Asanko Gold Inc.
Annual Report 2022

Plain-text annual report

ACADEMIES AUSTRALASIA GROUP LIMITED ANNUAL REPORT 2022 ACN 000 003 725 ACADEMIES AUSTRALASIA GROUP LIMITED ANNUAL REPORT 2022 CONTENTS Page Report of the Chairman and the Group Managing Director and CEO Directors’ Report Information on the Directors and Company Secretaries Information on Senior Company Executives Remuneration Report - Audited Corporate Governance Statement Auditor’s Independence Declaration Consolidated Financial Statements Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes Directors’ Declaration Independent Auditor’s Report Additional Information for a Company listed on the ASX Corporate Information Glossary - 1 - 2 3 6 8 8 10 11 12 13 14 15 16 47 48 53 55 56 REPORT OF THE CHAIRMAN AND THE GROUP MANAGING DIRECTOR AND CEO Dear Shareholder FY22 was the second year that we were adversely affected by the COVID-19 pandemic. There was a substantial fall of $6.58 million or 15% in revenue from services from $42.62 to $36.04 million. This was mainly because the Australian border was closed, and people movement was severely restricted. Notwithstanding a fall of that size, after subtracting subsidies for JobKeeper/JobSaver and rental rebates, our EBITDA for FY22 was $3.97 million - which is $512,000 or 15% better than the EBITDA achieved in FY21.The after-tax loss for FY22 was $1.31 million – or $249,000 more than the loss in the previous year. Last year we mentioned the frustration of being hit by a pandemic that came out of left field, there being not very much that we could do about it, and that our fate was in the hands of politicians and bureaucrats whose jobs were safe and who had less to worry about trying to make ends meet. There is a real need to be better organised and more efficient. Most of our business is with international students. While the border was shut, we worked hard to maintain contact with education agents and potential students. But now there is an inordinate wait for student visas to be processed. If visa processing time frames were closer to pre-COVID-19 levels during the last quarter of FY22, we would have substantially better results for FY22. We look forward to the new Federal Government being more efficient in this area. We remember that international education used to be a $40 billion business. Substantial value to Australia. We continue to be debt-free. We began FY23 with $16.0 million in cash, a 29% increase from the cash we had at the end of June 2021. This puts us in a good position for growth and to pursue new opportunities. At the end of FY22, TEQSA approved AAPoly’s Bachelor of Business (Cyber Security) degree which will be offered in Melbourne and Sydney soon. Presently applications for two other Bachelor degrees and one Master degree that have been submitted for approval. We are also working on another Bachelor degree. The border closures adversely affected the take-up of the 30 Destination Australia scholarships for international students, that we were granted by the Federal Government. We were only able to award 24 (80%) scholarships. More than half the students have graduated while others will graduate next year. It was disappointing that the Federal Government did not agree to our request to extend the deadline for students to apply for the remaining 6 scholarships. On behalf of the Board, we would like to convey our sincere appreciation to all shareholders, students, clients, partners, associates and other stakeholders for their loyalty, contribution, and support during another very difficult year. Thank you. Dr John Lewis Schlederer Chairman 30 August 2022 Christopher Elmore Campbell Group Managing Director and CEO - 2 - DIRECTORS’ REPORT Your Directors present their report on the Group for FY22. DIRECTORS The names of Directors in office at any time during, or since the end of, the financial year are: Dr John Lewis Schlederer Christopher Elmore Campbell Chiang Meng Heng Gabriela Del Carmen Rodriguez Naranjo Sartaj Hans All Directors have been in office from the start of the financial year to the date of this report. Details on the Directors and Company Secretaries are set out on pages 6 and 7. PRINCIPAL ACTIVITY The principal activity of the Group during the financial year was the provision of training and education services. CONSOLIDATED RESULT The consolidated loss before tax for the Group for FY22 was $1,782,000 (FY21: $164,000). The consolidated loss for the Group, after providing for income tax, amounted to $1,309,000 (FY21: $1,060,000). REVIEW OF OPERATIONS Revenue from services decreased by 15 % to $36,042,000 (FY21: $42,624,000). EBITDA after adjustments for Jobkeeper/Jobsaver and rental rebates: EBITDA JobKeeper/JobSaver and rental rebates EBITDA after adjustments FY22 $000s FY21 $000s 5,765 (1,791) 3,974 9,106 (5,644) 3,462 After adjusting for other income in the form of JobKeeper/JobSaver and rental rebates, the Group performed better than in the previous year. There was an improvement of $512,000 (15%) achieved mainly from the streamlining of operations which reduced personnel and premises costs. [Note: ‘EBITDA’ is not a term prescribed by the Australian Accounting Standards (‘AAS’).] - 3 - DIVIDENDS There were no dividends paid or declared during the year. SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the Company’s state of affairs during the financial year. RELOCATION OF PREMISES In FY22 the Company continued consolidating certain operations to reduce costs, including rent. Operations from the Sydney campus located at 333 Kent Street were relocated to existing premises at Level 6, 505 George Street as the building in Kent Street is going through major lengthy renovations. The Company has taken a 10- year lease of 3,300 sqm at 4-10 Goulburn Street, Sydney. COVID-19 PANDEMIC We have worked hard to seek international students from offshore following the opening of Australia’s international border and have been successful. But there has been a major logjam at the visa processing operations at the Department of Home Affairs (‘DHA’). Apparently, DHA has been hit by a large backlog of applications for student visas, substantial new applications, staff shortages at overseas posts because of COVID- 19, and the impact of a $900 million cut by the previous government in the budget handed down before the May elections. The sharp slowdown in visa processing has more than just the international education sector screaming. Other frustrated sectors include hospitality, waiting for tourists, and businesses waiting for skills visa processing to be issued for staff they need. The new Federal government made this a priority item that was addressed at the first National Cabinet meeting, chaired by the Prime Minister. Visa approvals are improving but still seem far from pre-COVID-19 levels. We are nevertheless confident about the future as the interest to study in Australia is there. Domestic training programs continue to be badly affected by COVID-19 – affected by the overall slowdown in business and the fear of infection. Unless the pandemic deteriorates, we are confident that the domestic business will improve too. DEGREE PROGRAMS Academies Australasia Polytechnic (‘AAPoly’) has been approved by TEQSA to offer the Bachelor of Business (Cyber Security). Cyber Security is a growing area of concern as a cyber-attack can very quickly break a business. It is not just an IT, Compliance or Finance department’s responsibility. It is an all-staff, whole-of- business responsibility. That is why our Cyber Security offering is within a Bachelor of Business degree. Our Bachelor of Business (Cyber Security) degree which addresses Governance, Risk and Compliance, is Australia’s first Bachelor degree in Cyber Security with a business focus. AAPoly has submitted applications for three other degrees to TEQSA. - 4 - ACQUISTION OF REMAINING INTEREST IN KREATE PTY LIMITED T/A RURALBIZ TRAINING (RBT) On 27 September 2021, AKG4 Investment Holdings Pty Limited acquired the remaining 25% of RBT for a consideration of $328,000. The Group now owns 100%. EVENTS AFTER THE REPORTING DATE Other than the securing of premises from 1 July 2022 at Goulburn Street in Sydney, there were no matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES Please refer to the Report of the Chairman and the Group Managing Director and CEO (Page 2). ENVIRONMENTAL ISSUES The Group’s operations are not subject to any significant environmental legislation. INDEMNIFICATION AND INSURANCE OF OFFICERS The Company’s constitution 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 paid an insurance premium amounting to $51,000 for a directors and officers liability insurance policy covering the directors’ and officers’ liabilities as officers of the Company. OPTIONS There are no other options over unissued share capital. ROUNDING OF AMOUNTS The Director’s report is presented in Australian Dollars and rounded to the nearest thousand dollars in accordance with Instrument 2016/191. - 5 - INFORMATION ON DIRECTORS AND COMPANY SECRETARIES Dr John Lewis Schlederer Qualifications Experience Interest in Shares Special Responsibilities Directorships held in other listed entities Non-executive Director, appointed 21 August 2009. Chairman since 1 January 2014. B.Sc. (Hons), Grad. Diploma, PhD. More than 22 years teaching experience at University of New South Wales and TAFE NSW and many years in business. 14,013,587 shares (10.98 %) Chairman of the Board. Chairman of the Remuneration Committee. Member of the Audit and Risk Committee. None Christopher Elmore Campbell Group Managing Director and Chief Executive Officer, appointed 1 Qualifications Experience Interest in Shares Special Responsibilities Directorships held in other listed entities Chiang Meng Heng Qualifications Experience Interest in Shares Special Responsibilities Directorships held in other listed entities July 1996. B.Soc.Sci. (Hons), FFin, FAICD, FCG (CS, CGP), FGIA. Experience in mergers and acquisitions and more than 21 years’ experience in managing educational institutions. Previous positions include senior appointments with the Monetary Authority of Singapore and an international bank in Australia. Member of the Advisory Council of Asia Society Australia (‘ASA’) since November 2020 after 8 years on the Board of ASA. 20,000,000 shares (15.67 %) Member of the Remuneration Committee. None. Non-executive Director, appointed 15 February 2000. BBA (Hons). Previous positions include Treasurer, Citibank NA, Singapore and Hong Kong; Adviser & Head, Banking Supervision, Monetary Authority of Singapore; EVP, Overseas Union Bank Ltd including secondments as Executive Director, International Bank of Singapore Ltd and President, Asia Commercial Bank Ltd; Managing Director, First Capital Corporation Ltd; Executive Director, Far East Organization and Group Managing Director, Lim Kah Ngam Ltd. Member of Singapore Parliament for 4 terms from 1985 to 2001. 51,185,961 shares (40.11%) Member of the Audit and Risk Committee and Remuneration Committee. None. - 6 - Gabriela Del Carmen Rodriguez Naranjo Qualifications Experience Interest in Shares Special Responsibilities Directorships held in other listed entities Sartaj Hans Qualifications Experience Interest in Shares Special Responsibilities Directorships held in other listed entities COMPANY SECRETARIES Directorships Deputy Group Managing Director and Group Chief Operating Officer. Appointed Executive Director, 21 October 2013. Alternate Director, 10 May 2011 to 31 December 2013, (Alternate to Neville Thomas Cleary (Retired 31 December 2013)). Appointed Chief Operating Officer on 15 August 2017 and Deputy Group Managing Director on 1 January 2019. B. Comp.Sci, B.Sci. Sys. Eng. Joined the Group in April 2001. More than 21 years’ experience managing in curriculum acquisitions, marketing, development and lecturing. Director, IHEA from 17 May 2017. Deputy Chairman of IHEA since 29 May 2019. 100,000 shares (0.08 %) Group Chief Operating Officer from 15 August 2017. Joint Company Secretary from 14 September 2016. None compliance, institutions, educational experience regulatory including Independent, Non-executive Director, appointed 19 October 2016. B.E. Honours (Electronics) Experience in information technology and superannuation at BT Financial Group, the wealth management arm of Westpac. Played a pivotal role in the development of Goulburn Health Hub, a medical facilities project in Goulburn. Many years experience in managing investments and financial affairs in private family companies. 813,929 shares (0.64%) Chairman of the Audit and Risk Committee (Appointed 19 October 2016). None Stephanie Noble Qualifications Experience Other Responsibilities Appointed 27 November 2006 BA (Hons) Accounting, FCCA (UK), CPA (Australia). More than 15 years as Company Secretary of Academies Australasia Group Limited. Group Finance Manager. Gabriela Del Carmen Rodriguez Naranjo Appointed 14 September 2016 See Information on Directors. - 7 - MEETINGS OF DIRECTORS Director Dr John Lewis Schlederer Christopher Elmore Campbell Chiang Meng Heng Gabriela Del Carmen Rodriguez Naranjo Sartaj Hans Directors’ Meetings Audit and Risk Committee Remuneration Committee A 3 3 3 3 3 B 3 3 3 3 3 A 2 2 2 2 2 B 2 2 2 2 2 A 2 2 2 - - B 2 2 2 - - A - Number of meetings held during the time the Director held office during the period B - Number of meetings attended INFORMATION ON SENIOR COMPANY EXECUTIVES Christopher Elmore Campbell Group Managing Director and Chief Executive Officer. See Information on Directors. Gabriela Del Carmen Rodriguez Naranjo Deputy Group Managing Director and Group Chief Operating Officer. See Information on Directors. REMUNERATION REPORT – AUDITED Remuneration Policies The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to the Group Managing Director and Chief Executive Officer, Senior Company Executives and the 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 set to attract appropriately qualified and experienced directors and senior company executives. During the year, the members of the Remuneration Committee were Dr John Lewis Schlederer, Chiang Meng Heng and Christopher Elmore Campbell. All executives receive a fixed base salary, which is based on factors such as market factors and experience, and superannuation (as required by law). Executives may sacrifice part of their salary towards superannuation. The Company does not have an employee share option plan. All remuneration paid to Directors and Executives is valued at the cost to the Company and expensed. Non-executive Directors’ remuneration comprises fixed fees. 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 Group. - 8 - Directors and Senior Company Executives Details of the Directors and Senior Company Executives holding office at any time during the financial year are set out on pages 6 to 7. a. Remuneration 30 June 2022 Directors and Senior Company Executives Short-term employee benefits Bonus Cash, salary and commissions Non- monetary benefits Post- employment benefits Superannuation Total Dr John Lewis Schlederer Christopher Elmore Campbell Chiang Meng Heng Gabriela Del Carmen Rodriguez Naranjo Sartaj Hans $000s $000s $000s $000s $000s 41 512 40 302 50 945 - - - - - - - - - - - - 28 28 4 28 5 93 69 540 44 330 55 1,038 30 June 2021 Directors and Senior Company Executives Short-term employee benefits Bonus Cash, salary and commissions Non- monetary benefits Post- employment benefits Superannuation Total Dr John Lewis Schlederer Christopher Elmore Campbell Chiang Meng Heng Gabriela Del Carmen Rodriguez Naranjo Sartaj Hans $000s $000s $000s $000s $000s 43 470 40 304 50 907 - - - - - - - - - - - - 25 25 4 25 5 84 68 495 44 329 55 991 None of the remuneration paid to any Director or Senior Company Executive is tied to any specific performance condition. b. Options issued as part of remuneration for the year ended 30 June 2022 The Group has no employee share plan. No options were granted as part of remuneration. c. Employment contracts of Executives The employment conditions of all executives are formalised in written contracts of employment. Generally, the employment contracts stipulate a one-month notice 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. With respect to senior company executives, the expiry date of Christopher Elmore Campbell’s fixed term contract of employment has been extended to 31 December 2023. Gabriela Del Carmen Rodriguez Naranjo’s fixed term contract expires on 31 December 2024. - 9 - AUDITORS’ INDEPENDENCE DECLARATION The Auditor’s Independence Declaration for FY22 appears on page 11. It forms part of the Directors’ Report for the year ended FY22. 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 by the external auditors, Pilot Partners, 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 auditors’ 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 2022: • Taxation services • Other services $66,000 $10,000 (2021: $73,000) (2021: $16,000) CORPORATE GOVERNANCE STATEMENT The Company’s Corporate Governance Statement and its Key to Disclosures, Corporate Governance Council Principles and Recommendations (ASX Appendix 4G) are provided to ASX together with the Company’s Annual Report. The Corporate Governance Statement is on the Company’s website: www.academies.edu.au Signed in accordance with a resolution of the Board of Directors pursuant to section 298 (2)(a) of the Corporations Act 2001. Dr John Lewis Schlederer Director 30 August 2022 Christopher Elmore Campbell Director - 10 - oilot' PILOT PARTNERS Chartered Accountants Level 10, Waterfront Place 1 Eagle St. Brisbane 4000 PO Box 7095 Brisbane 4001 Queensland Australia P+61 7 3023 1300 F+61 7 3229 1227 pilotpartners.com. au AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 ACADEMIES AUSTRALASIA GROUP LIMITED I declare that to the best of my knowledge and belief, during the year ended 30 June 2022, there have been: no contraventions of the auditor's independence requirements as set out in the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. ^ PILOT PARTNERS Chartered Accountants DANIEL GILL Partner Signed on 30 August 2022 Level 10 1 Eagle Street Brisbane Qld 4000 A member of Nexia ABN 50 063 687 769 ! Pilot is a registered trade mark licensed to Pilot Partners I Liability Limited by a scheme approved under Professional Standards Legislation Nexia International is a worldwide network of independent accounting and consulting firms. -11- ACADEMIES AUSTRALASIA GROUP LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2022 Note e 2 3 3 3 3 3 2 3 3 4 7 7 8 Revenue from services Student acquisition and teaching costs Gross profit Personnel expenses Premises expenses Other administration expenses Restructure and non-recurring costs Other income Earnings before interest, depreciation and amortisation Depreciation and amortisation expenses Profit / (loss) on disposal of assets Finance costs Interest income Loss before income tax Income tax expense Loss for the year Other comprehensive income: Exchange differences on translating foreign controlled entities Other comprehensive income for the year, net of tax Total comprehensive income for the year (Loss) / 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. - 12 - FY22 $000s 36,042 (15,280) 20,762 (11,704) (2,944) (2,060) 4,054 (80) 3,974 1,791 FY21 $000s 42,624 (19,448) 23,176 (13,498) (3,327) (2,349) 4,002 (540) 3,462 5,644 5,765 9,106 (6,113) 52 (1,493) 7 (1,782) 473 (7,186) (364) (1,761) 41 (164) (896) (1,309) (1,060) (9) (9) (1,318) (1,302) (7) (1,309) (1,311) (7) (1,318) (1.02) (1.02) - (1) (1) (1,061) (1,241) 181 (1,060) (1,242) 181 (1,061) (0.97) (0.97) 1.865 ACADEMIES AUSTRALASIA GROUP LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2022 Note FY22 FY21 $000s $000s Current Assets Cash and cash equivalents Trade and other receivables Other current assets Total Current Assets Non-Current Assets Plant and equipment Right of use assets Deferred tax assets Intangible assets Total Non-Current Assets Total Assets Current Liabilities Tuition fees in advance (Deferred income) Trade and other payables Current tax liabilities Lease liabilities Provisions Total Current Liabilities Non-Current Liabilities Lease liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Share capital Retained earnings Foreign currency translation reserve Non-controlling interests Total Equity The accompanying notes form part of these financial statements. 9 10 11 13 14 15 16 17 17 4 18 19 18 19 20 - 13 - 15,956 2,005 3,272 21,233 3,743 21,514 5,726 32,855 63,838 85,071 19,398 3,500 597 4,454 3,400 31,349 25,377 341 25,718 57,067 28,004 12,371 2,373 2,000 16,744 4,337 28,584 4,520 32,844 70,285 87,029 12,919 3,971 - 5,584 3,317 25,791 31,149 371 31,520 57,311 29,718 42,066 (14,534) 60 412 42,066 (13,003) 69 586 28,004 29,718 ACADEMIES AUSTRALASIA GROUP LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2022 Ordinary Shares Retained Earnings Reserves Non - Controlling Interests Total $000s $000s $000s $000s $000s Balance at 1 July 2021 Loss for the period Exchange differences on translating foreign operations Total comprehensive income for the year Acquistion of remaining 25% of RBT (Note 12) Dividend paid Balance at 30 June 2022 42,066 (13,003) - - - - - (1,302) - (1,302) (229) - 42,066 (14,534) Balance at 1 July 2020 (Loss) / profit for the period Exchange differences on translating foreign operations Total comprehensive income for the year Dividend paid Balance at 30 June 2021 42,066 - - - - (9,382) (1,241) - (1,241) (2,380) 42,066 (13,003) 69 - (9) (9) - - 60 70 - (1) (1) - 69 586 (7) - (7) (99) (68) 412 589 181 - 181 (184) 586 29,718 (1,309) (9) (1,318) (328) (68) 28,004 33,343 (1,060) (1) (1,061) (2,564) 29,718 The accompanying notes form part of these financial statements. - 14 - ACADEMIES AUSTRALASIA GROUP LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2022 Note FY22 $000s FY21 $000s 23a Cash Flows from Operating Activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Income taxes paid Net cash provided by (used in) operating activities Cash Flows from Investing Activities Make good payments Acquisition of remaining 25% of RBT Purchase of intangible assets Purchase of plant & equipment Net cash provided by (used in) investing activities Cash Flows from Financing Activities Dividends paid Lease payments Net cash provided by (used in) financing activities Net increase in cash held Net cash at the beginning of the financial year Net cash at the end of the financial year 9 43,187 (32,521) 7 (1,474) 124 9,323 (28) (328) (237) (327) (920) (68) (4,750) (4,818) 3,585 12,371 15,956 45,230 (39,757) 41 (1,743) 24 3,795 (82) - (239) (112) (433) (2,564) (5,331) (7,895) (4,533) 16,904 12,371 The accompanying notes form part of these financial statements. - 15 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES This 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 (AASB) and the Corporations Act 2001. The financial report includes the consolidated financial statements of Academies Australasia Group Limited and controlled entities (the Group). Details of the parent entity can be found in Note 27. 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 which 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. The financial statements were authorised for adoption on 30 August 2022. New, revised or amending Accounting Standards and Interpretations The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the AASB that are mandatory for the current reporting period. Bases of preparation The financial report has been prepared on the accruals basis and is based on historical costs, modified by the revaluation of certain 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 Instrument 2016/191. 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 its 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 12. 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. - 16 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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. Business combinations b. 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 is 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. Cash and cash equivalents c. 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. Trade and other receivables (including contract assets) d. Trade and other receivables include amounts due from customers for services performed 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 information on the determination of impairment losses. - 17 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial instruments e. Recognition and Initial Measurement All financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price. Financial Assets – Classification and subsequent measurement On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: – it is held within a business model whose objective is to hold assets to collect contractual cash flows; and – its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by- investment basis. All financial assets not classified as measured at amortised cost or FVOCI are measured at FVTPL. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL. Financial liabilities – Classification, subsequent measurement and gains and losses Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. - 18 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Derecognition The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value. On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the amount of the consideration received and receivable is recognised in profit and loss. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss. Fair value Fair value is the price the Group would receive to sell an asset in an orderly transaction between independent, knowledgeable and willing parties at measurement date. There are no financial assets or liabilities carried at 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 15 Revenue from Contracts with Customers. Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 15. 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. - 19 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Right of use assets and lease liabilities f. The Group’s lease portfolio includes property and equipment. The Group has adopted AASB 16 Leases using the full retrospective restatement approach from 1 July 2019, recognising right of use assets (ROUA) and an equivalent lease liability at the commencement of the lease. The ROUA is initially measured at cost less any lease incentives and the lease liability is measured as the present value of the remaining future lease payments discounted at the Group’s incremental borrowing rate at the date of initial application. A depreciation charge against the leased ROUA replaces the straight line expense payment and an interest expense is recognised against the lease liability. Lease payments are no longer recognised as operating cash flows, but as financing cash flows in the Statement of Cash Flows. AASB 16 eliminates the distinction between operating and finance leases and brings all leases except short term and low value onto the Statement of Financial Position. The Group recognises a ROUA, representing its right to use the underlying assets and a corresponding lease liability representing its obligation to make future lease payments. The Group recognises a ROUA and lease liability at the commencement date of the lease. ROUA are initially measured at cost (present value of the lease liability) and subsequently at cost less any accumulated depreciation, impairment losses and adjustments for re-measurement of the lease liability. The ROUA are depreciated using the straight line method from the commencement date to the end of the lease term. Short term leases (with a term of less than 12 months) and leases of low value assets are not recognised as ROUA and corresponding lease liability. Lease payments on these assets are expensed to the profit and loss account as incurred. The lease liabilities are initially measured as the present value of future lease payments expected to be paid over the lease term, discounted using the Group’s incremental borrowing rate. The lease liability is re-measured if the future estimated lease payments change as a result of rate changes or the likelihood of exercise of extension. The lease liabilities are subsequently increased by the interest cost on the lease liability and decreased by the lease payments. Make good liability A liability is recognised for the present value of expected costs for future restoration of the leased premises. The liability considers the costs associated with the removal of fittings, fit-out, furniture, signage, and other structures, as well as the cost of restoration of the premises to its original condition by reconditioning or repainting the walls, replacing, or cleaning the surfaces including carpets, tiles, vinyl, wallpaper and so on. The calculation of the make good liability involves assumptions such as lease end dates and cost of make good. The liability recognised for each lease is reviewed at the end of report date and the liability amount is updated based on the information available at the time. Changes to the estimated future make good obligation for leases are recognised in the financial statements by adjusting the lease liabilities account. The make good liability will be carried forward after the lease end date until the make good obligations are fully discharged. The initial estimate of the future make good liability is recognised as part of lease liabilities and the right-of-use assets. The right-of-use asset component is depreciated across the lease term on a straight-line basis. The interest on the make good liability is recognised as part of finance costs. - 20 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Leasehold improvements and plant and equipment g. 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. Depreciation h. 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 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 10 – 22.5% 5 – 67% 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. Goodwill i. 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. - 21 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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. 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. Intangible assets j. 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. The period of amortisation is up to 5 years. Impairment of assets k. 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. - 22 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Collectibility of trade and other receivables and contract assets are reviewed on an ongoing basis. Debts are written off when they are known to be uncollectible. An allowance for expected credit losses 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. The Group also applies the AASB 9 simplified model of recognising lifetime expected credit losses for receivables as these items do not have a significant financing component. An expected credit loss allowance is recognised for the total expected loss from possible default events that may arise over the expected life of the financial asset. Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial instrument. A credit loss is the difference between all contractual cash flows that are due and all cash flows expected to be received, all discounted at the original effective interest rate of the financial instrument. Recognition of expected credit losses in financial statements At each reporting date, the Group recognises the movement in the loss allowance as an impairment gain or loss in the statement of profit or loss and other comprehensive income. The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that asset. The Group has applied the expected credit loss model based on lifetime expected loss allowance for contract assets. Trade and other payables l. 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. Provisions and employee benefits m. 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. 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. Issued capital n. 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. - 23 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue o. Revenue is recognised over the period of tuition, upon completion of specific performance obligations of each of the contracts. No revenue is recognised prior to a student commencing the tuition phase of delivery. As all student contracts are for the provision of tuition, income for tuition is recognised as training is provided. Payment terms vary from contract to contract but in most cases, cash is received prior to the performance obligation being delivered. International students in particular are required to pay some level of tuition in advance. Monies received in advance are held as unearned income and recognised as revenue as the performance obligations are satisfied. Generally, the Group’s obligations in respect of refunds cease after the course commences. Revenue derived from the provision of education services is measured at the fair value of consideration received or receivable to the extent that economic benefits will flow to the Group and the revenue can be reliably measured. 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). p. 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 Taxation 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. Income tax q. 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 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 Taxation 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. - 24 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Foreign currency transactions and balances r. 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. Earnings per share s. Basic earnings per share are calculated as net profit attributable to members of the parent divided by the weighted average number of ordinary shares. t. Comparative figures When required by Accounting Standards, comparative figures have been restated to conform to changes in presentation for the current financial year. u. 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 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 16. No impairment has been recognised in respect of goodwill for the year ended 30 June 2022. - 25 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Key Estimates – Revenue The extent to which performance obligations have been satisfied in respect of revenue is estimated as per the revenue policy (Note 1(o)). Key Estimates- Recoverability of Receivables The extent to which receivables are recoverable is used in estimating any allowance for expected credit losses. Factors considered include: - - - - - the aging profile of receivables; the recognition of a corresponding deferred income liability; the nature of the debtor (e.g. government, business or individual); subsequent recovery of the receivable after date; and prior history. Key Assumptions-COVID-19 Pandemic For assumptions regarding going concern see note 1(w). For key issues that may trigger the impairment of goodwill see Note 16, and for estimates on the recoverability of receivables see above. Other relevant information on the COVID-19 Pandemic is in the Directors’ Report. v. 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; and for which discrete financial information is available. - The Company has only one operating segment: Education. w. Going Concern These financial statements have been prepared adopting the going concern assumption, which contemplates the orderly realisation of assets and payment of liabilities in the ordinary course of business. The appropriateness of this assumption is dependent upon: - - - - the continued support of the Group’s bankers; the continued support of shareholders in the event of a capital raising; the ability of the Group to return to profitable trading; the orderly realisation of selected assets in the ordinary course of business at values at least equal to their book values. - 26 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) The financial statements show that: - The Group had a net loss of $1,309,000 (2021 $1,060,000) for the year ended 30 June 2022, largely attributable to the impact of COVID-19. The Board is currently satisfied that there are reasonable grounds to assume that the Company will meet its future financial obligations as and when they fall due. The following factors support this assumption: - - Positive cash flow from operations for the year of $9,323,000. Substantial cash holdings across the Group of $15,956,000 of which $13,322,000 is required to be held in the TPS controlled accounts. Positive net assets of $28,004,000. The Group has no bank debt. Significant efforts made to rationalise the cost structures of the business. - - - The Board recognises that the Statement of Financial Position shows that the current liabilities exceed current assets by $10,116,000. Included in the current liabilities are fees paid in advance of $19,398,000. This is not an amount payable in the ordinary course of business and will be recognised as income as tuition is delivered. - 27 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 2. REVENUE Operating activities Revenue from services Non-operating activities JobKeeper/JobSaver Rental rebates 3. PROFIT FOR THE YEAR Student acquisition and teaching costs - Teaching costs - Acquisition costs - Teaching materials Personnel expenses - Wages and salaries - JobKeeper top up payments - Superannuation - Payroll tax - Other Premises expenses - Rental - Outgoings - Electricity - Cleaning - Other Other administration expenses - Other administration expenses - Bad and doubtful debts Restructure and non-recurring costs - Costs of personnel now retrenched, including redundancies - Premises expenses - outgoings backdated/relocation Depreciation and Amortisation expenses - Depreciation plant and equipment - Amortisation of intangible assets - Depreciation of right of use assets - Depreciation of make good Finance costs - Interest and bank facility fees - Interest recognised on lease liability - Interest recognised on make good - 28 - FY22 $000s FY21 $000s 36,042 42,624 805 986 1,791 5,421 223 5,644 9,326 5,037 917 15,280 9,823 - 862 564 455 11,704 1,012 1,134 195 295 308 2,944 2,001 59 2,060 - 80 80 259 772 5,048 34 6,113 160 1,314 19 1,493 11,794 6,459 1,195 19,448 10,788 769 950 643 348 13,498 1,152 1,129 254 446 346 3,327 2,306 43 2,349 488 52 540 350 702 6,091 43 7,186 138 1,605 18 1,761 ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 4. INCOME TAX EXPENSE a. The components of tax expense comprise: Current tax Deferred tax $000s $000s (733) 1,206 473 (271) (625) (896) b. The prima facie tax on loss from ordinary activities before tax is reconciled to income tax as follows: Tax payable on loss from ordinary activities before tax at 25% (2021:26%) (446) (43) Add/(less) tax effect of: i. Impact of change in the tax rate to 25% on the opening deferred balance ii. Permanent differences iii. Assumption of tax balances of controlled entities Income tax expense attributable to the entity - (49) 22 (473) The effective tax rate is 26.5 % (2021: 546 % - arising from tax adjustment at item i. above). c. Current tax payable for the year reconciles as follows: Opening provision Add: Current year provision Add: Prior year Less: Tax paid Closing provision (252) 733 (8) 124 597 844 171 (76) 896 (550) 271 3 24 (252) 5. DIRECTORS AND SENIOR COMPANY EXECUTIVES COMPENSATION a. Details of Directors and Senior Company Executives, including remuneration, have been set out on pages 6 to 9. b. Shareholdings Number of shares in the Company held by Senior Company Executives and parties related to them: Shareholdings: Executive Directors and Senior Company Executives Balance 1 July 2021 Purchased on ASX Balance 30 June 2022 Christopher Elmore Campbell Gabriela Del Carmen Rodriguez Naranjo 19,000,000 1,000,000 20,000,000 100,000 - 100,000 - 29 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 6. AUDITORS’ REMUNERATION Remuneration of the auditors of the parent entity for: - Auditing and reviewing the financial report - Taxation services - 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) FY22 $000s FY21 $000s 296 66 10 372 37 4 10 51 301 73 16 390 38 3 10 51 (1.02) (1.02) (0.97) (0.97) Weighted average number of ordinary shares used in calculation of basic earnings per share 127,614,467 127,614,467 The earnings amount used was a loss of $1,302,000 (2021: $1,241,000), being a loss on ordinary activities after tax attributable to owners of the parent entity. 8. DIVIDENDS PER SHARE Distributions recognised: Year ended 30 June 2022: interim ordinary dividend of 0 cents per share, fully franked (2021: 0.5 cents per share) Year ended 30 June 2021: final ordinary dividend of 0 cents per share, fully franked, paid in 2022 (2021: 1.365 cents per share) Dividends proposed or declared but not recognised in the financial statements: Proposed fully franked ordinary dividend of 0 cents per share (2021: fully franked 0 cents) FY22 $000s FY21 $000s - - - - 638 1,742 2,380 - Balance of franking account at year end adjusted for franking credits arising from payment of income tax 3,187 3,108 - 30 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 9. CASH AND CASH EQUIVALENTS Cash at bank and on hand FY22 FY21 $000s $000s 15,956 12,371 There is no overdraft balance at 30 June 2022 (2021: NIL). The net cash position is $15,956,000 (2021: $12,371,000) Included in the above amounts are tuition fees held in TPS accounts in Australia. As at 30 June 2022, the Group held $13,322,000 (2021: $10,142,000) in TPS accounts. (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 required to maintain, in Australia, separate bank accounts (TPS accounts) for prepaid fees received from international students prior to commencement of their course. Once the students commence their course, the funds may be transferred from the TPS accounts to operating cash reserves. At all times, the Group must ensure that there are sufficient funds in the TPS accounts to repay any prepaid tuition fees to international students who have not yet commenced their course. Fees paid by students who have commenced their course are deposited directly to operating cash reserves. All fees received, whether deposited to TPS or Group cash reserves are initially accounted for as unearned income, being subject to the Group’s revenue recognition policy). 10. TRADE AND OTHER RECEIVABLES CURRENT Trade receivables Less allowance for expected credit losses Contract assets 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 * Over 90 days – not impaired * Past due and impaired FY22 $000s 925 (128) 797 1,142 66 2,005 755 2 40 - 128 925 FY21 $000s 1,003 (69) 934 1,364 75 2,373 893 5 29 7 69 1,003 * 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. - 31 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 10. TRADE AND OTHER RECEIVABLES (continued) b. The Group has an exposure to credit risk in Singapore and Australia given the Group’s operations in those countries. For FY22, an amount of $31,000 is included in trade and other receivables in respect of the business operations in Singapore. All other receivables of the Group are exposures in Australia. c. Allowance for expected credit losses at the start of the year Movement in expected credit losses Allowance for expected credit losses at the end of the year FY22 $000s FY21 $000s 69 59 128 41 28 69 d. The following factors were considered when assessing credit losses, receivables and contract assets: i. A review was performed during the year and credit losses were recognised as impairments ii. Government debtors are assessed as low risk iii. Significant amounts of debtors were recovered after the year end iv. Other than SPT, historical levels of bad debts have been low Allowance for expected credit losses Trade receivables Contract assets Sub-total Colleges at which credit losses have already been written off Lower risk government debtors Sub- total Allowance for credit losses Credit Loss % 11. OTHER CURRENT ASSETS Prepayments Security deposits Current tax assets FY22 $000s 925 1,142 2,067 - (1,332) 735 (128) 17.4% 2,772 500 - 3,272 FY21 $000s 1,003 1,364 2,367 (307) (1,521) 539 (69) 12.9% 1,308 440 252 2,000 - 32 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 12. CONTROLLED ENTITIES Academies Australasia Group Limited (Ultimate Parent Entity) Subsidiaries (controlled directly or indirectly) ACA Investment Holdings Pte. Limited Academies Australasia (Management) Pty Limited Academies Australasia College Pte. Limited Academies Australasia Institute Pty Limited Academies Australasia Polytechnic Pty Limited Academies Australasia Pty Limited Academy of English Pty Limited AKG Investment Holdings Pty Limited AKG2 Investment Holdings Pty Limited AKG3 Investment Holdings Pty Limited AKG4 Investment Holdings Pty Limited AKG5 Investment Holdings Pty Limited AKG6 Investment Holdings Pty Limited AKG7 Investment Holdings Pty Limited AMC Training Pty Limited AMI Education Pty Limited Australian College of Technology Pty Limited Australian Institute of Professional Studies Pty Limited Australian International High School Pty Limited Australian Trades Institute Pty Limited Benchmark Resources Pty Limited T/A Benchmark College Centre for Australian Education Pte. Limited Clarendon Business College Pty Limited Academies Australasia Hair and Beauty T/A Brisbane School of Hairdressing, Gold Coast School of Hairdressing, Brisbane School of Beauty and Brisbane School of Barbering CLB Training & Development Pty Limited as trustee for the CLB Unit Trust T/A Spectra Training Discover English Pty Limited International College of Capoeira Pty Limited T/A College of Sports & Fitness Humanagement Pty Limited T/A Print Training Australia Kreate Pty Limited T/A RuralBiz Training Language Links International Pty Limited Live. Laugh. Learn. Pty Limited Newco CLB Training & Development Pty Limited Skilled Placements Pty Limited Supreme Business College Pty Limited Transformations – Pathways to Competence and Developing Excellence Pty Limited T/A Skills Training Australia Vostro Institute of Training Australia Pty Limited Country of Incorporation Percentage Owned/Controlled FY22 FY21 Singapore Australia Singapore Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Singapore Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 67.54 100 100 67.54 100 100 75 100 100 100 100 100 100 100 75 75 100 100 100 100 100 100 - 33 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 12. CONTROLLED ENTITIES (continued) Acquisition of controlled entities On 27 September 2021, AKG4 Investment Holdings Pty Limited acquired the remaining 25% of RBT for a consideration of $328,000. The Group now owns 100%. Purchase consideration – cash Non-controlling interest acquired – 25% Recognised in retained earnings RBT Fair Value $’000s 25% 328 (99) 229 13. PLANT AND EQUIPMENT FY22 $000s FY21 $000s Plant and equipment At cost Accumulated depreciation Leasehold improvements At cost Accumulated amortisation 4,501 (3,514) 987 7,795 (5,039) 2,756 4,658 (3,482) 1,176 8,134 (4,973) 3,161 Total plant & equipment 3,743 4,337 Year ended 30 June 2022 Balance at the beginning of the year 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 Plant and equipment Leasehold improvements $000s 1,176 100 (31) (259) 1 $000s 3,161 227 (83) (555) 6 Total $000s 4,337 327 (114) (814) 7 987 2,756 3,743 - 34 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 13. PLANT AND EQUIPMENT (continued) Year ended 30 June 2021 Balance at the beginning of the year 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 Plant and equipment Leasehold improvements Total $000s $000s $000s 1,482 109 (64) (350) (1) 1,176 3,975 3 (300) (506) (11) 3,161 5,457 112 (364) (856) (12) 4,337 14. RIGHT OF USE ASSETS FY22 $000s FY21 $000s Right of use assets At cost Accumulated depreciation Make good At cost Accumulated depreciation Total Balance at the beginning of the year Additions Terminated Modifications Depreciation expense Net foreign currency difference arising on translation of financial statements of foreign operations Carrying amount at the end of the year Make good - 35 - 44,114 (22,678) 21,436 49,345 (20,869) 28,476 284 (206) 78 352 (244) 108 21,514 28,584 28,476 420 (1,982) (510) (5,048) 80 21,436 35,602 719 - (1,587) (6,091) (167) 28,476 78 108 ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 15. DEFERRED TAX ASSETS / LIABILITIES FY22 $000s FY21 $000s Deferred Tax Asset 5,726 4,520 The deferred tax asset is made up of the following estimated tax benefits: Temporary differences: - - - deferred tax assets deferred tax liabilities losses 11,290 (5,840) 276 5,726 11,761 (7,389) 148 4,520 Deferred Tax Assets Provisions Unearned income Lease liabilities and make good Other Deferred Tax Liabilities Plant & equipment Right of use assets and make good Prepayments and other Losses Total Opening Balance Restated $000s 927 1,311 9,007 516 11,761 (120) (7,000) (269) (7,389) 148 4,520 Charged To Income $000s 35 1,172 (1,672) (6) (471) 11 1,714 (176) 1,549 128 1,206 Closing Balance $000s 962 2,483 7,335 510 11,290 (109) (5,286) (445) (5,840) 276 5,726 FY22 $000s FY21 $000s Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1(q) occur: Tax (operating) losses 324 337 - 36 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 16. INTANGIBLE ASSETS Goodwill at cost Accumulated impairment losses Net carrying value Course development costs and capitalised licences Accumulated amortisation Net carrying value Other at cost Year ended 30 June 2022 Balance at the beginning of the year Rebranding costs amortisation Course development costs and capitalised licences additions Course development costs and capitalised licences write off Course development costs and capitalised licences amortisation Balance at the end of the year Year ended 30 June 2021 Balance at the beginning of the year Rebranding costs amortisation Course development costs and capitalised licences additions Course development costs and capitalised licences amortisation Balance at the end of the year Goodwill $000s 32,376 - - - - 32,376 32,376 - - - 32,376 - 37 - FY22 $000s FY21 $000s 32,758 (382) 32,376 2,801 (2,325) 476 32,758 (382) 32,376 2,582 (2,120) 462 3 6 32,855 32,844 Course Development Costs and capitalised licences $000s Other Total $000s $000s 462 - 237 (6) (217) 476 417 - 239 (194) 462 6 (3) 32,844 (3) - - - 3 20 (9) - (5) 6 237 (6) (217) 32,855 32,813 (9) 239 (199) 32,844 ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 16. INTANGIBLE ASSETS (continued) Goodwill is assessed by management at the cash generating unit level. The recoverable amount of the cash-generating unit is determined based on a value in use calculation using cash flow projections covering five years. Cash flows beyond the five-year period are estimated using a terminal value calculated under standard valuation principles incorporating a long-term growth rate. The following assumptions were used in the value in use calculations: Revenue Growth Revenue Growth Pre-tax Free Cash Flow – Revenue from Services Pre-tax Free Cash Flow – Revenue from Services per annum Pre-tax Discount Rate Long Term Growth Rate FY23 53.3% FY24-FY27 5.5% FY23 14.2% FY24-FY27 14.2% 12.2% 1.0% An impairment would be triggered if any one of the key assumptions (with all other assumptions held constant) set out below applies over a 5-year period: • Revenue growth rate is 4.4% or lower. • Pre-tax discount rate exceeds 15.9%. • Pre-tax free cash flow – revenue from services per annum FY23-FY27 is 11.4% or lower. • Long term growth rate is minus 0.5% or lower. 17. TRADE AND OTHER PAYABLES CURRENT Unsecured Liabilities Tuition fees in advance (Deferred income) Trade payables Payable to the Australian Taxation Office* Sundry payables and accrued expenses * Fully paid FY22 $000s FY21 $000s 19,398 1,035 289 2,176 22,898 12,919 1,154 337 2,480 16,890 - 38 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 18. LEASE LIABILITIES Balance at beginning of year Additions – new leases Terminated Lease modifications Lease payments Net foreign currency difference arising on translation of financial statements of foreign operations Balance at end of year Make good Total Current Non-current Total Lease liability – undiscounted Less than one year One to five years More than five years Total undiscounted lease liabilities at end of year FY22 $000s 36,281 420 (2,163) (510) (4,750) 97 29,375 FY21 $000s 42,678 719 - (1,587) (5,331) (198) 36,281 456 452 29,831 36,733 4,454 25,377 29,831 5,276 22,180 6,058 33,514 5,584 31,149 36,733 6,667 21,281 13,940 41,888 a. Short-term lease payments expensed to the profit and loss account in the year $1,012,000 (2021: $1,152,000) (Note 3) 19. PROVISIONS CURRENT Employee entitlements NON-CURRENT Employee entitlements - 39 - FY22 $000s FY21 $000s 3,400 3,317 341 371 ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 20. SHARE CAPITAL Issued Share Capital FY22 Share number FY22 FY21 $000s Share number FY21 $000s Ordinary shares fully paid 127,614,467 42,066 127,614,467 42,066 Ordinary share capital Balance at the beginning of the financial year 127,614,467 42,066 127,614,467 42,066 Balance at the end of the financial year 127,614,467 42,066 127,614,467 42,066 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. 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 an acceptable debt to equity ratio, provide the shareholders with adequate returns and ensures 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. Management effectively manages the Group’s capital by assessing 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. 21. CONTINGENT LIABILITIES Corporate Guarantee There is a corporate guarantee between wholly-owned Group companies as security for bank facilities in effect during the year. This guarantee does not include: Academies Australasia College Pte. Limited Academies Australasia Hair and Beauty Pty Limited AKG6 Investment Holdings Pty Limited AMC Training Pty Limited Centre for Australian Education Pte. Limited Humanagement Pty Limited International College of Capoeira Pty Limited Kreate Pty Limited Language Links International Pty Limited - 40 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 22. SEGMENT REPORTING Business segments The Company has determined that it has only one operating segment: Education. Geographical information The Group operates in Australia and Singapore. The revenues and non-current assets of the Group for the year ended 30 June 2022 are as follows: Geographic Location Revenues from External Customers Non-current assets $000s Australia 33,484 61,089 $000s Singapore 2,558 2,749 Accounting Policies Segment revenues and expenses are those directly attributable to the segments. 23. CASH FLOW INFORMATION FY22 $000s FY21 $000s a. Reconciliation of cash flow from operations with loss after income tax Loss after income tax (1,309) (1,060) Non-cash flows in profit Amortisation Depreciation Net loss on disposal of plant and equipment Write-downs to recoverable amounts Unrealised foreign exchange movement Changes in assets and liabilities (Increase)/decrease in trade and other receivables (Increase)/decrease in other current assets (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 provisions Cash flow from operations 772 5,341 (52) 59 (6) 309 (1,525) 3 (1,199) 6,010 849 71 9,323 702 6,484 364 43 (17) 557 977 10 621 (5,551) 298 367 3,795 - 41 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 23. CASH FLOW INFORMATION (continued) b. Borrowing arrangements with banks Total Facilities Credit standby facility available Amount utilised Overdraft facility available Amount utilised FY22 $000s FY21 $000s 4,800 (4,031) 769 100 - 100 4,800 (4,221) 579 750 - 750 Credit standby Line fee 2.0%. Usage fee 1.75%. Security deposit $1,000,000. Bank overdraft General terms and conditions apply. Interest rates are variable and subject to adjustment. The credit standby, bank overdraft and commercial card facilities are due for review on 30 November 2022. . 24. EVENTS AFTER THE BALANCE SHEET DATE Other than the securing of premises from 1 July 2022 at Goulburn Street in Sydney, there were no matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years. 25. RELATED PARTY TRANSACTIONS Directors’ transactions with the Company and the Group Details of Directors’ remuneration are set out in the Remuneration Report on pages 8 and 9. Directors are reimbursed for expenses incurred by them on behalf of the Group. Directors’ and specified executives’ relevant interests in shares See Directors’ Report on pages 6,7 and 29. Other related party transactions Transactions between the Company and controlled entities comprise loans, management fees and interest and are eliminated on consolidation. - 42 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 26. FINANCIAL INSTRUMENTS 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 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. ii. Financial Risks The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency risk, liquidity risk and credit risk. Foreign currency risk The 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 Group had not hedged foreign currency transactions as at 30 June 2022. Senior management continues to evaluate this risk on an ongoing basis. 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. Interest rate risk The interest rate risk has been managed by the Group by reducing and in most cases eliminating interest bearing debt. The 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 average interest rate Floating interest rate Fixed interest maturing in: 1 year or less Fixed interest maturing in: 1 to 5 years Non- Interest bearing Total $000s $000s $000s $000s $000s Year ended 30 June 2022 Financial assets Cash and cash equivalents 9 Trade and other receivables Contract assets Financial liabilities Trade and other payables Lease liabilities 10 11 17 18 0.05% 15,956 - - 15,956 - - - - - - - - - - - - 4,454 4,454 - 25,377 25,377 - 43 - - 15,956 863 1,142 2,005 3,500 - 3,500 863 1,142 17,961 3,500 29,831 33,331 ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 26. FINANCIAL INSTRUMENTS (continued) Note Weighted average interest rate Floating interest rate Fixed interest maturing in: 1 year or less Fixed interest maturing in: 1 to 5 years Non- Interest bearing Total $000s $000s $000s $000s $000s Year ended 30 June 2021 Financial assets Cash and cash equivalents Trade and other receivables Contract assets 9 10 11 Financial liabilities Trade and other payables Lease liabilities 17 18 0.27% 12,371 - - 12,371 - - - - - - - - - - - - 5,584 5,584 - 31,149 31,149 - 12,371 1,009 1,364 2,373 3,971 - 3,971 1,009 1,364 14,744 3,971 36,733 40,704 iii. Net fair values of financial assets and liabilities The carrying amounts of financial assets and liabilities approximate their net fair value. iv. 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. FY22 +/- 2% in interest rates Profit $’000 Equity $’000 245 245 - 44 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 27. 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 FY22 $000s FY21 $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 49,306 4,557 53,863 2,727 - 2,727 42,066 9,070 51,136 (1,273) (1,273) 50,895 3,561 54,456 2,046 - 2,046 42,066 10,344 52,410 (1,859) (1,859) 28. COMPANY DETAILS The registered office and principal place of business of Academies Australasia Group Limited is: Level 6, 505 George Street Sydney NSW 2000 Australia - 45 - ACADEMIES AUSTRALASIA GROUP LIMITED NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 Principal places of business of AKG colleges: NEW SOUTH WALES VICTORIA Academies Australasia Polytechnic Spectra Training Vostro Institute Level 7, 628 Bourke Street Melbourne,VIC 3000 Discover English 247 Collins Street, Melbourne, VIC 3000 Skills Training Australia Level 14, 459 Little Collins Street Melbourne, VIC 3000 SOUTH AUSTRALIA Print Training Australia Unit 17, 169 Unley Road, Unley, SA 5061 WESTERN AUSTRALIA Language Links 120 Roe Street, Perth, WA 6003 SINGAPORE Academies Australasia College 45 Middle Road, Singapore 1889954 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 Ground Floor, 331 High Street Sydney, NSW 2750 College of Sports & Fitness Level 6, 505 George Street Sydney, NSW 2000 RuralBiz Training 46 Wingewarra Street, Dubbo, NSW 2830 QUEENSLAND Brisbane School of Hairdressing Brisbane School of Beauty Brisbane School of Barbering Queen Adelaide Building 90-112 Queen Street Mall Brisbane, QLD 4000 Gold Coast School of Hairdressing Pivotal Point Tower 3/2 Nerang Street Southport, QLD 4215 - 46 - 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 12 to 46, 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 2022 and of the performance for the year ended on that date of the Company and consolidated group; 2. The Chief Executive Officer and Group Finance Manager 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. (See Note 1w). The Company and wholly-owned subsidiaries identified in Note 12, but excluding those in Note 21, 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 30 August 2022 Christopher Elmore Campbell Director - 47 - pilot' INDEPENDENT AUDITOR'S REPORT PILOT PARTNERS Chartered Accountants Level 10, Waterfront Place 1 Eagle St. Brisbane 4000 PO Box 7095 Brisbane 4001 Queensland Australia P+61 7 3023 1300 F+61 7 3229 1227 pilotpartners corn au TO THE MEMBERS OF ACADEMIES AUSTRALASIA GROUP LIMITED OPINION We have audited the financial report of Academies Australasia Group Limited ("the Company") and its subsidiaries (collectively "the Group"), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. BASIS FOR OPINION We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. A member of Nexia ABN 60 063 687 769 I Pilot is a registered trade mark licensed to Pitot Partners ] Liability limited by a scheme approved under Professional Standards Legislation Nexia International is a worldwide network of independent accounting and consulting firms. -48- piloP KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Reason for si nificance Risk of im airment of oodwill and Goodwill assets comprise a significant portion of the Group's total assets. intangible and for The impairment assessment made by the Group its goodwill and intangible assets relies upon significant judgements in respect of factors such as forecast cash flows, growth rates and operational assumptions. economic and How our audit addressed the matter intan ible assets considered whether Our audit the methodology and principles applied by the Group in their discounted cash flow model met requirements of AASB 136 Impairment of Assets ("AASB 136"). the Using our understanding of the nature of the Group's business and the environment in which it operates, we assessed and tested the assumptions and methodologies used in the Group's discounted cash flow model. In doing so: (a) We reviewed the Group's impairment test, including an assessment of its arithmetical accuracy and conceptual soundness; (b)We assessed the basis for the Group's expected future performance, including consideration of historical performance; (c) We compared the discount rate to available external data; (d) We assessed growth rates against recent historical rates performance; (e) We assessed the basis for terminal rates values and against generally-accepted techniques and relevant external data; long-term growth (f) We performed sensitivity analysis and evaluated whether a reasonable change in assumptions could cause the carrying amount of the CGU to exceed its recoverable amount; and Liability limited by a scheme approved under Professional Standards Legislation -49- pilot Goin Concern The Group incurred a net loss of $1. 309m during the year ended 30 June 2022, and as of that date, the Group's current liabilities exceed its current assets by $10. 116m. The going concern assessment made by the Group relies upon significant judgements in respect of future cash flows as well as economic and operational assumptions. (g)We also considered the adequacy of the in the financial relevant disclosures report. Using our understanding of the nature of the Group's business and the environment in which it operates, we reviewed detailed information the assumptions made in their assessment of the Group's ability to continue as a going concern. In doing so: from management on (a) We reviewed the Group's cash flow forecast for the next 12 months, including an assessment of its arithmetical accuracy and conceptual soundness; (b) We assessed the reasonableness of the Group's assumptions underlying the forecast against available information; (c) We performed analysis on the forecast to assess whether a reasonable change in assumptions could cast doubt on the Group's ability to continue as a going concern; and (d) We reviewed disclosures relation to going concern. the adequacy of the in the financial report in Liability limited by a scheme approved under Professional Standards Legislation -50- pilot' OTHER INFORMATION [OR ANOTHER TITLE IF APPROPRIATE SUCH AS "INFORMATION OTHER THAN THE FINANCIAL REPORT AND AUDITOR'S REPORT THEREON"] The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2022, but does not include the financial report and our auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL REPORT The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL REPORT Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. Liability limited by a scheme approved under Professional Standards Legislation -51- pilof A further description of our responsibilities for the audit of the financial report is located at: htt : www.auasb. ov. au Home. as x. This description forms part of our auditor's report. REPORT ON THE REMUNERATION REPORT Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 8 to 9 of the directors' report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Academies Australasia Group Limited, for the year ended 30 June 2022 complies with section 300Aofthe Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. %^ (PoA^ PILOT PARTNERS Chartered Accountants DANIEL GILL Partner Signed on 30 August 2022 Level 10 1 Eagle Street Brisbane Qld 4000 Liability limited by a scheme approved under Professional Standards Legislation -52- ACADEMIES AUSTRALASIA GROUP LIMITED AND CONTROLLED ENTITIES ADDITIONAL INFORMATION FOR A COMPANY LISTED ON THE ASX 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 29 August 2022 were: Shareholder No. of Shares Held % Mr Chiang Meng Heng a Mr Christopher Elmore Campbell b Jilcy Pty Ltd Andrew Low c Dr John Lewis Schlederer d Eng Kim Low 51,185,961 20,000,000 17,400,000 14,174,981 14,013,587 7,648,232 40.11 15.67 13.63 11.11 10.98 5.99 a Includes 7,648,232 shares held by Eng Kim Low b 17,400,000 shares held by Jilcy Pty Ltd and 1,600,000 shares held by Bankura Pty Ltd c Includes 2,048,000 shares held by Paris Pushkin Pty Ltd and 1,809,091 shares held by Mutual Trust Pty Limited. d 7,500,000 shares held by J&B Schlederer Pty Ltd and 6,513,587 shares held by Schlederer Nominees Pty Ltd VOTING RIGHTS Ordinary Shares At 29 August 2022 there were 550 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 constitution, 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.” - 53 - ACADEMIES AUSTRALASIA GROUP LIMITED AND CONTROLLED ENTITIES ADDITIONAL INFORMATION FOR A COMPANY LISTED ON THE ASX 20 LARGEST SHAREHOLDERS AS AT 29 AUGUST 2022 Registered Name No. Shares % Jilcy Pty Ltd Andrew Low Eng Kim Low J&B Schlederer Pty Ltd Schlederer Nominees Pty Ltd Kin Group Pty Ltd National Nominees Limited Netwealth Investments Limited Paris Pushkin Pty Ltd 1 Mr Chiang Meng Heng 2 3 4 5 6 7 8 9 10 11 Mutual Trust Pty Ltd 12 13 14 15 Mr Christopher Elmore Campbell 16 17 Mr Sartaj Hans 18 MK & MP Investments Pty Ltd 19 Hamsar Holdings Pty Ltd 20 Mr Daniel Hing Yuen Wong Bankura Pty Ltd Salvage Pty Ltd BNP Paribas Nominees Pty Ltd JP Morgan Nominees Australia Pty Limited 43,537,729 17,400,000 10,317,890 7,648,232 7,500,000 6,513,587 2,595,514 2,315,944 2,171,144 2,048,000 1,809,091 1,600,000 1,178,351 1,067,844 1,000,000 837,907 700,595 677,135 582,231 547,645 34.12 13.63 8.09 5.99 5.88 5.10 2.03 1.81 1.70 1.60 1.42 1.25 0.92 0.84 0.78 0.66 0.55 0.53 0.46 0.43 112,048,839 87.80 HOLDING RANGE (SHAREHOLDERS) AS AT 29 AUGUST 2022 Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 + No. Holders 68 178 73 170 61 550 Total No. Shares 35,521 494,462 582,908 6,240,148 120,261,428 127,614,467 % 0.03 0.39 0.46 4.89 94.24 100.00 UNMARKETABLE PARCELS AS 29 AUGUST 2022 Minimum $500 parcel at $0.30 per unit Minimum Parcel Size No. Holders 1,667 96 Units 74,698 - 54 - ACADEMIES AUSTRALASIA GROUP LIMITED AND CONTROLLED ENTITIES ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES CORPORATE INFORMATION DIRECTORS Dr John Lewis Schlederer Christopher Elmore Campbell Chiang Meng Heng Gabriela Del Carmen Rodriguez Naranjo Sartaj Hans COMPANY SECRETARIES Stephanie Noble Gabriela Del Carmen Rodriguez Naranjo REGISTERED OFFICE Academies Australasia Group Limited Level 6, 505 George Street Sydney NSW 2000 Australia Telephone: (02) 9224 5555 Facsimile: (02) 9224 5550 Email: companysecretary@academies.edu.au Web Site: www.academies.edu.au SHARE REGISTRAR Computershare Investor Services Pty Limited GPO Box 2975 Melbourne, VIC 3001 Australia Telephone: +61 (03) 9415 4000 Toll Free (Australia only): 1300 855 080 SECURITIES EXCHANGE The Company is listed on the Australian Securities Exchange. The Home Exchange is Sydney. ASX Code: AKG - 55 - ACADEMIES AUSTRALASIA GROUP LIMITED AND CONTROLLED ENTITIES GLOSSARY AAC AAHB AAI AAPoly AASB ACT AIHS AKG AOE ASX BMC Board CBC Academies Australasia College Pte. Limited Academies Australasia Hair and Beauty Pty Limited Academies Australasia Institute Pty Limited Academies Australasia Polytechnic Pty Limited Australian Accounting Standards Board or a numbered Standard issued by it Australian College of Technology Pty Limited Australian International High School Pty Limited Academies Australasia Group Limited – (ACN 000 003 725) Academy of English Pty Limited Australian Securities Exchange Benchmark Resources Pty Limited - trading as Benchmark College Board of Directors of AKG Clarendon Business College Pty Limited College Subsidiary company of AKG that is licensed to operate as an education institution Company AKG Corporations Act Corporations Act 2001 (Cth) CSF DE International College of Capoeira Pty Limited - trading as College of Sports & Fitness Discover English Pty Limited Directors Board of Directors of AKG EBITDA Earnings before interest, taxation, depreciation and amortisation EPS FVTPL FVOCI Earnings per share Fair value through profit and loss Fair value through other comprehensive income FY22 to FY27 Financial Year to 30 June 2022 to Financial Year to 30 June 2027, respectively - 56 - ACADEMIES AUSTRALASIA GROUP LIMITED AND CONTROLLED ENTITIES GLOSSARY Group GST IHEA LLI OCI RBT ROUA SBC Shares SPT STA TAFE TEQSA TPS VET VOS AKG and all its subsidiaries Goods and Services Tax Independent Higher Education Australia (Previous name: Council of Private Higher Education – COPHE) Language Links International Pty Limited Other Comprehensive Income Kreate Pty Limited – trading as RuralBiz Training Right of Use Assets Supreme Business College Pty Limited Fully paid ordinary shares in AKG CLB Training & Development Pty Limited as trustee for the CLB Unit Trust - trading as Spectra Training Transformations – Pathways to Competence and Developing Excellence Pty Limited - trading as Skills Training Australia Technical and Further Education Tertiary Education Quality and Standards Agency Tuition Protection Scheme Vocational Education and Training Vostro Institute of Training Australia Pty Limited - 57 - 

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