively, to determine if a business has been acquired, the Group assesses whether (as a minimum) an input
and substantive process has been acquired and whether there is an ability to produce outputs from these.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to
profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement
period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
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 additional ordinary shares that would have been outstanding assuming conversion of all
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.
39
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Rounding of amounts
The Company is of a kind referred to in 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 2021. The adoption
of these Accounting Standards and Interpretations is not expected to have any significant impact on the Group’s financial
statements.
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. Refer to note 36 for further information.
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 impact
of the COVID-19 pandemic and forward-looking information that is available. The allowance for expected credit losses, as
disclosed in note 10, is calculated based on the information available at the time of preparation. The actual credit losses in
future years may be higher or lower.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical
innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are
less than previously estimated, technically obsolete or non-strategic assets that have been abandoned or sold.
40
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
has 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 fair value less cost of disposal (FVLCD) or 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. Refer to note 14 for further information.
Impairment of non-financial assets other than goodwill
The Group assesses the impairment of non-financial assets other than goodwill 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 assessing the value of the asset at fair value less costs of
disposal and using value-in-use models 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 judgements are required in
determining whether incremental product enhancements will provide additional future economic benefit.
Business combinations
As discussed in note 2, business combinations are initially accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all
available information at the reporting date. Fair value adjustments on the finalisation of the business combination
accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the
assets and liabilities, depreciation and amortisation reported.
41
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 4. Restatement of comparatives
Change in accounting policy - Software as a Service (SaaS) arrangements
The Group's accounting policy has historically been to capitalise costs related to the customisation and configuration of
SaaS arrangements as intangible assets in the statement of financial position. During the year, the International Financial
Reporting Standards Interpretations Committee ('IFRIC') issued a clarification regarding accounting for expenses due to
SaaS arrangements. In accordance with IFRIC clarification, the Group has changed its accounting policy retrospectively to
account for customisation and configuration costs incurred in relation to these arrangements as an expense in the
statement of profit or loss, when the Group does not control the customisation being performed.
The impact of the retrospective adoption of the accounting policy is summarised below:
Statement of profit or loss and other comprehensive income
Extract
Expenses
Employee benefits expenses
Depreciation and amortisation expenses
Profit before income tax expense
Income tax expense
Profit after income tax benefit/(expense) for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Basic earnings per share
Diluted earnings per share
Consolidated
30 June 2020
$'000
Reported
$'000
Adjustment
30 June 2020
$'000
Restated
(29,911)
(11,407)
(5,099)
3,624
(35,010)
(7,783)
2,957
(1,475)
1,482
(1,407)
442
1,550
(1,033)
(213)
-
1,337
(1,033)
(965)
517
(213)
304
Cents
Cents
Reported Adjustment
Cents
Restated
1.11
1.11
(0.74)
(0.74)
0.37
0.37
42
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 4. Restatement of comparatives (continued)
Statement of financial position at the beginning of the earliest comparative period
Extract
Assets
Non-current assets
Intangibles
Deferred tax
Total non-current assets
Total assets
Net assets
Equity
Accumulated losses
Total equity
Statement of financial position at the end of the earliest comparative period
Extract
Assets
Non-current assets
Intangibles
Deferred tax
Total non-current assets
Total assets
Net assets
Equity
Accumulated losses
Total equity
Consolidated
1 July 2019
$'000
Reported
$'000
Adjustment
1 July 2019
$'000
Restated
19,551
5,031
31,243
(5,177)
1,553
(3,624)
14,374
6,584
27,619
68,336
(3,624)
64,712
24,692
(3,624)
21,068
(17,731)
(3,624)
(21,355)
24,692
(3,624)
21,068
Consolidated
30 June 2020
$'000
Reported
$'000
Adjustment
30 June 2020
$'000
Restated
20,865
4,758
30,356
(6,652)
1,995
(4,657)
14,213
6,753
25,699
69,115
(4,657)
64,458
26,267
(4,657)
21,610
(16,181)
(4,657)
(20,838)
26,267
(4,657)
21,610
Statement of cash flows:
In accordance with the above, comparatives in the statement of cash flows have been restated to reflect changes in
accounting policy with regard to recognition of Software as a Service (SaaS) arrangements. Accordingly, payments for
intangibles have been reduced by $5,096,000 with a corresponding increase in payments to suppliers and employees. As
a result of this, net cash from operating activities decreased by $5,096,000 with a corresponding impact on net cash used
in investing activities.
43
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 5. 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 reviews underlying EBITDA (earnings before interest, tax, depreciation and amortisation, excluding impairment
expense, corporate advisory costs and restructure and integration costs). The accounting policies adopted for internal
reporting to the CODM are consistent with those adopted in the financial statements.
The information reported to the CODM is on a monthly basis. The CODM does not regularly review segment assets and
segment liabilities. Refer to statement of financial position for assets and liabilities.
Products and services
Refer to note 6 for information on the Group's products and services.
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 ended 30
June 2021 and 30 June 2020.
Operating segment information
Consolidated - 30 June 2021
Revenue
Sales to external customers
Interest revenue
Total revenue
Underlying EBITDA*
Depreciation and amortisation
Impairment of assets
Interest revenue
Finance costs
Restructure and integration costs
Corporate advisory costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
APAC
$'000
Americas
$'000
EMEA
$'000
Total
$'000
35,469
47
35,516
8,972
51
9,023
13,007
17
13,024
8,559
(1,273)
3,131
57,448
115
57,563
10,417
(9,329)
(4,818)
115
(237)
(2,450)
(5,476)
(11,778)
2,408
(9,370)
*
Underlying EBITDA for the Group is before interest revenue, after eliminating inter-segment royalty income earned by
APAC operating segment of $5,816,000, and after eliminating inter-segment royalty expense incurred by Americas
operating segment of $2,200,000 and EMEA operating segment of $3,616,000. The APAC operating segment
includes inter-segment royalty income of $5,816,000, the Americas operating segment includes $2,200,000 of inter-
segment royalty expense and the EMEA operating segment includes $3,616,000 of inter-segment royalty expense.
44
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 5. Operating segments (continued)
Consolidated - 30 June 2020 (Restated)
APAC
$'000
Americas
$'000
EMEA
$'000
Total
$'000
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
33,612
158
33,770
9,132
79
9,211
12,211
33
12,244
9,549
(2,756)
2,683
54,955
270
55,225
9,476
(7,783)
270
(284)
(197)
1,482
(965)
517
*
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.
Note 6. Revenue
Disaggregation of revenue
Revenue from contracts with customers is disaggregated into the following categories:
Licence fees
Net commission revenue
Copyright licence fees
Other revenue
Revenue
Consolidated
30 June 2021 30 June 2020
$'000
$'000
37,673
16,277
3,234
264
36,919
14,452
3,210
374
57,448
54,955
Revenue from external customers by geographic regions is set out in note 5 operating segments. The relationship between
the disaggregated revenue information set out above and the segment information set out in note 5 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 are generated only in the APAC operating segment. Other
revenue includes the sale of workbooks, ebooks 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 $23,877,000 (2020: $24,310,000). Contract liabilities are generally incurred at the beginning of the contract
period. Refer to note 17 for details on contract liabilities.
45
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 7. Expenses
(Loss)/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*
Intellectual property
Patents and trademarks
Customer contracts and distributor relationships
Total amortisation
Total depreciation and amortisation
Impairment of assets
Intangibles - product development**
Finance costs
Interest and finance charges paid/payable on borrowings facility
Interest and finance charges paid/payable on lease liabilities
Finance costs expensed
Net foreign exchange loss
Net foreign exchange loss
Net loss on disposal
Net loss on disposal of property, plant and equipment
Leases
Short-term lease payments
Employee benefits expenses:
Salaries and wages
Bonus and commission
Superannuation
Total employee benefits expenses
Consolidated
30 June 2021 30 June 2020
$'000
$'000
(Restated)
107
158
29
905
1,199
6,862
8
20
1,240
8,130
9,329
134
196
39
1,039
1,408
5,326
-
14
1,035
6,375
7,783
4,818
-
96
141
237
83
201
284
697
132
134
12
70
258
28,082
3,644
3,245
28,441
3,267
3,302
34,971
35,010
*
During the financial year, the useful life of certain Matheltics modules were re-assessed, and as a result, an
accelerated depreciation charge of $0.7 million has been recognised within the current year amortisation.
** Following a product strategy reset to focus on 'hero product', impairment expense of $4,818,000 was recognised on
the Readiwriter product suite which will be sunset.
46
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 8. Income tax
Income tax expense/(benefit)
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/(benefit)
Deferred tax included in income tax expense/(benefit) comprises:
Increase in deferred tax assets
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
(Loss)/profit before income tax benefit/(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/(benefit)
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
30 June 2021 30 June 2020
$'000
$'000
(Restated)
1,542
(3,759)
(191)
(2,408)
950
(110)
125
965
(3,759)
(110)
(11,778)
1,482
(3,533)
445
1,374
12
-
388
(412)
(46)
(2,217)
(191)
(2,408)
104
216
33
661
(610)
(9)
840
125
965
Consolidated
30 June 2021 30 June 2020
$'000
$'000
-
(59)
48,065
47,615
12,022
12,116
Unrecognised tax benefits includes $8,398,000 unused capital gains loss on disposal of investments (2020: $8,398,000).
47
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 8. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Contract liabilities
Research and development credits
Accrued expenses
Royalty asset
Unrealised foreign exchange fluctuation
Leases
Intangibles
Plant and equipment
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss
Credited to equity
Additions through business combinations (note 33)
Closing balance
Income tax payable
Note 9. Cash and cash equivalents
Current assets
Cash at bank and in hand
Short-term deposits
Total cash and cash equivalents
48
Consolidated
30 June 2021 30 June 2020
$'000
$'000
(Restated)
8,006
3,942
2,410
1,168
252
64
(10,499)
(39)
4,564
2,722
818
1,153
263
55
(2,830)
8
5,304
6,753
6,753
3,759
-
(5,208)
5,304
6,584
110
59
-
6,753
Consolidated
30 June 2021 30 June 2020
$'000
$'000
2,038
161
Consolidated
30 June 2021 30 June 2020
$'000
$'000
20,906
4,000
9,833
17,250
24,906
27,083
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 10. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Total trade and other receivables
Consolidated
30 June 2021 30 June 2020
$'000
$'000
10,161
(190)
9,971
9,291
(80)
9,211
1,684
309
11,655
9,520
Allowance for expected credit losses
The Group has recognised a loss of $110,000 (2020: gain of $35,000) in profit or loss in respect of impairment of
receivables for the year ended 30 June 2021.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Expected credit loss rate
Carrying amount
30 June 2021 30 June 2020 30 June 2021 30 June 2020 30 June 2021 30 June 2020
Allowance for expected
credit losses
Consolidated
%
%
$'000
$'000
$'000
$'000
Not overdue
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
0.48%
0.50%
5.02%
71.59%
0.22%
1.47%
19.50%
35.98%
7,673
2,011
298
179
10,161
8,498
551
210
32
9,291
37
10
15
128
190
19
8
41
12
80
The expected credit loss rate across the Group for each region has remained consistent. The movement in percentages of
expected loss rates have shifted due to a change in the mix of aged receivables between each geographic segment.
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
30 June 2021 30 June 2020
$'000
$'000
80
123
(9)
(4)
190
115
9
(17)
(27)
80
49
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 11. 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
Addition
Net cash receipt from sub-leases
Exchange differences
Interest income
Other changes
Closing balance
Minimum lease receivables in future financial years are as follows:
One year or less
Between one to two years
Between two to three years
Total commitments
Less: Future interest income
Total lease receivables
Note 12. Other assets
Current assets
Prepayments
Term deposits
Non-current assets
Prepayments
Total other assets
50
Consolidated
30 June 2021 30 June 2020
$'000
$'000
739
565
538
1,277
1,193
1,758
1,758
-
283
(604)
(154)
51
(57)
-
2,231
-
(603)
55
75
-
1,277
1,758
Consolidated
30 June 2021 30 June 2020
$'000
$'000
769
546
-
1,315
619
636
598
1,853
(38)
(95)
1,277
1,758
Consolidated
30 June 2021 30 June 2020
$'000
$'000
2,120
43
2,163
1,548
43
1,591
352
48
2,515
1,639
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 13. 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
Total plant and equipment
Consolidated
30 June 2021 30 June 2020
$'000
$'000
1,398
(1,153)
245
3,295
(2,938)
357
252
(202)
50
652
1,661
(1,256)
405
2,827
(2,651)
176
270
(200)
70
651
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 2019
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2020
Additions
Additions through business combinations (note 33)
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2021
Furniture
and fittings
$'000
Computer
equipment
$'000
Office
equipment
$'000
Total
$'000
677
9
(150)
3
(134)
405
71
-
(119)
(5)
(107)
245
269
104
(2)
1
(196)
176
242
101
-
(4)
(158)
357
96
24
(11)
-
(39)
70
8
2
(2)
1
(29)
50
1,042
137
(163)
4
(369)
651
321
103
(121)
(8)
(294)
652
51
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 14. Intangibles
Non-current assets
Goodwill - at cost
Product development - at cost
Less: Accumulated amortisation and impairment
Intellectual property - at cost
Less: Accumulated amortisation
Patents and trademarks - at cost
Less: Accumulated amortisation
Customer contracts and distributor relationships - at cost
Less: Accumulated amortisation
$'000
$'000
(Restated)
171,995
4,315
37,382
(7,493)
29,889
489
(8)
481
1,924
(1,836)
88
5,794
(594)
5,200
29,679
(20,093)
9,586
-
-
-
1,912
(1,816)
96
1,963
(1,747)
216
Total intangibles
207,653
14,213
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 2019
Adjustment for change in
accounting policy (note 4)
Balance at 1 July 2019
(restated)
Additions
Exchange differences
Amortisation expense
Balance at 30 June 2020
(restated)
Additions
Additions through business
combinations (note 33)
Exchange differences
Impairment of assets
Amortisation expense
Product
develop-
ment
$'000
Intellectual
property
$'000
Patents
and
trademarks
$'000
Goodwill
$'000
4,576
12,979
-
(3,530)
4,576
-
(261)
-
9,449
5,463
-
(5,326)
4,315
-
9,586
5,519
167,549
131
-
-
26,464
-
(4,818)
(6,862)
-
-
-
-
-
-
-
-
489
-
-
(8)
481
84
-
84
26
-
(14)
96
12
-
-
-
(20)
265
961
25
(1,035)
216
822
5,410
(8)
-
(1,240)
88
5,200
Customer
contracts
and
distributor
relation-
ships
$'000
Software
$'000
Total
$'000
265
1,647
19,551
-
(1,647)
(5,177)
-
-
-
-
-
-
-
-
-
-
-
14,374
6,450
(236)
(6,375)
14,213
6,353
199,912
123
(4,818)
(8,130)
207,653
Balance at 30 June 2021
171,995
29,889
52
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 14. Intangibles (continued)
Impairment testing of intangible assets:
During the financial year, the Group provisionally recognised $167,549,000 goodwill on the acquisition of Blake eLearning
Pty Ltd ('Blake eLearning') as detailed in note 33. The purchase consideration (representing the fair market value) for the
acquisition of the business is indicative of fair value. The Group considers this to be appropriate based on the fact that the
transaction was completed on an arm’s length basis between willing and knowledgeable parties. The Group does not
consider the market for the acquired business to have significantly changed since the acquisition date. Since the
acquisition, Blake eLearning business has met its short-term targets and there have been no indicators to suggest fair
value has decreased.
The goodwill acquired through business combinations has been allocated to the following cash-generating units ('CGUs'):
APAC
EMEA
Unallocated
Total
Consolidated
30 June 2021 30 June 2020
$'000
$'000
3,012
1,434
167,549
171,995
3,012
1,303
-
4,315
Due to the close proximity of the acquisition date of 28 May 2021 and the date of the financial report, the goodwill of
$167,549,000 has not been allocated, as the CODM are in the process of assessing and determining the appropriate
CGUs. In accordance with AASB 3 'Business combination', the Group has 12 months from the date of acquisition to finalise
the purchase price accounting and the allocation of fair value to goodwill and other indefinite life intangible assets.
The recoverable amount of APAC and EMEA CGU was determined based on value-in-use calculations which require the
use of assumptions. The calculations use cash flow projections based on the 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:
(a) Post-tax discount rate: APAC 11.1% and EMEA 11.1% (2020: APAC 10.9% and EMEA 10.8%).
(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% (2020: 3.0%).
For the financial year ended 30 June 2021, 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.
53
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 15. Right-of-use assets
Non-current assets
Right-of-use assets
Less: Accumulated depreciation
Total right-of-use assets
Consolidated
30 June 2021 30 June 2020
$'000
$'000
3,301
(1,689)
3,866
(1,025)
1,612
2,841
The Group leases office premises under agreements of between one to five 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 three years.
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 2019
Recognised on adoption of AASB 16
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2020
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2021
Property
leases
$'000
Other
assets
$'000
Total
$'000
-
3,886
33
(96)
(21)
(1,026)
2,776
48
(381)
9
(889)
1,563
-
-
78
-
-
(13)
65
-
-
-
(16)
49
-
3,886
111
(96)
(21)
(1,039)
2,841
48
(381)
9
(905)
1,612
For other AASB 16 lease-related disclosures refer to the following:
●
●
●
●
note 7 for details of interest on lease liabilities and other lease expenses;
note 19 and note 35 for details of lease liabilities at the beginning and end of the reporting period;
note 24 for the maturity analysis of lease liabilities; and
consolidated statement of cash flows for repayment of lease liabilities.
54
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 16. Trade and other payables
Current liabilities
Trade payables
Accrued expenses
Goods and service tax
Other payables
Total trade and other payables
Refer to note 24 for further information on financial instruments.
Note 17. Contract liabilities
Current liabilities
Contract liabilities
Non-current liabilities
Contract liabilities
Total contract liabilities
Consolidated
30 June 2021 30 June 2020
$'000
$'000
1,779
9,034
230
831
11,874
2,884
4,360
666
271
8,181
Consolidated
30 June 2021 30 June 2020
$'000
$'000
35,631
23,877
3,170
3,292
38,801
27,169
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
$35,631,000 and $3,170,000 respectively as at 30 June 2021 (2020: $23,877,000 and $3,292,000 respectively) and are
expected to be recognised as revenue as outlined above. Contract liabilities of $12,303,000 were acquired from the
business combination (refer note 33). At the reporting date, $740,000 of the acquired contract liabilities was recognised as
revenue.
Note 18. Borrowings
Banking facilities
Bank guarantee and ancillary facility of $114,000 is available under 3P Learning Limited (United Kingdom) is subject to a
regular review.
55
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 18. Borrowings (continued)
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
30 June 2021 30 June 2020
$'000
$'000
-
114
114
-
18
18
-
96
96
10,000
2,111
12,111
-
1,866
1,866
10,000
245
10,245
As at report date, there are outstanding bank guarantees of $1,464,000 with the bank. There are ongoing negotiations with
the bank to extend this facility.
Note 19. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Total lease liabilities
Consolidated
30 June 2021 30 June 2020
$'000
$'000
1,627
1,615
1,497
3,124
3,229
4,844
Refer to note 24 for maturity analysis of lease liabilities.
Refer to note 35 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.
56
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 20. Provisions
Current liabilities
Employee benefits
Lease make good
Other provisions
Non-current liabilities
Employee benefits
Lease make good
Other provisions
Total provisions
Consolidated
30 June 2021 30 June 2020
$'000
$'000
3,531
139
653
4,323
578
231
45
854
1,696
-
82
1,778
305
356
54
715
5,177
2,493
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 and storage costs.
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
Consolidated - 30 June 2021
Carrying amount at the start of the year
Additional provisions recognised
Amounts used
Exchange differences
Unwinding of discount
Carrying amount at the end of the year
Note 21. Issued capital
Lease make
good
$'000
Other
provisions
$'000
356
-
3
-
11
370
136
648
(78)
(8)
-
698
Ordinary shares - fully paid
276,484,170 139,484,170
216,589
34,494
Consolidated
30 June 2021 30 June 2020 30 June 2021 30 June 2020
Shares
Shares
$'000
$'000
57
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 21. Issued capital (continued)
Movements in ordinary share capital
Details
Balance
Issue of shares
Issue of shares
Balance
Issue of shares to vendors of Blake eLearning Pty Ltd at a deemed
issue price of $1.33 per share (note 33)
Share issue transaction costs
Date
Shares
$'000
1 July 2019
2 September 2019
20 February 2020
139,334,170
100,000
50,000
34,374
71
49
30 June 2020
139,484,170
34,494
28 May 2021
137,000,000
-
182,210
(115)
Balance
30 June 2021
276,484,170
216,589
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders
should the Company be wound up, in proportions that consider both the number of shares held and the extent to which
those shares are paid up. 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.
The Group is subject to certain covenants on its financing arrangements 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 2020 Annual Report.
Note 22. Reserves
Foreign currency reserve
Acquisition reserve
Share-based payment reserve
Consolidated
30 June 2021 30 June 2020
$'000
$'000
753
(798)
8,495
157
(798)
8,595
8,450
7,954
Foreign currency reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign
operations to Australian dollars.
58
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 22. Reserves (continued)
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 payment 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 2019
Foreign currency translation
Share-based payments
Transfer to issued capital on issue of shares
Balance at 30 June 2020
Foreign currency translation
Share-based payments
Balance at 30 June 2021
Foreign
currency
reserve
$'000
Acquisition
reserve
$'000
Share-based
payment
reserve
$'000
Total
$'000
370
(213)
-
-
157
596
-
753
(798)
-
-
-
(798)
-
-
(798)
8,477
-
189
(71)
8,595
-
(100)
8,049
(213)
189
(71)
7,954
596
(100)
8,495
8,450
59
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 23. Dividends
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking credits
Consolidated
30 June 2021 30 June 2020
$'000
$'000
Franking credits available for subsequent financial years based on a tax rate of 30%
118
81
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 24. 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 and foreign exchange risks, and ageing analysis for credit risk.
The Board of Directors ('Board') 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 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 sensitivity analysis and
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.
60
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 24. 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
30 June 2021 30 June 2020 30 June 2021 30 June 2020
$'000
$'000
$'000
$'000
1,313
545
-
837
766
-
3,461
716
465
1,778
89
743
17
3,808
-
-
857
-
-
2
859
-
-
-
-
-
-
-
The Group had net assets denominated in foreign currencies of $2,602,000 (assets $3,461,000 less liabilities $859,000) as
at 30 June 2021 (2020: $3,808,000 (assets $3,808,000 less liabilities $nil). Based on this exposure, had the Australian
dollar weakened by 10%/strengthened by 10% (2020: weakened by 10%/strengthened by 10%) against these foreign
currencies with all other variables held constant, the Group's profit/loss before tax for the year would have been $260,000
higher/$260,000 lower (2020: $381,000 higher/$381,000 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 is not exposed to any significant interest rate risk.
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.
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.
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) 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.
61
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 24. Financial instruments (continued)
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank loans
Bank guarantee and ancillary facility
Consolidated
30 June 2021 30 June 2020
$'000
$'000
-
96
96
10,000
245
10,245
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 - 30 June 2021
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Consolidated - 30 June 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%
1,779
831
1,723
4,333
-
-
1,469
1,469
-
-
61
61
-
-
-
-
1,779
831
3,253
5,863
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
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 25. 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.
62
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 26. 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
Note 27. Remuneration of auditors
Consolidated
30 June 2021 30 June 2020
$
$
1,952,459
109,198
650,000
(112,093)
1,520,396
112,443
182,558
163,590
2,599,564
1,978,987
During the financial year the following fees were paid or payable for services provided by Ernst & Young, the auditor of the
Company, its network firms and unrelated firms:
Audit services - Ernst & Young (Australia)
Fees for auditing the statutory financial report of the parent covering the Group
Fees for other services - Ernst & Young (Australia)
Tax and advisory
Total fees to Ernst & Young (Australia)
Fees to other overseas member firms of Ernst & Young (Australia)
Fees for auditing the financial report of any controlled entities
Audit services - overseas unrelated firms
Fees for auditing the financial report of any controlled entities
Note 28. Contingencies
Consolidated
30 June 2021 30 June 2020
$
$
651,398
295,595
12,875
-
664,273
295,595
-
45,170
9,489
-
The bank has given bank guarantees as at 30 June 2021 of $1,482,000 (2020: $1,866,000) for merchant facility and
operating leases.
Note 29. Commitments
The Group had no commitments as at 30 June 2021 and 30 June 2020.
63
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 30. Related party transactions
Parent entity
3P Learning Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 32.
Key management personnel
Disclosures relating to key management personnel are set out in note 26 and the remuneration report included in the
directors' report.
Transactions with related parties
The Group has a publishing, distribution and transition service agreement with Kalaci Pty Ltd (trading as Pascal Press)
and a software licence commercial agreement with ClickView Pty Ltd. Matthew Sandblom is a shareholder of
both the companies. The Group also has an office lease agreement with Matthew Sandblom, which has a lease term of 12
months.
The following transactions occurred with related parties:
Other income:
Other income from director related entities of Matthew Sandblom
Payment for services:
Occupancy and other expenses paid to director related entities of Matthew Sandblom
Consolidated
30 June 2021 30 June 2020
$
$
3,324
142,161
-
-
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Trade receivables from director related entities of Matthew Sandblom
Current payables:
Trade payables to director related entities of Matthew Sandblom (including acquired trade
payables of $194,891)
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Consolidated
30 June 2021 30 June 2020
$
$
3,324
289,584
-
-
64
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 31. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payment reserve
Accumulated losses
Total equity/(deficiency)
Parent
30 June 2021 30 June 2020
$'000
$'000
29,650
(13,216)
29,650
(13,216)
Parent
30 June 2021 30 June 2020
$'000
$'000
31,518
36,342
227,669
62,486
29,604
79,048
45,551
92,013
216,589
8,495
(42,966)
34,494
8,595
(72,616)
182,118
(29,527)
The comparative parent entity information above were revised during the current financial year. Refer to note 4 for detailed
information on Restatement of comparatives.
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and its subsidiary are parties to a deed of cross guarantee under which each company guarantees the
debts of the others. No deficiencies of assets exist in the subsidiary. Refer to note 34 for further information.
Contingent liabilities
The parent entity has given bank guarantees as at 30 June 2021 of $1,460,000 (2020: $1,846,000) 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 2021 and 30 June 2020.
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:
●
● Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
indicator of an impairment of the investment.
65
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 32. 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
Blake eLearning Pty Ltd**
Blake eLearning Inc.**
Blake eLearning UK Limited**
Blake eLearning China Pty Limited** ***
Principal place of business /
Country of incorporation
Ownership interest
30 June 2021 30 June 2020
%
%
Australia
Australia
Australia
New Zealand
United Kingdom
United States
Canada
Australia
United States
United Kingdom
China
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
85%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
Entity deregistered on 21 July 2021.
*
** Entities acquired on 28 May 2021.
*** Summarised financial information for subsidiaries that have non-controlling interests, has not been provided as they
are not material to the Group.
Note 33. Business combinations
Blake eLearning Pty Ltd (‘Blake’)
On 28 May 2021, the Group acquired 100% of the equity in Blake eLearning Pty Ltd and its controlled entities (collectively
'Blake') by issuing 137,000,000 new shares in the Company. The merger creates a large scale, leading EdTech platform. It
combines the Group's strength in numeracy and direct-to-school marketing with Blake's strength in literacy and direct-to-
consumer marketing and provides the Group with full control of the intellectual property rights to two of its key
products: Reading Eggs and Mathseeds.
The acquired business contributed revenue of $3,453,000 and profit after tax of $347,000 to the Group for the period from
28 May 2021 to 30 June 2021. Prior to the business combination, the Group was an agent for the sale of Blake's products
and revenue was recognised as net commission revenue at the point of sale. After the business combination, the Group
has become the principal for the sale of Blake's products and revenue is recognised as licence revenue over the licence
period. The full year revenue and profit before tax contribution for Blake, had the acquisition date been at the beginning of
the period, cannot be reliably estimated due to the inconsistencies in the revenue recognition accounting policies applied
by Blake and the policies adopted by the Group. As such it is not practicable to include these disclosures in the annual
report.
The initial accounting for the acquisition of Blake has only provisionally been determined as at 30 June 2021. At the date of
the finalisation of the 30 June 2021 annual report, the necessary market valuations and other calculations have not been
finalised, and the fair value of the assets and liabilities, including deferred tax balances and goodwill, have therefore only
provisionally been determined based on the directors’ best estimate of the likely value. In accordance with AASB 3
'Business combination', the Group has 12 months from the date of acquisition to finalise the purchase price accounting and
the allocation of fair value to goodwill and other intangible assets.
Under the 'Share Sale Agreement' to acquire 100% of the equity in Blake eLearning Pty Ltd and its controlled entities, an
adjustment amount is payable by the sellers where the working capital less net debt is lower than agreed, and alternatively,
an adjustment amount is payable by the Group where the working capital less net debt is higher than agreed. At the date of
the finalisation of the 30 June 2021 annual report, the adjustment amount has not been finalised and its outcome is
uncertain.
66
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 33. Business combinations (continued)
The provisional values assigned to the identifiable assets and liabilities of Blake as at the date of acquisition were:
Cash and cash equivalents
Trade receivables
Inventories
Prepayments
Other receivables
Plant and equipment
Other intangible assets
Trade payables
Other payables
Contract liabilities
Provision for income tax
Deferred tax liability
Employee benefits
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
3P Learning Limited shares issued to vendor (refer note 21)
Non-controlling interest
Acquisition costs expensed to profit or loss *
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: shares issued by Company as part of consideration **
Less: Non-controlling interest
Net cash received
*
**
Excluding share issue transaction costs recognised in equity amounted to $115,000.
137,000,000 shares issued at $1.33 per share based on the published share price on 28 May 2021.
Fair value
$'000
3,605
4,032
217
219
411
103
32,363
(2,393)
(2,701)
(12,303)
(1,750)
(5,208)
(1,923)
14,672
167,549
182,221
182,210
11
182,221
4,047
182,221
(3,605)
(182,210)
(11)
(3,605)
67
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 34. Deed of cross guarantee
During the financial year, the following entities entered into a deed of cross guarantee under which each company
guarantees the debts of the others:
3P Learning Limited (parent entity)
Blake eLearning Pty Ltd
As detailed in note 33, the Group acquired 100% of the shares in Blake eLearning Pty Ltd ('Blake').
By entering into the deed, the wholly-owned entities have 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'.
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial
position of the 'Closed Group':
Statement of profit or loss and other comprehensive income
Revenue
Other income
Interest revenue calculated using the effective interest method
Employee benefits expenses
Employee benefits expenses - restructure and integration
Depreciation and amortisation expenses
Impairment of assets
Professional fees - corporate advisory costs
Professional fees - other
Technology costs
Marketing expenses
Occupancy expenses
Administrative expenses and foreign exchange
Finance costs
Profit before income tax benefit
Income tax benefit
Profit after income tax benefit
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Profit after income tax benefit
Accumulated losses at the end of the financial year
68
30 June 2021
$'000
19,515
63,119
45
(15,110)
(2,102)
(12,600)
(9,379)
(5,476)
(3,115)
(3,534)
(1,428)
(317)
(2,692)
(263)
26,663
3,329
29,992
-
29,992
30 June 2021
$'000
(72,687)
29,992
(42,695)
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 34. Deed of cross guarantee (continued)
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Non-current assets
Investments
Plant and equipment
Intangibles
Right-of-use assets
Deferred tax
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Income tax payable
Provisions
Non-current liabilities
Contract liabilities
Lease liabilities
Provisions
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
69
30 June 2021
$'000
19,443
5,098
2,139
26,680
899
338
203,638
1,213
2,056
208,144
234,824
24,971
19,405
736
1,750
2,825
49,687
1,225
613
910
2,748
52,435
182,389
216,589
8,495
(42,695)
182,389
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 35. Cash flow information
Reconciliation of (loss)/profit after income tax to net cash from operating activities
(Loss)/profit after income tax benefit/(expense) for the year
Adjustments for:
Depreciation and amortisation
Impairment of intangibles
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:
Decrease/(increase) in trade and other receivables
Increase in deferred tax assets
Decrease/(increase) in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in provision for income tax
Increase in employee benefits
Increase in other provisions
Decrease in other operating liabilities
Consolidated
30 June 2021 30 June 2020
$'000
$'000
(Restated)
(9,370)
517
9,329
4,818
(100)
391
-
134
(997)
2,330
(3,541)
(482)
(992)
127
175
388
(915)
7,783
-
243
289
(26)
(13)
(961)
(620)
(123)
59
1,164
(234)
323
7
(354)
Net cash from operating activities
1,295
8,054
Non-cash investing and financing activities
Additions to the right-of-use assets
Shares issued under employee share plan
Shares issued in relation to business combinations
Consolidated
30 June 2021 30 June 2020
$'000
$'000
48
-
182,210
182,258
111
120
-
231
70
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 35. Cash flow information (continued)
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 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
Net cash used in financing activities
Interest on lease liabilities
Acquisition of leases
Exchange differences
Other changes
Balance at 30 June 2021
Note 36. Share-based payments
Finance
lease payable
$'000
Lease
liabilities
$'000
Total
$'000
18
-
(18)
-
-
-
-
-
-
-
-
-
-
-
-
(1,433)
6,291
(186)
111
37
24
4,844
(1,694)
141
48
(151)
(64)
18
(1,433)
6,273
(186)
111
37
24
4,844
(1,694)
141
48
(151)
(64)
3,124
3,124
The share-based payment credit/reversal for the year was $100,000 (2020: expense of $243,000).
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:
30 June 2021
Grant date
Expiry date
02/09/2016
21/11/2016
31/08/2017
09/11/2017
23/08/2018
09/11/2018
02/09/2020
02/09/2020
31/08/2021
31/08/2021
23/08/2022
23/08/2022
Exercise
price
Balance at
the start of
the year
Granted
Exercised
$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
-
-
-
-
-
-
-
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
(301,740)
(577,750)
(688,331)
(2,644,509)
-
-
(4,212,330)
-
-
-
-
691,562
2,867,647
3,559,209
Weighted average exercise price
$1.55
$0.00
$0.00
$1.39
$1.75
71
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 36. Share-based payments (continued)
30 June 2020
Grant date
Expiry date
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
Exercise
price
$1.26
$1.26
$1.42
$1.42
$1.75
$1.75
$1.75
Balance at
the start of
the year
1,052,587
2,015,419
1,381,140
2,644,509
1,398,858
2,867,647
710,717
12,070,877
Granted
Exercised
-
-
-
-
-
-
-
-
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
-
(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
Outstanding options/awards vested and exercisable as at 30 June 2021: nil (2020: 879,490).
The weighted average share price during the financial year was $1.23 (2020: $1.12) per ordinary share. The weighted
average remaining contractual life of options/awards outstanding at the end of the financial year was 1.14 years (2020:
1.21 years).
Performance rights
During the year, 293,989 (2020: 981,016) performance rights were granted at a fair value of $1.30 (2020: $0.875) per right.
The performance rights were granted with no exercise price and the fair value was determined based on the market value
of the Company's share price on the grant date. Vesting of performance rights are subject to predetermined revenue and
earnings per share growth target.
Set out below are summaries of performance rights granted under the plan:
30 June 2021
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
22/11/2019
21/12/2020
06/09/2022
31/08/2023
$0.00
$0.00
641,760
-
641,760
-
293,989
293,989
-
-
-
-
-
-
641,760
293,989
935,749
30 June 2020
Grant date
Expiry date
21/11/2016
21/11/2016
22/11/2019
01/09/2019
14/10/2019
06/09/2022
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
$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
Performance rights vested and exercisable as at 30 June 2021 was nil (2020: nil). The weighted average remaining
contractual life of performance rights outstanding at the end of the financial year was 1.88 years (2020: 2.25 years).
72
3P Learning Limited
Notes to the financial statements
30 June 2021
Note 37. Earnings per share
(Loss)/profit after income tax
Non-controlling interest
Consolidated
30 June 2021 30 June 2020
$'000
(9,370)
1
$'000
(Restated)
517
-
(Loss)/profit after income tax attributable to the owners of 3P Learning Limited
(9,369)
517
Weighted average number of ordinary shares used in calculating basic earnings per share
152,245,814 139,434,990
Weighted average number of ordinary shares used in calculating diluted earnings per share
152,245,814 139,434,990
Number
Number
Basic earnings per share
Diluted earnings per share
Note 38. Events after the reporting period
Cents
(6.15)
(6.15)
Cents
(Restated)
0.37
0.37
No matter or circumstance has arisen since 30 June 2021 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.
73
3P Learning Limited
Directors' declaration
30 June 2021
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
2021 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
Matthew Sandblom
Executive Chairman
25 August 2021
Sydney
74
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 2021, the consolidated statement of 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
2021 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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
75
Blake eLearning Pty Limited Acquisition and associated matters
Why significant
How our audit addressed the key audit matter
As disclosed in Note 33 to the financial statements,
on 28 May 2021 the Group acquired 100% of the
equity in Blake eLearning Pty Ltd and its controlled
entities (“Blake”), through the issuance of 137 million
shares in the Group. This transaction has been
treated as a business combination, with the Group
recognising the fair value of the assets acquired and
liabilities assumed on that date.
Accounting for this transaction required the Group,
with assistance from a third-party valuation specialist,
to exercise judgement in identifying and determining
the fair value of the acquired assets and liabilities.
As disclosed in Notes 14 and 33, the Group’s
accounting for the acquisition at 30 June 2021
remains provisional and has resulted in the
recognition of a significant balance of goodwill.
This was considered to be a key audit matter due to,
the value of the acquisition relative to the Group, the
judgement involved in identifying the accounting
acquirer and in determining the provisional fair values
of the related assets and liabilities.
Our audit procedures included the following:
► Considered the terms and conditions of the
Share Sale Agreement of Blake eLearning
Pty Limited.
► Assessed the Group’s conclusion that the
acquisition represents a business
combination in accordance with the
Australian Accounting Standards.
► Assessed the Group’s determination of the
accounting acquirer in accordance with
Australian Accounting Standards.
► Evaluated the process that management and
the directors have undertaken to perform
the provisional purchase price allocation of
the consideration for the acquired assets and
liabilities.
► Considered the provisional allocation of the
purchase price to the acquired assets and
liabilities, including the identification of other
intangibles with involvement from our
valuation specialists.
► Assessed the competence, qualifications,
objectivity and methodologies of the third-
party valuation specialist engaged by the
Group to identify and determine the
provisional fair values of the other
identifiable intangible assets acquired as
disclosed in Note 33 to the financial
statements.
• Assessed the adequacy of the related
disclosures in the financial report.
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Capitalisation of Product Development Costs
Why significant
How our audit addressed the key audit matter
As disclosed in Notes 2 and 14 to the financial
statements, the Group capitalises product
development costs upon meeting the criteria set out
in Australian Accounting Standards.
The carrying value of capitalised product
development costs was $29.9 million as at 30 June
2021, of which $26.5 million was acquired through a
business combination.
The capitalisation of product development costs was
considered a key audit matter due to, the judgment
involved in identifying whether costs incurred meet
the capitalisation criteria of Australian Accounting
Standards and the need for the Group to consider the
April 2021 decision made by the International
Financial Reporting Standards Interpretation
Committee (IFRIC), relating to configuration or
customisation costs in a cloud computing
arrangement.
Our audit procedures included the following:
► Assessed the Group’s policy for capitalisation
of product development costs for compliance
with Australian Accounting Standards
► Considered the impact of the recent IFRIC
decision on costs capitalised in the current
year and prior years.
► Assessed the operating effectiveness of
relevant controls over the processes and
procedures related to the capitalisation of
product development costs.
► Selected a sample of product development
costs capitalised during the year and tested
whether costs capitalised were appropriately
supported with reference to timesheets,
payroll records or third-party documentation
and were attributed to development activities
meeting the capitalisation criteria.
► 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 applied by management.
• Our audit procedures relating to capitalised
product development acquired though a
business combination are addressed in the
Blake eLearning Pty Limited Acquisition and
associated matters Key Audit Matter above.
• Assessed the adequacy of the financial
report disclosures contained in Note 2 and
14.
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Revenue Recognition
Why significant
How our audit addressed the key audit matter
The Group generated $57.4 million in revenue from
customers across its global operations for the year
ended 30 June 2021.
As disclosed in Notes 2 and 6 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 that the
Group has to the customer.
Given the importance of revenue to the users of the
financial statements, specifically as a key
performance indicator for the Group, this was
considered to be a key audit matter.
Our audit procedures included the following:
► Evaluated the Group’s revenue accounting
processes and assessed whether the Group’s
revenue accounting policies complied with
the requirements of Australian Accounting
Standards.
► Assessed the operating effectiveness of
relevant controls in place relating to the
recognition and measurement of revenue.
► Selected a sample of revenue transactions
and tested whether revenue was correctly
calculated and recognised in the correct
period. This included testing whether
revenue transactions were recognised as
deferred revenue at balance date where
applicable.
• Assessed the adequacy of the financial
report disclosures contained in Notes 2 and
6.
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 2021 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
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.
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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.
► 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.
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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 13 to 24 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of 3P Learning Limited for the year ended 30 June 2021,
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 Robinson
Partner
Sydney
25 August 2021
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80
3P Learning Limited
Shareholder information
30 June 2021
The shareholder information set out below was applicable as at 31 July 2021.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
PASCAL EDUCATIONAL SERVICES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
KPIT PTY LTD
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
PASCAL EDUCATIONAL SERVICES PTY LTD
MUTUAL TRUST PTY LTD
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
ANACACIA PTY LTD
CITICORP NOMINEES PTY LIMITED
BRISPOT NOMINEES PTY LTD
UBS NOMINEES PTY LTD
MUTUAL APPRECIATION SOCIETY PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
LEOPARD CAPITAL PTY LTD
MR SEAN PATRICK MARTIN
LCONE PTY LTD
MR JONATHAN CLAUDE KENNY
MR KEI YAN CHENG
Unquoted equity securities
Options over ordinary shares issued
Performance rights over ordinary shares issued
81
Ordinary shares
Number
of holders
% of total
shares
issued
395
276
105
149
43
968
234
0.06
0.28
0.29
1.66
97.71
100.00
-
Ordinary shares
Number held
% of total
shares
issued
82,200,000
46,849,316
41,100,000
26,836,456
25,497,053
13,700,000
12,263,944
4,402,231
3,033,420
3,000,000
2,773,497
1,095,577
1,012,363
591,672
413,808
404,920
370,000
343,309
288,856
284,280
266,460,702
29.73
16.94
14.87
9.71
9.22
4.96
4.44
1.59
1.10
1.09
1.00
0.40
0.37
0.21
0.15
0.15
0.13
0.12
0.10
0.10
96.38
Number
on issue
Number
of holders
3,559,209
935,749
2
4
3P Learning Limited
Shareholder information
30 June 2021
Substantial holders
Substantial holders in the Company are set out below:
Pascal Education Services Pty Ltd ATF Blake Sandblom Trust
Pascal Education Services Pty Ltd ATF BEL Unit Trust
KPIT Pty Ltd ATF KP Investment Trust
National Nominee ACF Australian Ethical Investment Limited
Viburnum Funds Pty Ltd
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number held
82,200,000
13,700,000
41,100,000
22,016,351
39,050,389
% of total
shares
issued
29.73
4.96
14.87
7.96
14.12
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.
82
3P Learning Limited
Corporate directory
30 June 2021
Directors
Matthew Sandblom - Executive Chairman
Samuel Weiss - Non-Executive Director
Claire Hatton - Non-Executive Director
Mark Lamont - Non-Executive Director
Katherine Ostin - Non-Executive Director
Allan Brackin - Non-Executive Director
Chief Executive Officer
Jose Palmero
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 directors and management are committed to conducting the business of 3P
Learning Limited in an ethical manner and in accordance with the highest standards
of corporate governance. 3P Learning Limited has adopted and has substantially
complied with the ASX Corporate Governance Principles and Recommendations
(Fourth Edition) ('Recommendations') to the extent appropriate to the size and nature
of its operations.
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 Manual
can be found on the company’s website at http://www.3plearning.com/investors/
governance/.
83
the award-winning team behind
3P Learning
1300 850 331
1300 762 165
investors@3plearning.com
www.3plearning.com