Asanko Gold Inc.
Annual Report 2014

Plain-text annual report

ACADEMIES AUSTRALASIA GROUP LIMITED ANNUAL REPORT 2014 ACN 000 003 725 CHAIRMAN’S REPORT Dear Shareholder In last year’s report Neville Cleary stressed the need for the party that won the 2013 Federal election to look hard at reviving the international education sector. In the year to June 2014, after five years of shrinking enrolments, the sector grew by 11.5 per cent, or $1.2 billion, to $15.7 billion. This is pleasing to see. But is this the result of a well thought through strategy put together by the Federal government or, as the Executive Director of the International Education Association of Australia recently put it, is it just ‘a happy confluence of circumstances?’ There is a need for a long term plan, supported by all branches of government, that all participants, especially the non-public sector which is risking its own capital, can work from. Without a clear blueprint for the future, planning our own operations continues to be difficult. Academies Australasia looks forward to the Federal Government’s response to the Chaney Report – commissioned in 2011 and submitted 19 months ago. It has been an eventful year – the biggest achievement being the divestment of our fasteners business following which Academies Australasia is exclusively engaged in education. We sold the business for $7.7 million in cash, of which $3.9 million has been received. The remaining $3.8 million is due to be paid in four equal instalments by December 2014, 2015, 2016 and 2017. The debt is secured. We made several acquisitions, giving us operations around Australia and expanding our course offerings. In the past 9 months, we acquired control of 7 registered training organisations bringing our total to 17 separately licenced colleges offering more than 230 courses. We now have a healthy balance of domestic and international students – 5 years ago we were 100% international students. While consolidating and bedding down recent acquisitions, we will continue to keep an eye out for other opportunities. That said, as our track record will show, we have been prudent in our valuations. We are in no rush to grow and will be careful to avoid opportunities that are expensive. On behalf of the Board, I would like to welcome all the directors, management and staff of the companies that have joined the Academies Australasia Group since December last year. We are pleased with the results for the year under review. - Profit attributable to owners of the parent entity grew 61% to $5.3 million - Revenue increased by 21% to $45.8 million - Contribution from education operations increased by 40% to $8.0 million. Excluding investment revaluation, the increase was 13% The Board is pleased to declare a significant increase in the final dividend of 0.5 cents per share, to 3.0 cents, taking the dividend for the year to 5.5 cents (fully franked). We continue to strengthen our operations through the recruitment of senior staff, staff training and improving our policies, procedures and systems. The streamlining and standardisation of operations throughout the group is also an important focus. Substantial commitments were made in respect to new premises and the upgrading of existing premises. Academies Australasia Polytechnic was relocated from 303 Collins Street to 628 Bourke Street in Melbourne and additional space was taken up in Penrith and in Brisbane. In October 2013, the end date of the Performance Incentive Plan (‘PIP’) was brought forward and the PIP closed, for a once-off charge of $344,000 in the period under review. The PIP was structured around profitability and increase in the value of the Company’s shares. Following the unexpected increase in the Company’s share price after the share placement in August 2013, the Board considered it prudent, reasonable and in the interest of stakeholders, to bring forward the end date. It is the Board’s intention to consider an alternative performance incentive programme to attract and hold senior staff. - 1 - I am pleased to report that the Group Managing Director has agreed to sign on for a further term of 3 years following the expiry of his current contract on 31 December 2014. There was a substantial increase in the Company’s share capital since the Annual General Meeting on 21 October 2013. At that date, the Company had 52,748,143 shares on issue. Since then, 9,315,341 shares were issued to bring the total shares on issue today to 62,063,484. This 17.7% increase in shares was for the purpose of two acquisitions: a. 3,409,091 shares being payment for the acquisition of DFL Education (Qld) Pty Limited; and b. 5,906,250 shares being part payment for the acquisition of Newco CLB Training & Development Pty Limited as trustee for the CLB Unit. It is pleasing to note that notwithstanding the substantial increase in shares, the earnings per share as well as the share price have increased. The Board continues to look out for investments that complement current businesses and where earnings per share is expected to be accretive and, where appropriate, will consider issuing equity as consideration. The directors have relevant interests in more than 50% of all shares on issue. Looking forward, I reiterate the importance of there being a clear plan for the international education sector in Australia. The world demand for international education (students enrolled for education outside their country of citizenship) has increased substantially over the past 30 years. This trend is expected to continue. Australia continues to be attractive to international students. We believe that Academies Australasia is well positioned for further growth. In the international space, our operations in Singapore are well regarded and a good base from which to grow further in the region. Our recent acquisitions, especially Spectra Training, are expected to make us a significant player in the domestic arena. With Neville Cleary’s retirement the Board is comprised of 4 members. Consideration is being given to expanding the Board and I expect to be able to make an announcement in this regard shortly. I would like to thank the Group Managing Director and all the directors, management and staff throughout the group for their contribution in the year under review. My fellow directors and I would like to thank all shareholders, students, customers and business associates for their loyalty and support. Finally, may I say that it was an honour to be asked by my colleagues on the Board to take on the position of Chairman upon Neville Cleary’s retirement. He left the Company in a good position - and big shoes to fill. I will do my best. Dr John Lewis Schlederer Chairman 3 September 2014 - 2 - CORPORATE GOVERNANCE STATEMENT The Board of Academies Australasia Group Limited (‘the Company’) is committed to the highest standards of corporate governance and enhancing shareholder value. The following Corporate Governance Statement outlines the framework in which the Board operates to ensure this commitment is upheld. At the date of this report, the Board comprised the following: - Dr John Lewis Schlederer - Christopher Elmore Campbell - Chiang Meng Heng - Gabriela Del Carmen Rodriguez Naranjo Chairman, Non-Executive, Independent Group Managing Director, Executive Director, Non-Executive Director, Executive from 21 October 2013 (Alternate to Neville Thomas Cleary to 31 December 2013) Appointed 2010 1996 2000 2013 All were members of the Board throughout the year. Mr Neville Cleary (Chairman and Non-Executive Director) retired from the Board on 31 December 2013. The Board endorses the Australian Securities Exchange (‘ASX’) Corporate Governance Principles and Recommendations, (2nd Edition with 2010 Amendments) (‘Recommendations’). This Corporate Governance Statement is prepared in accordance with these Recommendations. The ASX Corporate Governance Council recently published a new edition of the Principles and Recommendations (being the 3rd Edition), but these changes will only take effect for full year financial reports commencing on or after 1 July 2014. These changes are therefore not applied to this statement. Given the small size and composition of the Board, the small size of the Company, its activities, and its cost structures, it is neither reasonable nor practicable to comply with certain Recommendations. Key management of the group at any time during the reporting period comprises the Board of the Company and the senior group executives: - Stephanie Ann Noble - Group Finance Manager and Company Secretary - Academies Australasia Group Limited. - Edmund Kwan - Executive Director and Chief Executive Officer - Academies Australasia College Pte. Limited. - Esther Teo - Executive Director and Chief Executive Officer - Academies Australasia Polytechnic Pty Limited and Executive Director and Chief Executive Officer - Vostro Institute of Training Pty Limited (from 3 June 2014). Ivan James Mikkelsen - Director and General Manager - Premier Fasteners Pty Limited (until 1 December 2013). - This statement identifies and explains where the Company has not complied fully with any of the eight principles stated in the Recommendations. - 3 - Principle 1 – Lay solid foundations for management and oversight Roles and Responsibilities of Board and Management The Board is responsible for the overall corporate governance of the Company including setting its strategic direction and performance objectives, increasing shareholder wealth, meeting ethical and regulatory obligations, and managing business risk. Key responsibilities include: appointing and removing the Group Managing Director; final approval and monitoring of corporate strategies and performance objectives; • • • monitoring senior group executive performance and implementation of the Board approved strategies; • • reviewing and ratifying systems of risk management and internal compliance and control; approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestments; approving and monitoring financial and other reporting; and • • other matters required to be dealt with by the Board from time to time. All senior group executives are subject to annual performance review. The Company evaluates their expected contribution, progress, and achievements. All senior group executives were reviewed in respect to performance during the year ended 30 June 2014. The Board ensured that the terms of the (now closed) performance incentive plan (‘PIP’) were complied with. To assist in the execution of its responsibilities, the Board has established an Audit and Risk Committee and a Remuneration Committee. The Board delegates responsibility for the day-to-day operation and administration of the Company to the Group Managing Director. The Board meets at least four times per financial year to review the Company’s strategy and progress, with the Audit and Risk Committee meeting at least twice a year and the Remuneration Committee meeting at least once a year. Principle 2 – Structure the Board to add value Board Composition The relevant skills, experience, expertise, and terms of office of each director, who is in office at the date of the annual report, are detailed in the Directors’ Report. The name of the independent director of the Company is: Dr John Lewis Schlederer When determining whether a non-executive director is independent the director must not fail any of the following materiality thresholds: • less than 5% of Company shares are held by the director and any entity or individual directly or indirectly associated with the director; • no sales are made to or purchases made from any entity or individual directly or indirectly associated with the director; and - 4 - • none of the director’s income or the income of an individual or entity directly or indirectly associated with the director is derived from a contract with any member of the consolidated group other than income derived as a director of the group. The Board regularly assesses whether each non-executive director is independent. In assessing a director’s independence, materiality is assessed on a case by case basis having regard to the individual circumstances of the director. Chiang Meng Heng and Christopher Elmore Campbell each have relevant interests of 5% or more in the Company’s shares. Chiang Meng Heng and Christopher Elmore Campbell are not independent. Gabriela Del Carmen Rodriguez Naranjo is an Executive Director and is not independent. There is therefore only one independent director and so the Board does not meet the Recommendation that there be a majority of independent directors. However, the Board wishes to state that nothing has come to its attention that would cause it to question whether current procedures and governance are inappropriate for a company of its structure and size. The skills, experience, and performance of the non-independent directors have led the Board to conclude that they do act in the best interests of the Company. Consistent with the Recommendations, the position of Chairman is held by an independent director and the roles of Chairman and Group Managing Director are exercised by separate individuals, Dr John Lewis Schlederer and Christopher Elmore Campbell respectively. All directors – whether independent or not - should bring an independent judgement to bear on Board decisions. All directors have the right to seek independent professional advice in the furtherance of their duties as directors at the company’s expense. Written approval must be obtained from the Chairman prior to incurring any expense on behalf of the company. Nominations Committee The purpose of a Nominations Committee is to ensure that the Board comprises directors with a range of skills and experience appropriate for achieving its mandate. Currently, the Board executes all of the same functions a Nominations Committee would. The Board determines the appointment of new directors, except where a director is elected by shareholders. When considering the appointment of a new director, the Board follows the same principles and guidelines a Nominations Committee would. These principles and guidelines are outlined below. Procedure for Selection and Appointment of New Directors The structure of the Board is determined having regard to the following criteria: • The Chairman should be a non-executive director, preferably independent. • A majority of the Board should be non-executive directors, preferably independent. • The roles of Chairman and Group Managing Director should not be exercised by the same individual. • The Board should comprise of directors with an appropriate range of qualifications and expertise. The following principles and guidelines are adhered to in the selection and appointment of new directors: • The Board is required to have a broad range of skills, experience, diversity, and commercial expertise to ensure that it is able to discharge its mandate effectively. Therefore, when an individual is nominated for consideration as a director, they are evaluated on their skills, experience, diversity, and how they would complement or enhance the Board's effectiveness. • The composition of the Board needs to be conducive to making decisions expediently and in the best • interests of the Company as a whole (rather than of individual shareholders or interest groups). Individuals being considered for non-executive roles will be required to provide the Board with details of their other commitments and an indication of the time involved. Candidates must be able to satisfy the Board that they will have sufficient time to meet what is expected of them. - 5 - • The Constitution of the Company provides that the Board may at any time appoint any person to be a director. That person shall hold office until the end of the next general meeting and shall be eligible for election at that meeting. • The Constitution of the Company provides that at every general meeting one-third of the directors or, if their number is not a multiple of three, then the number nearest to one-third, shall retire from office and be eligible for re-election. Performance Evaluation The Board conducts a review of its performance, policies and practices annually. The review includes an examination of the effectiveness and composition of the Board, including the required mix of skills, experience, diversity and other qualities that the non-executive directors should bring to the Board. The Board also reviews the Company’s strategic direction, objectives, and corporate governance practices. The Board reviews the objectives and achievements of the Group Managing Director and senior group executives annually, with the Chairman regularly discussing performance with directors throughout the year. The Board reviewed its performance and the performance of its committees and individual directors and all senior group executives in respect to the year ended 30 June 2014. Principle 3 – Promote ethical and responsible decision making Code of Conduct The Company has established a Code of Conduct to guide the Board and senior group executives as to the practices necessary to maintain confidence in the Company's integrity, as well as the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. The Company and its directors, managers, employees, and contractors are expected to act with high standards of honesty, integrity, independent judgement, fairness, and equity; striving at all times to enhance the reputation and performance of the consolidated group as a whole. The Company’s Code of Conduct is on the Company’s website (www.academies.edu.au). Diversity Policy The Company is committed to diversity and inclusiveness. It aims to provide an environment in which employees have equal access to opportunities, are treated with fairness and respect, and are not judged by unlawful or irrelevant reference to their attributes. This commitment enables the Company to attract and retain people with the best skills and abilities. A copy of the Company’s Diversity Policy is on the Company’s website (www.academies.edu.au) The Company does not favour or discriminate against females. As at 30 June 2014, 43% of senior group executives, including Board members were female. The objective of 30% female composition of Board and senior group executives combined was therefore achieved. At that date, 63% of group employees (excluding academic staff) were female. The objective is to have an equal balance of male and female employees (excluding academic staff). Employees have a wide range of qualifications and experience and come from more than 20 countries. Share Trading Policy A copy of the Company’s policy on the trading of the Company’s securities by key management personnel is on the Company’s website (www.academies.edu.au). - 6 - The policy also addresses the subject of ‘Insider Trading’ – i.e. trading while in possession of price sensitive information. Employees must not trade in the Company’s securities while in possession of price sensitive information. This prohibition applies to all employees at all times. Principle 4 – Safeguard integrity in financial reporting Audit and Risk Committee The names and qualifications of the directors appointed to the Audit and Risk Committee and their attendance at meetings of the committee are included in the Directors’ Report. During the year the Audit and Risk Committee comprised of Dr John Lewis Schlederer, Neville Thomas Cleary (to 31 December 2013) and Chiang Meng Heng. The Committee was chaired by Dr John Lewis Schlederer. The Company complied with all four recommendations until the retirement of Neville Thomas Cleary on 31 December 2013. Presently, it complies with the recommendation that all members be non-executive. It does not comply with the minimum member size of three, the Chairman not being the Chairman of the Board and having a majority of independent directors. The Group Managing Director, Executive Director, Group Finance Manager and external auditor attend Audit and Risk Committee meetings. The functions of the Audit and Risk Committee encompass: • Financial reporting • Risk management • Authorities for financial risk management • External audit • Internal audit • Insurance programme • Legal proceedings The Audit and Risk Committee’s Charter is available on the Company’s website (www.academies.edu.au). Principle 5 – Make timely and balanced disclosure Continuous Disclosure The Company has adopted a policy to ensure that it complies with its continuous disclosure obligations under the ASX Listing Rules, which state that: Once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities, the entity must immediately tell ASX that information. Employees must immediately notify the Group Managing Director if they become aware of any information that should be considered for release to the market. The information is reviewed and, if considered material, the appropriate disclosure is made to the ASX. The Company will not release any information to any other party until acknowledgement has been received from the ASX that the information has been released to the market. A copy of the Company’s Continuous Disclosure policy is on the Company’s website (www.academies.edu.au). - 7 - Principle 6 – Respect the rights of shareholders The Company recognises that shareholders must receive high quality relevant information in a timely manner in order to be able to properly and effectively exercise their rights. The Company aims to ensure that shareholders are informed of all major developments affecting the Company. Information is communicated to shareholders on a regular basis through continuous disclosures and half yearly and annual reports. The Board ensures that these reports include all relevant information about the operations of the Company, changes in the state of affairs of the Company and details of future developments. All documents that are released publicly (i.e. ASX Announcements and Annual Reports) are made available on the Company's website (www.academies.edu.au). The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Company's strategy and goals. Important issues are presented to the shareholders as single resolutions. The Board also requests that the external auditor attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor's report. Principle 7 – Recognise and manage risk The Board has established policies for the oversight and management of material business risks. The Audit and Risk Committee assists the Board in carrying out this function. The following material business risks that have the potential to adversely impact the Company’s operations are addressed: a. Financial risk: market price risk, liquidity risk, credit risk and corporate and bank guarantees. b. Business risk: A range of policies and procedures dealing with specific business risks, including: - Delegation of Authority; - Capital investment; - Business conduct; and - Litigation reporting. c. Operational risk: - Health, safety and environment; - Asset protection and operational security; and - Insurance. Procedures exist to monitor risk, with ultimate reporting to the Board, through either the Audit and Risk Committee for financial and business risk or the Group Managing Director for operational risk. The Board acknowledges that the policies are designed to provide reasonable but not absolute protection against errors and irregularities and that they are intended to identify control issues that require the attention of the Board or Audit and Risk Committee. Management has reported that the material business risks are being managed effectively. The Company has a number of financial control processes to ensure that the information that is presented to senior management and the Board is both accurate and timely. The control processes include, among other things: annual audit and half year review by the external auditor; - - management review of the balance sheet and internal control environment; - monthly review of financial performance compared to budget and forecast; and - 8 - - analysis of financial performance and significant balance sheet items with comparative periods. The Board reviews the implementation of the risk management and internal compliance and control system on an annual basis. The group currently does not have an internal audit function due to the small size and cost structure of the group. As the group grows, consideration will be given to establishing an internal audit operation – either staffed in-house or on contract with an external firm. For the annual and half-year accounts released publicly, the Board has received assurance from the Group Managing Director (Chief Executive Officer) and the Group Finance Manager (Chief Financial Officer) that, in their opinion: - - the financial records of the group have been properly maintained; the financial statements and notes required by accounting standards for external reporting: • give a true and fair view of the financial position and performance of the Company and • • the consolidated group; and comply with the accounting standards and applicable ASIC Class orders; and the above representations are based on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. Principle 8 – Remunerate fairly and responsibly Remuneration Policies The Remuneration Committee annually reviews and makes recommendations to the Board on remuneration packages and policies applicable to the Group Managing Director, senior group executives and directors themselves. This role also includes responsibility for share option schemes, performance incentive packages, superannuation entitlements, any remuneration by gender, retirement and termination entitlements, fringe benefit policies and professional indemnity and liability insurance policies. Remuneration levels are competitively set to attract the most qualified and experienced directors and senior executives. The directors and senior group executives are all on fixed remuneration. The Company PIP was closed on 22 October 2013. Non-executive directors were not eligible to participate in the PIP. Remuneration Committee The role of the Remuneration Committee is to assist the Board with the application of its remuneration policies. The structure of this committee is consistent with the Recommendations in that it comprises at least three members and has an independent Chair. However, only one of the three members is an independent director. This is because its members are procured from the Board, where there is only one independent director. The names of the members of the Remuneration Committee and their attendance at meetings of the Committee are detailed in the Directors’ Report. There are no schemes for retirement benefits other than statutory superannuation for non-executive directors. A copy of the Company’s Remuneration Committee Charter is on the Company’s website (www.academies.edu.au). This Corporate Governance Statement and information about the Company’s corporate governance practices and policies (including ‘Charters’ referred to in this statement) is available on the Company’s website at www.academies.edu.au - 9 - 106th ANNUAL REPORT OF THE DIRECTORS Your directors present this report on Academies Australasia Group Limited and its controlled entities for the financial year ended 30 June 2014. DIRECTORS The names of directors in office at any time during or since the end of the year are: - Dr John Lewis Schlederer - Neville Thomas Cleary - Christopher Elmore Campbell - Chiang Meng Heng - Gabriela Del Carmen Rodriguez Naranjo Appointed 21 October 2013 (Alternate to Neville Thomas Retired 31 December 2013 Cleary until 31 December 2013) Dr John Lewis Schlederer, Christopher Elmore Campbell, Chiang Meng Heng and Gabriela Del Carmen Rodriguez Naranjo have all been in office since the start of the financial year to the date of this report. Neville Thomas Cleary was in office from the start of the financial year until 31 December 2013. COMPANY SECRETARY Mrs Stephanie Noble held the position of company secretary of Academies Australasia Group Limited at the end of the financial year. She was appointed company secretary on 27 November 2006. Mrs. Noble is a CPA Australia and a Fellow of the Association of Chartered Certified Accountants and holds an Honours Degree in Accounting. PRINCIPAL ACTIVITIES The principal activity of the consolidated group during the course of the financial year was the provision of training and education services. The fasteners business was sold on 1 December 2013. CONSOLIDATED RESULT The consolidated profit of the consolidated group for the financial year after providing for income tax and eliminating non-controlling entity interests amounted to $5,400,000 (2013: $3,269,000). REVIEW OF OPERATIONS A review of the operations of the consolidated group during the financial year and the results of those operations are as follows: Education The contribution from the education business (before tax) increased by 40% to $7,984,000 (2013: $5,681,000) during the financial year, while revenue increased by 40% to $42,569,000. Excluding the $2,109,000 from the revaluation of investments, the contribution before tax increased by 13%. - 10 - During the year the group acquired control of (See Note 14): - DFL Education (Qld) Pty Limited T/A Brisbane School of Hairdressing, Gold Coast School of Hairdressing and Brisbane School of Beauty (‘DFL’). International College of Capoeira Pty Limited T/A College of Sports & Fitness (‘CSF’). - - Vostro Institute of Training Australia Pty Limited (‘Vostro Institute’). - Kreate Pty Limited T/A RuralBiz Training. - Newco CLB Training and Development Pty Limited as trustee for the CLB Unit Trust T/A Spectra Training Fasteners The contribution from the fasteners business (before tax) was $359,000 and revenue was $3,215,000. The fasteners business was sold on 1 December 2013 Dividends Paid or Proposed A fully franked dividend of two and a half cents per share ($1,319,000) was paid on 26 September 2013. An interim fully franked dividend of two and a half cents per share ($1,404,000) was paid on 15 April 2014. The directors have announced the payment of a fully franked final dividend of three cents per share ($1,861,905), to be paid on 26 September 2014. FINANCIAL POSITION The net assets of the consolidated group have increased by $16,302,000 since 30 June 2013. SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the state of affairs of the consolidated group during the reporting period. EVENTS AFTER THE REPORTING PERIOD The acquisition of Newco CLB Training & Development Pty Limited as trustee for the CLB Unit Trust T/A Spectra Training was finalised on 23 July 2014 (See Note 14). On 1 July 2014, Spectra Training acquired 100% of Print Training Australia Pty Limited (‘PTA’). With the acquisition of Spectra Training, PTA became a wholly owned subsidiary of the group. On 16 August 2014, the group acquired 75% of Language Links International Pty Limited, a college in Perth that offers English Language courses. At an Extraordinary General Meeting held on 1 September 2014, shareholders approved the issue of the 1,500,000 new shares to the vendors of Spectra Training, and also ratified the prior issue of 7,815,341 shares. There were no other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated group, the results of those operations, or the state of affairs of the consolidated group in subsequent financial years. - 11 - FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES Reference is made in the Chairman’s Report (Pages 1 and 2) to the consolidated group’s future direction. No detailed information in respect of the consolidated group’s corporate strategies has been included, as directors believe that the disclosure of such information is likely to result in unreasonable prejudice to the consolidated group. ENVIRONMENTAL ISSUES The consolidated group operations are not subject to any significant environmental legislation. - 12 - INFORMATION ON DIRECTORS Dr John Lewis Schlederer Qualifications/Experience Interest in Shares Special Responsibilities - Chairman, (Independent & Non-Executive), Director since 2010, Chairman since 1 January 2014. - B.Sc (Hons), PhD, Grad. Diploma. More than 20 years teaching experience, at University of New South Wales and TAFE NSW (Technical and Further Education, New South Wales) and many years in business. - 987,140 shares (1.59%) as at 2 September 2014 - Chairman of the Remuneration Committee and Audit and Risk Committee. Non-Executive Director of Benchmark Resources Pty Limited T/A Benchmark College. Directorships held in other listed entities - None Christopher Elmore Campbell Qualifications/Experience Interest in Shares Special Responsibilities - Group Managing Director and Chief Executive Officer, since 1996. - B.Soc.Sci. (Hons), FFin, FAICD, FCIS, FSCA. Previous positions include senior appointments with the Monetary Authority of Singapore and an international bank in Australia. - 7,416,767 shares (11.95%) as at 2 September 2014 - Member of the Remuneration Committee. Director of each of the subsidiary companies in the Academies Australasia Group. Directorships held in other listed entities Director, Asia Society Australia. - None. Chiang Meng Heng Qualifications/Experience Interest in Shares Special Responsibilities - Director (Non-Executive), since 2000. - BBA (Hons). Previous positions include President, Asia Commercial Bank Ltd, Adviser & Department Head, Monetary Authority of Singapore, Managing Director, First Capital Corporation Ltd, Executive Director, Far East Organization and Group Managing Director, Lim Kah Ngam Ltd. - 24,941,886 shares (40.19%) as at 2 September 2014 - Member of the Audit and Risk, and Remuneration Committees. Chairman (Non-executive) and Director of ACA Investment Holdings Pte. Limited, Centre for Australian Education Pte. Limited and Academies Australasia College Pte. Limited. Directorships held in other listed entities - Far East Orchard Limited, Macquarie International Infrastructure Fund Limited and Keppel Land Limited (all listed on the Singapore Stock Exchange). Gabriela Del Carmen Rodriguez Naranjo Qualifications/Experience Interest in Shares Special Responsibilities - Executive Director, since 21 October 2013. (Alternate to Neville Cleary May 2011 to December 2013). - B. Comp.Sci, B.Sci. Sys. Eng, MAICD. More than 10 years experience in various aspects of international education in Australia. - 15,000 shares (0.02%) as at 2 September 2014 - Executive Director, Academies Australasia Group Limited. General Manager and Chief Operations Officer of Academies Australasia Pty Limited and Director of each of its subsidiaries (excluding ACA Investment Holdings Pte. Limited). - 13 - REMUNERATION REPORT Remuneration Policies The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to the Group Managing Director, senior group executives and directors themselves. This role also includes responsibility for share option schemes, performance incentive packages, superannuation entitlements, retirement and termination entitlements, fringe benefit policies and professional indemnity and liability insurance policies. Remuneration levels are competitively set to attract the most qualified and experienced directors and senior executives. During the year, the members of the Remuneration Committee were Dr John Lewis Schlederer, Neville Thomas Cleary (to 31 December 2013), Chiang Meng Heng and Christopher Elmore Campbell. The remuneration policy of the Company in respect of directors and senior group executives is to ensure certainty of exposure of the Company to employees by agreeing a fixed salary for each director and senior group executive. All executives receive a base salary, which is based on factors such as length of service and experience and superannuation (as required by law). Executives may sacrifice part of their salary to increase payments towards superannuation. There are no options over unissued capital. The Company does not have an employee share option plan. The PIP was closed on 22 October 2013. All remuneration paid to directors and executives is valued at the cost to the Company and expensed. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. The amount approved at the 2009 Annual General Meeting is $250,000 per annum. Fees for non-executive directors are not linked to the performance of the consolidated group. Directors and Senior Group Executives a. Directors and Senior Group Executives The names of each person holding the position of director of Academies Australasia Group Limited at any time during the financial year were: - Dr John Lewis Schlederer (Independent & Non-Executive Director, Chairman from 1 January 2014). - Neville Thomas Cleary (Independent & Non-Executive Director and Chairman to 31 December 2013) - Christopher Elmore Campbell (Group Managing Director - Executive). - Chiang Meng Heng (Non-Executive Director). - Gabriela Del Carmen Rodriguez Naranjo (Alternate Director to Neville Thomas Cleary to 31 December 2013. Executive Director from 21 October 2013). The names of each person holding the position of senior group executive, other than executives listed above at any time during the financial year were: - Stephanie Ann Noble (Group Finance Manager and Company Secretary - Academies Australasia Group Limited. Director Premier Fasteners Pty Limited to 1 December 2013). - Edmund Kwan (Executive Director and Chief Executive Officer- Academies Australasia College Pte. Limited). - Esther Teo (Executive Director and Chief Executive Officer - Academies Australasia Polytechnic Pty Limited. Executive director and Chief Executive Officer - Vostro Institute of Training Australia Pty Limited from 3 June 2014). Ivan James Mikkelsen (Director and General Manager - Premier Fasteners Pty Limited to 1 December 2013). - - 14 - b. Directors and Senior Group Executives Remuneration The remuneration for each director and each of the senior group executives during the year was as follows: 2014 Directors and Senior group executives Short-term employee benefits PIP/bonus Cash, salary and commissions Non- monetary benefits Post- employment benefits Superannuation Total Dr John Lewis Schlederer Neville Thomas Cleary (to 31 December 2013) Christopher Elmore Campbell Chiang Meng Heng Gabriela Del Carmen Rodriguez Naranjo Stephanie Ann Noble Edmund Kwan Esther Teo Ivan James Mikkelsen (to 1 December 2013) $000s $000s $000s $000s $000s 21 25 372 32 136 131 78 102 70 967 - - 71 - a 172 b 107 32 c 73 - 455 - - - - - - - - - - 33 2 78 3 a 24 b 22 10 c 34 13 54 27 521 35 332 260 120 209 83 219 1,641 Non-recurring payment arising from the early closure of the PIP a Gabriela Del Carmen Rodriguez Naranjo $133,000 b Stephanie Ann Noble $83,000 c Esther Teo $56,000 2013 Directors and Senior group executives Short-term employee benefits Dr John Lewis Schlederer Neville Thomas Cleary Christopher Elmore Campbell Chiang Meng Heng Gabriela Del Carmen Rodriguez Naranjo Stephanie Ann Noble Edmund Kwan Esther Teo Ivan James Mikkelsen Jacqualine Apps Bridget Carroll (to 4 March 2013) Philip Carroll (to 4 March 2013) PIP/bonus Cash, salary and commissions Non- monetary benefits 14 55 373 32 130 124 71 99 183 120 63 39 - - 143 - 46 31 - - - - - - 1,303 220 - - - - - - - - 21 - - - 21 Post- employment benefits Superannuation Total 30 - 77 3 15 13 7 36 17 11 21 22 44 55 593 35 191 168 78 135 221 131 84 61 252 1,796 None of the remuneration paid to any director or senior group executive is tied to any specific performance condition. - 15 - c. Options issued as part of remuneration for the year ended 30 June 2014 No options were granted as part of remuneration. d. Employment contracts of senior group executives The employment conditions of all senior group executives are formalised in written contracts of employment. Generally, the employment contracts stipulate a one-month resignation period. Termination payments are generally not payable on resignation or dismissal for serious misconduct. In the instance of serious misconduct the company can terminate employment at any time. Christopher Elmore Campbell has agreed to a further term of 3 years following the expiration of his current contract of employment on 31 December 2014. MEETINGS OF DIRECTORS The number of directors’ meetings (including meetings of committees of directors) and the number of meetings attended by the directors of the Company during the financial year are: Director Directors’ Meetings B A Audit and Risk Committee B A Remuneration Committee B A Dr John Lewis Schlederer Neville Thomas Cleary (retired 31 December 2013) Christopher Elmore Campbell Chiang Meng Heng Gabriela Del Carmen Rodriguez Naranjo 7 5 7 7 7 7 5 7 7 7 2 1 2 2 2 2 1 2 2 2 1 1 1 1 - 1 1 1 1 - A - Number of meetings held during the time the director held office during the period B - Number of meetings attended INDEMNIFICATION AND INSURANCE OF OFFICERS The Company’s Articles of Association provides an indemnity to officers of the Company. The Company is required to pay all costs, losses and expenses that an officer may incur by reason of any contract entered into or act or thing done by them in the discharge of their duties except where they act dishonestly. The Company has also paid an insurance premium in respect of a directors and officers liability insurance policy covering the directors and officer’s liabilities as officers of the Company. It has also taken out “key man” insurance policies, the premium and nature of the liabilities covered by the policies are not to be disclosed, under the terms of the policies. OPTIONS No options have been issued on the Company’s shares. - 16 - PROCEEDINGS ON BEHALF OF THE COMPANY The Company was not a party to any proceedings in a Court of Law during the year. NON-AUDIT SERVICES The Board of Directors, in accordance with advice from the Audit and Risk Committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence of auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons: • All non-audit services are reviewed and approved by the Audit and Risk Committee. • The nature of services provided does not compromise the general principles relating to audit independence. The following fees were paid or payable for non-audit services to the external auditors during the year ended 30 June 2014: • Taxation services • Due diligence and other services $73,000 $217,000 - 17 - AUDITOR’S INDEPENDENCE DECLARATION The Auditor’s Independence Declaration for the year ended 30 June 2014 has been received and can be found on page 19. Signed in accordance with a resolution of the Board of Directors. Dr John Lewis Schlederer Director 3 September 2014 Christopher Elmore Campbell Director - 18 - ACADEMIES AUSTRALASIA GROUP LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2014 Note 2014 $000s 2013 $000s Revenue from continuing operations Depreciation and amortisation expense Cost of sales Cost of services Employee benefits expense Finance costs Insurance Lease rental expense – operating leases Legal expenses Non-executive directors fees Payroll tax Other expenses Profit before income tax Income tax expense Profit for the year 2 3 3 45,784 37,827 (767) (1,549) (14,633) (10,569) (305) (494) (4,990) (113) (116) (574) (4,600) (715) (3,587) (12,230) (8,066) (210) (424) (4,084) (74) (133) (438) (3,303) 7,074 4,563 4 (1,674) (1,294) 5,400 3,269 Other comprehensive income: Exchange differences on translating foreign controlled entities Net (loss)/gain on revaluation of assets Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit attributable to: Owners of the parent entity Non-controlling interests Total comprehensive income attributable to: Owners of the parent entity Non-controlling interests Earnings per share (cents per share) Basic Diluted Dividends per share (cents) The accompanying notes form part of these financial statements. 7 7 8 - 20 - (25) (719) (744) 4,656 5,264 136 5,400 4,520 136 4,656 9.8 8.8 5.0 87 630 717 3,986 3,269 - 3,269 3,986 - 3,986 6.8 6.8 5.0 ACADEMIES AUSTRALASIA GROUP LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2014 Note 2014 $000s 2013 $000s Current Assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Total Current Assets Non-Current Assets Trade and other receivables Investments Plant and equipment Deferred tax assets Intangible assets Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Current tax liabilities Borrowings Provisions Total Current Liabilities Non-Current Liabilities Deferred tax liability Borrowings Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Share capital Share capital contracted to be issued Accumulated losses Asset revaluation reserve Foreign currency translation reserve Non-controlling interests Total Equity 9 10 11 12 10 13 15 16 17 18 4 19 20 16 19 20 21a 21b 7,833 8,798 - 1,227 17,858 6,225 2,618 6,637 - 28,770 44,250 62,108 18,852 297 1,319 1,556 22,024 85 2,665 5,740 8,490 30,514 31,594 25,446 7,087 (1,319) - 58 322 31,594 4,992 2,417 3,815 956 12,180 - 903 3,759 436 10,408 15,506 27,686 6,327 456 969 752 8,504 - 2,402 1,488 3,890 12,394 15,292 18,372 - (4,226) 1,063 83 - 15,292 The accompanying notes form part of these financial statements. - 21 - ACADEMIES AUSTRALASIA GROUP LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY As at 30 June 2014 Ordinary Shares Other Equity Retained Profits Reserves Non - Controlling Interests Total $000s $000s $000s $000s $000s $000s (4,414) 3,269 - - 3,269 - - (694) (2,387) (4,226) 429 - 87 630 717 - - - - 1,146 743 14,496 - - - - - - 3,269 87 630 3,986 484 114 (743) (1,401) - - (2,387) 15,292 (4,226) 5,264 1,146 - - 15,292 136 5,400 - 344 (25) (1,063) - - (25) (719) 5,608 (1,088) 136 4,656 - - - - (2,701) (1,319) - - - - - - - 186 7,087 (484) 3,808 3,936 - (2,701) 58 322 31,594 Balance at 1.7.2012 Profit for the period Exchange differences on translating foreign operations Asset revaluation reserve Total comprehensive income for the year Share issue (PIP) Share issue (Investment in associate) Acquisition of non-controlling interests Dividend paid 17,738 - - - - 484 114 36 - Balance at 30.6.2013 18,372 Balance at 1.7.2013 Profit for the period Exchange differences on translating foreign operations Asset revaluation reserve Total comprehensive income for the year Shares contracted to be issued (Acquisition of subsidiary) Share issue (PIP) Share issue (Placement) Acquisition of subsidiaries Dividend paid 18,372 - - - - - (484) 3,808 3,750 - - - - - - - - - - - - - - - - 7,087 - - - - Balance at 30.6.2014 25,446 7,087 The accompanying notes form part of these financial statements. - 22 - ACADEMIES AUSTRALASIA GROUP LIMITED CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 June 2014 Cash Flows from Operating Activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Income taxes paid Note 2014 $000s 2013 $000s 44,410 (40,166) 73 (305) (1,097) 39,849 (33,326) 63 (210) (950) Net cash provided by (used in) operating activities 25a 2,915 5,426 Cash Flows from Investing Activities Proceeds from sale of plant & equipment Purchase of plant & equipment Expenditure on re branding Net cash on acquisition/disposal of subsidiaries Investment in subsidiary Acquisition of non-controlling interests Investment in associate Investment in other financial assets Net cash provided by (used in) investing activities Cash Flows from Financing Activities Dividends paid Proceeds from borrowings Repayment of borrowings Proceeds from share placement Non recurring payment (PIP) Net cash provided by (used in) financing activities Net increase in cash held Cash at the beginning of the financial year Cash at the end of the financial year 9 39 (1,805) - 1,701 - - - - (65) (2,701) 1,784 (1,893) 3,808 (1,007) (9) 2,841 4,992 7,833 - (262) (62) 585 (190) (1,401) (300) (29) (1,659) (2,387) 1,781 (737) - - (1,343) 2,424 2,568 4,992 The accompanying notes form part of these financial statements. - 23 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements . of the Australian Accounting Standards Board and the Corporations Act 2001 The financial report includes the consolidated financial statements of Academies Australasia Group Limited and controlled entities. Details of the parent entity can be found in Note 30. Academies Australasia Group Limited is a listed public company, incorporated and domiciled in Australia. The group is a for profit entity for financial reporting purposes under Australian Accounting Standards Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated. Basis of preparation The accounting policies set out below have been consistently applied to all years presented. The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. The financial report is presented in Australian Dollars and rounded to the nearest thousand dollars in accordance with Class Order 98/100. Accounting Policies a. Basis of consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Academies Australasia Group Limited) and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls. The parent controls an entity when it 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 over the entity. A list of the subsidiaries is provided in Note 14. The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the group from the date on which control is obtained by the group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the group. Equity interests in a subsidiary not attributable, directly or indirectly, to the group are presented as “non- controlling interests”. The group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income. - 24 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) b. Business combinations Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisiton method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions). When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. c. Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of one month or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet. d. Trade and other receivables Trade and other receivables include amounts due from customers for services performed and goods sold in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets. Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Refer to Note 10 for further discussion on the determination of impairment losses. e. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct labour and an appropriate portion of variable and fixed overheads. Overheads are applied on the basis of normal operating capacity. Costs are assigned on the basis of weighted average costs. Where the book value of stock items exceeds the net realisable value, a provision for diminution in value is raised. - 25 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) f. Financial instruments Recognition and Initial Measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. Classification and Subsequent Measurement Loans and receivables Available-for-sale investments Financial assets at fair value through profit or loss i. Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in the period in which they arise. ii. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest rate method. iii. Available-for-sale investments are non-derivative financial assets that are either not capable of being classified into other categories of financial assets due to their nature or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value with any re-measurements other than impairment losses and foreign exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. Available-for-sale financial assets are classified as non-current assets when they are expected to be sold after 12 months from the end of the reporting period. All other available-for-sale financial assets are classified as current assets. iv. Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method. Financial Liabilities - 26 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Derivative instruments The group has no derivative instruments at reporting date. Fair value The only financial asset or liability carried at fair value is investments. Fair value is determined by a number of market and observable factors, including quoted prices, market activity levels, the financial position and performance of the investment and the relative size of the group’s shareholding. They are categorised as a Level 1 in the fair value hierarchy of the Accounting Standards (market inputs are used to determine fair value). Financial guarantees Where material, financial guarantees are issued, which require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at fair value on initial recognition. The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 118. The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow approach. The probability has been based on: - - - the likelihood of the guaranteed party defaulting in a year period; the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and the maximum loss exposed if the guaranteed party were to default. Interest borrowing costs Interest payable costs are recognised as expenses in the period in which they are incurred. g. Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the consolidated group, are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Operating lease rental payments are recognised on a straight line basis over the lease term and contingent rental payments are recognised in the period when incurred. Assets receivable under lease incentives are recognised when the group has a contractual right to them and they can be reliably estimated. Where applicable, specific categories of assets received under such arrangements are recognised in the appropriate asset heading and accounted for in accordance with the group’s applicable accounting policy for that asset. Lease incentives under operating leases are recognised as a liability and amortised as a reduction in rent on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which the economic benefits from the leased asset are consumed. - 27 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) h. Plant and equipment The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. i. Depreciation The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a straight-line or a diminishing value basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Leasehold improvements Plant and equipment Leased plant and equipment Depreciation Rate 12.5 – 22.5% 5 – 40% 5 – 25% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. j. Goodwill Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of: - - - the consideration transferred any non-controlling interest; and the acquisition date fair value of any previously held equity interest over the acquisition date fair value of net identifiable assets acquired. The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss. - 28 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) The amount of goodwill recognised on acquisition of each subsidiary in which the group holds less than a 100% interest will depend on the method adopted in measuring the non-controlling interest. The group can elect in most circumstances to measure the non-controlling interest in the acquiree either at fair value (full goodwill method) or at the non-controlling interest’s proportionate share of the subsidiary’s identifiable net asets (proportionate interest method). In such circumstances, the group determines which method to adopt for each acquisition and this is stated in the respective notes of these financial statements disclosing the business combination. Under the full goodwill method, the fair value of the non-controlling interest is detemined using valuation techniques which make the maximum use of market information where available. Under this method, goodwill attributable to the non-controlling interests is recognised in the consolidated financial statements. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is tested for impairment annually and is allocated to the group’s cash-generating units or groups of cash-generating units, representing the lowest level at which goodwill is monitored not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of. Changes in the ownership interests in a subsidiary are accounted for as equity transactions and do not affect the carrying values of goodwill. k. Intangible assets Intangible assets include course development costs and other intangible assets. Course development costs are capitalised where they can be related to the development of an identifiable and separable resource and which yields particular streams of future economic benefits. They are only capitalised when technical feasibility studies identify that the project is expected to deliver future economic benefits and these benefits can be measured reliably. These capitalised costs are amortised over their useful lives starting from the time the development of a particular resource is complete and available for use. l. Impairment of assets At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Collectibility of trade debtors is reviewed on an ongoing basis. Debts are written off when they are known to be uncollectible. A provision for doubtful debts is raised where some doubt as to collection exists and is the difference between the total amount owing and the amount expected to be recovered. m. Trade and other payables Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. - 29 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) n. Provisions and employee benefits Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Provision is made for the group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. o. Issued capital Ordinary shares are classified as equity, and are recognised at the fair value of the consideration received by the company. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. The group has entered into a commitment to settle transactions in its own shares and these new shares yet to be issued are recognised in equity, separately from issued capital. Once the shares are issued they are transferred within equity to issued capital. (Note 21) p. Revenue Revenue recognition relating to the provision of education services is determined with reference to the stage of completion of the transaction at the end of the reporting period, where the outcome of the contract can be estimated reliably. The assessment of stage of completion of educational services is also determined by reference to the provision of educational resources and the proportion of their costs incurred to date as well as the tuition day count. Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Dividend revenue is recognised when the right to receive a dividend has been established. Rental revenue is recognised on a straight line accrual basis over the term of the lease. All revenue is stated net of the amount of goods and services tax (GST). q. Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. - 30 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) r. Income tax The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Academies Australasia Group Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply from 1 July 2003. The tax consolidated group has entered a tax sharing agreement whereby each company in the group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group. s. Foreign currency transactions and balances Foreign currency transactions are translated into Australian currency (the functional currency) using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Foreign Group Companies The financial results and position of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows: - - - assets and liabilities are translated at year-end exchange rates prevailing at the end of the financial year; income and expenses are translated at average rates for the period; and retained earnings are translated at the exchange rates prevailing at the date of the transaction. Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of comprehensive income. t. Earnings per share Basic earnings per share are calculated as net profit attributable to members of the parent divided by the weighted average number of ordinary shares. Diluted earnings per share is calculated as net profit attributable to members of the parent, divided by the weighted average number of shares both issued and contracted to be issued. - 31 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) u. Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. v. Critical accounting estimates and judgements The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. These changed estimates and judgements are considered significant items of revenue and expenses relevant in explaining the financial performance. Key Estimates – Impairment The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates. Further details on the key estimates used in impairment can be found in Note 17. No impairment has been recognised in respect of goodwill for the year ended 30 June 2014. Key Estimates – Revenue Stage completion for student revenue is estimated as per revenue policy. w. Segment reporting An operating segment is a component of an entity - that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity) - whose operating results are regularly reviewed by the entity’s Board to make decisions about resources to be allocated to the segment and assess its performance for which discrete financial information is available - The company has determined that it has only one operating segment, education, since the sale of the fasteners business on 1 December 2013. - 32 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 2. REVENUE Operating activities - Sale of goods - Services revenue - Interest received - Rent received Non-operating activities - Other Total Revenue 3. PROFIT FOR THE YEAR Expenses Finance costs - external Bad and doubtful debts – trade receivables Rental expense on operating leases - Minimum lease payments - Contingent rentals 2014 $000s 2013 $000s 3,215 40,094 69 297 43,675 7,495 29,818 64 272 37,649 2,109 178 45,784 37,827 305 - 4,794 196 4,990 210 75 4,065 19 4,084 Superannuation expenses 814 530 4. INCOME TAX EXPENSE a. The components of tax expense comprise: Current tax Deferred tax b. The prima facie tax on profit from ordinary activities before tax is reconciled to income tax as follows: Tax payable on profit from ordinary activities before tax at 30% Add/(less): Tax effect of: Permanent differences Assumption of tax balances of controlled entities Income tax expense attributable to the entity - 33 - (921) (753) (1,674) (1,413) 119 (1,294) 2,122 1,369 (184) (264) 1,674 32 (107) 1,294 ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 4. INCOME TAX EXPENSE (continued) c. Current tax payable for the year reconciles as follows: Opening provision Add: Current year provision Less: Over provision previous year Add: Tax balance subsidiary acquired Less: Tax paid Closing provision 2014 $000s 2013 $000s 456 929 (8) 17 (1,097) 297 (9) 1.447 (32) - (950) 456 5. SENIOR GROUP EXECUTIVES COMPENSATION a. Names and positions of the senior group executives in office at any time during the financial year are: Senior group executive Position Christopher Elmore Campbell Group Managing Director. Gabriela Del Carmen Rodriguez Naranjo Stephanie Ann Noble Edmund Kwan Esther Teo Executive Director - Academies Australasia Group Limited from 21 October 2013. General Manager and Chief Operations Officer of Academies Australasia Pty Limited and director of each of its subsidiaries (except ACA Investment Holdings Pte. Limited). Group Finance Manager and Company Secretary - Academies Australasia Group Limited. Director Premier Fasteners Pty Limited to 1 December 2013. Executive Director and Chief Executive Officer - Academies Australasia College Pte. Limited. Executive Director and Chief Executive Officer - Academies Australasia Polytechnic Pty Limited. Executive Director and Chief Executive Officer - Vostro Institute of Training from 3 June 2014 Ivan James Mikkelsen Director and General Manager - Premier Fasteners Pty Limited to 1 December 2013. b. Remuneration for senior group executives has been included in the Remuneration Report section of the Directors’ Report. - 34 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 5. SENIOR GROUP EXECUTIVES COMPENSATION (continued) c. Shareholdings Number of shares held by senior group executives and parties related to them Senior group executive Balance 1.7.2013 Net Change Other (i) 000s 000s Christopher Elmore Campbell Gabriela Del Carmen Rodriguez Naranjo 8,137 15 126 - (i) Shares purchased on market via the Australian Securities Exchange. (ii) Shares surrendered and cancelled PIP (ii) 000s (846) - Balance 30.6.2014 000s 7,417 15 6. AUDITOR’S REMUNERATION Remuneration of the auditor of the parent entity for: - Auditing and reviewing the financial report - Taxation services - Due diligence and other services Remuneration of other auditors of subsidiaries for: - Auditing and reviewing the financial report - Taxation services - Other services 7. EARNINGS PER SHARE Basic (cents per share) Diluted (cents per share) 2014 $000s 2013 $000s 186 73 217 476 15 4 - 19 9.8 8.8 155 24 40 219 14 3 3 20 6.8 6.8 Weighted average number of ordinary shares used in calculation of basic earnings per share 54,401 47,867 a. In estimating the fully dilutive earnings per share the ordinary shares contracted to be issued (5,906,250) were included b. The earnings figure used was $5,264,000, being profit on ordinary activities after tax attributable to owners of the parent entity. - 35 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 8. DIVIDENDS Distributions recognised Interim fully franked ordinary dividend of 2.5 cents per share (2013: 2.5 cent fully franked) 2013 final fully franked ordinary dividend of 2.5 cents per share paid in 2014 (2012 2.5 cents franked paid in 2013 ) Interim fully franked ordinary dividend of 2.5 cents per share 2013 returned a. b. Dividends proposed or declared but not recognised in the financial statements: Proposed fully franked ordinary dividend of 3 cents per share (2013: 2.5 cents fully franked) Balance of franking account at year end adjusted for franking credits arising from: 2014 $000s 2013 $000s 1,404 1,180 1,319 (22) 2,701 1,207 - 2,387 1,862 1,340 — payment of income tax 3,646 2.445 9. CASH AND CASH EQUIVALENTS Cash at bank and on hand 7,833 4,992 Included in the above are tuition fees held in Tuition Protection Service Account in Australia In 2012 the Education Services for Overseas Student Act 2000 (“ESOS Act”) was amended to provide additional protection for international students studying in Australia. With effect from 1 July 2013, the group is now required to maintain, in Australia, separate bank accounts for prepaid fees received from international students prior to commencement of their course. As at 30 June 2014, the group held $5,100,000 (2013: $3,801,000) in prepaid fees for students who had not yet commenced studies, with a corresponding amount included in deferred revenue. These funds are held in separate bank accounts until the student commences their course, at which point the funds may be used to settle normal obligations of the group. At all times, the group must ensure that there are sufficient funds in these separate bank accounts to repay any prepaid tuition fees to all international students who have paid and have not yet commenced their course. 10. TRADE AND OTHER RECEIVABLES CURRENT Trade receivables Receivable from the sale of Premier Fasteners Lease incentives Other receivables NON-CURRENT Receivable from the sale of Premier Fasteners Lease incentives - 36 - 2014 $000s 2013 $000s 3,157 937 304 4,400 8,798 2,813 3,412 6,225 2,201 - - 216 2,417 - - - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 10. TRADE AND OTHER RECEIVABLES (continued) 2014 $000s 2013 $000s TOTAL Trade receivables Receivable from the sale of Premier Fasteners Lease incentives Other receivables a. The ageing analysis of trade receivables is as follows: 0 -30 days 31- 60 days – not impaired * 61- 90 days – not impaired * +91 days – not impaired * 3,157 3,750 3,716 4,400 15,023 1,708 327 214 908 3,157 2,201 - - 216 2,417 847 641 198 515 2,201 * These are debtors that are past due for which no collateral is held and for which no provision for doubtful debts has been made as there has not been a significant change in credit quality and the directors believe that the amounts are still recoverable. b. The consolidated group has an exposure to credit risk in Singapore and Australia given the consolidated group’s operations in those countries. An amount of $348,000 has been included in trade and other receivables in respect of the business operations in Singapore. All other receivables of the consolidated group are exposures in Australia. c. The receivable from the sale of Premier Fasteners is over 4 years in accordance with the terms of the contract for the sale. 11. INVENTORIES CURRENT At cost Raw materials and stores Finished goods 12. OTHER ASSETS CURRENT Prepayments and accrued income Security deposits 13. INVESTMENTS NON-CURRENT Investment in Associate (a) Shares in Listed Corporations 2014 $000s 2013 $000s - - - 564 3,251 3,815 1,062 165 1,227 - 2,618 2,618 954 2 956 394 509 903 a. On 1 December 2013, the group acquired an additional 11 % of the issued share capital of International College of Capoeira Pty Limited T/A as College of Sports & Fitness. Academies Australasia Group Limited now owns 51% (See Note 14). - 37 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 14. CONTROLLED ENTITIES Parent Entity - Academies Australasia Group Limited Ultimate Parent Entity - Academies Australasia Group Limited Academies Australasia Pty Limited Premier Fasteners Pty Limited (Sold 1 December 2013) Skilled Placements Pty Limited Parent Entity - Academies Australasia Pty Limited Academies Australasia (Management) Pty Limited Academy of English Pty Limited Academies Australasia Institute Pty Limited Australian Institute of Professional Studies Pty Limited Australian International High School Pty Limited Australian College of Technology Pty Limited Australian Trades Institute Pty Limited Clarendon Business College Pty Limited Supreme Business College Pty Limited AMI Education Pty Limited ACA Investment Holdings Pte. Limited Academies Australasia College Pte. Limited Centre for Australian Education Pte. Limited (Incorporated 9 December 2013) AKG Investment Holdings Pty Limited Academies Australasia Polytechnic Pty Limited AKG2 Investment Holdings Pty Limited Benchmark Resources Pty Limited T/A Benchmark College AKG3 Investment Holdings Pty Limited Live. Laugh. Learn. Pty Limited AKG4 Investment Holdings Pty Limited Discover English Pty Limited International College of Capoeira Pty Limited T/A College of Sports & Fitness (Acquired additional 11% 1 December 2013) DFL Education (Qld) Pty Limited T/A Brisbane School of Hairdressing, Gold Coast School of Hairdressing and Brisbane School of Beauty (Acquired 1 December 2013) Vostro Institute of Training Australia Pty Limited (Acquired 1 December 2013) Kreate Pty Limited T/A RuralBiz Training (Acquired 2 June 2014) Newco CLB Training & Development Pty Limited as trustee for the CLB Unit Trust T/A Spectra Training (2 June 2014) Percentage of voting power is in proportion to ownership/control - 38 - Country of Incorporation Percentage Owned/Controlled (%) 2014 2013 Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Singapore Singapore Singapore Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 100 - 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 51 100 100 51 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 - 100 100 100 100 100 100 100 100 40 - - - - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 14. CONTROLLED ENTITIES (continued) Acquisition of controlled entities On 1 December 2013, the group acquired: a) 100% of the issued share capital of DFL, a college operating in Brisbane and the Gold Coast, for a consideration of $4,858,094. The purchase was satisfied by the issue of 3,409,091 fully paid ordinary shares in Academies Australasia Group Limited and the payment of $1,108,094 in cash. b) A further 11% of the issued share capital of CSF, for $70,000 in cash. The group now owns 51%. c) 100% of the issued share capital of Vostro Institute, a college in Melbourne. The consideration was $2,000,000 in cash. The acquisition was completed on 30 January 2014. The numbers below incorporate final adjustments to those reported on 31 December 2013 ($717,000, $121,000 and $592,000 respectively), to reflect adjustments to identifiable assets acquired and liabilities assumed at the date of acquisition. Vostro Institute CSF DFL Fair Value Fair Value Fair Value Purchase consideration -Ordinary shares -Ordinary shares – 25 October 2012 -Cash – 25 October 2012 -Cash -Group share accumulated profit as associate Less: Cash Receivables Property, plant and equipment Intangibles Payables Identifiable assets acquired and liabilities assumed Group share Goodwill Purchase consideration settled in cash Cash inflow on acquisition $000s 100% - - - 2,000 - 2,000 623 633 134 14 (1,639) (235) (235) 2,235 2,000 623 $000s 51% - 114 300 70 7 491 203 298 371 - (696) 176 90 401 70 203 $000s 100% 3,750 - - 1,108 - 4,858 195 417 653 13 (577) 701 701 4,157 1,108 195 - 39 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 14. CONTROLLED ENTITIES (continued) Acquisition of controlled entities (continued) On 2 June 2014, the group acquired a) 51% of the issued share capital of RuralBiz Training, a college in Dubbo, NSW for a consideration of $234,835 in cash. b) 100% control of Spectra Training, a college in Melbourne, operating throughout mainland Australia. The consideration was $15,750,000, to be satisfied by the issue of 5,906,250 new fully paid ordinary shares in Academies Australasia Group Limited and the payment of $8,662,500 in cash, financed by a bank loan. The acquisition was completed on 23 July 2014. On that date the cash component was paid and 4,406,250 shares were issued. The issue of the remaining 1,500,000 shares was approved by shareholders on 1 September 2014. The acquisitions are part of the group’s overall strategy to expand its education operations. RuralBiz Training Spectra Training Fair Value Fair Value $000s 51% - 235 - 235 229 13 26 - (64) 204 104 131 235 229 $000s 100% 7,087 - 8,663 15,750 37 4,682 396 1,178 (2,598) 3,695 3,695 12,055 8,663 37 Purchase consideration -Ordinary shares (to be issued) -Cash -Cash payable to vendor Less: Cash Receivables Property, plant and equipment Intangibles Payables Identifiable assets acquired and liabilities assumed Group share Goodwill Purchase consideration settled in cash Cash inflow on acquisition - 40 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 14. CONTROLLED ENTITIES (continued) The consolidated revenue and profit of the group if the acquisitions had taken place on 1 July 2013 has not been disclosed. This is because it is impracticable to determine what the results of these acquisitions might have been prior to the actual date of acquisition in accordance with the accounting policies of the group using available accounting information. It is impracticable to disclose the profit of these acquisitions since acquisition and include them in the consolidated statement of comprehensive income. This is because they form part of the group’s education operation which is managed as a unit. Some costs can be determined only from a group perspective and cannot be allocated specifically to them. Consequently, it is not possible to determine separate results for these acquisitions. Sale of Controlled entity On 1 December 2013, the group sold Premier Fasteners Pty Limited for $7,688,937 in cash. Fair Value $000s 3,939 3,750 7,689 112 1,704 3,769 1,142 1,892 (930) 7,689 - Sale Proceeds -Cash -Deferred consideration Less: Cash Receivables Inventories Property, plant and equipment Intangibles Payables Identifiable assets and liabilities sold Gain/(loss) on disposal - 41 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 15. PLANT AND EQUIPMENT 2014 $000s 2013 $000s Plant and equipment At cost At valuation Accumulated depreciation Leasehold improvements At cost Accumulated amortisation Leased plant and equipment Capitalised leased assets Accumulated depreciation Total plant & equipment 2014 Balance at the beginning of the year Revaluation Additions Acquisitions Disposals Depreciation expense Net foreign currency difference arising on translation of financial statements of foreign operations Carrying amount at the end of the year 2013 Balance at the beginning of the year Revaluation Additions Disposals Depreciation expense Net foreign currency difference arising on translation of financial statements of foreign operations Carrying amount at the end of the year 3,180 1,843 (2,322) 2,701 2,584 (1,550) 1,034 53 (29) 24 3,759 Total $000s 3,759 (719) 4,125 1,580 (1,339) (767) (2) 6,637 3,233 974 295 (29) (715) 1 3,759 5,043 - (2,737) 2,306 5,762 (1,646) 4,116 215 - 215 6,637 Plant and equipment Leasehold improvements $000s $000s Leased plant and equipment $000s 24 - 215 - (24) - - 215 32 - - - (8) - 24 2,701 (719) 957 844 (1,110) (365) (2) 2,306 1,882 974 223 (11) (367) - 1,034 - 2,953 736 (205) (402) - 4,116 1,319 - 72 (18) (340) 1 2,701 1,034 - 42 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 16. DEFERRED TAX ASSETS / LIABILITIES Future income tax benefit The future income tax benefits is made up of the following estimated tax benefits: Temporary differences: -deferred tax assets -deferred tax liabilities Tax losses: -operating losses 2014 $000s 2013 $000s (85) 436 980 (1,206) 141 (85) 948 (512) - 436 Opening Balance $000s Charged To Income $000s Acquired $000s Closing Balance $000s Deferred Tax Assets Provisions Unearned income Other Deferred Tax Liabilities Plant & equipment Investments Prepayments and other 617 220 111 948 388 53 71 512 (221) 26 126 (69) (117) 633 168 684 Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1r occur: Tax losses: -operating losses -capital losses 13 76 12 101 - - 10 10 409 322 249 980 271 686 249 1,206 2014 $000s 2013 $000s 407 - - 407 5 412 - 43 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 17. INTANGIBLE ASSETS Goodwill at cost Accumulated impairment losses Net carrying value Course development costs Accumulated amortisation Net carrying value Other at cost Year ended 30 June 2014 Balance at the beginning of the year Sale of Premier Fasteners Acquisition of DFL Acquisition of Vostro Institute Acquisition of CSF Acquisition of RuralBiz Training Acquisition of Spectra Training Rebranding costs Balance at the end of the year Year ended 30 June 2013 Balance at the beginning of the year Foreign exchange adjustment Acquisition of Discover English Pty Limited Rebranding costs Balance at the end of the year Impairment Disclosures Fasteners segment Education segment Total - 44 - 2014 $000s 27,814 (382) 27,432 1,540 (352) 1,188 150 28,770 2013 $000s 10,727 (382) 10,345 - - - 63 10,408 Goodwill $000s 10,345 (1,892) 4,157 2,235 401 131 12,055 - 27,432 9,952 8 385 - 10,345 Course Development Costs $000s Other Total $000s $000s - - - - - - 1,188 - 1,188 - - - - - 63 - 13 11 - - 71 (8) 150 1 - - 62 63 10,408 (1,892) 4,170 2,246 401 131 13,314 (8) 28,770 9,953 8 385 62 10,408 2014 $000s - 27,432 27,432 2013 $000s 1,892 8,453 10,345 ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 17. INTANGIBLE ASSETS (continued) The recoverable amount of each cash generating unit is determined based on value in use calculations supplemented by the fair values of recent acquisitions. In accordance with paragraph 24 of AASB 136 Impairment of Assets, reliance has been placed on a model created in a preceding period. The model includes a sensitivity analysis allowing for a range of growth rates. The following assumptions were used in the value in use calculations: Education segment 5% 10% 2.5 Growth rate Discount rate Terminal Multiple The growth rate is a long-term average growth rate. The discount rate used reflects entity and market specific factors To generate impairment, the discount rate would need to be in excess of 20% or growth rates would need to be negative. 18. TRADE AND OTHER PAYABLES CURRENT Unsecured Liabilities Trade payables a Sundry payables and accrued expenses Payable to the vendors of Spectra Training b 2014 $000s 2013 $000s 4,997 5,192 10,189 8,663 18,852 4,071 2,256 6,327 - 6,327 a. Trade payables includes $3,521,000 (2013: $2,568,000) tuition fees paid in advance by college students. b. Paid on 23 July 2014, financed by a bank loan. 19. BORROWINGS CURRENT Secured Liabilities – Interest Bearing Bank bills Trade finance loan facility Lease purchase agreements NON-CURRENT Secured Liabilities – Interest Bearing Bank bills Lease purchase agreements Note 19a 19a 19a 19a 19a 2014 $000s 2013 $000s 1,238 - 81 1,319 2,503 162 2,665 919 46 4 969 2,402 - 2,402 - 45 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 19. BORROWINGS (continued) Note 2014 $000s 2013 $000s a. Total current and non-current secured liabilities: Bank bills Trade finance loan facility Lease purchase agreements 28 28 22, 28 b. The carrying amounts of non-current assets pledged as security are: Floating charge over assets Plant and equipment 3,741 - 243 3,984 39,147 215 39,362 3,321 46 4 3,371 11,099 - 11,099 c. The bank bills are secured by a floating charge over the assets of the parent entity and its wholly owned subsidiaries (other than those in Note 23). d. The lease purchase borrowings are additionally secured on the leased asset. The leases are due for repayment in 2017. 20. PROVISIONS CURRENT Employee entitlements Lease incentives Other NON CURRENT Employee entitlements Lease incentives Other TOTAL Employee entitlements Lease incentives Other 2014 $000s 2013 $000s 964 592 - 1,556 807 4,933 - 5,740 1,771 5,525 - 7,296 615 - 137 752 1,253 - 235 1,488 1,868 - 372 2,240 - 46 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 21. SHARE CAPITAL a. Issued Share Capital 2014 Share number 2014 $000s 2013 Share number 2013 $000s Ordinary shares fully paid 56,157,234 25,446 48,254,297 18,372 Ordinary share capital Balance at the beginning of the financial year 48,254,297 18,372 47,209,410 17,738 Placement of ordinary shares on 2 August 2013 5,340,000 3,808 Ordinary shares issued on 1 December 2013 on acquisition of DFL 3,409,091 3,750 - - - - Ordinary shares issued on 9 November 2012 (PIP) and cancellation in September 2013 Ordinary shares issued on 25 October 2012 for investment in CSF Ordinary shares issued on 15 February 2013 on acquisition of 25% of Academies Australasia Polytechnic Pty Limited (846,154) (484) 846,154 484 - - - - 142,858 114 55,875 36 Balance at the end of the financial year 56,157,234 25,446 48,254,297 18,372 b. Shares contracted to be issued Ordinary shares fully paid to be issued on acquisition of 100% of Spectra Training (See Note 14) 5,906,250 7,087 - - i. Shares disclosure. Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At a shareholders meeting each ordinary share is entitled to one vote when a poll is called. Otherwise, each shareholder has one vote on a show of hands. The number of shares authorised is equal to the number of shares issued. Shares have no par value. ii. Capital Management. Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern. The group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. There were no changes in the group’s capital management procedures during the year. - 47 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 22. LEASING COMMITMENTS Lease purchase commitments Payable – minimum lease payments Not later than one year Later than one year but not later than five years Minimum lease payments Less future finance charges Present value of minimum lease payments Note 2014 $000s 2013 $000s 93 172 265 (22) 243 4 - 4 - 4 19a At the end of the lease periods the lessor’s charges over the plant and equipment cease, leaving the assets the unencumbered property of the consolidated group. Operating Lease commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements: Not later than one year Later than one year but not later than five years Later than five years 2014 $000s 5,511 13,508 17,690 36,710 2013 $000s 3,825 8,982 1,530 14,337 The consolidated group leases property under operating leases expiring from 1 year to 15 years. Lease payments comprise a base amount plus an incremental rental, based on either movement in the Consumer Price Index or minimum percentage increase criteria. During the year, the group has acquired a number of new leases. Lease incentives have been recognised in accordance with the group’s accounting policies. 23. CONTINGENT LIABILITIES AND CONTINGENT ASSETS Contingent Liabilities Guarantees There is a corporate guarantee between the wholly owned group companies as security for the bank facilities. This guarantee does not include: Academies Australasia College Pte. Limited Centre for Australian Education Pte. Limited DFL Education (Qld) Pty Limited Kreate Pty Limited - 48 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 24. SEGMENT REPORTING FASTENERS EDUCATION CONSOLIDATED 2014 $000s 2013 $000s 2014 $000s 2013 $000s 2014 $000s 2013 $000s 3,215 - 3,215 7,495 - 7,495 40,094 2,475 42,569 29,818 514 30,332 43,309 2,475 45,784 - 35,749 2,078 37,827 - 45,784 37,827 359 738 7,984 5,681 8,343 6,419 9,108 58,026 17,078 1,726 29,596 9,437 (1,269) (1,856) 7,074 4,563 58,026 4,082 26,186 1,500 62,108 27,686 29,596 918 11,163 1,231 30,514 12,394 35 4,079 331 4,125 138 595 459 650 366 597 - - 46 55 Primary reporting – Business segments Revenue External sales Other revenue Unallocated revenue Total revenue Segment result Unallocated expenses net of unallocated revenue Profit from ordinary activities before income tax Segment assets Unallocated Total assets Segment liabilities Unallocated Total liabilities Acquisition of non-current segment assets Depreciation and amortisation of segment assets Business segments Major products/services of business segments: Education Fasteners Provision of training and education services Manufacture, import and sale of fasteners (to 1 December 2013) Geographical information The consolidated group operates in Australia and Singapore. The revenues and non-current assets of the consolidated group are as follows: Geographic Location Revenues from External Customers Non-current assets $000s Australia 40,279 27,447 $000s Singapore 5,505 97 Accounting Policies Segment revenues and expenses are those directly attributable to the segments. Segment assets and liabilities include all assets used in and all liabilities generated by the segments. Deferred tax assets and liabilities are not allocated to segments. - 49 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 25. CASH FLOW INFORMATION a. Reconciliation of cash flow from operations with profit after income tax 2014 $000s 2013 $000s Profit after income tax 5,400 3,269 Non-cash flows in profit (loss) Amortisation Depreciation Net (profit)/loss on disposal of plant and equipment Write-downs to recoverable amounts Unrealised gain on investments Unrealised foreign exchange movement Deferred tax on revaluation Changes in assets and liabilities (Increase)/decrease in trade and other receivables (Increase)/decrease in inventories (Increase)/decrease in other current assets (Increase)/decrease in investments (Increase)/decrease in intangibles (Increase)/decrease in deferred tax assets Increase/(decrease) in trade and other payables Increase/(decrease) in tax payables Increase/(decrease) in loans Increase/(decrease) in provisions Cash flow from operations b. Borrowing arrangements with banks Total Facilities Cash advance facilities available Amount utilised The major facilities are summarised as follows: 402 365 (9) (104) (2,109) (22) - (1,432) 112 (38) (27) (71) 754 91 (176) 5 (226) 2,915 340 375 29 75 (178) 77 (272) 172 (161) (87) 20 - 152 810 465 - 340 5,426 15,315 (3,537) 11,778 5,000 (3,321) 1,679 Bank overdrafts Bank overdraft facilities are arranged with the general terms and conditions being set and agreed annually. They are due for review on 1 July 2015. Interest rates are variable and subject to adjustment. Cash Advance Facilities $6,315,000 of the facilities expire on 30 June 2016 and $9,000,000 of the facilities expire on 14 September 2019. - 50 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 26. EVENTS AFTER THE BALANCE SHEET DATE The acquisition of Newco CLB Training & Development Pty Limited as trustee for the CLB Unit Trust T/A Spectra Training was finalised on 23 July 2014 (See Note 14). On 1 July 2014, Spectra Training acquired 100% of Print Training Australia Pty Limited (PTA). With the acquisition of Spectra Training, PTA became a wholly owned subsidiary of the group. On 16 August 2014, the group acquired 75% of Language Links International Pty Limited, a college in Perth that offers English Language courses. At an Extraordinary General Meeting held on 1 September 2014, shareholders approved the issue of the 1,500,000 new shares to the vendors of Spectra Training, and also ratified the prior issue of 7,815,341 shares. There were no other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated group, the results of those operations, or the state of affairs of the consolidated group in subsequent financial years. The financial report was authorised on 3 September 2014 by the Board of Directors. 27. RELATED PARTY TRANSACTIONS Directors’ transactions with the Company and the consolidated group Details of directors’ remuneration are set out in the Remuneration Report section of the Directors’ Report. Directors are reimbursed for expenses incurred by them on behalf of the consolidated group. During the year, CSF paid $60,000 to Andre Cerutti and $28,000 to Julio Cerne Chaves, two of the directors of CSF, being the settlement of their outstanding loans to the company. Directors’ and specified executives’ relevant interests in shares Details of directors’ relevant interests in shares are set out in the Directors’ Report. Other related party transactions Transactions between the Company and controlled entities include loans, management fees and interest are eliminated on consolidation. 28. FINANCIAL INSTRUMENTS a. Financial Risk Management The group’s financial instruments consist mainly of deposits with banks, investments, accounts receivable and payable, loans to and from subsidiaries, bills and leases. The main purpose of non-derivative financial instruments is to raise finance for group operations. i. Treasury Risk Management Senior management meet on a regular basis to review currency and interest rate exposure and to evaluate treasury management strategies where relevant, in the context of the most recent economic conditions and forecasts. - 51 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 28. FINANCIAL INSTRUMENTS (continued) ii. Financial Risks The main risks the group is exposed to through its financial instruments are interest rate risk, foreign currency risk, liquidity risk, credit risk and price risk. Interest rate risk The interest rate risk has been managed by the consolidated group by reducing and in most cases eliminating interest bearing debt. Stand by facilities has been set with a combination of fixed and floating rate possibilities. There is no set policy as to the mix of interest rate exposures. Foreign currency risk The consolidated group is exposed to foreign currency risk on its purchase of products and the sale of training and education courses to international students and on the translation of its foreign subsidiaries. The consolidated group had not hedged foreign currency transactions as at 30 June 2014. Senior management continue to evaluate this risk on an ongoing basis. Liquidity risk Liquidity risk is managed by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained, where possible. Credit risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements. In the education business, credit risk is minimised by, generally, collecting tuition fees in advance b. Financial Instruments i. Interest Rate Risk The consolidated group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows: Note Weighted Floating Fixed interest maturing in: Non- average interest rate interest rate 1 year or less 1 to 5 years Interest bearing Total $000s $000s $000s $000s $000s 2014 Financial assets Cash and cash equivalents Trade and other receivables Financial liabilities Trade and other payables Bank bills Lease purchase agreements 9 10 18 19 19 1.02% 7,833 5.67% 10.90% - 7,833 - - - - - 52 - - - - - 1,238 81 1,319 - - - - 2,503 162 2,665 - 7,833 15,023 15,023 18,852 - - 18,852 15,023 22,856 18,852 3,741 243 22,836 ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 28. FINANCIAL INSTRUMENTS (continued) Note Weighted Floating Fixed interest maturing in: Non- average interest rate interest rate 1 year or less 1 to 5 years Interest bearing Total $000s $000s $000s $000s $000s 2013 Financial assets Cash and cash equivalents Trade and other receivables 9 10 Financial liabilities Trade and other 18 payables Bank bills 19 Bank Trade refinance 19 Lease purchase agreements 19 1.13% 4,992 - 4,992 - - - - - 8.62% 4.84% 8.93% - - - - 919 46 4 969 - - - - 2,402 - - 2,402 - 2,417 2,417 6,327 - - - 6,327 4,992 2,417 7,409 6,327 3,321 46 4 9,698 ii. Net fair values of financial assets and liabilities The carrying amounts of financial assets and liabilities approximate their net fair value. iii. Amounts payable in foreign currencies The Australian dollar equivalents of unhedged amounts payable or receivable in foreign currencies calculated at year end exchange rates, are as follows: United States Dollars Amounts payable 2014 $000s 2013 $000s - 189 iv. In addition the group holds investments recognised at fair value of $2,618,000 (2013: $509,000). The basis for fair value is disclosed in Note 1. v. Sensitivity Analysis The following table illustrates sensitivity analysis to the group’s exposure to changes in interest rates. The table indicates the estimated impact on how profit and equity values reported at the end of the reporting period would have been affected by changes in the interest rate that management considers reasonably possible. 2014 +/- 2% in interest rates Profit Equity $ 72 $ 72 - 53 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 29. NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS Management have considered all standards and interpretations issued but not yet effective and do not believe that any will have a material impact on the financial report. No new standards and interpretations have been adopted early. 30. PARENT INFORMATION The following information has been extracted from the books of the parent and has been prepared in accordance with Australian Accounting Standards STATEMENT OF FINANCIAL POSITION 2014 $000s 2013 $000s Assets Current assets Non-current assets Total Assets Liabilities Current Liabilities Non-current liabilities Total Liabilities Equity Share capital Retained earnings Total Equity STATEMENT OF COMPREHENSIVE INCOME Total profit Total comprehensive income 21,309 4,431 25,740 170 748 918 32,534 (7,713) 24,821 4,874 4,874 6,101 5,173 11,274 486 745 1,231 18,372 (8,329) 10,043 1,669 1,669 - 54 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 31. COMPANY DETAILS The registered office of Academies Australasia Group Limited is: Level 6 505 George Street Sydney NSW 2000 The principal places of business as at 3 September 2014 are: NEW SOUTH WALES VICTORIA Academies Australasia Institute Academy of English Australian College of Technology Australian International High School Clarendon Business College Supreme Business College Level 6, 505 George Street Sydney, NSW 2000 Benchmark College 140 Henry Street, Penrith, NSW 2750 College of Sports & Fitness 12 Wentworth Avenue, Darlinghurst, NSW 2010 RuralBiz Training 46 Wingewarra Street, Dubbo, NSW 2830 Academies Australasia Polytechnic Level 7, 628 Bourke Street Melbourne,VIC 3000 Discover English 378 Bourke Street, Melbourne, VIC 3000 Spectra Training 100 Dorcas Street, Melbourne, VIC 3205 Vostro Institute 82-96 Hampstead Road, Maidstone, VIC 3012 SOUTH AUSTRALIA Print Training Australia Unit 17, 169 Unley Road, Unley, SA 5061 QUEENSLAND Brisbane School of Hairdressing Brisbane School of Beauty Queen Adelaide Building 90-112 Queen Street Mall Brisbane, QLD 4000 Gold Coast School of Hairdressing Shop G105, Australia Fair Shopping Centre Southport, QLD 4215 WESTERN AUSTRALIA Language Links 90 Beaufort Street, Perth, WA 6000 SINGAPORE Academies Australasia College 51 Middle Road, Singapore 188959 *** - 55 - ACADEMIES AUSTRALASIA GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS’ DECLARATION The directors of the Company declare that: 1. the financial statements and notes, set out on pages 20 to 55, are in accordance with the Corporations Act 2001 and : (i) comply with Accounting Standards which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and (ii) give a true and fair view of the financial position as at 30 June 2014 and of the performance for the year ended on that date of the Company and consolidated group. 2. The Chief Executive Officer and Chief Financial Officer have each declared that: (i) the financial records of the company and the consolidated group for the financial year have been properly maintained in accordance with s 286 of the Corporations Act 2001; (ii) the financial statements and notes for the financial year comply with Accounting Standards; and (iii) the financial statements and notes for the financial year give a true and fair view, and 3. In the directors’ opinion, 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 Company and wholly owned subsidiaries identified in Note 14 but excluding those in Note 23, have entered into a deed of cross guarantee under which the Company and its subsidiaries guarantee the debts of each other. At the date of this declaration, there are reasonable grounds to believe that the companies which are party to this deed of cross guarantee will be able to meet any obligations or liabilities to which they are, or may become subject to, by virtue of the deed. This declaration is made in accordance with a resolution of the Board of Directors. Dr John Lewis Schlederer Director 3 September 2014 Christopher Elmore Campbell Director - 56 - ACADEMIES AUSTRALASIA GROUP LIMITED AND CONTROLLED ENTITIES ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. SUBSTANTIAL HOLDERS Ordinary Shares The relevant interests of substantial shareholders as at 2 September 2014 were: Shareholder No. of Shares Held % a Mr Chiang Meng Heng b Mr Christopher Elmore Campbell Jilcy Pty Ltd Jilcy Super Fund A/C c Raphael Geminder d Gary Cobbledick Eng Kim Low ACN 166 970 565 Pty Ltd Pie Funds Management Limited 24,941,886 7,416,767 6,912,767 4,979,605 4,933,041 3,779,126 3,409,091 3,203,174 40.19 11.95 11.14 8.02 7.95 6.09 5.49 5.16 a Includes 3,779,126 shares held by Eng Kim Low b Includes 6,912,767 shares held by Jilcy Pty Ltd Jilcy Super Fund A/C and 500,000 shares held by Bankura Pty Ltd Campbell Family Trust A/C c 4,006,396 held BB&M Holdings Pty Limited and 973,209 held by Geminder Holdings Pty Limited 4,006,396 held BB&M Holdings Pty Limited and 926,645 held by Stormont Pty Limited. d VOTING RIGHTS Ordinary Shares At 2 September 2014 there were 418 holders of the ordinary shares of the Company. The voting rights attaching to the ordinary shares, set out in Articles 69 and 70 of the Company’s Articles of Association, are: Article 69 “Subject to these Articles and any rights or restrictions for the time being attached to any class or classes of shares: (a) at meetings of members or classes of members each member entitled to attend and vote may attend and vote in person or by proxy, or attorney and (where the member is a body corporate) by representative; (b) on a show of hands, every Member present has 1 vote; (c) on a poll, every Member present has: (i) 1 vote for each fully paid share; …….” Article 70 “Where more than 1 joint holder votes, the vote of the holder, whose name appears first in the register of members shall be accepted to the exclusion of the others.” - 59 - ACADEMIES AUSTRALASIA GROUP LIMITED AND CONTROLLED ENTITIES ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES 20 LARGEST SHAREHOLDERS AS AT 2 SEPTEMBER 2014 Registered Name No. Shares % 1 Mr Chiang Meng Heng Jilcy Pty Ltd Jilcy Super Fund A/C 2 BB&M Holdings Pty Limited 3 Eng Kim Low 4 ACN 166 970 565 Pty Ltd 5 Citicorp Nominees Pty Limited 6 National Nominees Limited 7 Catholic Church Insurance Limited 8 Vasek Fasteners Pty Ltd Premier Screw Super A/C 9 J&B Schlederer Pty Ltd J&B Schlederer super A/C 10 Geminder Holdings Pty Limited 11 12 Stormont Pty Limited 13 Mrs Gail Leslie Storey 14 15 Ms Anthea Judith Drescher Frank Kwong-Shing Wong 16 JP Morgan Nominees Australia Limited 17 18 Daniel Hing Yuen Wong Jehovah Jireh Family A/C 19 Moat Investment Pty ltd < Moat Investment A/C 20 Equitas Nominees Pty limited < 3021524 A/C Bankura Pty Ltd Campbell Family Trust A/C 21,162,760 34.10 6,912,767 11.41 6.46 4,006,396 6.09 3,779,126 5.49 3,409,091 5.17 3,209,566 4.68 2,902,743 2.59 1,607,860 2.50 1,553,529 1.59 987,140 1.57 973,209 1.49 926,645 1.02 634,335 0.77 476,000 0.71 439,922 0.61 380,000 0.58 359,806 0.55 340,000 0.48 300,000 0.42 259,750 54,620,645 88.01 HOLDING RANGE (SHAREHOLDERS) AS AT 2 SEPTEMBER 2014 Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 + No. Holders 70 146 65 100 37 418 Total No. Shares 49,854 427,437 503,545 3,729,237 57,353,411 62,063,484 % 0.08 0.69 0.81 6.01 92.41 100.00 UNMARKETABLE PARCELS AS AT 2 SEPTEMBER 2014 Minimum $500.00 parcel at $1.375 per unit 360 14 2,303 Minimum Parcel Size No. Holders Units * * * - 60 - OFFICES AND OFFICERS DIRECTORS Dr John Lewis Schlederer Chairman (Independent & Non- Executive) Christopher Elmore Campbell Group Managing Director Chiang Meng Heng Director (Non-Executive) Gabriela Del Carmen Rodriguez Naranjo Director (Executive) COMPANY SECRETARY Stephanie Ann Noble REGISTERED OFFICE Academies Australasia Group Limited Level 6 505 George Street Sydney NSW 2000 Telephone: (02) 9224 5555 (02) 9224 5550 Facsimile: Web Site: www.academies.edu.au SHARE REGISTRAR Computershare Investor Services Pty Limited Level 3 60 Carrington Street Sydney NSW 2000 Telephone: (02) 8234 5000 Toll Free (Australia only) 1300 850 505 Facsimile: (02) 8234 5050 SECURITIES EXCHANGE The Company is listed on the Australian Securities Exchange. The Home Exchange is Sydney. ASX Code: AKG - 61 - 

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